EXHIBIT 10.11
INDEPENDENT CONSULTING AGREEMENT
THIS AGREEMENT is made as of the 9TH day of January, 1997, by and
between COMPSCRIPT, INC., which together with its legal successors and assigns
is herein referred to as "COMPANY", and XXXXXX X. XXXXXXX, who with his heirs,
successors and assigns is herein called "XXXXXXX", and XXXXXX X. XXXXX, who with
his heirs, successors and assigns is herein called "XXXXX", and COMPREHENSIVE
FORMULARY MANAGEMENT, INC., or another corporate assignee through which the
services of XXXXXXX and XXXXX are rendered, which together with its legal
successors and assigns is herein called "CONSULTANT" (in the event there is no
such corporate assignee, XXXXXXX and XXXXX collectively shall be defined as
CONSULTANT). COMPANY, XXXXXXX, XXXXX and CONSULTANT are herein collectively
referred to as the "Parties". XXXXXXX XXXXXXXX ("Christie") is also executing
this Agreement for the limited purposes referred to in Sections 6 through 13(a).
WITNESSETH:
WHEREAS, COMPANY and XXXXXXX and XXXXX have entered into an employment
agreement on June 1, 1994, wherein each was employed by COMPANY as an executive
officer (the "Employment Agreement"); and
WHEREAS, COMPANY has contracted with Pharmacy Gold, Inc. (or any
successor) (hereinafter referred to as "PGI") pursuant to which a significant
new block of mail order and related business will be provided to COMPANY by PGI
and its affiliates (the "PGI Business"); and
WHEREAS, COMPANY desires to assure a smooth transition for the PGI
Business and, to that end, desires XXXXXXX and XXXXX to assume a new work
relationship with COMPANY to service the PGI Business and otherwise desires to
terminate the Employment Agreement; and
WHEREAS, XXXXXXX and XXXXX desire to assure retention of the PGI
Business with COMPANY and otherwise desire to terminate the Employment
Agreement; and
WHEREAS, CONSULTANT desires to procure new business for the COMPANY;
WHEREAS, COMPANY further desires to generally utilize certain of the
services of XXXXXXX and XXXXX, and XXXXXXX and XXXXX are desirous of offering
their services, as delineated under Section 11, to COMPANY on an exclusive
basis.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and promises made in this Agreement and for other valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the Parties hereby agree as follows:
1. SERVICES. CONSULTANT agrees to perform for COMPANY the Consulting
Services specified in Exhibit A.
2. COMPENSATION. As compensation for CONSULTANT's Consulting Services,
COMPANY shall pay CONSULTANT the consulting fees specified in Exhibit A.
3. CONSULTANT STATUS. It is understood and agreed that CONSULTANT (and
any persons employed by CONSULTANT) shall perform the Consulting Services as an
independent contractor and not as an employee of COMPANY. COMPANY will make no
deductions from any of the payments due to CONSULTANT hereunder for state or
federal tax purposes, including, but not limited to, social security, income tax
withholding, disability and other payroll tax requirements. CONSULTANT agrees
that CONSULTANT shall be personally responsible for any and all taxes and other
payments due on payments received by CONSULTANT from COMPANY hereunder. This
Agreement shall not be construed as authority from either Party to act for the
other Party in any agreement or other capacity or to make commitments of any
kind of the account of or on behalf of the other except to the extent and the
purposes expressly provided for herein.
4. TERM. Except as specifically noted otherwise, this Agreement will
continue for a term of five (5) years from the date hereof.
5. EXPENSES.
(a) GENERAL EXPENSES. Except as noted in paragraph (b) of
this Section 5, CONSULTANT will bear any and all expenses attributable to the
rendition of services under this Agreement.
(b) CERTAIN EXPENSES TO BE PAID BY COMPANY. The COMPANY agrees
to pay Fifty Thousand Dollars ($50,000.00) on the first day of each month for
each month from February 1997 through January of 1998. Furthermore, the COMPANY
will continue the Fifty Thousand Dollar ($50,000.00) a month payments for an
additional year (through January 1999) to the extent that any of the following
revenue goals have been met: either (i) as of February 1, 1998, for the
immediately proceeding twelve (12) month period, COMPANY gross revenues (less
returns, allowances or like adjustments allowed as credits per the underlying
PGI contract(s)) attributable to all PGI Business for which CONSULTANT is
compensated on Exhibit A are at or above Eight Million Dollars ($8,000,000.00)
(the "Targeted Amount"), or (ii) as of February 1, 1998, monthly revenues for
the PGI Business have reached a One Million Dollar ($1,000,000.00) per month or
greater average run rate for the immediately preceding three (3) month period,
or (iii) if by the end of the quarter beginning February 1, 1998 and ending May
1, 1998, the revenue run rate for the PGI business has reached an average of One
Million Dollars ($1,000,000.00) per month for such quarter, then COMPANY shall
continue such Fifty Thousand Dollar ($50,000.00) a month payments through
January 1999. In the event (x) the Targeted Amount is less than Eight Million
Dollars ($8,000,000), but greater than Six Million Dollars ($6,000,000), or (y)
as of February 1, 1998 monthly revenues have reached a Seven Hundred
Fifty-Thousand Dollars ($750,000) per month, but less than One Million Dollars
($1,000,000) per month average run rate for the immediately preceding three (3)
month period, or (z) if by the end of the quarter beginning February
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1, 1998, and ending May 1, 1998, the revenue run rate for the PGI business has
reached an average of less than One Million Dollars ($1,000,000.00) per month
but greater than Seven Hundred Fifty Thousand Dollars ($750,000.00) per month
for such quarter, then CONSULTANT's payments pursuant to this Section 5(b) shall
be reduced to Twenty-Five Thousand Dollars ($25,000) per month for the twelve
(12) month period beginning February, 1998. In the event of (iii) or (z) being
the triggering event, Fifty Thousand Dollars ($50,000.00) or Twenty-Five
Thousand Dollars ($25,000), respectively per month will also be paid
retroactively to February 1, 1998.
6. PROTECTION OF TRADE SECRETS. CONSULTANT hereby acknowledges that
certain "Confidential Information" are valuable trade secrets of COMPANY and
CONSULTANT hereby agrees to maintain and to protect them in the strictest
confidence. For purposes of this Agreement, "Confidential Information" as
described hereinafter includes trade secrets, methodology, schematics, models,
business descriptions, private or secret processes, methods and ideas, as they
exist from time to time, customer lists and information concerning the COMPANY's
products, services, business records and plans associated with the COMPANY's
operations, product design information, price structure and pricing, discounts,
costs, computer programs and listings, copyright, trademark, proprietary
information, formulae, protocols, forms, procedures, training methods, technical
information, know-how, show-how, new product and service development, past,
present and future marketing, activities and procedures, method for operating
the COMPANY's business, credit and financial data concerning the COMPANY, sales
strategies, sales presentations, research information, practices and plans and
information which is embodied in written or otherwise recorded form, and other
information of a confidential nature not known publicly (the "Confidential
Information"). Confidential Information shall not only include information which
is embodied in written or otherwise recorded form, but it shall also include
information which is mental, not physical. Notwithstanding anything herein to
the contrary, CONSULTANT shall not be under any restriction in connection with
the use of Confidential Information in connection with the performance of
services hereunder for the benefit of the Company.
7. NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION. CONSULTANT
acknowledges that it has no rights, title or interest in the Confidential
Information. CONSULTANT further agrees during the term of this Agreement and
thereafter (a) to receive and hold in trust the Confidential Information
obtained directly or constructively from the COMPANY, (b) not to use such
Confidential Information for any purpose without the prior consent of the
COMPANY, and (c) not to disclose such Confidential Information to anyone without
the COMPANY's prior consent.
The foregoing obligations not to use or disclose the
Confidential Information shall not apply to (a) information which is or becomes
generally available to the public, except by breach of this Agreement, (b)
information which CONSULTANT can establish by written records was in
CONSULTANT's possession at the time of disclosure and was not previously
acquired directly or indirectly from the COMPANY, and (c) information was
evidenced by CONSULTANT's written records which CONSULTANT received from a third
party not obligated to the COMPANY. The foregoing exceptions shall apply only
from and after the date that the information becomes available to the public or
is
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disclosed to CONSULTANT by a third party, respectively. Specific Confidential
Information shall not be considered to be within the foregoing exceptions merely
because it is embraced by more general information in the public domain.
Additionally, any combination of features shall not be considered to be within
the foregoing exceptions merely because individual features are in the public
domain. If CONSULTANT intends to avail itself of any of the foregoing
exceptions, CONSULTANT shall notify the COMPANY in writing of its intention to
do so and the basis for claiming the exception.
8. COVENANT NOT TO EMPLOY. Without the written consent of COMPANY,
except for Xxxxxxx Xxxxxxxx, until CONSULTANT no longer receives compensation
under this Agreement, and for a period of one year thereafter at any time or in
any manner, CONSULTANT agrees that CONSULTANT will not, either on CONSULTANT's
own behalf of, or any behalf of any person, firm, corporation, association,
affiliate, entity or organization (collectively "Organization") employ, solicit,
divert or otherwise encourage or attempt to solicit, divert or otherwise
encourage the employment of any COMPANY employee or agent employed by COMPANY at
any time during such period. Christie agrees to the terms and conditions of
Sections 6 through 11 hereof, namely, agreeing to protect trade secrets, keep
information confidential and not compete as provided in such Sections.
9. NON-SOLICITATION OF CUSTOMERS OR CLIENTS. Except as permitted under
Section 11 or in performing services under this Agreement, CONSULTANT shall not,
until CONSULTANT no longer receives compensation under this Agreement and for a
one year period of time thereafter, at any time or in any manner, either
directly or indirectly, for the CONSULTANT's own behalf or on behalf of any
Organization, directly or indirectly solicit or attempt to solicit any Business
(defined below) from any customers or clients of the COMPANY. A "customer" or
"client" shall mean any Organization with which the COMPANY and its agents or
representatives is receiving revenue from, is in the current process of
contracting with or to whom substantive discussions or negotiations have
occurred in the last 180 days regardless of whether such Organization was
solicited or provided services by the CONSULTANT at any time during the term of
this Agreement.
10. CONSULTANT. CONSULTANT shall take appropriate measures to insure
that any of CONSULTANT's employees who assist CONSULTANT in the performance of
Consulting Services are competent to do so and that they agree that they will
not disclose or inappropriately use Confidential Information per the terms of
this Agreement.
11. NON-COMPETITION AGREEMENT. Until CONSULTANT no longer receives
compensation pursuant to this Agreement, including, but not limited to Exhibit A
and for a one year period thereafter, with regard to the sale of (i) mail order
prescription drug programs, (ii) home IV therapy, (iii) pharmaceutical services
to long-term institutional care facilities, (iv) pharmacy benefit management
services (as defined below), (v) any product or service of any other
pharmaceutical business which product or service contributes revenues equal to
5% or more of COMPANY's gross revenues, in each of such cases (i) through (v) as
conducted at the date hereof by any of the COMPANY, Medical Services Corporation
and Hytree, Inc. (cases (i) through (v) herein called the
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"Business"). CONSULTANT shall not solicit, or directly or intentionally impair,
disrupt or interfere with any past, present or prospective contractual
relationship, between COMPANY and a customer of COMPANY. For purposes of this
Agreement, pharmaceutical benefits management services shall mean (i) electronic
claims adjudication; (ii) mail service; (iii) management of and a provision for
national retail network drug card program; (iv) contracting with manufacturers
to provide rebate formulary management; and (v) clinical programs.
During such restricted period CONSULTANT will not individually
or in conjunction with others, directly or indirectly engage in any Business,
whether as an officer, director, proprietor, employer, partner, independent
contractor, investor (except for the ownership of stock in a publicly held
corporation not exceeding 5% of the outstanding stock thereof), consultant,
advisor, agent or otherwise.
Notwithstanding the foregoing, CONSULTANT may engage in the
marketing and sale of pharmaceutical benefits management business on behalf of
PGI provided that CONSULTANT also markets the COMPANY's mail order prescription
drug component with any such business and until CONSULTANT no longer receives
compensation pursuant to this Agreement, including, but not limited to Exhibit A
and for a one year period thereafter. CONSULTANT shall only place such business
with PGI if COMPANY receives and accepts the mail order component thereof, if a
mail order component is available in connection with such business.
Additionally, during the restricted period, CONSULTANT may engage in the
marketing and sale of other Business (other than pharmaceutical benefit
management) on behalf of PGI provided that CONSULTANT cause such other Business
to be placed with COMPANY if COMPANY receives and accepts such other Business.
The COMPANY shall have the absolute right, in its sole discretion to refuse any
contracts submitted by CONSULTANT. After such restricted period, CONSULTANT
shall be free to place Business with COMPANY, or elsewhere, in CONSULTANT's
discretion.
COMPANY agrees to devote such time and resources as is
reasonably necessary to perform the services called for by customers developed
by CONSULTANT hereunder including to maintain and develop the present and future
PGI Business. In the event that COMPANY within seventy-five (75) days of a
letter of intent or memorandum of understanding for new business between the
COMPANY and the prospective customer has signified that it cannot provide mail
order or other services due to insufficient resources or capacity, or in the
event that COMPANY's mail order or other services to customers developed by
CONSULTANT are repeatedly and seriously deficient such that these customers
terminate their contracts with the COMPANY due to breaches by the COMPANY of a
repeated and material nature, as evidenced by 25% or more of the number of mail
order plan participants being terminated (or COMPANY, after all applicable cure
remedies have lapsed, being advised that such accounts will be terminated) AND,
after all mail service gross revenues have reached a $ 1 million monthly run
rate, such mail service revenues to COMPANY decline by 25% or more of the
average monthly run rate for the previous three month period, then CONSULTANT
shall be permitted to place mail order or other services with other mail order
and service providers.
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The parties further agree that CONSULTANT shall be permitted
to assist PGI in connection with other services (other than mail service) where
COMPANY has contractually agreed with PGI not to provide such services.
If PGI so requests, COMPANY acknowledges that CONSULTANT shall
be the exclusive marketing arm for PGI and its affiliates and members so long as
CONSULTANT performs in accordance with the terms hereof and after notice and an
opportunity to cure in the event of any failure to perform by CONSULTANT
hereunder.
12. REMEDIES.
(a) The CONSULTANT acknowledges and agrees that the COMPANY's
remedy at law for a breach of any of the provisions of Section 7 (Trade Secrets;
Confidentiality), Section 11 (Non-Compete), Section 9 (Non-solicitation of
Customers or Clients), Section 8 (Non-solicitation of Employees) would be
inadequate and a breach thereof will cause irreparable harm to the COMPANY. In
recognition of this fact, in the event of a breach by the CONSULTANT of any of
the provisions of the above-referenced Sections, the CONSULTANT agrees that, in
addition to any remedy at law available to the COMPANY, including, but not
limited to monetary damages, the COMPANY, without posting any bond, shall be
entitled to request equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available to the COMPANY.
(b) The CONSULTANT acknowledges that the granting of a
temporary injunction, temporary restraining order or permanent injunction merely
prohibiting the use of Proprietary Information would not be an adequate remedy
upon breach or threatened breach of Sections 6 through 11 and consequently
agrees, upon proof of any such breach, to the granting of injunctive relief
prohibiting any form of competition with the COMPANY. Nothing herein contained
shall be construed as prohibiting the COMPANY from pursuing any other remedies
available to it for such breach or threatened breach.
13. CONSULTANT TO TERMINATE. If a contract for which CONSULTANT is
receiving compensation pursuant to this Agreement is terminated by a party other
than Compscript "for cause" (as defined in such contract) CONSULTANT shall have
the right to terminate this Agreement provided that all compensation due
CONSULTANT shall immediately terminate and CONSULTANT shall continue to be bound
by the provisions of Sections 6 through 11 herewith.
14. JURISDICTION AND VENUE. This Agreement is signed, executed and
consummated in the City of Boca Raton, State of Florida, and Florida's laws
shall govern all disputes, controversies and litigation arising hereunder. Venue
with respect to any litigation shall be Palm Beach County, Florida.
15. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement between
the Parties and Christie and all prior written or oral negotiations,
representations, arrangements
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and/or agreements between any or all of the Parties or Christie herein are
merged into and superseded by this Agreement. The Parties and Christie release
each other from any claims, known or unknown, arising prior to the date of this
Agreement, including, but not limited to, any and all claims arising out of the
Employment Agreement, except as otherwise contemplated by this Agreement.
(b) All provisions of this Agreement are severable and no
provision hereof shall be affected by the invalidity of any other such
provision.
(c) No action by one of the Parties and no refusal or neglect
of one of the Parties to exercise any right hereunder or to enforce compliance
with the terms of this Agreement shall constitute a waiver of any provision
herein with respect to any violations, actions or omissions hereunder, unless
such waiver is expressed in writing by the waiving party.
(d) COMPANY and CONSULTANT shall at reasonable times, upon
written request, provide reasonable access to each other during normal business
hours for inspection of the books and records relating to the performance of
this Agreement as they specifically relate to the compensation addressed in
Exhibit A. Such access shall be subject to Section 7.
(e) For purposes of this Agreement, the singular includes the
plural and VICE-VERSA and the feminine, masculine and neuter include each other.
(f) This Agreement may be amended, altered or changed only
through a written document signed by the Parties.
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(g) Each of the corporate parties to this Agreement have
received all necessary corporate approval.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date set forth above.
COMPANY:
COMPSCRIPT, INC.
By: /S/ XXXXX X. XXXXX
---------------------------
Title: PRESIDENT/CEO
---------------------------
XXXXXXX:
/S/ XXXXXX X. XXXXXXX
--------------------------------
Xxxxxx X. Xxxxxxx
XXXXX:
/S/ XXXXXX X. XXXXX
------------------------------
Xxxxxx X. Xxxxx
CONSULTANT:
COMPREHENSIVE FORMULARY
MANAGEMENT, INC.
By: /S/ XXXXXX X. XXXXXXX
------------------------------
Title: PRESIDENT
------------------------------
CHRISTIE:
/S/ XXXXXXX XXXXXXXX
------------------------------
Xxxxxxx Xxxxxxxx
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EXHIBIT A
SCOPE OF SERVICES
1. CONSULTING SERVICES. CONSULTANT will solicit and develop business
for COMPANY, including, but not limited to, the PGI Business. CONSULTANT will
provide the COMPANY reasonably detailed monthly reports of CONSULTANT's
activities including the status of the PGI Business and new business. CONSULTANT
shall devote such time as is reasonably necessary to perform the services
hereunder including maintaining and developing the present and future PGI
Business.
2. COMPENSATION.
(a) CONSULTANT shall receive compensation for all business
currently under contract between COMPANY and PGI, and from future contracts with
PGI and any and all other customers, as a result of CONSULTANT's services for
COMPANY under this Agreement.
(b) CONSULTANT shall receive commissions for new business on
those sales made by the COMPANY which directly and substantially result from
services hereunder by the CONSULTANT under contracts approved by the COMPANY in
writing.
(c) CONSULTANT shall receive a commission (within 30 days of
receipt by COMPANY) on gross revenue (less returns, allowances, or like
adjustments allowed as credits per the underlying customer contract) earned by
COMPANY each and every year from a customer contract referred to in this Exhibit
through the term of such customer contract (including renewals) except as
otherwise provided in this Agreement as follows:
(i) mail order prescription drug programs-- 1%
(1/2% on PGI Business for 1997 and 1%
thereafter); provided, however, that direct
and indirect rebates on such contracts
received (and retained) by CONSULTANT will
be a credit against such compensation and
CONSULTANT will timely notify COMPANY of
such retained rebates;
(ii) home IV therapy--the COMPANY's standard
commission agreement rate unless otherwise
negotiated by the Parties;
(iii) pharmaceutical services to long-term
institutional care facilities --the
COMPANY's standard commission agreement rate
unless otherwise negotiated by the Parties;
and
(iv) other services as may be mutually agreed.
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3. TERMINATION OF COMPENSATION. The payment of compensation to
CONSULTANT under this Exhibit shall continue beyond the general five (5) year
term of the Agreement and shall terminate in the event of CONSULTANT's breach of
the Section 11 non-compete covenants except as otherwise provided in the
Agreement.
COMPANY:
COMPSCRIPT, INC.
/S/ XXXXXX X. XXXXXXX By: /S/ XXXXX X. XXXXX
----------------------------- ------------------------------
Xxxxxx X. Xxxxxxx Title: PRESIDENT/CEO
--------------------------
CONSULTANT:
COMPREHENSIVE FORMULARY
MANAGEMENT, INC.
/S/ XXXXXX X. XXXXX By: /S/ XXXXXX X. XXXXXXX
----------------------------- ------------------------------
Xxxxxx X. Xxxxx Title: PRESIDENT
--------------------------
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