EXHIBIT 10.1
[VHA LETTERHEAD]
December 5, 1996
X. Xxxxx Xxxxxx
Executive Vice President and COO
Transcend Services, Inc.
0000 Xxxxxxxxx Xxxx, X.X., Xxx. 0000
Xxxxxxx, XX 00000
Dear Xxxxx:
This letter refers to that certain Purchasing Agreement between Transcend
Services, Inc. ("Vendor") and VHA Inc. ("VHA"), dated as of December 5,
1996. Terms used in this letter that are defined in the Services Agreement have
the same meaning as in the Services Agreement.
XXX agrees to actively assist in selling and marketing of services to VHA
vendors and affiliates and HPPI members. Where such assistance (as further
defined in Attachment II Exhibit A) directly leads to the signing of a contract
for services vendor will pay VHA marketing fee as defined below:
SECTION 1. MARKETING FEE. Within twenty (20) days after the end of
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each full or partial month during the term of the Agreement, Vendor will
pay VHA a marketing fee equal to one and six-tenths percent (1.6%) of all
net sales (as defined in this paragraph) of Services pursuant to the
Agreement during such month, with the exception that the fee will be one
percent (1.0%) of all first year net sales to Montana Deaconess Medical
Center and 5,000 shares of unrestricted Transcend Services common stock as
a retention bonus in each subsequent year those accounts are under
contract. The term "net sales" means the fees for each Service
(determined in accordance with the Agreement) delivered to VHA Members and
Affiliates and HPPI Members. The term "all net sales" means the sum of net
sales.
VHA will have the opportunity to earn equity in Transcend Services,
Inc. in accordance with the provisions of the Restricted Stock
Agreement(Exhibit A) to this letter) and the Registration Rights
Agreement(Exhibit B to this letter), as follows:
- 133,000 common stock options(Transcend common stock; TRCR/NASDAQ)
issued upon Agreement signing at cost $0.00 cost (exercise price) to
vest during the three year period of this Agreement based on the
following performance expectations:
- For any sales realized by Transcend up to $6.0 million in annual
revenue that are sold through VHA (as defined in paragraph one,
this section), VHA's options will vest at the time each Vendor
contract is signed at an accelerated rate of .0055 shares per $1.00
of annual revenue to Transcend sold through VHA or up to a maximum
of 33,000 options.
- For any sales realized by Transcend between $6.0 and $14.0
million in annual revenue that are sold through VHA (as defined in
paragraph one, this section), VHA's options will vest at the time
each Vendor contract is signed at an accelerated rate of .0042
shares per $1.00 of annual revenue to Transcend sold through VHA or
up to a maximum of 33,000 options.
- For any sales realized by Transcend between $14.0 and $23.0
million in annual revenue that are sold through VHA (as defined in
paragraph one, this section), VHA's options will vest at the time
each Vendor contract is signed at an accelerated rate of .0036
shares per $1.00 of annual revenue to Transcend sold through VHA or
up to a maximum of 33,000 options.
- For any sales realized by Transcend between $23.0 and $35.0
million in annual revenue that are sold through VHA (as defined in
paragraph one, this section), VHA's options will vest at the time
each Vendor contract is signed at an accelerated rate of .0028
shares per $1.00 of annual revenue to Transcend sold through VHA or
up to a maximum of 34,000 options.
SECTION 2. MONTHLY REPORT. With each payment of a marketing fee,
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Vendor will deliver to VHA separate reports ("Monthly Reports") for VHA
Members and Affiliates and HPPI Members, in form and substance reasonably
satisfactory to VHA, which set forth accurately:
(a) the name of Vendor, the month and year to which the
Monthly Report (and the enclosed marketing fee) relates and the
contract number (as provided Vendor by VHA),
(b) with respect to each VHA Member and Affiliate and HPPI
Member (described by LIC number, full name, city, state and zip code
as provided Vendor by VHA), the sum of net sales and the associated
marketing fees for all Services provided to each such VHA Member and
Affiliate and HPPI Member during such month,
(c) the sum of the net sales and the associated marketing
fees for all Services sold to all VHA Members and Affiliates and HPPI
Members during such month,
(d) the calculation used by Vendor to determine the
marketing fee, and
(e) such additional information as VHA may reasonably
request from time to time.
Monthly reports shall be delivered, with the marketing fee enclosed,
to:
VHA Inc.
000 Xxxx Xxx Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-5500
(Mailing Address: P. O. Box 140909
Irving, TX 75014-0909)
Attn: Accounts Receivable
SECTION 3. REPORTING AND PAYMENT PENALTIES. In the event Vendor
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fails to pay the marketing fee in accordance with Section 1 and/or fails to
provide the reports described in Section 2 within the time and manner
stated, VHA may invoice Vendor for the marketing fees estimated by VHA to
be due, payable within ten (10) days of the date of such invoice. Invoice
by VHA or payment by Vendor shall not relieve Vendor of its payment
obligations under Section 1 or the reporting obligations under Section 2.
In addition, upon the occasion of the first failure to receive a payment or
report when due, Vendor shall receive a written warning. Upon the second
and any subsequent failure to provide payment or a report when due, Vendor
shall pay an administrative penalty in accordance with the following
schedule:
2nd Failure - $ 250
3rd Failure - $ 500
4th Failure - $ 1,250
5th Failure - $ 2,500
6th Failure - $ 5,000
SECTION 4. ELECTRONIC DATA INTERCHANGE (EDI). The parties agree to
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facilitate the administration of this Agreement by transmitting and
receiving data electronically. The parties agree to all terms and
conditions stated in the Electronic Data Interchange Trading Partner
Exhibit attached to this Side Letter and incorporated herein by reference.
XXX understands that Vendor is not currently capable of providing data
electronically using EDI, but will do so not later than July 1, 1997.
If this Side Letter accurately and completely sets forth our agreement,
kindly sign the enclosed duplicate and return it to me.
Yours very truly,
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
Executive Vice President
AGREED:
Transcend Services ("Vendor")
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By: /s/ X. Xxxxx Xxxxxx
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Authorized Representative
