EXHIBIT 10.1
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT, effective as of ________, 2000 (the
"Agreement") is by and between MEDgenesis Inc., a Minnesota corporation
("MEDgenesis"), and Chronimed Inc., a Minnesota corporation ("Chronimed").
RECITALS:
1. Chronimed has formed MEDgenesis as a wholly-owned subsidiary of
Chronimed, and contributed to MEDgenesis the business (the "Business") and
assets of Chronimed's Diagnostic Products Division.
2. Chronimed and MEDgenesis have entered into a Distribution and
Spin-Off Agreement dated as of the date hereof (the "Distribution Agreement")
under which Chronimed will distribute all of the outstanding stock of MEDgenesis
to the shareholders of Chronimed. The effective date of such distribution (the
"Effective Date") is the close of business on June 30, 2000.
3. The Distribution Agreement contemplates that Chronimed and
MEDgenesis shall enter into an agreement under which certain services will be
provided by Chronimed to MEDgenesis.
NOW, THEREFORE, the parties hereto agree as follows:
1. Services.
(a) Chronimed agrees to provide to MEDgenesis, during the term
provided in this Section 1, those Transition and other services with respect to
the MEDgenesis Business listed and described in Exhibit A hereto (the
"MEDgenesis Services"), at the rates specified in Exhibit A hereto. The
MEDgenesis Services are based on the parties' understanding of the support and
Transition services reasonably required by MEDgenesis at the date of this
Agreement. MEDgenesis shall pay Chronimed, for the MEDgenesis Services, on a
monthly basis, the amounts stated in Exhibit A hereto.
(b) Chronimed shall perform the Services in a timely,
efficient and workmanlike manner substantially consistent with the recent
historical practice of Chronimed.
(c) The employees or agents of Chronimed providing such
services shall remain employees or agents of Chronimed. Chronimed shall use its
discretion in performing the Services, subject to the general direction of
MEDgenesis and subject to compliance with applicable law. Chronimed shall
determine its work location, hours and rules. However, to the extent employees
of Chronimed shall be on the premises of MEDgenesis, they shall observe the
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working hours and working rules of such premises.
(d) Charges for the MEDgenesis Services shall be invoiced on
or about the twentieth business day of the calendar month next following the
calendar month in which the Services have been performed, and such invoice shall
be payable net 30 days following receipt thereof.
2. Occupancy of Facilities.
(a) If requested in writing by MEDgenesis, Chronimed shall
give MEDgenesis the right, as of the Effective Date, to have access to, occupy
and use the portions of the Chronimed facilities described in Exhibit B, which
are presently occupied and used to conduct the Business (such portions, the
"Facilities"), on a basis substantially consistent with the recent historical
practice of the Business, for the term set forth in Exhibit B hereto. Prior to
the first of each month, MEDgenesis shall pay the monthly fee set forth in
Exhibit B hereto for the Facility.
(b) The access, occupancy and use by MEDgenesis of the
Facilities following the date hereof shall be at the expense and risk of
MEDgenesis. MEDgenesis shall indemnify and hold harmless Chronimed, its
subsidiaries and its and its subsidiaries' employees and agents (the "Chronimed
Group") from and against any loss, expense, damage, liability or claim
(including reasonable attorneys' fees) arising from any negligence or misconduct
of or on behalf of MEDgenesis, or its employees or agents (the "MEDgenesis
Group"), and Chronimed shall indemnify and hold harmless the MEDgenesis Group
from and against any loss, expense, damage, liability or claim (including
reasonable attorneys' fees) arising from any negligence or misconduct of or on
behalf of members of the Chronimed Group, during such access, occupancy or use.
3. Termination.
(a) Termination Without Prior Notice. Chronimed and MEDgenesis
may each immediately terminate this Agreement by written notice to the other (i)
in the event of the other's voluntary bankruptcy or insolvency, (ii) in the
event that the other shall make an assignment for the benefit of creditors, or
(iii) in the event that a petition shall have been filed against the other under
any bankruptcy law, corporate reorganization law or other law for relief of
debtors (or any other law similar in purpose or effect), which has caused the
other to have its business effectively discontinued in its then present form.
(b) Termination With Notice. If either Chronimed or MEDgenesis
(the "Defaulting Party") shall fail adequately to perform in any material
respect any of its material obligations under this Agreement, whether
voluntarily or involuntarily or as a result of any law or regulation or
otherwise, the other may terminate this Agreement upon 10 days' written notice
in the event of failure of Chronimed or MEDgenesis to make payment in accordance
with this Agreement and upon thirty (30) days' written notice otherwise, to the
Defaulting Party specifying the respects in which the Defaulting Party has so
failed to perform its obligations under this Agreement, unless during such
period the Defaulting Party shall have remedied such failure.
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(c) Termination of Services. MEDgenesis may terminate any of
the MEDgenesis Services being provided by Chronimed or MEDgenesis's use of the
Facilities at any time during the term of the Agreement by written notice to
Chronimed sixty (60) days prior to the requested termination date. Chronimed may
terminate its provision of any of the MEDgenesis Services or MEDgenesis's use of
the Facilities by written notice to MEDgenesis sixty (60) days prior to the
requested termination date, provided that such termination date shall not be
before December 31, 2000, without the consent of MEDgenesis.
4. Limitation of Liability. Neither Chronimed nor MEDgenesis shall be
liable for any indirect, special or consequential damages in connection with, or
arising out of, this Agreement or the Services provided under this Agreement.
5. Disclaimer of Warranties. Except as expressly set forth in this
Agreement or in any other agreement between the parties modifying or
supplementing this Agreement, neither Chronimed nor MEDgenesis makes any
representation or warranty whatsoever, express or implied, including, but not
limited to, any representation or warranty as to merchantability or fitness for
a particular purpose, arising out of this Agreement or the Services provided
under this Agreement.
6. Notices. All notices, requests, demands and other communications
under this Agreement shall be given in accordance with the Distribution
Agreement.
7. General.
(a) Except as otherwise provided in this Agreement, neither
Chronimed nor MEDgenesis shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other, which
consent shall not be unreasonably withheld, and any such attempted assignment
without such prior written consent shall be void and have no force or effect.
This Agreement shall inure to the benefit of, and shall be binding upon, the
successors and permitted assigns of Chronimed and MEDgenesis.
(b) Each of Chronimed and MEDgenesis agrees that it shall take
appropriate action by instruction of or agreement with its personnel, to ensure
that all personnel performing Services under this Agreement shall be bound by
and comply with all of the terms and conditions of this Agreement.
(c) Each of Chronimed and MEDgenesis shall be responsible for
its actions in the performance of the Services and shall indemnify, hold
harmless and defend (upon request) the other from and against all claims and
losses of any type, but subject to the limitations of Section 4, (including
reasonable attorneys' fees) in connection with, in whole or in part, any
negligent act or omission, willful misconduct, or failure to comply with
federal, state or local law, in the performance of the Services.
(d) No person providing Services shall be liable for any
failure of, or delay in
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the performance of, Services under this Agreement for the period that such
failure or delay is due to acts of God, public enemy, civil war, strikes or
labor disputes, or any other cause beyond its reasonable control. Each of
Chronimed and MEDgenesis agrees to notify the other hereto promptly of the
occurrence of any such cause and to carry out this Agreement as promptly as
practicable after such cause is terminated.
(e) This Agreement and the Distribution Agreement constitutes
the entire agreement of Chronimed and MEDgenesis with respect to the Services.
This Agreement may be amended or modified, and any of the terms or conditions
hereof may be waived, only by a written instrument executed by Chronimed and
MEDgenesis, or in the case of a waiver, by the party waiving compliance. Any
waiver by either Chronimed or MEDgenesis of any condition, or of the breach of
any provision or term in any one or more instances, shall not be deemed to be
nor construed as a further or continuing waiver of any such condition, or of the
breach of any other provision or term of this Agreement.
(f) Nothing in this Agreement is intended to confer any rights
or remedies under or by reason of this Agreement on any persons other than
Chronimed or MEDgenesis and their respective successors and permitted assigns.
Nothing in this Agreement is intended to relieve or discharge the obligations or
liability of any third persons to Chronimed or MEDgenesis. No provision of this
Agreement shall give any third persons any right of subrogation or action over
or against Chronimed or MEDgenesis.
(g) This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of Minnesota without
reference to principles of conflicts of law.
(h) The section headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(i) This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute the same
instrument.
CHRONIMED INC. MEDGENESIS INC.
By:_______________________ By:__________________________
Its:_______________________ Its:__________________________
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EXHIBIT A
Services Rate Scope
-------- ---- -----
1. Information Services Per attached Per attached
consulting Schedule A-1 Schedule A-1
2. Accounting consulting $10,000 To include general
per month ledger, accounts payable,
and payroll support
consistent with historic
levels for the Diagnostic
Products unit
3. Legal consulting $4,000 per Up to 8 hours
per week of general legal
support
Services provided after December 31, 2000, if any, shall be subject to
renegotiation of rates. Accounting and legal services shall consist of personal
services only, with MEDgenesis to be responsible for providing all office
facilities, equipment and supplies necessary to support such services.
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SCHEDULE A-1
INFORMATION SYSTEMS
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Telephone System(s)
-------------------
$5,000/mth A monthly fee of $5,000/month will be charged for
Chronimed Telecommunication's support of the Red Circle,
Edina and Bury Drive PBX, ACD, and Voicemail systems.
Chronimed will also manage both local and long distance
carriers for MEDgenesis. This is contingent upon the
build out of a switch room at the Edina facility, so it
is unlikely that the following will be completed prior
to Fall 2000;
a) Purchase and install a Nortel Option 11 PBX telephone switch.
b) Install Voicemail software on the new Option 11.
c) Install the Option 11 at Edina (contingent upon having a switch room built).
d) Connect the Edina and Bury Drive facilities via a T1 so that Bury drive gets its
voicemail service from Edina instead of Red Circle.
e) Connect Bury Drive facilities security to a new
system to be installed at Edina. Disconnect Bury
Drive security from the Red Circle security system.
f) Secure local and long distance service for MEDgenesis at Edina.
g) Move the MEDgenesis 1-800 numbers to Edina.
$1,000/mth The monthly telecommunications support fee will be
reduced to $1,000/month after the Edina and Bury Drive
phone systems are fully operational (see above a-g), and
while MEDgenesis still has employees located at Red
Circle using the Red Circle PBX and Voicemail resources.
It is thought this service would not be needed after
December 30, 2000.
Chronimed IS Telecommunication staff will handle adds/moves/changes and service calls for
$75/hr telephone support for MEDgenesis on a per call basis of
$75/hour, in 15 minute increments and with a 15 minute
minimum. This service will not be offered after the
Edina and Bury Drive phone systems are fully operational
(see above a-g).
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Servers, Networks and Desktops
------------------------------
$18,000/mth A monthly fee of $18,000/month will be charged for Chronimed IS support of the MEDgenesis
local area networks at Edina, Bury Drive and Red Circle as well as the wide area network
connecting the three facilities, and the virtual private network supporting the traveling
sales force. This fee also includes support of all the MEDgenesis application and file
servers (CAMELOT, Visual Manufacturing, ADP, E-Time, etc.), as well as providing Level 1
Help Desk support. This fee will remain in place until the chosen Application Service
Provider (ASP) takes over this responsibility. It is anticipated that this service will
not be needed after August 1, 2000.
Chronimed IS technical staff will handle PC adds/moves/changes and service calls for PC
$75/hr support for MEDgenesis on a per call basis of $75/hour,
in 15 minute increments and with a 15 minute minimum.
This service will not be offered after the ASP has taken
over support of the networks, servers and desktops -
anticipated to be by August 1, 2000.
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Data General Support
--------------------
$6,300/mth A monthly fee of $6,300/month will be charged for
Chronimed IS support of the Data General system located
at Red Circle.
$3,000/mth The monthly Data General fee will be reduced to
$3,000/month once the Lilly Visual Manufacturing System
has been up and running for thirty days - anticipated to
be September 1, 2000. Through the end of the calendar
year the system will be used primarily for A/R and
historical look-ups. This reduced rate is reflective of
the anticipated reduced DG usage. It is anticipated that
this service will be available through December 31,
2000, after which the Data General will no longer be
accessible to MEDgenesis
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Transition Planning, Consultation and Support
---------------------------------------------
$115/hr Chronimed IS transition planning and consultation (Xxx
Xxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxxxxxx) will be billed
at a rate of $115/hour.
$90/hr Chronimed IS technical consulting (Xxxxx Xxxxxx) will be billed at a rate of $90/hour.
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Specific "out of pocket expenses" such as outside consultants, small equipment
or software purchases, etc. will be billed directly to MEDgenesis. Chronimed
will xxxx MEDgenesis a fixed monthly charge and people's time PLUS materials.
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EXHIBIT B
FACILITIES AND RATES
Upon written request by MEDgenesis, Chronimed will sublease to
MEDgenesis and MEDgenesis will sublease from Chronimed approximately 2,364
square feet of general office space (the "Sublease Premises") located within
Chronimed's Office Facility at 00000 Xxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx
(the "Office Facility"). The Sublease Premises will consist of the area or areas
in use by employees of Chronimed's Diagnostic Products division on the date of
the spin-off.
Chronimed will charge and MEDgensis will pay sublease base rent,
utility and operating expenses for the Sublease Premises in the amount of $24.32
per square foot (annualized). MEDgenesis shall pay Chronimed such sublease
payments on or before the first day of each month of occupancy.
MEDgenesis' sublease rights and obligations shall be subordinate to all
Chronimed rights and obligations under its master lease with the Office Facility
landlord. MEDgenesis shall receive all reasonable rights of ingress and egress,
use of common area space, and use of parking facilities presently afforded
Chronimed under its master lease for the office space. MEDgenesis shall bear all
responsibility for damage caused by its employees, agents, or invitees to the
Sublease Premises and Office Facility common or parking areas, ordinary wear and
tear excepted.
The sublease rights and occupancy granted herein shall terminate
December 31, 2000.
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