Consulting Agreement - Provident American Corp. and Robinson Lerer & Montgomery LLC
ROBINSON LERER & MONTGOMERY
STRATEGIC COMMUNICATIONS
75 Rockefeller Plaza
New York, NY 10019
212.484.6100
fax 212.484.7411
January 25, 1999
Mr. Alvin H. Clemens
Chairman and Chief Executive Officer
Provident American Corporation
2500 DeKalb Pike
Norristown, PA 19401
Dear Mr. Clemens:
Th/s letter, when signed by both Provident American Corporation ("PAMC"), "you"
or "your") and Robinson Lerer & Montgomery, LLC ("RLM", "we", "us" or "our"),
will constitute an agreement (the "Agreement") between you and us with regard to
our appointment by you as a consultant for certain of your corporate
communications work.
1. Fees: RLM will bill on a monthly basis for services rendered ("Total
Monthly Billings"). RLM shall receive $10,000 per month in cash (the
"Monthly Retainer") against Total Monthly Billings. The date of
commencement of services was May 27, 1998. The Monthly Retainer will be
reviewed at six month intervals, and adjustments will be made, where
appropriate.
The difference between the Total Monthly Billings and the Monthly
Retainer, will be paid through the issuance of HealthAxis.com, Inc.
("HealthAxis" or the "Company") Common Stock (the "Common Stock
Component"). The number of shares which shall be issued shall be based
upon the value of the Company and the price per share as determined on
Schedule "A" hereto. The HealthAxis Common Stock to be issued shall
also be pursuant to the terms of the Stock Purchase Agreement set forth
on Schedule "B" hereto, which shall be executed each time HealthAxis
Common Stock is issued hereunder. The valuation with regard to the
Common Stock Component will initially occur upon the completion of the
"Qualified Offering" as defined in Schedule "A" hereto, and thereafter,
at six (6) month intervals commencing six (6) months for the last day
of the month following the initial Qualified Offering (the "Valuation
Period"). All shares issued hereunder shall be deemed "Restricted
Securities" as defined under the Securities Act of 1933 (the "Act")
75 Rockefeller Plaza New York NY 10019 (212)484-7162 Fax (212)258-3169
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Alvin H. Clemens
Provident American Corporation
January 25, 1999
Page 2
Our standard hourly time charges are as follows:
Partner $385-$450
Principal $325
Executive Vice President $300
Senior Vice President $260
Vice President $200
Senior Associate $160
Associate $125
Assistant $ 60
It is understood and agreed that the above referenced hourly time
charges shall be subject to change by us upon thirty (30) days prior
written notice to you.
We shall receive a warrant to acquire 50,000 shares of PAMC at $3.30
each. The date of the warrant grant is September 16, 1998. The Board of
Directors of PAMC, will, on an annual basis, evaluate future option
grants to us.
Reimbursements: For our outlays on your behalf, you agree to reimburse
us for reasonable disbursements and other charges we incur in
connection with providing services to you under this Agreement. We
shall bill you monthly, in arrears, for such disbursements and other
charges.
Interest on Late Payments: On invoices for fees (i.e. the Monthly
Retainer) or reimbursements for which payment is not received within
thirty (30) days, you agree to pay us simple interest, computed
monthly, at one percent (1 percent) over the prime rate of interest in
effect at Chase Manhattan Bank, in New York City, on the undisputed
amount outstanding at the end of such 30-day period, until such payment
is received. In the event of a disputed charge, you shall notify us in
writing of the disputed amount and reason for the dispute, and you
agree to pay all undisputed amounts owed while the dispute is under
negotiation.
2. Term: This Agreement shall be effective as of May 27, 1998, and will
continue unless and until terminated by either party by prior written
notice to the other, by registered or certified mail. Upon termination
of this Agreement, you agree to pay all fees, disbursements and other
charges incurred prior to the effective date of such termination.
75 Rockefeller Plaza New York NY 10019 (212)484-7162 Fax (212)258-3169
<PAGE>
Alvin H. Clemens
Provident American Corporation
January 25, 1999
Page 3
3. Indemnity: You hereby agree to indemnify and hold harmless us and our
officers, directors, members, agents, and employees (each of the
foregoing, including us, being hereinafter referred to as an
"Indemnified Person") to the fullest extent permitted by law from and
against any and all losses, claims, damages , actions, proceedings,
arbitrations or investigations or threats thereof, and expenses related
thereto (including reasonable fees, disbursements, and other charges of
counsel) (all of the foregoing being hereinafter referred to as
"Liabilities"), based upon, relating to or arising out of our
engagement by you to perform services hereunder or any Indemnified
Person's role therein; provided, however, that you shall not be liable
under this paragraph: (a) for any amount paid in settlement of claims
without your consent, unless your consent is unreasonably withheld, or
(b) to the extent that it is judicially determined, or expressly stated
in an arbitration award, that such Liabilities resulted primarily from
the willful misconduct or gross negligence of the Indemnified Person
seeking indemnification. In connection with your obligation to
indemnify for expenses as set forth above, you further agree to
reimburse each Indemnified Person for all such expenses (including
reasonable fees, disbursements, and other charges of counsel) as they
are reasonably incurred by such Indemnified Person; provided, however,
that if any Indemnified Person is reimbursed hereunder for any
expenses, the amount so paid shall be refunded if and to the extent it
is judicially determined, or expressly stated in an arbitration award,
that the Liabilities in question resulted primarily from the willful
misconduct or gross negligence of such Indemnified Person. You hereby
also agree that neither we nor any other Indemnified Person shall have
any liability to you (or anyone claiming through you or in your name)
in connection with our engagement by you except to the extent that such
Indemnified Person has engaged in willful misconduct or been grossly
negligent. The foregoing provisions of this paragraph shall survive the
termination of this Agreement.
4. Applicable Law: This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable
to agreements made and to be performed entirely within such State,
without regard to the principles of conflicts of law. This Agreement
sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof and supersedes all prior
agreements, arrangements, and understandings, written or oral, relating
thereto. No representation, promise, or inducement has been made by
either party that is not embodied in this Agreement and neither party
shall be bound by or liable for any alleged representation, promise, or
inducement not so set forth. Neither party shall have the right to
assign any of its right or obligations under this Agreement. No
amendment or waiver of this Agreement shall be effective, binding, or
enforceable unless in writing and signed by both you and us or, in the
case of a waiver, by the party granting the waiver.
75 Rockefeller Plaza New York NY 10019 (212) 4g4-7152 Fax (212) 258-3159
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Alvin H. Clemens
Provident American Corporation
January 25, 1999
Page 4
Please confirm that the foregoing correctly sets forth the understanding of the
parties by signing and returning the enclosed duplicate copy of this letter.
Very truly yours,
Patrick S. Gallagher
Chief Financial Officer
ACCEPTED AND AGREED:
Alvin H. Clemens
Chairman and Chief Executive Officer Provident American Corporation
75 Rockefeller Plaza New York NY 10019 (212) 484-7162 fax (212) 258-3169
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Alvin H. Clemens
Provident American Corporation
January 25, 1999
Page 5
Schedule "A"
Within fifteen (15) days after the completion of a private placement
pursuant to Regulation D under the Act or a public offering under the Act ( a
"Qualified Offering"), HealthAxis shall issue to RLM, the number of shares of
HealthAxis Common Stock equal to the number of shares of HealthAxis Common Stock
which could have been purchased in the Qualified Offering with an investment
equal to the accumulated Common Stock Component (the "Qualified Offering
Valuation"). The Qualified Offering Valuation shall be applicable to all shares
of HealthAxis Common Stock issued subsequently thereto, until the next Qualified
Offering, at which time the new Qualified Offering Valuation shall be
applicable. In the event the Qualified Offering is a public offering, the
Qualified Offering Valuation shall be equal to, on a per share basis, the per
share public offering price.
Set forth on Exhibit "1" hereto is an example of the workings of this
Schedule.
75 Rockefeller Plaza New York NY 10019 (212)484-7162 Fax(212)258-3169
<PAGE>
Alvin H. Clemens
Provident American Corporation
January 25, 1999
Page 6
Example
01/01/99-01/31/99 Total Monthly Billings $40,000
Monthly Retainer 10,000
January Common Stock Component 30,000
February Common Stock Component 20,000
March Common Stock Component 30,000
April Common Stock Component 20,000
May Common Stock Component 10,000
June Common Stock Component 30,000
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Six month aggregate Common Stock Component 140,000
August 1, 1999 HealthAxis completes a Private Placement of $15,000,000 and
issues 1.5 million shares @ 10.00
RLM receives 14,000 shares of HealthAxis Common Stock
The applicable Qualified Offering Valuation is $10.00/share
75 Rockefeller Plaza New York NY 10019 (212) 484-7162 Fax (212) 258-3169
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SCHEDULE "B"
STOCK PURCHASE AGREEMENT
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THIS AGREEMENT is made this day of ,1999, between HealthAxis.com, Inc.
a Pennsylvania corporation (the "Company"), and Robinson Lerer & Montgomery,
LLC, a Delaware limited liability company (the "Purchaser") (the Company and the
Purchaser being hereinafter referred to as the "Parties").
WHEREAS the Purchaser is a valued advisor to the Company, and its
continued participation is considered by the Company to be important for the
Company's continued growth; and
WHEREAS in recognition of Purchaser's highly valued contribution to the
Company, the Company is willing to sell to the Purchaser and the Purchaser
desires to purchase shares of the Company's common stock, par value $ . per
share (the "Common Stock") according to the terms and conditions hereof.
1. Purchase of Stock.
Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby subscribes for and shall purchase, and the Company shall sell
to the Purchaser, shares (the "Purchase Stock") of the Common Stock at a
purchase price of $ per share on the date hereof (the "Purchase Date").
The aggregate price for the Purchase Stock shall be $ (such
amount hereinafter sometimes referred to as the "Purchase Price"). On the
Purchase Date, in consideration of receipt of the Purchase Price, the Company
will deliver to the Purchaser one or more certificates, registered in the
Purchaser's name, for the Purchase Stock, which shall be subject to the terms
and conditions hereinafter set forth.
2. Purchaser's Representations and Warranties.
(a) The Purchaser hereby represents and warrants that it is
acquiring the Purchase Stock for investment for its own
account and not with a view to, or for resale in connection
with, the distribution or other disposition thereof.
(b) The Purchaser represents and warrants to the Company that this
Agreement has been duly authorized, executed and delivered by
the Purchaser and is a valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance
with its terms.
(c) The Purchaser is an "accredited investor" under Regulation D
promulgated under the Securities Act of 1933 (the "Act")
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(d) The Purchaser represents and warrants to the Company its
acknowledgment that the Purchase Stock is subject to
restrictions on transfer and must be held indefinitely, unless
the Purchase Stock is registered under the Securities Act of
1933, and applicable state blue sky laws, or an exemption from
such registration is available.
(e) The Purchaser represents and warrants that it is familiar with
the Company (including its business, as presently conducted
and its proposed future operations) and has been afforded an
opportunity to request from the Company and to review, and has
received all information considered by it to be necessary.
3. The Company's Representations and Warranties.
---------------------------------------------
The Company represents and warrants to the Purchaser that (a) this
Agreement has been duly authorized, executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable against the Company
in accordance with its terms and (b) the Purchase Stock, when issued and
delivered in accordance with the terms hereof, will be duly and validly issued,
fully paid and nonassessable.
4. Binding Effect.
---------------
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
5. Amendment.
----------
This Agreement may be amended only by a written instrument signed by
the Parties hereto.
6. Applicable Law.
---------------
The laws of the Commonwealth of Pennsylvania shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
7. Notices.
--------
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt requested, postage prepaid, to the Party to whom it is
directed:
(a) If to the Company, to it at the following address:
____________________________________
____________________________________
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Attn: __________________________
(b) if to the Purchaser, to it as the address set forth below
under its signature; or at such other address as either party
shall have specified by notice in writing to the other.
1. Waiver of Compliance; Consents.
-------------------------------
Any covenant, agreement or condition herein may be waived by the
parties hereto, respectively, only by a written instrument signed by the party
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or conditions shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure nor effect indemnification with respect to subsequent failure.
8. Assignment.
-----------
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties except by
operation of law.
9. Miscellaneous.
--------------
(a) In this Agreement (i) all references to "dollars" or "$" are
to United States dollars and (ii) the word "or" is not
exclusive.
(b) The Section headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of
the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
10. Severability of Provisions.
---------------------------
(a) If any provision or any portion of any provision of this
Agreement shall be held invalid or unenforceable, the
remaining portion of such provision and the remaining
provisions of this Agreement shall not be affected thereby.
(b) If the application of any provision or any portion of any
provision of this Agreement to any person or circumstance
shall be held invalid or unenforceable, the application of
such provision or portion of such provision to persons or
circumstances other than those as to which it is held invalid
or unenforceable shall not be affected thereby.
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2. Counterparts.
-------------
This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof each signed by less
than all, but together signed by all of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date written below.
HEALTHAXIS.COM, INC.
By:
-----------------------
Name:
Title:
PURCHASER:
ROBINSON LERER & MONTGOMERY, L.L.C.
By:
-----------------------
Name:
Title:
Address: 75 Rockefeller Plaza
New York, NY 10019
Phone: (212) 484-6100
Fax: (212) 484-7411