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EXHIBIT 10.22
October 29, 1996
Kats Management, LLC
0000 Xxxxx 00xx
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
This letter sets forth the terms and conditions of the contract (the
"Agreement") among Kats Management, LLC (Consultant), and Complete Wellness
Centers, Inc., a Delaware corporation (the "Company"), pursuant to which the
Consultant will serve as an acquisition and integration consultant to the
Company. This letter is a binding agreement among the parties. The terms of the
Agreement are as follows:
1. TERM
The term of this Agreement shall commence on November 1, 1996 and shall
continue for five (5) years unless sooner terminated in accordance with Section
4.
2. CONSULTANT'S RESPONSIBILITIES
A. Duties.
(i) Affiliation Consultant
Consultant agrees to act as an affiliation consultant
on behalf of the Company. As such, Consultant will act for the
purpose of identifying and bringing to successful contract
closure certain chiropractors and their chiropractic clinics
willing to establish a new business or professional
corporation therein to provide integrated medical and
chiropractic services (the "Integrated Medical Center"), in
accordance with the Company's business plan as it may change
from time to time. The terms of the integration contract with
the chiropractic office and chiropractor will be set forth in
a separate contract between the Company and the chiropractic
clinic/chiropractor in the Integrated Medical Center
Management and Security Agreement (the "Integration
Contract"). In the performance of it's duties as an
affiliation consultant, Consultant shall report to the Senior
Director of Operations and Development and shall coordinate
its efforts
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with the Director of Integration and Acquisition and a
consultant to the Company, X.X. Xxxxxx & Associates, Inc.
Consultant should have no obligation under this agreement to
compensate Xxxxx X. Xxxxxx or X. X. Xxxxxx & Associates, Inc.
In the performance of its duties, Consultant must provide to
the Company at a minimum the personal services of Xx. Xxxxx
Xxxx. Xx. Xxxx will be responsible for contact with potential
integration candidates, distribution of Company materials to
such candidates, gathering information from candidates as may
be requested by the Company, undertaking such activity as may
be required to cause candidate to sign an Integration
Contract, and satisfying such obligations as may be reasonably
required or directed by the Company for the purpose of
advancing the Company's business plan. Notwithstanding
anything herein to the contrary, Xx. Xxxx shall have no
authority, express or implied, to bind the Company to any
obligation, contract or commitment whatsoever, including, but
not limited to, an Integration Contract, unless and until such
Integration Contract is expressly adopted, authorized or
ratified by the Company.
(ii) Integration Consultant
Consultant agrees to act as an integration consultant
on behalf of the Company. As such, Consultant will act for the
purpose of assisting the Company in the development of its
Integrated Medical Centers. As part of the Agreement, the
Company's Integrated Medical Centers' professionals and staff
during the term of the Integration Contract, shall have the
right, at no cost to the Integrated Medical Centers or its
professionals and staff unless otherwise indicated and not
including travel and housing and other miscellaneous travel
expenses, to attend all Consultant's seminars and to receive
in a manner similar to Consultant lifetime clients all doctor
and staff manuals, access to Top-Flight for the customary
price, bi-monthly newsletters, and tapes ("Kats Services").
Such services shall not include personal or phone consulting
by Consultant. In the performance of duties as an integration
consultant, Consultant shall report to the Senior Director of
Operations and Development and must provide to the Company, at
a minimum, the personal services of Xx. Xxxxx Xxxx.
3. COMPENSATION
In consideration of performance and activities herein, the Company shall pay as
follows:
A. Commissions. For each binding Integration Contract executed by the
Company during the engagement as a direct result of Consultant's
efforts, a commission in the amount equal to twenty percent (20%) of
the Integration Fee (as defined in the Integration Contract and
excluding any Enrollment, Operations or Collective Advertising Fees)
received by the Company during the initial term of the
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Integration Contract. If the Integration Contract is terminated after
the initial term, Consultant shall receive the same proportional
amount of the outstanding receivables due the Company. The initial
term of the Integration Contract is defined as either the five (5)
year or ten (10) year term. Any commission earned under this section
shall be payable to Consultant within thirty (30) days of collection
by the Company. The Company maintains a log of clients and contacts
which documents the commission eligibility of the Company consultants.
Letters of intent and/or contact reports are used to evidence the
eligibility. In cases where multiple consultants may have had
interface with prospective clients, the Senior Director of Operations
and Development shall decide the allocation. It is expressly
understood that if a Kats Management client joins the Company, the
result is predominantly due to Consultant's effort and Consultant
shall be given commission eligibility. Additionally, if a prospective
client is not a Kats Management client and has not had Company or
another consultant contact in the past six months, Consultant shall be
given commission eligibility.
B. Fees.
(i) For each Integration Contract executed by the
Company in which the chiropractor is a lifetime
client of Consultant, a fee of three hundred fifty
dollars ($350.00) per year, payable to Consultant
during the initial term of the Integration Contract.
Consultant will continue to provide practice
development service to such chiropractor(s).
or
(ii) For each Integration Contract executed by the
Company in which the chiropractor is a regular client
of Consultant, a fee of two hundred fifty dollars
($250.00) per month, payable to Consultant during the
initial term of the Integration Contract commencing
during the first full month after execution of such
Integration Contract. Consultant will continue to
provide practice development services to such
chiropractor(s).
C. Bonus. A bonus of ten thousand dollars ($10,000) for each of the
first five (5) Integration Contracts executed by the Company and five
thousand dollars ($5,000) for each of the next twenty-five (25)
Integrated Contracts executed by the Company as a direct result of
Consultant's efforts. Said bonuses payable to the Consultant, forty
five (45) days with respect to the first five (5) Integration
Contracts and ninety (90) days with respect to the next twenty-five
(25) Integration Contracts, after the execution of such Integration
Contracts provided the Integration Contract is still in effect.
D. Stock Options. On November 1, 1996, Consultant shall receive
non-qualified options to purchase up to eleven thousand (11,000)
shares of the Company's Common Stock (the "Options") at an exercise
price of 75% of the initial public offering price, under the Company's
1994 Stock Option Plan which shall be evidenced by a stock option
agreement. Sale of the Options may be subject to limitations pursuant
to Rule 144 under the Securities Act of 1933. The Options
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shall vest with respect to 3700 options on November 1, 1997, 3700
options on November 1, 1998, and 3600 options on November 1, 1999 and
shall be exercisable for a period of five (5) years from the date of
this Agreement. However, in the event this Agreement is terminated,
the vested Options shall be exercisable for a period of three (3)
months from the date of termination.
E. Continued Payment. It is expressly understood that the term of
this contract is for five years unless otherwise terminated according
to Section 4, but that the payment of all monies due under Section 3
shall continue to be paid during the duration of the initial term of
the Integration Contract.
F. Miscellaneous. The Company shall reimburse Consultant for any
documented out of pocket expenses incurred in connection with the
responsibilities described herein, subject to the requirement of prior
written approval of such expense. Also, it is expressly understood
that if 50 or more non-Kats Management clients attend(s) regular Kats
Management seminars, Consultant shall be entitled to recover its hard
costs from the Company.
4. TERMINATION
This Agreement may be terminated prior to the end of the term:
A. by a written agreement among Consultant and Company;
B. by the Company in the event of the death of Xxxxx X. Xxxx or
his disability for a period of one hundred and twenty (120)
consecutive days or the adjudicated mental incompetence of
Xxxxx X. Xxxx
C. by the Company or Consultant for Cause, where "Cause" shall
mean breach of fiduciary duty or of the provisions of this
Agreement, manifest incompetence, plain dereliction or neglect
of duty persisted in after warning, or conviction of any
future felony or conduct involving moral turpitude by Company
or Consultant.
5. COVENANT NOT TO COMPETE
A. During the Consulting Term and one (1) year thereafter, the
Consultant will not without the prior written permission of
the Company in each instance directly or indirectly carry on
or participate in a business the same as or similar to or in
competition with that conducted or engaged in by the Company
or any of its subsidiaries or affiliates.
B. The term "carry on or participate in a business the same as or
similar to that conducted or engaged in by the Company or any
of its subsidiaries or affiliates" shall include the
Consultant, directly or indirectly, doing any of the following
listed
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acts, other than carrying on or engaging in activities
expressly permitted under this Agreement:
(i) carrying on or engaging in any such business
as a principal, or solely or jointly with
others as a director, officer, agent,
employee, consultant or partner, or
stockholder or limited partner owning more
than five percent (5%) of the stock or equity
interests in or securities convertible into
more than five percent (5%) of the stock of
or equity interests in any corporation,
association or limited partnership; or
(ii) as agent or principal carrying on or engaging
in any activities or negotiations with
respect to the acquisition or disposition of
any such business; or
(iii) lending credit or money for the purpose of
establishing or operating any such business;
or
(iv) giving advice to any other person, firm,
association, corporation or other entity
engaging in any such business; or
(v) lending or allowing his name or reputation to
be used in any such business;
C. In the event of a breach or threatened breach by the
Consultant of the provisions of this Section 5, the Company
shall be entitled to injunctive relief against the Consultant.
Nothing herein shall be construed as prohibiting the Company
from pursuing any other remedies available to the Company for
such breach or threatened breach, including without limitation
the recovery of damages from the Consultant.
D. During the Consulting Term and for one (1) year thereafter,
the Consultant will not without the prior written permission
of the Company in each instance will not solicit, or attempt
to solicit and employ any employee of the Company or any of
its subsidiaries or affiliator, or commit an act the primary
purpose of which is to induce employee of the Company or any
of its subsidiaries or affiliates to leave such employment or
significantly interfere with, disrupt or attempt to disrupt
any past, present or prospective relationship, contractual or
otherwise, relating to the business activities between the
Company or any of its subsidiaries or affiliates and their
respective prospects.
E. The parties hereto consider the restrictions contained in this
Section 5 to be reasonable. If, however, such restrictions
are found by any court having jurisdiction to be unreasonable
because they are (or any of them is) too broad, then such
restrictions shall nevertheless remain effective, but shall be
considered amended as to protection of business, time or
geographic area in whatever manner is considered reasonable by
that court and, as so amended, shall be enforced.
F. The provisions of this Section 5 shall not include any
services of the type provided by Consultant as of the date of
execution of this Agreement (which shall exclude any
integration services).
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G. The provisions of this Section 5 shall not include any
services of the type provided by an affiliate of the
Consultant, Integrated Physicians Management Company, LLC,
with respect to only the nine (9) clinics identified in
Exhibit A
H. The provisions of this Section 5 shall survive the expiration
or termination, for any reason, or this Agreement and shall be
separately enforceable.
6. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. The Consultant agrees that he will not, during the Consulting
Term or thereafter, make use of, divulge or otherwise
disclose, directly or indirectly, any trade or business secret
(including, without limitation, any customer list, data,
records or financial information constituting a trade or
business secret) concerning the business or policies of the
Company or any of its subsidiaries or affiliates which he may
have learned as a result of his employment during the
Consulting Term or prior thereto as shareholder, employee,
officer and/or director or the Company except to the extent
such use or disclosure is necessary to the performance of this
Agreement and in furtherance of the Company's best interest.
The provisions of this Section 6 shall survive the expiration
or termination, for any reason, of this Agreement.
B. The Consultant shall not during the Consulting Term or for one
(1) year thereafter make use of, divulge or otherwise
disclose, directly or indirectly, any confidential information
concerning the business or policies of the Company or any of
its subsidiaries or affiliates which he may have learned while
a shareholder, employee, officer and/or director of the
Company.
C. In the event of a breach or threatened breach by the
Consultant of the provisions of this Section 6, the Company
shall be entitled to an injunction restraining the Consultant
from disclosing, in whole or in part, any such trade or
business secret and/or any such confidential information, or
from rendering any services to any person, firm, corporation,
association, or other entity to whom any such trade or
business secret and/or any such confidential information, in
whole or in part, has been disclosed or is threatened to be
disclosed. Nothing herein shall be construed as prohibiting
the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including
without limitation the recovery of damages from the
Consultant.
D. The provisions of this Section 6 shall survive the expiration
or termination, for any reason, of this Agreement and shall be
separately enforceable.
7. INDEPENDENT CONTRACTOR
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Consultant is and shall remain an independent contractor at all times with
respect to its performance hereunder, and shall have no right or authority to
assume or create any obligation, express or implied, on behalf of the Company
without the prior written consent of the Company as the case may be, in each
instance. Nothing in this Agreement shall be construed as creating the
relationship of employer and employee, master and servant, or principal and
agent, nor that of partnership or joint venture.
8. FEES AND EXPENSES
The Company and Consultant shall pay their own costs incidental to the
execution of the Agreement, including attorney's fees, accountants, etc.
9. DISCRETION TO OFFER, DICTATE TERMS AND SIGN INTEGRATION CONTRACTS
Notwithstanding (i) any provision that may be expressly or implicitly set forth
herein, inferred, established by operation of law, or otherwise created, or
(ii) any oral or written statements, omissions, representations or warranties
that may be issued, omitted, uttered or signed by representatives of the
Company or otherwise, or (iii) any efforts or time which Consultant may
undertake or expend in the course of the engagement hereunder, each of the
parties hereto expressly recognize and agree that the Company shall have full,
final and absolute discretion to decide whether to offer, accept or sign an
Integration Contract with acquisition candidates and clusters identified by
Consultant. However acceptance of an integrated contract from the Company will
not be unreasonably withheld and whether to establish, modify, limit or
withdraw any of the terms or conditions of any Integration Contract which it
may enter into through Consultant or any other agent or representative during
the term of engagement as an acquisition consultant or thereafter.
10. AMENDMENT
This Agreement may be amended only by the written agreement of the Company and
Consultant.
11. SUCCESSORS AND ASSIGNS
The Company's rights and obligations under this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the Company; and
the Company may delegate all or any part of its rights and obligations
hereunder to any affiliate or subsidiary of the Company.
The Consultant acknowledges and agrees that this Agreement and its rights and
interest hereunder may not be assigned, nor may its obligation and duties
hereunder be delegated.
12. INDEMNIFICATION
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Company agrees to indemnify and hold Consultant (including Xxxxx X. Xxxx)
harmless from and against any and all claims, actions, damages and liabilities
whatsoever, asserted by any person or entity against Consultant, which claim,
action, damage or liability results from or arises out of, the Company's
negligent or intentional failure to perform or abide by agreements or
obligations created as a result of the performance of the Consultant under the
terms of this contract.
Consultant agrees to indemnify and hold harmless the Company (and the Company's
Officers and Director) from and against any and all claims, damages and
liabilities whatsoever, asserted by any person or entity, resulting by reason
of the intentional or unauthorized wrongful conduct of Consultant, Xxxxx X.
Xxxx, and/or any employee or agent.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws
of the State of Maryland.
14. ENTIRE AGREEMENT
This Agreement supersedes any and all other agreements, either oral or written
heretofore made with respect to the subject matter hereof.
15. SEVERABILITY
Any provision of this Agreement which is found to be unenforceable in any
jurisdiction, shall, as to such jurisdiction only, be ineffective to the extent
of such unenforceability, without invalidating or otherwise affecting the
remaining provisions hereof. If any of the covenants against competition
contained in Section 5 are found by a court having jurisdiction to be
unreasonable in duration, geographical scope, or character of restriction, the
covenant shall not be rendered unenforceable thereby, but rather the duration,
geographical scope, or character of restriction of said covenant shall
respectively be reduced or modified to render the covenant reasonable and the
covenant shall be enforced as modified.
16. COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement shall be binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of the parties reflected hereon as signatories.
17. NOTICES
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All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail, postage prepaid, addressed
to:
A. Consultant at the address shown above, or at such other
address or addresses as Consultant shall designate to the
Company in accordance with this Section,
or
B. Company at the address set forth on the above letterhead, or
at such other address as the Company shall designate to
Consultant in accordance with this section.
18. PRONOUNS
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms and the singular
form of nouns and pronouns shall include the plural and vice versa.
19. MISCELLANEOUS
A. No delay or omission by the Company or Consultant in
exercising any right under this Agreement shall operate as a
waiver of that or any other right. A waiver or consent given
by the Company or Consultant on any one occasion shall be
effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion.
B. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or
affect the scope or substance of any of this Agreement.
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* * *
If the foregoing accurately sets out our agreement with regard to the above,
please indicate your acceptance by executing and returning two copies of this
letter to the undersigned.
Very truly yours,
COMPLETE WELLNESS CENTERS, INC.
By:
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E. Xxxxxx Xxxxxx
President and COO
Accepted and agreed to this ___ day of _________________, 1996.
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Xxxxx X. Xxxx, DC
Managing Member
Kats Management, LLC
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