UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT 1934
Date of Report (Date of earliest event reported): June 6, 2014
HEALTHCARE CORPORATION OF AMERICA
(Exact name of registrant as specified in charter)
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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66 Ford Road Suite 230 Denville, NJ |
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(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s telephone number, including area code: |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On June 6, 2014, Healthcare Corporation of America (the “Company”) entered into an amendment (the “Amendment”) to its Non-Exclusive License Agreement, dated March 27, 2014 (the “License Agreement”), with Genex Consulting, LLC (“Genex”), pursuant to which the License Agreement was amended to give the Company an exclusive license to the use of certain software owned by Genex. The original License Agreement provides that the Company will pay Genex for certain fees for the use of the software. The Amendment provides that, in addition to the usage fees, the Company would pay Genex fees equal to (i) 5% of the greater of (a) the total cash receipts attributable to sales of 340Basics products utilizing the licensed software, and (b) 70% of the amount of projected sales of 340Basics products which utilize the licensed software for such period in the Company’s annual budget, as approved by the Company’s Board of Directors, and (ii) an additional 2% of the total cash receipts attributable to sales of 340Basics products for customers that were referred to the Company by Genex.
The license may be converted back into a non-exclusive license if certain events occur, including if (i) the Company is delinquent in making payments to Genex for a period of 60 days or more, (ii) the revenue received by the Company from sales of 340Basics products which utilize the licensed software is less than $5 million for calendar year 2015 or any calendar year thereafter, (iii) at any time after May 30, 2019, and (iv) if a change of control occurs, as described in the Amendment.
The License Agreement, as amended, has five year term and may be terminated by either party after the initial five years term, upon three months written notice.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 10, 2014, Thomas E. Durkin, III resigned from his position as a director of the Company.
Item 8.01 Other Events.
On April 28, 2014, the Company entered into a Marketing Agreement (the “Marketing Agreement”) with Accountable Health, Inc. (“Accountable Health”) pursuant to which Accountable Health agreed to promote and sell the Company’s 340Basics services. The Marketing Agreement has an initial three-year term and may be terminated by either party on 6 months advance written notice. The Marketing Agreement provides that the Company will pay Accountable Health $0.25 per prescription claim made by a client of the Company that was referred to the Company by Accountable Health.
Item 9.01 Financial Statements and Exhibits
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10.1 |
Non-Exclusive Software License Agreement dated March 27, 2014 |
10.2 |
Amendment to Non-Exclusive Software License Agreement dated June 6, 2014 |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HEALTHCARE CORPORATION OF AMERICA
Dated: June 12, 2014
By: /S/ Natasha Giordano
Name: Natasha Giordano
Title: Chief Executive Officer
NON-EXCLUSIVE SOFTWARE LICENSE AGREEMENT (InfoPointTM for
340Basics)
This
Nonexclusive Software License Agreement ("Agreement") is entered
into, effective as of January 2, 2014 (the "Effective Date"), by and
between Genex Consulting, LLC, having a place of business at 103 Carnegie
Center, Ste. 300, Princeton, NJ 08540 (hereinafter "GENEX") and
340Basics Inc. having a place of business at 66 Ford Rd #230, Denville, NJ
07834 (hereinafter "340Basics").
WHEREAS,
GENEX has expertise in the area of software development, consultancy and
support, and GENEX has developed and owns certain proprietary software for
pharmacy benefit management and sales, known as InfoPointTM, which
is a proprietary software to support pharmacy benefit management, including
member eligibility, claims recording/reporting, member details, billing,
mail-order pharmacy sales, and has moreover adapted and optimized one version
of this software specifically to support compliance with the 340B Drug Pricing
Program of the Public Health Service Act (the 340B Program), and as well
as developing and maintaining associated functions and websites;
WHEREAS
340Basics is a company providing services to entities covered by the 340B
programs, such as clinics, hospitals and pharmacies, particularly services
relating to 340B Program reporting and compliance issues, whereas 340Basics
uses and desires to continue to use InfoPointTM software in its
business, and further desires to receive software consultancy and support
services from GENEX,
NOW,
THEREFORE, in consideration of the mutual covenants of the parties and for
other good and valuable consideration, the Parties hereby agree as follows:
1. DEFINITIONS
a) "Licensed Software" refers to the following
software, as currently existing and used by 340Basics and as improved or
modified during the term of this Agreement: (i) InfoPointTM , which
is a suite of related software products for pharmacy benefit management,
including the following components: Member Login, Client Login, Eligibility
System, FileShare, Adminstrator Reporting, and Customer Service System, (ii)
software to support pharmacy operations, including Billing, Pharmacy Sales,
Claims Processing, Reports and Management Dashboard, (iii) software
specifically to support compliance
with
the 340B Program and to optimize the foregoing software for use by entities
subject to the 340B Program, and (iv) websites where the foregoing software is
made accessible to users.
b) "340Basics Products" refers to pharmacy benefit management
services and products provided by 340Basics to its customers, particularly in
connection with pharmaceuticals sold pursuant to the 340B Drug Pricing Program
of the Public Health Service Act, including compliance with the 340B
requirements, processing and paying prescription drug claims, developing and
maintaining formularies, contracting with pharmacies, negotiating discounts and
rebates with drug suppliers, providing and administering prescription benefit
plans, and providing mail-order pharmacy sales and service.
2. LICENSE GRANT
AND OWNERSHIP OF LICENSED SOFTWARE
a) Subject to the terms of this Agreement,
GENEX grants to 340Basics a worldwide, nonexclusive, non-transferable limited
license to use the Licensed Software in connection with 340Basics Products.
b) The Licensed Software and any improvements
thereon shall remain the property of GENEX, protected by applicable
intellectual property law, including trade secret and copyright law. 340Basics
shall have no right to sublicense, assign or otherwise transfer all or any portion
of the Licensed Software or to use the Licensed Software for any purpose except
as expressly set forth in the Agreement.
c) 340Basics will not, during the term of
this Agreement or any time thereafter, attempt to access or modify,
misappropriate or make any copy of the Licensed Software, nor assist or
encourage others in doing so, nor attack, dispute or contest, directly or
indirectly, GENEX's exclusive right, title and interest in or to the Licensed
Software or the validity of the GENEX's ownership thereof.
3. SOFTWARE
HOSTING, SUPPORT AND CONSULTING
a) Subject
to the terms of this Agreement, GENEX grants to 340Basics a worldwide, nonexclusive,
non-transferable limited license to use the Licensed Software in connection
with 340Basics Products.
b)
The Licensed Software
and any improvements thereon shall remain the property of GENEX, protected by
applicable intellectual property law, including trade secret and copyright law.
340Basics shall have no right to sublicense, assign or otherwise transfer all
or any portion of the Licensed Software or to use the Licensed Software for any
purpose except as expressly set forth in the Agreement.
c) 340Basics will not, during the term of
this Agreement or any time thereafter, attempt to access or modify, misappropriate
or make any copy of the Licensed Software, nor assist or encourage others in
doing so, nor attack, dispute or contest, directly or indirectly, GENEX's
exclusive right, title and interest in or to the Licensed Software or the
validity of the GENEX's ownership thereof.
4. SOFTWARE
HOSTING, SUPPORT AND CONSULTING
a) The Licensed Software will be hosted on
dedicated servers set up and maintained by GENEX. Genex will obtain necessary
operating system software, including SQL server license, FileShare access, Secure
FTP server software, SSL certificates, EDI software, and backup and disaster
recovery software and storage, e.g., Microsoft Azure.
b) GENEX will provide support for the
Licensed Software as follows:
i)
Set-up, customization
and training.
ii) Account Managers available by phone during
normal business hours, Monday through Friday.
iii) 340Basics's technical lead will be able to
contact GENEX's Lead Technical Engineer via cell phone for support.
iv) GENEX will respond to most requests within
24 hours, critical issues will be responded to same day.
v) Genex will proactively maintain and
monitor the server.
5. PAYMENT
a) 340Basics will pay
GENEX as follows:
SERVICE
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FEE
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1) Initial license and one-time set-up fee
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$ ($35,000 less credit
of for money already paid)
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2)
Monthly
server operation and support, including
maintenance and backup for current level of service providing up to 8 feeds
(data push/pull).
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$4250/month
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3) Additional monthly server cost for each
feed in excess of 8 (exclusive of initial customization cost to set up feed)
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$75/month/feed
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4) Monthly basic license fee for Genex
340BasicsTm suite (Client Login, Member Login, Eligibility,
Customer Service, FileShare)
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$4500/month
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5) User volume license
fee for Genex 340BasicsTm suite (Client Login, Member Login,
Eligibility, Customer Service, FileShare)
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·
1 to 99,999 end
users (including members, patients and employees): Included in basic license
fee above.
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100,000 - 199,000
m/p/e: Basic fee plus .20 per additional end user.
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Over 250,000:
Additional $.15 per additional end user.
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6) Monthly hosting and support for website
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$ Included on PCA
agreement
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7) Monthly hosting and support for Mobile
CoPay Calculator
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$50/month
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8) Server support in excess of four hours
per month
(up to 4 hours of support each month is included in the monthly server
operation and support fee; these support hours do not carry over from month
to month), as required by 340Basics
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$150/hr
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9) Customization support, as required by
340Basics
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$125/hr
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10) Offsite development, as required by
340Basics
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$65/hr
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11) Onsite development, as required by
340Basics
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$75/hr
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12) Business analysis, testing,
documentation, as required by 340Basics
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$65/hr
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b)
The regular monthly
payments (items 2-7 above) will be paid on a quarterly basis, payment for the
three months in each quarter to be provided no later than the first day of that
quarter. All other payments will be made against monthly invoice, payable
within 10 days of receipt. Any out-of-pocket charges will be reimbursed at
cost.
c) Genex may, without terminating this
Agreement, suspend any services during any period in which 340Basics is
delinquent or in dispute in the payment of fees owing to Genex, or otherwise in
breach of this Agreement. Past due amounts owed hereunder shall accrue interest
at a monthly rate of 1.5%, compounded monthly, and Genex shall be entitled to
recover costs and reasonable attorney's fees in connection with any collection
action for monies owed hereunder.
d) Genex shall have the right to increase the
prices in subsection 4(a) hereof upon the anniversary of this Agreement;
provided however that any such annual increase shall not exceed the greater of
five percent (5%) or the US Department of Labor Consumer Price Index for All
Urban Consumers (CPI-U) for the preceding 12 month period. Notwithstanding the
foregoing, Genex shall have the right to increase the Server Operation and
Support fee (item 2 in subsection 4(a) above) to offset the imposition or
increase of any rates charged by the communications common carriers or Genex's
timesharing or database suppliers, or if any change in the rules, regulations
or operating procedures of any service supplier or any cognizant federal, state
or local governmental agency or regulatory authority results in an increase in
the cost of providing the services requested by 340Basics. Any such increase
shall become effective as to 340Basics on the same day as such increase becomes
effective as to Genex.
6. WARRANTY
AND INDEMNIFICATION
a) 340Basics
Indemnity: 340Basics will defend, indemnify and hold GENEX harmless from
and against any and all claims, losses, liabilities, damages, costs, and
expenses (including reasonable attorney's fees) arising from or related to any
use or disclosure of the Licensed Software not permitted under this Agreement.
In the event that GENEX is sued in a court of competent jurisdiction, 340Basics
will defend, indemnify and hold GENEX harmless from and against any and all
losses, liabilities, damages, costs and
expenses (including reasonable attorneys fees) to the
extent the allegation is based on any claim arising out of any use or
modification of the Licensed Software not authorized under this Agreement, or
on any claim arising out of any negligence or misconduct by 340Basics.
340Basics warrants that it will take reasonable precautions to encrypt
transmissions and preserve the confidentiality of users' personal data and
information and of its own data, and GENEX assumes no liability for the
security of data transmitted by 340Basics to third parties outside the normal
scope of operation of websites maintained and operated by GENEX, e.g., custom
reports and the like or transmissions directly from 340Basics to third parties.
b)
GENEX Indemnity: In the event that 340Basics is sued in a court of
competent jurisdiction for any claim that the Licensed Software, or its use as
authorized hereunder, infringes or misappropriates any intellectual property
right of any third party, GENEX will defend, indemnify and hold 340Basics
harmless from and against any and all claims, losses, liabilities, damages,
costs, and expenses (including reasonable attorney's fees). Genex warrants that
it will take reasonable precautions to encrypt transmissions and preserve the
confidentiality of users' personal data and information.
c)
EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY WARRANTY
TO THE OTHER AND ALL OTHER WARRANTIES ARE EXPRESSLY DISCLAIMED. EXCEPT FOR
PAYMENTS OWED HEREUNDER, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
DIRECT, INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, LOST
PROFITS OR LOST DATA, COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY,
SERVICES, OR ANY CLAIMS BY THIRD PARTIES (INCLUDING BUT NOT LIMITED TO ANY
DEFENSE THEREOF). THE LICENSED SOFTWARE IS PROVIDED "AS IS" WITHOUT
WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION,
ANY WARRANTY OF MERCHANTABILITY, TITLE, NON-INFRINGEMENT AND/OR FITNESS FOR A
PARTICULAR PURPOSE. Liability of Genex for any and all claims arising out of or
relating to this Agreement shall, in the aggregate, not exceed one (1) month's
average billing to 340Basics taken over the twelve (12) months preceding
the
month in which the damage or injury is alleged to have occurred, but if this
Agreement has not been in effect for twelve (12) months preceding such date,
then over
such fewer number of preceding full months
that this Agreement has been in effect.
7. TERM
AND TERMINATION
a) Term: This Agreement and the license granted herein shall be
effective from the Effective Date, or first use of the Licensed Software,
whichever event occurs first. The term of this Agreement shall run until
terminated in accordance with this Section 6.
b) Termination for Cause: This Agreement may be terminated
immediately if either party materially fails to perform or comply with any
provisions of this Agreement.
c) Termination for Convenience: This Agreement may be terminated by
either party as of the anniversary hereof, upon three months written notice,
provided all payments due hereunder have been made through the effective date
of termination.
d) Effects of Termination: Upon termination, 340Basics shall
immediately discontinue all further use of the Licensed Software, including but
not limited to use in support of any 340Basics Product, or any sale of
340Basics Product utilizing the Licensed Software, and shall destroy any
tangible media held on which the Licensed Software exists, and remove the
Licensed Software from any and all systems.
8. INJUNCTIVE
RELIEF. 340Basics agrees that the provisions in this Agreement
regarding unauthorized use of the Licensed
Software and nondisclosure are necessary to protect the legitimate business
interests of GENEX. 340Basics also agrees that monetary damages alone cannot
adequately compensate GENEX if there is a violation of such provisions by
340Basics and that injunctive relief is essential for the protection of GENEX.
340Basics agrees, therefore, that if GENEX alleges that 340Basics has breached
or violated such provisions then, in addition to any other remedies it may
have, GENEX will have the right to petition a court of competent jurisdiction,
without the requirement for the posting of a bond, for injunctive relief
against 340Basics in addition to all other remedies at law or in equity.
9. CONFIDENTIALITY.
340Basics agrees that all source code, source documentation and
underlying
inventions, algorithms, know-how and ideas relating to the Licensed Software
are
GENEX's proprietary information (hereinafter
"Proprietary Information"). Except as expressly and unambiguously
allowed herein, the 340Basics will hold in confidence and not disclose any
Proprietary Information to any third party nor use same for any purpose not
permitted hereunder. 340Basics and any third party receiving Proprietary
Information as expressly allowed in this Agreement are in the aggregate the
"receiving party." Proprietary Information is not intended to
include, and does not include, information that (i) is in or enters the public
domain without breach of this Agreement through no fault of the receiving party,
(ii) the receiving party was legally in possession of prior to receiving it,
(iii) the receiving party can demonstrate was developed by it independently and
without use of, or reference to, Proprietary Information, or (iv) the receiving
party receives lawfully from a third party not bound by obligations of
confidentiality thereto. If receiving party is required to disclose Proprietary
Information by law, court order, or government agency, such disclosure shall
not be deemed a breach of this Agreement provided that receiving party gives
GENEX prompt notice of such requirement in order to allow GENEX to object or
limit such disclosure, receiving party cooperates with GENEX to protect
Proprietary Information, and receiving party complies with any protective order
in place and discloses only the information required by process of law.
Obligations under this Section 8 survive the expiration or termination of this
Agreement.
10. GENERAL.
a) Notices: Notices under this Agreement shall be in writing,
addressed to the Chief Executive Officer of the other party, and may be sent by
hand-delivery, courier or telefacsimile.
b) Governing Law: THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW JERSEY
AND THE UNITED STATES WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS THEREOF
AND WITHOUT REGARD TO THE UNIFORM COMMERCIAL CODE, THE UNITED NATIONS
CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS OR OTHER
INTERNATIONAL SALES CONVENTIONS. The sole jurisdiction and venue for actions
related to the subject matter hereof shall be the state and federal courts
located in New Jersey. Both parties consent to the exclusive jurisdiction of
such courts and
agree
that process may be served in the manner provided herein for giving of notices
or otherwise as allowed by law.
c) Entire Agreement: This Agreement is the entire agreement
between the parties with respect to the subject matter hereof. It may not be
modified except by a written agreement signed by an authorized representative
of each party hereto.
d) Force majeure: No liability shall result to any Party
from any delay in performance or from nonperformance caused by circumstances
beyond the reasonable control of the Party affected, including but not limited
to, acts of God, fire, flood, explosion, war, terrorism, action or request of
governmental authority, accident, labor trouble or shortage, unusually severe
weather, electrical power failures, telecommunication outages, or any other
circumstances of a similar or different nature beyond the reasonable control of
the Party affected.
e) Independent Contractors: Nothing in this Agreement shall operate to
or be construed or interpreted as to render the Parties hereto as other than
independent contractors, nor shall anything in this Agreement operate or be
construed or interpreted as to render any Party, or any of such Party's
employees, agents or contractors, to be employees, agents, associates, joint
ventures or partners of the other Party.
t) Severability: If any provision of this Agreement is held
by a court of competent jurisdiction
to be illegal, invalid or unenforceable, that provision shall be limited or
eliminated to the minimum extent necessary so that this Agreement shall
otherwise remain in full force and effect and enforceable.
g) Waiver: No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof, and no waiver shall be effective unless
made in writing and signed by an authorized representative of the waiving
party.
h) Assignment: Neither this Agreement, nor any rights,
licenses or obligations hereunder, may be assigned, transferred or sublicensed
by 340Basics without the prior written approval of GENEX.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth at the beginning of this Agreement. All signed copies of this Agreement shall be deemed to be originals.
Genex Consulting, LLC 340Basics
/S/ Anula Courtis /S/ Natasha Giordano
Signature Signature
Anula Courtis Natasha Giordano
Name Name
President President and Chief Executive Officer
Title Title
March 27, 2014 March 27, 2014
Date Date
AMENDMENT TO
NON-EXCLUSIVE SOFTWARE LICENSE AGREEMENT (InfoPointTM for
340Basics)
GENEX
Consulting, LLC, having a place of business at 103 Carnegie Center, Ste. 300,
Princeton, NJ 08540 (hereinafter “GENEX”) and 340Basics Inc. having a place of
business at 66 Ford Rd #230, Denville, NJ 07834 (hereinafter “340Basics”),
having entered into a Nonexclusive Software License Agreement (“Agreement”),
said Agreement having been executed March 27, 2014 and made effective as of
January 2, 2014, desire to amend that Agreement to provide for an exclusive
license and to address other issues as set forth below, and Healthcare
Corporation of America (OTCQB: HCCA), 340Basics’ parent company having a place
of business at 66 Ford Rd #230, Denville, NJ 07834 (“HCCA”) desires to be added
as a party and to enter into this Amendment in order to induce GENEX to enter
into the same;
NOW, THEREFORE, in consideration of the mutual covenants
of the parties and for other good and valuable consideration, the parties hereto
hereby amend the Agreement as follows, this Amendment to be effective as of
June 1, 2014 (the “Exclusive Effective Date”):
1.
Subsection a) of Section 2 of the Agreement, entitled “LICENSE GRANT AND
OWNERSHIP OF LICENSED SOFTWARE” is deleted and replaced with the following:
a) Subject
to the terms of this Agreement, GENEX grants to 340Basics a worldwide,
exclusive, non-transferable limited license to use the Licensed Software in
connection with 340Basics Products. Nothing herein shall be considered to grant
any license to use the Licensed Software for any other purpose or in connection
with any other products, e.g., for Auditing,
Medicaid, Medicare and Revenue Recovery.
Subsections
b) and c) of Section 2 are unchanged.
2.
Section 3 of the Agreement, the first section entitled “SOFTWARE HOSTING,
SUPPORT AND CONSULTING” which through an error duplicated the provisions of
Section 2, is deleted and replaced with the following language: “[Section 3 is
intentionally omitted]”.
3.
Section 5 of the Agreement, entitled “PAYMENT” is amended by adding additional
subsections e), f), and g) as follows:
e)
Exclusivity Fee: in addition to the payments in Section 5(a) above, 340Basics
will pay, at the times and in the manner set forth in this Section 5, an
Exclusivity Fee in the amount of:
(i) 5% of 340Basic Script Revenue,
plus
(ii) an additional 2% of 340Basics
Script Revenue from clients referred by GENEX, provided that such referrals are
documented in writing, via email from GENEX to 340Basics, and acknowledged by
340Basics.
For
purposes of this Agreement, “340Basics Script Revenue” for a given period shall
mean the greater of:
(iii) total
cash receipts of 340Basics and its affiliates during such period that are
attributable to sales of 340Basics Products which utilize the Licensed Software,
net of reasonable discounts and adjustments actually given; and
(iv) 70% of the amount specified as “340Basics Script Revenue”,
corresponding to projected sales of 340Basics Products which utilize the Licensed Software,
net of reasonable discounts and adjustments, for such period in 340Basics’s annual budget (the
“Annual Budget”) in effect for such period, as approved by 340Basics’s Board of
Directors.
When the
Exclusivity Fee is calculated based on total cash receipts as specified in the
foregoing clause (i), it shall be referred to as the Sales Exclusivity Fee, and
when the Exclusivity Fee is calculated based on the 70% of budgeted amount as specified
in the foregoing clause (ii), it shall be referred to as the “Minimum
Exclusivity Fee”.
For as
long as this Agreement continues in effect, 340Basics, HCCA & GENEX will
work together to agree on the Annual Budget for each calendar year commencing
with the 2015 calendar year prior to the beginning of the relevant calendar
year (and in any event prior to such Annual Budget’s submission for approval to
HCCA and 340Basic’s Board of Directors). For purposes of illustration, Table 1
provides a calculation of potential Exclusivity Fee payments for the years 2014
(June – December, based on the budget already approved by the Board) and 2015
(January – December, based on estimates but not approved by the Board):
TABLE
1: Potential License Fee Payments
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Period
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Revenues
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Notes
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2014
Budget
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June
– December
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$2,454,200
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Amount
of projected 340Basic Script Revenue in budget - already approved by the
Board
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Minimum
Commitment
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70%
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$1,717,940
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Fees
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Minimum
Exclusivity Fee
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5%*
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$85,897
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Amount
payable for the period if cash receipts do not exceed 70% of budget
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Per
Budget Exclusivity Fee
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5%*
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$122,710
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Amount
payable for the period if cash receipts equal 100% of 340Basic Script Revenue
projected in the budget
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2015
Budget
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$9,727,200
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Estimated
amount of projected 340Basic Script Revenue in budget (NB: not yet approved
by the Board)
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Minimum
Commitment
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70%
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$6,809,040
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Fees
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–Minimum
Exclusivity Fee
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5%*
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$340,452
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Amount
payable for the period if cash receipts do not exceed 70% of budget
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Per
Budget Exclusivity Fee
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5%*
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$486,360
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Amount
payable for the period if cash receipts equal 100% of 340Basics Script
Revenue projected in the budget
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* If GENEX brings in clients, it
will be paid an additional 2% on receipts from such clients
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f) Timing
of Exclusivity Fee payment: Payments to GENEX of the Exclusivity Fee will be
made on a monthly basis in immediately available funds, according to the schedule
set forth in this subsection. 340Basics will make an Initial Payment to GENEX
of $12,300 (the average monthly Minimum Exclusivity Fee for 2014) upon
execution of this Amendment. Upon termination of this Agreement or conversion
of the license granted under this Agreement to a nonexclusive license, pursuant
to Section 7(e), GENEX will first apply this Initial Payment of $12,300 to any
outstanding amounts owed by 340Basics or HCCA under this Agreement as of the
time of such termination or conversion, and then pay any balance remaining to
340Basics. 340Basics will pay by the 30th of each month following the end of
the prior month the Sales Exclusivity Fee or the Minimum Exclusivity Fee,
whichever is higher. On or before the 30th day of the month following
a quarter (so on or before October 30 for the quarter ending September, and so
forth), 340Basics and GENEX will true up the payments (either by payment from
340Basics or refund from GENEX) so that GENEX will have received (on a year-to-date basis through the end of such quarter; except that
for 2014, the basis will be the only period from June through December 2014), the
greater of (a) the total of the Minimum Exclusivity Fees due or (b) the total
of the Sales Exclusivity Fees due. An example of this calculation is set forth
on the spreadsheet attached hereto as Appendix A.
c) Termination
for Convenience: This Agreement may be terminated by either party at any time
after the fifth anniversary of the Exclusive Effective Date, upon three months
written notice, provided that if the termination is by 340 Basics, all payments
due hereunder must have been made through the effective date of termination.
Section
7 of the Agreement is further amended by adding the following subsection:
e) Conversion
to Nonexclusive: in addition to any other rights available under this Section
7 or any other provision of this Agreement:
(i) if 340Basics or HCCA is at any
time delinquent for a period of 60 days or more in paying the Exclusivity Fee, any
payments due under Section 11 hereof, or other payments due to GENEX under this
Agreement, or if HCCA fails to comply with GENEX's exercise of its option to
receive 10% Secured Convertible Debentures of HCCA under Section 11
hereof;
(ii) if the amount of the “340Basic Script Revenue” is less
than Five Million Dollars ($5,000,000) for 2015 or any calendar year thereafter;
(iii) at any time after the fifth anniversary of the
Exclusive Effective Date; and
(iv) if 340Basics or HCCA become insolvent or
declare bankruptcy; or
(v) if 340Basics undergoes a change
of control of the 340Basics business (whether by sale or transfer of
substantially all assets or business of 340Basics or by sale
or transfer of a majority of stock in 340Basics or HCCA) wherein (a)
such change of control is without prior written consent by GENEX, such
consent not to be unreasonably withheld, and (b) such change of
control is a change of control which requires approval of the Board(s) of
Directors of 340Basics and/or of HCCA after the date hereof;
then GENEX
shall have the right to amend the Agreement to convert the license granted
hereunder to a nonexclusive license, effective immediately upon written notice
to 340Basics, by amending Subsections 2(a), 5(e), 5(f), and 7(c), such that Subsections
2(a) and 7(c) of the Agreement will prospectively revert to the original terms
of the Nonexclusive
Software License Agreement as executed March 27, 2014, and new Subsections 5(e) and 5(f) will cease to have
effect prospectively.
All
other provisions of Section 7 shall remain unchanged.
6.
The Agreement is further amended to add the following Section 11:
11.
DEBT OF 340BASICS AND HCCA TO GENEX.
a) Each of 340Basics and HCCA hereby
acknowledges and agrees that the balance of 340Basics’ and HCCA’s payment obligations
to GENEX that are due and payable as of May 31, 2014
(the “Outstanding Balance”), which Outstanding Balance is hereby acknowledged
by each of 340Basics and HCCA to be equal to approximately $380,000, remains
outstanding and due and payable on demand, by 340Basics and HCCA jointly and
severally, and that such Outstanding Balance is not satisfied, discharged or
otherwise affected by this Amendment.