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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUER
Under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
MediQuik Services, Inc.
(Name of Small Business Issuer in its charter)
Delaware 74-2876711
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4295 San Felipe, Suite 200, Houston, Texas 77027
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (713)888-1919
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered Each class is to be registered
none
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Registration Statement contains statements relating to future
results of the Company (including certain projections and business trends)
that are "forward-looking statements" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and the Securities Exchange
Act of 1934, as amended. All statements, other than statements of historical
fact, included in this Registration Statement regarding the Company's
financial position, future net revenues, net income, potential evaluations,
business strategy and plans and objectives for future operations are
"forward-looking statements." Although the Company believes that the
assumptions upon which such forward-looking statements are based are
reasonable, it can give no assurance that such assumptions will prove to be
correct. Actual results may differ materially from those projected as a
result of certain risks and uncertainties, including, but not limited to,
changes in political and economic conditions, regulatory conditions,
government health care spending and competitive pricing pressures.
Important factors that could cause actual results to differ materially from
the Company's expectations ("Cautionary Statements") are disclosed elsewhere
in this Registration Statement. All forward-looking statements in this
Registration Statement are expressly qualified by the Cautionary Statements
and by reference to the underlying assumptions that may prove to be
incorrect.
These forward-looking statements are commonly identified by the use of
such terms and phrases as "intends," "estimates," "expects," "projects,"
"anticipates," "foreseeable future," "seeks," "believes" and "scheduled" and,
in many cases, are followed by a cross-reference to "Risk Factors." Such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in such forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company does not undertake any obligation to publicly release any revisions
to these forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unanticipated events.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
MediQuik Services, Inc. (the "Company" or "MediQuik") was organized to
take advantage of an identified niche market related to the delivery of
health care, medical and pharmaceutical supplies. This market is the
management of chronic disease patients for managed care payors. These payors
include self-insured, self-administered employers of all sizes, small to
moderate sized health insurance companies and small to moderate sized health
maintenance organizations, preferred provider organizations, and third-party
administrators. The Company's first product is diabetes management and
diabetes pharmaceutical supplies. As this product matures, the Company
intends to offer other chronic disease management products, such as arthritis
management and cardiac management. Historically, as a cost saving and time
saving strategy, MediQuik has contracted with other entities to receive,
bundle and deliver goods and services rather than develop the necessary
resources in-house.
The Company's predecessor, also chartered under the name "MediQuik
Services, Inc.," was organized in Delaware on April 7, 1998 ("Old MediQuik").
Effective December 31, 1998, Old MediQuik was merged with and into Cash Flow
Marketing, Inc., a Delaware corporation ("Cash Flow"), which, as the
surviving corporation, subsequently changed its name to MediQuik Services,
Inc. Cash Flow was originally organized in Colorado on July 9, 1997, and
changed its domicile to Delaware effective December 31, 1998. At the time of
the merger, Cash Flow was a "shell" corporation with substantially no assets,
business or operations.
Pursuant to the terms of the merger, each stockholder of Old MediQuik
received one share of common stock of the Company, $.001 par value per share
("Common Stock"), for each .9327 shares of common stock of Old MediQuik held
by such stockholder. Each stockholder of Cash Flow received one share of
Company Common Stock for each 2 shares of Cash Flow common stock held by such
stockholders.
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BUSINESS OF THE ISSUER
In recent years, the demand for higher quality health care with reduced
cost has prompted dramatic changes in the United States health care system.
The industry response has been the emergence of managed care, whose primary
mission is to control costs. Today, more than two-thirds of all Americans
with private health insurance are enrolled in these plans.
MediQuik was organized to take advantage of these changes in the
delivery of health care. The core business of the Company is chronic disease
management for managed care payors, managed care provider networks and
third-party administrators. The Company provides its services to these
customers under discounted fee for service agreements and offers capitated
service contracts (i.e., payment to the Company based on the total number of
participants rather than the amount of service consumed) under which MediQuik
would share a portion of the risk related to program costs with the managed
care payor. MediQuik's customers and potential customers include
self-insured, self-administered employers of all sizes, small to moderate
sized health insurance companies, small to moderate sized health maintenance
organizations, third-party administrators and preferred provider
organizations.
The Company's first product is diabetes management, the major profit
component of which is the delivery of self testing supplies (test strips,
lancets and alcohol prep pads) directly to the home of the patient. Diabetes
mellitus is the most common and most costly chronic disease in the United
States. In a release dated November 1, 1998, the National Center for Chronic
Disease Prevention and Health Promotion of the Centers for Disease Control
and Prevention (the "CDC") estimated that 15.7 million people in the United
States, or 5.9% of the population, have diabetes, although only about 10.3
million have been diagnosed. According to the American Diabetes Association,
in 1997 the per capita costs of health care for people with diabetes was
$10,071 per annum.
There is no cure for diabetes. The disease can be controlled, but only
if the patient is willing to actively participate in that control. In order
to control diabetes, the patient must regularly determine personal blood
sugar levels. This is normally done at home by the patient and is a simple
and relatively painless process. Patients use a lancet to prick a finger and
draw a drop of blood which is deposited upon a test strip. The test strip is
then introduced into a glucometer and a few seconds later the patient's blood
sugar level is displayed.
The Company believes that it can provide pharmaceuticals for the
treatment of diabetes to patients covered by managed care providers and to
other MediQuik customers at substantial cost savings when compared with other
alternative delivery systems and will provide better patient management,
which reduces a patient's need for hospitalization and prevents the
development of other chronic diabetic health related problems. After the
MediQuik product is authorized by a payor and a patient is enrolled in the
program, the Company will ship supplies to the patient's home bimonthly or
quarterly. Because of the chronic nature of the disease, the Company expects
its medical and financial relationship with a patient to continue for many
years. As of August 18, 1999, the Company had entered into the following
major provider agreements:
<TABLE>
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Est. No. of Lives
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National HealthCare Alliance, Inc. 732,000
MultiPlan, Inc. 21,000,000
USA Managed Care Organization, Inc. 6,000,000
Cooperative Health Services of Colorado 1,700,000
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TOTAL LIVES 29,432,000
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To support its business activity, MediQuik has formed a strategic
alliance with Bayer Corporation, a worldwide leader in the manufacturing and
supply of diabetes related products ("Bayer"). As a result, Bayer products
are available to the Company at deeply discounted prices. The alliance with
Bayer allows MediQuik to sell Bayer products to managed care payors as well
as long-term care facilities, including nursing homes, assisted living
centers and home health care agencies. With the aging population and its
increased risk of diabetes, this opens up a significant growth market for
supply to the elderly.
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After MediQuik achieves meaningful market penetration with the diabetes
management product, the Company intends to develop and offer respiratory
management and congestive heart failure management services.
In May 1999, MediQuik formed a subsidiary known as ChronicRx.com to
provide Internet-based pharmacy services. ChronicRx.com will focus on the
chronic care niche and will specialize in prescription and non-prescription
medicines and management products used to treat chronic diseases of all
kinds. ChronicRx.com will provide 24-hour access to pharmacists, educational
material regarding the diagnosis, symptoms and treatment of chronic
illnesses, prescription and over-the-counter drugs, and personal care
products for chronic disease patients. The Company believes that a number of
factors poise ChronicRx.com for rapid growth: its access to discounted
pharmaceuticals; the availability of cost efficient mail-order distribution
and the low cost, wide market reach of the Internet. The Company believes
that ChronicRx.com will be the first pharmacy on the Internet focused
primarily on the management of chronic diseases. ChronicRx.com plans to
begin offering services in October 1999.
As a cost saving and time saving strategy, management has elected to out
source major components of the business, such as order fulfillment, billing
and collecting, utilization reporting, legal and accounting and a portion of
sales.
COMPETITION
The business of providing blood sugar monitoring supplies by mail order
is an immature industry characterized by high growth rates, low barriers to
enter the business, and many small competitors. Of the many companies that
are mail order providers of blood glucose monitoring supplies, most do not
directly compete with MediQuik because they generally concentrate on Medicare
patients by direct solicitation, rather than focusing on health care payors.
To the knowledge of the Company, each sells to patients rather than payors
under distribution agreements with the major manufacturers that provide for
relatively small price discounts. The Company believes that these companies
have little or no impact on the business of MediQuik. For them, one sale
results in one patient. For MediQuik, one sale will likely produce hundreds
or thousands of patients.
Several companies do compete with MediQuik in the traditional fee for
service market. MediQuik is aware of two companies that have exclusive
marketing agreements with certain manufacturers which target payors as
clients rather than individual patients. One is National Diabetic
Pharmacies, Inc. ("NDP"), based in Roanoke, Virginia. NDP works primarily
with diabetic managed care patients and has approximately $18,000,000 in
annual sales. NDP distributes products manufactured by Boehringer Mannheim.
Another competitor of the Company is TM Supply, Inc. doing business as Total
Medical Supply, located in Dothan, Alabama. It has a distribution agreement
with Home Diagnostics, Inc., a manufacturer of health care products. The
Company believes that Total Medical Supply has historically concentrated on
Medicare business but has begun to shift into the managed care private
sector. MediQuik believes that neither NDP nor Total Medical Supply is
currently soliciting capitated agreements.
MediQuik has developed a program that shares cost containment directly
with the payor, which makes MediQuik effective as both a capitated fee and a
fee for service provider. MediQuik believes that it is the first company in
its industry to offer capitated fee contracts. The Company believes that
such contracts will create a financial commonality of interest with its
potential clients and that competitors will adopt this strategy as well so it
is important for MediQuik to acquire market share as quickly as possible.
THE MARKET
Management estimates that the U.S. demand for diabetes monitoring and
maintenance, supplies, pharmaceuticals and equipment is more than $5 billion
annually and is growing as both the U.S. population and the incidence of
diabetes appear to be increasing. Management believes that on a worldwide
basis, Johnson & Johnson, Boehringer Mannheim, Bayer and MediSense, Inc. are
the major manufacturers in the field. Effective July 1, 1998, Medicare
coverage was extended pursuant to the Balanced Budget Act of 1997 to permit
the reimbursement of diabetes self-testing supplies, as well as educational
and training services for diabetes. Management of the Company believes
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that managed care payors will view Medicare's reimbursement guidelines as the
baseline for pricing these products and services.
MARKET SEGMENTATION. The Company believes that there are five segments
to the market for diabetes testing supplies, pharmaceuticals and equipment:
1. Retail pharmacies typically offer a range of manufacturers products which
are available without prescription to the general public. Patients may be
reimbursed directly by their insurance carrier. A large portion of the
retail purchasers are Medicare qualified and file their own claims for
Medicare reimbursement. Most payors, including Medicare, reimburse for the
cost of the supplies less annual deductible and copayment amounts. Rules
for qualification and reimbursement for Medicaid patients vary from state
to state.
2. Managed care payors may distribute products directly to patients covered by
their plan.
3. Mail order suppliers may enroll patients directly rather than through
managed care payor referrals. These suppliers tend to concentrate on
Medicare patients and typically have distribution agreements with each of
the major manufacturers. These suppliers take care of billing and
collecting from third-party payors for the patient and the patient is
responsible to the supplier for deductible and copay amounts.
4. MediQuik is aware of at least three companies that interface directly with
payors for patient referrals. MediQuik believes that each of these
companies has an exclusive agreement with a manufacturer which provides a
pricing advantage over other supply sources. MediQuik and at least one of
its competitors offer significant price discounts to the payors and
encourage the payors to waive deductible and co-pay amounts for their
patients.
5. MediQuik has developed and offers capitated fee arrangements under which
the Company will agree to provide certain diabetes related services for a
group of patients for a fixed fee. MediQuik believes that it is the only
company prepared to enter into agreements with payors to share in the
financial risk of patient treatment.
CHARACTERISTICS OF DIABETES. Diabetes is a disease characterized by
high levels of blood glucose. During the normal digestion process, the body
converts food into glucose (sugar) to be used by the body's cells as a source
of energy. Insulin, a hormone produced by the pancreas gland, is necessary
for normal utilization of glucose by most cells in the body. In people with
diabetes, insulin is either absent or lacking, or the body does not respond
to the insulin that is produced. As a result, the body cannot use glucose
for energy and it begins to build up in the blood, creating high sugar levels
in the body. Diabetes is categorized into four types:
1. Type 1 diabetes was previously called insulin-dependent diabetes mellitus
("IDDM") or juvenile-onset diabetes. According to the CDC, type 1 diabetes
may account for 5% to 10% of all diagnosed cases of diabetes. Risk factors
contributing to the development of the disease are less well defined for
type 1 diabetes than for type 2 diabetes, but autoimmune, genetic, and
environmental factors are involved in the development of this type of
diabetes.
2. Type 2 diabetes was previously called non-insulin-dependent diabetes
mellitus ("NIDDM") or adult-onset diabetes. The CDC estimates that type 2
diabetes may account for about 90% to 95% of all diagnosed cases of
diabetes. Factors associated with type 2 diabetes include age, obesity,
family history of diabetes, prior history of gestational diabetes, impaired
glucose tolerance, physical inactivity, and race/ethnicity. According to
the CDC, African Americans, Hispanic/Latino Americans, American Indians,
and some Asian Americans and Pacific Islanders are at particularly high
risk for type 2 diabetes.
3. Gestational diabetes develops in 2% to 5% of all pregnancies, according to
the CDC, but disappears when a pregnancy is over. The CDC also reports that
gestational diabetes occurs more frequently in African Americans,
Hispanic/Latino Americans, American Indians, and persons with a family
history of diabetes.
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Obesity is also associated with higher risk. Women who have had gestational
diabetes are at increased risk for later developing type 2 diabetes.
According to the CDC, some studies have found that nearly 40% of women with
a history of gestational diabetes developed diabetes in the future.
4. "Other specific types" of diabetes result from specific genetic syndromes,
surgery, drugs, malnutrition, infections, and other illnesses. The CDC
reports that such types of diabetes may account for 1% to 2% of all
diagnosed cases of diabetes.
PREVALENCE OF DIABETES IN THE UNITED STATES. In a release dated
November 1, 1998, the CDC estimated that 15.7 million people in the United
States, or 5.9% of the population, had diabetes and that approximately
798,000 new cases of diabetes are diagnosed each year. The cases were
segmented as follows:
Total (diagnosed and undiagnosed): 15.7 million
Diagnosed: 10.3 million
Undiagnosed: 5.4 million
Type 1 diabetes: 1 million
Type 2 diabetes: 14.9 million
Women: 8.1 million (8.2% of all adult women)
Men: 7.5 million (8.2% of all adult men)
Children age 19 years or younger: 123,000 (.16% of all people in this age
group)
Adults age 65 years or older: 6.3 million (18.4% of all people in this age
group)
The distribution of diabetes among adults, reported by race and
ethnicity (diagnosed and undiagnosed), is as follows: African Americans,
10.8%; Mexican Americans, 10.6%; White Americans, 7.8%; American Indians and
Alaska Natives, 9%.
According to the American Diabetes Association, the total cost of
diabetes in 1997 was estimated to be $98 billion. Direct costs, estimated to
be $44.1 billion in 1997, include costs attributable to medical treatment.
Indirect costs, estimated to be $54 billion in 1997, include costs
attributable to disability and mortality.
Based on death certificate data, the CDC reported that diabetes
contributed to the deaths of 193,140 persons in 1996. According to the CDC,
however, it is believed that death certificate data under-represents deaths
for which diabetes is the cause or a contributing factor. Diabetes was the
seventh leading cause of death listed on U.S. death certificates in 1996,
according to CDC's National Center for Health Statistics and is the sixth
leading cause of death by disease.
Treatment emphasizes control of blood glucose through blood glucose
monitoring, regular physical activity, meal planning, and attention to
relevant medical and psychosocial factors. In many patients, oral
medications and/or insulin injections are also required for appropriate
glucose control. Treatment of diabetes is an ongoing process that is planned
and regularly reassessed by the health care team, the person with diabetes,
and his or her family. Patient and family education are important parts of
the process. IDDM can only be treated with insulin injections. About 40% of
NIDDM patients use insulin.
Diabetes can lead to significant long-term complications especially
where the disease has not received proper treatment for long periods. The
following table identifies some of the long-term complications and contains
certain statistical data evidencing the relationship to diabetes:
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HEART DISEASE The American Diabetes Association reports that heart
disease is 2 to 4 times more common in adults with
diabetes and is present in 75% of diabetes-related
deaths.
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STROKE According to the American Diabetes Association, the
risk of stroke is 2 to 4 times higher in people with
diabetes.
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HIGH BLOOD PRESSURE The CDC estimates that 60 to 65% of people with
diabetes have high blood pressure.
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BLINDNESS Diabetes is the leading cause of new cases of blindness
among people 20 to 74 years of age, according to the
CDC, and 12,000 to 24,000 new cases of blindness each
year are caused by diabetic retinopathy.
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NERVE DISEASE The CDC reports that about 60 to 70% of people with
diabetes have mild to severe forms of diabetic nerve
damage (with such manifestations as impaired sensation
or pain in the feet or hands, delayed digestion of food
in the stomach, carpal tunnel syndrome, and other nerve
problems). Severe forms of diabetic nerve disease are
a major contributing cause of lower extremity
amputations.
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AMPUTATIONS More than half of lower limb amputations in the United
States occur among people with diabetes according to
reports by the CDC. From 1993 to 1995, the average
number of amputations performed each year among people
with diabetes was 67,000.
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DENTAL DISEASE According to the CDC, periodontal disease, a gum
disease that can lead to tooth loss, occurs with
greater frequency and severity in people with diabetes.
They report one study which found that 30% of type 1
diabetes patients age 19 years or older had periodontal
disease.
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COMPLICATIONS OF The rate of major congenital malformations in babies
PREGNANCY born to women with pre-existing diabetes varies from 0
to 5% in women who receive preconception care to 10% in
women who do not receive preconception care, according
to the CDC. Three to 5% of pregnancies among women
with diabetes result in death of the newborn; this
compares to a rate of 1.5% for women who do not have
diabetes.
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KIDNEY DISEASE The American Diabetes Association reports that diabetes
is the leading cause of kidney disease, accounting for
40% of new cases.
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ACQUISITION STRATEGY
In addition to the internal growth of the Company described above, the
Company intends to grow by acquiring additional chronic disease management
companies. Through such acquisitions, the Company intends to develop
internally the capability to conduct order fulfillment, billing and
collecting, sales, utilization, reporting and other operations for the home
delivery of prescription drugs and disease management products and supplies
to patients nationwide.
DEPENDENCE ON MAJOR CUSTOMERS
The Company is dependant on the managed care payors with which it has
provider agreements. If any of National HealthCare Alliance, Inc.,
MultiPlan, Inc., USA Managed Care Organization, Inc. or Cooperative Health
Services of Colorado terminate its respective agreement with the Company and
the Company is not successful in
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generating sales to replace the lost business, the Company's future business
and operating results could be materially adversely affected. In addition,
the managed care industry is undergoing substantial consolidation. In the
event payors which currently have provider agreements with the Company are
acquired by payors not associated with the Company, the acquired payor may
elect to terminate its agreement with the Company.
INTELLECTUAL PROPERTY
The Company is in the process of applying for registration of the
service mark "MediQuik" with the United States Patent and Trademark Office.
The Company believes there will be no material adverse effect on its business
if it is unable to successfully register such service mark.
GOVERNMENTAL REGULATIONS
Numerous state and federal laws and regulations affect the Company's
business and operations, including, but not limited to those discussed below.
The Company believes that it is operating its business in substantial
compliance with all existing legal requirements material to the operation of
the business. There are, however, significant uncertainties regarding the
application of many of these legal requirements, and the Company cannot
provide an assurance that a regulatory agency charged with enforcement of any
of these laws or regulations will not interpret them differently or, if there
is an enforcement action brought against the Company, that the Company's
interpretation would prevail. In addition, there are numerous proposed
healthcare laws and regulations at the federal and state levels, many of
which could materially affect the Company's ability to conduct its business
or adversely affect the Company's results of operation.
The Company is unable to predict what additional federal or state
legislation or regulatory initiatives may be enacted in the future relating
to the Company's business or the healthcare industry in general, or what
effect such legislation or regulations may have on the Company. The Company
cannot provide any assurance that federal or state governments will not
impose additional restrictions or adopt interpretations of existing laws that
could have a material adverse effect on the Company's business or results of
operation. The Company believes that its operations are currently subject to
these laws only to a limited extent, however, because the Company's current
customers are managed care payors whose revenue is primarily derived from
private rather than government sources.
ANTI-REMUNERATION LAWS. The Company is subject to federal and state
anti-remuneration laws, such as the Medicare/Medicaid anti-kickback laws,
which govern certain financial arrangements among health care providers and
others who may be in a position to refer or recommend patients to such
providers. These laws prohibit, among other things, direct and indirect
payments that are intended to induce the referral of patients to, the
arranging for services by, or the recommending of, a particular provider of
health care items or services. The Medicare/Medicaid anti-kickback law has
been broadly interpreted to apply to certain contractual relationships
between health care providers and sources of patient referral. State laws
vary from state to state, are sometimes vague and seldom have been
interpreted by courts or regulatory agencies. Violation of these laws can
result in civil and criminal penalties, and exclusion of health care
providers or suppliers from participation in (i.e., furnishing covered items
or services to beneficiaries of) the Medicare and Medicaid programs.
BILLING REGULATION. Certain provisions in the Social Security Act
authorize penalties, including exclusion from participation in Medicare and
Medicaid, for various billing-related offenses. The Department of Health and
Human Services can also initiate permissive exclusion actions for improper
billing practices such as submitting claims "substantially in excess" of the
provider's usual costs or charges, failure to disclose ownership and
officers, or failure to disclose subcontractors and suppliers.
FEDERAL AND STATE ASSISTANCE PROGRAMS. Funds received by the healthcare
providers under Medicare and Medicaid are subject to audit with respect to
the proper application of various payment formulas. Such audits can result
in retroactive adjustments of revenue from these programs, resulting in
either amounts due to the government agency
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from the provider or amounts due the provider from the government agency.
The Company does not currently receive payments under any Medicare or
Medicaid program, but it may elect to engage in such business in the future.
ENVIRONMENTAL LAWS
The Company believes it is in compliance with all applicable federal,
state and local laws and regulations regarding environmental matters.
EMPLOYEES
As of August 1, 1999, the Company and its subsidiaries had approximately
7 full-time employees. The employees of the Company are not subject to
collective bargaining agreements and management believes relations with
employees are good.
RISK FACTORS
In addition to the other information contained herein, the following
factors should be considered carefully by any interested party before
investing in the Company.
LIMITED OPERATING HISTORY. The business of the Company was organized in
April 1998. As a result, the Company has very little operating history.
There can be no assurance that the recently assembled management group will
be able to successfully exploit the combined assets of the Company and
effectively implement the Company's operating strategies. Further, the
Company is subject to the general business risk factors that similar young
companies experience with the responsibilities and complexities attendant to
a new organization, including (i) the ability to attract and maintain
competent and experienced management and operating personnel, (ii) the
ability to secure appropriate debt and equity capital to finance desired
growth, and (iii) the efficient management and performance of the Company's
everyday operations.
NEED FOR ADDITIONAL CAPITAL. The Company's acquisition strategy will
require substantial capital. In addition to requiring funding for
acquisitions, the Company may need additional funds to implement its internal
growth and operating strategies or to finance other aspects of its
operations. No assurance can be given that the Company will be able to
obtain the necessary capital to finance a successful acquisition program or
its other cash needs. If the Company is unable to obtain additional capital
on acceptable terms, it may be required to reduce the scope of its presently
anticipated expansion. Reliance on internally generated cash or debt to
complete acquisitions could substantially limit the Company's operational and
financial flexibility. The extent to which the Company will be able or
willing to use shares of Common Stock to consummate acquisitions will depend
on its market value from time to time and the willingness of potential
sellers to accept it as full or partial payment. Using shares of Common
Stock for this purpose may result in significant dilution to then existing
stockholders. If the Company is unable to obtain additional capital on
acceptable terms, or if the use of internally generated cash or debt to
complete acquisitions significantly limits the Company's operational or
financial flexibility, or if the Company is unable to use shares of Common
Stock to make future acquisitions, there could be a material adverse effect
on the Company.
DIVIDENDS. The Company does not currently intend to pay cash dividends
on its Common Stock and does not anticipate paying such dividends at any time
in the foreseeable future. The Company will follow a policy of retaining all
of its earnings, if any, to finance development and expansion of its business.
LIMITED LIABILITY OF OFFICERS AND DIRECTORS. The Company has adopted
provisions to its Certificate of Incorporation and By-laws which limit the
liability of its officers and directors and provide for indemnification by
the Company of its officers and directors to the full extent permitted by the
Delaware General Corporation Law. The Company's Certificate of Incorporation
generally provides that its officers and directors shall have no personal
liability to the Company or its stockholders for monetary damages for
breaches of their fiduciary duties as directors, except for breaches of their
duties of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or
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knowing violation of law, acts involving unlawful payment of dividends or
unlawful stock purchases or redemptions, acts specified in the Delaware
General Corporation Law, or any transaction from which a director derives an
improper personal benefit. Such provisions substantially limit the
stockholders' ability to hold officers and directors liable for breaches of
fiduciary duty, and may require the Company to indemnify its officers and
directors.
UNCERTAIN MARKET ACCEPTANCE. The business of the Company is chronic
disease management for managed care payors, managed care provider networks
and third-party administrators, based on discounted fee for service
agreements. In addition, the Company has recently developed and now offers
capitated service contracts. Although the Company has had early success in
signing customers to service contracts, there can be no assurance of market
acceptance of the Company's marketing strategy to the extent required for
long-term profitability of the Company. The Company is subject to all the
risks associated with introducing a new marketing concept. The Company has
not undertaken any independent market studies to determine the feasibility of
this concept.
COMPETITION. The business of providing blood sugar monitoring supplies
by mail order is an immature industry characterized by high growth rates and
low barriers to enter the business. The Company is aware of a number of
competitors that will compete directly with the Company's products and
marketing concept. Many of the Company's current and potential competitors
are larger and have significantly greater financial and marketing resources
than those of the Company. There can be no assurance that such competition
will not limit the Company's ability to maintain or to increase its market
share and will not adversely affect the Company's business.
DEPENDENCE ON THE EFFORTS OF MANAGEMENT. The success of the Company
will depend to a significant degree upon the involvement of its management,
who will be in charge of the Company's strategic planning and operations.
Certain officers and directors have significant experience in the health care
industry which will be important to the Company's success. However, the
Company will need to attract and retain additional individuals in order to
carry out its business objectives. The competition for qualified executives
is great and there are no assurances that these individuals will be available
to the Company.
RELIANCE ON SERVICE AGREEMENTS WITH INDEPENDENT CONTRACTORS. The
Company relies on independent contractors working pursuant to relatively
short term agreements to provide many of the services incidental to the
Company's performance of its obligations under its contracts with managed
care payors. Such services include order fulfillment, billing and collecting,
utilization reporting and sales. Many of these services are provided by
small companies and independent contractors. The success of the Company will
depend on its ability to continue to procure satisfactory services from
providers of such services at a reasonable cost.
UNCERTAIN PUBLIC MARKET FOR SHARES. At present, the Company's Common
Stock is listed publicly on the NASD Over-the-Counter Bulletin Board
("OTCBB") under the symbol "MDQK". To date only limited public trading of
the Company's shares has occurred and there is no assurance the market will
develop sufficiently to create significant liquidity for the securities.
There is also no assurance as to the depth or liquidity of any such market or
the prices at which holders may be able to sell the Company's Common Stock.
An investment in the Common Stock may be highly illiquid. Investors may not
be able to sell their shares readily or at all when the investor needs or
desires to sell. Furthermore, under current provisions of Regulation T
adopted by the Board of Governors of the Federal Reserve System, so long as
the market price of MediQuik Common Stock is less than $5.00 per share and
the Common Stock is traded in the over-the-counter market, the Common Stock
is not marginable and it is unlikely that a lending institution would accept
the Company's Common Stock as collateral for a loan. See "MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS."
VOLATILITY OF STOCK PRICE. If the public market develops for the Common
Stock, many factors will influence the market prices. The Common Stock will
be subject to significant fluctuation in response to variations in operating
results of the Company, investor perceptions of the Company, supply and
demand, interest rates, general economic conditions and those specific to the
industry, developments with regard to the Company's activities, future
financial condition and management.
10
<PAGE>
CERTAIN ANTI-TAKEOVER PROVISIONS. The Company's Certificate of
Incorporation provides for a classified Board of Directors. This provision
may inhibit a change in control of the Company. In addition, the Certificate
provides for "blank check" preferred stock, which may be issued without
stockholder approval. The ability of the Company to issue shares of
preferred stock, without further stockholder approval, may also inhibit a
change in control of the Company. See "DESCRIPTION OF SECURITIES."
POTENTIAL ISSUANCE OF ADDITIONAL COMMON STOCK AND PREFERRED STOCK. The
Company is authorized to issue up to 25,000,000 shares of Common Stock, of
which 5,934,803 shares are outstanding as of the date of this Registration
Period, excluding 250,000 shares issuable pursuant to warrants held by
financial, management and business advisors previously engaged by the
Company. See "SHARES ELIGIBLE FOR FUTURE SALES." To the extent it is
authorized, the Board of Directors of the Company will have the ability,
without seeking stockholder approval, to issue additional shares of Common
Stock in the future for such consideration as the Board of Directors may
consider sufficient. The issuance of additional Common Stock in the future
will reduce the proportionate ownership and voting power of the existing
stockholders. The Company is also authorized to issue up to 1,000,000 shares
of preferred stock, the rights and preferences of which may be designated in
series by the Board of Directors. To the extent of such authorization, such
designations may be made without stockholder approval. The designation and
issuance of series of preferred stock in the future would create additional
securities which may have dividend and liquidation preferences over the
Common Stock. The Company does not currently have any preferred stock issued
and outstanding.
CUMULATIVE VOTING AND PRE-EMPTIVE RIGHTS. There are no pre-emptive
rights in connection with the Company's Common Stock. Cumulative voting in
the election of directors is not permitted. Accordingly, the holders of a
majority of the shares of Common Stock, present in person or by proxy at a
duly called meeting, will be able to elect each member of the Company's Board
of Directors. See "DESCRIPTION OF SECURITIES."
APPLICABILITY OF LOW PRICED STOCK RISK DISCLOSURE REQUIREMENTS. Based
on recent trading prices reported on the OTCBB, MediQuik Common Stock is
considered a low priced security under rules promulgated under the Exchange
Act as currently in effect. Under these rules, broker-dealers participating
in transactions in low priced securities must first deliver a risk disclosure
document which describes the risks associated with such stocks, the
broker-dealer's duties, the customer's rights and remedies, and certain
market and other information, and make a suitability determination approving
the customer for low priced stock transactions based on the customer's
financial situation, investment experience and objectives. Broker-dealers
must also disclose these restrictions in writing to the customer, and obtain
specific written consent of the customer, and provide monthly account
statements to the customer. So long as MediQuik Common Stock is trading
below or near the threshold for low priced securities, the likely effect of
these restrictions will be a decrease in the willingness of broker-dealers to
make a market in the Common Stock, decreased liquidity of the Common Stock
and increased transaction costs for sales and purchases of the Common Stock
as compared to other securities. Generally, a low priced security is an
equity security other than a security that is (i) priced at $5.00 or more,
(ii) registered, or approved for registration, and traded on a national
securities exchange approved by the Securities and Exchange Commission
("SEC"), (iii) authorized for quotation on an automated quotation system
sponsored by a registered securities association and approved by the SEC,
(iv) issued by an investment company registered under the Investment Company
Act of 1940, or (v) a security whose issuer has either net tangible assets in
excess of $2.0 million (or $5.0 million if the issuer has not been in
continuous operation for at lease three years) or average revenues of at
least $6.0 million for the last three years.
YEAR 2000 READINESS. The Company is presently evaluating the impact of
the Year 2000 Issue as it affects its business operations and interfaces with
customers and vendors. The Company has developed an internal team that is
assessing Year 2000 readiness. Internal computer systems have been reviewed
and cleared by outside system consultants for Year 2000 compliance. The
Company is heavily reliant on outsource vendors in the delivery of products
and continues to assess their level of readiness. The Company is committed
to providing the necessary resources for Year 2000 compliance.
The Company believes that its greatest Year 2000 risk is related to
reimbursement from third-party payors. Risk also exists relative to the flow
of inventory from vendors. Minimal risks are associated with the Company's
11
<PAGE>
information technologies, financial systems and internal communications.
Prior to year end 1999, the Company plans to develop Year 2000 contingency
plans for continuing operations in the event of disruptions due to the Year
2000 Issue. There can be no assurance, however, that all instances of
noncompliance which could have a material adverse effect on the Company's
operations or financial condition have been identified. Additionally, there
can be no assurance that the systems of other companies with which the
Company transacts business will be corrected on a timely basis, or that such
failure, or a correction which is incompatible with the Company's information
systems, would not have a material adverse effect on the Company's operations
or financial condition. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION."
REPORTS TO SECURITY HOLDERS
Prior to the filing of this Registration Statement, the Company had not
been subject to the reporting requirements of the Securities Exchange Act of
1934 and had not filed any reports with the SEC. The public may read and
copy any materials the Company files in the future with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. In addition, the Company intends to
file all required reports with the SEC electronically. The SEC maintains an
Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC.
This site is available at http:/www.sec.gov. The Company also maintains an
Internet site which contains information about the Company. This site is
available at http:/www.mediquik.net. If the Company is not required to
deliver an annual report to security holders, the Company intends to
voluntarily send an annual report to its security holders, which report will
include audited financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
This management discussion contains certain forward-looking statements
as identified by the use of words like "expects", "believes", and
"anticipates" and other similar phrases. Such statements reflect management's
current view of future financial performance based on certain assumptions,
risks and uncertainties. If any assumptions, risk or uncertainty factors
change, such changes may have a material impact on actual financial results.
The Company is under no obligation to revise any forward-looking statements
contained herein, which are as of the date hereof. Readers are cautioned to
not place undue reliance on any forward-looking statements contained in this
discussion.
OVERVIEW
MediQuik is an early stage healthcare services company specializing in
the delivery of medical supplies and chronic disease management programs to
chronically ill patients on behalf of managed care payors.
The Company's business was organized on April 7, 1998, and began
full-time operations in July 1998 as Old MediQuik. Effective December 31,
1998, Old MediQuik merged with and into Cash Flow Marketing, Inc., with Cash
Flow as the surviving corporation. Cash Flow changed its name to MediQuik
Services, Inc. immediately following the merger. This transaction has been
treated as a capital transaction in substance rather than a business
combination; thus, the accounting is similar to a reverse acquisition but no
goodwill and/or intangibles have been recorded. As a result Old MediQuik is
considered the accounting acquiror for financial statement purposes.
Therefore, the financial statements of the Company for periods prior to
January 1, 1999 are the financial statements of Old MediQuik, not Cash Flow.
MediQuik is seeking to rapidly expand through internal sales growth
and strategic acquisition. During 1998 and the first half of 1999, the
Company established: (i) corporate marketing and fulfillment operations;
(ii) contractual relationships with product manufacturers; (iii) contractual
relationships with specialty service providers; (iv) contractual
relationships with insurance payors and provider networks; (v) a joint
venture with a pharmacy products distribution company; and (vi) initial
patient enrollment and fulfillment operations.
12
<PAGE>
The Company offers comprehensive disease monitoring and maintenance
solutions by providing pharmacy and diagnostic products, disease education,
compliance review and reporting, and personal health resources via the U.S.
Mail, telecommunications and the Internet. MediQuik is focused on delivering
high quality products and services to chronic disease patients for insurance
organizations that bear the primary financial risk for healthcare treatment.
MediQuik also works directly with health maintenance organizations, preferred
provider organizations, self-insured companies and other third-party payors
in an effort to enhance the quality of life for chronically ill patients and
improve the financial outcomes for managed care payors.
The Company seeks to provide disease management products and services to
patients who: (i) require disease treatment and maintenance for long periods
of time; (ii) require medical testing products and prescription medications;
and (iii) require extensive disease education and self-management tools.
The Company is currently serving patients with diabetes and is
developing new disease management programs for other high cost, chronic
diseases, such as respiratory disease and congestive heart failure. MediQuik
is focusing on certain diseases with large afflicted patient populations
where clinical research indicates that active management will improve the
health condition of the patient and reduce the financial burden for managed
care payors.
MediQuik offers patients and managed care plans a single source for
disease management products, mail-order medications, personalized education,
24 hour nurse assistance, and quarterly patient counseling. The Company
provides a complete line of blood glucose monitoring systems, testing strips,
lancets, swabs, insulin pumps, compliance and wound care products for
diabetes patients, and the Company is adding new products and services to
complement the existing disease management programs. The Company also
provides billing and collection activities on behalf of the patient to the
healthcare plan.
Research indicates that patients who actively manage certain chronic
disease factors experience reduced disease complications and an enhanced
quality of life. The Company believes that a coordinated disease management
program, including convenient product delivery and billing, personalized
patient education, routine disease counseling, immediate access to healthcare
professionals, and ongoing compliance testing will improve clinical and
financial outcomes for patients and managed care payors.
Although initial Company revenues were derived primarily through product
sales, the Company has expanded beyond product delivery and has become a full
disease management provider working to improve patient care and reduce costs
to managed care payors. The Company currently offers managed care agreements
based on fee-for-service and capitated fee arrangements.
MediQuik receives patients primarily through agreements with managed
care plans and provider networks. According to KPMG Peat Marwick, an
estimated 85% of privately insured U.S. citizens were in some type of managed
care plan in 1997, an increase from 48% in 1992. With the significant
increase in managed care enrollment, the Company believes that patient
referrals should increasingly be generated through the managed care plans.
REVENUE FROM OPERATIONS
The Company commenced operations in July 1998 and received its initial
revenue in August 1998. For the period from April 7, 1998 to December 31,
1998, the Company reported revenue of $372,226. Total revenue increased to
$720,854 for the six months ended June 30, 1999.
Revenue growth was primarily derived from diagnostic product sales to
managed care plans, providers and patients. The Company expects increased
revenue from direct sales to managed care plans and decreased revenue from
sales to other managed care providers. The Company expects to realize
significant improvement in gross margin percentages with increased direct
managed care plan revenues. To date, the Company has not relied on cash flow
from operations to fund its initial operating activities.
13
<PAGE>
GROSS PROFIT
The Company commenced operations in July 1998 and received its initial
gross profit in August 1998. For the period from April 7, 1998 to December
31, 1998, the Company reported gross profit of $54,673 or 14.7% of revenue
for the period. Gross profit increased to $115,495, or 16.0% of revenue, for
the six months ended June 30, 1999.
Gross profit was derived from diagnostic product sales to managed care
payors and patients. The gross profit percentage is the result of volume
purchase discounts and immediate payment on delivery terms. The Company
expects an increase in gross profit percentage with increased direct sales to
managed care plans.
OPERATING EXPENSES
For the period from April 7, 1998 to June 30, 1998, operating expenses
were $68,794. Operating expenses increased to $842,771 for the six months
ended June 30, 1999, an increase of 1,125% reflecting initiation of the
Company's operating activities. For the period from April 7, 1998 to
December 31, 1998, operating expenses were $653,320. The increase in
operating expenses is primarily associated with the initiation of operating
business activities including marketing and selling expenses, general and
administrative costs and the hiring and training of staff.
NET LOSS
The Company experienced a net loss of $598,332 for 1998, primarily
attributed to the development of the Company's business operations. Net
loss increased from $68,794 for the period from April 7, 1998 to June 30,
1998 in comparison to $727,276 for the six months ended June 30, 1999. The
Company expects the net loss to decrease with increased revenues and gross
profits from business operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company had an aggregate of $58,243 in cash as of June 30, 1999. The
Company has $130,000 of 15% Subordinated Debentures due in June and December
1999. The Company paid $15,000 of the debentures in July 1999, and has
received an extension to August 30, 1999 with respect to payments due in the
amount of $50,000 plus accrued interest. The debentures are owed to
significant shareholders of the Company. The Company has accrued wages of
$110,000 primarily to Company officers and insiders who are significant
shareholders in the Company. The Company expects to pursue additional equity
and debt financing to meet future working capital requirements.
Accounts receivable are primarily derived from payments due to the
Company by managed care plans and providers. As revenues increase, the
Company expects working capital requirements to increase. Standard medical
billing cycles for managed care plans average between 45-60 days. The Company
expects to experience similar billing cycles as direct managed care plan
business increases.
The Company had no lines of credit as of June 30, 1999. In July 1999,
the Company obtained a $100,000 line of credit from a bank. Repayment of
such line of credit has been guaranteed by R. Craig Christopher, Chief
Operating Officer of the Company. The Company expects to seek additional
lines of credit to finance inventory purchase requirements associated with
revenue growth.
YEAR 2000 READINESS
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. Beginning in
the year 2000, these date code fields will need to accept four digit entries
in order to distinguish dates beginning "20" from dates beginning "19". As a
result, computer systems and/or software used by many companies will need to
be upgraded to comply with "Year 2000" requirements. This is commonly known
as the "Year 2000 Issue." The Company is presently evaluating the impact of
the Year 2000 Issue as it affects its business operations and interfaces with
customers and vendors. The Company has developed an internal team that is
assessing
14
<PAGE>
Year 2000 readiness. Internal computer systems have been reviewed and
cleared by outside system consultants for Year 2000 compliance. The Company
is heavily reliant on outsource vendors in the delivery of products and
continues to assess their level of readiness. A description of Year 2000
readiness is as follows:
1. The Company completed a detailed inventory and risk assessment of all
systems and business operations.
2. The Company converted all internal information technologies to Year
2000 compliant systems.
3. The Company will continue communication with customers and vendors on
Year 2000 readiness.
The Company believes that the Year 2000 project compliance will cost
approximately $5,000. The Company is committed to providing the necessary
resources for Year 2000 compliance.
The Company believes that its greatest Year 2000 risk is related to
reimbursement from third-party payors. Risk also exists relative to the flow
of inventory from vendors. Minimal risks are associated with the Company's
information technologies, financial systems and internal communications.
Prior to year end 1999, the Company plans to develop Year 2000 contingency
plans for continuing operations in the event of disruptions due to the Year
2000 Issue. There can be no assurance, however, that all instances of
noncompliance which could have a material adverse effect on the Company's
operations or financial condition have been identified. Additionally, there
can be no assurance that the systems of other companies with which the
Company transacts business will be corrected on a timely basis, or that such
failure, or a correction which is incompatible with the Company's information
systems, would not have a material adverse effect on the Company's operations
or financial condition.
ITEM 3. DESCRIPTION OF PROPERTY
The Company's executive and administrative offices are located at 4295
San Felipe, Suite 200, Houston, Texas 77027, which facilities are leased by
the Company from an unaffiliated third party. The Company's lease on these
premises covers 3,820 square feet and expires on June 30, 2004. The monthly
rental rate for such premises is $5,252.50. Because services related to many
of the Company's business activities are provided by contractors or
consultants rather than Company employees, the Company requires only limited
office space and facilities for fulfillment operations. The Company believes
that the current facilities are adequate for its present needs. Furthermore,
the Company believes that suitable additional or replacement space will be
available when required on terms acceptable to the Company. The Company has
no present intent to invest in real estate, real estate mortgages or persons
primarily engaged in real estate activities, however the Company may change
this policy at any time without a vote of security holders. The Company has
obtained insurance to cover certain risks related to the premises as required
by the terms of the lease.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of August 11, 1999 as to (i) each person known
by the Company to own beneficially more than 5% of the outstanding Common Stock,
(ii) each Director of the Company, (iii) each Executive Officer of the Company
and (iv) all Directors and Officers of the Company as a group.
<TABLE>
<CAPTION>
Name of Shares of Common Percent
Beneficial Owner Stock Owned(1) of Class(2)
---------------- ---------------- -----------
<S> <C> <C>
Fisher Management Group, Inc.(3) 1,317,642 22.20%
3121 Buffalo Speedway, Ste. 5407
Houston, Texas 77098
15
<PAGE>
Grant M. Gables(4) 972,756 16.39%
11549 Riverview Way
Houston, Texas 77077
Jocody Financial , Inc. 474,543 8.00%
5773 Woodway, Suite 290
Houston, Texas 77057
Howard B. Butler, Jr. 313,784 5.29%
7721 San Felipe
Houston, Texas 77063
Roger Cotrofeld, Jr. 306,637 5.17%
123 Mohawk Drive
Fort Plain, NY 13339
R. Craig Christopher 272,865 4.60%
8335 Ariel
Houston, Texas 77074
William Marciniak (5) 332,373 5.60%
908 Antler
Schertz, Texas 78164
Benjamin J. Scardello (6) 336,000 5.66%
17003 Windrow Drive
Spring, Texas 77379
Scardello Marketing Group, LLC 330,000 5.56%
4295 San Felipe, Suite 200
Houston, Texas 77027
All Officers and Directors as a 2,227,778 37.54%
group (5 persons)
</TABLE>
- -------------
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be the beneficial owner of a security if such person has or
shares the power to vote or direct the voting of such security or the
power to dispose or direct the disposition of such security. A person is
also deemed to be a beneficial owner of any securities if that person has
the right to acquire beneficial ownership within 60 days. Accordingly,
more than one person may be deemed to be a beneficial owner of the same
securities. Unless otherwise indicated by footnote, the named entities
or individuals have sole voting and investment power with respect to the
Shares of Common Stock beneficially owned.
(2) Represents the number of shares of Common Stock beneficially owned as of
the date of this Registration Statement by each named person or group,
expressed as a percentage of all of the shares of such class outstanding
as of such date without giving effect to 250,000 shares issuable pursuant
to warrants held by consultants and advisors to the Company. See "SHARES
ELIGIBLE FOR FUTURE SALES."
(3) Such shares are attributable to Fisher Management Group, Inc. in its
capacity as general partner of various limited partnerships which each own
shares of Common Stock.
(4) Includes 474,543 shares held by Jocody Financial, Inc., a corporation
wholly owned by Mr. Gables' spouse.
(5) Includes 196,208 shares held by Mr. Marciniak's minor children.
(6) Includes 330,000 shares held by Scardello Marketing Group, LLC of which
Mr. Scardello owns 57.5% and acts as managing member.
16
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth certain information concerning the
Company's executive officers and directors. The members of the Board of
Directors are divided into three classes, as nearly equal in number as
possible. Generally, members are elected for a three-year term, with the
term of one class expiring each year. Howard B. Butler, Jr. is a Class I
director, William J. Marciniak is a Class II director, and Grant M. Gables
is a Class III director. The term of the Class I director expires at the
Company's next annual meeting of stockholders. The terms of the Class II and
Class III directors expire at the annual meeting of stockholders to be held
in 2000 and 2001, respectively. At each annual meeting of stockholders,
directors of the class the term of which then expires will be elected by the
holders of the Common Stock to succeed those directors whose terms are
expiring. Officers are elected annually by, and serve at the discretion of,
the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age(1) Position
---- ------ --------
<S> <C> <C>
Grant M. Gables......... 34 President, Chief Executive Officer and Director
William J. Marciniak.... 49 Vice President of Marketing and Director
Howard B. Butler, Jr.... 52 Secretary, Treasurer, Corporate Counsel and Director
R. Craig Christopher.... 55 Chief Operating Officer
Benjamin J. Scardello... 45 Vice President of Managed Care Services
</TABLE>
- -------------
(1) As of August 1, 1999.
GRANT M. GABLES has been an officer and director of the Company since
April 7, 1998. Mr. Gables has served as executive management with three
health care billing and technology companies since January 1995. From March
1997 until June 1998, he was Vice President of Marketing for MediNet EDI
Solutions with responsibility for strategic planning and development of
technology for health care organizations. From September 1995 until February
1997, he was Executive Vice President of Reimbursement Assurance Corporation
with executive responsibility for operations and sales and emphasis on
information delivery technology for health care groups. From January 1995
until August 1995, Mr. Gables was with Rapid Reimbursement, Inc. as Chief
Operating Officer with responsibility for installation of medical billing
capability and management of claims processing and medical billing. From
March 1994 until December 1994, he was General Partner of GMG Capital Funding
Company with responsibility for investment analysis and financial planning
for health care companies. He was Senior Vice President of International
Trade Exchange, Inc. from May 1992 until March 1994. Mr. Gables graduated
from Texas A & M University in 1987 with a Bachelors of Business
Administration degree with a major in Finance and from the University of
Houston in December 1993 with a Masters of Business Administration - Finance
with concentrations in Finance and Marketing.
WILLIAM J. MARCINIAK has been an officer and director of the Company
since April 7, 1998. Since 1989, Mr. Marciniak has served as an independent
consultant to the health care industry. In such capacity he developed
employer funded employee stock ownership plans for the Mediplex Companies, an
infusion therapy company. In addition, he developed a medical receivables
securitization program for Advacare, Inc., a medical billing company, that
was funded by Prudential and arranged a $100,000,000 private placement for
Medical Funding, Inc. and $100,000,000 credit facility for Home Health Plan,
Inc. for the acquisition of infusion pharmacies. From 1982 to 1989 he was
President of Bankers United Trust and from 1974 to 1982 Regional Manager of
International Bank and Trust. Mr. Marciniak graduated from the Southern
Illinois University in 1973 with a major in Business Administration and a
minor in mathematics.
HOWARD B. BUTLER, JR. has been an officer and director of the Company
since April 7, 1998. Mr. Butler has been a practicing attorney in Houston,
Texas since 1972 and a sole practitioner since 1986. He is a 1969 graduate
of Lamar University, Beaumont, Texas with a Bachelor of Business
Administration in economics and a 1972 graduate of the University of Houston
College of Law with a Doctor of Jurisprudence degree.
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<PAGE>
R. CRAIG CHRISTOPHER has been an officer of the Company since July 1,
1998. His primary responsibilities involve the development of strategic
alliances and distribution channels for MediQuik's health care products and
services. Prior to joining MediQuik, Mr. Christopher held senior level
management positions with a number of health care companies, most notably as
founder and Chairman of the Board of Directors of Taylor Medical, Inc., a
distributor of health supplies ("Taylor"). During his tenure, Taylor expanded
from a single location in Texas to 32 offices in 14 states having 150 sales
representatives and achieved total annual sales of $100 million. While at
Taylor, Mr. Christopher developed methods for marketing medical supplies to
physicians and new training and communications procedures to make the sales
force more responsive. In addition, Mr. Christopher led the development of
strict operating controls for Taylor. Mr. Christopher is a 1966 graduate of
Rice University where he was a scholarship athlete.
BENJAMIN J. SCARDELLO has been an officer of the Company since June 14,
1999. Mr. Scardello has held senior management and officer positions with
both regional and national firms in the retail and health care industries.
Prior to joining MediQuik, he was the founder and President of Scardello
Marketing Group, L.L.C. ("SMG"), which was formed to support the national
marketing plans of MediQuik. Prior to his association with MediQuik, Mr.
Scardello served as a Vice President for FH&R Healthcare Services, Inc., a
Houston based information management company. While at FH&R, he co-developed
a series of new healthcare information technologies designed to help
physicians, hospital and insurance companies improve their ability to manage
health care operations under a managed care reimbursement environment. In
the early 1990's, Mr. Scardello founded and served as President of Triad, a
medical billing company with over 200 employees serving leading healthcare
providers throughout the nation.
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth for the period ended December 31, 1998
all compensation received or accrued by the Chief Executive Officer and by
each of the other most highly compensated executive officers ("Named
Executive Officers"). As of the date hereof, the Company has not entered
into employment agreements with the Named Executives.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
NAME AND PRINCIPAL POSITION ANNUAL COMPENSATION (1) ----------------
------------------------ RESTRICTED STOCK
SALARY (2) BONUS AWARDS (3)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Grant M. Gables
President and
Chief Executive Officer............... $ 56,000 -- $400
William J. Marciniak
Vice President of Marketing........... $ 48,000 -- $100
R. Craig Christopher
Chief Operating Officer .............. $ 34,000 -- $250
</TABLE>
- ----------------
(1) The Named Executives received no compensation for periods prior to
April 7, 1998, the date of organization of Old MediQuik.
(2) Includes 1998 salary deferrals by Mr. Gables, Mr. Marciniak and Mr.
Christopher of $14,000, $14,000 and $12,625, respectively.
(3) Based on an estimated value of $0.001 per share for shares of restricted
stock issued by Old MediQuik pursuant to the Stock Incentive Plan
(defined below). The issuers right to repurchase the shares of
restricted stock expired June 17, 1999.
18
<PAGE>
STOCK INCENTIVE PLAN
The Board of Directors of the Company has approved and adopted by
written consent, the MediQuik Services, Inc. Stock Incentive Plan (the "Stock
Incentive Plan"). The purpose of the Stock Incentive Plan is to provide
deferred stock incentives to certain key employees and directors of the
Company who contribute significantly to the long-term performance and growth
of the Company. The following description provides a summary of the Stock
Incentive Plan. Such summary does not purport to be complete. Reference is
made to the more detailed provisions of the Company's Stock Incentive Plan,
which is included as an exhibit to this Registration Statement.
GENERAL PROVISIONS OF THE STOCK INCENTIVE PLAN. The Stock Incentive
Plan is administered by the Board of Directors or a committee of the Board of
Directors duly authorized and given authority by the Board of Directors to
administer the Stock Incentive Plan (the Board of Directors or such
designated Committee as administrator of the Stock Incentive Plan shall be
hereinafter referred to as the "Board"). The Board has exclusive authority
to administer the Stock Incentive Plan including without limitation, to
select the employees to be granted awards under the Stock Incentive Plan, to
determine the type, size and terms of the awards to be made, to determine the
time when awards will be granted, and to prescribe the form of instruments
evidencing awards made under the Stock Incentive Plan. The Board is
authorized to establish, amend and rescind any rules and regulations relating
to the Stock Incentive Plan as may be necessary for efficient administration
of the Stock Incentive Plan. Board action with respect to the Stock
Incentive Plan requires a majority vote of the members of the Board taken at
a meeting at which a quorum is present (currently two directors).
Three types of awards are available under the Stock Incentive Plan: (i)
nonqualified stock options or incentive stock options, (ii) stock
appreciation rights, and (iii) restricted stock. An aggregate of 1,500,000
shares of Common Stock may be issued pursuant to the Stock Incentive Plan,
subject to adjustment to prevent dilution due to merger, consolidation, stock
split or other recapitalization of the Company.
The Stock Incentive Plan does not affect the right or power of the
Company or its stockholders to make or authorize any major corporate
transaction such as a merger, dissolution or sale of assets. Under terms of
the Stock Incentive Plan, if the Company is dissolved, liquidated or merged
out of existence, each participant will be entitled to a benefit as though he
became fully vested in all previous awards to him immediately prior to or
concurrently with such dissolution, liquidation or merger. The Board may
provide that an option or stock appreciation right will be fully exercisable,
or that a share of restricted stock will be free of such restriction upon a
change in control of the Company.
The Stock Incentive Plan may be amended at any time and from time to
time by the Board of Directors but no amendment which increases the aggregate
number of shares of Common Stock that may be issued pursuant to the Stock
Incentive Plan will be effective unless it is approved by the stockholders of
the Company. The Stock Incentive Plan will terminate upon the earlier of the
adoption of a resolution by the Board of Directors terminating the Stock
Incentive Plan, or ten years from the date of the Stock Incentive Plan's
initial approval by the Board of Directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ACQUISITION OF ASSETS
Effective April 7, 1998, MediQuik Services, L.L.C., a Nevada limited
liability company ("MSL"), transferred its interest in six provider
agreements to the Company in exchange for 2,750,000 shares of Common Stock
(the "MSL Shares"), the forgiveness of MSL's indebtedness to Old MediQuik in
the amount of $64,404, and the assumption by the Company of payment
obligations under the 15% Subordinated Debentures (the "Debentures") issued
by MSL in the aggregate principal amount of $130,000. The Debentures are
payable in two equal installments due on June 30, 1999 and December 31, 1999.
The Debentures accrue interest at a rate of 15% per annum, which is payable
quarterly. Fisher Management Group, Inc., which beneficially owns 22.20% of
the outstanding Common Stock, is the General Manager of MSL.
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Jana J. Gables, Howard B. Butler, Jr., and Grant M. Gables acted as
promoters of the Company and Jacody Financial , Inc., a corporation owned by
Jana J. Gables, wife of Grant M. Gables, received 451,000 of the MSL Shares,
as a designee of MSL in proportion to its interest in the MSL Assets. Grant
M. Gables and Howard B. Butler, Jr. purchased 88,000 and 22,000 shares,
respectively, in connection with the organization of the Company for a
purchase price of $.01 per share.
Effective June 18, 1999, the Company acquired certain assets of
Scardello Marketing Group LLC ("SMG") in exchange for $25,000 in cash, the
forgiveness of SMG's indebtedness to the Company in the amount of $15,396,
and 330,000 shares of Common Stock. Benjamin J. Scardello, an executive
officer of MediQuik, is the managing member and 57.5% owner of SMG.
FINANCIAL CONSULTING AGREEMENTS
Effective April 7, 1998 the Company entered into a Consulting Agreement
with The Fisher Group, an Oklahoma limited partnership ("Fisher") and an
affiliate of the Company, for acquisition and financial consulting services
to continue until terminated by either party. The Fisher agreement initially
provided for the payment of a monthly fee in the amount of $8,000 plus
reimbursement of expenses. In August, 1999, the Fisher agreement was
amended, reducing the monthly fee to $2,000 plus reimbursement of expenses.
Fisher Management Group, Inc., which beneficially owns 22.20% of the
outstanding Common Stock, is the general partner of Fisher.
Effective April 7, 1998 the Company entered into a Consulting Agreement
with Jocody Financial, Inc. ("Jocody"), an affiliate of the Company, for
acquisition and financial consulting services to continue until terminated by
either party. The Jocody agreement initially provided for the payment of a
monthly fee in the amount of $8,000 plus reimbursement of expenses. In
August, 1999, the Jocody agreement was amended, reducing the monthly fee to
$2,000 plus reimbursement of expenses. Jocody owns 8.00% of the Common Stock
of the Company and is wholly-owned by Jana J. Gables.
The Company entered into an independent sales contractor and provider
agreement with Horizon Medical Services, San Antonio, Texas, ("Horizon") to
continue until the agreement is terminated by either party in accordance with
its terms. The Horizon agreement provides for payment to Horizon of an
amount equal to 50% of the profit after deduction of all costs from all sales
of products or services procured by Horizon. William J. Marciniak, a
director and officer of the Company, is the owner and General Manager of
Horizon.
In June, 1999, the Company entered into an Agreement with Scardello
Marketing Group LLC ("SMG") for SMG to assist in the acquisition of a
diabetic pharmaceutical supply company ("DPS, Co.") by MediQuik and in the
financing of that acquisition. Upon the acquisition of DPS, Co. by the
Company, SMG will receive 200,000 shares of MediQuik Common Stock or options
to acquire such MediQuik Common Stock in consideration for the successful
acquisition. In addition, if the Company acquires DPS, Co., SMG will
receive 100,000 shares of Common Stock or options to acquire such MediQuik
Common Stock in consideration for arranging financing for the acquisition on
terms as set forth in the Agreement, whether or not MediQuik utilizes the
financing source. Benjamin J. Scardello, an executive officer of MediQuik,
is the managing member and 57.5% owner of SMG. See "SHARES ELIGIBLE FOR
FUTURE SALES."
ITEM 8. DESCRIPTION OF SECURITIES
The following summary is a description of certain provisions of the
Company's Certificate of Incorporation and By-laws. Such summary does not
purport to be complete. Reference is made to the more detailed provisions of
the Company's Certificate of Incorporation and By-laws, which are included as
exhibits to this Registration Statement.
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COMMON STOCK
The Company's Certificate of Incorporation authorizes the issuance of up
to 25,000,000 shares of Common Stock, $.001 par value, of which 5,934,803
shares are issued and outstanding as of August 18, 1999. The holders of
Common Stock are entitled to one vote per share on the election of directors
and on all other matters submitted to a vote of stockholders. Shares of
Common Stock do not have preemptive rights or cumulative voting rights. The
Company's Certificate of Incorporation provides that the Board of Directors
shall be divided into three classes, as nearly equal in number as possible,
and that at each annual meeting of stockholders all of the directors of one
class shall be elected for a three-year term.
The holders of Common Stock are entitled to receive dividends ratably
when, as and if declared by the Board of Directors, and upon liquidation are
entitled to share ratably in the Company's net assets. Payment of dividends
on the Common Stock may become subject to restrictions contained in any
agreement in connection with the future issuance of preferred stock and to
prior payment of dividends on future issuances of preferred stock. See " -
PREFERRED STOCK." The decision to pay dividends is subject to such other
financial considerations as the Board of Directors of the Company may deem
relevant. No assurance can be given as to the timing or amount of any
dividend that the Company may declare on the Common Stock.
PREFERRED STOCK
The Certificate of Incorporation of the Company authorizes the issuance
of up to 1,000,000 shares of serial preferred stock, $.001 par value (the
"Preferred Stock"), of which none have been issued or reserved for issuance.
The Board of Directors of the Company is authorized by its Certificate
of Incorporation, without any action on the part of stockholders, to issue
Preferred Stock in one or more series, and to fix and state the powers,
designations, preferences and relative, participating, optional or other
special rights of the shares of each series, and the qualifications,
limitation or restrictions thereof, including, (1) the distinctive serial
designation and the number of shares constituting such series; (2) the rights
in respect of dividends, if any, to be paid on the shares of such series,
whether dividends shall be cumulative and, if so, from which date or dates,
the payment dates for dividends, and the participating or other special
rights, if any, with respect to dividends; (3) the voting powers, full or
limited, if any, of the shares of such series; (4) whether the shares of such
series shall be redeemable and, if so, the price or prices at which, and the
terms and conditions upon which such shares may be redeemed; (5) the amount
or amounts payable upon the shares of such series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation; (6)
whether the shares of such series shall be entitled to the benefits of a
sinking or retirement fund to be applied to the purchase or redemption of
such shares; (7) whether the shares of such series shall be convertible into,
or exchangeable for, shares of any other class or classes or any other
series, the conversion price or prices, or the rate or rates of exchange; (8)
the subscription or purchase price and form of consideration for which the
shares of such series shall be issued; and (9) whether the shares of such
series which are redeemed or converted shall have the status of authorized
but unissued shares of serial preferred stock and whether such shares may be
reissued as shares of the same or any other series of serial preferred stock.
Thus, the Board of Directors, without stockholder approval, may authorize
the issuance of Preferred Stock which could make it more difficult for
another company to effect certain business combinations with the Company.
DEFENSES AGAINST HOSTILE TAKEOVERS
INTRODUCTION. While the following discussion summarizes the reasons
for, and the operation and effects of, certain provisions of the Company's
Certificate of Incorporation which management has identified as potentially
having an anti-takeover effect, it is not intended to be a complete
description of all potential anti-takeover effects. Reference is made to the
more detailed provisions of the Company's Certificate of Incorporation and
By-Laws, which are included as exhibits to this Registration Statement.
In general, the anti-takeover provisions in Delaware law and the
Company's Certificate of Incorporation are designed to minimize the Company's
susceptibility to sudden acquisitions of control which has not been
negotiated with
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and approved by the Company's Board of Directors. As a result, these
provisions may tend to make it more difficult to remove the incumbent members
of the Board of Directors. The provisions would not prohibit an acquisition
of control of the Company or a tender offer for all of the Company's capital
stock. The provisions are designed to discourage any tender offer or other
attempt to gain control of the Company in a transaction that is not approved
by the Board of Directors, by making it more difficult for a person or group
to obtain control of the Company in a short time and then impose its will on
the remaining stockholders. However, to the extent these provisions
successfully discourage the acquisition of control of the Company or tender
offers for all or part of the Company's capital stock without approval of the
Board of Directors, they may have the effect of preventing an acquisition or
tender offer which might be viewed by stockholders to be in their best
interests.
Tender offers or other non-open market acquisitions of stock are usually
made at prices above the prevailing market price of a Company's stock. In
addition, acquisitions of stock by persons attempting to acquire control
through market purchases may cause the market price of the stock to reach
levels which are higher than would otherwise be the case. Anti-takeover
provisions may discourage such purchases, particularly those of less than all
of the Company's stock, and may thereby deprive stockholders of an
opportunity to sell their stock at a temporarily higher price. These
provisions may therefore decrease the likelihood that a tender offer will be
made, and, if made, will be successful. As a result, the provisions may
adversely affect those stockholders who would desire to participate in a
tender offer. These provisions may also serve to insulate incumbent
management from change and to discourage not only sudden or hostile takeover
attempts, but any attempts to acquire control which are not approved by the
Board of Directors, whether or not stockholders deem such transactions to be
in their best interests.
AUTHORIZED SHARES OF CAPITAL STOCK. The Company's Certificate of
Incorporation authorizes the issuance of up to 1,000,000 Shares of serial
preferred stock. When issued, the Preferred Stock will become additional
capital stock required to be purchased by an acquiror. The Board of
Directors could authorize the issuance of Preferred Stock with voting rights
increasing the number of votes required to approve any proposed acquisition.
The Board of Directors of the Company can determine the extent, if any, to
which the holders of shares of Preferred Stock of any series will be entitled
to vote as a class or otherwise with respect to the election of directors or
otherwise, subject to certain limitations under Delaware law. If the Board
of Directors of the Company decides to issue an additional class of voting
preferred stock to a person opposed to a proposed acquisition, such person
might be able to prevent the acquisition single-handedly.
STOCKHOLDER MEETINGS. Delaware law provides that the annual stockholder
meeting may be called by a corporation's board of directors or by such person
or persons as may be authorized by a corporation's certificate of
incorporation or By-Laws. The Company's Certificate of Incorporation
provides that annual stockholder meetings may be called only by the Company's
Board of Directors or a duly designated committee of the Board. Although the
Company believes that this provision will discourage stockholder attempts to
disrupt the business of the Company between annual meetings, its effect may
be to deter hostile takeovers by making it more difficult for a person or
entity to obtain immediate control of the Company between annual meetings as
a forum to address certain other matters and discourage takeovers which are
desired by the stockholders. The Company's Certificate of Incorporation also
provides that stockholder action may be taken only at a special or annual
stockholder meeting and not by written consent.
CLASSIFIED BOARD OF DIRECTORS AND REMOVAL OF DIRECTORS. The Company's
Certificate of Incorporation provides that the Company's Board of Directors
is to be divided into three classes which shall be as nearly equal in number
as possible. The directors in each class serve for terms of three years,
with the terms of one class expiring each year. Each class currently
consists of approximately one-third of the number of directors. Each
director will serve until his successor is elected and qualified.
A classified Board of Directors could make it more difficult for
stockholders, including those holding a majority of the Company's outstanding
stock, to force an immediate change in the composition of a majority of the
Board of Directors. Since the terms of only one-third of the incumbent
directors expire each year, it requires at least two annual elections for the
stockholders to change a majority, whereas a majority of a non-classified
Board may be changed in one year. In the absence of the provisions of the
Company's Certificate of Incorporation classifying the
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Board, all of the directors would be elected each year. The provision for a
staggered Board of Directors affects every election of directors and is not
triggered by the occurrence of a particular event such as a hostile takeover.
Thus a staggered Board of Directors makes it more difficult for stockholders
to change the majority of directors even when the reason for the change would
be unrelated to a takeover.
The Company's Certificate of Incorporation provides that a director may
not be removed except for cause by the affirmative vote of the holders of 75%
of the outstanding Shares of capital stock entitled to vote at an election of
directors. This provision may, under certain circumstances, impede the
removal of a director and thus preclude the acquisition of control of the
Company through the removal of existing directors and the election of
nominees to fill in the newly created vacancies. The supermajority vote
requirement would make it difficult for the stockholders of the Company to
remove directors, even if the stockholders believe such removal would be
beneficial.
RESTRICTION OF MAXIMUM NUMBER OF DIRECTORS AND FILLING VACANCIES ON THE
BOARD OF DIRECTORS. Delaware law requires that the board of directors of a
corporation consist of one or more members and that the number of directors
shall be set by the corporation's By-Laws, unless it is set by the
corporation's certificate of incorporation. The Company's Certificate of
Incorporation provides that the number of directors (exclusive of directors,
if any, to be elected by the holders of preferred stock) shall not be less
than one or more than 15, as shall be provided from time to time in
accordance with the Company By-Laws. The power to determine the number of
directors within these numerical limitations and the power to fill vacancies,
whether occurring by reason of an increase in the number of directors or by
resignation, is vested in the Company's Board of Directors. The overall
effect of such provisions may be to prevent a person or entity from quickly
acquiring control of the Company through an increase in the number of the
Company's directors and election of nominees to fill the newly created
vacancies and thus allow existing management to continue in office.
STOCKHOLDER VOTE REQUIRED TO APPROVE BUSINESS COMBINATIONS WITH RELATED
PERSONS. To approve business combinations involving a "related person", the
Company's Certificate of Incorporation requires (i) the approval of the
holders of 75% of the Company's outstanding voting stock (and any class or
series entitled to vote separately) and (ii) a majority of the outstanding
stock not beneficially owned by the related person. The exception to the
foregoing is where the business combination has been approved in advance by
two-thirds of those members of the Company's Board of Directors who were
directors prior to the time the related person became a related person. As
defined in the Certificate of Incorporation, "related person" generally
includes any person who owns 10% or more of the Company's outstanding voting
stock.
Section 203 of the DGCL prohibits, with certain exceptions, a Delaware
corporation from engaging in any of a broad range of business combinations
with an "interested stockholder" for a period of three years following the
date such stockholder became an interested stockholder. An "interested
stockholder" is defined in Section 203 as any person that is (i) the owner of
15% or more of the outstanding voting stock of a corporation or (ii) an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder. However,
Section 203 does not apply to a corporation unless its voting stock is either
(A) listed on a national securities exchange, (B) authorized for quotation on
the NASDAQ Stock Market or (C) held of record by more than 2,000
stockholders. The Company does not currently satisfy any of these conditions
and, therefore, is not currently subject to Section 203. Unless the Company
amends its certificate of incorporation to elect not to be governed by
section 203, the Company will be subject to Section 203 upon satisfaction
upon the satisfactory of any of the foregoing conditions (A), (B), or (C).
The exceptions in Section 203 under which a corporation may engage in a
business combination with an interested stockholder are: (i) approval of the
acquisition by the board of directors prior to the date the stockholder
became an interested stockholder, (ii) the interested stockholder acquiring
at least 85% of the outstanding voting stock (excluding shares owned by
directors, officers and certain employee stock plans) as a result of the
transaction in which it became an interested stockholder or (iii) approval of
the transaction by the board of directors and the affirmative vote
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at an appropriate meeting (and not by written consent) of two-thirds of the
outstanding voting stock not owned by the interested stockholder on or after
the date on which the interest stockholder became and interested stockholder.
Under Delaware law, business combinations resulting in the sale of
substantially all of the assets of the Company or merger of the Company with
another business organization must be approved by vote of the majority of the
Company's outstanding voting stock entitled to vote at a duly called meeting.
The supermajority provisions in the Certificate of Incorporation and Section
203 of the DGCL, if applicable, may have the effect of foreclosing mergers and
other business combinations which the holders of a majority of the Company's
stock deem desirable and place the power to prevent such a transaction in the
hands of a minority of the Company's stockholders.
Under Delaware law, there is no cumulative voting by stockholders for the
election of directors unless authorized in the corporation's certificate of
incorporation. MediQuik's Certificate of Incorporation does not authorize
cumulative voting. The absence of cumulative voting rights effectively means
that the holders of a majority of the stock voted at a stockholder meeting
may, if they so choose, elect all directors of the Company, thus precluding
representation of minority stockholders on the Company's Board of Directors.
ADVANCE NOTICE REQUIREMENTS FOR NOMINATION OF DIRECTORS AND PROPOSAL OF
NEW BUSINESS AT ANNUAL STOCKHOLDER MEETINGS. The Company's Certificate of
Incorporation generally provides that any stockholder desiring to make a
nomination for the election of directors or a proposal for new business at a
stockholder meeting must submit written notice not less than 30 or more than
60 days in advance of the meeting. This advance notice requirement may give
management time to solicit its own proxies in an attempt to defeat any
dissident slate of nominations, should management determine that doing so is
in the best interests of stockholders generally. Similarly, adequate advance
notice of stockholder proposals will give management time to study such
proposals and to determine whether to recommend to the stockholders that such
proposals be adopted. In certain instances, such provisions could make it
more difficult to oppose management's nominees or proposals, even if the
stockholders believe such nominees or proposals are in their interests. The
Company's Certificate of Incorporation provides that the period for
stockholders to nominate directors and introduce new business may be as short
as 10 days (when less than 40 days' notice of the stockholders meeting is
given). This may tend to discourage persons from bringing up matters
disclosed in the proxy materials furnished by the Company and could inhibit
the ability of stockholders to bring up new business in response to recent
developments.
LIMITATIONS ON ACQUISITIONS OF CAPITAL STOCK. The Company's Certificate
of Incorporation generally provides that if any person were to acquire
beneficial ownership of more than 20% of any class of the Company's
outstanding Common Stock, each vote in excess of 20% would be reduced to
one-hundredth of a vote, with the reduction allocated proportionately among
the record holders of the stock beneficially owned by the acquiring person.
The limitation on voting rights of Shares beneficially owned in excess of 20%
of the Company's outstanding Common Stock, would discourage stockholders from
acquiring a substantial percentage of the Company's stock in the open market,
without disclosing their intentions, prior to approaching management to
negotiate an acquisition of the Company's remaining stock. The effect of
these provisions is to require amendment of the Certificate of Incorporation,
which requires Board approval, before a stockholder can acquire a large block
of the Company's Common Stock. As a result, these provisions may deter
takeovers by potential acquirors who would have acquired a large holding
before making an offer for the remaining stock, even though the eventual
takeover offer might have been on terms favorable to the remaining stockholders.
SUPERMAJORITY VOTING REQUIREMENT FOR AMENDMENT OF CERTAIN PROVISIONS OF
THE CERTIFICATE OF INCORPORATION. The Company's Certificate of Incorporation
provides that specified provisions contained in the Certificate of
Incorporation may not be repealed or amended except upon the affirmative vote
of the holders of not less than 75% of the outstanding stock entitled to vote.
This requirement exceeds the majority vote that would otherwise be required
by Delaware law for the repeal or amendment of the Certificate of
Incorporation. Specific provisions subject to the supermajority vote
requirement are (i) Article VIII, governing the calling of stockholder
meetings and the requirement that stockholder action be taken only at annual
or special meetings, (ii) Article IX, requiring written notice to the Company
of nominations for the election of directors and new business proposals, (iii)
Article X, governing the number
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and terms of the Company's directors, (iv) Article XI, governing the removal
of directors, (v) Article XII, limiting acquisitions of 20% or more of the
Company's stock, (vi) Article XIII, governing approval of business
combinations involving related persons, (vii) Article XIV, relating to the
consideration of various factors in the evaluation of business combinations,
(viii) Article XV, providing for indemnification of directors, officers,
employees and agents, (ix) Article XVI, limiting directors' liability, and (x)
Articles XVII and XVIII, governing the required stockholder vote for amending
the By-Laws and Certificate of Incorporation, respectively. Article XIV is
intended to prevent the holders of less than 75% of the Company's outstanding
voting stock from circumventing any of the foregoing provisions by amending
the Certificate of Incorporation to delete or modify one of such provisions.
This provision would enable the holders of more than 25% of the Company's
voting stock to prevent amendments to the Certificate of Incorporation or
By-Laws even if they were favored by the holders of a majority of the voting
stock.
TRANSFER AGENT AND REGISTRAR
Atlas Stock Transfer Corporation, 5899 South State Street, Salt Lake
City, Utah 84107, telephone number (801) 266-7151, serves as the transfer
agent, registrar and warrant agent of the Company.
SHARES ELIGIBLE FOR FUTURE SALES
Currently the Company has 25,000,000 shares of Common Stock and 1,000,000
shares of Preferred Stock authorized by its Certificate of Incorporation, with
5,934,803 shares of Common Stock and no Preferred Stock outstanding. Under
Delaware law and the Company's Certificate of Incorporation, the Board of
Directors is authorized to issue all of the remaining authorized but unissued
shares of Common Stock and Preferred Stock from time to time without approval
of the stockholders (except as required by the rules of a national securities
exchange, if applicable) for such value (not less than par value) as they
determine.
Pursuant to a Consulting and Financial Advisory Services Agreement dated
February 1, 1999, the Company issued to R.F. Bearden, Associates, Inc.
("Bearden") warrants for the purchase of 250,000 shares of Common Stock at an
exercise price ranging from $3.00 to $4.00 per share (the "Bearden Warrants").
All of the Bearden Warrants expire by April 30, 2000. Pursuant to the
agreement, Bearden has the right to include shares of Common Stock issuable
upon the exercise of the Bearden Warrants in certain registration statements
filed by MediQuik under the Securities Act, other than a registration
statement filed in connection with the Company's first underwritten public
offering. MediQuik is generally required to pay the costs associated with
such registration. The number of shares of Common Stock that must be
registered on behalf of Bearden is subject to limitation, however, if the
Company's managing underwriter determines that market conditions so require.
Pursuant to a Letter Agreement dated June 18, 1999, the Company engaged
Scardello Marketing Group, L.L.C. ("SMG") to assist in the acquisition and
purchase of a diabetic pharmaceutical supply company ("DPS, Co.") by the
Company. Under the terms of the Letter Agreement, in the event that the
Company acquires DPS, Co., SMG shall receive 200,000 shares of Common Stock or
options to acquire such MediQuik Common Stock. Further, if the Company
acquires DPS, Co. and if SMG provides a financing service and a firm
commitment from said financing source at terms as set forth in the Agreement,
SMG shall receive 100,000 shares of Common Stock or options to acquire such
MediQuik Common Stock whether or not MediQuik uses the financing source.
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Of the Common Stock currently outstanding, 5,081,055 shares are
"restricted securities," as that term is defined, under Rule 144 promulgated
under the Securities Act in that such shares were issued and sold by the
Company without registration, in private transactions not involving a public
offering, and/or are securities held be affiliates. All such shares may be
resold publicly only following their effective registration under the
Securities Act or pursuant to an exemption from the registration requirements
of the act, such as Rule 144 thereunder. Although such restricted
securities are not presently tradeable in any public market which may develop
for the Common Stock, such securities may in the future be publicly sold in to
any such market, in accordance with the provisions of Rule 144.
In general, Rule 144 was adopted by Securities and Exchange Commission
under the Securities Act to provide an exemption for public resales of
restricted securities through brokers' transaction effected without purchaser
solicitation. Securities sold in compliance with Rule 144 lose their status
as restricted securities in the hands of the purchaser and thereafter trade
free of restrictions in the same manner as securities sold by the issuer in a
transaction registered under the Securities Act. Restricted securities may
be resold pursuant to Rule 144 only if (i) the securities are held for at
least one year from the date of acquisition, provided that (A) the shares are
sold in ordinary brokers' transactions or transactions directly with a
market maker without public solicitation, (B) adequate current information
about the Company is publicly available and (C) the amount of securities sold
by or for the account of the holder during any three-month period does not
exceed the greater of 1% of the issuer's outstanding shares or the average
weekly trading volume for the four-week period prior to the notice required
by Rule 144(h), or (ii) the securities are held for at least two years from
the date of acquisition. Future sales by current shareholders, especially of
substantial amounts, could depress the market price of the Common Stock in
any market that may develop.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's Common Stock was listed on the NASD Over-The-Counter
Bulletin Board ("OTCBB") in January 1999 and as yet has experienced limited
trading activity. A public trading market having the characteristics of
depth, liquidity and orderliness depends upon the existence of market makers
as well as the presence of willing buyers and sellers, which are circumstances
over which the Company does not have control. The following table sets forth
the high and low sale prices for the Common Stock (as reported by OTCBB) for
the periods indicated since the inception of trading in January 1999. The
quotations below reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
1999:
First Quarter (from January 26, 1999 through March 31, 1999)........... $4.625 $1.75
Second Quarter ........................................................ $7.875 $3.125
Third Quarter (from July 1, 1999 through August 11, 1999).............. $4.50 $2.25
</TABLE>
On August 11, 1999 the last reported sales of the Common Stock on the
OTCBB was $2.50. As of August 11, 1999, there were 105 holders of record of
the Common Stock, as shown on the records of the Transfer Agent and Registrar
of the Common Stock. Since many shares may be held by investors in nominee
names, such as the name of their broker or their broker's nominee, the number
of record holders often bears little relationship to the number of beneficial
owners of the Common Stock.
The Company has reserved the trading symbol "MDQK."
The Company has never paid any cash dividends on its stock and
anticipates that for the foreseeable future it will retain earnings, if any,
for use in the operation of its business. Payment of cash dividends in the
future will depend
26
<PAGE>
upon the Company's earnings, financial condition, any contractual
restrictions, restrictions imposed by applicable law, capital requirements
and other factors believed relevant by the Company's Board of Directors.
ITEM 2. LEGAL PROCEEDINGS
Neither the Company nor any of its subsidiaries is involved in any legal
proceedings which the Company believes could have a material adverse effect
on the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is certain information concerning all sales of
securities by Cash Flow, Old MediQuik and the Company that were not
registered under the Securities Act.
In connection with its organization on July 10, 1997, Cash Flow issued
and sold an aggregate of 1,700,000 shares of its common stock for $.001 per
share to R. David Preston, Chairman of the Board, President and Chief
Executive Officer of Cash Flow Colorado, Tracy Moore, Secretary and member of
the board of directors of Cash Flow Colorado, and Gaylene Granquist Preston,
member of the board of directors of Cash Flow Colorado.
From July 15, 1997 to December 15, 1997, pursuant to Rule 504 of
Regulation D, Cash Flow issued and sold 283,047 shares of its Common Stock to
12 accredited investors and 19 non-accredited investors for an aggregate
consideration of $356,809.
In connection with the organization of Old MediQuik, on April 7, 1998,
Old MediQuik issued and sold an aggregate of 110,000 shares of its common
stock to Grant M. Gables, President and Chief Executive of Old MediQuik, and
Howard B. Butler, Jr., Secretary and Treasurer of Old MediQuik, for $.001 per
share. On April 7, 1998, Old MediQuik issued an aggregate of 2,750,000
shares of its common stock to the designees of MediQuik Services, LLC in
consideration of the transfer of the initial operating assets of Old MediQuik
from MediQuik Services, LLC.
On April 7, 1998, Old MediQuik also issued to R.F. Bearden Associates,
Inc. ("Bearden") warrants for the purchase of 1,540,000 shares of Old
MediQuik common stock at an exercise price ranging from $.01 to $5.00 per
share in consideration of $11,000 and consulting services pursuant to the
exemption provided by Section 4(2) of the Securities Act. From July through
September 1998, Bearden acquired 134,047 shares of Old MediQuik common stock,
pursuant to Rule 504 of Regulation D, through exercise of such warrants for
$2.00 per share. On February 1, 1999, the consulting services agreement was
amended and all remaining warrants were cancelled without exercise.
On April 15, Old MediQuik granted an aggregate of 1,000,000 shares of
its restricted stock to its officers and directors pursuant to the MediQuik
Services, Inc. Stock Incentive Plan; such shares were issued on November
1998. The restricted stock is common stock of Old MediQuik which was subject
to an option to repurchase by the issuer which expired, unexercised, on June
17, 1999.
On April 15, 1998, Old MediQuik also granted 300,000 shares of its common
stock to Bearden for consulting services in connection with the organization
of Old MediQuik to be issued within one year of the grant date. On November
18, 1998, Old MediQuik issued 117,961 shares of Common Stock to Bearden
pursuant to the grant. From February to April 1999 the Company issued
166,142 shares of Common Stock pursuant to the grant and issued warrants to
purchase 250,000 shares of Common Stock at an exercise price ranging from
$3.00 to $4.00 per share in consideration of services provided.
From April 20, 1998 through April 22, 1998, Old MediQuik issued to
three accredited investors Series I Non-Negotiable 9% Convertible Promissory
Notes in the aggregate principal amount of $153,000 pursuant to the exemption
provided by Section 4(2) of the Securities Act. Each note provided that
$1,000 of the outstanding principal was convertible, at the holders' option,
into 25 shares of Old MediQuik common stock for each $1.00 of debt converted.
In August 1998, the holders of the notes each exercised their option to
convert $1,000 of outstanding principal, which resulted in the issuance of
25,000 shares of Old MediQuik common stock to each holder, or an aggregate of
75,000 shares. The notes were fully paid by the Company and cancelled.
27
<PAGE>
In connection with a merger effective December 31, 1998, pursuant to
which Old MediQuik was merged with and into Cash Flow, the Company issued an
aggregate of 4,849,000 shares of Common Stock to the stockholders of Old
MediQuik and the stockholders of Cash Flow pursuant to Rule 506 of Regulation
D.
From February 1, 1999 to February 19, 1999, pursuant to Rule 504 of
Regulation D, the Company issued and sold 350,000 shares of Common Stock to
30 accredited investors for the consideration of $2.00 per share.
Under terms of consulting and advisory agreements executed by the
company during the period December 1998 to March 1999, the Company issued
132,000 shares to 7 persons and entities pursuant to Rule 701 of the
Securities Act.
On June 9, 1999, pursuant to Regulation S, the Company issued and sold
75,000 shares of Common Stock to one accredited investor in an offshore
transaction for $2.00 per share.
On July 1, 1999, the Company issued 330,000 shares of Common Stock to
Scardello Marketing Group, LLC in consideration of the transfer of assets by
Scardello Marketing Group, LLC to the Company.
In July 1999, pursuant to Rule 506 of Regulation D, the Company issued
and sold 38,000 shares of Common Stock to 4 accredited investors for the
consideration of $2.70 per share.
Except as otherwise indicated, the Company believes that the
transactions described above were exempt from registration under the
Securities Act pursuant to Section 4(2) thereof as transactions not involving
any public offering because such securities were sold to a limited group of
persons, each of which was believed to have been a sophisticated investor or
had a pre-existing business or personal relationship with the Company or its
management and was purchasing for investment without a view to further
distribution. The Company took steps to ensure that the purchaser was
acquiring securities for purposes of investment and not with a view to
distribution, including execution of agreements concerning such purchaser's
investment intent. Except as otherwise indicated, all sales of the Company's
securities were made by officers of the Company who received no commission or
other remuneration for the solicitation of any person in connection with the
respective sales of securities described above. Restrictive legends were
placed on stock certificates evidencing the shares and/or agreements relating
to the right to purchase such shares.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and By-laws provide, in
effect, that, to the fullest extent and under the circumstances permitted by
Section 145 of the Delaware General Corporation Law (the "DGCL"), the Company
will indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he or she is a director, officer, incorporator, employee, or agent
of the Company or is or was serving at the Company's request as a director,
officer, incorporator, employee, partner, trustee or agent of another
corporation or enterprise. The Certificate of Incorporation also relieves
directors of the Company from monetary damages to the Corporation or its
stockholders for breach of such director's fiduciary duty as a director to
the fullest extent permitted by the DGCL. Under Section 102(b)(7) of the
DGCL, a corporation may relieve its directors from personal liability to such
corporation or its stockholders for monetary damages for any breach of their
fiduciary duty as directors except (i) for a breach of the duty of loyalty,
(ii) for failure to act in good faith, (iii) for intentional misconduct or
knowing violation of law, (iv) for willful or negligent violation of specific
provisions in the DGCL imposing requirements with respect to stock
28
<PAGE>
repurchases, redemption and dividends, or (v) for any transactions from which
the director derived an improper personal benefit.
Section 145 of the DGCL provides generally that a person sued as a
director, officer, employee or agent of a corporation may be indemnified by
the corporation for reasonable expenses, including attorneys' fees, if in the
case of other than derivative suits such person has acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of the corporation (and, in the case of a criminal proceeding, had
no reasonable cause to believe that such person's conduct was unlawful). In
the case of a derivative suit, an officer, employee or agent of the
corporation which is not protected by the Certificate of Incorporation may be
indemnified by the corporation for reasonable expenses, including attorneys'
fees, if such person has acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in the case of a
derivative suit in respect of any claim as to which an officer, employee or
agent has been adjudged to be liable to the corporation unless that person is
determined to be fairly and reasonably entitled to indemnity for proper
expenses by the court in which such action or suit is brought.
Indemnification is mandatory in the case of a director, officer, employee, or
agent who is successful on the merits in defense of a suit against such person.
29
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
MediQuik Services, Inc.
Houston, Texas
We have audited the accompanying balance sheet of MediQuik Services, Inc. (the
"Company") as of December 31, 1998, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for the period from
April 7, 1998 (date of incorporation) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1998, and the
results of its operations and its cash flows for the period from April 7, 1998
(date of incorporation) to December 31, 1998 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
July 16, 1999
-1-
<PAGE>
MEDIQUIK SERVICES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
JUNE 30,
1999 DECEMBER 31,
ASSETS (UNAUDITED) 1998
<S> <C> <C>
CURRENT ASSETS:
Cash $ 58,243 $ 7,578
Accounts receivable - trade 75,786 43,824
Accounts receivable - other 19,454 6,961
Advances 16,000 16,000
Inventory 354,896 79,093
----------- ---------
Total current assets 524,379 153,456
PROPERTY AND EQUIPMENT:
Office equipment 37,669 249
Less accumulated depreciation (836) (29)
----------- ---------
Total property and equipment 36,833 220
INVESTMENT - MP Total Care 250,001
OTHER 54,525 61,651
----------- ---------
TOTAL $ 865,738 $ 215,327
----------- ---------
----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable - trade $ 268,779 $ 153,656
Accrued expenses 351,815 100,908
Notes payable - shareholders 130,000 280,000
----------- ---------
Total current liabilities 750,594 534,564
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock - $.001 par value 25,000,000 shares authorized;
5,572,000 shares issued and outstanding at June 30, 1999 and
4,849,000 shares issued and outstanding at December 31, 1998 5,572 4,849
Additional paid-in capital 1,416,689 274,246
Accumulated deficit (1,307,117) (598,332)
----------- ---------
Total stockholders equity (deficit) 115,144 (319,237)
----------- ---------
TOTAL $ 865,738 $ 215,327
----------- ---------
----------- ---------
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
MEDIQUIK SERVICES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED APRIL 7, 1998 TO APRIL 7, 1998 TO
JUNE 30, JUNE 30, DECEMBER 31,
1999 1998 1998
<S> <C> <C> <C>
REVENUE:
Sales - strips $ 715,773 $ 368,513
Sales - lancets 579 795
Other revenues 4,502 2,918
--------- -------- ---------
Total revenue 720,854 372,226
--------- -------- ---------
COST OF SALES:
Purchase - strips 604,922 316,831
Purchases - lancets 437 617
Other cost of sales 105
--------- -------- ---------
Total cost of sales 605,359 317,553
--------- -------- ---------
GROSS PROFIT 115,495 54,673
OPERATING EXPENSES:
Salaries - officer 77,923 138,000
Consulting fees 457,864 $ 34,000 202,190
Other 306,984 34,794 313,130
--------- -------- ---------
Total operating expenses (842,771) (68,794) (653,320)
--------- -------- ---------
LOSS FROM OPERATIONS (727,276) (68,794) (598,647)
OTHER INCOME (EXPENSE):
Interest income 2,795 315
Other income 15,696
--------- -------- ---------
Total other income (expenses) 18,491 315
--------- -------- ---------
NET LOSS $(708,785) $(68,794) $(598,332)
--------- -------- ---------
--------- -------- ---------
BASIC AND DILUTED LOSS PER SHARE $ (0.15) $ (0.08) $ (0.24)
--------- -------- ---------
--------- -------- ---------
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING 4,641,274 907,404 2,489,977
--------- -------- ---------
--------- -------- ---------
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
MEDIQUIK SERVICES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD FROM
APRIL 7, 1998 (DATE OF INCORPORATION) TO DECEMBER 31, 1998 AND THE SIX MONTHS
ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C>
BALANCE APRIL 7 1998 (Date of Incorporation)
Founders' shares $ 110 $ 110
Acquisition of MediQuik Services LLC assets 2,750 2,750
Issuance of 1,540,000 warrants $ 15,400 15,400
Issuance of restricted stock 1,000 1,000
Conversion of Convertible Debt 75 2,925 3,000
Acquisition of Cash Flow Management Inc. 662 662
Proceeds from issuance of common stock 134 255,921 256,055
Issuance of stock under financial services
agreement 118 118
Net loss $ (598,332) (598,332)
------ ---------- ----------- ---------
BALANCE DECEMBER 31, 1998 4,849 274,246 (598,332) (319,237)
Proceeds from issuance of common stock 425 849,575 850,000
Issuance of stock under consulting agreements 132 131,868 132,000
Issuance of stock under financial services
agreement 166 166
Issuance of 250,000 warrants 161,000 161,000
Net loss (708,785) (708,785)
------ ---------- ----------- ---------
BALANCE JUNE 30, 1999 (UNAUDITED) $5,572 $1,416,689 $(1,307,117) $ 115,144
------ ---------- ----------- ---------
------ ---------- ----------- ---------
</TABLE>
See accompanying notes to financial statements
-4-
<PAGE>
MEDIQUIK SERVICES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS PERIOD FROM PERIOD FROM
ENDED APRIL 7, 1998 TO APRIL 7, 1998 TO
JUNE 30, JUNE 30, DECEMBER 31,
1999 1998 1998
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(708,785) $ (68,794) $(598,332)
Adjustment for noncash transactions:
Stocks and warrants issued for service 293,166 4,400 8,518
Depreciation and amortization 7,641 2,278 9,141
Net changes in assets and liabilities:
Accounts receivable (44,453) (50,785)
Advances (86,906) (16,000)
Inventory (275,803) (79,093)
Accounts payable 115,123 153,656
Accrued expenses 250,907 100,908
Other asset 292 (70,763)
--------- --------- ---------
Net cash used in operating activities (361,912) (149,022) (542,750)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (37,422) (249)
Investment in MP Total Care (250,001)
--------- --------- ---------
Net cash used in investing activities (287,423) (249)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt issuance 150,000 280,000
Repayment of indebtedness (150,000)
Proceeds from sale of stock 850,000 2,860 270,577
--------- --------- ---------
Net cash provided by financing activities 700,000 152,860 550,577
--------- --------- ---------
NET INCREASE IN CASH 50,665 3,838 7,578
CASH, Beginning of year 7,578
--------- --------- ---------
CASH, End of year $ 58,243 $ 3,838 $ 7,578
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL CASH FLOW DISCLOSURES-
Interest paid $ 16,362
NONCASH TRANSACTIONS:
Stock issued for services 132,166 $ 118
Restricted stock award 1,000
Warrants issued for services 161,000 $ 4,400 4,400
Debt converted to stock 3,000
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
MEDIQUIK SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM APRIL 7, 1998 (DATE OF INCORPORATION)
TO DECEMBER 31, 1998 AND THE SIX MONTHS ENDED JUNE 30, 1999 AND
THE PERIOD FROM APRIL 7, 1998 TO JUNE 30,1998 (UNAUDITED)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS ACTIVITY - MediQuik Services, Inc. ("MediQuik")
was organized in Delaware on April 7, 1998. On April 7, 1998, MediQuik
issued an aggregate of 2,750,000 shares of its common stock to designees
of MediQuik Services, LLC in consideration of the transfer of certain
assets of MediQuik from MediQuik Services, LLC. Effective December 31,
1998 MediQuik was merged with and into Cash Flow Marketing, Inc., a
Delaware Corporation ("Cash Flow"), which, as the surviving corporation,
subsequently changed its name to MediQuik Services, Inc. (the "Company").
This transaction has been treated as a capital transaction in substance,
rather than a business combination; thus the accounting is similar to a
reverse acquisition but no goodwill and/or intangible has been recorded.
As a result MediQuik is considered the acquiring entity for financial
statements purposes and the financial statements for the period prior to
January 1, 1999 are those of MediQuik Services, Inc, not Cash Flow the
legal acquirer.
In connection with the merger, the Company issued an aggregate of
4,849,000 shares of common stock to the stockholders of MediQuik and Cash
Flow. At the time of the merger, Cash Flow was a "Shell" corporation with
substantially no assets, business or operations.
USE OF ESTIMATES - The preparation of the accompanying financial
statements in conformity with generally accepted accounting principles
requires management to make certain estimates and assumptions that
directly affect the results of reported amounts of assets, liabilities,
revenues and expenses. Actual results may differ from these estimates.
REVENUE AND COST RECOGNITION - The Company recognizes revenues from sales
contracts when products are shipped.
INVENTORY - Inventory consists of chronic disease management products and
is reflected in the financial statements at the lower of cost (first in,
first out) or market method.
CASH EQUIVALENTS - Cash equivalents for purposes of these financial
statements are considered to be all highly liquid debt instruments with an
original maturity of three months or less.
BAD DEBTS - Management has determined that no allowance is necessary at
December 31, 1998.
PROPERTY AND EQUIPMENT - Property and equipment is stated at cost. The
cost of betterments are added to the property accounts. Maintenance and
repair costs are charged to expenses as incurred. Upon disposal of an
asset, the difference between the sales proceeds and the net book value is
charged or credited to income. Depreciation of property is provided using
primarily the straight-line method over the following estimated useful
lives:
<TABLE>
<CAPTION>
CLASSIFICATION YEARS
<S> <C>
Office equipment 5
Leasehold improvements 15
</TABLE>
-6-
<PAGE>
Depreciation expense was $807 and $29 for the six months ended June 30,
1999 and the period from April 7, 1998 to December 31, 1998, respectively.
IDENTIFIED INTANGIBLE - As a result of the purchase of assets from
MediQuik Services, LLC the Company has recorded an identified intangible
in other assets related to certain contracts acquired. This intangible is
being amortized over the life of contracts. As of December 31, 1998 the
accumulated amortization is $9,112.
INTERIM FINANCIAL INFORMATION - The financial statements as of and for the
six months ended June 30, 1999 and 1998 included herein have been prepared
by the Company, without audit pursuant to the rules and regulations of the
Securities and Exchange Commission, and reflect all adjustments which are,
in the opinion of management, necessary to present a fair statement of the
results for the interim periods on a basis consistent with the annual
audited financial statements. All such adjustments are of a normal
recurring nature. The results of operations for the interim periods are
not necessarily indicative of the results to be expected for an entire
year. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading.
SIGNIFICANT CUSTOMER - The Company had sales to a significant customer of
approximately 86% in 1998.
COMPREHENSIVE INCOME - In June 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 130,
"Reporting of Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
standards for reporting and displaying comprehensive income and its
components. SFAS 130 is effective for periods beginning after December 31,
1997. The purpose of reporting comprehensive income is to report a measure
of all changes in equity of an enterprise that results from recognized
transactions and other economic events of the period other than
transactions with owners in their capacity of owners. As of December 31,
1998, there are no adjustments ("Other Comprehensive Income") to net loss
in deriving comprehensive income.
SEGMENT DISCLOSURES - In June 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information,"
("SFAS 131"). SFAS 131 establishes standards for the way that public
business enterprises report information about operating segments. SFAS 131
is effective for periods beginning after December 31, 1997. The Company
currently operates under one segment.
DERIVATIVES - In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"), which establishes accounting and reporting standards for derivative
instruments and hedging activities. In June 1999, FASB issued SFAS No.
137, which delays the effective date for implementation of SFAS 133 to
fiscal years beginning after June 15, 2000. The Company held no
derivatives in 1999 or 1998 and believes that SFAS No. 133, when adopted
effective January 1, 2001, will not materially impact its financial
position or results of operations.
EQUITY INVESTMENT - The Company records its equity investments at cost
where management does not have significant ability to exercise significant
control over the investee's operating and financial policies.
FAIR VALUES OF FINANCIAL INSTRUMENTS - At December 31, 1998, the carrying
amounts of the Company's cash, receivables and payables approximated their
fair values.
-7-
<PAGE>
2. EARNINGS PER SHARE
The Company has adopted SFAS 128, "Earnings per Share," which establishes
standards for computing and presenting earnings per share ("EPS"). No
dilutive securities of the Company were outstanding at December 31, 1998;
however, warrants to purchase 250,000 shares of Common Stock at an
exercise price ranging from $3.00 - $4.00 per share were issued in
February 1999. Since the Company incurred a loss for all periods
presented, any dilutive securities would have been excluded as they would
be anti-dilutive to basic EPS.
3. INCOME TAXES
The Company has a loss carryforward of approximately $503,000 as of
December 31, 1998 that may be applied against future taxable income. This
loss gives rise to a deferred tax asset at December 31, 1998 of
approximately $171,000. Management has established a valuation allowance
equal to the amount of the deferred tax asset as it is more likely than
not that the Company will not be able to realize this asset. The loss
carryforward begins to expire on December 31, 2018.
4. NOTES PAYABLE - SHAREHOLDERS
Notes payable - shareholders consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
<S> <C> <C>
Three notes payable, $50,000 each to shareholders with interest
at 9%, payable February 20, 1999 $150,000
Note payable to shareholders with interest at 15%, payable in
two installments of $15,000 each, due on June 30, 1999 and
December 31, 1999 $ 30,000 30,000
Ten notes payable, $10,000 each to certain shareholders with
interest at 15%, payable in installments of $50,000 each, due
on June 30, 1999 and December 31, 1999 100,000 100,000
-------- --------
$130,000 $280,000
-------- --------
-------- --------
</TABLE>
Of the amounts due in June, $15,000 was paid in July 1999. The remaining
$50,000 payment due in June 1999 has been extended until August 31, 1999.
The three 9% notes payable had an original aggregate principal balance of
$153,000. Each of the notes provided for $1,000 of the outstanding
principal to be convertible into 25 shares of the Company's common stock
for $1.00 of debt converted. In August 1998 the three note holders each
converted $1,000 of principal for 25,000 shares of common stock.
5. LEASES
The company leases office space on a month to month basis for $2,781 a
month. The lease requires a 60-day notice of termination. Rent expense
amounted to $29,096 and $29,369 for the six months ended June 30, 1999 and
the period ended December 31, 1998, respectively.
-8-
<PAGE>
6. EQUITY TRANSACTIONS
PRIVATE STOCK OFFERINGS -
During August to October 1998, the Company issued 134,047 of additional
shares of common stock for $255,921.
In February 1999, the Company issued 350,000 of additional shares of
common stock for $700,000.
In June 1999, the Company issued 75,000 of additional shares of common
stock for $150,000.
WARRANTS - In April 1998, the Company issued warrants for the purchase of
1,540,000 shares of MediQuik common stock at an exercise price ranging
from $.01 to $5.00 per share in consideration of $11,000 and consulting
services; the Company has recorded consulting expense of $4,400 for the
fair value of such warrants as of the grant date. Following consummation
of the Cash Flow merger, the consulting agreement was amended and all
unexercised outstanding warrants were canceled.
In February 1999, the Company issued new warrants to purchase 250,000
shares of Common Stock at an exercise price ranging from $3.00 to $4.00
per share in consideration for services provided. All warrants expire by
April 30, 2000; the Company has recorded an expense of $161,000 for the
fair value of the grant date of the warrants.
OTHER EQUITY TRANSACTIONS -
On April 7, 1998 110,000 shares were issued for $110.
On April 15, 1998 the Company granted 1,000,000 shares of common stock,
pursuant to the Company Stock Incentive Plan, to certain key executives at
a value of $.001 determined by the Board of Directors for issuance during
1998. These shares were issued during 1998.
On April 15, 1998 the Company granted 300,000 shares of common stock to a
consultant for financial advisory and corporate consulting services at a
value of $.001 determined by the Board of Directors for issuance by April
14, 1999. During 1998 117,961 shares were issued and prior to April 14,
1999 166,142 shares were issued.
7. RELATED PARTY TRANSACTIONS
As of December 31, 1998, the Company had certain outstanding receivable
and payable balances with related parties for $22,865 and $19,644,
respectively. The receivable amounts derive from sales in the ordinary
course of business and the payable amounts relate to certain consulting
services.
In 1998, the Company paid for business plan development and investment
banking services furnished by an affiliate and certain consulting and
legal services performed by other related parties. During the period ended
December 31, 1998, the Company incurred expenses of $173,500 for these
services, which are included in the statement of operations.
8. STOCK INCENTIVE PLAN
The Stock Incentive Plan is to provide stock incentives to certain key
employees and directors of the Company. An aggregate of 1,500,000 shares
of common stock may be issued pursuant to the Stock Incentive Plan. Also
see Note 6.
-9-
<PAGE>
9. COMMITMENTS
The Company has entered into several provider agreements with various
corporations for terms ranging from one to five years. The Company
supplies diagnostic products to the patients under these provider
agreements. The Company has also entered into two consulting agreements
containing monthly fees.
LEASE - On May 7, 1999, the Company entered into a new five-year lease
agreement for office space. The minimum lease payments under such
agreement are as follows:
<TABLE>
<S> <C>
1999 $ 31,515
2000 63,030
2001 63,030
2002 63,030
2003 63,030
Thereafter 31,515
--------
Total $315,150
--------
--------
</TABLE>
10 SUBSEQUENT EVENTS
STOCK OFFERINGS AND FINANCING - In July 1999, the Company issued 330,000
shares of common stock to Scardello Marketing Group, LLC in consideration
of the transfer of certain assets by Scardello Marketing Group, LLC to the
Company.
In July 1999, the Company issued and sold 38,000 shares of common stock
for the consideration of $2.70 per share.
In July 1999, the Company obtained a $100,000 line of credit from a bank.
Repayment of such line of credit has been guaranteed by an officer of the
Company.
******
-10-
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
2.1 Certificate of Incorporation of MediQuik
2.2 By-laws of MediQuik
3.1 Specimen of Common Stock Certificate
3.2 Specimen of Common Stock Purchase Warrant
6.1 MediQuik Stock Incentive Plan
6.2* Ancillary Services Participating Provider Agreement,
dated February 6, 1998, for PPO/EPO Networks between
MediQuik and National Healthcare Alliance, Inc.
6.3* Participating Facility Agreement, dated February 1,
1998, between MediQuik and Multiplan, Inc.
6.4* Health Care Service Ancillary Agreement, dated April 7,
1998, between MediQuik and USA Managed Care
Organization, Inc.
6.5 Letter Agreement, dated May 25, 1999, between MediQuik
and Cooperative Health Services of Colorado
6.6* 1998 Mail Order and Mail Order Testing Compliance
Agreement, dated October 2, 1998, between MediQuik and
Bayer Corporation
6.7* 1999 Nursing Home/Long Term Care/Home Health Care
Distributor Agreement, dated February 9, 1999, between
MediQuik and Bayer Corporation
</TABLE>
* Certain information in this exhibit is subject to a request for
confidential treatment. In accordance with Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, such information has been omitted and
filed separately with the Securities and Exchange Commission.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
MEDIQUIK SERVICES, INC.
Date: August 20, 1999 By: /s/ GRANT M. GABLES
------------------------- -------------------------------------
Grant M. Gables
President and Chief Executive Officer
<PAGE>
================================================================================
CERTIFICATE OF INCORPORATION
OF
CASH FLOW MARKETING, INC.
================================================================================
ARTICLE I
NAME
The name of the Corporation is Cash Flow Marketing, Inc.
ARTICLE II
DURATION
The Corporation is to have perpetual existence.
ARTICLE III
REGISTERED OFFICE AND AGENT
The address of its registered office in the State of Delaware is the
Corporation Trust Center at 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware. The name of its registered agent at
such address is The Corporation Trust Company.
ARTICLE IV
PURPOSES
The purpose for which the Corporation is organized is to transact all
lawful business for which corporations may be incorporated pursuant to the laws
of the State of Delaware. The Corporation shall have all the powers of a
corporation organized under the General Corporation Law of the State of
Delaware.
ARTICLE V
CAPITAL STOCK
The aggregate number of shares of all classes of capital stock which the
Corporation has authority to issue is 26,000,000 of which 25,000,000 are to be
shares of common stock, $.001 par value per share, and of which 1,000,000 are to
be shares of serial preferred stock, $.001 par value per share. The shares may
be issued by the Corporation from time to time as approved by the board of
directors of the Corporation without the approval of the stockholders except as
otherwise provided in this Article V or the rules of a national securities
exchange if applicable. The consideration for the issuance of the shares shall
be paid to or received by the Corporation in full before their issuance and
shall not be less than the par value per share. The consideration for the
issuance of the shares shall be cash, services rendered, personal property
(tangible or intangible), real property, leases of real property or any
combination of the foregoing. In the absence of actual fraud in the
transaction, the judgment of the board of directors as to the value of such
consideration shall be conclusive. Upon payment of such consideration such
shares shall be deemed to be fully paid and nonassessable. In the case of a
stock dividend, the part of the surplus of the Corporation which is transferred
to stated capital upon the issuance of shares as a stock dividend shall be
deemed to be the consideration for their issuance.
A description of the different classes and series (if any) of the
Corporation's capital stock, and a statement of the relative powers,
designations, preferences and rights of the shares of each class and series (if
any) of capital stock, and the qualifications, limitations or restrictions
thereof, are as follows:
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<PAGE>
A. COMMON STOCK. Except as provided in this Certificate, the holders of
the common stock shall exclusively posses all voting power. Subject to the
provisions of this Certificate, each holder of shares of common stock shall be
entitled to one vote for each share held by such holders.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class or series of stock having
preference over the common stock as to the payment of dividends, the full amount
of dividends and sinking fund or retirement fund or other retirement payments,
if any, to which such holders are respectively entitled in preference to the
common stock, then dividends may be paid on the common stock, and on any class
or series of stock entitled to participate therewith as to dividends, out of any
assets legally available for the payment of dividends, but only when and as
declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up of the
Corporation, after there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class having
preference over the common stock in any such event, the full preferential
amounts to which they are respectively entitled, the holders of the common stock
and of any class or series of stock entitled to participate therewith, in whole
or in part, as to distribution of assets shall be entitled, after payment or
provision for payment of all debts and liabilities of the Corporation, to
receive the remaining assets of the Corporation available for distribution, in
cash or in kind.
Each share of common stock shall have the same relative powers, preferences
and rights as, and shall be identical in all respects with, all the other shares
of common stock of the Corporation.
B. SERIAL PREFERRED STOCK. Except as provided in this Certificate, the
board of directors of the Corporation is authorized, by resolution or
resolutions from time to time adopted, to provide for the issuance of serial
preferred stock in series and to fix and state the powers, designations,
preferences and relative, participating, optional or other special rights of the
shares of each such series, and the qualifications, limitation or restrictions
thereof, including, but not limited to determination of any of the following:
(1) the distinctive serial designation and the number of shares
constituting such series;
(2) the rights in respect of dividends, if any, to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date or dates, the payment or date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends;
(3) the voting powers, full or limited, if any, of the shares of such
series;
(4) whether the shares of such series shall be redeemable and, if so,
the price or prices at which, and the terms and conditions upon which such
shares may be redeemed;
(5) the amount or amounts payable upon the shares of such series in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Corporation;
(6) whether the shares of such series shall be entitled to the
benefits of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and, if so entitled, the amount of such fund and the
manner of its application, including the price or prices at which such shares
may be redeemed or purchased through the application of such funds;
(7) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or any other series of
the same or any other class or classes of stock of the Corporation and, if so
convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange;
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<PAGE>
(8) the subscription or purchase price and form of consideration for
which the shares of such series shall be issued; and
(9) whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as shares of the same or any other
series of serial preferred stock.
Each share of each series of serial preferred stock shall have the same
relative powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of the Corporation of the same series,
except the times from which dividends on shares which may be issued from time to
time of any such series may begin to accrue.
ARTICLE VI
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or series of
stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right to purchase
stock may be issued pursuant to resolution of the board of directors of the
Corporation to such persons, firms, corporations or associations, whether or not
holders thereof, and upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
ARTICLE VII
REPURCHASE OF SHARES
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the stockholders,
purchase or otherwise acquire shares of any class, bonds, debentures, notes,
scrip, warrants, obligations, evidences or indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the Corporation outstanding at the time of the purchase or acquisition
in question or as are imposed by law.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS; CUMULATIVE VOTING
A. No action that is required or permitted to be taken by the
stockholders of the Corporation at any annual or special meeting of stockholders
may be effected by written consent of stockholders in lieu of a meeting of
stockholders, unless the action to be effected by written consent of
stockholders and the taking of such action by such written consent have
expressly been approved in advance by the board of directors of the Corporation.
B. Special meeting of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the board of directors of the
Corporation, or by a committee of the board of directors which as been duly
designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the bylaws of the
Corporation, include the power and authority to call such meetings but such
special meetings may not be called by another person or persons.
C. There shall be no cumulative voting by stockholders of any class or
series in the election of directors of the Corporation.
D. Meetings of stockholders may be held at such place as the bylaws may
provide.
3
<PAGE>
ARTICLE IX
NOTICE FOR NOMINATIONS AND PROPOSALS
A. Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of stockholders may be
made by the board of directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of directors. In order
for a stockholder of the Corporation to make any such nominations and/or
proposals at an annual meeting or such proposals at a special meeting, he or she
shall give notice thereof in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the Corporation of less than
thirty days nor more than sixty days prior to any such meeting; provided,
however, that if less than forty days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed, as prescribed,
to the Secretary of the Corporation not later than the close of the tenth day
following the day on which notice of the meeting was mailed to stockholders.
Each such notice given by a stockholder with respect to nominations for the
election of directors shall set forth (1) the name, age, business address and,
if known, residence address of each nominee proposed in such notice, (2) the
principal occupation or employment of each such nominee, and (3) the number of
shares of stock of the Corporation which are beneficially owned by each such
nominee. In addition, the stockholder making such nomination shall promptly
provide any other information reasonably requested by the Corporation.
B. Each such notice given by a stockholder to the Secretary with respect
to business proposals to bring before a meeting shall set forth in writing as to
each matter: (1) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting;
(2) the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business; (3) the class and number of shares of the
Corporation which are beneficially owned by the stockholder; and (4) any
material interest of the stockholder in such business. Notwithstanding anything
in this Certificate to the contrary, no business shall be conducted at the
meeting except in accordance with the procedures set forth in this Article.
C. The Chairman of the annual or special meeting of stockholders may, if
the facts warrant, determine and declare to such meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if he
should so determine, he shall so declare to the meeting and the defective
nomination or proposal shall be disregarded and laid over for action at the next
succeeding adjourned, special or annual meeting of the stockholders taking place
thirty days or more thereafter. This provision shall not require the holding of
any adjourned or special meeting of stockholders for the purpose of considering
such defective nomination or proposal.
ARTICLE X
DIRECTORS
A. NUMBER; VACANCIES. The number of directors of the Corporation shall
be such number, not less than one nor more than 15 (exclusive of directors, if
any, to be elected by holders of preferred stock of the Corporation), as shall
be provided from time to time in a resolution adopted by the board of directors,
provided that no decrease in the number of directors shall have the effect of
shortening the term of any incumbent director, and provided further that no
action shall be taken to decrease or increase the number of directors from time
to time unless at least two-thirds of the directors then in office shall concur
in said action. Exclusive of directors, if any, elected by holders of preferred
stock, vacancies in the board of directors of the Corporation, however caused,
and newly created directorships shall be filled by a vote of two-thirds of the
directors then in office, whether or not a quorum, and any director so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of the class to which the director has been chosen expires and
when the director's successor is elected and qualified. The board of directors
shall be classified in accordance with the provisions of Section B of this
Article X.
B. CLASSIFIED BOARD. The board of directors of the Corporation (other
than directors which may be elected by the holders of preferred stock), shall be
divided into three classes of directors which shall be designated Class I, Class
II and Class III. The members of each class shall be elected for a term of
three years and until their
4
<PAGE>
successors are elected and qualified. Such classes shall be as nearly equal
in number as the then total number of directors constituting the entire board
of directors shall permit, exclusive of directors, if any, elected by holders
of preferred stock, with the terms of office of all members of one class
expiring each year. Should the number of directors not be equally divisible
by three, the excess director or directors shall be assigned to Classes I or
II as follows: (1) if there shall be an excess of one directorship over the
number equally divisible by three, such extra directorship shall be
classified in Class I; and (2) if there be an excess of two directorships
over a number equally divisible by three, one shall be classified in Class I
and the other in Class II. At the organizational meeting of the Corporation,
directors of Class I shall be elected to hold office for a term expiring at
the first annual meeting of stockholders, directors of Class II shall be
elected to hold office for a term expiring at the second succeeding annual
meeting of stockholders and directors of Class III shall be elected to hold
office for a term expiring at the third succeeding annual meeting thereafter.
Thereafter, at each succeeding annual meeting, directors of each class shall
be elected for three year terms. Notwithstanding the foregoing, the director
whose term shall expire at any annual meeting shall continue to serve until
such time as his successor shall have been duly elected and shall have
qualified unless his position on the board of directors shall have been
abolished by action taken to reduce the size of the board of directors prior
to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the position(s) to
be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased, other
than directors which may be elected by the holders of preferred stock, the
additional directorships shall be allocated among classes as appropriate so that
the number of directors in each class is as specified in the immediately
preceding paragraph.
Whenever the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one or
more directors of the Corporation, the board of directors shall include said
directors so elected and not be in addition to the number of directors fixed as
provided in this Article X. Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of the Corporation elect one or more directors of the
Corporation, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of stockholders.
ARTICLE XI
REMOVAL OF DIRECTORS
Notwithstanding any other provision of this Certificate or the bylaws of
the Corporation, any director or all the directors of a single class (but not
the entire board of directors) of the Corporation may be removed, at any time,
but only for cause and only by the affirmative vote of the holders of at least
75% of the voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (considered
for this purpose as one class) cast at a meeting of the stockholders called for
that purpose. Notwithstanding the foregoing, whenever the holders of any one or
more series of preferred stock of the Corporation shall have the right, voting
separately as a class, to elect one or more directors of the Corporation, the
preceding provisions of this Article XI shall not apply with respect to the
director or directors elected by such holders of preferred stock.
ARTICLE XII
ACQUISITION OF CAPITAL STOCK
A. For the purpose of this Article:
(1) The term "Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute.
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<PAGE>
(2) The term "acting in concert" shall mean (i) knowing participation
in a joint activity or conscious parallel action towards a common goal
whether or not pursuant to an express agreement, and (ii) a combination or
pooling of voting or other interest in the Corporation's outstanding shares
of capitol stock for a common purpose, pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether
written or otherwise.
(3) The term "acquire," "acquisition" or "acquiring" with respect to
the acquisition of any security of the Corporation shall refer to the
acquisition of such security by any means whatsoever, including without
limitation, an acquisition of such security by gift, by operation of law,
by will or by intestacy, whether voluntarily or involuntarily.
(4) The term "Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute.
(5) The term "Common Stock" means all Common Stock of the Corporation
and any other securities issued by the Corporation (other than the
Warrants) which are treated as stock for purposes of Section 382 of the
Code.
(6) The term "Fair Market Value" of the Common Stock shall mean the
average of the daily closing prices of the Common Stock for 15 consecutive
trading days commencing 20 trading days before the date of such computation
The closing price is the last reported sale price on the principal
securities exchange on which the Common Stock is listed or, if the Common
Stock is not listed on any national securities exchange, the NASDAQ
National Marked System, or, if the Common Stock is not designated for
trading on the NASDAQ National Market System, the average of the closing
bid and asked prices as reported on NASDAQ or, if not so reported, as
furnished by the National Quotation Bureau Incorporated. In the absence of
such a quotation, the Corporation shall determine the current market rice
on a reasonable and appropriate basis of the average of the daily closing
prices for 15 consecutive trading days commencing 20 trading days before
the date of such computation.
(7) The term "own," "owing," "ownership" or "owning" refer to the
ownership of securities within the meaning of Section 382 of the Code after
taking into account the attribution rules of Section 382(l)(3) of the Code
and the regulations promulgated hereunder (except insofar as such
attribution would be inconsistent with provisions of this Article XII
relating to Warrants).
(8) The term "Person" shall mean any individual, firm, corporation,
partnership, joint venture or other entity and shall include any group
composed of such person and any other person with whom such person or any
Affiliate or Associate (as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Act) of such person has any
agreement, arrangement or understanding, directly or indirectly, for the
purposes of acquiring, holding, voting or disposing of Common Stock or
Warrants, and any other person who is a member of such group.
(9) The term "Transfer Agent" shall mean the transfer agent with
respect to the Common Stock nominated and appointed by the Board of Directors
from time to time.
(10) The term "Warrant" shall mean any securities issued or assumed by
the Corporation, or any securities issuable by the Corporation in respect to
issued securities which are convertible into, or which include the right to
acquire, shares of Common Stock, whether or not the right to make such
conversion or acquisition is subject to any contingencies, including, without
limitation, warrants, options, calls, contracts to acquire securities,
convertible debt instruments or any other interests treated as an option
pursuant to Section 382(l)(3) of the Code.
(11) The term "Warrant Agent" shall mean any warrant agent for any
Warrants nominated and appointed by the Board of Directors from time to time.
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<PAGE>
B. (1) If, at any time during the ten years from the effective date of
this Certificate, any Person shall acquire the beneficial ownership (as
determined pursuant to Rules 13d-3 and 13d-5 under the Act) of more than 20% of
any class of Common Stock, then the record holders of Common stock beneficially
owned by such acquiring Person shall have only the voting rights set forth in
this paragraph B on any matter requiring their vote or consent. With respect to
each vote in excess of 20% of the voting power of the outstanding shares of
Common Stock which such record holders would otherwise be entitled to cast
without giving effect to this paragraph B, the record holders in the aggregate
shall be entitled to cast only one-hundredth of a vote. A Person who is a
record owner of shares of Common Stock that are beneficially owned
simultaneously by more than one person shall have, with respect to such shares,
the right to cast the least number of votes that such person would be entitled
to cast under this paragraph B by virtue of such shares being so beneficially
owned by any of such acquiring Persons. The effect of the reduction in voting
power required by this paragraph B shall be given effect in determination the
presence of a quorum for purposes of convening a meeting of the stockholders of
the Corporation.
(2) The limitation on voting rights prescribed by this paragraph B
shall terminate and be of no force and effect as of the earliest to occur of:
(i) the date that any person becomes the beneficial owner of
shares of stock representing at least 75% of the total number of votes entitled
to be cast in respect of all outstanding shares of stock, before giving effect
to the reduction in votes prescribed by this paragraph B; or
(ii) the date (the "Reference Date") one day prior to the date
on which, as a result of such limitation of voting rights, the Common Stock will
be delisted from (including by ceasing to be temporarily or provisionally
authorized for listing with) the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX"), or be no longer authorized for inclusion
(including by ceasing to be provisionally or temporarily authorized for
inclusion) on the National Association of Securities Dealers, Inc. Automated
Quotation System/National Market System ("NASDAQ/NMS"); provided, however, that
(a) such termination shall not occur until the earlier of (x) the 90th day after
the Reference Date or (y) the first day on or after a Reference Date that there
is not pending a proceeding under the rules of the NYSE, the AMEX or the
NASDAQ/NMS or any other administrative or judicial proceeding challenging such
delisting or removal of authorization of the Common Stock, an application for
listing of the Common stock with the NYSE or the AMEX or for authorization for
the Common Stock to be including on the NASDAQ/NMS, or an appeal with respect to
any such application, and (b) such termination shall not occur by virtue of such
delisting or lack of authorization if on or prior to the earlier of the 90th day
after the Reference Date or the day on which no proceeding, application or
appeal of the type described in (y) above is pending, the Common Stock is
approved for listing or continued listing on the NYSE or the AMEX or authorized
for inclusion or continued inclusion on the NASDAQ/NMS (including any such
approval or authorization which is temporary or provisional). Nothing contained
herein shall be construed so as to prevent the Common Stock from continuing to
be listed with the NYSE or AMEX or continuing to be authorized for inclusion on
the NASDAQ/NMS in the event that the NYSE, AMEX or NASDAQ/NMS, as the case may
be, adopts a rule or is governed by an order, decree, ruling or regulation of
the Securities and Exchange Commission which provides in whole or in part that
companies having common stock with differential voting rights listed on the NYSE
or the Amex or authorized for inclusion on the NASDAQ/NMS may continue to be so
listed or included.
C. The restrictions contained in this Article XII shall not apply to (1)
any underwriter or member of an underwriting or selling group involving a public
sale or resale of securities of the Corporation or a subsidiary thereof;
provided, however, that upon completion of the sale or resale of such
securities, no such underwriter or member of such selling group is a beneficial
owner of more than 4.9% of any class of equity security of the Corporation, (2)
any revocable proxy granted pursuant to a proxy solicitation in compliance with
section 14 of the Act by a stockholder of the Corporation or (3) any employee
benefit plans of the Corporation. In addition, the Continuing Directors of the
Corporation, the officers and employees of the Corporation and its subsidiaries,
the directors of subsidiaries of the Corporation, the employee benefit plans of
the Corporation and its subsidiaries, entities organized or established by the
Corporation or any subsidiary thereof pursuant to the terms of such plans and
trustees and fiduciaries with respect to such plans acting in such capacity
shall not be deemed to be a group with respect to their beneficial ownership of
voting stock of the Corporation solely by virtue of their being directors,
officers or employees of the Corporation or a subsidiary thereof or by virtue of
the Continuing Directors of the
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Corporation, the officers and employees of the Corporation and its
subsidiaries and the directors of subsidiaries of the Corporation being
fiduciaries or beneficiaries of an employee benefit plan of the Corporation
or a subsidiary of the Corporation. Notwithstanding the foregoing, no
director, officer or employee of the Corporation or any of its subsidiaries
or group of any of them shall be exempt from the provisions of this Article
XII should any such person or group become a beneficial owner of more than
20% of any class of equity security of the Corporation.
D. A majority of the Continuing Directors, as defined in Article XIII,
shall have the power to construe and apply the provisions of paragraphs B, C and
D of this Article XII and to make all determinations necessary or desirable to
implement such provisions, including but not limited to matters with respect to
(1) the number of shares beneficially owned by any person, (2) whether a person
has an agreement, arrangement or understanding with another as to the matters
referred to in the definition of beneficial ownership, (3) the application of
any other definition or operative provision of this Article XII to the given
facts or (4) any other matter relating to the applicability or effect of
paragraphs B, C and D of this Article XII. Any constructions, applications, or
determinations made by the Continuing Directors pursuant to paragraphs B, C and
D of this Article XII in good faith and on the basis of such information and
assistance as was then reasonably available for such purpose shall be conclusive
and binding upon the Corporation and its stockholders.
E. All certificates evidencing ownership of Common Stock or ownership of
Warrants of the Corporation shall bear a conspicuous legend in compliance with
the General Corporation Law of Delaware describing the restrictions on transfers
set forth in this Article XII.
F. If any provision of this Article XII or any application of any such
provision is determined to be invalid by any federal or state court having
jurisdiction over the issues, the validity of the remaining provisions shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court.
ARTICLE XIII
APPROVAL OF CERTAIN BUSINESS COMBINATIONS
The stockholder vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this section.
A. (1) Except as otherwise expressly provided in this Article XIII, and
in addition to any other vote required by law, the affirmative vote required by
law, the affirmative vote of the holders of (i) at least 75% of the voting power
of the outstanding shares entitled to vote thereon (and, if any class or series
of shares is entitled to vote thereon separately the affirmative vote of the
holders of at least 75% of the outstanding shares of each such class or series),
and (ii) at least a majority of the outstanding shares entitled to vote thereon,
not including shares deemed beneficially owned by a Related Person (as
hereinafter defined), shall be required in order to authorize any of the
following:
(a) any merger or consolidation of the Corporation or a
subsidiary of the Corporation with or into a Related person (as
hereinafter defined);
(b) any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage or pledge, of all or any
Substantial Part (as hereinafter defined) of the assets of the
Corporation (including without limitation any voting securities of a
subsidiary) or of a subsidiary, to a Related Person;
(c) any merger or consolidation of a Related Person with or
into the Corporation or a subsidiary of the Corporation;
(d) any sale, lease, exchange, transfer or other disposition
of all or any Substantial Part of the assets of a Related Person to
the Corporation or a subsidiary of the Corporation;
8
<PAGE>
(e) the issuance of any securities of the Corporation or a
subsidiary of the Corporation to a Related Person other than on a pro
rata basis to all holders of capital stock of the Corporation of the
same class or classes held by the Related person, pursuant to a stock
split, stock dividend or distribution or warrants or rights, and other
than in connection with the exercise or conversion of securities
exercisable for or convertible into securities of the Corporation or
any of its subsidiaries which securities have been distributed pro
rata to all holders of capital stock of the Corporation;
(f) the acquisition by the Corporation or a subsidiary of the
Corporation of any securities of a Related Person;
(g) any reclassification of the common stock of the
Corporation, or any recapitalization involving the common stock of the
Corporation or any similar transaction (whether or not with or into or
otherwise involving a Related Person) that has the effect directly or
indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity or convertible
securities of the Corporation or any subsidiary that are directly or
indirectly owned by any Related Person; and
(h) any agreement, contract or other arrangement providing for
any of the transactions described in this Article XIII.
(2) Such affirmative vote shall be required notwithstanding any other
provision of this Certificate, any provision of law, or any agreement with any
regulatory agency or national securities exchange which might otherwise permit a
lesser vote or no vote; provided, however, that in no instance shall the
provisions of this Article XIII require the vote of greater than 85% of the
voting power of the outstanding shares entitled to vote thereon for the approval
of a Business Combination.
(3) The term "Business Combination" as used in this Article XIII
shall mean any transaction which is referred to in any one or more of
subparagraphs A(1)(a) through (h) above.
B. The provisions of paragraph A shall not be applicable to any
particular Business Combination, and such Business Combination shall require
only such affirmative vote as is required by any other provision of this
Certificate, any provision of law, or any agreement with any regulatory agency
or national securities exchange, if the Business Combination shall have been
approved in advance by a two-thirds vote of the Continuing Directors (as
hereinafter defined; provided, however, that such approval shall only be
effective if obtained at a meeting at which a continuing Director Quorum (as
hereinafter defined) is present.
C. For the purposes of this Article XIII the following definitions apply:
(1) The term "Related Person" shall mean and include (i) any
individual, corporation, partnership or other person or entity which together
with its "affiliates" or "associates" (as those terms are defined in the Act)
"beneficially owns" (as that there is defined in the Act) in the aggregate 10%
or more of the outstanding shares of the common stock of the Corporation; and
(ii) any "affiliate" or "associate" (as those terms are defined in the Act) of
any such individual, Corporation, partnership or other person or entity;
provided, however, that the term "Related Person" shall not include the
Corporation, any subsidiary of the Corporation, any employee benefit plan,
employee stock plan of the Corporation or of any subsidiary of the Corporation,
or any trust established by the Corporation in connection with the foregoing, or
any person or entity organized, appointed, established or holding shares of
capital stock of the Corporation for or pursuant to the terms of any such plan,
nor shall such term encompass shares of capital stock of the Corporation held by
any of the foregoing (whether or not held in a fiduciary capacity or otherwise).
Without limitation, any shares of the common stock of the Corporation which any
Related Person has the right to acquire pursuant to any agreement, or upon
exercise or conversion rights, warrants or options, or otherwise, shall be
deemed "beneficially owned" by such Related Person.
9
<PAGE>
(2) The term "Substantial Part" shall mean more than 25% of the total
assets of the entity at issue, as of the end of its most recent fiscal year
ending prior to the time the determination is made.
(3) The term "Continuing Director" shall mean any member of the board
of directors of the Corporation who is unaffiliated with and who is not the
Related Person and was a member of the board prior to the time that the Related
Person became a Related Person, and any successor of a Continuing Director who
is unaffiliated with and who is not the Related Person and is recommended to
succeed a Continuing Director by a majority of Continuing Directors then on the
board.
(4) The term "Continuing Director Quorum" shall mean two-thirds of
the Continuing Directors capable of exercising the powers conferred on them.
ARTICLE XIV
EVALUATION OF BUSINESS COMBINATIONS
In connection with the exercise of its judgment in determining what is in
the best interests of the Corporation and of the stockholders, when evaluating a
Business Combination (as defined in Article XIII) or a tender or exchange offer,
the board of directors of the Corporation shall, in addition to considering the
adequacy of the amount to be paid in connection with any such transaction,
consider all of the following factors and any other factors which it deems
relevant; (A) the social and economic effects of the transaction on the
Corporation and its subsidiaries, employees and customers, creditors and other
elements of the communities in which the Corporation and its subsidiaries
operate or are located; (B) the business and financial condition and earnings
prospects of the acquiring person or entity, including, but not limited to, debt
service and other existing financial obligations, financial obligations to be
incurred in connection with the acquisition and other likely financial
obligations of the acquiring person or entity and the possible effect of such
conditions upon the Corporation and its subsidiaries and the other elements of
the communities in which the Corporation and its subsidiaries operate or are
located; and (C) the competence, experience, and integrity of the acquiring
person or entity and its or their management.
ARTICLE XV
INDEMNIFICATION
Any person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (whether or not by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
incorporator, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, incorporator, employee,
partner, trustee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise (including an employee benefit plan), shall be
entitled to be indemnified by the corporation to the full extent then permitted
by law against expenses (including counsel fees and disbursements), judgments,
fines (including excise taxes assessed on a person with respect to an employee
benefit plan), and amounts paid in settlement incurred by him in connection with
such action, suit, or proceeding. Such right of indemnification shall inure
whether or not the claim asserted is based on matters which antedate the
adoption of this Article XV. Such right of indemnification shall continue as to
a person who has ceased to be a director, officer, incorporator, employee,
partner, trustee, or agent and shall inure to the benefit of the heirs and
personal representatives of such a person. The indemnification provided by this
Article XV shall not be deemed exclusive of any other rights which may be
provided now or in the future under any provision currently in effect or
hereafter adopted of the bylaws, by any agreement, by vote of stockholders, by
resolution of disinterested directors, by provisions of law, or otherwise.
10
<PAGE>
ARTICLE XVI
LIMITATIONS ON DIRECTORS' LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except: (A) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (B) for acts or omissions that are not
in good faith or that involve intentional misconduct or a knowing violation of
law, (C) under Section 174 of the General Corporation Law of the State of
Delaware, or (D) for any transaction from which the director derived any
improper personal benefit. If the General Corporation law of the State of
Delaware is amended after the date of filing of this Certificate to further
eliminate or limit the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE XVII
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the Corporation is expressly authorized to adopt,
repeal, alter, amend and rescind the bylaws of the Corporation by a vote of
two-thirds of the board of directors. Notwithstanding any other provision of
this Certificate or the bylaws of the Corporation, and in addition to any
affirmative vote required by law (and notwithstanding the fact that some
lesser percentage may be specified by law), the bylaws shall be adopted,
repealed, altered, amended or rescinded by the stockholders of the
Corporation only by the vote of the holders of not less than 75% of the
voting power of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or rescission is included in the notice of such meeting), or, as
set forth above, by the board of directors.
ARTICLE XVIII
AMENDMENT OF CERTIFICATE OF INCORPORATION
Subject to the provisions hereof, the Corporation reserves the right to
repeal, alter, amend or rescind any provision contained in this Certificate in
the manner now or hereafter prescribed by law, and all rights conferred on
stockholders herein are granted subject to this reservation. Notwithstanding
the foregoing at any time and from time to time, the provisions set forth in
Articles VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII and this Article XVIII
may be repealed, altered, amended or rescinded in any respect only if the same
is approved by the affirmative vote of the holders of not less than 75% of the
voting power of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for this
purpose as a single class) cast at a meeting of the stockholders called for that
purpose (provided that notice of such proposed adoption, repeal, alteration,
amendment or rescission is included in the notice of such meeting).
ARTICLE XIX
The name and address of the incorporator is:
Danyel Owens
770 South Post Oak Lane
Suite 435
Houston, Texas 77056
11
<PAGE>
I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a
corporation pursuant to the General Corporation Law of Delaware, does make and
file this Certificate of Incorporation, hereby declaring and certifying that the
facts herein stated are true, and accordingly have hereunto set my hand this
23rd day of November, 1998.
/s/ Danyel Owens
------------------------------------
Danyel Owens
12
<PAGE>
CERTIFICATE OF MERGER
OF
CASH FLOW MARKETING, INC.
(a Colorado corporation)
WITH AND INTO
CASH FLOW MARKETING, INC.
(a Delaware corporation)
The undersigned corporations, Cash Flow Marketing, Inc., a Colorado
corporation, and Cash Flow Marketing, Inc., a Delaware corporation, do hereby
certify:
FIRST: That the name and state of incorporation of each of the constituent
corporations of the merger is as follows:
State of
Name of Corporation Incorporation
- ------------------------- -------------
Cash Flow Marketing, Inc. Colorado
Cash Flow Marketing, Inc. Delaware
SECOND: That the Plan and Agreement of Merger dated as of November 24,
1998, between the parties to the merger has been approved, adopted, certified,
executed and acknowledged by Cash Flow Marketing, Inc., a Colorado corporation,
by unanimous written consent of the stockholders of Cash Flow Marketing, Inc.,
in accordance with the requirements of Sections 7-7-103 and 7-1-7-104 of the
Colorado Business Corporation Code and by Cash Flow Marketing, Inc., a Delaware
corporation, by written consent of a majority of the stockholders of Cash Flow
Marketing, Inc., in accordance with the requirements of Section 252 of the
General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving corporation of the merger is Cash
Flow Marketing, Inc., a Delaware corporation.
13
<PAGE>
FOURTH: That the Plan and Agreement of Merger dated as of November 24,
1998, between the parties to the merger provides for (i) the conversion of each
outstanding share of common stock, $.001 par value per share, of Cash Flow
Marketing, Inc., a Colorado corporation, except for those shares of common stock
with respect to which the owners of record thereof duly exercise their
dissenters' rights under Section 7-113-202 of the Colorado Business Corporation
Code, into one share of common stock, $.001 par value per share, of Cash Flow
Marketing, Inc., a Delaware corporation; (ii) the cancellation of any fractional
share of common stock, $.001 par value per share, of Cash Flow Marketing, Inc.,
a Delaware corporation, to which an owner of record of shares of common stock,
$.001 par value per share, of Cash Flow Marketing, Inc., a Colorado corporation,
would otherwise be entitled and the issuance in lieu thereof of a whole share of
common stock, $.001 par value per share, of Cash Flow Marketing, Inc., a
Delaware corporation; and (iii) the cancellation, retirement and resumption of
status as an authorized and unissued share of common Stock, $.001 par value per
share, of Cash Flow Marketing, Inc., a Delaware corporation, of each outstanding
share of common stock, $.001 par value per share, of Cash Flow Marketing, Inc.,
a Delaware corporation, owned of record by Cash Flow Marketing, Inc., a Colorado
corporation.
FIFTH: That no amendment or changes in the Certificate of Incorporation of
Cash Flow Marketing, Inc., a Delaware corporation, which is the surviving
corporation, are to be effected by the merger.
SIXTH: That the executed Plan and Agreement of Merger is on file at the
principal place of business of Cash Flow Marketing, Inc., a Delaware
corporation, as the surviving corporation, located at 2901 East Evans Avenue,
Suite B, Denver, Colorado 80210.
SEVENTH: That a copy of the Agreement and Plan of Merger will be
furnished, upon request and without cost, to any stockholder of either
constituent corporation.
EIGHTH: The authorized capital stock of Cash Flow Marketing, Inc., a
Colorado corporation which is the foreign corporation which party to the merger,
is as follows:
<TABLE>
<CAPTION>
Class of Number Par Value
Name of Corporation Capital Stock of Shares Per Share
- ------------------------ ------------- ---------- -------------
<S> <C> <C> <C>
Cash Flow Marketing, Inc., Common Stock 25,000,000 $.001
a Colorado corporation
Cash Flow Marketing, Inc., Common Stock 1,000,000 $.001
a Colorado corporation
</TABLE>
NINTH: That these Articles of Merger shall be effective, and the merger of
Cash Flow Marketing, Inc., a Colorado corporation, with and into Cash Flow
Marketing, Inc., a Delaware corporation, shall be effected, upon the date of
the filing thereof.
14
<PAGE>
Attached to and incorporated in that certain Certificate of Merger of Cash Flow
Marketing, Inc., a Colorado corporation, with and into Cash Flow Marketing,
Inc., a Delaware corporation.
Dated: December 23, 1998.
ATTEST: CASH FLOW MARKETING, INC.,
a Colorado corporation
By: /s/ By: /s/
------------------------ ---------------------------------
Tracy Moore, Secretary R. David Preston, President
ATTEST: CASH FLOW MARKETING, INC.,
a Delaware corporation
By: /s/ By: /s/
------------------------ ---------------------------------
Tracy Moore, Secretary R. David Preston, President
15
<PAGE>
CERTIFICATE OF MERGER
OF
MEDIQUIK SERVICES, INC.
(a Delaware corporation)
INTO
CASH FLOW MARKETING, INC.
(a Delaware corporation)
The undersigned corporation organized and existing under and by virtue of
the General Corporation Law of Delware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
NAME STATE
MEDIQUIK SERVICES, INC. DELAWARE
CASH FLOW MARKETING, INC. DELAWARE
SECOND: That an agreement of merger between the parties to the merger has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of section 251 of
the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is Cash
Flow Marketing, Inc., which shall hereinwith be changed to MediQuik Services,
Inc.
FOURTH: That the Certificate of Incorporation of Cash Flow Marketing,
Inc., a Delaware corporation which will survive the merger, shall be the
Certificate of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement of Merger is on file at the principal
place of business of the surviving corporation, the address of which is 45 Wall
Street, Suite 1022, New York, New York, 10005.
SIXTH: That a copy of the Agreement of Merger will be furnished by the
surviving corporation, on request and without cost, to any shareholder of any
constituent corporation.
16
<PAGE>
SEVENTH: That this Certificate of Merger shall be effective on December
24, 1998.
DATED: 12/23/98
Cash Flow Marketing, Inc.
By: /s/
----------------------------------
Grant M. Gables, President
17
<PAGE>
MEDIQUIK SERVICES, INC.
A Delaware Corporation
BY LAWS
ARTICLE I
PRINCIPAL EXECUTIVE OFFICE
The principal executive office of MediQuik Services, Inc. (the "Corporation")
shall be at 45 Wall Street, Suite 1022, New York, New York 10005. The
Corporation may also have offices at such other places within or without the
State of Texas as the board of directors shall from time to time determine.
ARTICLE II
STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. All annual and special meetings of
stockholders shall be held at the principal executive office of the
Corporation or at such other place within or without the State of Delaware as
the board of directors may determine and as designated in the notice of such
meeting.
SECTION 2. ANNUAL MEETING. A meetings of the stockholders of the
Corporation for the election of directors and for the transaction of any
other business of the Corporation shall be held annually at such date and
time as the board of directors may determine.
SECTION 3. SPECIAL MEETINGS. Special meeting of the stockholders of
the Corporation for any purpose or purposes may be called at any time by the
board of directors of the Corporation, or by a committee of the board of
directors which as been duly designated by the board of directors and whose
powers and authorities, as provided in a resolution of the board of directors
or in the By Laws of the Corporation, include the power and authority to call
such meetings but such special meetings may not be called by another person
or persons.
SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings shall
be conducted in accordance with these By Laws or as otherwise prescribed by
the board of directors. The chairman or the chief executive officer of the
Corporation shall preside at such meetings.
SECTION 5. NOTICE OF MEETING. Written notice stating the place, day
and hour of the meeting and the purpose or purposes for which the meeting is
called shall be mailed by the secretary or the officer performing his duties,
not less than ten days nor more than fifty days before the meeting to each
stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the stockholder at his address as it appears on the stock
transfer books or records of the Corporation as of the record date prescribed
in Section 6, with postage thereon prepaid. If a stockholder be present at a
meeting, or in writing waive notice thereof before or after the meeting,
notice of the meeting to such stockholder shall be unnecessary. When any
stockholders' meeting, either annual or special, is adjourned for thirty days
or more, notice of the adjourned meeting shall be given as in the case of an
original meeting. It shall not be necessary to give any notice of the time
and place of any meeting adjourned for less than thirty days or of the
business to be transacted at such adjourned meeting, other than an
announcement at the meeting at which such adjournment is taken.
bylaws 1
<PAGE>
SECTION 6. FIXING OF RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders,
or any adjournment thereof, or stockholders entitled to receive payment of
any dividend, or in order to make a determination of stockholders for any
other proper purpose, the board of directors shall fix in advance a date as
the record date for any such determination of stockholders. Such date in any
case shall be not more than sixty days, and in case of a meeting of
stockholders, not less than ten days prior to the date on which the
particular action, requiring such determination of stockholders, is to be
taken.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination
shall apply to any adjournment thereof.
SECTION 7. VOTING LISTS. The officer or agent having charge of the
stock transfer books for shares of the Corporation shall make, at least ten
days before each meeting of stockholders, a complete record of the
stockholders entitled to vote at such meeting or any adjournment thereof,
with the address of and the number of shares held by each. The record, for a
period of ten days before such meeting, shall be kept on file at the
principal executive office of the Corporation, whether within or outside the
State of Texas, and shall be subject to inspection by any stockholder for any
purpose germane to the meeting at any time during usual business hours. Such
record shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder for any
purpose germane to the meeting during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
stockholders entitled to examine such record or transfer books or to vote at
any meeting of stockholders.
SECTION 8. QUORUM. One-fourth of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than one-fourth of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally notified. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
SECTION 9. PROXIES. At all meetings of stockholders, a stockholder
may vote by proxy executed in writing by the stockholder or by his duly
authorized attorney in fact. Proxies solicited on behalf of the management
shall be voted as directed by the stockholder or, in the absence of such
direction, as determined by a majority of the board of directors. No proxy
shall be valid after eleven months from the date of its execution unless
otherwise provided in the proxy.
SECTION 10. VOTING. At each election for directors every stockholder
entitled to vote at such election shall be entitled to one vote for each
share of stock held. Unless otherwise provided by the Certificate of
Incorporation, by statute, or by these By Laws, a majority of those votes
cast by stockholders at a lawful meeting shall be sufficient to pass on a
transaction or matter, except in the election of directors, which election
shall be determined by a plurality of the votes of the shares present in
person or by proxy at the meeting and entitled to vote on the election of
directors.
SECTION 11. VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When
ownership of stock stands in the name of two or more persons, in the
absence of written directions to the Corporation to the contrary, at any
meeting of the stockholders of the Corporation any one or more of such
stockholders may cast, in person or by proxy, all votes to which such
ownership is entitled. In the event an attempt is made to cast conflicting
votes, in person or by proxy, by the several persons in whose name shares of
stock stand, the vote or votes to which these persons are entitled shall be
cast as directed by a majority of those holding such stock and present in
person or by proxy at such meeting, but no votes shall be cast for such stock
if a majority cannot agree.
bylaws 2
<PAGE>
SECTION 12. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in
the name of another corporation may be voted by any officer, agent or proxy
as the By Laws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name. Shares standing
in the name of a receiver may be voted by such receiver, and shares held by
or under the control of a receiver may be voted by such receiver without the
transfer thereof into his name if authority to do so is contained in an
appropriate order of the court or other public authority by which such
receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee
and thereafter the pledgee shall be entitled to vote the shares so
transferred.
Neither treasury shares of its own stock held by the Corporation, nor
shares held by another corporation, if a majority of the shares entitled to
vote for the election of directors of such other corporation are held by the
Corporation, shall be voted at any meeting or counted in determining the
total number of outstanding shares at any given time for purposes of any
meeting.
SECTION 13. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the chairman of the board or the board of directors may appoint
any persons, other than nominees for office, as inspectors of election to act
at such meeting or any adjournment thereof. The number of inspectors shall
be either one or three. If the board of directors so appoints either one or
three inspectors, that appointment shall not be altered at the meeting. If
inspectors of election are not so appointed, the chairman of the board may
make such appointment at the meeting. In case any person appointed as
inspector fails to appear or fails or refuses to act, the vacancy may be
filled by appointment in advance of the meeting or at the meeting by the
chairman of the board or the president.
Unless otherwise prescribed by applicable law, the duties of such
inspectors shall include: determining the number of shares of stock and the
voting power of each share, the shares of stock represented at the meeting,
the existence of a quorum, the authenticity, validity and effect of proxies;
receiving votes, ballots or consents; hearing and determining all challenges
and questions in any way arising in connection with the right to vote;
counting and tabulating all votes or consents; determining the result; and
such acts as may be proper to conduct the election or vote with fairness to
all stockholders.
SECTION 14. NOMINATING COMMITTEE. The board of directors or a
committee appointed by the board of directors shall act as nominating
committee for selecting the management nominees for election as directors.
Except in the case of a nominee substituted as a result of the death or other
incapacity of a management nominee, the nominating committee shall deliver
written nominations to the secretary at least twenty days prior to the date
of the annual meeting. Provided such committee makes such nominations, no
nominations for directors except those made by the nominating committee shall
be voted upon at the annual meeting unless other nominations by stockholders
are made in writing and delivered to the secretary of the Corporation in
accordance with the provisions of the Corporation's Certificate of
Incorporation.
SECTION 15. NEW BUSINESS. Any new business to be taken up at the
annual meeting shall be stated in writing and filed with the secretary of the
Corporation in accordance with the provisions of the Corporation's
Certificate of Incorporation. This provision shall not prevent the
consideration and approval or disapproval at the annual meeting of reports of
officers, directors and committees, but in connection with such reports no
new business shall be acted upon at such annual meeting unless stated and
filed as provided in the Corporation's Certificate of Incorporation.
bylaws 3
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
Corporation shall be under the direction of its board of directors. The
chairman shall preside at all meetings of the board of directors.
SECTION 2. NUMBER, TERM AND ELECTION. The number of directors of the
Corporation shall be such number, not less than one nor more than 15
(exclusive of directors, if any, to be elected by holders of preferred stock
of the Corporation), as shall be provided from time to time in a resolution
adopted by the board of directors, provided that no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director, and provided further that no action shall be taken to decrease or
increase the number of directors from time to time unless at least two-thirds
of the directors then in office shall concur in said action. Exclusive of
directors, if any, elected by holders of preferred stock, vacancies in the
board of directors of the Corporation, however caused, and newly created
directorships shall be filled by a vote of two-thirds of the directors then
in office, whether or not a quorum, and any director so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which the
term of the class to which the director has been chosen expires and when the
director's successor is elected and qualified. The board of directors shall
be classified in accordance with the provisions of Section 3 of this Article
III.
SECTION 3. CLASSIFIED BOARD. The board of directors of the
Corporation (other than directors which may be elected by the holders of
preferred stock), shall be divided into three classes of directors which
shall be designated Class I, Class II and Class III. The members of each
class shall be elected for a term of three years and until their successors
are elected and qualified. Such classes shall be as nearly equal in number as
the then total number of directors constituting the entire board of directors
shall permit, exclusive of directors, if any, elected by holders of preferred
stock, with the terms of office of all members of one class expiring each
year. Should the number of directors not be equally divisible by three, the
excess director or directors shall be assigned to Classes I or II as follows:
(1) if there shall be an excess of one directorship over the number equally
divisible by three, such extra directorship shall be classified in Class I;
and (2) if there be an excess of two directorships over a number equally
divisible by three, one shall be classified in Class I and the other in Class
II. At the organizational meeting of the Corporation, directors of Class I
shall be elected to hold office for a term expiring at the first annual
meeting of stockholders, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting of
stockholders and directors of Class III shall be elected to hold office for a
term expiring at the third succeeding annual meeting thereafter. Thereafter,
at each succeeding annual meeting, directors of each class shall be elected
for three year terms. Notwithstanding the foregoing, the director whose term
shall expire at any annual meeting shall continue to serve until such time as
his successor shall have been duly elected and shall have qualified unless
his position on the board of directors shall have been abolished by action
taken to reduce the size of the board of directors prior to said meeting.
Should the number of directors of the Corporation be reduced, the
directorship(s) eliminated shall be allocated among classes as appropriate so
that the number of directors in each class is as specified in the position(s)
to be abolished. Notwithstanding the foregoing, no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director. Should the number of directors of the Corporation be increased,
other than directors which may be elected by the holders of preferred stock,
the additional directorships shall be allocated among classes as appropriate
so that the number of directors in each class is as specified in the
immediately preceding paragraph.
Whenever the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class, to elect one
or more directors of the Corporation, the board of directors shall include
said directors so elected and not be in addition to the number of directors
fixed as provided in this Article III. Notwithstanding the foregoing, and
except as otherwise may be required By Law, whenever the holders of any one
bylaws 4
<PAGE>
or more series of preferred stock of the Corporation elect one or more
directors of the Corporation, the terms of the director or directors elected
by such holders shall expire at the next succeeding annual meeting of
stockholders.
SECTION 4. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held at such time and place as shall be determined by
resolution of the board of directors without other notice than such
resolution.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the chairman, the chief
executive officer or one-third of the directors. The person calling the
special meetings of the board of directors may fix any place as the place for
holding any special meeting of the board of directors called by such persons.
Members of the board of the directors may participate in special
meetings by means of telephone conference or similar communications equipment
by which all persons participating in the meeting can hear each other. Such
participation shall constitute presence in person.
SECTION 6. NOTICE. Written notice of any special meeting shall be
given to each director at least two days previous thereto delivered
personally or by telegram or at least seven days previous thereto delivered
by mail at the address at which the director is most likely to be reached.
Such notice shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage thereon prepaid if mailed or when
delivered to the telegraph company if sent by telegram. Any director may
waive notice of any meeting by a writing filed with the secretary. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any meeting of the board of directors need be specified
in the notice or waiver of notice of such meeting.
SECTION 7. QUORUM. A majority of the number of directors fixed by
Section 2 shall constitute a quorum for the transaction of business at any
meeting of the board of directors, but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting
from time to time. Notice of any adjourned meeting shall be given in the same
manner as prescribed by Section 5 of this Article III.
SECTION 8. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the board of directors, unless a greater number is prescribed by these By
Laws, the Certificate of Incorporation, or the General Corporation Law of the
State of Delaware.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the board of directors at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors.
SECTION 10. RESIGNATION. Any director may resign at any time by
sending a written notice of such resignation to the home office of the
Corporation addressed to the chairman. Unless otherwise specified therein
such resignation shall take effect upon receipt thereof by the chairman.
SECTION 11. VACANCIES. Any vacancy occurring on the board of
directors shall be filled in accordance with the provisions of the
Corporation's Certificate of Incorporation. Any directorship to be filled by
reason of an increase in the number of directors may be filled by the
affirmative vote of two-thirds of the directors then in office or by election
at an annual meeting or at a special meeting of the stockholders held for
that purpose. The term of such director shall be in accordance with the
provisions of the Corporation's Certificate of Incorporation.
SECTION 12. REMOVAL OF DIRECTORS. Any director or the entire board of
directors may be removed only in accordance with the provisions of the
Corporation's Certificate of Incorporation.
bylaws 5
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SECTION 13. COMPENSATION. Directors, as such, may receive
compensation for service on the board of directors. Members of either
standing or special committees may be allowed such compensation as the board
of directors may determine.
SECTION 14. AGE LIMITATION. No person 70 years or more of age shall
be eligible for election, reelection, appointment or reappointment to the
board of the Corporation. No director shall serve as such beyond the annual
meeting of the Corporation immediately following the director becoming 70
years of age. This age limitation does not apply to an advisory director.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, as they may determine to be
necessary or appropriate for the conduct of the business of the Corporation,
and may prescribe the duties, constitution and procedures thereof. Each
committee shall consist of one or more directors of the Corporation appointed
by the chairman. The chairman may designate one or more directors as
alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
The chairman shall have power at any time to change the members of, to
fill vacancies in, and to discharge any committee of the board. Any member of
any such committee may resign at any time by giving notice to the
Corporation; provided, however, that notice to the board, the chairman of the
board, the chief executive officer, the chairman of such committee, or the
secretary shall be deemed to constitute notice to the Corporation. Such
resignation shall take effect upon receipt of such notice or at any later
time specified therein; and, unless otherwise specified therein, acceptance
of such resignation shall not be necessary to make it effective. Any member
of any such committee may be removed at any time, either with or without
cause, by the affirmative vote of a majority of the authorized number of
directors at any meeting of the board called for that purpose.
ARTICLE V
OFFICERS
SECTION 1. POSITIONS. The officers of the Corporation shall be a
chairman, a president, one or more vice presidents, a secretary and a
treasurer, each of whom shall be elected by the board of directors. The board
of directors may designate one or more vice presidents as executive vice
president or senior vice president. The board of directors may also elect or
authorize the appointment of such other officers as the business of the
Corporation may require. The officers shall have such authority and perform
such duties as the board of directors may from time to time authorize or
determine. In the absence of action by the board of directors, the officers
shall have such powers and duties as generally pertain to their respective
offices.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
Corporation shall be elected annually by the board of directors at the first
meeting of the board of directors held after each annual meeting of the
stockholders. If the election of officers is not held at such meeting, such
election shall be held as soon thereafter as possible. Each officer shall
hold office until his successor shall have been duly elected and qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided. Election or appointment of an officer, employee
or agent shall not of itself create contract rights. The board of directors
may authorize the Corporation to enter into an employment contract with any
officer in accordance with state law; but no such contract shall impair the
right of the board of directors to remove any officer at any time in
accordance with Section 3 of this Article V.
bylaws 6
<PAGE>
SECTION 3. REMOVAL. Any officer may be removed by vote of two-thirds
of the board of directors whenever, in its judgment, the best interests of
the Corporation will be served thereby, but such removal, other than for
cause, shall be without prejudice to the contract rights, if any, of the
person so removed.
SECTION 4. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term.
SECTION 5. REMUNERATION. The remuneration of the officers shall be
fixed from time to time by the board of directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
SECTION 6. AGE LIMITATION. No person 70 or more years of age shall
be eligible for election, reelection, appointment or reappointment as an
officer of the Corporation. No officer shall serve beyond the annual meeting
of the Corporation immediately following the officer becoming 70 or more
years of age.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. To the extent permitted by applicable law, and
except as otherwise prescribed by the Corporation's Certificate of
Incorporation or these By Laws with respect to certificates for shares, the
board of directors or the executive committee may authorize any officer,
employee, or agent of the Corporation to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the Corporation.
Such authority may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name
unless authorized by the board of directors. Such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the Corporation shall be signed by one or more officers,
employees or agents of the Corporation in such manner, including in facsimile
form, as shall from time to time be determined by resolution of the board of
directors.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the
Corporation in any of its duly authorized depositories as the board of
directors may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. The shares of the Corporation
shall be represented by certificates signed by the chairman of the board of
directors or the president or a vice president and by the treasurer or an
assistant treasurer or the secretary or an assistant secretary of the
Corporation, and may be sealed with the seal of the Corporation or a
facsimile thereof. Any or all of the signatures upon a certificate may be
facsimiles if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the Corporation itself or an employee
of the Corporation. If any officer who has signed or whose facsimile
signature has been placed upon such certificate
bylaws 7
<PAGE>
shall have ceased to be such officer before the certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer
at the date of its issue.
SECTION 2. FORM OF SHARE CERTIFICATES. All certificates representing
shares issued by the Corporation shall set forth upon the face or back that
the Corporation will furnish to any stockholder upon request and without
charge a full statement of the designations, preferences, limitations, and
relative rights of the shares of each class authorized to be issued, the
variations in the relative rights and preferences between the shares of each
such series so far as the same have been fixed and determined, and the
authority of the board of directors to fix and determine the relative rights
and preferences of subsequent series.
Each certificate representing shares shall state upon the face thereof:
that the Corporation is organized under the laws of the State of Delaware;
the name of the person to whom issued; the number and class of shares, the
designation of the series, if any, which such certificate represents; the par
value of each share represented by such certificate, or a statement that the
shares are without par value. Other matters in regard to the form of the
certificates shall be determined by the board of directors.
SECTION 3. PAYMENT FOR SHARES. No certificate shall be issued for
any share until such share is fully paid.
SECTION 4. FORM OF PAYMENT FOR SHARES. The consideration for the
issuance of shares shall be paid in accordance with the provisions of the
Corporation's Certificate of Incorporation.
SECTION 5. TRANSFER OF SHARES. Transfer of shares of capital stock
of the Corporation shall be made only on its stock transfer books. Authority
for such transfer shall be given only to the holder of record thereof or by
his legal representative, who shall furnish proper evidence of such
authority, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Corporation. Such transfer shall be made only on
surrender for cancellation of the certificate for such shares. The person in
whose name shares of capital stock stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.
SECTION 6. LOST CERTIFICATES. The board of directors may direct a
new certificate to be issued in place of any certificate theretofore issued
by the Corporation alleged to have been lost, stolen, or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen, or destroyed. When authorizing such issue of a new
certificate, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen, or
destroyed certificate, or his legal representative, to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen, or destroyed.
ARTICLE VIII
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the last day of December
of each year. The Corporation shall be subject to an annual audit as of the
end of its fiscal year by independent public accountants appointed by and
responsible to the board of directors.
bylaws 8
<PAGE>
ARTICLE IX
DIVIDENDS
Dividends upon the stock of the Corporation, subject to the provisions
of the Certificate of Incorporation, if any, may be declared by the board of
directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in the Corporation's own stock.
ARTICLE X
CORPORATION SEAL
The corporate seal of the Corporation shall be in such form as the board
of directors shall prescribe.
ARTICLE XI
AMENDMENTS
In accordance with the Corporation's Certificate of Incorporation, these
By Laws may be repealed, altered, amended or rescinded by the stockholders of
the Corporation only by vote of not less than 75% of the voting power of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose as one
class) cast at a meeting of the stockholders called for that purpose
(provided that notice of such proposed repeal, alteration, amendment or
rescission is included in the notice of such meeting). In addition, the board
of directors may repeal, alter, amend or rescind these By Laws by vote of
two-thirds of the board of directors at a legal meeting held in accordance
with the provisions of these By Laws.
MEDIQUIK SERVICES, INC.
bylaws 9
<PAGE>
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NUMBER SHARES
MediQuik Services, Inc.
AUTHORIZED STOCK 10,000,000 SHARES
$.001 PAR VALUE
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 58500V 10 4
This Certifies that is the
--------------------------------------------------
registered holder of Shares
--------------------
MEDIQUIK SERVICES, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to
be signed by its duly authorized officers and its Corporate Seal to be hereto
affixed.
Dated
PRESIDENT
SECRETARY
COUNTERSIGNED AND REGISTERED
TRANSFER AGENT AND REGISTRAR:
ATLAS STOCK TRANSFER CORPORATION
5899 SOUTH STATE STREET
SALT LAKE CITY, UTAH 84107 AUTHORIZED SIGNATURE
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable law or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common.
UNIF GIFT MIN ACT - Custodian
----------------------- ------------------------
(Cust) (Minor)
Under Uniform Gifts to Minors Act
---------------------------
(State)
Additional abbreviations may also be used though not in above list.
For Value Received, _______________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- ---------------------------------------------------------
- ---------------------------------------------------------
- ------------------------------------------------- Shares of the capital stock
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ____________________ Attorney to transfer the said stock on the books
of the within named Corporation with full power of substitution in the premises.
Dated
---------------------------
Signature
-------------------------------------
-------------------------------------
NOTICE: The signature in this
assignment must correspond with the
name as written upon the face of the
Certificate, in every particular,
without alteration or enlargement, or
any change whatever.
Signature Guaranteed By:
-------------------------
(Please have signature guaranteed by a National
Bank through its officer or by a member firm of a
major stock exchange)
<PAGE>
Exhibit 3.2
THE SECURITIES COVERED HEREBY HAVE BEEN (I) ACQUIRED FOR INVESTMENT;
(II) ISSUED AND SOLD IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES LAWS OF VARIOUS STATES; AND (III) ISSUED AND SOLD
IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") PROVIDED BY SECTION
4(2) OF THE SECURITIES ACT. THE SECURITIES CANNOT BE OFFERED FOR
SALE, SOLD OR TRANSFERRED OTHER THAN PURSUANT TO (A) AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OR ANY TRANSACTION WHICH IS
OTHERWISE IN COMPLIANCE WITH THE SECURITIES ACT; OR (B) EVIDENCE
SATISFACTORY TO THE ISSUER OF COMPLIANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY OTHER JURISDICTION. THE ISSUER SHALL BE
ENTITLED TO RELY UPON AN OPINION OF COUNSEL SATISFACTORY TO IT WITH
RESPECT TO COMPLIANCE WITH THE ABOVE LAWS.
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER
TRANSFERRED OR DISPOSED OF EXCEPT AS PROVIDED HEREIN. THE HOLDER OF
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
MEDIQUIK SERVICES, INC.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, for value received, ___________________ (the
"HOLDER"), upon due exercise of this Warrant, is entitled to purchase from
MediQuik Services, Inc., a Delaware corporation (the "COMPANY"), on or before
the close of business on ___________ (the "EXPIRATION DATE"), all or any part
of _________________________________ (_________) shares of fully paid and
non-assessable Common Stock, $.001 par value, of the Company (the "COMMON
STOCK"), at a purchase price per share computed pursuant to Section 1 below.
This Warrant is hereinafter called the "Warrant," and the shares of
Common Stock issuable upon exercise hereof are hereinafter called the
"Warrant Shares." The term "Warrant Shares" shall also include shares
issuable upon exercise hereof.
1. PURCHASE PRICE. The Purchase Price per share of Common Stock under
this Warrant is ____________ AND NO/100 DOLLARS ($_______.00), subject to
adjustment pursuant to Section 5 below (the "Purchase Price").
MediQuik Services, Inc./Warrant - Page 1
<PAGE>
2. EXERCISE OF WARRANT.
A. PROCEDURE FOR EXERCISE. The Holder of this Warrant may, at
any time on or before the Expiration Date, exercise this Warrant in whole or
in part from time to time for the purchase of the shares of Common Stock that
such Holder is then entitled to purchase hereunder at the Purchase Price. In
order to exercise this Warrant in whole or in part, the Holder hereof shall
deliver to the Company (a) a written notice of such Holder's election to
exercise this Warrant substantially in the form attached hereto, which notice
shall specify the number of whole shares of Common Stock to be purchased, (b)
payment of the aggregate Purchase Price of the shares of Common Stock being
purchased in the manner provided herein, (c) an executed Investor
Representation Letter in the form attached hereto, and (d) this Warrant.
Upon receipt of the notice of exercise, the payment, the executed Investor
Representation Letter and surrender of this Warrant, the Company shall, as
promptly as practicable, execute or cause to be executed and deliver to such
Holder a certificate or certificates representing the aggregate number of
shares of Common Stock specified in such notice. The stock certificate or
certificates so delivered shall be in such denominations as may be specified
in such notice and shall be registered in the name of such Holder or, subject
to Section 4, such other name as shall be designated in such notice. Payment
of the Purchase Price may be made to the Company by cash, certified check or
cashier's check or wire transfer.
B. NO FRACTIONAL SHARES. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant. If this Warrant shall
have been exercised only in part, the Company shall, at the time of delivery
of such certificate or certificates, deliver to such Holder a new warrant
evidencing the rights of such Holder to purchase the remaining shares of
Common Stock called for by this Warrant, which new warrant shall in all other
respects be identical with this Warrant, or, at the request of such Holder,
appropriate notation may be made on this Warrant and the same returned to
such Holder.
C. EXPENSES. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, execution and delivery of
stock certificates under this Section, except that, in case such stock
certificates are to be registered in a name or names other than the name of
the Holder of this Warrant, all stock transfer taxes payable upon the
execution and delivery of such stock certificate or certificates shall be
paid by the Holder hereof at the time of delivering the notice of exercise
mentioned above. In such case, the Holder hereof shall deliver with such
notice of exercise evidence, satisfactory to the Company, that such taxes
have been paid.
3. TRANSFER. This Warrant may not be transferred or disposed of, in
whole or in part (including any interest or participation in this Warrant),
in any manner, other than a transfer of this Warrant (or the right to acquire
any whole number of shares pursuant to this Warrant) to Jaz Bermaine. Upon
surrender of this Warrant at the principal office of the Company, together
with a written assignment of this Warrant duly executed by the Holder hereof
or his agent or attorney assigning the Warrant or a portion thereof to Jaz
Bermaine, the Company shall execute and deliver a new warrant or warrants in
the name of Jaz Bermaine and in the denominations specified in such
instrument of assignment, and this Warrant shall promptly be canceled. The
Holder shall pay all
MediQuik Services, Inc./Warrant - Page 2
<PAGE>
expenses, taxes and other charges payable in connection with the preparation
execution and delivery of Warrants to Jaz Bermaine under this Section 3.
4. COMPLIANCE WITH SECURITIES ACT; RESTRICTIONS ON TRANSFER.
A. COMPLIANCE WITH SECURITIES ACT. Except as provided in Section 3,
this Warrant shall not be transferable. The related Warrant Shares shall not be
transferable except upon the conditions specified in this Section, which
conditions are intended, among other things, to ensure compliance with the
provisions of the Securities Act or any applicable state securities laws in
respect of the transfer of such Warrant Shares.
B. RESTRICTIONS ON TRANSFER. By acceptance of this Warrant, the
Holder of this Warrant agrees, prior to any transfer or attempted transfer of or
the Warrant Shares, to give written notice to the Company of such Holder's
intention to effect such transfer. The notice shall describe the manner and
circumstances of the proposed transfer in detail and shall contain an
undertaking by the Holder to furnish such other information as may be required
to enable the Company's counsel to render the opinions referred to below, and
shall give the identity and address of the Holder's counsel. The Holder shall
submit a copy of the notice to the counsel designated in the notice and the
Company shall submit a copy thereof to its counsel, and the following provisions
shall apply:
(i) If, in the opinion of both the Company's and the Holder's
counsel, the proposed transfer of the Warrant Shares may be effected without
registration of the Warrant Shares under the Securities Act, the Company shall,
as promptly as practicable, so notify the Holder who will then be entitled to
transfer the Warrant Shares in accordance with the terms of the notice delivered
by the Holder to the Company.
(ii) If, in the opinion of either the Company's or the Holder's
counsel, the proposed transfer of the Warrant Shares may not be effected without
registration of the Warrant Shares under the Securities Act, the Company shall,
as promptly as practicable, so notify the Holder, and the Company shall not be
obligated to effect the proposed transfer, except pursuant to an offering
registered under the Securities Act.
C. LEGEND Each certificate for Warrant Shares issued upon exercise
of this Warrant shall bear a legend to the effect that the Warrant Shares may
not be transferred except upon compliance with the provisions of this Section 4,
and each certificate for Warrant Shares transferred pursuant to Section 4.B.(i)
shall also bear such a legend unless, in the opinion of counsel for the Company,
such a legend is not required.
D. CERTAIN COVENANTS, REPRESENTATIONS AND WARRANTIES OF HOLDER.
(i) Holder hereby represents, warrants and covenants to the
Company that it has had, or agents on its behalf, have had the opportunity to
review the Company's records and that it, or its agent(s), are familiar with the
Company's assets, activities and nature of business. Holder has had the
opportunity to ask questions of and receive answers from the Company's
management
MediQuik Services, Inc./Warrant - Page 3
<PAGE>
concerning the Company's business and operations, and has made an independent
review and determination of the value of the investment and has the
qualifications to do so. Holder understands that these Shares have not been
registered under the Securities Act in reliance upon exemptions available for
non-public or limited offerings not involving a public offering. Holder
understands that any resale of the Warrant Shares will require compliance
with an exemption under the Securities Act in the absence of registration
thereunder.
(ii) Holder acknowledges that the Warrant and the Warrant
Shares have not been registered under the Securities Act, and are being acquired
for Holder's own account for investment and not with a view to the distribution
thereof.
(iii) Holder and its representatives have the knowledge and
experience in financial and business matters to enable them to evaluate the
merits and risks of acquiring the Warrant and the Warrant Shares.
(iv) Holder is able to bear the economic risks of its
investment in the Warrant and the Warrant Shares, including the risk of a loss
of the entire value of the Warrant and the Warrant Shares.
(v) The Company may instruct its transfer agents not to
transfer any of the Warrant Shares unless the transfer agents have been advised
by the Company or otherwise have been satisfied that the Holder has complied
with the provisions above-described.
(vi) The Holder understands that the Company has not covenanted
and is not obligated to furnish a registration statement under the Securities
Act covering the Warrant or the Warrant Shares, to file a notification under any
regulations promulgated pursuant to the Securities Act with respect to the
Warrant or the Warrant Shares, or to take any other action that would make
available an exemption from registration.
5. ANTIDILUTION.
A. RECLASSIFICATION OR RECAPITALIZATION. In case of any
reclassification or recapitalization of the Company's capital stock, including
dividends of stock or other securities or property, stock splits, reverse stock
splits, subdivisions, combinations or reorganizations, the Company shall take
all steps necessary to amend or adjust the terms and conditions of this Warrant
so that the Holder shall have the right to exercise the Warrant into the kind
and amount of shares of stock and other securities and property receivable upon
such reclassification or recapitalization for which such Warrant might have been
converted immediately prior to such reclassification or recapitalization. Such
adjustments or amendments shall be made successively whenever any event
described above shall occur.
B. MERGER. In case of any other change in the Common Stock or in
case of any consolidation of the Company with or the merger of the Company into
another corporation or in the case of any conveyance or transfer of all or
substantially all of the properties of the Company to
MediQuik Services, Inc./Warrant - Page 4
<PAGE>
another corporation entitled to acquire and operate the same, then within ten
(10) days of notice of the same from the Company to Holder, Holder shall be
permitted to exercise this Warrant in whole or in part for the purchase of
shares of Common Stock which such Holder is then entitled to purchase
hereunder at the Purchase Price. To the extent not exercised by Holder
within such time period, this Warrant shall be null and void, and of no
further force or effect.
C. NOTICE. Notice of matters arising under this Section 5 shall be
given pursuant to Section 7 below.
D. ADJUSTMENTS. Except as otherwise provided herein, the
effective date of any adjustment pursuant to Section 5.A shall be the
effective date of the event that causes such adjustment. The effective date
of any exercise of this Warrant under Section 5.B shall be the date
immediately prior to the consummation of that event specified therein.
6. SPECIAL AGREEMENTS OF THE COMPANY.
A. RESERVATION OF COMMON STOCK. The Company covenants and agrees
that it will reserve and set apart and have at all times, a number of shares
of authorized but unissued Common Stock deliverable upon the exercise of the
Warrant or any other rights or privileges provided for therein sufficient to
enable it at any time to fulfill all of its obligations thereunder; and if at
any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the exercise of the Warrant at the Purchase Price
then in effect, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for
such purpose.
B. PAR VALUE. As a condition precedent to the taking of any
action which would cause an adjustment reducing the Purchase Price below the
then par value, if any, per share of the Common Stock issuable upon exercise
of this Warrant, the Company will take such corporate action as may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue its Common Stock at the Purchase Price upon conversion of
this Warrant in accordance with the provisions of this Section 6.
C. SHARES TO BE FULLY PAID AND NONASSESSABLE. The Company
covenants that all shares of Common Stock which may be issued upon exercise
of this Warrant will be, upon issuance and payment of the Purchase Price,
fully paid and nonassessable.
7. NOTICES. Any notice or other document required or permitted to be
given or delivered to the Holder of this Warrant and the Warrant Shares shall
be sent by certified or registered mail to R. F. Bearden Associates, Inc.,
2800 Post Oak Boulevard, Suite 5260, Houston, Texas 77056, to the attention
of the President, or such other address as shall have been furnished to the
Company in writing by such Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be sent by certified
or registered mail to the principal office of the Company at 770 South Post
Oak, Suite 520, Houston, Texas 77057, to the attention of the President, or
such
MediQuik Services, Inc./Warrant - Page 5
<PAGE>
other address as shall have been furnished to the Holder of the Warrant and
to the Holders of the Warrant Shares by the Company.
8. LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
mere enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder for the Purchase Price or as
a shareholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of _____________________.
MEDIQUIK SERVICES
a Delaware corporation
By:
--------------------------------------
Grant M. Gables, President and
Chief Executive Officer
MediQuik Services, Inc./Warrant - Page 6
<PAGE>
FORM OF NOTICE OF EXERCISE
TO BE EXECUTED BY THE REGISTERED HOLDER IF IT DESIRES TO
EXERCISE THE WARRANT
The undersigned hereby exercises the right to purchase ___________________
shares of Common Stock pursuant to the terms of this Warrant and delivers the
aggregate Purchase Price for the number of shares of Common Stock so purchased,
in the amount of $________ in cash, by wire transfer or by certified or
cashiers check.
------------------------------------------
Signature
------------------------------------------
Print Name
------------------------------------------
------------------------------------------
Address
------------------------------------------
Social Security Number
Date:
-------------------, -----
(Signature Medallion Guaranteed): Date:
-----------------------------
MediQuik Services, Inc./Warrant - Page 7
<PAGE>
INVESTOR REPRESENTATION LETTER
MediQuik Services, Inc.
770 South Post Oak, Suite 520
Houston, Texas 77057
Gentlemen:
This Investor Representation Letter is executed and delivered in
connection with the purchase by the undersigned (the "Purchaser") of _______
shares of common stock (the "Shares") of MediQuik Services, Inc., a Delaware
corporation pursuant to the terms of that certain Common Stock Purchase
Warrant dated ________________.
In connection with the purchase of the Shares, Purchaser hereby makes
the following representations, warranties and confirms the following
understandings:
a. INVESTMENT PURPOSE. Purchaser is acquiring the Shares for his
own account and for investment purposes only, within the meaning of the
Securities Act of 1933 (the "Act"), with no intention of assigning any
participation or interest therein, and not with a view to the distribution
thereof.
b. REVIEW AND EVALUATION OF INFORMATION. The Purchaser is a
sophisticated financial consultant and as such has had unique access to the
books and records of the Company and the opportunity to ask the Company
questions about the offering to the extent deemed necessary to permit full
evaluation of the merits and risks of an investment in the Company. Further,
Purchaser has consulted with such other of his accounting, legal and tax
advisors as he deemed necessary and appropriate in making his decision to
purchase the Shares.
c. PURCHASER'S FINANCIAL EXPERIENCE. Purchaser is sufficiently
experienced in financial and business matters to be capable of evaluating the
merits and risks of his investment in the Company.
d. SUITABILITY OF INVESTMENT. Purchaser has evaluated the merits
and risks of Purchaser's proposed acquisition of Shares of the Company,
including those risks particular to Purchaser's personal situation, and has
determined that the investment is suitable for Purchaser. Purchaser has
adequate financial resources for an investment of this character, and could
bear a complete loss of his investment. Further, Purchaser will continue to
have, after making his investment in the Company, adequate means of providing
for his current needs, the needs of those dependent on him, and possible
personal contingencies.
e. UNREGISTERED OFFERING. Purchaser understands that the Shares
are not being registered under the Act because the sale is exempt from
registration under the Act and rules and regulations promulgated thereunder,
as a "transaction by an issuer not involving any public offering," and that
the availability of such exemption is predicated, in part, on Purchaser's
representations and warranties contained in this Investor Representation
Letter. In the view of the Securities and Exchange Commission, the statutory
basis for the exemption claimed by the Company in connection with the sale
MediQuik Services, Inc./Warrant - Page 8
<PAGE>
of Shares would not be present if, notwithstanding Purchaser's
representations and warranties, Purchaser has the intention of acquiring the
Shares for resale upon the occurrence or nonoccurrence of some predetermined
event.
f. LIMITATIONS ON DISPOSITION. The Shares have not been
registered under the Act or under applicable state securities laws and,
therefore, cannot be sold, assigned, or otherwise transferred unless they are
subsequently registered under the Act and under applicable state securities
laws or an exemption from such registrations is then available. Purchaser
hereby agrees that he will not sell, assign, or transfer his Shares unless
they are registered under the Act and under applicable state securities laws
or an exemption from such registration is then available in the opinion of
counsel to the Company.
g. ABSENCE OF OFFICIAL EVALUATION. Purchaser understands that no
federal or state agency has made any finding or determination as to the
fairness of the terms of an investment in the Company, nor any recommendation
or endorsement of a purchase of the Shares.
h. RESIDENCY. Purchaser's principal residence is in the country
and state or other jurisdiction indicated, and his citizenship is as
indicated, opposite his signature to this Investor Representation Letter.
Purchaser has no intent of changing his residency, citizenship, or principal
office to any other country or state or jurisdiction.
i. ACCREDITED INVESTOR. The Purchaser is an "Accredited
Investor" as that term is defined in Rule 501 of Regulation D promulgated by
the Securities and Exchange Commission under the Act.
j. NONRELIANCE. Purchaser is not relying on the Company or any
legal opinion with respect to the tax and economic effect of his investment
in the Company.
The representations, warranties, covenants, and agreements contained
herein shall survive Purchaser's delivery of payment for the Shares and the
delivery of the Shares by the Company.
Dated:
-----------------------
PURCHASER RESIDENCE OF PURCHASER
-------------------------------- -----------------------------------
Name: Number, Street
--------------------------
------------------------------------
City, State, Zip Code
MediQuik Services, Inc./Warrant - Page 9
<PAGE>
MEDIQUIK SERVICES, INC.
STOCK INCENTIVE PLAN
1.
PURPOSE
The purpose of this Stock Incentive Plan (the "Plan") is to advance
the interests of MediQuik Services, Inc. (the "Company") and its stockholders
by providing deferred stock incentives in addition to current compensation to
certain key executives, certain directors and key employees of the Company
and of its subsidiaries who contribute significantly to the long-term
performance and growth of the Company and such subsidiaries. As used in this
Plan, subsidiary includes parent of the Company and any subsidiary of the
Company within the meaning of Sections 425(e) and (f) of the Internal Revenue
Code of 1986, as amended ("Code"), respectively.
2.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the
Company (the "Board of Directors") or a committee of the Board of Directors
duly authorized and given authority by the Board of Directors to administer
the Plan (the Board of Directors or such duly authorized committee
hereinafter referred to as the "Board"), as such is from time to time
constituted.
The Board shall have all the powers vested in it by the terms of the
Plan, such powers to include exclusive authority (within the limitation
described herein) to select the employees to be granted Awards under the
Plan, to determine the type, size and terms of the Awards to be made to each
employee selected, to determine the time when Awards will be granted, and to
prescribe the form of the instruments evidencing Awards made under the Plan.
The Board shall be authorized to interpret the Plan and the Awards granted
under the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determinations which it believes
necessary or advisable for the administration of the Plan. The Board may
correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award in the Manner and to the extent the Board deems
desirable to carry it into effect. Any decision of the Board in the
administration of the Plan, as described herein, shall be final and
conclusive. The Board may act only by a majority of its members in office,
except that the members thereof may authorize any one or more of their number
of any officer of the Company to execute and deliver documents on behalf of
the Board. No member of the Board shall be liable for anything done or
omitted to be done by him or by any other member of the Board in connection
with the Plan, except for his own willful misconduct or as expressly provided
by statute.
3.
PARTICIPATION
Subject to the provisions of the Plan, the Board shall have exclusive
power to select the directors and officers and other key employees of the
Company and its subsidiaries participating in the Plan to be granted Awards
under the Plan.
4.
AWARDS UNDER THE PLAN
(a) TYPE OF AWARDS. Awards under the Plan may be of three types:
(i) "Nonqualified Stock Options" or "Incentive Stock Options," (ii) "Stock
Appreciation Rights" attached to Stock Options, or (iii) "Restricted Stock."
Stock Options are rights to purchase shares of Common Stock of the Company
having a par value of $.001 per share (the "Common Stock"). Stock
Appreciation Rights are rights to receive, without payment to the Company,
cash and/or shares of Common Stock in lieu of the purchase of shares of
Common Stock under the Stock Option to which
Stock incentive plan 1
<PAGE>
the Stock Appreciation Rights are subject to the terms, conditions and
restrictions specified in Paragraph 5. Restricted Stock is a share of Common
Stock which is subject to the repurchase option and the other terms,
conditions and restrictions described in Paragraph 6.
(b) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. There may be
issued under the Plan (as Restricted Stock or pursuant to the exercise of
Stock Options or Stock Appreciation Rights) an aggregate of 10,000,000 shares
of Common Stock, subject to adjustment as provided in Paragraph 7. In
addition to Common Stock actually so issued, there shall be deemed to have
been issued pursuant to the Plan (and therefore no longer available in
connection with Awards) a number of shares equal to the aggregate of the
number of shares of Common Stock under option in respect of which Stock
Appreciation Rights granted pursuant to subparagraph 5(f) shall have been
exercised minus the number of shares of Common Stock, if any, issued upon
exercise of such Stock Appreciation Rights. Common Stock issued pursuant to
the Plan may be either authorized but unissued shares or reacquired shares,
or both. If any Common Stock issued as Restricted Stock shall be repurchased
pursuant to the option described in Paragraph 6 below, or if any Common Stock
issued under the Plan shall be reacquired pursuant to restrictions imposed at
the time of issuance, such shares may again be issued under the Plan.
(c) RIGHTS WITH RESPECT TO COMMON STOCK.
(i) An employee to whom an Award of Restricted Stock has
been made shall have, after issuance to him of a certificate for the
number of shares of Common Stock awarded and prior to the expiration
of the Restricted Period or the earlier repurchase of such shares of
Common Stock as herein provided, ownership of such shares of Common
Stock, including the right to vote the same and to receive dividends
thereon, subject however, to the options, restrictions and limitations
imposed thereon pursuant to the Plan.
(ii) An employee to whom an Award of Stock Option or Stock
Appreciation Rights is made (and any person succeeding to such an
employee's rights pursuant to the Plan) shall have no rights as a
stockholder with respect to any shares of Common Stock issuable
pursuant to any such Stock Option or Stock Appreciation Rights until
the date of the issuance of a stock certificate to him for such
shares. Except as provided in Paragraph 8, no adjustment shall be made
for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for
which the record date is prior to the date such stock certificate is
issued.
(d) EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS: EXPIRATION
OF RESTRICTIONS APPLICABLE TO RESTRICTED STOCK. Options and Stock
Appreciation Rights shall be subject to such terms and conditions upon
exercisability as the Board may determine consistent with the provisions of
this Plan. Repurchase and other restrictions applicable to Restricted Stock
shall be such as are determined in the discretion of the Board consistent
with the provisions of the Plan. The Board may determine to permit any Option
granted hereunder to be exercisable immediately upon the date of grant or any
time thereafter. The Board may determine to permit any Stock Appreciation
Right granted hereunder to be exercisable not less than six months after the
initial award of the Option containing, or the amendment or supplementation
of any existing Option Agreement adding the Stock Appreciation Right;
provided, however, that this limitation shall not apply in the event of death
or disability. The Board may determine that there shall be no restrictions
applicable to Restricted Stock awarded under the Plan.
5.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Board may grant Stock Options (to which may but need not be
attached Stock Appreciation Rights as specified in subparagraph 5(f). Each
Stock Option (referred to herein as an "Option") granted under the Plan shall
be evidenced by an instrument in such form as the Board shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions (and with such other terms and conditions, including but
not limited to restrictions upon the Option or the shares of Common Stock
issuable upon exercise thereof, as the Board, in its discretion, shall
establish):
Stock incentive plan 2
<PAGE>
(a) The Option price shall be determined by the Board at the
time the Option is granted and shall not be less than the par value of
such shares of Common stock.
(b) The Board will determine the number of shares of Common
Stock to be subject to each Option. The number of shares of Common
Stock subject to an outstanding Option will be reduced on a share for
share basis to the extent that shares of Common Stock under such
Option are used to calculate the cash and/or shares of Common Stock
received pursuant to exercise of a Stock Appreciation Right attached
to such Option.
(c) The Option shall not be transferable by the optionee
other than by will or the laws of descent and distribution, and shall
be exercisable during his lifetime only to him.
(d) The Board will determine the conditions and terms
governing the exercise of granted Options; provided, however that no
Option shall be exercisable:
(i) after the expiration of ten years from the date it
is granted and may be exercised during the period prior to its
expiration only at such time or times as the Board may establish;
(ii) unless payment in United States dollars by cash or
check is made for the shares being acquired thereby in full at
the time of exercise, or at the option of the holder of such
Option, in Common Stock theretofore owned by such holder (or any
combination of cash and Common Stock).
For purposes of determining the amount, if any, of the purchase
price satisfied by payment of Common Stock under clause (ii) above,
such Common Stock shall be valued at its fair market value on the date
of exercise. Fair market value means the fair market value of one
share of Common Stock on the date in question, which is deemed to be
the mean between the highest and lowest sales prices per share of
Common Stock on any national stock exchange upon which Common Stock is
listed, or if Common Stock is not listed on any national stock
exchange, the mean between the highest closing bid and lowest closing
asked prices for Common Stock as reported by the National Association
of Securities Dealers NASDAQ System, or if not reported by such
system, the mean between the closing bid and asked prices as quoted by
such quotation source as shall be designated by the Board on that
date. If there shall have been no sale on the date in question, fair
market value shall be determined by reference the last preceding date
on which such a sale or sales were so reported. If the Common Stock
is not listed or admitted to trading on the New York Stock Exchange,
any National Securities Exchange quoted on the NASDAQ National Markets
Systems or in the over-the-counter market, then, the fair market value
shall be as set by, or in a manner established by, the Board of
Directors of the Corporation in good faith. Any Common Stock delivered
in satisfaction of all or a portion of the purchase price shall be
appropriately endorsed for transfer and assigned to the Company. The
Board may, in its discretion and to the extent permitted by the laws
of the State of Delaware determine to permit the holder of an Option
to satisfy the purchase price of the shares as to which an Option is
exercised by delivery of the Option holder's promissory note, such
note to be subject to such terms and conditions as the Board may
determine. The Board may, in its discretion and to the extent
permitted by the laws of the State of Delaware, determine to cause the
Company to lend to the holder of an Option, funds on such terms and
conditions as the Board may determine to be appropriate, sufficient
for the holder of an Option to pay the purchase price of the shares as
to which an Option is to be exercised.
(e) If any person to whom an Option has been granted shall
die holding an Option which has not been fully exercised, his
executors, administrators, heirs or distributees, as the case may be,
may, at any time within one year after the date of such death (but in
no event after the Option has expired under the provisions of
subparagraph 5(d)(i) hereon, exercise the Option with respect to any
shares as to which the decedent could have exercised the Option at the
time of his death.
Stock incentive plan 3
<PAGE>
(f) If the Board, in its discretion, so determines, there
may be attached to the Option a Stock Appreciation Right which shall
be subject to such terms and conditions, not inconsistent with the
Plan, as the Board shall impose, including the following:
(i) A Stock Appreciation Right may be exercised only
to the extent that the option to which it is attached is at the
time exercisable. However, if the option to which the Stock
Appreciation Right is attached is exercisable and if the
optionee is at the relevant time an officer or director of the
Company who is required to file reports pursuant to Section
16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act") ("Covered Participant") - the Stock
Appreciation Right may, subject to the approval of the Board,
be exercised, under such terms and conditions as may be
specified by the Board;
(ii) A Stock Appreciation Right shall entitle the
optionee (or any person entitled to act under the provisions of
subparagraph 5(e) hereunder to surrender unexercised the Option
to which the Stock Appreciation Right is attached (or any
portion of such Option) to the Company and to receive from the
Company in exchange therefor that number of shares of Common
Stock having an aggregate value equal to (or, in the discretion
of the Board, less than) the excess of the value of one share
over the option price per share times the number of shares
subject to the option, or portion thereof, which is so
surrendered. The Company shall be entitled to elect to settle
its obligation arising out of the exercise of a Stock
Appreciation Right, by the payment of cash equal to the
aggregate value of the shares it would otherwise be obligated
to deliver or partly by the payment of cash and partly by the
delivery of shares of Common Stock. Any such election shall be
made within 15 business days after the receipt by the Board of
written notice of the exercise of the Stock Appreciation Right.
The value of a share of Common Stock for this purpose shall be
the fair market value thereon on the last business day next
preceding the date of the election to exercise the Stock
Appreciation Right;
(iii) No fractional shares shall be delivered under
this subparagraph 5(f) but in lieu thereof a cash adjustment
shall be made.
(g) The Option agreement evidencing any incentive stock
option granted under this Plan shall provide that if the optionee
makes a disposition, within the meaning of Section 425(c) of the code
and the regulations promulgated thereunder, of any share or shares of
Common Stock issued to him pursuant to his exercise of an Option
granted under this Plan within the two-year period commencing on the
day after the date of the granting of such Option or within a one-year
period commencing on the day after the date of transfer of the share
or shares to him pursuant to the exercise of such Option, he shall,
within ten days of such disposition, notify the Company thereof and
immediately deliver to the Company any amount of federal income tax
withholding required by law.
6.
RESTRICTED STOCK
Each Award of Restricted Stock under the Plan shall be evidenced by an
instrument in such form as the Board shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions (and with such other terms and conditions as the Board, in its
discretion, shall establish):
(a) The Board shall determine the number of shares of Common
Stock to be issued to a participant pursuant to the Award.
(b) Shares of Common Stock issued to a participant in
accordance with the Award may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the
laws of descent and distribution, for such period as the Board shall
determine, from the date on which the Award is granted (the
"Restricted Period"). The Company will have the option to repurchase
the shares subject to the
Stock incentive plan 4
<PAGE>
Award at such price as the Board shall have fixed, in its sole
discretion, when the Award was made, which option will be exercisable
at such times and upon the occurrence of such events as the Board
shall establish when the Award is granted or if, on or prior to the
expiration of the Restricted Period or the earlier lapse of the
Option, the participant has not paid to the Company an amount equal to
any Federal, State or local income or other taxes which the Company
determines is required to be withheld in respect of such shares. Such
option shall be exercisable on such terms, in such manner and during
such period as shall be determined by the Board when the Award is
made. Certificates for shares of Common Stock issued pursuant to
Restricted Stock Awards shall bear an appropriate legend referring to
the foregoing Option and other restrictions and to the fact that the
shares are partly paid. Any attempt to dispose of any such shares of
Common Stock in contravention of the foregoing Option and other
restrictions shall be null and void and without effect. If shares of
Common Stock issued pursuant to a Restricted Stock Award shall be
repurchased pursuant to the Option described above, the participant,
or in the event of his death, his personal representative, shall
forthwith deliver to the Secretary of the Company the certificates for
the shares of Common Stock awarded to the participant, accompanied by
such instruments of transfer, if any, as may reasonably be required by
the Secretary of the Company. If the Option described above is not
exercised by the company during such period as is specified by the
Board when the Award is made, such Option and the restrictions imposed
pursuant to the first sentence of this subparagraph 6(b) shall
terminate and be of no further force and effect.
7.
STOCK DIVIDENDS, STOCK SPLITS, REORGANIZATIONS AND
CERTAIN OTHER CORPORATION TRANSACTIONS
(a) EXERCISE OF CORPORATE POWERS. The existence of outstanding
awards of Options, Stock Appreciation Rights or Restricted Stock shall not
affect in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalization, reorganization or
other changes in the Company's capital structure or its business or any
merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the Company's
shares of Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding whether of a
similar character or otherwise.
(b) RECAPITALIZATION OF THE COMPANY. If, while there are Options,
Stock Appreciation Rights or Restricted Stock outstanding, the Company shall
effect any subdivision or consolidation of shares of Common Stock or other
capital readjustment, the payment of a stock dividend, stock split,
combination of shares or recapitalization or other increase or reduction in
the number of shares of Common Stock outstanding, without receiving
compensation therefor in money, services or property, then the number of
shares of Common Stock available under the Plan and the number of Options,
Stock Appreciation Rights or Restricted Stock which may thereafter be
exercised shall (i) in the event of an increase in the number of shares
outstanding, be proportionately increased and the fair market value of the
Options, Stock Appreciation Rights or Restricted Stock awarded as of the date
of the award shall be proportionately reduced; and (ii) in the event of a
reduction in the number of shares outstanding, be proportionately reduced,
and the fair market value of the Options, Stock Appreciation Rights or
Restricted Stock awarded as of the date of the Award shall be proportionately
increased.
(c) REORGANIZATION OF THE COMPANY. If the Company is reorganized,
or merged or consolidated or a party to a plan of exchange with another
corporation pursuant to which reorganization, merger, consolidation or plan
of exchange stockholders of the Company receive any shares of Common Stock or
other securities, or if the Company shall distribute securities of another
corporation to its stockholders, each Participant shall be entitled to
receive in lieu of the number of unexercised Options, Stock Appreciation
Rights or Restricted Stock at the date of award, to which such holder would
have been entitled pursuant to the terms of the agreement of merger of
consolidation, if immediately prior to such merger or consolidation such
holder had been the holder of record of a number of shares of Common Stock
equal to the number of the unexercised Options or Stock Appreciation Rights
previously awarded to him, and Restricted Stock shall be treated the same as
unrestricted outstanding shares of Common Stock; provided, that, anything
herein contained to the contrary notwithstanding, upon the dissolution or
Stock incentive plan 5
<PAGE>
liquidation of the Company or upon any merger or consolidation of the Company
where it is not the surviving corporation, each Participant shall be entitled
to a benefit as though he had become fully vested in all Options, Stock
Appreciation Rights and Restricted Stock previously awarded to him and then
outstanding under this Plan, and had terminated employment with the Company
immediately prior to or concurrently with such dissolution or liquidation or
merger or consolidation.
(d) ISSUE OF COMMON STOCK BY THE COMPANY. Except as hereinabove
expressly provided, the issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon any conversion
of shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of, or fair market value of, any Options or
Stock Appreciation Rights then outstanding under previous awards but holders
of Restricted Stock shall be treated the same as the holders of outstanding
unrestricted shares of Common Stock
(e) CHANGE IN CONTROL. The Board may, in its sole discretion,
provide that an Option or Stock Appreciation Right shall become fully
exercisable or that a share of Restricted Stock shall be free of any
restrictions upon a Change in Control of the Company (as defined in the next
sentence). "Change in Control" of the Company shall be conclusively deemed to
have occurred if (and only if) any of the following shall have taken place:
(i) a change in control is reported by the Company in response to either Item
6(e) of Schedule 14(a) of Regulation 14(a) promulgated under the Exchange Act
or Item 1 of Form 8-K promulgated under the Exchange Act; (ii) any "person"
(as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent or more of the combined voting power of the
company's then outstanding securities; or (iii) following the election or
removal of directors, a majority of the Board of Directors consists of
individuals who were not members of the Board of Directors two years before
such election or removal, unless the election of each director who was not a
director at the beginning of such two-year period has been approved in
advance by directors representing at least a majority of the directors then
in office who were directors at the beginning of the two-year period.
(f) CHANGE IN AUTHORIZED COMMON STOCK. In the event that the
number of shares of Common Stock which the corporation is authorized to issue
pursuant to its Certificate of Incorporation is increased or decreased, the
aggregate maximum number of shares of Common Stock which may be issued under
the Plan specified in paragraph 4(b) shall be increased or decreased
proportionately.
8.
DESIGNATIONS OF BENEFICIARY BY PARTICIPANT
A participant may name a beneficiary to receive any payment to which
he may be entitled in respect of Awards under the Plan in the event of his
death, on a form to be provided by the Board. A participant may change his
beneficiary from time to time in the same manner. If no designated
beneficiary is living on the date on which any amount becomes payable to a
participant's beneficiary, such payment will be made to the participant's
executors or administrators, and the term "beneficiary" as used in the Plan
shall include such person or persons.
9.
TAXES
(a) The Company may make such provisions as it deems appropriate
for the withholding of any taxes which it determines is required in
connection with any Options or Stock Appreciation Rights or Restricted Stock
granted under this Plan.
(b) Notwithstanding the terms of subparagraph 9(a), any participant
may pay all or any portion of the taxes required or allowed to be withheld by
the Company if paid to him in connection with the exercise of an Option,
Stock incentive plan 6
<PAGE>
Stock Appreciation Right or vesting of any Award of Restricted Stock by
electing to have the Company withhold shares of Common Stock, or by
delivering previously owned shares of Common Stock, having a fair market
value, determined in accordance with subparagraph 5(d), equal to the amount
required to be withheld or paid. A Participant must take the foregoing
election on or before the date that the amount of tax to be withheld is
determined ("Tax Date"). Such elections are irrevocable and subject to
disapproval by the Board. Elections by Covered Participants are subject to
the following additional restrictions: (i) such election may not be made
within six months of the grant of the Award, provided that this limitation
shall not apply in the event of death or disability, and (ii) such election
must be made either six months or more prior to the Tax Date or in a Window
Period (as defined herein). Where the Tax Date in respect of an Award is
deferred until after exercise or expiration of restrictions and the Covered
Participant elects share withholding, the full amount of shares of Common
Stock will be issued or transferred to him upon exercise of the Option or
exercise of the Stock Appreciation Right or expiration of restrictions of the
Restricted Stock, as the case may be, but the Covered Participant shall be
unconditionally obligated to tender back to the Company the number of shares
necessary to discharge the Company's withholding obligation or his estimated
tax obligation on the Tax Date. As used herein, Window Period means the
period commencing on the third business day following the Company's release
of a quarterly or annual summary statement of sales and earnings and ending
on the twelfth business day following such release.
10.
MISCELLANEOUS PROVISIONS
(a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained
in the employ of the Company or any subsidiary.
(b) A participant's rights and interest under the Plan may not be
assigned or transferred in whole or in part either directly or by operation
of law or otherwise (except in the event of a participant's death), including
but not by way of limitation, execution, levy, garnishment, attachment,
pledge, bankruptcy or in any other manner and no such right or interest of
any participant in the Plan shall be subject to any obligation or liability
of such participant.
(c) No shares of Common Stock shall be issued hereunder unless
counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal and state securities laws.
(d) The expenses of the Plan shall be borne by the Company.
(e) The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or make any other segregation of
assets to assure the payment of any Award under the Plan and payment of
Awards shall be subordinate to the claims of the Company's general creditors.
By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of, and
consent to, any action taken under the Plan by the Company or the Board.
11.
AMENDMENT OR DISCONTINUANCE
The Plan may be amended at any time and from time to time by the Board
of Directors but no amendment which increases the aggregate number of shares
of Common Stock which may be issued pursuant to the Plan shall be effective
unless and until the same is approved by the stockholders of the Company. No
amendment of the Plan shall adversely affect any right of any participant
with respect to any Award theretofore granted without such participant's
written consent.
Stock incentive plan 7
<PAGE>
12.
TERMINATION
This Plan shall terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board of
Directors terminating the Plan; or
(b) ten years from the date hereof
No termination of the Plan shall alter or impair any of the rights or
obligations of any person, without his consent, under any Award theretofore
granted under the Plan.
13.
STOCKHOLDER ADOPTION
The Plan is approved and adopted by the stockholders of the Company by
written consent in the manner required by the laws of the State of Delaware
as of April 7, 1998.
MEDIQUIK SERVICES, INC.
Stock incentive plan 8
<PAGE>
STATEMENT OF UNANIMOUS CONSENT
OF
THE BOARD OF DIRECTORS
OF
MEDIQUIK SERVICES, INC.
This Statement of Unanimous Consent of the Board of Directors of
MediQuik Services, Inc., when executed by the Board of Directors, shall
become effective as of the 4th day of January, 1999, pursuant to the
provisions of Section 108 of the General Corporation Law of Delaware, and
shall have the same force and effect as if all such Directors were present
and acting at a meeting duly noticed and held for the purpose of adopting the
Resolutions hereinafter set forth. This Unanimous Consent may be effected,
with requisite force and authority, by way of facsimile.
Amendment of Stock Incentive Plan
WHEREAS, on April 7, 1998, the Board of Directors and the
Incorporator of MediQuik Services, Inc., by unanimous consent, authorized the
establishment of the Company's STOCK INCENTIVE PLAN (the "Plan") which, in
part, set forth the maximum number of Shares authorized for issuance pursuant
to the Plan at an aggregate of ten million (10,000,000) shares; and
WHEREAS, it is the unanimous decision of the Board that the maximum
number of Shares of Common Stock of the Company that may be issued, pursuant
to the Plan, be reduced to an aggregate of 1,500,000 shares; Therefore, it is -
RESOLVED, that the Stock Incentive Plan of MediQuik Services, Inc.
be, and is hereby, amended to reduce the maximum number of shares of common
stock of the Company that may be issued pursuant to the Plan to an aggregate
of one million five hundred thousand (1,500,000) shares of common stock.
AGREED AND EFFECTIVE as of the 4th day of January, 1999.
/s/ Grant M. Gables /s/ William J. Marciniak /s/ Howard B. Butler, Jr.
- ---------------------- ------------------------ --------------------------
Grant M. Gables, William J. Marciniak, Howard B. Butler, Jr.,
Director Director Director
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, SUCH INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATION OF SUCH OMITTED
INFORMATION HAS BEEN INDICATED WITH AN ASTERISK[*].
NATIONAL HEALTHCARE ALLIANCE, INC.
ANCILLARY SERVICES PARTICIPATING PROVIDER AGREEMENT
FOR PPO/EPO NETWORKS
This Agreement (hereinafter referred to as "Agreement") is hereby made by
and between MEDIQUIK SERVICES, L.L.C. (hereinafter referred to as "Ancillary
Service"), organized under the laws of the State of Texas, and NATIONAL
HEALTHCARE ALLLIANCE, INC., (hereinafter referred to as "NHA") a Nevada
corporation, effective January 1, 1998.
WITNESSETH
WHEREAS, NHA is a corporation duly organized and existing under the laws
of the State of Texas and is engaged in the business of marketing health care
cost containment services and preferred provider networks for groups of
individuals; and
WHEREAS, Ancillary Service provides certain Covered Services (as defined
below) and which is (i) duly licensed by the applicable licensing authority of
the state in which it is located; (ii) accredited by an applicable Accreditation
Agency for their services, Medicare or any other applicable organization and;
(iii) is in compliance with all other applicable Federal, State and Local laws
governing operation of such Ancillary Service to the extent that such laws are
applicable to such Ancillary Service; and
WHEREAS, the Ancillary Service desires to contract with NHA in a cost
contaimnent and preferred provider program as is herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements,
and subject to the conditions and limitations set forth herein, the parties
hereto hereby agree as follows:
1.0 DEFINITIONS
1.1 "Benefits" means dollar amount payable for a Covered Service after
application of copays under a Contract.
1.2 "Certification" means a Utilization Review determination made on behalf
of a Payor that specific services and supplies provided by the Ancillary Service
or an Ancillary Service Health Care Practitioner to a Participant are Medically
Necessary and Reasonable Covered Services and meet the standards and criteria
for Certification. Certification applies only to medical necessity based on
information provided. Certification is not a verification of eligibility or
that benefits exist to cover such Covered Service; such verification must be
obtained from Payor.
1.3 "Clinical Note" means a dated written notation by an Ancillary Service
employee or Subcontractor that documents a Visit with a Participant and that
contains a description of (i) signs and symptoms of the Participant's medical
condition; (ii) any Covered Services and other medical
<PAGE>
treatments, supplies, appliances and equipment provided; and (iii) any
changes in the Participant's physical or emotional condition.
1.4 "Completed Claim" means a request for payment for Covered Services
submitted by Ancillary Service that is accurate, complete, and in the form
agreed to by the parties.
1.5 "Contract" means a group health benefits policy or contract administered
by Payor under an NHA program that designates certain providers as preferred
providers under preferential arrangements.
1.6 "Copays" means any applicable co-insurances, co-payments, copays and/or
deductibles.
1.7 "Covered Person" means any individual who is eligible to receive Covered
Services in accordance with this agreement.
1.8 "Covered Services" means all services within Ancillary Service's
capabilities that are to be rendered to Covered Persons by Ancillary Service in
accordance with this agreement. Reimbursement for Covered Services by Payors
will be based on a determination that such services were Medically Necessary and
Reasonable and that, if required by the Contract, such services were approved
for Certification.
1.9 "Effective Date" is to be interpreted within context to determine whether
it means that date related to the Agreement or that date related to fee
schedules as shown on attached Exhibits.
1.10 "Facility" means any facility licensed to render medically related
services. Reference to network Facilities will be noted by inclusion of the term
"network" preceding the term "Facility(s)".
1.11 "Medically Necessary and Reasonable" shall include due consideration of
whether services are: (i) appropriate and necessary for the symptoms, diagnosis
or treatment of a medical condition; (ii) provided for the diagnosis or direct
care and treatment of a medical condition; (iii) with in standards of good
medical practice with in the organized medical community; (iv) not primarily for
the convenience of the Participant, the Participant's attending or consulting
physician, or another healthcare Provider; and (v) the most appropriate level of
services or supplies that can be provided in accordance with accepted medical
practice.
1.12 "Ancillary Service Health Care Practitioner" means those appropriately
licensed practitioners assigned by Ancillary Service to provide Covered Services
to Covered Persons in fulfillment of the Ancillary Service responsibilities
under this Agreement.
1.13 "Participant" means an individual who, on the date healthcare services
are rendered, is eligible for and covered under the provisions of a Contract
which has been arranged by a Payor as defined herein.
1.14 "Payor" means an entity to which claims for Covered Services rendered to
Covered Persons under a Contract are to be submitted and reimbursed, according
to the Program, and includes, but
<PAGE>
is not limited to, any employer, third party administrator, trust, insurance
company, or entity that has entered into an agreement to obtain services for
its Covered Persons from the NHA network of participating providers. Payors
are contractually committed to the terms and conditions related to
obligations of Payor including, but not limited to, reimbursement of Agency.
1.15 "Program" means the benefits arranged by NHA through agreements with
Payors for the provision of Covered Services to Covered Persons.
1.16 "Provider" means those physicians, hospitals, Outpatient Facilities and
other organizations or individuals that have agreements with NHA directly or
indirectly to provide certain health care services to Covered Persons.
1.17 "Utilization Review" or "UR" means a function performed on behalf of the
Payor to determine whether Covered Services to be provided to a Participant
qualify for Certification
2.0 SERVICES OF THE ANCILLARY SERVICE
2.1 PROVISION OF SERVICES. Ancillary Service agrees to provide to all
Covered Persons all Covered Services within the scope of its capability,
consistent with accepted standards of care.
2.2 NONDISCRIMINATION.
2.2.1. Covered Services shall be provided in accordance with the
standards and procedures applicable to Ancillary Service's other patients and
without discrimination on account of sex, race, color, religion, marital status,
economic status, sexual orientation, age, ancestry, national origin, health
status, or source of payment. Nonetheless, Ancillary Service understands that
plan benefits are subject to different diagnostic and treatment provisions, in
so far as reimbursement for services are concerned.
2.2.2 Ancillary Service shall not be required, because of this
agreement, to perform any service that it does not nor will not perform for any
other patients.
2.3 IDENTIFICATION OF COVERED PERSONS AND SERVICES. NHA shall arrange for
Payor to provide Ancillary Service with a method of identifying Covered Persons.
2.4 COVERED SERVICES. Except in the case of an Emergency, the Ancillary
Service shall provide Covered Services to Participants, and shall be paid by the
Payors for such services, only if such services are (i) Medically Necessary and
Reasonable, (ii) ordered by a physician Provider, and (iii) are Certified, if
required by Contract.
2.5 ACCEPTANCE OF PARTICIPANTS. The Ancillary Service shall accept as a
patient each Participant whose Physician has established a plan of treatment
which includes Covered Services, within the capability of the Ancillary Service,
specifically prescribed for said Participant.
<PAGE>
2.6 CLINICAL NOTES AND SUMMARY REPORTS. Each patient encounter shall be
documented in a Clinical Note by the Ancillary Service Health Care Practitioner
or Subcontractor who performs such visit. The Ancillary Service shall
periodically prepare, for each Participant receiving care hereunder, a Summary
Report which shall summarize the Clinical Notes and other observations regarding
the Participant recorded since the time of preparation of the previous Summary
Report regarding such Participant. Each Summary Report shall be submitted by the
Ancillary Service to the Participant's attending Physician as soon as such
report is completed.
2.7 ADEQUATE PERSONNEL. At all times during the term of this Agreement, the
Ancillary Service shall employ or contract with sufficient numbers and
categories of health care practitioners to provide all Covered Services to
Participants.
2.8 PERSONNEL QUALIFICATIONS. All Ancillary Service Health Care
Practitioners who provide the Covered Services to the Participants shall at all
times have the minimum training and qualifications established by applicable
Federal and State statutory or regulatory requirements.
2.9 PLAN OF TREATMENT. The Ancillary Service shall, if appropriate, review
the original plan of treatment for each Participant to whom the Ancillary
Service provides the Covered Services hereunder with said Participant's
attending Physician, and shall submit said Participant's plan of treatment to
said Physician for recertification, at such intervals as the severity of said
Participant's medical condition requires by at least every thirty (30) calendar
days or such shorter period as applicable Federal and State law shall require.
2.10 MEDICAL RECORDS. For purposes of Utilization Review, Ancillary Service
agrees to make available at all reasonable times all of Ancillary Service's
books and records relating to all matters which are the subject of this
Agreement, including but not limited to services rendered, fees and charges. In
no event shall Ancillary Service be required to disclose or provide any
information or records the disclosure of which is prohibited by law.
2.11 UTILIZATION REVIEW & QUALITY ASSURANCE. Ancillary Service agrees to
comply with NHA's utilization review and quality assurance standards and
procedures, including pre-admission certification, concurrent review, discharge
planning and case management.
2.12 THIRD PARTY BENEFICIARY. The Ancillary Service is aware of and
acknowledges that NHA intends to contract with Payors with respect to the
rendering by the Ancillary Service of Covered Services as provided herein and
that the services the Ancillary Service has agreed to provide hereunder are for
the benefit of NHA and Payors. The Ancillary Service agrees to provide health
care services to Participants as may be Medically Necessary when requested by
such Participants. NHA recognizes the right of the Ancillary Service to select
patients and to establish treatment hours and procedures. The Ancillary Service
further agrees to comply with applicable federal and state laws and regulations
pertaining to discrimination.
2.13 APPROVAL OF ANCILLARY SERVICE PHYSICIANS. The name and specialty of each
Ancillary Service member physician whom NHA has approved to provide services
hereunder is set forth on Attachment A. NHA will defer to the Ancillary
Service's credentialing criteria and process only
<PAGE>
when that process parallels those credentialing criteria utilized by NHA. NHA
reserves the right to review the Ancillary Service's credentialing criteria.
Attachment A will list those Ancillary Service Health Care Practitioners
eligible to provide services under the terms of the Agreement. Ancillary Service
will use its best efforts and inform NHA in writing, at least thirty (30) days
prior to any change in the status of a participating Ancillary Service
Physician. This would include, as a minimum, all additions and terminations
affecting Attachment A.
2.14 OBLIGATIONS OF ANCILLARY SERVICE PHYSICIANS. The Ancillary Service
represents and warrants that each Ancillary Service Physician shall comply with
all of the duties, obligations and By Laws of the Ancillary Service, as well as
of Ancillary Service Physicians, under this Agreement.
2.15 MEDICAL STAFF PRIVILEGES. As of the effective date of this Agreement,
each Ancillary Service Physician shall have active admitting privileges at no
fewer than one (1) Participating Hospital, and shall maintain such admitting
status at all times during the term of this Agreement.
2.16 REFERRAL OF PARTICIPANTS. Each Ancillary Service Physician shall use his
best efforts to refer Participants to Network Providers, and to admit or arrange
for admission of Participants to Network Provider Hospitals, unless otherwise
directed by the participant, provided that such referral or admission is
medically appropriate.
2.17 REQUIRED DISCLOSURES. The Ancillary Service shall notify NHA in writing
within thirty (30) calendar days following the occurrence of any of the
following events:
2.17.1 There is a change in the Ancillary Service's business address, or
2.17.2 Any of the Ancillary Service Health Care Practitioner's license to
practice in the State of Texas is suspended, revoked, terminated, or subject to
terms of probation or to the restriction, or
2.17.3 Any Ancillary Service Health Care Practitioner is no longer
credentialed in the specialty set forth opposite his/her name in Attachment A;
or
2.17.4 Any Ancillary Service Health Care Practitioner learns that he/she
has become a defendant in any malpractice action or is required to pay damages
in any such action by way of judgment or settlement; or
2.17.5 Any Ancillary Service Physician becomes the subject of any
disciplinary proceeding or action before the State Board of Medical Examiners or
a similar agency in any state; or
2.17.6 Any Ancillary Service Health Care Practitioner is convicted of a
felony or
2.17.7 Any Ancillary Service Health Care Practitioner becomes
incapacitate] or withdraws from the Agency; or
2.17.8 An act of nature or any event beyond the Ancillary Service's or
the subject Ancillary Service Health Care Practitioner's reasonable control
occurs, which substantially interrupts all of the portion of the Ancillary
Service's or any Ancillary Service Health Care Practitioner's practice for a
period of sixty (60) consecutive calendar days or which has a material adverse
effect on the Ancillary Service's or Ancillary Service Health Care
Practitioner's ability to perform its or his/her obligations hereunder for such
a period; or any other problem arises which might materially affect the
Ancillary
<PAGE>
Service's or any of the Ancillary Service Health Care Practitioner's ability
to carry out its duties and obligations under this Agreement.
- -------------------------------------------------------------------------------
THIS AGREEMENT WILL BECOME EFFECTIVE WITHIN THIRTY (30) DAYS AFTER ACCEPTANCE
BY NHA FOR MOST PAYORS, HOWEVER FOR CERTAIN PAYORS THE EFFECTIVE DATE MAY BE
DELAYED FOR PERIODS UP TO NINETY (90) DAYS. DUE TO THE POTENTIAL FOR DELAYED
EFFECTIVE DATES, NEW PHYSICIANS SHOULD VERIFY THEIR STATUS BEFORE RENDERING
SERVICE. NHA WILL IDENTIFY, UPON REQUEST, THOSE PAYORS THAT MAY IMPOSE DELAYED
EFFECTIVE DATES.
- -------------------------------------------------------------------------------
3.0 PREFERRED RATES
3.1 RATES. The initial payment rates for Covered Services are specified in
Exhibit 1 and/or Exhibits 2-5, if necessary, to describe other unique programs.
These rates shall be accepted as payment in full for Covered Services to Covered
Persons and shall remain in effect until changes in rates are agreed upon, in
writing, or this agreement is terminated. Either party may request renegotiation
of the rates by giving the other party ninety (90) days advance written notice.
Ancillary Service agrees to not bill Covered Person, Payor and NHA for any
charges related to Covered Persons over that specified in attached Exhibits.
3.2 PAYMENT. Payment of amounts specified under this agreement shall
constitute payment in full for Covered Services. Ancillary Service shall not
seek any additional payment from Covered Persons for Covered Services except for
copays, which are obligations of Covered Persons under the Program. Nothing
herein shall affect Ancillary Service's right to bill for non-Covered Services.
NHA recognizes the right of the Ancillary Service to bill the Covered
Person for any and all charges which may arise from other than Covered Services
as may have been contracted for outside the Agreement.
3.3 RESTRICTIVE NETWORKS. Ancillary Service acknowledges that NHA may, in
certain restrictive networks, choose to contract certain ancillary services,
including by way of example only, laboratory services, to one or more providers,
and that if Payor and/or NHA so chooses, then Ancillary Service will be required
to use such providers for the provision of such ancillary services to Covered
Persons, even if Ancillary Service typically would have performed such services
in Ancillary Service's office. In the event of the foregoing, were Ancillary
Service to perform such services, Ancillary Service may be limited to a
reimbursement equal to what would be paid to that selected provider for the same
service.
4.0 CLAIMS
4.1 CLAIMS SUBMISSION. Ancillary Service shall submit claims to NHA for
Covered Services witllin a reasonable time of the date of discharge of a Covered
Person or the date of service. NHA shall reprice claims and forward to
respective Payors for prompt payment.
4.2 PROMPT PAYMENT. The Payor Agreement between NHA and Payors shall provide
that Payors shall remit payment for Covered Services statements within thirty
(30) working-days of its receipt
<PAGE>
thereof. It shall further provide that in the event a Payor shall fail to
make payment of amounts due under this Agreement, for submitted claims
properly completed, within the thirty (30) working-day period, all packaged
prices and discounts shall be null and void and normal pricing including
providers standard policy with respect to late payments will prevail. A
maximum of forty (40) working-days from date billed by Ancillary Service to
payment received by Ancillary Service will be considered in determining
whetller a discount is applicable.
The thirty (30) working-day limitation will not apply in those cases
where Coordination of Benefits is involved. Such thirty (30) working-day period
may be extended for an additional reasonable time period up to a maximum of
ninety (90) days if Payor requires additional time to investigate whether it is
responsible for such billed charges and provided that Payor has reasonable
grounds to believe that it is not the primary Payor for the services and Payor
has initiated and diligently pursued investigation of other payment sources
prior to the expiration of the initial thirty (30) working-day period. If
payment is not received within the specified time period, Ancillary Service can
bill patient for services rendered. Furthermore, the responsible party (patient
or Payor) will be subject to pay Ancillary Service for services rendered at one
hundred percent (100%) of billed charges.
4.3 COORDINATION OF BENEFITS. Ancillary Service shall take reasonable steps
to secure current information from Participants with respect to the existence
and source of other third party liability or coverage for Participants and shall
provide such information to Payor as directed by NHA. Ancillary Service shall
cooperate with Payor and NHA in administering coordination of benefits and other
third party reimbursement provisions and in informing Payor of any erroneous
payments under this Agreement and in refunding such amounts to Payor.
4.4 SUBCONTRACTORS. If any Covered Services are to be performed by a
Subcontractor, the Ancillary Service and the Subcontractor shall enter into a
written contract which expressly provides that the Subcontractor's services are
subject to the same term and conditions as Covered Services hereunder. The
Ancillary Service shall provide NHA, prior to the execution of such Covered
Services as of the effective date of this Agreement and thereafter, with a copy
of any such contract with a Subcontractor that may be entered into after the
effective date of this Agreement, which contract shall be subject to the prior
approval of NHA. Payors shall not pay the Ancillary Service for any Covered
Services provided by a Subcontractor unless, at the time that such Covered
Services are rendered, the Ancillary Service has previously provided NHA with a
copy of the contract between the Ancillary Service and the Subcontractor and
such contract has been approved by NHA.
4.5 PAYOR'S ROLE. Ancillary Service acknowledges that, except for copays,
Ancillary Service shall look to Payor for payment for Covered Services. Nothing
herein shall preclude Ancillary Service's right to pursue payment from Covered
Persons to the extent that it does not receive payment from Payor, unless such
payment has been denied due to a finding that services rendered were not
medically necessary.
4.6 NHA NOT INSURER. Ancillary Service acknowledges that NHA is not an
insurer, guarantor, or underwriter and is not liable for payment to Ancillary
Service for services provided to any person.
<PAGE>
5.0 RECORDS
Ancillary Service shall maintain adequate and accurate medical, financial
and statistical records, data and information reasonably required by us for
encounter data, claims processing, coordination of benefits, subrogation,
auditing and other requirements for the administration of all NHA Programs in
accordance with applicable laws, regulations, and practices. Ancillary Service
shall, as permitted by law, make such records reasonably available to NHA. NHA
or Payors will provide reasonable notice and reimbursement to Ancillary Service
for copies of records requested and received.
6.0 STANDARDS
6.1 GOOD STANDING. Ancillary Service shall maintain in good standing all
licenses required by law.
6.2 GENERAL PROVISIONS. All Covered Services provided by the Ancillary
Service to the Participants hereunder shall comply in all respects with any
applicable Federal, State and local statutory or regulatory requirements.
6.3 INSURANCE COVERAGE. Ancillary Service shall have and maintain
professional liability insurance coverage, in a minimum amount of
$100,000/$300,000, with a recognized insurance carrier as a prerequisite to
providing Covered Services to Covered Persons.
6.4 NOTIFICATION. Ancillary Service shall notify NHA promptly of any
noncompliance or anticipated noncompliance with the standards set forth in this
section.
6.5 UTILIZATION REVIEW. In connection with the utilization review services
which NHA has agreed to secure for Payor, the parties acknowledge and agree that
a key component of their efforts to maximize cost containment for the benefit of
Payors is the development of systems and procedures which will closely monitor
and scrutinize the Ancillary Service's practices relating to the utilization of
Ancillary Service's services. It is expressly agreed that in no event shall NHA
render professional medical opinions with regard to particular patients, but
rather that NHA, Payor, Ancillary Service and the entity performing the
Utilization Review shall, in agreement with Ancillary Service establish
effective mechanisms by which Ancillary Service may receive any required
Certification.
7.0 TERM AND TERMINATION
7.1 TERM AND TERMINATION. The term of this Agreement shall begin on the
Effective Date and shall remain in full force and effect until terminated as
herein provided. Either party may terminate this Agreement, with or without
cause, by delivering written notice to the other party not less than ninety (90)
days before the date upon which such termination is to become effective.
7.2 TERMINATION OF INDIVIDUAL PAYORS. Ancillary Service has the right to
terminate any individual Payor under this Agreement upon giving NHA and the
Payor thirty (30) days notice in the case of
<PAGE>
Payor's bankruptcy or Payor's failure to pay, or otherwise comply with the
terms of this Agreement. The notice of termination for cause will not be
effective if the breaching party cures the breach to the satisfaction of the
other party within the thirty (30) day notice period. Termination of an
individual Payor shall have no effect on the contractual relationship between
NHA, other Payors or Ancillary Service under this Agreement.
7.3 TERMINATION UPON BREACH. Either party may terminate the agreement for
cause upon the breach of this agreement by the other party not remedied within
thirty (30) days after receipt of notice thereof from the complaining party.
7.4 PROCEDURE UPON TERMINATION. Upon termination of the agreement by either
party for any reason all rights and obligations shall cease, except those that
shall have theretofore accrued as a result of the operation of this agreement.
Upon such termination Ancillary Service shall, to the extent provided in any
plan, continue to provide Covered Services to Covered Persons and Payor shall
continue to reimburse for such Covered Services, for a period not to exceed
ninety (90) days, until the later of the conclusion of any treatment for a
specific condition existing as of such termination and/or the discharge or
transfer of eligible persons receiving such treatment.
7.5 GOVERNMENTAL CONFLICTS. Notwithstanding any other provision of this
Agreement to the contrary (it heing the agreement of the parties that the
provisions of this Section shall supersede, govern and control any conflict
otherwise posed by such other provisions), if the governmental agencies (or
their representatives) which administer Medicare, or if any other federal, state
or local government or agency passes, issues or promulgates any law, rule,
regulation, standard or interpretation at any time while this Agreement is in
effect which prohibits, restricts, limits or in any way changes the method or
amount of reimbursement or payment for services rendered under this Agreement,
or which otherwise affects either party's rights or obligations hereunder,
either party may give the other notice of intent to amend this Agreement to the
satisfaction of the noticing party, to adjust for such prohibition, restriction,
limitation or change. The parties shall use best reasonable efforts to amend the
Agreement accordingly and leave intact as much of the Agreement as possible. If
this Agreement is not so amended in writing within the period such law, rule,
regulation, standard or interpretation allows, this Agreement may terminate.
8.0 GENERAL
8.1 ASSIGNMENT. This agreement may not be assigned, delegated, or
transferred by either party without the prior written consent of the other.
8.2 INDEPENDENT CONTRACTORS. Under this agreement, NHA and Ancillary Service
are independent contractors, and neither party nor its agents or employees shall
have any right or authority to assume or create any obligation on behalf of or
in the name of the other party.
8.3 NOTICES. Any notice given pursuant to this agreement shall be in writing
and shall be delivered personally or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
<PAGE>
NHA: NATIONAL HEALTHCARE ALLIANCE, INC.
770 S. Post Oak Lane, Suite 445
Houston, TX 77056
Ancillary Services: MEDIQUIK SERVICES, L.L.C.
2008 West Main
Houston, TX 77098
Attn: President
A notice shall be deemed given on the date it is deposited in the mail in
accordance with the foregoing. Either party may change the address to which to
send notices by giving the other party ten (10) days' prior written notice of
such change.
8.4 SEVERABILITY. The provisions of this agreement shall be deemed
severable, and if any portion shall be held invalid, illegal, or unenforceable
for any reason, the remainder of this agreement shall be effective and binding
on the parties.
8.5 WAIVER OF PROVISIONS. A waiver of any of the terms and conditions hereof
shall not be construed as a waiver of any other terms and conditions hereof.
8.6 GOVERNING LAW. This agreement shall be construed in accordance with the
laws of the State of Texas.
8.7 ENTIRE AGREEMENT. This agreement, including the attached Exhibits,
contains a full and complete expression of the rights and obligations of the
parties, and it shall supersede all other agreements, written and oral,
heretofore made by the parties.
8.8 AMENDMENTS. We reserve the right to amend this Agreement, with exception
of Ancillary Service's right to terminate, by sending Ancillary Service written
notice forty-five (45) days prior to the effective date of any amendment. This
Agreement may otherwise be amended at any time if in writing presented by
certified mail, return receipt requested, and duly signed by both parties.
8.9 ARBITRATION. It is understood and agreed that any dispute, controversy
or question arising under this Agreement shall be referred for decision by
arbitration by an arbitrator selected by the parties. The proceeding shall be
governed by the Rules of the American Arbitration Association then in effect or
such rules last in effect (in the event such Association is no longer in
existence). If the parties are unable to agree upon such an arbitrator within
thirty (30) days after either party has given the other party written notice of
its desire to submit the dispute, controversy or question for decision, each
party shall appoint an arbitrator of its choice within ten (10) days. The
appointed arbitrators will select a third arbitrator. The arbitrators shall hear
the parties and settle the dispute, controversy or question.
Arbitration shall be the exclusive remedy for the settlement of disputes
arising under this Agreement except as otherwise provided. The decision of the
arbitrator(s) shall be final, conclusive
<PAGE>
and binding, and no action of law or inequity may be instituted by either
party other than to enforce the award of the arbitrator(s). The prevailing
party will recover the costs of arbitration including reasonable attorney's
fees from the losing party. The non-prevailing party will pay compensation
and expenses of the arbitrator(s) and the arbitration.
8.10 NON-EXCLUSIVITY OF RELATIONSHIP.
8.10.1 This agreement does not preclude NHA from negotiating or entering
into similar agreements with other providers of medical services.
8.10.2 This agreement does not preclude Ancillary Service from
negotiating or entering into similar agreements with other preferred provider
organizations.
8.11 INDEMNIFICATION.
8.11.1 Ancillary Service agrees to indemnify and hold NHA and its
officers, directors, and employees harmless against any and all loss, damage,
and expense, including court costs and attorneys' fees, resulting from and
arising out of claims, demands, or litigation brought against NHA in connection
with any negligent or intentionally wrongful act of Ancillary Service under this
agreement.
8.11.2 NHA agrees to indemnify and hold Ancillary Service and its
officers, directors, and employees harmless against any and all loss, damage,
and expense, including court costs and attorneys' fees, resulting from and
arising out of claims, demands, or litigation brought against Ancillary Service
in connection with any negligent or intentionally wrongful act of NHA under this
agreement.
8.12 NON-DISCLOSURE. Information concerning respective strategies including
rate formulas, marketing presentations and benefit plan design structuring will
be treated as confidential by both parties. Disclosures and/or use of such
information will be made only as necessary to conduct the appropriate respective
marketing and business activities.
8.13 CONFIDENTIALITY. NHA and Ancillary Service shall be subject to all
applicable laws and regulations concerning confidentiality of patient medical
records. NHA and Ancillary Service shall take reasonable precautions to prevent
any unauthorized disclosure of records prepared under the terms of this
Agreement and to ensure that confidentiality rights of Covered Persons are not
abridged.
8.14 DIRECTORIES. Provider consents to the listing of his/her name in the NHA
Provider Directories for those Programs in which Provider is participating, and
shall provide NHA with any other information needed to provide for a specific
account NHA Provider Directory. NHA's Provider Directory may be distributed by
us to regulating agencies, Covered Persons, prospective Covered Persons,
employers, the media, existing or prospective physicians or other health care
providers affiliated with NHA and/or Payor. NHA and/or Payor may release other
identifying information as may be required by state or federal regulatory
agencies.
<PAGE>
8.15 STEERAGE. NHA shall maintain a listing of preferred providers through
directories, Internet listings of providers and/or toll-free access to provider
listings; NHA shall seek contracted financial incentives with Payors which
encourage utilization of Preferred Providers; and NHA shall request that NHA be
included on all identification cards. Reimbursement schedules shall apply only
to claims of members of the NHA PPO/EPO networks. Preferred Network Fees and
Services shall not apply to indemnity members.
Accept and agreed to by Ancillary Services and NHA's duly authorized
representatives.
MEDIQUIK SERVICES, L.L.C. NATIONAL HEALTHCARE ALLIANCE, INC.
By: /s/ By: /s/
--------------------- ------------------------------
Ben L. Pierce Melvin Q. Thorne
- -------------------------- ------------------------------
Print or Type Name Print or type Name
General Manager 2/6/98 President 2/6/98
- --------------------------- -------------------------------
Title Date Title Date
- ---------------------------
Federal Tax ID
PLEASE ENTER FACILITY TAX ID# 76 0550 959
PLEASE ENTER FACILITY TELEPHONE # 713/529-7572
PLEASE ENTER FACILITY FAX #713/529-7563
<PAGE>
ANCILLARY SERVICE ATTACHMENT A
NATIONAL HEALTHCARE ALLIANCE, INC.
ANCILLARY SERVICE PARTICIPATING PROVIDER AGREEMENT
Participating Practitioner Members for _MEDIQUIK SERVICES, L.L.C. _ (Ancillary
Service).
NAME SPECIALTY
- ---- ---------
<PAGE>
ANCILLARY SERVICE PPO EXHIBIT 1
NATIONAL HEALTHCARE ALLIANCE, INC.
SCHEDULE OF PREFERRED NETWORK FEES AND SERVICES
ANCILLARY SERVICE: MEDIQUIK SERVICES, L.L.C. FED. TAX ID. 760550454
ADDRESS: 2008 West Main
CITY, STATE, ZIP: Houston, TX 77098 TELEPHONE #:
EFFECTIVE DATE: JANUARY 1, 1998
FEE SCHEDULE AUTHORIZATION SIGNATURES:
/s/ Ben Pierce /s/ Melvin Thorne
- --------------------------------- -----------------------------------
ANCILLARY SERVICE NHA
2/6/98 2/6/98
- --------------------------------- ------------------------------------
Date Date
- -------------------------------------------------------------------------------
PER DIEMS or FEE SCHEDULES PROVIDED TO NHA MEMBERS:
- -------------------------------------------------------------------------------
REIMBURSEMENT SCHEDULE: REIMBURSEMENT FOR MEDICALLY NECESSARY COVERED SERVICES
RENDERED TO COVERED PERSONS SHALL BE BASED ON THE LESSOR OF BILLED CHARGES OR
SUCH DISCOUNTS OR FEE SCHEDULES AS FOLLOW:
*
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
ANCILLARY SERVICE EPO EXHIBIT 2
NATIONAL HEALTHCARE ALLIANCE, INC.
SCHEDULE OF EPO AND OCCUCARE NETWORK FEES AND SERVICES
ANCILLARY SERVICE: MEDIQUIK SERVICES, L.L.C. FED. TAX ID. 760550454
ADDRESS: 2008 West Main
CITY, STATE, ZIP: Houston, TX 77098 TELEPHONE #:
EFFECTIVE DATE: JANUARY 1, 1998
FEE SCHEDULE AUTHORIZATION SIGNATURES:
/s/ Ben Pierce /s/ Melvin Thorne
- -------------------------------- -----------------------------------
ANCILLARY SERVICE NHA
2/6/98 2/6/98
- -------------------------------- ------------------------------------
Date Date
- -------------------------------------------------------------------------------
PER DIEMS or FEE SCHEDULES PROVIDED TO NHA MEMBERS:
- -------------------------------------------------------------------------------
REIMBURSEMENT SCHEDULE:
REIMBURSEMENT FOR MEDICALLY NECESSARY COVERED SERVICES RENDERED TO COVERED
PERSONS SHALL BE BASED ON THE LESSOR OF BILLED CHARGES OR SUCH DISCOUNTS OR FEE
SCHEDULES AS FOLLOW:
*
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, SUCH INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATION OF SUCH OMITTED
INFORMATION HAS BEEN INDICATED WITH AN ASTERISK[*].
MULTIPLAN, INC.
PARTICIPATING FACILITY AGREEMENT
THIS AGREEMENT, effective February 1, 1998 is entered into between MultiPlan,
Inc., 115 Fifth Avenue, New York, NY 10003-1004 (Multiplan) and MEDIQUICK
SERVICES, L.L.C with principal offices located at 3 Riverway Suite 1416,
Houston, TX 77056 (Provider).
WHEREAS, MultiPlan represents and is authorized by various organizations and
institutions, including employers, third party administrators and other similar
entities (Clients), who provide or administer health care coverage pursuant to a
benefit plan, Workers' compensation programs, automobile liability coverage, or
other programs (Benefit Programs) for covered individuals (Participants) to
establish a preferred provider relationship with Provider as described herein;
and
WHEREAS, Provider wants to provide health care services in accordance with the
terms of this Agreement;
THEREFORE, in consideration of the foregoing and of the mutual covenants,
promises and undertakings herein and intending to be legally bound hereby, the
parties agree as follows:
A. RESPONSIBILITIES OF MULTIPLAN
1. NOTIFICATION. MultiPlan agrees to notify its participating Clients
that Provider is participating in the MultiPlan network and to
distribute to its Clients material made available to MultiPlan by
Provider about Provider's services.
2. LIMITATIONS. MultiPlan does not determine benefits eligibility or
availability for Clients' Participants and does not exercise any
discretion or control as to Clients' Benefit Program assets, with
respect to policy, payment, interpretation, practices, or procedures.
MultiPlan is not the administrator, insurer, underwriter, or guarantor
of Clients' Benefit Programs, and MultiPlan is not liable for the
payment of services under Clients' Benefit Programs. Nothing in this
Agreement shall be construed as interfering with the freedom of choice
of eligible Participants.
3. REFERRALS. MultiPlan shall maintain a twenty-four hour-a-day
toll-free telephone referral system for the purpose of advising
Clients and Participants of providers in MultiPlan's Network. Provider
shall be included in this referral system.
4. GRIEVANCES AND APPEALS. MPI shall maintain a grievance and appeal
mechanism that shall be available to Provider as a forum for the
resolution of complaints and disputes pertaining to issues arising out
of this Agreement including but not limited to reimbursement and
quality management issues. In general, utilization management issues
will be referred to the Client.
<PAGE>
B. RESPONSIBILITIES OF PROVIDER
1. PROVISION OF HEALTH CARE SERVICES. Provider solely shall be
responsible for the provision of health care advice and treatment
rendered, ordered, or authorized by Provider, its employees and/or
agents, with respect to Participants. Such services shall be provided
to Participants, including those covered by Workers' Compensation and
auto liability coverage, in accordance with community standards, in
the manner in which Provider renders services to other patients, and
without discrimination based on sex, race, color, religion, marital
status, sexual orientation, age, ancestry, or national origin.
2. LICENSURE AND CERTIFICATION. Provider shall comply with all laws
relating to furnishing health care services to Participants and
maintain in effect all permits, licenses and governmental approvals
which may from time to time be necessary for that purpose. Provider
shall maintain Medicare certification, as well as accreditation by
JCAHO or another acceptable body. Provider shall deliver to MultiPlan
a copy of Provider's current certificate of accreditation which shall
be annexed to this Agreement as Exhibit 1. Provider agrees to notify
MultiPlan within thirty days of any change in compliance with any of
these requirements. Provider shall notify MultiPlan of any pending
investigation, action, or sanction against it, any agent and/or any
employee, which may materially affect Provider's ability to perform an
obligation under this Agreement, or would otherwise bear on a
requirement of this paragraph.
3. UTILIZATION. Provider shall cooperate with all reasonable utilization
management programs administered by Clients or their designees to the
extent that such programs are consistent with community standards.
4. INSURANCE. Provider shall maintain professional liability insurance
covering Provider against claims arising out of the services to be
performed hereunder in the minimum amounts required by law or, in the
absence of statutory requirements, no less than the amounts shown on
Appendix A. If the form of insurance is "claims made," Provider shall
purchase appropriate tail coverage for claims, demands, or actions
made after termination of this Agreement in relation to acts or
omissions occurring during the term of this Agreement. Provider shall
provide MultiPlan with a copy of its certificate(s) of insurance.
Provider shall notify MultiPlan in writing within thirty days of
cancellation, non-renewal, and/or any material change in such
coverage.
5. PROVIDER GRIEVANCE PROCEDURES. Provider shall maintain procedures for
resolving grievances and shall cooperate with any grievance procedures
or programs sponsored by MultiPlan, Clients, or their designees.
Provider shall notify MultiPlan promptly upon knowledge of any
dispute, complaint, or grievance relating to patient care or other
disputes involving MultiPlan, its Clients, their designees, or
Participants.
<PAGE>
6. DIRECTORY. Provider agrees that MultiPlan and/or Clients may use
Provider's name, address, telephone number and type of services or
facilities in any printed directory or other roster of participating
Providers.
C. FINANCIAL
1. COMPENSATION.
a. Provider agrees to accept as payment-in-full for covered services
rendered to Participants, the amounts due according to Appendix
A. Negotiated rates offered to MultiPlan shall be above any
prompt pay discounts offered to the general public or required by
law. If, during the term of this Agreement, Provider enters into
any other contract, agreement, or other arrangement under which
Provider provides substantially the same services at a negotiated
rate(s) less than that set forth in Appendix A, the lower
negotiated rate shall apply to covered services rendered under
this Agreement.
b. When Clients or their designees perform utilization reviews
and/or bill validations, eighty percent of the amount due
according to Appendix A, shall be paid by the Clients prior to
any review or validation. Based on the results of the review or
validation, Clients shall pay Provider the balance due, or
Provider shall make a refund to Client(s) within thirty business
days after the date the final approved amount is determined.
Clients shall not forfeit the negotiated rate when this procedure
is followed.
2. PAYMENT. Provider shall submit claims to Clients on a completed UB92 or
other standard billing form providing the same information, and Clients
must make payment to Provider within thirty business days of receipt of
such claim in order to obtain the benefit of the negotiated rate. Upon
request, Provider shall furnish to Client or MultiPlan, all information
reasonably required to verify Provider's health care services and the
charges for such services.
3. ADJUSTMENTS TO CLIENTS' PAYMENTS. Clients' payments due under this
Agreement shall be reduced by any applicable deductibles, co-payments,
coinsurance. Provider shall notify Client and MultiPlan of any
erroneous claim sent to a Client within sixty days of the date the
claim was issued, and of any erroneous payment received within sixty
days of the date Client's payment was received.
4. DISPUTED CLAIMS. In the event of a dispute between Provider and a
Client regarding billed amounts or payment due, Client shall have the
right, upon written notification of MultiPlan about the dispute within
sixty days of receipt of the relevant Clean Claim, to withhold payment
pending resolution of the dispute. MultiPlan shall make its best
efforts to assist the parties in resolving the dispute.
<PAGE>
5. PARTICIPANT BILLINGS. Provider agrees to bill the Participant for
appropriate co-payments, deductibles, and coinsurance only in the
amount of the difference between the amount due for covered services
based on Appendix A, and the sum of the amounts paid by the Clients
and any other payors. Provider shall not balance bill or attempt to
collect compensation from Participants in connection with services
covered by Workers' Compensation programs, except as expressly
permitted by law.
6. COORDINATION OF BENEFITS. Provider shall cooperate with Clients for
purposes of coordinating benefits. When a Client is a primary payor,
Provider shall accept from Client as payment in full for covered
services the amounts established in Appendix A, less the appropriate
deductibles, copayments and coinsurance. When a Client is a secondary
payor, Provider shall accept from Client as payment for covered
services the difference between the amount set forth in Appendix A,
less the sum of the amount paid by the primary payor(s) and the
appropriate deductibles, copayments and coinsurance.
7. AUDIT. Upon fifteen business days' written notice, and during
MultiPlan's regular business hours, each party shall have the right to
audit the other's records pertaining to compensation under this
Agreement for a period of six months prior to the date of the notice
of audit.
8. SURVIVAL. With respect to services rendered during the term of this
Agreement, the rights and obligations set forth in this Section shall
survive the termination of the Agreement.
D. TERM AND TERMINATION
1. TERM. This Agreement shall be effective for an initial term of two
years from the Effective Date indicated above. Thereafter, this
Agreement shall automatically renew for successive one year terms.
2. TERMINATION.
a After the expiration of the initial term, either party may
terminate this Agreement by giving no less than ninety days'
advance written notice to the other party prior to the expiration
of the term then in progress.
b. Either party may terminate this Agreement for cause due to a
material breach by giving thirty days' advance written notice
during which the breach may be cured. The notice of termination
for cause will not be effective if the breaching party cures the
breach to the reasonable satisfaction of the other party within
the thirty-day notice period.
<PAGE>
c. MultiPlan shall have the right to terminate this Agreement
immediately if it determines, in its reasonable discretion, that
the health or welfare of Participants is jeopardized by the
continuation of the Agreement. Under such circumstances,
MultiPlan shall provide written notice to Provider specifying the
basis for termination.
3. EFFECT OF TERMINATION. If any Participant remains under Provider's
care on the termination date, whether in- or outpatient, Provider
shall continue to render appropriate care to such Participant until
Provider can arrange for transfer of such care to another Provider.
Provider shall make best efforts to transfer such Participants to
other MultiPlan providers. Provider shall accept payment from Clients
for such post-termination care as if the Agreement had not been
terminated.
E. MISCELLANEOUS
1. INDEPENDENT CONTRACTORS. Each party, including its officers,
directors, employees and agents, acts as an independent contractor.
Neither party has express or implied authority to assume or create any
obligation on behalf of the other. The parties shall maintain a
cooperative relationship in order to effectuate this Agreement.
2. INDEMNIFICATION. Each party solely is responsible for its own actions
or omissions, and those of its officers, directors, employees and
agents, arising in connection with obligations created under this
Agreement, including Provider's rendering professional advice and/or
treatment. Each party shall hold the other, including its officers,
directors, employees, agents, successors and assigns, harmless from
and against all claims, liability, damages, and expenses, which may be
alleged against or incurred by the other party and are the result of
any act or omission in connection with this Agreement.
3. SEVERABILITY AND WAIVER. The waiver by either party of any breach of
any provision of this Agreement shall not be construed as a waiver of
any subsequent breach of the same or any other provision. The failure
to exercise any right hereunder shall not operate as a waiver of such
right. The finding by a court of competent jurisdiction that any
provision herein is void shall not void any other valid provision of
this Agreement.
4. CONFIDENTIALITY AND DISCLOSURE.
a. The parties shall comply with all applicable laws and regulations
regarding maintenance and disclosure of Participants' medical
records. The names of MultiPlan's Clients shall be kept
confidential and shall not be used except as necessary to
implement this Agreement.
<PAGE>
b. Neither party shall disclose the negotiated rates and/or the
compensation payable to Provider pursuant to the terms of this
Agreement, except as may be required in order to comply with this
Agreement, or to the extent required by applicable law. In
addition, MultiPlan, in its discretion, may release such
information to Clients and potential clients as MultiPlan may
reasonably determine is required in connection with marketing its
products.
c. MultiPlan and Clients may include Provider's name, address,
telephone number, practice specialties, in its directories of
participating Providers.
5. NOTICES Any notice required to be given pursuant to this Agreement
shall be in writing and delivered by hand, by certified mail/return
receipt requested, or by facsimile confirmed with overnight delivery,
to the signatories, or their successors if any, at the addresses set
forth below.
6. MODIFICATION This Agreement, together with Appendix A and Exhibit 1,
constitute the entire agreement between the parties with respect to
the subject matter hereof, and as of the date this Agreement is
executed by both parties, shall supersede any previous agreements or
understandings, written or oral, between the parties. All
modifications of the Agreement shall be in writing and signed by both
parties.
7. ASSIGNMENT This Agreement may not be assigned by either party without
the prior written approval of both parties. Any other attempt at
assignment shall be void.
8. GOVERNING LAW. This Agreement shall be governed by the laws of the
state in which Provider is licensed to operate.
IN WITNESS HEREOF, the parties have executed this Agreement.
MULTIPLAN, INC. MEDIQUICK SERVICES, L.L.C
115 Fifth Avenue
New York New York 10003-1004
By: /s/ 2/9/98 By: /s/ 2/5/98
-------------------------- ------------------------------
Donald Rubin date Signature date
Chairman Ben L. Pierce, General Manager
-----------------------------------
Print Name
3 Riverway, Suite 1416
Houston, TX 77056
Tax I.D. # 76-0550959
<PAGE>
MULTIPLAN, INC.
PPO PARTICIPATING FACILITY AGREEMENT
APPENDIX A
A. FEE SCHEDULE
1. For inpatient and outpatient services covered by group health
Benefit Programs rendered to Participants, Provider agrees to
accept as payment in full amounts set forth below:
*
2. For inpatient and outpatient services covered by Workers'
Compensation and/or No Fault Automobile Liability coverage
rendered to Participants, Provider agrees to accept as payment in
full the following:
*
*
B. LICENSURE
Provider is licensed in the state of N/A
C. ACCREDITATION
Provider is accredited by: N/A
JCAHO ____________________ accreditation period ending __________
Other (specify): _________ accreditation period ending __________
(Certificate attached as Exhibit 1)
D. INSURANCE
Provider shall maintain malpractice insurance no less than the following
amounts:
$ 300,000 per occurrence; $1,000,000 annual aggregate.
-------------- ---------------
Carrier ESSEX INSURANCE COMPANY.
---------------------------------
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
MULTIPLAN, INC.
PPO PARTICIPATING FACILITY AGREEMENT
EXHIBIT 1
CERTIFICATE OF ACCREDITATION
(cover sheet)
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, SUCH INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATION OF SUCH OMITTED
INFORMATION HAS BEEN INDICATED WITH AN ASTERISK[*].
HEALTH CARE SERVICE ANCILLARY AGREEMENT
THIS Agreement is made by and between MediQuik Services, LLC. (hereinafter
referred to as "Facility"), a provider of health care services or items,
licensed to practice or administer such services or items in the state or states
where such services or items are provided, and USA MANAGED CARE ORGANIZATION,
INC. A TEXAS CORPORATION, (hereinafter referred to as "USA").
W I T N E S S E T H:
WHEREAS, USA is engaged in the business of administrating quality health care
service at an affordable price and Facility desires to provide services for the
members of various group, accident health plans (USA H&W Network a group health
and wellness program), work related injury/illness plans {USA Workers' Injury
Network (USAWIN)}, motorist medical plans, Medicare supplemental plans, Select
plans (USA, Medicare Select), HMO (Health Maintenance Organization) plans (for
out of service area coverage only), and self-insured employers (hereinafter
referred to as "INSUREDS"); and
WHEREAS, USA has a network of contracted facilities, physicians, and ancillary
service providers (hereinafter referred to along with Facility as "Providers")
available for use by the eligible INSUREDS of venous plans contracted with USA,
thereby making available to INSUREDS such Providers for health and medical care
needs: and
WHEREAS, USA has entered into agreements with one or more insurance carriers,
HMOs, self-insured groups, unions, and third party administrators (hereinafter
referred to as "INSURERS") to provide for health care review, medical service,
and other insurance utilization review services; and
WHEREAS, Providers will be made available by USA as a convenience to INSUREDS.
for the purpose of allowing INSUREDS access to health care, medical care, and
Medicare; and
WHEREAS, Facility desires to contract with USA and its affiliates to provide
services to INSUREDS and to accept as payment in full for such services the
amounts set forth in the attached Exhibit B; and
WHEREAS, Facility agrees to conduct itself ethically and in a manner which
shall preserve and maintain the human dignity and integrity of all patients, and
by its attitude and manner shall convey to the patient compassion and concern
for the patient's problems. Facility shall dedicate itself to alleviating those
problems and providing comfort and care to those in need.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for good and valuable consideration, the legal adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
<PAGE>
1. SERVICES TO BE PROVIDED.
a) USA does hereby agree to add Facility to its network of
Providers, and Facility does hereby agree to provide INSUREDS
with services that Facility normally and customarily provides, at
the rates set forth in Exhibit B of this Agreement. All services
to be provided by Facility under this Agreement shall be
performed, or ordered and approved by physicians who are members
in good standing of Facility's staff, or who are otherwise
authorized by Facility to provide medical care to patients being
treated in Facility.
b) Facility shall provide to USA a current copy of their staff
roster and will make available to USA updates as changes occur.
2. RATES TO BE PAID TO THE FACILITY.
a) Facility is to be paid by INSURER according to the rates
established in Exhibit B. The negotiated rates in Exhibit B
represent the total amount to be received by Facility, including
any co-payments, co-insurance and/or deductibles paid by
INSUREDS. INSURER shall pay Facility the amount due for services
rendered to INSURED, based on the provisions to the applicable
plan, and Facility agrees to look to INSURER for the payment of
such services, except for any amounts required to be paid by
INSURED pursuant to Subparagraph 2(c). Payments will be made to
Facility for medical services actually rendered and only after
submission of a claim.
b) Facility agrees to provide services under this Agreement for the
treatment and care of illnesses, injuries or conditions of
INSUREDS for which Facility normally provides. In the event a
third party other than INSURER should have primary responsibility
for payment of the services provided an INSURED, Facility agrees
to collect payment from such other source prior to requesting
payment from INSURER. Any payment made by INSURER to Facility for
obligations which are the primary responsibility of a third
party, shall be refunded to the INSURER by Facility. By
executing this Agreement, Facility waives all rights to collect
and/or pursue collection of any amounts in excess of the
reimbursement listed in Exhibit B from any INSURERS who may have
secondary responsibility.
c) Services rendered or items furnished INSUREDS by Facility which
are not covered as a benefit under the applicable plan, and all
co-payments, co-insurances and/or deductibles, are to be paid by
INSURED and Facility is responsible for collection of such
payments.
<PAGE>
d) For Medicare supplemental plans, Facility agrees to waive 100%
(one hundred percent) of the Medicare Part "A" deductible. For
Medicare Select plans, Facility agrees to the provisions in
Attachment I.
e) Facility agrees and acknowledges that USA is administrating
health care on behalf of INSURERS under this Agreement. USA will
not be responsible or liable for the cost of any services
provided to INSUREDS by Facility or for the payment of any claim
to Facility.
f) Facility agrees to participate in the Cost Containment Guidelines
as set forth in Exhibit A.
3. PAYMENT OF CLAIM.
Payment of claims is subject to the temrs and conditions of INSURED'S
insurance plan. Payment by INSURER shall be limited to services
provided to INSURED for which INSURED is eligible. Payment by INSURER
will be reduced by co-insurance, co-payments and/or deductibles.
Facility agrees to bill at its usual and customary rate and further
agrees not to pursue collection of the difference between Facility's
usual and customary rates and the rates set forth in Exhibit B.
INSURER will make payments within thirty (30) days of receipt of
claims, unless written notice of dispute or discrepancy is mailed to
Facility within thirty (30) days. If claim is not paid within thirty
(30) days on undisputed claims and ninety (90) days on disputed
claims, Facility shall have the right to deny the negotiated rates set
forth in Exhibit B, and seek full billed charges.
4. HOLD HARMLESS.
a) PPO INSUREDS
Facility agrees that INSURER is responsible for payment of
Facility's compensation pursuant to this Agreement. Facility
shall not request payment from any INSURED for any treatment or
services provided to INSURED pursuant to the terms of the
Agreement except as otherwise provided herein. Facility agrees
to release and hold harmless INSURED, provided INSURER makes
payment pursuant to the terms of this Agreement. Notwithstanding
the foregoing, in the event INSURER fails to make payment within
ninety (90) days of receipt of claim or if INSURER is declared
insolvent or otherwise unable to make payment, Facility may bill
the INSURED for services rendered.
b) HMO INSUREDS (OUT OF SERVICE AREA)
Facility hereby agrees that in no event, including, but not
limited to non-payment by INSURER, INSURER insolvency, or breach
of this Agreement, shall Facility bill, charge, collect a deposit
from, seek compensation, remuneration, or reimbursement from, or
have any recourse against INSURED, or persons other than INSURER
acting
<PAGE>
on their behalf for services provided pursuant to this Agreement.
This provision shall not prohibit collection of supplemental charges
(non-covered services) or co-payments on INSURER'S behalf made in
accordance with the terms of the applicable plan between INSURER
and INSURED.
Facility further agrees that (1) this provision shall survive the
termination of this Agreement regardless of the cause giving rise
to termination and shall be construed to be for the benefit of
INSURED, and that (2) this provision supersedes any oral or
written contrary Agreement now existing or hereafter entered into
between Facility and INSURED or persons acting on their behalf.
Any modifications, addition or deletion to the provisions of this
clause shall be effective on a date no earlier than fifteen (15)
days after the Commissioner of Insurance has approved such
changes.
5. MEDICAL RECORDS.
a) With the proper patient consent and in accordance with all local,
state and federal laws governing confidentiality, Facility will
keep and make available to USA or INSURER copies of all medical
records. for the purpose of maintaining a quality assurance
program, required by USA or INSURER for a period of the greater
of five (5) years from the date of treatment or consultation, or
the number of years that medical records are required to be kept
under applicable governing laws.
b) Facility shall furnish, upon request and without charge, all
information reasonably required by USA to verify and substantiate
its provision of medical services, the charges for such services,
and the medical necessity for such services.
6. PRE-CERTIFICATION AND CERTIFICATION.
It is the responsibility of Facility to verify with INSURER prior to
the delivery of medical services in non-emergent situations and within
forty-eight (48) hours or the next business day in emergency
situations, that any patient is an INSURED in good standing under the
applicable plan, eligible for benefits, and to obtain information as
to the extent and nature of INSURED'S benefits. Facility understands
that it is their responsibility to verify eligibility and benefits,
allowing Facility to determine, if/when pre-certification
(preauthorization) and certification (authorization) is required by
the plan. Facility understands that an INSURED'S membership
identification card is not a guarantee that the card holder is an
INSURED in good standing. INSURED'S I.D. card will display appropriate
telephone numbers for benefits eligibility verification.
<PAGE>
Facility agrees and acknowledges that USA has contracted with venous
INSURERS. INSURERS have elected at their discretion to secure services
{pre-certification (pre-authorization), certification (authorization),
case management and utilization management} from the vendor of their
choice. While the requirements of the plan. as well as each vendor may
vary, Facility agrees, at a minimum to comply with the following:
Non-emergent and/or emergent admissions may require
pre-certification/certification to be eligible for full benefits.
Facility agrees to phone the appropriate number provided on INSURED'S
identification card to determine whether
pre-certification/certification is required. Facility agrees to
notify the appropriate party prior to the delivery of medical services
in non-emergent situations and within forty-eight (48) hours or the
next business day in emergent situations. Facility should be prepared
to provide the following information:
a) Patient's name, sex, and date of birth
b) INSURED'S name, address, social security number, and group/policy
number
c) Name of INSURER
d) Pre-admission diagnosis(es)
e) Name, address, and telephone number of the physician
f) Date of service (admission or procedural date)
g) Treatment and or surgical procedures
Facility further understands that pre-certification and certification
are a determination of medical necessity. Pre-certification/certification
shall be granted when the intensity level of the treatment and the level
of care are appropriate with respect to the severity of the illness.
Medical services will be pre-certified/certified based on the information
provided to the appropriate party at the time of notification.
Pre-certification and certification are not verification of eligibility
and/or benefits. To verify eligibility and/or benefits, Facility must
phone the appropriate number listed on INSURED'S identification card.
ln the case of an admission, if the medical condition of the INSURED
is such that he/she cannot be discharged from Facility on the last day
certified, Facility must call the appropriate telephone number on the
INSURED'S identification card, on or before the last day certified. An
additional number of days may be certified. Benefits may be reduced
for additional days which are not certified.
In the case of an admission, where INSURED'S illness, injury or
condition (e.g. coma) prohibits INSURED from cooperating with Facility
to identify himself/herself as an INSURED having access to USA's
network Facility agrees to notify the appropriate party as soon as
Facility is able to identify INSURED.
Emergent admissions may be payable if they a) are certified or b) meet
the conditions of an emergency as defined below:
<PAGE>
An emergency (according to the federal definition) is:
1) A medical condition manifesting itself by acute symptoms of
sufficient seventy (including severe pain) such that the
absence of immediate medical attention could reasonably be
expected to result in:
(i) placing the health of the individual (or, with respect
to a pregnant woman, the health of the woman or her unborn
child) in serious jeopardy; or
(ii) serious impairment to bodily functions; or
(iii) serious dysfunction of any bodily organ or part; or
2) With respect to a pregnant woman who is having contractions:
(i) that there is inadequate time to effect a safe transfer
to another hospital before delivery; or
(ii) that transfer may pose a threat to the health or safety
of the woman or the unborn child.
7. CHANGE IN TERMS AND BENEFITS.
It is agreed by the parties hereto that the benefits, terms and
conditions of the various agreements between INSURER and INSURED of
any plan may be changed during the term of this Agreement without
notice However, such changes will not affect this Agreement, unless
agreed to by Facility and USA.
8. TERMINATION OF COVERAGE OF INSUREDS.
Coverage for each INSURED may be terminated by INSURED or INSURER.
When an INSURED whose coverage has terminated receives services from
Facility, Facility agrees to bill INSURED directly. INSURER shall not
be liable to Facility for any bills incurred by an INSURED whose
coverage has been terminated.
9. DURATION.
The initial term of this Agreement shall be a period of one (1) year
from the date of execution of this Agreement by USA. During that time,
Facility agrees that the reimbursement rates listed in Exhibit B will
not be subject to increase. This Agreement shall automatically renew
for successive one (1) year terms on the anniversary date of this
Agreement and shall remain in force until termination, as provided for
in Section 10 (Termination) of this Agreement. Facility shall have the
right to submit a proposal for a potential increase or decrease of
contractual rates to USA on an annual basis within ninety (90) days of
the anniversary date. Facility agrees to allow USA reasonable time to
review such proposal and counter-propose if necessary. Facility
understands that rates will never be made retroactive.
<PAGE>
10. TERMINATION.
Either party to this Agreement may elect to terminate this Agreement
without cause at any time by giving one hundred eighty (180) days
prior written notice to the other party. Said notice shall clearly
explain the reason giving rise to termination to be considered in
compliance with this Section.
USA may terminate this Agreement for immediate cause, which includes,
but is not limited to, the following:
a) Facility's filing of bankruptcy (whether voluntary or
involuntary), declaration of insolvency, or the appointment of a
receiver or conservator of its assets.
b) Facility's failure to maintain appropriate accreditation by
agencies approved by USA.
In the event this Agreement is terminated for immediate cause,
termination shall be effective upon receipt of written notification.
USA may also terminate this Agreement for reasons other than immediate
cause. Those reasons may include. but are not limited to, a breach of
any provision contained in this Agreement, habitual neglect, or the
continued failure of Facility to perform its professional duties. If
termination is for reasons other than immediate cause. USA will notify
Facility in writing, stating the reason for termination. and giving
Facility sixty (60) days in which to cure.
If Facility has failed to effect a satisfactory cure, within the sixty
(60) day cure period, of all reasons stated in the nonce of
termination, termination shall be effective on the tenth (10th) day
following the expiration of the sixty (60) day cure period.
11. NOTICE TO INSURER OF TERMINATION OF AGREEMENT.
In the event this Agreement is terminated by either party in
accordance with the procedure set forth herein USA shall notify
INSURER. Facility will notify INSURED, prior to giving service, that
this Agreement is no longer in effect.
12. ACCURACY OF INFORMATION.
Facility represents and warrants that all information provided USA is
true and accurate in all respects and acknowledges that USA is relying
on the accuracy of such information in entering into and continuing
the term of this Agreement. Facility shall promptly notify USA,
without request, of any change in the information provided.
13. INDEPENDENT CONTRACTOR.
a) In entering into and complying with this Agreement, USA and
Facility are at all times performing as independent contractors.
Nothing in this Agreement shall be construed or be deemed to
create
<PAGE>
a relationship of employer and employee, principal and agent,
partnership, joint venture, or any relationship other than that of
independent parties contracting with each other solely to carry out
the provisions of this Agreement for the purposes recited herein.
b) Facility shall be responsible for the hospital services provided
to each INSURED that uses Facility's services.
14. CONFIDENTIALITY.
Each party may, in the course of the relationship established by this
Agreement. disclose to the other party in confidence non-public
information concerning such party's earnings, volume of business,
methods, systems. practices, plans, purchaser discounts and contract
terms, and other confidential or commercially valuable proprietary
information (collectively referred to as "Confidential Information").
Each party acknowledges that the disclosing party shall at all times
be and remain the owner of all Confidential Information disclosed by
such party, and that the party to whom Confidential Information is
disclosed may use such Confidential Information only in furtherance of
the purposes and obligations of this Agreement. The party to whom any
Confidential Information is disclosed shall use its best efforts,
consistent with the manner in which it protects its own Confidential
Information, to preserve the confidentiality of any such Confidential
Information which such party knows or reasonably should know that the
other party deems to be Confidential Information.
The party to whom Confidential Information is disclosed shall not use
said information to the disadvantage of or in competition against the
disclosing party. It is understood by each party that any Confidential
Information disclosed is non-public information, which is of great
value to the disclosing party and that a breach of the foregoing
confidentiality provision would cause irreparable damage, and the
injured party shall have the right to seek and obtain, in any court of
competent jurisdiction, an injunction to restrain a violation or
alleged violation by the other party of this covenant, together with
any damages that the party may suffer in the event of such a breach.
15. DISPUTES.
All disputes and differences between Facility and INSURER, upon which
an amicable understanding cannot be reached, are to be decided by the
following method:
a) MEDIATION THROUGH USA:
Facility shall notify USA in writing of the dispute or
disagreement. Facility shall supply USA with all pertinent
information and state its position on the dispute. Upon receipt
of this information USA will immediately contact INSURER and
request the same information. USA will then attempt to mediate
the dispute to the mutual satisfaction of all parties. If
mediation is not possible within a
<PAGE>
reasonable time. not to exceed thirty (30) days from the time of
first notice, the procedure set forth in subparagraph 15(b) will
apply.
b) ARBITRATION:
If the dispute cannot be solved by the mediation process
described above, either Facility or INSURER may elect to submit
the dispute to binding arbitration under the rules of the
American Arbitration Association or any other method of
arbitration mutually agreed upon by the parties.
16. RESPONSIBILITY OF PARTIES.
Each party agrees it shall not be responsible for any claims, losses,
damages, liabilities, costs, expenses or obligations arising out of or
resulting from the negligent or willful misconduct of the other party,
its officers employees and agents in the performance of services
pursuant to this Agreement.
17. NOTICES.
All notices, requests, or correspondence required under this Agreement
shall be in writing, and delivered by United States mail to:
a) If to USA:
USA MANAGED CARE ORGANIZATION, INC.
916 Capital of Texas Highway South
Austin, Texas 78746
Attention: Provider Relations
b) If to Facility:
MediQuik Services, LLC
2008 West Main
Houston, Texas 77098
Attention: Ben Pierce
Either party may change the address to which communications are
to be sent by giving written notice. All communications will be
directed to Facility at the most current address on file with
USA.
18. ATTORNEY'S FEES.
If it shall become necessary for either USA or Facility to employ an
attorney to enforce or defend its rights under this Agreement, the
non-prevailing party in any arbitration, legal action or proceeding
shall reimburse the prevailing party for its reasonable attorney's
fees and costs of suit, in addition to any other relief to which such
party is entitled.
<PAGE>
19. PARTIAL INVALIDITY.
If any part, clause or provision of this Agreement is held to be void
by a court of competent jurisdiction. the remaining provisions of this
Agreement shall not be affected and shall be given such construction,
if possible, as to permit it to comply with the minimum requirements
of any applicable law, and the intent of the parties hereto.
20. ASSIGNABILITY.
Neither party may assign any of its rights or delegate any of its
duties hereunder to a non-related third party without prior written
consent of the other party. Facility acknowledges USA's right to
assign its rights or delegate any of its duties hereunder to another
entity controlled by or affiliated with USA Managed Care Organization,
Inc.
21. WAIVER.
A party's waiver of a breach of any provision of this Agreement shall
not constitute a waiver of any subsequent breach of the same or
another provision contained in the Agreement. A party's subsequent
acceptance of performance by the other party shall not be construed as
a waiver of a preceding breach of this Agreement other than failure to
perform the particular dunes so accepted.
22. CONTROLLING LAW.
This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and
construed in accordance with the laws of the state where services are
being provided.
23. CONFORMITY WITH STATE STATUTES.
Any provision of this Agreement which is in conflict with the
statutes, local laws, or regulations of the state in which services
are provided, is hereby amended to conform to the minimum requirements
of such statutes.
24. ENTIRE AGREEMENT.
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof, and supersedes all
prior Agreements and understandings, expressed or implied, oral or
written. Any material change to this Agreement's language or rates
must be in writing and signed by duly authorized of officers or
representatives of Facility and USA. Non-material changes can be
communicated via notifications. If neither party disapproves of a
notification in writing within thirty (30) days, such notice will be
considered accepted and binding. No other third party, including but
not limited to any INSUREDS and INSURERS, shall be required to consent
or receive notice of any such amendment or nonce in order for the
amendments or notices to be effective and binding upon the parties to
this Agreement.
<PAGE>
25. TITLE NOT TO AFFECT INTERPRETATION.
The paragraph and subparagraph headings in this Agreement are for
convenience only, and form no part of this Agreement and shall not
affect its interpretation.
26. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
including facsimiles, each of which are incorporated herein and shall
be deemed to be an original as against any part whose signature
appears thereon, and all of which shall together constitute one and
the same instrument.
27. FORCE MAJEUR.
Neither party shall be liable nor deemed to be in default for any
delay or failure in performance under this Agreement or other
interruption in the discharge of its responsibility, either directly
or indirectly, from acts of God, civil or military authority, acts of
public enemy, war, accidents, fires, explosions, earrhquakes, floods,
failure of transportation, machinery or supplies, vandalism, strikes
or other work interruptions by employees, or any similar or dissimilar
cause beyond the reasonable control of either party.
28. SURVIVAL.
In the event this Agreement is terminated as set forth herein,
Sections 4, 14, 16, 18, 22, 28, and 29 shall survive the termination
of this Agreement.
29. TERMINATION RESPONSIBILITIES.
In accordance with Section 10 (Termination) or any termination of this
Agreement, said termination shall have no effect upon the rights or
obligations of the parties arising out of any transactions occurring
prior to the effective date of such termination Facility agrees to
accept, as payment in full, the rates in Exhibit B for services
rendered to an INSURED who is inpatient upon the effective date of
such termination, until INSURED is discharged or safely transferred to
a participating USA facility.
30. DISCRIMINATION.
Facility agrees to provide services for INSUREDS within the normal
scope of Facility's medical practice. These services shall be
accessible to INSIJREDS, and made available to them, without
limitation or discrimination, to the same extent as they are made
available to other parents of Facility, and in accordance with
accepted medical and professional practices and standards applicable
to Facility's other patients.
31. SILENT PPO.
USA is not a silent PPO nor does it operate as one. Silent PPO's are
organizations who "sell" their contracted rates with providers to
brokers who use those discounts for their clients. USA maintains a
current contracted carrier/payor list indicating clients who have
directly contracted with USA for use of USA's network; and
<PAGE>
services. Such clients are required via their direct contract with USA,
to provide a minimum 10% (ten percent) financial incentive, to encourage
the use of USA's contracted Providers. Such 10% (ten percent)
financial incentives can occur in a variety of ways, including, but
not limited to: A reduction or elimination of deductibles, a reduction
or elimination of a co-pay percentage, or a minimum differential in
the co-insurance of at least 10% (ten percent).
32. JOINT COMMISSION ON ACCREDITATION OF HEALTHCARE ORGANIZATIONS (JCAHO)
COMPLIANCE.
USA is assisting JCAHO in the preparation of standards for health care
delivery networks. Facility agrees to work with USA to meet the JCAHO
network standards.
33. INSURANCE.
Facility shall, at its expense, carry malpractice and professional
liability insurance, public liability and property damage insurance,
or an equivalent program of self-insurance, in an amount equal to the
greater of the amount required to maintain accreditation/certification
or the amount required to meet the state's minimum requirements.
34. LICENSURE.
Facility shall, throughout the duration of this Agreement, be required
to maintain all licenses, certifications, etc, as may be required by
the state in which Facility provides services.
This Agreement is effective upon the date of execution by USA.
For and on behalf of: For and on behalf of:
USA MANAGED CARE ORGANIZATION, INC. MediQuik Services LLC
916 Capital of Texas Highway South 2008 West Main
Austin, Texas 78746 Houston, Texas 77098
4/28/98 3/24/98
- ----------------------------------- --------------------------
Date Date
/s/ /s/
- ----------------------------------- --------------------------
Signature Signature
Donna Smith Ben L. Pierce
- ----------------------------------- --------------------------
Printed name Printed Name
Vice President of Administration General Manager
- ----------------------------------- --------------------------
Title Title
<PAGE>
ATTACHMENT I
MEDICARE SELECT
This is an Attachment to the existing Agreement only, and in no way supersedes
the provisions agreed to in the Agreement.
1. SERVICES TO BE PROVIDED
*
2. PAYMENT OF CLAIMS
a) INSURER shall make no payment for services rendered to INSUREDS
unless they are determined to be necessary under the Medicare
claims process. This requirement shall include any Medicare Peer
Review Organization procedures.
b) Facility understands and agrees that no benefits for providing
services to INSUREDS will be paid by INSURER unless those
services are covered under the Federal Medicare Program (Title
XVIII of the Social Security Act) and such services shall be paid
in accordance with the applicable plan.
3. HOLD HARMLESS
a) Facility agrees that in no event, including, but not limited to
non-pavement by INSURER, INSURER'S insolvency or breach of this
Attachment shall Facility bill, charge, collect a deposit from,
seek compensation, remuneration or reimbursement from, or have
any recourse against any INSURED, or persons other than INSURER
acting on behalf of any INSURED, for services provided pursuant
to this Attachment.
b) Facility further agrees that the provision of this Section shall
survive the termination of this Attachment regardless of the
cause giving rise to termination and shall be construed to be for
the benefit of INSURED.
c) Any modification, addition, or deletion to the provisions of this
Section must comply with state and federal changes to Medicare
law.
4. RATES TO BE PAID TO THE FACILITY
*
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
*
5. BILLING PROCEDURES
a) Facility shall submit to INSURER or INSURER'S designee encounter
and billing information for INSUREDS who have received services.
For certain types of services, INSURER or its designee may
request copies of Medicare's payment notice to Facility and
Facility shall comply with any such reasonable request.
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
b) When payment for services has been made by INSURER in an amount
that exceeds the maximum benefits under the applicable plan, or
when INSURER has made payment to Facility in error, INSURER shall
have the right to recover such payment from Facility. INSURER has
agreed that recovery of overpayment shall not be taken from
future payments, but shall be separately requested by INSURER
with appropriate documentation to substantiate such request for
recovery of payment.
6. QUALITY ASSURANCE AND UTILIZATION REVIEW
Facility agrees to comply with and participate in INSURER'S quality
assurance and utilization review program. Facility agrees to comply
with such other procedures and to provide other data as may be
requested by INSURER or INSURER'S designee in order for INSURER or its
designee to conduct quality and utilization review activities
concerning services provided to INSUREDS.
7. USE OF NAME
a) USA shall market health care products and shall arrange to have
Facility's name and address included in the list of participating
facilities distributed to eligible INSUREDS and in marketing
brochures and other marketing literature without review and
approval by Facility.
b) Facility shall review and approve all other publications
containing Facility's name, pursuant to this Attachment, prior to
release to public.
8. TERMINATION
a) Facility acknowledges that the plan year shall commence on
January 1 and end on December 31 of each year. Facility
understands that participation is required for the entire plan
year for any given year. Facility's right to terminate shall be
limited to giving one hundred eighty (180) days prior written
notice to USA and shall only be effective on December 31st of the
respective year. USA may elect to terminate this Attachment on
December 31st, for reasons other that those listed in Section 10
(Termination) of the Agreement, by giving at least one hundred
eighty (180) days prior written notice to Facility. Such
termination shall have no effect upon the rights or obligations
of the parties arising out of any transactions occurring prior to
the effective date of such termination. Upon termination of this
Attachment for any reason, Facility agrees to render services to
any INSUREDS hospitalized on the date of termination, until such
INSUREDS are discharged or transferred from Facility to another
participating facility.
<PAGE>
b) If and when the sale of Medicare Select policies are no longer
authorized under the Federal Medicare program, this Attachment
will continue for any Medicare Select policies that were sold
prior to such program termination and for as long as any such
policies continue in force. In the event of any change in
applicable federal or state law which makes any provision of this
Attachment contrary to that law, the parties agree that this
Attachment is hereby amended to conform to the minimum
requirements of such applicable federal or state law.
For and on behalf of: (Facility name, address, etc.)
MediQuik Services LLC
- --------------------------------------
2008 West Main
- --------------------------------------
Houston, Texas 77098
- --------------------------------------
04/07/98
- --------------------------------------
Date
/s/
- --------------------------------------
Signature
Ben L. Pierce
- --------------------------------------
Printed Name
General Manager
- --------------------------------------
Title
<PAGE>
EXHIBIT A
COST CONTAINMENT GUIDELINES
1. Facility agrees to provide health care service in conformity with
accepted prevailing medical and surgical practices in the community in
which Facility operates.
2. Facility agrees to utilize participating facilities and ancillary
services (e.g., laboratory, x-ray, ultrasound, etc.) when not
available in Facility and when consistent with good medical practice.
3. In an effort to avoid duplication of costs, Facility agrees to accept
participating physician pre-admission testing, subject to Facility's
policy and good medical practice.
4. Facility agrees to encourage the use of generic drugs whenever
medically possible, when in the best interest of the patient, and when
allowed upon physician order.
5. While Utilization Management is primarily conducted by telephone,
certain situations may require an on-site visit. Should this occur,
Facility agrees to accept Utilization Review Representative on
Facility campus for the purpose of reviewing medical records pertinent
to continued stay or retrospective review of INSURED. Utilization
Review Representative agrees to conduct reviews in accordance with
Facility's policies.
Current INSURED medical records shall immediately be made available by Facility,
upon request, with proper patient authorization, for the purpose of concurrent
review and retrospective review.
<PAGE>
EXHIBIT B
_________________ is a facility providing services in the State of National
-----------
PPO PAYMENT SCHEDULE
Facility agrees to accept the following as payment in full for services
rendered.
PROFESSIONAL SERVICES:
*
OUTPATIENT SERVICES:
*
MEDICARE:
*
WORKERS' INJURY SERVICES:
*
- ----------------------------------------------------------------------------
1. Name of Billing Entity: MediQuik Services, LLC
------------------------------------------------
2. Billing Tax Identification Number: 76-0550959
-------------------------------------
3. Billing Address: 1004 Rolling Meadows Dr., Mt. Juliet, TN 37122
-------------------------------------------------------
4. Billing Telephone No. (800) 808-5261
--------------------------------------------------
5. Directory Address(es): Street Address, City, State, Zip, Telephone
(No PO Box Numbers)
(a) 2008 West Main b)
--------------------------- --------------------------------
Houston, TX 77098
--------------------------- --------------------------------
(713) 529-7572
--------------------------- --------------------------------
6. Facility Name: MediQuik Services, LLC
---------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
The services provided and billed for by this entity are (please be as
specific as possible):
Diabetes Management Services, including home delivery of blood glucose
- ----------------------------------------------------------------------------
monitoring supplies.
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<PAGE>
EXHIBIT B (CONTINUED)
This facility is currently accredited/certified by the following (please circle
all that apply): American College of Radiology (ACR), American College of
Surgeons (ACS), American Lithotripsy Society (ALS), American Osteopathic
Association (AOA), American Society for Histocompatibility and Immunogenetics
(ASHI), College of American Pathologists (CAP), Commission on Accreditation of
Rehabilitation Facilities (CARF), Commission on Office Laboratory Accreditation
(COLA), Community Health Accreditation Program (CHAP), Council on Accreditation
(COA), Joint Commission on Accreditation of Healthcare Organizations (JCAHO),
Medical Quality Commission (MQC), Medicare, Stare of Washington Office of
Laboratory Quality Assurance.
(ATTACH COPIES OF ACCREDITATIONS/CERTIFICATIONS SUPPORTING YOUR RESPONSE)
For and on behalf of: For and on behalf of:
USA MANAGED CARE ORGANIZATION, INC. MediQuik Services LLC
916 S. Capital of Texas Hwy. 2008 West Main
Austin, TX 78746 Houston, TX 77098
4/28/98 3/24/98
- ----------------------------------- ------------------------------
Date Date
/s/ /s/
- ----------------------------------- ------------------------------
Signature Signature
Donna Smith Ben L. Pierce
- ----------------------------------- ------------------------------
Printed name Printed Name
Vice President of Administration General Manager
- ----------------------------------- ------------------------------
Title Title
<PAGE>
LETTER AGREEMENT
May 25, 1999
Mr. Robert T. Hill
President
Cooperative Health Services, LLC
225 E. Cheyenne Mountain Blvd.
Colorado Springs, CO 80906-3700
Dear Bob,
This letter will confirm our understanding that MediQuik Services, Inc.
(MediQuik) will be the provider of mail-order pharmacy products and services for
Cooperative Health Services, LLC (CHS) and associated clients. CHS understands
that MediQuik will provide all prescription medications through the MediQuik
joint venture agreement with Guardian Health Systems.
It is our understanding that our relationship is applicable to the
Cooperative ConNEXTion agreement obtained by CHS. We look forward to working
with you on the Kit Carson Cooperate project as well as the other electrical
cooperative clients that will be procured through CHS.
If this is your understanding, please acknowledge in the space provided
below and returning by fax to (713) 888-1947.
Yours truly,
/s/
Grant M. Gables
President and CEO
Cooperative Health Services, LLC
/s/ 5/26/99
- --------------------------------
Mr. Robert T. Hill, President
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, SUCH INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATION OF SUCH OMITTED
INFORMATION HAS BEEN INDICATED WITH AN ASTERISK[*].
1998 MAIL ORDER AND MAIL ORDER HEALTH PLAN PATIENT
TESTING COMPLIANCE AGREEMENT
CONTRACT GM
This Agreement made and effective this 2nd day of October, 1998 by and between
Bayer Corporation, acting through its Diagnostics Division at 511 Benedict
Avenue, Tarrytown, New York, 10591 (hereinafter "Bayer"), and Medi-Quik
Services, Inc. located at 600 Travis, Suite 6500, Houston, Texas, 77002
(hereinafter "Distributor").
In consideration of the mutual promises and covenants contained herein, the
parties agree as follows:
1. INTRODUCTION
1.1 Pursuant to this Agreement, Bayer agrees to sell and Distributor agrees
to purchase "For Mail Order, Health Plan Patient Testing Compliance
Program" labeled GLUCOMETER ENCORE-Registered Trademark- Blood Glucose
Test Strips and/or GLUCOMETER ELITE-Registered Trademark- Blood Glucose
Test Strips (individually or collectively "Test Strips") for sale to
patients with diabetes ("End-users").
1.2 Distributor is currently an Authorized Distributor of Bayer's products
pursuant to a separate Agreement between Bayer and Distributor the
terms of which are incorporated herein by reference.
1.3 Distributor currently accepts Medicare/Medicaid assignment.
1.4 Under the conditions of paragraph 1.6 hereof, Bayer will issue an
allowance to the Distributor in accordance with paragraphs 1.7, 2.2, and
2.2.1 for the allowance amount set forth on Attachment A for sales of
Test Strips made to End-users for which Distributor conducts a Mail
Order, Health Plan Patient Testing Compliance Program, as defined below,
for all End-users.
Mail Order, Health Plan Patient Testing Compliance Program is defined as
follows:
- Distributor, through out-bound telephone service, reviews
End-user blood glucose testing supplies and provides
training on Bayer blood glucose monitors ("Meters").
- Distributor must maintain on file a physician letter for
each End-user indicating the level of testing required by
said End-user.
- Distributor must conduct out-bound telephone calls to
End-users quarterly to determine each patient is testing to
the physician recommendation level.
- Distributor offers educational materials to patients
indicating the importance of maintaining normal blood
glucose levels.
<PAGE>
1.5 If Distributor sells Test Strips to End-users who are members of
qualified Participating Plans, as set forth on Attachment B or on
a document computer diskette which is in an acceptable format to
Bayer, said Participating Plans must classify Test Strips as a
medical benefit. Participating Plans that classify Test Strips as
a Pharmacy Benefit do not qualify. Distributor does not qualify
for an allowance on Test Strips sold to members of Participating
Plans with which Bayer has entered into a separate Agreement for
Test Strips.
1.6 In consideration of the allowance pricing to the Distributor by
Bayer, Distributor agrees to provide each End-user's name,
address, Social Security Number, product, date of sale, quantity
of product, and name of Participating Plan as set forth on
Attachment B or Medicare/Medicaid coverage ("End-user
Information"), for each End-user to whom Test Strips are sold.
Distributor shall forward such information to Bayer on a monthly
basis as set forth in paragraph 1.7 and 2.2.1. Bayer will provide
an allowance to the Distributor only for those sales for which
End-user Information is provided. Distributor will only be
responsible for payment of net price if the documentation is in a
format acceptable to Bayer when Enduser Information is provided
and it is submitted on a monthly basis.
1.7 Distributor shall keep on file at its premise the names,
addresses, telephone numbers and End-users authorizations for all
End-users, as well as Medicare/Medicaid numbers of End-users who
are Medicare/Medicaid qualified, with respect to whom Distributor
has submitted documentation for an allowance. Distributor must
maintain physician letter of required testing level and phone
records for End-users. Distributor shall provide proof of sale to
End-users on a monthly basis by submitting in a format acceptable
to Bayer the End-user name, address, Social Security Number,
product, date of sale, quantity of product, and name of
Participating Plan or Medicare/Medicaid coverage to Bayer Customer
Order Service Department.
1.8 Distributor remains responsible for the accuracy of all End-user
Information submitted to Bayer. Distributor agrees that Bayer has
the right to perform random audits of Distributor's records
including phone records, invoices and other books and records of
Distributor to determine that allowances have been paid in
accordance with the provisions of this Agreement and that Test
Strips were sold exclusively to End-users. Such audits will be
performed by Bayer at a reasonable time and in a reasonable
manner, at any time, upon 48 hours prior notice. For audits
conducted at the Distributor's site, End-users' names, addresses,
telephone numbers, physician letters and or Medicare/Medicaid
numbers will not leave the premise with an Auditor or Bayer
representative nor will such information be used for any other
purpose other than to verify that Test Strips were sold to
End-users, and that the Distributor is fully performing within the
terms and conditions of this Agreement. However, the Auditor or
Bayer representative shall be given office and telephone access to
make spot check phone calls to verify the aforementioned
information. If the audit discloses any cases wherein allowances
were issued to the Distributor for non-qualifying purchases, the
Distributor shall reimburse Bayer for such allowance payments
within thirty (30)
<PAGE>
days of receipt of notice from Bayer, whether or not such allowances
were paid as a result of an error by Distributor.
1.9 Distributor agrees to purchase directly from Bayer the yearly
committed volume as agreed upon on Attachment A in combination
purchases of "For Mail Order, Health Plan Patient Testing
Compliance Program" labeled GLUCOMETER ELITE Test Strips and
GLUCOMETER ENCORE Test Strips.
1.10 Distributor agrees NOT to trade out End-users to competitors blood
glucose monitoring systems for the term of this Agreement so long
as the net price to the Distributor as shown on Attachment A
remains the same.
1.11 Meters provided to Distributor by Bayer at no cost for End-users
may not be billed to Medicare, Medicaid or any other third party
insurance and, are not eligible for any Bayer manufacturer's
mail-in rebate/trade-in offer, and each meter will have a sticker
indicating the aforementioned. Distributor will complete warranty
card in each End-user's name and return completed cards to Bayer.
1.12 Meters provided to Distributor by Bayer at no cost for End-users
are not for resale and as such it is the sole responsibility of
the Distributor to guarantee that the no cost Meters provided
under this Agreement will be provided only to End-users for
trade-out purposes.
1.13 Distributor shall obtain from End-users' Participating Plan
written authorization to provide End-users with Health Plan
Patient Testing Compliance Program services as described in
paragraph 1.4 above. If an End-user is not a member of a
Participating Plan, Distributor shall obtain End-user's physician
written authorization for End-user to participate in Health Plan
Patient Testing Compliance Program.
1.14 This Agreement is conditional upon Distributor providing Bayer an
acceptable list of Participating Plans as outlined on Attachment B
titled "Participating Plans List". The Participating Plans List
can be submitted on a 3 1/2" floppy disk in a mutually agreeable
format. If Distributor requires a Participating Plan to be added
to this Agreement after the date of initial acceptance by Bayer,
such requests must be made in writing thirty (30) days prior to
the beginning of the next consecutive month. Upon written approval
from Bayer, the Participating Plan will then be eligible for
allowances on Test Strips.
1.15 "Mail Order, Health Plan Patient Test Compliance" Test Strips are not for
retail sale.
1.16 Distributor may not advertise the prices of "Mail Order, Health
Plan Patient Testing Compliance Test Strips".
<PAGE>
2. ALLOWANCES
2.1 Distributor agrees to purchase Test Strips directly from Bayer in
the quantities and at the prices designated in subparagraph 2.1.1.
Bayer has no control over the prices for which the Test Strips are
sold by the Distributor to the End-users.
<TABLE>
<CAPTION>
Product
2.1.1 Test Strip Number Unit Price Effective Date*
---------- ------- ---------- ---------------
<S> <C> <C> <C>
"For Mail Order, Health Plan
Patient Testing Compliance
GLUCOMETER ENCORE"
Test Strip 50s 2250 (stickered) * 1/1/98
"For Mail Order, Health Plan
Patient Testing Compliance
GLUCOMETER ELITE" 3871 or
Test Strip 50s 3918 (stickered) * 1/1/98
</TABLE>
Minimum quantity - 24 boxes (1 Case)
Price may change with 30 day written notice; Allowance Value on
Attachment A will be adjusted to meet the net price at the volume
level agreed upon.
2.1.2. Payment terms are as stated in Attachment A.
2.2 In consideration of the Distributor's services set forth herein
and the submission of documentation which is acceptable to Bayer,
Bayer will provide an allowance to the Distributor as per pricing
levels indicated on Attachment A.
2.2.1. Distributor shall submit documentation as required in
paragraph 1.7, in a format acceptable to Bayer, to the
Bayer Customer Order Services Department not later than the
tenth day of the month following the month that Test Strips
were sold to End-user. Allowances will not be honored if
documentation submitted to Bayer is 90 days or more after
Distributor sold Test Strips to Enduser.
2.3 Distributor will accept short-dated Test Strips. Short-dated is
defined as Test Strips having less than 12 months dating.
Distributor may refuse to accept Test Strips with less than 5
months dating. Bayer will maintain lot numbers of the short-dated
Test Strips sold to Distributor and will accept returns if these
short-dated Test Strips cannot be sold. Distributor will be
notified if short-dated product will be shipped.
2.4 If the documentation submitted by Distributor is insufficient to
support the claimed allowances for sales to End-users, or if
Bayer's periodic audits, as detailed in
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
paragraph 1.8, fail to substantiate such information, Bayer will so
notify the Distributor who will have ten (10) days from the date of such
notification to provide any additional documentation. If Bayer
does not receive the documentation within this period, the
allowances issued will be billed back for the unearned allowance
and the Distributor shall pay same within five (5) days thereof.
2.5 To the extent it may be required, any allowances or other price
reductions issued by Bayer to Distributor under this Agreement may
constitute a discount under Section 1128B(b)(3)(A) of the
Social Security Act [42 USC 1320a-7b(b)(3)(A)]. Accordingly,
Distributor agrees to properly disclose and appropriately reflect
the allowance or reduction in price in any costs claimed or
charges made to Medicare, Medicaid, or other federal or state
health insurance programs which reimburse the Test Strips and
require such disclosure. Distributor shall retain all allowance or
other price reduction information and make it available to
Medicare, Medicaid or other government agencies in compliance with
the discount disclosure requirement.
2.6 Test Strips are for distribution in the United States and District of
Columbia only.
3. TERM
3.1 This agreement will commence on October 2, 1998, and shall
terminate on October 1, 2000. It may be extended or modified only
upon execution of a writing by authorized representatives of both
parties.
3.2 Bayer may terminate this Agreement immediately upon written notice
to the Distributor if Bayer, in its sole judgment, determines that
the Distributor has:
3.2.1. Knowingly claimed allowances for sales that were not made to
End-users; or
3.2.2. Submitted claims for End-users covered under Participating
Plans that classify Test Strips as a Pharmacy Benefit; or
3.2.3. Collected or attempted to collect from End-users in an
amount in excess of the Medicare/Medicaid reimbursement
rate and co-payment rate and the Distributor has submitted
allowance claims to Bayer for such uses; or
3.2.4. Sold the Test Strips provided to Distributor under this
Agreement to parties other than End-users and the
Distributor has submitted allowance claims to Bayer for
such uses; or
3.2.5. Failed to keep and provide access to Bayer of the
documentation set forth in paragraph 1.7; or
<PAGE>
3.2.6. Acquired Test Strips at a price other than in 2.1.1. less
Test Strip Allowance Value of committed yearly volume.
3.2:7. Failed to meet any current or new Medicare/Medicaid
regulations or other requirements pertaining to this
Agreement or diabetes care services.
3.3 If Distributor violates any terms of this Agreement (including
without limitation the failure to make any payment required under
this Agreement when such payment becomes due) Bayer may, in its
discretion and without further liability whatsoever, immediately
terminate this Agreement. Distributor waives prior notice, service
of process and preseizure hearing as prior conditions to
repossessions of all Meters and Test Strips still in Distributor's
possession provided hereunder through this Agreement and shall pay
all costs incurred in connection with such repossession (including
reasonable attorney's fees). If Bayer becomes aware of any breach
Bayer will so notify the Distributor in writing so the Distributor
may immediately correct the breach.
3.4 Either party may terminate this Agreement for any reason upon one
hundred and twenty (120) days prior written notice.
3.5 Either party may terminate this Agreement upon thirty (30) days
prior written notice upon the happening of any of the following
events.
3.5.1. the adjudication of either party to be bankrupt or insolvent;
3.5.2. the filing by either party of a petition in bankruptcy or
insolvency;
3.5.3. the filing by either party of a petition or answer seeking
reorganization or readjustment under any law relating to
insolvency or bankruptcy;
3.5.4. the appointment of a receiver with respect to all or
substantially all of the property of either party;
3.5.5. any assignment by either party of its assets for the
benefit of creditors;
3.5.6. the institution by either party of any proceedings for
liquidation or the winding up of its business other than
for purposes of reorganization, consolidation or merger.
3.6 For the term and purpose of this 1998 Mail Order and Mail Order
Health Plan Patient Testing Compliance Agreement-Contract GM, all
of the Distributor's Test Strip requirements for Meters must be
purchased directly from Bayer.
<PAGE>
3.7 If the Distributor diverts or sells any Test Strips or Meters
intended for Distributor's End-users to any other Distributor or
third party such action shall constitute grounds for termination
of this Agreement immediately upon written notice and removal of
Distributor as an Authorized Distributor of Bayer. Bayer has the
right to recover all allowances paid to the Distributor under this
Agreement.
3.8 If the Distributor displays or advertises Bayer's "For Mail Order,
Health Plan Patient Testing Compliance Program" labeled product to
End-users, or if Meters and Test Strips are used for anything
other than mail order to End-users as described in this Agreement
such action shall constitute grounds for termination of this
Agreement immediately upon written notice. Bayer has the right to
recover all allowances paid to the Distributor under this
Agreement.
3.9 If Distributor fails to comply with a request by Bayer to submit
documentation as required in sections 1.6, 1.7, or 2.2.1 then
Bayer may at its option terminate this Agreement immediately upon
written notice. Bayer has the right to recover all allowances paid
to Distributor that were not documented in accord with provisions
of this Agreement.
4. WARRANTY
4.1 Bayer's standard warranty terms shall apply to Test Strips provided
under this Agreement.
5. GENERAL
5.1 GOVERNING LAW: This Agreement will be governed by the laws of the
State of New York.
5.2. ASSIGNMENT: This Agreement shall not be assigned by Distributor
without the prior written consent of Bayer.
5.3 MODIFICATION: This Agreement contains all the agreements and
conditions applicable to this undertaking. All prior oral and
written agreements of any kind are excluded. The terms and
conditions of this Agreement shall not be added to, modified,
superseded or otherwise altered except by a written modification
signed by authorized representatives of both parties.
5.4 NO WAIVER OF CONDITIONS: Failure of Bayer to insist on strict
performance shall not constitute a waiver of any of the provisions
of this Agreement or waiver or any other default of the
Distributor.
5.5 INDEPENDENT CONTRACTOR AND INDEMNIFICATION
5.5.1. This Agreement does not create a special or fiduciary
relationship between the parties; Distributor is an
independent contractor,
<PAGE>
and nothing in this Agreement is intended to constitute
either party as an agent, legal representative, subsidiary,
joint venturer, partner, employee, or servant of the other for
any purpose whatsoever.
5.5.2 Nothing in this Agreement authorizes Distributor to make
any contract, warranty, or representation on Bayer's behalf
or to incur any debt or other obligation in Bayer's name.
Distributor shall indemnify and hold Bayer, and Bayer's
affiliates and parent company's officers, directors,
shareholders, employees and representatives, harmless
against any and all claims, losses, costs, expenses,
liabilities, and damages arising solely and directly, as a
result of, or in connection with Distributor's breach of
its obligations under this Agreement including the costs,
including attorney's fees, of defending against them.
5.5.3 Nothing in this Agreement authorizes Bayer to make any
contract, warranty, or representation on Distributor's
behalf or to incur any debt or other obligation in
Distributor's name.
5.6 Distributor and Bayer shall maintain confidentiality of all the
terms and conditions of the Agreement throughout the duration
hereof and for a period of two (2) years following the effective
date of expiration or termination.
6. All notices to the respective parties shall be in writing and
shall be sent via certified mail return receipt requested or
express courier to the following addresses:
To Bayer Corporation: To Distributor:
Bayer Corporation, Diagnostics Division Medi-Quik Services, Inc.
430 South Beiger Street 600 Travis, Suite 6500
Mishawaka, Indiana 46544 Houston, Texas77002
Attn.: Kevin J. Magers Attn: Craig Christopher
7. This 1998 Mail Order Health Plan Patient Testing Compliance
Agreement-Contract GM supersedes the Contract G accepted by
Medi-Quick Services, Inc., on July 27, 1998, which will be
rendered null and void with the acceptance by Bayer of this 1998
Mail Order Health Plan Patient Testing Compliance Agreement
Contract GM.
8. This Agreement will be effective only upon receipt of the
requisite information on Attachments A and B, and counter
signature of Bayer hereon. Distributor should acknowledge their
acceptance of this Agreement by signing both copies and returning
them to Bayer Corporation by the close of business October 9, 1998
after which time this proposal will be considered null and void.
If the required information is acceptable to Bayer, Bayer will
countersign both copies of the Agreement and return one to
Distributor for its records.
<PAGE>
Bayer Corporation Medi-Quik Services, Inc.
By: /s/ By: /s/
------------------------------------- ------------------------------
Authorized Signature Authorized Signature
Kevin J. Magers, Manager Strategic
------------------------------------- ------------------------------
Contracting-Self Test Grant M. Gables, President
------------------------------------- ------------------------------
Print Name and Title Print Name and Title
10/6/98 10/2/98
------------------------------------- ------------------------------
Date Date
<PAGE>
ATTACHMENT A
FOR CONTRACT GM
a) If Distributor does not meet committed yearly volume, as set forth below,
the Distributor will be charged back the price difference which is equal to the
price at the committed volume level minus the price at the volume level achieved
in the given contract year. Volumes are in combined purchases of Products.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Committed Net ELITE
Yearly Pricing ELITE Net ENCORE ENCORE
Volume After Allowance % Pricing After Allowance % Payment
In 50s Allowance Value Allowance Allowance Value Allowance Terms
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
50,000 * * * * * * *
- ----------------------------------------------------------------------------------------------------------
100,000 * * * * * * *
- ----------------------------------------------------------------------------------------------------------
200,000 * * * * * * *
- ----------------------------------------------------------------------------------------------------------
250,000 * * * * * * *
- ----------------------------------------------------------------------------------------------------------
300,000 * * * * * * *
- ----------------------------------------------------------------------------------------------------------
</TABLE>
b) If Distributor commits to * unit yearly volume and does not meet such
committed volume in each contract year, Bayer will charge the Distributor
back the price difference which is equal to the price at the committed volume
level minus the price of the volume achieved as per the following schedule.
<TABLE>
<CAPTION>
Yearly Volume ELITE Net ENCORE
In 50s Pricing Pricing
<S> <C> <C>
10,000 * *
25,000 * *
36,000 * *
</TABLE>
Medi-Quick Services, Inc. agrees to purchase directly from Bayer, a committed
yearly volume of * boxes of 50s in combined purchases of GLUCOMETER
ELITE and GLUCOMETER ENCORE Test Strips.
/s/ Grant Gables
- ----------------------------------
Distributor's authorized signature
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
Attachment B
Bayer Corporation, Diagnostics Division
Participating Plans List
<TABLE>
<CAPTION>
===============================================================================================================================
Participating Plan Name Address City ST Zip Number of Covered Model Type*
Lives
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Global Medical Solutions 7350 N.W. 7th St. Miami FL 33126 280,000 At risk Provider
- -------------------------------------------------------------------------------------------------------------------------------
Multi Plan 115 Fifth Ave 7th NY NY 10003 21 million Network Provider
Floor
- -------------------------------------------------------------------------------------------------------------------------------
Health Care Services 916 S. Capital of Tx Austin TX 78746 7 million Network Provider
USA Managed Care Org Inc. Hwy
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Integranet Phy. 260 N. Smith Houston TX 77060 1,800,000 mso
Resource Inc. Houston Pkwy
National Healthcare 770 S. Post Oak Houston TX 77056 600,000 Network Provider
Alliance Inc. Suite 445
- -------------------------------------------------------------------------------------------------------------------------------
Foundation Health 5525 McArthur Blvd., Dallas, Evino TX 75038 50,000 Network Provider
Preferred Suite 850
===============================================================================================================================
</TABLE>
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT IS SUBJECT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, SUCH INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE LOCATION OF SUCH OMITTED
INFORMATION HAS BEEN INDICATED WITH AN ASTERISK[*].
1999 NURSING HOME/LONG TERM CARE/HOME HEALTH CARE DISTRIBUTOR
GLUCOMETER ELITE-Registered Trademark- METER AND TEST STRIP AGREEMENT
SOLE SOURCE - CONTRACT X
This Agreement is made by and between Bayer Corporation, acting through its
Diagnostics Division at 511 Benedict Avenue, Tarrytown, New York 10591
(hereinafter "Bayer"), and Mediquik Services, Inc., located at 770 South Post
Oak #520, Houston, TX 77056 (hereinafter "Distributor").
In consideration of the mutual promises and covenants contained herein, the
parties agree as follows:
1. INTRODUCTION
1.1. Pursuant to this Agreement, Bayer agrees to sell and Distributor
agrees to purchase "For Professional Use Only" labeled
GLUCOMETER ELITE Blood Glucose Test Strips 50's ("Test Strips")
for resale exclusively to nursing homes/long term care
facilities, and home health care agencies (End-users).
1.1.1. Bayer will provide one GLUCOMETER ELITE-Registered
Trademark- Meter (Meter) at no charge to each nursing
station in each of the Distributor's nursing home/long
term care facility it services, if needed.
1.1.2. Distributor may purchase Single-Let-TM- Lancets,
FINGERSTIX-Registered Trademark- Lancets, and/or
GLUCOLET-Registered Trademark- 2 Automatic Lancing
Devices (individually or collectively "Lancet Products")
as set forth in paragraph 2.3.1.
1.2. The End-user facilities serviced by the Distributor must sign
and the Distributor must keep on file, an own use certificate
specifying the Meters, Test Strips and/or Lancet Products
acquired under this contract may not be resold to other
End-users or any other channels of distribution.
1.3. Distributor is currently an Authorized Distributor of Bayer
products, pursuant to a separate Agreement between Bayer and
Distributor, the terms of which are incorporated herein by
reference.
1.4. Distributor agrees to provide training, in-service and ongoing
support for all nursing staff of Bayer Meters and Test Strips at
End-user facilities.
1.4.1. Distributor agrees to communicate the unique features of
Meters, Test Strips and/or Lancet Products via
newsletters, formulary letters, flyers, management
meetings, telemarketing and sales representative support.
1.5. Under the conditions of paragraph 1.6 hereof, Bayer will issue a
credit to the Distributor in accordance with paragraph 2.4 for
the credit amount set forth on Attachment A for sales of Test
Strips and/or the credit amount set forth in 2.3.1 for sales of
Lancet Products made to End-users for which Distributor
maintains End-user information in a format acceptable to Bayer.
1.5.1. Distributor must refrain from debiting on current or past
due statements for proper issuance of credit by Bayer
Corporation. Debiting Bayer prior to issuance of credit
1
<PAGE>
as stated in paragraph 2.4 will result in immediate
termination of contract upon written notice to
Distributor.
1.6. In consideration of the issuance of the credit to the
Distributor by Bayer, Distributor agrees to provide name,
address, Distributor customer number, invoice number, product
sold, quantity of product sold, and date of sale ("End-user
information") for each End-user to whom Test Strips and/or
Lancet Products are sold. Distributor shall forward such
information to Bayer on a monthly basis as set forth in
paragraph 2.4. Such End-user Information monthly submissions
should be substantially similar in format to the format set
forth in Attachment C. Bayer will issue credit to the
Distributor only for those sales for which End-user Information
is provided.
1.7. Distributor remains responsible for the accuracy of all End-user
Information submitted to Bayer. Distributor agrees that Bayer
has the right to perform random audits of Distributor's records
in support of credit claims to determine that credits have been
issued in accordance with provisions of this Agreement. Such
audits will be performed by Bayer at a reasonable time and in a
reasonable manner upon ten (10) days prior written notice to
Distributor. Bayer will not use the Distributor's End-user
Information for any purpose other than to verify contract
eligibility. If the audit discloses any cases wherein credits
were issued to the Distributor for non-qualifying purchases, the
Distributor shall reimburse Bayer for such credit issued within
thirty (30) days of receipt of notice from Bayer, whether or not
such credits were issued as a result of an error by Distributor.
1.8. Distributor agrees to purchase Test Strips listed in paragraph
2.1.1 directly from Bayer in the quantity committed to in
Attachment A, per contract year.
1.9. Distributor agrees to represent Bayer Meters and Test Strips as
their exclusive system of choice for a minimum of 5 years.
1.9.1. Exclusive shall mean the Distributor agrees and warrants
it will represent Bayer as its sole and only manufacturer
of Test Strips for End-user facilities and Distributor's
total of Bayer Test Strip sales will represent 90% of
their End-user business 12 months from the date of
acceptance of this contract by Bayer.
1.9.2. Bayer will evaluate compliance with Attachment A at
twelve month intervals. Should purchases fail to meet
Committed Yearly Volumes, Bayer has the right to invoice
the Distributor for failure to meet the yearly committed
volume as set forth on Attachment A and immediately
terminate this Agreement.
1.9.3. Quarterly Reviews will be conducted by a Bayer
representative based on Distributor reports of market
share attainment. Distributor shall provide Bayer with a
Quarterly Market Share Report in a format similar to that
shown in Attachment B no later than thirty (30) days
following the close of each calendar quarter.
2. CREDITS
2.1. Distributor agrees to purchase Test Strips directly from Bayer
at the prices and quantities designated in subparagraph 2.1.1.
Bayer has no control over the prices for which the Test Strips
are sold by the Distributor to the End-users.
2
<PAGE>
<TABLE>
<CAPTION>
PRODUCT UNIT EFFECTIVE
2.1.1. TEST STRIP NUMBER PRICE DATE*
---------- ------- ----- ---------
<S> <C> <C> <C>
"For Professional Use 3873 * 1/1/99
Only GLUCOMETER ELITE"
Test Strips 50s
</TABLE>
Minimum case quantities
(24 Boxes/Case)
*Price may change with 30 days' written notice.
2.2. Bayer will credit the Distributor's account the amount as per
the pricing level committed to as set forth on Attachment A, for
Test Strips sold by the Distributor to End-users.
2.3. Distributor may also purchase directly from Bayer Single-Let
Lancets. FINGERSTIX Lancets, and GLUCOLET 2 Automatic Lancing
Devices at the price and quantities designated in subparagraph
2.3.1.. These Lancet Products are not price protected and price
increases will be based on annual increases in the Average
Wholesale Price as reflected in Bayer's Distributor Price Lists.
<TABLE>
<CAPTION>
PRODUCT UNIT UNIT NET PRICE EFFECTIVE
2.3.1. LANCET PRODUCTS NUMBER PRICE CREDIT AFTER CREDIT DATE*
--------------- ------- ----- ------ ------------ ---------
<S> <C> <C> <C> <C> <C>
Single-let Disposable 6568 * * * 1/1/99
Lancets, 200/Box
FINGERSTIX Lancets, 5965 * * * 1/1/99
200/Box
GLUCOLET 2 Automatic 5976 * * * 1/1/99
Lancing Device, 10/Box
</TABLE>
*Price may change with 30 days' written notice.
Order requirements for Lancet Products are found in Bayer's 1999 Distributor
Price Lists.
2.4. Distributor shall claim credits on a monthly basis by submitting
End-user information as defined in paragraph 1.6 in a format
acceptable tot he Bayer Customer Order Services Chargeback
Department not later than the tenth day of the month following
the month for which sales were made to End-users. Such End-user
Information monthly submissions should be substantially similar
in format to the format set forth in Attachment C. If the
End-user Information submitted by Distributor is satisfactory,
Bayer will issue a credit to the Distributor's account. Claims
for credits will not be honored if submitted to the Bayer
Customer Order Services Chargeback Department 90 or more days
after Distributor's sale to End-users.
2.5. If the documentation submitted by Distributor is insufficient to
support the claimed credits, Bayer will so notify the
Distributor who will have ten (10) days from the date of such
notification to provide the necessary documentation. If Bayer
does not receive the documentation within this period, the
credit will not be granted.
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
3
<PAGE>
2.6. To the extent that it may be required, any credits or other
price reductions issued by Bayer to Distributor under this
Agreement may constitute a discount under Section 1128B(b)(3)
(A) of the Social Security Act [42 USC 1320a-7b(b)(3)(A)].
Accordingly, Distributor agrees to properly disclose and
appropriately reflect the credit or reduction in price in any
costs claimed or charges made to Medicare, Medicaid, or other
federal or state health insurance programs which reimburse the
Meters and Test Strips and require such disclosure. Distributor
shall retain all credit or other price reduction information and
make it available to Medicare, Medicaid or other government
agencies in compliance with the discount disclosure requirement.
2.7. For Meters provided at no charge, Distributor shall not make any
claims for reimbursement under Medicare/Medicaid or any other
third party insurance and, Meters are not eligible for any
manufacturer's mail-in/trade-in offer. Distributor will insure
completed warranty cards are returned to Bayer.
2.8. Test Strips and Lancet Products are for distribution in the
United States and District of Columbia only.
2.9. Meters provided under this Agreement to Distributor by Bayer at
no charge for End-user use can only be supplied to End-users in
the United States and District of Columbia.
3. TERM
3.1. This Agreement will commence on the date of counter signature by
Bayer in accord with provisions as stated in paragraph 7 and
shall terminate on 12/31/00. It may be extended or modified
only upon execution of a writing by authorized representatives
of both parties.
3.2. Bayer may terminate this Agreement immediately upon written
notice to the Distributor if Bayer, in its sole judgment,
determines that the Distributor has:
3.2.1. knowingly claimed credits for sales that were not made to
End-users; or
3.2.2. sold the Test Strips and/or Lancet Products provided to
Distributor under this Agreement to parties other than
End-users and the Distributor has submitted credit claims
to Bayer for such uses; or
3.2.3. acquired Test Strips and/or Lancet Products at a Unit
Price other than listed in 2.1.1 and 2.3.1; or
3.2.4. failed to keep and provide access to Bayer of End-user
Information set forth in paragraphs 1.6, 1.7, and 2.4; or
3.2.5. sold the Meters provided at no charge to Distributor
under this Agreement.
3.3. If Distributor violates any terms of this Agreement (including
without limitation the failure to make any payment required
under this Agreement when such payment becomes due) Bayer may,
in its discretion and without further liability whatsoever,
immediately terminate this Agreement. Distributor waives prior
notice, service of process and preseizure hearing as prior
conditions to repossessions of all Meters, Test Strips and
Lancet Products still in
4
<PAGE>
Distributor's possession provided hereunder and shall pay all
costs incurred by Bayer in connection with such repossession
(including reasonable attorney fees).
3.4. Bayer may terminate this Agreement for any reason upon sixty
(60) days prior written notice to Distributor.
3.5. Either Party may terminate this Agreement upon thirty (30) days
prior written notice upon the happening of any of the following
events:
3.5.1. the adjudication of either party to be bankrupt or
insolvent;
3.5.2. the filing by either party of a petition in bankruptcy or
insolvency;
3.5.3. the filing by either party of a petition or answer
seeking reorganization or readjustment under any law
relating to insolvency or bankruptcy;
3.5.4 the appointment of a receiver with respect to all or
substantially all of the property of either party;
3.5.5 any assignment by either party of its assets for the
benefit of creditors;
3.5.6 the institution by either party of any proceedings for
liquidation or the winding up of its business other than
for purposes of reorganization, consolidation or merger.
3.6. For the term of this Agreement, Distributor agrees to provide
one hundred per cent (100%) of their Bayer Test Strip
requirements to End-users who utilize the Bayer Blood Glucose
monitor.
3.7. If Distributor diverts or sells any Test Strips, Meters, or
Lancet Products intended for Distributor's End-users to any
other Distributor or third party such action shall constitute
grounds for termination of this Agreement immediately upon
written notice and removal of Distributor as an Authorized
Distributor of Bayer. Bayer has the right to recover all credits
issued to the Distributor under this Agreement. Bayer also
reserves the right to recover the Average Wholesale Price
published in the 1999 Bayer Distributor Price List for all no
charge meters shipped to the Distributor under the terms of this
Agreement.
4. WARRANTY
4.1. Bayer's standard warranty terms shall apply to Meters, Test
Strips, and Lancet Products provided under this Agreement.
5. GENERAL
5.1. GOVERNING LAW: This Agreement will be governed by the laws of
the State of New York.
5.2. ASSIGNMENT: This Agreement shall not be assigned by Distributor
without the prior written consent of Bayer.
5
<PAGE>
5.3. MODIFICATION: This Agreement contains all the Agreements and
conditions applicable to this undertaking. All prior oral and
written Agreements of any kind are excluded. The terms and
conditions of this Agreement shall not be added to, modified,
superseded or otherwise altered except by a written modification
signed by authorized representatives of both parties.
5.4. NO WAIVER OF CONDITION: Failure of Bayer to insist on strict
performance shall not constitute a waiver of any of the
provisions of this Agreement or waiver or any other default of
the Distributor.
5.5. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
5.5.1. This Agreement does not create a special or fiduciary
relationship between the parties; Distributor is an
independent contractor, and nothing in this Agreement is
intended to constitute either party an agent, legal
representative, subsidiary, joint venturer, partner,
employee, or servant of the other for any purpose
whatsoever.
5.5.2. Nothing in this Agreement authorizes Distributor to make
any contract, warranty, or representation on Bayer's
behalf or to incur any debt or other obligation in
Bayer's name. Distributor shall indemnify and hold Bayer,
and Bayer's affiliates and parent company's officers,
directors, shareholders, employees and representatives,
harmless against any and all claims, losses, costs,
expenses, liabilities, damages arising directly or
indirectly from, as a result of, or in connection with
Distributor's performance of its obligations under this
Agreement including the costs, including attorney's fees,
of defending against them.
5.6. Distributor and Bayer shall maintain the confidentiality of all
the terms and conditions of the Agreement throughout the
duration hereof and for a period of two (2) years following the
effective date of expiration or termination.
6. All notices to the respective parties shall be in writing and shall be
sent via certified mail return receipt requested to the following
addresses:
TO BAYER CORPORATION: TO DISTRIBUTOR:
Bayer Corporation, Diagnostics Division MediQuik Services, Inc.
430 South Beiger Street 770 South Post Oak Lane #520
Mishawaka, Indiana 46544 Houston, Texas 77056
Attn: Mary L. Bishop
Contract Administrator
7. This Agreement will be effective only upon receipt of the
requisite information on Attachment's A and counter signature of
Bayer hereon. Distributor should acknowledge their acceptance
of this Agreement by signing both copies and returning them to
Bayer Corporation by the close of business February 28, 1999,
after which time this proposal will be considered null and void.
If the required information is acceptable to Bayer, Bayer will
countersign both copies of this Agreement and return one to
Distributor for its records.
6
<PAGE>
BAYER CORPORATION DISTRIBUTOR
By: /s/ By: /s/
---------------------------- ---------------------------
Authorized Signature Authorized Signature
Mary L. Bishop, Manager,
Contract Administration Craig Christopher
- -------------------------------- ---------------------------
Print Name and Title Print Name and Title
2/9/99 2/4/99
- -------------------------------- ---------------------------
Date Date
7
<PAGE>
ATTACHMENT A FOR CONTRACT X
a) If DISTRIBUTOR not meet Committed Yearly Volume, as set forth below,
the Distributor will be charged back the price difference which is equal to
the price at the Committed Yearly Volume level minus the price at the volume
level achieved in the given contract year, multiplied by the quantity of
Distributor's actual product purchases in the given contract year. In
addition, if purchase levels fall below * yearly volume in 50s, then
price to which chargeback will be assessed is the GLUCOMETER-Registered
Trademark- ELITE Test Strip Base Pricing of * /box of 50s.
<TABLE>
<CAPTION>
GLUCOMETER ELITE Net GLUCOMETER ELITE
Committed Yearly Test Strip 50s Test Strip 50s
Volume in 50s Credit Value Price After Credit
--------------- ---------------- --------------------
<S> <C> <C>
56,000 * *
80,000 * *
104,000 * *
128,000 * *
152,000 * *
176,000 * *
208,000 * *
232,000 * *
256,000 * *
280,000 * *
</TABLE>
b) If Distributor agrees to purchase * GLUCOMETER ELITE Test Strips
(50s) in a given contract year and does not meet such committed volume in the
given contract year, the Distributor will be charged back the price
difference which is equal to the price at the Committed Yearly Volume level
minus the price of the volume achieved as per the following schedule,
multiplied by the quantity of Distributor's actual product purchases in the
given contract year.
<TABLE>
<CAPTION>
GLUCOMETER ELITE
Yearly Test Strip 50s Chargeback to
Volume in 50s Base Pricing Distributor
------------- ---------------- --------------
<S> <C> <C>
less than * * *
</TABLE>
MediQuik Services, Inc. agrees to purchase directly from Bayer the Committed
Yearly Volume of * boxes of "For Professional Use Only GLUCOMETER
ELITE" Test Strips 50s per contract year.
/s/ Craig Christopher, COO
- ----------------------------------------
Distributor's Authorized Signature
- ----------------
*This information has been omitted from this exhibit and is subject to a
request for confidential treatment. In accordance with Rule 24b-2 under the
Securities Exchange Act of 1934, as amended, such information has been filed
separately with the Securities and Exchange Commission.
<PAGE>
ATTACHMENT B FOR CONTRACT X
QUARTERLY MARKET SHARE REPORT FORMAT
DISTRIBUTOR NAME AND ADDRESS ACCOUNT NUMBER: ____________
___________________________________ CONTRACT NUMBER: ___________
___________________________________
___________________________________
REPORTING PERIOD: ____________ TO ____________
TOTAL SUMMARY
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Product Product Description Package Total # of Quarterly Unit
Code Size Packages Market Share %
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3873 "For Professional Use Only GLUCOMETER ELITE-Registered 50s
Trademark-" Test Strips
- ---------------------------------------------------------------------------------------------------------------------
Competitive Product Unit Sale 50's
- ---------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
BRANCH DETAILS
BRANCH LOCATION:
- ---------------------------------------------------------------------------------------------------------------------
Product Product Description Package Total # of Quarterly Unit
Code Size Packages Market Share %
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3873 "For Professional Use Only GLUCOMETER ELITE-Registered 50s
Trademark-" Test Strips
- ---------------------------------------------------------------------------------------------------------------------
Competitive Product Unit Sale 50's
- ---------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
SEND SUMMARY REPORT AND BACK-UP DETAIL TO:
Bayer Corporation, Diagnostics Division
Contract Administration
Attn: Mary L. Bishop
PO Box 2009
Mishawaka, IN 46546-2009
<PAGE>
ATTACHMENT C FOR CONTRACT X
END USER INFORMATION
MONTHLY REPORT(S) FORMAT
DISTRIBUTOR NAME AND ADDRESS ACCOUNT NUMBER: ____________
___________________________________ CONTRACT NUMBER:
___________________________________
___________________________________
REPORTING PERIOD: ____________ TO ____________
<TABLE>
<CAPTION>
PRODUCT LEVEL SUMMARY
- -----------------------------------------------------------------------------------------------------------------------------
Product Product Description Package Quantity Credit Total
Code Size (Units) Amount $ Credit $
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
3873 "For Professional Use Only GLUCOMETER ELITE-Registered 50s
Trademark-" Test Strips
- -----------------------------------------------------------------------------------------------------------------------------
6568 Single-Let-TM- Disposable Lancets 200s
- -----------------------------------------------------------------------------------------------------------------------------
5965 FINGERSTIX-TM- Lancets 200s
- -----------------------------------------------------------------------------------------------------------------------------
5976 GLUCOLET-Registered Trademark- 2 Automatic Lancing Device 10s
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE SUMMARY REPORT(s) MUST BE ACCOMPANIED BY ALL APPLICABLE BACK-UP DETAIL
DATA (INCLUDING DISTRIBUTOR'S CUSTOMER'S NAME AND ADDRESS, DISTRIBUTOR'S
CUSTOMER NUMBER, INVOICE NUMBER, PRODUCT CODE, QUANTITY OF PRODUCT
SOLD, AND DATE OF SALE) IN A FORMAT SIMILAR TO THAT SHOWN BELOW.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
END-USER BACK-UP DETAIL
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Distributor's Distributor's Distributor's Invoice Product Quantity Date of
Customer's Customer's Address Customer Number Code of Product Sale
Name Number Sold
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
SEND SUMMARY REPORT AND BACK-UP DETAIL TO:
Bayer Corporation, Diagnostics Division
Contract Administration
Attn: Mary L. Bishop
PO Box 2009
Mishawaka, IN 46546-2009
204042.1
