EXHIBIT 10.5
HEALTH ALLIANCE NETWORK SYSTEMS
JOINT VENTURE AGREEMENT
AGREEMENT, made as of the 1st day of March, 1996, between HEALTH
CONTAINMENT CORPORATION, a New York corporation ("HAN") and JUNIPER HEALTHCARE
CONTAINMENT SYSTEMS, INC., a New York corporation ("JHCSI") (individually a
"Joint Venturer" and together, the "Joint Venturers").
W I T N E S S E T H:
WHEREAS, HAN has entered into an agreement with The Guardian Life Insurance
Company, Inc. ("Guardian"), a copy of which is annexed hereto as Exhibit "A"
(the "Guardian Agreement"), to provide certain healthcare cost containment
services to Guardian through one or more preferred provider organizations;
WHEREAS, HAN has agreed to assign the Guardian Agreement (with respect to
access to any preferred provider organization in New Jersey) to a joint venture
between HAN and JHCSI;
WHEREAS, HAN and Preferred Providers of New Jersey, Inc. (d/b/a/ QualCare)
("QualCare"), a preferred provider organization, are parties to an agreement
dated September 18, 1995, a copy of which is annexed hereto as Exhibit "B" (the
"HAN/QualCare Agreement"), whereby QualCare agrees to provide Guardian with
access to QualCare's preferred provider network in the State of New Jersey at a
discounted price pursuant to the terms of the Guardian Agreement;
WHEREAS, the parties desire to form a joint venture for the purpose of
providing Guardian with the Services (as hereinafter defined) through QualCare;
and
WHEREAS, the parties desire to enter into a joint venture agreement to set
forth their relative rights and obligations between one another relating to the
Joint Venture;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Name. The Joint Venturers hereby associate themselves and form, solely
for the purposes herein described, a joint venture (the "Joint Venture") to be
known as the "Health Alliance Systems". The Joint Venture may also do business
under any other assumed name as the Joint Venturers may elect, after filing any
appropriate assumed name certificate(s) as shall be required by applicable law.
2. Office. The principal business office of the Joint Venture shall be at
000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxx Xxxx, Xxx Xxxx 00000 or such other place
or places as the Joint Venturers shall hereafter select.
3. Business. The business of the Joint Venture shall be to provide Guardian
with the Services in New Jersey through QualCare. As used in this Agreement, the
term "Services" shall mean the health care cost containment services and access
to QualCare's preferred provider network of healthcare providers that QualCare
is providing to beneficiaries of Guardian's health insurance plans in the State
of New Jersey pursuant to the Guardian Agreement.
4. Term. The Joint Venture shall commence on the date hereof and continue
until the first to occur of (a) the date on which the Guardian Agreement
terminates and is not renewed, (b) the date on which the HAN/QualCare Agreement
terminates and is not renewed, (c) the date on which Guardian terminates its use
of Qualcare pursuant to the Guardian Agreement, (d) the date on which the
JHCSI/HAN Agreement between Xxxx Xxxxxx ("Xxxxxx") and JHCSI that is described
in Section 5.2(f)(i) hereof terminate, (e) at any time by mutual consent of HAN
and JHCSI, or (f) December 31, 1997.
5. Contributions and Other Obligations Of the Joint Venturers.
5.1 Each Joint Venturer agrees to make an initial capital contribution to
the Joint Venture of $250.00 payable on execution hereof.
5.2 During the term of this Agreement, HAN shall have the following
obligations to the Joint Venture which, unless otherwise specified, shall be at
HAN's own expense:
(a) HAN shall use its best efforts to (i) fully perform its obligations
under, and (ii) enforce, at the cost of the Joint Venture, its rights under, the
HAN/QualCare Agreement on the Joint Venture's behalf.
(b) INTENTIONALLY DELETED.
(c) HAN shall use reasonable efforts to maintain the relationship between
Guardian and the Joint Venture and between QualCare and HAN, and to obtain
renewals of the Guardian Agreement with the Joint Venture and of the
HAN/QualCare Agreement with HAN.
(d) If the Joint Venture performs its obligations under Section 5.9, then
HAN shall be solely responsible to pay QualCare all sums due to QualCare
pursuant to the HAN/QualCare Agreement, and shall pay such sums to QualCare when
due.
(e) HAN shall, at the sole cost of the Joint Venture, obtain all necessary
licenses, permits and other governmental approvals, if any, required or
necessary to operate the Joint Venture. If HAN is required to obtain any
license, permit or approval in connection with its involvement in the Joint
Venture, then HAN shall obtain and maintain the same and shall pay the costs of
obtaining and maintaining the same.
(f) (i) JHCSI and Xxxxxx are parties to a certain Consulting Agreement
dated June 7, 1994, as amended on August 31, 1994 and as further amended on May
18, 1995, between JHCSI and Xxxxxx (the "JHCSI/Xxxxxx Agreement").
(ii) During the term of this Agreement, HAN shall pay to Xxxxxx an amount
equal to all cash consideration (the "Cash Amounts") that JHCSI is otherwise
obligated to pay to Xxxxxx pursuant to the JHCSI/Xxxxxx Agreement with respect
to the Services provided to Guardian by QualCare in the State of New Jersey.
(iii) During the term of this Agreement, Xxxxxx will make no claim against
JHCSI for any portion of the Cash Amounts that JHCSI would otherwise be
obligated to pay to him pursuant to the JHCSI/Xxxxxx Agreement with respect to
the Services provided to Guardian by QualCare in the State of New Jersey, and
releases JHCSI from any obligation to pay any portion of the Cash Amounts to
him. Xxxxxx hereby consents to HAN's agreement to pay him the Cash Amounts as
provided in this Section 5.2(f).
(iv) Notwithstanding anything contained in this Agreement to the contrary,
(1) HAN shall not be obligated to pay Xxxxxx any cash, stock or other
compensation that JHCSI is obligated to pay to Xxxxxx arising from the agreement
dated as of January 1, 1995 between JHCSI and Medichoice Network, Inc. (an
affiliate of Medical Review Corp.) or from any other agreement between JHCSI and
Medichoice (or any of their respective affiliates) (collectively, the
"JHCSI/Medichoice Agreement"), and (2) except for the Cash Amounts described in
Section 5.2(f)(iii), nothing contained in this Agreement shall be deemed to
release JHCSI or its affiliates from any of their respective obligations to
Xxxxxx pursuant to the provisions of the JHCSI/Xxxxxx Agreement, the
JHCSI/Medichoice Agreement, or the Consulting Agreement dated May 31, 1995
between Xxxxxx and JHCSI ("May Agreement").
5.3 During the term of this Agreement, JHCSI shall have the following
obligations to the Joint Venture and HAN, which, unless otherwise specified,
shall be at JHCSI's own expense:
(a) JHCSI shall manage and administer the Joint Venture, in accordance with
the budget agreed to by the Joint Venturers each year; provided that the
existing budget then in effect shall continue in effect, adjusted for inflation,
until a new one has been agreed to by the parties.
(b) JHCSI shall provide all accounting (excluding accounting services to be
rendered by the Joint Venture's accountants as set forth in Section 10.2),
bookkeeping and record keeping services.
(c) In order to implement the budget and business plan agreed to by the
Joint Venturers from time to time, JHCSI shall market and promote the Joint
Venture in the manner and to the extent it in its sole discretion determines;
provided JHCSI's actions on behalf of the Joint Venture shall be conducted in a
manner to ensure that they are not detrimental to the relationship of the Joint
Venture or that of either Joint Venturer with Guardian or QualCare; and further
provided that HAN shall be responsible for conducting all negotiations and
communications with QualCare and Guardian.
(d) If JHCSI is required to obtain any license, permit or approval in
connection with its involvement in the Joint Venture, then JHCSI shall obtain
and maintain the same and shall pay the costs of obtaining and maintaining the
same.
5.4 An individual capital account shall be maintained for each Joint
Venturer. The capital account of each Joint Venturer shall consist of the Joint
Venturer's initial cash contribution increased by the amount of any additional
capital contribution made by such Joint Venturer plus the agreed fair market
value (sometimes "Gross Asset Value") of any property contributed to the capital
of the Joint Venture (net of liabilities secured by such property that the Joint
Venture is considered to assume or take subject to) by such Joint Venturer. For
purposes hereof, the performance of the obligations (as opposed to the
contributions of tangible property) required of the Joint Venturers pursuant to
Sections 5.2 and 5.3 above shall not be deemed to be a capital contribution and
shall not increase any Joint Venturer's capital account. The capital account of
each Joint Venturer shall be credited with such Joint Venturer's share of
profits determined in accordance with Section 6 hereof and any items in the
nature of income or gain that are specially allocated to such Joint Venturer.
The capital account of each Joint Venturer shall be debited with the amount of
cash and the agreed fair market value of any Joint Venture property (net of
liabilities secured by such distributed property that such Joint Venturer is
considered to assume or take subject to) distributed to such Joint Venturer
pursuant to any provision of this Agreement, such Joint Venturer's distributive
share of losses and deduction determined in accordance with Section 6 hereof,
and any items in the nature of expenses or losses that are specially allocated
to such Joint Venturer.
5.5 No interest shall be paid by the Joint Venture on the capital
contributions and no Joint Venturer shall, except as otherwise provided herein,
have the right to withdraw, or demand a refund or return of, its capital
contribution, or receive or demand property other than cash.
5.6 The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of capital accounts are intended to comply with
Treasury Regulation Section 1.704-1(b), as amended, and shall be interpreted and
applied in a manner consistent with such Regulation, as amended. If the
accountants for the Joint Venture shall determine that it is prudent to modify
the manner in which the capital accounts, or any debits or credits thereto, are
computed in order to comply with such Regulation, such modification may be made
upon written notice to both Joint Venturers, provided that it is not likely to
have a material effect on the amounts distributable to any Joint Venturer during
any tax year or pursuant to Section 13 hereof upon the liquidation of the Joint
Venture. If the accountant for the Joint Venture shall determine adjustments are
necessary or appropriate pursuant to Treasury Regulation Section
1.7041(b)(2)(iv), upon notice to both Joint Venturers, there shall be an
adjustment to the amounts debited or credited to capital accounts with respect
to (a) any property contributed to the Joint Venture or distributed to the Joint
Venturers and (b) any liabilities that are secured by such contributed or
distributed property or that are assumed by the Joint Venture or the Joint
Venturers. The Joint Venture, after consultation with its accountant, and after
notice to both Joint Venturers, also shall make any appropriate modifications if
unanticipated events might otherwise cause this Agreement not to comply with
Treasury Regulation Section 1.704-1(b).
5.7 If a Joint Venturer sells its interest in the Joint Venture subject to
the restrictions contained in this Agreement, the remaining Joint Venturer may,
at its sole discretion make the adjustments allowed by the Internal Revenue Code
of 1986, as amended (the "Code"), and the Treasury Regulations promulgated
thereunder in order to increase the basis of the purchaser, provided the same
may be done in accordance with rules and regulations applicable at the time of
such action.
5.8 JHCSI agrees that Xxxxxx'x continued employment by, and ownership
interest in, HAN and its affiliated entities for the sole purpose of the
operation of the Joint Venture does not constitute a violation of the
JHCSI/Xxxxxx Agreement or the May Agreement; provided, nevertheless, that the
JHCSI/Xxxxxx Agreement and the May Agreement (including, without limitation, the
covenant not to compete and representations and warranties contained therein)
shall continue in full force and effect.
5.9 The Joint Venture shall pay to HAN each month, from cleared or "good"
funds received by the Joint Venture from Guardian, an amount equal to the amount
that was paid or is then payable by HAN to QualCare pursuant to the HAN/QualCare
Agreement.
5.10 HAN warrants and represents to JHCSI that (a) HAN has no written or
oral agreement with QualCare or its affiliates pursuant to which QualCare has
agreed to pay to Xxxxxx or HAN, or any of their respective affiliates, any
portion of the payment that QualCare will receive pursuant to the provisions of
the HAN/QualCare Agreement, and (b) the HAN/QualCare Agreement is in full force
and effect and HAN has not received notice from QualCare claiming any breach of
such agreement.
5.11 At the time of the first distribution from the lockbox account, the
Joint Venture shall pay, as an expenses of the Joint Venturer, the legal fees
incurred by each Joint Venturer to Xxxxxxx & Xxxxxxxxx, LLP and Certilman,
Balin, Xxxxx & Xxxxx, LLP in connection with drafting and negotiating this
Agreement and the formation of the Joint Venture.
6. Profits and Losses. 6.1 The capital percentage interest of each Joint
Venturer (the "Capital Percentage Interest") shall be as follows:
HAN 50%
JHCSI 50%
6.2 The term "Cash Flow" shall mean all revenue received by the Joint
Venture from Guardian or any other source remaining after payment of all
obligations of the Joint Venture (including, without limitation, payment to HAN
of the amounts described in Section 5.9) and after provision of reasonable
reserves (in amounts determined jointly by the Joint Venturers).
6.3 Net profits or net losses of the Joint Venture shall be allocated to
each of the Joint Venturers in proportion to their respective Capital Percentage
Interests. All Cash Flow of the Joint Venture shall be distributed to each of
the Joint Venturers in proportion to their respective Capital Percentage
Interests. Distributions of Cash Flow shall be made at such time and in such
amounts as set forth in Section 8.
6.4 In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Joint Venture shall, solely for tax purposes,
be allocated among the Joint Venturers so as to take account of any variation
between the adjusted basis of such property to the Joint Venture for Federal
income tax purposes and its initial Gross Asset Value (computed in accordance
with the terms set forth herein).
If the Gross Asset Value of any Joint Venture asset is adjusted in
accordance with the terms set forth herein, subsequent allocations of income,
gain, loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for Federal income tax
purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Treasury Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made
by the Joint Venture, upon notice to both Joint Venturers, in any manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 6.4 are solely for purposes of Federal, state, and
local taxes and shall not affect, or in any way be taken into account in
computing, any Joint Venturer's capital account or share of profits, losses,
other items, or distributions pursuant to any provision of this Agreement.
Additionally, this Agreement incorporates by reference the "Minimum Gain
Chargeback Requirement" of Section 1.704-2(f) of the Treasury Regulations.
7. Additional Contributions. Unless unanimously agreed by both Joint
Venturers, no Joint Venturer shall be required to make any contribution to the
Joint Venture other than as set forth in Section 5.
8. Salaries, Draws, Distributions Payment Terms and Profit Determinations.
8.1 No Joint Venturer shall be entitled to a salary or draw.
8.2 Distributions of all Cash Flow shall be made within five (5) business
days after each check is received from Guardian and the check for such payment
has cleared or become "good" funds. The Joint Venturers will enter into a
"lockbox" agreement with a bank or other financial institution pursuant to which
all payments from Guardian will be deposited into an account maintained by the
lockbox agent, and each month the lockbox agent will (a) pay those expenses that
the Joint Venture is obligated to pay pursuant to this Agreement (including,
without limitation, the payments to HAN described in Section 5.9), (b) pay
itself its agreed upon fees for serving in such capacity, (c) deposit Two
Hundred Dollars ($200) per month in the Joint Venture's bank account (Account
Number 028-001081) at Marine Midland Bank, 000 Xxxxxxxxxx Xxxx, Xxxxx Xxxx, Xxx
Xxxx 00000, (d) distribute 50% of the remaining Cash Flow to each Joint Venturer
(or as may be directed by the Joint Venturers pursuant to a jointly executed
letter of direction), and (e) send a monthly lock box account activity statement
to each Joint Venturer.
9. Confidentiality and Restrictive Covenant.
9.1 Each of HAN and JHCSI is sensitive to the confidential nature of their
relationship to each other, to QualCare and to Guardian as provided in this
Agreement. Consequently, it is hereby agreed as follows:
Neither HAN nor JHCSI will, directly or indirectly, at any time reveal or
make known to any person, firm, corporation or business organization, any
customer lists, trade secrets or any secret or confidential information of any
kind (collectively, "Confidential Information") used by the other party (the
"Protected Party") and made known to HAN or JHCSI by reason of this Agreement or
the activities of the Joint Venture with respect to Guardian or QualCare.
The obligations of this Section 9.1 shall not apply to any Confidential
Information which
(a) was demonstrably known to the other party prior to learning it from the
Protected Party;
(b) was known or generally available to the public or becomes known or generally
available to the public through no breach of this Agreement;
(c) is demonstrably learned or developed by any party from sources independent
of the Protected Party;
(d) a Joint Venturer discloses to its officers, directors, employees or
professional consultants in connection with the conduct of such Joint Venturer's
business activities (provided that each such person shall be made aware of the
confidential nature of such information and the requirement that it not be
disclosed to third parties);
(e) a Joint Venturer is required disclose to any governmental agency or court of
law or by legal process (in which case, the disclosing party will attempt to
provide the Protected Party notice and reasonable opportunity under the
circumstances to object); or
(f) a Joint Venturer discloses in connection with the prosecution or defense of
a litigation by or among the Joint Venturers, Xxxxxx and/or the Joint Venture.
9.2 During the term of this Agreement, neither HAN, Xxxxxx nor JHCSI will,
directly or indirectly, offer to provide PPO health care cost containment
services to Guardian within the State of New Jersey which is in competition with
the Services offered to Guardian by the Joint Venture through the HAN/QualCare
Agreement. The services provided to Guardian pursuant to the JHCSI/Medichoice
Agreement shall not be deemed to violate the provisions of this Section 9.2.
9.3 In the event of any conflict between the provisions of this Section 9
and the provisions of paragraph 8.3 of the JHCSI/Xxxxxx Agreement dated June 7,
1994, such provisions of the JHCSI/Xxxxxx Agreement shall control.
10. Books and Records.
10.1 The fiscal year of the Joint Venture shall end on December 31. 10.2
All accounting records of all Joint Venture business shall be kept open to
inspection by either of the Joint Venturers, or their designee or legal
representative, at all reasonable times. The Joint Venture shall maintain its
accounting records and shall report for income tax purposes on the cash or
accrual basis of accounting as the Joint Venturer's accountants shall determine
or as required by the income tax regulations. Both Joint Venturers consent to
the selection of Xxxxxxxxx & Xxxx, P.C., Certified Public Accountants, as the
accountants for the Joint Venture. Within 90 days of the end of each calendar
year, a complete accounting of the affairs of the Joint Venture shall be
prepared at the expense of the Joint Venture and shall be furnished to each
Joint Venturer, together with such appropriate information as may be required by
each Joint Venturer for the purpose of preparing its income tax return for that
year. The complete accounting shall include, but not be limited to, a balance
sheet as of the end of the Joint Venture's fiscal year and statements of income
for such fiscal year. All matters of accounting for which there is no provision
in this Agreement are to be governed by generally accepted accounting principles
applied on a consistent basis. Each year, JHCSI shall pay the Joint Venture's
accountant the agreed upon budgeted amount to prepare and file all necessary
year end tax returns and prepare all necessary financial statements.
10.3 The books and records of the Joint Venture shall be kept at the
offices of the Joint Venture's accountants, or in such other place as may be
agreed upon by the Joint Venturers.
11. Banking. All funds of, and amounts paid to, the Joint Venture (other
than those held by the lockbox agent) shall be deposited in its name in one or
more accounts at Marine Midland Xxxx,000 Xxxxxxxxxx Xxxx, Xxxxx Xxxx, Xxx Xxxx
00000, or at such other financial institution as the Joint Venturer's may agree
upon. All withdrawals therefrom are to be made upon checks signed by an officer
or other designee of both Joint Venturers.
12. Termination.
12.1 The Joint Venture shall be dissolved and terminated
(a) at any time by mutual agreement of the Joint Venturers;
(b) by either Joint Venturer upon 30 days notice to the other Joint Venturer if
such other Joint Venturer has materially breached this Agreement (and has failed
to cure such breach within thirty days after receipt of written notice
specifying the alleged breach, or if such breach cannot reasonably be cured
within such thirty day period, such cure period shall be extended for such
additional period as may reasonably be required to cure the breach as long as
cure of the breach is promptly commenced and diligently pursued to completion);
(c) by a Joint Venturer of the other Joint Venturer has been convicted of a
crime or of fraud;
(d) upon the occurrence of any event causing dissolution under existing state
law; or
(e) as otherwise provided in this Agreement;
in any of which events the Joint Venturers shall proceed with reasonable
promptness to liquidate the business of the Joint Venture. The proceeds of such
liquidation shall be applied and distributed in the following order of priority,
when realized:
(i) First, to the payment of all debts, taxes, obligations and other
liabilities of the Joint Venture (collectively, the "Liabilities"), including
any Liabilities owed to the Joint Venturers or their affiliates, and the
necessary expenses of liquidation. Where there is a contingent debt, obligation
or liability, a reasonable reserve shall be set up to meet such contingency and
if and when the contingency shall cease to exist, the monies, if any, in the
reserve shall be distributed as herein provided;
(ii) Then, to the Joint Venturers in accordance with, and in proportion to,
their positive capital account balances; and
(iii) Last, to the Joint Venturers pro rata in accordance with their
Capital Percentage Interests.
12.2 A reasonable time shall be allowed for the orderly liquidation of the
assets of the Joint Venture and the discharge of liabilities to creditors so as
to permit the sale of Joint Venture property on favorable prices or terms.
12.3 Except as set forth above in this Section 12, no Joint Venturer shall
have the right or power to demand or receive property other than cash from the
Joint Venture.
12.4 Except as provided in Section 12.1 with respect to the obligations of
the parties to liquidate the Joint Venture upon dissolution, upon termination of
the Joint Venture, neither Joint Venturer shall have any further obligations to
the other or to the Joint Venture with respect to the Guardian Agreement or the
HAN/QualCare Agreement. It is the intention of the parties that upon termination
of the Joint Venture each of JHCSI and HAN, and their respective affiliates,
shall be free to contract with QualCare and Guardian for its own benefit and
that neither JHCSI nor HAN, nor their respective affiliates, shall be entitled
to participate in any economic or other benefit derived from any agreement
entered into after such termination by JHCSI or HAN (or their respective
affiliates), on the one hand, and Guardian and/or QualCare, on the other;
provided, nevertheless, that if this Agreement terminates prior to the
termination of the JHCSI/Xxxxxx Agreement and/or the May Agreement, the terms
and provisions of such surviving agreements shall continue unimpaired by the
provisions of this Section 12.4.
The termination of the Joint Venture shall not act to terminate, amend or
modify or to create a breach of the JHCSI/Xxxxxx Agreement or the May Agreement.
12.5 If either Joint Venturer breaches or fails to perform any of its
obligations under this Agreement and such breach remains uncured after the
notice and grace period provided in Section 12.1(b), then in addition to any
other remedies that may be available pursuant to this Agreement, at law or in
equity, the non-breaching Joint Venturer may (but shall not be obligated to)
perform the obligations that the breaching Joint Venturer has failed to perform
on behalf of the Joint Venture (provided that such performance shall not result
in a waiver or cure of the breach by the breaching Joint Venturer).
13. Restrictions on Transfer; Right of First Refusal.
13.1 No Joint Venturer shall sell, assign, transfer, or otherwise dispose
of all or any part of its interest in the Joint Venture, without (a) the written
consent of the other Joint Venturer, which may be withheld at its absolute
discretion, or (b) as otherwise permitted by Section 13.2 hereof. As a condition
precedent to any sale, assignment, transfer or other disposition of an interest
in the Joint Venture pursuant to the preceding sentence or Section 13.2(a), the
transferee shall execute and deliver to the Joint Venture a legally enforceable
agreement expressly assuming all of the terms, conditions, covenants and
agreements of this Agreement. The sale or disposition of any interest in the
capital stock of a Joint Venturer by its shareholders or other equity owner(s)
shall not be considered a sale or disposition of an interest in the Joint
Venture for the purposes of this Agreement.
13.2 Notwithstanding the foregoing, each Joint Venturer may convey its
interest in the Joint Venture to (a) a person or entity (i) that controls, is
controlled by, or is under common control with, the Joint Venturer, (ii) into
which or with which such Joint Venturer merges, or (iii) which acquires all or
substantially all of the assets of such Joint Venturer, and (b) a parent,
grandparent, child, grandchild, brother, sister, spouse or spouse of any of the
foregoing or trust for the benefit of himself or any of the foregoing.
13.3 Upon the happening of any of the following events (each a "Triggering
Event") with respect to a Joint Venturer (an "Affected Venturer") or with
respect to an Affected Venturer's interest in the Joint Venture ("Affected
Interest"), the Joint Venture and the other Joint Venturer shall have the right
and option to purchase all or any portion of the Affected Venturer's interest in
the Joint Venture at the price and upon the terms hereafter provided below in
Section 13.6.
(a) Any involuntary transfer, sale or other disposition of all or any part
of an interest of a Joint Venturer in the Joint Venture, whether by operation of
law, pursuant to court order, execution of a judgment or other legal process or
otherwise, and including, but not limited to, a transfer to a trustee in
bankruptcy, receiver or assignee for the benefit of creditors.
(b) The filing of a voluntary petition in bankruptcy or reorganization or
an adjudication as bankrupt or insolvent or the voluntary seeking, or consenting
to, or acquiescing in, the appointment of any trustee, receiver, conservator or
liquidator.
(c) The filing of an involuntary petition in bankruptcy or reorganization
an adjudication as bankrupt or insolvent which proceeding is not dismissed
within 120 days after its filing.
(d) Any attempted withdrawal of a Joint Venturer from the Joint Venture in
violation of this Agreement.
13.4 Upon the occurrence of a Triggering Event, the Affected Venturer shall
forthwith give written notice to the Joint Venture and to the other Joint
Venturer, stating when the Triggering Event occurred, the reason therefor, the
percentage of the interest of the Affected Venturer in the Joint Venture so
affected, and the name, address and capacity of the transferee, if a transfer
has occurred. If no such notice is given, the Joint Venture or the other Joint
Venturer may institute the purchase proceedings by a written notice to the
Affected Venturer.
13.5 Upon receipt of any notice specified in Section 13.4, the Joint
Venture or the other Joint Venturer, at the option of the other Joint Venturer,
shall have the right and option, for a period ending ninety (90) calendar days
following the determination of the purchase price of the Affected Interest, to
elect to purchase all of such Affected Interest at the price and terms provided
below.
13.6 If, as a result of a Triggering Event, all or any part of the interest
of the Affected Venturer in the Joint Venture has been transferred to a
transferee, such transferee shall take and hold such interest subject to this
Agreement and to all of the obligations and restrictions upon the Joint Venturer
from whom such interest was acquired and shall observe and comply with this
Agreement and with all such obligations and restrictions.
The purchase price for the Affected Interest shall be equal to the fair
market value of such interest as determined by appraisal conducted at the
expense of the Joint Venture. Such appraisal shall be conducted by a person with
experience in evaluating contracts similar to this Agreement in the health care
industry. If the parties are unable to agree upon an appraiser, then each shall
choose an appraiser and the two appraisers so chosen shall select a third
appraiser. All of the appraisers so chosen shall jointly determine the fair
market value of the Affected Interest. If one appraiser is chosen, the parties
shall each pay one half of his fee. If three appraisers are used, each party
shall pay the fee of the appraiser selected by it and shall pay one half of the
fee for the third appraiser.
The purchase price determined above shall be payable, at the purchaser's
option, either all in cash or with 50% of the purchase price paid at the closing
and the balance in equal monthly installments over 24 months with interest at
the prime rate, as published in the Wall Street Journal, as of the date of the
closing.
13.7 No Joint Venturer shall, with respect to its interest in the Joint
Venture: pledge, encumber, hypothecate, create a security interest in or lien
on, or in any way attempt to otherwise grant, convey or transfer any interest in
or suffer to exist any lien, attachment, levy, execution or encumbrance on its
interest in the Joint Venture without the written consent of the other Joint
Venturer.
13.8 HAN represents and warrants that during the term of this Agreement,
Xxxxxx shall, on behalf of HAN (or of any company that succeeds to HAN's
interest in the Joint Venture), remain primarily responsible for managing the
relationship with (a) Guardian pursuant to the Guardian Agreement, (b) QualCare
pursuant to the HAN/QualCare Agreement, and (c) JHCSI pursuant to this
Agreement.
13.9 HAN represents and warrants that as of the date hereof Xxxxxx owns not
less than 60% of the ownership interests in HAN, and that no other person
individually owns more than 10% the ownership interests in HAN. JHCSI represents
and warrants that as of the date hereof Juniper Medical Systems, Inc. is the
only shareholder of JHCSI.
14. Notices. Any notice required or given with respect to this Agreement
shall be valid and effective when delivered by registered or certified mail
return receipt requested or by hand or by overnight mail or courier or by
telecopier to the address (or telecopier number) as set forth below. Any party
hereto may change such address (or telecopier number) by notice given to the
Joint Venture and the other Joint Venturers in accordance with this Section 14.
If to HAN: HEALTH CONTAINMENT CORPORATION
0 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Telecopier Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, President
with a copy to: XXXXXXX & XXXXXXXXX, LLP
Xxx Xxxxx Xxxxxxxx, 00xx Xxxxx
Xxxxx Xxxxxx, XX 00000
Telecopier Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
If to JHCSI: JUNIPER HEALTHCARE CONTAINMENT SYSTEMS, INC.
000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxxx, President
with a copy to: CERTILMAN BALIN XXXXX & XXXXX, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
15. Indemnification.
15.1 Notwithstanding anything to the contrary stated herein, neither Joint
Venturer, and no officer, director, member, shareholder, employee, agent,
affiliate or permitted successor or assign of either Joint Venturer, shall be
liable, responsible or accountable in damages or otherwise to the other Joint
Venturer or to the Joint Venture for any errors in judgment, for any act
performed by such person or entity, or for any omission or failure to act, if
the performance of such act or such omission or failure (a) was done in good
faith in connection with the operation of the Joint Venture, (b) was within the
scope of the authority conferred upon such person or entity by this Agreement,
(c) does not constitute a breach of fiduciary duty, or a breach of any
representation, warranty or covenant contained in this Agreement, and (d) does
not constitute willful misconduct, gross negligence or reckless disregard of
duties. If any part of this Section 15.1 shall, for any reason and to any
extent, be invalid or unenforceable, this Section 15.1 shall be construed to
exculpate the foregoing persons and entities to the fullest extent permitted by
the law.
15.2 The Joint Venture shall indemnify and hold harmless each of the Joint
Venturers and each of their respective officers, directors, shareholders,
affiliates, agents and employees (collectively, the "Indemnified Persons") from
and against any and all claims, expenses and liabilities made against or
reasonably incurred by any such Indemnified Person in connection with the
defense or disposition of any claim, lawsuit, arbitration, proceeding,
government action or similar event in which any such Indemnified Person may be
involved or with which any such Indemnified Person may be threatened, with
respect to or arising out of any act performed by such Indemnified Person or any
omission or failure to act by such Indemnified Person if the performance of such
act or such omission or failure (a) was done in good faith for the direct
benefit of the Joint Venture, (b) was within the scope of the authority
conferred upon such person or entity by this Agreement, (c) does not constitute
a breach of fiduciary duty, or a breach of any representation, warranty or
covenant made by the Indemnified Person in this Agreement, and (d) does not
constitute willful misconduct, gross negligence or reckless disregard of duties.
The Joint Venture's indemnification obligations under this Section 5.2
shall not apply with respect to (1) any proceeding brought by the Joint Venture
or a Joint Venturer, or (2) any claim asserted or proceeding brought against an
Indemnified Person by any present, future or former shareholder of a Joint
Venturer, or by any taxing or governmental or regulatory authority having
jurisdiction with respect to the business conducted by such Indemnified Person.
15.3 HAN shall indemnify and hold harmless the Joint Venture and JHCSI and
its shareholder, officers and directors, affiliates and employees (collectively,
the "JHCSI Indemnified Party") from and against any and all claims, expenses and
liabilities made against or reasonably incurred by the Joint Venture or any
JHCSI Indemnified Party in connection with the defense or disposition of any
claim, lawsuit, arbitration, proceeding, government action or similar event
brought by QualCare with respect to the HAN/QualCare Agreement in which any such
JHCSI Indemnified Party may be involved or with which any such JHCSI Indemnified
Party may be threatened, with respect to or arising out of any act performed by
HAN or any omission or failure to act by HAN if the performance of such act or
such omission or failure (a) was not done in good faith for the direct benefit
of the Joint Venture, (b) was not within the scope of the authority conferred
upon HAN by this Agreement, (c) constitutes a breach of a breach of fiduciary
duty, or any representation, warranty or covenant made by HAN in this Agreement,
and (d) constitutes willful misconduct, gross negligence or reckless disregard
of duties by HAN.
15.4 JHCSI shall indemnify and hold harmless the Joint Venture and Xxxxxx,
XXX and its shareholders, officers, directors, affiliates and employees
(collectively, the "HAN Indemnified Party") from and against any and all claims,
expenses and liabilities made against or reasonably incurred by the Joint
Venture or any HAN Indemnified Party in connection with the defense or
disposition of any claim, lawsuit, arbitration, proceeding, government action or
similar event in which the Joint Venture or any such HAN Indemnified Party may
be involved or with which the Joint Venture or any such HAN Indemnified Party
may be threatened, with respect to or arising out of any claim asserted or
proceeding brought against the Joint Venture or a HAN Indemnified Person (a) by
any present, future or former shareholder of JHCSI or Juniper Medical Systems,
Inc., or (b) by any federal, state or local government, or entity exercising
governmental executive, legislative, judicial, taxing, regulatory or
administrative functions, with respect to the business conducted by JHCSI or
Juniper Medical Systems, Inc. (exclusive of the business conducted by the Joint
Venture).
15.5 Indemnification Procedures.
(a) Definitions.
As used in this Section 15.5, the term "Indemnified Party" shall mean any
person or entity who is entitled to be indemnified pursuant to this Section
15; and the term "Indemnitor" shall mean any person or entity who is
obligated to indemnify another person or entity pursuant to this Section
15.
(b) Claim Notices.
The Indemnified Party shall send a written notice (the "Claim Notice") to
the Indemnitor upon the occurrence of any event or the discovery of any
facts, or the commencement of any litigation or proceeding against the
Indemnified Party which might give rise to a claim for indemnification.
Each Claim Notice shall be given as promptly as possible after the
Indemnified Party has actual notice of such event, state of facts,
litigation or proceeding and it appears reasonably probable that such
event, state of facts, litigation or proceeding might involve matters that
would give rise to a claim for indemnification against any Indemnitor. Each
Claim Notice shall specify, with particularity, the nature and, to the
extent ascertainable, the amount of the claim.
(c) Defense of Claims.
The Indemnitor shall have the right, using experienced attorneys, to
litigate or otherwise contest, compromise or settle (at the Indemnitor's
expense) any such claim described in a Claim Notice. The Indemnified Party
shall have the right to retain counsel and participate, at the Indemnified
Party's sole expense, in the defense of any action or proceeding brought in
connection with such a claim.
(d) Cooperation.
Each Indemnified Party shall cooperate fully with the Indemnitor in
connection with the litigation, contest, compromise and settlement of all
claims that are subject to indemnification.
16. Miscellaneous.
16.1 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives, successors, heirs and
assigns (collectively "Successors-In-Interest"), and such
Successors-In-Interest, whether acquiring such interest by way of gift,
purchase, foreclosure, or by any other method, shall hold such interest subject
to all of the terms and provisions of this Agreement. 16.2 This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed wholly in such State.
16.3 This Agreement (together with any schedules and exhibits hereto) sets
forth the entire agreement and understanding of the parties in respect of the
subject matter hereof and supersedes all prior and contemporaneous agreements,
arrangements and understandings relating to the subject matter hereof.
16.4 This Agreement may he amended or modified only by a written instrument
executed by each party hereto or, in the case of a waiver, by the party waiving
compliance. The failure of a party at any time or times to require performance
of any provisions hereof shall in no manner affect the party's right at a later
time to enforce the same. No waiver by any party of the breach of any term
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such breach or of the breach of any other term of this Agreement.
16.5 Reference to this Agreement herein shall include any amendment or
renewal hereof.
16.6 If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and only to the extent such provision shall be held to be invalid or
unenforceable and shall not in any way affect the validity or enforceability of
the other provisions hereof, all of which provisions are hereby declared
severable, and this Agreement shall be carried out as if such invalid or
unenforceable provision or portion thereof was not embodied herein.
16.7 This Agreement may be executed in several counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same agreement. The headings in this Agreement are solely for the convenience of
the parties, and are not intended to and do not limit, construe or modify any of
the terms and conditions hereof. Any pronouns and any variation thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the parties may require.
16.8 The parties acknowledge that they are, and shall remain, independent
contractors and that the execution of this Agreement by each of them, does not
create, nor shall it be construed as creating, any relationship of principal and
agent, of partnership, joint-venture, affiliate or subsidiary between them, and
that neither party shall be severally or jointly responsible for the acts of the
other party.
16.9 Notwithstanding any provision contained in this Agreement to the
contrary, each party hereby waives any right that it might now have or may in
the future acquire to assert any claim against the other for consequential or
punitive damages in connection with any breach by the other party of its
obligations under this Agreement.
16.10 HAN and JHCSI shall bear all legal fees and costs in connection with
the formation of the Joint Venture and preparation of this Agreement, on an
equal basis.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HEALTH CONTAINMENT CORPORATION
By:/s/Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, President
JUNIPER HEALTHCARE CONTAINMENT SYSTEMS, INC.
By:/s/Xxxxx Xxxxxxxxxxx
Xxxxx Xxxxxxxxxxx, President
/s/XXXXXXX XXXXXX
XXXXXXX XXXXXX
only as to applicable provisions hereof.
