Exhibit 10.16
Litigation Agreement between the Company and Xxx Xxxx, Xx., Xxx Xxxx, Xx., and
Xxxx Xxxx
Liabilities associated with the suit by United HealthCare, Inc.
("United") against Xxx Xxxx and Avesis Incorporated ("Avesis") and counterclaims
by Xx. Xxxx against United, as well as any future suit initiated by United based
upon the FOP contract, will be handled as follows:
1. Avesis will pay for legal fees and expenses, settlements, and judgments
incurred by it and/or Xx. Xxxx in connection with the United litigation and Xx.
Xxxx'x counterclaims against United, but only to the extent of 100% of the gross
margin earned by Avesis on D.C. Fraternal Order of Police ("FOP") collected
revenues (including revenues from the current FOP contract and any future
contract(s) between Avesis and the FOP arising from NHE efforts) plus 33 1/3% of
all of the net pretax profits of Avesis during any fiscal year in which the
litigation continues, whether or not derived from FOP business (as determined
based on Avesis' audited financial statements) ("net profits"). "Gross margin"
for this purpose is defined as collected revenue from FOP contracts less all
incremental expenses paid by Avesis as a result of FOP contracts.
2. To the extent that collected gross margins on FOP business plus 33 1/3% of
net profits are inadequate to cover legal fees and expenses, settlements and/or
judgments which may be owing from time to time by Xx. Xxxx and/or Avesis, such
amounts will. be advanced by Xx. Xxxx. Avesis will indemnify Xx. Xxxx for
amounts paid by Xx. Xxxx pursuant to this paragraph, but only to the extent of
gross margin earned by Avesis on FOP business from time to time thereafter plus
33 1/3% of net profits.
3. Commissions on FOP business will be deferred by NHE (except for fees and
commissions payable to X. Xxxxxx and X. Xxxxxx) until the litigation is finally
resolved. They will ultimately be payable only if, when, and to the extent that
Avesis has recovered all of its legal costs hereunder and has gross profit on
the FOP business after such recovery.
4. Should Xx. Xxxx make a recovery from counterclaims pursued against United, he
will first recoup his own unreimbursed outlays, if any, for the United
litigation and the counterclaims, next will reimburse Avesis for any
unreimbursed outlays made by it, and then will keep one-half of any surplus and
the balance will be paid to Avesis.
Lest there be any misunderstanding, the net effect of the above is
that Avesis' exposure under the United litigation is limited to its realized and
collected gross margins on FOP revenues plus 33 1/3% of its net profits.
It is agreed and understood that representation of Avesis and Xx. Xxxx
initially shall be handled jointly by Xxxxxxx & Xxxxx and Xxxxxx & Xxxxxx, P.A.,
provided that this agreement shall be revisited if joint representation is
deemed undesirable as the litigation develops. All parties waive any applicable
conflicts of interest as necessary to permit the joint representation.
This letter shall govern the rights of NHE, Xxx Xxxx, Xx., and Xxxx
Xxxx in addition to Xxx Xxxx, Xx. as well as each of their respective spouses.
No party shall have liability for any settlement entered into without
the party's written consent, which may not be unreasonably withheld.
Finally, it is understood that Avesis' indemnification obligations as
set forth herein shall be to the maximum extent permitted by Delaware law, and
that the terms of this understanding are exclusive and shall supersede any
general indemnification provisions in Delaware law, Avesis' bylaws or otherwise.
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The undersigned agree that the attached memorandum represents their
agreement relating to the lawsuit filed by United HealthCare, Inc. against
Xxxxxxx X. Xxxx, Xx. and Avesis Incorporated.
AVESIS INCORPORATED
Dated: August, 24, 1994 By:/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx, President
Dated: August 24, 1994 /s/ Xxxxxxx X. Xxxx, Xx.
--------------------------
Xxxxxxx X. Xxxx, Xx.
Dated: August 24, 1994 /s/ Xxxxxxx X. Xxxx, Xx.
--------------------------
Xxxxxxx X. Xxxx, Xx.
Dated: August 24, 1994 /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
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