JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT entered into
this 10th day of February 2005 by and between RX Fulfillment
Services, Inc. (“RX”), a Texas corporation, and
Laura Clelland d.b.a. DiabeteSource (“DS”).
WITNESSETH
WHEREAS, RX provides pharmacy and medical
products and services for patients and healthcare facilities
(the “Services”) and desires access to new
markets;
WHEREAS, DS markets medical products and
services, and desires assistance in supplying these products and
services; and
WHEREAS, RX and DS desire to create a
company to provide each of its products and services under one
company to the Indian Health Services, markets identified as
American Indian reservations and other Indian Nation affiliated
healthcare markets; and
NOW, THEREFORE , in consideration of the
foregoing premises and the mutual promises, covenants, and
agreements contained herein, the parties hereto do hereby
promise, covenant and agree as follows:
1.
Definitions.
Throughout this Joint Venture Agreement, and
unless the context otherwise requires, the following words shall
have the indicated meanings:
1.1.
‘‘Agreement’’ This Joint
Venture Agreement.
1.2.
‘‘Bankruptcy’’ The
filing by a Joint Venturer of a petition commencing a voluntary
case under the Bankruptcy Code (Title 11 of the United States
Code); a general assignment by a Joint Venturer for the benefit
of creditors; an admission in writing by a Joint Venturer of its
inability to pay its debts as they become due; the filing by a
Joint Venturer of any petition or answer in any proceeding
seeking for itself, or consenting to, or acquiescing in, any
insolvency, receivership, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future statute, law or regulation, or the filing by a Joint
Venturer of an answer or other pleading admitting or failing to
deny, or to contest, the material allegations of the petition
filed against it in any such proceeding; the seeking of, or
consenting to, or acquiescence by a Joint Venturer in the
appointment of any trustee, receiver, or liquidator of it, or
any part of its property; and the commencement against a Joint
Venturer of an involuntary case under the Bankruptcy Code, or a
proceeding under any receivership, composition, readjustment,
liquidation, insolvency, dissolution or like law or statute,
which case or proceeding is not dismissed or vacated within 60
days.
1.3.
''Joint Venturers’’ DS, RX and any
other person or persons or entity or entities who may
subsequently be designated as a member of this joint venture
pursuant to the further terms of this Agreement.
1.4.
''Joint Venture’’ The joint venture
formed by this Agreement.
1.5.
''Joint Venture Interest’’ A Joint
Venturer's share of the profits and surplus of the Joint
Venture.
1.6.
''Joint Venture Rights’’ The
property rights of a Joint Venturer which are comprised of a
Joint Venturer's: (i) right in specific Joint Venture property,
(ii) interest in the Joint Venture, and (iii) right to
participate in the management thereof.
2.
Name .
The name of the Joint Venture shall be ''REZ
Healthcare, Inc.'', an Arizona corporation, and any further
reference herein to the Joint Venture will be identified as
“Joint Venture.”
3.
Principal Place of Business .
The principal office and place of business of
the Joint Venture (the ''Office'') shall be 207 Williamson
Avenue, Winslow, AZ 86047. The alternate office for
finance and administration shall be 9100 Southwest Freeway,
Suite 130-A, and Houston, Texas, 77074. The Joint Venture
shall have such other or additional offices as the Joint
Venturers may determine from time to time.
4.
Business and Purpose .
The sole purpose of the Joint Venture is to
market the Services, and to engage in such operations and
business as may be deemed necessary or appropriate to accomplish
such purpose.
5.
Term .
The Joint Venture shall commence upon the date
of this Agreement. Unless sooner terminated pursuant to the
further provisions of this Agreement, the Joint Venture shall
continue until January 31, 2010, subject to the provisions of
Section 9. Thereafter, this Agreement shall be renewed and
continue from term to term unless at least three months prior to
January 31, 2010, or to the end of any subsequent term year, one
of the Joint Venturers gives written notice to the other Joint
Venturer of its intent to terminate the Joint Venture as of the
end of such year.
6.
Capital Contributions .
6.1.
No cash contributions or capital shall be
required by this Joint Venture.
6.2.
The Joint Venturers may, at their discretion,
make capital contributions in such amounts and at such times, as
they shall deem appropriate.
6.3.
A capital account shall be established and
maintained in all events for each Joint Venturer in the manner
provided under and in accordance with applicable Treasury
Regulations. Accordingly, a Joint Venturer's capital account
shall include generally, without limitation, the initial capital
contribution of a Joint Venturer, (i) increased by the Joint
Venturer's allocable share of income and gain, and (ii)
decreased by distributions of money or property, allocations of
expenditures of the Joint Venture, and allocations of losses and
deductions, and (iii) as otherwise adjusted in accordance with
the additional rules set forth in the applicable Treasury
Regulations.
6.4.
Except as specifically provided in this
Agreement, or as otherwise provided by law, no Joint Venturer
shall have the right to withdraw or reduce its contributions to
the capital of the Joint Venture.
7.
Profit and Loss .
7.1.
The percentages of Joint Venture Rights and
Joint Venture Interest of each of the Joint Venturers in the
Joint Venture shall be as follows:
DS
51 %
RX 49
%
7.2.
Except as provided in Section 6.3 of this
Agreement, for purposes of the Internal Revenue Code of 1986, as
amended (the ''Code''), or the corresponding provisions of any
future federal internal revenue law, or any similar tax law of
any state or jurisdiction, the determination of each Joint
Venturer's distributive share of all items of income, gain,
loss, deduction, credit or allowance of the Joint Venture for
any period or year shall be made in accordance with, and in
proportion to, such Joint Venturer's percentage of Joint Venture
Interest as it may then exist, unless otherwise required by the
applicable Treasury Regulations.
7.3.
Notwithstanding Section 6.2 of this Agreement,
all items of income, gain, loss, deduction, credit or allowance
with respect to property contributed to the Joint Venture by a
Joint Venturer shall be allocated among the Joint Venturers so
as to take account of the variation between the basis of the
contributed property and its fair market value at the time of
the contribution, which allocation shall be made in accordance
with the Internal Revenue Code and the regulations issued under
such provisions.
8.
Distribution of Profits .
8.1.
The Managers will provide financial statements
to the Joint Venturers on a quarterly basis. The net cash
from operations of the Joint Venture shall be distributed at
such times as may be determined by unanimous agreement of the
Managers, but not less frequently than every calendar quarter;
such distribution among the Joint Venturers shall be made in
proportion to their Joint Venture Interests.
8.2 As used in this Section 7, the term ''net
cash from operations'' shall mean: the gross cash proceeds from
the Joint Venture operations less the portion thereof used to
pay or establish reserves for all Joint Venture expenses, debt
payments, capital improvements, replacements, and contingencies,
all as determined by the Managers. “Net Cash From
Operations” shall not be reduced by depreciation,
amortization, cost recovery deductions, or similar allowances,
but shall be increased by any reductions of reserves previously
established.
9.
Responsibilities and Duties .
9.1.
RX Responsibilities : RX Shall have
the responsibility of establishing and providing all durable
medical equipment and pharmaceutical services for the customers
of this Joint Venture through the operation of its facilities.
These services shall include but not be limited to the
following:
a.
Establish, man and operate the facilities to be
used to provide the Services (“Facilities”).
b.
Provide the connecting database, services and
other hardware and software necessary to operate the
Facilities.
c.
Provide training and support for the operation
of all remote locations.
d.
Provide the properly licensed and trained
personnel necessary to operate the facilities and remote
locations and to provide the Services.
e.
Shall maintain the books and records of the
Joint Venture and shall establish and maintain all banking and
other funding relationships for the Joint Venture.
9.2.
DS Responsibilities : DS shall
refer customers to the Joint Venture and shall otherwise market
the delivery of Services to end-user customers of the Joint
Venture. These services shall include but not be limited
to the following:
a.
Establishing and negotiating the initial terms
of all contracts entered into by the Joint Venture prior to
acceptance by the Joint Venture for final contracting.
b.
Providing on-site customer contacts,
presentations, and interaction concerning the Services.
c.
Verifying, confirming, and ensuring delivery of
all Services.
d.
Advising the Joint Venture of customer
satisfaction and acceptance issues and ensuring that any
outstanding issues are resolved and followed up on.
10.
Customers .
10.1
Referrals . DS shall refer
customers to the Joint Venture and it is hereby agreed that all
customers referred by DS shall be and shall remain the exclusive
customers of this Joint Venture and all revenues produced by
providing the Services shall be the earnings solely of the Joint
Venture. In addition, all customers referred by DS shall
be the exclusive customers of the Joint Venture in the future
and any future customers in the same category as customers
referred by DS shall be the exclusive customers of this Joint
Venture now and in the future. By way of example, but not
limitation, if DS refers an Indian Reservation Facility to the
Joint Venture, then all future Indian Reservation Facilities
which thereafter become customers of the Joint Venture or shall
be the exclusive customer of the Joint Venture, without regard
to the origination of that particular customer.
10.2.
Damages . In light of the agreement
set forth above in Section 10.1, which is essential to this
Agreement, in the event that DS or its affiliates provide
services identical or similar to the Services, to any customer
referred by RX or The Joint Venture, as defined in Section 10.1
above then RX shall be entitled to damages equal to 49% of all
revenue received by DS or its affiliates at any time,
notwithstanding the termination of the Joint Venture. This
clause shall serve as the termination of the Joint Venture.
11.
Rights, Duties and Powers of the Managers;
Certain Agreements Respecting the Joint Venturers'
Representatives .
11.1.
The Joint Venture shall be managed by the
designees of the Joint Venturers. Initially, Laura
Clelland and Daryl Webster shall manage this Joint Venture and
the term “Managers” used throughout this Agreement
shall mean and refer to Ms. Clelland and Mr. Webster in that
capacity.
11.2.
Mana
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