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
