Exhibit 10.20
JOINT VENTURE LIMITED PARTNERSHIP AGREEMENT
THIS JOINT VENTURE LIMITED PARTNERSHIP AGREEMENT ("Agreement") is made and
entered into as of June 30, 1992, by and between BLUE CROSS AND BLUE SHIELD OF
ARIZONA, INC., an Arizona corporation ("BCBSAZ") and IMS--NET OF ARIZONA, INC.,
an Arizona corporation ("IMS--NET") sometimes referred to collectively as the
"Joint Venturers."
THIS AGREEMENT is made and entered into with reference to the following
facts:
A. IMS--NET is a wholly-owned subsidiary of Integrated Medical Systems,
Inc. ("IMS") which has developed and owns certain proprietary computer software
operating on various types of computers that facilitates the transmission of
data, text, voice, clinical graphics and diagnostic images over telephone lines
which can improve the efficiency and effectiveness of communication related to
health care delivery.
B. IMS has granted IMS--NET an exclusive license for use of its
proprietary network and related computer software in the state of Arizona.
C. BCBSAZ is familiar with the Arizona health care market and has
developed business, contacts and communications with hospitals, physicians and
other licensed health care professionals.
D. BCBSAZ and IMS--NET desire to establish a limited partnership as a
joint venture to establish and operate a medical information network in Arizona,
to improve the efficiency and effectiveness of communication related to health
care delivery between BCBSAZ, hospitals, acute care facilities, mental health
and substance abuse facilities or other facilities and physicians and other
licensed health care professionals with privileges to utilize such facilities in
accordance with this Agreement.
E. BCBSAZ and IMS--NET desire to set forth their intentions and agreements
with respect to the development, ownership and operation of the limited
partnership joint venture (hereinafter "Joint Venture").
NOW, THEREFORE, in consideration of the recitals, covenants, conditions and
agreements contained herein, the parties agree as follows:
1. Definitions. For purposes of this Agreement and in addition to the
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terms otherwise defined herein, the following terms shall have the meanings as
set forth below:
1.1. Act. "Act" shall mean the Arizona Limited Partnership Act,
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Arizona Revised Statutes, Section 29-301, et seq.
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1.2. Agreement. "Agreement" shall mean this Joint Venture Limited
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Partnership Agreement dated on the day and year appearing in the opening
paragraph hereof and all Exhibits attached hereto or incorporated by
reference herein and all amendments duly adopted from time to time.
1.3. AZMIN. "AZMIN" refers to the Arizona Medical Information
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Network and the Joint Venture Limited Partnership which owns and operates
the Network.
1.4. ComCenter Hardware. "ComCenter (Communications Center)
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Hardware" refers to the Network-owned, message switching computer(s) on
which the ComCenter Software runs. Such hardware is the Digital Equipment
Corporation ("DEC") VAX family of computers.
1.5. ComCenter(TM) Software. "ComCenter(TM) Software" shall mean the
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computer software, as hereafter defined, developed and owned by IMS that
supports and facilitates the transmission of data, text, voice, clinical
graphics and diagnostic images over a telephone network which resides on
and operates the ComCenter hardware and includes the Network Interface.
1.6. ComCenter System. "ComCenter (Communications Center) System"
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refers to the ComCenter Software and ComCenter Hardware together.
1.7. Exclusive Territory. "Exclusive Territory" shall mean the state
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of Arizona.
1.8. IMS--NET(TM). "IMS--NET(TM)" shall mean the Comcenter(TM)
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Software together with the PC-C Software(TM), as hereafter defined
including all Network Interface. IMS--NET(TM) software is proprietary to
IMS.
1.9. Joint Venture. "Joint Venture" shall mean the limited
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partnership entity created by this Agreement.
1.10. Local Sponsor. "Local Sponsor" shall mean any individual or
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entity desiring to use the Network, as hereafter defined, to receive and/or
disseminate advertising or information, which agrees to pay fees to the
Joint Venture for the right to so use the Network and/or for the right of
others to use the Network, and which does not meet the definition of
National Sponsor, as hereafter defined.
1.11. National Sponsor. "National Sponsor" shall mean any health
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care related entity desiring to use a Network as defined, to receive and/or
disseminate information, which agrees to pay fees for the right to so use
the Network and which participates in at least two networks with which
Integrated Medical Systems, Inc. is affiliated.
1.12. NCW. "NCW" (Network Communications Workstation) refers to an
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IBM PC or fully compatible computer on which the PC-COM Software(TM) runs.
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1.13. Network Interface. "Network Interface" refers to portions of
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IMS--NET(TM) software which automate or partially automate message
transmission and which are used to interface BCBSAZ'S existing computer
system(s) to the Network, and includes such existing IMS software products
as Automsg(TM) and Relay(TM).
1.14. Network. "Network" shall mean the medical information network
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owned and operated by IMS--NET which utilizes IMS-NET(TM) software to
improve the efficiency and effectiveness of communication of and among
Subscribers, BCBSAZ and other sponsors or users authorized to use the
Network by IMS--NET.
1.15. NSA. "NSA" ("Network Services Agreement") refers to an
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agreement between the Joint Venture and a local sponsor, such as BCBSAZ.
1.16. PC-Com(TM) Software. "PC-Com(TM) Software" shall mean the
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computer software, as hereafter defined, developed and owned by IMS, that
supports and facilitates the transmission of data, text, voice, clinical
graphics and diagnostic images over a telephone network and which operates
on International Business Machine ("IBM") Personal Computers or
IBM-compatible Personal Computers. The PC-Com(TM) resides on the NCW.
1.17. Script. "Script" refers to any customized screen or message
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format that will appear on BCBSAZ'S or Subscriber NCWs, and used to
facilitate the sending or receiving of information in a format desired by a
Local Sponsor.
1.18. Software. "Software" shall mean a series of independent but
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interrelated computer programs which interact with computer equipment and
operating systems to form a complete data processing system. "Software"
includes, but is not limited to, computer program listings, user manuals,
functional specifications, technical documentation, source code, and
tangible media upon which the computer programs are recorded.
1.19. Subdirectory. "Subdirectory" refers to a list of a Local
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Sponsor's sites and Subscriber sites that appears as a screen or screens on
a Local Sponsor's NCWs and designates those Subscribers that the Local
Sponsor has paid to communicate with over the Network.
1.20. Subscriber. "Subscriber" refers to any physician private
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practice site or other party authorized by AZMIN to participate in the
Network.
1.21. Synergy Series(TM). "Synergy Series" refers to the practice
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support software modules provided by IMS to Subscribers in addition to the
PC-Com Software. Certain Synergy Series(TM) software is provided to
Subscribers without charge, such as "Word Pro(TM)" word processing,
"Clinical Manager(TM)" clinical data management, "Rx Manager(TM)" drug
therapy management and "CME Manager(TM)"
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continuing medical education management and other modules may be offered at
the option of Subscribers.
2. Formation of Limited Partnership.
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2.1. Formation. The Joint Venturers hereby form and establish a limited
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partnership (the "Joint Venture") under the terms and provisions of this
Agreement and the provisions of the Act and the rights and liabilities of the
Joint Venturers shall be as provided in the Act, except as otherwise expressly
provided in this Agreement.
2.2. Name of the Limited Partnership. The name of the Joint Venture shall
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be "IMS--NET of Arizona Joint Venture, Ltd.," d/b/a Arizona Medical Information
Network, or such other name as the Joint Venturers may from time to time
designate. The Joint Venturers shall cause to be filed, on behalf of the Joint
Venture, such certificate of limited partnership or assumed or fictitious name
certificate or certificates as may from time to time be required by law.
2.3. Place of Business of the Joint Venture. The principal place of
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business of the Joint Venture shall be located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The agent for service of process on the Joint
Venture at such address shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇.
2.4. Partners Names and Addresses. The names and addresses of the Partners
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("Joint Venturers") are:
General Partner (also Limited Partner:
designated as "Managing
Partner"):
IMS--NET of Arizona, Inc. Blue Cross Blue Shield of Arizona, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
2.5. Title to Property. All property owned by the Joint Venture, whether
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real or personal, tangible or intangible, shall be deemed to be and shall be
owned by IMS--NET and the Joint Venture shall not have any ownership interest in
such property, except as set forth in this Agreement.
2.6. Filing of Certificates. The Managing Venturer (as defined below)
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shall file and publish all such certificates, notices, statements or other
instruments required by law for the formation and operation of a limited
partnership in all jurisdictions where the Joint Venture may elect to do
business.
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3. Purpose.
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3.1. Purpose. The purpose of the Joint Venture is to establish and operate
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one or more for-profit Networks in the Exclusive Territory, to improve the
efficiency and effectiveness of communication related to health care delivery
between hospitals, acute care facilities, mental health, substance abuse
facilities and other medical facilities and physicians and other licensed health
care professionals with privileges to utilize such facilities and other
providers or payors with a bona fide interest in communicating with such other
participants, including BCBSAZ. In furtherance of its business, the Joint
Venture shall have and may exercise all the powers now or hereafter conferred by
the Act on limited partnerships formed thereunder, and shall do any and all
things related or incidental to its business as fully as natural persons might
or could do under the laws of the state of Arizona. The Joint Venture shall
engage in no other business.
4. Term and Fiscal Year.
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4.1. Duration of the Joint Venture. The Joint Venture shall commence upon
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the date of execution of this Agreement, and shall continue until December 31,
2032 or until its earlier termination in accordance with the provisions of
Section 14 of this Agreement.
4.2. Fiscal Year. Except for the Joint Venture's initial fiscal year,
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which shall commence on the date hereof and end on December 31, 1992, the fiscal
year of the Joint Venture shall commence on the first day of January of each
year and shall end on the last day of December in the same year.
5. Capital Contributions.
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5.1. Initial Capital Contributions.
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5.1.1. Concurrently herewith, each Joint Venturer shall make the
following contributions to the Joint Venture:
(a) In exchange for its interest in the Joint Venture, effective
upon the date of this Agreement, IMS--NET shall cause to be licensed
to the Joint Venture the business plan for operation of one or more
Networks in the Exclusive Territory, all proprietary concepts, trade
secrets, techniques or business expertise or other acumen developed by
IMS for the purpose of commercializing a medical information network
and an exclusive license to use the Software owned by IMS, including
IMS--NET(TM), Com-Center(TM), and Synergy Series(TM) Software in the
Exclusive Territory, as more fully set forth in the License Agreement
attached to this Agreement as Exhibit B and incorporated herein by
this reference.
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(b) In exchange for a capital contribution of $1,000, BCBSAZ
shall receive its interest in the Joint Venture, which amount shall be
paid upon the date of execution of this Agreement.
5.1.2. No interest shall accrue on any contribution to the capital of
the Joint Venture, and no Joint Venturer shall have the right to withdraw
or to be repaid any capital contributed by it.
5.2. Additional Capital Contributions. Additional capital contributions
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shall be made only with the consent of the Joint Venturers.
6. Allocation of Profits and Losses.
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6.1. Losses. All Joint Venture losses shall be allocated 100% to
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IMS--NET.
6.2. Profits. So long as (i) BCBSAZ is in compliance or has complied with
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its obligations under the NSA and (ii) BCBSAZ has not exchanged all its interest
in the profits of the Joint Venture as described in Section 6.7 below, BCBSAZ
shall be allocated a portion of the profits of the Joint Venture in a manner
described in this Section 6, and that portion of the profits of the Joint
Venture not allocated to BCBSAZ shall be allocated to IMS--NET.
6.2.1. Profits Interest. BCBSAZ shall be allocated 50% of the net
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profits of the Joint Venture adjusted and determined in accordance with the
following:
(a) Net Profits of the Joint Venture shall be determined
using generally accepted accounting principles, consistently applied,
provided that cumulative net losses incurred by the Joint Venture from
the date of this Agreement through the time of calculation and
allocated to IMS--NET under Section 6.1 shall be offset against
profits; and
(b) The portion of the net profits of the Joint Venture to be
allocated to BCBSAZ under this Agreement shall be reduced by the
portion of such profits interest which BCBSAZ has theretofore elected
to exchange with Integrated Medical Systems, Inc. ("IMS"), the parent
corporation of IMS--NET for common stock of IMS as described in
Section 6.7 below.
6.3. Federal Tax Allocation. Except as otherwise required hereunder or as
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otherwise provided by the Code and the rules and Treasury Regulations, for
federal income tax purposes, each item of income, gain or credit, and each item
of loss or deduction entering into the computation of the Joint Venture's
taxable income shall be allocated to the Joint Venturers on the same basis as
profits and losses are allocated to the Joint Venturers for book purposes.
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6.4. Allocations Respecting Contributed Assets. In accordance with Code
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Section 704(c) and the Treasury Regulations thereunder, income gain, credit,
loss and deduction with respect to any asset 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 Adjusted Asset Value. In the event the Adjusted Asset Value of any
Joint Venture asset is adjusted pursuant to the terms of this Agreement,
subsequent allocations of income, gain, credit, 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 Adjusted Asset Value in the
same manner as under Code Section 704(c) and the Treasury Regulations
thereunder.
6.5. Capital Account Balance. Each Joint Venturer's capital account (a)
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shall be credited with (i) its contributions of cash, licenses and agreed values
of intangibles respectively with the valuations set forth in Sections 5.1.1(a)
and 5.1.1(b), to the capital of the Joint Venture, (ii) its allocable share of
the Joint Venture profits determined as set forth in Section 6.2, (iii)
additional capital contributions made by it, if any, and (iv) by the amount of
any Joint Venture liabilities that are assumed by it or that are secured by any
Joint Venture property distributed to it, and (b) shall be debited with (i) its
allocable share, if any, of the Joint Venture losses, (ii) the amount of any
withdrawals by or distributions to it by the Joint Venture, and (iii) by the
amount of any of its liabilities that are assumed by the Joint Venture or that
are secured by any property contributed by it to the Joint Venture. The capital
accounts are to be maintained in a manner consistent with Treasury Regulations
Section 1.704-1(b)(2)(iv).
6.6. General. The respective interests of the Joint Venturers in the
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profits and losses of the Joint Venture shall remain as set forth above unless
changed by amendment to this Agreement or by an assignment of an interest in the
Joint Venture authorized by the terms of this Agreement.
6.7. Exchange by BCBSAZ. The parties acknowledge and agree the BCBSAZ has
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an agreement with IMS, a Colorado corporation which is the parent corporation of
IMS--NET, to exchange part or all of the rights of BCBSAZ under this Agreement
in exchange for an equity interest in IMS, and to the extent that such exchange
is effected, IMS shall become a party to this Agreement, shall become an
additional limited partner and one of the joint venturers and shall be subject
to the other terms and conditions of this Agreement and shall share in the
rights and responsibilities of BCBSAZ as described in this Agreement to the
extent such exchange has been effected.
6.8. Distributions of Available Cash. The Joint Venture shall make cash
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distributions to Joint Venturers only out of profits as determined and allocated
under Section 6.2. Distributions, if available, shall be made within 60 days
following: (i) the end of calendar years 1992 and 1993, (ii) semi-annually in
1994 and 1995 and (iii) quarterly thereafter.
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7. Managing Venturer.
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7.1. Appointment. The business and affairs of the Joint Venture shall be
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conducted under the direction and control of the General Partner which shall be
designated as "Managing Venturer" or "Manager." The Managing Venturer of the
Joint Venture shall be IMS--NET which shall serve, with the powers described
below, until it resigns or is replaced by a new Managing Venturer pursuant to
the written agreement of both Joint Venturers.
7.2. Management Services Agreement. The duties, rights, responsibilities
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and authority of the Managing Venturer shall be as set forth in the Management
Services Agreement in the form attached as Exhibit A, which the Managing
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Venturer shall sign and which shall be incorporated by reference into this
Agreement.
7.3. Approval of Certain Actions. Notwithstanding anything in Section 7.2
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to the contrary,
7.3.1. Actions with respect to the purchase or sale of real estate,
the making of distributions of dividends or surplus by the Joint Venture to
the Joint Venturers or any of them other than in accordance with this
Agreement or the Management Services Agreement, or the material changing
the way the Networks are operated may not be taken without prior and
specific approval of both Joint Venturers.
7.3.2. The authority of the Managing Venturer to operate the Network
or Networks shall be subject to review only in the following matters which,
if not approved unanimously by the Joint Venturers, shall be submitted to
binding arbitration:
(a) Payment of fees or other compensation to employees, officers
or directors of Joint Venturers, Management Committee members, or
other persons, which compensation is not contemplated by the budget of
the Joint Venture or is not fair value for services actually provided
to the Joint Venture;
(b) Distribution of dividends or surplus by the Joint Venture to
the Joint Venturers or other distributions or payments of cash other
than in accordance with this Agreement, or the Management Services
Agreement;
(c) Joint Venture participation in any business venture not
contemplated by this Agreement or any extraordinary expense or
purchase of capital items exceeding $50,000 in any 12 month period;
and
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(d) Payment by the Joint Venture to IMS or any affiliate or
subsidiary thereof of a management fee, home office fee, or any
extraordinary fee not specifically provided in the Joint Venture
Agreement.
7.4. Liability of Joint Venturers to Other Joint Venturer and the Joint
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Venture. Neither Joint Venturer shall be liable to the other Joint Venturer
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because any taxing authorities disallow or adjust any deductions or credits in
the Joint Venture income tax returns. In addition, the doing of any act or the
omission to do any act by either Joint Venturer, the effect of which may cause
or result in loss or damage to the Joint Venture, if done in good faith and
otherwise in accordance with the terms of this Agreement, shall not subject such
Joint Venturer to any liability. The Joint Venture will indemnify and hold
harmless each Joint Venturer and its successors and assigns from any claim,
loss, expense, liability, action or damage resulting from any act or omission in
connection with Joint Venture affairs, including, without limitation, reasonable
costs and expenses of litigation, except where the same is due to or arising out
of the fraud, bad faith or gross negligence of the Joint Venturer.
8. Additional Responsibilities of the Joint Venturers.
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8.1. IMS--NET.
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8.1.1. IMS--NET will be solely responsible for funding all marketing
expenses associated with the recruiting, servicing and billing of National
Sponsors. IMS--NET shall receive all revenues from National Sponsors and,
after deducting 25% of such revenue as its compensation, shall promptly
transmit the balance to the Joint Venture.
8.1.2. Pursuant to the provisions of the Software License Agreement,
IMS--NET shall enter into the Escrow Agreement attached as an exhibit to
the Software License Agreement which is Exhibit B to this Agreement.
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8.1.3. IMS--NET shall make available to the Joint Venture and the
Network any improvements in the technology or business practices reasonably
available to IMS--NET through its affiliated entities which would improve
the operation of the Joint Venture or the Networks.
8.2. Responsibilities of BCBSAZ. Any additional responsibilities or
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duties of BCBSAZ other than as described elsewhere in this Agreement or in an
agreement referred to herein, shall be subject to unanimous approval of the
Joint Venturers.
9. Representations and Warranties. BCBSAZ and IMS--NET each, for itself
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alone, warrants and represents that:
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9.1. Content of Agreement. Each has carefully read and understands
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the content of this Agreement.
9.2. Financial Risks. Each understands the financial risks involved
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in this investment, which could result in a substantial or complete loss of
its investment. Each can assume a high degree of risk in making such an
investment and can afford the loss of its entire investment.
9.3. Reliance on Own Counsel. Each, in evaluating the merits of an
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investment in the Joint Venture has relied, to the extent each deems
necessary, on the advice of its own personal accountant and tax and legal
counsel. Each acknowledges that neither the Joint Venture nor its counsel
has provided any tax opinion or other legal advice in connection with this
offering.
9.4. Business and Financial Experience. Each, by reason of their
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business and financial experience or the business and financial experience
of their professional advisors who are unaffiliated with the Joint Venture,
believe that they have the capacity to protect their own interests in
connection with this offering.
9.5. Due Organization and Authority. Each is duly organized, validly
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existing and in good standing in the state of its incorporation and
possesses all necessary powers and authority to enter into this Agreement.
10. Payment of Certain Expenses.
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10.1. Reimbursable Expenses. BCBSAZ and IMS--NET agree to cause the
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Joint Venture either to pay or reimburse BCBSAZ or IMS--NET, as the case
may be, only for such filing fees, costs, prepaid franchise taxes or other
expenses directly incurred in organizing or registering the Joint Venture
as a limited partnership in good standing with the state of Arizona, and
any county or local government department or agency necessary or convenient
to the operation of the Joint Venture as contemplated by this Agreement.
10.2. Nonreimbursable Expenses. BCBSAZ and IMS--NET agree that any
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and all other expenses incurred by BCBSAZ and IMS--NET in organizing the
Joint Venture other than as is expressly set forth in Section 10.1 above
and in the Management Services Agreement shall not be reimbursable by the
Joint Venture and shall be paid solely by the party incurring such
expenses. Without limiting the generality of the foregoing, each party
shall bear its own legal and accounting fees, travel, lodging, telephone
and other out-of-pocket expenses involved in the negotiation, organization
and formation of the Joint Venture.
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11. Confidentiality.
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11.1. Confidentiality. The parties acknowledge that after execution of
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this Agreement, BCBSAZ and IMS--NET will each have access to certain
confidential information and trade secrets which are proprietary to IMS--NET or
BCBSAZ. Each party to this Agreement acknowledges that the unauthorized use of
such information or the disclosure of any such information of the other party,
or the disclosure of any such information, any part thereof belonging to the
other party, to any unauthorized third party shall be injurious to the party
whose confidential information and trade secrets are disclosed. Each party to
this Agreement, on its own behalf and on behalf of its officers, directors and
employees, by becoming a party to this Agreement, covenants and agrees that,
except as authorized hereunder, they will not use or disclose to any
unauthorized third party, information related to the Software, clients,
marketing, research and development or other trade secrets or proprietary
confidential information of the other party. Further, both IMS--NET and BCBSAZ
agree to treat as confidential all Joint Venture information such as client
lists, pricing information and related data and both acknowledge that
unauthorized use of any such information would cause irreparable damage to the
Joint Venture.
11.2. Enforcement by Injunction. The parties agree and acknowledge that
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irrevocable harm and damage will be sustained by the party to whom the
proprietary information and trade secrets belongs in the event that the other
party or its officers, directors or employees violate or threatened to violate
the provisions of Section 11.1 above. In the event of such a breach or
threatened breach of Section 11.1, the party seeking to enforce Section 11.1
shall be entitled to have an injunction issued by any court of competent
jurisdiction enjoining and restraining such breach. The seeking of an
injunction shall not preclude such party from seeking such other remedies as may
be available, including monetary damages.
11.3. Enforcement by Injunction by Joint Venture. The parties further
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agree and acknowledge that irrevocable harm and damage would be sustained by the
Joint Venture in the event that either BCBSAZ or its officers or directors or
IMS--NET or its officers or directors or affiliates violate the provisions of
Section 11.1 above. In the event of a breach or threatened breach of Section
11.1 by either BCBSAZ or IMS--NET, or both, then either Joint Venturer, acting
in the name and place of the Joint Venture shall be entitled to have an
injunction issued by any court of competent jurisdiction enjoining and
restraining such breach. The seeking of an injunction shall not preclude
IMS--NET from seeking such other remedies as are available, including monetary
damages.
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12. Dissolution and Termination.
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12.1. Events of Dissolution.
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12.1.1. The Joint Venture shall be terminated and dissolved upon
the earlier to occur of the following:
(i) In the event a Joint Venturer shall be in material breach
of this Agreement, in addition to such other remedies as may be
available to the non-defaulting Joint Venturer under law, upon
the election of such non-defaulting Joint Venturer after written
notice of said material breach to the breaching Joint Venturer,
which breach remains uncured for sixty (60) days after written
notice of such breach;
(ii) Upon the dissolution and commencement of winding up of
either Joint Venturer, or upon either an adjudication of either
Joint Venturer as bankrupt or insolvent, or upon the filing by
either Joint Venturer of any petition under any chapter of the
United States Bankruptcy Code or any other present or future
applicable federal, state or other statute or law regarding
bankruptcy, insolvency or other relief for debtors, or either
Joint Venturer's seeking, or consenting to, or acquiescing in,
the appointment of any trustee, receiver or liquidator of itself
or of all, or any substantial portion of, its property or of its
interest in the Joint Venture;
(iii) upon the unanimous consent of the Joint Venturers; or
(iv) a date which is 40 years from the date of this Agreement.
12.1.2. Dissolution of the Joint Venture shall be effective on
the day on which the event occurs giving rise to the dissolution, but
the Joint Venture shall not terminate until the assets of the Joint
Venture shall have been distributed as provided herein.
Notwithstanding the dissolution of the Joint Venture, prior to the
termination of the Joint Venture as aforesaid, the business of the
Joint Venture and the affairs of the Joint Venturers, as such, shall
continue to be governed by this Agreement.
12.1.3. Dissolution shall not be caused by the admission of a
new limited partner to the Joint Venture; any such admission (other
than admission of IMS as contemplated by Section 6.7 above) shall
occur only upon unanimous consent of the Joint Venturers.
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12.2. Liquidation of Assets. Upon dissolution, the Managing Venturer
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shall liquidate the assets of the Joint Venture, and apply and distribute the
proceeds thereof as contemplated by this Agreement.
12.3. Distributions Upon Liquidation.
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12.3.1. After payment of liabilities owing to creditors, the
Managing Venturer shall set up such reserves as it deems reasonably
necessary for any contingent or unforeseen liabilities or obligations
of the Joint Venture. Said reserves may be paid over by the Managing
Venturer to a bank, to be held in escrow for the purpose of paying any
such contingent or unforseen liabilities or obligations and, at the
expiration of such period as the Managing Venturer may deem advisable,
such reserves shall be distributed to the Joint Venturers or their
assigns in the manner set forth in paragraph 12.3.2 below.
12.3.2. After paying such liabilities and providing for such
reserves, the Managing Venturer shall cause the remaining net assets
of the Joint Venture to be distributed to the Joint Venturers in
respect of the positive balances in their capital accounts in
compliance with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2),
and if any Joint Venturer's capital account has a deficit balance
(after giving effect to all contributions, distributions and
allocations for all taxable years, including the year in which such
liquidation occurs), such Joint Venturer shall contribute to the
capital of the Joint Venture the amount necessary to restore such
deficit balance to zero in compliance with Treasury Regulations
Section 1.701(b)(2)(ii)(b)(3).
12.4. Valuations. For the purposes of valuing the assets of the Joint
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Venture for distribution as contemplated in Section 14 hereof, the Joint
Venture's assets shall be deemed to be sold at their fair market value and the
resulting profits and losses shall be allocated to the Joint Venturers capital
accounts in accordance with Section 5 hereof.
13. Agreement Not to Compete. In the event IMS--NET acquires all of
------------------------
BCBSAZ's interest in the Joint Venture as described in Section 6.7, BCBSAZ and
IMS--NET hereby mutually covenant and agree:
13.1. No Competition by BCBSAZ. During the term of this
------------------------
Agreement and for three (3) years after the date on which all of
BCBSAZ's interest in this Agreement is exchanged by BCBSAZ for common
stock of IMS as described above, BCBSAZ and IMS--NET agree as follows:
13.1.1. BCBSAZ and its officers and directors shall not,
directly or indirectly own, manage, operate, control, organize,
participate in the management, control, or organization of, be
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employed by any individual or organization which manages,
operates or offers medical information network services or
similar arrangements wherever located, which competes with, or
would compete with, the Network.
13.1.2. BCBSAZ and its officers and directors acknowledge
and agree that irrevocable harm and damage will be sustained by
IMS--NET and its business in the event that BCBSAZ or its
officers and directors compete with IMS--NET. In the event of
violation of Section 13.1.1 hereof, the parties acknowledge that
said breach would result in irreparable injury to IMS--NET for
which monetary damages would be inadequate, and therefore, in the
event of a breach or threatened breach of Section 13.1.1,
IMS--NET shall be entitled (in addition to all other legal and
equitable remedies) to have an injunction issued by any court of
competent jurisdiction enjoining and restraining said breach. The
running of any statute of limitations shall be tolled during the
period of said breach.
13.1.3. If the restriction contained in Section 13.1.1 or
the application thereof is held to be unenforceable because of
the area covered, or the duration or scope thereof, the court
making such determination shall have the power to reduce the area
and/or duration thereof and/or otherwise reduce the scope thereof
and the restriction shall then be enforceable in its reduced
form.
14. Miscellaneous.
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14.1. Notices. All notices required to be given hereunder shall be given
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in writing and shall be personally delivered or deemed delivered if dispatched
by certified mail, return receipt requested, postage prepaid, addressed to the
parties as set forth in Section 2.4 above.
A notice shall be deemed given on the date it is deposited in the mail in
accordance with the foregoing. Any party may change the address to which to
send notices by notifying the other party of such change of address in writing
in accordance with the foregoing.
14.2. Governing Law. This Agreement and all rights, duties and
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obligations hereunder shall be construed and interpreted in accordance with the
internal laws (not the choice of law) of the state of Arizona
14.3. Waiver. No waiver of any term, covenant or condition contained in
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this Agreement or failure to exercise a right or remedy shall be deemed to imply
a further waiver of such term, covenant, right or remedy.
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14.4. Severability. Nothing contained in this Agreement shall be
------------
construed so as to require the commission of an act contrary to law and whenever
there is any conflict between any provision of this Agreement and any present
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail, but in such event, the
provisions of this Agreement affected shall be curtailed and limited only to the
extent necessary to bring it within the requirements of the law and to carry out
the purposes of this Agreement.
14.5. Binding Agreement. Subject to the restrictions on transfer and
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encumbrances set forth herein, this Agreement shall inure to the benefit of and
be binding upon BCBSAZ and IMS--NET and their respective legal representatives,
successors, transferees, and assigns. Whenever a reference is herein made to
any party such reference shall be deemed to include a reference to the legal
representatives, successors, transferees, and assigns of such party.
14.6. Assignment. This Agreement shall not be assigned by either BCBSAZ
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or IMS--NET without the express prior written consent of the other party.
14.7. Headings. All headings and captions used herein are for convenience
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of reference only, and shall not be a part or affect the interpretation of this
Agreement.
14.8. Modification. This Agreement may be modified only upon execution of
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a written agreement signed by both parties.
14.9. Entire Agreement. This Agreement and the other agreements referred
----------------
to herein supersede all prior oral and written understandings and agreements
between the parties. The parties acknowledge and agree that this Agreement,
together with all documents and agreements referenced and incorporated herein,
contains the entire agreement between the parties. No representations,
promises, conditions or warranties with reference to the execution of this
Agreement have been made or entered into between the parties other than as
expressly stated herein.
14.10. Attorneys Fees. In the event of any suit under this Agreement,
--------------
reasonable attorneys' fees and costs shall be awarded by the court to the
prevailing party, to be included in any judgment recovered. In addition, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
costs incurred in enforcing any judgment arising from a suit under this
Agreement. This post-judgment attorneys' fees and costs provision shall be
severable from the other provisions of this Agreement and shall survive any
judgment on such suit and is not to be deemed merged into the judgment.
14.11. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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14.12. Exhibits. All exhibits attached hereto and referred to herein are
--------
incorporated as though fully set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
BLUE CROSS AND BLUE SHIELD
OF ARIZONA, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
P. O. Box 13466
Phoenix, Arizona 85002-3466
By /s/ ^SIGNATURE TO COME^
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Title President & CEO
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IMS--NET OF ARIZONA, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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