U.S.SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10KSB40
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
Commission File Number: 0-19170
JUNIPER GROUP, INC.
(Name of small business issuer in Its Charter)
New York 11-2866771
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
111 Great Neck Road, Suite 604,
Great Neck, New York 11021
(address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (516) 829-4670
Securities registered pursuant to Section 12(b) of the Exchange Act: NONE
Securities registered pursuant to Section 12(g) of the Exchange Act:
Title of Each Class:
Common Stock (par value $.001 per share)
12% Non-Voting Convertible Redeemable Preferred Stock $.10 par value
Redeemable Class A Warrants
Redeemable Class B Warrants
Check whether the issuer (1) filed all reports required to be filed by Section
13 or Section 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that Registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. YES X NO
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [ X ]
State issuer's revenues for its most recent fiscal year. - $2,503,188.
The aggregate market value of the Common Stock held by non-affiliates of the
Registrant was approximately $2,420,000 based upon the $0.16 closing price of
these shares on the NASDAQ Stock Market as of March 17, 1997.
As of March 17, 1997, there were 19,614,493 outstanding shares of Common Stock,
$.001 par value per share.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. Business Development
Juniper Group, Inc. (formerly Juniper Features Ltd., the "Company") is a
New York Corporation. Its principal businesses are composed of two (2) segments,
healthcare and entertainment: (i) the healthcare operations are conducted
through two subsidiaries of Juniper Medical Systems, Inc. ("JMSI"), which is a
wholly owned subsidiary of the Company: (a) PartnerCare, Inc. ("PCI", formerly
Diversified Health Affiliates, Inc.), a managed care revenue enhancement company
providing various types of services such as: Physician Practice Management,
Managed Care Revenue Enhancement, Comprehensive Pricing Reviews, MSOs and
Liability Assessment Programs to newly evolving integrated hospital and
physician markets and (b) Juniper Healthcare Containment Systems, Inc.
("Containment"), which develops and provides full service healthcare networks
for insurance companies and managed care markets in the Northeast U.S.; and (ii)
the entertainment segment is conducted principally through Juniper Pictures,
Inc. ("Pictures"), a wholly owned subsidiary of Juniper Entertainment, Inc.
("JEI"), a wholly owned subsidiary of the Company, which engages in the
acquisition, exploitation and distribution of rights to films to the various
media (i.e., home video, pay-per view, pay television, cable television,
networks and independent syndicated television stations) in the domestic and
foreign marketplace. The Company's operations are based at 111 Great Neck Road,
Suite 604, Great Neck, New York 11021.
The Company was incorporated in July 1987 and commenced entertainment
operations in January 1988. In late 1991, the Company recognized an opportunity
to expand into healthcare, and in December 1991, JMSI, acquired all of the
outstanding capital stock of PCI. Containment commenced operations in September
1992. Containment operates its business from the Company's Great Neck location.
PCI operates its business from its Boca Raton, Florida location and the
Company's Great Neck location.
During the second quarter of 1996, the Company took several actions that it
believes will improve the results of its hospital revenue enhancement management
business. It changed the name of its subsidiary that conducts that business from
Diversified Health Affiliates, Inc. to PCI. The Company believes that this name
better characterizes the nature of the relationship sought to be developed
between PCI and the hospitals that it serves. In addition, PCI determined that
it was necessary to aggressively and strategically redirect its efforts in
order to pursue new managed care markets and initiatives. To that end, PCI
replaced its president with a new president, whose management and marketing
skills and extensive experience in the managed care field will, in management's
opinion, better serve its needs.
In February 1997, at the Company's annual meeting of shareholders (The
"Annual Meeting"), the shareholders approved a proposal to change the Company's
state of incorporation from New York to Nevada. Reincorporation in Nevada will
allow the Company to take advantage of certain provisions of the corporate law
of Nevada but will not result in any change in the business, management, assets,
liabilities or net worth of the Company.
In order to effect the Company's reincorporation in Nevada, the Company
will be merged into a newly formed, wholly-owned subsidiary of the Company
incorporated in Nevada. The Nevada subsidiary, named Juniper Group, Inc., which
was formed on January 22, 1997, has not engaged in any activities except in
connection with the proposed transaction.
In addition, at the Annual Meeting the shareholders approved amendments to
the Certificate of Incorporation of the Company (1) to change the name of the
Company from Juniper Features Ltd. to Juniper Group, Inc.; (2) to eliminate the
preemptive rights of the holders of the Company's common stock (see Item 6
Management's Discussion and Analysis or Plan of Operation); (3)to increase the
authorized common stock of the Company from 20,000,000 to 300,000,000 shares;
and (4) to require the vote of holders of 80% of the issued and outstanding
shares of common stock to approve certain business combinations.
The shareholders also approved an amendment to the By-Laws of the Company
to provide for a pre-takeover notification requirement and approved the
Company's 1996 Stock Option Plan.
B. Business of Issuer
(i) Healthcare Cost Containment Services and Revenue Enhancement
(a) Healthcare Cost Containment Services
Containment is a provider of healthcare cost containment services for third
party healthcare payors. Containment provides its clients with savings on
hospital expenditures through a geographically tailored network of high-quality,
cost-effective healthcare providers. In addition, Containment provides its
clients with timely, informative data claims analysis and reporting. Containment
assists third party healthcare payors, including group health insurance
companies, in reducing their costs associated with the delivery of health
services. Containment has arrangements with networks of healthcare providers and
facilities (preferred provider organizations, "PPO's") that agree to discount
their charges in return for prompt payment and access to a higher volume of
patients. Group health insurance companies agree to channel their enrollees to a
preferred provider organization network, resulting in lower insurance premiums
to their clients. Containment provides supervision through sub-contractors to
ensure that the appropriate and necessary medical services are provided to the
patient in a cost effective manner. Containment also provides health network
coverage to its insurance clients and their enrollees.
Based upon data generated by the healthcare industry and U.S. Government
sources, healthcare expenditures have increased from $249 billion in 1980 (9.1%
of gross national product) to an estimated $700 billion in 1990 (12% of gross
national product). It is anticipated that healthcare expenditures will exceed $1
trillion in the year 2000. Employers, who paid an estimated $165 billion in
healthcare costs for their employees in 1989, have taken steps to control their
rapidly escalating healthcare costs. Many have modified their traditional
insurance coverage or made available to their employees the opportunity to
participate in HMOs and PPOs. Many employers have also elected to self-insure
the cost of providing healthcare benefits to their employees, thereby providing
an opportunity to reduce costs. This has also enabled them to take a more active
role in managing healthcare benefits and costs. In response to the trend towards
self-insurance and increasing competition from HMOs and PPOs, group insurance
carriers have sought to control premium increases through the adoption of cost
containment programs.
Independent PPO cost management firms, such as Containment, offer numerous
programs designed to meet these collective objectives. PPO services have only
recently been offered on a commercially significant scale by independent firms
which are engaged primarily in providing these types of services. The industry
is currently highly fragmented with numerous independent firms providing medical
utilization review and PPO services, the vast majority of which provide such
services on a regional or local level.
Since 1992, Containment has had an on-going agreement with The Guardian
Life Insurance Company ("Guardian"), whereby Containment is paid a percentage of
the savings it generates for the insurance company. Containment provides this
service for Guardian in New Jersey and Connecticut.
The Company has, over the past several years, worked closely with a
healthcare professional to bring the Company both health insurance company group
plan customers, as well as, professional healthcare providers and networks. The
healthcare professional has assisted in arranging the relationships between the
Company, the Guardian, and the network of providers currently under contract
with Containment.
The agreement with the healthcare professional for his services continues
until December 31, 1997 and provides that the Company will pay the healthcare
professional commissions at varying rates and grant options to purchase common
stock if certain contract renewals are realized or certain revenue levels are
achieved. Based upon the contracts existing as of December 31, 1996 and through
the remaining term of the contracts, should certain financial goals be achieved,
the healthcare professional has a total potential of receiving 1,550,000 common
share purchase options at exercise prices varying from $.19 to $.50 per share.
At December 31, 1996, none of the options was granted.
In 1996, the Company agreed with the healthcare professional to reorganize
the manner in which its business with health insurance company group plans is
structured. The purpose of this reorganization was to provide new services to
healthcare insurance companies. This change, which occurred in early 1996,
resulted in conducting such business in the form of a joint venture with a
Company affiliated with the healthcare professional.
(b) Managed Care Revenue Enhancement Program ("MCREP")
In 1996, the country experienced an explosive growth of managed care
markets. In order to address the opportunities fostered by this trend,
management embarked on a number of critical initiatives which would reposition
and reengineer the nature and direction of the Company's managed care business.
First the Company changed its subsidiary's name to PCI to better characterize
the relationships it would seek among itself, the hospitals and the integrated
networks it would serve.
PCI also recruited new leadership, including a new President, whose
management, marketing skills and experience in the managed care marketplace
would better serve the future needs and direction of the Company. The Company
then pursued a series of initiatives which has produced new product lines and
eliminated those which demonstrate poor sales opportunities or were
unprofitable. It moved out of the Diagnostic Related Groups ("DRG") audit
business and became a Managed Care Revenue Enhancement company.
PCI has developed a comprehensive program that addresses the entire
spectrum of business and revenue issues pertaining to the hospital's managed
care relationships. PCI ensures that hospitals obtain all the dollars that they
are entitled to under their managed care agreements.
PCI's program also includes the profiling of managed care contracts and the
performance benchmarking of these agreements. PCI validates whether or not the
projected financial value anticipated from these arrangements can be obtained.
PCI's assessments include line item audits of claims generated through these
relationships, as well as trending reviews to identify, and document "Silent
PPO" activity. PCI also identifies managed care claims that have not been
properly paid, or have been written-off . PCI then actively pursues payors to
expedite payments to the hospital for rebilled claims.
This transition has given the Company a new opportunity to service the
growing number of hospitals and integrated networks that are facing the
complexities associated with managed care contracts. These relationships result
in payment errors on claims and non-compliance issues that foster sizable
revenue losses to hospitals. PCI's new product lines target these problems and
provides services which recapture loss revenue in this two hundred billion
dollar industry.
The vision of the Company's new direction has been complemented by
management's commitment to developing a growing relevance in evolving managed
care markets and meeting the needs of its new clients. PCI emphasizes the
importance of maintaining an atmosphere of customer support and appreciates the
need to meet client needs in an unobtrusive manner. PCI's staff of professionals
come from the insurance and PPO industries and are also sensitive to the
importance of payor relationships.
PCI's MCREP business consists of the essential ingredients needed to assist
hospitals in maximizing the business value of their managed care contracts. The
components of this Program are as follows:
1) Managed Care Contract Compliance
PCI identifies all managed care contracts and benchmarks performance
requirements for each contract. Its clients are provided with comprehensive,
easy to read profiles of the managed care contracts in the hospital's portfolio.
PCI evaluates claims actively generated by each payor for contract compliance.
Per diems and percentage discounts taken by payors are validated in accordance
with hospital expectations. MCREP provides the hospital with an immediate source
of additional revenue from closed accounts. MCREP becomes a second filter of
claims adjudication. The quality process results in a correct bill and assures
the hospital that all revenue due is properly billed.
2) Line Item Reviews and Administration
PCI's team identifies and recovers all charges overlooked subsequent to the
presentation of the final hospital bill, as well as reviews previously submitted
claims. PCI's unique Line Item Reviews simultaneously match units of service to
the medical record documentation at the time of discharge. Line Item Reviews
identify the claims under and over charged by the payor. While reviewing the
bills, PCI is simultaneously auditing the medical records. This critical
component of the Managed Care Revenue Enhancement Program also serves as a
quality assurance review of the hospital's medical records. By ensuring an
accurate final bill for submission to the insurance company, the hospital avoids
additional billing and collection expenses.
(c) Comprehensive Pricing Review
CPR encompasses CPT-4/HCPCS Charge Master updates, CPT-4/HCPCS Optimization
Reviews and Comprehensive Pricing Strategies as well as UB 92 Revenue Code
Validation. The purpose of CPR is to evaluate the quality of Outpatient coding
and determine the effect on hospital reimbursement. As part of the outpatient
coding validation, PCI reviews a cross section of records comprised of a
sampling from ambulatory surgery, outpatient services and the emergency room.
Hospitals are then provided with a detailed report which identifies trends in
lost revenues. This provides the hospital with the opportunity to obtain
anticipated revenue from the initial claim while simultaneously saving
additional re-billing expenses.
PCI'steam of reimbursement specialists apply specific codes to applicable
claims, eliminating unlisted code denials on the hospital's Explanation of
Benefits. PCI also works closely with the hospital's departments utilizing
surgical intervention codes ensuring that services are listed and identifying
allowable unbundling to maximize reimbursement.
(d) Liability Assessment Program
LAP is designed to minimize financial losses from insurance companies
audits of patient bills. PCI's analysts identify and analyze trends in
overcharges by contract, by payor, by claim and by department. Hospitals are
able to evaluate the efficiency of their billing system utilizing the data
provided by PCI.
Competition
Although its MCREP services are significantly different from those offered
by other hospital consulting services, the Company competes for consulting
business primarily with revenue-optimization services companies. The Company
competes for its MCREP clients by distinguishing its services from those
provided by revenue optimization service companies, which generally do not use
benchmark performance levels of managed care agreements or target "Silent PPO"
practices as does the Company. Approximately 500 companies of varying size offer
revenue-optimization services that may be considered competitive with the
Company. Competitors include the healthcare consulting practice of Anderson
Consulting, the Gailer Advisors, Inc., Iameter, MC Strategies, Inc., National
Coding Services, Inc., Quality Medical Consultants, Inc., and J.A. Thomas &
Associates, Inc. Most of these firms have substantially greater financial,
technical, marketing and management resources than the Company. The Company does
not believe that any single company commands significant market share. Larger,
more established consulting firms have an enhanced competitive position, due in
part to established name recognition and direct access to hospital clients
through the provision of other services. Small firms, although not necessarily
offering those particular services comparable to those of the Company, compete
on the basis of price.
The managed care industry is highly competitive. The Company's MCREP
programs will compete with other providers of healthcare services, including
regional groups as well as national firms. Based upon these competitive factors,
the Company believes that it will be able to compete successfully in the markets
by adhering to its business strategy, although there can be no assurance that
the Company will be able to compete successfully.
Sales and Marketing
The Company's 1996 growth initiative has also driven new sales and
marketing strategies, resulting in a growing interest in PCI's new product lines
which capture unrecovered dollars that hospitals are entitled to under their
managed care agreements. The initiatives have also been received well by
national hospital chains, regional hospital networks, and larger hospitals that
have numerous managed care contracts. Targeted sales efforts to these entities
became a primary focus in 1996. In most cases hospital chains required timely
procedures requiring corporate due diligence and preferred vendor certification
prior to accessing their member hospital. Efforts have been underway to address
these requirements which, when completed, will foster greater sales
opportunities.
In addition to the above sales and marketing efforts, new initiatives are
also underway targeting geographic markets which are characterized by an
accelerated growth of the managed care industry. Specifically, resources and
sales efforts were invested into developing both the Florida and New Jersey
markets. This included numerous meetings with corporate officers and
representatives of hospital chains that have a large presence in Florida. These
markets represent a great deal of opportunity since managed care revenue
represents a major revenue source to hospitals within these areas, sometimes
close to or exceeding 50%.
(ii) Entertainment
Pictures is engaged in the distribution of films through licensing to home
video, pay-per-view, pay-cable, and commercial television broadcast media
domestically as well as in foreign markets. Pictures has exclusive distribution
rights to eighty-one (81) films in various media within various international
markets.
During 1996 and 1995, the Company significantly curtailed its efforts in
the distribution of film licenses to commit and focus its resources on the
growth of the healthcare segment, which during that time was, and currently is,
the most efficient and cost effective strategy for the Company to maximize
revenue. In 1997, the Company will continue directing efforts toward
reestablishing a foothold in the film industry. The Company expects to begin
recognizing growth in revenues from the sale of film licenses in 1997.
Pictures acquires worldwide rights to films which are saleable to various
markets. In acquiring the rights to a film, Pictures analyzes the viability of
the product for distribution in an effort to target the film's audience appeal.
Armed with its analysis, Pictures markets the film, using sales representatives
and the efforts of its officers, to the various media in a selective manner. In
addition, Pictures aids the media to which it markets its films by producing a
strategy for the presentation of the film, with a view to
programming/counterprogramming against competitive media in the same market and
skewing a film to the proper demographic population (i.e., female, male, child,
teenager and middle age) in order to produce the most favorable outcome
regarding ratings and advertising revenue.
Pictures acquires its film rights from independent film production
companies. Pictures monitors the industry for available films, concentrating on
content, quality, theme, actors and actresses, plot, format and certain other
criteria to determine the film's suitability for the home video, pay-per-view,
pay/cable and commercial media to which Pictures markets its product, both
domestically and internationally.
Pictures markets its product through its sales representatives, who also
assist Pictures at domestic and international trade shows to market Pictures'
film library.
Pictures acquires domestic and/or foreign distribution rights to films for
a license period that typically spans between 10 and 20 years, during which time
Pictures has the right to distribute such films in various media (video, pay
cable, syndication and free T.V.). Pictures earns a distribution fee, which is
based upon a percentage of gross receipts received for the license. In addition,
the Company recoups its expenses incurred in making the sale (i.e. market costs,
travel and entertainment, advertising, fax, phone, mail, etc.), along with
recouping any advances made to producers upon signing or within a fixed period
of time thereafter (minimum guarantee) from the gross receipts. The balance of
gross receipts after such recoupment is paid to the producer. Any minimum
guarantees paid to the producer are payable over a period of 3-8 years.
Competition
Competition is intense in the motion picture distribution industry. The
Company is in competition with other motion pictures distribution companies
including many which have greater resources than the Company, both in the
acquisition of distribution rights to movie properties and the sales of these
properties to the various markets (ei. pay, cable and television).
Major Customers
In 1996, Guardian accounted for 75% of the total revenue of the Company. In
1995, Guardian accounted for 83% of the total revenue of the Company. The loss
of the contract with Guardian would have a material adverse effect on the
operations of the Company. However, the Company is pursuing contracts with other
insurance companies, which if successful, may reduce the Company's dependence
upon Guardian.
The Entertainment segment of business is not dependent upon any one
significant customer.
Employees
As of March 17, 1997, the Company had 9 full-time employees. Of the
full-time employees, 7 work at the Company's offices, and 2 work at client
premises.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive, healthcare and film distribution offices are
located at 111 Great Neck Road, Suite 604, Great Neck, New York 11021. This
property consists of 2,026 square feet of offices and is subleased from
Entertainment Financing Inc.("EFI"), an entity affiliated with the Chief
Executive Officer of the Company, currently at $4,263 per month. EFI's lease,
and the Company's sublease on this space expires on May 31, 2002. EFI has agreed
that for the term of the sub-lease the rent paid to it will be substantially the
same rent that it pays under its master lease to the landlord. In addition, in
January 1995, the Company opened an office in Boca Raton, Florida. This property
consists of 1900 square feet of offices and is sub-leased from EFI Funding, Ltd.
("Funding"), an entity affiliated with the Chief Executive Officer of the
Company, currently at $1,150 per month. Funding's lease and the Company's
sublease on this space expires on November 30, 1997. Funding has agreed that for
the term of the sub-lease the rent paid to it will be substantially the same
rent that it pays under its master lease to the landlord. Minor additional
charges are made by EFI and Funding to the Company to cover administrative
costs.
ITEM 3. LEGAL PROCEEDINGS
In December 1996, an action was filed in the Superior Court of New Jersey,
by MediChoice Network, Inc. against Containment, for damages in the amount of
approximately $197,000. The claim alleges failure to pay for services provided
under a contract. A default judgment in the amount of $197,000 was entered
against the Company for failure to answer the original complaint in a timely
fashion. An application is currently pending to vacate the default. The Company
believes it is entitled to damages against the Plaintiff, and that it has
meritorious defenses to the claim, but it intends to seek a settlement of the
matter.
In February 1997, a law firm commenced an action against each of Pictures
and PCI. The actions seek damages for legal services aggregating approximately
$13,600. Concurrently, the Company became aware of an unasserted claim by two
shareholders of the Company, one of whom is the spouse of one of the
claimant-attorneys, for damages for alleged stock manipulation. Management
believes that the allegations are without merit and will vigorously defend any
such claim. Currently, the Company is engaged in settlement negotiations to
resolve all three matters and avoid unnecessary litigation expenses.
In May 1995, Ted Lichtenheld commenced an action against the Company and
others in the United States District Court for the Southern District of New
York, seeking damages in the amount of $100,000 for each of the seven (7)
alleged acts of willful infringement, or in the alternative $20,000 for each of
the seven (7) alleged acts for unintentional infringement, plus a return of the
film, together with attorney's fees in connection with the motion picture
"Personal Foul." Lichtenheld alleged that he licensed the picture to Double
Helix Films, Inc. ("Helix") and that, pursuant to that license agreement, Helix
failed to make payment to Lichtenheld. It is further alleged that by reason of
Helix's breach of the agreement, all rights granted to Helix had reverted to
Lichtenheld. Lichtenheld's claim against the Company is based upon the Company's
distribution of the picture (pursuant to the sub-license from Helix) after the
purported termination of the license to Helix. The Company is vigorously
defending the action and asserts that under Lichtenheld's agreement with Helix,
the reversion did not affect the Company's rights to the picture.
On May 22, 1996, Ordinary Guy, Inc. and Crow Productions, Inc. commenced an
action against the Company, its CEO and an affiliate of the CEO in the United
States District Court for the Eastern District of New York seeking damages in
the amount of $464,470.50, plus interest alleging that the Company has successor
liability for a judgment entered in March of 1993 by the Plaintiffs against
Juniper Releasing, Inc. ("Releasing"), a company affiliated with the Company's
CEO. It is alleged that the Company was formed in 1989 as a successor to
Releasing and that the Company and others transferred assets out of Releasing to
avoid the payment of Releasing's creditors. The Company is vigorously defending
the allegations and has asserted that the claims are without merit and are time
barred.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ending December 31, 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's common stock, Class A Warrants and Class B Warrants are
traded on the National Association of Securities Dealer Automatic Quotation
System ("NASDAQ") Small Cap Market, under the symbols "JUNI", "JUNIW" and
"JUNIZ" respectively. The Company's 12% Convertible Redeemable Preferred Stock
("Preferred Stock") is traded in the Over-the-Counter Market on the NASD OTC
Bulletin Board. The following constitutes the high and low sales prices for the
common stock, the Class A Warrants and the Class B Warrants as reported by
NASDAQ for each of the quarters of 1995 and 1996. The quotations shown below
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
1995 HIGH LOW
FIRST QUARTER
Common Stock ............................. 0.359 0.109
Class A Warrants ......................... 0.125 0.078
Class B Warrants ......................... 0.125 0.078
SECOND QUARTER
Common Stock ............................. 0.297 0.109
Class A Warrants ......................... 0.078 0.078
Class B Warrants ......................... 0.078 0.078
THIRD QUARTER
Common Stock ............................. 0.578 0.203
Class A Warrants ......................... 0.094 0.078
Class B Warrants ......................... 0.094 0.078
FOURTH QUARTER
Common Stock ............................. 0.906 0.172
Class A Warrants ......................... 0.266 0.078
Class B Warrants ......................... 0.141 0.078
1996 HIGH LOW
FIRST QUARTER
Common Stock ............................. 0.875 0.188
Class A Warrants ......................... 0.125 0.125
Class B Warrants ......................... 0.125 0.125
SECOND QUARTER
Common Stock ............................. 0.344 0.188
Class A Warrants ......................... 0.125 0.125
Class B Warrants ......................... 0.125 0.125
THIRD QUARTER
Common Stock ............................. 0.375 0.125
Class A Warrants ......................... (1) (1)
Class B Warrants ......................... (1) (1)
FOURTH QUARTER
Common Stock ............................. 0.219 0.031
Class A Warrants ......................... 0.125 0.125
Class B Warrants ......................... 0.125 0.125
(1) Issue did not trade
Preferred Stockholders are entitled to receive out of assets legally
available for payment a dividend at a rate of 12% per annum of the Preferred
Stock liquidation preference of $2.00 (or $.24 per annum) per share, payable
quarterly on March 1, June 1, September 1 and December 1, in cash or in shares
of Common Stock having an equivalent fair market value. Unpaid dividends on the
Company's Preferred Stock cumulate. The quarterly payments due on September 1
and December 1, 1992, and all payments due in 1993, in 1994, in 1995 and in
1996 and the payment due on March 1, 1997 have not yet been paid and are
accumulating. These dividends have not been declared because earned surplus is
not available to pay a cash dividend. Accordingly, dividends will accumulate
until such time as earned surplus is available to pay a cash dividend or until a
post effective amendment to the Company's registration statement covering a
certain number of common shares reserved for the payment of Preferred Stock
dividends is filed and declared effective, or if such number of common shares
are insufficient to pay cumulative dividends, then until additional common
shares are registered with the Securities and Exchange Commission (SEC). No
dividends shall be declared or paid on the Common Stock (other than a dividend
payable solely in shares of Common Stock) and no Common Stock shall be
purchased, redeemed or acquired by the Company unless full cumulative dividends
on the Preferred Stock have been paid or declared, or cash or shares of Common
Stock have been set apart which is sufficient to pay all dividends accrued on
the Preferred Stock for all past and then current dividend periods.
As stated above, pursuant to the terms of the Preferred Stock, the Company
has the option of making quarterly dividend payments in cash or shares of Common
Stock. The Company does not intend to make any Preferred Stock dividends in cash
in the foreseeable future. Prospectively, subject to the Company's Prospectus
being current, and a sufficient number of common shares being registered with
the SEC, the Company anticipates making quarterly dividend payments in shares of
Common Stock for the foreseeable future including the quarterly dividend
payments which were due on September 1 and December 1, 1992; and all payment due
in 1993; in 1994; in 1995, in 1996 and March 1, 1997, which have not yet been
paid. The total cash value of the arrearage of unpaid dividends is $269,000.
The Company has not declared cash dividends on its Common Stock and does
not intend to do so in the foreseeable future. If the Company generates
earnings, management's policy is to retain such earnings for further business
development. It plans to maintain this policy as long as necessary to provide
funds for the Company's operations. Any future dividend payments will depend
upon the full payment of Preferred Stock dividends, the Company's earnings,
financial requirements and other relevant factors, including approval of such
dividends by the Board of Directors.
As of March 17, 1997, there were 166 shareholders of record of the
Company's common stock, excluding shares held in street name.
As of December 31, 1996, the Company has approximately 116,800 Class A
Warrants outstanding. Each Class A Warrant entitles the holder to purchase, at
any time through May 1, 1997 (at which time they expire), one common share and
one Class B Warrant at a price equal to $2.50, subject to adjustment. The
Company has authorized the issuance of Class B Warrants to purchase an aggregate
of 300,000 shares of Common Stock, of which it has issued 183,200 Class B
Warrants upon the exercise of Class A Warrants. Each Class B Warrant entitles
the holder to purchase, at any time through May 31, 1998 (at which time they
expire), one common share at a price equal to $5.00, subject to adjustment.
Recent Sales of Unregistered Securities
In February 1996 the Company sold 40,000 shares of the Company's common
stock upon the exercise of options issued to a consultant under section 4(2) of
The Securities Act of 1993, as amended, for $10,000, or $0.25 per share.
In February 1996, the Company sold 500,000 shares of the Company's common
stock upon the exercise of options issued to non-U.S. persons in an offering
under Regulation S for $100,000, or $0.20 per share.
In March 1996, the Company sold 687,000 shares of the Company's common
stock upon the exercise of options issued to non-U.S. persons in an offering
under Regulation S for $107,344, or $0.16 per share.
In September 1996, the Company sold 400,000 shares of the Company's common
stock upon the exercise of options issued to non-U.S. persons in an offering
under Regulation S for $50,500 or $0.13 per share.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
Fiscal Year 1996 vs Fiscal Year 1995
The Company's revenues decreased to $2,503,000 in 1996 from $3,596,000 in
1995, representing a 30% decrease.
Revenue related to the Healthcare segment decreased to $2,389,000 in 1996,
from $3,586,000 in 1995, representing a 33% decrease. The decrease in revenue
during 1996 was predominately attributed to Containment, which had revenue of
$1,872,000 in 1996, compared to revenue of $2,992,000 in 1995. This decrease is
largely attributed to a decline in claims processed. This is a result of the
following three factors: (1) a reduction in indemnity claims due to the national
trend in the markets toward managed care; (2) a reduction in claims to be
repriced from Containmen's major client. This facilitated the client's decision
to rapidly process a backlog of claims rather than delay their payment, by
having Containment reprice such claims and avail themselves of greater savings;
and (3) a new joint venture arrangement which replaces Containment's previous
arrangement and results in lower gross revenue, but substantially greater gross
profit margins. PCI's revenue decreased to $516,000 in 1996, from $594,000 in
1995. This was the result of PCI's change in direction from a DRG audit company
to a Managed Care Revenue Enhancement company.
Revenue related to entertainment increased to $115,000 in 1996 from $10,000
in 1995. This increase is largely attributable to the Company's marketing of its
film licenses.
Operating costs decreased to $1,319,000 in 1996 from $2,339,000 in 1995, a
44% decrease. The Healthcare operating costs decreased to $1,259,000 in 1996
from $2,333,000 in 1995, a 46% decrease. As a percentage of revenue, operating
costs for the Healthcare segment decreased to 53% in 1996 from 65% in 1995.
Operating costs for Entertainment include film amortization and producers
royalties. Where the Company acquires licensing rights through guaranteed
payments, it records such guarantees on its balance sheet. The amortization of
such licensing rights is calculated under the film forecast method. Film
amortization represents amortization of the original acquisition price
capitalized on the balance sheet. Producers royalties reflect current amounts
due producer's for their share of current revenue for films with no minimum
guarantee obligation.
Selling, general and administrative expenses increased to $1,875,000 in
1996 from $1,433,000 in 1995, a 31% increase. The significant increases in
selling, general and administrative expenses were: Bad Debt Expense of $199,000;
Legal Expense of $131,000; Office Expense of $46,000; Commissions of $21,000;
Rent of $19,000; and Insurance Expense of $19,000. These increases were offset
by decreases in: Director's Compensation of $48,000; and Interest Expense of
$36,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a working capital deficiency at December 31, 1996 of
$360,000. The ratio of current assets to current liabilities was .74:1 at
December 31, 1996. Cash flow used by operating activities during 1996 was
$127,000.
The Company has no material commitments for capital expenditures or the
acquisition of films. If cash flow permits, however, the Company plans to
enhance its information system capabilities to more efficiently and effectively
provide its health healthcare services and to acquire additional films during
1997.
During 1996, the Company raised an aggregate of $268,000 through the
private sales of the Company's stock, pursuant to Section 4(2) and Regulation S
under the Securities Act of 1933, as amended (the "Act").
The Company believes that it will need additional financing to meet its
operating cash requirements for the current level of operations during the next
twelve months, and will require additional capital in order to complete its
planned expansion. The Company has developed a plan to reduce its liabilities
and improve cash flow through expanding operations and raising additional funds
either through issuance of debt or equity. The Company anticipates that it will
be able to raise the necessary funds it may require for the remainder of 1997
through public or private sales of securities. If the Company is unable to fund
its cash flow needs the Company may have to reduce or stop planned expansion, or
possibly scale back operations. The Company currently does not have any lines of
credit.
The Company has issued shares of its Common Stock on a number of occasions
without offering preemptive rights to existing Shareholders or procuring waivers
of their preemptive rights. No Shareholder has alleged any damage resulting to
him as a result of the sale of shares of Common Stock by the Company without
offering preemptive rights. The amount of damages incurred by Shareholders by
reason of the failure to offer preemptive right, if any, is not ascertainable
with any degree of accuracy. The Company believes that if any such claims were
asserted, the Company may have valid defenses.
During 1996 and 1995, the Company focused its resources on the growth of
the healthcare segment, which, during that time, was and currently is the most
efficient and cost-effective strategy for the Company to maximize revenue.
Although resources and capital remain limited, the Company has begun directing
efforts toward reestablishing a foothold in the film industry. The Company
expects to continue recognizing growth in revenues from the sale of film
licenses in 1997.
Healthcare
The transition of PCI from a DRG audit company offering limited services
and markets, to a full service Managed Care Revenue Enhancement company has
required a major investment of time, manpower and Company resources. This
engendered a period of the phasing out old services, while at the same time
committing increased resources to non-revenue producing, but nevertheless
critical development activities.
The transition to a Managed Care Revenue Enhancement company has also
required a retooling of the Company's infrastructure as well as the development
of new marketing strategies and materials. The Company incurred approximately
$130,000 for this retooling and development in 1996. New contracts which clearly
define PCI's new services have been developed. In addition, these contracts
create payment terms which expedite the collection process of PCI revenue from
its new books of business.
This also required new staffing including the recruitment of experienced
personnel from the insurance and managed care industry. Infrastructure
initiatives, especially those associated with information systems capabilities,
are continuing to be addressed through investments in new hardware, software,
staffing and technical support, and the Company incurred approximately $45,000
on these initiatives in 1996.
PCI will also need to invest in the upgrading of its communication
resources, since telemarketing and sales initiatives associated with national
companies require improvement in the number and quality of communications
equipment. These additional costs have also been factored into PCI's expansion
into the national managed care arena. Fax capabilities, electronic mailing and
other considerations to improve connectivity between PCI's clients, its Florida
office and its New York office have been actively reviewed and addressed.
With increasing sales efforts to seek out national market opportunities,
the Company intends to continue to invest resources in underwriting costs
associated with travel and lodging and sales contacts. PCI has also developed
revenue incentive arrangements with established individuals in the managed care
industry. Their contacts and recognition of our services' value, will serve as
another source of sales opportunities.
Entertainment
During the latter part of 1996, the Company was involved in negotiations
and discussions with a number of television buyers in the TV broadcast markets,
for thematic picture packages.
Although the Company's resources and capital remain limited, the Company
has begun directing efforts toward reestablishing a foothold in the film
industry. The Company expects to continue recognizing growth in revenues from
the sale of film licenses in 1997.
In 1997, the Company will consider searching for full time sales personnel
and utilizing outside sales representatives. Initially, the Company will begin
promoting its film library in the domestic television markets. Secondarily, it
will utilize representatives to attend film festivals and penetrate film
markets.
ITEM 7. FINANCIAL STATEMENTS
The response to this item follows Item 13, and is hereby incorporated
herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
The Company's Certificate of Incorporation provides for no less than three
(3) Directors. Each Director shall hold office until the next annual meeting of
shareholders and until his successor has been elected and qualified. At the
present time there are a total of three (3) Directors. The Board of Directors is
empowered to fill vacancies on the Board. The Company's Directors and Executive
Officers are listed below:
POSITIONS
NAME AGE W/COMPANY DIRECTOR SINCE
Vlado Paul Hreljanovic 49 Chairman of the Board, 1987
President, CEO and
acting CFO
Harold A. Horowitz 46 Director 1991
Peter W. Feldman 52 Director 1995
Yvonne T. Paultre 56 Secretary -
Richard O. Vazquez 44 President-PCI -
DIRECTORS
Vlado Paul Hreljanovic has been the President, Chief Executive Officer and
Chairman of the Board since 1987. Upon graduation from Fordham University, he
joined KPMG (formerly Peat Marwick Mitchell & Co.) as an accountant. Mr.
Hreljanovic is and has been the sole shareholder, officer and director of
Entertainment Financing, Inc. and EFI Funding, Ltd., which only business is as
lessee of the Company's offices in Great Neck, New York and Boca Raton, Florida,
and the sub-lessors of such premises to the Company. He has served as a member
of the Executive Committee of The New Leadership Division, North Shore
University Hospital NYU Medical School since 1988.
Harold A. Horowitz has been a Director of the Company since January 1991.
Since October 1, 1995, he has been a principal and Chairman of the Board of
In-Stock Business Forms and Paper Products, Ltd., and an independent consultant
to various public and private companies. Until October 1, 1995, Mr. Horowitz was
a Partner of the law firm of Finkelstein, Bruckman, Wohl, Most and Rothman,
which firm was securities counsel to the Company. Mr. Horowitz received his JD
degree in 1976 from Columbia University School of Law and masters degree in
economics from Columbia University in 1973. He received his BA degree from
Yeshiva University in 1971.
Peter W. Feldman was elected to the Board of Directors of the Company on
February 1, 1995 to fill a vacancy. Mr. Feldman has been the managing director
of a Kentucky Fried Chicken franchise since 1972. He was a Director and officer
of Labels For Less, a discount women's clothing chain, from 1975 through 1990.
Additionally, Mr. Feldman was Chief Financial Officer and administrator of
Morris Industrial Builders, a real estate developer, from 1985 through 1991. Mr.
Feldman has been the principal of International Food and Development, Inc., a
company that develops and operates restaurants throughout the Caribbean.
OTHER OFFICER
Yvonne T. Paultre has been Secretary since 1991. Ms. Paultre has
supervisory responsibilities for the Company's employees, customer relations and
office policies. She is also responsible for operations of the Company's
television syndication area.
KEY EMPLOYEE
Richard O. Vazquez was formerly Vice President for Integrated Networks at
MultiPlan, Inc. During his tenure he was responsible for developing and
marketing all integrated strategies for MultiPlan. This included network
contracting throughout the USA, Latin America and the Caribbean. Prior to that
he was the Associate Executive Director of Elmhurst Hospital and Medical Center,
responsible for all capital programs, including a $230 million major
modernization project. He has been a speaker and guest lecturer at numerous
managed care conferences and forums, as well as being published on healthcare
issues. He is a National Urban Fellow, having attained an MPA from Baruch
College and a BA from New York University.
Section 16(a) Beneficial Ownership Reporting Complaince
To the Company's knowledge, based solely on a review of copies of Forms 3,
4 and 5 furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1996, the
Company's officers, directors, and 10% shareholders complied with all applicable
Section 16(a) filing requirements.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
of the Chief Executive Officer of the Company for services provided to the
Company and its subsidiaries in 1996, 1995 and 1994. No other executive officer
received salary and bonus in excess of $100,000 in any such year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
--------------
Annual Compensation Securities
Name and Other Annual Underlying
Principal Position Year Salary Bonus Compensation Options (#)
------------------------------------ -------------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Vlado Paul Hreljanovic, Chairman of 1996 $167,774 $45,931 (2) $56,800 (1) -
the Board and Chief Executive Officer
1995 $163,363 - $45,500 (3) -
1994 $150,000 $26,250 (4) $45,200 (5) 250,000 (6)
</TABLE>
(1) Other compensation for Mr. Hreljanovic is 1996 was primarily comprised of,
among other things, automobile payments, including lease, maintenance, and
insurance of $29,300, and health and life insurance of $27,500.
(2) Paid in 670,000 shares of the Company's unregistered common stock valued at
$45,931, which were issued to Mr. Hreljanovic on July 1, 1996 (560,000 shares),
and December 24, 1996 (110,000 shares), in recognition of efforts exerted by Mr.
Hreljanovic on behalf of the Company and its subsidiaries.
(3) Other compensation for Mr. Hreljanovic in 1995 was primarily comprised of,
among other things, automobile payments including lease, maintenance, and
insurance of $25,000 and health and life insurance of $18,600.
(4) Paid in 525,000 shares of the Company's unregistered common stock valued at
$26,250, which were issued to Mr. Hreljanovic on February 8, 1995 (75,000
shares) and April 18, 1995 (450,000 shares), in recognition of efforts exerted
by Mr. Hreljanovic on behalf of the Company and its subsidiaries.
(5) Other compensation for Mr. Hreljanovic in 1994 was primarily comprised of,
among other things, automobile payments including lease, maintenance, and
insurance of $29,900 and health and life insurance of $14,500.
(6) Options granted to Mr. Hreljanovic pursuant to his employment agreement, at
110% of the market value on January 1, 1994, the effective date, which equaled
$0.407 per share. These options are for a term of five years.
<TABLE>
<CAPTION>
Aggregate Option Exercises in Last Fiscal Year and Year-End Options
--------------------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Name Acquired Year-End (#) Year-End ($)
and on Value Exercisable/ Exercisable/
Principal Position Exercise Realized Unexercisable Unexercisable
------------------------------------ -------------------- ------------- --------------------------------
<S> <C> <C> <C>
Vlado Paul Hreljanovic, Chairman of - - 250,000/0 $0/$0
the Board and Chief Executive Officer
</TABLE>
Compensation of Directors: In 1996, Mr. Horowitz and Mr. Feldman were
issued 50,000 and 100,000 Shares, respectively, of the Company's unregistered
common stock, valued at $4,500 and $4,900, respectively, in recognition of
efforts exerted on behalf of the Company as Board Members during 1996. Mr.
Horowitz received $4,477 as additional compensation.
Non-employee directors are entitled to five hundred ($500.00) dollars for
each meeting attended and to reimbursement for their out-of-pocket expenses in
attending such meetings.
Employment Agreements: Mr. Hreljanovic has an Employment Agreement with the
Company which expires on April 30, 2000, and that provides for his employment as
President and Chief Executive Officer at an annual salary adjusted annually for
the CPI Index and for the reimbursement of certain expenses and insurance. Based
on the foregoing formula, Mr. Hreljanovic's salary in 1996 was $167,774.
Additionally, Mr. Hreljanovic may receive shares of the Company's common stock
as consideration for raising funds for the Company.
Under the terms of this employment agreement, the Chief Executive Officer
of the Company is entitled to receive a cash bonus of a percentage of the
Company's pre-tax profits if the Company's pre-tax profit exceeds $100,000.
Additionally, if during the term, the employment agreement is terminated by
the Company after a changein control (as defined by the agreement), the officer
is entitled to a lump sum cash payment equal to approximately three times his
base salary.
Mr. Vazquez has an employment agreement with PCI which expires on June 30,
1998 and provides for his employment as President of PCI with annual
compensation of $200,000, payable in cash of $135,000 and in the Company's
Common Stock of $65,000. Additionally, Mr. Vazquez is entitled to an annual
bonus to be determined by the Board of Directors of the Company and options to
purchase 590,000 shares of the Company's Common Stock under the Company's 1996
Incentive Stock Option Plan. Such options will vest as Mr. Vazquez achieves
certain annual gross revenue thresholds, ranging from $1,000,000 to $5,000,000
during the term of his employment agreement.
STOCK OPTION PLANS
1989 Restricted Stock, Non-Qualified and Incentive Stock Option Plan
On December 7, 1989, a restricted stock, non-qualified and incentive stock
option plan was adopted. The Company has authorized 375,000 shares of common
stock to be reserved for issuance thereunder. Under the terms of this plan,
restricted stock awards are authorized for employees. Additionally,
non-qualified options may be granted to employees, directors, consultants and
others who render services to the Company. 269,600 shares of restricted stock
have been issued to employees, pursuant to the plans. In addition, 250,000
options have been issued to the Chief Executive Officer under the Plan. The
Company intends to increase the number of shares authorized under this Plan.
Under the terms of the restricted stock awards, restricted stock may be issued
to employees in consideration of (i) cash in an amount not less than the par
value thereof or such greater amount as may be determined by the Compensation
Committee of the Board of Directors and (ii) the continued employment of the
employees during the restricted period, which will in no event be less than one
year.
Under the Non-Qualified Option aspect of the Incentive Compensation Plan,
options may be granted to employee, directors, consultants and other individuals
who render services to the Company. The option price for each option granted
will be determined by the Compensation Committee. Each option will have a term
of not more than 10 years from the date of grant and may be exercisable in
installments as prescribed by the Compensation Committee.
The Company's Incentive Stock Option aspect of the Incentive Compensation
Plan provides for granting incentive options to employees to purchase shares of
common stock of the Company at option prices which are not less than the fair
market value of the Company's common stock at the date of grant, except that any
Incentive Option granted to an employee holding 10% or more of the outstanding
voting securities of the Company must be for an option price not less than 110%
of fair market value.
Incentive Options granted under the Incentive Compensation Plan will expire
not more than 10 years from the date of the grant (five years from the date of
the grant in the case of a 10% Stockholder), and the Incentive Option agreements
entered into with the holders will specify the extent to which Incentive Options
may be exercised during their respective terms. The aggregate fair market value
of the shares of common stock subject to Incentive Options that become first
exercisable by an optionee in a particular calendar year may not exceed
$100,000.
1996 Stock Option Plan
On February 12, 1997, the shareholders of the Company adopted the 1996
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. This Plan allows the Company to
grant incentive stock options, non-qualified stock options and stock
appreciation rights (collectively "options") to purchase up to an aggregate of
5,000,000 shares of common stock to employees, including officers, and to
non-employees involved in the continuing development and success of the Company.
The terms of the options are to be determined by the Board of Directors. Options
will not have expiration dates later than ten years from the date of grant (five
years from the date of the grant in the case of a 10% stockholder). The option
prices may not be less than the fair market value of the common shares on the
date of grant, except that any option granted to an employee holding 10% or more
of the outstanding voting securities of the Company must be for an option price
not less than 110% of fair market value. An option to purchase 590,000 shares of
common stock was granted to Mr. Vazquez under the plan. No other options have
been granted as of the date of this report.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 17, 1997: (i) the name and
address of each person who owns of record or who is known by the Board of
Directors to be beneficial owner of more than five percent (5%) of the Company's
outstanding common stock, (ii) each of the Company's Directors, and (iii) all of
the Company's Executive Officers and Directors as a group.
NAME AND BENEFICIAL PERCENT OF COMMON
ADDRESS OWNERSHIP STOCK OUTSTANDING
Vlado Paul Hreljanovic
111 Great Neck Road
Suite 604
Great Neck, NY 11021 3,664,542 (1) 18.4%
Harold A. Horowitz
111 Great Neck Road
Suite 604
Great Neck, NY 11201 150,000 0.8%
Peter W. Feldman
777 Yamato Road
Suite 135
Boca Raton, FL 33134 232,500 1.2%
Officers and Directors as a
group (4 Persons) 4,086,542 (1) 20.6%
(1) Includes options to purchase 250,000 shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company paid rent under two sub-leases during 1996 and 1995, to
companies affiliated with the Chief Executive Officer of the Company. The rents
paid and terms under the subleases are substantially the same as those under the
affiliate's lease agreements with the landlords. Rent expense for the years
ended December 31, 1996, and 1995 was $95,000 and $71,050, respectively. In
prior years, the Company made advances to or received advances from these
companies for working capital requirements. As a result, at December 31, 1996,
the balances due from(to) the affiliates were approximately ($2,000) and $5,000.
As of December 31, 1996 and 1995, the balance due from a company affiliated
with the Chief Executive Officer of the Company was $55,205. This balance is a
result of advances made, from time to time, to the affiliated company.
The Company acquired distribution rights to two films from a company
affiliated with the Chief Executive Officer of the Company for a ten year
license period, which expires on June 5, 1998. The Company is obligated to pay
such company producers fees at the contract rate. Such payments will be charged
against earnings. In 1996 and 1995, no payments were made to such company, and
no revenue was recognized from such films.
During 1996 and 1995, the Company's principal shareholder and officer made
loans directly to the Company, made payments to unaffiliated parties on behalf
of the Company, incurred travel expenses while conducting business for the
Company, and received repayment of loans and reimbursement of certain expenses
during the year. With regard to loans, interest accrues at 12% per annum. At
December 31, 1996 and 1995, the balance due from the Officer for all activities
above, was $23,000 and $5,400, respectively.
One of the Company's directors was a partner in a law firm engaged by the
Company as general counsel. As consideration for his efforts on behalf of the
Company in 1996, the Board member received 50,000 shares, valued at $4,500 and
$4,477 as additional compensation. As consideration for his efforts on behalf of
the Company in 1995, the Board member received 100,000 shares, valued at $5,000.
During 1996 and 1995, the law firm billed nothing in 1996 and $156,000, in fees
in 1995, the outstanding balance due the firm was approximately $100,000 and
$109,000, respectively.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Description
2.1 Agreement and Plan of Merger dated as of January 20, 1997 between the
Registrant and Juniper Group, Inc., a Nevada corporation (2)
3.1 Certificate of Incorporation of the Registrant, as amended (1)
3.2 Amendment to the Certificate of Incorporation of the Registrant, filed
March 7, 1997
3.3 Certificate of Incorporation of Juniper Group, Inc., a Nevada
corporation.(2)
3.4 By-Laws of the Registrant (1)
3.5 Amendment to the By-Laws of the Registrant approved by the shareholders
of the Registrant on February 12, 1997 (2)
3.6 By-Laws of Juniper Group, Inc., a Nevada corporation (2)
4.1 1996 Stock Option Plan (2)
10.1 Employment Agreement between the Registrant and V. Paul Hreljanovic,
as amended (1)
10.3 Agreement Between Juniper Healthcare Containment Systems, Inc. and the
Guardian Life Insurance Company, effective January 1, 1996 (1)
10.4 Consulting Agreement between Registrant and Anthony V. Milone, dated June
7, 1994, as amended August 31, 1994 and May 18, 1995 (1)
10.5 Employment Agreement between PCI, Inc. and Richard O. Vazquez,
dated June 7, 1996
10.6 Joint Venture Agreement between Juniper Healthcare Containment Systems,
Inc. and Health Containment Corporation dated March 1, 1996
21.1 Subsidiaries
23.1 Consent of Independent Certified Public Accountants
27.1 Financial Data Schedule
(1) Incorporated by reference to the Company's annual report on Form 10-KSB
for the fiscal year ended December 31, 1995
(2) Incorporated by reference to the Company's Proxy Statement for its
Annual Meeting held in February 1997
(b) Reports on Form 8-K.
NONE
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1995........ F-3
Consolidated Statements of Income
for the two years ended December 31, 1996........................... F-4
Consolidated Statements of Cash Flows
for the two years ended December 31, 1996........................... F-5
Consolidated Statements of Shareholders'
Equity for the two years ended December 31, 1996................. F-6
Notes to Consolidated Financial Statements............................F-7
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
JUNIPER GROUP, INC.
We have audited the accompanying consolidated balance sheets of Juniper
Group, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related
consolidated statements of income, cash flows and shareholders' equity for each
of the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as, evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Juniper
Group, Inc. and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the years then ended, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 8 to
the consolidated financial statements, the Company has suffered recurring losses
from operations which raises substantial doubt about its ability to continue as
a going concern. Management's plans regarding those matters are also described
in Note 8. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/GOLDSTEIN & GANZ, CPA's, P.C.
Great Neck, New York
March 26, 1997
F-2
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
December December
ASSETS 31, 1996 31, 1995
--------- -----------
Current Assets
Cash ........................................... $ 14,593 $ 129,558
Accounts receivable - trade .................... 795,091 804,681
Due from affiliates ............................ 59,359 86,087
Prepaid expenses and other current assets ...... 105,995 150,148
Due from officer ............................... 23,318 --
----------- -----------
Total current assets ....................... 998,356 1,170,474
Film licenses .................................. 2,963,729 2,980,678
Property and equipment net of accumulated
depreciation of $85,740 and $55,798
respectively ................................. 114,738 122,703
Other assets ................................... 3,519 2,396
----------- -----------
$ 4,080,342 $ 4,276,251
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses .......... $ 1,177,736 $ 878,612
Notes payable - current ........................ 105,587 179,163
Due to producers - current ..................... 67,556 93,289
Due to shareholders ............................ 7,000 7,000
----------- -----------
Total current liabilities ................. 1,357,879 1,158,064
Notes payable - long term ........................ 1,069 54,752
Due to producers - long term ..................... 196,741 266,039
Due to officers - long term ..................... -- 4,566
----------- -----------
Total liabilities ......................... 1,555,689 1,483,421
----------- -----------
Shareholders' Equity
12% Non-voting convertible redeemable
preferred stock: $.10 par value, 875,000
shares authorized, 235,900 shares issued
and outstanding at December 31, 1996, and
December 31, 1995: aggregate liquidation
preference, $471,800 at December 31, 1996
and December 31, 1995 ......................... 23,590 23,590
Common Stock - $.001 par value,300,000,000
shares authorized, 19,027,516 and 15,504,696
issued and outstanding at December 31, 1996
and December 31, 1995, respectively ........... 19,027 15,505
Capital contributions in excess of par:
Attributed to preferred stock ................. 210,303 210,303
Attributed to common stock .................... 7,160,265 6,741,804
Retained earnings (deficit) .................... (4,888,532) (4,198,372)
----------- -----------
Total shareholders' equity .................... 2,524,653 2,792,830
----------- -----------
$ 4,080,342 $ 4,276,251
=========== ===========
See Notes to Consolidated Financial Statements
F-3
<PAGE>
JUNIPER GROUP, INC
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
1996 1995
------------ ------------
Revenues:
Healthcare .......................... $ 2,388,538 $ 3,585,923
Entertainment ....................... 114,650 10,000
------------ ------------
2,503,188 3,595,923
------------ ------------
Operating Costs:
Healthcare .......................... 1,258,746 2,332,977
Entertainment ....................... 59,797 5,864
Selling, general and administrative expenses 1,874,805 1,432,656
------------ ------------
3,193,348 3,771,497
------------ ------------
Net income (loss) ...........................$ (690,160) $ (175,574)
============ ============
Weighted average number of shares outstanding 17,149,602 13,366,764
============ ============
Net income (loss) per common share ..........$ (0.04) $ (0.02)
============ ============
See Notes to Consolidated Financial Statements
F-4
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1996 1995
--------- ---------
Operating Activities
Net income (loss) ................................ $(690,160) $(175,574)
Adjustments to reconcile net cash provided
by operating activities:
Amortization of film licenses ................... 76,949 4,068
Depreciation expense ............................ 42,766 38,408
Payment of officer's compensation with equity ... 45,931 26,250
Payment of various liabilities with equity ...... 19,676 26,345
Payment of directors' compensation with equity .. 9,400 53,969
Payment of employees' compensation with equity .. 18,132 --
Changes in assets and liabilities:
Accounts receivable ............................. 9,590 (3,152)
Prepaid expenses and other current assets ....... 44,153 2,627
Other assets .................................... (1,123) (1,021)
Due to/from officers and shareholders ........... (27,884) (62,191)
Due from affiliates ............................. 26,728 (11,879)
Accounts payable and accrued expenses ........... 299,124 162,323
--------- ---------
Net cash provided from (used for)
operating activities .......................... (126,718) 60,173
--------- ---------
Investing activities:
Sale (purchase) of equipment ..................... (34,801) (5,780)
Purchase of film licenses ........................ (11,000) --
--------- ---------
Net cash provided from (used for)
investing activities ............................. (45,801) (5,780)
--------- ---------
Financing activities:
Reduction in borrowings ........................... (127,259) (246,426)
Proceeds from borrowings .......................... -- 100,000
Payments to and on behalf of producers ............ (83,031) (192,978)
Proceeds from exercise of options ................. 257,844 158,000
Proceeds from private placements .................. 10,000 126,400
--------- ---------
Net cash provided from (used for)
financing activities ............................ 57,554 (55,004)
--------- ---------
Net increase (decrease ) in cash .................. (114,965) (611)
Cash at beginning of period ....................... 129,558 130,169
--------- ---------
Cash at end of period ............................. $ 14,593 $ 129,558
========= =========
See Notes to Consolidated Financial Statements
F-5
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------
Capital Capital
Contributions Contributions Retained
Par Value in excess Par Value in excess Earnings
at $.10 of par at $.001 of par (Deficit) Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $ 23,590 $210,303 $11,924 $6,264,421 $(4,022,798) $2,487,440
Proceeds from private
placements - - 700 125,700 - 126,400
Shares issued to officer as compensation - - 525 25,725 - 26,250
Shares issued to producers for
acquisition of film licenses - - 500 89,500 - 90,000
Shares issued as payment for
various expenses - - 311 26,034 - 26,345
Shares issued to members of
the Board of Directors - - 602 53,367 - 53,969
Shares issued from exercise
of stock options 943 157,057 - 158,000
Net loss for the year ended
December 31, 1995 - - - - (175,574) (175,574)
_______ ________ _______ _________ __________ __________
Balance, December 31, 1995 23,590 210,303 15,505 6,741,804 (4,198,372) 2,792,830
Proceeds from private
placements - - 40 9,960 - 10,000
Shares issued to officer as
compensation - - 670 45,261 - 45,931
Shares issued to producers for
acquisition of film licenses - - 350 48,650 - 49,000
Shares issued as payment for
various expenses - - 240 19,436 - 19,676
Shares issued as compensation
to employees - - 85 18,047 - 18,132
Shares issued to members of
the Board of Directors - - 150 9,250 - 9,400
Shares issued from exercise of
stock options 1,587 256,257 - 257,844
Shares issued to convert debt
to equity 400 11,600 - 12,000
Net loss for the year ended
December 31, 1996 - - - - (690,160) (690,160)
_______ ________ _______ __________ ___________ __________
Balance, December 31, 1996 $23,590 $210,303 $19,027 $7,160,265 $(4,888,532) $2,524,653
======= ======== ======= ========== =========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of all
subsidiaries. Intercompany profits, transactions and balances have been
eliminated in consolidation.
Joint Venture
In 1996, one of the Company's subsidiaries entered into a joint venture in
which it owns a 50% interest. Accordingly, 50% of the assets, liabilities and
items of income and expense have been consolidated in the financial statements
of the subsidiary, which are included in the consolidated financial statements
of the Company. During 1996, the joint venture accounted for 23% of the
Company's revenues.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Financial Instruments
The estimated fair values of accounts receivable, accounts payable and
accrued expenses approximate their carrying values because of the short maturity
of these instruments. The Company's debt (i.e. Due to Producers, Creditor Notes
and other obligations) does not have a ready market. These debt instruments are
shown on a discounted basis (see Notes 4 & 5) using market rates applicable at
the effective date. If such debt were discounted based on current rates, the
fair value of this debt would not be materially different than their carrying
value.
Supplemental Cash Flow Information
Cash paid for interest totaled $15,796 and $23,025 in 1996 and 1995,
respectively.
During 1996, the following transactions occurred which did not require the
use of cash, but instead were paid by the issuance of the Company's common
stock: payments to producers amounting to $49,000; directors compensation of
$9,400; officers compensation of $45,931; payment of corporate debt amounting to
$12,000; certain corporate expenses amounting to $19,675; and employee bonuses
amounting to $18,132.
During 1995, the following transactions occurred which did not require the
use of cash but instead were paid by the issuance of the Company's common stock:
payments to producers amounting to $90,000; officers compensation of $26,250;
directors compensation of $53,969; and certain corporate expenses amounting to
$26,345.
Accounts Receivable
The Company estimates an allowance for doubtful accounts, which allowance
amounted to approximately $163,000 and $79,500 at December 31, 1996 and 1995,
respectively.
Film Licenses
Film costs are stated at the lower of estimated net realizable value
determined on an individual film basis, or cost, net of amortization. Film costs
represent the acquisition of film rights for cash and guaranteed minimum
payments. Producers retain a participation in the profits from the sale of film
rights, however, producer's share of profits is earned only after payment to the
producer exceeds the guaranteed minimum, where minimum guarantees exist. In
these instances, the Company records as participation expense an amount equal to
the producer's share of the profits. The Company incurs expenses in connection
with its film licenses, and in accordance with license agreements, charges these
expenses against the liability to producers. Accordingly, these expenses are
treated as payments under the film license agreements.
When the Company is obligated to make guaranteed minimum payments over
periods greater than one year, all long term payments are reflected at their
present value. Accordingly, in such case, original acquisition costs represent
the sum of the current amounts due and the present value of the long term
payments.
F-7
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 1 - Summary of Significant Accounting Policies (Continued)
The Company acquired distribution rights to eight films for which it has no
financial obligations unless and until the rights are sold to third parties. The
value of such distribution rights has not been reflected in the balance sheet.
The Company was able to acquire these film rights without guaranteed minimum
financial commitments as a result of its ability to place such films in various
markets.
Amortization of Film Licenses
Amortization of film licenses is calculated under the film forecast method.
Accordingly, licenses are amortized in the proportion that revenue recognized
for the period bears to the estimated future revenue to be received. Estimated
future revenue is reviewed annually and amortization rates are adjusted
accordingly.
Property and Equipment
Property and equipment including assets under capital leases are stated at
cost. Depreciation is computed generally on the straight-line method for
financial reporting purposes.
Recognition of Revenue from License Agreements
Revenue from television licensing agreements is recognized when the license
period begins and the licensee and the Company become contractually obligated
under a noncancellable agreement. All revenue recognition for license agreements
is in compliance with the Statement of Financial Accounting Standards No.53.
Operating Costs
Operating costs include costs directly associated with earning revenue.
PCI's operating costs include salary or fees and travel expenses of the
individuals performing the services, and sales commissions. Containment's
operating costs include the cost of sub-contractors and sales commissions.
Pictures operating costs include film amortization and producer's royalties.
Major Customers
During 1996 and 1995, the Company had revenues from The Guardian Life
Insurance Company ("Guardian") that represented 75% and 83% of total revenue,
respectively. The Company currently provides services to Guardian in New Jersey
and Connecticut. The loss of the contract with Guardian would have a material
adverse effect on the operations of the Company.
Reclassifications
Certain amounts in the 1995 financial statements were reclassified to
conform to the 1996 presentation.
NOTE 2 - Accounts Payable and Accrued Expenses
At December 31, 1996 and 1995, accounts payable and accrued expenses
consisted primarily of legal fees ($303,226 and $184,506, respectively),
commissions ($110,187 and $214,027, respectively), and the cost of
Sub-contractors ($339,366 and $295,195, respectively). Other accruals relate to
selling, general and administrative expenses incurred in the normal course of
business.
NOTE 3 - Film Licenses
At December 31, 1996 and 1995, film licenses amounted to $2,963,729 and
$2,980,678, respectively. This reflects the Company's original acquisition price
less accumulated amortization for the distribution rights to 77 and 73 film
licenses, respectively. Such amortization amounted to $295,369 and $218,420 at
December 31, 1996 and 1995, respectively.
F-8
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3 - Film Licenses (Continued)
The Company has directed predominantly all its time and efforts toward
building the healthcare segment of the business. Since early 1995, due to the
limited availability of capital, personnel and resources, the volume of film
sales activity was significantly diminished. Although the Company's resources
and capital remain limited, the Company has begun directing efforts toward
reestablishing a foothold in the film industry. The Company's growth in revenues
from the sale of film licenses in 1996 is expected to continue in 1997.
Initially, the Company began promoting its film library in the domestic
television markets. Secondarily, it will utilize representatives to attend film
festivals and penetrate foreign markets, subject to the Company capital
resources.
Based upon the Company's estimates of future revenue as of December 31,
1996, approximately 34% of the amortized film licenses will be amortized during
the three years ended December 31, 1999. Management expects that greater than
70% of the film licenses applicable to related television and films will be
amortized by 2001.
The Company's policy is to amortize film licenses under the film forecast
method. Depending upon the Company's success in marketing and achieving its
sales forecast, it is reasonably possible that the Company's estimate that it
will recover the carrying amount of its film library from future operations,
will change in the near term. As a result of this potential change, the carrying
amount of the film library may be reduced materially in the near term.
NOTE 4 - Notes Payable
In June 1993, the Company negotiated a settlement agreement with a Producer
who had been awarded approximately $275,000 in connection with an arbitration
proceeding against the Company. The agreement provided for payments in 1993 of
$115,000 and monthly payments thereafter of $5,000, inclusive of imputed
interest, through August 1996. Although the Company is in arrears $16,873, the
balance at December 31, 1996, the lender has not taken any steps to foreclose on
the security, or execute its judgment. A pay-out agreement was made to extend
the terms through early 1997.
The Company has loans outstanding for the acquisition of capital assets.
These loans bear interest at various rates from 8.5% to 9.0% and mature at
various dates through July 1998. The monthly payments for these loans are
$2,031. At December 31, 1996, the outstanding balances of these loans was
$58,783.
The composition of Notes Payable at December 31, 1996 and 1995, were as
follows:
1996 1995
---- ----
Notes payable ................................ $ 31,000 $100,000
Arbitration award ............................ 16,873 60,856
Loans for capital purchases .................. 58,783 73,059
-------- --------
106,656 233,915
Less current portion ......................... 105,587 179,163
-------- --------
Long term portion ............................ $ 1,069 $ 54,752
======== ========
NOTE 5 - Producer's Minimum Guarantees and Participations
Obligations incurred in connection with the acquisition of film licenses,
including minimum guarantees, producer's participations and settlements with
producers were $264,297 at December 31, 1996. During 1996, the Company reduced
its obligations to producers by $83,031.
F-9
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 5 - Producer's Minimum Guarantees and Participations (Continued)
The following schedule summarizes the maturities of the balances at
December 31, 1996:
1997 $ 67,556
1998 121,248
1999 20,252
2000 36,440
2001 18,801
--------
$264,297
========
NOTE 6 - Shareholders' Equity
Throughout 1996, the Company issued common stock through various private
placements and the exercise of options. The prices at which the shares were
negotiated and sold varied, depending upon the bid and ask prices of the
Company's common stock quoted on the NASDAQ stock exchange. In the aggregate,
the Company received $267,800 for 1,627,000 shares, and $284,400 for 1,643,000
shares of common stock in 1996 and 1995, respectively.
In connection with the Company's obligations to producers, the Company
issued 350,000 shares, valued at $49,000 and 500,000 shares valued at $90,000,
in 1996 and 1995, respectively. In connection with payables for operating
activities, the Company issued 240,000 shares, valued at $19,676, and 311,000
shares valued at $26,345 in 1996 and 1995, respectively. In addition, the
Company issued the Chief Executive Officer 670,000 shares, valued at $45,931 and
525,000 shares, valued at $26,250, for his bonus compensation in 1996 and 1995,
respectively. During the year, as compensation to its Board of Directors, the
Company issued 150,000 shares of common stock, valued at $9,400, and 602,000
shares valued at $53,969 in 1996 and 1995, respectively.
Also, in 1996 the Company issued 85,820 shares to employees as
compensation, valued at $18,132.
All shares issued in 1996 and 1995, were not registered and, as such, were
restricted shares under the Securities Act of 1933, as amended.
Net income (loss) per common share for 1996 and 1995 has been computed by
dividing net income (loss), after preferred stock dividend requirements of
$56,616 in 1996 and 1995, by the weighted average number of common shares
outstanding throughout the year of 17,149,602 and 13,366,764, respectively.
Options Granted
In July 1992, the Company issued 25,000 common stock purchase warrants to
an individual as consideration for the referral of certain business in the
medical area. The warrants are exercisable for $2.50 per share through July 26,
1997. At December 31, 1996, no warrants had been exercised.
In January 1994, in connection with an amendment to the Employment
Agreement for the President and Chief Executive Officer, the Company issued
options to purchase 250,000 shares of common stock at 110% of the market value
of the effective date which equals $.407 per share (see Note 9). The options are
for a term of five years. At December 31, 1996, none of the options had been
exercised.
On October 4, 1994, the Company entered into an agreement with a
consultant, for a term of fifteen months, to assist the Company in public
relations and marketing of certain products and services. In consideration for
these services, the consultant received options to purchase 43,000 shares and
100,005 shares of the Company's common stock at $.233 and $.31 per share,
respectively. In March 1995, the option to purchase 43,000 shares was exercised.
At December 31, 1996, the options for 100,005 shares had not been exercised.
F-10
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 6 - Shareholders' Equity (Continued)
On January 18, 1995, the Company entered into a one year agreement with a
consultant to assist the Company in the development of future business
opportunities, as well as to develop heightened public awareness of the
Company's business with broker dealers and investment bankers. The consultant
received 100,000 shares of common stock and an option to purchase 50,000 shares
of common stock. The options are exercisable at $.25 per share. At December 31,
1996, no options had been exercised.
In May 1996, the Company amended its agreement dated June 7, 1995 with a
healthcare professional retained to bring to the Company both health insurance
company group plan customers and professional healthcare providers (see Note 8).
The amendment provided that the healthcare professional expand the geographic
territories in which his services are performed in exchange for an option to
purchase 100,000 shares of the Company's common stock at $.105 per share. The
option was exercisable for one year. At December 31, 1996, the option had been
exercised.
On September 20, 1995, the Company entered into an agreement with a
consultant to provide certain public relations services. The agreement is for
one year. As consideration for these services, the Company granted to the
consultant, options to purchase 150,000 shares at $.25 per share. At December
31, 1996, all the options had been exercised.
On October 2, 1995, the Company retained the services of a consultant for
one year to assist in the marketing of the Company's healthcare business in the
western United States. As consideration, the Company granted an option to
purchase 650,000 shares of the Company's common stock at an exercise price of
$.15 per share, exercisable for two years. In November 1996, all the options
were exercised.
On November 9, 1995, the Company entered into an agreement with two
consultants to provide introductions to potential distributors and end users of
the Company's pen-based computer system for healthcare applications in certain
foreign markets. The agreement is for one year and entitles each consultant to
options to purchase 500,000 shares of common stock at a price of $.20 per share.
The options are exercisable for two years. As of December 31, 1996, both
consultants had exercised all their options.
Warrants and Convertible Preferred Stock
Each of the Company's Class A Warrants, entitles the holder to purchase, at
a price of $2.50, one share of common stock and one Class B Warrant. Each Class
B Warrant entitles the holder to purchase, at any time through May 1, 1997, one
share of Common Stock at a price of $5.00 per share. The Preferred Stock
entitles the holder to dividends equivalent to a rate of 12% of the Preferred
Stock liquidation preference of $2.00 per annum (or $.24 per annum) per share
payable quarterly on March 1, June 1, September 1, December 1 in cash or common
stock of the Company having an equivalent fair market value, thereafter.
Further, each share of the Preferred Stock is convertible at the holder's option
into two shares of Common Stock. Holders of warrants are protected against
dilution upon the occurrence of certain events. Holders of warrants do not have
voting power and are not entitled to any dividends. The Company, upon not less
than 30 days prior written notice and providing the average closing price for
the common stock for 10 consecutive trading days exceeds $2.50 or higher, may
redeem all of the warrants for $.05 per warrant. At December 31, 1996, 116,800
Class A Warrants and 300,000 Class B Warrants were outstanding.
In 1991, the Company also sold to the underwriters of the Company's initial
public offering, for $100,000, warrants exercisable through May 1, 1996, to
purchase up to 30,000 units at $7.20 each. The underwriters' units consist of
two shares of common stock, one share of Convertible Preferred Stock and one
Class A Warrant, each warrant entitling the holder to purchase one share of
common stock for $2.50 and one Class B Warrant. On May 1, 1996, all underwriters
warrants remained unexercised and terminated. At December 31, 1996, 235,900
shares of Convertible Preferred Stock were outstanding. Pending effectiveness of
a post-effective amendment to the Company's registration statement, the
outstanding Preferred Stock, Class A Warrants and Class B Warrants cannot be
converted or exercised.
F-11
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 6 - Shareholders' Equity (Continued)
On May 31, 1995, the Company entered into an investment banking agreement
for a five year period. In consideration, the Company issued warrants to
purchase 567,503 shares of the Company's common stock at an exercise price of
$.135 per share. The warrants are exercisable for five years, commencing at
various dates from May 31, 1996 to May 31, 2001. At December 31, 1996, all
warrants were outstanding. In connection with the investment banking agreement
and the services provided to complete that agreement, the Company issued to a
consultant, warrants to purchase 56,750 shares of the Company's common stock at
an exercise price of $.135 per share. These warrants are exercisable for five
years, commencing at various dates from May 31, 1996 to May 31, 2001. At
December 31, 1996, all warrants were outstanding.
NOTE 7 - Related Parties
The Company paid rent under two sub-leases during 1996 and 1995, to
companies affiliated with the Chief Executive Officer. The rents paid and terms
under the subleases are substantially the same as those under the affiliate's
lease agreements with the landlords. Rent expense for the years ended December
31, 1996, and 1995 was approximately $95,000 and $71,000, respectively (see Note
8). In prior years, the Company made advances to or received advances from the
affiliates for working capital requirements. As a result, at December 31, 1996,
the balances due from one affiliate was approximately $5,000 and the balance due
to the second affiliate was approximately $2,000.
The Company acquired distribution rights to two films from a company
affiliated with the Chief Executive Officer for a ten year license period, which
expires on June 5, 1998. The Company is obligated to pay the affiliated
producers fees at the contract rate. Such payments will be charged against
earnings. In 1996 and 1995, no payments were made to the affiliate, and no
revenue was recognized.
The Company owns distribution rights to two films which were acquired
through a company affiliated with the Chief Executive Officer, that is the
exclusive agent for the producers. This exclusive agent is 100% owned by the
principal shareholder of the Company, but receives no compensation for the sale
of the licensing rights. Additionally, after recoupment of original acquisition
costs, the principal shareholder has a 5% interest as a producer in the revenue
received by the unaffiliated entities. The Company has received no revenue
relating to these films during 1996 and 1995.
In prior years, the Company received advances from and made advances to an
affiliated company, owned 50% by the principal shareholder of the Company. At
December 31, 1996 and 1995, the outstanding balance, due upon demand, was
approximately $55,000. No advances were made to or received from the affiliate
in 1996.
Throughout 1996, the Company's principal shareholder and officer made loans
to, and payments on behalf of the Company and received payments from the Company
from time to time. The largest balance due from the officer was $28,669. The
outstanding balance due from the officer at December 31, 1996, was $23,318.
One of the Company's directors was a partner in a law firm engaged by the
Company as general counsel. As consideration for his efforts on behalf of the
Company, the Board Member received 50,000 Shares, valued at $4,500. During 1995,
the law firm billed approximately $156,000 in fees, and at December 31, 1996,
the outstanding balance due the firm was approximately $100,000.
The Company's President and Chief Executive Officer (see Note 6), was
issued 670,000 shares of common stock, valued at $45,931. Further, the Company
issued 150,000 shares valued at $9,400 to directors.
NOTE 8 - Commitments and Contingencies
Leases
The Company leased its office facilities under two subleases. One lease
expires in November 1997 and the other in May 2002 (see Note 7). Future minimum
annual base rental commitments as of December 31, 1996 are as follows:
F-12
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Commitments and Contingencies (Continued)
1997 $ 69,520
1998 59,936
1999 61,962
2000 63,988
2001 66,014
Thereafter 27,013
--------
$348,433
========
License Agreements
In some instances, film licensors have retained an interest in the future
sale of distribution rights owned by the Company above the guaranteed minimum
payments. Accordingly, the Company may become obligated for additional license
fees as sales occur in the future.
Employment Agreement
In April 1996, the Company entered into an amendment to the employment
agreement with the President and Chief Executive Officer of the Company. Under
the terms of the agreement, as amended, the officer will remain employed through
April 2000, at an annual salary of $150,000 adjusted annually for the CPI index
beginning in 1995. The officer will also receive reimbursement of certain
expenses and insurance (see Note 7) and certain options to and shares of the
Company's common stock (see Note 6). Additionally, the officer may, in the
future, receive shares of the Company's common stock as consideration for
raising funds for the Company. Further, should the officer become disabled, the
Company is obligated to provide disability income for four years.
Under the terms of this employment agreement, the Chief Executive Officer
of the Company is entitled to receive a cash bonus when the Company's pre-tax
profit exceeds $100,000.
Additionally, if during the term, the employment agreement is terminated by
the Company after a change in control (as defined by the agreement), the officer
is entitled to a lump sum cash payment equal to approximately three times his
base salary.
Mr. Vazquez has an employment agreement with PCI, Inc. a wholly-owned
subsidiary of the Company, which expires on June 30, 1998, and provides for his
employment as President of the subsidiary at an annual salary of $200,000,
including $135,000 in cash and $65,000 in the Company's Common Stock.
Additionally, Mr. Vazquez is entitled to an annual bonus to be determined by the
Board of Directors of the Company and options to purchase 590,000 shares of the
Company's Common Stock under the Company's 1996 Incentive Stock Option Plan.
Such options will vest as Mr. Vazquez achieves certain annual gross revenue
thresholds, ranging from $1,000,000 to $5,000,000 during the term of his
employment agreement.
Consulting Agreements
The Company has, over the past several years, worked closely with a
healthcare professional who has participated with the Company for the purpose of
bringing to the Company both health insurance company group plan customers, as
well as, professional healthcare providers and networks. The healthcare
professional has assisted in arranging the relationships between the Company,
the Guardian, and the network of providers currently under contract with
Containment.
F-13
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 8 - Commitments and Contingencies (Continued)
The agreement with the healthcare professional for his services continues
until December 31, 1997 and provides that the Company will pay the healthcare
professional commissions at varying rates and grant options to purchase common
stock if certain contracts are renewed or certain revenue levels are
achieved.
Based upon the contracts existing as of December 31, 1996 and through the
remaining term of the contracts, should certain financial goals be achieved, the
healthcare professional has a total potential of receiving 1,550,000 common
share purchase options at exercise prices varying from $.19 to $.50 per share.
At December 31, 1996, none of the options were granted.
Preemptive Rights
Shareholders of a New York corporation have preemptive rights unless
otherwise provided in the certificate of incorporation or bylaws. Until February
12, 1997, the Company's Certificate of Incorporation did not limit or eliminate
the Shareholders' preemptive rights. Accordingly, if the Company were to offer
to sell for cash additional shares of common stock or shares convertible into or
exchangeable for common stock, each Shareholder would have the right to purchase
that number of shares as would enable him to maintain his proportionate interest
in the Company's common stock.
The Company has recently determined that, notwithstanding the Shareholders'
preemptive rights, the Company has issued shares on a number of occasions
without offering preemptive rights to existing Shareholders or procuring waivers
of their preemptive rights. No Shareholder has alleged any damage resulting to
him as a result of the sale of shares of common stock by the Company without
offering preemptive rights. The amount of damages incurred by Shareholders by
reason of failure to offer preemptive rights, if any, is not ascertainable with
any degree of accuracy. Management believes that if any such claims were
asserted, the Company may have valid defenses.
Litigation
In December 1996, an action was filed in the Superior Court of New Jersey,
by MediChoice Network, Inc. against Juniper Healthcare Containment Systems,
Inc., a subsidiary of the Company for damages in the amount of approximately
$197,000. The claim alleges failure to pay for services provided under a
contract. A default judgment in the amount of $197,000 was entered against the
Company for failure to answer the original complaint in a timely fashion. An
application is currently pending to vacate the default. The Company believes it
is entitled to damages against the Plaintiff and that it has meritorious
defenses to the claim, but, it intends to seek a settlement of the matter.
Management believes the outcome of this matter will have no material effect upon
the financial condition of the Company.
In February 1997, a law firm commenced an action against two subsidiaries
of the Company. The actions seek damages for legal services aggregating
approximately $13,600. Concurrently, the Company became aware of an unasserted
claim by two shareholders of the Company, one of whom is the spouse of one of
the claimant-attorneys, for damages for alleged stock manipulation. Management
believes that the allegations are without merit and will vigorously defend any
such claim. Currently, the Company is engaged in settlement negotiations to
resolve all three matters and avoid unnecessary litigation expenses. Management
believes that the outcome of these matters will not have a material effect upon
the financial condition of the Company.
In May 1995 an individual commenced an action against the Company seeking
damages in the amount of $100,000 for each of seven alleged acts of willful
infringement, or in the alternative $20,000 for each of the seven alleged acts
for unintentional infringement, plus a return of the film, together with
attorney's fees. The individual alleged that he licensed the picture to Double
Helix Films, Inc. ("Helix") and that, pursuant to that license agreement, Helix
failed to make payment to the individual. It is further alleged that by reason
of Helix's breach of the agreement, all rights granted to Helix had reverted to
the individual. The individual's claim against the Company is based upon the
Company's distribution of the picture (pursuant to the sub-license from Helix)
after the purported termination of the license to Helix. The Company is
vigorously defending the action and asserts that under the individual's
agreement with Helix, the reversion did not affect the Company's rights to the
picture. Management believes that the outcome of this matter will not have a
material effect upon the financial condition of the Company.
On May 22, 1996, two parties commenced an action against the Company, its
CEO and an affiliate of the CEO seeking damages in the amount of $464,470, plus
interest alleging that the Company has successor liability for a judgment
entered in March of 1993 by the Plaintiffs against Juniper Releasing, Inc.
("Releasing"), a company affiliated with the Company's CEO. It is alleged that
the Company was formed as a successor to Releasing and that the Company and
others transferred assets out of Releasing to avoid the payment of Releasing's
creditors. The Company is vigorously defending the allegations and has asserted
that the claims are without merit and are time barred. Management believes the
outcome of this matter will not have a material effect upon the financial
condition of the Company.
Going Concern
As shown in the accompanying financial statements, the Company's:
* Revenue decreased to $2,503,000 in 1996, from $3,596,000 in 1995;
* Net loss increased to $(690,160) in 1996, from $(175,574) in 1995;
* Working capital decreased from a positive $12,000 at December 31, 1995, to a
negative $360,000 at December 31, 1996.
The fact that the Company continued to sustain losses in 1996; has
negative working capital at December 31, 1996; and still requires additional
sources of outside cash to sustain operations, continues to create uncertainty
about the Company's ability to continue as a going concern.
Management of the Company has developed a plan to reduce its liabilities
and improve cash flow through expanding operations and raising additional funds
either through the issuance of debt or equity. The ability of the Company to
continue as a going concern is dependent upon the Company's ability to raise
additional funds either through the issuance of debt or the sale of additional
common stock and the success of Management's plan to expand operations. The
Company anticipates that it will be able to raise the necessary funds it may
require for the remainder of 1997 through public or private sales of securities.
The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
F-14
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 9 - Incentive Compensation Plans
1989 Restricted Stock, Non-Qualified and Incentive Stock Option Plan
On December 7, 1989, a restricted stock, non-qualified and incentive stock
option plan was adopted. The Company has authorized 375,000 shares of common
stock to be reserved for issuance thereunder. Under the terms of this plan,
restricted stock awards are authorized for employees. Additionally,
non-qualified options may be granted to employees, directors, consultants and
others who render services to the Company. Under the terms of the restricted
stock awards, restricted stock may be issued to employees in consideration of
(i) cash in an amount not less than the par value thereof or such greater amount
as may be determined by the Compensation Committee of the Board of Directors and
(ii) the continued employment of the employees during the restricted period. The
Compensation Committee sets the terms of the restricted period, which will in no
event be less than one year. Pursuant to the plan, during 1995, 250,000 options
were issued to the President (see Note 6).
During 1996, the Board of Directors authorized the issuance of 85,820
shares of restricted common stock, under the incentive compensation plans to
employees. These shares were valued at $18,132 (see Note 5).
Under the Non-Qualified Option aspect of the Incentive Compensation Plan,
options may be granted to employees, directors, consultants and other
individuals who render services to the Company. The option price for each option
granted will be determined by the Compensation Committee. Each option will have
a term of not more than 10 years from the date of grant and may be exercisable
in installments as prescribed by the Compensation Committee.
The Company's Incentive Stock Option aspect of the Incentive Compensation
Plan provides for the grant to employees of incentive options to purchase shares
of common stock of the Company at option prices which are not less than the fair
market value of the Company's common stock at the date of grant, except that any
Incentive Option granted to an employee holding 10% or more of the outstanding
voting securities of the Company must be for an option price not less than 110%
of fair market value.
Incentive Options granted under the Incentive Compensation Plan will expire
not more than 10 years from the date of the grant (five years from the date of
the grant in the case of a 10% Stockholder), and the Incentive Option agreements
entered into with the holders will specify the extent to which the Incentive
Options may be exercised during their respective terms. The aggregate fair
market value of the shares of common stock subject to Incentive Options that
become first exercisable by an optionee in a particular calendar year may not
exceed $100,000.
1996 Stock Option Plan
On February 12 , 1997, the shareholders of the Company adopted the 1996
Stock Option Plan. The Plan supplements the Company's 1989 Restricted Stock,
Non-Qualified and Incentive Stock Option Plan. This Plan allows the Company to
grant incentive stock options, non-qualified stock options and stock
appreciation rights (collectively "options"), to employees, including officers,
and to non-employees involved in the continuing development and success of the
Company. The terms of the options are to be determined by the Board of
Directors. Options will not have expiration dates later than ten years from the
date of grant (five years from the date of the grant in the case of a 10%
Stockholder). The Option Prices may not be less than the fair market value of
the common shares on the date of grant, except that any option granted to an
employee holding 10% or more of the outstanding voting securities of the Company
must be for an option price not less than 110% of fair market value.
Statement of Financial Accounting Standards No. 123
At December 31, 1996, the Company had one stock-based compensation plan,
which is described above. The Company applies APB Opinion 25, Accounting for
Stock Issued to Employees, and related Interpretations in accounting for its
plan. Accordingly, no compensation cost has been recognized for its fixed stock
option plan or for options issued to non-employees for services performed. Had
compensation costs for these options been determined, based on the fair market
value at the grant dates consistent with the method of FASB Statement 123,
Accounting for Stock-Based Compensation, the Company's net income and earnings
per share would have been reduced to the pro forma amounts indicated below:
F-15
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 9 - Incentive Compensation Plans (Continued)
1996 1995
---- ----
Net income (loss) ................ As reported $ (690,160) $(175,574)
Pro forma $ (988,824) $(507,649)
Earnings (loss) per share As reported $ (0.04) $ (0.02)
Pro forma $ (0.06) $ (0.04)
NOTE 10 - Income Taxes
For the years ended December 31, 1996 and 1995, no provision was made for
Federal and state income taxes due to the losses during those periods. As a
result of losses incurred through December 31, 1996, the Company has net
operating loss carryforwards of approximately 3,620,000. These carryforwards
expire $510,000 in 2006, $1,451,000 in 2007, $165,000 in 2008, $716,000 in 2009,
$231,000 in 2010, and $547,000 in 2011.
Deferred Tax Assets
In accordance with Financial Accounting Standards Board Statement No. 109
"Accounting for Income Taxes", the Company recognized deferred tax assets of
$1,484,000, at December 31, 1996. Since the Company is dependent on future
taxable income to realize deferred tax assets, the Company has recorded a
related valuation allowance of $1,484,000. Deferred tax assets as December 31,
1996 primarily reflect the tax effect of net operating loss carry forwards.
NOTE 11 - Business Segment Information
The operations of the Company are divided into two business segments:
healthcare - consisting of managed care revenue enhancement and healthcare cost
containment services; and entertainment - consisting of the acquisition and
distribution of rights to films. The Company markets its managed care revenue
enhancement services throughout the United States; its healthcare cost
containment services are predominantly located in the Northeast; and films are
available to be marketed throughout the world.
Financial information by business segment is as follows:
1996 1995
---- ----
Revenue:
Healthcare ........ $ 2,388,538 $ 3,585,923
Entertainment ..... 114,650 10,000
----------- -----------
$ 2,503,188 $ 3,595,923
=========== ===========
Operating Income (Loss):
Healthcare ........ $ 321,401 $ 610,981
Entertainment (1) . (186,974) (85,650)
Corporate ......... (824,587) (700,905)
----------- -----------
$ (690,160) $ (175,574)
=========== ===========
(1) Includes a loss on Settlement with Producer of $150,000 in 1995.
F-16
<PAGE>
JUNIPER GROUP, INC.
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 11 - Business Segment Information (Continued)
1996 1995
---- ----
Identifiable Assets:
Healthcare ......... $ 690,361 $ 626,145
Entertainment ...... 3,262,841 3,283,005
Corporate .......... 127,140 367,101
---------- ----------
$4,080,342 $4,276,251
========== ==========
Depreciation:
Healthcare ......... $ 11,850 $ 8,400
Corporate . 30,916 30,008
---------- ----------
$ 42,766 $ 38,408
========== ==========
Capital Expenditures:
Healthcare ......... $ 3,182 $ --
Corporate .......... 31,619 101,321
---------- ----------
$ 34,801 $ 101,321
========== ==========
NOTE 12 - Quarterly Results of Operations (Unaudited)
Below is a summary of the quarterly results of operations for each quarter
of 1996 and 1995:
<TABLE>
<CAPTION>
1996 First Second Third Fourth
<S> <C> <C> <C> <C>
Revenue .......................... $ 667,522 $ 486,202 $ 597,452 $ 752,011
Gross profit ..................... 255,754 190,197 285,266 453,428
------- ------- ------- -------
Net income (loss) ................ $ (69,705) $ (140,519) $ (162,415) $ (317,521)
======= ======== ======== ========
Net income (loss) per common share $ (.01) $ (.01) $ (.02) $ (.04)
==== ==== ==== ====
1995
Revenue .......................... $ 847,282 $ 1,155,035 $ 903,810 $ 689,796
Gross profit ..................... 263,691 406,717 360,050 226,624
------- ------- ------- -------
Net income (loss) ................ $ (23,032) $ 71,852 $ (36,042) $ (188,352)
======= ====== ======= ========
Net income (loss)
per common share .............. $ (0.00) $ (0.00) $ (0.00) $ (0.01)
===== ===== ===== =====
</TABLE>
NOTE 13 - Subsequent Events
Annual Meeting of Shareholders
On February 12, 1997, the Company held its annual meeting of shareholders.
The following proposals were among those approved by the shareholders of the
Company:
* To amend the Certificate of Incorporation of the Company to change the name of
the Company from Juniper Features, Ltd. to Juniper Group, Inc.
* To amend the Certificate of Incorporation of the Company to eliminate the
preemptive rights of holders of the Company's common stock (see Note 8).
* To amend the Certificate of Incorporation of the Company to increase the
authorized common stock of the Company from 20,000,000 shares to 300,000,000
shares.
* To approve the Company's 1996 Stock Option Plan (see Note 9).
F-17
<PAGE>
SIGNATURES
In accordance with section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed by the undersigned,
thereunto duly authorized.
Date: March 26, 1997 JUNIPER GROUP, INC.
By: /s/ Vlado Paul Hreljanovic
Vlado Paul Hreljanovic
President and
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Signatures Titles Date
By:/s/ Vlado Paul Hreljanovic Chairman of the Board,
Vlado Paul Hreljanovic President, Chief Executive
Officer (Principal Executive
and Financial Officer) March 26, 1997
By: /s/ Harold A. Horowitz Director March 26, 1997
Harold A. Horowitz
By:/s/Peter W. Feldman Director March 26, 1997
Peter W. Feldman
<PAGE>
EXHIBIT INDEX
Exhibit Description
3.2 Amendment to the Certificate of Incorporation of the Registrant, filed
March 7, 1997.
10.5 Joint Venture Agreement between Juniper Healthcare Containment
Systems, Inc. and Health Containment Corporation dated March 1, 1996
10.6 Employment Agreement between PCI, Inc. and Richard O. Vazquez, dated
June 7, 1996
21.1 Susidiaries
23.1 Consent of Independent Certified Public Accountants
27.1 Financial Data Schedule
EXHIBIT 3.2
Certificate of Amendment
of
Certificate of Incorporation
of
Juniper Features Ltd.
Under Section 805 of the Business Corporation Law
Pursuant to the provisions of Section 805 of the Business Corporation Law,
the undersigned, being respectively the President and the Secretary of Juniper
Features Ltd., hereby certify as follows:
FIRST: The name of the corporation isJuniper Features Ltd. (the
"Corporation")
SECOND: The certificate of incorporation of the Corporation was filed by
the Department of State on July 7, 1987.
THIRD: The amendments to the certificate of incorporation of the
Corporation effected by this certificate of amendment are as follows:
a.to change the name of the Corporation from Juniper Features Ltd. to
Juniper Group, Inc.;
b.to increase the authorized Shares of the Corporation from 20,875,000
Shares authorized, 20,000,000 of which are Common Stock, $.001 par value, and
875,000 of which are Preferred Stock, $.10 par value, to 300,875,000 Shares,
300,000,000 of which are Common Stock, $.001 par value, and 875,000 of which are
Preferred Stock, $.10 par value;
c.to eliminate preemptive rights of holders of Corporation's capital stock;
and d. to require the vote of the holders of 80% of the issued and outstanding
shares of Common Stock to approve certain business combinations involving the
Corporation and a related person.
FOURTH: To accomplish the foregoing amendments, the following Articles of
the certificate of incorporation of the Corporation are hereby amended to read
as follows:
a. Article First of the certificate of incorporation of the Corporation
(relating to the name of the Corporation) is hereby amended to read as follows:
First: The name of the Corporation is Juniper Group, Inc.
b. Article Fourth of the certificate of incorporation of the Corporation
(relating to the authorized capital stock of the Corporation) is hereby amended
to read as follows:
Fourth: The aggregate number of shares that the Corporation shall have
authority to issue is (i) three hundred million (300,000,000) shares of common
stock, each of which shall have a par value of $.001, all of which are of the
same class, and the aggregate par value of which shall be $300,000.00, and (ii)
eight hundred seventy-five thousand (875,000) shares of preferred Stock, each of
which shall have a par value of $.10 per share and the aggregate par value of
which shall be $87,500.00.
To accomplish the foregoing amendments, the following Articles of the
certificate of incorporation of the Corporation are hereby added to read as
follows:
c. A new Article Seventh (relating to the elimination of preemptive rights
of shareholders) is hereby added to the certificate of incorporation to read as
follows:
Seventh: No holder of any of the shares of any class of the Corporation
shall be entitled as of right to subscribe for, purchase, or otherwise acquire
any shares of any class of the Corporation which the Corporation proposes to
issue or any rights or options which the Corporation proposes to grant for the
purchase of shares of any class of the Corporation or for the purchase of any
shares, bonds, securities, or obligations of the Corporation which are
convertible into or exchangeable for, or which carry any rights, to subscribe
for, purchase, or otherwise acquire shares of any class of the Corporation; and
any and all of such shares, bonds, securities, or obligations of the
Corporation, whether now or hereafter authorized or created, may be issued, or
may be reissued or transferred if the same have been reacquired and have
treasury status, and any and all of such rights and options may be granted by
the Board of Directors to such persons, firms, corporations, and associations,
and for such lawful consideration, and on such terms, as the Board of Directors
in its discretion may determine, without first offering the same, or any
thereof, to any said holder. Without limiting the generality of the foregoing
stated denial of any and all preemptive rights, no holder of shares of any class
of the Corporation shall have any preemptive rights in respect of the matters,
proceedings, or transactions specified in subparagraphs (1) to (6), inclusive,
of paragraph (e) of Section 622 of the Business Corporation Law.
d. A new Article Eighth ( relating to the requirement of a vote of the
holders of 80% of the issued and outstanding shares of Common Stock to approve
certain business combinations involving the Corporation and a related person) is
hereby added to the certificate of incorporation to read as follows:
Eighth: The affirmative vote of the holders of not less than 80% of the
outstanding shares of "Voting Stock" (as hereinafter defined) of the Corporation
shall be required for the approval or authorization of any "Business
Combination" (as hereinafter defined); provided, however, that the 80% voting
requirement referred to above shall not be applicable if:
(1)The Board of Directors of the Corporation by a vote of not less than a
majority of the directors then holding office: (a) expressly approved in
advance the acquisition of outstanding shares of Voting Stock of the
Corporation that caused the Related Person (as hereinafter defined) to
become a Related Person; or (b) approved the Business Combination prior to
the Related Person involved in the Business Combination having become a
Related Person; or
(2)The Business Combination is solely between the Corporation and another
corporation, 100% of the Voting Stock of which is owned, directly or
indirectly, by the Corporation.
For the purposes of this Paragraph:
(1)The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a subsidiary with or into a Related
Person; (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, of all or any "Substantial Part" (as hereinafter defined) of
the assets either of the Corporation (including, without limitation, any
voting securities of a subsidiary) or of a subsidiary, to or with a Related
Person; (c) the issuance or transfer by the Corporation or a subsidiary
(other than by way of a pro rata distribution to all shareholders) of any
securities of the Corporation or a subsidiary of the Corporation to a
Related Person; (d) any reclassification of securities (including any
reverse stock split) or recapitalization by the Corporation, the effect of
which would be to increase the voting power (whether or not currently
exercisable) of the Related Person; (e) the adoption of any plan or
proposal for the liquidation or dissolution of the Corporation proposed by
or on behalf of a Related Person; (f) any series or combination of
transactions having, directly or indirectly, the same effect as any of the
foregoing; and (g) any agreement, contract or other arrangement providing,
directly or indirectly, for any of the foregoing.
(2)The term "Related Person" shall mean and include any individual,
corporation, partnership or other "person" or "group" of persons or
entities (as such terms are used on February 12, 1997 in Rule 13d of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
"Affiliates" and "Associates" (as such terms are defined on February 12,
1997 in Rule 12b-2 of the Exchange Act) of any such individual,
corporation, partnership or other person or group of persons, which
individually or together is the "Beneficial Owner" (as defined on February
12, 1997 in Rule 13d-3 and Rule 14d-l(b)(4) of the Exchange Act) in the
aggregate of 10% or more of the outstanding Voting Stock of the
Corporation, but the term "Related Person" shall not include the
Corporation, any employee benefit plan(s) sponsored by the Corporation, or
any person or entity who held such beneficial ownership prior to February
12, 1997.
(3)Any person or group that has the right to acquire any shares of the
Voting Stock of the Corporation pursuant to any agreement, or upon the
exercise of conversion rights, warrants or options, or otherwise, shall be
deemed a Beneficial Owner for purposes of determining whether such person
or group, individually or together with its Affiliates and Associates, is a
Related Person.
(4)The term "Substantial Part" shall mean more than 5% of the recorded
value of the total assets of the entity in question as of the end of the
fiscal year ending prior to the time the determination is being made or, in
the case of Voting Stock of a subsidiary of the Corporation, 10% or more of
the outstanding shares of such subsidiary's Voting Stock.
(5)The term "Voting Stock" shall mean all outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors, and each reference to a proportion of shares of Voting Stock
shall refer to shares having such proportion to the number of shares
entitled to be cast.
(6)The provisions set forth in this Article EIGHTH may not be amended,
altered, changed, repealed, or rescinded in any respect unless such action
is approved by the affirmative vote of the holders of not less than 80% of
all shares of stock of the Corporation entitled to vote in the election of
directors.
FIFTH: The foregoing amendments of the certificate of incorporation of the
Corporation were duly authorized by the unanimous written consent of all the
members of the Board of Directors of the Corporation, and subsequently were
approved by the affirmative vote of a majority of the holders of all of the
outstanding shares of the Corporation entitled to vote on said amendments of the
certificate of incorporation at a meeting of shareholders.
IN WITNESS WHEREOF, we have signed this document on this 20th day of
February 1997, and do hereby affirm, under the penalties of perjury, that the
statements contained herein have been examined by us and are true and correct.
/s/ V. Paul Hreljanovic
V. Paul Hreljanovic
President
/s/ Yvonne T. Paultre
Yvonne T. Paultre
Secretary
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
111 Great Neck Road, Suite 604, Great Neck, New York 11021 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 Tony Milone ("Milone") 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 Milone 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 Milone (the "JHCSI/Milone Agreement").
(ii) During the term of this Agreement, HAN shall pay to Milone an amount
equal to all cash consideration (the "Cash Amounts") that JHCSI is otherwise
obligated to pay to Milone pursuant to the JHCSI/Milone Agreement with respect
to the Services provided to Guardian by QualCare in the State of New Jersey.
(iii) During the term of this Agreement, Milone 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/Milone 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. Milone 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 Milone any cash, stock or other
compensation that JHCSI is obligated to pay to Milone 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
Milone pursuant to the provisions of the JHCSI/Milone Agreement, the
JHCSI/Medichoice Agreement, or the Consulting Agreement dated May 31, 1995
between Milone 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 Milone's 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/Milone Agreement or the May Agreement; provided, nevertheless, that the
JHCSI/Milone 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 Milone 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 Kurzman & Eisenberg, LLP and Certilman,
Balin, Adler & Hyman, 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, 523 Middleneck Road, Great Neck, New
York 11023, (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, Milone and/or the Joint Venture.
9.2 During the term of this Agreement, neither HAN, Milone 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/Milone Agreement dated June 7,
1994, such provisions of the JHCSI/Milone 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 Goldstein & Ganz, 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 Bank,523 Middleneck Road, Great Neck, New York
11023, 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/Milone 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/Milone 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,
Milone 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 Milone 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
2 Gannett Drive, Suite 200
White Plains, NY 10604
Telecopier Number: (914) 694-6531
Attention: Anthony V. Milone, President
with a copy to: KURZMAN & EISENBERG, LLP
One North Broadway, 10th Floor
White Plains, NY 10601
Telecopier Number: (914) 285-9855
Attention: Stephen R. Levy, Esq.
If to JHCSI: JUNIPER HEALTHCARE CONTAINMENT SYSTEMS, INC.
111 Great Neck Road, Suite 604
Great Neck, New York 11021
Telecopier Number: (516) 829-4391
Attention: Vlado Hreljanovic, President
with a copy to: CERTILMAN BALIN ADLER & HYMAN, LLP
90 Merrick Avenue
East Meadow, New York 11554
Telecopier Number: (516) 296-7111
Attention: Gavin C. Grusd, 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 Milone,
HAN 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/Anthony Milone
Anthony Milone, President
JUNIPER HEALTHCARE CONTAINMENT SYSTEMS, INC.
By:/s/Vlado Hreljanovic
Vlado Hreljanovic, President
/s/ANTHONY MILONE
ANTHONY MILONE
only as to applicable provisions hereof.
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated June 7, 1996, by and between PARTNERCARE INC.,
a New York corporation, having a principal place of business at 111 Great Neck
Road, Suite 604, Great Neck, NY 11021 (the "Company"), and RICHARD O. VAZQUEZ,
having a residence address at 2600 Netherland Avenue, Riverdale, New York 10463
(the "Executive").
RECITALS
The Executive is experienced in the field of revenue enhancement management
for health care providers. The Company desires to employ the Executive to act as
President of the Company and to render services in that field, and the Executive
desires to render such services on behalf of the Company. Accordingly, the
Company and the Executive desire to set forth the terms and conditions on which
(i) the Company will employ the Executive, (ii) the Executive will render
services to the Company and to Juniper Features Ltd. ("Juniper"), and any other
corporation or business entity controlling, controlled by or under common
control with the Company (each, an "Affiliate"), and (iii) the Company will
compensate the Executive for such services.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Employment.
The Company hereby employs the Executive, and the Executive hereby accepts
such employment, upon the terms and conditions herein set forth.
2. Term.
Subject to the provisions for termination provided herein, the initial term
of employment of the Executive under this Agreement shall be for a period of two
years commencing on July 1, 1996 and ending on June 30, 1998 (the "Initial
Term"). The Executive's employment under this Agreement shall be automatically
extended thereafter for not more than two additional one-year periods (each, an
"Extension Term") unless the Company gives a notice of termination not later
than 90 days prior to the expiration of the Initial Term or any Extension Term.
The Initial Term and all Extension Terms, if any, are referred to herein as the
"Term."
3. Duties and Responsibilities.
3.1 The Executive shall devote his full attention and apply his best
efforts, energies and skills on a full-time basis, to the business of the
Company and each Affiliate (such corporations or other business entities being
referred to herein collectively as the "Juniper Group") and shall not during the
Term of this Agreement be engaged in any other business activity, whether or not
such business activity is pursued for gain, profit, or other pecuniary
advantage. Subject to the provisions of Section 10 hereof, the foregoing
restriction shall not be construed as preventing the Executive from investing
his assets in such form or manner as will not require any services on his part
in the operation of the affairs of the companies in which such investments are
made.
3.2 During the Term, the Executive shall serve as and perform the functions
of President of the Company and shall perform such other duties and functions as
the Board of Directors, the Chairman of the Board, or the Chief Executive
Officer of the Company may determine, consistent with the Executive's experience
and background, including, but not limited to, those duties and functions set
forth on Schedule A hereto. The Executive shall be principally responsible for
performing such services at the Company's principal offices.
3.3 The Executive shall have a fiduciary duty to act only in the best
interest of the Juniper Group and acknowledges that he owes the Juniper Group a
high degree of trust and loyalty. While he is employed by the Company, the
Executive shall not take any action which would harm or detrimentally impact
upon the Juniper Group's business; in so far as Executive is informed or should
be otherwise be reasonably informed of the same.
3.4 At all times during the performance of this Agreement, the Executive
shall strictly adhere to all policies, rules and regulations that have now been,
or may hereafter be, established by the Juniper Group for his conduct,
including, but not limited to, all matters set forth in the Company's Employee
Handbook, as modified from time to time, a copy of which the Executive
acknowledges receiving and reading. The Executive shall be promptly informed of
any new policies, rules and regulations. The Executive shall report directly to,
and shall be subject to the direction and control of, Vlado Paul Hreljanovic,
the Chairman of the Board, President and Chief Executive Officer of Juniper and
The Chief Executive Officer of the Company.
3.5. In order to induce the Company to enter into this Agreement, the
Executive represents and warrants to the Company that (a) the Executive is not a
party or subject to any employment agreement or arrangement with any other
person, firm, company, corporation or other business entity, and (b) the
Executive is subject to no restraint, limitation, or restriction by virtue of
any agreement or arrangement or by virtue of any law or rule or otherwise which
would impair the Executive's right or ability (i) to enter the employ of the
Company, or any other member under this Agreement, the Company shall pay the
Executive, and the Executive shall accept, (i) a salary of $135,000 per year
(the "Salary"), (ii) during each year of the Initial Term, Executive shall
receive such number of shares of Juniper Common Stock as shall equal $65,000 per
year, payable monthly in shares of Common Stock valued at $5,416.06 for each
installment, such number of shares of Common Stock determined by dividing such
dollar amount by the fair market value of a share of Common Stock at the end of
each such month, and (iii) a bonus to be determined annually by the Board of
Directors of the Company (the "Bonus").
4.0 Compensation
4.1 For all services rendered by the Executive under this Agreement, the
Company shall pay the Executive, and the Executive shall accept, (i) a salary of
$135,000 per year (the "Salary"), (ii) during each year of the Initial Term,
Executive shall receive such number of shares of Common Stock as shall equal
$65,000 per year, payable monthly in shares of Common Stock valued at $5,416.06
for each installment, such number of shares of Common Stock. The Company shall
pay the Executive's Salary in equal bi-monthly installments and shall pay the
Executive's Bonus earned with respect to any period at such time or times as the
Board of Directors of the Company shall determine. All payments of Salary and
Bonus shall be subject to all withholding and other employment taxes required by
law, which shall be withheld and paid by the Company in accordance with its
normal payroll practices.
4.2 The Company shall pay the Executive's Salary in equal bi-monthly
installments and shall pay the Executive's Bonus earned with respect to any
period at such time or times as the Board of Directors of the Company shall
determine. All payments of Salary and Bonus shall be subject to all withholding
and other employment taxes required by law, which shall be withheld and paid by
the Company in accordance with its normal payroll practices.
4.3 On the date hereof and on the first day of July during each year of the
Term, Juniper shall grant to the Executive options ("Options") to purchase
590,000 shares of Juniper Common Stock, $.001 par value ("Common Stock"),
exercisable at a price equal to the fair market value of the shares of Common
Stock on each date such options vest, under the Juniper Features Limited 1996
Incentive Stock Option Plan (the "Plan"), which has been approved by the
Company's Board of Directors and which is subject to approval by the Company's
shareholders. The Options shall be on the terms set forth in the Plan and shall
vest as follows:
(i) if Gross Revenues (as hereinafter defined) from Executive Clients (as
hereinafter defined) during any Contract Year (as hereinafter defined) are equal
to $1,000,000, then on the last day of that Contract Year, Options to purchase
50,000 shares of Common Stock shall vest;
(ii) if Gross Revenues from Executive Clients during such Contract Year
exceed $1,000,000, but are less than $2,000,000, then on the last day of that
Contract Year, Options to purchase an additional 100,000 shares of Common Stock
shall vest ratably to the extent that Gross Revenues exceed $1,000,000, it being
the intention of the parties that if such Gross Revenues equal $2,000,000,
Options to purchase an aggregate of 150,000 shares of Common Stock shall vest;
(iii) if Gross Revenues from Executive Clients during such Contract Year
exceed $2,000,000, but are less than $3,000,000, then on the last day of that
Contract Year, Options to purchase an additional 150,000 shares of Common Stock
shall vest ratably to the extent that Gross Revenues exceed $2,000,000, it being
the intention of the parties that if such Gross Revenues equal $3,000,000,
Options to purchase an aggregate of 300,000 shares of Common Stock shall vest;
(iv) if Gross Revenues from Executive Clients during such Contract Year
exceed $3,000,000, but are less than $5,000,000, then on the last day of that
Contract Year, Options to purchase an additional 150,000 shares of Common Stock
shall vest ratably to the extent that Gross Revenues exceed $3,000,000, it being
the intention of the parties that if such Gross Revenues equal $5,000,000,
Options to purchase an aggregate of 450,000 shares of Common Stock shall vest;
(v) if Gross Revenues from Executive Clients during such Contract Year
exceed $5,000,000, but are less than $7,500,000, then on the last day of that
Contract Year, Options to purchase an additional 140,000 shares of Common Stock
shall vest ratably to the extent that Gross Revenues exceed $5,000,000, it being
the intention of the parties that if such Gross Revenues equal $7,500,000,
Options to purchase an aggregate of 590,000 shares of Common Stock shall vest.
If Options granted at the beginning of any Contract Year do not vest on the
last day of that Contract Year as hereinabove provided, then such Options shall
expire. If Juniper's shareholders do not approve the Plan, then the Options
shall be granted subject to and in accordance with the same terms of the Plan as
if it were in effect; provided, however, that the Executive acknowledges that
the Options so granted may not qualify for certain favorable treatment under the
Internal Revenue Code of 1986, as amended, or the Securities Exchange Act of
1934, as amended (the "Exchange Act").
4.4 For purposes of this Agreement, the following terms shall have the
meanings ascribed to them below:
(a) "Executive Clients" shall mean clients of the Company who became
clients principally as a result of the efforts of the Executive.
(b) "Gross Revenues" shall mean all amounts actually collected by the
Company, net of bad debt expense taken or credits allowed during the period in
question.
(c) "Contract Year" shall mean the one-year period commencing on July 1 and
ending on June 30 of each year during the Term of this Agreement, except that if
this Agreement does not terminate on June 30, then the last Contract Year shall
terminate on the date of the termination of this Agreement.
4.5 The Executive acknowledges that, unless the Company agrees otherwise,
the shares of Common Stock issued pursuant to the exercise of the Executive's
Options (the "Option Shares") will be issued pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and as such may not be resold by the Executive without
registration under the Securities Act or an exemption from registration. The
Executive further acknowledges that neither the Company nor Juniper is obligated
to file a registration statement with respect to the Option Shares. All
certificates representing the Option Shares shall bear a legend in substantially
the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, IS AMENDED (THE "ACT") AND MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION. THE TRANSFER OF SUCH
SHARES IS ALSO RESTRICTED UNDER THE TERMS OF AN AGREEMENT DATED JUNE 7, 1996,
AND SUCH SHARES ARE ALSO SUBJECT TO THE TERMS OF SHAREHOLDERS' AGREEMENT DATED
JUNE , 1996.
4.6 Concurrently with the execution of this Agreement, the Executive is
executing an agreement with the Company and Vlado Paul Hreljanovic pursuant to
which the Executive is granting to Hreljanovic an irrevocable right and proxy to
vote all Option Shares for so long as the Executive, any affiliate of the
Executive or any member of the Executive's family owns such Option Shares. The
Company acknowledges that nothing in this Section 4.6 shall preclude the
Executive from selling or otherwise transferring the Option Shares, subject to
the other provisions of this Agreement and such legal restrictions as may be
applicable.
4.7 Anything herein to the contrary notwithstanding, the Executive shall
not sell, assign, transfer or encumber in any manner more than 15% of the total
number of Option Shares that he owns in any period of three consecutive months
(each such period being referred to herein as a "Quarter"). In addition, the
Executive shall not sell, assign, transfer or encumber in any manner more than
the lesser of (x) 7-1/2% of the total number of Option Shares that he owns or
(y) 5,000 Option Shares during any period of ten consecutive business days
during any such Quarter.
5. Benefits.
5.1 The Executive shall be entitled for each year of employment such paid
vacation as is commensurate with that afforded to Executives of the Juniper
Group of equal rank as the Executive at such time as the Executive and the
Chairman of the Company shall mutually agree. Such vacation is presently three
weeks for the first four years of employment and four weeks thereafter, and such
holidays are nine per year (seven fixed and two optional). No portion of any
unused vacation time shall be carried over to a subsequent period unless
specifically authorized by the Chairman or the Chief Executive Officer.
5.2 The Executive shall also be entitled to participate in any pension or
profit sharing plan, stock purchase plan, stock option plan, group life
insurance plan, hospitalization insurance plan, medical services plan and other
similar plans, now or hereafter existing, afforded to Executives of the Juniper
Group of equal rank as the Executive. The Company will pay the cost of the
Executive's present medical insurance costs until he becomes eligible under the
Company's existing medical insurance plan.
6. Expenses.
6.1 As a condition of his employment, the Executive shall maintain an
automobile. Accordingly, the Company shall lease an automobile for the
Executive's use. In addition, the Company shall pay or reimburse the Executive
for tolls and parking incurred in connection with the performance of his duties
hereunder, which shall be paid upon presentation of original invoices.
6.2 The Executive shall be authorized to incur other ordinary and necessary
business expenses in connection with the performance of his duties hereunder,
including travel expenses and entertainment be entitled to annual paid sick
leave in length to conform with the Company's general employment practices,
which is presently five days per year.
7. Sick Leave; Disability
7.1 The Executive shall be entitled to annual paid sick leave in length to
conform with the Company's general employment practices, which is presently five
days per year.
7.2 If the Executive is unable to perform his duties hereunder by reason of
physical or mental incapacity or infirmity (a "Disability") for a period of 90
consecutive days or a period of 120 days during any consecutive 12-month period,
then the Executive shall be "Disabled " for purposes of this Agreement and the
period of his Disability as provided above shall be referred to herein as the
"Disability Period". The existence of a Disability hereunder shall be determined
by a licensed physician selected by the Company, and the Executive hereby
consents to an examination by such physician for such purpose. During the
Disability Period, the Company shall continue to pay the Executive the Salary
earned hereunder; provided, however, that such payments shall be reduced by the
amount of any disability income payments the Executive receives during the
Disability Period under any policy carried by the Company of which the Executive
is the beneficiary. The Company shall have the right to terminate this Agreement
and the Executive's employment hereunder for Disability at any time after the
end of the Disability Period.
8. Death During Employment.
If the Executive shall die during the Term, the Company shall pay to the
estate of the Executive the Salary which would otherwise be payable to the
Executive up to the end of the month in which his death occurs and shall grant
such Options as shall have been earned by the Executive under Section 4.3 hereof
up to the date of his death. The Company shall have no further obligation to the
Executive's estate.
9. Termination.
9.1 The Company shall have the right to terminate the Executive's
employment for Cause (as hereinafter defined in Subsection 9.2) at any time,
which termination shall be effective immediately upon the Company's giving
notice to the Executive setting forth in reasonable detail the grounds therefor.
If the Executive's employment is terminated for Cause, the Company shall pay to
the Executive within 45 days after such termination, all accrued Salary earned
through the date of termination. The Executive hereby specifically acknowleges
this Agreement.
9.2 For purposes of this Agreement, any of the following actions or events
shall constitute grounds for termination of the Executive's employment for
"Cause":
(i) the Executive's neglect or refusal to perform, or if he otherwise fails
to perform, his duties as an Executive of the Company.
(ii) any other conduct constituting a breach of this Agreement or of any
code of conduct heretofore or hereafter adopted by the Company or the Juniper
Group;
(iii) the Executive's conviction (including a conviction on a nolo
contendere plea) of a felony or misdemeanor (other than minor traffic offenses);
(iv) any willful, intentional, or grossly negligent act having the effect
of significantly injuring the Executive's reputation or the reputation or
business of the Juniper Group; or
(v) any other malfeasance, misfeasance or nonfeasance by the Executive
relative to or in connection with the performance of his duties hereunder
(including, without limitation, the Executive's inability to perform his duties
hereunder as a result of chronic alcoholism or drug addiction).
9.3 If Gross Revenues from Executive Clients during the period commencing
on July 1, 1996, and ending on September 30, 1997, are less than $1,500,000, the
Company shall have the right to terminate the Executive's employment without
Cause by giving a notice of termination at any time after September 30, 1997,
and before December 1, 1997, which termination shall be effective 30 days after
the Company gives such notice. In that event, the Company shall pay the
Executive, and the Executive shall accept as liquidated and agreed upon damages,
an amount equal to two months' Salary payable in accordance with the Company's
customary payroll practices.
9.4 The Company shall have the right to terminate the Executive's
employment without Cause at any time, which termination shall be effective 30
days after the Company gives notice thereof to the Executive. If the Executive's
employment is terminated before the expiration of the Term without Cause and
other than as a result of the Executive's death or disability or pursuant to
Section 9.3 hereof, then, and in such event, the Company shall pay the
Executive, and the Executive shall accept as liquidated and agreed upon damages,
an amount equal to his annual Salary, which amount shall be paid in 12 equal
monthly installments commencing one month after the effective date of
termination.
9.5 If the Executive voluntarily terminates his employment with the Company
prior to expiration of the Term (for any reason whatsoever), the Company shall
pay to the Executive his accrued Salary through the date of termination. The
Executive hereby specifically acknowledges that upon voluntary termination of
his employment, he shall have no right to receive any other payments otherwise
provided for under this Agreement.
9.6 If the Executive's employment is terminated for Disability or death,
then the Company shall pay to the Executive or his personal representative and
shall grant such Options as shall have been earned by the Executive under
Section 4.3 hereof up to the date of his death or disability.
9.7 Notwithstanding anything contained herein to the contrary, if during
the Post-Termination Period (as hereinafter defined in Subsection 10.2) the
Executive obtains other employment or engages in his own business or otherwise
engages in any business activities for his own benefit or account, the Executive
shall immediately notify the Company, and an amount equal to the Executive's
total salary, compensation, and other income during such period from such other
employment, business or business activities shall be applied pro tanto in
reduction to any amounts payable under this Section 9 during the
Post-Termination Period, except nothing herein shall preclude Executive from
engaging in activities relating to his present real estate investments provided
he does not violate any of the terms of this Agreement.
10. Restrictive Covenants.
10.1 The Executive acknowledges that (i) the business activities of the
Juniper Group will include providing managed care and healthcare cost
containment and revenue enhancement services (the "Healthcare Cost Reduction
Business") in the United States, (ii) he will have a major responsibility for
the operation, administrative development and growth of the Healthcare Cost
Reduction Business of the Company in the United States, (iii) his work for the
Company will bring him into close contact with confidential information of the
Company and its customers and clients, (iv) the agreements and covenants
contained in this Section 10 are essential to protect the business interests of
the Company and the Company would not enter into this Agreement but for such
agreements and covenants, and (v) he has means to support himself and his
dependents other than by engaging in the Healthcare Cost Reduction Business.
Accordingly, the Executive covenants and agrees as follows:
10.1.1 Except as otherwise specifically provided for in this Agreement,
throughout the Employment Period and the Post-Termination Period (as such terms
are defined in Subsection 10.2), the Executive shall not, directly or
indirectly, (i) engage in any activity that is in competition with the
Healthcare Cost Reduction Business of the Company in any geographical area in
which the Company has conducted such business at any time during the last year
of the Employment Period or (ii) without limiting the generality of clause (i)
above, be or become, or agree to be or become, interested in or associated with,
in any capacity (including, without limitation, as a partner, shareholder,
owner, officer, director, employee, principal, agent, creditor, trustee,
consultant, co-venturer or otherwise), any individual, corporation, firm,
association, partnership, joint venture or other business entity, which is
engaged in or which is planning to engage in any aspect of the Healthcare Cost
Reduction Business of the Company in any geographical area in which the Company
has conducted such business at any time during the last year of the Employment
Period; provided, however, that the Executive may own, solely as an investment,
securities of any publicly held corporation traded on any national securities
exchange in the United States of America, if the Executive is not a controlling
person of or member of a group which controls, such corporation and does not,
directly or indirectly, own more than 1% of any class of securities of such
corporation.
10.1.2 Throughout the Employment Period and the Post-Termination Period,
the Executive shall not, directly or indirectly (i) induce or attempt to
influence any employee of the Juniper Group to leave its employ, (ii) aid or
agree to aid any competitor, customer or supplier of the Juniper Group in any
attempt to hire any person who shall have been employed by the Juniper Group
within the one (1) year period preceding such requested aid, or (iii) induce or
attempt to influence any person or business entity who was a client or supplier
of the Juniper Group during any portion of such period to transact business with
a competitor of the Juniper Group in the Health Care Cost Reduction Business;
10.1.3 Throughout the Employment Period and thereafter, the Executive shall
not disclose to anyone any information about the affairs of the Juniper Group,
including without limitation, trade secrets, inventions, customer lists, client
lists, business plans, operational methods, pricing policies, marketing plans,
sales plans, identity of suppliers, or other financial information not publicly
disclosed and which is confidential to the Juniper Group or is not generally
known in the relevant trade (collectively, "Proprietary Information"),
regardless of whether the Executive developed such Proprietary Information, nor
shall the Executive make use of any such Proprietary Information for his own
benefit.
10.2 For the purposes of this Agreement the following terms shall have
respective meanings ascribed to them below:
10.2.1 "Employment Period" means the period of the Executive's employment
by the Company, including such period of employment, if any, extending beyond
the Term.
10.2.2 "Post-Termination Period" means the period during which the Company
is making Termination Payments to the Executive under Subsection 10.3 hereof.
10.2.3 "Restrictive Covenants" means any of the provisions of Subsection
10.1 hereof.
10.3 Upon termination of the Executive's employment for any reason other
than death or Disability, the Company shall have the right to continue to pay
the Executive's Salary for up to one year after the effective date of the
termination of the Executive's employment with the Company (the "Termination
Date") in consideration for the Restrictive Covenants set forth in Subsections
10.1.1 and 10.1.2. Such payments are referred to herein as "Termination
Payments." The Company may exercise its right to make Termination Payments by
giving written notice thereof not later than 30 days after the Termination Date,
which notice shall set forth the period for which the Company intends to make
such Termination Payments. The Company shall make such Termination Payments in
installments commencing 30 days after the Termination Date and monthly
thereafter. Payments made under Subsections 9.3 or 9.4 hereof shall constitute
"Termination Payments" for purposes of this Agreement and shall not be required
to be made in addition to any Termination Payments payable under this Subsection
10.3.
10.4 If the Executive breaches, or threatens to commit a breach of, any of
the Restrictive Covenants, the Company shall have the following rights and
remedies, each of which shall be independent of the others and severally
enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to the Company at law or in equity:
10.4.1 The Executive shall account for and pay over to the Company all
compensation, profits, monies, accruals and other benefits derived or received
by the Executive or any person or business entity affiliated with the Executive
as a result of any action the provisions of Subsection 10.4.1 above, the
Executive acknowledges and agrees that in the event of a violation or threatened
violation of any of the Restrictive Covenants, the Company shall have no
adequate remedy at law and shall therefore be entitled to enforce each provision
by temporary or permanent injunctive or mandatory relief obtained in any court
of competent jurisdiction without the necessity of proving damages, posting any
bond or other security, and without prejudice to any other rights and remedies
which may be available at law or in equity.
10.5 If any of the Restrictive Covenants, or any part thereof, is held to
be invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full force and effect, without
regard to the invalid or unenforceable portions.
10.6 If any of the Restrictive Covenants, or any part thereof, is held to
be unenforceable because of the duration of such provision or the area covered
thereby, the parties hereto agree that the court making such determination shall
have the power to reduce the duration and/or area of such provision and, in its
reduced form, such provision shall then be enforceable.
10.7 The parties hereto intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. In the event that the courts
of any one or more of such jurisdictions shall hold such Restrictive Covenants
wholly unenforceable by reason of the breadthect the Company's right to the
relief provided above in the courts of any other jurisdictions within the
geographical scope of such Restrictive Covenants, as to breaches of such
covenants in such other respective jurisdictions, the above covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
10.8 Anthing contained in this article to the contrary notwithstanding, the
Employee shall not be prohibited from seeking new employment or taking
reasonable steps, including but not limited to employment interviews.
11. Insider Information.
In the course of the performance of the Executive's duties hereunder, the
Executive may become aware of information regarding the Company, Juniper, and
their respective businesses that may be considered "inside information" for
purposes of the Securities Act and the Exchange Act and the Rules and
Regulations promulgated thereunder. The Executive acknowledges that his purchase
or sale securities of Juniper or any of its affiliates while in possession of
such inside information or his informing any other person of such inside
information for the purpose of purchasing, selling or otherwise dealing in
securities of Juniper or its affiliates is prohibited by law and shall
constitute a breach of this Agreement and a basis for termination of the
Executive's employment for Cause.
12. Inventions.
All inventions, discoveries, investigations, improvements, know-how, trade
secrets, and developments in technology ("Inventions") which directly relate to
the business carried on, or then planned to be carried on, by the Juniper Group
which have been or shall be made, conceived, learned of or reduced to practice
by the Executive, either alone or with others, whether the activity in question
takes place within or outside the usual working hours of the Executive or on or
off the premises of the Company shall be held by the Executive for the exclusive
benefit of the Company, and the Executive shall assign in writing to the
Company, without any payment being required or the part of the Company, all of
the right, title and interest which he may have acquired in and to any
Inventions. In addition, he shall, both during and at any time prior to three
(3) years after the Employment Period, assist the Company in every way
reasonably requested by the Company, at the expense of the Company without cost
to the Executive (and with reasonable compensation to the Executive in the event
his employment has then ended), to obtain for the Company in any and all
countries, and to maintain and enforce patents or the reissue or extension
thereof on all Inventions which have been or may be assigned.
13. Documentation of Proprietary Information and Inventions.
All documents, records, models, prototypes or other tangible embodiments or
evidence of Proprietary Information or Inventions, and all copies of the
foregoing ("Materials"), which may at any time be acquired by or come into the
possession of the Executive are the sole and exclusive property of the Company.
All Materials shall be surrendered to the Company upon the request by the
Company at any time. In addition, upon the reasonable request by the Company at
any time, the Executive shall prepare materials accurately and adequately to
describe, set forth or embody any Proprietary Information or Inventions and
deliver the same to the Company in order to accomplish or complete the transfer
thereof to the Company, and the Executive shall be reimbursed by the Company for
all of his reasonable out-of-pocket expenses incurred in so doing. During or at
any time prior to three (3) years after the Employment Period, the Executive
shall execute all documents and take all such other action as the Company may
reasonably require (being reimbursed for all of his reasonable out-of-pocket
expenses in this connection) in order to assign the Company any and all
copyrights and reproduction rights to any Materials prepared by him during and
in connection with such employment.
14. Insurance.
The Company may, from time to time, apply for, purchase and maintain, in
its own name and at its own expense, life, health, accident, disability or other
insurance upon the Executive in any sum or sums that it may deem necessary to
protect its interests, and the Executive agrees to aid and cooperate in all
reasonable respects with the Company in procuring any and all such insurance,
including, without limitation, submitting to the usual and customary medical
examinations, and by filling out, executing and delivering such applications and
other instruments in writing as may be reasonably required by an insurance
company or companies to which an application or applications for such insurance
may be made by or for the Company. In order to induce the Company to enter into
this Agreement, the Executive represents and warrants to the Company that to the
best of his knowledge the Executive is insurable at standard (non-rated)
premiums.
15. Miscellaneous.
15.1 This Agreement is a personal contract, and the rights and interests of
the Executive hereunder may not be sold, transferred, assigned, pledged or
hypothecated by the Executive, except as otherwise expressly permitted by the
provisions of this Agreement. The Executive shall not under any circumstances
have any option or right to require payment hereunder otherwise than in
accordance with the terms hereof. Except as otherwise expressly provided herein,
the Executive shall not have any power of anticipation, alienation or assignment
of payments contemplated hereunder, and all rights and benefits of the Executive
shall be for the sole personal benefit of the Executive, and no other person
shall acquire any right, title or interest hereunder by reason of any sale,
assignment, transfer, claim or judgment or bankruptcy proceedings against the
Executive; provided, however, that (i) the Executive shall have the right to
assign his right to receive any payment previously due and owing, subject to all
claims and defenses of the Company, and (ii) in the event of the Executive's
death, or gross disability, the Executive's estate, legal representatives or
beneficiaries (as the case may be) shall have the right to receive all of the
benefits that accrued to the Executive pursuant to, and in accordance with, the
terms of this Agreement.
15.2 The Company shall have the right to assign this Agreement to any
successor to substantially all of its business or assets, and the Executive and
any such successor shall be bound by all provisions hereof.
15.3 Any notice required or permitted to be given pursuant to this
Agreement shall be in writing and sent to the party for whom or which intended,
at the address of such party set forth below, by registered or certified mail,
return receipt requested or at such other address as either party shall
designate by notice to the other in the manner provided herein for giving
notice:
If to the Company: PartnerCare, Inc.
111 Great Neck Road, Suite 604
Great Neck, NY 11021
with a copy to: Snow Becker Krauss, P.C.
605 Third Avenue
New York, NY 10158-0125
Attn: Eric Honick, Esq.
If to Executive: Richard O. Vazquez
2600 Netherland Avenue
Riverdale, NY 18463
15.7 This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
15.8 If any provision of this Agreement, or any part thereof, is held to be
illegal or unenforceable, the remainder of this Agreement shall nevertheless
remain in full force and effect.
15.9 Each of the parties hereto shall, at any time and from time to time
hereafter, upon the reasonable request of the other, take further action and
execute, acknowledge and deliver all such instruments of further assurance as
necessary to carry out the provisions of this Agreement.
15.10 This Agreement contains the entire agreement and understanding
between the Company and the Executive with respect to the subject matter hereof.
No representations or warranties of any kind or nature relating to the Company
or its business, assets, liabilities, operations, future plans or prospects have
been made by or on behalf of the Company to the Executive.
15.11 All controversies or claims arising out of or relating to this
Agreement, or the breach hereof, except for those relating to or arising out of
Sections 10, 11 and 12 hereof, or the breach of such Sections, shall be settled
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
15.12 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts made and to be
performed entirely within that State.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written
JUNIPER FEATURES, LTD. PARTNERCARE, INC.
By:/s/Vlado Paul Hreljanovic By:/s/Vlado Paul Hreljanovic
Vlado Paul Hreljanovic Vlado P. Hreljanovic
Chairman Chairman
Consented and agreed to solely with
respect to Paragraph 4.1 and 4.3 of this Agreement.
/s/Richard O. Vazquez
Richard O. Vazquez
<PAGE>
SCHEDULE A
1) DEVELOP AND FOSTER STRATEGIC BUSINESS INITIATIVES WITH RESPECT TO ANY
HEATHCARE RELATED SERVICES AND PRODUCTS IN THE UNITED STATES AND WORLDWIDE.
2) MAINTAIN AND SUPPORT EXISTING PRODUCT LINES TO THE SATISFACTION OF OUR
CLIENTS.
3) KEEP THE CHAIRMAN AND CEO INFORMED OF THE CURRENT STATUS OF THE
COMPANY'S REVENUE STREAMS AND COST EXPOSURE.
4) PROMULGATE AND GROW NEW MARKETS AND PRODUCT LINES.
5) REPRESENT THE COMPANY IN ALL BUSINESS MATTERS APPROPRIATE AND GERMANE TO
THE COMPANY'S GROWTH, REPUTATION AND PERFORMANCE.
6) MAINTAIN HIGH ETHICAL AND PROFESSIONAL CONDUCT AND STANDARDS.
7) DEVELOP AND ORGANIZE A MANAGEMENT TEAM.
8) DEVELOP AND ORGANIZE A SALES AND MARKETING TEAM.
9) MAINTAIN THE APPROPRIATE STAFFING LEVELS.
10) DEVELOP MARKETING MATERIALS.
EXHIBIT 21.1
JUNIPER GROUP, INC.
SUBSIDIARIES
All of the Company's subsidiaries are wholly-owned.
Juniper Group, Inc. Subsidiaries Incorporated In
Juniper Entertainment, Inc. .................................. New York
Juniper Medical Systems, Inc. ................................ New York
Juniper Group, Inc. .......................................... Nevada
Juniper Entertainment, Inc. Subsidiary Incorporated In
Juniper Pictures, Inc. ....................................... New York
Juniper Medical Systems, Inc. Subsidiaries Incorporated In
PartnerCare, Inc. ............................................ New York
Juniper Healthcare Containment Systems, Inc. ................. New York
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-89952) of Juniper Group, Inc. of our report dated
March 26, 1997, appearing on page F-2 of this Form 10-KSB.
Goldstein & Ganz, CPA's, P.C.
Great Neck, New York
March 26, 1997
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<PERIOD-END> DEC-31-1996
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