OPERATING AGREEMENT OF PROGRESSIVE MEDICAL IMAGING OF UNION CITY, LLC (a New Jersey limited liability company)
OF
PROGRESSIVE
MEDICAL IMAGING OF UNION CITY, LLC
(a New
Jersey limited liability company)
THIS
OPERATING AGREEMENT (this “Agreement”) is
entered into as of the ______ day of ___________________, 2000, by
and among Progressive Health, LLC, Stellar Health, LLC and Medcon Consultants,
Inc. (sometimes referred to herein individually as a “party” or together as the
“parties”).
EXPLANATORY
STATEMENT
The
parties have agreed to organize and operate a limited liability company in
accordance with the provisions of the “New Jersey Limited Liability Company Act”
and subject to the terms and conditions set forth in this
Agreement.
NOW,
THEREFORE, for good and valuable consideration, the parties, intending legally
to be bound, agree as follows:
1. Definitions. Any
capitalized term used herein and not otherwise defined in this Agreement shall
have the meaning ascribed to such term in Exhibit
A.
2. Formation and Name; Office;
Purpose; Term.
2.1 Organization. The
parties have organized a limited liability company pursuant to the Act and the
provisions of this Agreement and, for that purpose, acknowledge that they have
caused to be executed and filed with the Secretary of State a Certificate of
Formation, a copy of which is attached as Exhibit
C.
2.2 Name of the Company.
The name of the Company shall be “Progressive Medical Imaging of Union City, LLC
doing business as Progressive Medical Imaging “at the ▇▇▇▇▇▇▇
Center”. The Company may do business under that name and under any other name or
names which the Management Committee may select. If the Company does business
under a name other than that set forth in its Certificate of Formation, then the
Company shall file a certificate of registration of alternate name as required
by the Act.
2.3 Purpose. The Company
is organized to acquire, own and develop an outpatient facility for the delivery
of healthcare services and to do all other acts which are necessary or desirable
to implement the purposes of the Company. The Company may also engage in any
other lawful purpose that is approved by the Management Committee.
2.4 Term. The term of the
Company began upon the filing of the Certificate of Formation with the Secretary
of State and shall continue indefinitely unless its existence is terminated
sooner pursuant to Section 8 of this Agreement.
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2.5 Registered Office and
Registered Agent. The registered office of the Company in the State of
New Jersey shall be at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇. The name of
the registered agent of the Company in the State of New Jersey at such address
is ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
2.6 Principal Office. The
Management Committee shall determine the location of the principal office of the
Company which may be within or outside New Jersey.
3. Members.
3.1 Members. The name,
present mailing address and Percentage of each Member are set forth on Exhibit
B.
3.2 Representations and
Warranties. Each Interest Holder, and in the case of an Interest Holder
other than an individual, each person executing this Agreement on behalf of such
Interest Holder, hereby represents and warrants to the Company and each other
Interest Holder that (a) the Interest Holder has duly executed and delivered
this Agreement; (b) the Interest Holder’s authorization, execution, delivery and
performance of this Agreement do not conflict with any other agreement or
arrangement to which that Interest Holder is a party or by which it is bound;
(c) the Interest Holder understands that no Federal or state agency has made any
finding or determination with respect to the fairness of the Interests for
public or private investment, nor any recommendation or endorsement of the
Interests for investment; (d) the Interests, as an investment, involve a high
degree of risk; (e) there is no market for the Interests and it may not be
possible readily to liquidate such investment in the Interests at any time; (f)
the Interests have been or are being purchased or transferred for the Interest
Holder’s own account entirely for investment and not with a view to or for
resale in connection with any distribution thereof; (g) the Interests may not be
sold without registration under the Securities Act of 1933, as amended, or an
exemption therefrom and are subject to the restrictions on transfer contained in
this Agreement; (h) the Interest Holder is able to bear the economic risk of its
investment in the Company and is able to hold the Interests for an indefinite
period of time; (i) the Interest Holder understands the merits and risks of its
investment in the Company and the Interests; (j) the Interest Holder is an
“accredited investor” as such term is defined in Rule 501 of Regulation D under
the Securities Act of 1933; (k) the Interest Holders understand and acknowledge
that the certain principles of Progressive Health, LLC, own and operate a
diagnostic imaging facility in Englewood Cliffs, New Jersey which is less than
ten miles from where the Company will operate; and (l) in the case of Interest
Holders that are not natural persons, it is duly organized, validly existing and
in good standing under the law of the jurisdiction of its organization, that the
Interest Holder has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, and all necessary actions
for the due authorization, execution, delivery and performance of this Agreement
by that Interest Holder have been duly taken.
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4.
Capital; Capital
Accounts.
4.1 Initial Capital
Contributions. Simultaneously with the execution and delivery of this
Agreement, the Members shall each contribute to the capital of the Company the
amounts set forth opposite their names on Exhibit
B.
4.2 Additional Capital
Contributions.
(a)
No Interest Holder shall be required to make Capital Contributions to the
Company in addition to those set forth in section 4.1 above and Exhibit B
herein.
(b)
Discretionary Capital
contributions; New Interests. If at any time or times the Management
Committee determines that additional Capital Contributions are necessary or
desirable to further the Company’s business purposes, it may request such
additional Capital Contributions from current Members and/or other Persons, and
in exchange for such Capital Contributions may admit new Members and/or issue to
contributing Members and/or other Persons such interests in the Company
(including Percentage Interests) as the Management Committee deems appropriate;
and upon such admission or issuance, this Agreement and all Percentage Interests
will be amended accordingly (with Percentage Interests of all Interest Holders
not making the additional Capital Contributions being diluted proportionately)
and such amendment will be effective without any further vote of the Members;
provided;
however, that the Company may not issue new interests to any Member or to any
Person which is an Affiliate of any Member unless such issuance (i) is on terms
no less favorable to the Company than would be obtained upon an arms’ length
basis or (ii) is approved by all the initial Members. Such interests may have
any rights, powers, preferences and duties allowed under the Act, including
rights, powers, preferences and duties senior to existing Interests.
Notwithstanding the preceding provisions of this Section 4.2, in the event that
any new interests in the Company are proposed to be issued in exchange for cash
or cash equivalents, the Management Committee shall cause each Member to receive
twenty business days’ prior written notice of the terms and conditions of such
issuance and each member shall have the right to purchase on such terms and
conditions (exercisable by notice and appropriate payment delivered within ten
business days of such Member’s receipt of notice of the issuance) a portion of
such interest equal to such Member’s Percentage Interest multiplied by the
aggregate amount of such new interest to be issued.
4.3 No Interest on Capital
Contributions. Interest Holders shall not be paid interest on their
Capital Contributions.
4.4 Return of Capital
Contributions. Except as otherwise provided in this Agreement, no
Interest Holder shall have the right to receive any return of any Capital
Contribution.
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4.5 Form of Distribution.
If an Interest Holder is entitled to receive a return of a Capital Contribution
or any other distribution, the Company, upon approval of the Members, may
distribute cash, notes, property, or a combination thereof to the Interest
Holder.
4.6 Capital Accounts. A
separate Capital Account shall be maintained for each Interest Holder, in
accordance with Code Section 704(b) and Regulation Section 1.704-1
(b).
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Loans.
Any Member may, at any time, make or cause a loan to be made to the Company in
any amount and on those terms upon which the Company and the Member
agree.
5.
Profit, Loss, and
Distributions
5.1 Allocation of Profits from
Capital and Non-Capital Transactions. After giving effect to the special
allocations set forth in sections 5.3 and 5.4, Profits shall be allocated to the
Interest Holders in accordance with their Percentages.
5.2 Allocation of Losses from
Capital and Non-Capital Transactions. After giving effect to the special
allocations set forth in Sections 5.3 and 5.4, Losses shall be allocated to the
Interest Holders in accordance with their Percentages; provided, that no
Interest Holder shall be allocated a Loss that creates or increases an Adjusted
Capital Account Deficit for such Interest Holder.
5.3 Regulatory
Allocations
(a) Minimum Gain
Chargeback. Except as set forth in Regulation Section 1.704-2(f), if,
during any Company Fiscal Year, there is a net decrease in Minimum Gain, each
Interest Holder, prior to any other allocation under this section 5.3, shall be
specially allocated items of gross income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to that Interest Holder’s
share of the net decrease of Minimum Gain, computed in accordance with
Regulation Section 1.704-2(g). Allocations of gross income and gain under this
section 5.3(a) shall be made first from gain recognized from the disposition of
Company assets subject to Non-recourse Liabilities, to the extent of the Minimum
Gain attributable to those assets, and thereafter, from a pro-rata portion of
the Company’s other items of income and gain for the Fiscal Year. It is the
intent of the parties that any allocation under this section 5.3(a) shall
constitute a “minimum gain chargeback” under Regulation Section
1.704-2(f).
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(b) Interest Holder Minimum Gain
Chargeback. Except as otherwise provided in Regulation Section
1.704-2(i)(4), if, there is a net decrease in Interest Holder Minimum Gain
attributable to an Interest Holder Non-recourse Liability during any Company
Fiscal Year, each Interest Holder who has a share of the Interest Holder Minimum
Gain attributable to such Interest Holder Non-recourse Liability shall be
specially allocated items of gross income and gain for such Fiscal Year (and, if
necessary, subsequent Fiscal Years) in an amount equal to that Interest Holder’s
share of the net decrease in the Interest Holder Minimum Gain. This allocation
shall be made after the allocation under section 5.3(a), and prior to any other
allocation under this section 5.3. Allocations of gross income and gain under
this section 5.3(b) shall be made first from gain recognized from the
disposition of Company assets subject to Interest Holder Non-recourse
Liabilities to the extent of Interest Holder Minimum Gain attributable to those
assets, and thereafter, from a pro-rata portion of the Company’s other items of
income and gain for the Fiscal Year. It is the intent of the parties that any
allocation under this section 5.3(b) shall constitute a “minimum gain
chargeback” under Regulation Section 1.704-2(i).
(c) Qualified Income
Offset. If any Interest Holder unexpectedly receives any adjustments,
allocations, or distributions described in Regulation Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6), items of gross income and gain shall be specially
allocated to each such Interest Holder in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of such Interest Holder as quickly as possible. An allocation
under this section 5.3(c) shall be made only if and to the extent that such
Interest Holder would have an Adjusted Capital Account Deficit after all other
allocations provided for under this section 5.3 have been tentatively made as if
this section 5.3(c) were not in the Agreement.
(d) Non-recourse
Deductions. Non-recourse Deductions for a Fiscal Year shall be specially
allocated among the Interest Holders in accordance with their
Percentages.
(e) Interest Holder Non-recourse
Deductions. Any Interest Holder Non-recourse Deduction for any Fiscal
Year shall be specially allocated to the Interest Holder who bears the risk of
toss with respect to the Interest Holder Non-recourse Liability to which the
Interest Holder Non-recourse Deduction is attributable, as determined in
accordance with Regulation Section 1.704-2(i)(1).
(f) Code Section 754
Adjustment. To the extent an adjustment to the tax basis of any Company
asset under Code Section 734(b) or Code Section 743(b) is required, under
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of the adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases basis), and the gain or loss shall be
specially allocated to the Interest Holders in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted under that
Section of the Regulations.
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(g)
Gross Income
Allocation. In the event any Interest Holder has a deficit Capital
Account at the end of any Fiscal Year which is in excess of the sum of (i) the
amount such Interest Holder is obligated to restore and (ii) the amount such
Interest Holder is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Interest Holder shall be specially allocated items of Company income and gain in
the amount of such excess as quickly as possible, provided that an allocation
pursuant to this section 5.3(g) shall be made only if and to the extent that
such Interest Holder would have a deficit Capital Account in excess of such sum
after all other allocations provided for in this section 5 have been made as if
section 5.3(c) and this section 5.3(g) were not in this Agreement.
5.4 Curative Allocations.
The allocations set forth in section 5.3 (the “Regulatory
Allocations”) are intended to comply with certain requirements of the
Regulations. It is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of the Company income, gain, loss or
deduction pursuant to this section 5.4. Therefore, notwithstanding any other
provision of this section 5 (other than the Regulatory Allocations), the
Management Committee shall make such offsetting special allocations of Company
income, gain, loss or deduction in whatever manner it determines appropriate, in
its sole and absolute discretion, so that, after such offsetting allocations are
made, each Interest Holder’s Capital Account balance is, to the extent possible,
equal to the Capital Account balance such Interest Holder would have had if the
Regulatory Allocations were not part of the Agreement and all Company items were
allocated pursuant to sections 5.1 and 5.2.
5.5 Tax Allocations: Code
Section 704(c).
(a) In
accordance with Code Section 704(c) and the Regulations thereunder, income,
gain, loss, and deduction with respect to any property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Interest Holders so as to take account of any variation between the adjusted
basis of such property to the Company for federal income tax purposes and its
initial Gross Asset Value (computed in accordance with the definition of Gross
Asset Value) as determined by the Management Committee using any permissible
method under Code Section 704(c) and the Regulations thereunder.
(b) In
the event the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraph (ii) of the definition of Gross Asset Value, 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 Regulations thereunder.
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(c) Any
elections or other decisions relating to such allocations shall be made by the
Management Committee in any manner that reasonably reflects the purpose and
intention of this Agreement. Allocations pursuant to this section 5.5 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 Interest Holder’s Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.
5.6 General Allocation
Provisions.
(a) If
any assets of the Company are distributed in kind to the Interest Holders, those
assets shall be valued at their fair market value, and any Interest Holder
entitled to any interest in those assets shall receive that interest as a
tenant-in-common with all other Interest Holders so entitled. Unless the
Management Committee determines otherwise, the fair market value of the assets
shall be determined by an independent appraiser who shall be selected by the
Company. The Profit or Loss for each unsold asset shall be determined as if the
asset had been sold at its fair market value, and the Profit or Loss shall be
allocated as provided in sections 5.1 through 5.5 and shall be properly credited
or charged to the Capital Accounts of the Interest Holders prior to the
distribution of the assets under sections 5.7 and 5.8.
(b) The
Management Committee is hereby authorized, upon the advice of the Company’s tax
counsel, to amend this section 5 to comply with the Code and the Regulations
promulgated under Code Section 704(b); provided, that no
amendment shall materially affect distributions to an Interest Holder without
the Interest Holder’s prior written consent.
(c) The
Members are aware of the income tax consequences of the allocations made by this
section 5 and hereby agree to be bound by the provisions of this section 5 in
reporting their shares of Company income and losses for income tax
purposes.
(d) For
purposes of determining the Profits, Losses, or any other items allocable to any
period, Profits, Losses, and any such other items shall be determined on a
daily, monthly, or other basis, as determined by the Management Committee using
any permissible method under Code Section 706 and the Regulations
thereunder.
(e) Solely
for purposes of determining an Interest Holder’s proportionate share of the
“excess non-recourse liabilities” of the Company within the meaning of
Regulation Section 1.752-3(a)(3), the Interest Holders’ Interests in Company
profits are in proportion to their Percentages.
(f)
To the extent permitted by Regulation Section 1.704-2(h)(3), the Management
Committee shall endeavor to treat distributions to Interest Holders as having
been made from the proceeds of a Non-recourse Liability or a Member Non-recourse
Liability only to the extent that such distributions would cause or increase an
Adjusted Capital Account Deficit for any Interest Holder.
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(g)
Except for arrangements expressly described in this Agreement, no Interest
Holder shall enter into (or permit any Person related to the Interest Holder
to.enter into) any arrangement with respect to any liability of the Company that
would result in such Interest Holder, or a person related to such Interest
Holder under Regulation Section 1.752-4(b), bearing the economic risk of loss
(within the meaning of Regulation Section 1.752-2) with respect to such
liability unless such arrangement has been approved by all of the Members. To
the extent an Interest Holder is permitted to guarantee the repayment of any
Company indebtedness under this Agreement, each of the other Interest Holders
shall be afforded the opportunity to guarantee such Interest Holder’s pro rata
share of such indebtedness, determined in accordance with the Interest Holders’
respective Sharing Ratios.
5.7 Distribution of Cash Flow
and Net Capital Proceeds.
(a) Except
as may be provided in a written consent signed by all of the Members, the
Company shall make cash distributions to its Members in accordance with their
Percentages to pay the income taxes on the income that passes through from the
Company under the respective provisions of the Code and applicable state law.
The total amount required to be distributed hereunder shall be an amount equal
to the excess, if any, of (i) forty percent (40%) of the taxable income of the
Company over (ii) the amount of tax credits, including, without limitation,
foreign tax credits, to which the Company is entitled and which may be allocated
and passed through to the Interest Holders. The Company shall make the
distributions required in this section 5.7(a) in a timely manner to allow the
tax (including, without limitation, estimated tax payments) attributable to the
income passed through to any Interest Holder to be paid when due.
(b) In
addition to the distributions required pursuant to section 5.7(a), Cash Flow and
Net Capital Proceeds of the Company may be distributed at such time or times as
determined in the discretion of the Management Committee to the Interest Holders
in accordance with their Percentages.
(c) All
amounts required to be withheld under Code Section 1446 or any other provision
of federal, state, or local law shall be treated as amounts actually distributed
to the affected Interest Holders for all purposes under this
Agreement.
5.8 Liquidation and
Dissolution.
(a)
If the Company is liquidated, the assets of the Company shall be
distributed to the Interest Holders as provided in section 8.2.
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(b)
No Interest Holder shall be obligated to restore a Negative Capital Account.
6.
Management: Rights, Powers,
and Duties.
6.1 Management.
(a) The
management of the Company shall be vested in the General Managers (the
“Management Committee”) designated by the Members as provided in section 6.1 (b)
hereof. The General Managers need not be Members of the
Company.
(b) The
number of General Managers on the Management Committee shall be one (1) unless
otherwise provided herein. The initial General Manager of the Company shall be
Progressive Health, LLC.
(c) A
General Manager may be removed for cause by a vote of the Members.
(d) In
the event any General Manager is removed, dies or is unwilling or unable to
serve as such, the Members may elect a new General Manager and the remaining
General Managers shall constitute the Management Committee until the election of
a new General Manager. If at any time there are no General Managers then
serving, the Members shall elect a new General Manager(s).
(e) Each
General Manager shall have one (1) vote. Except as otherwise provided in this
Agreement, the Management Committee shall act by the affirmative vote of a
majority of the total number of members of the Management
Committee.
(f) Once
an action is approved by the Management Committee as provided in section 6.1(e)
or any other applicable provision of this Agreement, then any General Manager,
acting alone, may execute any documents necessary or desirable to effectuate
such action and any person conducting business with the Company shall be
entitled to rely on the authority and signature of any General
Manager.
(g) The
Management Committee shall have full, exclusive, and complete discretion, power,
and authority, subject in all cases to the other provisions of this Agreement
including without limitation section 6.1(h) and the requirements of applicable
law, to manage, control, administer, and operate the business and affairs of the
Company for the purposes herein stated, and to make all decisions affecting such
business and affairs, including, without limitation, for Company purposes, the
power to:
(i)
acquire by purchase, lease or otherwise, any real or personal
property,
tangible or intangible;
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(ii) to
operate, maintain, finance, improve, construct, own, grant options with respect
to, or lease any real estate and any personal property;
(iii) sell,
dispose, trade, or exchange Company assets in the ordinary course of the
Company’s business;
(iv) enter
into agreements and contracts and to give receipts, releases, and
discharges;
(v) purchase
liability and other insurance to protect the Company’s properties and
business;
(vi) execute
or modify leases with respect to any part or all of the assets of the
Company;
(vii) borrow
money for and on behalf of the Company, and, in connection therewith, execute
and deliver notes, mortgages and other instruments including those authorizing
the confession of judgment against the Company;
(viii) prepay/
in whole or in part, amend, modify, or extend any mortgages or deeds of trust
which may affect any asset of the Company and in connection therewith to execute
for and on behalf of the Company any extensions, renewals, or modifications of
such mortgages or deeds of trust;
(ix) execute
any and all other instruments and documents which may be necessary or in the
opinion of the Management Committee desirable to carry out the intent and
purpose of this Agreement, including without limitation, documents whose
operation and effect extend beyond the term of the Company;
(x)
make any and all expenditures which the Management Committee, in its sole and
absolute discretion, deems necessary or appropriate in connection with the
management of the affairs of the Company and the carrying out of its obligations
and responsibilities under this Agreement, including without limitation, all
legal, accounting and other related expenses incurred in connection with the
organization and financing, and operation of the Company;
(xi) enter
into any kind of activity necessary to, in connection with, or incidental to,
the accomplishment of the purposes of the Company; and
(xii) contract
on behalf of the Company for the employment and services or employees and/or
independent contractors, such as lawyers and accountants, and delegate to such
Persons the duty to manage or supervise any of the assets or operations of the
Company;
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(xiii) institute,
prosecute, defend, settle, compromise and dismiss lawsuits or other judicial or
administrative proceedings brought on or in behalf of, or against, the Company,
the Members or any General Manager in connection with activities arising out of,
connected with, or incidental to this Agreement, and to engage counsel or others
in connection therewith;
(xiv) indemnify
a Member or General Manager or former Member or General Manager, and to make any
other indemnification that is authorized by this Agreement in accordance with
the Act; and
(xv) invest
and reinvest Company reserves.
(h)
Notwithstanding anything to the contrary in this Agreement, the Management
Committee shall not undertake any of the following on behalf of the Company
without the approval of those Members holding more than fifty percent (50%) of
the Voting Interests:
(i) selling
or otherwise disposing of all or substantially all of the Company’s property;
(ii) the
admission of a new Member;
(iii) the
acquisition of capital assets by the Company in excess of $25,000 individually
or in the aggregate;
(iv) make
loans to or guarantee loans of any General Manager or any Affiliate of a General
Manager;
(v) make
rebates, kickbacks, or reciprocal arrangements, nor may any General Manager
participate in any business arrangement which would circumvent this
Agreement;
(vi) enter
into any new borrowing on behalf of the Company, the debt service of which, when
added to the debt service on all prior indebtedness of the Company, will exceed
three-fourths (75%) of the Company’s Cash Flow as determined by the Management
Committee; or
(viii) enter
into any contract or agreement where the aggregate value or payment due is in
excess of $25,000.
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(i)
A meeting of the Management Committee may be called by any General
Manager. Notice of each such meeting shall be given to each General Manager by
telephone, telecopy, telegram or similar method (in each case, notice shall be
given at least seventy-two (72) hours before the time of the meeting) or sent by
first-class mail (in which case notice shall be given at least five (5) days
before the meeting), unless a longer notice period is established by the
Management Committee. Each such notice shall state (i) the time, date, place
(which shall be at the principal office of the Company unless otherwise agreed
to by all General Managers) or other means of conducting such meeting and (ii)
the purpose of the meeting to be so held. No actions other than those specified
in the notice may be considered at any special meeting unless unanimously
approved by the General Managers. Any General Manager may waive notice of any
meeting in writing before, at, or after such meeting, except when a General
Manager attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting was not properly
called.
(j)
Any action required to be taken at a meeting of the Management Committee,
or any action that may be taken at a meeting of the Management Committee, may be
taken at a meeting held by means of conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at such meeting.
(k)
Notwithstanding anything to the contrary in this section 6.1, the Management
Committee may take without a meeting any action that may be taken by the
Management Committee under this Agreement if such action is approved by the
unanimous written consent of the General Managers.
(l)
If the Management Committee cannot agree upon whether or not to take any
action or refrain from taking any action, then any General Manager may submit
such proposed issue to the Members in accordance with section 6.2 of this
Agreement.
6.2 Meetings of and Voting by
Members.
(a)
A meeting of the Members may be called at any time by any General Manager or by
those Members holding more than fifty percent (50%) of the Voting Interests.
Meetings of Members shall be held at the Company’s principal place of business
or at any other place designated by the Person calling the meeting. Not less
than five (5) nor more than sixty (60) days before each meeting, the Person
calling the meeting shall give written notice of the meeting to each Member
entitled to vote at the meeting. The notice shall state the time, place, and
purpose of the meeting. Notwithstanding the foregoing provisions, each Member
who is entitled to notice waives notice if before or after the meeting the
Member signs a waiver of the notice which is filed with the records of Members’
meetings, or is present at the meeting in person or by proxy. Unless this
Agreement provides otherwise, at a meeting of Members, the presence in person or
by proxy of Members holding more than fifty percent (50%) of Voting Interests
constitutes a quorum. A Member may vote either in person or by written proxy
signed by the Member or by his duly authorized attorney in
fact.
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(b) Except
as otherwise provided in this Agreement, wherever this Agreement requires the
approval of the Members, the affirmative vote of Members holding more than fifty
percent (50%) of the Voting Interests shall be required to approve the
matter.
(c) In
lieu of holding a meeting, the Members may vote or otherwise take action by a
written instrument indicating the consent of Members holding more than fifty
percent (50%) of the Voting Interests.
(d) Wherever
the Act requires unanimous consent, or the consent of all Members other than the
one who is the subject of an action, to approve or take any action, that consent
shall be given in writing.
(e) With
respect to those Members which are partnerships, if any, the individuals listed
in the address for such on Exhibit B shall be
recognized by the Management Committee and the Company for all purposes of this
Agreement as the designated representative of such Member and authorized to
exercise all rights and obligations of such Member hereunder, until such time as
the Member informs the Management Committee in writing signed by all its
constituent partners to the contrary.
(f) If
any matter is brought to the Members for a vote or consent and the Members are
deadlocked and unable to obtain the affirmative vote or consent of Members
holding more than 50% of the Voting Interests to either approve or disapprove of
the matter, then any Member may request the matter to be submitted to
arbitration in accordance with section 11.6.
6.3
Personal
Services.
(a) No
Member shall be required to perform services for the Company solely by virtue of
being a Member. Unless approved by the Management Committee, no Member shall
perform services for the Company or be entitled to compensation for services
performed for the Company.
(b) Unless
approved by Members holding more than fifty percent (50%) of the Voting
Interests, no General Manager shall be entitled to compensation for services
performed for the Company in that capacity. However, upon substantiation of the
amount and purpose thereof, a General Manager shall be entitled to reimbursement
for expenses reasonably incurred in connection with the activities of the
Company.
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6.4 Duties of
Parties,
(a) The
General Managers shall devote such time to the business and affairs of the
Company as is necessary to carry out the General Managers’ duties set forth in
this Agreement.
(b) Except
as otherwise expressly provided in Section 6.4(c) and Section 10, nothing in
this Agreement shall be deemed to restrict the rights of any Member, or of any
Affiliate of any Member, to conduct any other business or activity. The
organization of the Company shall be without prejudice to their respective
rights (or the rights of their respective Affiliates) to maintain, expand, or
diversify such other interests and activities and to receive and enjoy profits
or compensation therefrom. Each Member waives any rights the Member might
otherwise have to share or participate in such other interests or activities of
any other Member or the Member’s Affiliates.
(c) Each
Member understands and acknowledges that the conduct of the Company’s business
may involve business dealings and undertakings with Members and their
Affiliates. In any of those cases, those dealings and undertakings shall be at
arm’s length and on commercially reasonable terms.
6.5 Liability and
Indemnification.
(a) The
General Managers shall not be liable, responsible, or accountable, in damages or
otherwise, to any Interest Holder or to the Company for any act performed or act
omitted to be performed by the General Managers within the scope of the
authority conferred on the General Managers by this Agreement, except for fraud,
willful misconduct or an intentional breach of this Agreement.
(b) The
Company shall indemnify the General Managers for any act performed or act
omitted to be performed by the General Managers within the scope of the
authority conferred on the General Managers by this Agreement, except for fraud,
willful misconduct or an intentional breach of this Agreement. Such
indemnification shall include, without limitation, all judgments and claims
against any General Manager relating to any liability or damage incurred by
reason of any such act performed or omitted to be performed by such General
Manager in connection with the business of the Company, including attorney fees
incurred by such General Manager in connection with the defense of any action
based on any such act or omission, which attorney fees may be paid as incurred,
including all such liabilities under federal and state securities laws
(including the Securities Act of 1933, as amended) to the greatest extent
permitted by law.
(c) In
the event of any action by a General Manager or Interest Holder against any
General Manager, including a Company derivative suit, the Company shall
indemnify, save harmless and pay all expenses of such General Manager, including
attorney fees, incurred in the defense of such action.
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(d)
The Company shall indemnify, save harmless and pay all expenses, costs or
liabilities of any General Manager who for the benefit of the Company makes any
deposit, acquires any option or makes any other similar payment or assumes any
obligation in connection with any property proposed to be acquired by the
Company and who suffers any financial loss as the result of such
action.
6.6 Power of
Attorney.
(a) Each
Interest Holder constitutes and appoints each General Manager as the Interest
Holder’s true and lawful attorney-in-fact (“Attorney-in-Fact”), and in the
Interest Holder’s name, place, and stead, to make, execute, sign, acknowledge,
and file:
(i) a
certificate of formation or any amendment thereto;
(ii) all
such documents or instruments to reflect the admission to the Company of a
substituted Member, an additional Member, or the withdrawal of any Member, in
the manner prescribed in this Agreement;
(iii) all
documents which the Attorney-in-Fact deems appropriate to reflect any amendment,
change, or modification of this Agreement;
(iv) any
and all other certificates or other instruments required to be filed by the
Company under the laws of the State of New Jersey or of any other state or
jurisdiction, including, without limitation, any certificate or other
instruments necessary in order for the Company to continue to qualify as a
limited liability company under the laws of the State of New
Jersey;
(v) one
or more alternate name certificates; and
(vi) all
documents which may be required to dissolve and terminate the Company and to
cancel its certificate of formation.
(b) Irrevocability. The
foregoing power of attorney is irrevocable and is coupled with an interest, and,
to the extent permitted by applicable law, shall survive the death or disability
of an Interest Holder. It also shall survive the Transfer of an Interest, except
that if the transferee is approved for admission as a Member, this power of
attorney shall survive the delivery of the assignment for the sole purpose of
enabling the Attorney-in-Fact to execute, acknowledge, and file any documents
needed to effectuate the substitution. Each Interest Holder shall be bound by
any representations made by the Attorney-in-Fact acting in good faith pursuant
to this power of attorney, and each Interest Holder
hereby waives any and all defenses which may be available to contest, negate, or
disaffirm the action of the Attorney-in-Fact taken in good faith under this
power of attorney.
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6.7
Authorized
Transactions. By executing this Agreement, all of the Members of the
Company unanimously consent to the following:
(a) the
Company borrowing up to One Million Seven Hundred Thousand ($1,500,000.00)
Dollars, and such additional sums as may be determined by any General Manager,
in accordance with the terms and conditions set forth in that certain loan
letter (the “DVI Letter”) issued by DVI Financial Services, Inc. (the “Lender”)
to the Company, dated November 20, 2000 as same may be amended or modified. The
undersigned also hereby unanimously consent to any and all actions heretofore
taken by Progressive Health, LLC with respect to or in connection with the
Commitment;
(i) the
authorization of any of the General Managers to execute and deliver any and all
documents necessary or advisable to effectuate the purposes of the Lease, the
DVI Commitment and any other contracts executed in connection therewith, such
documents to include, without limitation, closing statements, notes, mortgages,
assignments of leases and rents agreements and the like;
(ii) the
Company entering into a lease (the “Lease”) for approximately 3,000 square feet
at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ on terms and conditions acceptable
to the Management Committee;
(b) such
other matters as the General Manager deems to be in the best interest of the
Company.
7.0
Transfers and Pledges of
Interests.
7.1 Transfers.
(a)
Except as provided in section 7.5, no Person may Transfer all or any portion of
or any interest or rights in the Person’s Membership Rights or Interest unless
all of the following conditions (“Conditions of
Transfer”) are satisfied: (i) the Transfer will not require registration
of Interests or Membership Rights under any federal or state securities laws;
(ii) the transferee delivers to the Company a written instrument agreeing to be
bound by the terms of this Agreement; (iii) the Transfer will not result in the
termination of the Company pursuant to Code Section 708; (iv) the transferor or
the transferee delivers the following information to the Company: (A) the
transferee’s taxpayer identification number; and (B) the transferee’s initial
tax basis in the transferred Interest; (v) the transferor and/or transferee
shall pay to the Company a transfer fee that is sufficient to pay all reasonable
expenses, of the Company in connection with the transaction; and (vi) the
transferor complies with the provisions set forth in section
7.6.
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(b) If
the Conditions of Transfer are satisfied, then a Member or Interest Holder may
Transfer all or any portion of that Person’s Membership Rights or Interest. If
such a Transfer is made, the transferee of a Member shall become a substituted
Member in the Company with full Membership Rights, and the transferee of an
Interest Holder shall be recognized as the successor in interest to the Interest
Holder.
(c) Each
Member hereby acknowledges the reasonableness of the prohibition contained in
this section 7.1 in view of the purposes of the Company and the relationship of
the Members. The Transfer of any Membership Rights or Interests in violation of
the prohibition contained in this section 7.1 shall be deemed invalid, null and
void, and of no force or effect. Any Person to whom Membership Rights or
Interests are attempted to be transferred in violation of this Section shall not
be entitled to vote on matters coming before the Members, receive distributions
from the Company, or have any other rights in or with respect to the Membership
Rights or the Interests.
7.2 Effect of Involuntary
Withdrawal. Immediately upon the occurrence of an event of Involuntary
Withdrawal (other than with respect to the death of a Member who makes a
permitted Testamentary Transfer pursuant to Section 7.5), the successor of the
withdrawn Member shall thereupon become an Interest Holder but shall not become
a Member; provided that the successor may become a substituted Member upon
satisfaction of the Conditions of Transfer set forth in section 7.1(a) and the
procurement of the consent of all the remaining Members, which consent may be
withheld for any reason or for no reason.
7.3 Sale on Termination as an
Employee.
(a) If
any Member who is an employee of the Company (i) ceases to be an employee of the
Company and (ii) performs any service in connection with any diagnostic imaging
business within 100 miles of the Premises, then, such Member shall sell, and the
Company shall purchase, all of the Member’s Membership Interest in the Company
in the manner and on the terms hereinafter provided. For purposes of this
section 7.3, if any Member is an entity and a manager, trustee, partner or
equity owner in such entity is an employee of the Company, then such entity
shall be required to sell its entire Membership’s Interest in the Company
pursuant to this section 7.3 if such manager, trustee, partner or equity owner
ceases to be an employee of the Company and performs professional medical
services within 100 miles of the Premises other than for the Company. In the
event a court determines that any portion of this section 7.3 (a) is
unenforceable, then the court is authorized to narrow the scope of this section
to the extent necessary to make it enforceable.
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(b) If
a Member is required to sell his Membership Interest in the Company pursuant to
section 7.3(a) above, then the closing for the purchase and sale shall take
place on a date which is not less than sixty (60) and not more than one hundred
and eighty (180) days after the date when the Member (or manager, trustee,
partner or equity owner of such Member) ceases to be employee of the Company and
performs professional medical services within 100 miles of the Premises other
than for the Company (unless extended by mutual agreement of the parties). Such
closing shall be at 10:00 A.M. at the principal place of business of the Company
or at such other time or place as the parties may mutually
agree.
(c) (i)
The purchase price for any Membership Interest in the Company sold pursuant to
this section 7.3 shall the Member’s Percentage multiplied by the book value of
the Company as of the last day of the Company’s taxable year immediately
preceding the year in which the Member both ceases to be an employee of the
Company and performs professional medical services within 100 miles of the
Premises other than for the Company, as determined by the accountant then
regularly employed by the Company to maintain the books and records of the
Company; provided that no value shall be ascribed to goodwill or any other
intangible asset and any real estate owned by the Company shall be valued at its
fair market value as hereinafter determined, rather than its book value. In
making such determinations, said accountant shall use the accounting records
normally used in the maintenance of the Company’s books and records consistent
with prior years and sound accounting practice. Such determination shall be
submitted in writing by the said accountant and when so submitted shall be final
and binding on all persons having any interest whatsoever in such
determination.
(ii) For
purposes of this’Agreement, the fair market value of any real estate shall be
determined by agreement between the Company and the selling Member, and if the
parties are unable to agree, then each party shall select a disinterested
appraiser and if the higher of the two appraisals does not exceed the lower of
the two appraisals by more than ten percent (10%), then the fair market value of
the real estate shall be the average of the two appraisals. If the higher
appraisal exceeds the lower appraisal by more than ten percent (10%), the two
appraisers shall select a third disinterested appraiser who shall determine the
fair market value of the real estate, which determination shad be submitted in
writing and shall be final and binding on all persons having any interest
whatsoever in such determination. All costs of an appraiser selected by the two
disinterested appraisers shall be shared equally by the Company and the selling
Member. All costs of an individually selected appraiser shall be borne by the
party selecting the appraiser.
(d) The
portion of the purchase price to be paid at the closing by the Company to the
selling Member shall be an amount equal to ten percent (10%) of the purchase
price. The balance of the purchase price on account of the sale of the
Membership Interest of the Company as provided herein shall be paid by the
execution and delivery to the selling Member of a non-negotiable promissory note
of the Company for the amount of such balance, payable in forty (40) consecutive
equal quarterly installments of principal plus accrued interest computed at the
applicable federal rate for obligations of similar maturities for the month
during which the closing occurs, as determined under Code Section 1274, the
first such installment to be due and payable three (3) months from and after the
date of the closing.
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7.4 Voluntary
Resignation. A Member shall not have the right or power to voluntarily
resign from the Company prior to the dissolution and winding up of the
Company.
7.5 Permitted Transfers.
Any Member may Transfer, by inter vivos or testamentary
Transfer, all or a portion of his Membership Rights to his spouse, children or
their issue, outright or in trust (“Family Members”); any
Interest Holder may Transfer all or any portion of his Interest to any
partnership, limited liability company, corporation or any other entity in which
the beneficial interest are owned by Family Members; and any entity which as a
Member or an Interest Holder may transfer all or any portion of its Membership
Rights or Interest to any beneficial owner of the entity; provided that the
Conditions of Transfer contained in section 7.1(a)(i) through (v) inclusive are
satisfied. In such event, the transferee of a Member shall be a substituted
Member in the Company with respect to the transferred Interest and the
transferee of an Interest Holder shall be recognized as the successor in
interest to the Interest Holder.
7.6 Right of First
Refusal.
(a) If
a Member or an Interest Holder (the “Offeror”) desires to transfer all or part
of his Membership Rights or Interest in the Company (the “Offered Interest”), he
shall notify the Company and the Remaining Members that he has received a bona
fide written offer (the “Purchase Offer”) from a person (the “Purchaser”) to
purchase the Offered Interest for a purchase price (the “Offer Price”)
denominated and payable in United States dollars at closing or according to
specified terms, with or without interest, which offer shall be in writing
signed by the Purchaser and shall be irrevocable for a period ending no sooner
than the first business day following the end of the Offer Period, as
hereinafter defined.
(b) Prior
to making any transfer that is subject to the terms of this section 7.6, the
Offeror shall give to the Company and each other Member written notice (the
“Offer Notice”) which shall include a copy of the Purchase Offer and an offer
(the “Firm Offer”) to sell the Offered Interest to the other Members (the
“Offerees”) for the Offer Price, payable according to the same terms as (or more
favorable terms than) those contained in the Purchase Offer, provided that the
Firm Offer shall be made without regard to the requirement of any ▇▇▇▇▇▇▇ money
or similar deposit required of the Purchaser prior to closing, and without
regard to any security (other than the Offered Interest) to be provided by the
Purchaser for any deferred portion of the Offer Price.
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(c) The
Firm Offer shall be irrevocable for a period (the “Offer Period”) ending at
11:59 P.M., local time at the Company’s principal place of business, on the
thirtieth day following the day of the Offer Notice.
(d) At
any time during the first twenty-five (25) days of the Offer Period, any Offeree
may accept the Firm Offer as to all or any portion of the Offered Interest, by
giving written notice of such acceptance to the Offeror and each other Offeree
and the Company, which notice shall indicate the maximum Offered Interest that
such Offeree is willing to purchase. In the event that Offerees (“Accepting
Offerees”), in the aggregate, accept the Firm Offer with respect to all of the
Offered Interest, the Firm Offer shall be deemed to be accepted and each
Accepting Offeree shall be deemed to have accepted the Firm Offer as to that
portion of the Offered Interest that corresponds to the ratio of the percentage
of the Offered Interest that such Accepting Offeree indicated a willingness to
purchase to the aggregate percentages of the Offered Interest that all Accepting
Offerees indicated a willingness to purchase. If Offerees do not accept the Firm
Offer as to all of the Offered Interest during the first twenty-five (25) days
of the Offer Period, then the Company shall have the option to purchase such
remaining Offered Interest by giving written notice of such acceptance to all of
the Accepting Offerees and the Offeror during the Offer Period. If the Company
does not accept the Firm Offer as to all such remaining Offered Interest, the
Firm Offer shall be deemed to be rejected in its entirety.
(e) In
the event that the Firm Offer is accepted, the closing of the sale of the
Offered Shares shall take place within thirty (30) days after the Firm Offer is
accepted or, if later, the date of closing set forth in the Purchase Offer. The
Company, the Offeror and the Accepting Offerees shall execute such documents and
instruments as may be necessary or appropriate to effect the sale of the Offered
Interest pursuant to the terms of the Firm Offer and this section
7.6.
(f) If
the Firm Offer is not accepted in the manner hereinabove provided, the Offeror
may sell the Offered Interest to the Purchaser at any time within sixty (60)
days after the last day of the Offer Period, provided that such sale shall be
made on terms no more favorable to the Purchaser than the terms contained in the
Purchase Offer and provided further that such sale complies with other terms,
conditions, and restrictions of this Agreement that are not expressly made
inapplicable to sales occurring under this section 7.6. In the event that the
Offered Interest is not sold in accordance with the terms of the preceding
sentence, the Offered Shares shall again become subject to all of the conditions
and restrictions of this section 7.6.
(g) All
sales pursuant to a Purchase Offer shall be made in accordance with applicable
federal and state securities laws and the remaining Members can require the
Offeror to furnish to the remaining Members, at the Offeror’s expense, an
opinion of counsel, reasonably acceptable as to the form, substance and issuer
thereof, that such sale is exempt from applicable federal and state securities
registration requirements. All Shares sold pursuant to this section 7.6 to a
proposed Purchaser shall, except to the extent otherwise provided, continue to
be subject to the terms of this Agreement.
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(h)
In the event that the Firm Offer is accepted but an Accepting Offeree and/or the
Company breaches its obligation to purchase the Offered Interest pursuant to the
terms of the Firm Offer and this section 7.6, the Offeror shall notify in
writing (the “Default Notice”) each other Accepting Offeree and/or the Company
who accepted the Firm Offer, if any, and each other Accepting Offeree and/or the
Company shall have the right to purchase the portion of the Offered Interest not
purchased by reason of the default in the same proportions as they agreed to
purchase the remainder of the Offered Interest by giving written notice of such
acceptance to the Offeror within ten (10) days of the receipt of the Default
Notice, in which event a closing shall take place in accordance with section
7.6(e). If such other Accepting Offerees and the Company do not exercise their
right to purchase such portion of the Offered Interest as provided in this
section 7.6(h), then the Firm Offer shall be deemed to be rejected and the
Offeror may sell the Offered Interest as provided in section 7.6(f). In the
event that the Firm Offer is accepted but an Accepting Offeree and/or the
Company breaches its obligation to purchase the Offered Interest pursuant to the
terms of the Firm Offer and this section 7.6, then such Accepting Offeree and/or
the Company shall have no right to purchase the Offered Interest under this
Section 7.6; provided that if the Offered Interest is not sold to an Accepting
Offeree and/or the Company or to the Purchaser within six (6) months from the
date of the Firm Offer, then such Accepting Offeree and/or the Company shall
retain its right to purchase an Offered Interest pursuant to this section
7.6.
8.0 Dissolution, Liquidation,
and Termination of the Company.
8.1 Events of
Dissolution. The existence of the Company shall be for a period of thirty
years; provided that the Company shall be dissolved upon the happening of either
of the following events:
(a) upon
the unanimous written agreement of all of the Members;
(b) the
sale of all or substantially all the business and assets of the
Company;
or
(c) ninety
(90) days after the date on which the Company only has one Member, unless at
least one additional Member is admitted within ninety (90) days after the date
on which the Company had only one Member.
The
Company shall not dissolve upon the bankruptcy, death, retirement, resignation,
dissolution, expulsion, incapacity, withdrawal or other event which terminates
the continued membership of any Member but shall continue in existence pursuant
to the terms of this Agreement.
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8.2 Procedure far Winding
Up.
If the Company is dissolved, the General Managers shall wind up its affairs. On
winding up of the Company, the assets of the Company shall be distributed as
follows:
first, to
creditors, including Members who are creditors, to the extent otherwise
permitted by law, in satisfaction of liabilities of the Company, other than
liabilities for which reasonable provision has been made;
second,
to Interest Holders to the extent of and in proportion to their Positive Capital
Accounts; and
third, to
the Interest Holders in accordance with their Percentages.
8.3 Cancellation of
Certificate. If the Company is dissolved, following completion of winding
up the Company, the General Manager, and if there are no General Managers, the
Members shall promptly cancel the Certificate of Formation by filing a
Certificate of Cancellation with the Secretary of State. If there are no
Members, the Certificate of Cancellation shall be filed by the last Person to be
a Member or his legal or personal representatives.
9.0
Books, Records, Accounting,
and Tax Elections
9.1 Bank Accounts. All
funds of the Company shall be deposited in a bank account or accounts opened by
on behalf of the Company. The Management Committee shall determine the
institution or institutions at which the accounts will be opened and maintained,
the types of accounts, and the Persons who will have authority with respect to
the accounts and the funds therein.
9.2 Books and
Records.
(a) The
Management Committee shall keep or cause to be kept complete and accurate books
and records of the Company and supporting documentation of the transactions with
respect to the conduct of the Company’s business. The records shall include,
without limitation; (i) complete and accurate information regarding the state of
the business and financial condition of the Company; (ii) a copy of the
Certificate of Formation and operating agreement, all amendments to the
Certificate of Formation and operating agreement, and all executed copies of any
written powers of attorney pursuant to which the operating agreement, any
certificate, and all amendments thereto have been executed; (iii) a current list
of the names and last known business, residence, or mailing addresses of all
Members and other Interest Holders the dates they became Members or Interest
Holders; (iv) the Company’s federal, state, and local tax returns, and (v) true
and full information regarding the amount of cash and a description and
statement of the agreed value of any other property or services contributed by
each Member or Interest Holder and which each Member has agreed to contribute in
the future.
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(b) The
books and records shall be maintained in accordance with sound accounting
practices and shall be available at the Company’s principal office for
examination by any Member or the Member’s duly authorized representative at any
and all reasonable times during normal business hours.
(c) Any
request for information shall be in writing, and shall state the purpose
therefor. Each Member shall reimburse the Company for all costs and expenses
incurred by the Company in connection with the Member’s inspection and copying
of the Company’s books and records.
9.3 Annual Accounting
Period. The annual accounting period of the Company shall be its taxable
year. The Company’s taxable year shall be selected by the Management Committee
subject to the requirements and limitations of the Code.
9.4 Reports. Within 90
days after the end of each taxable year of the Company, the Management Committee
shall cause to be sent to each Person who was a Member at any time during the
accounting year then ended: (i) an annual compilation report, prepared by the
Company’s independent accountants in accordance with standards issued by the
American Institute of Certified Public Accountants; and (ii) a report
summarizing the fees and other remuneration paid by the Company to any Member,
the General Managers or any Affiliate in respect of the taxable year. In
addition, within 90 days after the end of each taxable year of the Company, the
Management Committee shall cause to be sent to each Person who was an Interest
Holder at any time during the taxable year then ended, that tax information
concerning the Company which is necessary for preparing the Interest Holder’s
income tax returns for that year. At the request of any Member, and at the
Member’s expense, the Management Committee shall cause an audit of the Company’s
books and records to be prepared by independent accountants for the period
requested by the Member.
9.5 Tax Matters Partner.
The Management Committee shall appoint a tax matters partner (“Tax Matters
Partner”). The Management Committee may remove the Tax Matters Partner and
appoint a new Tax Matters Partner at any time and from time to time. The Tax
Matters Partner shall have all powers and responsibilities provided in Code
Section 6221, et seg. The Tax Matters Partner shall
keep all Interest Holders informed of all notices from government taxing
authorities which may come to the attention of the Tax Matters Partner. The
Company shall pay and be responsible for all reasonable third-party costs and
expenses incurred by the Tax Matters Partner in performing those duties. A
Interest Holder shall be responsible for any costs incurred by them with respect
to any tax audit or tax-related administrative or judicial proceeding against
any Member, even though it relates to the Company. The Tax Matters Partner shall
not compromise any dispute with the Internal Revenue Service without the
approval of the Members.
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9.6 Tax Elections. The
Management Committee shall have the authority to make all Company elections
permitted under the Code, including, without limitation, elections of methods of
depreciation and elections under Code Section 754. The decision to make or not
make an election shall be at the Management Committee’s sole and absolute
discretion.
9.7 Election to be Treated as
Partnership. The Company shall make any applicable election to be treated
as a partnership for Federal and state income tax purposes. By executing this
Agreement, each of the Members hereby consents to any election made by the
Company for it to be treated as a partnership for Federal and state income tax
purposes.
10.0 Non-Compete/Non
Solicitation. During the Restricted Period (as defined) every Member and
Interest Holder hereby agrees that neither he, nor any entity in which such
Member or Interest Holder beneficially owns 5% or more (whether held directly or
indirectly) whether for his own account or on behalf of another, shall engage in
or participate in, whether as owner, partner, stockholder, director, officer,
employee, joint venturer, lender, investor, advisor, consultant, or any other
participant (whether or not for remuneration of any nature whatsoever), any
business or activity which competes, directly or indirectly with either (i) the
business or businesses conducted by the Company or its Affiliates within the
Restricted Area or (ii) any business in which the Company is contemplating
becoming involved. Notwithstanding the foregoing, Members and Interest Holders
may buy and hold publicly traded securities of any competitor provided that such
ownership does not exceed either (i) 1% of the outstanding stock of such
publicly traded company, or (ii) an aggregate of original purchase prices in
excess of $100,000.
During
the Restricted Period, every Member and Interest Holder hereby agrees that he
will not, directly or indirectly, engage in encouraging, soliciting, placing, or
recruiting any of the Company’s (or its’ Affiliates’) employees, clients, or
customers (or any supplier, lender, lessor or any other person or entity which
has a business relationship with the Company or any of its affiliates), with a
view towards influencing or inducing such employee, client, or customer (or any
supplier, lender, lessor or any other person or entity which has a business
relationship with the Company or any of its Affiliates) to terminate or diminish
the extent of his, her or its relationship with the Company (or its affiliates)
or to develop relationships with the Member or Interest Holder which could
result in the termination or diminishment of the extent of his, her or its
relationship with the Company (or its Affiliates). In the event a court
determines that any portion of this section 10.0 is unenforceable, then the
court is authorized to narrow the scope of this section to the extent necessary,
to make it enforceable.
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For
purposes of this section, the following terms shall have the meanings ascribed
to them:
(i) “employees”
shall include any individual (i) who is employed by the Company, or (ii)
who has received any employment based remuneration from the Company within the
six (6) months prior to the Member or Interest Holder’s Termination
Date.
(ii) “Restricted
Period” means the period commencing on the first day an individual
becomes a Member or Interest Holder of the Company, and shall end twelve months
after the date which such individual (or their affiliate or successor) ceases to
be a Member or Interest Holder of the Company,
(iii) “Restricted Area”
shall mean an area within 25 miles of (i) any facility operated by the
Company or, (ii) the Company’s corporate headquarters, including any facilities
not in existence on the date an individual or corporate entity, as the case may
be, first becomes a Member or Interest Holder.
(iv) “Termination
Date” means, (i) with respect to Members, the date upon which such Member
resigns, is terminated, or otherwise is no longer a Member of the Company, (ii)
with respect to Interest Holders, the first date upon which an Interest Holder
no longer possesses any economic interest or right to acquire an economic
interest in the Company.
11.0
General
Provisions.
11.1 Assurances. Each
Member shall execute all such certificates and other documents and shall do all
such filing, recording, publishing, and other acts as the Members deem
appropriate to comply with the requirements of law for the formation and
operation of the Company and to comply with any laws, rules, and regulations
relating to the acquisition, operation, or holding of the property of the
Company.
11.2 Notifications. Any
notice, demand, consent, election, offer, approval, request, or other
communication (collectively a “notice”) required or permitted under this
Agreement must be in writing and either delivered personally or sent by
overnight express mail, certified or registered mail, postage prepaid, return
receipt requested. A notice must be addressed1 to an
Interest Holder at the Interest Holder’s last known address on the records of
the Company. A notice to the Company must be addressed to the Company’s
principal office. A notice delivered personally will be deemed given only when
acknowledged in writing by the person to whom it is delivered. A notice that is
sent by mail will be deemed given three business days after it is mailed. Any
party may designate, by notice to all of the others, substitute addresses or
addressees for notices; and, thereafter, notices are to be directed to those
substitute addresses or addressees.
– 25
–
11.3
Specific
Performance. The parties recognize that irreparable injury will result
from a breach of any provision of this Agreement and that money damages will be
inadequate to remedy fully the injury. Accordingly, in the event of a breach or
threatened breach of one or more of the provisions of this Agreement, any party
who may be injured (in addition to any other remedies which may be available to
that party) shall be entitled to one or more preliminary or permanent orders (a)
restraining and enjoining any act which would constitute a breach or (b)
compelling the performance of any obligation which, if not performed, would
constitute a breach.
11.4 Complete Agreement.
This Agreement constitutes the complete and exclusive statement of the agreement
among the Members and Interest Holders. It supersedes all prior written and oral
statements, including any prior representation, statement, condition, or
warranty.
11.5 Amendments. Except as
expressly provided otherwise herein or prohibited under the applicable law, this
Agreement may only be amended with the written consent of those Members holding
more than sixty percent (60%) of the aggregate of all Percentages then held by
Members; provided that no amendment shall increase the liability or required
Capital Contributions or decrease the Percentage of any Member without
the express written consent of that Member.
11.6
Applicable Law:
Arbitration and Extension of Time.
(a) All
questions concerning the construction, validity, and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement shall
be governed by the internal law, not the law of conflicts, of the State of New
Jersey.
(b) Any
dispute or controversy arising out of or relating to this Agreement shall be
determined and settled by arbitration in the City of Newark, New Jersey, in
accordance with the Commercial Rules of the American Arbitration Association
then in effect with one arbitrator and judgment upon the award rendered by the
arbitrator may be entered in any court of competent jurisdiction. The expenses
of the arbitration shall be borne equally by the parties to the arbitration, and
each party shall pay for its own experts, evidence and legal counsel, unless the
arbitrator shall determine that the refusal or failure to agree or otherwise act
by one of the parties (which refusal or failure constituted the dispute or
controversy being arbitrated) was unreasonable, in which event such party shall
bear all expenses of the arbitration and shall pay for the experts, evidence and
legal counsel of the other party. Whenever any action is required to be taken
under this Agreement within a specified period of time and the taking of such
action is materially affected by a matter submitted to arbitration, such period
shall automatically be extended by the number of days plus ten (10) that are
taken for the determination of that matter and the delivery to the parties of a
written statement or opinion respecting same by the
arbitrator(s).
– 26
–
11.7 Section Titles. The
headings herein are inserted as a matter of convenience only, and do not define
or limit the scope of this Agreement or the intent of the provisions
hereof.
11.8 Binding Provisions.
This Agreement is binding upon, and inures to the benefit of, the parties hereto
and their respective heirs, executors, administrators, personal and legal
representatives, successors, and permitted assigns.
11.9 Terms. Common nouns
and pronouns shall be deemed to refer to the masculine, feminine, neuter,
singular, and plural, as the identity of the Person may in the context
require.
11.10 Separability of
Provisions. Each provision of this Agreement shall be considered
separable; and if, for any reason, any provision or provisions herein are
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid.
11.11
Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original and all of which, when taken together,
constitute one and the same document. The signature of any party to any
counterpart shall be deemed a signature to, and may be appended to, any other
counterpart.
11.12 Estoppel Certificate.
Each Interest Holder shall, within ten days after written request by any Member,
deliver to the requesting Person a certificate stating, to the Interest Holder’s
knowledge, that: (a) this Agreement is in full force and effect; (b) this
Agreement has not been modified except by any instrument or instruments
identified in the certificate; and (c) there is no default hereunder by the
requesting Person, or if there is a default, the nature and extent
thereof.
11.13 Construction. Every
covenant, term and provision of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against any Interest
Holder.
11.14 Incorporation by
Reference. Every exhibit, schedule and other appendix attached to this
Agreement and referred to herein is hereby incorporated in this Agreement by
reference.
11.
15 No Partnership Intended for
Nontax Purposes. Except for tax purposes, (a) the Members have formed the
Company under the Act, and expressly do not intend hereby to form a partnership,
either general or limited and (b) the Members do not intend to be partners to
one another, or partners as to any third party and (c) to the extent any Member,
by word or action, represents to another Person that any member is a partner or
that the Company is a partnership, the Member making such wrongful
representation shall be liable to any other Members who incur personal liability
by reason of such wrongful representation.
– 27
–
11.16 No Rights of Creditors and
Third Parties under Agreement This Agreement is entered into among the
Members and the Interest Holders for the exclusive benefit of the Company, its
Members, and their successors and assignees. This Agreement is expressly not
intended for the benefit of any creditor of the Company or any other Person.
Except and only to the extent provided by applicable statute, no creditor or any
third party shall have any rights under this Agreement or any agreement between
the Company and any Member or Interest Holder with respect to any Capital
Contribution or otherwise.
11.17 Assignability. This
agreement shall not be assignable without the written consent of Members holding
at least 50% of the voting interest of the Company.
11.18 Representations: Waiver and
Indemnification. All the parties hereto acknowledge and understand that
they should obtain their own legal, tax and accounting advice regarding
participation in the Company. The parties acknowledge that all of the terms,
conditions and provisions of this Agreement have been negotiated by them without
any influence by any other party. The parties acknowledge and understand that
this Agreement is necessary to preserve harmony and continuity with respect to
the Management of the Company. As part of the consideration for the General
Partner forming, developing and operating the Company, taking into account the
General Partner waived any development fee for this transaction, the parties
hereby waive any conflict of interest of the General Partner and all its
shareholders, members, directors and employees who are such on the date of this
Agreement, or at any time thereafter and release, hold harmless and indemnify
the General Partner, its shareholders, members, directors and employees from,
any claims of or relating to a conflict of interest or other made by any of the
parties or any of their heirs, assignees, administrators, legal or personal
representatives, executors or successors based upon the General Partners
involvement in this transaction. This waiver, release and indemnification shall
be binding upon the parties and their heirs, executors, administrators,
successors an assignees and shall inure to the benefit of all the shareholders,
members, directors, and employees of the General Manager who are as such on the
date of this Agreement or at any time thereafter.
– 28
–
(Balance
of page left blank intentionally)
– 29
–
IN
WITNESS WHEREOF, the parties have executed, or caused this Agreement to be
executed as of the date set forth hereinabove.
|
Progressive
Medical Imaging of Union City, LLC
|
||
|
WITNESS:
|
MEMBERS:
|
|
|
[ILLEGIBLE]
|
[ILLEGIBLE]
|
|
|
By:
Progressive Health, LLC
|
||
|
[ILLEGIBLE]
|
[ILLEGIBLE]
|
|
|
By: Stellar
Health, LLC
|
||
|
[ILLEGIBLE]
|
[ILLEGIBLE]
|
|
|
By: Medcon
Consultants, Inc.
|
||
|
INTEREST HOLDERS:
|
||
|
By:
|
||
|
By:
|
||
|
By:
|
||
|
By:
|
||
|
By:
|
– 30
–
Exhibit
A
DEFINITIONS
The
following capitalized terms shall have the meanings specified in this Exhibit
A.
“Act” means the New Jersey
Limited Liability Company Act as amended from time to time.
“Adjusted Capital Account
Deficit” means, with respect to any Interest Holder, the deficit balance,
if any, in the Interest Holder’s Capital Account as of the end of the applicable
taxable year, after giving effect to the following adjustments:
(i) the
deficit shall be decreased by the amounts which the Interest Holder is obligated
to restore under section 5.8(b) of the Agreement, or is deemed obligated to
restore under Regulation Section 1.704-2(g)(1) and (i)(5); and
(ii) the
deficit shall be increased by the items described in Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6).
“Affiliate” means,
with respect to any Person
(i) any
Person directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any officer, director, manager or trustee of such Person
or (iii) any Person who is an officer, director, manager or trustee of any
Person described in clause (i) of this sentence. For purposes of this
definition, the terms “controlling,” “controlled by” or “under common control
with” shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person or entity,
whether through the ownership of voting securities, by contract or otherwise, or
the power to elect at least 50% of the directors, managers or persons exercising
similar authority with respect to such Person or entities.
“Agreement” means the
Operating Agreement to which this Exhibit A is annexed, as amended from time to
time.
“Capital Account”
means the account to be maintained by the Company for each Interest Holder in
accordance with the following provisions:
(i) an
Interest Holder’s Capital Account shall be credited with the Interest Holder’s
Capital Contributions, the amount of any Company liabilities assumed by the
Interest Holder (or which are secured by Company property distributed to the
Interest Holder), the Interest Holder’s allocable share of Profits and any item
of income or gain specially allocated to the Interest Holder under the
provisions of section 5 of the Agreement;
A-1
(ii) an
Interest Holder’s Capital Account shall be debited with the amount of money and
the Gross Asset Value of any Company property distributed to the Interest
Holder, the amount of any liabilities of the Interest Holder assumed by the
Company (or which are secured by property contributed by the Interest Holder to
the Company), the Interest Holder’s allocable share of Losses and any item of
expense or loss specially allocated to the Interest Holder under the provisions
of section 5 of the Agreement; and
(iii) if
any Interest is transferred under this Agreement, the transferee shall succeed
to the Capital Account of the transferor to the extent the Capital Account is
attributable to the transferred Interest. It is intended that the Capital
Accounts of all Interest Holders shall be maintained in compliance with the
provisions of Regulation Section 1.704-1(b), and all provisions of this
Agreement relating to the maintenance of Capital Accounts shall be interpreted
and applied in a manner consistent with that Regulation.
“Capital Contribution”
means the Gross Asset Value of any asset contributed or deemed contributed under
Regulation Section 1.704-1(b)(2)(iv)(d) to the Company by an Interest Holder,
net of liabilities assumed or to which the assets are subject.
“Capital Transaction”
means any transaction not in the ordinary course of business which results in
the Company’s receipt of cash or other consideration other than Capital
Contributions, including, without limitation, proceeds of sales or exchanges or
other dispositions of property not in the ordinary course of business,
financings, refinancings, condemnations, and insurance proceeds for the
destruction of assets used in the trade or business of the
Company.
“Cash Flow” means all cash funds derived from operations of
the Company (including interest received on reserves), less cash funds used to
pay current operating expenses and to pay or establish reasonable reserves for
future expenses, debt payments, capital improvements, contingencies, and
replacements as determined by the Members. Cash Flow shall not include Net
Capital Proceeds but shall be increased by the reduction of any reserve
previously established. Cash Flow shall not be reduced by non-cash charges,
including without limitation, depreciation, and amortization.
“Code” means the
Internal Revenue Code of 1986, as amended, or any corresponding provision of any
succeeding law.
“Company” means the
limited liability company formed in accordance with this
Agreement.
A-2
“Depreciation” means,
for each Fiscal Year, an amount equal to the depreciation, amortization, or
other cost recovery deduction allowable with respect to an asset for such Fiscal
Year, except that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such Fiscal Year,
Depreciation shall be an amount which bears the same ratio to such beginning
Gross Asset Value as the federal income tax depreciation, amortization, or other
cost recovery deduction for such Fiscal Year bears to such beginning adjusted
tax basis; provided, however, that if the adjusted basis for federal income tax
purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation
shall be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Members.
“Fiscal Year” means (i) the period commencing on the date of
formation of the Company and ending on December 31, 1999 (ii) any subsequent
twelve (12) month period commencing on January 1 and ending on December 31,
(iii) the period commencing on January 1 of the Company’s last year and ending
on the last day of the Company’s last year, or (iv) any portion of the periods
described in clauses (i), (ii) and (iii) for which the Company is required to
allocate Profits, Losses, and other items of Company income, gain, loss, or
deduction pursuant to section 5 of the Agreement.
“Gross Asset Value”
means with respect to any asset, the asset’s adjusted basis for federal income
tax purposes, except as follows:
(i) The
initial Gross Asset Value of any asset contributed by a Member to the Company
shall be the gross fair market value of such asset as determined by the
contributing Member and the Company;
(ii) The
Gross Asset Values of all Company assets shall be adjusted to equal their
respective gross fair market values (taking Code Section 7701(g) into account),
as determined by the Members as of the following times: (A) the acquisition of
an additional interest in the Company by any new or existing Member in exchange
for more than a de minimis Capital Contribution; (B) the distribution by the
Company to a Member of more than a de minimis amount of Company property as
consideration for an interest in the Company; and (C) the liquidation of the
Company within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g), provided
that an adjustment described in clauses (A) and (B) of this paragraph shall be
made only if the Members reasonably determine that such adjustment is necessary
to reflect the relative economic interests of the Members in the
Company;
(iii) The
Gross Asset Value of any item of Company assets distributed to any Member shall
be adjusted to equal the gross fair market value (taking Code Section 7701(g)
into account) of such asset on the date of distribution as determined by the
Members; and
(iv) The
Gross Asset Values of Company assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulation Section 1.704-1(b)(2)(iv)(m) and subparagraph (vii) of the definition
of “Profits” and “Losses” or section 5.3(f) hereof; provided, however, that Gross
Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the
extent that an adjustment pursuant to subparagraph (ii) is required in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).
A-3
If the
Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (ii) or (iv), such Gross Asset Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such asset, for purposes
of computing Profits and Losses.
“Interest” means an
Interest Holder’s share of the Profits and Losses of, and the right to receive
distributions from, the Company.
“Interest Holder”
means any Person who holds an Interest, whether as a Member or an unadmitted
assignee of a Member, or as a purchaser of, or the transferee of a purchaser of,
an Interest without any other Membership Rights.
“Interest Holder Minimum
Gain” means an amount, with respect to each Interest Holder Non-recourse
Liability, equal to the Minimum Gain that would result if such Interest Holder
Non-recourse Liability were treated as a Non-recourse Liability, determined in
accordance with the provisions of Regulation Section
1.704-2(i)(3).
“Interest Holder Non-recourse
Deductions” has the meaning set forth in Regulation Section
1.704-2(i)(2). The amount of Interest Holder Non-recourse Deductions for a
Fiscal Year of the Company equals the net increase, if any, in the amount of
Interest Holder Minimum Gain during that taxable year, reduced, but not below
zero, by the aggregate distributions made during such year of the proceeds of an
Interest Holder Non-recourse Liability that are both attributable to such
Interest Holder Non-recourse Liability and allocable to an increase in the
Interest Holder Minimum Gain, determined in accordance with Regulation Section
1.704-2(i)(2).
“Interest Holder Non-recourse
Liability” means any Company
liability to the extent the liability is non-recourse (under Code Section 1001),
and an Interest Holder or person or entity related to an Interest Holder under
Regulation Section 1.752-4(b) bears the economic risk of loss, determined in
accordance with Regulation Section 1.704-2(b)(4).
“Involuntary
Withdrawal” means, with respect to any Member, the occurrence of any of
the following events:
(i) the
Member becomes a debtor in bankruptcy;
(ii)
the Member executes an assignment for the benefit of
creditors;
A-4
(iii) the
Member seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator of the Member or of all or substantially all of that
Member’s properties;
(iv)
the Member fails, within 90 days after the appointment, without the Member’s
consent or acquiescence, of a trustee, receiver or liquidator of the Member or
of all or substantially all of that Member’s properties, to have the appointment
vacated or stayed, or fails within 90 days after the expiration of a stay to
have the appointment vacated;
(v)
the Member is expelled pursuant to this Agreement;
(vi)
the Member is expelled by the unanimous vote of the other Members
if:
(A) there
has been a Transfer of all or substantially all of that Member’s transferable
interest in the Company, other than a Transfer for security purposes, or a court
order charging the Member’s interest;
(B) within
90 days after the Company notifies a corporate member that it will be expelled
because it has filed a certificate of dissolution or the equivalent, its charter
has been revoked, or its right to conduct business has been suspended by the
jurisdiction of its incorporation, there is no revocation of the certificate of
dissolution or no reinstatement of its charter of its right to conduct business;
or
(C) a
limited liability company that is a Member has been dissolved and its business
is being wound up;
(vii)
on application by the Company or another Member, the Member’s expulsion by
judicial determination because:
(A) the
Member engaged in wrongful conduct that adversely and materially affected the
Company’s business;
(B) the
Member committed a material breach of this Agreement;
(C) the
Member engaged in conduct relating to the Company business which makes it not
reasonably practicable to carry on the business with the Member as a Member of
the Company;
(viii) in
the case of a Member who is an individual, upon:
(A) the
Member’s death;
A-5
(B) the
appointment of a guardian or general conservator for the Member;
or
(C) a
judicial determination that the Member has otherwise become incapable of
performing the Member’s duties under this Agreement;
(ix) termination
of a Member who is not an individual, partnership, corporation, trust or
estate.
“Member” means each
Person signing this Agreement and any Person who subsequently is admitted as a
member of the Company.
“Membership Rights”
means all of the rights of a Member in the Company, including a Member’s: (i)
Interest; (ii) right to inspect the Company’s books and records; and (iii) right
to participate in the management of and vote on matters coming before the
Company.
“Minimum Gain” has the
meaning set forth in Regulation Section 1.704-2(b)(2) and 1.704-2(d). Minimum
Gain shall be computed separately for each Interest Holder in a manner
consistent with the Regulations under Code Section 704(b).
“Negative Capital
Account” means a Capital Account
with a balance of less than zero.
“Net Capital Proceeds”
means the net cash proceeds received by the Company from a Capital Transaction,
less any portion thereof used to establish reserves for Company expenses,
obligations, and contingencies as determined by the Members. Net Capital
Proceeds shall include all principal and interest payments on any debt
obligation received by the Company in any Capital Transaction.
“Nonrecourse
Deductions” has the meaning set forth in Regulation Section
1.704-2(b)(1). The amount of Nonrecourse Deductions for a taxable year of the
Company equals the net increase, if any, in the amount of Minimum Gain during
that taxable year, reduced, but not below zero, by the aggregate distributions
made during such year of the proceeds of a Nonrecourse Liability that are
allocable to an increase in Minimum Gain, determined in accordance with
Regulation Section 1.704-2(c).
“Nonrecourse
Liability” means any liability of the Company with respect to which no
Interest Holder or person or entity related to an Interest Holder has personal
liability determined in accordance with Code Section 752 and the Regulations
promulgated thereunder.
“Percentage” means, as
to a Member, the percentage set forth after the Member’s name on Exhibit B, as amended from
time to time, and as to an Interest Holder who is not a Member, the percentage
interest in the Company issued by the Company to such Interest Holder or the
Percentage of the Member whose Interest has been acquired by such Interest
Holder, to the extent the Interest Holder has succeeded to that Member’s
Interest.
A-6
“Person” means and
includes any individual, corporation, partnership, association, limited
liability company, trust, estate, or other entity.
“Positive Capital
Account” means a Capital Account with a balance greater than zero.
“Premises” means the
offices of the Company located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
“Profits” and “Losses” means, for each Fiscal Year of the Company, the
Company’s taxable income or loss determined in accordance with Code Section
703(a), with the following adjustments:
(i) all
items of income, gain, loss, deduction, or credit required to be stated
separately under Code Section 703(a)(1) shall be included in computing taxable
income or loss; and
(ii) any
tax-exempt income of the Company, not otherwise taken into account in computing
Profits or Losses, shall be included in computing taxable income or loss;
and
(iii) any
expenditures of the Company described in Code Section 705(a)(2)(B) or treated as
such under Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Profits or Losses, shall be subtracted from taxable income
or loss; and
(iv) in
the event the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraphs (ii) or (iii) of the definition of Gross Asset Value, the amount
of such adjustment shall be treated as an item of gain (if the adjustment
increases the Gross Asset Value of the asset) or an item of loss (if the
adjustment decreases the Gross Asset Value of the asset) from the disposition of
such asset and shall be taken into account for purposes of computing Profits or
Losses;
(v) gain
or loss resulting from any taxable disposition of Company property shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding the fact that the adjusted book value differs from the adjusted
basis of the property for federal income tax purposes; and
(vi) in
lieu of the depreciation, amortization, or cost recovery deductions allowable in
computing taxable income or loss, there shall be taken into account Depreciation
for such Fiscal Year computed in accordance with the definition of
Depreciation;
A-7
(vii) to
the extent an adjustment to the adjusted tax basis of any Company asset pursuant
to Code Section 734(b) is required, pursuant to Regulation Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a Member’s
interest in the Company, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses;
and
(viii) notwithstanding
any other provision of this definition, any items which are specially allocated
pursuant to section 5.3 or 5.4 of the Agreement shall not be taken into account
in computing Profits or Losses.
“Regulations” means
the income tax regulations, including any temporary regulations, from time to
time promulgated under the Code.
“Secretary of State”
means the Office of the New Jersey Secretary of State of New
Jersey.
“Transfer” means, when
used as a noun, any voluntary sale, assignment, attachment, pledge,
hypothecation, or other relinquishment, and, when used as a verb, means,
voluntarily to sell, assign, pledge, hypothecate or otherwise
relinquish.
“Voluntary
Resignation” means a Member’s dissociation from the Company by means
other than by a Transfer or an Involuntary Withdrawal.
“Voting Interest” means the percentage of voting authority held
by a Member, which shall be equal to the percentage that the Member’s Percentage
bears to the aggregate Percentages held by all Members (after eliminating the
Percentages held by Interest Holders who are not Members).
A-8
Exhibit
B
NAME,
ADDRESS AND PERCENTAGE OF EACH MEMBER
|
Name/Address
|
Initial
Capital
Contribution
|
Units
|
Percentage
|
|||||||||
|
Progressive
Health, LLC
▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
$ | 100.00 | 525 | 75.0 | % | |||||||
|
Stellar
Health, LLC
▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
$ | 100.00 | 70 | 10.0 | % | |||||||
|
Medcon
Consultants, Inc.
▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
$ | 100.00 | 70 | 10.0 | % | |||||||
INTEREST
HOLDERS
|
Initial
Capital
Contribution
|
Units
|
Percentage
|
||||||||||
|
Total
Interest Holders
|
$ | 350,000.00 | 35 | 5.0 | % | |||||||
|
1
Interest Holder Unit
|
$ | 10,000.00 | 1 | 0.1429 | % | |||||||
B-1