EXHIBIT D-2
AMENDED AND RESTATED OPERATING AGREEMENT
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MDNY HOLDINGS, LLC
A NEW YORK LIMITED LIABILITY COMPANY
This AMENDED AND RESTATED OPERATING AGREEMENT (the "Agreement") is
entered into as of the ____ day of _________, 1996, among those persons who have
executed and delivered this Agreement, pursuant to the provisions of the New
York Limited Liability Company Law, on the following terms and conditions.
Certain capitalized terms are defined in Section 2 of this Agreement.
RECITALS
WHEREAS, the Company was formed on May 31, 1996 as a limited liability
company pursuant to Articles of Organization filed with the Secretary of State
of New York (the "Articles of Organization");
WHEREAS, the Company is to be treated as an association taxable as a
corporation for federal and state tax purposes; and
WHEREAS, the Company's Member-Managers have caused its Articles of
Organization and Operating Agreement to be amended, this Amended and Restated
Operating Agreement shall be binding upon all persons who are now or at any time
hereafter become, Members of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth herein, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereby agree as follows:
Section 1
ORGANIZATION
1.1 FORMATION. The Members agree to continue the Company as a
limited liability company pursuant to the provisions of the Act and upon the
terms and conditions set forth in this Agreement.
1.2 NAME. The name of the Company is MDNY Holdings, LLC, a New
York limited liability company, and all business of the Company shall be
conducted in such name.
1.3 PURPOSE. The Company is formed for any lawful business
purpose or purposes for which limited liability companies may be organized in
the State of New York including, without limitation, to, directly or indirectly
through one or more entities, purchase, invest in, own, operate, or dispose of
interests in a certain health maintenance organization, and engage in such
additional business endeavors as the Board of Managers may determine.
1.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be at c/o ▇▇▇▇ ▇▇▇▇▇▇, MD, at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place within or without the State of New
York as the Members may determine.
1.5 TERM. The term of the Company commenced on May 31, 1996, the
date the Articles of Organization were filed in the office of the Secretary of
State of New York in accordance with the Act and shall continue until May 30,
2096, unless dissolved or liquidated prior thereto pursuant to the Act or
pursuant to this Amended Agreement.
1.6 FILINGS.
(a) The Board of Managers caused the Articles of
Organization to be filed on May 31, 1996 in the office of the Secretary of State
of New York in accordance with the provisions of the Act. The Board of Managers
shall take any and all other actions reasonably necessary to perfect and
maintain the status of the Company as a limited liability company under the laws
of New York. The Board of Managers shall cause amendments to the Articles of
Organization to be filed whenever required by the Act.
(b) The Board of Managers shall execute and cause to be
filed original or amended Articles of Organization and shall take any and all
other actions as may be reasonably necessary to perfect and maintain the status
of the Company as a limited liability company or similar type of entity under
the laws of any other states or jurisdictions in which the Company engages in
business.
(c) Upon the dissolution of the Company, the Board of
Managers shall promptly execute and cause to be filed articles of dissolution in
accordance with the Act and the laws of any other states or jurisdictions in
which the Company has filed Articles of Organization.
1.7 TITLE TO PROPERTY. All real and personal property owned by
the Company shall be owned by the Company as an entity and no Member shall have
any ownership interest in such property in his individual name or right, and
each Member's Membership Interest shall be personal property for all purposes.
Except as otherwise provided in this Agreement, the Company shall hold all of
its real and personal property in the name of the Company and not in the name of
any Member.
Section 2
DEFINITIONS
Capitalized words and phrases used in this Agreement shall have the
following meanings:
(a) "Act" means the New York Limited Liability Company Law,
as amended from time to time (or the corresponding provisions of any succeeding
law).
(b) "Articles of Organization" shall mean the articles of
organization of the Company as originally filed with the New York Secretary of
State on May 31, 1996, as they may from time to time be amended.
(c) "Agreement" means this Amended and Restated Operating
Agreement, as amended and restated from time to time.
(d) "Board of Managers" means the Persons serving on the
Board of Managers of the Company, including any other Persons that succeed them
in that capacity, duly elected in accordance with the terms of this Agreement.
References to the Manager in the singular or as him, her, it, itself, or other
like references shall also, where the context so requires, be deemed to include
the plural or the masculine or feminine reference, as the case may be.
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(e) "Capital Contribution" means, with respect to any
Member, the amount of money and the fair market value of any other property
contributed to the Company with respect to the Membership Interest held by such
Member.
(f) "Class A Interests" mean the Class A Non-Voting
Membership Interests issued by the Company to shareholders of Long Island
Physician Holdings Corporation ("LIPH") and to The Catholic Healthcare Network
of Long Island, Inc. ("CHNLI") in certain restructuring transactions; by the
Company to members of Queens Physician Holdings, LLC ("QPH") pursuant to an
Intrastate Prospectus; by the Company to members of ▇▇▇▇▇▇ Valley Physician
Holdings LLC ("HVPH") pursuant to an Intrastate Prospectus; and by the Company
in future offerings and/or acquisitions.
(g) "Class A Member" means a Member holding a Class A
Interest.
(h) "Class B Interest" means Class B Voting Membership
Interests, including Class B-1 Interests, Class B-2 Interests and Class B-3
Interests and other series of Class B Voting Membership Interests that may be
offered by the Company to Health Care Providers and Participating Providers in
the future.
(i) "Class B Member" means a Member holding a Class B
Interest.
(j) "Class B-1 Interests" mean the Class B-1 Voting
Membership Interests, with the voting rights more fully described herein, issued
by the Company to LIPH shareholders pursuant to the merger of LIPH into the
Company.
(k) "Class B-1 Member" means a Member holding a Class B-1
Interest.
(l) "Class B-2 Interests" mean the Class B-2 Voting
Membership Interests, with the voting rights more fully described herein, issued
by the Company to members of QPH pursuant to an Intrastate Prospectus.
(m) "Class B-2 Member" means a Member holding a Class B-2
Interest.
(n) "Class B-3 Interests" mean the Class B-3 Voting
Membership Interests, with the voting rights more fully described herein, issued
by the Company to members of HVPH pursuant to an Intrastate Prospectus.
(o) "Class B-3 Member" means a member holding a Class B-3
Interest.
(p) "Class C Interests" means Class C Voting Membership
Interests, including Class C-1 Interests and other series of Class C Voting
Membership Interests that may be issued by the Company in connection with the
acquisition of, or entering into service arrangements with, entities affiliated
with hospitals.
(q) "Class C-1 Interests" means the Class C-1 Voting
Membership Interests, with the voting rights more fully described herein, issued
by the Company to CHNLI in certain restructuring transactions.
(r) "Class C-1 Member" means a member holding a Class C-1
Interest.
(s) "Code" means the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of succeeding law).
(t) "Company" means the limited liability company formed by
this Agreement pursuant to the Act.
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(u) "Dividend" means any cash or other property paid or
distributed by the Company with respect to an outstanding Membership Interest.
(v) "Fiscal Year" shall mean the fiscal year of the Company,
which shall be the year ending December 31st.
(w) "Health Care Provider" means primary care physicians,
medical and surgical specialty care physicians, psychologists, psychiatrists,
chiropractors, podiatrists and dentists practicing in an office or hospital
located in New York State and who qualify and are accepted as Participating
Providers in a Practice Association.
(x) "Hospital Entities" mean entities that own, operate or
promote the interests of hospitals located in New York State and, which are, or
are expected to, contract to provide hospital services to MDNY enrollees.
(y) "HVPH" means ▇▇▇▇▇▇ Valley Physician Holdings LLC, a New
York limited liability company.
(z) "LIPH" means Long Island Physician Holdings Corporation,
a physician-owned New York corporation.
(aa) "Member" means any person who meets the requirements of
Section 3.1 herein, who is or hereafter becomes a Member pursuant to the terms
of this Agreement, and who holds a Membership Interest in the Company.
Reference to a Member in the singular or as him, her, himself or herself or
other like references shall also, where the context so requires, be deemed to
include the plural or the masculine or feminine reference, as the case may be.
(bb) "Membership Interest" shall mean an equity interest in
the Company, including, but not limited to, all classes and subclasses of the
Class A Interests, Class B Interests and Class C Interests.
(cc) "MDNY" means MDNY Healthcare, Inc., a New York
corporation, a health maintenance organization and a wholly-owned subsidiary of
the Company, that has operated as MDLI Healthcare, Inc., but which will operate
as MDNY Healthcare, Inc., going forward.
(dd) "MDNY Common Stock" means the MDNY Class A common
stock, together with the MDNY Class B common stock and any other class of MDNY
common stock, all of the issued and outstanding shares of which will be owned by
the Company.
(ee) "Participating Practice" means a BONA FIDE group
practice which is accepted into a Practice Association.
(ff) "Participating Providers" mean Health Care Providers
who (i) meet and continue to meet the credentialing criteria and are accepted
into a Practice Association, or (ii) are members of a Participating Practice and
who, individually, meet and continue to meet the credentialing criteria of that
Practice Association.
(gg) "Person" means any individual, corporation,
professional corporation, governmental authority, limited liability company,
limited liability partnership, partnership, trust, unincorporated association or
other entity.
(hh) "Practice Association" means an independent practice
association owned by a regional holding company (including HVPH, LIPH, LLC, a
New York limited liability company, and QPH) which contracts with MDNY to
provide health care services to the enrollees of MDNY.
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(ii) "Practitioner Entity" means Health Care Providers,
groups of Health Care Providers, entities owned by Health Care Providers,
Practice Associations, or entities that own, directly or indirectly, through one
or more majority owned subsidiaries, such groups or Practice Associations each
under contract to provide health care services to MDNY's enrollees.
(jj) "QPH" means Queens Physician Holdings, LLC, a New York
limited liability company.
(kk) "Voting Interest" means those Membership Interests in
the Company entitling the Member to vote on all matters relating to the Company.
(ll) "Voting Member" means a Member holding a Voting
Interest.
Section 3
MEMBERS
3.1 MEMBERS.
(a) Only Participating Providers and Hospital Entities, may
be Members, except that subscribers of Membership Interests who are not admitted
into a Practice Association for any reason may continue to hold Class A
Interests and be Class A Members.
(b) An individual Class B Member must maintain his status as
a Participating Provider in order to hold a Class B Voting Interest in the
Company.
(c) Participating Providers in a Participating Practice must
maintain their status as Participating Providers in order for that Participating
Practice to continue providing services to MDNY and in turn in order to continue
to hold Voting Interests in the Company.
(d) Class B Interests may only be owned by Participating
Providers. Class C Interests may only be owned by Hospital Entities.
(e) No individual Class B Member may own more than one Class
B Interest, but can own an unlimited number of Class A Interests, subject to
availability and the discretion of the Board of Managers.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS. Each Member may contribute
from time to time such additional money or other property, subject to the
provisions of Section 3.1, as the Board of Managers may agree.
3.3 OTHER MATTERS RELATING TO CAPITAL CONTRIBUTIONS.
(a) Except as otherwise provided in this Agreement, no
Member shall have the right to demand or receive a return of his Capital
Contributions. Under circumstances requiring a return of any Capital
Contributions, no Member shall have priority over any other Member nor the right
to receive property other than cash, except as may be specifically provided
herein.
(b) No Member shall receive any interest, salary, or
drawing with respect to his Capital Contributions or for services rendered on
behalf of the Company or otherwise in his capacity as a Member, except as
otherwise provided in this Agreement.
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(c) Provided that the Members act in accordance with the
terms of this Agreement, the Members shall not be liable for the debts,
liabilities, contracts, or any other obligations of the Company. Except as
otherwise provided by mandatory provisions of applicable state law, a Member
shall be liable only to make his Capital Contributions and shall not be required
to lend any funds to the Company or, after his original Capital Contribution has
been made, to make any additional Capital Contributions to the Company, except
as provided herein.
3.4 ISSUANCE OF OTHER MEMBERSHIP INTERESTS AND DEBT OBLIGATIONS.
(a) In order to raise additional capital funds to acquire
interests in other health care-related business opportunities or for any other
purpose related to the operation of the Company, the Board of Managers, subject
to the voting requirements of Section 4.5(a), is authorized to cause other
Membership Interests in the Company, or warrants, options or other rights to
acquire such, to be issued from time to time to Members or other Persons, and to
admit such other Persons as additional Members with respect to the issuance of
any Membership Interest in the Company. Except as otherwise provided herein,
the Board of Managers shall have sole and complete discretion in determining the
consideration and terms and conditions with respect to any such issuance.
(b) Additional Membership Interests in the Company may be
issued in one or more classes or series with such designations and preferences
and relative, participating, optional or other special rights as, to the fullest
extent permitted by law, may be fixed by the Board of Managers in their sole
discretion, subject to the provisions of this Agreement and the voting
requirements of Section 4.5(a), including variations among classes of Membership
Interests in the Company in the following relative rights and preferences:
(i) the right to Dividends; (ii) the rights upon dissolution and liquidation of
the Company, (iii) if redeemable, the price at, and the terms and conditions on
which, they are redeemable, (iv) if convertible, the rate at, and the terms and
conditions on which, they may be converted into any class of Membership Interest
in the Company; (v) the issuance thereof and matters relating to the assignment
thereof; and (vi) the rights of holders to vote on matters relating to the
Company and this Agreement; provided that (x) no such class or series shall be
issuable except as set forth in Section 3.1, and (y) a class or series of
Membership Interests shall provide the same designations, preferences and
rights, including voting rights, for each Membership Interest within such class
or series, and (z) Hospital Entities are not permitted to own Voting Interests
equal to more than 50% of the outstanding Voting Interests held by Participating
Providers (i.e., not more than 33 1/3% of all outstanding Voting Interests).
(c) All additional Membership Interests will be issued
subject to the requirement that the Member agree to be bound by the terms of
this Agreement and grant a power of attorney to the officers of the Company to
execute this Agreement on his behalf.
(d) Upon the issuance of any additional Membership
Interests in the Company, including any new class of Membership Interests, or
upon the issuance of any option, warrant or other right to acquire a Membership
Interest in the Company, the Board of Managers, without the consent of any
Member, may amend any provision of this Agreement and execute, prepare and
record such other documents as may be required in connection therewith or as may
be necessary or desirable to reflect such issuance. In connection with any such
issuance, the Board of Managers shall do all things necessary to comply with the
Act and may take such other actions deemed to be necessary or advisable.
(e) The Board of Managers is also authorized, subject to
the voting requirements of Section 4.5(a), to cause the issuance of unsecured
and secured debt obligations of the Company and debt obligations of the Company
convertible into Membership Interests in the Company from time to time to
Members or other Persons on terms and conditions established by the Board of
Managers in its sole discretion.
3.5 NO PREEMPTIVE RIGHTS. No Member shall have any preemptive right
to purchase or subscribe for any new or additional Membership Interests in the
Company by reason of the issuance of any new or additional Membership Interests
in the Company, including the issuance of any new class of Membership Interests,
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any options, warrants or rights to acquire any new or additional Membership
Interests in the Company or any debt obligations of the Company, whether
convertible into Membership Interests in the Company or otherwise.
3.6 MEETINGS OF MEMBERS.
(a) The Class B Interests and Class C Interests entitle the
holders thereof to vote on all matters to be voted on by Members of the Company,
including, but not limited to, the election of Managers. The Class A Interests
do not entitle their holders to voting rights, except as may be provided by this
Agreement or the Act.
(b) Meetings of the Class B Members and Class C Members are
required to be held annually for the election of Managers and the transaction of
such other business as may come before the meeting. Annual meetings of the
Members, commencing in 1997, shall be held at a time and on a day between April
1 and May 20 to be selected by the Board of Managers. All meetings shall be
held within or without the State of New York, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof. In order for a
meeting of the Members to be considered duly held with regard to a particular
matter, a majority of the Members which are entitled to vote at such meeting on
the particular question must be present, in person or by proxy, in order to
constitute a quorum for the transaction of business. If a quorum is not present
or represented at any meeting of the Members, the Members entitled to vote
thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting, without notice other than announcement at the meeting,
until a quorum is present or represented. At such adjourned meeting at which a
quorum is present or represented, any business may be transacted at the meeting
as originally noticed.
(c) Any action to be taken at a meeting of the Members, or
any action which may be taken at a meeting of the Members, may be taken without
a meeting if a consent in writing, setting forth the action to be taken, shall
be signed by Members holding the minimum number of Membership Interests
necessary to authorize such action by vote at a meeting at which all Members
entitled to vote were present and voted, and such consent shall have the same
force and effect as a vote of the Members entitled to vote on the particular
question. Every written consent shall bear the date of signature of each Member
who signs the consent and no written consent shall be effective to take the
action referred to therein unless, within sixty (60) days of the earliest dated
consent delivered in the manner required by this Section 3.6 to the Company,
written consents signed by a sufficient number of Members to take the action are
delivered to the Company, to the attention of the President, at the Company's
principal place of business. Delivery made to the office of the Company shall
be by hand or by certified or registered mail, return receipt requested. Prompt
written notice of the taking of such action by less than unanimous written
consent shall be given to those Members who would have been entitled to vote
thereon and who have not consented in writing.
(d) Special meetings of the Members may be called for any
purpose by the President, or the Board of Managers or at the request in writing
of a majority of the Managers, or at the request in writing of at least ten
(10%) percent of all the Voting Interests entitled to vote at the meeting. A
request directed to either the President or the Secretary shall state the
purpose of the proposed meeting and business transacted at any special meeting
of the Members shall be confined to the purpose stated in the notice of the
meeting.
(e) For purposes of determining the Members entitled to
vote or act at any meeting or adjournment thereof, the Managers may fix in
advance a record date which shall not be greater than sixty (60) days nor fewer
than (10) days before the date of any such meeting. If the Managers do not so
fix a record date, the record date for determining Members entitled to notice of
or to vote at a meeting of Members shall be at the close of business on the
business day immediately preceding the day on which notice is given, or if
notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
(f) The record date for determining Members entitled to
give consent to action in writing without a meeting, (1) when no prior action of
the Managers has been taken, shall be the day on which the
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first written consent is given or (2) when prior action of the Managers has been
taken, shall be (a) such date as determined for that purpose by the Managers,
which record date shall not precede the date upon which the resolution fixing it
is adopted by the Managers and shall not be more than 20 days after the date of
such resolution or (b) if no record date is fixed by the Managers the record
date shall be the close of business on the day on which the Managers adopt the
resolution relating to that action.
(g) Only Members of record on the record date as herein
determined shall have any right to vote or to act at any meeting or give consent
to any action relating to such record date, provided that no Member who
transfers all or part of such Member's Interest after a record date (and no
transferee of such Interest) shall have the right to vote or act with respect to
the transferred Interest as regards the matter for which the record date was
set.
(h) At least ten (10) days before each meeting of Members,
and at least ten (10) days before each written consent by Members, or such
shorter period if time does not permit, a complete list of the Members entitled
to vote at the meeting, arranged in alphabetical order, with the address of each
and the amount of Membership Interests held by each, shall be prepared by the
officer or agent having charge of the books. For a period of ten (10) days
prior to the meeting, the list shall be kept on file at the principal office of
the Company and shall be subject to inspection by any Member at any time during
usual business hours. The list also shall be produced and kept open at the time
and place of the meeting and shall be subject to inspection by any Members
during the whole time of the meeting.
(i) Written notice stating the place, day and hour of the
meeting and the general nature of the purpose or purposes for which the meeting
is called, shall be deposited in the United States mail or delivered within
fifteen (15) days after the receipt of any request for a meeting. Any such
meeting shall be held on a date not less than twenty (20) nor more than sixty
(60) days after the date of such mailing or delivery of the notice of the
meeting. Any such mailing or delivery of notice shall be by or at the direction
of the President, the Secretary, or the officer or person calling the meeting,
to each Member of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the Member at his address as it appears on the
books of the Company. The date of notice for such a meeting and the meeting
date may each be extended for a period of up to an additional sixty (60) days,
if in the opinion of the President such additional time is necessary to permit
preparation of proxy or information statements or other documents required to be
delivered in connection with such meeting by any regulatory authorities.
(j) When a quorum is present at any meeting, generally, the
vote of the majority of the Voting Interests, present in person or represented
by proxy, shall decide any question brought before such meeting, unless the
question is one upon which a different vote is required by the Act or this
Agreement. Those matters requiring the affirmative vote of a majority of the
entire Board of Managers and a separate vote of the majority of the Practitioner
Managers and the majority of the Hospital Managers as provided in Section 4.5(a)
may be voted and acted upon by the Members only by the separate majority votes
of the holders of all Class B Interests voting as a class and of the holders of
all Class C Interests voting as a class. The Members present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Members to leave less than a quorum.
Any dispute relating to the number of votes cast on a particular matter shall be
determined by an Inspector of Elections duly appointed by the Board of Managers
or if no Inspector of Election is appointed by the regularly employed
independent certified accountants of the Company, whose determination shall be
final and binding for all purposes.
3.7 PROXIES. A Member may issue or withhold his vote by proxy
executed in writing by the Member or by a duly authorized attorney-in-fact.
Unless a proxy provides otherwise and complies with the requirements of state
law relating to irrevocable proxies, no proxy shall be valid after the
expiration of eleven (11) months from the date thereof. Every proxy, unless by
its terms irrevocable, shall be revocable at the pleasure of the Member
executing it.
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3.8 VOTING AGREEMENTS. An agreement between two or more Members, if
in writing and signed by the parties thereto, may provide that in exercising any
voting rights, the Membership Interests held by them shall be voted as therein
provided, or as they may agree, or as determined in accordance with a procedure
agreed upon by them.
3.9 LIST OF THE MEMBERS. An alphabetical list of the names,
addresses, and business telephone numbers of the Members of the Company along
with the number and designation of Membership Interests held by each of them
(the "Member List") shall be maintained as part of the books and records of the
Company and shall be available for inspection by any Member or such Member's
designated agent, for any proper purpose related to such Member's Membership
Interest, at the principal office of the Company upon the request of the Member.
The Member List shall be updated at least quarterly to reflect changes in the
information contained therein. A copy of the Member List shall be mailed to any
Member requesting the Member List within ten (10) days of the request. A
reasonable charge for copy work may be charged by the Company. The purposes for
which a Member may request a copy of the Member List include, without
limitation, matters relating to Members' voting rights. If the Board of
Managers wrongfully neglects or refuses to exhibit, produce, or mail a copy of
the Member List as properly requested, the Board of Managers shall be liable to
any Member requesting the Member List for the costs, including attorneys' fees,
incurred by that Member for compelling the production of the Member List, and
for actual damages suffered by any Member by reason of such refusal or neglect.
The use of the Member List for any commercial purposes, including without
limitation, the selling of such list or a portion thereof, shall not be a proper
purpose for inspection thereof. The Board of Managers may require the Member
requesting the Member List to represent that the Member List is not requested
for a commercial purpose unrelated to the Member's Membership Interest in the
Company. The remedies provided hereunder to Members requesting copies of the
Member List are in addition to, and shall not in any way limit, other statutory
remedies available to a Member.
Section 4
MANAGEMENT
4.1 GENERAL. The Board of Managers shall be responsible for the
management of the Company, its assets and the disposition thereof, and is
responsible for the general policies of the Company and the general supervision
of the Company's activities conducted by its officers, agents, employees,
advisors or independent contractors as may be necessary in the course of the
Company's business, and shall devote to the business affairs of the Company such
time and effort as the Board of Managers may from time to time deem necessary.
The Managers shall not be obligated to devote their time exclusively to the
business of the Company. Individual Managers may only take action on behalf of
the Company as authorized by the Board of Managers.
4.2 COMPOSITION OF THE BOARD OF MANAGERS.
(a) The number of Managers constituting the entire Board of
Managers shall consist of twenty-nine (29) persons, eight (8) of whom ("Hospital
Managers") will be designated by Designating Hospital Entities (as hereinafter
defined) and twenty-one (21) of whom ("Practitioner Managers") will be
designated by Designating Practitioner Entities (as hereinafter defined).
(b) Effective on the date hereof, the Board of Managers
shall be comprised of the fourteen (14) persons currently serving as directors
of MDNY. Prior to the 1997 Annual Meeting of Holdings Members (the "1997
Meeting"), at the time of each sale or issuance of more than $1,000,000 of
Membership Interests to Health Care Providers or a Practitioner Entity, the
Practitioner Entity with which the holders of such series of Membership
Interests are associated (each such Practitioner Entity and LIPH or any
successor to LIPH's ownership of the Practice Associations currently owned by
it, being a "Designating Practitioner Entity") shall have the right to
designate, and the Board of Managers will elect to serve until the 1997 Meeting,
such number of Practitioner Managers as shall bear, as near as possible, the
same ratio to 10 as the total dollar amount of the consideration paid
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or contractually committed to be paid for Class A and Class B Membership
Interests acquired or contracted to be acquired by such associated holders bears
to the total consideration paid by or contractually committed to be paid by LIPH
or its shareholders for shares of MDNY or Membership Interests; provided
however, that no present Practitioner Manager will be required to resign from
the Board of Managers prior to the 1997 Meeting to effect such election; and
provided further that except as provided in Section 4.2(b), no Practitioner
Manager vacancies currently existing will be filled prior to the 1997 Meeting.
(c) Prior to the 1997 Meeting, at the time of each sale or
issuance of more than $1,000,000 of Membership Interests to a Hospital Entity
(each such Hospital Entity and CHNLI being a "Designating Hospital Entity"),
such Designating Hospital Entity shall have the right to designate, and the
Board of Managers will elect to serve until the 1997 Meeting, such number of
Hospital Managers as shall bear, as near as possible, the same ratio to 4 as the
total dollar amount of the consideration paid or contractually committed to be
paid for Class A and Class C Membership Interests acquired or contracted to be
acquired by such Hospital Entity bears to the total consideration paid or
contractually committed to be paid by CHNLI for shares of MDNY; provided
however, that no present Hospital Managers will be required to resign from the
Board of Managers prior to the 1997 Meeting to effect such election; and
provided further that except as provided in this Section 4.2(c) no Hospital
manager vacancies currently existing will be filled prior to the 1997 Meeting.
(d) The Board of Managers will, commencing with the 1997
Meeting, be elected by the holders of series ▇-▇, ▇-▇, ▇-▇ and any other series
of Class B and of series C-1 and any other series of Class C Membership
Interests entitled to elect one or more Managers as set forth in this Section
4.2. All Managers will be elected by a plurality of votes cast by holders of
each such series at a meeting at which a quorum is present; provided, however,
that, if so specified by a Designating Practitioner Entity or a Designating
Hospital Entity, the Managers to be elected by the owners of Voting Membership
Interests associated with it shall be elected by Cumulative Voting. As more
fully set out elsewhere in this Section 4.2, the Person(s) each series of each
Class of Membership Interests shall be entitled to elect, voting separately,
will be nominated by the Board of Managers based upon directions from the
governing boards of the Designating Hospital Entities and, in the case of each
series of Class B Membership Interests, the Designating Practitioner Entities
with which the holders of such series are associated. Such Persons, unless they
decline to serve or are found by the Board of Managers to be unqualified for
reasons of character or fitness (in which case the respective Designating
Practitioner Entity or Designating Hospital Entity will designate a substitute),
will be nominated for election and proxies to vote for their election will be
solicited by the Board of Managers. While this Section 4.2(d) determines the
nominees for whom the Company will solicit proxies, it is not the exclusive
method by which a Person may be nominated to be elected as a Practitioner
Manager.
(e) Commencing with the 1997 Meeting and subsequent
thereto, the twenty-one (21) Practitioner Managers shall be comprised of sixteen
(16) primary care physicians or specialty care physicians other than
psychiatrists ("Physician Practitioner Managers"), and five (5) other Health
Care Providers that will consist to the extent practicable of one psychiatrist,
one psychologist, one dentist, one chiropractor and one podiatrist (together
with the Physician Practitioner Managers, the "Practitioner Managers"). If any
specialty among the five (5) other Health Care Providers is unfilled or has a
limited number of constituents, the Board of Managers shall have the authority
to reallocate that Practitioner Manager seat to another specialty within this
group. Every Practitioner Manager must be a Participating Provider in one of
the Practice Associations.
(f) Not less than 90 days prior to the anticipated date of
the 1997 Meeting and each Annual Meeting thereafter, the Board of Managers shall
(I) allocate the twenty-one (21) seats reserved for Practitioner Managers
(including the sixteen (16) seats for Physician Practitioner Managers) among
each of the series of Class B Interests whose holders are associated with a
Designating Practitioner Entity, in proportion, as near as possible, to the
total dollar amount of the consideration paid or contractually committed to be
paid for Class A and Class B Membership Interests purchased from the Company by
the owners of all such series; provided, however, that in making such
calculation, the holders of Class B-1 Membership Interests will be deemed to
have acquired or contracted to acquire an amount of Class A and Class B
Membership Interests equal to the dollar amount of such
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consideration contributed by LIPH for Class A Common Stock of MDNY, and in no
event will the holders of the Class B-1 Membership Interests be allocated less
than two (2) Physician Practitioner Managers or the holders of any series of
Class B Interests for whom a Practitioner Entity has qualified as a Designating
Practitioner Entity be allocated less than one (1) Practitioner Manager; and
(II) allocate the eight (8) seats reserved for Hospital Managers among the
series of Class C Interests held by the Designating Hospital Entities, in
proportion, as near as possible, to the total dollar amount of the consideration
paid or contractually committed to be paid for Class A and Class C Membership
Interests purchased from the Company by such Designating Hospital Entities;
provided, however, that in making such calculation, CHNLI, as the owner of Class
C-1 Membership Interests, shall be deemed to have acquired or contracted to be
acquired an amount of Class A and Class C Membership Interests equal to the
dollar amount of such consideration contributed by CHNLI for Class B Common
Stock of MDNY, and in no event will CHNLI be allocated less than two (2)
Hospital Managers or the holders of any series of Class C Interests for whom a
Hospital Entity has qualified as a Designating Hospital Entity be allocated less
than one (1) Hospital Manager.
(g) The Board of Managers shall, not less than 90 days
prior to the anticipated date of the 1997 Meeting and each Annual Meeting
thereafter, notify each Designating Practitioner Entity and Designating Hospital
Entity of the number of Managers to be elected by it or its associated owners.
Each such Designating Practitioner Entity or Designating Hospital Entity shall
have the right to designate the allocated number of Persons as nominees for
membership on the Board of Managers. Such designation shall be made not later
than fifteen days after receipt of Notice. The Board of Managers shall promptly
notify the appropriate Designating Practitioner Entity or Designating Hospital
Entity of any designee found unqualified for reasons of character or fitness so
as to permit a substitute to be submitted and approved not later than 60 days
prior to the scheduled Annual Meeting dates. If necessary, the Board of
Managers will consult with the respective managing bodies of each of the
Designating Practitioner Entities concerning their proposed nominees to attempt
to arrive at a consensus among them so as to achieve the required distribution
of Board seats among the different classes of practitioners set forth in
Subsection 4.2(e). To the extent the Board of Managers is unable to obtain a
consensus, a lottery will be held to determine an order and sequence in which
each of the Designating Practitioner Entities will designate nominees to Board
seats to the extent necessary to achieve the required allocation.
(h) If, subsequent to the 1997 Meeting, there are
additional sales of Membership Interests and the Company issues any additional
series of Class B or Class C Interests which would entitle the holders of such
series to elect, voting as a separate class, one or more Practitioner Managers
or Hospital Managers, the associated Designating Practitioner Entity or
Designating Hospital Entity will be entitled, during the interim between such
sale and the next Annual Meeting of Members to have up to two (2) Persons attend
and participate, without voting, in all meetings of the Company's Board of
Managers and of MDNY's Board of Directors.
4.3 VACANCIES. After the 1997 Meeting any vacancy in the Board will
be filled by the Board of Managers as follows: (a) the governing Board of the
respective Designating Hospital Entity or Designating Practitioner Entity which
nominated the Manager whose resignation, removal or withdrawal gave rise to the
vacancy shall designate a person to fill such vacancy, (b) such Person, unless
he or she declines to serve or is found by the Board of Managers to be
unqualified for reasons of character or fitness (in which case the respective
Designating Practitioner Entity or Designating Hospital Entity will designate a
substitute), will be elected a Manager by the Board to fill the vacancy. A
Manager elected to fill a vacancy shall serve the unexpired term of the Manager
being replaced.
4.4 RIGHTS AND POWERS OF THE BOARD OF MANAGERS. The Board of
Managers shall have full charge of the overall management, conduct and operation
of the Company in all respects and in all matters and shall have the authority
to act on behalf of the Company in all matters respecting its businesses and
assets, subject to any limitations in or contrary provisions of this Agreement.
The power and authority of the Board of Managers pursuant to this Agreement
shall be liberally construed to encompass all acts and activities in which a
limited liability company may engage under the Act. The Board of Managers,
subject to the voting requirements of Section 4.5(a), is empowered to perform
any acts they deem necessary, appropriate or desirable for the furtherance of
the Company
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and its purposes that are not specifically prohibited by this Agreement or
applicable law including, without limitation, the power to:
(a) Make investments, either directly or through
subsidiaries, by purchase, lease, exchange or otherwise as may be necessary,
convenient or incidental to the accomplishment of the purposes of the Company,
including any transaction the Board of Managers deems advisable;
(b) Operate, maintain, finance, improve, own, grant options
with respect to, sell, convey, assign, mortgage, exchange or lease Company
property or assets, as may be necessary, convenient or incidental to the
accomplishment of the purposes of the Company;
(c) Enter into and execute all agreements, contracts,
instruments and related documents necessary or appropriate in connection with
the operation of the Company's business, including, without limitation, billing,
management and administrative agreements and contracts with Persons performing
such services for the Company's business;
(d) Purchase and maintain, in its sole discretion and at
the expense of the Company, liability, indemnity and any other insurance
sufficient to protect the Company, the Members, the Board of Managers, the
Company's officers, employees, agents, partners or any other Person, from those
liabilities and hazards which may be insured against in the conduct of the
business and in the management of the business and affairs of the Company;
(e) Employ and dismiss Persons in the operation and
management of the Company's business on such terms and for such compensation as
the Board of Managers shall reasonably determine;
(f) Borrow money, including, without limitation, borrowings
from any affiliate of the Company, and issue evidences of indebtedness, and as
security therefor to mortgage or encumber any or all of the Company's property
or assets;
(g) Negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other action
on behalf of the Company with respect to any lease or sublease;
(h) Employ and dismiss attorneys, accountants, investment
bankers and other professional advisors on behalf of the Company;
(i) Pay, extend, renew, modify, adjust, submit to
arbitration, prosecute, defend or compromise, upon such terms as may be
determined and upon such evidence as may be deemed sufficient, any obligation,
suit, liability, cause of action, or claim, including taxes, either in favor of
or against the Company, including amendment of the Company tax returns and
amendment of this Agreement to permit operation of the Company in accordance
with any such settlement of tax issues;
(j) Establish, from the proceeds of the sale of Membership
Interests in the Company and from income derived from the Company's operations,
such reserves as the Board of Managers, in its sole discretion, shall deem
reasonable to meet anticipated Company expenses or for other business purposes
and consistent with the Company's operating philosophy that (i) MDNY's
marketplace is highly competitive and market share and continued expansion are
vital to the success of MDNY; (ii) substantial reserves are necessary to compete
effectively and MDNY should accumulate a "war chest of reserves" during its
initial years of operation, and (iii) after sufficient reserves are obtained,
the medical payout ratio may be progressively increased to 90%;
(k) Deposit, withdraw, invest, pay, retain and distribute
the Company's funds in any manner consistent with the provisions of this
Agreement;
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(l) Execute and file with any state tax authority, if
necessary or appropriate to comply with or minimize withholding obligations
under the laws of that state, a statement on behalf of Members and holders of
other equity interests in the Company acknowledging and confirming their
obligations to file tax returns with such state;
(m) Subject to the provisions of this Agreement, in the
Board's sole discretion, admit additional Members upon the purchase of a
Membership Interest;
(n) Subject to the provisions of this Agreement, cause the
Company to issue additional classes of Membership Interests in the Company, and
other securities and debt or equity interests in the Company which may be
different in any respect from the previously issued Membership Interests in the
Company, all on such terms and at such prices as the Board of Managers may
determine in its sole discretion;
(o) Make, execute, assign, acknowledge and file on behalf
of the Company all documents or instruments of any kind which the Board of
Managers may deem necessary or appropriate in carrying out the business of the
Company, including, without limitation, powers of attorney, agreements of
indemnification, sales contracts, deeds, options, loan obligations, mortgages,
deeds of trust, notes, documents or instruments of any kind or character and
amendments thereto;
(p) Make any election on behalf of the Company, as is or
may be permitted under the Code or under the taxing statute or rule of any
state, local, foreign or other jurisdiction, and to supervise the preparation
and filing of all tax and information returns which the Company may be required
to file;
(q) In its sole discretion, declare and pay Dividends to
Members in accordance with this Agreement;
(r) Pursuant to the terms of this Agreement cause the
Company to repurchase Membership Interests in the Company or other equity
interests, or options, warrants or other rights to acquire such, which may be
outstanding from time to time or in privately negotiated transactions at prices
then agreed upon;
(s) Possess and exercise any additional rights and powers
of a Board of Managers under the Act (and any other applicable laws), to the
extent not inconsistent with this Agreement; and
(t) Engage in any kind of activity and perform and carry
out contracts of any kind necessary in connection with, or incidental to the
purposes of, the Company, as may be lawfully carried on or performed by a
limited liability company under the laws of each state in which the Company is
then formed or qualified.
4.5 MEETINGS OF THE BOARD OF MANAGERS.
(a) With the exception of those matters hereinafter set
forth in the Act, the vote of the majority of Managers voting together,
represented at a meeting at which a quorum is present, is required for Board
action. A majority of the total number of Managers will constitute a quorum for
the transaction of business. The following matters require the affirmative vote
of the majority of the entire Board, and, by separate vote, the majority of the
Practitioner Managers and the majority of the Hospital Managers (subject to the
limitations of Section 8):
(i) The dissolution, merger or consolidation of the
Company, or the sale, lease, exchange or other
disposition of all or substantially all of the assets
of the Company (each a "Fundamental Change");
(ii) A change in this Agreement;
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(iii) The sale of any shares of MDNY Common Stock owned by
the Company;
(iv) The establishment by the Company of a new line of
business other than the operation of an insurance
company, or the establishment of any subsidiary
(corporate or other) of the Company whose board of
directors (or similar managing body) does not reflect
the same proportion of Practitioner Managers (or their
designees) and Hospital Managers (or their designees)
as the Board of Managers of the Company;
(v) The issuance of additional Membership Interests; except
that (w) Hospital Entities may, without Board approval,
purchase, at unit prices comparable to those paid by
other Members, Membership Interests in order to
maintain or restore the ten percent (10%) ownership
required to preserve the rights and preferences of
Class C Interests as set forth in Section 8 herein; (x)
except that the issuance and sale of additional Class B
Interests to Participating Providers solely in
connection with a proposed expansion of the service
area of MDNY (which expansion has been approved by the
Board of Directors of MDNY) may be approved solely by
the affirmative vote of at least a majority of the
Practitioner Managers, and that the issuance and sale
of additional Class C Interests to Hospital Entities
solely in connection with a proposed expansion of the
service area of MDNY (which expansion has been approved
by the Board of Directors of MDNY) may be approved
solely by the affirmative vote of at least a majority
of the Hospital Managers; and (y) provided, however,
that if, in either case, such sales are made to persons
or entities whose practice or hospital is in a
geographic area in which MDNY has already contracted
for the provision of medical services or hospital
facilities, then a vote of the majority of the entire
Board and a separate vote of the Practitioner Managers
practicing in such geographic area or Hospital Managers
who were designated by the Hospital Entity where
affiliated hospital(s) are located in such geographic
area will be required.
(vi) The Company making any commitment of funds or assets,
including, but not limited to, entering into any
agreement, borrowing or making other financial
arrangements, with a value in excess of $1,000,000
("Major Commitment"); and
(vii) The determination of the amount of any dividends
received from MDNY which shall be distributed to the
Company's Members, which distribution shall be pro rata
in accordance with their Membership Interests.
(viii) Action which would result in any subsidiary of the
Company having, from the total number of its directors
or Managers appointed by the Company, a number of
Health Care Providers and representatives of Hospital
Entities disproportionate to the numbers of such
persons then serving as Managers of the Company.
In addition, (A) the vote of the majority of CHNLI's representatives on the
Board is required to approve any change or amendment to paragraph (b) of Article
II of MDNY's by-laws relating to ethical principles; and (B) any change
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in this Agreement which would alter the rights or privileges of the holders of
any Class or series of any Class of Membership Interests must be approved by a
majority of the Managers who own such Class or series.
(b) If a quorum shall not be present at any meeting of the
Board of Managers, the Managers present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present. Regular or special meetings of the Board of Managers
may be held either within or without the State of New York.
(c) The Chairman of the Board, if one is elected by the
Board of Managers, shall preside at all meetings of the Board of Managers and
shall have such other powers and duties as may from time to time be prescribed
by the Board of Managers, based upon written direction given to him pursuant to
resolution duly adopted by the entire Board of Managers and separate majorities
of the Practitioner Managers and Hospital Managers.
(d) Regular meetings of the Board of Managers shall be held
quarterly for the purpose of the transaction of such business as may come before
the meeting. One such meeting shall be held following the Annual Meeting of
Members and at such meeting officers shall be elected. Regular meetings of the
Board may be held without notice at such time and place as shall from time to
time be determined by resolution of the Board of Managers.
(e) Special meetings of the Board of Managers may be called
by the Chairman of the Board or the President and shall be called by the
Secretary on the written request of two (2) Managers. Notice of the time, place
and general nature of the purpose or purposes of a special meeting of the Board
of Managers shall be given to each Manager at least five (5) days before the
date of the meeting.
(f) Attendance of a Manager at any meeting shall constitute
a waiver of notice of such meeting, except where a Manager attends for the
express purpose of objecting to the transaction of any business on the grounds
that the meeting is not lawfully called or convened. Except as may otherwise be
provided by the Act, or by this Agreement, neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the Board of Managers
need be specified in the notice or waiver of notice of such meeting.
(g) The majority of the Managers, together with separate
majorities of the Practitioner Managers and the Hospital Managers, may from time
to time designate certain of the Managers to constitute committees, including an
executive committee, which shall in each case consist of such number of
Managers, not less than one, and shall have and may exercise such powers as the
Managers may determine and specify in the respective resolutions appointing
them. A majority of all of the members of any such committee may determine its
action and fix the time and place of any meeting, unless the Managers shall
otherwise direct. The Managers shall have the power at any time to change the
number and the members of any such committee and to discharge any such
committee.
(h) Any action required or permitted to be taken at any
meeting of the Managers or executive committee may be taken without a meeting if
a consent in writing setting forth the actions so taken is signed by all the
Managers or all the members of such committee, as the case may be. If any
action is so taken by the Managers by written consent of less than all of the
Managers, prompt notice of the taking of such action shall be furnished to each
Manager who did not execute such written consent, provided that the
effectiveness of any such action shall not be impaired by any reasonable delay
in giving such notice.
(i) Members of the Board of Managers may participate in a
meeting of the Board by means of conference telephone or similar communications
equipment by means of which all members participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall
constitute presence in person at such meeting.
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4.6 ELECTION OF THE BOARD OF DIRECTORS OF MDNY.
(a)(i) The Board of Directors of MDNY shall consist of
eighteen (18) members. Four (4) of the Board members must be enrollees in
MDNY's health care plans, eight (8) members will be Physician Practitioner
Managers of the Company, two (2) members will be other Health Care Providers who
are Practitioner Managers of the Company (together with the Physician
Practitioner Managers, the "Practitioner Directors"), and four (4), subject to
the limitations of Section 8 herein, shall be Hospital Managers of the Company
(the "Hospital Directors"). The Company shall make nominations and cast its
votes as a shareholder of MDNY such that, with the exception of the MDNY
enrollees, Members of MDNY's Board of Directors must be elected from and be
members of the Company's Board of Managers. The Hospital Directors on the MDNY
Board shall be nominated by and from the Hospital Managers of the Company and
the Practitioner Directors on the MDNY Board shall be nominated by and from the
Practitioner Managers of the Company. These Hospital Directors and Practitioner
Directors shall be elected for terms coextensive with their terms as Managers of
the Company.
(ii) Notwithstanding anything to the contrary set forth in
Section 4.6(a)(i), if the holders of a series of Class B Interests or Class C
Interests have elected one or more Practitioner Managers or Hospital Managers,
then at least one Manager elected by the holders of each such series shall be
elected as a Practitioner Director or Hospital Director, as applicable; provided
that if the holders of the Class B-1 Interests or the Class C-1 Interests have
not, for any reason, elected at least one Practitioner Manager or one Hospital
Manager, then a Person nominated by the Designating Practitioner Entity or
Designating Hospital Entity with which such series is associated shall be
elected as a Practitioner Director or Hospital Director, as applicable; and
provided, further, that the numbers and types of Directors provided for in
Section 4.6(a)(i) shall not be changed hereby. If the holders of a series of
Class B Interests or Class C Interests have elected more than one Practitioner
Manager or Hospital Manager, then a majority of the Managers elected by the
holders of such series shall designate which such Manager shall be elected as a
Practitioner Director or Hospital Director, as applicable, in accordance with
the preceding sentence. The remaining Practitioner Directors and Hospital
Directors shall be elected as provided for Section 4.6(a)(i).
(b) In determining the manner in which the Company will vote
its shares of MDNY Common Stock on certain matters, an affirmative vote of the
majority of all the Practitioner Managers and of the majority of all the
Hospital Managers voting separately (subject to the limitations of Section 8),
is required. These matters include, but are not limited to, the following:
(i) A Fundamental Change of MDNY;
(ii) The establishment, modification or change to the
risk-sharing methodology for funding hospital risk
pools, including the percentage of medical
expenses allocated to hospital risk pools and the
nature of items charged against hospital risk
pools;
(iii) Selection, inclusion or termination of hospitals
which are Participating Providers with MDNY or
with an independent Practice Association under
contract to MDNY;
(iv) A Major Commitment by MDNY;
(v) The issuance of additional shares of MDNY Common
Stock, except to the Company;
(vi) The establishment by MDNY of a new line of
business other than a health maintenance
organization, or the establishment of any
subsidiary (corporate or other) of MDNY whose
board of directors (or similar
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governing body) does not reflect the same
proportion of Practitioner Directors (or their
designees) and Hospital Directors (or their
designees) as the Board of Directors of MDNY;
(vii) A change in MDNY's Certificate of Incorporation;
and
(viii) A change in MDNY's by-laws affecting to or
relating to the purpose of MDNY or the selection,
term, termination and qualifications of
individuals comprising the MDNY Board or any
committee thereof; provided further, that any
change to the provision of MDNY's by-laws which
states that MDNY shall not offer medical services
that are morally objectionable to the Diocese of
Rockville Centre as part of its basic benefit
plan, but only as a rider to ensure that each of
the CHNLI hospitals and/or CHNLI shall not derive
any economic benefit from the sale of such
coverage or from the provision of such services,
shall require the affirmative vote of a majority
of those MDNY Directors that are affiliated with
CHNLI.
In addition, if the matter in question would adversely affect MDNY's providers
or participants in a particular geographic region, the votes of the Practitioner
Directors and Hospital Directors must include the affirmative vote of a majority
of the Directors representing that region; that is, the Directors who are
associated with a Practitioner Entity or Hospital Entity whose associated
practitioners or hospitals operate in such subdivision. For purposes of this
provision, a matter would be deemed to "adversely affect" a geographic
subdivision if the matter involved a policy, financial arrangement or other
determination that would, on its face, treat, affect or otherwise apply to a
geographic subdivision in a different way such that the providers or
participants in such geographic subdivision were materially disadvantaged
thereby.
The Certificate of Incorporation of MDNY shall provide that each of
the matters provided for in this Section 4.6(b) as requiring the separate
majority vote of Practitioner Managers and Hospital Managers for determination
of the manner in which the Company will vote its shares of MDNY stock shall only
be acted upon by the directors of MDNY pursuant to the separate majority vote of
MDNY Practitioner Directors and MDNY Hospital Directors.
(c) Subject to the limitations of Section 8 herein, the
Board of Directors of MDNY, by resolution adopted by a majority of such Board,
shall designate from among its members: (i) a Finance Committee of such Board,
which shall be comprised of three (3) Practitioner Directors and three (3)
Hospital Directors; (ii) a Hospital Selection Committee which shall be comprised
of three (3) Practitioner Directors and three (3) Hospital Directors; (iii) a
Medical Delivery Committee, which shall be comprised of four (4) Hospital
Directors and eight (8) Practitioner Directors; (iv) a Customer Satisfaction
Committee, which shall be comprised of two (2) Practitioner Directors and four
(4) administrative staff representatives of MDNY; and (v) a Marketing and
Product Development Committee which shall be comprised of four (4) Practitioner
Directors and two (2) Hospital Directors. With the exception of the Finance
Committee, each of the foregoing committees of the MDNY Board of Directors shall
act solely in an advisory capacity with respect to the Board of Directors. The
Finance Committee, in addition to any other powers granted to it by resolution
of the MDNY Board of Directors, shall be vested with the authority to (i)
perform a full review of, and to approve, the annual budget of MDNY, and, only
after the budget is approved by the Finance Committee, shall the budget be
submitted to the entire Board of Directors of MDNY, which Board must either
adopt or reject such approved budget in its entirety, provided, however, that
if, after a diligent good faith effort, the Finance Committee shall be
deadlocked over the terms of the budget, the terms of the budget shall be
determined by the entire Board of MDNY and shall only become effective when
approved by a two-thirds (2/3) majority of all directors of MDNY, (ii) report on
the financial condition of MDNY to the MDNY Board, (iii) establish cash
management policy and assure maintenance of adequate reserves for MDNY, (iv)
review rate filing submissions by MDNY, and (v) review and approve any dividend
to be paid by MDNY to the Company.
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(d) MDNY shall undertake to establish a contractual
relationship with and make its network available to Fidelis, a prepaid health
service plan. Fidelis will, in turn, offer to the participating practitioners
and facilities in MDNY the opportunity to participate in its plan and shall
consider entering into other arrangements with MDNY that may be to the mutual
benefit of both parties. MDNY agrees not to establish its own medicaid-only
plan, provided that MDNY is not required, by state or federal law, regulation or
policy to establish its own plan and is not subject to any special tax,
surcharge or other assessment because it has not established its own
medicaid-only plan.
4.7 OTHER MATTERS CONCERNING THE BOARD OF MANAGERS.
(a) The Board of Managers may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, or other
paper or document believed by such members to be genuine and to have been signed
or presented by the proper party or parties.
(b) The Board of Managers may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisors selected by it and any opinion of any such Person as to
matters that the Board of Managers reasonably believes to be within such
Person's professional or expert competence shall be full and complete
justification and protection in respect of any action taken or suffered or
omitted by the Board of Managers hereunder in good faith and in reliance on such
opinion.
(c) The Board of Managers shall have the right, in respect
of any of its powers or obligations hereunder, to act through any of its duly
authorized officers or a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the Board of Managers in the
power of attorney, have full power and authority to do and perform all and every
act and duty which is permitted or required to be done by the Board of Managers
hereunder.
4.8 LIMITATIONS ON AUTHORITY. The Board of Managers shall have
no authority to do any act prohibited by law nor shall the Board of Managers
have any authority to:
(a) Do any act in contravention of this Agreement or of the
Certificate of Incorporation of MDNY;
(b) Do any act which would make it impossible to carry on
the ordinary business of the Company;
(c) Possess Company property, or assign rights in specific
Company property, for other than a Company purpose; or
(d) Knowingly perform any act that would subject any Member
or holder of other equity interests to liability as a member of a limited
liability company in any jurisdiction.
4.9 WITHDRAWAL OF MANAGERS. A member of the Board of Managers shall
be deemed to have withdrawn from the position of Manager of the Company upon the
occurrence of any one of the events listed in this Section 4.9 (each such event
herein referred to as an "Event of Withdrawal"):
(a) The Manager voluntarily resigns or retires from the
position of Manager of the Company by giving 20 days' prior written notice to
the Company and to the Board of Managers.
(b) The Manager is removed pursuant to Section 4.10 hereof.
(c) The death of the Manager.
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(d) The insanity of the Manager.
(e) The Manager:
(i) makes a general assignment for the benefit of
creditors;
(ii) files a voluntary bankruptcy petition;
(iii) files a petition or answer seeking for himself a
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any law;
(iv) files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against him in a
proceeding of the type described in paragraphs (i) through (iii) of this
subsection; or
(v) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of all or any substantial part
or his properties.
(f) A final and non-appealable judgment is entered by a
court with appropriate jurisdiction ruling that the Manager is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the Manager, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect.
(g) The withdrawal of the Manager as a Member pursuant to
Section 6.4 hereof.
If an Event of Withdrawal specified in subsections (e) or (f) of this Section
4.9 occurs, the withdrawing Manager shall give written notice to the other
Managers within 30 days after such occurrence. Only the Events of Withdrawal
described in this Section 4.9 shall result in withdrawal of a Manager from such
position. The withdrawal of a Manager will result in a vacancy to be filled in
the manner set forth in Section 4.3.
4.10 REMOVAL OF A MANAGER. A member of the Board of Managers may
be removed for cause by the vote of a majority of the Company's Voting
Interests. Any or all of the Managers may be removed without cause solely by
action of the holders of a majority of the series of Class B Interests or Class
C Interests associated with the Designating Practitioner Entity or Designating
Hospital Entity which nominated such Manager or Managers; provided, however,
that if less than all of the Managers nominated by such Designating Practitioner
Entity or Designating Hospital Entity are to be removed, no such individual
Manager may be removed if the Class B Interests or Class C Interests, as
applicable, voted against his removal would be sufficient to elect him if voted,
in such manner as would have been permissible under the governing instruments of
such Designating Practitioner Entity or Designating Hospital Entity at an
election at which (i) the same total number of votes were cast as at the vote on
removal and (ii) the entire number of Managers which the Designating
Practitioner Entity or Designating Hospital Entity is entitled to nominate were
being elected. Any removal pursuant to this Section 4.10 shall not affect the
Membership Interest in the Company owned by the removed Manager or otherwise
constitute the Manager's withdrawal as a Member. The removal of a Manager will
result in a vacancy to be filled in the manner set forth in Section 4.3.
4.11 OFFICERS. One or more individuals, including any Manager,
may be appointed by the Board of Managers as officers of the Company. Such
individuals shall have such titles and exercise and perform such powers and
duties as shall be assigned to them from time to time by the Board of Managers.
Officers appointed by the Board of Managers shall have such authority to bind
the Company as the Board of Managers shall determine. The officers shall not be
obligated to devote their time exclusively to the business of the Company. Any
officer may be removed by the Board of Managers at any time, with or without
cause. Each officer shall hold office until his
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or her successor is selected by the Board of Managers and qualified. Any number
of offices may be held by the same individual. The salaries and other
compensation of the officers shall be fixed by the Board of Managers.
4.12 COMPENSATION; EXPENSES. In the event that any Member
(including any Manager) performs services on behalf of the Company, such Member
shall receive such fees, salary, and commissions and shall be reimbursed for any
reasonable direct expenses incurred in connection with the Company's business as
the Board of Managers may determine.
4.13 CONSENT OF MEMBERS. To the fullest extent permitted by law,
the Members hereby consent to the exercise by the Board of Managers of the
powers conferred on them by this Agreement.
4.14 THIRD PARTY RELIANCE. Any Person dealing with the Company
as to any matter may rely solely on written advice from the Board of Managers
and such Person shall not be required to determine or inquire into the authority
or power of the Board of Managers to bind the Company or to execute, acknowledge
or deliver any and all documents in connection therewith. As to the authority
of the Board of Managers to act on behalf of the Company and as between the
Company or the Board of Managers, on the one hand, and such other Person, on the
other hand, the facts stated in any such written advice from the Managers will
be conclusive and binding on the Company and the Board of Managers.
4.15 LIMITATIONS ON LIABILITY; INDEMNIFICATION AND CONTRIBUTION.
(a) No Manager or officer of the Company shall be
personally liable, responsible or accountable in damages or otherwise to the
Company or any of the Members for any act or omission performed or omitted by
him in such capacity, or for any decision made in such capacity, except in the
case of a judgment or other final adjudication that establishes that his acts or
omissions were in bad faith or involved intentional misconduct or a knowing
violation of law or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled or that with respect to a
distribution the subject of Section 508(a) of the Act, his acts were not
performed in accordance with Section 409 of the Act. For purposes of this
Section 4.15, the fact that an action, omission to act or decision is taken on
the advice of counsel for the Company shall be evidence of good faith and lack
of fraudulent conduct.
(b) The Company shall indemnify and hold harmless the Board
of Managers, the officers, employees and agents of the Company (individually, an
"Indemnitee") from and against any and all, joint and several, losses, claims,
demands, costs, damages, liabilities, expenses of any nature (including
attorneys' fees and disbursements), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, in which an Indemnitee may be
involved, or threatened to be involved, as a party or otherwise ("Liabilities"),
arising out of, in connection with or incidental to the business of the Company
including all liabilities under the Federal and state securities laws as
permitted by law, regardless of whether an Indemnitee continues to be a Manager,
or an officer, employee or agent of the Company, at the time any such liability
or expense is paid or incurred, if a judgment or other final adjudication
adverse to such Indemnitee establishes that (i) the Indemnitee's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or (ii) the Indemnitee
personally gained in fact a financial profit or other advantage to which he was
not legally entitled. The termination of any action, suit or proceeding by
settlement or upon a plea of nolo contendere, or its equivalent, shall not, in
and of itself, create a presumption or otherwise constitute evidence that the
Indemnitee's actions constituted active or deliberate dishonesty, bad faith,
intentional misconduct, a knowing violation of law or that he gained a financial
profit or other advantage to which he was not legally entitled.
(c) Expenses (including legal fees and expenses) incurred
in defending any proceeding subject to subsection (a) of this Section 4.15 shall
be paid by the Company in advance of the final disposition of such proceeding
upon receipt of an undertaking (which need not be secured) by or on behalf of
the Indemnitee to repay
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such amount if it shall ultimately be determined, by a court of competent
jurisdiction or otherwise, that the Indemnitee is not entitled to be indemnified
by the Company as authorized hereunder.
(d) The indemnification provided in this Section 4.15 shall
be in addition to any other rights to which each Indemnitee may be entitled
under any agreement or vote of the Members, as a matter of law or otherwise, and
shall inure to the benefit of the heirs, successors, assigns, administrators and
personal representatives of the Indemnitee. Such indemnification, however,
shall only apply to Liabilities incurred by virtue of the Indemnitee's status as
a Manager, or officer, employee or agent of the Company, and not as to
Liabilities incurred in other capacities (for example, by virtue of contracting
with the Company).
(e) The Company may purchase and maintain insurance on
behalf of any one or more Persons against any Liabilities which may be asserted
against or expense which may be incurred by such Persons in connection with the
Company's activities, whether or not the Company would have the power to
indemnify such Person against such Liability under the provisions of this
Agreement.
(f) Any indemnification hereunder shall be satisfied only
out of the assets of the Company and no Member shall be subject to personal
liability by reason of these indemnification provisions.
(g) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 4.15 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 4.15 are for the benefit
of the Indemnitees and the heirs, successors, assigns, administrators and
personal representatives of the Indemnitees and shall not be deemed to create
any rights for the benefit of any other Persons.
(i) Any Indemnitee that proposes to assert the right to be
indemnified under this Section 4.15 shall, promptly after receipt of notice of
any action which may be subject to indemnification hereunder, notify the Company
of the commencement of such action, enclosing a copy of all papers served. The
failure so to notify the Company of any such action shall not relieve it from
any liability that it may have to any Indemnitee hereunder, unless such
Indemnitee is prejudiced thereby. In case any such action shall be brought and
notice given to the Company of the commencement thereof, the Company shall be
entitled to participate in, and to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnitee, and after notice from the Company to
such Indemnitee of its election so to assume the defense thereof, the Company
shall not be liable to such Indemnitee for any legal or other expenses except as
provided below and except for the reasonable costs of investigation subsequently
incurred by such Indemnitee at the request of the Company in connection with the
defense thereof. The Indemnitee shall have the right to employ separate counsel
and to participate in (but not control) any such action, but the fees and
expenses of such counsel shall be the expense of such Indemnitee unless (i) the
employment of counsel by such Indemnitee has been authorized by the Board of
Managers, (ii) the employment of separate counsel is necessitated by a
conflicting interest among Indemnitees, or (iii) the Company shall not in fact
have employed counsel to assume the defense of such action. In each case, the
fees and expenses of counsel shall be at the expense of the Company. The
Company shall not be liable for any settlement of any action or claims effected
without its written consent unless the Company has failed to assume the defense
of any such action or claims.
(j) If the indemnification provided for in this Section
4.15 is found to be unenforceable or is unavailable to the Indemnitee for any
reason whatsoever, the Company, in lieu of indemnifying the Indemnitee, shall
contribute to the amount incurred by the Indemnitee, whether for expenses,
judgments, fines, taxes, penalties and amounts paid in settlement in connection
with any action, suit or proceeding, in such proportion as is deemed fair and
reasonable in light of all the circumstances of such action by Board action,
arbitration or by the court before which such action was brought in order to
reflect (i) the relative benefits received by the Company and the Indemnitee as
a result of the event(s) and/or transaction(s) giving cause to such action;
and/or (ii) the relative
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faults of the Company (and its Managers, officers, Members, employees and
agents) and the Indemnitee in connection with such event(s) or transaction(s).
Section 5
ACCOUNTING, BOOKS AND RECORDS
5.1 ACCOUNTING, BOOKS AND RECORDS. The Company shall maintain at
its principal place of business separate books of account for the Company which
shall show a true and accurate record of all costs and expenses incurred, all
charges made, all credits made and received, and all income derived in
connection with the conduct of the Company and the operation of its business in
accordance with generally accepted accounting principles consistently applied.
Any Member or his designated representative shall have the right, at any
reasonable time, upon written request stating the purpose for such inspection,
to have access to and inspect and copy the contents of such books or records.
The Company shall file the Annual Reports required to be filed by the New York
Intrastate Financing Act with the Department of Law and mail a copy of this
Annual Report to the Members of the Company.
5.2 REPORTS. The Board of Managers shall be responsible for the
preparation of financial reports and tax and information returns of the Company
and the coordination of financial matters of the Company with the Company's
accountants. The Board of Managers shall ensure that the Company complies with
the reporting requirements of the Securities and Exchange Act of 1934, as
amended, and that within 90 days after the close of the Company's fiscal year,
the Company mails to each Member an annual report of its independent public
accountants containing audited financial statements of the Company.
Section 6
WITHDRAWAL OR OTHER TERMINATION OF PARTICIPATION
IN A PRACTICE ASSOCIATION
6.1 WITHDRAWAL OR TERMINATION. In the event (i) an individual
who is a Member withdraws from or otherwise ceases to be a member of a Practice
Association for any reason other than death or retirement; or (ii) a
Participating Practice with which such Member is associated becomes bankrupt,
dissolves or liquidates or ceases to be a member of a Practice Association for
any reason; or (iii) there is a suspension for more than 60 days of the hospital
services to MDNY promoted or sponsored by a Member; or (iv) a Member is
associated with a Practice Association whose contract with MDNY terminates; or
(v) the contract between MDNY and a Member or the contract between MDNY and a
Hospital Entity with which a Member is associated, for hospital services
promoted or sponsored by such Member or Hospital Entity is terminated, then, in
each such event, the Company shall have the right but not the obligation, to
purchase that Member's Membership Interests, in whole or in part.
Notwithstanding the foregoing, the Company shall not have the right to purchase
the Membership Interests of a Member if the event which would otherwise give
rise to such right is the transfer by a Member or a Hospital Entity with which
such Member is associated, of his or its Class C Interests to a Hospital Entity
approved by the Board of Managers, and such transferred Class C Interests shall
continue to be Class C Interests when owned by the transferee. Except as set
forth in the previous sentence, upon the occurrence of an event giving rise to
the Company's purchase rights hereunder, the affected Member's Voting Interest
shall automatically be converted into Class A Interests. The Member must
provide the Company with a writing (a "Notice") addressed to the Company's
President. The Notice shall be deemed to be an offer to sell that Member's
entire Membership Interest at a purchase price equal to the value of an Interest
determined by the Company's independent certified public accountants or an
independent consultant appointed by the Company at the end of the most recent
fiscal year completed prior to the date of the Member's offer to sell his
Membership Interest. The Company's right of purchase may be exercised in whole
or in part. In the event the Company shall decline to purchase any or all of a
Member's Membership Interests (or fail to respond) within ten (10) days after
receipt of the Notice, then subject to the provisions of this Agreement,
- 22 -
the Member may offer any remaining Membership Interests to another member of a
Practice Association. In such event, however, any Voting Interest shall
automatically be converted into a Class A Interest. In the event a
Participating Provider that is a member of a Participating Practice withdraws
from a Practice Association but the Participating Practice is able to maintain
its membership in the Practice Association, and the Company does not purchase
any or all of his Membership Interests, he may sell his Membership Interests to
other members of the Participating Practice. If the purchaser is a Member
owning Voting Interests, the Voting Interest sold will automatically be
converted into Class A Interests.
7 DEATH OF A MEMBER. Upon the death of an individual Member,
the decedent's estate shall have two years from the date of death within which
to sell such decedent's medical practice or interest in a group practice. Once
the estate has secured a purchaser for the practice, such purchaser shall have
the right to join the appropriate Practice Association and purchase all of the
estate's Membership Interests upon satisfying the credentialing criteria of the
Practice Association. If after the passage of two years, either the estate has
been unable to find a purchaser of the decedent's practice, or if during the
two-year period, the estate finds a purchaser who either does not qualify for
participation in the appropriate Practice Association or does not want to
participate in the appropriate Practice Association, the Company shall have the
right, but not the obligation, to purchase the estate's Membership Interests, in
whole or in part. The Company's right to purchase the Membership Interests
shall be exercised in the same manner as that set out in Section 6.1 herein.
In the event the Company chooses not to purchase any or all of the
estate's Membership Interests, the estate may offer and sell the Membership
Interests to another Member of the Company. In such event, however, each Class
B Membership Interest shall be automatically converted into one Class A
Membership Interest to maintain the one Member-one vote structure. An estate of
a Member who was a member of a Participating Practice may then sell the
Membership Interests to the other members of the Participating Practice who are
Participating Providers, provided, however, that if any such Person becomes the
owner of more than one Class B Membership Interest, such excess will be
converted to Class A Membership Interests.
7.1 RETIREMENT OF A MEMBER. Upon the retirement of an individual
Member from his practice, the Member has three options: (i) request that his
Voting Interest be converted into a Class A Interest, in which case he can
continue to hold all of his Membership Interests, or (ii) sell the Membership
Interests owned by him to a Participating Provider who is already a Member of
the Company, provided, that his Class B Membership Interest sold shall be
automatically converted into a Class A Interest, or (iii) within two years of
the date of his retirement, find a purchaser for his practice or his interest in
his group practice and sell his Membership Interest to the purchaser of such
practice or Interest, subject to the purchaser joining the appropriate Practice
Association, satisfying the credentialing criteria of the Practice Association
and obtaining the consent of the Board of Managers. In the event such purchaser
is a Participating Provider in a Practice Association, any Class B Membership
Interest sold shall be automatically exchanged for one Class A Membership
Interest.
7.2 TRANSFER OF MEMBER'S INTEREST IN REGIONAL HOLDING COMPANIES.
In the event the interests of a Member in a regional holding company, including
HVPH, LIPH and QPH, are transferred, sold, assigned, etc. this transfer shall be
deemed a withdrawal from the Company by such Member and such Member's Membership
Interests will be subject to the provisions of Section 6.1.
7.3 EFFECTIVE DATE. Any admission of a Member pursuant to
Section 3.1, Section 3.4 or this Section 6 shall be deemed effective as of the
last day of the calendar month in which such admission occurs.
7.4 LIMITATION ON TRANSFER. No Member may sell, assign, transfer
or otherwise in any way dispose of all or any part of a Membership Interest or
any interest therein or grant or create any security interest in or lien, claim
or other encumbrance of any kind in a Membership Interest, whether voluntarily
or involuntarily, by operation of law or otherwise, except as expressly provided
in this Agreement
- 23 -
or as authorized by the Board of Managers. Any disposition or encumbrance of a
Membership Interest otherwise than as provided in this Agreement shall be void
AB INITIO, and the Company shall not reflect the same in its records or
otherwise recognize or give effect thereto.
Section 8
DISSOLUTION AND WINDING UP
8.1 LIQUIDATING EVENTS. The Company shall dissolve and commence
winding up and liquidating upon the first to occur of any of the following
("Liquidating Events"):
(a) the expiration of the term provided in Section 1.5;
(b) the sale of all or substantially all of the Company's
assets;
(c) the vote of the Managers required under Section
4.5(a)(i) followed by the vote of at least seventy-five percent (75%) of the
then issued and outstanding Voting Interests including a majority of each class
of Voting Interests to dissolve, wind up, and liquidate the Company;
(d) the happening of any other event that makes it unlawful,
impossible, or impractical to carry on the business of the Company; or
(e) the entry of a decree of judicial dissolution under
Section 702 of the Act.
The Members hereby agree that: (i) the bankruptcy, death, dissolution,
expulsion, incapacity or withdrawal of any Member shall not constitute a
Liquidating Event, and (ii) notwithstanding any provision of the Act, the
Company shall not dissolve prior to the occurrence of a Liquidating Event.
8.2 WINDING UP. Upon the occurrence of a Liquidating Event, the
Company shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members and no Member shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the Company's
business and affairs. To the extent not inconsistent with the foregoing, all
covenants and obligations in this Agreement shall continue in full force and
effect until such time as the Company property has been distributed pursuant to
this Section 7.2 and the Articles of Organization have been cancelled in
accordance with the Act. The President of the Company, under the direction of
the Board of Managers, shall be responsible for overseeing the winding up and
dissolution of the Company, shall take full account of the Company's liabilities
and property, shall cause the Company's property to be liquidated as promptly as
is consistent with obtaining the fair value thereof unless the Members
unanimously consent to Distributions of all or any part of the property in kind,
and shall cause the property or the proceeds therefrom, to the extent sufficient
therefor, to be applied and distributed in the following order:
(a) first, to the payment and discharge of all of the
Company's debts and liabilities to creditors including Members (to the extent
permitted by applicable law); and
(b) the balance, if any, among the Members in proportion to
their respective percentage ownership of Membership Interests.
8.3 RIGHTS OF MEMBERS. Except as otherwise provided in this
Agreement, (a) each Member shall look solely to the assets of the Company for
the return of his Capital Contribution and shall have no right or power to
demand or receive property other than cash from the Company, and (b) no Member
shall have priority over any other Member as to the return of his Capital
Contributions or the payment of Dividends by the Company.
- 24 -
Section 9
MODIFICATION OF RIGHTS AND PREFERENCES OF CLASS C INTERESTS
Notwithstanding anything to the contrary herein, if, after notice from
the Company that the Hospital Entities have ceased to own or be contractually
committed to acquire an aggregate of 10% of the outstanding equity interest in
the Company, the Hospital Entities shall fail to acquire sufficient additional
equity interests in the Company within one year thereafter so as to own or be
contractually committed to acquire an aggregate of not less than 10% of the
outstanding equity interest in the Company, then: (i) all rights and
preferences conferred on the Hospital Entities holding Class C Interests by the
following Sections of this Agreement shall be eliminated: Section 4.2; Section
4.3; Section 4.5(a); Section 4.6(a); Section 4.6(b); and Section 4.6(c), except
that as long as CHNLI has any Membership Interests in the Company it shall
retain the right to prevent any change to the provisions of MDNY's by-laws which
state that MDNY shall not offer medical services that are morally objectionable
to the Diocese of Rockville Centre as part of its basic benefit plan, but only
as a rider to ensure that each of the CHNLI hospitals and/or CHNLI shall not
derive any economic benefit from the sale of such coverage from the provision of
such services; and Section 4.10; (ii) the number of total seats on the Board of
Managers of the Company shall be reduced to twenty-one (21); and, (iii) Class C
Interests shall have the same voting rights as Class B Interests.
Section 10
GENERAL PROVISIONS
10.1 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified, or supplemented only by the Board of Managers pursuant to a
supermajority vote required by Section 4.5(a)(ii).
10.2 WAIVER OF COMPLIANCE. Any failure of a party to comply with
any obligation, covenant, agreement, or condition herein may be waived by the
other parties; provided, however, that any such waiver may be made only by an
instrument signed by the party(ies) granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
10.3 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Company's Members and
their respective successors and permitted assigns. No party may assign any of
his rights hereunder except in accordance with the terms hereof. Nothing in
this Agreement, expressed or implied, is intended or shall be construed to
confer upon any person other than the parties hereto, any successors and
permitted assigns, any rights, remedy, or claim under or by reason of this
Agreement or any provisions herein contained.
10.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to its conflicts of law doctrines).
10.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other parties.
10.6 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given by registered or
certified mail (return receipt requested), by Federal Express or any other
generally recognized overnight delivery service, receipt acknowledged, or by
hand, to the parties at the addresses stated above (or at such other address for
a party as shall be specified by like notice).
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10.7 SEVERABILITY. If any one or more provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
IN WITNESS WHEREOF, the undersigned Member-Managers have duly executed
this Agreement as of the day and year first above written.
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
Class A Members
By:
-------------------------------------
Attorney-in-Fact
Class A and B-1 Members
By:
-------------------------------------
Attorney-in-Fact
Class A and B-2 Members
By:
-------------------------------------
Attorney-in-Fact
Class A and B-3 Members
By:
-------------------------------------
Attorney-in-Fact
Class A and C-1 Members
By:
-------------------------------------
Attorney-in-Fact
