OPERATING AGREEMENT FOR PREMIER SD, LLC
OPERATING AGREEMENT
FOR
PREMIER SD, LLC
5728\ Agt-OperatingAgreement-PremierSD
6.8.200517:01:56\6.7.200518:35:52
TABLE OF CONTENTS
Exhibits and Schedules:
| Exhibit 1.1 | Articles of Organization |
| Schedule 2.1 | SD Accounts |
| Schedule 4.1.a | Services |
| Schedule 9.1.p. | Percentages |
PREMIER SD, LLC
This Operating Agreement (the “Operating Agreement”)
is dated ______________ , 2005, and is between PREMIER HEALTH SERVICES, LLC,
a Delaware limited liability company (“PHS,) and SOUTHERN DIAGNOSTICS,
INC., a corporation organized under the laws of Colorado (“SD,”
and collectively with PHS, the “Members”), and PREMIER SD, LLC,
an Alaska limited liability company (the “Company”).
The
parties want to organize and operate a limited liability company under the Alaska
Limited Liability Company Act (the “Act”), in accordance with the
terms and subject to the conditions set forth below.
The parties therefore agree as follows:
ARTICLE 1
Formation
| 1.1. | Organization. The parties shall organize
the Company as an Alaska limited liability company in accordance with
the Act and the provisions of this Operating Agreement. For that purpose,
if they have not already filed Articles of Organization, then they shall
cause Articles of Organization, in the form attached as Exhibit 1.1 to
be executed and filed with the Department of State immediately upon the
execution of this Operating Agreement. |
| 1.2. | Name of the Company. The name of the
Company will be PREMIER SD, LLC. The Company may do business
under that name and under any other name or names that the Manager selects.
If the Company does business under a name other than that set forth in
its Articles of Organization, the Company shall file a fictitious name
registration as required by applicable law. |
| 1.3. | Purpose. The Company is authorized
to engage in any business permitted under the Act. |
| 1.4. | Term. The term of the Company begins
upon the filing of the Articles of Organization and is perpetual, unless
its existence is sooner terminated under Section 7.1 of this Operating
Agreement. |
| 1.5. | Principal Office. The principal office
of the Company must initially be located at 0000 X. Xxxxxx Xxxx, Xxxxx
000, Xxxx Xxxxx, Xxxxxxx 00000 or at any other place the Manager selects.
|
| 1.6. | Title to Company Property. All real
and personal property acquired by the Company will be acquired and held
by the Company in its name. |
ARTICLE 2
Capital Contributions
| 2.1. | Initial Capital Contributions. Upon
executing this Operating Agreement, PHS shall contribute $100 cash
to the Company and SD shall contribute, pursuant to an Assignment Agreement
satisfactory to the Manager, the diagnostic-testing accounts set forth
in Schedule 2.1 (the “Original SD Accounts”), together with
all agreements, books and records described in such schedule (collectively,
the “Agreements and Records”). |
| 2.2. | Additional Capital Contributions. The
Members have no obligation to make any Capital Contributions other than
as set forth in Sections 2.1 and 3.4. Nor is any Member personally liable
for any obligation of the Company. |
| 2.3. | No Interest on Capital Contributions. Except
as expressly provided in this Operating Agreement, Interest Holders will
not be paid interest on their Capital Contributions. |
| 2.4. | Return of Capital Contributions. Except
as otherwise provided in this Operating Agreement, no Interest Holder
has the right to receive any return of any Capital Contribution. |
| 2.5. | Capital Accounts. The Company shall
create and maintain a separate Capital Account for each Interest Holder
in accordance with Section 9.3.b of this Operating Agreement. |
| 2.6. | Loans. Any Member may, at any time,
make or cause a loan to be made to the Company in any amount and on those
terms upon the Manager determines. |
ARTICLE 3
Accounts and Seminars
| 3.1. | Account Related Definitions. For
the purposes of this Operating Agreement, the following terms, relating
to the diagnostic-testing accounts that SD is contributing to the Company,
are defined as provided: |
||
| a.
|
“Premier Accounts” means
all accounts that the Company or any of its Affiliates tests and that
are not on the date of testing an SD Account. However, on any particular
date, an account that is otherwise a Premier Account is no longer deemed
such if on that date more than 180 days have elapsed since the account
was last tested by the Company (or any of its Affiliates). A Premier Account
that is no longer deemed such for lack of testing by the Company or any
of its Affiliates during the aforesaid 180-day period may again be deemed
a Premier Account by meeting the conditions for becoming and remaining
such account in this Operating Agreement. |
||
| b. |
“SD Account” means
any of the Company’s accounts (including any future accounts that
SD generates for the Company) that is either an Original SD Account or
a New SD Account. On any particular date, an account that is otherwise
an SD Account is no longer deemed such if, on such date, more than 180
days have elapsed since the account was last tested by the Company. In
addition, with respect to the Original SD Accounts, until more than 180
days have elapsed from the date of this Operating Agreement, no such account
will lose its status as an SD Account. An SD Account that is no longer
deemed such for lack of testing by the Company during the aforesaid 180-day
period may again be deemed an SD Account by meeting the conditions for
becoming and remaining such account in this Operating Agreement. |
||
| c. |
“Original SD Account”
means each of the diagnostic-testing accounts listed on Schedule
2.1, provided it satisfies the following conditions when assigned to the
Company on the date of this Operating Agreement: |
||
| i.
|
neither PHS (nor any of its Affiliates) tested the
account within the 180-day period before SD assigned it to the Company;
and |
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2
| ii. |
neither PHS (nor any of its Affiliates) submitted
Regular Testing Documentation for the account within the 30-day period
before SD assigned it to the Company. |
||
| d. |
“New SD Account” means
an account for which SD submits Regular Testing Documentation to the Company
any time after the date of this Operating Agreement and that is not on
the date of submission a Premier Account. |
||
| e. |
“Regular Testing Documentation”
means, with respect to any diagnostic-testing account that SD
assigns to the Company on the date hereof or generates for the Company
after such date, a substantially completed patient-insurance-verification
form, or any other form the Company and SD agree on. SD is considered
to have submitted Regular Testing Documentation to the Company only if
it does so in accordance with the Company’s policies and procedures
relating to submitting such documentation. “Regular Testing Documentation”
means, with respect to PHS or any of its Affiliates (other than SD), a
substantially completed patient-insurance-verification form or other documentation
used in good faith in the ordinary course of business of PHS or any of
its Affiliates to schedule an account for diagnostic testing. |
||
| 3.2. | Assignment. When it signs
this Operating Agreement, SD shall deliver a list describing all the Original
SD Accounts, together with delivering all Agreements and Records pertaining
thereto, and that list will be attached hereto as Schedule 2.1. SD hereby
assigns to the Company the Original SD Accounts, and such Agreements and
Records, and that assignment constitutes its initial Capital Contribution
under Section 2.1. |
||
| 3.3. | Representations. SD represents,
warrants, and covenants as follows: |
||
| a. |
SD owns, and the Company will receive
when assigned to it, each of the diagnostic- testing accounts now or hereafter
included among the Original SD Accounts, together with the Agreements
and Records, free and clear of any liens, encumbrances, or third- party
claims of any nature; |
||
| b. |
Each Original SD Account satisfies the
conditions set forth in Sections 3.1.c.i and 3.1.c.ii; |
||
| c. |
SD has heretofore complied and will hereafter
comply with all the Company’s health- care compliance policies,
and all applicable laws and regulations, pertaining to each of the diagnostic-testing
accounts now or hereafter included among the SD Accounts; |
||
| d. |
No direct or indirect compensation arrangement
exists between SD (or any entity that manages it) and franchisees of Chiropractic
USA. The term "indirect compensation arrangement" is defined consistent
with 42 CFR §411.354(c)(2); |
||
| e. |
Any individual performing marketing services
on behalf of SD (or any entity that manages it) or at its (or such managing
company’s) request for the Company’s benefit, is either (i)
a bona fide employee of SD (as defined under 42 CFR Section 1001.952(i)
and 26 USC 3121(d)(2) and other applicable federal and state laws),
or (ii) an independent contractor who is paid fair market value for services
rendered, and is not compensated in any manner that directly or indirectly
takes into consideration the volume or value of business recommended to
SD or otherwise obtained for the Company’s benefit; |
||
| f. |
Any individual performing marketing services
on behalf of SD (or any entity that manages it) (i) is not the relevant
decision maker with regard to making clinical |
||
3
determinations for the Company to perform diagnostic
testing services, and (ii) has no control over any decision by any licensed
health care provider relating to any clinical treatment or service, including
ordering any diagnostic tests; |
||
| g. |
No direct or indirect ownership or investment interest
exists between SD and franchisees of Chiropractic USA. The term "indirect
ownership or investment interest" is defined consistent with 42 CFR §411.354(b)(5);
|
|
| h. |
With respect to any management or similar agreement
between SD and Diagnostic USA, Inc., a Colorado corporation (“Diagnostic
USA,” or any other party that manages SD, in any case the “Management
Agreement”) all management services included in the Management Agreement
are commercially reasonable and necessary for the legitimate business
purpose of the arrangement, and commercially reasonable even if no referrals
were made by any related party or entity owned, operated or controlled
by Xxxxxxx or Xxxx Xxxxxx, or any other individual that has control over
SD (collectively, the “SD Control Persons”); |
|
| i. |
All management services included in the Management
Agreement shall actually be performed; |
|
| j. |
Compensation for management services in the Management
Agreement shall be at fair market value, set in advance, and shall not
take into account the volume or value of referrals generated by any provider
employed by or affiliated with any entity owned, operated or controlled
by the SD Control Persons; and |
|
| k. |
SD and its Affiliates shall comply with the terms
of the Noncompete and Confidentiality Agreements that they are executing
concurrently herewith; and shall ensure that their respective employees
and contractors abide by the same terms during and after the period of
such employees’ and contractors’ employment but only for as
long as SD is bound and only to the extent enforceable by law. |
|
| 3.4. | New SD Accounts. Throughout
the term of this Operating Agreement, SD shall exercise its best efforts,
directly or through Southern Diagnostics or any other authorized designee)
to generate New SD Accounts exclusively for and in the Company’s
name and shall assign them, together with all agreements, books and records
pertaining thereto (including Regular Testing Documentation), to the Company,
in accordance with the Company’s policies and procedures, promptly
after being generated. SD’s Capital Account will not, however, be
credited to reflect any New SD Accounts assigned to the Company. |
|
| 3.5. | Seminars. SD shall conduct
seminars promoting the diagnostic-testing services offered by the Company
for chiropractors and other health-care providers exclusively for and
in the name of the Company. |
|
ARTICLE 4
Distributions and Allocations
| 4.1. | Guaranteed Payments to SD. | ||
| a. | As payment for its
use of the Accounts, the Company shall pay SD the following amounts: |
||
| i. | 30% of its Adjusted Gross Collections from SD Accounts. | ||
4
| “Adjusted Gross Collections” means gross
collections of the Company from SD Accounts, less applicable Doctor
Payments. A “Doctor Payment” is the amount that the SD Account
doctor is entitled to receive from the Company (or PHS) based on such
doctor's rate (currently $200/hour), in effect from time to time,
for the services described in Schedule 4.1.a., of this Agreement for such
SD Accounts; and ii. 30% of gross collections of the Company from SD Accounts,
without adjustment for Doctor Payments, providing that the gross collections
arise from the Company providing services to such accounts under its professional-technical
billing structure. |
|||
| b. |
The Company shall pay SD
the amounts it owes under i. and ii., above, on a monthly basis. The parties
agree that all payments the Company makes under this Section 4.1 are “guaranteed
payments” under Section 707(c) of the Code. |
||
| 4.2. | Cash Flow. In its sole discretion,
the Manager may periodically make distributions of Cash Flow (which the
parties acknowledge is determined subject to the Company’s payment
commitments then accrued and owed to SD under the terms of Section 4.1.a,
and as further subject to the Company’s distribution commitment
to SD set forth in this Section below) to PHS to the extent of its Positive
Capital Account. On any sale of the SD Accounts then existing, the Company
must distribute to SD 30% of the net sales proceeds that the Company collects
directly from a sale of those accounts. |
||
| 4.3. | Liquidation and Dissolution. If
the Company is liquidated, the Company shall distribute and apply its
assets in the following order and priority: |
||
| a. |
to the payment of any debts and liabilities of the
Company other than debts or liabilities owed to Members; then to expenses
of the Company incident to winding up and terminating the Company; |
||
| b. |
to the establishment of any reserves the Manager determines
to be reasonably necessary to provide for any further expenses of winding
up and terminating the Company and for any contingent or unforeseen liabilities
or obligations of the Company, but at the end of such period of time the
Manager determines advisable, the balance of the reserves remaining after
the payment of such contingencies will be distributed in the manner provided
below; |
||
| c. |
to the payment of debts and liabilities of the Company
to Members—including any guaranteed payment due SD under Section
4.1.a; |
||
| d. |
only if liquidation arises other than as a result of
a Termination Notice to SD or a sale of the SD Accounts, the Company must
re-assign its rights in the Original SD Accounts to SD; |
||
| e. |
to the Interest Holders in proportion to their Adjusted
Capital Balances, until their remaining Adjusted Capital Balances have
been paid in full; |
||
| f. |
if any Interest Holder has a Positive Capital Account
after the distributions made pursuant to Section 4.3.e and before any
further allocation of Profit pursuant to Section 4.5. a.iii, to those
Interest Holders in proportion to their Positive Capital Accounts; |
||
| g. |
the balance, to the Interest Holders in proportion
to their Percentages. Notwithstanding anything in this Section 4.3, no
Interest Holder is obligated to restore a Negative Capital Account. |
||
5
| 4.4. | Allocation of Profit or Loss from
Operations. After giving effect to the special allocations set
forth in Section 4.6, for any taxable year of the Company, Profit or Loss
(other than Profit or Loss resulting from a Capital Transaction, which
Profit or Loss must be allocated in accordance with the provisions of
Section 4.5) must be allocated entirely to PHS. |
||
| 4.5. | Allocation of Profit or Loss from
a Capital Transaction. |
||
| a. |
Profit. After giving effect
to the special allocations set forth in Section 4.6, Profit from a Capital
Transaction must be allocated as follows: |
||
| i.
|
if one or more Interest Holders has a Negative Capital
Account, to those Interest Holders, in proportion to their Negative Capital
Accounts, until all of those Negative Capital Accounts have been reduced
to zero; |
||
| ii. |
any Profit not allocated pursuant to Section 4.5.a.i
must be allocated to the Interest Holders so that Capital Accounts are
adjusted in proportion and to the extent of the amounts distributable
to them pursuant to first Section 4.3.e and then Section 4.3.f; and |
||
| iii. |
any Profit in excess of the foregoing allocations
must be allocated to the Interest Holders in proportion to their Percentages.
|
||
| b. |
Loss. After giving effect
to the special allocations set forth in Section 4.6, Loss from a Capital
Transaction must be allocated as follows: |
||
| i. |
first, if one or more Interest Holders have a Positive
Capital Account in excess of their respective Adjusted Capital Balances,
to those Interest Holders, in proportion and to the extent of the amounts
by which their respective Positive Capital Accounts exceed their respective
Adjusted Capital Balances; |
||
| ii. |
second, to the Interest Holders in proportion to
and to the extent of their Positive Capital Accounts (after adjustment
for allocations under 4.5.b.i) until all Positive Capital Accounts have
been reduced to zero); and |
||
| iii. |
finally, any Loss not allocated to reduce Positive
Capital Accounts to zero pursuant to Section 4.5.b.ii must be allocated
to the Interest Holders in proportion to their Percentages. |
||
| 4.6. | Special Allocations. |
||
| a. |
Sale of SD Accounts. In
connection with any distribution required from a sale of SD Accounts under
Section 4.2, the parties agree that any Profit or Loss from such transaction
shall be allocated 30% to SD and 70% to PHS. |
||
| b. |
Qualified Income Offset. No
Interest Holder will be allocated Losses or deductions if the allocation
causes the Interest Holder to have an Adjusted Capital Account Deficit.
If an Interest Holder receives (1) an allocation of Loss or deduction
(or item thereof) or (2) any distribution that causes the Interest Holder
to have an Adjusted Capital Account Deficit at the end of any taxable
year, then all items of income and gain of the Company (consisting of
a pro rata portion of each item of Company income, including gross
income and gain) for that taxable year shall be allocated to that Interest
Holder, before any other allocation is made of Company items for that
taxable year, in the amount and in proportions required to eliminate the
excess as quickly as possible. This Section 4.6.b is |
||
6
| intended to comply, and shall be interpreted consistently,
with the “qualified income offset” provisions of the Treasury
Regulations promulgated under Code Section 704(b). |
||
| c. | Minimum Gain Chargeback. Except as
set forth in Treasury Regulations Section 1.704- 2(f)(2), (3), and (4),
if, during any taxable year, there is a net decrease in Minimum Gain,
each Interest Holder, prior to any other allocation pursuant to this ARTICLE
4, shall be specially allocated items of gross income and gain for such
taxable year (and, if necessary, subsequent taxable years) in an amount
equal to that Interest Holder’s share of the net decrease of Minimum
Gain, computed in accordance with Treasury Regulations Section 1.704-2(g)(2).
Allocations of gross income and gain pursuant to this Section 4.6.c shall
be made first from gain recognized from the disposition of Company assets
subject to nonrecourse liabilities (within the meaning of the regulations
promulgated under Code Section 752), to the extent of the Minimum Gain
attributable to those assets, and thereafter, from a pro rata portion
of the Company’s other items of income and gain for the taxable
year. It is the intent of the parties hereto that any allocation pursuant
to this Section 4.6.c shall constitute a “minimum gain chargeback”
under Treasury Regulations Section 1.704-2(f). |
|
| d. | Contributed Property and Book-ups. In
accordance with Code Section 704(c) and the regulations thereunder, as
well as Treasury Regulations Section 1.704-l(b)(2)(iv)(d)(3), income,
gain, loss, and deduction with respect to any property contributed (or
deemed contributed) to the Company shall, solely for tax purposes, be
allocated among the Interest Holders so as to take account of any variation
between the adjusted basis of the property to the Company for federal-income-tax
purposes and its fair market value on the date of contribution (or deemed
contribution). If the adjusted book value of any Company asset is adjusted
as provided herein, subsequent allocations of income, gain, loss, and
deduction with respect to the asset shall take account of any variation
between the adjusted basis of the asset for federal income tax purposes
and its adjusted book value in the manner required under Code Section
704(c) and the regulations thereunder. |
|
| e. | Code Section 754 Adjustment. To the
extent an adjustment to the tax basis of any Company asset pursuant to
Code Section 734(b) or Code section 743(b) is required, pursuant to Treasury
Regulations section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of the adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases basis), and
the gain or loss shall be specially allocated to the Interest Holders
in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to that section of the Treasury Regulations.
|
|
| f. | Nonrecourse Deductions. Nonrecourse
Deductions for a taxable year or other period shall be specially allocated
among the Interest Holders in proportion to their Percentages. |
|
| g. | Member Loan Nonrecourse Deductions. Any
Member Loan Nonrecourse Deduction for any taxable year or other period
shall be specially allocated to the Interest Holder who bears the risk
of loss with respect to the loan to which the Member Loan Nonrecourse
Deduction is attributable in accordance with Treasury Regulations Section
1.704-2(b). |
|
| h. | Guaranteed Payments. To the extent
any compensation paid to any Member by the Company is determined by the
Internal Revenue Service not to be a guaranteed payment |
7
under Code Section 707(c) or is not paid to the Member
other than in the Person’s capacity as a Member within the meaning
of Code Section 707(a), the Member shall be specially allocated gross
income of the Company in an amount equal to the amount of that compensation,
and the Member’s Capital Account shall be adjusted to reflect the
payment of that compensation. |
||
| i. | Unrealized Receivables. If an Interest
Holder’s Interest is reduced (provided the reduction does not result
in a complete termination of the Interest Holder’s Interest), the
Interest Holder’s share of the Company’s “unrealized
receivables” and “substantially appreciated inventory”
(within the meaning of Code Section 751) shall not be reduced, so that,
notwithstanding any other provision of this Agreement to the contrary,
that portion of the Profit otherwise allocable upon a liquidation or dissolution
of the Company pursuant to Section 4.3 hereof that is taxable as ordinary
income (recaptured) for federal- income-tax purposes shall, to the extent
possible without increasing the total gain to the Company or to any Interest
Holder, be specially allocated among the Interest Holders in proportion
to the deductions (or basis reductions treated as deductions) giving rise
to such recapture. Any questions as to the aforesaid allocation of ordinary
income (recapture), to the extent such questions cannot be resolved in
the manner specified above, shall be resolved by the Manager. |
|
| j. | Withholding. All amounts required
to be withheld pursuant to Code Section 1446 or any other provision of
federal, state, or local tax law shall be treated as amounts actually
distributed to the affected Interest Holders for all purposes under this
Agreement. If the Company is obligated to withhold an amount in excess
of amounts currently distributable to an Interest Holder, the Company
may reduce future amounts distributable to the Interest Holder, treat
such amounts as a debt of the Interest Holder to the Company, or require
the Interest Holder to contribute such amounts to the Company in payment
of such withholding obligation. |
|
| k. | Curative Allocations. The allocations
set forth in Sections 4.6.a, 4.6.c, and 4.6.g are intended to comply with
certain requirements of Treasury Regulations Sections 1.704- 1(b) and
1.704-2. Notwithstanding any other provision of this ARTICLE 4, such allocations
shall be taken into account in allocating profits, losses and items of
Company income, gain, loss and deductions to the Interest Holders so that,
to the extent possible, the net amount of such allocations to each Interest
Holder in the current and future periods shall be equal to the net amount
of items that would have been allocated to each such Interest Holder if
the allocations in Sections 4.6.a, 4.6.c, and 4.6.g had not occurred.
|
|
| 4.7. | General Distribution and Allocation Provisions. | |
| a. | Except as otherwise provided in this Operating Agreement,
the timing and amount of all distributions will be exclusively determined
by the Manager. The parties acknowledge and agree that all distributions
and other payments to the Members shall be subject to any withholding
requirements applicable under federal or state laws to which the Company
is bound. |
|
| b. | If any assets of the Company are distributed in
kind to the Interest Holders, those assets will be valued on the basis
of their fair market value, and any Interest Holder entitled to any interest
in those assets shall receive that interest as a tenant-in-common with
all other |
|
8
Interest Holders so entitled. The fair market value
of the assets will be determined by an independent appraiser who will
be selected by the Manager. The Profit or Loss for each unsold asset shall
be determined as if the asset had been sold at its fair market value,
and the Profit or Loss will be allocated as provided in Section 4.5 and
will be properly credited or charged to the Capital Accounts of the Interest
Holders prior to the distribution of the assets in liquidation pursuant
to Section 4.3. |
||
| c. |
All Profit and Loss will be allocated, and all distributions
will be made to the Persons shown on the records of the Company to have
been Interest Holders as of the last day of the taxable year for which
the allocation or distribution is to be made. Notwithstanding the foregoing,
unless the Company’s taxable year is separated into segments, if
there is a Transfer or an Involuntary Withdrawal during the taxable year,
the Profit and Loss shall be allocated between the original Interest Holder
and the successor on the basis of the number of days each was an Interest
Holder during the taxable year; provided, however, the Company’s
taxable year shall be segregated into two or more segments in order to
account for Profit, Loss, or proceeds attributable to a Capital Transaction
or to any other extraordinary nonrecurring items of the Company. |
|
| d. |
The Manager is hereby authorized, upon the advice
of the Company’s tax counsel, to amend this ARTICLE 4 to comply
with the Code and the Treasury Regulations promulgated under Code section
704(b), but no such amendment may materially affect distributions to an
Interest Holder without the Interest Holder’s prior written consent.
|
|
| 4.8. | No Third-Party-Beneficiary Rights.
The provisions of this ARTICLE 4 are not intended to be for the
benefit of any creditor or any other Person (other than a Member or Interest
Holder in his or her capacity as such) to whom any debts, liabilities,
or obligations are owed by the Company or any Member or Interest Holder
(or who otherwise has any claim against the Company or any Member or Interest
Holder ). No such creditor or other Person obtains any right under any
of such provisions or may by reason of any of such provisions make any
claim in respect of any debt, liability, or obligation (or otherwise)
against the Company or any of the Members or Interest Holders. |
|
ARTICLE 5
Management
| 5.1. | Management. | |
| a. | Manager. The Company will be manager-managed,
and thus its business and affairs will be managed exclusively by the Manager,
who will be appointed by PHS, in its sole discretion. Without limiting
the generality of the foregoing, the Manager shall supervise the following
activities: accounting, billing, collections, back-office administration,
customer service, and diagnostic testing. PHS hereby appoints Xxxx Xxxxxxxxx
as the Manager. No Person other than the Manager, or a person duly authorized
by the Manager, has any right or authority to act for or bind the Company.
PHS may remove or replace and reappoint the Manager as it deems appropriate.
PHS is responsible for ensuring that the Manager operates the Company
generally consistent with the standards of quality and service applicable
to the operations of Affiliates of the Company that also provide diagnostic
testing services. Further, the Company shall deliver reasonable |
|
9
accounting information to SD as it reasonably
requests to verify any payments owed to SD hereunder. |
|||
| b. | General Powers. The Manager
has full power, right, and authority to execute and deliver, for and on
behalf of the Company, any and all documents and instruments that may
be necessary or desirable to carry on the business of the Company, including
any and all deeds, contracts, leases, mortgages, deeds of trust, promissory
notes, security agreements, and financing statements pertaining to the
Company’s assets or obligations, and to authorize any confession
of judgment against the Company. No person dealing with the Manager need
inquire into the validity or propriety of any document or instrument executed
in the name of the Company by the Manager, or as to the authority of the
Manager in executing the same. |
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| c. | Limitation on Authority of Members.
|
||
| i.
|
No Member is an agent of the Company solely by virtue
of being a Member, and no Member has authority to act for the Company
solely by virtue of being a Member. |
||
| ii. |
This Section 5.1 supersedes any authority granted
to the Members pursuant to the Act. Any Member who takes any action or
binds the Company in violation of this Section 5.1 will be solely responsible
for any loss and expense incurred by the Company as a result of the unauthorized
action and shall indemnify the Company with for the loss or expense. |
||
| 5.2. | Meetings of and Voting by Members. | ||
| a. | A meeting of the Members may be called
at any time by any Member. Meetings of Members will be held at the Company’s
principal place of business. Not less than 10 nor more than 90 days before
each meeting, the Member calling the meeting shall give written notice
of the meeting to each Member entitled to vote at the meeting. The notice
must state the time, place, and purpose of the meeting. Notwithstanding
the foregoing provisions, each Member who is entitled to notice waives
notice if, before or after the meeting, the Member signs a waiver of the
notice that is filed with the records of Members’ meetings, or is
present at the meeting in person or by proxy. Unless this Operating Agreement
provides otherwise, at a meeting of Members, the presence in person or
by proxy of Members holding not less than 51% of the Percentages then
held by Members constitutes a quorum. A Member may vote either in person
or by written proxy signed by the Member or by the Member’s duly
authorized attorney-in-fact. |
||
| b. | Except as otherwise provided in this Operating
Agreement, the affirmative vote of Members holding 51% or more of the
Percentages then held by Members at any meeting at which a quorum is present
will be required to approve any matter coming before the Members. |
||
| c. | In lieu of holding a meeting, the Members
may vote or otherwise take action by a written instrument indicating the
consent of Members holding 51% or more of the Percentages then held by
Members (or if unanimous Member consent is required under this Operating
Agreement or by law, by a written instrument indicating the consent of
all the Members). |
||
| d. | Wherever the Act requires unanimous consent
to approve or take any action, that consent must be given in writing and,
in all cases, means the consent of all Members. |
||
10
| 5.3. | Personal
Services. Except as expressly provided otherwise in this Operating
Agreement, no Member will be required to perform services for the Company
solely by virtue of being a Member, nor may any Member perform services
for the Company or be entitled to compensation for services performed
for the Company. |
|
| 5.4. | Limitations
on Powers of Members. Except as expressly permitted under this
Operating Agreement, no Member may, directly or indirectly: |
|
| a. |
dissolve, terminate, or liquidate the
Company; |
|
| b. |
petition a court for the dissolution,
termination, or liquidation of the Company; or |
|
| c. |
cause any property of the Company to
be subject to the authority of any court, trustee, or receiver (including
suits for partition and bankruptcy, insolvency, and similar proceedings). |
|
| 5.5. | Prohibition
against Partition. Each Member hereby irrevocably waives any and
all rights that Member may have to commence or maintain an action for
partition with respect to any of the Company’s property. |
|
| 5.6. | Duties
of Parties. |
|
| a. |
The Manager is not liable, responsible,
or accountable in damages or otherwise to the Company or to any Member
for any action taken or any failure to act on behalf of the Company within
the scope of the authority conferred on the Manager by this Operating
Agreement or by law, unless the action was taken or omission was made
fraudulently or in bad faith or constituted gross negligence. |
|
| b. |
Except as otherwise expressly provided
in Section 5.6.c or any Noncompetition and Confidentiality Agreement required
herein, nothing in this Operating Agreement is to be deemed to restrict
in any way the rights of any Member, or of any Affiliate of any such Member,
to conduct any other business or activity whatsoever, and no such Member
will be accountable to the Company or to any other Member with respect
to that business or activity. The organization of the Company is without
prejudice to the respective rights of the Members (or the rights of their
respective Affiliates) to maintain, expand, or diversify such other interests
and activities and to receive and enjoy profits or compensation therefrom.
Each Member waives any rights the Member might otherwise have to share
or participate in such other interests or activities of any other Member
or such Member’s Affiliates. |
|
c. |
The conduct of the Company’s business
may involve business dealings and undertakings with Members and their
Affiliates. In any of those cases, those dealings and undertakings shall
be at arm’s length and on commercially reasonable terms. |
|
| 5.7. | Advancement
and Indemnification. The Company shall indemnify the Manager for,
and provide it with advancement for legal fees relating to, any act performed
within the scope of the authority conferred on them herein, except that
if a final and nonappealable judicial decision determines that the Manager
engaged in fraud, gross negligence, or an intentional breach of this Operating
Agreement, the Manager shall no longer be entitled to such right with
respect to such misconduct and must reimburse the Company for its expenses
incurred in indemnifying the Manager. |
|
11
ARTICLE 6
Transfers
| 6.1. | Transfers. SD may not transfer
its Membership Rights, or any rights or interests therein (including its
Interest), in whole or in part, unless PHS consents thereto in writing.
Any Transfer made without such consent is void. If, however, notwithstanding
the foregoing, a Transfer of Membership Rights is recognized as valid
and enforceable under law, the Person to whom such rights are attempted
to be transferred will have only the rights of an Interest Holder, but
will not be entitled to any rights beyond those, if any, that the Act
requires be granted to an assignee of an interest in a limited liability
company who is not admitted as a member. A Transfer, or issuance, of any
ownership interest—legal or beneficial—in a Member is considered
a Transfer of its Membership Rights. So long as such transfer does not
violate any applicable laws, rules or regulations PHS hereby consents
to SD transferring revenues that it is entitled to receive hereunder to
its Affiliate, Diagnostic USA. Notwithstanding anything in this Agreement
to the contrary, neither the Company nor PHS may engage in either of the
following transactions before the third anniversary of the date of this
Agreement without the prior written consent of SD: (a) a PHS Ownership
Transfer (as defined below); and (b) an SD Account Ownership Transfer
(as defined below). A PHS Ownership Transfer means a transfer of PHS’
Membership Rights in effect at the time of any such transfer. An SD Account
Ownership Transfer means a sale of the SD Accounts in effect at the time
of any such sale. Further, the parties acknowledge and agree that, notwithstanding
anything in this Agreement to the contrary, after such third anniversary
date, (y) PHS may transfer all or any part of its Membership Rights (including
its Interest) and need not obtain either the Company's or any other Members'
consent to do so. If PHS does transfer its Membership Rights, its transferee
succeeds to PHS's rights under Sections 5.1.a. and 5.1.b (including PHS's
right to appoint and replace the Manager); and (z) the Company may sell
any or all of the SD Accounts then in effect to a third party in an arms’-length
bona fide purchase and sale transaction (subject to the special
allocation provision in Section 4.6.a). |
||
| 6.2. | Right of First Refusal.
|
||
| a. |
If SD (the “Transferor”) receives
a bona fide written offer that it desires to accept (the “Transferee
Offer”) from any other Person (a “Transferee”) to purchase
all or any portion of or any interest or rights in the Transferor’s
Membership Rights (the “Transferor Interest”), then, prior
to any Transfer of the Transferor Interest, the Transferor shall give
PHS (the “Remaining Member”) written notice (the “Transfer
Notice”) containing the following: |
||
| i.
|
the Transferee’s identity; |
||
| ii. |
true and complete copy of the Transferee Offer;
and |
||
| iii. |
the Transferor’s offer (the “Offer”)
to sell the Transferor Interest to the Remaining Member for a price and
on terms the same as those contained in the Transferee Offer (the “Transfer
Purchase Price”). |
||
| b. |
The Offer will be and remain irrevocable
for a period (the “Offer Period”) ending at 11:59 P.M., local
time at the Company’s principal office, on the 30th day following
the date the Transfer Notice is given to the Remaining Member. At any
time during the Offer |
||
12
| Period, the Remaining Member may accept the Offer
by giving written notice to the Transferor of its acceptance (the “Offeree
Notice”). If the Remaining Member accepts the Offer, the parties
shall fix a closing date (the “Transfer Closing Date”) for
the purchase, which shall not be earlier than 10 or more than 90 days
after the expiration of the Offer Period. |
||
| c. | If the Remaining Member accepts the Offer, the Transfer
Purchase Price must be paid in immediately available funds on the Transfer
Closing Date, or if different, in the manner set forth in the Transferee
Offer. |
|
| d. | If the Remaining Member rejects the Offer or fails
to accept the Offer (within the time and in the manner specified in Section
6.2.b), then, if PHS consents to the Transfer in writing, which consent
will not be unreasonably withheld, the Transferor will be free for a period
(the “Free Transfer Period”) of 30 days after the expiration
of the Offer Period to Transfer the Transferor Interest to the Transferee,
for the same or greater purchase price and on the same terms and conditions
as set forth in the Transfer Notice. If the Transferor does not Transfer
the Transferor Interest within the Free Transfer Period, the Transferor’s
right to Transfer the Transferor Interest under this Section 6.2.d terminates.
|
|
| e. | Any Transfer by the Transferor after the last day
of the Free Transfer Period or without strict compliance with the terms,
provisions, and conditions of Sections 6.1 and 6.2 and the other terms,
provisions, and conditions of this Operating Agreement, will be null and
void and of no force or effect. If, notwithstanding the foregoing, any
such Transfer is recognized as valid and enforceable under law, any Person
to whom Membership Rights are attempted to be transferred in violation
of this Operating Agreement will have only the rights of an Interest Holder,
but will not be entitled to any rights beyond those, if any, that the
Act requires be granted to an assignee of an interest in a limited liability
company who is not admitted as a Member.. |
|
| f. | If the Transferee Offer provides for the Transferee’s
payment of any noncash consideration (“Unique Consideration”)
that is of such a nature that the Remaining Member cannot reasonably duplicate
it, the Remaining Member may, in lieu thereof, substitute a cash consideration.
If the Remaining Member elects to do so, it must inform the Transferor
of such election in its Offeree Notice. Within 15 days after the Remaining
Member delivers his Offeree Notice, the Transferor and the Remaining Member
shall agree on the amount of the cash to be substituted for the Unique
Consideration. If the parties cannot conclude an agreement within such
time, an independent appraiser the Remaining Member selects, who must
be either a certified public accountant or certified appraiser for the
type of property being appraised, must determine the amount of cash. The
Transfer Closing Date is suspended while the independent appraisal is
being conducted. The cost of the appraisal must be shared between the
Transferor and Remaining Member equally. |
ARTICLE 7
Dissolution
| 7.1. | Events of Dissolution. The Company
shall be dissolved upon the happening of any of the following events:
|
13
| a.
|
PHS no longer desires to operate the business conducted
by the Company or otherwise desires to cease operating the Company; provided,
however, that, unless PHS has delivered a Termination Notice to SD in
accordance with this Agreement, PHS may make such election only after
the third anniversary of the date of this Agreement; |
|
| b. |
the Company sells all or substantially all the SD
Accounts; |
|
| c. |
upon the unanimous written agreement of the Members;
|
|
| d. |
delivery by any Member of a Termination Notice to
the Breaching Member; or |
|
| e. |
an Involuntary Withdrawal occurs, unless the Member
undergoing the Involuntary Withdrawal is SD, and PHS, within 90 days after
the occurrence of the Involuntary Withdrawal, elects to continue the business
of the Company. |
|
| 7.2. | Procedure for Winding Up. If
the Company is dissolved, the Manager shall wind up its affairs. On winding
up of the Company, the assets of the Company shall be distributed in accordance
with Section 4.3. |
|
| 7.3. | Delivery of a Noncompete Agreement.
If the Company re-assigns the Original SD Accounts to SD upon
a dissolution, the Company must concurrently deliver a noncompete agreement
to SD from it; its Affiliates under the control of either it, PHS or Xxxx
Xxxxxxxxx; PHS; and Xxxx Xxxxxxxxx agreeing to a 2-year period not to
solicit such accounts following the date of such dissolution. |
|
ARTICLE 8
Books, Records, and Accounting
| 8.1. | Bank Accounts. All funds of the Company
will be deposited in a bank account or accounts opened in the Company’s
name. The Manager will determine the institution or institutions at which
the accounts will be opened and maintained, the types of accounts, and
the Persons who will have authority with respect to the accounts and the
funds therein. |
| 8.2. | Books and Records. The Manager shall
keep or cause to be kept complete and accurate books and records of the
Company, including records required by law, and supporting documentation
of transactions with respect to the conduct of the Company’s business.
The books and records will be maintained in accordance with sound accounting
practices and will be available at the Company’s registered office
for inspection and copying by any Member or the Member’s duly authorized
representative at any and all reasonable times during ordinary business
hours. |
| 8.3. | Annual Accounting Period. The annual
accounting period of the Company will be a fiscal year ending on the last
day of December. Each such period is considered the taxable year of the
Company. |
| 8.4. | Reports. Within 75 days after the
end of each taxable year of the Company, the Manager shall cause to be
sent to each Person who was a Member at any time during the taxable year
then ended a complete accounting of the affairs of the Company for the
taxable year then ended. In addition, within 75 days after the end of
each taxable year of the Company, the Manager shall cause to be sent to
each Person who was an Interest Holder at any time during the taxable
year then ended, that tax information concerning the Company that is necessary
for preparing the Interest Holder’s income tax returns for that
year. |
14
| 8.5. | Tax Matters Representative. The Manager
is the Company’s tax-matters representative (“Tax Matters
Representative”) within the meaning of that term in Code Section
6231. The Tax Matters Representative will have all powers and responsibilities
provided in Code Section 6231, et seq. The Tax Matters Representative
shall keep all Members informed of all notices from government taxing
authorities that may come to its attention. The Company shall pay and
be responsible for all reasonable third-party costs and expenses incurred
by the Tax Matters Representative in performing those duties. Each Member
is responsible for any costs incurred by that Member with respect to any
tax audit or tax- related administrative or judicial proceeding against
any Member, even though it relates to the Company. The Tax Matters Representative
may compromise or settle any dispute with the Internal Revenue Service.
|
| 8.6. | Election to be Taxed as a Partnership. The
Company will be treated as a partnership for federal- and state-income
tax purposes. The Manager may, however, cause the Company to elect to
be treated as a corporation for federal- or state-income tax purposes.
|
| 8.7. | Tax Elections. The Manager has the
authority to make all Company elections for federal- income-tax matters
permitted under the Code, including elections of methods of depreciation
and elections under Code Section 754. The decision to make or not make
an election will be at the Manager’s sole and absolute discretion.
|
ARTICLE 9
General Definitions
| 9.1. | Definitions.
The following capitalized terms have the meanings specified in
this Section 9.1. Other terms are defined elsewhere in the Operating
Agreement. |
|
| a. |
“Act” means
the Alaska Limited Liability Company Act, as amended from time to time.
|
|
| b. |
“Affiliate” means,
with respect to a corporation, limited liability company, partnership,
or other business entity, any person controlling, controlled by, or under
common control with that business entity. With respect to an individual,
affiliate means that individual’s Family members, as well as such
Family members’ spouses, and the other business entities such individual
and his or her Family members, directly or indirectly, control. “Control”
has the meaning ascribed to it under the Securities Act of 1933, as amended.
Notwithstanding anything in this Operating Agreement to the contrary,
however, SD is not an Affiliate of either the Company or PHS. |
|
| c. |
“Breaching Member”
means any Member in breach of its obligations under this Agreement. |
|
| d. |
“Code” means
the Internal Revenue Code of 1986, as amended, or any corresponding provision
of any succeeding law. |
|
| e. |
“Company” means
the limited liability company formed in connection with this Operating
Agreement. |
|
| f. |
“Department of State”
means the Alaska Department of State. |
|
| g. |
“Family” means,
with respect to an individual, such individual’s spouse, lineal
ancestors, or descendants by birth or adoption, siblings, and trusts for
the exclusive benefit of such individual or any of the other foregoing
individuals. |
|
15
| h. | “Interest” means
a Person’s share of the Profits and Losses of, and the right to
receive distributions from, the Company. |
||
| i. | “Interest Holder” means
any Person who holds an Interest, whether as a Member or an unadmitted
assignee of a Member. |
||
| j. | “Involuntary Withdrawal”
means, with respect to any Member, the occurrence of any of the
following events: |
||
| i.
|
the Member makes an assignment for the benefit of
creditors; |
||
| ii. |
the Member files a voluntary petition of bankruptcy;
|
||
| iii. |
the Member is adjudged bankrupt or insolvent, or
there is entered against the Member an order for relief in any bankruptcy
or insolvency proceeding; |
||
| iv. |
the Member files a petition seeking for the Member
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any statute, law, or regulation;
|
||
| v. |
the Member seeks, consents to, or acquiesces in
the appointment of a trustee for, receiver for, or liquidation of the
Member or of all or any substantial part of the Member’s properties;
|
||
| vi. |
the Member files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against
the Member in any proceeding described in Sections 9.1.j.i through 9.1.j.v;
|
||
| vii. |
any proceeding against the Member seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation that continues for 120 days
after the commencement thereof, or a trustee, receiver, or liquidator
is appointed for the Member or all or any substantial part of the Member’s
properties without the Member’s agreement or acquiescence, and such
appointment is not vacated or stayed within 120 days or, if the appointment
is stayed within such period, is not vacated within 120 days after the
expiration of the stay; |
||
| viii. |
if the Member is an individual, the Member’
dies or suffers permanent disability; “Permanent disability”
means any event that results in the failure of a Member, due to physical
or mental incompetence, to perform substantially the same services he
performed for the Company before such event if such failure continues
for any period of 180 consecutive days or a period of 270 days within
any consecutive 365-day period; |
||
| ix. |
if the Member is an entity, any of the events discussed
in Sections 9.1.j.i through 9.1.j.viii occurs with respect to its principal
owner; |
||
| x. |
if the Member is acting as a Member by virtue of
being a trustee of a trust, the termination of the trust; |
||
| xi. |
if the Member is a partnership or limited liability
company, the dissolution and commencement of winding up of the partnership
or limited liability company; |
||
| xii. |
if the Member is a corporation, the dissolution
of the corporation or the revocation of its charter; or |
||
| xiii. |
if the Member is an estate, the distribution by
the fiduciary of the estate’s entire interest in the Company |
||
16
| k. | “Major Breach” means
a material breach by a Breaching Member of its obligations under this
Agreement which has not been cured within 90 days of notice thereof from
the non-Breaching Member. Except as provided below, a breach is not deemed
material unless (i) the breach is likely to cause damages to the non-Breaching
Member of at least $50,000; and (ii) the Breaching Member has had
delivered to it by the non-Breaching Member at least 2 prior notices of
the same or similar type of breach (excluding breaches that have been
cured within 90 days’ notice from the non-Breaching Member), each
likely to cause at least the same amount of damages, within the 12-month
period immediately preceding the date that the non-Breaching Member delivers
notice of the Major Breach. A breach by SD of any of its obligations in
Section 3.3 is deemed a material breach. |
||
| l. | “Manager” means
the Person designated as Manager in Section 5.1.a. |
||
| m. | “Member” means
each Person signing the Operating Agreement, namely, SD and PHS, and any
Person who subsequently is admitted as a member of the Company in accordance
with the terms of this Agreement. |
||
| n. | “Membership Rights”
means all a Member’s rights in the Company, including a
Member’s: |
||
| i.
|
Interest; |
||
| ii. |
right to inspect the Company’s books and records;
|
||
| iii. |
right to participate in the management of, and vote
on matters coming before, the Company; and |
||
| iv. |
unless the Operating Agreement or the Articles of
Organization provide to the contrary, right to act as an agent of the
Company. |
||
| o. | “Operating Agreement”
means this Operating Agreement, as amended from time to time.
|
||
| p. | “Percentage” means,
as to a Member, the percentage set forth after the Member’s name
on Schedule 9.1.p, as amended from time to time, and as to an Interest
Holder who is not a Member, the Percentage of the Member whose Interest
has been acquired by such Interest Holder, to the extent the Interest
Holder has succeeded to that Member’s Interest. |
||
| q. | “Person” means
an individual, corporation, partnership, association, limited liability
company, trust, estate, or other entity. |
||
| r. | “Termination Notice”
means a notice that a Member promptly delivers to a Breaching
Member for any Major Breach. |
||
| s. | “Transfer” means,
when used as a noun, any sale, hypothecation, pledge, granting of a security
interest, assignment, attachment, or other transfer or disposition—whether
voluntary or involuntary, as by operation of law; and, when used as a
verb, means to sell, hypothecate, pledge, grant a security interest, assign,
or otherwise transfer or dispose— whether voluntary or involuntary,
as by operation of law. |
||
| t. | “Treasury Regulations”
means the income-tax regulations, including any temporary regulations,
from time to time promulgated under the Code. |
||
| 9.2. | Definitions Pertaining to Distributions. | ||
| a. | “Adjusted Capital Balance”
means, as of any day, an Interest Holder’s total Capital
Contributions, less all amounts actually distributed to the Interest Holder
pursuant to |
||
17
ARTICLE 4. If any Interest is transferred
in accordance with the terms hereof, the transferee shall succeed to the
Adjusted Capital Balance of the transferor to the extent the Adjusted
Capital Balance relates to the Interest transferred. |
|||
| b. | “Capital Contribution”
means the total amount of cash and the fair market value of any
other assets contributed (or deemed contributed under Treasury Regulations
Section 1.704-1(b)(2)(iv)(d)) to the Company by a Member, net of liabilities
assumed by the Company or to which the assets are subject. |
||
| c. | “Capital Proceeds” means
the gross receipts received by the Company from a Capital Transaction.
|
||
| d. | “Capital Transaction”
means any transaction not in the ordinary course of business that
results in the Company’s receipt of cash or other consideration
other than Capital Contributions, including proceeds of sales or exchanges
or other dispositions of property not in the ordinary course of business,
financings, refinancings, condemnations, recoveries of damage awards,
and insurance proceeds. |
||
| e. | “Cash Flow” means
all cash funds derived from operations of the Company (including interest
received on reserves), without reduction for any noncash charges, but
less cash funds used to pay current operating expenses and to pay or establish
reasonable reserves as determined by the Managers for future expenses,
debt payments, capital improvements, and replacements. Cash Flow does
not include Capital Proceeds, but is increased by the reduction of any
reserve previously established. |
||
| 9.3. | Definitions Pertaining to Taxes. | ||
| a. | “Adjusted Capital Account
Deficit” means, with respect to any Interest Holder, the
deficit balance, if any, in the Interest Holder’s Capital Account
as of the end of the relevant taxable year, after giving effect to the
following adjustments: |
||
| i.
|
the deficit shall be decreased by the amounts that
the Interest Holder is deemed obligated to restore under Section 4.6.c.
and Treasury Regulations Sections 1.704-2(g)(1) and (i)(5) (i.e., the
Interest Holder’s share of Minimum Gain and Member Minimum Gain);
and |
||
| ii. |
the deficit shall be increased by the items described
in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
|
||
| b. | “Capital Account” means
the account to be maintained by the Company for each Interest Holder in
accordance with the following provisions: |
||
| i. |
an Interest Holder’s Capital Account shall
be credited with the Interest Holder’s Capital Contributions, the
amount of any Company liabilities assumed by the Interest Holder (or that
are secured by Company property distributed to the Interest Holder), the
Interest Holder’s allocable share of Profit and any item in the
nature of income or gain specially allocated to the Interest Holder pursuant
to the provisions of Section 4.6; and |
||
| ii. |
an Interest Holder’s Capital Account shall
be debited with the amount of money and the fair market value of any Company
property distributed to the Interest Holder, the Interest Holder’s
allocable share of Loss, and any item in the nature of expenses or losses
specially allocated to the Interest Holder pursuant to the provisions
of Section 4.6. |
||
18
| If any Interest is transferred pursuant to the terms
of this Agreement, the transferee shall succeed to the Capital Account
of the transferor to the extent the Capital Account is attributable to
the transferred Interest. If the book value of Company property is adjusted
pursuant to Section 4.6.d, the Capital Account of each Interest Holder
shall be adjusted to reflect the aggregate adjustment in the same manner
as if the Company had recognized gain or loss equal to the amount of such
aggregate adjustment. It is intended that the Capital Accounts of all
Interest Holders shall be maintained in compliance with the provisions
of Treasury Regulations Section 1.704- 1(b), and all provisions of this
Agreement relating to the maintenance of Capital Accounts shall be interpreted
and applied in a manner consistent with that regulation. |
|||
| c. | “Member Loan Nonrecourse Deductions”
means any Company deductions that would be Nonrecourse Deductions
if they were not attributable to a loan made or guaranteed by a Member
within the meaning of Treasury Regulations Section 1.704-2(i). |
||
| d. | “Member Minimum Gain”
has the meaning set forth in Treasury Regulations Section 1.704-2(i)
for “partner nonrecourse debt minimum gain.” |
||
| e. | “Minimum Gain” has
the meaning set forth in Treasury Regulations Section 1.704-2(d). Minimum
Gain shall be computed separately for each Interest Holder in a manner
consistent with the regulations under Code Section 704(b). |
||
| f. | “Negative Capital Account”
means a Capital Account with a balance of less than zero. |
||
| g. | “Nonrecourse Deductions”
has the meaning set forth in Treasury Regulations Section 1.704-2(b)(1).
The amount of Nonrecourse Deductions for a taxable year of the Company
equals the net increase, if any, in the amount of Minimum Gain during
that taxable year, determined according to the provisions of Treasury
Regulations Section 1.704-2(c). |
||
| h. | “Nonrecourse Liability”
means any liability of the Company with respect to which no Member
has personal liability, as determined in accordance with Code Section
752 and the regulations promulgated thereunder. |
||
| i. | “Positive Capital Account”
means a Capital Account with a balance greater than zero. |
||
| j. | “Profit” and
“Loss” respectively mean, for each taxable year
of the Company (or other period for which Profit or Loss must be computed),
the Company’s taxable income or loss determined in accordance with
Code Section 703(a), with the following adjustments: |
||
| i. | all items of income, gain, loss, deduction, or credit
required to be stated separately pursuant to Code Section 703(a)(1) shall
be included in computing taxable income or loss; |
||
| ii. | any tax-exempt income of the Company, not otherwise
taken into account in computing Profit or Loss, shall be included in computing
taxable income or loss; |
||
| iii. | any expenditures of the Company described in Code
Section 705(a)(2)(B) (or treated as such pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profit or Loss, shall be subtracted from taxable income or loss; |
||
| iv. | gain or loss resulting from any taxable disposition
of Company property shall be computed by reference to the adjusted book
value of the property disposed |
19
of, notwithstanding the fact that the adjusted book
value differs from the adjusted basis of the property for federal income
tax purposes; |
|||
| v. |
in lieu of the depreciation, amortization, or cost-recovery
deductions allowable in computing taxable income or loss, there shall
be taken into account the depreciation computed based upon the adjusted
book value of the asset; and |
||
| vi. |
notwithstanding any other provision of this definition,
any items which are specially allocated pursuant to Section 4.6 hereof
shall not be taken into account in computing Profit or Loss. |
||
| 9.4. | General Definitions. For
purposes of this Agreement, “including (include)” means “including
(include), without limitation.” “Or,” as in “A
or B,” means “A or B or both.” “Herein,”
“hereunder,” and “hereof” refer to this Operating
Agreement, and not to the specific section in which that term occurs.
|
||
ARTICLE 10
Miscellaneous.
| 10.1. | Entire Agreement. This Operating Agreement,
together with any confidentiality or noncompetition agreement that SD
has entered or will enter in connection with this Operating Agreement,
and the Assignment Agreement from SD entered concurrently herewith (the
terms of which are incorporated herein by reference), represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes all other negotiations, understandings and
representations if any made by and between the parties. No representations,
inducements, promises or agreements, oral or otherwise, if any, not embodied
herein are of any force and effect. |
| 10.2. | Amendments. Except as expressly provided
otherwise in this Operating Agreement or under the Act, the provisions
hereof may be amended, supplemented, waived or changed only by a written
document signed by the party as to whom enforcement of any such amendment,
supplement, waiver or modification is sought and making specific reference
to this Operating Agreement. |
| 10.3. | Further Assurances. The parties (including
all Members and Interest Holders) shall from time to time to execute and
deliver such further and other transfer, assignments and documents and
do all matters and things which may be convenient or necessary to more
effectively and completely carry out the intentions of this Operating
Agreement. |
| 10.4. | Binding Effect. All of the terms and
provisions of this Operating Agreement, whether so expressed or not, are
binding upon, inure to the benefit of, and are enforceable by the parties
and their respective personal representatives, legal representatives,
heirs, successors and permitted assigns. |
| 10.5. | Notices. All notices, requests, demands,
consents and other communications required or permitted under this Agreement
must be in writing (including telex and telegraphic communication) and
must be (as elected by the person giving such notice) hand delivered by
messenger or courier service, telecommunicated, or mailed (airmail if
international) by registered or certified mail (postage prepaid), return
receipt requested, addressed to the appropriate party at its address set
forth below or to such other address as that party may designate by notice
complying with the terms of this Section. Each such notice will be |
20
| deemed delivered: (a) on the date delivered if by
personal delivery; (b) on the date of transmission with confirmed answer
back if by telefax or other telegraphic method; or (c) on the date upon
which the return receipt is signed or delivery is refused or the notice
is designated by the postal authorities or courier service as not deliverable,
as the case may be, if mailed or couriered. |
|
| PHS’s address is 0000 X. Xxxxxx Xxxx, Xxxxx
000, Xxxx Xxxxx, Xxxxxxx 00000. SD’s address is 0000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, XX 00000. |
|
| The Company’s address is 0000 X. Xxxxxx Xxxx,
Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000. |
|
| 10.6. | Headings. The headings and subheadings
contained in this Operating Agreement are for convenience of reference
only, and not to be considered a part hereof and will not limit or otherwise
affect in any way the meaning or interpretation of this Operating Agreement.
|
| 10.7. | Severability. If any provision of
this Operating Agreement or any other agreement entered into pursuant
hereto is contrary to, prohibited by or deemed invalid under applicable
law or regulation, such provision will be inapplicable and deemed omitted
to the extent so contrary, prohibited or invalid, but the remainder hereof
will not be invalidated thereby and will be given full force and effect
so far as possible. If any provision of this Operating Agreement may be
construed in two or more ways, one of which would render the provision
invalid or otherwise voidable or unenforceable and another of which would
render the provision valid and enforceable, such provision will have the
meaning which renders it valid and enforceable. |
| 10.8. | Waivers. The failure or delay of any
party at any time to require performance by another party of any provision
of this Operating Agreement, even if known, will not affect the right
of such party to require performance of that provision or to exercise
any right, power or remedy hereunder. A waiver by any party of any breach
of any provision of this Operating Agreement is not to be construed as
a waiver of any continuing or succeeding breach of such provision, a waiver
of the provision itself, or a waiver of any right, power or remedy under
this Operating Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to any other or further notice or
demand in similar or other circumstances. |
| 10.9. | Third Parties. Nothing in this Operating
Agreement, whether express or implied, is intended to confer any rights
or remedies under or by reason of this Operating Agreement on any persons
other than the parties hereto and their respective personal representatives,
other legal representatives, heirs, successors, and permitted assigns.
Nothing in this Agreement is intended to relieve or discharge the obligations
or liability of any third person to any party to this Operating Agreement,
nor shall any provision give any third person any right of subrogation
or action over or against any party to this Operating Agreement. |
| 10.10. | Jurisdiction and Venue. A substantial
portion of the negotiations, anticipated performance and execution of
this Operating Agreement occurred or will occur in Palm Beach County,
Florida. Therefore, each of the parties irrevocably and unconditionally:
(a) agrees that any suit, action or legal proceeding arising out of or
relating to this Agreement must be brought only in the courts of record
of the State of Florida in Palm Beach County or the District Court of
the United States, Southern District of Florida (sitting in that |
21
county); (b) consents to the jurisdiction of each
such court in any suit, action or proceeding; (c) waives any objection
that he, she or it may have to the laying of venue of any such suit, action
or proceeding in any of such courts; and (d) agrees that service of any
court paper may be effected on such party by mail, as provided in this
Operating Agreement, or in such other manner as may be provided under
applicable laws or court rules in the State of Florida. |
|
| 10.11. | Governing Law. This Operating Agreement
and all transactions contemplated hereby are to be governed by, and construed
and enforced in accordance with, the internal laws of the State of Florida
without regard to principles of conflict of laws. |
| 10.12. | Counterparts. This Operating Agreement
may be executed in one or more counterparts, each of which will be deemed
an original, but all of which together constitute one and the same instrument.
Confirmation of execution by telex or by telecopy facsimile signature
page shall be binding upon any party so confirming or telecopying. |
| The parties are executing and delivering this Operating Agreement on the date set forth in the first paragraph hereof. | |
| PHS: | SD: | |||
| PREMIER HEALTH SERVICES, LLC | SOUTHERN DIAGNOSTICS, INC. | |||
| By: | By: | |||
| (signature) | (signature) | |||
| Print Name: Xxxx Xxxxxxxxx | Print Name: | |||
| Its: Manager | Its: President | |||
| THE COMPANY: | ||||
| PREMIER SD, LLC | ||||
| By: | ||||
| (signature) | ||||
| Print Name: Xxxx Xxxxxxxxx | ||||
| Its: Manager |
State or Province of }} ss:
County or City of }}
The foregoing document was acknowledged before me this _____ day of __________ , 2005 , by _________________________________, in the capacity represented above, who is
22
personally known to me or who has produced _____________________________________
as identification and who (did / did not) [circle one] take an oath.
WITNESS my hand and official seal in the County/City and State/Province last
aforesaid this ____ day of ___________________ , 2005.
____________________________________
Notary Public, State/Province of _______________
Name:
| (SEAL) | My commission expires: |
State or Province of }} ss:
County or City of }}
The foregoing document was acknowledged before me this _____
day of __________ , 2005 , by __________________________________ , in the capacity
represented above, who is personally known to me or who has produced _____________________________________
as identification and who (did / did not) [circle one] take an oath.
WITNESS my hand and official seal in the County/City and State/Province last
aforesaid this ____ day of ___________________ , 2005.
____________________________________
Notary Public, State/Province of _______________
Name:
| (SEAL) | My commission expires: |
State or Province of }} ss:
County or City of }}
The foregoing document was acknowledged before me this _____ day of __________
, 2005 , by ___________________________________
, in the capacity represented above, who is personally known to me or who has
produced _____________________________________
as identification and who (did / did not) [circle one] take an oath.
WITNESS my hand and official seal in the County/City and State/Province last
aforesaid this ____ day of ___________________ , 2005.
____________________________________
Notary Public, State/Province of _______________
Name:
| (SEAL) | My commission expires: |
23
