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EXHIBIT 10.21
OPERATING AGREEMENT
OF
DIGISPHERE, LLC
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* Confidential treatment has been requested with respect to portions of this
document. Omitted portions have been filed separately with the Securities and
Exchange Commission.
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TABLE OF CONTENTS
Page
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Explanatory Statement...................................................................... 1
Article I. Defined Terms................................................................ 1
Article II. Formation and Name; Office; Purpose; Term................................... 5
2.1 Organization........................................................... 5
2.2 Name of the Company.................................................... 5
2.3 Purpose................................................................ 5
2.4 Term................................................................... 5
2.5 Resident Agent/Name and Address........................................ 5
2.6 Principal Place of Business............................................ 5
2.7 Members................................................................ 5
Article III. Members; Capital; Capital Accounts.......................................... 5
3.1 Initial Contributions.................................................. 5
3.2 No Additional Contributions............................................ 5
3.3 No Personal Liability.................................................. 6
3.4 No Interest on Contributions........................................... 6
3.5 Return of Contributions................................................ 6
3.6 Form of Return of Capital.............................................. 6
3.7 Capital Accounts....................................................... 6
Article IV. Profit, Loss, and Distributions............................................. 6
4.1 Cash Flow.............................................................. 6
4.2 Allocation of Profit or Loss........................................... 6
4.3 Regulatory Allocations................................................. 6
4.4 Liquidation and Dissolution............................................ 8
4.5 General................................................................ 8
Article V. Management; Rights, Powers, Duties and Permitted Expenses................... 8
5.1 Meetings of and Voting by Members...................................... 8
5.2 Board of Directors...................................................... 9
5.3 Action by Unanimous Written Consent.....................................10
5.4 Duties of Parties.......................................................10
5.5 Indemnification of Members..............................................11
5.6 Limitations on Liability................................................12
5.7 Day to Day Management...................................................12
5.8 Certain Duties..........................................................13
5.9 Certain Company Actions.................................................14
5.10 Permitted Expenses......................................................15
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Article VI. Responsibilities of Members..................................................15
6.1 Contracting Procedures and Services.....................................15
6.2 Certain Agreements of the Members.......................................15
6.3 Confidentiality.........................................................16
Article VII. Transfer of Interests........................................................17
7.1 Transfers...............................................................17
Article VIII. Dissolution, Liquidation, and Termination of the Company.....................17
8.1 Events of Dissolution...................................................17
8.2 Noticing Procedure for Failure to Meet Performance Goals................19
8.3 Withdrawal..............................................................19
8.4 Procedure for Winding Up and Distribution...............................19
8.5 Filing of Certificate of Cancellation...................................19
Article IX. Books, Records, Accounting, and Tax Elections................................20
9.1 Bank Accounts...........................................................20
9.2 Maintenance of Books and Records........................................20
9.3 Right to Inspect Books and Records; Receive Information.................21
9.4 Annual Accounting Period................................................21
9.5 Tax Matters Partner.....................................................21
9.6 Accountants.............................................................21
9.7 Accounting Method.......................................................21
Article X. General Provisions...........................................................22
10.1 Assurances.............................................................22
10.2 Notifications..........................................................22
10.3 Complete Agreement.....................................................22
10.4 Applicable Law.........................................................22
10.5 Section Titles.........................................................23
10.6 Binding Provisions.....................................................23
10.7 Jurisdiction and Venue.................................................23
10.8 Terms..................................................................23
10.9 Separability of Provisions.............................................23
10.10 Counterparts...........................................................23
10.11 Estoppel Certificate...................................................23
10.12 Publicity and Reports..................................................23
10.13 Creditors .............................................................24
10.14 Expenses ..............................................................24
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OPERATING AGREEMENT
OF
DIGISPHERE, LLC.
This Operating Agreement (this "Agreement") is entered into as of August
1, 1997, by and between Medical Science Systems, Inc., a Texas corporation
("MSS"), Digisphere Inc., a subsidiary of Xxxxxx Communications Inc., a Delaware
corporation, and Xxxxxx Communications Inc., a Delaware corporation ("NCI").
EXPLANATORY STATEMENT
MSS is a biotechnology company developing genetic prognostic tests, risk
assessment tools, treatment services and therapeutic products;
MSS is commercializing its genetic prognostics tests worldwide in all
market segments including doctors, patients, consumers, payers, industry and
institutions;
MSS has developed a risk assessment software tool known as the Disease
Progression Explorer that can be used to educate doctors and patients about
disease progression;
MSS will be offering the Disease Progression Explorer and treatment
planning services in support of its genetic prognostic commercialization
efforts;
MSS desires that the Disease Progression Explorer be marketed and
distributed independent of MSS efforts;
NCI is a company specializing in medical advertising, education,
graphics, public relations and direct to consumer marketing;
NCI offers these services to businesses and institutions who are
developing and/or selling medical products or services to doctors and patients,
or who are educating doctors, patients, consumers and/or students, about a
disease; and
The parties desire to operate a business through a limited liability
company known as Digisphere, LLC, a Delaware limited liability company, and to
organize and operate a limited liability company in accordance with the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINED TERMS
The following capitalized terms shall have the respective meanings
specified in this Article I. Capitalized terms not defined in this Agreement
shall have the meaning specified in the Act.
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"Act" means the Delaware Limited Liability Company Act, Delaware Code,
Title 6, SectionSection 18-101 et seq. as amended from time to time.
"Affiliate" means (a) a Person directly or indirectly controlling,
controlled by, or under common control with another Person; (b) a Person owning
or controlling more than 10 percent or more of the outstanding voting securities
or beneficial interests of another Person; and/or (c) an officer, director,
partner, or member of the immediate family of an officer, director, or partner
of another Person.
"Agreement" means this Operating Agreement, as amended from time to
time, including each exhibit hereto.
"Capital Account" means the account to be maintained by the Company for
each Member in accordance with the following provisions:
(i) a Member's Capital Account shall be credited with the amount
of money and the fair market value of any property contributed to the
Company (net of liabilities secured by such property that the Company
either assumes or to which such property is subject), the amount of any
Company unsecured liabilities assumed by the Member, and the Member's
distributive share of Profit and any item in the nature of income or
gain specially allocated to the Member pursuant to the provisions of
Section 4.3 (other than Section 4.3.2); and
(ii) a Member's Capital Account shall be debited with the amount
of money and the fair market value of any Company property distributed
to the Member (net of liabilities secured by such distributed property
that the Member either assumes or to which such property is subject),
the amount of any unsecured liabilities of the Member assumed by the
Company, and the Member's distributive share of Loss and any item in the
nature of expenses or losses specially allocated to the Member pursuant
to the provisions of Section 4.3 (other than Section 4.3.2).
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 4.3.2, the
Capital Account of each Member 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 Members shall be maintained in compliance with Code
Section 704(b) and the Regulations thereunder, and all provisions of this
Agreement relating to the maintenance of Capital Accounts shall be interpreted
and applied in a manner consistent with the Regulations.
"Cash Flow" means all cash funds derived from operations of the Company
(including interest received on reserves), without reduction for any non-cash
charges, but less cash funds used to pay current operating expenses and to pay
or establish reasonable reserves for future expenses, debt payments, capital
improvements, and replacements as determined by the Members.
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"Client(s)" means businesses and institutions who are developing and/or
selling medical products or services to doctors and patients, or who are
educating doctors, patients, consumers and/or students about a disease. This
includes pharmaceutical companies, academic institutions, foundations, biotech
or biomedical companies, device and diagnostic companies.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding revenue law.
"Company" means Digisphere, LLC, the limited liability company formed in
accordance with this Agreement.
"Contribution" means any money, property, or services rendered, or a
promissory note or other binding obligation to contribute money or property, or
to render services as permitted in this title, which a Member contributes to the
capital of the Company in that Member's capacity as a Member pursuant to an
agreement between the Members, including an agreement as to value.
"Interest" means a Person's right to share in the Cash Flow, income,
gains, losses, deductions, credit, or similar items of, and to receive
distributions from, the Company, any right to vote or participate in management,
and any right to information concerning the business and affairs of the Company.
"Disease Progression Explorer" means the technology described and
licensed to Company under the license agreement attached as Exhibit "A" (the
"License Agreement).
"Member" means any Person who executes a counterpart of this Agreement
as a Member and any Person who subsequently is admitted as a Member of the
Company.
"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.
"Minimum Gain" has the meaning set forth in Regulation Section
1.704-2(d). Minimum Gain shall be computed separately for each Member in a
manner consistent with the Regulations under Section 704(b) of the Code.
"Nonrecourse Deductions" means net increase, if any, in the amount of
Minimum Gain during that taxable year, determined according to the provisions of
Regulation Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulation Section
1.704-2(b)(3).
"Percentage" means, as to a Member, the percentage set forth after the
Member's name on Exhibit B, as amended from time to time.
"Person" means and includes an individual, corporation, partnership,
association, limited liability company, trust, estate, or other entity.
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"Profit" and "Loss" means, 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 Section 703(a) of the Code, with
the following adjustments:
(i) all items of income, gain, loss, deduction, or credit required
to be stated separately pursuant to Section 703(a)(1) of the Code 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 Section
705(a)(2)(B) of the Code (or treated as such pursuant to Regulation
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 book value as
adjusted under Regulation Section 1.704-1(b) ("adjusted book value") of
the property disposed of, notwithstanding the fact that the adjusted
book value differs from the adjusted basis of the property for federal
income tax purposes;
(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 4.3 hereof shall
not be taken into account in computing Profit or Loss.
"Regulation" means the income tax regulations, including any temporary
regulations, from time to time promulgated under the Code by the U.S. Treasury
Department.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Targeted Marketing Information Service" means the Company providing
some or all of the following services to Clients: medical education advertising,
product samples, medical literature, newsletters or other product support; an
"Answer Line"; Behavior Modification; or other services meant to support the
sale, use or compliance with a Client's product or service.
"Transfer" means, when used as a noun, any sale, hypothecation, pledge,
assignment, attachment, or other transfer, and, when used as a verb, to sell,
hypothecate, pledge, assign, or otherwise transfer. Transfer does not include a
transfer by operation of law in connection with the merger or consolidation of a
Member or the sale or other transfer of all or substantially all of the assets
of a Member.
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ARTICLE II
FORMATION AND NAME; OFFICE; PURPOSE; TERM
2.1 Organization. The parties hereby organize a limited liability
company pursuant to the Act and the provisions of this Agreement. The Company
shall cause a Certificate of Formation to be prepared, executed, and filed with
the Secretary of State. The Company shall further cause such other documents to
be filed as shall be necessary to comply with applicable law and to qualify the
Company to do business in each jurisdiction in which such qualification is
required.
2.2 Name of the Company. The name of the Company is Digisphere, LLC.
2.3 Purpose. The purpose of the Company is to promote, distribute and
provide worldwide to potential Clients: 1.) the Disease Progression Explorer as
a medical education tool for doctors and patients; and 2.) a Targeted Marketing
Information Service reaching patients diagnosed as susceptible to disease from
MSS prognostic tests. The Company shall not engage in any other business unless
approved by the Members.
2.4 Term. The Company shall continue in existence until August 31, 2000,
unless sooner dissolved as provided by this Agreement or the Act.
2.5 Resident Agent/Name and Address. The name of the Company's resident
agent in the state of Delaware is Incorporating Services, Ltd., and the address
of the Company's resident agent in the state of Delaware is 00 Xxxx Xxxxx
Xxxxxx, Xxxxx, Xxxxxxxx 00000.
2.6 Principal Place of Business. The Company's principal place of
business shall be located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, or at any
other place within the state of New Jersey upon which the Members agree.
2.7 Members. The name, present mailing address, taxpayer identification
number, and Percentage of each Member are set forth on Exhibit "B".
ARTICLE III
MEMBERS; CAPITAL; CAPITAL ACCOUNTS
3.1. Initial Contributions. Upon the execution of this Agreement, the
Members shall make the following contributions to the Company:
3.1.1 NCI will contribute [ * ] as its initial contribution.
3.1.2 MSS will contribute [ * ] as its initial contribution.
3.2 No Additional Contributions. The intent of the Members is to hold
capital contributions to a minimum, relying on up front Client payments to
generate the majority or all necessary working capital. No Member shall be
required to contribute any additional capital to the
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Company, unless agreed upon in writing by all Members of the Company, and then,
such additional capital contributions, if any, shall be made by the Members in
proportion to their Percentages.
3.3 No Personal Liability. No Member shall have personal liability for
any obligation of the Company except as expressly provided by law.
3.4 No Interest on Contributions. Members shall not be paid interest
with respect to Contributions unless otherwise agreed in writing by the Members.
3.5 Return of Contributions. Except as otherwise provided in this
Agreement, Members shall not have the right to receive the return of any
Contribution or withdraw capital from the Company, except upon the dissolution
of the Company.
3.6 Form of Return of Capital. If a Member is entitled to receive the
return of a Contribution, upon unanimous approval of the Members the Company may
distribute, in lieu of money, property having a value equal to the amount of
money distributable to such Person.
3.7 Capital Accounts. A separate Capital Account shall be maintained for
each Member.
ARTICLE IV
PROFIT, LOSS, AND DISTRIBUTIONS
4.1 Cash Flow. Cash Flow for each taxable year of the Company shall be
distributed to the Members in such amounts and at such times as the Members
shall agree upon, except as otherwise required by this section. All such
distributions shall be made to the Members at the same time or times in
proportion to their Percentage. For each taxable year of the Company, to the
extent that sufficient Cash Flow is available, a distribution sufficient to
satisfy the tax consequence to each Members resulting from its Interest in the
Company shall be distributed no later than seventy-five (75) days after the end
of the taxable year.
4.2 Allocation of Profit or Loss. After giving effect to the special
allocations set forth in Section 4.3, for any taxable year of the Company,
Profit and Loss shall be allocated to the Members in proportion to their
Percentages. If Losses are reallocated under Section 4.3.1., subsequent
allocations of Profit and Loss shall be made so that, to the extent possible,
the net amount allocated pursuant to this Section 4.2 equals the net amount that
would have been allocated to each Member if no reallocation had occurred under
Section 4.3.1.
4.3 Regulatory Allocations.
4.3.1 Minimum Gain Chargebacks and Qualified Income Offset. No
Member shall be allocated Losses or deductions if the allocation causes the
Member to have an Adjusted Capital Account Deficit; instead, such items shall be
allocated to the other Members. In order to comply with the "minimum gain
chargeback" requirements of the Regulations, and not withstanding any
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other provision of this Agreement to the contrary, in the event there is a net
decrease in a Member's share of Minimum Gain and/or Member nonrecourse debt
Minimum Gain as provided in Regulation Section 1.704-2(i)(2) (determined by
substituting "Member" for "partner") during a Company taxable year, such Member
shall be allocated items of income and gain for that year (and if necessary,
other years) before any other allocation is made. It is the intent of the
parties hereto that any allocation pursuant to this Paragraph 4.3.1 shall
constitute a "minimum gain chargeback" and a "qualified income offset" under the
Regulations and the Company may conform the provisions of this Paragraph 4.3.1
to the requirements for a minimum gain chargeback and a qualified income offset.
4.3.2 Contributed Property and Book-Ups. In accordance with the
Code and the Regulations, 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 Members so as to take account any variation
between the adjusted basis of the property to the Company for federal income tax
purposes and its fair market value at the date of Contribution (or deemed
Contribution). The Company will use the method for allocating such items as the
Members may agree.
4.3.3. Nonrecourse Deductions. Nonrecourse Deductions for a
taxable year or other period shall be specially allocated among the Members in
proportion to their Percentages.
4.3.4 Member Loan Nonrecourse Deductions. Any Member Loan
Nonrecourse Deductions for any taxable year or other period shall be specially
allocated to the Member who bears the risk of loss with respect to the loan to
which the Member Loan Nonrecourse Deductions are attributable in accordance with
Regulation 1.704-2(i).
4.3.5 Unrealized Receivables. If a Member's share of Profits or
capital is reduced (provided the reduction does not result in a complete
termination of the Member's Interest), the Member's share of the Company's
"unrealized receivables" and "substantially appreciated inventory" (within the
meaning of Section 751 of the Code) 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 4.4 hereof which 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 Member, be specially
allocated among the Members in proportion to the deductions (or basis reductions
treated as deductions) giving rise to such recapture.
4.3.6 Withholding. All amounts required to be withheld pursuant to
Section 1446 of the Code or any other provision of federal, state, or local tax
law shall be treated as amounts actually distributed to the affected Members for
all purposes under this Agreement.
4.3.7 Intent of Allocations. The tax allocation provisions of this
Agreement are intended to produce final Capital Account balances of the Members
that will permit liquidating distributions that are made in accordance with such
final Capital Account balances under Section 4.4.1 to be equal to the
distributions that would occur if such distributions were made to the Members in
proportion to their Percentages.
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4.4 Liquidation and Dissolution.
4.4.1 Upon liquidation of the Company, the assets of the Company
shall be distributed to the Members in accordance with their positive balances
in their respective Capital Accounts, after giving effect to all Contributions,
distributions, and allocations for all periods.
4.4.2 No Member shall be obligated to restore a Negative Capital
Account.
4.4.3 Any remaining assets of the Company after giving effect to
Section 4.4.1 shall be distributed to the Members in proportion to their
Percentages.
4.5 General.
4.5.1 Except as otherwise provided in this Agreement, the timing
and amount of all distributions shall be determined by the Members.
4.5.2 If any assets of the Company are distributed in kind to the
Members, those assets shall be valued on the basis of their fair market value,
and any Member entitled to any interest in those assets shall receive that
interest as a tenant-in-common with all other Members so entitled. Unless the
Members otherwise agree, the fair market value of the assets shall be determined
by an independent appraiser who shall be selected by the Members. The Profit or
Loss for each unsold asset shall be determined as if the asset had been sold at
its fair market value, and the Profit or Loss shall be allocated as provided in
Section 4.2 and shall be properly credited or charged to the Capital Accounts of
the Members prior to the distribution of the assets in liquidation pursuant to
Section 4.4.
4.5.3 All Profit and Loss shall be allocated, and all
distributions shall be made, to the Persons shown on the records of the Company
to have been Members 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 Member and the successor on the basis of the
number of days each was a Member 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 sale, disposition or
financing of assets of the Company.
ARTICLE V
MANAGEMENT: RIGHTS, POWERS, DUTIES AND PERMITTED EXPENSES
5.1 Meetings of and Voting by Members.
5.1.1 A meeting of the Members may be called at any time by any
Member. Meetings of Members may be held at the Company's principal place of
business or at any other place designated by the Person or Persons calling the
meeting provided the Members mutually consent. Not less than ten (10) nor more
than sixty (60) days before each meeting, the Person or
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Persons calling the meeting shall give written notice of the meeting to each
Member entitled to Vote at the meeting. The notice shall state the time, place,
and purpose of the meeting. Notwithstanding the foregoing provisions, each
Member who is entitled to notice may waive notice, either before or after the
meeting, by executing a waiver of such notice, or by appearing at and
participating, in person or by proxy, in the meeting. At a meeting of the
Members, the presence in person or by proxy of Members holding Percentages which
aggregate one-hundred percent (100%) 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.
5.1.2 Except as otherwise provided in this Agreement, the
unanimous affirmative Vote of all Members present at the meeting in person and
by proxy shall be required to approve any matter coming before the Members.
5.1.3 Unless approved by the Members, no Member shall be entitled
to compensation for services performed for the Company. However, upon
substantiation of the amount and purpose thereof, the Members shall be entitled
to reimbursement for expenses reasonably incurred, and advances of funds to be
expended, in furtherance of the business of the Company, as described in Section
5.9.
5.2 Board of Directors.
5.2.1 To facilitate the meeting and voting process, the Company
shall establish a Board of Directors (the "Board") and the Members shall each
designate one authorized agent to sit on the Board (individually, the "Director"
and collectively, the "Directors"). The Director shall be authorized to appear
at member meetings and vote on behalf of the Member as an authorized agent of
the Member. The Board shall oversee the operations of the Company. The Board
shall meet regularly, at times and places agreed upon by the Directors, to
discuss and guide the course of the Company's activities.
5.2.2 Each Member shall have the right to designate and remove,
with or without cause, its Director.
5.2.3 The Members have designated the following individuals to
serve as the initial Directors as of the date of the commencement of the term of
the Company: Xx. Xxxx X. Xxxxx (designated by MSS) and Xx. Xxxxxx X. Xxxxx
(designated by NCI).
5.2.4 Unless approved by the Members, no Director shall be
entitled to compensation for services performed for the Company. However, upon
substantiation of the amount and purpose thereof, the Director shall be entitled
to reimbursement for expenses reasonably incurred, and advances of funds to be
expended, in furtherance of the business of the Company, as described in Section
5.9.
5.2.5 Except as otherwise provided in this Agreement, the
unanimous affirmative vote of all Directors present at the meeting in person and
by proxy shall be required to approve any matter coming before the Directors.
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5.3 Action by Unanimous Written Consent. In lieu of holding a meeting,
the Members and/or the Directors may take action by unanimous written consents
specifying the action to be taken, which consents must be executed and delivered
to the Company by all the Members.
5.4 Duties of Parties.
5.4.1 It is acknowledged that the Members and their respective
Affiliates are, among other things, in the business of providing services that
are similar to and may be competitive with the business of the Company. The
Members agree that, during the term of the Company and thereafter, each Member
and its Affiliates may continue to engage in such business activities and
solicit and deal with Clients and prospective Clients of the Company and in
other business activities and ventures of every nature, independently or with
others, and neither the Company nor the other Members shall have any right or
interest in such activities and ventures or in the resulting income or profits.
5.4.2 (a) Notwithstanding anything to the contrary in this
Agreement or any exhibit attached hereto, during the term of the
Company, NCI agrees that it will not, directly or indirectly engage in,
or have any interest in any person, firm, corporation or business
(whether as an employee, officer, director, agent, security holder,
creditor, consultant, contractor or otherwise) that engages in any
activity in any county or counties in any area throughout the world,
which is the same as, similar to, or competitive in any manner with the
software licensed to Company by MSS in any such area as of the effective
date of this Agreement, for so long as the Company or any of its
successors shall engage in any of such activities in any such area. The
intent of this section is not to limit NCI's ability to provide medical
education programs consistent with its normal course of business, but to
restrict them from selling competitive software. Notwithstanding the
foregoing, any competitive Targeted Marketing Information Service
contemplated by NCI with respect to disease areas with which MSS is
apparently not involved shall be reviewed with MSS and may be canceled
at their request if a similar product is under development by MSS for
marketing by the Company within two years of the request.
Notwithstanding anything to the contrary hereinabove, nothing contained
herein shall prevent NCI and its Affiliates from owning less than five
percent (5%) of the capital stock of a corporation the common stock of
which is publicly traded on a national securities exchange or through
NASDAQ.
(b) The parties intend that the covenant contained in
subparagraph 5.4.2(a) shall be construed as a series of separate
covenants, one for each area (whether a country, state, county or other
political subdivision) referred to in this section. Except for
geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenant contained in subparagraph 5.4.2(a).
If in any judicial proceeding a court shall refuse to enforce any of the
separate covenants deemed included in subparagraph 5.4.2(a), then such
unenforceable covenant shall be deemed eliminated from this Agreement to
the extent necessary to permit the remaining separate covenants to be
enforced.
5.4.3 Except as otherwise expressly provided in Article VI,
Members have the right to maintain, expand, or diversify their own other
investment interests and activities and to
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receive and enjoy profits or compensation therefrom. Each Member waives any
rights the Member might otherwise have to share or participate in such other
interests or activities of any other Member or the Member's Affiliates.
5.5 Indemnification of Members.
5.5.1 A Member shall not be liable, responsible, or accountable,
in damages or otherwise, to any other Member or to the Company for any act
performed by the Member with respect to Company matters, and within the standard
of care specified in Section 5.4.3(b).
5.5.2 The Company shall indemnify each Member for any act
performed by the Member with respect to Company matters, unless such act
constitutes grossly negligent or reckless conduct, intentional misconduct, or a
knowing violation of law.
5.5.3 MSS represents and warrants to Company that (a) to the best
of its knowledge, it is the sole owner of title to the Disease Progression
Explorer and all related patents, trademarks, copyrights and proprietary rights
therein, including, but not limited to, computer software and (b) as of the
effective date of this Agreement, MSS has not received any communications or
claims alleging that the Disease Progression Explorer violates the rights of any
person or entity. Subject to the limitations of liability set forth in Section
5.6 below, MSS agrees to indemnify and hold Company harmless from and against
any and all loss, liability, damage and expense (including, but not limited to,
reasonable attorneys' fees and expenses incurred by Company in establishing
liability under, or the enforcing of, this indemnity) arising out of or
resulting from a breach or alleged breach of the foregoing representation and
warranty.
5.5.4 Subject to the limitations of liability set forth in Section
5.6 below, MSS agrees to indemnify and hold the Company harmless from and
against any and all loss, liability, damage and expense (including, but not
limited to, reasonable attorneys' fees and expenses incurred by the Company in
establishing liability under, or the enforcing of, this indemnity) arising out
of or resulting from a claim that the Disease Progression Explorer or any
version thereof as supplied by MSS infringes a patent, copyright, trade secret
or other intellectual property right of a third party, provided that the Company
gives MSS prompt written notice of any such claim and allows MSS to direct the
defense and settlement of the claim. Notwithstanding the foregoing, MSS will
have no liability for any infringement claim of any kind: (i) to the extent it
is based on modification of the Disease Progression Explorer or any version
thereof by a party other than MSS, with or without authorization, or combination
of the same with hardware or software not supplied by MSS, if the claim would
have been avoided by the use of the Disease Progression Explorer or the version
thereof apart from such combination or would have been avoided if the same had
not been modified or had been combined with other hardware or software; (ii) to
the extent it results from failure of the Company to use updated or modified
software or hardware provided by MSS for avoiding infringement; or (iii) to the
extent it results from compliance by MSS with designs, plans or specifications
furnished by or on behalf of a client of the Company. THE PROVISIONS OF THIS
SECTION 5.5.4 SET FORTH THE ENTIRE LIABILITY OF MSS AND THE SOLE REMEDIES OF THE
COMPANY WITH RESPECT TO INFRINGEMENT AND ALLEGATIONS OF INFRINGEMENT OF
INTELLECTUAL
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PROPERTY RIGHTS OR OTHER PROPRIETARY RIGHTS OF ANY KIND OF ANY THIRD
PARTY.
5.5.5 Except as provided elsewhere in this Agreement, the Company
shall indemnify and hold each Member harmless from and against any and all loss,
liability, damage and expense (including, but not limited to, reasonable
attorneys' fees and expenses incurred by such Member in establishing liability
under, or the enforcing of, this indemnity) arising out of or resulting from any
acts or omissions of the Company in connection with its activities under this
Agreement or with the marketing, promotion, sale, licensing or other
distribution of the Disease Progression Explorer or any version thereof, or of
the Targeted Marketing Information Service.
5.6 Limitations of Liability
5.6.1 Disclaimer of Certain Types of Liability. REGARDLESS OF
WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS ESSENTIAL PURPOSE OR OTHERWISE,
IN NO EVENT SHALL MSS BE LIABLE TO NCI OR THE COMPANY OR ANY OTHER PARTY,
WHETHER ARISING UNDER CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY,
BREACH OF WARRANTY, INDEMNITY OR OTHERWISE, FOR LOSS OF ANTICIPATED PROFITS,
COST OF MONEY, LOSS OF USE OF CAPITAL OR REVENUE, OR FOR ANY SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGES OF ANY KIND, EVEN IF MSS
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES.
5.6.2 Limitations on Amount of Liability.
(a) WITH RESPECT TO LIABILITY ARISING OUT OF A
PARTICULAR CLIENT VERSION OF THE DISEASE PROGRESSION EXPLORER SUPPLIED BY MSS,
IN NO EVENT SHALL MSS' TOTAL CUMULATIVE LIABILITY TO NCI, THE COMPANY AND ANY
OTHER PARTY FOR SUCH CLIENT VERSION UNDER THIS AGREEMENT AND UNDER THE LICENSE
AGREEMENT EXCEED THE SUM OF THE TOTAL DEVELOPMENT COSTS REIMBURSED TO MSS FOR
SUCH CLIENT VERSION UNDER THE LICENSE AGREEMENT PLUS ANY PROFITS DISTRIBUTED TO
MSS BY THE COMPANY ARISING OUT OF THE CLIENT CONTRACT PURSUANT TO WHICH SUCH
CLIENT VERSION WAS DEVELOPED.
(b) IN NO EVENT SHALL MSS' TOTAL CUMULATIVE LIABILITY
TO THE COMPANY AND ANY OTHER PARTY UNDER THIS AGREEMENT AND UNDER THE LICENSE
AGREEMENT, FROM ALL CAUSES OF ACTION OF ANY KIND, WHETHER ARISING UNDER
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, BREACH OF WARRANTY,
INDEMNITY OR OTHERWISE, EXCEED THE SUM OF THE TOTAL PROFITS DISTRIBUTED TO MSS
BY THE COMPANY.
5.7 Day-to-Day Management
5.7.1 The day-to-day operations of the Company shall be managed by
one manager (the "Manager"). Except as specifically provided otherwise in this
Agreement, the Manager shall have the right to act for and bind the Company in
the ordinary course of its
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business. Subject to Section 5.9, the signature of the Manager shall be
sufficient to bind the Company for any transaction conducted or occurring in the
ordinary course of the Company's business. The Manager shall keep the Directors
advised of the ongoing activities and developments of the Company and shall
provide the Member with copies of all contracts and commitments entered into by
the Company. The Directors hereby appoint Xxxxx Xxxxxxxx as the initial Manager.
5.7.2 The Manager may be replaced or removed at any time (with or
without cause) by written agreement of the Members. The Members may also
appoint, and replace and remove (with or without cause), such other officers and
employees of the Company as the Members shall agree to in writing. Officers
shall have such authority and responsibilities as shall be assigned to them by
the Members. The Manager and the other officers and employees of the Company may
receive such compensation from the Company as the Members shall determine.
5.8 Certain Duties. The Manager shall be responsible for performing, or
causing to be performed, the following duties:
5.8.1 at least annually, or at such other times as the Members
shall determine, the Manager shall prepare budgets of the Company for review by
and the written approval of the Directors;
5.8.2 the Manager shall cause to be paid, on behalf of the Company
and solely from its funds, all payments required to be made by the Company in
connection with the business and operations of the Company;
5.8.3 at the reasonable expense of the Company, the Manager shall
cause to be prepared and filed all Company tax returns and reports required to
be filed with governmental authorities, after review and approval by the
Directors;
5.8.4 at the reasonable expense of the Company, as soon as
practicable after the end of each fiscal year of the Company, but not more than
75 days after the end of each such fiscal year, the Manager shall cause to be
provided to each Member:
(a) all information necessary for the preparation by
each Member of its federal income tax returns; and
(b) an audited financial statement of the Company for
such fiscal year, prepared by the Company's then serving
accountants, containing a balance sheet and statements of income
and cash flows; and
5.8.5 at the reasonable expense of the Company, as soon as
practicable after the end of each month, but not more than 15 days after the end
of each such month, the Manager shall cause to be provided to each Member an
unaudited financial statement of the Company for such month, prepared by
accounting personnel, containing a balance sheet and statements of income and
cash flows.
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5.9 Certain Company Actions. Notwithstanding the provisions of Section
5.7.1, except as provided in or contemplated by the budget of the Company
attached to this Agreement as Exhibit "C" or in any revised or subsequent budget
approved in writing by the Members (in each case, an "Approved Budget"), the
following actions shall not be deemed to be within the scope of the ordinary
day-to-day business and operations of the Company and shall require the
unanimous written approval of one-hundred percent (100%) of the Members:
5.9.1 the sale of all or substantially all of the Company's assets
or of any asset with a selling price of more than $2,500;
5.9.2 the borrowing of money by the Company, other than accounts
payable of the Company incurred in the normal course of the Company's business;
5.9.3 the lending of Company funds to any person or entity, other
than accounts receivable arising out of the normal course of the Company's
business;
5.9.4 the purchase or lease of any real property;
5.9.5 the purchase of any personal property costing in excess of
$2,500 as to any item or group of related items or the lease of any item or
group of related items of personal property requiring annual lease payments in
excess of $5,000 or with a term in excess of one year;
5.9.6 the institution or settlement of any claim or litigation;
5.9.7 any merger, business combination, joint venture or
acquisition or the entry into any line of business not contemplated by Section
2.3;
5.9.8 any commitment of funds in excess of $5,000 for any item or
matter or any group of related items or matters;
5.9.9 subject to Section 6.2, any commitment for the Company to
provide services to a Client, or any commitment by the Company to obtain
services, in excess of $150,000;
5.9.10 the grant or acquisition of any license, franchise or
similar right to or from (as the case may be) any Person or entity;
5.9.11 the pledge, mortgage or encumbrance of any asset or
property of the Company;
5.9.12 the entry into any contract or commitment with any
Affiliate of a Member;
5.9.13 the selection and engagement of legal counsel;
5.9.14 a decision to continue the business of the Company after
dissolution of the Company;
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5.9.15 approval of the transfer of a Membership Interest and
admission of an assignee as a Member; and
5.9.16 an amendment to the Certificate of Formation or this
Agreement.
5.10 Permitted Expenses. Upon substantiation of the amount and purpose
thereof, the Company will reimburse the Members and Directors for certain
permitted expenses in accordance with the criteria listed on Exhibit "D".
Expenses meeting the aforementioned criteria shall be paid without the Members'
consent.
ARTICLE VI
RESPONSIBILITIES OF MEMBERS
6.1 Contracting Procedures and Services.
6.1.1 Contracts with Clients. It is expected that:
(a) the Company will provide its services (collectively,
"Client Services") to Clients of the Company ("Clients")
principally pursuant to written contracts ("Client Contracts")
with Clients; and
(b) for the foreseeable future, a substantial portion of
Client Services will be performed for Clients by MSS and NCI
personnel, on behalf of the Company pursuant to contracts between
MSS, NCI and the Company, including the services of the Manager.
6.1.2 Member Services. MSS will enter into an exclusive license
with the Company to distribute the Disease Progression Explorer in the form of
the license attached hereto as Exhibit "B" (the "License Agreement"). To the
extent that any of the terms, conditions, provisions and covenants in this
Agreement conflict with the terms of the License Agreement, the License
Agreement shall control and prevail.
6.2 Certain Agreements of the Members.
6.2.1 Each Member, and its appropriate officers and employees,
shall devote to the business of the Company such time and attention, and
perform such services, as it reasonably determines to be necessary to
fulfill its responsibilities under this Agreement. The Members shall
cooperate in all aspects of the Company's business. The actual division
of labor between the Members will be determined by the needs of the
Company and particular Clients. The Company, with the assistance of each
of the Members (as appropriate), will develop and price contract
proposals to prospective Clients of the Company.
6.2.2 NCI shall be primarily (but not exclusively) responsible for
supporting the Company's sales, marketing and training, including,
specifically:
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(a) sales and marketing of all products or services of
fered by the Company;
(b) preparation of collateral material to support selling
and marketing efforts for all products and services offered by the
Company;
(c) market research as deemed necessary;
(d) Client Services, including Client evaluation, needs,
billing and collection;
(e) Client relations and project management, including
participating jointly with MSS in Client projects; and
(f) day-to-day business operations as necessary.
6.2.3 MSS shall be primarily (but not exclusively) responsible for
supporting contract fulfillment with the Company's Clients, including
specifically:
(a) the creation of Client versions of the Disease
Progression Explorers for Clients of the Company;
(b) the creation of a demonstration version of the Disease
Progression Explorer to be used by NCI in the marketing and sale
of the Disease Progression Explorer;
(c) training of Clients in the use of Client versions
pursuant to the Client Contracts;
(d) the facilitation of the submission of business reply
solicitations to patients who have utilized MSS' genetic
prognostics tests (assuming patient consent and the absence of the
violation of any applicable laws) to further the development of
the Company's Targeted Marketing Information Service; and
(e) assisting NCI with the project management of Client
versions of the Disease Progression Explorer or other medical
education software tools developed for the Clients of the Company.
6.3 Confidentiality. Each Member agrees that it and its Affiliates will
not, at any time while it is a Member (except in furtherance of the Company's
business), directly or indirectly use, disclose or make available to anyone any
confidential information concerning the Company or the other Member. Such
confidential information includes (but is not limited to) computer programs
(source and object codes), systems and technology; Client and prospective Client
names, leads and information; information supplied by Clients to the Company in
confidence; prices charged or proposed to be charged to Clients; cost
information; supplier information; employee names, compensation, benefits and
related data; engineering and technical data and equipment specifications;
Client service requirements; information regarding equipment and facilities; the
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Company's business policies and plans; and the Company's banking, financial, tax
and accounting information. Confidential information does not include (a)
information known to a Member or an Affiliate prior to the date of this
Agreement, (b) information already known to, or readily ascertainable by, the
public or which becomes known to the public other than as a result of disclosure
by such Member, or (c) information required to be disclosed by law or judicial
process.
ARTICLE VII
TRANSFER OF INTERESTS
7.1 Transfers. Except with the consent of the other Members, no Member
may Transfer all, or any portion of, or any interest or rights in, the Interest
owned by the Member. Each Member hereby acknowledges the reasonableness of this
prohibition in view of the purposes of the Company and the relationship of the
Members.
7.1.1 The attempted Transfer of any portion or all of an Interest
in violation of the prohibition contained in this Section 7.1 shall be deemed
invalid, null and void, and of no force or effect.
7.1.2 A transferee by operation of law shall not be entitled to
any vote or role in the management of the Company. Such a transferee by
operation of law shall succeed only to the economic interest of the transferring
Member for purposes of distributing cash and allocating Profits or Loss.
7.1.3 No new Member shall be admitted to the Company without the
consent of all Members.
ARTICLE VIII
DISSOLUTION, LIQUIDATION, AND TERMINATION OF THE COMPANY
8.1 Events of Dissolution. The Company shall be dissolved upon the
happening of the first to occur of an event specified in Section 18-801 of the
Act or any of the following events:
8.1.1 when the period fixed for its duration in Section 2.4 has
expired, provided however that the parties may mutually agree to extend this
period;
8.1.2 upon the unanimous approval of all Members;
8.1.3 subject to the provisions of Section 8.2, upon a material
breach of the obligations set forth in this Agreement, including failure to meet
the following agreed upon performance goals (the "Performance Goals"):
a) NCI agrees to seek to attain the following Performance
Goals during the first two years of the Company's existence:
(i) good faith reasonable efforts to market and
distribute a Targeted Marketing Information Service to
Clients;
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(ii) good faith reasonable efforts to market and
distribute the Disease Progression Explorer to Clients;
(iii) meeting the financial and managerial
responsibilities detailed in this Agreement;
(iv) maintaining strong communications with
Clients, consistent with the level needed to continue the
project;
(v) [ * ]
(vi) [ * ]
(vii) [ * ]
b) MSS agrees to seek to obtain the following Performance
Goals during the first two (2) years of the Company's existence:
(i) good faith reasonable efforts to fulfill the
terms of the License Agreement;
(ii) good faith reasonable efforts to fulfill the
terms of the Client Contracts approved by MSS; and
(iii) responsiveness within one business day, if
practicable, to NCI or Client needs for system support.
c) The Members agree to adjust the Performance Goals at
the end of two (2) years after the initial market test period by
mutual good faith negotiations taking into account the actual
number of Client version Disease Progression Explorers distributed
during the preceding two (2) year period as well the then existing
potential markets, and the potential market size based Targeted
Market Information Service. Such negotiations shall commence as
soon as practically possible after the close of such two (2) year
period, and the Members shall use their good faith efforts to
conclude such negotiations within one (1) month. In the event that
the Members are unable to agree in good faith on new Performance
Goals, then
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said Performance Goals shall remain at their previous amount until
the expiration of the Agreement term.
8.2 Noticing Procedure for Failure to Meet Performance Goals. Failure to
materially meet the obligations set forth in this Agreement or the Performance
Goals shall be grounds for the complaining member (the "Noticing Member") to
demand remedy in writing (the "Written Demand for Remedy") to the non-performing
Member (the "Non-performing Member"). The Written Demand for Remedy shall be in
reasonable detail. If the remedies are not made by the Non-performing Member
within 30 days of the date of receipt by the Non-performing member of the
Written Demand for Remedy, the Noticing Member may withdraw, as detailed below.
8.3 Withdrawal. A Noticing Member may withdraw from the Company prior to
the expiration of the term of the Company in the event of the failure of a
Non-performing Member to cure a noticed failure to materially meet its
obligations set forth in this Agreement or to meet a Performance Goal within the
allotted time prescribed in Section 8.2. A Noticing Member that wishes to
withdraw from the Company (a "Withdrawing Member") shall give at least 90 days'
notice (a "Notice of Withdrawal") of its intent to withdraw to the
Non-performing Member, including the effective date of the proposed withdrawal.
Unless the Members otherwise agree in writing, following the giving of a Notice
of Withdrawal, the Company shall be dissolved and liquidated so that the
liquidation is completed by the date (not less than 90 days after the date of
the Notice of Withdrawal unless otherwise agreed in writing by the Members)
specified in the Notice of Withdrawal or as soon as may be practicable
thereafter. If a Member shall give a Notice of Withdrawal and the other Member
wishes to continue the business of the Company, the Members shall negotiate in
good faith the purchase of the Interest of the Withdrawing Member by the
remaining Member on terms and conditions that are satisfactory to both Members.
In the event of a withdrawal by either Member, the License Agreement shall also
terminate on withdrawal. The provisions of this Section 8.3 shall be the sole
remedy of a Noticing Member for a breach of this Agreement by a Non-performing
Member, and no Non-performing Member shall be liable to the Noticing Member for
damages arising out of any such breach.
8.4 Procedure for Winding Up and Distribution. If the Company is
dissolved, the remaining Members shall wind up its affairs. On winding up of the
Company, the assets of the Company shall be distributed, first, to creditors of
the Company, including Members who are creditors, in satisfaction of the
liabilities of the Company, and then, to the Members in accordance with Section
4.4 of this Agreement. The withdrawal of a Member or the termination of the
Company shall not relieve a withdrawing Member of its obligation (if any) to the
Company or any Client made in connection with any Client Contract.
8.5 Filing of Certificate of Cancellation. Upon completion of winding up
the affairs of the Company, the Members shall promptly file the Certificate of
Cancellation with the Secretary of State. If there are no remaining Members,
such Certificate shall be filed by the last Person to be a Member; if there are
no remaining Members, or last Person to be a Member, the Certificate shall be
filed by the legal or personal representatives of the last Person to be a
Member.
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ARTICLE IX
BOOKS, RECORDS, ACCOUNTING, AND TAX ELECTIONS
9.1 Bank Accounts. All funds of the Company shall be deposited in a bank
account or accounts opened in the Company's name. The Members shall determine
the financial institution or institutions at which the accounts will be opened
and maintained, the types of accounts, and the Persons who will have authority
with respect to the accounts and the funds therein.
9.2 Maintenance of Books and Records.
9.2.1 The Manager shall keep or cause to be kept complete and
accurate books, records, and financial statements of the Company and supporting
documentation of transactions with respect to the conduct of the Company's
business. Such books, records, financial statements, and documents shall include
but not be limited to the following:
(a) a current list of the full name and last known
business or residence address of each Member, in alphabetical
order, with the Contribution and the share in Profits and Losses
of each Member specified in such list;
(b) the Certificate of Formation, including all
amendments; and any powers of attorney under which the Certificate
of Formation or amendments were executed;
(c) federal, state, and local income tax or information
returns and reports, if any, for the six most recent taxable
years;
(d) this Agreement and any amendments; and any powers of
attorney under which this Agreement or amendments were executed;
(e) financial statements for the six most recent years;
(f) internal books and records for the current and three
most recent years;
(g) a true copy of relevant records indicating the amount,
cost, and value of all property which the Company owns, claims,
possesses, or controls; and
(h) all interests and agreements to which the Company is a
party.
9.2.2 Such books, records, and financial statements of the Company
and supporting documentation shall be kept, maintained, and available at the
Company's office within the State of New Jersey.
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9.3 Right to Inspect Books and Records; Receive Information.
9.3.1 Upon the request of a Member the Company shall promptly
deliver to the requesting Member at the expense of the Company a copy of this
Agreement, as well as the information required to be maintained by the Company
under Section 9.2.1.
9.3.2 Each Member has the right upon request to do the following:
(a) to inspect and copy during normal business hours any
of the records required to be maintained by the Company under
Section 9.2.1 of this Agreement; and
(b) to obtain from the Company promptly after becoming
available, a copy of the Company's federal, state, and local
income tax or information returns for each year.
9.3.3 The Company shall send or shall cause to be sent to each
Member within 90 days after the end of each fiscal year of the Company: (i) such
information as is necessary to complete federal and state income tax or
information returns, and (ii) a copy of the Company's federal, state, and local
income tax or information returns for the fiscal year; provided, however, that
if the Company's independent public accountants determine that the Company then
lacks sufficient information to prepare such tax returns, the Company may
request an extension of the time to file such returns, if legally available for
such returns, and notify the Members of such determination.
9.4 Annual Accounting Period. The annual accounting period of the
Company shall end on the 31st of December each year.
9.5 Tax Matters Partner. NCI shall be the "Tax Matters Partner" for the
purposes of Code Section 6231. However, all actions taken by the Tax Matters
Partner shall be by mutual consent of the Members.
9.6 Accountants. Unless the Members shall otherwise agree, the
accountants for the Company shall be Xxxxx Xxxxxx LLP. In the event of the
termination of the services of Xxxxx Xxxxxx LLP as the accountants for the
Company, new accountants shall be selected by the unanimous consent of the
Members.
9.7 Accounting Method. The Company shall keep its accounting records in
accordance with generally accepted accounting principles. The Company shall
elect to be taxed as a partnership under the Internal Revenue Code of 1986, as
amended. The Company shall report its income for tax purposes on such basis as
the Members shall agree upon in consultation with the Company's Accountants.
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ARTICLE X
GENERAL PROVISIONS
10.1 Assurances. Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing, and other acts as
the Members deem reasonably appropriate to comply with the requirements of law
for the formation and operation of the Company and to comply with any laws,
rules, and regulations relating to the acquisition, operation, or holding of the
property of the Company.
10.2 Notifications. Any notice, demand, consent, election, offer,
approval, request, or other communication (collectively a "notice") required or
permitted under this Agreement must be in writing and either delivered
personally or sent by certified or registered mail, postage prepaid, return
receipt requested or by recognized overnight courier service. A notice must be
addressed to a Member as follows:
If to NCI:
Xxxxxx Communications Inc.
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
If to MSS:
Medical Science Systems, Inc.
0000 XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxx
If to Digisphere Inc.:
Digisphere Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
A notice to the Company must be addressed to the Company's principal office. All
notices shall be effective upon receipt. Any party may designate, by notice to
all of the others, substitute addresses or addressees for notices; and,
thereafter, notices are to be directed to those substitute addresses or
addressees.
10.3 Complete Agreement. This Agreement constitutes the complete and
exclusive statement of the agreement among the Members with respect to its
subject matter. It supersedes all prior written and oral statements among the
Members, including any prior representation, statement, condition, or warranty
with respect to its subject matter. Except as expressly provided otherwise
herein, this Agreement may not be amended without the written consent of all of
the Members.
10.4 Applicable Law. All questions concerning the construction,
validity, and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal law, not
the law of conflicts, of the State of Delaware.
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10.5 Section Titles. The headings herein are inserted as a matter of
convenience only and do not define, limit, or describe the scope of this
Agreement or the intent of the provisions hereof.
10.6 Binding Provisions. This Agreement is binding upon, and inures to
the benefit of, the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
10.7 Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the Person
may in the context require.
10.8 Separability of Provisions. Each provision of this Agreement shall
be considered separable; and if, for any reason, any provision or provisions
herein are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or affect those portions of
this Agreement which are valid.
10.9 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, including telecopied counterparts, each of which shall be
deemed an original and all of which, when taken together, constitute one and the
same document. The signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
10.10 Estoppel Certificate. Each Member shall, within ten (10) days
after written request by any Member, deliver to the requesting Person a
certificate stating, to the Member's knowledge, that: (a) this Agreement is in
full force and effect; (b) this Agreement has not been modified except by any
instrument or instruments identified in the certificate; and (c) there is no
default hereunder by the requesting Person, or if there is a default, the nature
and extent thereof.
10.11 Publicity and Reports. Each Member shall coordinate all publicity
relating to the transactions contemplated by this Agreement, and no party shall
issue any press release, publicity statement or other public notice relating to
this Agreement, or the transactions contemplated by this Agreement, without
obtaining the prior written consent of all Members except to the extent that a
particular action is required by applicable law. Consent shall not be
unreasonably withheld. Notwithstanding the foregoing, unless required by law, no
press release, publicity statement or other public notice shall be issued within
the first six (6) months of this Agreement.
10.12 Representations and Warranties. Each Member represents and
warrants to the other Member that:
(a) Such Member is a corporation duly organized, validly existing
and in good standing under the laws of its state or organization.
(b) All corporate action on the part of such Member necessary for
the authorization, execution and delivery of this Agreement and the performance
of its obligations under this Agreement has been taken, and this Agreement
constitutes a valid and legally binding obligation of such Member, enforceable
in accordance with its terms.
10.13 Creditors. The provisions of this Agreement shall not be for the
benefit of, or enforceable by, any creditor of the Company. The appointment of
any manager, officer or
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employee of the Company pursuant to this Agreement shall not give any contract
rights to such officer or employee.
10.14 Expenses. Each member shall pay its own expenses and the fees and
disbursements of its counsel and accountants in connection with the preparation
and negotiation of this Agreement.
IN WITNESS WHEREOF, the parties have executed, this Agreement as of the
date set forth above.
MEMBERS:
"MSS" "NCI"
Medical Science Systems, Inc., Xxxxxx Communications Inc.,
a Texas corporation a Delaware corporation
By: By:
------------------------- -------------------------------------
Name: Xxxx X. Xxxxx Name: Xxxxxx X. Xxxxx
Title: President/Chief Title: President/Chief Executive Officer
Executive Officer
Digisphere Inc.,
a Delaware corporation
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
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EXHIBIT "A"
LICENSE AGREEMENT
29
EXHIBIT "B"
MEMBERS
MEMBER PERCENTAGE TAX ID NO. ADDRESS
------ ---------- ---------- -------
Medical Science Systems, Inc. [ * ] 00-0000000 0000 XxxXxxxxx, Xxx. 000
Xxxxxxx Xxxxx, XX 00000
Xxxxxx Communications Inc. [ * ] _________ 00 Xxxxxxx Xxxxxx, Xxx. 00
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
30
EXHIBIT "C"
BUDGET
(TO BE PROVIDED)
31
EXHIBIT "D"
PERMITTED EXPENSE CRITERIA
1. Development costs paid pursuant to the License Agreement.
2. Maintenance fees to MSS.
3. Travel costs related to the creation of Client versions pursuant to
Client Contracts for MSS and NCI.
4. Prorata direct expense of Manager (salary and benefits in performing
services to Company).
