EXHIBIT 10.6
EXECUTION COPY
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AMERICAN REIMBURSEMENT, LLC
LIMITED LIABILITY COMPANY AGREEMENT
Between
MED DIVERSIFIED, INC.,
And
XXXXXXX X. XXXXXXXX & ASSOCIATES, LLC
as Members
Dated as of March 29, 2002
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This Limited Liability Company Agreement (this "Agreement") of American
Reimbursement, LLC, a Delaware limited liability company (the "Company"), dated
as of March 29, 2002, is entered into by and between Med Diversified, Inc. and
Xxxxxxx X. Xxxxxxxx & Associates, LLC, a Massachusetts limited liability company
(the "Independent Member" and, together with Med, the "Members").
WHEREAS, the Members desire to form a limited liability company under and
pursuant to the Delaware Limited Liability Company Act for the purposes set
forth in this Agreement by causing a Certificate of Formation of the Company to
be filed with the office of the Secretary of State of the State of Delaware on
March 27, 2002, and by entering into this Agreement.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree to form the Company in accordance with the Delaware
Limited Liability Company Act and subject to the terms and provisions of this
Agreement.
ARTICLE ONE
DEFINITIONS
Section 1.01 DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"ACT" means the Delaware Limited Liability Company Act (6 DEL. C. Sections
18-101, ET SEQ.), as amended from time to time.
"AFFILIATE" of any Person means any other Person that (i) directly or
indirectly controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan) or (ii) is an officer or director of
such Person. For purposes of the foregoing definition, a Person shall be deemed
to be "controlled by" another Person if such other Person possesses, directly or
indirectly, the power (i) to vote five percent (5%) or more of the securities
(on a fully diluted basis) having ordinary voting power for the election of
directors, members or managing partners of such Person or (ii) to direct or
cause the direction of the management and policies of such Person, whether by
contract or otherwise.
"AGREEMENT" means this Limited Liability Company Agreement of the Company,
as it may be amended, restated or supplemented from time to time.
"CAPITAL ACCOUNTS" shall have the meaning set forth in Section 7.01.
"CAPITAL CONTRIBUTIONS" means the amount of all cash (whether in the form
of money, a note payable upon demand or a combination thereof) or the agreed
upon value of other property or services contributed by the Members to the
Company.
"CERTIFICATE" means the Certificate of Formation of the Company, including
any restatements or amendments, filed with the Delaware Secretary of State.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" shall have the meaning set forth in Section 3.01(b).
"COVERED PERSON" shall have the meaning set forth in Section 8.03.
"DELAWARE SECRETARY OF STATE" means the Secretary of State of the State of
Delaware.
"FISCAL YEAR" means the fiscal year of the holder of the Majority Interest.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to,
government.
"INDEPENDENT MEMBER" shall have the meaning set forth in Section 5.08.
"INDEPENDENT PERSON" means a Person who is not (i) a director, officer or
employee of any Affiliate of any Member (other than any limited or special
purpose corporation or limited liability company similar to the Company); (ii) a
Person related to any officer or director of any Affiliate of any Member; (iii)
a direct or indirect holder of more than ten percent (10%) of any voting
securities of any Affiliate of any Member; or (iv) a Person related to a direct
or indirect holder of more than ten percent (10%) of any voting securities of
any Affiliate of any Member.
"MAJORITY INTEREST" means the interest in the Company held by Members
holding more than fifty percent (50%) of the Membership Percentages.
"MANAGERS" means Xxxxxxx X. Xxxxxxxx and such other Persons that may be
designated from time to time by the Members as managers of the Company to
perform such functions for the Company as may be determined from time to time by
the Members. A Manager shall be deemed to be a "manager" of the Company within
the meaning of Section 18-101 of the Act.
"MEMBERS" are the Persons designated as Members of the Company in EXHIBIT A
attached hereto. Any reference to a Member shall, unless the context clearly
requires otherwise, include a reference to its predecessors and successors in
interest.
"MEMBERSHIP PERCENTAGES" means the Members' respective limited liability
company interests in the Company as set forth in EXHIBIT A.
"PERSON" means an individual or any corporation, limited liability company,
association, partnership, joint venture, estate, trust or other legal entity,
including any Governmental Authority.
"PROFITS" and "LOSSES" mean the Company's taxable income or loss for each
Fiscal Year (or other period) determined in accordance with the accounting
methods followed by the Company for federal income tax purposes, except that any
income of the Company that is exempt from federal income tax and not otherwise
taken into account in computing Profits and Losses shall be added to such
taxable income or loss.
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"RECEIVABLES" shall have the meaning set forth in Section 3.01(a).
"SECURITIES" shall have the meaning set forth in Section 3.01(c).
"TRUST" shall have the meaning set forth in Section 3.01(c).
"TRUSTEE" shall have the meaning set forth in Section 6.01.
Section 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, (i) terns used
herein include, as appropriate, all genders and the plural as well as the
singular, (ii) references to words such as "herein", "hereof' and the like shall
refer to this Agreement as a whole and not to any particular part, article or
section within this Agreement, (iii) references to a section such as
"Section 1.01" and the like shall refer to the applicable section of this
Agreement, (iv) the term "include" and all variations thereof shall mean
"include without limitation" and (v) the term "or" shall include "and/or".
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles in effect from time
to time. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under such generally accepted accounting principles, the
definitions contained in this Agreement or in any such certificate or other
document shall control.
ARTICLE TWO
ORGANIZATION OF COMPANY
Section 2.01 FORMATION. The parties hereby form a limited liability company
pursuant to the provisions of the Act and this Agreement, and agree that the
rights, duties and liabilities of the Members and Managers shall be as provided
in the Act, except as otherwise provided in this Agreement. Pursuant to
Section 18-201(d) of the Act, this Agreement shall become effective as of the
formation of the Company.
Section 2.02 NAME AND OFFICE. The name of the Company shall be American
Reimbursement, LLC, and its office shall be located at 000 Xxxxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxxxxxx 00000 or such other place as the Members may
determine from time to time.
Section 2.03 DURATION. The term of the Company shall commence on the date
the Certificate is filed in the office of the Delaware Secretary of State and
shall continue until March 31, 2032, unless the Company is dissolved before such
date in accordance with the provisions of this Agreement. The existence of the
Company as a separate legal entity shall continue until cancellation of the
Certificate in the manner required by the Act.
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Section 2.04 REGISTERED OFFICE AND REGISTERED AGENT. The Company's initial
registered office shall be at the office of its registered agent at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 and the name of its
initial registered agent at such address shall be The Corporation Trust Company.
The registered office and registered agent may be changed from time to time in
accordance with the Act. If the registered agent shall ever resign, the Company
shall promptly appoint a successor.
Section 2.05 EXECUTION, DELIVERY AND FILING OF CERTIFICATE. Xxxxxxx X.
Xxxxx, as an "authorized person" within the meaning of the Act, shall execute,
deliver and file the Certificate with the Delaware Secretary of State.
ARTICLE THREE
PURPOSES
Section 3.01 PURPOSES. The purposes for which the Company is formed are:
(a) to acquire, own, hold, service, sell, assign, pledge, finance,
refinance and otherwise deal with from time to time (i) accounts
receivable, including any right to payment from a Person, whether
constituting an account, chattel paper, instrument or general intangible,
arising out of or relating to medical products, supplies or services or
related products, supplies or services; (ii) interests in any of the
foregoing; and (iii) any proceeds or other monies due under any of the
foregoing, any related fees and charges, security interests in the
foregoing or other property securing payment thereof and related
agreements, instruments, documents and rights (collectively, the
"Receivables");
(b) to acquire, own, hold, service, sell, assign, pledge, finance,
refinance and otherwise deal with Receivables, any collateral securing the
Receivables, related insurance policies, related agreements with
affiliates, agreements with originators or servicers of Receivables and any
proceeds or further rights associated therewith (collectively, the
"Collateral");
(c) to sell, assign, pledge or otherwise transfer Receivables,
Collateral, Securities and notes or beneficial interests in any of the
foregoing, to trusts or other entities established by or on behalf of the
Company or one of its affiliates (each, a "Trust") or to Affiliates of the
Company;
(d) to authorize, sell and deliver or participate in the issuance of
one or more series or classes of participation certificates, bonds, notes
or other evidences of interest or indebtedness with respect to the
Receivables or the Collateral (collectively, "Securities"), in either case
issued by a Trust;
(e) to acquire Securities or other property of a Trust, including
remainder interests in Collateral, Receivables or reserve accounts;
(f) to issue, authorize, sell and deliver Securities or other
instruments secured, collateralized by or evidencing beneficial interests
in Receivables or Securities;
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(g) to hold, and to enjoy all of the rights and privileges as a
holder or beneficial owner of, any Securities, Collateral, or other
property;
(h) to negotiate, authorize, execute, deliver or assume or perform
the obligations under any agreement, instrument or document relating to the
activities set forth in subsections (a) through (g) above, including but
not limited to any trust agreement, sale and servicing agreement, pooling
and servicing agreement, indenture, reimbursement agreement, credit support
agreement, receivables purchase agreement, promissory note, security
agreement, assignment, indemnification agreement, placement agreement or
underwriting agreement; and
(i) to engage in any activity and to exercise any powers permitted
to limited liability companies under the laws of the State of Delaware that
are related or incidental to the foregoing and necessary, convenient or
advisable to accomplish the foregoing.
Section 3.02 POWER AND AUTHORITY. The Company shall have the power and
authority to take any and all actions necessary, appropriate, proper, advisable,
incidental or convenient to accomplish or for the furtherance of the purposes
set forth in Section 3.01.
Section 3.03 LIMITATIONS ON POWERS. Notwithstanding any other provision of
this Agreement and any provision of law, the Company shall not do any of the
following:
(a) engage in any business or activity other than as set forth in
this Agreement;
(b) without the unanimous affirmative vote of the Members, (i)
dissolve or liquidate, in whole or in part, or institute proceedings to be
adjudicated bankrupt or insolvent, (ii) consent to the institution of
bankruptcy or insolvency proceedings against it, (iii) file a petition
seeking or consent for reorganization or relief under any applicable
federal or state law relating to bankruptcy, (iv) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or a substantial part of its
property, (v) make any assignment for the benefit of creditors, (vi) admit
in writing its inability to pay its debts generally as they become due;
(vii) institute or join in any institution of any bankruptcy, insolvency,
liquidation, reorganization or arrangement proceedings or other proceedings
under any federal or state law, against any entity in which the Company
holds an ownership interest; or (viii) take any limited liability company
action in furtherance of the actions set forth in clauses (i) through (vii)
above;
(c) without the unanimous affirmative vote of the Members, take or
cause to be taken any of the actions referred to in clauses (i) through
(vii) of subparagraph (b) above with respect to any entity of which the
Company is a partner or member.
(d) without the unanimous affirmative vote of the Members, merge or
consolidate with any other corporation, company or entity or sell all or
substantially all of its assets or acquire all or substantially all of the
assets or capital stock or other ownership interest of any other
corporation, company or entity.
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Section 3.04 COMPANY OPPORTUNITY. No Member need afford the Company or any
other Member the opportunity of investing or otherwise participating in any
other enterprise, regardless of whether such enterprises, but for this sentence,
would be deemed an opportunity of the Company. Nothing in this Agreement shall
prohibit any Member from engaging in any other business activity, whether or not
competitive with, similar to, or within the scope of the activities conducted by
or on behalf of the Company.
ARTICLE FOUR
CAPITAL CONTRIBUTIONS; BORROWINGS
Section 4.01 ADMISSION AND INITIAL CONTRIBUTIONS OF MEMBERS.
(a) Each of Med and the Independent Member shall be admitted as a
Member of the Company at the time such entity (i) executes this Agreement or a
counterpart signature page to this Agreement and (ii) is listed as a Member on
EXHIBIT A attached hereto.
(b) The Members shall make the Capital Contributions set forth next
to their names in EXHIBIT A upon the formation of the Company. No interest shall
accrue on any Capital Contribution made to the Company.
Section 4.02 ADDITIONAL CAPITAL CONTRIBUTIONS. The Members shall not be
obligated to make additional Capital Contributions except upon the consent of
all Members.
Section 4.03 WITHDRAWALS. No Member shall be entitled to be repaid any
portion of its Capital Account or withdraw from the Company without the consent
of all Members or as otherwise provided in this Agreement.
Section 4.04 BORROWINGS. The Company may borrow sums to be used for any of
the business purposes described in Section 3.01; PROVIDED, HOWEVER, that any
such borrowing shall require the prior approval of a Majority Interest and shall
not be prohibited by this Agreement, any applicable law, regulation or
agreement. Any Member may advance such sums to the Company as approved in
writing by a Majority Interest. Any amounts borrowed from a Member shall not
constitute a contribution to the capital of the Company but shall constitute a
debt of the Company that shall be repaid before any distributions to the
Members.
Section 4.05 ADDITIONAL MEMBERS. No additional Members shall be admitted to
the Company without the unanimous consent of the Members.
ARTICLE FIVE
MANAGEMENT
Section 5.01 POWERS OF THE MEMBERS.
(a) The Company shall be managed by its Members. Subject to the
other provisions of this Article Five and Article Six, each Member shall have
the authority, on behalf of the Company, to do all things appropriate for the
accomplishment of the purposes of the
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Company, including, but not limited to, (i) acquiring and selling, assigning and
transferring installment obligations, leases, retail installment sale or
conditional sale contracts, inventory loans, motor vehicle wholesale inventory
sales contracts, dealer rental car loans or sales contracts, promissory notes,
security agreements and receivables; (ii) disbursing Company funds for Company
purposes; (iii) investing and reinvesting Company funds; (iv) executing
contracts, notes, mortgages and other agreements and instruments; (v) employing
attorneys, accountants, Managers or other agents, which may include Affiliates
of the Company; (vi) paying all Company obligations; (vii) performing all
ministerial acts and duties relating to the payment of all indebtedness, taxes
and assessments due or to become due with regard to any property of the Company;
(viii) purchasing and maintaining insurance on behalf of the Company against any
liability or expense asserted against or incurred by or on behalf of the
Company; (ix) transacting the Company's business under an assumed name or name
other than its name as set forth in the Certificate; (x) appointing any Member
or other Person as agent for service of process on the Company as required by
the law of any jurisdiction in which the Company transacts business; (xi)
commencing, prosecuting or defending any proceeding in the Company's name; and
(xii) doing such other acts as may facilitate the Company's exercise of its
powers; PROVIDED, HOWEVER, that all such acts shall fall within the purposes of
the Company as set forth in Section 3.01.
(b) Notwithstanding anything in this Agreement to the contrary, the
Company shall at all times have at least one Independent Member, and no action
of the type described in Article Six shall occur without the consent of each
Independent Member.
(c) Each Member irrevocably appoints the other Members as its
attorney-in-fact on its behalf and in its stead to execute and swear to any
amendment to the Certificate and file any writing, and to give any notice that
may be required by any rule or law and that may be necessary or appropriate in
order to effect any action by or on behalf of the Company or the Members taken
as provided in this Agreement or that may be necessary or appropriate to correct
any errors or omissions. This power of attorney is coupled with an interest and
shall not be revoked by the act of any Member. This power of attorney shall
survive and not be affected by an assignment by any Member of its limited
liability company interest in the Company; PROVIDED, HOWEVER, that, where a
Member's entire limited liability company interest is assigned to an assignee
who becomes a substitute Member in its stead, such power shall survive for the
sole purpose of enabling such Member to effect such substitution. Each Member
shall provide seven (7) days' prior written notice of actions to be taken as
attorney-in-fact on behalf of another Member and the acting Member shall be
authorized to take such actions unless the other Member objects in writing
during such notice period.
(d) A copy of the Certificate or amendments to the Certificate will
be provided to each Member upon written request to the Company.
(e) Subject to the other provisions of this Article and Article Six,
the Members shall have full power to act for and to bind the Company to the
extent provided by Delaware law. Every contract, note, mortgage, lease, deed or
other instrument or agreement executed by any Member shall be conclusive
evidence that at the time of execution, the Company was then in existence, that
this Agreement had not theretofore been terminated or amended in any manner and
that the execution and delivery of such instrument was duly
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authorized by the Members. A Manager may bind the Company only to the extent
authorized by the Members.
Section 5.02 LIMITATIONS ON POWERS OF MEMBERS. Notwithstanding any other
provision of this Agreement, no act shall be taken, sum expended, decision made,
obligation incurred or power exercised by any Member on behalf of the Company,
without prior written notice to all Members outlining the proposed action
followed by the written consent of a Majority Interest with respect to: (i) any
mortgage, grant of security interest, pledge or encumbrance of any asset of the
Company; (ii) any merger of the Company with another entity; (iii) a transaction
involving an actual or potential conflict of interest between a Member and the
Company; (iv) any material change in the character of the business and affairs
of the Company; or (v) any act that would contravene in a material respect any
provision of this Agreement or the Act.
Section 5.03 SELF DEALING. Any Member and any Affiliate thereof may deal
with the Company, directly or indirectly, as vendor, purchaser, employee, agent
or otherwise. No contract or other act of the Company shall be voidable or
affected in any manner by the fact that a Member or an Affiliate thereof is
directly or indirectly interested in such contract or other act apart from its
interest as a Member, nor shall any Member or an Affiliate thereof be
accountable to the Company or the other Members in respect of any profits
directly or indirectly realized by reason of such contract or other act, and
such interested Member shall be eligible to vote or take any other action as a
Member in respect of such contract or other act as it would be entitled were it
or its Affiliate not interested therein. Notwithstanding the foregoing, (i) any
direct or indirect interest of a Member or an Affiliate thereof in any contract
or other act, other than its interest as a Member, shall be disclosed to all
other Members, (ii) such contract or other act shall be approved by a Majority
Interest unless the same is specifically authorized herein, and (iii) the
Members shall not receive or hold any property of the Company as collateral
security in respect of any claim against the Company.
Section 5.04 STANDARD OF CARE; LIABILITY. Each Member and its respective
directors, officers, stockholders and Affiliates shall discharge its duties in
good faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, and in a manner he reasonably believes to
be in the best interests of the Company as required by this Agreement or the
Act. A Member shall not be liable for monetary damages to the Company for any
breach of any such duties except for receipt of a financial benefit to which the
Member is not entitled, voting for or assenting to a distribution to Members in
violation of this Agreement or the Act, or a knowing violation of the law.
Section 5.05 COMPENSATION. The Company shall reimburse each Member for any
reasonable out-of-pocket expenses incurred on behalf of the Company. In
addition, any Member may receive reasonable compensation for any services
rendered to the Company approved by a Majority Interest.
Section 5.06 MEETINGS OF MEMBERS. All Members shall be entitled to vote on
any matter submitted to a vote of the Members. Unless a greater vote is required
by the Act or this Agreement, the affirmative vote of a Majority Interest shall
be required. Meetings of Members for the transaction of such business as may
properly come before the Members may be held at such place, on such date and at
such time as a Majority Interest shall determine. Special
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meetings of Members for any proper purpose or purposes may be called at any time
by the holders of at least twenty-five percent (25%) of the Membership
Percentages of all Members. The Company shall deliver or mail written notice
stating the date, time, place and purposes of any meeting to each Member
entitled to vote at the meeting. Such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting.
Section 5.07 CONSENT. Any action required or permitted to be taken at an
annual or special meeting of the Members may be taken without a meeting, if the
Members unanimously consent, in writing, to take the proposed action. Every
written consent shall bear the date of consent in lieu of meeting and the
signature of each Member who signs the consent.
Section 5.08 INDEPENDENT MEMBER. The Company shall at all times have at
least one Member (each, an "Independent Member") that shall be an Independent
Person.
Section 5.09 MANAGERS. Except as otherwise provided by the Act:
(a) the debts, obligations and liabilities of the Company, whether
arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Manager shall be
obligated personally for any such debt, obligation, or liability of the
Company solely by reason of being a Manager of the Company;
(b) no Manager shall be required to make any Capital Contribution in
the form of cash to the Company; and
(c) no Manager shall be (i) entitled to receive any Profits or (ii)
liable for any Losses.
ARTICLE SIX
POWER TO INSTITUTE BANKRUPTCY OR INSOLVENCY PROCEEDINGS
Section 6.01 UNANIMOUS VOTE REQUIRED. Notwithstanding any other provision
of this Agreement and any provision of law that otherwise so empowers the
Company, the Company shall not, without (i) the prior written consent of each
trustee from time to time (each, a "Trustee") under any pooling and servicing
agreement, indenture, trust agreement or similar agreement between the Company,
a Trustee and a servicer, if any, pursuant to which the Company shall issue
certificates and/or notes and (ii) the affirmative vote of one hundred percent
(100%) of the Members of the Company, including all Independent Members,
institute proceedings to be adjudicated a bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against it, or file a
petition seeking, or consent to, reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or a substantial part of its property, or make any assignment for
the benefit of creditors, or admit in writing its inability to pay its debts
generally as they become due, or take any limited liability company action in
furtherance of any such action.
Section 6.02 VOTING ON BANKRUPTCY OR INSOLVENCY. All Members, including
each Independent Member, shall be entitled to vote on any proposal of the type
described in Section
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6.01. The affirmative vote of one hundred percent (100%) of the Members,
including each Independent Member, entitled to vote on such a proposal shall be
required for such a proposal to be adopted.
ARTICLE SEVEN
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
Section 7.01 CAPITAL ACCOUNTS. A capital account shall be maintained for
each Member (each, a "Capital Account"), to which contributions and Profits
shall be credited and against which distributions and Losses shall be charged.
Capital Accounts shall be maintained in accordance with the accounting
principles of Code Section 704 and the Treasury Regulations thereunder.
Section 7.02 ALLOCATION OF PROFITS AND LOSSES.
The Profits and Losses of the Company shall be determined as of the end of
each Fiscal Year of the Company and shall be allocated among the Members;
PROVIDED, HOWEVER, that Independent Member will have no interest in the Profits
and Losses of the Company.
Section 7.03 DISTRIBUTIONS.
(a) The Company shall distribute to the Members such sums as a
Majority Interest determines to be available for distribution and not required
to provide for current or anticipated Company needs. All distributions shall be
made to the Members.
(b) No distributions shall be declared and paid unless, after the
distribution is made, the Company would be able to pay its debts as they become
due in the usual course of business and the assets of the Company are in excess
of the sum of (i) the Company's liabilities, plus (ii) the amount that would be
needed to satisfy the preferential rights of other Members upon dissolution that
are superior to the rights of the Members receiving the distribution.
(c) The Company shall not be required to make a distribution to a
Member on account of its interest in the Company if such distribution would
violate Section 18-607 of the Act or other applicable law.
ARTICLE EIGHT
EXCULPATION OF LIABILITY; INDEMNIFICATION
Section 8.01 EXCULPATION OF LIABILITY. Except as otherwise provided by the
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Member shall be obligated personally for any
such debt, obligation or liability of the Company solely by reason of being a
Member of the Company.
Section 8.02 INDEMNIFICATION. The Company hereby agrees to indemnify each
Member, Manager, employee or agent of the Company, and each director, officer,
employee or Affiliate of
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a Member, who was or is a party or is threatened to be made a party to a
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, and whether formal or informal (other
than an action by or in the right of the Company) by reason of the fact that
such Person is or was a Member, employee or agent of the Company against
expenses (including reasonable attorneys' fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such Person in
connection with the action, suit or proceeding.
Section 8.03 FIDUCIARY DUTY. To the extent that, at law or in equity, a
Member, director, officer, employee or Affiliate of a Member, or a Manager
(each, a "Covered Person") has duties (including fiduciary duties) and
liabilities relating thereto to the Company or to any other Covered Person, a
Covered Person acting under this Agreement shall not be liable to the Company or
to any Member for its good faith reliance on the provisions of this Agreement.
The provisions of this Agreement, to the extent that they restrict the duties
and liabilities of a Covered Person otherwise existing at law or in equity, are
agreed by the Members to replace such other duties and liabilities of such
Covered Person.
ARTICLE NINE
TERM OF COMPANY
Section 9.01 COMMENCEMENT. The term of the Company shall commence upon the
filing of the Certificate with the Delaware Secretary of State. The bankruptcy
of a Member or the occurrence of any other event under Section 18-304 of the Act
shall not cause a Member to cease to be a Member of the Company and upon the
occurrence of such an event, the business of the Company shall continue without
dissolution.
Section 9.02 DISSOLUTION. The Company shall be dissolved and its affairs
wound up upon the occurrence of any of the following events: (i) the sale or
other disposition of substantially all of the assets of the Company; (ii) the
written consent thereto of all of the Members; (iii) the retirement, expulsion
or dissolution of a Member; PROVIDED, HOWEVER, that the Company shall not
dissolve and be wound up if within ninety (90) days after such event, all
remaining Members agree in writing to continue the business of the Company and
to admit one or more Members as necessary or desired; or (iv) the entry of a
decree of judicial dissolution pursuant to Section 18-802 of the Act.
ARTICLE TEN
APPLICATION OF ASSETS
Section 10.01 APPLICATION OF ASSETS. Upon dissolution of the Company, the
Company shall cease carrying on its business and affairs and shall commence
winding up of the Company's business and affairs and complete the winding up as
soon as practicable. The Company's affairs shall be concluded by a Member or
Members selected in writing by a Majority Interest. Except when the Company has
rated obligations outstanding, the assets of the Company may be liquidated or
distributed in kind, as determined by a Majority Interest, and the same shall
first be applied to-the payment of, or to a reasonable reserve for the payment
of, the Company's
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liabilities (including such provision for contingent, conditional or unmatured
liabilities as a Majority Interest shall deem appropriate) and then to Members
(other than Independent Member). If the Company has rated obligations
outstanding, the Company will not liquidate any assets that are subject to a
security interest in favor of the holders of such rated obligations without the
consent of such holders. If the assets of the Company shall not be sufficient to
pay all of the liabilities of the Company, to the fullest extent permitted by
the Act, no assets of the Company may be sold or disposed of without the written
consent of all of the holders of outstanding securities issued by any trust
formed in respect of a transaction to which the Company is a party. To the
extent that Company assets cannot either be sold without undue loss or readily
divided for distribution in kind to the Members, then the Company may, as
determined by a Majority Interest, convey those assets to a trust or other
suitable holding entity established for the benefit of the Members in order to
permit the assets to be sold without undue loss and the proceeds thereof
distributed to the Members at a future date. The legal form of the holding
entity, the identity of the trustee or other fiduciary and the terms of its
governing instrument shall be determined by a Majority Interest.
Section 10.02 TERMINATION. The Company shall terminate when all the assets
of the Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Members in the
manner provided for in this Article and the Certificate shall have been
cancelled in the manner required by the Act.
Section 10.03 CLAIMS OF THE MEMBERS. The Members and former Members shall
look solely to the Company's assets for the return of their Capital
Contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and former
Members shall not have recourse against the Company or any other Member.
ARTICLE ELEVEN
RESTRICTION ON TRANSFERS OF INTERESTS
Section 11.01 RESTRICTION ON TRANSFERS OF INTERESTS. No Member may assign,
pledge or otherwise transfer its interest in the Company in whole or part. Any
attempt by a Member to transfer its interest shall be null and void.
ARTICLE TWELVE
INVESTMENT REPRESENTATION
Section 12.01 INVESTMENT REPRESENTATION. The Members represent to each
other and to the Company that they are acquiring their respective interests in
the Company for their own accounts, and without a view to selling or pledging
them.
12
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
Section 13.01 LIMITATIONS ON AMENDMENT. The Company shall not, without the
prior written consent of each nationally recognized rating agency that has rated
any securities issued and outstanding pursuant to any pooling and servicing
agreement, indenture, trust agreement or other similar agreement entered into by
the Company or any Affiliate of the Company, amend, alter, change or repeal
Article Three, Section 5.08, Article Six or this Section 13.01. Subject to the
foregoing limitation, the Company reserves the right to amend, alter, change or
repeal any provision contained in this Agreement in the manner now or hereafter
prescribed by statute or applicable law, and all rights conferred upon Members
herein are granted subject to this reservation.
Section 13.02 BOOKS OF ACCOUNT: REPORTS.
(a) The Company shall keep true and complete books of account and
records of all Company transactions. The books of account and records shall be
kept at the principal office of the Company. The Company shall maintain at such
office (i) a list of names and addresses of all Members; (ii) a copy of the
Certificate; (iii) copies of the Company's federal, state and local income tax
returns and reports for the three (3) most recent years; (iv) copies of this
Agreement; and (v) copies of the financial statements of the Company for the
three (3) most recent years. Such Company records shall be available to any
Member or its designated representative during ordinary business hours at the
reasonable request and expense of such Member.
(b) The Company will use its best efforts to furnish, or cause to be
furnished, to Members the following items on the date indicated: (i) annually by
June 30, (A) an annual report consisting of an income statement for the prior
year and a balance sheet as of the year ended, and (B) Member information tax
returns (Schedule K-1), and (ii) as required, such other information concerning
the Company and the Property of the Company as may be appropriate in order to
make full and fair disclosure to the Members of the current financial and
operating conditions of the Company.
Section 13.03 BANK ACCOUNTS AND INVESTMENT OF FUNDS. All funds of the
Company shall be deposited in its name in such checking accounts, savings
accounts, time deposits or certificates of deposit or shall be invested in such
other manner, as shall be designated by a Majority Interest from time to time.
Withdrawals shall be made upon such signature or signatures as a Majority
Interest may designate.
Section 13.04 ACCOUNTING DECISIONS. All decisions as to accounting matters,
except as specifically provided to the contrary herein, shall be made by a
Majority Interest in accordance with generally accepted accounting principles
consistently applied. Such decisions shall be acceptable to the accountants
retained by the Company, and a Majority Interest may rely upon the advice of the
accountants as to whether such decisions are in accordance with generally
accepted accounting principles.
13
Section 13.05 DISREGARDED ENTITY INTENDED SOLELY FOR TAX PURPOSES. As of
the date hereof, it is the intent of the Members that the Company be disregarded
for federal, state and local income tax purposes as an entity separate from its
owner pursuant to Section 301.7701-3(b)(1)(ii) and not as a separate taxable
entity. A Majority Interest may rely upon the advice of the accountants retained
by the Company as to the availability and effect of all such elections for tax
purposes.
Section 13.06 ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties and may be modified only as provided herein. No
representations or oral or implied agreements have been made by any party hereto
or its agent, and no party to this Agreement has relied upon any representation
or agreement not set forth herein. This Agreement supersedes any and all other
agreements, either oral or written, among the Company and its Members.
Section 13.07 NOTICES. Except as provided below, all communications and
notices provided for hereunder shall be in writing (including telecopy or
electronic facsimile transmission or similar writing) and shall be given to the
other party at its address or telecopy numbers set forth on Exhibit A hereto, or
at such other address or telecopy number as such party may hereafter specify for
the purposes of notice to the other party hereto. Each such notice or other
communication shall be effective (i) if given by telecopy, upon receipt thereof,
(ii) if given by mail, three (3) business days after the time such communication
is deposited in the mails with first-class postage prepaid or (iii) if given by
any other means, when received at the address specified in this Section 13.08.
Section 13.08 CONSENT OF MEMBERS. Various provisions of this Agreement
require or permit the consent, agreement, approval or disapproval, written or
otherwise, of the Members or some specified proportion thereof. In any such
case, the Company may give all Members written notice that any Member who does
not indicate its disapproval by written notice to the Company within a specified
period of time (not less than thirty (30) days after mailing of the notice)
shall be deemed to have given its consent or approval to the action or event or
to have made the agreement referred to in the notice. In such event, any Member
who does not indicate its disapproval by written notice to the Company within
the time specified shall be deemed to have given its written consent, approval,
disapproval or agreement.
Section 13.09 FURTHER EXECUTION. Upon request of the Company from time to
time, the Members shall execute and swear to or acknowledge any amended
Certificate and any other writing that may be required by any rule or law or
that may be appropriate to the effecting of any action by or on behalf of the
Company or the Members that has been taken in accordance with the provisions of
this Agreement.
Section 13.10 BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the parties, their successors and permitted
assigns. None of the provisions of this Agreement shall be construed as for the
benefit of or as enforceable by any creditor of the Company or the Members or
any other Person not a party to this Agreement.
Section 13.11 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants,
14
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of any security or the rights of the holders thereof.
Section 13.12 CAPTIONS, HEADINGS AND TITLES. All captions, headings and
title used in this Agreement are for convenience only, do not form a substantive
part of this Agreement and shall not restrict or enlarge any substantive
provisions of this Agreement.
Section 13.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The Company shall have custody of the counterparts
executed in the aggregate by all Members.
Section 13.14 DELAWARE LAW TO CONTROL. This Agreement shall be governed by,
and all questions with respect to the construction of this Agreement and the
rights and liabilities of the parties hereto shall be determined in accordance
with, the internal laws of the State of Delaware, without regard to any
otherwise applicable principles of conflicts of laws.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
15
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
MED DIVERSIFIED, INC., as a Member
By: /s/ Xxxxx X. Xxxxxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Chairman & CEO
XXXXXXX X. XXXXXXXX & ASSOCIATES, LLC
as Independent Member
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Manager
16
EXHIBIT A
Capital Membership
Member's Name and Address Contributions Percentages
------------------------- ------------- -----------
Med Diversified, Inc.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxx 00000 $ 1,000 99%
=======
Xxxxxxx X. Xxxxxxxx Associates LLC
00 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000 Services as 1%
Independent Member
Total 100%
===
A-1
