LIMITED LIABILITY COMPANY AGREEMENT
OF CASTER ONE, L.L.C.
Organized under the Delaware Limited Liability Company Act (the "Act").
ARTICLE I.
NAME AND LOCATION
Section 1.1. Name. The name of this limited liability company is Caster
One, L.L.C. (the "Company").
Section 1.2. Members. The only members of the Company upon the
execution of this Limited Liability Company Agreement (this "Agreement") shall
be Prime Refractive, L.L.C., a Delaware limited liability company ("Prime"), and
Caster Eye Center Medical Group, a California professional corporation ("Caster,
Inc."). For purposes of this Agreement, the "Members" shall include such named
members and any new members admitted pursuant to the terms of this Agreement,
but does not include any person or entity who has ceased to be a member in the
Company.
Section 1.3. Principal Offices. The principal offices of the Company shall
be located at 0000 Xxxxxxx xx Xxxxx Xxx., Xxxxx X-000, Xxxxxx, Xxxxx 00000-0000,
0000 Xxxxxxxx Xxxx. #000X, Xxxxxxx Xxxxx, Xxxxxxxxxx, 00000, and at such other
locations as may be selected by the Members.
Section 1.4. Registered Agent and Address. The name of the registered agent
and the address of the registered office of the Company as set forth in the
Certificate of Formation of the Company are:
The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Section 1.5. Other Offices. Other offices and other facilities for the
transaction of business shall be located at such places as the Managers may from
time to time determine.
Section 1.6 Contribution Agreement. The Company was initially formed
with a single member, Xxxxxx Xxxxxx, M.D. ("Caster") for the purpose of
consummating the transactions contemplated by that certain Contribution
Agreement dated effective as of March 1, 2000, by and among Prime Medical
Services, Inc., a Delaware corporation ("PMSI"), Prime Refractive, L.L.C., a
Delaware limited liability company, Caster, Inc., Caster, and the Company (the
"Contribution Agreement"). The parties have executed this Agreement concurrent
with the consummation of the transactions contemplated by the Contribution
Agreement. This agreement supercedes and replaces any prior membership agreement
or other governing or organizational document of the Company.
Section 1.7 Certain Defined Terms. Unless otherwise defined in this
Section 1.7 of elsewhere in this Agreement, all capitalized terms used in this
Agreement shall have the meanings ascribed to them in the Contribution
Agreement. The following terms used in this Agreement shall (unless expressly
provided herein or unless the context otherwise requires) have the following
respective meanings:
"Adjusted Capital Account Deficit" shall mean, with respect to
any Member, the deficit balance, if any, in a Member's Capital Account
as of the end of the Company's fiscal year, after giving economic
effect to the following adjustments: (i) credit to such Capital Account
for any amounts which a Member is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore
pursuant to the provisions of Regulations ss.ss.1.704-2(g)(1) and
1.704-2(i)(5) and (ii) debit to such Capital Account for the items
enumerated in Regulations ss.ss.1.704-1(b)(2)(ii)(d)(4)-(6). The
foregoing definition of "Adjusted Capital Account Deficit" is intended
to comply with the provisions of Regulations ss.1.704-1(b)(2)(ii)(d)
and shall be construed as being consistent therewith.
"Capital Account" shall mean, with respect to each Member, the
capital account which is maintained as part of the Company's books and
records, in accordance with the following:
(i) Each Member's Capital Account will be credited
with the amount of money contributed by such Member to the
capital of the Company, plus the initial Gross Asset Value of
any property (other than money) contributed by such Member to
the capital of the Company (net of liabilities securing such
contributed property that the Company is considered to assume
or take subject to under Section 752 of the Code) plus the
amount of any Net Income allocated to such Member, and the
amount of any items in the nature of income or gain specially
allocated to such Member pursuant to Sections 6.3 or 6.4;
(ii) Each Member's Capital Account will be debited by
the amount of money distributed to such Member by the Company
(exclusive of a guaranteed payment within the meaning of
ss.707(c) of the Code paid to such Member), plus the Gross
Asset Value of any property distributed to such Member by the
Company (net of liabilities securing such distributed property
that such Member is considered to assume or take subject to
under ss.752 of the Code) and decreased further by the amount
of any Net Loss allocated to such Member and the amount of any
items in the nature of loss or deduction specially allocated
to such Member pursuant to Sections 6.3 or 6.4.
(iii) The Capital Account of a Member who receives a
distribution in liquidation of his Membership Interest that
gives rise to an adjustment to the adjusted tax basis of
Company property under ss.734 of the Code shall have a
corresponding adjustment made to such Member's Capital Account
in accordance with the provisions of Regulation ss.1.704-1(b).
In the event of any other Distribution (as hereinafter
defined) to a Member that gives rise to an adjustment under
Code ss. 734, an adjustment shall be made to the Capital
Accounts of all of the Members in accordance with Regulation
ss. 1.704-1(b)(iv)(m)(4).
(iv) In the event the Gross Asset Value of Company
assets are adjusted pursuant to the terms of this Agreement,
the Capital Accounts of the Members shall be adjusted
simultaneously to reflect the aggregate net adjustment as if
the Company recognized gain or loss equal to the amount of
such aggregate net adjustment and such gain or loss was
allocated to the Members pursuant to the appropriate
provisions of this Agreement.
(v) The foregoing Capital Account definition and the
other provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Regulations
ss.1.704-1(b)(2)(iv), and shall be interpreted and applied in
a manner consistent with such Regulations, with such optional
adjustments as the Managers shall determine appropriate in
order to provide that the Company's allocations shall meet the
"substantial economic effect" test of the applicable
Regulations.
"Company Minimum Gain" shall have the same meaning as ascribed
to the term " partnership minimum gain" set forth in Regulations xx.xx.
1.704-2(b)(2) and 1.704-2(d).
"Distribution" shall mean money or property distributed to a
Member in its capacity as a Member pursuant to Article V hereof.
"Gross Asset Value" means, with respect to any asset of the
Company, the asset's adjusted basis for federal income tax purposes;
provided, however, that (a) the Gross Asset Value of any asset
contributed by a Member to the Company or distributed to a Member by
the Company shall be the gross fair market value of such asset (without
taking into account ss.7701(g) of the Code), as reasonably determined
by the contributing or distributee Member, as the case may be, and the
Company or in the case of assets initially contributed the amounts set
forth on Schedule A, (b) the Gross Asset Values of all Company assets
shall be adjusted to equal their respective gross fair market values
(taking into account ss.7701(g) of the Code), as reasonably determined
by the Managers upon the termination of the Company for federal income
tax purposes pursuant to ss.708(b) of the Code; and (c) the Gross Asset
Values of all Company assets may be adjusted in the discretion of the
Managers to equal their respective gross fair market value (taking into
account ss.7701(g) of the Code), as reasonably determined by the
Managers as of (i) the date of the acquisition of an additional
interest in the Company by any new or existing Member in exchange for
more than a de minimis contribution to the capital of the Company; (ii)
upon the distribution by the Company to a retiring or continuing Member
of more than a de minimis amount of Company property or money in
reduction of such Member's interest in the Company; or (iii) upon the
liquidation of the Company within the meaning of Regulations
ss.1.704-1(b)(2)(ii)(g); provided, however, that the adjustments made
pursuant to clauses "(i)" and "(ii)" above shall be made only if the
Managers reasonably determine that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Members
in the Company.
"Member Minimum Gain" shall mean an amount, determined with
respect to each Member Non-Recourse Debt, equal to the Company Minimum
Gain that would result if such Member Non-Recourse Debt were treated as
a Non-Recourse Liability, determined in accordance with Regulations
ss.1.704-2(i)(3).
"Member Non-Recourse Debt" shall have the same meaning as
ascribed to the term "partnership nonrecourse gain" pursuant to
Regulations ss.1.704-2(i)(5).
"Member Non-Recourse Deductions" shall have the same meaning
as ascribed to the term "partner nonrecourse deductions" pursuant to
Regulations ss.1.704-2(i)(2). The amount of Member Non-Recourse
Deductions with respect to a Member Non-Recourse Debt during a Company
taxable year shall equal the excess, if any, of the net increase, if
any, in the amount of Member Minimum Gain attributable to a Member
Non-Recourse Debt during that taxable year, over the aggregate amount
of any Distributions during that taxable year to the Member who bears
the economic risk of loss for such Member Non-Recourse Debt, to the
extent that such Distributions are from the proceeds of such Member
Non-Recourse Debt and are allocable to an increase in Member Minimum
Gain attributable to such Member Non-Recourse Debt, determined in
accordance with the Regulations ss.1.704-2(i)(2).
"Net Income" or "Net Loss" shall mean the taxable income or
gain and taxable loss as determined in accordance with the accounting
methods followed by the Company for federal income tax purposes,
pursuant to Code ss.703(a) (and for purposes of determining Net Income
or Net Loss, all items of income, gain, loss or deduction required to
be stated separately pursuant to Code ss.703(a)(1) shall be included in
Net Income or Net Loss) subject to the following adjustments:
(i) Any Company income that is exempt from federal
tax, and not otherwise taken into account in computing Net
Income or Net Loss, shall be added to such taxable income or
loss;
(ii) Any Company expenditures which are described in
Code ss.705(a)(2)(B) (or deemed to be such expenditures
pursuant to Regulations ss.1.704-1(b)(2)(iv)(i)(1)) and not
otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition shall be subtracted from such
taxable income or loss;
(iii) Any deductions for depreciation, cost recovery
or amortization attributable to any assets of the Company
shall be determined by reference to their Gross Asset Value,
except that if the Gross Asset Value of an asset differs from
its adjusted tax basis for federal income tax purposes at any
time during such year or other period, the deductions for
depreciation, cost recovery or amortization attributable to
such asset from and after the date during such year or period
in which such difference first occurs shall bear the same
ratio to the Gross Asset Value as of such date as the federal
income tax depreciation, amortization or other cost recovery
deduction for such year or other period from and after such
date bears to the adjusted tax basis as of such date;
provided, however, that if the adjusted basis for federal
income tax purposes of an asset at the beginning of such
fiscal year is zero, such deductions for depreciation, cost
recovery, or amortization shall be determined with reference
to such beginning Gross Asset Value using any reasonable
method selected by the Managers.
(iv) Gain or loss, resulting from the Company taxable
disposition of any Company property with respect to which gain
or loss is recognized for federal income tax purposes, shall
be computed by reference to the Gross Asset Value of the
disposed property, notwithstanding the fact that the adjusted
tax bases of such property may differ from its Gross Asset
Value; and
(v) Any items of income or loss which are specially
allocated pursuant to Sections 6.3 and 6.4 shall not be taken
into account in computing the Company's Net Income or Net
Loss.
"Non-Recourse Deductions" shall have the meaning established
by Regulations ss.1.704-2(b)(1). The aggregate of Non-Recourse
Deductions for a taxable year of the Company shall equal the excess of
the net increase, if any, in the amount of Company Minimum Gain, during
that taxable year over the aggregate amount of Distributions during
that taxable year of proceeds of a Non-Recourse Liability which are
allocable to an increase in Company Minimum Gain, determined pursuant
to Regulations ss.1.704-2(d).
"Non-Recourse Liability" shall have the meaning established by
Regulations ss.1.704-2(b)(3).
ARTICLE II.
MEMBERSHIP
Section 2.1. Members' Interests. The "Membership Interest" of each Member
is set forth on Exhibit A.
Section 2.2. Admission to Membership. The admission of new Members
shall be only by the vote of the Managers pursuant to Section 8.9 hereof. If new
Members are admitted, this Agreement shall be amended to reflect each Member's
revised Membership Interest.
Section 2.3. Property Rights. No Member shall have any right, title, or
interest in any of the property or assets of the Company.
Section 2.4. Liability of Members. No Member of the Company shall be
personally liable for any debts, liabilities, or obligations of the Company,
including under a judgment decree, or order of court. Nothing contained in this
Section 2.4 shall be construed to limit the liability of Members to each other
or the Company under the terms of any provision of the Contribution Agreement or
other Transaction Documents.
Section 2.5. Transferability of Membership. Except as provided below,
Membership Interests in the Company are transferable only with the unanimous
written consent of all Members. If such unanimous written consent is not
obtained when required, the transferee shall be entitled to receive only the
share of profits or other compensation by way of income and the return of
contributions to which the transferor Member otherwise would be entitled.
Notwithstanding the foregoing, the following shall not be deemed to violate any
provision of this Agreement (each, a "Permitted Transfer"): (i) the Membership
Interests of Prime may be freely transferred, without consent, to any entity
that is then owned and controlled, directly or indirectly, by PMSI (or its
successor in interest), (ii) the Membership Interests of any Member may be
freely assigned, pledged or otherwise transferred, without consent, to secure
any debt, liability or obligation owed to Prime by the Company, any Member or
any entity affiliated with the Company, (iii) the Membership Interests of any
Member may be freely assigned, pledged or otherwise transferred, without
consent, in favor of the Lender(s) under, or by the Lender(s) as a result of the
enforcement of any security interest arising pursuant to, those certain Credit
Facilities (the "Credit Facilities") of PMSI and/or any of PMSI's subsidiaries,
(iv) the pledge by Caster, Inc. (pursuant to Section 10.2 of the Contribution
Agreement) of its right to receive distributions from the Company in respect of
its Membership Interest, and (v) the Membership Interests of Caster, Inc. may be
transferred (A) to a trust or trusts (a "Permitted Trust") for the benefit of
Caster and/or members of Caster's immediate family (including an entity owned by
a Permitted Trust) but only where Caster either controls the trust or retains
during his lifetime the exclusive ability to vote the Membership Interests
(pursuant to a written proxy or other instrument reasonably acceptable in form
and substance to Prime), (B) to an entity (a "Permitted Entity") that is
wholly-owned, directly or indirectly, by Caster and/or members of Caster's
immediate family, but only where Caster either controls the entity or retains
during his lifetime the exclusive ability to vote the Membership Interests
(pursuant to a written proxy or other instrument reasonably acceptable in form
and substance to Prime), or (C) from a Permitted Trust or Permitted Entity to
Caster. Notwithstanding the foregoing, after the expiration of the six (6) year
period immediately following the Closing Date (as such term is defined in the
Contribution Agreement), Caster, Inc. shall be entitled to sell all or any
portion of its Membership Interest and Caster may sell or cause Caster, Inc. to
sell, any portion of the Stock Interest (as hereinafter defined) to one or more
ophthalmologists that are primarily engaged in Refractive Surgery and reasonably
acceptable to Prime; provided, however, that Prime's refusal to approve of any
proposed transferee(s) as required by this sentence shall be deemed to have been
reasonable for all purposes if such transferee(s) cannot demonstrate to the
reasonable satisfaction of Prime that such transferee(s) would have generated
the same annual level of revenue and profitability for the Company following
such transfer as did Caster, on average, for the two (2) years immediately
preceding such transfer (in each case multiplied by the percentage of Caster,
Inc.'s total Membership Interest, or Caster's percentage of outstanding Stock
Interest, as the case may be, being conveyed). Caster, Inc. represents and
warrants to Prime and the Company that all of its ownership interests (the
"Stock Interests") are, as of the date it enters into this Agreement, owned
solely by Caster. Any transfer, issuance, sale, conveyance or encumbrance of any
Stock Interests, or any interest therein, by Caster or Caster, Inc. shall be
subject to the same restrictions on transfer as are set forth above with respect
to transfers of Membership Interests. Accordingly, any transfer of any Stock
Interests in violation of these restrictions shall, if Caster, Inc. is then the
owner of any Membership Interest, be deemed a transfer of Caster, Inc.'s
Membership Interest in violation of this Agreement. Similarly, any transfer of
any Stock Interests in a transaction described in clauses (ii), (iii) or (v)
above as a Permitted Transfer shall be permitted as well.
As an express condition to any transfer by Caster, Inc. or any
transferee of Caster, Inc., the proposed transferee shall have agreed in
writing, in form and substance reasonably satisfactory to Prime, that such
proposed transferee will be bound by all of the terms and provisions of this
Agreement, the Contribution Agreement and any other Transaction Document (as
defined in the Contribution Agreement) which by reasonable implication are
applicable to the Membership Interest being transferred and not solely Caster or
Caster, Inc. as a selling party under the Contribution Agreement.
Notwithstanding any other provisions of this Agreement, if Caster dies or
becomes incapacitated, or can no longer manage his affairs, Caster's executor,
administrator, conservator, guardian, trustee, personal representative, or the
holder of a power of attorney from Caster may exercise all of the rights of
Caster, Inc. under this Agreement, including the right to vote, to designate a
Manager, and to receive distributions. In the event of Caster's death, the
transfer of Stock Interests to Caster's heirs or legatees, whether by the laws
of descent and distribution, operation of law or otherwise, or to the
beneficiaries of a Permitted Trust, shall be deemed to be a Permitted Transfer.
By signing this Agreement in his capacity as an officer of Caster, Inc., Caster
is also acknowledging and agreeing to the restrictions on transfer of the Stock
Interests as provided herein.
Section 2.6. Resignation of Members. A Member may not withdraw from the
Company except on the unanimous consent of the remaining Members. The terms of
the Member's withdrawal shall be determined by agreement between the remaining
Members and the withdrawing Member.
ARTICLE III.
MEMBERS' MEETINGS
Section 3.1. Time and Place of Meeting. All meetings of the Members
shall be held at such time and at such place within or without the State of
Delaware as shall be determined by the Managers.
Section 3.2. Annual Meetings. In the absence of an earlier meeting at
such time and place as the Managers shall specify, annual meetings of the
Members shall be held at the principal office of the Company on the date which
is thirty (30) days after the end of the Company's fiscal year if not a legal
holiday, and if a legal holiday, then on the next full business day following,
at 10:00 a.m., at which meeting the Members may transact such business as may
properly be brought before the meeting.
Section 3.3. Special Meetings. Special meetings of the Members may be
called at any time by any Member. Business transacted at special meetings shall
be confined to the purposes stated in the notice of the meeting.
Section 3.4. Notice. Written or printed notice stating the place, day
and hour of any Members' meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) days nor more than thirty (30) days before the date of the special
meeting, either personally or by mail, by or at the direction of the person
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered three (3) days after it is deposited
in the United States mail, postage prepaid, to the Member at his address as it
appears on the records of the Company at the time of mailing.
Section 3.5. Quorum. Members present in person or represented by proxy,
holding more than fifty percent (50%) of the total votes which may be cast at
any meeting shall constitute a quorum at all meetings of the Members for the
transaction of business. If, however, such quorum shall not be present or
represented at any meeting of the Members, the Members entitled to vote, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present or represented. When any adjourned meeting is reconvened
and a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally noticed. Once a
quorum is constituted, the Members present or represented by proxy at a meeting
may continue to transact business until adjournment, notwithstanding the
subsequent withdrawal therefrom of such number of Members as to leave less than
a quorum.
Section 3.6. Voting. Members shall only have the right to vote in
instances or with respect to matters where member voting or consent is required
by applicable law or to the extent expressly set forth in this Agreement,
including but not limited to, Sections 2.5 (transfers of Membership Interests),
7.1(b) (dissolution), 8.1 (changing the number of Managers), 8.11 (compensation
of Managers) and 13.1 (amendments to operating agreement, certificate of
formation). With respect to any act or transaction that requires the affirmative
vote or consent by the Members under applicable law, the affirmative vote or
written consent of two of the three Managers (one of whom must, as long as
Caster has not delivered the written notice described in Section 9.3(a) of the
Contribution Agreement, be the Manager designee of Caster, Inc.) shall also be
required in order to approve the act or transaction, in each instance. Subject
to the foregoing, when a quorum is present at any meeting, the vote of the
Members, whether present or represented by proxy at such meeting, holding more
than fifty percent (50%) of the total votes which may be cast at any meeting
shall be the act of the Members, unless the vote of a different number is
required by the Act, the Certificate of Formation or this Limited Liability
Company Agreement. Each Member shall be entitled to one vote for each percentage
point represented by their Membership Interest. Fractional percentage point
interests shall be entitled to a corresponding fractional vote. The provisions
of this Section shall in all events be subordinate to with the provisions of
Section 8.9 relating to acts or transactions requiring the written approval of
two (2) or more Managers, one of which must be a Manager designated by Caster,
Inc.
Section 3.7. Proxy. Every proxy must be executed in writing by the
Member or by his duly authorized attorney-in-fact, and shall be filed with the
Secretary of the Company prior to or at the time of the meeting. No proxy shall
be valid after eleven (11) months from the date of its execution unless
otherwise provided therein. Each proxy shall be revocable unless expressly
provided therein to be irrevocable and unless otherwise made irrevocable by law.
Section 3.8. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Members may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Members entitled to vote with respect to the subject matter
thereof, and such consent shall have the same force and effect as a unanimous
vote of Members.
Section 3.9. Meetings by Conference Telephone. Members may participate
in and hold any meeting of Members by telephone (including a conference
telephone) conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
ARTICLE IV.
MEMBERSHIP CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions. Each Member has contributed to the
Company the assets set forth in Schedule A, having the agreed fair market
values, as set forth on Schedule A, which amount shall be credited to each
Member's Capital Account as their initial capital contribution. Except for each
Member's initial capital contribution made in connection with the formation of
the Company, no capital contributions shall be required of any Member without
the unanimous approval of all the Members to raise additional capital, and only
then proportionately as to each Member.
Section 4.2. Intentionally Omitted.
Section 4.3. Deficit Capital Account Balances. Upon liquidation of the
Company, no Member with a deficit balance in its Capital Account shall have any
obligation to restore such deficit balance, or to make any contribution to the
capital of the Company.
Section 4.4. Tax Matters Partner. The Managers shall designate one
Manager by majority vote to act as the tax matters partner (the "TMP") of the
Company (as defined in the Code), and the TMP is hereby authorized and required
to represent the Company, or designate another person or firm to represent the
Company, (in each case, at the Company's expense) in connection with all
examinations of the Company's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Company funds for
professional services and costs associated therewith. The initial TMP shall be
Xxxxx Xxxxxx. The Members agree to cooperate with the TMP and its designee, if
any, and to do or refrain from doing any or all things reasonably required by
the TMP or its designee, if any, to conduct such proceedings. The Company will
reimburse the TMP and any such designee for all expenses incurred in connection
with its duties as TMP and any costs associated with any administrative or
judicial proceeding with respect to the tax liabilities of the Members.
ARTICLE V.
DISTRIBUTION TO MEMBERS
Section 5.1. Distributions of Available Excess Earnings. At the end of
each calendar month, subject only to the qualifications and limitations set
forth below, the Company shall, unless provided otherwise in accordance with
Section 8.9(b) or Section 8.9(c), distribute its Available Excess Earnings (as
hereinafter defined) to its members, to be divided among them in accordance with
their Membership Interests. As used herein, "Available Excess Earnings" shall
mean and refer to all cash and cash equivalents of the Company that would not be
reasonably required in order to (a) satisfy all accounts payable and payment
obligations of the Company that will become due in the ordinary course within
thirty (30) days of the date of determination (assuming no receipt of additional
cash or cash equivalents during such ninety (30) day period) or (b) establish
adequate reserves to satisfy liabilities or obligations of the Company that are
foreseen and can be reasonably estimated on the date of determination.
Distributions in kind shall be made on the basis of agreed value as determined
by the Managers. Notwithstanding the foregoing, the Company may not make a
distribution to its Members to the extent that, immediately after giving effect
to the distribution, all liabilities of the Company, other than liabilities to
the Members with respect to their interests and liabilities for which the
recourse of creditors is limited to specified property of the Company, exceed
the fair value of the Company assets; except that the fair value of property
that is subject to liability for which recourse of creditors is limited, shall
be included in the Company assets only to the extent that the fair value of the
property exceeds that liability.
Section 5.2 Distributions to Pay Tax. In the event the distributions,
with respect to any fiscal year, to any Member are less than the Income Tax
Liability (as hereinafter defined) of such Member for that fiscal year, then,
notwithstanding anything to the contrary in this Agreement, within two and one
half (2.5) months after the close of such fiscal year distributions shall be
made to the Members in proportion to their respective Membership Interests in an
aggregate amount equal to the Income Tax Liability (as hereinafter defined). As
used in this Agreement, the "Income Tax Liability" shall mean the product of the
net income of the Company for such fiscal year multiplied by the highest
marginal rate applicable to individuals for federal and California income tax
purposes, and giving effect to any federal income tax deduction for California
tax. If the Company may not make a distribution pursuant to this Section 5.2 as
a result of the application of Section 5.1, the Company may, with the approval
of the Managers, make a loan to each Member in an amount equal to the difference
between the amount of the Income Tax Liability determined pursuant to the
preceding sentence and the amount otherwise distributed to such Member pursuant
to Sections 5.1 and 5.2.
ARTICLE VI.
ALLOCATION OF NET PROFITS AND LOSSES
Section 6.1. Allocation of Net Income and Net Loss. Net Income and Net
Loss for each fiscal year shall be allocated between the Members in accordance
with their respective Membership Interests.
Section 6.2. Loss Limitation. Notwithstanding Section 6.1, Net Loss
shall not be allocated to any Member to the extent such allocation would cause
such Member to have an Adjusted Capital Account Deficit. Any Net Loss that
cannot be allocated to a Member by virtue of this Section 6.2 shall be
reallocated to other Members. If both Members have an Adjusted Capital Account
Deficit, the balance of the Net Loss shall be allocated between the Members in
proportion to their Membership Interest.
Section 6.3. Special Allocations. The following special allocations shall
be made in the following order:
(a) Company Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 6, if there is a net decrease in Company Minimum Gain
during any fiscal year, each Member shall be specially allocated items of
Company income and gain for such year (and, if necessary, subsequent years) in
proportion to, and to the extent of, an amount equal to such Member's share of
the net decease in Company Minimum Gain, determined in accordance with
ss.1.704-(2)(g)(2) of the Regulations. This Section 6.3(a) is intended to comply
with the minimum gain chargeback requirement of the Regulations and shall be
interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Notwithstanding any other
provision of this Article 6 except Section 6.3(a), if there is a net decrease in
Member Minimum Gain attributable to a Member Nonrecourse Debt during any fiscal
year, each Member with a share of the Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with ss.1.704-2(i)(5) of the
Regulations, shall be specially allocated items of Company income and gain for
such year (and, if necessary, subsequent years) in proportion to, and to the
extent of, an amount equal to such Member's share of the net decease in Member
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with ss.1.704-2(i)(5) of the Regulations. This Section 6.3(b) is
intended to comply with the Member minimum gain chargeback requirement of the
Regulations and shall be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or distributions described in
ss.ss.1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations, items of Company
income and gain shall be specially allocated to each such Member in an amount
and manner sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Member as quickly as possible,
provided that an allocation pursuant to this Section 6.3(c) shall be made only
if and to the extent that such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Article 6 have been
tentatively made as if this Section 6.3(c) were not in the Agreement.
(d) Nonrecourse Deductions. Any Nonrecourse Deductions for any fiscal year
or other period shall be specially allocated among the Members in proportion to
their Membership Interests.
(e) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any fiscal year or other period shall be allocated to the Member
who bears the economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in accordance with
Regulations ss.1.704-2(i).
Section 6.4 Curative Allocations. The "Regulatory Allocations" consist
of the allocations to a Member (or its predecessor) under Sections 6.3(a),
6.3(b), 6.3(c), 6.3(d) and 6.3(e) hereof. Notwithstanding any other provisions
of this Article 6 (other than the Regulatory Allocations), the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Members so that, to the extent possible, the
net amount of such allocations of other items and the Regulatory Allocations to
each Member shall be equal to the net amount that would have been allocated to
each such Member if the Regulatory Allocations had not occurred. For purposes of
applying the foregoing sentence (i) no allocations pursuant to this Section 6.4
with respect to allocations pursuant to Section 6.3(a) shall be made prior to
the fiscal year during which there is a net decrease in Company Minimum Gain,
and then only to the extent necessary to avoid any potential economic
distortions caused by such net decease in Company Minimum Gain, (ii) no
allocations pursuant to this Section 6.4 shall be made with respect to
allocations pursuant to Sections 6.3(b) and 6.3(e) relating to a particular
Member Nonrecourse Debt prior to the fiscal year during which there is a net
decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt,
and then only to the extent necessary to avoid any potential economic
distortions used by such net decease in Member Minimum Gain, and (iii)
allocations pursuant to this Section 6.4 shall be deferred with respect to
allocations pursuant to Section 6.3(e) hereof relating to a particular Member
Nonrecourse Debt to the extent the Managers reasonably determine that such
allocations are likely to be offset by subsequent allocations pursuant to
Section 6.3(b) hereof. The Managers shall have reasonable discretion, with
respect to each fiscal year, to (i) apply the provisions of this Section 6.4 in
whatever order is likely to minimize the economic distortions that might
otherwise result from the Regulatory Allocations, and (ii) divide all
allocations pursuant to this Section 6.4 among the Members in a manner that is
likely to minimize such economic distortions.
Section 6.5 Tax Allocations; Code ss.704(c). In accordance with Code
ss.704(c) and the Regulations thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of Company, or any Company
asset which is subject to adjustment in its Gross Asset Value, any such property
or asset of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such property or asset to the Company for federal income tax purposes and its
Gross Asset Value. Any elections or other decisions relating to such allocations
shall be made by the Managers in any manner that reasonably reflects the intent
of this Agreement. Allocations pursuant to this Section 6.5 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, any person's Capital Account or share of Net
Income, Net Loss, other items, or Distributions pursuant to any provision of
this Agreement.
ARTICLE VII.
DISSOLUTION AND WINDING UP
Section 7.1. Dissolution. Notwithstanding any provision of the Act, the
Company shall be dissolved only upon the first of the following to occur:
(a) Forty (40) years from the date of filing the Certificate of Formation
of the Company; or
(b) Written consent of all the then current Members to dissolution.
Section 7.2. Winding Up. In the event of dissolution of the Company,
the Managers (excluding any Manager holding office pursuant to designation by a
Member subject to bankruptcy proceedings) shall wind up the Company's affairs as
soon as reasonably practicable. On the winding up of the Company, the Managers
shall pay and/or transfer the assets of the Company in the following order:
(a) In discharging liabilities (including loans from Members) and the
expenses of concluding the Company's affairs; and
(b) The balance, if any, shall be distributed to the Members
in accordance with the positive balances of the Members Capital
Accounts. Upon dissolution and distribution of the Company assets, such
distributed assets shall be deemed sold with the resulting Net Income
or Net Loss being allocated among the Members and credited or debited
to their respective Capital Accounts pursuant to Articles IV and VI.
ARTICLE VIII.
MANAGERS
Section 8.1. Selection of Managers. Management of the Company shall be
vested in the Managers. Initially, the Company shall have three (3) Managers,
being Xxxx Xxxxxx and Xxxxx Xxxxxx (as the initial Manager designees of Prime),
and Xxxxxx Xxxxxx, M.D. (as the initial Manager designee of Caster, Inc.).
Thereafter, for so long as there are three (3) Managers, (a) Prime shall be
entitled to designate two (2) of the Managers; and (b) Caster, Inc. shall be
entitled to designate the remaining one (1) Manager. Notwithstanding the
foregoing, a Member shall not be entitled to designate any Manager unless its
Membership Interest: (y) has not (other than as allowed under Section 2.5 of
this Agreement) been transferred, repurchased, assigned, pledged, hypothecated
or in any way alienated; and (z) equals or exceeds thirty percent (30%) of the
aggregate Membership Interests (after including in such determination all
Membership Interests held by the permitted transferees of such Member);
provided, however, that the foregoing limitations shall not apply in the event
the parties restructure their relationship pursuant to this Agreement in an
effort to comply with any applicable law, rule or regulation that makes such
restructuring necessary. The Members may, by unanimous vote of all Members, from
time to time, change the number of Managers of the Company and remove or add
Managers accordingly. A Manager shall serve as a Manager until his or her
resignation or removal pursuant to Section 8.2 or 8.3 of this Article VIII.
Managers need not be residents of the State of Delaware or Members of the
Company.
Section 8.2. Resignations. Each Manager shall have the right to resign
at any time upon written notice of such resignation to the Members. Unless
otherwise specified in such written notice, the resignation shall take effect
upon the receipt thereof, and acceptance of such resignation shall not be
necessary to make same effective. The Member who designated a resigning manager
shall be entitled to designate the successor thereto without any further action
by the Members or other Managers. If any action of the Members is required under
applicable law, the Members agree to take such action and any other action as
may be necessary from time to time to effectuate the provisions of this Section
8.2.
Section 8.3. Removal of Managers. Any Manager may be removed, for or
without cause, at any time, but only by the Member who designated such Manager,
upon the written notice to all Members. The Member who designated such removed
Manager shall be entitled to designate the successor without any further action
by the Members or other Managers. If any action of the Members is required under
applicable law, the Members agree to take such action and any other action as
may be necessary from time to time to effectuate the provisions of this Section
8.3.
Section 8.4. General Powers. The business of the Company shall be
managed by its Managers, which may, by the vote or written consent in accordance
with this Agreement, exercise any and all powers of the Company and do any and
all such lawful acts and things as are not by the Act, the Certificate of
Formation or this Limited Liability Company Agreement directed or required to be
exercised or done by the Members, including, but not limited to, contracting for
or incurring on behalf of the Company debts, liabilities and other obligations,
without the consent of any other person, except as otherwise provided herein.
Section 8.5. Place of Meetings. The Managers of the Company may hold
their meetings, both regular and special, either within or without the State of
Delaware, and any Manager shall be entitled to attend any meeting by telephone.
Section 8.6. Annual Meetings. The annual meeting of the Managers shall
be held without further notice immediately following the annual meeting of the
Members, and at the same place, unless by unanimous consent of the Managers that
such time or place shall be changed.
Section 8.7. Regular Meetings. Regular meetings of the Managers may be
held without written notice at such time and place as shall from time to time be
determined by the Managers. As long as Caster has not delivered the written
notice described in Section 9.3(a) of the Contribution Agreement, no meeting of
the Managers shall be held without the Manager designee of Caster, Inc. being
given at least seven (7) days prior notice.
Section 8.8. Special Meetings. Special meetings of the Managers may be
called by any Manager on seven (7) days notice to each Manager, with such notice
to be given personally, by mail or by telecopy, telegraph or mailgram.
Section 8.9. Quorum and Voting.
-----------------
(a) At all meetings of the Managers the presence of at least
two (2) Managers shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the affirmative vote of at
least a majority of the Managers present at any meeting at which there
is a quorum shall be the act of the Managers, except as may be
otherwise specifically provided by the Act, the Contribution Agreement,
the Certificate of Formation, this Limited Liability Company Agreement
or any other Transaction Document. If a quorum shall not be present at
any meeting of Managers, the Managers present there may adjourn the
meeting from time to time without notice other than announcement at the
meeting, until a quorum shall be present.
(b) In addition to the other provision contained in this
Agreement requiring the unanimous vote of the Members or the consent of
Caster, Inc. or Caster, Inc.'s designated Manager, as long as Caster
has not died or become permanently disabled, and no Trigger Event (as
defined in the Contribution Agreement) has occurred (subject to
Caster's right to withdraw any Termination Notice), the following acts
or transactions by, or involving, the Company may not be taken without
first obtaining the written consent of (A) Caster, Inc., any person to
whom Caster, Inc.'s Membership Interest has been rightfully transferred
pursuant to the Section 2.5, or the Manager designee of Caster, Inc.,
and (B) Prime, any person to whom Prime's Membership Interest has been
rightfully transferred pursuant to the Section 2.5, or each of the two
(2) Manager designees of Prime; provided, however, that no written
consent of any party is required under this subsection to take a
particular action if (but only to the extent that) such action is
required to be taken pursuant to the express terms and provisions of
the Contribution Agreement:
i. Disposition, sale, assignment or other transfer by
the Company of any interest it owns in the Company, except
that such interest may be extinguished without the approval
required under this Article.
ii. The election or removal of officers, and establishing or changing the
compensation for officers or other employees in a manner inconsistent with past
practices.
iii. Initiating or settling any litigation or regulatory proceeding, or
confessing any judgment.
iv. Hiring or changing the Company's accountants or legal counsel.
v. Opening or closing bank or other depository accounts, and establishing
or changing the signature withdrawal authority with respect to any such
accounts.
vi. Waiving, refusing to enforce, amending, restating, superseding or
modifying any of the provisions of this Agreement or any Transaction Document.
vii. Entering into or terminating agreements with
medical doctors with respect to the performance of procedures
in the Company's facilities relating to Refractive Surgery or
otherwise.
viii. Moving the location of the Company's principal place of business.
ix. Amending, modifying, canceling, extending, or
renewing the Facility Use Agreement or any other agreement to
which the Company is a party and relating to Caster's
performance of medical services, the Business, or Refractive
Surgery, or the Company's entering into, amending, modifying,
canceling, extending or renewing any other similar agreement
with any other person, firm, or entity relating to Caster's
performance of medical services, the Business, or Refractive
Surgery Caster.
x. Mergers, consolidations or combinations of the Company with another
limited liability company or other entity.
xi. Filing bankruptcy or seeking relief under any debtor relief law.
xii. The admission of any new Member or the issuance of any interest in the
Company to any party.
xiii. The determination of "Available Excess Earnings."
xiv. The determination to not make Distributions
otherwise required by this Agreement, making any
disproportionate distribution to a Member of cash or property
in-kind, or, subject to the provisions of Section 8.11, making
any distribution of cash or property to any Manager in his or
her capacity as a Manager;
xv. Sale, lease or other transfer of all or
substantially all of the Company's assets, or any material
amount of the Company's assets other than in the ordinary
course of the Company's business.
xvi. Borrowing or incurring any material
indebtedness, other than open accounts payable to unaffiliated
third parties, guaranteeing any material indebtedness or
obligation of any party, or granting any collateral or
security interest in Company property to secure payment or
performance of any indebtedness, obligation, or guaranty.
xvii. Purchasing or leasing assets or property, or
entering into any contract or obligation, which obligates the
Company to pay in excess of $10,000 in the aggregate in one or
any series of installments.
xviii. Causing a material change in the nature of the Company's business or
the legal name of the Company.
xix. Entering into a transaction or other action with
any Manager, officer or Member not otherwise described in this
Section 8.9 that is not fair and reasonable to the Company or
the Members or that would be considered a breach of fiduciary
duty.
xx. Materially reducing the amount or scope of the insurance coverage
described in Schedule 3.10 to the Contribution Agreement, except for the
addition of the additional assureds described on Schedule 3.10. The Company
covenants to continuously maintain said insurance coverage for so long as
Caster, Inc. is a Member.
xxi. Taking any other action which, by the terms of
this Agreement, requires the approval or consent of not less
than sixty-six percent (66%) of the Members.
xxii. Settling any actual or threatened claim,
litigation, or regulatory proceeding, or confessing any
judgment, arising out of or connected with any actual or
alleged error, omission, negligence, or willful misconduct of
Caster.
xxiii. Issuing any new Membership Interests that will
reduce the Membership Interests of the existing Members other
than on a pro rata basis.
xxiv. Taking any action, making any determination, or
making any election with respect to a right granted to the
Managers pursuant to Section 1.7, Article V or Article VI.
xxv. Engaging in any act or transaction not in the ordinary course of the
Company's business.
(c) Notwithstanding any other provision contained in this
Agreement requiring the unanimous vote of the Members or the consent of
Caster, Inc. or Caster, Inc.'s designated Manager, as long as Caster
has not breached the provisions of ARTICLE VIII or ARTICLE IX of the
Contribution Agreement, the following acts or transactions by, or
involving, the Company may not be taken without first obtaining the
written consent of (A) Caster, Inc., any person to whom Caster, Inc.'s
Membership Interest has been rightfully transferred pursuant to the
Section 2.5, or the Manager designee of Caster, Inc., and (B) Prime,
any person to whom Prime's Membership Interest has been rightfully
transferred pursuant to the Section 2.5, or each of the two (2) Manager
designees of Prime; provided, however, that no written consent of any
party is required under this subsection to take a particular action if
(but only to the extent that) such action is required to be taken
pursuant to the express terms and provisions of the Contribution
Agreement:
i. Mergers, consolidations or combinations of the Company with another
limited liability company or other entity.
ii. Filing bankruptcy or seeking relief under any debtor relief law.
iii. Taking any action, making any determination, or
making any election with respect to a right granted to the
Managers pursuant to Section 1.7, Article V or Article VI.
iv. Sale, lease or other transfer of all or
substantially all of the Company's assets, or any material
amount of the Company's assets other than in the ordinary
course of the Company's business.
v. Entering into a transaction or other action with
any Manager, officer or Member not otherwise described in this
Section 8.9 that is not fair and reasonable to the Company or
the Members or that would be considered a breach of fiduciary
duty.
vi. Taking any other action which, by the terms of this Agreement, requires
the approval or consent of not less than sixty-six percent (66%) of the Members.
vii. Issuing any new Membership Interests that will reduce the Membership
Interests of the existing Members other than on a pro rata basis.
viii. The determination of "Available Excess
Earnings"; provided, that this will not prevent the
accumulation and non-distribution by the Company of six (6)
times the average monthly Available Excess Earnings (averaged
using the preceding six (6) months) after satisfying any
obligation to distribute Available Excess Earnings pursuant to
Section 5.2 hereof.
ix. The determination to not make Distributions
otherwise required by this Agreement, making any
disproportionate distribution to a Member of cash or property
in-kind, or, subject to the provisions of Section 8.11, making
any distribution of cash or property to any Manager in his or
her capacity as a Manager;
x. Engaging in any act or transaction not in the ordinary course of the
Company's business.
xi. Notwithstanding the provisions of Sections
8.9(b)(vi) and 8.9(b)(ix), waiving, refusing to enforce,
amending, restating, superseding or modifying any of the
provisions of this Agreement or any Transaction Document
(including the Facility Use Agreement) with respect to any
matter described in this Section 8.9(c).
xii. Unless Caster is no longer exclusively using the
Company's facilities in the manner contemplated in Section
9.3(a) of the Contribution Agreement (regardless of whether
Section 9.3(a) is then enforceable), materially reducing the
amount or scope of the insurance coverage described in
Schedule 3.10 to the Contribution Agreement, except for the
addition of the additional assureds described on Schedule
3.10. The Company covenants to continuously maintain said
insurance coverage for so long as Caster, Inc. is a Member.
(d) Any of the above actions taken by the Company without the
necessary approval pursuant to Section 8.9(b) or Section 8.9(c) is void
ab initio. A Member shall be deemed to have materially breached this
Agreement if the Company, acting pursuant to the apparent authority of
the Manager designee(s) of such Member, takes any of the above actions
without the necessary approval pursuant to Section 8.9(b) or Section
8.9(c).
Section 8.10. Committees. The Managers may, by resolution passed by
sixty-six percent (66%) of the Managers, designate committees, each committee to
consist of two or more Managers (at least one of which must be a Manager
designee of Prime and one of which, as long as Caster has not delivered the
written notice described in Section 9.3(a) of the Contribution Agreement, must
be a Manager designee of Caster, Inc.), which committees shall have such power
and authority and shall perform such functions as may be provided in such
resolution (subject to applicable law), which in all events shall be consistent
with the other provisions of this Agreement and the Transaction Documents and
shall not be contrary to the provisions of Section 8.9 of this Agreement. Such
committee or committees shall have such name or names as may be designated by
the Managers and shall keep regular minutes of their proceedings and report the
same to the Managers when required.
The foregoing paragraph notwithstanding, the Managers shall establish a
Medical Executive Committee, the size and composition of which shall be
established by the affirmative vote or written consent of two of the three
Managers (one of whom must, as long as Caster has not delivered the written
notice described in Section 9.3(a) of the Contribution Agreement, be the Manager
designee of Caster, Inc.). Members of the Medical Executive Committee must be
licensed physicians, but need not be Members, Managers, or officers of the
Company. The Medical Executive Committee shall meet at such time or times as it
may, by majority vote of its members, elect and may adopt procedures for the
conduct of its meetings. The Medical Executive Committee shall have authority
and control over the nonprofessional medical aspects of the Company's business,
and shall provide advice to the Managers on decisions relating to equipment
purchases, technological obsolescence, quality assurance, credentialing, and
such other matters as shall be requested by the Managers. The Medical Executive
Committee shall be advisory only and shall not have the authority to bind the
Company. The majority of the members of the Medical Executive Committee shall
constitute a quorum for the transaction of its business and the affirmative vote
of the majority of the members of the Medical Executive Committee shall
constitute action validly taken by that body; provided, however, that a quorum
shall not be deemed to exist unless, as long as Caster has not delivered the
written notice described in Section 9.3(a) of the Contribution Agreement, the
Manager designee of Caster, Inc. has been given reasonable prior notice of such
meeting and an opportunity to participate in such meeting.
Section 8.11. Compensation of Managers. The Members, by unanimous
approval, shall have the authority to provide that any one or more of the
Managers shall be compensated, and may, by unanimous approval, fix any
compensation (which may include expenses) they elect to pay to any one or more
of the Managers.
Section 8.12. Action by Written Consent. Any action required or
permitted to be taken at any meeting of the Managers or of any committee
designated by the Managers may be taken without a meeting if written consent,
setting forth the action so taken, is signed by all the Managers or of such
committee, and such consent shall have the same force and effect as a unanimous
vote at a meeting.
Section 8.13. Meetings by Conference Telephone. Managers or members of
any committee designated by the Managers may participate in and hold any meeting
of the Managers or such committee by telephone (including a conference
telephone) or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in such
a meeting shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 8.14. Liability of Managers. No Manager of the Company shall be
personally liable for any debts, liabilities, or obligations of the Company,
including under a judgment, decree, or order of the court, except as expressly
provided otherwise in an agreement between the Manager and the Company or
another party.
Section 8.15. Specific Power of Managers. The Managers shall have the
authority to enter into and execute all documents in relation to the formation
of the Company including, but not limited to, issuance of the Certificate of
Formation and this Limited Liability Company Agreement.
ARTICLE IX.
NOTICES
Section 9.1. Form of Notice. Whenever under the provisions of the Act,
the Certificate of Formation or this Limited Liability Company Agreement notice
is required to be given to any Manager or Member, and no provision is made as to
how such notice shall be given, notice shall not be construed to mean personal
notice only, but any such notice may also be given in writing, by mail, postage
prepaid, addressed to such Manager or Member at such address as appears on the
books of the Company, or by telecopy, telegraph or mailgram. Any notice required
or permitted to be given by mail shall be deemed to be given three (3) days
after it is deposited, postage prepaid, in the United States mail as aforesaid.
Section 9.2. Waiver. Whenever any notice is required to be given to any
Manager or Member of the Company under the provision of the Act, the Certificate
of Formation or this Limited Liability Company Agreement, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether signed
before or after the time stated in such waiver, shall be deemed equivalent to
the giving of such notice.
ARTICLE X.
OFFICERS
Any Manager may also serve as an officer of the Company. The Managers
may designate one or more persons to serve as officers and may designate the
titles of all officers. The initial officers of the Company shall be: Xxx
Xxxxxxx, Chairman of the Board; Xxxx Xxxxxx, President; Xxxxx Xxxxxx, Vice
President, Secretary and Treasurer; Xxxx Xxxxxxxxx, Vice President; and Xxxxxx
Xxxxxx, M.D., Vice President. The officers of the Company shall have powers
commensurate with the corporate powers ordinarily associated their respective
titles, as limited, extended or otherwise modified pursuant to any resolution of
the Managers, and otherwise consistent with the terms of this Agreement and the
Transaction Documents.
ARTICLE XI.
INDEMNITY
Section 11.1. Indemnification. The Company shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, any appeal in such an action, suit
or proceeding and any inquiry or investigation that could lead to such an
action, suit or proceeding (whether or not by or in the right of the Company),
by reason of the fact that such person is or was a manager, officer, employee or
agent of the Company or is or was serving at the request of the Company as a
director, manager, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another corporation, employee benefit plan,
other enterprise, or other entity, against all judgments, penalties (including
excise and similar taxes), fines, settlements and reasonable expenses (including
attorneys' fees and court costs) actually and reasonably incurred by him in
connection with such action, suit or proceeding to the fullest extent permitted
by any applicable law, and such indemnity shall inure to the benefit of the
heirs, executors and administrators of any such person so indemnified pursuant
to this Article XI. The right to indemnification under this Article XI shall be
a contract right and shall not be deemed exclusive of any other right to which
those seeking indemnification may be entitled under any law, bylaw, agreement,
vote of members or disinterested managers or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. Any repeal or amendment of this Article XI by the Managers (pursuant to
Section 8.9 hereof) or by changes in applicable law shall, to the extent
permitted by applicable law, be prospective only, and shall not adversely affect
the indemnification of any person who may be indemnified at the time of such
repeal or amendment.
Section 11.2. Indemnification Not Exclusive. The rights of
indemnification and reimbursement provided for in this Article XI shall not be
deemed exclusive of any other rights to which any such Manager, officer,
employee or agent may be entitled under the Certificate of Formation, this
Limited Liability Company Agreement, agreement or vote of Members, or as a
matter of law or otherwise.
Section 11.3. Other Indemnification Clauses. Notwithstanding the
foregoing, this Article XI shall not be construed to contradict the
indemnification provision of the Contribution Agreement. Notwithstanding
anything contained herein, this Article XI shall be ineffectual and shall not
permit or require indemnification for all, or any, losses, costs, liabilities,
claims or expenses arising, directly or indirectly, from any action or omission
permitting or requiring indemnification under the Contribution Agreement; and in
no event may any indemnity be allowed under this Agreement or pursuant to any
provision of the Act for an amount paid or payable pursuant to the
indemnification provisions of the Contribution Agreement.
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Fiscal Year. The fiscal year of the Company shall be the
calendar year.
Section 12.2. Records. At the expense of the Company, the Managers shall
maintain records and accounts of all operations of the Company. At a minimum,
the Company shall keep at its principal place of business the following records:
(a) A current list of the full name and last known
business or residence address of each Member and of each holder of an
economic interest in the Company set forth in alphabetical order,
together with the Capital Contributions and share in Net Profits and
Net Losses of each Member and holder of an economic interest;
(b) A current list of the full name and business or residence address of
each Manager;
(c) A copy of the Certificate of Formation and Limited
Liability Company Agreement of the Company, and all amendments thereto,
together with executed copies of any powers of attorney pursuant to
which any of the foregoing were executed;
(d) Copies of the Company's federal, state and local
income tax or information returns and reports, if any, for the six most
recent fiscal years; and
(e) Correct and complete books and records of account of the Company.
Section 12.3. Seal. The Company may by resolution of the Managers adopt
and have a seal, and said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any manner reproduced. Any officer of the
Company shall have authority to affix the seal to any document requiring it.
Section 12.4. Agents. Every Manager and Officer is an agent of the
Company for the purpose of the business. The act of a Manager or Officer,
including the execution in the name of the Company of any instrument for
carrying on in the usual way the business of the Company, binds the Company;
provided, however, if such act requires the approval of the Members of the
Managers, such approval has first been obtained.
Section 12.5. Checks. Subject to the provisions of Section 8.9(b)(v),
all checks, drafts and orders for the payment of money, notes and other
evidences of indebtedness issued in the name of the Company shall be signed by
such officer, officers, agent or agents of the Company and in such manner as
shall from time to time be determined by resolution of the Managers. In the
absence of such determination by the Managers, such instruments shall be signed
by the Treasurer or the Secretary and countersigned by the President or a Vice
President of the Company, if the Company has such officers.
Section 12.6. Deposits. Subject to the provisions of Section 8.9(b)(v), all
funds of the Company shall be deposited from time to time to the credit of the
Company in such banks, trust companies or other depositories as the Managers may
select.
Section 12.7. Annual Statement. The Managers shall present at each annual
meeting a full and clear statement of the business and condition of the Company.
Section 12.8. Financial Statements. As soon as practicable after the
end of each fiscal year of the Company, but in no event later than April 15
immediately following the end of such fiscal year, a balance sheet as at the end
of such fiscal year, and a profit and loss statement for the period ended, shall
be distributed to the Members, along with such tax information (including all
information returns) as may be necessary for the preparation of each Member of
its federal, state and local income tax returns. The balance sheet and profit
and loss statement referred to in the previous sentence may be as shown on the
Company's federal income tax return.
Section 12.9. Binding Arbitration. Any controversy between the Members
regarding this Agreement or any other Transaction Document, any claims arising
out of any breach or alleged breach of this Agreement or any other Transaction
Document, and any claims arising out of the relationship between the Members
created hereunder, shall be submitted to binding arbitration by all Members
involved in accordance with the procedures for arbitration contained in the
Contribution Agreement.
Section 12.10. Authority to Execute Facility Use Agreement. The Members
hereby authorize the Managers to execute and deliver to Caster, Inc. the
Facility Use Agreement attached to the Contribution Agreement as Exhibit C.
Section 12.11. Cross Default; Remedies. Each of the Members agrees that
a breach by it (or any entity controlling, controlled by, or under common
control with it) of any of the provisions of the Contribution Agreement or any
other Transaction Document shall also be deemed to be a breach of this Agreement
(subject to any right to cure provided with respect to such breach). The
remedies contemplated provided in Section 9.7(a) and (b) of the Contribution
Agreement shall in all events be the exclusive remedies for any and all acts or
omissions of Caster that result in a material breach of any of the provisions of
Article VIII and Article IX thereof, regardless of whether such acts or
omissions, in the absence of this sentence, would give rise to a claim under any
of the Transaction Documents.
Section 12.12 Expenses. Each Member agrees that, notwithstanding the
prior practices associated with the Business (as defined in the Contribution
Agreement) as conducted prior to the Closing Date, all liabilities, obligations,
costs and expenses that arise after the Closing Date and are personal to such
Member (or arose from transactions or occurrences that directly benefited such
Member in a capacity other than as a Member) shall not be considered expenses of
the Company and shall be borne solely by such Member, unless agreed otherwise by
the unanimous vote or written consent of the Managers, or unless (and only to
the extent) provided otherwise in the Facility Use Agreement. With respect to
any such personal expenses that were incurred prior to the Effective Time (as
defined in the Contribution Agreement), such expenses shall not be incurred or
reimbursed by, or charged to, the Company after the Effective Time.
Section 12.13 Consents. To be valid and effective, all consents of the
Managers or Members required or permitted by this Agreement shall be in writing
and signed by each party giving consent.
ARTICLE XIII.
AMENDMENTS
Section 13.1. Amendments. Except to the extent expressly provided
otherwise herein, this Agreement may only be altered, amended or repealed and a
new limited liability company agreement may only be adopted by the unanimous
vote of the Members at any regular meeting of the Members or at any special
meeting of the Members called for that purpose, or by execution of a written
consent in accordance with the provisions of Section 3.8. Except to the extent
expressly provided otherwise therein, the Certificate of Formation of the
Company, and any other corporate governance document of the Company, or any
other document which establishes, creates or governs the relations between the
Members or the Managers may only be altered, amended or repealed by the
unanimous vote of the Members at any regular meeting of the Members or at any
special meeting of the Members called for that purpose, or by execution of a
written consent in accordance with the provisions of Section 3.8.
Section 13.2. When Limited Liability Company Agreement Silent. It is
expressly recognized that when the Limited Liability Company Agreement is silent
or in conflict with the requirements of the Act as to the manner of performing
any Company function, the provisions of the Act shall control.
Section 13.3. Integration with Contribution Agreement. To the extent of
any inconsistency between the provisions of the Contribution Agreement and this
Agreement, the terms and provisions of the Contribution Agreement shall control.
Accordingly, no Member or Manager shall be deemed to have breached any fiduciary
duty owed to any other Member or the Company as a result of investing in,
acquiring or developing any facility, business or operations that are related or
similar to, or in direct competition with, the Company's business if such act or
transaction is allowed or not prohibited by the provisions of Article VIII of
the Contribution Agreement, or the termination of such provisions.
[Signature page follows]
S-1
SIGNATURE PAGE TO
LIMITED LIABILITY COMPANY AGREEMENT
IN WITNESS WHEREOF, the undersigned Members hereby adopt this Limited
Liability Company Agreement as the Limited Liability Company Agreement of the
Company, effective as of the 1st day of March, 2000.
Caster Eye Center Medical Group
------------------------------------
Xxxxxx Xxxxxx, M.D., President
Prime Refractive, L.L.C.
Xxxxx Xxxxxx, Treasurer
CONSENT OF SPOUSE
The undersigned spouse of Caster acknowledges on her own
behalf that: I have read the foregoing Agreement and I know its
contents. I am aware that by its provisions Caster Eye Center
Medical Group grants the Company certain assets that may be
community property and may restrict my ability to later transfer my
community property interest in such assets, my spouse's interest in
Caster Eye Center Medical Group and Caster Eye Center Medical
Group's Membership Interest in the Company. I hereby approve of the
provisions of the Agreement, including the contribution of my
community property interest, if any, in the assets contributed to
the Company, and agree that such Membership Interest and Stock
Interests and my interest in them are subject to the provisions of
the Agreement and that I will take no action at any time to hinder
operation of the Agreement on such Membership Interest and Stock
Interests or my interest in them.
Xxxxxxxxxx Xxxxxx
A-1
043838.0000 AUSTIN 167621 v12
EXHIBIT A
OWNERSHIP INTERESTS
Name Contribution Membership Interest
Prime Assets with agreed fair market 60%
Caster, Inc. Assets with agreed fair market 40%
value of $244,325
