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Exhibit 10.37 Operating Agreement for Imperial Management Services, LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
IMPERIAL MANAGEMENT SERVICES, LLC
OPERATING AGREEMENT
This Agreement, dated ___________, 2011 by and between the undersigned members,
is hereby adopted as the written Operating Agreement of Imperial Management
Services, LLC, (the "Company") and
WHEREAS, this Agreement does not contain any provisions inconsistent with the
Articles of Organization of the Company, and
WHEREAS, the members wish to set forth provisions relating to the business of
this limited liability company, the conduct of its affairs and the rights,
powers, preferences, limitations and responsibilities of its members, managers,
employees or agents, as the case may be,
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the undersigned agree as follows:
ARTICLE I
DEFINITIONS
1. Words and phrases set forth within this Operating Agreement which relate to
the business of this limited liability company or the conduct of its affairs or
the rights, powers, preferences, limitations or responsibilities of its members,
managers, employees, or agents, as the case may be, or to any matter which this
limited liability company is required or has done under mandate of law or the
fulfillment of this Operating Agreement, shall be defined as it has been defined
in Section 102 of the New York Limited Liability Company Law or in other
applicable statutes or rulings.
ARTICLE II
FORMATION
1. The undersigned have authorized the formation of this limited liability
company by an organizer who prepared, executed and filed with the New York
Secretary of State, the Articles of Organization pursuant to the New York
Limited Liability Company Law.
2. The name of this Limited Liability Company is Imperial Management Services,
LLC.
3. The Company is formed for any lawful business purpose and shall have all the
powers set forth in Sec. 202(a) -202(q) of the New York Limited Liability
Company Law.
4. The executive offices and the principal place of business of this Company
shall be located in Suffolk County, New York at 110 Marcus Drive, Melville, New
York 11747, or at such other place or places as the managers may determine from
time to time.
5. Unless the managers shall otherwise determine, there shall be no Registered
Agent of this Company.
6. The Secretary of State of New York has been designated as agent of this
Company upon whom process against it may be served, and the post office address
to which the Secretary of State shall mail a copy of such process against the
Company served upon him has been set forth in the Articles of Organization of
the Company. The managers may change such address from time to time in
accordance with applicable provisions of law.
7. The principal business of the Company shall be to provide management
services, the use of equipment, including Fonar MRI scanners, non-medical
personnel, office space, furnishings, maintenance and upkeep services to
professional corporations and such other business as the managers may from time
to time determine. The Company shall also be authorized to acquire, own, lease,
sell and deal in or with real, personal and/or intangible property, securities
and investments of every kind as may be from time to time consistent with the
best interests of the members and the Company.
ARTICLE III
MEMBERS/MANAGERS
1. There shall be two classes of members in this Company: the Class A Members
and one Class B Member. The Class A Members shall have an initial ownership
interest in the aggregate of 25% of the Company and the Class B Member shall
have an initial ownership interest of 75% of the Company. On all matters on
which members may vote, each member shall be entitled to cast the percentage of
votes equal to his percentage of ownership interests in the Company (voting
interests). To the extent that the Class A Members receive distributions
representing a return of their capital contribution, their ownership percentage
in this Company and voting rights will be proportionally reduced.
2. Except as otherwise provided herein, the vote of a majority in voting
interests of the members of each class of members shall be required to admit a
person as a new member and to issue such person a membership interest in this
Company. Such new member shall not be entitled to any retroactive allocation of
income or losses, or taxable deductions heretofore incurred by this Company.
3. This Company shall keep books and records pursuant to Sec. 1102 of the New
York Limited Liability Company Law, either in written form or in other than
written form if easily converted into such written form within a reasonable
time. Such books and records shall be maintained on a cash basis pursuant to
this Agreement, and the Accounting Year of this Company shall end on June 30.
4. Each member may inspect and copy, at his own expense, the Articles of
Organization, the Operating Agreement, minutes of any meeting of members and all
tax returns, financial statements and other books and records of the Company,
and other information regarding the affairs of the Company. 5. No member shall
be personally liable for any debts, obligations or liabilities of this Company
or of any other member, solely by reason of his being a member of this Company,
whether such debt arose in contract, tort or otherwise. However, such member
shall be personally liable for the payment of his Capital Contribution.
6. The approval of at least two-thirds in voting interests of the members
entitled to vote thereon shall be required to approve the sale, exchange, lease,
mortgage, pledge or other transfer or disposition of all or substantially all of
the assets of this Company.
7. The management of this Company shall be vested in three managers, subject to
any provision of the Articles of Organization or the Operating Agreement and
Section 419 of said New York Limited Liability Company Law. The Class A Members
shall elect one manger by the majority of the voting interests of the Class A
Members. The Class B Member shall select one manager. The third manager (the
"General Manager") shall be elected by the members of the Company having a
majority of the voting interests of the Company. The election of managers shall
be on an annual or other periodic basis decided by the members. The initial
manager for the Class A Members ("Class A Manager") shall be Timothy Damadian,
the initial manager for the Class B Members ("Class B Manager") shall be Raymond
Damadian and the initial "General Manager" shall be Health Management
Corporation of America ("HMCA").
(a) The Names and Addresses of the manager or managers or class or classes
of managers shall be set forth in the Books and Records of this Company. A
manager may, but need not be, a member of this Company. The managers shall
receive no salary for performing their duties as manager unless the holders of a
majority of the voting interests of each Class of Members shall otherwise
decide. Any such salary as manager shall be separate and distinct from any
distributions made, should such manager be a member.
(b) A manager shall hold office until the next annual meeting of members or
until his earlier resignation, retirement or removal. Any manager may resign at
any time by the giving of written notice thereof to this Company, provided
however there is no violation of any provision of the Operating Agreement or any
provision of a contractual agreement between this Company and the manager. The
removal or resignation of a manager who is a member, does not affect in any way
such manager's rights, duties, privileges and obligations as a member nor does
it constitute a withdrawal as a member.
(c) Any vacancy occurring in the number of managers may be filled, by at
least a majority in voting interests of all members entitled to vote for the
managership position which is vacant (Class A Manager, Class B Manager or
General Manager). Such newly elected manager shall be elected to serve the
unexpired term of his predecessor. If the number of managers is increased by
amendment to this Operating Agreement, then such new manager shall be elected by
vote or written consent of at least a majority in voting interests of all
members, or as otherwise provided in the amendment to this Operating Agreement.
(d) As long as the management of this Company is vested in managers, then
no member, by reason of being a member, shall be an agent of this Company for
the purpose of its business unless authority has been delegated to such member
by the appropriate manager or by some other provision of this Operating
Agreement.
(e) Each manager shall perform his duties as a manager in good faith and
with that degree of care which a reasonable and prudent person in a like
position would use under similar circumstances. Each manager's liability to this
Company or to its members for damages for any breach of duty in such capacity is
eliminated, except if there is a final judgment or adjudication adverse to the
manager that established that his acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law or that he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled or that is with respect to a distribution the subject of
Sec. 508(a) of the New York Limited Liability Company Law. There may not be any
elimination of liability for any act or omission committed prior to the adoption
by this Company of a provision eliminating such liability.
(f) Unless otherwise provided under a separate agreement, a manager shall
not be required to manage this Company as his sole business interest but may,
without liability to this Company or its members, be involved in the management
of other entities and engaged in other activities, including the management or
ownership of imaging facilities; nor shall this Company or its members have any
right to participate in such other business interests or in income or profits
therefrom.
8. Subject to any limitations contained in this Operating Agreement or any other
applicable agreement between the members, the managers shall have the power and
authority on behalf of this Company to do all things as set forth in Sec. 202(a)
-202(q) of the New York Limited Liability Company Law, except as otherwise
provided in this Agreement.
9. The Class A Manager and the Class B Manager each shall have one vote on
extraordinary matters including those set forth below. In the event of a
disagreement, the Class A Manager shall make the final determination. The
General Manager shall have no vote on these matters.
a. To borrow money, obtain loans or enter into other financing
transactions, to give security therefore or to make loans or guarantees.
b. To merge, consolidate or dissolve the Company, or to sell or otherwise
transfer all or substantially all of the asserts of the Company.
c. To make capital expenditures.
d. To determine and make distributions.
e. To approve the budget of the Company.
f. To redeem or repurchase all or any part of a member's membership
interest subject to provisions of this Agreement and applicable law.
10. The General Manager shall have the authority to take all other actions which
may be taken by the managers, including, but not limited to the following items.
The Class A Manager and Class B Manager shall not vote on these matters.
a. In the event a member withdraws from the Company, forfeits his
membership interest by reason of default, or otherwise transfers his membership
interest back to the Company, the General Manager shall have the authority to
reissue and transfer that interest to another party on such terms as the General
Manager shall determine.
b. To enter into any contract in the ordinary course of business.
c. To hire and discharge employees; to determine the number and
qualifications of employees and to determine rates of compensation, benefits and
conditions of employment.
d. To open Company accounts (including certificates of deposit and accounts
which may be interest-bearing or non-interest bearing) in banks, savings and
loan associations and other financial institutions.
e. To engage the services of any attorney, consultant, accountant or other
professional or independent contractor.
f. To commence or settle any litigation or arbitration.
g. To provide day-to-day management of the Company.
h. To obtain such insurance coverage as may be necessary or appropriate to
the business of the Company.
i. To supervise, manage and train employees.
j. To pay operating expenses.
k. To purchase supplies, materials and services used in the ordinary
course.
l. To issue and collect bills for services and material furnished by the
Company.
11. Except as set forth in this Operating Agreement or in a separate agreement,
no member shall have the unconditional right to give, sell, assign, pledge,
hypothecate, exchange or otherwise transfer to another, all or any part of his
membership interests in this Company. Except as otherwise provided in this
Operating Agreement or in a separate agreement, prior to a member securing the
right to sell, assign, pledge, hypothecate, exchange or otherwise transfer all
or part of his membership interests in this Company to another, such member must
secure from the members such consent by vote or in writing of a majority in
voting interests, excluding the member seeking such right. Nothing herein shall
be deemed to prevent a member from granting an assignee the right to become a
member upon condition that Sec. 604 of the New York Limited Liability Company
Law is satisfied.
12. A member may withdraw as a member of this Company upon not less than sixty
days prior written notice to this Company, but any such withdrawal shall not
entitle the member to the return of all or any part of his Capital Contribution
to the Company.
ARTICLE IV
MEETINGS
1. This Company shall hold its annual meeting of members at such time as shall
be determined by the General Manager, at such place determined by the General
Manager, for the purpose of transacting such business as may come before such
meeting. Special Meetings may be called for any purpose by a manager or any
member or group of members holding not less than ten percent of the voting
interests of the members of the Company in the aggregate.
2. Whenever it is anticipated that members will be required or permitted to take
any action by vote at a meeting, written notice shall be given to the members
entitled to vote thereon, stating the place, date and hour of the meeting,
stating the purpose of such meeting, and under whose direction such meeting has
been called. The Class A Members shall in the aggregate have 25% of the voting
interests of the Company which shall be apportioned among them in the same
proportion that their Capital Contributions bear to the Capital Contributions of
all of the Class A Members in the aggregate. The Class B Member shall have 75%
of the voting interests of the Company. Such notice of meeting shall be given
personally or by first class mail, not less than ten nor more than fifty days
before the date of such meeting. Such notice of meeting need not be given to any
member who submits a signed waiver of notice, in person or by proxy, whether
before or after the meeting.
3. A majority in voting interests of the members entitled to vote on the matter
to be considered, in person or by proxy, shall constitute a quorum at a meeting
of members for the transaction of such business. The members present, despite
not being a quorum, may adjourn the meeting. No notice of adjourned meeting is
necessary if the time and place of the adjourned meeting is announced at the
meeting at which the adjournment is taken. At a meeting in which a quorum is
initially present, the quorum is not broken by the subsequent withdrawal of any
member, despite the fact that such withdrawal results in less than a quorum
being present, and all votes taken are binding upon the members of this Company.
All acts at a meeting of members at which a quorum is present, shall be the act
of all the members and be binding upon them, except when such vote requires a
greater proportion or number of membership interests pursuant to the New York
Limited Liability Company Law, the Articles of Organization or this Operating
Agreement.
4. A member may vote in person by a proxy executed in writing by such member.
Every proxy so executed shall be revocable at the will of the member. Such proxy
shall automatically be revoked, if prior to its use, the death or incompetence
of the member occurred, and notice of such death or adjudication of incompetence
is received by the proxy holder. A proxy is presumed to be revoked, whether or
not it is stated to be irrevocable, if the member who executed such proxy, sells
his membership interests prior to the date such proxy is scheduled to be
exercised.
5. Whenever the members of this Company are required or permitted to take any
action by vote, such action may be taken without a meeting, without prior notice
and without a vote, if a consent or consents in writing, setting forth the
action so taken shall be signed by the members who hold the voting interests
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all of the members entitled
to vote thereon were present and voted and shall be delivered to the office of
this Company, its principal place of business or a manager, of this Company.
Delivery made to the office of this Company shall be by hand or by certified or
registered mail, return receipt requested.
6. Every written consent shall bear the date of signature of each member who
signs the consent, and no written consent shall be effective to take the action
referred to therein unless, within sixty days of the earliest dated consent
delivered in the manner required by this paragraph to this Company, written
consents signed by a sufficient number of members to take the action are
delivered to the office of this Company, its principal place of business or a
manager of this Company. Delivery made to such office, principal place of
business or manager, shall be by hand or by certified or registered mail, return
receipt requested.
7. Two or more members may enter into a binding agreement, in writing and
executed by the members seeking to be bound, which provides that the voting
interests held by them shall be voted in accordance with such agreement or
pursuant to any lawful procedure agreed upon by them.
ARTICLE V
FINANCIAL MATTERS
1. Each member of this Company shall contribute the amount hereinafter set forth
opposite his name on the signature pages of this Agreement ("Capital
Contribution").
2. An Account denominated as a Member Capital Account shall be maintained for
each member. Each Member Capital Account shall be increased by the value of each
Capital Contribution made by such member, allocations to such member of the net
profits and any other allocations to such member of income pursuant to the
Internal Revenue Code. Each Member Capital Account will be decreased by the
value of each distribution made to the member by this Company, allocations to
such member of net losses and other allocations to such member pursuant to the
Internal Revenue Code. Upon sale or transfer by a member of his membership
interests, such member's Member Capital Account shall thereupon become the
Member Capital Account of the new member to whom such membership interests were
sold or transferred in accordance with Sec. 1.704-1(b)(2)(iv) of the Treasury
Regulations.
3. No member shall be responsible or liable to the Company or any other member
for the failure to maintain a positive balance in his Member Capital Account,
nor is he required to restore all or any part of a deficit balance in such
Member Capital Account. However, such Member Capital Account must be maintained
so as to comply with the provisions and requirements of Sec. 704(b) of the
Internal Revenue Code.
4. The members shall have equal priority with each other for the return of
Capital Contributions made to this Company or for net profits, net losses or for
any distribution set forth in law or in this Operating Agreement. However, any
loan or indebtedness owed to a member by this Company shall have priority in
payment over other distributions.
5. If any member who receives a distribution from this Company based upon the
value of his Capital Contribution and such member had no knowledge that such
distribution violated Sec. 508(a) of the New York Limited Liability Company Law,
then and in that event, such member shall have no liability to this Company or
to its creditors for such distribution. However, if such member knew or should
have known that such distribution was, at the time of such distribution,
contrary to such statute, then, in that event, such member shall be liable to
this Company for the amount of such distribution.
6. No member shall receive from this Company any part or portion of his Capital
Contribution unless there remains sufficient assets in this Company to pay the
debts and liabilities of the Company without placing the solvency of this
Company in a disabling position.
7. Distributions of the excess cash flow of the Company shall be made in the
following order:
(a) On a quarterly basis to the Class A Members a return at a rate equal to
18% per annum of the balance of the Capital Contribution of the Class A Members
in the Company.
(b) At the option of the Company and subject to available cash annual
distributions, 80% of the excess cash flow to the Class A Members until the
Class A Members have received an amount equal to 100% of their capital
contribution the Company. Unless the Company shall otherwise provide, this
annual distribution shall be deemed a redemption of the Class A Members'
interests in this Company and a return of their Capital Contributions. . The
foregoing distributions will continue until the Class A Members receive an
amount equal to all of their Capital Contributions to the Company. During this
period, the Class B Member shall be entitled to a distribution of 20% of the
Company's total distribution..
(c) Thereafter, subject to management's discretion and the availability of
excess cash, 95% of the excess cash flow will be payable to the Class B Member
and 5% to the Class A Members.
8. Excess cash flow shall consist of the cash receipts of the Company less the
amounts used or set aside for the payment of the debts and liabilities of the
Company and shall be determined by the Class A Manager and the Class B Manager.
9. The profits and losses of this Company shall be allocated in the same
proportions as distributions of the excess cash flow of the Company are made
pursuant to Section 7 of this Operating Agreement, excluding any distributions
applied to the redemption of interests in this Company, except as hereinafter
set forth. The amount of the allocation of any profits to the Class A Members
shall not exceed the amount of any such distributions, less the amount of any
such distributions applied to the redemption of the Class A Members' interests
in this Company. In addition, all of the depreciation of the assets of the
Company shall be allocated solely to the Class A Members, unless and until their
interests have been redeemed by the Company in full.
10. The Company shall, for a period of ten (10) years, have the right to redeem
all of the outstanding Class A membership interests for an amount equal to the
accrued but unpaid distributions pursuant to Section 7 (a) hereof plus the
amount equal to the members' unreturned Capital Contributions to the Company.
11. No member shall be entitled to interest on his Capital Contribution nor is
such member entitled as a matter of right, to a return, in part or in whole, of
his Capital Contribution, except as and to the extent provided in this Operating
Agreement.
12. All necessary federal and state tax returns for this Company shall be
prepared and filed. Each member shall furnish any information in his possession
that may be necessary and pertinent to the preparation of such returns.
13. Neither this Company nor any member may make an election for the Company to
be excluded from the application of Subchapter K of Chapter 1 of Subtitle A of
the Internal Revenue code or any similar provisions of applicable state law, and
no provisions of this Agreement shall be interpreted to authorize any such
election.
14. One member or one manager, as the case may be, shall be designated as "tax
matters partner" of this Company pursuant to Sec. 6231(a)(7) of the Internal
Revenue Code. Any member or manager so designated shall take all actions as may
be necessary to cause each other member to become a "notice partner" within the
meaning of Sec. 6222 of the Internal Revenue Code.
ARTICLE VI
DISSOLUTION
1. This Company shall be dissolved and its affairs wound up upon the first to
occur of the following:
(a) The latest date on which this Company is to dissolve, if any, as set
forth in the Articles of Organization, or by a judicial decree pursuant to Sec.
702 of the New York Limited Liability Company Law.
(b) The vote or written consent of at least two thirds in voting interests
of the members.
2. Upon dissolution of this Company, the members or managers may, in the name of
and on behalf of this Company, prosecute and defend suits, whether civil,
criminal or administrative, settle and close this Company's business, dispose of
and convey this Company's property, discharge this Company's liabilities and
distribute to the members any remaining assets, all without affecting the
liability of each and every member.
3. Upon dissolution, the assets of this Company shall be distributed as follows:
(a) To creditors, including members who are creditors, to the extent
permitted by law, in satisfaction of liabilities of this Company, whether by
payment or by establishment of adequate reserves, other than liabilities for
distributions to members under Sec. 507 or Sec. 509 of the New York Limited
Liability Company Law.
(b) To members and former members in satisfaction of liabilities for
distribution under Sec. 507 or Sec. 509 of the New York Limited Liability
Company Law.
(c) To the Class A Members, for the return of their Capital Contributions,
to the extent not previously returned.
(d) The remaining balance, to the Class A Members in the manner provided in
Section 7 (a) of this Agreement and the remainder to the Class B Member.
4. Within ninety days following the dissolution and the commencement of winding
up the affairs of this Company, or at any other time there are no members,
Articles of Dissolution shall be filed with the Secretary of State of New York.
Upon such filing of Articles of Dissolution by the Secretary of State of New
York, the Articles of Organization shall be deemed to be canceled.
5. Upon liquidation of this Company within the meaning of Sec.
1.704-1(b)(2)(ii)(g) of the Treasury Regulations, if any member has a deficit
Member Capital Account (after giving effect to all contributions, distributions,
allocations and other adjustments for all fiscal years, including the fiscal
year in which such liquidation occurs) the member shall have no obligation to
make any Capital Contribution, and the negative balance of any Member Capital
Account shall not be considered a debt owed by the member to this Company or to
any other person for any purpose.
6. If not otherwise provided by this Agreement and if permitted by applicable
law, upon dissolution, each member shall receive a return of his Capital
Contribution solely from the assets of this Company. If, after payment or
discharge of the debts and liabilities of this Company, such assets are
insufficient to return any Capital Contribution of any member, such member shall
have no recourse against any other member.
ARTICLE VII
GENERAL CONSTRUCTION
1. This Agreement shall not be effective unless executed by all of the parties
hereto, unless the Class B Member shall otherwise decide.
2. When the masculine gender is used in this Agreement and when required by the
context, the same shall include the feminine and neuter genders and vice versa.
3. No failure of a member to exercise and no delay by a member in exercising any
right or remedy under this Agreement shall constitute a waiver of such right or
remedy. No waiver by a member of any such right or remedy under this Agreement
shall be effective unless made in writing duly executed by all members and
specifically referring to each such right or remedy being waived.
4. This Agreement supersedes each and every course of conduct previously pursued
or consented to and each and every oral agreement and representation previously
made by the members with respect to the subject matter hereof, whether or not
relied or acted upon. No amendment of this Agreement shall be effective unless
made in writing duly executed by all members and specifically referring to each
provision of this Agreement being amended. No course of conduct or performance
subsequently pursued or acquiesced in and no oral agreement or representation
acted upon, shall amend this Agreement or impair or otherwise affect any
members' obligations, rights or remedies pursuant to this Agreement.
5. Any notice, demand or other communication required or permitted to be given
pursuant to this Agreement or under the New York Limited Liability Company Act
shall have been sufficiently given for all purposes, if given pursuant to the
provisions of this Agreement or as set forth in the New York Limited Liability
Company Act, as the case may be.
IN WITNESS WHEREOF, the persons signing this Agreement below conclusively
evidence their agreement to the terms and conditions of this Agreement by so
signing this Agreement.
