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WILLIAM C. LAST, JR. (SBN 83588)
PATRICK J. WHITEHORN (SBN 225927)
LAST & EAORO ELECTRONICALLY
520 South El Camino Real, Suite 430 FILED
San Mateo, California 94402 Superior. Court of California,
oe: (G50) 606.8365 County of San Francisco
Facsimile: -
: 06/28/2017
Clerk of the Court
Attorneys for Gregory Fishman. BY:EDNALEEN ALEGRE
Deputy Clerk
SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR SAN FRANCISCO COUNTY
UNLIMITED JURISDICTION
GREGORY FISHMAN Case No.: CGC-17-557162
Plaintiff, First Amended Complaint for:
1. BREACH OF FIDUCIARY DUTY;
vs. 2. BREACH OF FIDUCIARY DUTY;
CAMBRIDGE STAFFING SOLUTIONS, LLC., a e BREE ORO LG aon
eps gee eats GOOD FAITH AND FAIR
California limited liability company; ALEX SINO, DEALING:
an Individual and manager of Cambridge Staffing 4. BREACH OF CONTRACT:
Solutions, LLC; LIDIA KIRITCHENKO, an 5. BREACH OF CONTRACT:
Individual and manager of Cambridge Staffing 6. ACCOUNTING.
Solutions, LLC; and DOES 1 through 50,
inclusive,
Defendants.
Plaintiff GREGORY FISHMAN alleges as follows:
PRELIMINARY ALLEGATIONS
1, Plaintiff GREGORY FISHMAN (“Plaintiff”) is and at all times herein relevant was an
individual residing in San Francisco, California, County of San Francisco.
2. Defendant ALEX SINO (“SINO”), is an individual who resides in Palm Beach County,
Florida.
3. Defendant LIDIA KIRITCHENKO (“KIRITCHENKO”), is an individual who resides in
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Palm Beach County, Florida.
4, At all times relevant herein, defendant CAMBRIDGE STAFFING SOLUTIONS, LLC.
was, and now is, a California Limited Liability Company which was formed in 2007 (“CAMBRIDGE”).
5. At all times relevant herein, Plaintiff Gregory Fishman was and is a member and 33%
interest holder in CAMBRIDGE.
6. Atall times relevant herein, SINO was and is a member, manager and 33% interest holder
in CAMBRIDGE.
7. At all times relevant herein, KIRITCHENKO was and is a member, manager and 33%
interest holder in CAMBRIDGE.
8. Defendants DOES 1 through 50, inclusive, are sued hereunder by fictitious names because
their true names and capacities are unknown to Plaintiff at this time. Plaintiff will amend this Complaint
to substitute the true name and capacity of each DOE Defendant when the same is ascertained.
9. Plaintiff is informed and believes and on that basis, alleges that at all times herein
mentioned, Defendants, and DOES 1 through 10, inclusive, and each of them, were the agents,
representatives, servants and employees of each of the remaining Defendants, and in performing the acts
hereinafter set forth, did so, with the knowledge and consent of each of the remaining Defendants and
within the course and scope of said agency, servitude, representative capacity and employment.
10. Plaintiff is informed and believes and on that basis, alleges that each of the fictitiously
named Defendants is legally responsible for the damages to FISHMAN hereinafter set forth.
11. Defendants CAMBRIDGE, SINO, KIRITCHENKO, and DOES | through 50, and each
of them, inclusive shall be referred to collectively as “DEFENDANTS.”
FIRST CAUSE OF ACTION
(For Breach of Fiduciary Duty Against
Defendants SINO, KIRITCHENKO and Does 1-50 inclusive)
12. _ Plaintiff realleges and incorporates by reference each allegation in the above paragraphs.
13. According to the Second Amended Limited Liability Operating Agreement of Cambridge
Staffing Solutions, LLC (Exhibit “A”) as amended by Addendum 1 to the Second Amended Limited
Liability Operating Agreement of Cambridge Staffing Solutions, LLC, Waiver of Notice, Minutes and
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Unanimous Resolution of The Member, dated May 16, 2010 (Exhibit “B”) and CEO Employment
Agreement dated July 1, 2010 (Exhibit “C”), defendant SINO is the Executive Vice President and
Manager of defendant CAMBRIDGE, and defendant KIRITCHENKO is a member and manager of
Defendant CAMBRIDGE.
14. As the operating Manager of CAMBRIDGE, SINO owes fiduciary duties to Plaintiff.
15. Asamember and Manager of CAMBRIDGE, KIRITCHENKO owes fiduciary duties to
Plaintiff.
16. As part of the fiduciary duties owed to Plaintiff, Defendants SINO and KIRITCHENKO
have a duty of loyalty to account to CAMBRIDGE and its members, including Plaintiff, and to hold
themselves as trustees for any property, profit or benefit derived by managing CAMBRIDGE’s
business; to refrain from competing with CAMBRIDGE as set forth in paragraph 8.10 of the Second
Amended Limited Liability Operating Agreement of Cambridge Staffing Solutions, LLC (Exhibit “A”),
and to refrain from dealing with CAMBRIDGE as or on behalf of anyone who has an interest adverse
to that of the company.
17... As part of the fiduciary duties owed to the Plaintiff, Defendants SINO and
KIRITCHENKO also have a duty of care to refrain from engaging in grossly negligent or reckless
conduct, intentional misconduct or knowing violation of law when managing the Company business.
18. Plaintiff is informed and believes and alleges thereon that Defendants SINO and
KIRITCHENKO have failed and refused to account to Plaintiff the profit or losses; and benefits
derived from CAMBRIDGE's business,
19. Plaintiff is informed and believes and alleges thereon that Defendants SINO and
KIRITCHENKO prepared K-1 tax documents for Plaintiff, filed those statements with various taxing
authorities, but failed and refused to distribute those K-! tax documents to Plaintiff.
20. Plaintiff is informed and believes and alleges thereon that Defendants SINO and
KIRITCHENKO failed and refused to distribute profits to Plaintiff.
21. Defendants SINO and KIRITCHENKO breached their fiduciary duties to the Plaintiff
by their failure and refusal account to Plaintiff for his 33% share of the revenue and profits of
CAMBRIDGE and to provide required tax documents.
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First Amended Complaint 722. Asa direct and proximate result of Defendants SINO and KIRITCHENKO's breach of
fiduciary duty, Plaintiff has suffered damages in an amount to be proved at trial, exceeding the
jurisdiction of this court.
23. Defendant Defendants SINO and KIRITCHENKO’s foregoing conduct is willful,
wanton, despicable, oppressive and malicious thereby justifying punitive damages.
24, The exact amount of the Plaintiff's damages will be ascertained at trial.
WHEREFORE, Plaintiff prays for judgment as hereinafter set forth.
SECOND CAUSE OF ACTION
(For Breach of Fiduciary Duty Against
Defendants SINO, KIRIFCHENKO and Does 1-50 inclusive)
25. Plaintiff realleges and incorporates by reference each allegation in the above paragraphs.
26. Plaintiff is informed and believes and alleges thereon that at all times relevant herein it
was the plan of CAMBRIDGE to expand beyond the initial acquisition of Faith Home Health Care, Inc.
and into other areas of both clinic based and home health care services in the health care industry, either
through acquisitions or licensing expansion into other territories.
27, Plaintiff is informed and believes and alleges thereon that Defendants SINO and
KIRITCHENKO have organized, incorporated, created or otherwise acquired at least four separate
companies that operate in the health care field and directly compete against CAMBRIDGE and its
subsidiaries. SINO and KIRITCHENKO are member managers and/or corporate officers and
shareholders of Faith Telehealth Care, LLC; Health Gate, LLC; Q24. LLC; and Certified Health Care
Services, Inc. Plaintiff is informed and believes that these companies are operating in the health care
industry in the same locations as CAMBRIDGE and CAMBRIDGE’s subsidiaries, and are competing
with CAMBRIDGE and CAMBRIDGE'’s subsidiaries.
28. Plaintiff is informed and believes and alleges thereon that these companies were
organized, incorporated, created or otherwise acquired by Defendants SINO and KIRITCHENKO and
are not owned or operated by CAMBRIDGE or any of CAMBRIDGE’s subsidiaries.
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29. Plaintiff is informed and believes and alleges thereon that Defendants SINO and
KIRITCHENKO have breached their fiduciary duties to Plaintiff by operating these competing
businesses.
30. As a direct and proximate result of Defendants SINO and KIRITCHENKO's breach of
fiduciary duty, Plaintiff has suffered damages in an amount to be proved at trial, exceeding the
jurisdiction of this court.
31. Defendant Defendants SINO and KIRITCHENKO’s foregoing conduct is willful,
wanton, despicable, oppressive and malicious thereby justifying punitive damages.
32. The exact amount of the Plaintiff's damages will be ascertained at trial.
WHEREFORE, Plaintiff prays for judgment as hereinafter set forth.
THIRD CAUSE OF ACTION
{For Breach of Obligation of Good Faith and Fair Dealing Against
Defendant SINO and KIRITCHENKO and Does 1-50 inclusive)
33. Plaintiff realleges and incorporates by reference each allegation in the above paragraphs.
34. As members and managers of CAMBRIDGE, SINO and KIRITCHENKO are charged
with the duty to exercise all the rights consistent with the obligation of good faith and fair dealing.
35. By their failure and refusal to account to Plaintiff for Plaintiff's share of any revenue
and profits of CAMBRIDGE, SINO and KIRITCHENKO breached their obligations of good faith and
fair dealing to the Plaintiff.
36. Asadirect and proximate result of SINO and KIRITCHENKO 's breach of the
Obligation of Good Faith and Fair Dealing, Plaintiff has suffered damages in an amount to be proved at
trial, exceeding the jurisdiction of this court.
37. Defendant SINO and KIRITCHENKO’s foregoing conduct is willful, wanton,
despicable, oppressive and malicious thereby justifying punitive damages.
38... The exact amount of the Plaintiff's damages will be ascertained at trial.
WHEREFORE, Plaintiff prays for judgment as hereinafter set forth.
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FOURTH CAUSE OF ACTION
(For Breach of Contract Against
Defendant SINO and KIRITCHENKO and Does 1-50 inclusive)
39. Plaintiff realleges and incorporates by reference each allegation in the above paragraphs.
40. SINO and KIRITCHENKO entered into a contact with Plaintiff, the Second Amended
Limited Liability Operating Agreement of Cambridge Staffing Solutions, LLC (Exhibit “A”) as
amended by Addendum 1 to the Second Amended Limited Liability Operating Agreement of
Cambridge Staffing Solutions, LLC, Waiver of Notice, Minutes and Unanimous Resolution of The
Member, dated May 16, 2010 (Exhibit “B”).
41. The Limited Liability Operating Agreement includes an agreement, at Section 3.3,
between the members and managers “. . . that they will not work for any businesses competitive with
that of the Company at any time while the Company or any successor is pursuing its business as
described in Section 2.3(i), (ii) and (iii) ...”
42. Defendants SINO and KIRITCHENKO have breached the contract in that Defendants
SINO and KIRITCHENKO have organized, incorporated, created or otherwise acquired companies that
are operating in the health care industry in the same locations as CAMBRIDGE and CAMBRIDGE’s
subsidiaries, and are competing with CAMBRIDGE and CAMBRIDGE’s subsidiaries.
43. Plaintiff has done all, or substantially all, of the important things required under the
contract, or else was excused from doing those things by the conduct of Defendants SINO and
KIRITCHENKO.
44, As a result of Defendant SINO and KIRITCHENKO’s breaches of contract, Plaintiff has
been damages in an amount in excess of the jurisdiction of this court and in an amount to be ascertained
at trial.
WHEREFORE, Plaintiff prays for judgment as hereinafter set forth.
FIFTH CAUSE OF ACTION
(For Breach of Contract Against
Defendant SINO and Does 1-50 inclusive)
45. Plaintiff realleges and incorporates by reference each allegation in the above paragraphs.
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46. SINO and entered into a contact with Plaintiff, and CAMBRIDGE, the CEO
Employment Agreement dated July 1, 2010 (Exhibit “C”).
47. The CEO Employment Agreement dated July 1, 2010 includes an agreement by SINO,
at Section 2.C, that SINO “. . . will not, during the term of this Agreement, and for a period of three
years thereafter, directly or indirectly engage in any other similar or competing other business, either as
an employee, employer, consultant, principal, officer, director, advisor, or in any other capacity, either
with, or without compensation, without the prior written consent of Company. . . .”
48. Defendant SINO has breached the contract in that Defendants SINO and has organized,
incorporated, created or otherwise acquired companies that are operating in the health care industry in
the same locations as CAMBRIDGE and CAMBRIDGE’s subsidiaries, and are competing with
CAMBRIDGE and CAMBRIDGE’s subsidiaries.
49. Plaintiff has done all, or substantially all, of the important things required under the
contract, or else was excused from doing those things by the conduct of Defendants SINO.
50. As aresult of Defendant SINO’s breaches of contract, Plaintiff has been damages in an
amount in excess of the jurisdiction of this court and in an amount to be ascertained at trial.
WHEREFORE, Plaintiff prays for judgment as hereinafter set forth.
SIXTH CAUSE OF ACTION
(For Accounting Against
All Defendants)
51. Plaintiff realleges and incorporates by reference each allegation in the above paragraphs.
52. SINO has been in possession of all information pertaining to CAMBRIDGE’s business
and financial affairs since his becoming a member, manager and Executive Vice President in 2010.
53. Plaintiff has been denied access to CAMBRIDGE's financial and business records.
54, The extent of the damages caused to Plaintiff by SINO and KIRITCHENKO’s
wrongdoing cannot be ascertained without a Court-ordered accounting.
WHEREFORE, Plaintiff prays for judgment as hereinafter set forth.
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DEMAND FOR JUDGMENT
WHEREFORE, Plaintiff demands judgment as follows:
UNDER THE FIRST, SECOND, THIRD, FOURTH AND FIFTH CAUSES OF ACTION:
1. For general and special damages, according to proof;
2. For punitive damages;
UNDER THE SIXTH CAUSE OF ACTION:
3. For a Court Ordered accounting.
UNDER ALL CAUSES OF ACTION:
4. For the costs of the lawsuit;
5. For such other and further relief as this Court may deem just and proper.
Dated: June 28, 2017 LAST & FAORO,
By:
WijHam C. Last
Patrick J. Whitehorn
Attorneys for Gregory Fishman.
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First Amended ComplaintEXHIBIT Adune 28. 2009
SECOND AMENDED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
CAMBRIDGE STAFFING SOLUTIONS. LLCTABLE OF CONTENTS
ARTICLE [ DEFINITIONS ....
ARTICLE II FORMATION OF LIMITED LIABILITY COMPANY.
Section 2.1. Formation; Name. ...
Section 2.2. Registered Office; Registered Agent; Principal Office ...
Section 2.3. Purposes and Scope of the Compan
Section 2.4. Scope of Members’ Authority ....
ARTICLE Il MANAGEMENT OF COMPANY.
Section 3.1. Management of Company.
Section 3.2. Time and Attention.....
Section 3.3... Compensation of Manager...
Section 3.4... Tax Matters'Partner..
ARTICLE [V FINANCING .....c.scccesseuseeseseus
Section 4.1. Initial Capital Contributions ...
Section 4.2... Subsequent Capital Contributions.
Section 4.3. Withdrawal of Capital.
Section 4.4. Loans to Compan:
Section 4,5. Capital Accounts..
ARTICLE V ACCOUNTING AND DISTRIBUTIONS ......
Section 5.1. Allocation of Net Profits and Net Los:
Section 5.2. Section 704(c) Allocations...
Section 5.3, Overriding Allocation Provisions
Section 5.4. Tax ReWmMs....sencien
Section 5.5. Distributions to Members.
Section 5.6. Accounting...
Section 5.7. Bank Accounts
ARTICLE VETERM AND TERMINATION
Section 6.1... Term...
Section 6.2. No Voluntary Termination
Section 6.3... Dissolution and Winding Up of the Company.
ARTICLE VII ASSIGNMENT...
Section 7.1. - Prohibited Transfer
Section 7.2, Permitted Transfers.
Section 7.3. Right of First Offer,
Section 7.4. Admission of Transferce.
ARTICLE VI GENERAL
Section 8.1. Notices
June 28, 2009Section 8.2,
Section 8.3.
Section 8.4.
Section 8.5,
Section 8.6.
Section 8.7.
Section 8.8.
Section 8.9.
Section 8.10.
June 28, 2009
Governing Law ....
Entire Agrecment.....
Waiver.......
Dispute Resolution.
Successors ....
Severability ..
Counterparts.
EXHIBITS
Members, Addresses, and Percentage InterestsLIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
CAMBRIDGE STAFFING SOLUTIONS, LLC
THIS LIMITED. LIABILITY COMPANY. OPERATING AGREEMENT
(“Agreement”), is made and entered into as of the 2% day of , 2009, by and between
Gregory Fishman (“Gregory”), Peter Kiritchenko (“Peter Kiritchenko”) and Lidia Kiritchenko
(“Lidis”) (Peter Kiritchenko, Gregory and Lidia are sometimes individually referred to herein as
“Member” and, collectively, as the “Members”),
RECITALS
‘The Members have agreed to form a limited liability company in accordance with
the Califoria Beverly-Killea Limited Liability Company Act under the name “Cambridge
Staffing Solutions LLC” (the “Company”),. The Members desire to enter into this Agreement in
order to set forth their understanding with respect to the inanagement, operation, and other
mutters of the Company.
NOW, THEREPORE, the Members hereby agree as follows:
ARTICLEL
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings set
forth below: -
“Act” shall mean the California Beverly-Killea Limited Liability Company Act,
as codified in Sections 17000 et seq. of the California Corporations Code, us the same may be
amended from time to time.
“Adiusted Capital Account Deticit” shall mean, with respect to any Member the
deficit balanee, if any, in such Member's Capital Account as of the end of the relevant Fiscal
Year, afier giving effect to the following adjustments:
{a) Decreasing such deficit by any amounts which such Member is deemed to
be obligated to restore pursuant to the penultimatc sentence of each of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Increasing such deficit by the itcms described in Regulations Section
1.704-1(b)(2)ii)(d)(4), (5) and (6).
“Agreement” shall meun this Operating Agreement, as originally executed and as
amended from time to time.
a
icles” shall mean the Articles of Organization for the Company which have
been or will be filed with the California Scerctary of State, as umended from time to time. C
a
June 28, 2009 1 Lv” shall. mean an account. established and maintained for cach
Member in accordance with Regulations Section 1.704-1(b)(2){iv), the balance of which shall be
(a) increased by (i) the Amount of any cash and the fair market value of any other propeny
contributed to the Company by such Member, and (ii) the amount of any allocations of Net
Profits to such Member, and (b) decreased by (i) the amount of any cash and the fair market
value of any other property disiributed to such Member by the Company and (ii) the amount of
any allocations of Net Loss to such Member,
“Capital Contributions” shall mean the totat amount of cash und the fair market
value of any other property contributed to the Company by Members, as shown in the
Company’s books and records. The Members’ initial Capital Contributions arc set forth on
Exhibit “A” attached hereto.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, the provisions of succeeding Jaw, and to the extent applicable, the Regulations.
“Company” shall mean Cambridge Staffing Solutions, LLC.
“Distributable Funds” shall mean the amount of the excess of the cash receipts
from the Company's operations over its cash expenses, including amounts set aside as reserves,
In calculating Distributable Funds, no deduction shall be made for payments of the loan referred
to in Section 4.4 hereof.
“Fiscal Year” shall mean the Company's fiscal year, as set lorth in Seetion 5.6(a).
“Liquidator” shall have the meaning set forth in Section 6.3.
“Major Decision” shall have the meaning set forth in Section 3.1.
“Majority in interest” shall mean those Members holding a majority of the
Percentage Interests held by al! Members at a given time.
“Managers” shat have the meaning set forth in Section 3.1.
“Member” shall mean, except as otherwise herein specifically provided, each
Person who is an initial signatory to this Agreement (other than any Person who has transferred
the Person's entire Percentage Interest pursuant to this Agreement) and any other Person who
may be admitted as a Member and who subsequently becomes a signatory to this Agreement.
“Member Nonrecourse Debt" shall have the meaning set forth in Section 1,704-
‘A(b)(4) of the Regulations relating to “partner minimum gain”.
“Member Nonrecourse Debt Minimum Gain” mean an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecoutse Liability, determined in accordance
with Section 1.704-3(i)(3) of the Regulations,
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June 2B 2009
Ww“Member Nonrecourse Deductions” has the meaning set forth in Sections 1.704~
2()(1) and 1.704-2(i)(2) of the Regulations relating to “partner nonrecourse deductions.”
“Minimum Gain” shall mean: that amount of gain which would be recognized for
federal income tux purposes il, as of the close of the Fiscal Year with respect to which the
calculation is being made, the Company's assets were sold for an amount equal to the total
principal amount of all nonrecourse indebtedness of the Company then secured by such assets, It
is the intention of the Members. that the concept of Minimum Gain, as used in. this Agreement,
has the same meaning as it does in Section 1.704-2(d\1) of the Regulations.
“Net Profits” and “Net Lass” shall mean the income, gain, loss and deductions of
the Company in the aggregate or separately stated, as appropriate, determined under the method
of accounting employed by the Company at the close of each Fiscal Year on the Company's
information tax return filed for federal income (ax purposes together with all tax items described
in Section 702(a) of the Code that are not included in the Company"s taxable income or loss.
Notwithstanding anything to the contrary in this Agreement, Net Profits and Net Loss shall not
include allocations under Code Section: 704{c) (which are set forth at Section 5.3) or Regulatory
Allocations.
“Nanrecourse Deductions” shall have. the meaning sel forth in Section 1.704-
2(b)(3) of the Regulations.
“Percentaye Interest” or “Interest” shall mean a Members the right to vote and the
right to receive information concerning the business and affairs of the Company.
“Person” shall mean an. individual, general partnership. limited partnership,
limited liability company, corporation, trust, estate, rcal estate investment trust, association oF
any other entity.
“Regulations” shall mean the regulations currently in force as final or temporary
that have been issued by the Department of Treasury pursuant to its authority under the Cade, as
such may be modified or amended from time to time.
“Revulatory Allocations” shall mean the allocations set forth at Sections 5.4(a),
5.A(b), 5.4(c), 5.4(4), 5.4(e). and 5.4(h).
“Tax. Percentage” shall mean a Member's entire beneficial interest in the
Compuny, including the Member’s share of Net Profits, Net Loss, distributions, and capital. For
avoidance of doubt, this shall mean forty percent (40%) us to Peter Kiritchenko, forty percent
(40%) as to Gregory Fishman and twenty percent (20%) as to Lidia Kiritchenko.
une 28, 2008 3ARTICLE Hi
FORMATION OF LIMITED LIABILITY COMPANY
Section 2.1... Formation; Name.
(a) The Members have caused the Company to be formed as a California
limited liability company by filing the Articles in accordance with the Act with the California
Secretary of State. ‘the name of the Company shall be “Cambridge Stuffing Sulutions, LLC”,
The Company may operate its business under one or more assumed names.
(b). Except as expressly provided for herein to the contrary, ihe rights and
obligations of the Members and the management, administration and termination of the
Company shall be governed by the Act. A Member's Percentage Interest in the Company shal!
be personal property for all purposes. All real and other property owned by the Company shall
be deemed owned by the Company as an entity, and no. Member, individually, shall have any
ownership of such property.
Section 2.2. Registered Office; Rewistered Agent: Principal Office. The registered agent and
office of the Company in the Statc of California shall be Gregory. The Manager may from time
to time change the registered: agent or office through appropriate filings with the California
Secretary of State. The principal office of the Company shall be 633 Grand View Avenue, No:
3, San Francisco, CA 94114 or such other place as the Manager may designate from time to time,
which need not be in the State of California, The Company may have such other offices as the
Manager may designate from time to time.
Section 2.3. Purposes and Scope of the.
‘The purpose of the Company is to (i) organize a business focused on recruitment
and placement of nurses, physical therapists and other medical personnel for work in the United
States and elsewhere in the world, (ii) educate and prepare nurses and other medical personnel
for passing the English language and professional competency examinations necessary for such
placements, as related to such placement activity and not for independent educational purposes
(iii) facilitate the immigration process of such medical personnel, and (iv) engage in any other
lawful act or activity agreed upon by the Members for which a limited liability company may be
organized under the Act, The Company shall huve the nuthority 10 do all things necessary or
convenient {o uccomplish its purpose and operate its business as described in this Section.
Section 2.4. Scope of Members’ Authocity. Except as otherwise expressly and specifically
provided in this Agreement, no Member (other than the Managers) shall have any authority to act
for, or fo assume any obligations or responsibility on behalf of, any other Member or the
Company.
hee.
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June 28, 2008 4ARTICLE Ill
MANAGEMENT OF COMPANY
Scction 3.1. Management of Company. The names of three Managers of the company shall be:
Peter Kiritchenko, Gregory Fishman. and Lidia Kiritchenko, cach of whom shall require a
separate contract with the Company. Until such time as Peter Kiritchenko’s loans shall be repaid
in full, with interest, Peter Kiritchenko shal] have the right to make all Major Decisions for the
Company, without the votes of the other Members and Managers, except as noted below in
Section 3.2. Peter Kiritchenko shall notify other members and managers of all Company Major
Decisions. in written form. For avoidance of doubt, funds shall only be expended in accordance
with a Majority of Interest approved monthly budget or specifically approved by Peter
Kiritchenko. ‘No other Manager or Member shall have a right to make any Major Decisions for
the Company, without the Majority of Interest approval of the other Members and Managers of
the Company. The following shall be construed to be Major Decisions:
G) the opening and closing of Company accounts;
(ii). the opening of affiliate companies, subsidiaries. or representative
companies abroad;
(iti). the issuance of Powers of Attomey to anyone;
(iv) any borrowing by the Company, whether or not sccured;
{v) the filing of any applications, reports, appeals or similar items with
any court;
(vi) approval of the annual and monthly budget;
(vii) the establishment of reserves;
(viii) hiring any key employees or entering into any leases:
(ix) dissolving the Company: or
(x) Any increase in the Company budget of more than Three Thousand
Dollars ($3000).
Section 3.1.2 Any major decisions to be made abroad with respect to any affiliate or subsidiary
of Company, and specifically decisions concerning change of Operating Agreement, transfer of
shares or issuance of powers of attomey on behalf of Company, arc not to lake place without
Peter Kiritchenko’s advance written authorization.
Section 3.1.3 Until Peter Kiritchenko's loan is repaid in full, with an interest specified in this
document, Peter Kiritchenko shall have the right to solely approve the monthly and annual
budget of he Company.
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June 28, 2008 5 y Le
4Section 3.1.4 Company shall have no right to sell or wansfer any shares in any affiliate without
Peter Kiritchenko's advance written authorization. By mutual Agreement of all Members and
Managers, the Company could be placed for sale. . If they could not agree on a sales price, an
independent appraisal will be conducted to evaluate the value of the company, in accordunce
with section 7.5. The appraised value shall he binding on all the parties invalved.
Section 3.1.5 Any Manager or Member, EXCEPT Peter Kiritchenko, acting solely in the
capacity of Manager or Member bind the Company or execute any instrument in violation of
Section 3.1 through 3.1.4 shall indemnify, defend, and save harmless each other Member and the
Company from and against any loss, cast, expense, liability, or damage arising from or out of
any claim based on any action by such Member described in the ahovementioned sections.
Section 3.2. Without all the other Members agreement, Peter Kiritchenko cannot:
a, Sell the Company shares;
b, Put. up Company shures as collateral;
c. Incur 3 Party debts on behaif of the Company;
d. Dispose of assets of the Company;
¢, Merge the Company or cause it to buy another Company; or
f. tssuc Powers of Attorney or authorize his representatives to do any of the above, or
anything in contravention of this Agreement...
Section 3.3, Time_and Attention. The Managers shall devote such time and attention to
Company business as shall from time to time be necessury or uppropriate and shall exercise the
powers and authority geanted in this Agreement in the best interest of the Company. The
Members acknowledge. however, that the Managers have other business interests and therefore,
they shall not be required to devote their full-time efforts to the Company. No Member,
however, shall have any interest in any enterprise competitive with the business of the Company.
The Managers acknowledge that the contacts and knowledge they are developing in their work
on behalf of the Company constitute trade secrets and. other intellectual. property of the
Compuny.. In order to safeguard such property, the Managers agree that they will not work for
any businesses competitive with that of the Company at any time while the Company or any
successor is pursuing its business as described in Section 2.3(i), (ii) and (iii).
Section 1.4. Compensution of Manager. The Managers shall serve withaut compensation but
shall be entitled to reimbursement for actual out-of-pocket expenses directly arising from the
Company's businesses, consistent with approved budgets.
Section 3.5. Foreign Operations, Until such time as the Members ununimously agree
otherwise, Gregory Fishman shall be appointed as General Director of nny forcign affiliates, for
a term of unlimited duration. He shall require a separate contract with he Company., and he
may not he Terminated except for serious violation of this Agrcement.
Section 3.6. Tax Matters Parner. Lidia shall be and is hereby designated as the “tax matters
partner” for purposes of Section 6231(a)(7)(A) of the Code, She shall not agree to any extension
of the statute of limitations or to any settlement or compromise of any dispute with any taxing
authority without the approval of ail the other Members, which approval shall not be inercasingly
June 28, 2009 6withheld. If Lidia ceases to be a Member for any reason, a replacement “tax mutters partner”
shall be selected by the Unanimous Vote of the remaining Members.
ARTICLE IV
TNANCING
Section 4.1. Initial Capits! Contributions. The Members have each contributed the amounts
specified on Exhibit “A” attached hereto.
Section 4.2. Subsequent Capital Contributions. The Members may make subsequent capital
contributions if ali Members agree.
Section 4.3. Withdrawal of Copital. No Member may withdraw capital from the Company
without the consent of the other Members. No Member shall be entitled to interest on the Capital
Contributions to the Company. Except as provided in this Agreement, ne Member shall be
entitled to a return of any cash or property contributed to the Company until the full and
complete winding up and liquidation of the business and affairs’ of the Company. No Member
shail be personally liable for the return to uny other Member of any portion of the Member's
Capital Contribution, but on the contrary, any such return shall be made solely from Company
assets.
Section 4.4. Loans to Company. No Member shall be required to loan funds to the Company.
Peter Kiritchenko contemplates making loans to the Company. Peter Kiritchenko may loan
funds to. the Company but shall be under no obligation to do so. Such loans shall bear interest at
seven percent (7%) per annum compounded semiannually. Until repaid, the Company agrees
that eighty percent (80°) of Distributable Funds shall be paid to Peter Kiritehenko as payment
first of interest and then of outstanding principal on his loans. If all Members. ugree, Peter
Kiritchenko’s loans may be répaid more rapidly, During this period, unti) Peter Kiritchenko's
Loan is paid off, the remaining twenty percent (20%) of Distributable Funds shull be paid to
Gregory Fishman.
Section 4.5.. Capital Accounts. A separate Capital Account shall be maintained for each
Member. The provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section |.704-1(b), and shall be interpreted and applied ina
manner. consistent with such ‘Regulations including reallocations of Capital: Accounts, as
determined by the Members. No Member shall be required to make any contribution to the
Company by reason of any negative balance jn the Member’s Capial Account, nor shall any
negative balance in a Member's Capital Account create any liability on the part of a Member toa
third party.
ARTICLE V
ACCOUNTING AND DISTRIBUTIONS
Section 5.1. - Allocation of Net Profits and Net Loss. Except as otherwise provided in Sections
$.2 und $.3, €
dune 28, 2009 7(a). Net Profits shall first be allocated as follows:
a First, 10 the Members until each member has been allocated an
aggregate amount of Net Profits under this subscction (i) equal in the aggregate amount
of Net Luss previously allocated (o the Member under Section 5.1(b) below. Such
allocations shall be divided among the Members based on the amount of unreserved Net
Loss previously allocated to each.
(ii) Then, Net Profits shal! be allocated to the Members in accordance
with the Tax Percentage of each,
(iii) Net Losses shall be allocated to the Members in accordance with
the Tax Percentage of cach.
(b) ft shall be required that company distribute Net Profits to all Members on
a quarterly basis absent 2 Unanimous Vote by all the Members to the contrary. Enough
funds shall be withheld, however, reasonably sufficient to pay tax obligations of the
Company.
Section 5.2, Section 704(c) Allocations. In accordance with Code Section 704(c) and the
Regulations thereunder, income, gain, loss. and deduction with fespect. to. any property
contributed to the capital 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 to
the Company for federal income tax purposes and its fair market vatue.
Section 5.3. Overriding Allocation Provisions. Notwithstanding anything contained herein to
the contrary, the following allocations shall be made:
{a) inimum Gain Chargeback, Except as otherwise. provided in Section
1,704 of the Regulations, notwithstanding any other provision of this Agreement, if there is a nct
decrease in Minimum Gain during any Fiscal Year, each Member shal! be specially allocated
items of income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to suclt Member's share of the net decrease in Minimum Gain, deternined in
accordance with Section 1.704-2(g) of the Regulations. Allocutions pursuant to the previous
sentence shall be made in proportion to the respective amounis required to be allocated to each
Member pursuant thereto. The items (6 be so allocated shall be determined in accordance with
Section 1.704-2(g) of the Regulations, ‘This Section 5.3(a) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(f} of the Regulations and shall be
interpreted consistently therewith.
(0) Member Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704 of the Regulations, notwithstanding any other provision of this Agreement, if there
is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(g)(1) of the Regulations, shall be specially allocnied items of
dune 28, 2009 7 gincome and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain
altributable to such Member Nonrecourse Debt, determined in accordance with Section 1.704-
2(i) of the Regulations. Allocations. pursuant to the previous. sentence shall be made ‘in
proportion to the respective amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated shall be determined in accordance with Section 1.704-2(i) of the
Regulations. This. Section 5.3(b) is intended to. comply with the partner minimum gain
chargeback requirement in Section 1.704-2(i) of the Regulations and shall be interpreted
consistently therewith,
(c) Qualified Income Offset. Notwithstanding any other provision of this
Agreement, in the event any Member unexpectedly receives any adjustments, allocations, or
distributions described in Section 1.704-1(b)(2)(ii)(d)(4).(5) and (6) of the Regulations, items of
income and gain shall be specially allocated to each such Member in an amount and manner
sufficient to climinatc, 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 5.3(c) shall be made only if and to the extent that such Member would have an Adjusted
Capital Account Deficit after all other alfocations provided for in this Section 5.3 have been
tentatively made as if this Section 5.3(c) were not in this Agreement. This qualificd income.
offset is intended to comply with Regulations. Section’ 1.704-1(b)(2)(iiMd). and. shall be
interpreted consistently therewith.
(a) Net Loss Limitation. No Member shall be allocated Net Loss to the extent
that the allocation would cause the Member to have an Adjusted Capital Account Deficit.
{e) Nonrecourse Deductions; Member Nonrecourse Deductions. Nonrecourse,
deductions shall be allocated in accordance with cach Member's relutive Tax Percentoge.. Any
Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member
who bears the economic disk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions. are attributuble in accordance with Section 1.704-2 of the
Regulations; and. any Net Profit used to repay any indebtedness which. was the source of the
expenditure resulting in such Net Loss shall be allocated to such Member.
{ft} Section: 754 Adiustments, [fan election under Section 754 of the Code is
in effect with respect to the Company, to the extent an adjustment to the adjusted tax basis of any
Company asset is required, such adjustment shall be made pursuant to all applicable Regulations,
(eg). Curative Allocations. If income, Jess or items thereof are allocated to one
or more Members pursuant to Sections 5.3(a), 5.3(b), 5.3(c), 5.3(d), 5.3(c), and 5.3(h) above,
subsequent income and loss first will be allocuted (subject to the provisions of Sections 5.3(a),
5.3(b), 5.3(c), 5.3{d), 5.3(c), and. 5.3(h)) to the Members in a manner designed to result in each
Member having a Capital Account balance equal to what it would have been if the original
allocation of income or loss pursuant to Sections 5.3(a), 5.3(b). 5.3{c), 5.3(d), 5.3(e), and’5.3(h)
had not occurred
(h) Gross Income Allocation. If a Member has a deficit Capital Account at
the end of any Company fiscul year which is in excess of the sum of (i) the amount the Member
C
June 28, 2009 9 wt
@
aeis obligated to restore pursuant to any provision of this Agrcement, and (ii) the amount the
Member is deemed to be obligated (o restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g){1) and 1.704-2iX5), the Member shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 3.3(h) shall be made only if and to the extent
that the Member would have a deficit Capital Account in excess of such sum afier all other
allocations provided for in this Article 5 have been. made, as if Section $.3{c) .and.this Section
5.3(h) were notin this Agreement.
Section 5.4. Tax Returns. The Managers shall prepare or cause to be prepared, at the expense
of the Company, all tax returns and statements, if any, which must be filed on behalf of the
Company with any taxing authority.
Section 5.5. Distributions to Members. Distributable Funds shall be distributed to the
Members in their respective Tax Pereentage when und if determined Unanimously by all of the
Members. For avoidance of doubt, consistent with Section 4.4 hereof, for so long as any amount
is owing to Peter Kiritchenko on account of his loans to the Company, eighty percent (80%) of
Distributable Funds shall be paid to Peter Kirilchcnko as payment of principal and interest on
such loans. During this period, the remaining twenty percent (20%) of Distributable Funds shall
be paid to Grogory Fishman. Subsequent to repayment of this debt, Forty Percent (40%) of.
Distributable Funds shall be paid to Peter Kiritchenke; Forty Percent (40%). of Distributable
Funds shall be paid to Gregory Fishman; and ‘I'wenty Percent (20%) of Distributable Funds shalt
be puid to Lidia Kiriichenko.
Section 5.6. Accounting.
(a)... The “Fiscal Year" of the Company shall end on the last day of December
of each year.
{b). The books of aecount of the Company shall be kept and maintained at all
times at the Company's principal place of business. The books of account shall be maintained
on a cash basis in accordance with generally accepted accounting principles, consistently
applied, and shall show all items of income and expense.
(c). ‘The Managers shall prepare and furnish to each of the Members in a
reasonable time after the close of cach calendar year an imaudited statement, certified by the
Company's regularly employed firm of certified public accountants to be true and correct to the
best of its knowledge and belief, showing the operation of the Company lor such quarter, and
year to date, the balance in each Member's capital account, the unpaid balance duc under all
obligations of the Company, and all other information reasonably requested by any Member,
(d) Each Member shall have the right at all reasonable times during usual
business hours to audit, examine, and make copies of of extracts from the books of account of
the Company. Such right may be exercised through any agent or employee of such Member
designated by such Member or by.an independent public accountant designated by such Member.
Fach Member shall bear all expenses incurred in any examination mude for such Member's
account.
dune 28, 2009 10
7 whe
be?Section 5.7. Bunk Accounts. Funds of the Company shall be deposited in an interest-bearing
if possible) Company accuunt or accounts. Withdrawals from bank accounts shall be made by
the Managers. Any withdrawals in excess of $5,000 shall. require the approval of Peter
Kiritchenko. Any check exceeding $5,000.00 shall require the signatures of two Managers.
ARTICLE VI
TERM AND TERMINATION
Scction 6.1. Term. The Company shui] continue in existence until terminated, dissolved and
its affairs wound up in accordance with the Act und the provisions of this Agreement. All
provisions of this Agreement relative to the dissolution and winding up shall be cumulative; that
is, the exercise or use of one of the provisions hereof shall not preclude the exercise or use of any
other provision hereof,
Section 6.2. No Voluntary Termination. No Member shall have the rightto withdraw from the
Company.
Section 6.3. Dissolution and Winding Up of the Company,
(a). Upon the dissolution of the Company, the Managers (or, if the office of a
Manager is vacant, another person chosen by the appropriate Members) (the “Liquidator”) shall
proceed to the winding up of the affairs of the Company, including the filing with the California
Secretary of State of a Certificate of Dissolution and a Certificate of Cancellation, as and when
prescribed by the Act. Subject to the provisions of this Article Vi and Article Vil, the asseis of
the Company shall be liquidated as promptly as is consistent with obtaining a fair market value
therefor, and the proceeds therefrom, to the extent available, shall be applied and distributed by
the Company in accordance with the closing Capilal Account balance of each Member.
(b) Upon the compietion of the winding up and liquidation of the Company, a
final statement with respect thereto shall be prepared by the Liquidator and submitted to each
Member, Upon completion of the: liquidation, the Company shall. be deemed: completely
dissolved and terminated subject to the filing of a Certificate of Dissolution and a Certificate of
Cancellation with the California Secretary of State in accordance with the Act,
ARTICLE VIE
ASSIGNMENT
Section 7.1, Prohibited Transfers. Except as provided in Section 7.2 or 7.3 below, no Member
may sell, transfer, assign or otherwise transfer, or mortgage, hypothecate or otherwise encumber
or permit or suffer any encumbrance of all or any part of such Member's Percentage Interest
unless approved by all the other Members, which approval may be granted or withheld in his, her
or its sole discretion. Any altempt to so transfer or encumber any such interest shull be void.
ung 28, 2003 tHSection 7.2. Permitted Transfers, The following Transfers shall constitute “Permitted
Transfers”: upon thirty (30) days’ prior written notive, a Member shall have the right, without
the consent of the other Members, to transfer such Member’s entire Percentage Interest or any
portion thereof to an Affiliated Entity (as hereinafter defined) of such Member, absent ugreement
to the contrary with the other Members. For the purposes of this Section 8.2, an Affiliated Entity
of such Member shall be (i) any person in the immediate family of any Member, or (ii) to any
trust for the benefit of a Member or any person referred to above: Assignment toa family.
member shall not include a transfer of the member’s voting or management nights in this LLC,
and the assignee shall not become a member of the LLC.
Section 7.3. Right of First Offer. In the event any Member (the “Offeror”) intends to transfer
his, her or its Percentage Interest by sele to or exchange with a third party, that Member shall
first send a written notice (the “Offer Notice”) offering his, her or its Percentage Interest to the
other Members (the “Offerees”) at the same price or exchange value and other terms at which the
Percentage interest is proposed to be sold or exchanged. The Offerees shall have thinty (30) days
from receipt of the Offer Notice in which to accept or reject the offer as to the entire Percentage
Interest being offered. In the event the Offeror proposes to exchange the interest. the exchange
value to be credited for such interest, together with the identity of the other property for which it
is being exchanged and the terms and conditions of such exchange shall be set forth in the
‘written notice. All Members shall at all times have a duty to cooperate and provide records in
connection with a prospective purchase, as cvidenced by a written offer and signed Non-
Disclosure Agreement,
(a). ‘The Offeror shall be entitled to sell whatever portion. if any, of the Interest
which was not acquired as set forth above for a period of six (6) calendar months from the
expimtion of the thirty (30) day acceptance period on terms no more favorable to the buyer than
those contained in the Offer Notice. In any case, if all of the Interest has not been sold within six
(6) months from the expiration of the thirty (30) day acceptance period, then the Offeror shall
cepeat the proccdures of this Section 7.3 prior to offering its Interest for sale to third parties.
Section 7.4. Admission of Transferee. Even if a transfer of a Percentage Interest is allowed
pursuant to Section 8.3, the transferee shall nol be admitted as a voting or operational Member
absent.the Unanimous approval of the Members.
Section 7.5. In the event any Member (the “Offeror”) intends to transfer his, her or
yy sale to or exchange with a third party, whereby the Right of First
refusal was not exercised by any other member, all Members must agree on the price set for the
sale of such Membership Interests, In the event the Members fail to agree, the Company shall be
valued by a Committee of Independent Valuators (“Valuation Committce”) at the expense of the
Company, who together, in consultation with each other, shall determine valuation of the
Company. The Valuation Commitee shall have forty five (45