Preview
FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023
NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024
EXHIBITA
EXHIBIT A
FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023
NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024
WNY MEDICAL MANAGEMENT, LLC
SECOND RESTATED OPERATING AGREEMENT
(July 2019)
FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023
NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024
Index
Page
Article
I - Organization......... eeeeesaeeneeeaeens eeeaeeuseeeneeasensennees seeeaeeeecseeeseeeeesseeesaceaestseseneeneaeas 1
1.1 Formation... paeeeeensaceeecuetineeeeseseaueeseessaceceestienseeecesesraneeseseesaaaeeeeesaqas 1
1.2 — NAMC i. ceecececssscsstsessecsseecsecssseeseesessceeeesseessaeeseeessaecesseccaeessueesecersaeeenesenses 1
1.3. Principal Place of Business... eee esseeseessseeeseeneevscesesesesseseesensesseeneens 2
1.4 Registered AGent......cccseeeserscrseeeseestecsestectesneesereeeesenerses leenaeesaeeneenaeens 2
1.5 TOL oo. .eeesesssestscnsseesseceseesesesseessseceseessasesssersuserssessaeseseerenasersasessasenees beneeeeaes 2
1.6 PULPOSES wee beseevesnesenaeeeseaseensaecesessessesaeessazesenas Saeseetanesesseceesenes Seeeeeeeaseeee 2
1.7. Anti-Kickback Statute Safe Harbor ......ssscscssesscssscsersessecseeseeeesesseeeresnseneeed
1.8 Compliance Matters............ Sosesnaeeeseecnsceeeeesneseaesenaeess seseseceesaeeeeaeesensessaseeneeess 2
1.9 Tithe cic eeeeeessscersesreeenenes deeaessevsevsesauesuesaseneessescescenersesneens eeaeeseeveceeseeenesseees 2
Article Tl — Definitions... .cccescesessccssceseescsesecesssssessccseessessecsecenesessceneceneeeaeesseesaeceaesneesaees 2
2.1 Definitions... cccsescseseeseeseessessecaeceeneeteeseeeeees seevecevscesseeeaaeeanerseseaeesaessesenes 2
Article TT - Members... eeeeeseerenrees dalecsaeeesaevesceesseeceseeesneceeessaeersnee® deseeeeneeetneeeseeeveeeeeaeees 6
3.1 Membership Classes ......ccccccsccssesessseseessessessessesseeseeeevsesseeneeeeesaeeneeneennesnesaees 6
3.2 Names and Addresses ........cceccscssscssersreeneersecsaecesesneeetserssesasenevsnessaeeess sarees
3.3 New Members... eccssssecsesecseeceeseeteessesseesessesseesessaeeneensseaseseseerssnagensenss 6
3.4 Issuance of Additional Units... eee seeeeeeeeaeeenaeeesaeeees eeeeaeeeneeveneeees 6
3.5 Limitation of Liability... sesaeeneeaeeaeeseeaeeneeneeneerssenecseeeas Saeesetageneecseeneeneees 6
3.6 — Priority and Return of Capital... eesccsssccsseeesecseessevsneseescessesneeeneseeesseees 6
3.7 — Liability of a Member to the Company... cs ceeesesessesseenseneeneeeensesenees 7
3.8 Liability of a New Member to The Founding Members... eee eeeeeeeenes 7
3.9 Financial Adjustment 0... eeeceeeseeteesneceeeseesecseessesesesseessessssssesenetenssngs 7
3.10 Eligibility Requirements........... daeeneeeneeeseseseenee daeeseevacenseeseeeecaeeaesaseasesseenaeees 7
3.11 Annual Certification... .cccccccscccseeseeceeecescessescessesesestecsaesaeersnsesseeteeeveeseees 8
3.12 Membership Certificates 0... ceeeesceceeseceseeeeenecenersseseeseenersasens beseeees re)
3.13 Endorsement on Certificates ..........cccsssscessscecesseessessscetesenesensenns beseaees evsenes 8
3.14 Agreement of Members. .......... Saeeeseueesaaeeuecseeceseceaneseneesesaecsaueceseeseneneagersseses 8
Article IV — Books and Records....... seeeneeeaeenaeees Seseeesaeeeaees Seceeseetsdeceaecssanecsaeeseaeeetaceseneeeaneses 8
4.1 Books and Records wc. cicsesseesessecseeeccssceneeteveseeeeseeseeeacecessesaseneeseeseseeeeees 8
4.2 Confidentiality of Books and Records........... laeeseceneeeseeeseeenseeseesseerseesaeeneeeeas 8
4,3 Information ........cccescccssesessseeecesecssevececsseceesssecssecsuesseeeeseueseaeessecaeesseseasenaees 8
4.4 Financial Information... eececsccssecstseesecesssetteeeens eeeesaeeesaeeenseessaeersesenaees 9
4.5 Bank ACCOUNS ......iccecccstcccsnecesseeescesstecsenesessesseeeseecsasceseecnaeersereeaeeneas weed
Article V — Management.............. Siseeaeeeeeeaaees Liceeneesaeesseensesecessesecsaeeesecaeeeneeteseneceeesneeneessaes 9
5.1 Management.......... ladeseesseeeesaeceseeeevssaessseneesessnecensaeecesageerepaseseenaceseenesessaeeess 9
5.2 Day-to-Day Operations... ceeeeeseseceesseneeecnececesesaevsueeaseneesesereess beveeeesaes 9
5.3 Decisions Requiring a Supermajority Vote oo... cscesssesseesessecssseresssserensares 9
5.4 Powers of Board of Managetrs........sccccsesssessecreserseeseeseeeseereseneensssnsesseenss 9
5.5 Binding Authority ccc ccssesssseeesseeeeeeneerseeraes beetseesaereneesas bevenaee saeeeaeenaeenes 9
Hurwitz & Fine, P.C. il
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FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023
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5.6 Reliance on Information v...cccccccsccssecesssssceseseccsesssvseseeevessnsseeeees Seveeeneenseeess 10
5.7 — Liability for Certain Acts 0... icscccssssessssssrestessrersessesnesserereesees eererereereera€¢)
5.8 No Exclusive Duty to Company ........ ce eeeeereeereee ecaceacenececeeaeeasenseneeneeees 10
5.9 Transactions with Interested Persons... ccseesseeseeeeserseessecesscesreneeseesenees 10
5.10 Expense .ccesccsesseesneeees Liceseesseessessecesersscesessuesssesseersusssasenesensssesensenes wee lO
5.11 Indemnification... cc ceccesseesesserseereees eeuseeseeeaeeeneceseesaecneecaeeneseneenaeestees 10
5.12 Registration .....scsceeseeceens seeeneens leseneeeseesecneeecaenaeceseceateseeesseenseseaeseeeneeneees 10
5.13 Removal ..csceeeesecees Leaeeeeeneeeeeaeeeeenaeeeeaeeeeeaeeeenaeeerenaeeseeeeaeeeeneaeeneeeseneesenee 11
5.14 Vacancies... seseueaevenecusceeessecsuevsseeseseccacesssesesarenaeeseneeenenesesaeerseeensessnaeensees 11
5.15 Composition of Board... eceeseeereenecreeneeseesesesseseensees baeeeeeseeesens eed l
5.16 Term......... saeeeneeneee deteesaeensaeeveneee seseseescesseessecsecnsecsaesaeesseessesenesnarenasenees sell
5.17 Meetings... ceecesccesscssessecetecssesseseeesseessesssessesneesseesseesssecsseseeerseenssenseseeeeees 11
5.18 Notice of Special Meeting oo... ccs esessetsesseseeseerssnecssssscsereereeeeerssents weed
5.19 Quorum; Vote oes Leveevecsecaeeeesecvonescncaeeesesseseceseesssecuesssrsneeneeeseceesees 12
5.20 Officers... seeesaeeeaeeeses seeeeseeeanecaaesssecsceecsucceuevssaueceaeesensecenaesnaeesnaeensees 12
5.21 Changes to the Management Structure oles ese erseees seeeeaeeeeeneeeneenaes 12
Article VI — Representations and Warranties ........scssssesessssersessenscreseessecersssscessesssneenes 12
6.1 Representations and Warranties... esesesereees seseenaeeeseesaeeeneeneeeeneeeeeas 12
Article VII —- Meetings of Members............ deeaneeeeees esessevaeesaseseesaecscecascesaecaeeseseaeesaeenneeneess 13
71 Regular Meetings .......ccescssccsessecsseesssersceceneecnestaesesscessecseeesssessessesseeensesaes 13
7.2 Special Meetings... cesesenceees Leenesseaeesecsecseceaecaeeaeeneesaseareasenseneones 13
7.3 Notice of Special Meetings... csssseseseserserssersereeecees eesesevseeaeraevaee 13
74 Record Date ......ccccsccssscessccenecssccsssesseecersecsaeecseeesseesesecessesesnesnssessreeseeaesea 13
75 QUOTUM ... eee peacesecaceessaeecenseeesens doeeeesaeeeventecensneesersaneseetanes dececestaceevenseses 13
7.6 Vote Required oo... .ccscscesssceesseeeeeneeneeterteetecssssseeees ideaseseeeesaecareneseeseneenes 14
7.7 PYOXTCS. seseesscsssseessnscesecenscecsuessnseceseeenseesnetenseeenaees seeeenaeoees seeveseeeeneersueenseoesess 14
7.8 CONSENIS ....eeeeeseesteeeteeeeseeenes seeeseeeeeeseeeeraeeneees esceecenaceseeeneceseseaecnaseneeeneenees 14
Article VIII — Capital Contributions... Seeeneeseesseseaeceesssccaceseceaeceeeesecenecaeeenesseonaey 14
8.1 Capital Contributions... Saseeneessesseesaeeseeeascuseecaeessaeensesseeeecsseenaeeneees 14
8.2 Member Loans.............. evaeesesagesseneeecesetageneeaeraes Seesaneeaeseeerseesseceaeesacnnevsaens 14
8.3 Capital Accounts.......... soeeeeeesceusaecesaeeeaecesuceseecnneeseesstageeaaessaeeenieenseeeneees 14
8.4 —- Transfers oo... sceeeeeesesseveeenes bieeaaee ecesesaeeseesaeesaessecesecesaceaesenessaeeneensesneesneees 15
8.5 Modifications ..........06 desseceseeeeeeaaeceseesceatceesaeeseragerenanesessenea seaeeeenaceeseneeteees 15
8.6 Deficit Capital ACCOUNE oo. eeeesecserersesecsersesenseessesessessersesessssetseseeneees 15
8.7 Advances of Funds............0.4 secevaees seseesaeaeedecseeneeseeeaeeacesetsceenenseenseneseeenees 15
Article IX — Budget... eesseescssscneeseersesscssessessessecnscescsesesesseeseenaseaeesssssesssessessesteeneeneets 15
9.1 Budget......... seeeenaeee seneeesaeesseeesaeevacessneessaecenaeseaessaeesssaeeeusessusseessessusonsusenees 15
Article X — Allocations and Distributions .............. deceeeaeeeeneeenees leseaeesaeseaueeaeeesaeeaeenneeneeeeees 15
10.1 Allocations of Profits and Losses wo... eee eeseeneeneeens esunecnesnessecseeneenaeees 15
10.2 Distributions.......ccceecesessessseeeeseeesseeseeens seeuesasenaeseeaeesseessessaceneneesaeeneeseenes 15
10.3 Offset. eee baeeenee bevesteeaes Seseensecvscessaneenseecesscssaecesseeesenessesecsnieessaesueornas 16
Hurwitz & Fine, P.C. iii
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10.4 Limitation Upon Distribution ........... seceneenseesnes eeesenseeeseoeneees seseaeeeneeeneeaeenes 16
10.5 Accounting Period ve iccccsencseseeeecsssssssestsesssescsscesessessersssessereereenees 16
Article XI — Taxes... seveuanaceeceeeecececcsssusnsaneeesscevsneensuageeeesesecss dssceseesretessaesenstaessentrsee LO
11.1 Tax Retutns.....ccccccccccccesssscssssccsstsccssescvsescuseecessnssssenetseesraesesseesenes denneeessnees 16
11.2 Tax Elections .......ccecssssseesereeees Veeesevensensesevsnseeeseseseaneas Sevevavasecessaseeeses verse LO
11.3 Tax Matters Partners ......cccecceeeees bevecacenvensaeese desaneeeseens sevneeeneeeeeceesesesesss 16
Article XTI — ASSIQNMENt......ciccscesscessesecetscssssesetecrssenserseessesessceaeenneesteceaesnasenecsseenses veel 6
12.1 Transfer Prohibited .......... Venveceesneeeeeeceseeesveseenenees duceeeeeuecsaeescesenneeetessenanesens 16
12.2 Permitted Transfers .........cccsssscscessssssccscssersccessencssecevevensceescssesseusecessnageees 17
12.3 Transfers to New Members and Institutional Members cece eeeeeeeceeecnneens 17
12.4 Right of First Refusal........... uaeeneneessessesdeeseeseeneessensecseeseeaeenevseviceserateneeatens 17
Article XIII — Term and Termination .........cccscsccesserees seceeeeesseseusceceecesessseceesescenseeeseseesees 18
13.1 Term caccsccccesscscessscevessescenssscessescvevsesesnssvessesessessessssseveesuseeseatssusssssessesevsesers 18
13.2 Voluntary Withdrawal occ ceeesccsesseenecereeneceteeereeess Seeveseeeeeess saseeeeeseeeaeense 18
13.3 Automatic Withdrawal .....cccccccccccsssscsscesescersssccsseesesscsssesssescnseesesseesenseesens 18
13.4 Removal for Cause......c.ccccccccsccsccscssssresesessccccesersssccecssssseessccsesseceeceseetaeesess 19
13.5 Effect of Withdrawal or Removal on Members’ Capital Accounts,
Distributions and Liabilities... cescsccesseeesseeees deseseanensceecereeseess 19
13.6 Purchase Price... cccecccsccccsesscsccesssnseccsseuseeesevssnnseeseesrenes sesesseeescsevevereeseeene
lh D
Article XIV — Covenants ........... seceeveceesevausageasauaananenaes seseeneeeeees seeeeceeucucegensnssesssseevevsveseveess 20
14.1 Non-competition........... Siceneesevseeecesdsenesessesseeaesaeonesenecaeenessasenssaeesaeeasenetaeeats 20
14.2 Non-Solicitation......ccccccccccssssscsssscssseseesrseveees Seveaness Sevesseesecavseseuseceassasevees 21
Article XV — Dissolution ........ccccccsscssssssccessessceveesssessscesssssescassnceeseecesesseeusscessensansserserseeseess 21
15.1 Dissolution... pevdaceeceseeeceteusesesneteeeeeseess devvenesecceyesuucessecessesscesesensacess 21
15.2 Winding Up..scesccccscsscsecternertrstserees seeeeeee asessceeeeneessaeeeeseeseaeesnaeeesnenes 21
15.3 Articles of Dissolution .......cccccccccccssscscesesssssscossesssnsscosseneaeecsessessuseccseesaes 21
15.4 Deficit Capital Account... eccesessesseesessesseesaeeaeessendersevaeeesenscneeseeaees 21
15.5 Nonrecourse to Other Members.......cccccceescccesesseseseseeeeees peseavaeseceaaeeess veel
15.6 Termination.....ccccccccccesen seesesanseesscsvenaes Seceseaeeenes seseeevenes Seseseeveneseeeaausesaees 22
Article XVI — Insurance .........ccsesesesssssssccsssstscsvccscvecensntetsecsevevensvens bevcueevnvvesuenananeeaeeseserseecs 22
16.1 IMSULANCE oo... ceecceecccceesstsesscesessesecessnseesusessssstsovevscueseseesesseescusueeseeesersesneees 22
Article XVII — General Provisions ......ccccsccsesssscssscvssecssssvsssessescvseseseesevscsssatesvsesussesennsesseses 23
17.1 Patient RECOrdS woo... .cceseecssccesssesscevesssreucccessareeeess coveceneceeeeueceeseenges sevstetsevesens DO
17.2 Inder nification........cccccsssessssesssessecessscesessetsersesesseceaesensevevasesssuevsuteseesensess 23
17.3 Notices ....ccecccesevees Seseeeeesenss Sesesesuceeesseeeevscssesusscesrsetscensussenssessssssscessnesesnnnss 23
17.4 Changes 1n Law.......cscccscsscsssesecssessssstscsessseesssessscessecseseseseasesseseesenereneens 23
17.5 Further ASSUrances.........cccccsssccececsssscecessssscceeceeseseeseseecesscereecesesseaeevessnaass 23
17.6 Amendment ........ccceccssscscceserreeses sossueuaeecesceecececersusssesstersesenteeeeersesess vera
17.7 Headings oe eeeeseneees heveeseee secscesevecneaeeneeseescesssesteneensesnsensesaeensesesneeees 24
Hurwitz & Fine, P.C. iv
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17.8 WAIVED... cccessecccessecseseessssecssesecsseeessssessssnscssaueesssaeecesseeeestaesersaacessneeeroageseeees 24
ne
17.9 Severability ......... besteseeeeseguanenaes deseeseeseneesaeeseseceseeesseerseeeeseseaseseaeeseaeeesaeeaeens 24
or
17.10 Binding... haseaeesecuacsneceeeaeenseseeecseesseseneeeaeenseeseee Seevseeeenevseeaeeeneeseeess 24
17.11 Counterparts... ccccssecsssereereetsceteeeneees sseeseensecsseeseessersneesesseceaeeenes verse a4
:
17.12 Governing Law ...ccssccesesrsneeeeees Lseeseeeeseeessecetasenseereacesensesedeeesasenseens 24
:
17.13 Legal Representation ou... cece beeessneeenenensseeaeeeeaees Seseeeeeeeeessaeeeenaepaeees 24
Exhibit A —- Members of Company
Exhibit B — Additional Members of the Company
Exhibit C — Certificate of Eligibility
Hurwitz & Fine, P.C. Vv
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FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023
NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024
SECOND RESTATED OPERATING AGREEMENT
This Second Restated Agreement is dated October 31, 2019, and is entered into by and
among each of the persons listed on Exhibit A attached hereto and made a part hereof (each
individually a "Member" and collectively, the "Members"), and shall be effective July 1, 2019
(“Effective Date”), subject to the approval of the New York State Department of Health.
WHEREAS, the Company (defined below) was formed on March 24, 2009 pursuant to
the New York Act (defined below); and
WHEREAS, the Company received preliminary regulatory approval to operate a
multispecialty ambulatory surgery extension clinic in Amherst, New York on or about June 7,
2018 following the earlier approval on or about April 10, 2013 to operate a single specialty free
standing ambulatory surgery center in Buffalo, New York specializing in pain management
services; and
WHEREAS, the Founding Members (defined below) have been the sole Members of the
Company since its formation; and
WHEREAS, the Founding Members contemplate entering into certain Unit (defined
below) purchase agreements with interested physicians and health care institutions to acquire
membership interests in the Company; and
WHEREAS, in anticipation of an expansion in the membership class, the Members desire
to restate and amend the Restated Operating Agreement of the Company dated February 1, 2012
(the “2012 Agreement”) to reflect the agreement of the Members, and to establish their
respective rights and obligations pursuant to the New York Act in connection with the Company;
and
WHEREAS, this Second Restated Operating Agreement dated October 31, 2019 of the
Company (i) amends and restates in its entirety the 2012 Agreement, (ii) supersedes any and all
agreements by or among any of the Members and/or the Company with respect to the subject
matter set forth herein, (iii) has been duly authorized by the unanimous consent and approval of
the Members by Membership Interests (as required and defined in the 2012 Agreement) and (iv)
has been executed and approved by all of the Members.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are acknowledged, the 2012 Agreement hereby is amended and restated in full and shall
be binding on the Members as follows:
ARTICLE I
Organization
1.1 Formation. All Members hereby ratify and reconfirm the establishment of the
Company as a limited liability company as formed on March 24, 2009 by the filing of the
Articles of Organization (defined below) with the New York Secretary of State pursuant to the
New York Act.
12 Name, The name of the Company is WNY MEDICAL MANAGEMENT, LLC,
which name may be changed by the Board of Managers (defined below) upon written notice to
all Members. If the Company does business under a name other than the name set forth in the
Articles of Organization, then the Company shall file a certificate as required by Section 130 of
1
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the New York General Business Law with the consent and approval of the New York State
Department of Health.
1.3 Principal Place of Business. The principal place of business of the Company
within the State of New York shall be 700 Michigan Avenue, Buffalo, New York 14203 or such
other place or address as the Board of Managers shall from time to time determine.
14 Registered Agent. The Company's registered agent shall be the Secretary of State
of the State of New York. The address to which the Secretary will make a copy of any process
against the Company is c/o Hurwitz & Fine, P.C., having a registered office at 1300 Liberty
Building, Buffalo, New York 14202. The registered agent may be changed from time to time by
the Board of Managers in accordance with the applicable legal requirements.
1.5 Term. The term of the Company commenced on the date of filing of the Articles
of Organization with the New York Secretary of State and shall continue until the Company is
dissolved sooner pursuant to the Articles of Organization, this Agreement or the New York Act
(the “Term”’).
1.6 Purposes. The Company is formed to establish and operate one or more
ambulatory surgery centers licensed under Article 28 of the New York State Public Health Law,
and the powers and purposes of the Company are limited to the ownership and operation of such
Article 28 facilities.
1.7 Anti-Kickback Statute Safe Harbor. The Company and its Members intend to
comply with the Anti-Kickback Statute, 42 U.S.C, §1320-7b(b), as amended, and are prepared to
operate the Company in a manner that substantially complies with the purpose and intent of the
safe harbor regulations for ambulatory surgical centers as set forth in 42 CFR 1001.952(a), as
amended (the “ASC Safe Harbor”).
1.8 Compliance Matters. The Company shall use its best efforts to operate in a
manner that is substantially likely to comply with the Stark Law, 42 U.S.C. § 1395nn, the New
York Health Care Practitioner Referral Law, PHL § 238-a, and the Anti-Kickback Statute, 42
U.S.C. § 1320 a-7b(b), and their respective implementing regulations. .
19 Title. Title to and all rights and interests in and to the Company’s assets shall be
acquired in the name of and held by the Company or, if acquired and held in any other name,
shall be held for the benefit of the Company.
ARTICLE II
Definitions
2.1 Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:
(a) "Agreement" shall mean this Second Restated Operating Agreement dated
October 31, 2019, as the same from time to time may be amended.
(b) "Articles of Organization" shall mean the Articles of Organization of the
Company filed with the New York Secretary of State, as the same from time to time may be
amended.
(c) “ASC Facility” shall mean the ambulatory surgical center operated by the
Company at 700 Michigan Avenue, Buffalo, New York and the extension clinic which is to be
Hurwitz & Fine, P.C. 2
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operated by the Company at 3112 Sheridan Drive, Amherst, New York. The ASC Facility will
be duly licensed by the State of New York as a freestanding facility that operates exclusively for
the purpose of providing surgical services to patients not requiring hospitalization, that qualifies
as an ambulatory surgical center under 42 C.F.R. § 416, and shall be a Medicare-certified
ambulatory surgical center pursuant to 42 C.F.R. § 416.
(d) “ASC Percentage Interest” shall mean, as to any Member, the number of
Units owned by such Member divided by the total number of issued and outstanding Units.
(e) “ASC Procedures” shall mean any procedure(s) included on the list of
Medicare-covered procedures for ambulatory surgery centers qualifying as an ambulatory
surgical center under 42 C.F.R. § 416.
(f) “Board of Managers” shall mean the body described in Article V.
(g) "Capital Account" as of any date shall mean the Capital Contribution to the
Company by a Member, adjusted as of such date pursuant to this Agreement.
(h) “Capital Contribution” shall mean the aggregate contributions by a Member
to the capital of the Company in cash, or the fair market value of other property actually
contributed by a Member to the Company.
(i) "Code" shall mean the Internal Revenue Code of 1986, as amended.
Gj) "Company" shall refer to WNY Medical Management, LLC.
(k) “Disabled Member” or “Disability” shall mean, with respect to a Member,
the inability of a Member, by reason of mental or physical illness, disease or injury, to perform
the usual ASC Procedures within such Member’s medical or surgical specialty for at least six (6)
consecutive months, as determined by the Board of Managers in its reasonable discretion.
() “Disqualifying Event” shall mean any of the following events:
(i) If a Member files a voluntary petition in bankruptcy or becomes
the subject of an order for relief under the federal bankruptcy laws.
(ii) Ifa Member applies, consents to or acquiesces in the appointment
of a receiver, trustee, custodian or similar officer of the Member
over any substantial part of his or her assets.
Gii) Upon the involuntary appointment of a receiver, trustee, custodian
or similar officer with respect to a Member over all or a substantial
part of his or her assets if the appointment is not stayed, vacated or
dismissed at the expiration of ninety (90) days.
(iv) Upon the institution or commencement of any involuntary
proceeding against a Member seeking reorganization,
readjustment, dissolution, or similar relief under any statute, law or
regulation that remains in place at the expiration of ninety (90)
ays.
(v) If a Member’s medical staff privileges at the ASC Facility are
terminated, suspended (whether temporary or permanent
suspension), revoked or relinquished (other than a voluntary
resignation of privileges which are not under investigation).
(vi) If a Member’s license to practice medicine in any state is
terminated, revoked, suspended (whether temporary or permanent
Hurwitz & Fine, P.C. 3
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suspension), or impaired (including without limitation placement
on probationary status).
(vii) In the event of the loss of a Member’s professional liability
insurance coverage.
(viii) A Member’s suspension, exclusion or debarment (temporarily or
permanently) from any federal government payer or contracting
program.
(ix) A Member’s failure to create and/or maintain accurate and timely
medical records, as required by the ASC Facility’s policies,
procedures and/or medical staff by-laws.
(x) A New Member ceases, at any time, to satisfy the Eligibility
Requirements for a Member, as set forth in this Agreement, or fails
to timely complete and file with the Board of Managers the
“Certification of Eligibility” required by this Agreement, and fails
or is unable to cure such violation(s) in a manner reasonably
acceptable by the Board of Managers within thirty (30) days
following receipt of written notice of violation from the Board of
Managers.
(xi) In the event of the death of a Member, or the disability or
retirement of a Member other than a Founding Member.
(xii) Upon a Member’s arrest, indictment or conviction of a crime other
than a minor traffic violation.
(xiii) A reasonable good faith determination by the Board of Managers
that a Member’s continued ownership interest in the Company (x)
would pose an undue risk of harm to patients, staff or visitors, or
(y) would adversely affect the confidence of the public in the
services provided by the Company, or a determination by the
Board of Managers that the Member has engaged in conduct that is
unethical, unprofessional, fraudulent, unlawful, or adverse to the
interest, reputation or business of the Company.
A Member shall notify the Board of Managers within seventy-two (72) hours of any act
or acts concerning the Member that may give rise to a Disqualifying Act, including becoming the
subject of a formal inquiry, hearing, investigation or other proceeding.
(m) "Distribution" means distributions of cash or other property made by the
Company to the Members pursuant to Article X of this Agreement.
(n) "Fiscal Year" shall mean the fiscal year of the Company, which shall be the
year ending December 31.
(0) “Founding Members” shall mean Pratibha Bansal, M.D., William N.
Capicotto, M.D., Cameron B. Huckell, M.D., Frank Mascaro, M.D., Joseph E. Serghany, M.D.,
and Romanth Waghmarae, M.D.
(p) “Institutional Member” shall mean the Class C Members admitted to the
Company as a Member after the Effective Date of this Agreement.
(q) "Manager" shall mean a member of the Board of Managers. A Manager must
be a Member. The composition of the Board is as described in Section 5.15 of this Agreement.
This definition may not be deleted, modified or amended without the approval of the New York
State Department of Health.
Hurwitz & Fine, P.C. 4
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(r) "Member" shall mean each Founding Member, each Permitted Transferee,
each New Member, and each Institutional Member which executes a counterpart of this
Agreement as a Member and a disclosure statement in a form acceptable to the Board of
Managers.
(s) “Membership Class” shall mean the Class A, Class B, or Class C Units as
established pursuant to this Agreement. Class A and Class B Units shall have and be entitled to
the same rights and privileges in all respects, except for and subject to the rights of Founding
Members to participate as members on the Board of Managers, certain decisions of the Company
requiring a Supermajority of Founding Members, the ability in certain circumstances to convert
Class A Units to Class B and/or Class C Units, and the assignment or transferability rights of
Class A Members as provided for in Articles XII and XIII of this Agreement. Class C Units are
reserved for Institutional Members, and shall have such rights, powers and privileges of
membership as may hereafter be set forth in a further restatement and amendment of this
Agreement.
(t) "Net Losses" shall mean, for any Fiscal Year, the losses of the Company, if
any, determined in accordance with the accounting method followed by the Company for federal
income tax purposes.
(u) "Net Profits" shall mean, for any Fiscal Year, the income of the Company, if
any, determined in accordance with the accounting method followed by the Company for federal
income tax purposes.
(v) "New Member" or "New Members" shall mean those Members admitted to the
Company as a New Member after the Effective Date of this Agreement.
(w) "New York Act" shall mean the New York Limited Liability Company Law, as
the same from time to time may be amended.
(x) “Permitted Transferee” shall mean a Founding Member, his or her spouse
and/or a line of descendants of the Founding Member.
(y) "Reserves" shall mean that portion of Net Profits which the Board of
Managers shall deem reasonably necessary to meet the foreseeable liabilities or obligations of
the Company or for other reasons.
(Z) “Retired Founder” shall mean a Founding Member who retires from the
active practice of medicine.
(aa) “Supermajority of Founding Members” shall mean the Founding Members
holding in the aggregate more than two-thirds (2/3) of the outstanding Class A Units.
(bb) “Supermajority of New Members” shall mean Members holding in the
aggregate more than two-thirds (2/3) of the outstanding Class B Units.
(cc) "Treasury Regulations" shall mean all proposed, temporary and _ final
regulations promulgated under the Code as from time to time in effect.
(dd) “Unit? shall refer to the Class A, Class B, and Class C Units, and shall mean
the property interest of a Member in the Company, including a Member’s right, title and interest
Hurwitz & Fine, P.C. 5
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in and to any and all assets, distributions, losses, profits and interests of the Company and any
other interests and economic incidents of ownership.
ARTICLE II
Members
3.1 Membership Classes. The Company shall have three classes of membership
interests or Units - - Class A Units, Class B Units, and Class C Units - - which together shall
constitute one hundred percent (100%) of the membership interests of the Company. As of the
Effective Date, all Units held by the Founding Members shall be deemed to be Class A Units.
The Founding Members and/or their Permitted Transferees shall hold one hundred percent
(100%) of the Class A Units, and the New Members shall hold one hundred percent (100%) of
the Class B Units. Class C Units are reserved for Institutional Members. Upon an appropriate
resolution of the Class A Members, as more fully described in Article XII, Class A Units may
be converted to Class B Units and/or Class C Units.
3.2. Names and Addresses. The names, residence addresses, number of Units held by
the Founding Members, and the respective ASC Percentage Interest of the Founding Members as
of the date hereof, are set forth in Exhibit A. As additional persons are admitted as New
Members or Institutional Members, pursuant to Section 3.3 of this Agreement and become
parties to this Agreement, their names, residence addresses, and number of Class B or Class C
Units held by such new Member and their respective ASC Percentage Interest shall be listed on
Exhibit B.
3.3. New Members. An individual may be admitted as a New Member or Institutional
Member after the Effective Date of this Agreement only upon the written consent or approval of
the Board of Managers and the New York State Department of Health. No such person shall
become a New Member or Institutional Member unless he, she, or it has become a party to this ©
Agreement and has executed a disclosure statement in the form approved by the Board of
Managers. In addition, no New Member or Institutional Member or group of New Members
and/or Institutional Members may acquire ten percent or more of the membership interests or
voting rights in the Company unless approved by the Public Health Council.
3.4 Issuance of Additional Units. The Company may issue additional Units to
Members for such purposes as the Board of Managers shall determine, subject to the conditions
for admission of New Members or Institutional Members set forth in Sections 3.3 and 3.10 of
this Agreement.
3.5 Limitation of Liability. Each Member's liability shall be limited as set forth in this
Agreement, the New York Act and other applicable law. A Member shall not be personally
liable for any indebtedness, liability or obligation of the Company beyond his, her, or its Capital
Contribution, except that such Member shall remain personally liable for the payment of his, her,
or its respective Capital Contribution or additional Capital Contribution and as otherwise set
forth in this Agreement, the New York Act and any other applicable law. The obligation to
make this payment shall survive the withdrawal or removal of a Member from the Company, the
termination or dissolution of the Company, and the sale, transfer or assignment of a Member's
interest in violation of this Agreement, and shall be made within the time prescribed by the
Board of Managers.
3.6 Priority and Return of Capital. No Member shall have priority over any other
Member, whether for the return of his, her, or its Capital Contribution (or additional Capital
Contribution) or as to any Distribution; provided, however, that this Section 3.6 shall not apply
Hurwitz & Fine, P.C. 6
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to a loan or other indebtedness as distinguished from a Capital Contribution (or additional
Capital Contribution) made by a Member to the Company.
3.7 Liability of a Member to the Company. A Member who rightfully receives the
return of any portion of a Capital Contribution (or additional Capital Contribution) is liable to the
Company only to the extent now or hereafter provided by the New York Act. A Member who
receives a Distribution made by the Company in violation of this Agreement or made when the
Company's liabilities exceed its assets (after giving effect to such Distribution) shall be liable to
the Company for the amount of such Distribution.
3.8 Liability of a New Member or Institutional Member to the Founding Members.
Each New Member and Institutional Member acknowledges that the Founding Members have
personally guaranteed or may in the future guarantee payment and performance in connection with
(i) the issuance of a corporate line of credit or (di) the issuance of one or more mortgage and/or
equipment loans to the Company (individually and collectively the “Guarantees”) and each agrees
to execute and deliver any document reasonably required by the financial institution(s) or equipment
vendors to extend and/or maintain said Guarantees. If any Founding Member (the “Indemnitee”)
becomes liable as a result of the Guarantees as to any obligations of the Company
(“Indemnification”) as to which all other Members were provided with notice, then each New
Member and Institutional Member shall indemnify said Indemnitee up to each New Member’s and
Institutional Member’s pro rata share of the Indemnification, which shall equal his, her, or its ASC
Percentage Interest in the Company, within fifteen (15) days written notice of any payment by the
Founding Member(s) to the financial institution(s) or equipment vendors.
If any New Member or Institutional Member refuses or fails to make the required payment
to an Indemnitee in accordance with this Section 3.8, then the Board of Managers may consider (i)
an equitable adjustment (dilution) in the non-contributing New Member’s or Institutional Member’s
ASC Percentage Interest or (ii) a reduction in the purchase price that such New Member (or former
New Member) or Institutional Member (or former Institutional Members) is entitled to receive for
his, her, or its Class B or Class C Units upon repurchase by the Company under Article XIII of this
Agreement in an amount equal to the New Member’s or Institutional Member’s required payment to
the Indemnitee.
3.9 Financial Adjustments. No New Member or Institutional Member admitted after
the Effective Date of this Agreement shall be entitled to any retroactive allocation of losses,
income or expense deductions incurred by the Company. The Board of Managers may, at its
discretion, at the time a New Member or Institutional Member is admitted, close the books and
records of the Company (as though the Fiscal Year had ended) and make pro rata allocations of
loss, income and expense deductions to such New Member or Institutional Member for that
portion of the Fiscal Year in which such New Member or Institutional Member was admitted in
accordance with the Code.
3.10 Eligibility Requirements. Throughout the Term of this Agreement, each New
Member must be an individual who is (i) licensed to practice medicine in the State of New York,
(ii) actively engaged in the full-time practice of medicine in the State of New York, County of
Erie and/or Niagara, (iii) in a position to perform medical services on a regular basis at the ASC
Facility operated by the Company, (iv) deriving at least one-third (1/3) of his or her medical
practice income from his or her own performance of ASC Procedures, (v) performing at least
one-third (1/3) of his or her ASC Procedures at the ASC Facility operated by the Company, (vi)
not excluded from participation in any federally funded health care program and (vii)
maintaining adequate levels of professional malpractice insurance coverage as required by the
Company.
Hurwitz & Fine, P.C. 7
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NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024
3.11 Annual Certification. Each New Member shall, prior to admission as a Member
in the Company,
Preview
FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 EXHIBITA EXHIBIT A FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 WNY MEDICAL MANAGEMENT, LLC SECOND RESTATED OPERATING AGREEMENT (July 2019) FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 Index Page Article I - Organization......... eeeeesaeeneeeaeens eeeaeeuseeeneeasensennees seeeaeeeecseeeseeeeesseeesaceaestseseneeneaeas 1 1.1 Formation... paeeeeensaceeecuetineeeeseseaueeseessaceceestienseeecesesraneeseseesaaaeeeeesaqas 1 1.2 — NAMC i. ceecececssscsstsessecsseecsecssseeseesessceeeesseessaeeseeessaecesseccaeessueesecersaeeenesenses 1 1.3. Principal Place of Business... eee esseeseessseeeseeneevscesesesesseseesensesseeneens 2 1.4 Registered AGent......cccseeeserscrseeeseestecsestectesneesereeeesenerses leenaeesaeeneenaeens 2 1.5 TOL oo. .eeesesssestscnsseesseceseesesesseessseceseessasesssersuserssessaeseseerenasersasessasenees beneeeeaes 2 1.6 PULPOSES wee beseevesnesenaeeeseaseensaecesessessesaeessazesenas Saeseetanesesseceesenes Seeeeeeeaseeee 2 1.7. Anti-Kickback Statute Safe Harbor ......ssscscssesscssscsersessecseeseeeesesseeeresnseneeed 1.8 Compliance Matters............ Sosesnaeeeseecnsceeeeesneseaesenaeess seseseceesaeeeeaeesensessaseeneeess 2 1.9 Tithe cic eeeeeessscersesreeenenes deeaessevsevsesauesuesaseneessescescenersesneens eeaeeseeveceeseeenesseees 2 Article Tl — Definitions... .cccescesessccssceseescsesecesssssessccseessessecsecenesessceneceneeeaeesseesaeceaesneesaees 2 2.1 Definitions... cccsescseseeseeseessessecaeceeneeteeseeeeees seevecevscesseeeaaeeanerseseaeesaessesenes 2 Article TT - Members... eeeeeseerenrees dalecsaeeesaevesceesseeceseeesneceeessaeersnee® deseeeeneeetneeeseeeveeeeeaeees 6 3.1 Membership Classes ......ccccccsccssesessseseessessessessesseeseeeevsesseeneeeeesaeeneeneennesnesaees 6 3.2 Names and Addresses ........cceccscssscssersreeneersecsaecesesneeetserssesasenevsnessaeeess sarees 3.3 New Members... eccssssecsesecseeceeseeteessesseesessesseesessaeeneensseaseseseerssnagensenss 6 3.4 Issuance of Additional Units... eee seeeeeeeeaeeenaeeesaeeees eeeeaeeeneeveneeees 6 3.5 Limitation of Liability... sesaeeneeaeeaeeseeaeeneeneeneerssenecseeeas Saeesetageneecseeneeneees 6 3.6 — Priority and Return of Capital... eesccsssccsseeesecseessevsneseescessesneeeneseeesseees 6 3.7 — Liability of a Member to the Company... cs ceeesesessesseenseneeneeeensesenees 7 3.8 Liability of a New Member to The Founding Members... eee eeeeeeeenes 7 3.9 Financial Adjustment 0... eeeceeeseeteesneceeeseesecseessesesesseessessssssesenetenssngs 7 3.10 Eligibility Requirements........... daeeneeeneeeseseseenee daeeseevacenseeseeeecaeeaesaseasesseenaeees 7 3.11 Annual Certification... .cccccccscccseeseeceeecescessescessesesestecsaesaeersnsesseeteeeveeseees 8 3.12 Membership Certificates 0... ceeeesceceeseceseeeeenecenersseseeseenersasens beseeees re) 3.13 Endorsement on Certificates ..........cccsssscessscecesseessessscetesenesensenns beseaees evsenes 8 3.14 Agreement of Members. .......... Saeeeseueesaaeeuecseeceseceaneseneesesaecsaueceseeseneneagersseses 8 Article IV — Books and Records....... seeeneeeaeenaeees Seseeesaeeeaees Seceeseetsdeceaecssanecsaeeseaeeetaceseneeeaneses 8 4.1 Books and Records wc. cicsesseesessecseeeccssceneeteveseeeeseeseeeacecessesaseneeseeseseeeeees 8 4.2 Confidentiality of Books and Records........... laeeseceneeeseeeseeenseeseesseerseesaeeneeeeas 8 4,3 Information ........cccescccssesessseeecesecssevececsseceesssecssecsuesseeeeseueseaeessecaeesseseasenaees 8 4.4 Financial Information... eececsccssecstseesecesssetteeeens eeeesaeeesaeeenseessaeersesenaees 9 4.5 Bank ACCOUNS ......iccecccstcccsnecesseeescesstecsenesessesseeeseecsasceseecnaeersereeaeeneas weed Article V — Management.............. Siseeaeeeeeeaaees Liceeneesaeesseensesecessesecsaeeesecaeeeneeteseneceeesneeneessaes 9 5.1 Management.......... ladeseesseeeesaeceseeeevssaessseneesessnecensaeecesageerepaseseenaceseenesessaeeess 9 5.2 Day-to-Day Operations... ceeeeeseseceesseneeecnececesesaevsueeaseneesesereess beveeeesaes 9 5.3 Decisions Requiring a Supermajority Vote oo... cscesssesseesessecssseresssserensares 9 5.4 Powers of Board of Managetrs........sccccsesssessecreserseeseeseeeseereseneensssnsesseenss 9 5.5 Binding Authority ccc ccssesssseeesseeeeeeneerseeraes beetseesaereneesas bevenaee saeeeaeenaeenes 9 Hurwitz & Fine, P.C. il FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 5.6 Reliance on Information v...cccccccsccssecesssssceseseccsesssvseseeevessnsseeeees Seveeeneenseeess 10 5.7 — Liability for Certain Acts 0... icscccssssessssssrestessrersessesnesserereesees eererereereera€¢) 5.8 No Exclusive Duty to Company ........ ce eeeeereeereee ecaceacenececeeaeeasenseneeneeees 10 5.9 Transactions with Interested Persons... ccseesseeseeeeserseessecesscesreneeseesenees 10 5.10 Expense .ccesccsesseesneeees Liceseesseessessecesersscesessuesssesseersusssasenesensssesensenes wee lO 5.11 Indemnification... cc ceccesseesesserseereees eeuseeseeeaeeeneceseesaecneecaeeneseneenaeestees 10 5.12 Registration .....scsceeseeceens seeeneens leseneeeseesecneeecaenaeceseceateseeesseenseseaeseeeneeneees 10 5.13 Removal ..csceeeesecees Leaeeeeeneeeeeaeeeeenaeeeeaeeeeeaeeeenaeeerenaeeseeeeaeeeeneaeeneeeseneesenee 11 5.14 Vacancies... seseueaevenecusceeessecsuevsseeseseccacesssesesarenaeeseneeenenesesaeerseeensessnaeensees 11 5.15 Composition of Board... eceeseeereenecreeneeseesesesseseensees baeeeeeseeesens eed l 5.16 Term......... saeeeneeneee deteesaeensaeeveneee seseseescesseessecsecnsecsaesaeesseessesenesnarenasenees sell 5.17 Meetings... ceecesccesscssessecetecssesseseeesseessesssessesneesseesseesssecsseseeerseenssenseseeeeees 11 5.18 Notice of Special Meeting oo... ccs esessetsesseseeseerssnecssssscsereereeeeerssents weed 5.19 Quorum; Vote oes Leveevecsecaeeeesecvonescncaeeesesseseceseesssecuesssrsneeneeeseceesees 12 5.20 Officers... seeesaeeeaeeeses seeeeseeeanecaaesssecsceecsucceuevssaueceaeesensecenaesnaeesnaeensees 12 5.21 Changes to the Management Structure oles ese erseees seeeeaeeeeeneeeneenaes 12 Article VI — Representations and Warranties ........scssssesessssersessenscreseessecersssscessesssneenes 12 6.1 Representations and Warranties... esesesereees seseenaeeeseesaeeeneeneeeeneeeeeas 12 Article VII —- Meetings of Members............ deeaneeeeees esessevaeesaseseesaecscecascesaecaeeseseaeesaeenneeneess 13 71 Regular Meetings .......ccescssccsessecsseesssersceceneecnestaesesscessecseeesssessessesseeensesaes 13 7.2 Special Meetings... cesesenceees Leenesseaeesecsecseceaecaeeaeeneesaseareasenseneones 13 7.3 Notice of Special Meetings... csssseseseserserssersereeecees eesesevseeaeraevaee 13 74 Record Date ......ccccsccssscessccenecssccsssesseecersecsaeecseeesseesesecessesesnesnssessreeseeaesea 13 75 QUOTUM ... eee peacesecaceessaeecenseeesens doeeeesaeeeventecensneesersaneseetanes dececestaceevenseses 13 7.6 Vote Required oo... .ccscscesssceesseeeeeneeneeterteetecssssseeees ideaseseeeesaecareneseeseneenes 14 7.7 PYOXTCS. seseesscsssseessnscesecenscecsuessnseceseeenseesnetenseeenaees seeeenaeoees seeveseeeeneersueenseoesess 14 7.8 CONSENIS ....eeeeeseesteeeteeeeseeenes seeeseeeeeeseeeeraeeneees esceecenaceseeeneceseseaecnaseneeeneenees 14 Article VIII — Capital Contributions... Seeeneeseesseseaeceesssccaceseceaeceeeesecenecaeeenesseonaey 14 8.1 Capital Contributions... Saseeneessesseesaeeseeeascuseecaeessaeensesseeeecsseenaeeneees 14 8.2 Member Loans.............. evaeesesagesseneeecesetageneeaeraes Seesaneeaeseeerseesseceaeesacnnevsaens 14 8.3 Capital Accounts.......... soeeeeeesceusaecesaeeeaecesuceseecnneeseesstageeaaessaeeenieenseeeneees 14 8.4 —- Transfers oo... sceeeeeesesseveeenes bieeaaee ecesesaeeseesaeesaessecesecesaceaesenessaeeneensesneesneees 15 8.5 Modifications ..........06 desseceseeeeeeaaeceseesceatceesaeeseragerenanesessenea seaeeeenaceeseneeteees 15 8.6 Deficit Capital ACCOUNE oo. eeeesecserersesecsersesenseessesessessersesessssetseseeneees 15 8.7 Advances of Funds............0.4 secevaees seseesaeaeedecseeneeseeeaeeacesetsceenenseenseneseeenees 15 Article IX — Budget... eesseescssscneeseersesscssessessessecnscescsesesesseeseenaseaeesssssesssessessesteeneeneets 15 9.1 Budget......... seeeenaeee seneeesaeesseeesaeevacessneessaecenaeseaessaeesssaeeeusessusseessessusonsusenees 15 Article X — Allocations and Distributions .............. deceeeaeeeeneeenees leseaeesaeseaueeaeeesaeeaeenneeneeeeees 15 10.1 Allocations of Profits and Losses wo... eee eeseeneeneeens esunecnesnessecseeneenaeees 15 10.2 Distributions.......ccceecesessessseeeeseeesseeseeens seeuesasenaeseeaeesseessessaceneneesaeeneeseenes 15 10.3 Offset. eee baeeenee bevesteeaes Seseensecvscessaneenseecesscssaecesseeesenessesecsnieessaesueornas 16 Hurwitz & Fine, P.C. iii FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 10.4 Limitation Upon Distribution ........... seceneenseesnes eeesenseeeseoeneees seseaeeeneeeneeaeenes 16 10.5 Accounting Period ve iccccsencseseeeecsssssssestsesssescsscesessessersssessereereenees 16 Article XI — Taxes... seveuanaceeceeeecececcsssusnsaneeesscevsneensuageeeesesecss dssceseesretessaesenstaessentrsee LO 11.1 Tax Retutns.....ccccccccccccesssscssssccsstsccssescvsescuseecessnssssenetseesraesesseesenes denneeessnees 16 11.2 Tax Elections .......ccecssssseesereeees Veeesevensensesevsnseeeseseseaneas Sevevavasecessaseeeses verse LO 11.3 Tax Matters Partners ......cccecceeeees bevecacenvensaeese desaneeeseens sevneeeneeeeeceesesesesss 16 Article XTI — ASSIQNMENt......ciccscesscessesecetscssssesetecrssenserseessesessceaeenneesteceaesnasenecsseenses veel 6 12.1 Transfer Prohibited .......... Venveceesneeeeeeceseeesveseenenees duceeeeeuecsaeescesenneeetessenanesens 16 12.2 Permitted Transfers .........cccsssscscessssssccscssersccessencssecevevensceescssesseusecessnageees 17 12.3 Transfers to New Members and Institutional Members cece eeeeeeeceeecnneens 17 12.4 Right of First Refusal........... uaeeneneessessesdeeseeseeneessensecseeseeaeenevseviceserateneeatens 17 Article XIII — Term and Termination .........cccscsccesserees seceeeeesseseusceceecesessseceesescenseeeseseesees 18 13.1 Term caccsccccesscscessscevessescenssscessescvevsesesnssvessesessessessssseveesuseeseatssusssssessesevsesers 18 13.2 Voluntary Withdrawal occ ceeesccsesseenecereeneceteeereeess Seeveseeeeeess saseeeeeseeeaeense 18 13.3 Automatic Withdrawal .....cccccccccccsssscsscesescersssccsseesesscsssesssescnseesesseesenseesens 18 13.4 Removal for Cause......c.ccccccccsccsccscssssresesessccccesersssccecssssseessccsesseceeceseetaeesess 19 13.5 Effect of Withdrawal or Removal on Members’ Capital Accounts, Distributions and Liabilities... cescsccesseeesseeees deseseanensceecereeseess 19 13.6 Purchase Price... cccecccsccccsesscsccesssnseccsseuseeesevssnnseeseesrenes sesesseeescsevevereeseeene lh D Article XIV — Covenants ........... seceeveceesevausageasauaananenaes seseeneeeeees seeeeceeucucegensnssesssseevevsveseveess 20 14.1 Non-competition........... Siceneesevseeecesdsenesessesseeaesaeonesenecaeenessasenssaeesaeeasenetaeeats 20 14.2 Non-Solicitation......ccccccccccssssscsssscssseseesrseveees Seveaness Sevesseesecavseseuseceassasevees 21 Article XV — Dissolution ........ccccccsscssssssccessessceveesssessscesssssescassnceeseecesesseeusscessensansserserseeseess 21 15.1 Dissolution... pevdaceeceseeeceteusesesneteeeeeseess devvenesecceyesuucessecessesscesesensacess 21 15.2 Winding Up..scesccccscsscsecternertrstserees seeeeeee asessceeeeneessaeeeeseeseaeesnaeeesnenes 21 15.3 Articles of Dissolution .......cccccccccccssscscesesssssscossesssnsscosseneaeecsessessuseccseesaes 21 15.4 Deficit Capital Account... eccesessesseesessesseesaeeaeessendersevaeeesenscneeseeaees 21 15.5 Nonrecourse to Other Members.......cccccceescccesesseseseseeeeees peseavaeseceaaeeess veel 15.6 Termination.....ccccccccccesen seesesanseesscsvenaes Seceseaeeenes seseeevenes Seseseeveneseeeaausesaees 22 Article XVI — Insurance .........ccsesesesssssssccsssstscsvccscvecensntetsecsevevensvens bevcueevnvvesuenananeeaeeseserseecs 22 16.1 IMSULANCE oo... ceecceecccceesstsesscesessesecessnseesusessssstsovevscueseseesesseescusueeseeesersesneees 22 Article XVII — General Provisions ......ccccsccsesssscssscvssecssssvsssessescvseseseesevscsssatesvsesussesennsesseses 23 17.1 Patient RECOrdS woo... .cceseecssccesssesscevesssreucccessareeeess coveceneceeeeueceeseenges sevstetsevesens DO 17.2 Inder nification........cccccsssessssesssessecessscesessetsersesesseceaesensevevasesssuevsuteseesensess 23 17.3 Notices ....ccecccesevees Seseeeeesenss Sesesesuceeesseeeevscssesusscesrsetscensussenssessssssscessnesesnnnss 23 17.4 Changes 1n Law.......cscccscsscsssesecssessssstscsessseesssessscessecseseseseasesseseesenereneens 23 17.5 Further ASSUrances.........cccccsssccececsssscecessssscceeceeseseeseseecesscereecesesseaeevessnaass 23 17.6 Amendment ........ccceccssscscceserreeses sossueuaeecesceecececersusssesstersesenteeeeersesess vera 17.7 Headings oe eeeeseneees heveeseee secscesevecneaeeneeseescesssesteneensesnsensesaeensesesneeees 24 Hurwitz & Fine, P.C. iv FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 17.8 WAIVED... cccessecccessecseseessssecssesecsseeessssessssnscssaueesssaeecesseeeestaesersaacessneeeroageseeees 24 ne 17.9 Severability ......... besteseeeeseguanenaes deseeseeseneesaeeseseceseeesseerseeeeseseaseseaeeseaeeesaeeaeens 24 or 17.10 Binding... haseaeesecuacsneceeeaeenseseeecseesseseneeeaeenseeseee Seevseeeenevseeaeeeneeseeess 24 17.11 Counterparts... ccccssecsssereereetsceteeeneees sseeseensecsseeseessersneesesseceaeeenes verse a4 : 17.12 Governing Law ...ccssccesesrsneeeeees Lseeseeeeseeessecetasenseereacesensesedeeesasenseens 24 : 17.13 Legal Representation ou... cece beeessneeenenensseeaeeeeaees Seseeeeeeeeessaeeeenaepaeees 24 Exhibit A —- Members of Company Exhibit B — Additional Members of the Company Exhibit C — Certificate of Eligibility Hurwitz & Fine, P.C. Vv FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 SECOND RESTATED OPERATING AGREEMENT This Second Restated Agreement is dated October 31, 2019, and is entered into by and among each of the persons listed on Exhibit A attached hereto and made a part hereof (each individually a "Member" and collectively, the "Members"), and shall be effective July 1, 2019 (“Effective Date”), subject to the approval of the New York State Department of Health. WHEREAS, the Company (defined below) was formed on March 24, 2009 pursuant to the New York Act (defined below); and WHEREAS, the Company received preliminary regulatory approval to operate a multispecialty ambulatory surgery extension clinic in Amherst, New York on or about June 7, 2018 following the earlier approval on or about April 10, 2013 to operate a single specialty free standing ambulatory surgery center in Buffalo, New York specializing in pain management services; and WHEREAS, the Founding Members (defined below) have been the sole Members of the Company since its formation; and WHEREAS, the Founding Members contemplate entering into certain Unit (defined below) purchase agreements with interested physicians and health care institutions to acquire membership interests in the Company; and WHEREAS, in anticipation of an expansion in the membership class, the Members desire to restate and amend the Restated Operating Agreement of the Company dated February 1, 2012 (the “2012 Agreement”) to reflect the agreement of the Members, and to establish their respective rights and obligations pursuant to the New York Act in connection with the Company; and WHEREAS, this Second Restated Operating Agreement dated October 31, 2019 of the Company (i) amends and restates in its entirety the 2012 Agreement, (ii) supersedes any and all agreements by or among any of the Members and/or the Company with respect to the subject matter set forth herein, (iii) has been duly authorized by the unanimous consent and approval of the Members by Membership Interests (as required and defined in the 2012 Agreement) and (iv) has been executed and approved by all of the Members. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the 2012 Agreement hereby is amended and restated in full and shall be binding on the Members as follows: ARTICLE I Organization 1.1 Formation. All Members hereby ratify and reconfirm the establishment of the Company as a limited liability company as formed on March 24, 2009 by the filing of the Articles of Organization (defined below) with the New York Secretary of State pursuant to the New York Act. 12 Name, The name of the Company is WNY MEDICAL MANAGEMENT, LLC, which name may be changed by the Board of Managers (defined below) upon written notice to all Members. If the Company does business under a name other than the name set forth in the Articles of Organization, then the Company shall file a certificate as required by Section 130 of 1 FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 the New York General Business Law with the consent and approval of the New York State Department of Health. 1.3 Principal Place of Business. The principal place of business of the Company within the State of New York shall be 700 Michigan Avenue, Buffalo, New York 14203 or such other place or address as the Board of Managers shall from time to time determine. 14 Registered Agent. The Company's registered agent shall be the Secretary of State of the State of New York. The address to which the Secretary will make a copy of any process against the Company is c/o Hurwitz & Fine, P.C., having a registered office at 1300 Liberty Building, Buffalo, New York 14202. The registered agent may be changed from time to time by the Board of Managers in accordance with the applicable legal requirements. 1.5 Term. The term of the Company commenced on the date of filing of the Articles of Organization with the New York Secretary of State and shall continue until the Company is dissolved sooner pursuant to the Articles of Organization, this Agreement or the New York Act (the “Term”’). 1.6 Purposes. The Company is formed to establish and operate one or more ambulatory surgery centers licensed under Article 28 of the New York State Public Health Law, and the powers and purposes of the Company are limited to the ownership and operation of such Article 28 facilities. 1.7 Anti-Kickback Statute Safe Harbor. The Company and its Members intend to comply with the Anti-Kickback Statute, 42 U.S.C, §1320-7b(b), as amended, and are prepared to operate the Company in a manner that substantially complies with the purpose and intent of the safe harbor regulations for ambulatory surgical centers as set forth in 42 CFR 1001.952(a), as amended (the “ASC Safe Harbor”). 1.8 Compliance Matters. The Company shall use its best efforts to operate in a manner that is substantially likely to comply with the Stark Law, 42 U.S.C. § 1395nn, the New York Health Care Practitioner Referral Law, PHL § 238-a, and the Anti-Kickback Statute, 42 U.S.C. § 1320 a-7b(b), and their respective implementing regulations. . 19 Title. Title to and all rights and interests in and to the Company’s assets shall be acquired in the name of and held by the Company or, if acquired and held in any other name, shall be held for the benefit of the Company. ARTICLE II Definitions 2.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: (a) "Agreement" shall mean this Second Restated Operating Agreement dated October 31, 2019, as the same from time to time may be amended. (b) "Articles of Organization" shall mean the Articles of Organization of the Company filed with the New York Secretary of State, as the same from time to time may be amended. (c) “ASC Facility” shall mean the ambulatory surgical center operated by the Company at 700 Michigan Avenue, Buffalo, New York and the extension clinic which is to be Hurwitz & Fine, P.C. 2 FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 operated by the Company at 3112 Sheridan Drive, Amherst, New York. The ASC Facility will be duly licensed by the State of New York as a freestanding facility that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization, that qualifies as an ambulatory surgical center under 42 C.F.R. § 416, and shall be a Medicare-certified ambulatory surgical center pursuant to 42 C.F.R. § 416. (d) “ASC Percentage Interest” shall mean, as to any Member, the number of Units owned by such Member divided by the total number of issued and outstanding Units. (e) “ASC Procedures” shall mean any procedure(s) included on the list of Medicare-covered procedures for ambulatory surgery centers qualifying as an ambulatory surgical center under 42 C.F.R. § 416. (f) “Board of Managers” shall mean the body described in Article V. (g) "Capital Account" as of any date shall mean the Capital Contribution to the Company by a Member, adjusted as of such date pursuant to this Agreement. (h) “Capital Contribution” shall mean the aggregate contributions by a Member to the capital of the Company in cash, or the fair market value of other property actually contributed by a Member to the Company. (i) "Code" shall mean the Internal Revenue Code of 1986, as amended. Gj) "Company" shall refer to WNY Medical Management, LLC. (k) “Disabled Member” or “Disability” shall mean, with respect to a Member, the inability of a Member, by reason of mental or physical illness, disease or injury, to perform the usual ASC Procedures within such Member’s medical or surgical specialty for at least six (6) consecutive months, as determined by the Board of Managers in its reasonable discretion. () “Disqualifying Event” shall mean any of the following events: (i) If a Member files a voluntary petition in bankruptcy or becomes the subject of an order for relief under the federal bankruptcy laws. (ii) Ifa Member applies, consents to or acquiesces in the appointment of a receiver, trustee, custodian or similar officer of the Member over any substantial part of his or her assets. Gii) Upon the involuntary appointment of a receiver, trustee, custodian or similar officer with respect to a Member over all or a substantial part of his or her assets if the appointment is not stayed, vacated or dismissed at the expiration of ninety (90) days. (iv) Upon the institution or commencement of any involuntary proceeding against a Member seeking reorganization, readjustment, dissolution, or similar relief under any statute, law or regulation that remains in place at the expiration of ninety (90) ays. (v) If a Member’s medical staff privileges at the ASC Facility are terminated, suspended (whether temporary or permanent suspension), revoked or relinquished (other than a voluntary resignation of privileges which are not under investigation). (vi) If a Member’s license to practice medicine in any state is terminated, revoked, suspended (whether temporary or permanent Hurwitz & Fine, P.C. 3 FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 suspension), or impaired (including without limitation placement on probationary status). (vii) In the event of the loss of a Member’s professional liability insurance coverage. (viii) A Member’s suspension, exclusion or debarment (temporarily or permanently) from any federal government payer or contracting program. (ix) A Member’s failure to create and/or maintain accurate and timely medical records, as required by the ASC Facility’s policies, procedures and/or medical staff by-laws. (x) A New Member ceases, at any time, to satisfy the Eligibility Requirements for a Member, as set forth in this Agreement, or fails to timely complete and file with the Board of Managers the “Certification of Eligibility” required by this Agreement, and fails or is unable to cure such violation(s) in a manner reasonably acceptable by the Board of Managers within thirty (30) days following receipt of written notice of violation from the Board of Managers. (xi) In the event of the death of a Member, or the disability or retirement of a Member other than a Founding Member. (xii) Upon a Member’s arrest, indictment or conviction of a crime other than a minor traffic violation. (xiii) A reasonable good faith determination by the Board of Managers that a Member’s continued ownership interest in the Company (x) would pose an undue risk of harm to patients, staff or visitors, or (y) would adversely affect the confidence of the public in the services provided by the Company, or a determination by the Board of Managers that the Member has engaged in conduct that is unethical, unprofessional, fraudulent, unlawful, or adverse to the interest, reputation or business of the Company. A Member shall notify the Board of Managers within seventy-two (72) hours of any act or acts concerning the Member that may give rise to a Disqualifying Act, including becoming the subject of a formal inquiry, hearing, investigation or other proceeding. (m) "Distribution" means distributions of cash or other property made by the Company to the Members pursuant to Article X of this Agreement. (n) "Fiscal Year" shall mean the fiscal year of the Company, which shall be the year ending December 31. (0) “Founding Members” shall mean Pratibha Bansal, M.D., William N. Capicotto, M.D., Cameron B. Huckell, M.D., Frank Mascaro, M.D., Joseph E. Serghany, M.D., and Romanth Waghmarae, M.D. (p) “Institutional Member” shall mean the Class C Members admitted to the Company as a Member after the Effective Date of this Agreement. (q) "Manager" shall mean a member of the Board of Managers. A Manager must be a Member. The composition of the Board is as described in Section 5.15 of this Agreement. This definition may not be deleted, modified or amended without the approval of the New York State Department of Health. Hurwitz & Fine, P.C. 4 FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 (r) "Member" shall mean each Founding Member, each Permitted Transferee, each New Member, and each Institutional Member which executes a counterpart of this Agreement as a Member and a disclosure statement in a form acceptable to the Board of Managers. (s) “Membership Class” shall mean the Class A, Class B, or Class C Units as established pursuant to this Agreement. Class A and Class B Units shall have and be entitled to the same rights and privileges in all respects, except for and subject to the rights of Founding Members to participate as members on the Board of Managers, certain decisions of the Company requiring a Supermajority of Founding Members, the ability in certain circumstances to convert Class A Units to Class B and/or Class C Units, and the assignment or transferability rights of Class A Members as provided for in Articles XII and XIII of this Agreement. Class C Units are reserved for Institutional Members, and shall have such rights, powers and privileges of membership as may hereafter be set forth in a further restatement and amendment of this Agreement. (t) "Net Losses" shall mean, for any Fiscal Year, the losses of the Company, if any, determined in accordance with the accounting method followed by the Company for federal income tax purposes. (u) "Net Profits" shall mean, for any Fiscal Year, the income of the Company, if any, determined in accordance with the accounting method followed by the Company for federal income tax purposes. (v) "New Member" or "New Members" shall mean those Members admitted to the Company as a New Member after the Effective Date of this Agreement. (w) "New York Act" shall mean the New York Limited Liability Company Law, as the same from time to time may be amended. (x) “Permitted Transferee” shall mean a Founding Member, his or her spouse and/or a line of descendants of the Founding Member. (y) "Reserves" shall mean that portion of Net Profits which the Board of Managers shall deem reasonably necessary to meet the foreseeable liabilities or obligations of the Company or for other reasons. (Z) “Retired Founder” shall mean a Founding Member who retires from the active practice of medicine. (aa) “Supermajority of Founding Members” shall mean the Founding Members holding in the aggregate more than two-thirds (2/3) of the outstanding Class A Units. (bb) “Supermajority of New Members” shall mean Members holding in the aggregate more than two-thirds (2/3) of the outstanding Class B Units. (cc) "Treasury Regulations" shall mean all proposed, temporary and _ final regulations promulgated under the Code as from time to time in effect. (dd) “Unit? shall refer to the Class A, Class B, and Class C Units, and shall mean the property interest of a Member in the Company, including a Member’s right, title and interest Hurwitz & Fine, P.C. 5 FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 in and to any and all assets, distributions, losses, profits and interests of the Company and any other interests and economic incidents of ownership. ARTICLE II Members 3.1 Membership Classes. The Company shall have three classes of membership interests or Units - - Class A Units, Class B Units, and Class C Units - - which together shall constitute one hundred percent (100%) of the membership interests of the Company. As of the Effective Date, all Units held by the Founding Members shall be deemed to be Class A Units. The Founding Members and/or their Permitted Transferees shall hold one hundred percent (100%) of the Class A Units, and the New Members shall hold one hundred percent (100%) of the Class B Units. Class C Units are reserved for Institutional Members. Upon an appropriate resolution of the Class A Members, as more fully described in Article XII, Class A Units may be converted to Class B Units and/or Class C Units. 3.2. Names and Addresses. The names, residence addresses, number of Units held by the Founding Members, and the respective ASC Percentage Interest of the Founding Members as of the date hereof, are set forth in Exhibit A. As additional persons are admitted as New Members or Institutional Members, pursuant to Section 3.3 of this Agreement and become parties to this Agreement, their names, residence addresses, and number of Class B or Class C Units held by such new Member and their respective ASC Percentage Interest shall be listed on Exhibit B. 3.3. New Members. An individual may be admitted as a New Member or Institutional Member after the Effective Date of this Agreement only upon the written consent or approval of the Board of Managers and the New York State Department of Health. No such person shall become a New Member or Institutional Member unless he, she, or it has become a party to this © Agreement and has executed a disclosure statement in the form approved by the Board of Managers. In addition, no New Member or Institutional Member or group of New Members and/or Institutional Members may acquire ten percent or more of the membership interests or voting rights in the Company unless approved by the Public Health Council. 3.4 Issuance of Additional Units. The Company may issue additional Units to Members for such purposes as the Board of Managers shall determine, subject to the conditions for admission of New Members or Institutional Members set forth in Sections 3.3 and 3.10 of this Agreement. 3.5 Limitation of Liability. Each Member's liability shall be limited as set forth in this Agreement, the New York Act and other applicable law. A Member shall not be personally liable for any indebtedness, liability or obligation of the Company beyond his, her, or its Capital Contribution, except that such Member shall remain personally liable for the payment of his, her, or its respective Capital Contribution or additional Capital Contribution and as otherwise set forth in this Agreement, the New York Act and any other applicable law. The obligation to make this payment shall survive the withdrawal or removal of a Member from the Company, the termination or dissolution of the Company, and the sale, transfer or assignment of a Member's interest in violation of this Agreement, and shall be made within the time prescribed by the Board of Managers. 3.6 Priority and Return of Capital. No Member shall have priority over any other Member, whether for the return of his, her, or its Capital Contribution (or additional Capital Contribution) or as to any Distribution; provided, however, that this Section 3.6 shall not apply Hurwitz & Fine, P.C. 6 FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 to a loan or other indebtedness as distinguished from a Capital Contribution (or additional Capital Contribution) made by a Member to the Company. 3.7 Liability of a Member to the Company. A Member who rightfully receives the return of any portion of a Capital Contribution (or additional Capital Contribution) is liable to the Company only to the extent now or hereafter provided by the New York Act. A Member who receives a Distribution made by the Company in violation of this Agreement or made when the Company's liabilities exceed its assets (after giving effect to such Distribution) shall be liable to the Company for the amount of such Distribution. 3.8 Liability of a New Member or Institutional Member to the Founding Members. Each New Member and Institutional Member acknowledges that the Founding Members have personally guaranteed or may in the future guarantee payment and performance in connection with (i) the issuance of a corporate line of credit or (di) the issuance of one or more mortgage and/or equipment loans to the Company (individually and collectively the “Guarantees”) and each agrees to execute and deliver any document reasonably required by the financial institution(s) or equipment vendors to extend and/or maintain said Guarantees. If any Founding Member (the “Indemnitee”) becomes liable as a result of the Guarantees as to any obligations of the Company (“Indemnification”) as to which all other Members were provided with notice, then each New Member and Institutional Member shall indemnify said Indemnitee up to each New Member’s and Institutional Member’s pro rata share of the Indemnification, which shall equal his, her, or its ASC Percentage Interest in the Company, within fifteen (15) days written notice of any payment by the Founding Member(s) to the financial institution(s) or equipment vendors. If any New Member or Institutional Member refuses or fails to make the required payment to an Indemnitee in accordance with this Section 3.8, then the Board of Managers may consider (i) an equitable adjustment (dilution) in the non-contributing New Member’s or Institutional Member’s ASC Percentage Interest or (ii) a reduction in the purchase price that such New Member (or former New Member) or Institutional Member (or former Institutional Members) is entitled to receive for his, her, or its Class B or Class C Units upon repurchase by the Company under Article XIII of this Agreement in an amount equal to the New Member’s or Institutional Member’s required payment to the Indemnitee. 3.9 Financial Adjustments. No New Member or Institutional Member admitted after the Effective Date of this Agreement shall be entitled to any retroactive allocation of losses, income or expense deductions incurred by the Company. The Board of Managers may, at its discretion, at the time a New Member or Institutional Member is admitted, close the books and records of the Company (as though the Fiscal Year had ended) and make pro rata allocations of loss, income and expense deductions to such New Member or Institutional Member for that portion of the Fiscal Year in which such New Member or Institutional Member was admitted in accordance with the Code. 3.10 Eligibility Requirements. Throughout the Term of this Agreement, each New Member must be an individual who is (i) licensed to practice medicine in the State of New York, (ii) actively engaged in the full-time practice of medicine in the State of New York, County of Erie and/or Niagara, (iii) in a position to perform medical services on a regular basis at the ASC Facility operated by the Company, (iv) deriving at least one-third (1/3) of his or her medical practice income from his or her own performance of ASC Procedures, (v) performing at least one-third (1/3) of his or her ASC Procedures at the ASC Facility operated by the Company, (vi) not excluded from participation in any federally funded health care program and (vii) maintaining adequate levels of professional malpractice insurance coverage as required by the Company. Hurwitz & Fine, P.C. 7 FINAL FILED: ERIE COUNTY CLERK 01/26/2024 11:48 AM INDEX NO. 812935/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 01/26/2024 3.11 Annual Certification. Each New Member shall, prior to admission as a Member in the Company,