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IN THE COURT OF COMMON PLEAS OF DELAWARE COUNTY PENNSYLVANIA CIVIL ACTION-LAW
____________________________ NO._______________________ vs. ____________________________
NOTICE TO DEFEND
You have been sued in court. If you wish to defend against the claims set forth in the following pages, you must take action within twenty (20) days after this complaint and notice are served, by entering a written appearance personally or by an attorney and filing in writing with the court your defenses or objections to the claims set forth against you. You are warned that if you fail to do so the case may proceed without further notice for any money claimed in the complaint or for any other claim or relief requested by the plaintiff. You may lose money or property or other rights important to you. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW. THIS OFFICE CAN PROVIDE YOU WITH INFORMATION ABOUT HIRING A LAWYER. IF YOU CANNOT AFFORD TO HIRE A LAWYER, THIS OFFICE MAY BE ABLE TO PROVIDE YOU WITH INFORMATION ABOUT AGENCIES THAT MAY OFFER LEGAL SERVICES TO ELIGBLE PERSONS AT A REDUCED FEE OR NO FEE.
LAWYERS RFERENCE SERVICE FRONT AND LEMON STREETS
MEDIA, PA 19063 610-566-6625
Peter Ruggieri
Viaduct International , LLC et al.
Harty Law Group, PLLC
Thomas S. Harty, Esq. (PA. ID No. 49987)
123 South Broad St.Suite 2140Philadelphia Pennsylvania [email protected]
267.262.5650
______________________________________________________________________________
Peter Ruggieri : Court of Common Pleas
50 Sleepy Hollow Drive : Delaware County, Pennsylvania
Newtown Square, Pennsylvania 19073 :
:
Plaintiff : Civil Action No.
:
vs. :
:
ViaDuct International :
203 S. Broad Street :
Suite 1002 :
Philadelphia, Pennsylvania 19102 :
:
ViaClean Technologies, LLC :
203 S. Broad Street : Complaint & Jury Trial Demand
Suite 1002 :
Philadelphia, Pennsylvania 19102 :
:
ViaDuct Medical Management, LLC :
203 S. Broad Street :
Suite 1002 :
Philadelphia, Pennsylvania 19102 :
:
James Young :
203 S. Broad Street :
Suite 1002 :
Philadelphia, Pennsylvania 19102 :
:
Defendants :
______________________________________________________________________________
Plaintiff Peter Ruggieri (“Plaintiff”) by way of complaint against the defendants ViaDuct
International, LLC, ViaClean Technologies, LLC, ViaDuct Medical Management, LLC and
James Young (collectively the “Defendants”) says:
Introduction
1. This action is instituted by the Plaintiff for, inter alia:
(i) An order compelling production of certain documentation and records as
mandated by the Pennsylvania Uniform Limited Liability Company Act of
2016 at 15 Pa.C.S.A ⸹8850 (“PULLCA”).
(ii) Breach of the duty of loyalty as set forth at ⸹8849.2 (b) of PUCCLA by
Defendant James Young (“Young”).
(iii) Breach of the of duty of care by Young as set forth at ⸹8849.2(c) of
PUCCLA by Young.
(iv) Young’s failure to act in good faith as set forth mandated by
⸹8849.2(d) of PUCCLA by Young.
(v) The appointment of a Receiver or Special Fiscal Agent for ViaDuct
International, LLC, ViaClean Technologies, LLC, ViaDuct Medical
Management, LLC (the “LLC Defendants”).
(iv) A preliminary injunction enjoining the Defendants from:
(a) Selling, transferring or conveying an ownership interest(s) in one of
more of the LLC Defendants or any affiliate thereof.
(b) Removing, copying, disclosing or damaging any electronically stored
data or information (“ESI”) confidential information or trade secrets of
including but not limited to:
information concerning the company’s assets, database, operations,
finances, employees, products and prospective products and
technology including, without limitation, any and all technical and
non-technical information;
copyright, trade secret and proprietary information;
ideas, schematics, concepts, work in process, technology, models,
inventions, material data, business methods, business policies,
research and/or development, drawings, know-how, processes,
apparatus, equipment, algorithms, software programs, source code,
object code, software source documents, and formulae related to
the current, future and proposed products and services of the party.
financial information, customer and supplier lists, client
information,
(c) Interfering with or encouraging any employee or prospective
employee, vendor, service provider, consultant or contractor to terminate
their association with the companies.
2. As detailed below the Defendants solicited Plaintiff and others to invest in a series
of deliberately, convoluted and confusing investment schemes.
3. According to Defendants, ViaDuct International, LLC (“ViaDuct”) and James
Young (“Young”) were managing various, affiliated limited liability companies that had been
organized to pursue the research, development, and sale of a number of extraordinary "products"
including:
A comprehensive cancer-risk assessment program.
A program known as "Explain My Surgery."
A hand and shield protective device.
DocScrips, which would provide in-house physician dispensing
programs for physicians specializing in pain management, urgent
care, orthopedics, pediatrics, primary care, and obstetricians.
4. Based on the representations of ViaDuct and Young the Plaintiff elected to invest
$250,000 in ViaDuct Medical Management, LLC (“VMM”), which was allegedly developing
the program, referred to as “Explain my Surgery”.
5. “Explain my Surgery” was purportedly going to operate as a resource guide for
patients on various surgical procedures. Through this program, patients could learn about their
procedure, while at the same time permitting the treating physician to bill the insurance carrier
for a patient consult.
6. According to the Defendants VMM was:
As a small, nimble but exceptionally functional organization we have weathered
the storm and are now proud to announce that we are nationally approved by
Dentons Law Firm, an internationally recognized firm, from a compliance
perspective. Based on their recommendations we have put in place a blueprint
from a sales training and national enrollment perspective for over 100 thousand
physician network through C&R Insurance Services.
As a member of our trusted network, you have been instrumental both as a
consultant and from a professional perspective. We thank you for all the support
and constant interaction by you so that we had the knowledge to get through this
rigorous diligence phase. We have agreed to abide by Dentons memorandum and
are officially starting Phase One of the national roll out through C&R Insurance
Services. See Exhibit A.
7. In exchange for his $250,000 investment Plaintiff was to receive an eight percent
(8%) equity interest in VMM.1 According to Young, Plaintiff’s investment was to be utilized to
fund counsel fees that had been and were going to be incurred so that that the company could
finalize an investment transaction with Berkshire Hathaway.
8. Over the course of the next several years, the Defendants repeatedly sang the
praises of VMM’s performance, even claiming that the Company had developed a “cancer
screening” program and was on the cusp of significant growth.
9. However, Young later advised the Plaintiff that ViaDuct had elected to abandoned
VMM’s operations and instead place its focus on a new product line, known as BIOPROTECT.
10. According to Young, ViaDuct, and an affiliate, ViaClean Technologies, LLC
(“ViaClean”) had developed BIOPROTECT. Based on their evaluation and research, the
projections forecasted “billions” in sales potential, particularly since it had been “FDA”
approved for use on medical devices, and was worth at least $26,000,000 as of August of 2018.
See Exhibit C.
11. Young later claimed that the company had procured millions in government
contracts and that a large New York law firm had invested a substantial sum in the company.
12. As a result, Young informed Plaintiff that he had elected to “transfer” or merge
1 Initially, Plaintiff intended to invest through a single purpose entity, 3 Howe LLC but instead invested
personally. See Exhibits E & F.
Plaintiff’s ownership interest in VMM into ViaDuct or ViaClean Technologies, LLC
(“ViaClean”; collectively the “LLC Defendants”).
13. Despite their glowing representations concerning the Defendants’ alleged
successful operations they repeatedly failed and refused to:
Issue annual financial reports
Issue K-1’s or other tax reporting forms
Provide an allocation of income or losses annually
Make annual distributions of income or loss
Conduct annual meetings of the members
Provide information concerning member capital accounts
Provide the members a written report as the operations of the Defendants.
14. Moreover, the Defendants have consistently failed to clarify the ownership
structure of the LLC Defendants; usurped corporate opportunities and denied Plaintiff access to
the books and records of the business pursuant to his demand and consistent with PUCLLA and
the governing Operating Agreements. As Plaintiff continued to express his concerns the
Defendants suggested they would purchase his interest in the foregoing enterprise; but then
failed to produce an agreement; propose terms and conditions and instead directed him a check
to repay an alleged “loan”. See Exhibit F.
15. As a result, this action is instituted to procure (i) access to the books and records
of the Defendants; (ii) a declaratory judgment establishing the Plaintiff’s ownership in each of
the Defendant limited liability companies; (iii) appointment of a receiver or special fiscal agent
(iv) damages, punitive damages, attorney fees; and (v) such other relief as the Court deems just
and proper.
Jurisdiction and Venue
16. This Court has personal jurisdiction over all named Defendants, inasmuch as all
said Defendants are specifically organized under the laws of the Commonwealth of
Pennsylvania, reside herein and/or transact business, and maintain an office address in
Pennsylvania.
17. Venue is vested in this judicial district as the Defendants regularly engage in
business in the Commonwealth of Pennsylvania and a substantial part of the events or omissions
giving rise to the claim occurred in this judicial district.
The Plaintiff and Defendants
18. Peter Ruggieri is a resident of the Commonwealth of Pennsylvania residing at 50
Sleepy Hallow Drive Newtown Square, Pennsylvania 19073.
19. ViaDuct, based on information and belief, is a Pennsylvania corporation with its
primary office located at 203 South Broad Street, Suite 1002, Philadelphia, Pennsylvania 19102.
20. ViaClean d/b/a BIOPROTECT, based on information and belief, is a
Pennsylvania corporation with its primary office located at 203 South Broad Street, Suite 1002,
Philadelphia, Pennsylvania 19102.
21. VMM, based on information and belief, is a Pennsylvania corporation with its
primary office located at 203 South Broad Street, Suite 1002, Philadelphia, Pennsylvania 19102.
(VMM, ViaDuct, and ViaClean shall collectively be referred to as the “LLC Defendants”)
22. Young, based on information and belief, is the chief executive officer, sole
director, and "majority" and controlling owner of each of the LLC Defendants. Young maintains
his primary office at 203 South Broad Street, Suite 1002, Philadelphia, Pennsylvania 19102.
Statement of Facts
23. Starting in late 2013 and throughout 2014 Young in his capacity as Chief
Executive Officer of Viaduct repeatedly solicited Ruggieri to invest in the “company”.
24. According to Young, ViaDuct, directly or through a series of affiliated entities
was in the process of developing a number of extraordinary "products" including, but not limited
to:
A comprehensive cancer-risk assessment program.
A program known as "Explain My Surgery."
A hand and shield protective device.
DocScrips, which would provide in-house physician dispensing
programs for physicians specializing in pain management, urgent
care, orthopedics, pediatrics, primary care, and obstetricians.2
25. Young further promised Plaintiff that ViaDuct and Young were overseeing the
day-to-day management of each entity.
26. Young recommended that Plaintiff focus his investment in VMM, which had
purportedly developed a “gold medal” program, referred to as “Explain my Surgery”.
27. “Explain my Surgery” was a software program allegedly developed by VMM,
thkat was purportedly going to operate as a resource guide for patients on various surgical
procedures.
28. Through this program, patients would learn about their upcoming procedure,
while at the same time permitting the treating physician to bill the insurance carrier for a patient
consult.
29. According to the Defendants VMM was:
1. Collectively the foregoing shall be referred to as the “Products”, singularly each
shall be referred to as a “Product”.
[a] small, nimble but exceptionally functional organization we have weathered the
storm and are now proud to announce that we are nationally approved by Dentons
Law Firm, an internationally recognized firm, from a compliance perspective.
Based on their recommendations we have put in place a blueprint from a sales
training and national enrollment perspective for over 100 thousand physician
network through C&R Insurance Services.
As a member of our trusted network, you have been instrumental both as a
consultant and from a professional perspective. We thank you for all the support
and constant interaction by you so that we had the knowledge to get through this
rigorous diligence phase. We have agreed to abide by Dentons memorandum and
are officially starting Phase One of the national roll out through C&R Insurance
Services. See Exhibit A.
30. According to Young, Plaintiff’s investment was to be utilized to pay, among other
things, counsel fees necessary to complete an investment transaction with Berkshire Hathaway.
31. Based on the foregoing representations, Plaintiff agreed to invest the sum of two
hundred and fifty thousand dollars ($250,000) in VMM and agreed to the terms of an Operating
Agreement. See Exhibit B& D.
32. In exchange for his capital contribution, Plaintiff was to receive an 8% ownership
interest in VMM.
33. Pursuant to the Operating Agreement for VMM:
(i) The Company was organized, to engage in any lawful act or activity for
which a limited liability company could be formed. See Exhibit B ⁋2.3
(ii) Young was the Manager to act on behalf of the company. See Exhibit B
⁋5.1
(iii) The books and records were to be kept at the company’s principal office
and to be made available at reasonable times for inspection and copying.
See Exhibit B ⁋8.
34. In the event of a breach of the Operating Agreement, the parties expressly
stipulated that monetary damages would be inadequate and expressly provided that injunctive
relief was to be afforded by a court of competent jurisdiction.
35. Over the next several years, Young repeatedly assured Plaintiff that Berkshire
Hathaway was in late-stage due diligence and negotiations to invest a substantial sum in the
business.
36. Although Young repeatedly informed Plaintiff that VMM was performing
extraordinarily well, he routinely failed to provide any supporting documents or information.
37. In fact, over the next several years Young would only schedule an in person
meeting with the Plaintiff to provide him an update as to the companies’ operations, and avoided
placing anything in writing.
38. Despite the Plaintiff’s investment in the company, ViaDuct and Young failed for
5 years to :
Issue annual financial reports
Issue K-1’s or other tax reporting forms
Make an allocation of income/losses annually
Make annual distributions of income or loss
Conduct annual meetings of the members
Provide information concerning member capital accounts
Provide the members a written report as the operations of the Defendants.
39. After Young and the Defendants failed to provide any concrete information
concerning VMM, Young informed the Plaintiff that ViaDuct had elected to abandon VMM’s
operations.
40. Young further advised the Plaintiff that his ownership interest in VMM had been
swapped for an 8% ownership interest in ViaClean pursuant to some type of merger.
41. According to Young ViaClean had been organized and had developed a new
product, that being BIOPROTECT.
42. Neither Young nor any other Defendant offered an explanation why this
“opportunity” had not been offered to VMM consistent with the terms of its Operating
Agreement.
43. Moreover, every LLC Defendant shares the same offices, management team and
operating assets as VMM and ViaDuct.
44. According to its website, ViaClean represented that BIOPROTECT was a
“breakthrough antimicrobial technology”.
45. Consistent with the foregoing Young and other representatives of ViaClean
advised Ruggieri that the BIOPROTECT cleaning solution could prevent harmful bacteria or
viruses from growing on hard surfaces such as gym equipment, countertops, desks, and other
similarly situated products.
46. According to ViaClean’s website BIOPROTECT is a (i) patented, water-based,
antimicrobial technology that provides persistent and continuous protection of a surface for up to
90 days; and (ii) preservative antimicrobial coating that can be applied to both porous and
non-porous surfaces to inhibit the growth of odor-causing, and stain-causing bacteria, mold,
mildew, fungi, and algae.
47. The coating allegedly forms a layer of spikes (self-assembling monolayer), each
of which carries a positive charge that attracts the negatively charged bacteria. Once attracted,
the molecular spikes pierce the cell and rupture its cell membrane, causing the odor-causing
bacteria, bacteria, which cause staining and discoloration, mold, mildew, fungi, and algae to die.
48. Plaintiff has further been advised that because the BIOPROTECT product is able
to provide protection against viruses, it thus offers significant benefits to the health care
industry.
49. If true, the BIOPROTECT product line would prove extremely valuable.
50. However, over the past several years, Young, ViaDuct, and ViaClean, remained
extremely circumspect when it comes to BIOPROTECT’s performance, sales, and development.
They have failed and refused to provide information concerning the ViaClean’s income,
expenses, ownership, and other material data.
51. In fact, Plaintiff was only recently advised by another investor that he does not
hold an 8% ownership interest but instead less than 1% while Young has, through ViaDuct
retained more than a 90% ownership interest for himself. See Exhibit D.
52. Plaintiff received Exhibit D from another member indicating that he has an
ownership interest in an enterprise known as "ViaClean" in exchange for his $250,000
contribution.
53. The information provided to Ruggieri indicates that while he is the largest single
investor in the company, yet he allegedly owns the lowest percentage ownership interest therein
and that ViaDuct International owns more than 90% of the outstanding enterprise. See Exhibit
D.
54. Plaintiff subsequently, confronted the Defendants as to why his ownership interest
had been diluted; and was advised that his interest had been diluted because ViaClean was worth
“$26,000,000”.
55. However, Defendants offered no support for such a claim.
56. Moreover, the Defendants have steadfastly refused to provide any information in
writing concerning Plaintiff’s ownership interest and have insisted that information concerning
ownership or the businesses’ operation be communicated only by phone or in person.
57. After confronting the Defendants with their ongoing failure to provide
information concerning the operations of the various companies or information concerning his
ownership interest the Defendants offered to purchase his interest in the company.
58. Despite their promise to purchase his “ownership” interest the Defendants failed
to produce an agreement, detail the proposed purchase price, terms or to explain the basis for
their proposal. Instead, Defendants directed Plaintiff a check, which contained a false notation
that the payment was issued as a “loan repayment”. See Exhibit E.
59. During the past 4 years the LLC Defendants and Young have failed and refused to
provide:
a. Any information concerning the businesses' ongoing operations
except in the most generic terms.
b. Any information concerning the businesses' finances, including,
but not limited to, financial statements, K-1s, or other
documentation necessary to assess the businesses' ongoing
operational needs and management.
c. How ownership interests were calculated and what membership
certificates have been issued to investors.
d. What distributions have been made to owners or officers of each
Defendant.
e. What loans have been made to each company, officer or member.
f. Employment agreements with any officer, manager, or member.
g. Documents relating to intercompany transfers by and between the
various ViaDuct companies.
60. In particular, Young, the founder, CEO and majority owner of the Defendant
LLC’s has failed and refused to provide any information, other than verbally, regarding the
ViaClean's operations.
61. As a result, by letter dated June 12, 2020 Plaintiff directed to the Defendants a
letter demanding access to the books and records of the LLC Defendants consistent with
Pennsylvania law.
62. The Defendants have, once again, failed and refused to respond or to produce any
documentation relating to Ruggieri's investment or the LLC Defendant’s performance.
63. Based on information and belief, Young has operated the LLC Defendants
without regard to his duties as the majority shareholder, officer, and director.
64. Moreover, the Defendants have failed and refused to provide information
concerning their operations.
65. Consequently, Plaintiff seeks this Court's intervention as set forth below.
Count I
Books and Record Demand
65. Plaintiff incorporates by reference the allegations of paragraphs 1-64 as is set
forth at length.
66. Over the course of the past several years, the Defendants have steadfastly refused
and/or failed to provide any information concerning the operations of the Defendant's LLCs in
writing or otherwise. The foregoing demand is in direct violation of the governing Operating
Agreement.
67. As a result on June 12, 2020 Plaintiff made a demand to inspect the books and
records of Defendant LLCs.
68. The Pennsylvania Uniform Limited Liability Act 15 Pa. C.S.A ⸹8850 sets forth
the statutory scheme governing limited liability companies in the Commonwealth (the “LLC
Act”).
69. In a manager-managed limited liability company, the following rules apply:
(1) The informational rights stated in subsection (a) and the duty stated in
subsection (a)(3) apply to the managers and not the members.
(2) During regular business hours and at a reasonable location specified by the
company, a member may inspect and copy full information regarding the
activities, affairs, financial condition, and other circumstances of the company as
is just and reasonable if:
(i) the member seeks the information for a purpose reasonably related to the
member's interest as a member;
(ii) the member makes a demand in record form received by the company
describing with reasonable particularity the information sought and the purpose
for seeking the information; and
(iii) the information sought is directly connected to the member's purpose.
(3) Within 10 days after receiving a demand under paragraph (2)(ii), the company
shall, in record form, inform the member that made the demand of:
(i) the information that the company will provide in response to the demand and
when and where the company will provide the information; and
(ii) the company's reasons for declining, if the company declines to provide any
demanded information.
70. Pursuant to the PUCLLC, demand has been made to inspect the books and records
of the LLC Defendants to no avail.
71. An inspection of the books and records is essential to determine what has
transpired with the LLC, Defendants' operations, investor proceeds, and the actual ownership of
the companies.
72. Based on the foregoing facts, the Defendants have withheld the records for
nefarious reasons.
WHEREFORE, Plaintiff demands Judgment permitting Plaintiff or his designate
representatives to review the books and records and awarding him attorney fees and costs of suit.
Count II
Declaratory Judgement
73. Plaintiff incorporates by reference the allegations of the preceding paragraphs as
if set forth herein at length.
74. A complaint for declaratory judgment is governed by the provisions of the
Declaratory Judgment Act, 42 Pa.C.S § 7531-7541 (the “Act”).
75. The granting of a declaratory judgment is a matter within the sound discretion of a
court of original jurisdiction.
76. The purpose of a declaratory judgment is to afford relief from uncertainty with
respect to rights, status, and other legal relations and is to be liberally construed and
administered.
77. A petitioner, whose rights, status, or other legal relations that are affected by a
contract may have determined any question of construction or validity arising therefrom and
obtain a declaration of rights, status, or other legal relations thereunder.
78. To sustain an action under the Act, a plaintiff must demonstrate “actual
controversy” indicating inevitable litigation and a direct, substantial, and present interest.
79. In this case, Young has operated each of the LLC Defendants as if they were one
in the same entity, “merged” entities for all practical purposes, and usurped opportunites for his
own personal benefit.
80. The Plaintiff seeks a declaration that he owns an 8% ownership interest in
Viaduct and/or ViaClean.
81. The Defendants have refused to document the Plaintiff’s ownership interest in
ViaDuct or ViaClean; and have now attempted to suggest he “loaned” money to the Defendants.
See Exhibit F.
82. Therefore, Plaintiff seeks an order of the Court declaring him an 8% owner of
ViaDuct, ViaClean, or whichever entity actually owns BIOPROTECT.
WHEREFORE, Plaintiff seeks:
(a) a declaratory judgment establishing his ownership interest in one or more
of the LLC Defendants.
(b) attorney fees;
(c) costs of suit; and
(d) for such other relief as the Court deems just and proper.
Count III
Breach of Fiduciary Duty
(Duty of Loyalty-Young)
83. Plaintiff incorporates by reference the allegations of the preceding paragraphs as
if set forth herein at length.
84. Pursuant to the Pennsylvania Uniform Limited Liability Company Act of 2016
(“PULLCA”) 15 Pa.C.S.A ⸹8849 provides that managing members owe the member of a limited
liability company a fiduciary duty.
85. The fiduciary duty of loyalty of a member in a member-managed limited liability
company includes the duty to account to the company and its members for the property, profit, or
benefits derived therefrom; and to refrain from misappropriating the same for the managers own
benefit.
86. In addition, a managing member must refrain from competing or acting in an
adverse manner to the company and other members' interests.
87. Young, has breached his statutory duty by failing and refusing to:
Issue annual financial reports
Issue K-1’s or other tax reporting forms
Make an allocation of income/losses annually
Make annual distributions of income or loss
Conduct annual meetings of the members
Provide information concerning member capital accounts
Provide the members a written report as the operations of the Defendants.
88. Moreover, Young has failed and refused to identify Plaintiff’s ownership interest
or to issue membership interests consistent with the investments made by each member; or to
make the company’s books and records available for inspection.
89. Most importantly, Young usurped an opportunity available to VMM in order to
benefit, exclusively Young and others he so chose.
90. Because of Young’s acts, omissions and breach of duty, the Plaintiff has been
damaged.
WHEREFORE, Plaintiff demands judgment against the Defendants for damages,
punitive damages, attorney fees, costs of suit and such other relief as the Court deems just
and proper.
Count IV
Breach of Fiduciary Duty
(Duty of Care-Young)
91. Plaintiff incorporates by reference the allegations of the preceding paragraphs as
if set forth herein at length.
92. Pursuant to the Pennsylvania Uniform Limited Liability Company Act of 2016
(“PULLCA”) 15 Pa.C.S.A ⸹8849 provides that managing members owe the members of a
limited liability company a duty of care. This statutory mandate requires that a managing
member:
[r]efrain from engaging in gross negligence, recklessness, willful misconduct,
or knowing violation of law.
93. In direct violation of the foregoing Young has refused to make co-defendants
books available for inspection and refused to account for their income or assets.
94. In addition, a managing member must refrain from acting in an adverse manner to
the company and other member’s interests. By and though Young’s usurpation of opportunities
available to the VMM the Plaintiff has been damaged.
95. Moreover, Young has breached their duty of care by failing and refusing to:
Issue annual financial reports
Issue K-1’s or other tax reporting forms
Make an allocation of income/losses annually
Make annual distributions of income or loss
Conduct annual meetings of the members
Provide information concerning member capital accounts
Provide the members a written report as the operations of the Defendants.
96. Finally, Young has failed and refused to identify Plaintiff ownership interest or to
issues membership interests consistent with the investments made by each member.
97. Because of the Defendants’ acts, omissions and breach of duty, the Plaintiff has
been damaged.
WHEREFORE, Plaintiff demands judgment against the Defendants for damages,
punitive damages, attorney fees, costs of suit and such other relief as the Court deems just
and proper.
Count V
Breach of the Implied Covenant of Good Faith and Fair Dealing
(Young)
98. Plaintiff incorporates by reference the allegations of the preceding paragraphs as
if set forth herein at length.
99. Pursuant to PULLCA (15 Pa.C.S.A ⸹8849) a member shall discharge their duties
and obligations under this title or under the Operating Agreement and any rights consistent with
good faith and fair dealing. Young has breached the duty of good faith and fair dealing in
negotiating and performing their obligations owed to the Plaintiff by:
(i) Refusing to provide information concerning the VMM or ViaClean’s financial
performance.
(ii) Usurping corporate opportunities for his own economic benefit.
(iii) by failing and refusing to:
Issue annual financial reports
Issue K-1’s or other tax reporting forms
Make an allocation of income/losses annually
Make annual distributions of income or loss
Conduct annual meetings of the members
Provide information concerning member capital accounts
Provide the members a written report as the operations of the Defendants.
100. In addition, Young has refused to provide Plaintiff information concerning his
ownership interest, allocated the vast majority of the shares in ViaClean to a company he owns
and controls in order to dilute Plaintiff and others' interest in VMM and/or ViaClean.
101. As a result thereof, the Plaintiff has suffered damages.
WHEREFORE, it is respectfully submitted that this Honorable Court enters judgment
against the Defendants, for damages, both actual and punitive, together with interest, cost of suit,
attorney’s fees and such other further relief as is appropriate and just.
Count VI
Breach of Contract
102. Plaintiff incorporates by reference the allegations of the preceding paragraphs as
if set forth herein at length.
103. Pursuant to the Operating Agreement between the members of the LLC
Defendants and the LLC Defendants the members were to receive on an annual basis the
following:
Annual financial reports
K-1’s or other tax reporting forms
An allocation of income/losses annually
Annual distributions of income or loss
Annual meetings of the members
Information concerning member capital accounts
A written report concerning the operations of the Defendants.
104. Moreover, the Defendants were obligated to adequately and properly document
ownership of the LLC Defendants, which they failed to do for the past several years.
105. Defendants further agreed to make available the books and records of the
company upon request.
106. Finally and most importantly, VMM was authorized to engage in any business
lawfully permitted.
107. In breach of the foregoing, Young and ViaDuct have failed and refused to provide
the foregoing information for several years, to properly document the ownership interest of the
Plaintiff, to make available the books and record of VMM, and usurped the company’s
opportunity for their own benefit.
108. The “shield” afforded Managers and members from personal liability must be
disregarded because, among others, Young and his cohorts have used the form of the entity as a
sham to pursue fraudulent or illegal activities or to cause injustice, ignoring corporate
formalities, undercapitalizing the company and exerting control to influence the corporate
decisions and actions for personal interests.
109. As a result, Young is personally liable for the LLC Defendant’s debts. See, Good
v. Holstein, 787 A.2d 426, 430 (Pa.Super. 2001); E. Minerals & Chemicals v. Mahan, 225 F.3d
330, 336 (3d Cir. 2000).
WHEREFORE, Plaintiff demands judgment against the Defendants for damages,
punitive damages, attorney fees, costs of suit and such other relief as the Court deems just
and proper.
Count VII
Appointment of Special Fiscal Agent
110. Plaintiffs incorporate by reference the allegations of the preceding paragraphs as
if set forth herein at length.
111. The Court in Manufacturers & Traders Trust Co. v. Minuteman Spill
Response, Inc., 999 F. Supp. 2d 805, 816 (W.D. Pa. 2013) highlighted nine equitable factors,
compiled from the case law of multiple circuits, which a district court may consider to
determine whether it is appropriate to appoint a receiver. 999 F. Supp. 2d at 816-17 (citing
Comerica Bank v. State Petroleum Distributors, Inc., Civ. No. 3:08-678, 2008 WL 2550553,
at *4 (M.D. Pa. June 2, 2008)). These nine factors are:
(1) the probability of the plaintiff’s success in the action;
(2) the possibility of irreparable injury to the plaintiff’s interests in the property;
(3) the inadequacy of the security to satisfy the debt;
(4) the probability that fraudulent conduct has occurred or will occur to frustrate
the plaintiff’s claim;
(5) the financial position of the debtor;
(6) the imminent danger of the property being lost, concealed, injured, diminished
in value, or squandered;
(7) the inadequacy of available legal remedies;
(8) the lack of a less drastic equitable remedy; and
(9) the likelihood that appointing a receiver will do more harm than good.
112. Where the record shows that the court’s intervention is necessary to protect a
plaintiff’s equitable interests during the pendency of a litigation, some courts opt to appoint a
special fiscal agent, rather than a receiver, because a special fiscal agent is a “less dramatic” and
“less intrusive device” than a receiver. Leone Indus. v. Assoc. Packaging, Inc., 795 F. Supp. 117,
120 (D.N.J. 1992) see also In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp.
450, 560 (D.N.J. 1997) aff’d. in part, 148 F.3d 283 (3d Cir. 1998). It is preferable to appoint a
special fiscal agent in those circumstances where the plaintiffs’ needs would be sufficiently
protected by either remedy. See In re Prudential, 962 F. Supp. at 560; Leone, 795 F. Supp. at
120.
113. Fiscal agents are generally appointed to monitor corporate record keeping or to
prevent the erosion of assets on behalf of shareholders” or other plaintiffs. See e.g. In re
Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 560 (D.N.J. 1997) aff’d. in part,
148 F.3d 283 (3d Cir. 1998).
114. In breach of their obligations the Defendants have usurped business opportunities
available to VMM, and failed and refused to:
Issue annual financial reports
Issue K-1’s or other tax reporting forms
Make an allocation of income/losses annually
Make annual distributions of income or loss
Conduct annual meetings of the members
Provide information concerning member capital accounts
Provide the members a written report as the operations of the Defendants.
115. In addition, the Defendants have refused to provide ownership information; or any
material information concerning BIOPROTECT.
116. Based on the foregoing, the Plaintiff has demonstrated the:
(1) Probability of the plaintiff’s success in the action;
(2) Possibility of irreparable injury to the plaintiff’s and other member’s interest
in the property;
(3) Inadequacy of the security to satisfy the debt;
(4) Probability that fraudulent conduct has occurred or will occur to frustrate the
plaintiff’s claim;
(5) Financial position of the debtor;
(6) Imminent danger of the property being lost, concealed, injured, diminished in
value, or squandered;
(7) Inadequacy of available legal remedies;
(8) Lack of a less drastic equitable remedy; and
(9) Likelihood that appointing a receiver will do more harm than good.
117. Where the record shows that the court’s intervention is necessary to protect a
plaintiff’s equitable interests during the pendency of a litigation, some courts opt to appoint a
special fiscal agent, rather than a receiver, because a special fiscal agent is a “less dramatic” and
“less intrusive device” than a receiver.
118. The Plaintiff, Young, VMM, and ViaDuct agreed that equitable relief was
appropriate in the event of a breach of the Operating Agreement.
119. Thus, based on the above either a receiver or special fiscal agent must be
appointed by the Court.
WHEREFORE, Plaintiff demands judgment against the Defendants and requests the
appointment of a Receiver or Special Fiscal Agent for each of the LLC Defendants; as well
as damages, punitive damages, attorney fees, costs of suit, and such other relief as the Court
deems just and proper.
COUNT XIII
(Equitable and Injunctive Relief)
120. Plaintiff repeats the allegations in the preceding paragraphs as if set forth herein at
length.
121. Plaintiff is entitled to the issuance of a preliminary and permanent injunction as
detailed below.
122. In order to sustain a claim for a temporary restraining order and a preliminary
injunction, the Plaintiff must establish that (1) there is a likelihood of irreparable harm to the
Plaintiff (2) the balance of harm favors the movant, (3) there is a likelihood of success on the
merits of the case and 4) the public interest favors the granting and the injunction.
123. By and through their actions as detailed above, Young has breached his fiduciary
obligations while the LLC Defendants have breached their contractual obligations, as well as
governing statutory mandates.
124. Young's conduct has been consistently inequitable, unfair, and oppressive. He has
refused to provide financial or other information, has engaged in self-dealing conduct, and
otherwise refused to act consistently with his duties as the managing member.
125. Based on the above, there is a likelihood of irreparable harm to the Plaintiff; and
the public interest clearly favors the movant.
126. Because of the foregoing described misconduct, the Plaintiff requests, pending the
termination of this proceeding, an injunction, enjoining the Defendants from:
(a) Selling, transferring or conveying an ownership interest(s) in one of
more of the LLC Defendants or any affiliate thereof.
(b) Removing, copying, disclosing or damaging any electronically stored
data or information (“ESI”) confidential information or trade secrets of
including but not limited to:
information concerning the company’s assets, database, operations,
finances, employees, products and prospective products and
technology including, without limitation, any and all technical and
non-technical information;
copyright, trade secret and proprietary information;
ideas, schematics, concepts, work in process, technology, models,
inventions, material data, business methods, business policies,
research and/or development, drawings, know-how, processes,
apparatus, equipment, algorithms, software programs, source code,
object code, software source documents, and formulae related to
the current, future and proposed products and services of the party.
financial information, customer and supplier lists, client
information,
(c) Interfering with or encouraging any employee or prospective
employee, vendor, service provider, consultant or contractor to terminate
their association with the companies.
Absent such relief, the Plaintiff shall suffer irreparable harm for which no monetary
damages shall suffice.
127. Finally, pursuant to the Operating Agreement, the Defendants have acknowledged
and Plaintiff is entitled to such equitable relief under the facts and circumstances presented.
WHEREFORE, Plaintiff prays the Court:
(a) Enter preliminary and injunctive relief.
(b) Awarding Plaintiffs attorney's fees, costs of suit.
(c) Awarding Plaintiffs such other relief as the Court deems just and proper.
Jury Trial Demand
Plaintiff demands a trial by jury on all triable, non-equitable issues.
Respectfully Submitted
Harty Law Group, PLLC
BY: Thomas S. Harty, Esq. /s/
Thomas S. Harty, Esquire
Attorney for Plaintiff
VERIFICATION
I, Peter Ruggieri hereby verify that the facts set forth in the foregoing pleading is true and
correct to the best ofmy personal knowledge, information and belief I understand that the
statements herein are subject to the penalties of 18 Pa C S §4904 relating to unsworn
falsification to authorities
//Li
Peter R
From "Jim Young" <iyoung@viaductinternational com>To gkrugg1211@comcast net
Sent Thursday December4 2014 12 45 41 PMSubject Explain My Update
Viaduct Medical Management1500 Locust StPhiladelphia PA 19102
December4 2014
Pete
I wanted to take this opportunity to personally update you on the progress ofExplainMySurgery
First I wanted to thank you for all of your effort from the start of this project and yourhelp as we diligently worked to improve the functionality of our system I also appreciatethe confidence and faith you had in us at Viaduct Medical Management as a newlyformed startup company From the time we began we have undertaken a pain stakingcompliance process This has pushed us to our limits both from a financial and humancapital standpoint and has certainly accelerated the growth of us as an organization asa whole
As a small nimble but exceptionally functional organization we have weathered thestorm and are now proud to announce that we are nationally approved by Dentons LawFirm an internationally recognized firm from a compliance perspective Based on theirrecommendations we have put in place a blueprint from a sales training and nationalenrollment perspective for over 100 thousand physician network through C&RInsurance Services
As a member of our trusted network you have been instrumental both as a consultantand from a professional perspective We thank you for all the support and constantinteraction by you so that we had the knowledge to get through this rigorous diligencephase We have agreed to abide by Dentons memorandum and are officially startingPhase One of the national roll out through C&R Insurance Services
We truly appreciate your help and from the start of our relationship your dedicationhasn t gone without notice We ask that we would now be able to reengage you andyour network with the new structure and process in place to become as successful aspossible in each individual specialty We also look forward to now representingadditional products and services which we have vetted in a calculated manner throughmultiple distribution opportunities We have various products and services which willprovide an added value into our existing network over the next 18 months
Please feel free to inquire with any questions as we begin the Phase One roll out
Sincere thanksJim Young
There are no secrets to success It is the result of preparation hard work and learningfrom failure
Jim Young
CEO
Viaduct International
office 267 886 9360
cell 856 229 2797
fax 877 248 5224
iyoung@viaductinternational com
Conference Call 605 477 2100 code 1064941#
www waductmternatlona/ com
® I NTERNATIONAL
THE INFORMATION CONTAINED IN THIS E MAIL MESSAGE IS INTENDED ONLY FOR THEPERSONAL AND CONFIDENTIAL USE OF THE DESIGNATED RECIPIENTS This e mail messageand/or any attachments thereto may be confidential legally privileged and/or exempt from disclosureunder applicable law If the reader of this message is not an intended recipient you are hereby notifiedthat any review use disclosure dissemination forwarding or copying of this e mail message and/orattachments or taking of any action in reliance on the contents therein is strictly prohibited Please notifyViaduct International LLC immediately by reply e mail and delete the original message and allattachments from your system Thank you
a
VIADUCT NEEDICAL MANAGEMENT LLC
OPERATING AGREEMENT
THIS OPERA] LAG AGREEMENT of Viaduct Medical Mmaimmt LLC aPennsylvania limited liability uompanv is entered into effecuvc as of the 15 Day of October,2014 by and among the parties whose names are set forth as Members on Schedule A attachedhereto, may be amended and supplemented from time to hme
W
"lhe parties hereto desire to form a limited liability company and enter into this limitedliability company agreement to set forth their respective rights, duties and obhgations withrespect thereto
NOW THEREFORE, in consideratlon of the mutual promises of the parties hereto andof other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged and intending to be legally bound hereby the parties hereto agree as follows
Section IDefined Terms
The followmg capltaljzed terms shall have the meanings specified in this Sectzon 1 Otherterms are defined in the text of this Agreement and throughout this Agreement, those terms shallhave the meanings respecuvely ascribed to them
“Act” means the Pennsylvania Limited Liability Company Law of 1994 15 Pa CS§8901, et seq and any successor statute, as amended from time to tune
“Aflfltate” means, as to any Person, any other Person that directly or indirectly, throughone or more intermediaries, controls, is controlled by or is under common control with suchPerson or, if such Person is an individual, the immediate Family of such Person or trusts solelyfor the benefit of such immediate Family As wed in this definition the term “control meanswe possession directly or indirectly or as trustee or executor, ofthe power to direct or cause thedirection of the management and policms of a Person, whether through ownersh1p of votingsecurities, as trustee or executor by contract or credit arrangement or otherwise
‘Agreement” means this Operatmg Agreement, as amended, modified, supplemented orrestated from time to me
“Capital Account” means with reSpect to a Member the account maintained, for thepurpose of determining a member 5 return on investment, for such Member in accordance withthe prov1510ns ofSection III this Agreement
“Capila! Contribution” moans with respect to each Member, the aggregate amount ofcash and the agrch value 0t any property or services contributed to the Company pursuant to
II
Section III of this Agreement In the case of a Member that acquires an interest in the Companyby virtue of an assignment or transfer in accordance with the terms of this Agreement, “CapitalContribution” means the actual consideration paid to acquire such Member’s interest
“Certificate” the Certificate of Organization of the Company and any and allamendments thereto and rectatements thereof filed on behalf of the Company with the office ofthe Department of State of the Commonwealth of Pennsylvania pursuant to the Act
“Chum” has the meaning set forth 1n Section IX ofthis Agreement
“Code” means the Internal Revenue Code of 1986, as amended from time to tune, or anycorresponding federal tax statute enacted after the date of this Agreement A reference to aSpecific section ofthe Code refers not only to such specific section but also to any conespondingprovision of any federal tax statute enacted after the date of this Agreement, as such specificsection or conesponding prOVIsion is in effect on the date of application of the provismns of thisAgreement containing such reference
“Company” means the Pennsylvania limited liability company named “, LLC ’ which hasbeen formed under the Act
“Covered Person” means a Member, any Affiliate of a Member, any officer, director,shareholder, partner, employee, representative or agent of a Member, or their respecttveAffiliates, or any officer, employee, Manager or agent ofthe Company or its Affiliates
“Damages” has the meaning set forth 1n Sectzon IX of this Agreement
“Fiscal Year” means the calendar year or any portion thereof for which the Company lsrequired to allocate Net Income and Net loss and other items pursuant to Section IV 0t thisAgreement
“Immediate Family” means, Wlth respect to any individual, such individual’s parentsspouse, Issue and adopted children or any ofthem
“IndemmfiedParty” has the meaning set forth in Secnon IX ofthis Agreement
“Interest” means a Member 5 Interest in the Company including without limitation, suchMember 5 share of the profits and losses of the Company and such Member’s right to receivedistributions (liquidating or otherwise), allocations and information and such Member’s right toconsent to or approve actions by the Company, all m accordance with the provision of thisAgreement and the Act
“Involuntary Withdrawal” means with respect to any Member, the occurrence ofany ofthe following events
(a) the Member makes an assignment for the benefit of creditors;
3343 76 2 2
(b) the Member files a voluntary petition ofbankruptcy;
(c) the Member is adjudged bankrupt or insolvent or there is entered against theMember an order for relief in any bankruptcy or insolvency proceeding;
(d) the Member files a pention or answer seeking for the Member any reorganizauon,arrangement, composition, readjustment, liquidation, dissolution or similar relief under anystatute, law, or regulation,
(e) the Member Seeks, consents to, or aequiesces in the appointment of a trustee,receiver, or liquidator of the Member or of all or any substantial part ofthe Member 5 properties
(i) the Member files an answer or other pleading admitting or failing to contest thematerial allegations of a petition filed against the Member in any proceeding described in (i)through (V) above;
(g) w1thin one hundred twenty (120) days any proceeding against the Memberseeking reorganization, arrangement, composition readjustment, liquidation, dissolution, orsimilar relief under any statute, law, or regulation if the proceeding has not been discharged orwithin ninety (90) days afier the appointment of a trustee, receiver, or liquidator for the Memberof all or any substantial part of the Member’s properties without the Member’s agreement oracquiescence which appointment is not vacated or stayed for ninety (90) days or, if theappointment is stayed for ninety (90) days after the expnation ofthe stay during which penod theappointment is not vacated,
(h) if the Member is an individual, the Member’s death or adjudication by a Court ofcompetentjurisdiction as incompetent to manage the Member’s person or property;
(i) if the Member is actmg as a Member by virtue of being a trustee of a tmst, thetermination ofthe trust;
(j) if the Member is a parmership or another limited liability company thedissolution and comencement ofwinding up of the partnership or limited liability company
(k) if the Member is a corporation, the dissolution ofthe corporation or the revocanonof its charter or
(I) if the Member 15 an estate, the distribution by the fiduciary of the estate’s entireinterest in the hunted liability company
“Laws” means
(a) all const1tutions treaties laws statutes, codes, ordinances, orders, decrees rules,regulations and municipal by laws, Whether domestic, foreign or international;
3343 76 2 3
(b) all Judgments, orders, wn'ts, injunctions, decisions, rulings, decrees and awards ofany governmental body.
(c) all policies, practices and guidelines of any governmental body and
(d) any amendment, modification re enactment, restatement or extension of theforegoing, in each case binding on or affecting the party or Person referred to in the context inwhich such word IS used; and Law shall mean any one of them
“Managers ” means the Person(s) designated as manger(s) ofthe Company in accordancewith Section 3 l of this Agreement
“Market Rate” means Two (2) tunes the Net Income ofthe Company
“Member” means the Persons designated as members on Schedule A and any Personadmitted as an additional Member or a substitute Member pursuant to the provisions of thisAgreement, in such Person’s capacity as, and so long as such Person is a Member of theCompany, and Members means two or more of such Persons when acting in their capacities asMembers of the Company For purposes of this Agreement, the Members shall constitute oneclass or group of Members Schedule A of this Agreement shall list all the Members and shall berevised fiom time to tune to reflect changes in the Members
‘Membership Rzghn” means all of the rights of a Member in the Company, including aMember’s (i) Interest, (11') right to insPect the Company’s books and records; (iii) right topartic1patc 1n the management of and vote on matters coming before the Company, and (iv)unless this Agreement or the Certificate provides to the contrary, right to act as an agent of theCompany
“Net Income” or “Net Loss” means, for each Fiscal Year or other period, an amountequal to the Company’s taxable mcome or loss for such year or period, other than items ofincome or loss specially allocated pursuant to this Agreement as determined by the Company 5accountants in accordance with Section 703(a) of the Code (tor this purpose, all items of income,gain loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Codeshall be included in Net Income or Net Loss), with the adjustments required to comply with theCapital Account maintenance rules of Treasury Regulation Section 1 704—1(b), including therules relating to (i) revaluations 1n the case of distributions of Company property in kind and theoptional revaluation of Company property and (ii) utilizing “book” depreciation, ecst recovery oramortization as determined under Treasury Regulation Section 1 704 1(b)(2)(iv)(g)(3) 1f there isa difference between the fair market value of contributed or revalued property and the adjustedtax basis of such property The Members shall cause the Company to revalue the property asrequired or permitted under the applicable Treasury Regulations
“Name” has the meaning set forth in Section IX ofthis Agreement
334376 2 4
“Percentage Interest” means the interest of a Member, expressed as a portion of 100%,as shown on Schedule A of this Agreement which reflects the Member’s ownership interest inthe Company
“Person” means anv natural person, corporatton, associauon, partnership (general orlimited), limited liability company, joint venture, trust, estate unincorporated association, orother legal entity or organizatlon
‘ Preferred Distribunon” has the meaning set forth in Section IV of th1s Agreement.
“Property” means that property or parcel ofland known as Philadelphia, Pennsylvania.
“Regulatory Allocations” means allocations of Net Income and Net Loss (or 1temsthereof) and Company mdebtedness in accordance with the following
(a) The non recourse deductions of the Company (withm the meaning of TreasuryRegulatton Seehon 1 704 2(b)(1) and (c)) shall be allocated mow; the Members in accordancewith their respective Percentage Interests
(b) Allocations ofNet Income or Net Loss (or items thereof) shall be made consistentwith the requirements of Treasury Regulation Section 1 704 2(e) Including without hmitatlon,those provxslons relating to allocations of mcome and deductions attributable to non recoursedebt and partner non recourse debt Allocations that would conform to those required by a“minimum gain chargeback” (as defined in Treasury Regulation Section 1 704 2(1)) 1n additionto the requtrements of Treasury Regulation Secuon 1 704 1(b)(2)(u)(d) relatmg to a qualifiedincome offset’ and Treasury Regulatlon Secuon 1704-2(1)(4), relaung to the chargeback onaccount of a decrease 1n mmlmum gain attributable to partner non recourse debt shall be madein a manner, at a tune, and in the amounts consistent with those provisions
(0) The “excess non recourse indebtedness” of the Company (within the meaning ofTreasury Regulatton Sectlon 1 752 3(a)(3)) shall be allocated among the Members in accordancewith their respectlve Percentage Interests
(d) Solely for federal income tax purposes, Items of mcome, gain, loss and deduction shall beallocated among the Members in a manner so as to take into account the difference between theincome tax basis of any Company property contributed by a Member to the Companytmmediately after its contnhution to the Company and its value for purposes of this Agreement,as required by Secuon 704(0) of the Code The Members, in their absolute discretion, may electto account for the book tax variation usmg any method permitted under the applicable TreasuryRegulatlons
“bupermajorny Vote” means at Fifty Two percent (52%) ofthe Percentage Interests thateach member has at the tune of the vote to the aggregate of all of the outstanding membershipinterests
“Tax Matters Member” has the meaning set forth in Sectzon VIII of this Agreement
334376 2 5
“Tax Payment Loan” has the meaning set forth 111 Section IV of this Agreement
“franbfer” means, when used as a noun any voluntary sale, hypothccation, pledge,assignment attachment, bequeath, donation, or other transfer, and, when used as a verb, meansvoluntarily to sell hypotheeate, pledge assign attach, bequeath donate, or otherwise transfer
“Treasury Regulations” means the income tax regulations, including temporaryregulations, promulgated under the Code, as such regulations may be amended from time to tame(including corresponding proviswns of succeeding regulatiom)
“Voluntary Withdrawal” means a Member 3 dissociation with the Company by means ofa Tmnster or by voluntary dissociation from the Company
“Voting Rtghts” means the number of votes of eaeh Member (as set forth 1n Section Vof this Agreement) for purposes of votmg on any matter arismg under this Agreement
“thhholdmg TaxAct” has the meaning set forth in Section IV of this Agreement
Section 11Organization, Name; Purpose, Term; Office
2 1 Organization The Members heretofore have authorized the organization of theCompany as a limited liability company under and pursuant to the provisions of the Act andagree that the rights, duties and liabilities of the Members shall be as provided 1n the Act, exceptas otherwise provided in this Agreement.
2 2 Name. of the Company The name of the Company shall be “Viaduct MedicalManagement, LLC’ The business of. the Company may be conducted upon compliance With allapplicable Laws under any other name designated by the Members
2 3 Purpose The Company is formed for the object and purpose of, and nature of thebusiness to be conducted and promoted by the Company IS engaging in any lawful act or activityfor which limited liability companies may be formed under the Act and engaging 111 any and allactivities necessary convenient, desirable or incidental to the foregoing
2 4 Term The term of existence of the Company commenced on the date the Certificatewas filed in the office of the Department of State of the Commonwealth 0t Pennsylvania andshall continue perpetually until the Company IS sooner dissolved in accordance with theprovismns of this Agreement. The existence of the Company as a separate legal entity shallcontinue until cancellation of the Certificate in the manner required by the Act.
2 5 Registered Office and Prantpal Ofiice The registered office of the Company inPennsylvania and the principal office of the Company shall be located at 225 S 18”: Street,Philadelphia PA 19103 Unit 714 or at such other location as, from time to time, may bedetermined by the Members The Company may also have such other offices at such otherIoeations as, from time to tune may be deemed advisable by the Members
334376 2 6
Section IIICompany Capital; Initial Percentage Interests, Capital Accounts
3 1 Company Capztal and Initial Percentage Interests
(a) The initial Capital Contribution which each Member has made or isdeemed to have made to the Company is set forth opposite each Member’s name on Schedule Aof this Agreement
([3) ‘Jo Member shall be required to lend any funds to the Company or tocontribute any capital to the Company in excess of the amount that is initially credited to suchMember’s Capital Account No Member shall have any obligation to eliminate a deficit balancein such Member’s Capital Account at any time or to bring such Member’s Capital Account intoany panicular parity with any other Member’s Capital Account at any tune
(e) No mterest shall be paid on or With respect to the Capital Contribution orCapital Account of any Member
((1) Although the Company may make distributions to the Members from nineto time as a return of then‘ Capital Contnbutions, no Member shall have the right to withdraw orotherwise dissociate from the Company (Whether voluntary or involuntary), except as otherwisepermitted in this Agreement, or demand a retum of any of such Member’s Capital Contributionor Capital Account, or the fan- market value of such Member’s interest in the Company, exceptupon dissolution and winding up of the Company Any attempted dissociation in violation ofthis Agreement shall be null and void ab mztzo
3 2 Capital Accounts A separate Capltal Account shall be established and maintainedtor each Member under this Agreement The Capital Account of each Member shall be creditedwith the cash and the agreed value of any preperty (net of liabilities assumed by the Companyand liabilities to which such property is sub} eat) or services contnbuted to the Company by suchMember, plus all income gain, or Net Income of the Company allocated to such Memberpursuant to Section IV (including Net Income and mcomc and gain exempt horn tax), and shallbe debited with the sum of (1) all Net Losses or deductions of the Company allocated to suchMember pursuant to Section IV, (ii) such Member’s distributive share of expenditures of theCompany described in Section 705(a)(2)(B) of the Code (or treated as so described underTreasury Regulation Section 1 704 1(b)(2)(iv)(i)) and (iii) all cash and the fair market value ofany property (net of liabilities assumed by such Member and the liabilities to which suchproperty is subject) distributed by the Company to such Member pursuant to Section IV Theamount of the Capital Account of a Member shall be determined in accordance with the rules setforth in Treasury Regulation 1 704 1(1)) Any references in any Semen of this Agreement to theCapital Account of a Member shall be deemed to refer to such Capital Account as the same maybe credited or debited from time to time as set forth above It is the intention of the Members tosatisfy the capital account maintenance requirements of Treasury Regulation Section 1704—I(b)(2)(1v), and the foregoing provisions defining Capital Accounts are intended to comply Withsuch provisions
334376 2 7
Section IVAllocatlon of Net Income or Loss, Distributions, Other Interests ofMembers
4 l Allocatzon ofNet Income orNet Loss
(a) Allocatton of Net Income or Net Loss Generally Except as otherwiseprovided in this Semen IV, Net Income or Net Loss, and all tax eredlts of the Company for eachfiscal period, shall be allocated among the Members in accordance with their respectivePercentage Interests
(b) Regulatoo: Allocations Net Income and Net Loss (and 1tems thereof) andCompany indebtedness shall be spec1allv allocated in accordance w1th the RegulatoryAllocations to the extent applicable and Regulatory Allocations 01 hot Income and Net Loss(and items thereot) shall be made prior to other allocations ofNet Income or Net I ass under thisAgreement
(0) Allocations and Dzstrzbutzom wzth Respect to Percentage InterestsTramfirred If a Percentage Interest is transferred, there shall be allocated to each Member whoheld the transferred Percentage Interest during the Flscal Year of transfer the product of (a) theNet Income or Net Loss allocable to such transferred Percentage Interest for such Fiscal Yearand (b) a fraction, the numerator of which is the number of days such Member held thetransferred Percentage Interest dun'ng Such Fiscal Year and the denominator ofwhich is the totalnumber of days 111 such Fiscal Year, provided, however, that the Company shall allocate the NetIncome or Net Loss by closing the Company’s books immediately after the transfer 01 anyPercentage Interest, if requested by the transferor or transferee of the Percentage Interest withinfifieen(15) days after the close of the tame the tansfer occurred Otherwise the allocation will bedetermined, not as of the date of transfer, but at the end ofthe Fiscal Year
42 Dzstrtbutzons
(a) Subject to this Seaman IV, dismbutions of cash and/or other assets orproperty of the Company, from whatever source (including, without limitation, net proceeds ofCompany operauons and sale, fmancmg or refmaneing ofCompany assets) shall be made to theMembers at the conclusion of each Fiscal Year, and will be computed on a cash basis first toany Member in repayment ofany debts, including loans owed to such Member by the Companyand all remaining profits to be dismbuted to the Members in accordance with their respectivePercentage Interests as from time to time adjusted and listed on Schedule A, or in the minutes ofthe company whichever is most recent
(b) The Members may set aslde fluids and establish reserves for such items asthe Manager(s) shall dctermmc, including without limitation, working cap1ta.l, maintenance ofbonding capacity, Laplldl expenditures acquisition of other assets by the Company and thesatistaction of liabilities (including, without limitation contingent liabilities) as they may comedue
-34376 2 8
(c) Wlth respect to any Fiscal Year of the Company m which Members areallocated taxable income for federal income tax pulposes (and for this purpose all items ofincome, gain, loss or deduction required to be separately stated pursuant to Section 703 of theCode shall be included in this calculation of taxable income (other than the amount, if any, bywhich capital losses exceed capital gains» the Company shall attempt to distribute to theMembers, within ninety (90) days after the close of such Fiscal Year, no less than the amountdetermined by multiplying the Company 5 taxable income (computed as set forth in thissentence) by the highest composite federal state and local income tax rate applicable to anyMember Nothing in this Agreement shall require the Company to borrow money or reduce itscash flow so as to restrict its ability to opeidte the day to day activities ofthe busmcss in order tomake such distributions
(d) Unless treated as a Tax Payment Loan (as hereinafier defined) anyamount paid by the Company for or With respect to any Member on account of any withholdingtax or other tax payable with respect to the income, profits or distributions of the Companypursuant to the Code, the Treasury Regulations, or any foreign, state or local statute, regulationor ordinance requiring such payment (each a ‘Withholding Tax Act”) shall be treated as adistribution to such Member for all purposes of this Agreement To the extent that the amountrequired to be remitted by the Company under a W1thholding Tax Act exceeds the amount thenotherwise distributable to such Member, the excess shall constitute a loan from the Company tosuch Member (a Tax Payment Loan”) which shall be payable upon demand and shall bearinterest, from the date that the Company makes the payment to the relevant taxing authority, atthe applicable federal short term rate under Seenon 1274(d) of the Code, compoundedsemiannually So long as any Tax Payment Loan or the interest thereon remains unpaid, theCompany shall make future distributions due to aueh Member under this Agreement by applyingthe amount of any such distribution first to the payment of any unpaid interest on all TaxPayment I cans of such Member and then to the repayment of the principal of all Tax PaymentLoans of Such Member The Members shall take all actions necessary to enable the Company tocomply with the provisions of any Withholding Tax Act applicable to the Company and to carryout the provisions of this subsection
Section VControl and Management
5 1 General Provzszons Concemzng iManagemenz The powers of the Company shall beexercised by or under the authority of and the business and affairs of the Company shall bemanaged under the direction of, a Manager(s) appomted by the Members to serve during theentu‘e term of the company The Manager has the sole and exclusive authonty to act on behalf ofthe company and to enter into contracts on the company’s behalf The Manager fitrther has theauthority to appoint a co Manager who will serve at the discretion of the Manager and shall haveno authority other than what is in the sole discretion of the Manager, given to the co Manager,and duly recorded in the Minutes of the company 3 records No Member (other than in suchPerson 5 capacity as a Manager) has the authority or power to act for or on behalf of theCompany to do any act that would be binding on the Company or to incur any expenditures onbehalf of the Company A Supermajority Vote shall designate the Manager and shall elect the
334370—7 9
Manager The Company shall have one (1) Manager James C Young shall serve as theManager of the Company The Manager shall serve unttl his death, resignation, or removal inaccordance with this Agreement All acuons by the Membership on behalf of the Company shallrequire the consent of the Manager, provided, however, that the Manager may delegate to anyother co Manager 01 other authorized Person the authority to apt on behalf of the Company withrespeet to Spcufie matters The Manager may resign at any time upon gning written notice ofresignation to the Members and any co Manager A Manager may be removed at any tune (w1thor without cause) by a Supermajority Vote of the membership If a Manager ceases to serve as aManager at any time for any reason, the resulting vacancy shall be filled by the Manager at hissole discretion
5 2 Meetmgs of Managers and Members Wntten Consents In the event of coManagers, meetings of the Board of Managers may be called by any Manager Meetmgs of theMembers may be called by any Manager or at the request of Members holding at least thirtyFive (35%) of the Percentage Interests Any Manager or Member may participate in a meetingby means of conference telephone or similar communicattons equipment by means of which allPersons participating in the meetmg can hear and speak to each other at the same time or insequence, and participatlon in a meetmg pursuant to this provision shall constitute presence atthe meeting Any action required or permitted to be taken at a meeting may be taken without ameetmg if a consent, in writing, setting forth the actIon so taken shall be signed by the Board ofManagers or Members required to approve such acnon
5 3 Contracts wzth Aflflzates The Company may enter into contracts and agreements forproperty or services in the ordinary course ofbusiness With the Manager
5 4 Company Expmses All expenses of the Company shall be billed directly to and bepaid by the Company The Manager or C0 Manager shall be reimbursed for all expensesmcurred for or on behalf of the Company
Section VITransfer of Membership Interests, Admission ofAdditional Members
6 1 Transfer ofMembersth Interests
(3) Restrzctzorzs on Transfer Except as otherw1se provided in this Agreement,no Member may Transfer, whether by act ofthe Member or by Operation of Law, any Interest orMembership Rights, without written approval by the Manager, which consent may be withheldfor any reason or for no reason Any attempted Transfer by a Person of a Member’s Interest orMembership Rights, or any part thereof, other than in accordance with this Agreement shall be,and is hereby declared null and vo1d ab initio
(b) Transférs ofMembersth Interests Voluntary Withdrawal Notwithstanding therestrictlon in paragraph (a) above, upon a Voluntary Withdrawal of any Member owning at leasttwenty five percent (25%) of the total Percentage Interest of the Company (the “OfferingMember”) the Offering Member shall ofier to sell all 01 the Membership Rights owned ofrecordand beneficially by the Offering Member (the “Offered Interest”) to the Members other than the
3343 76 2 10
Offering Member (the ‘Remaining Members”) or the Company for a purchase price perPercentage Interest determined by the Offerhtg Member but not more than Fifiy (50%) of thethen Market Rate (the Unit Price’) Within sixty (60) days after receipt of the OfferingMember’s ofiet the Remaining Members or the Company shall give written notice to theOffering Member electmg to do one of the following (i) purchase the Offered Interest at anamount equal to the Unit Price tunes the PerCLntage Interest of the Offering Member or (ii) sellthe Membership Rights owned 0t rccoul and beneficially by the Remaining Members to theOl‘lering Member at an amount equal to the Unit Price tunes the Percentage Interest of theRemaining Members [n the absence of a contrary agreement among the Remaining Membersthe Remaining Membcr(s) not in agreement (the Dissenting Member(s)’) may voluntarilywithdrawal from the Companv and upon such Voluntary Withdrawal will be deemed to haveoffered all of the Membership Rights owned of record and beneficially by the DissentmgMembcrfs) lo the Remaining Member(5) or the Company for the Umt Price times the PercentageInterest of the Dissenting Member“) Ihe Offering Member must provide ninety (90) dayswritten notice of the Offering Member’s intent to voluntarily withdrawal from the CompanyThe Remaining Members shall, within sixty (60) days of receipt of the Ottering Member 5notice, motif) the Ottering Member of the Remaining Members decision to accept the OfferingMember’s withdrawal and the purchase of the Offered Interest by either the Company or theRemaining Members, or ofi‘er to sell the Membership Rights owned ofrecord and benefic1ally bythe Remaining Members to the Ofi‘ertng Member Absent any timely notice fi'om the RemainingMembers the Remaining Members shall be deemed to have accepted the Offering Member 5withdrawal If the Remaining Members or the Company accept the Offering Member’swithdrawal or if the Offering Member accepts the Remaining Members offer to sell, theapplicable purehase price will be paid in twenty four (24) consecuttve monthly installmentswithout interest thh the first payment due on the fist day of the third month immediatelyfollowing the date on which the Offering Member receives notice of the election from theRemaining Members (or expiration of the notice penod)
(0) Transfer: of Wemberslzzp Interests Involuntary Withdrawal Notwithstandingthe restriction m paragraph (a) above upon an Involuntary Wlthdrawal of any Member (theWithdrawn Member’), the remaining Members holding a majority of the Voting Rights may
elect to continue the Company in which case the Members other than the Withdrawn Member(the Residual Members’) or the Company shall purchase, and the Withdrawn Member shallsell, all of the Membership Rights owned of record and beneficially by the Withdrawn Member(the ‘Withdrawal lnterest’ ) for a price equal to the Twenty Five (25%) of the Market Rate timesthe Percentage Interest of the Withdrawn Member (the ‘Withdrawal Purchase Priee”) In theabsence of a contrary agreement among the Residual Members, each Residual Member shallpurchase the Withdrawal Interest in the propomon that his or her recpecttvc Percentage Interestbears to the total Percentage Interest of all the Residual Members The Withdrawn Member mustprovide written nohee to the Residual Members immediately upon the happening of the eventthat triggers the Involuntary thhdrawal The Residual Members shall within sixty (60) days ofreceipt of the WithdtaWn Member 5 notice notify the Withdrawn Member of the ResidualMembers decision to accept the Wlthdrawn Member’s withdrawal and the purchase of theWithdrawal Interest by either the Company or the Residual Members, or to dJssolve theCompany Absent any timely notice from the Residual Members, the Residual Members shall bedeemed to have accepted the Withdrawn Member’q withdrawal Ifthe Residual Members or the
”4376 2 ll
COmpcmy accepts the Withdrawn Member’s withdrawal, the Withdrawal Purchase Price will bepaid to the Withdrawn Member 111 twenty four (24) consecutive monthly installments withoutinterest with the first payment due on the first day of the third month Immediately following thedate on which the Withdrawn Member receives notice of the acceptance fiom the ResidualMembers (or expiration of the notice period) In the event the Residual Members elect todissolve the Company the proceeds of the dissolution shall be distributed in accordanee withSectzon V1]
6 2 Admrss'zon ofAddztzonal Members Addihonal Members may at any time and fromtime to time be admitted to the Company in the Managers sole discretion upon the terms andcondinons determined by ResolutiOn of the company All additional Members shall execute anddeliver to the Company a counterpart of this Agreement
Section VIIDissolution of the Company
7 1 Dzvsolutzon
(a) Events of Dusolutzon The Company shall be dissolved and its affalrswound up upon the first to occur of the tollowing
(1) Supermajon'ty Approval or
(ii) the entry of an order ofjud101a1 dissolution of the Company underSemen 8972 ofthe Act
(b) Dzsmbutlons upon Dzssolutzon In the event of a dissolution of theCompany, the assets of the Company shall be llquidated m such manner as the Board ofManagers shall determine and, after Company obligahons to third partles have been dischargedor provided for in accordance with applicable Law, the net proceeds of such liquidahon shall bedistributed as follows
(1) First, among the Members if any, who have made unrepaid loansor advances to the Company, an amount up to the aggregate amount of such unrepaid loans andadvances, in proportion to the amount of such loans and advances and the unpaid mtcrcstthereon,
(1i) Second, among the Members, an amount up to the aggregateamount of their unrepaid Capital Contributions in proportlon to the amounts of such unrepaidCapital Contributions; and
(ii1) Third, among the Members in accordance with their respectivePercentage Interests
A reasonable time shall be allowed for such hquidation m order to minimize the losses normallyattendant upon a liquidation
334376 2 12
(c) Certzficate of Dtssolutzon When all debts, liabilities and obligations ofthe Company have been paid and dtscharged or adequate provision has been made therefor andall remaining assets of the Company have been distributed to the Members, the Board ofManagers shall execute and file in the Department of State a certificate of dissolution containingthe information requtred bv the Act
(d) In connection with the Company’s liquidation, the Company’s accountantsshall compile and fixrnish to each Member 3 statement setting forth the assets and liabilines ofthe Company as of the date ofcomplete hquidation
Section V IllBooks and Records, Tax Matters, Liability
8 1 Books and Records
(a) The Board of Managers shall cause to be kept full and accurate books andrecords of the Company A separate Cap1ta1 Account shall be established for each Member onthe books ofthe Company The Company shall maintain the followmg records, among others
(1) A current 113': of the full name and last known business address ofeach Member
(ii) A copy of the Certificate and all mmhents thereto togetherwith executed copies of any powers of attorney pursuant to which the Certificate and suchamendments have been executed
(iii) Copies of the Company’s federal, foreign state and local mcometax returns and reports, if any for the three (3) most recent years
(1v) Cop1es ofthis Agreement and all amendments thereto
(v) Any financial statements of the Company for the three (3) mostrecent Fiscal Years
All books and records of the Company shall be kept at the Company’s principal office and shallbe available at such location at reasonable times for inspection and copying by the Members ortheir duly authorized representatives All informanon needed by the Members and other Personswho were Members during the applicable Fiscal Year for income tax purposes shall be preparedby the Company’s accountants and furnished to each such Person afiel- the end of each FiscalYear of the Company
(b) The books will be closed and balanced at the end of each Fiscal Year TheManager shall cause to be made available to each Member upon written request within 120days after the «Jess of each Fiscal Year copies of the Company’s annual financial statements,including a w ritten balanee sheet and elatement of income or loss Such financial statements Wlll
334376 2 13
also indicate the Members share of the Net Income and Net Loss and other relevant fiscal itemsof the Company for such year The Manager shall arrange for the preparation of all tax returnsrequired to be filed for the Company Each Member shall be enutled to receive, upon writtenrequest, copies of all federal, state and local income tax returns and information returns, If any,which the Company 1s required to file
8 2 Tax Matters
(a) Tax Elechons
(i) The Members shall cause the Company to make the election underSachem 754 ofthe Code to adjust the basis of the Company 5 property in the case of a transfer ofa Percentage Interest by sale or exchange or upon the death of a Member, 1f the transfereebecomes a substttute Member, and the transferee requests that the Company make the elecnon, inwritmg not later than thirty (30) days after the close of the Fiscal Year in which the event givmgrise to the adjustment for which an election is needed occurs The Members may also, in then-discretion, cause the Company to make an elecnon at any time without a request to do so
(ii) The Company shall take any action necessary to be taxed as a“partnership” for federal and state Income tax purposes and neither the Company nor anyMember shall take any amen that would result in the Company being taxed as other than a“partnership’ for federal income tax purposes, including (but not limited to) electing to be taxedas other than a ‘partnership’ by filing Form 8832 ‘Entity Classification Election ’
(iii) All other tax elecuons on behalf of the Company may be made orrescmded in the dlscretion of the Members
(b) Tax Matters Member James C Young shall act on behalf. of theCompany as the “tax matters member’ within the meaning of Section 6231(a)(7) ofthe Code
8 3 Lzabzlz'ty ofMembers [he Members shall have no liability for the obligatlons orliabilities of the Company except to the extent requ1red by the Act
334376 2 14
Section IX
Indemnificahon
9 1 Indemnification
(a) Indemmficatzan of Covered Persons To the extent permltted by Law, theCompany shall mdemnify, defend and hold harmless each Covered Person from and against anyand all debts, losses claims, damages, costs, demands, fines, Judgments, contracts (imphed andexpressed, written and unwritten) penalties, obligatlons, payments, liabilitles of every type andnature (whether known or unknown, fixed or contingent), including, w1thout limitation, thosearising out of any lawsuit, actiOn or pmceedmg (whether brought by a party to this Agreement orby any third party) together with any reasonable costs and expenses (including withoutlim1tanon, reasonable attorneys’ fees, out of pocket expenses and other reasonable costs andexpemes incurred in investigahng, preparing or defending any pending or threatened lawsuit,action or proceeding) incurred in connection With the foregomg (collectively “Damages”)suffered or sustained by such Covered Person by reason of any act, omission or alleged act oromission by such Covered Person arising out of such Covered Person’s activities taken primarilyon behalf ofthe Company, or at the request or with the approval ofthe Company, or primarily infilrtherance of the mterests of the Company provided, however, that the acts, omisswns oralleged acts or omissions upon which such actual or threatened achons, proceedings or claimsare based did not constitute willful misconduct or gross negligence, and are within the authoritygranted by this agreement to such Covered Person
(b) Indemmficatzon Procedure A party seeking indemnificatlon from theCompany pursuant to paragraph (a) above (an “Indemnified Party”) shall give prompt notice tothe Company of the assertton of any claim, including any claim brought by a third party, inreSpect of which indemnity may be sought hereunder (a ‘Claim”) and shall give the Companysuch information w1th respect thereto as the Company may reasonably reqqu but no failure togive such nohce shall relieve the Company of any liabllity hereunder except to the extent theCompany has suffered actual prejudice thereby The Company shall have the right, exercisableby written notice (the “Notice”) to the Indemnified Party (which Nouce shall state that theCompany expressly agrees that as between the Company and the Indemnifiefl Party theCompany shall be solely obligated to sat1sfy and discharge the Claim) w1thin thirty (30) days ofreceipt of notice from the Indemnified Party ofthe commencement of or assertion of any Claim,to assume the defense of such Claim, using counsel selected by the Company and reasonablyacceptable to the Indemmfied Party provided that the Company shall not have the obligatlon toassume the defense of a Claim (A) seelcmg an mJunction, restraming order, declaratory relief orother nonmonetary relief against the Indemnified Party (whether or not the Company 1s alsonamed as a party) if the claim is being brought by the Company or on behlf ofthe COmpany by aMember or (B) if the named partles to any such action (mcluding any impleaded parhes)includes both the Indemnified Party and the Company and the Indemnified Party shall have beenadvised by counsel that there are one or more legal or equitable defenses available to theIndemnified Party which are different from those available to the Company; in which case suchIndemnified Fwy shall have the right to participate in his own defense of the Claim of the typeset forth in clause (A) anchor (B) above and all Damages In connection therewith shall bereimbursed by the Company to the extent provided in paragraph (a) above In addition, if the
334376 2 15
Company fails to give the Indemnified Party the Vance complying with the provisions statedabove within the stated time period the Indemnified Party shall have the right to assume controlof the defense at the Claim and all Damages in connection therewith shall be reimbursed by theCompany to the extent proVided in paragraph (a) above upon demand of the Indemnified PartyIn any event, no party assuming the defeme of any Claim shall have the right to compromise orsettle any Llaim for non monetary relief agaimt the other party or any claim for monetary reliefagainst another party without such party’s consent (which consent shall not be unreasonablywithheld or denied) unless such monetary relief is paid in full by the settling party
[fat any time afier the Company assumes the defense of a Claim any ofthe condittons setforth abme are no longer sansfied the Indemnified Party shall have the same rights as if plause(A) or (B) in the preceding paragraph had been satisfied and the Company never assumed thedefense of such Claim
The Company or the Indemnified Party as the case may be, shall in any event have theright to participate at its own expense in the defense of any Claim which the other is defending
The Company, if it has assumed the defense of any Claim in accordance with the terms ofthis Agreement. shall have the right, upon five (5) business days prior written notice to theIndemnified Patty, to consent to the entry ofjudgment with resme to or otherwise settle, suchClaim unless (i) the Claim involves equitable or other non monetary damages or (ii) in thereasonable judgment of the Indemnified Party such settlement would have a continuing materialadverse effect on the Indemnified Party’s business (including any material impairment of itsrelationships with customers and suppliers) In the ease of (i) and (ii) above, such settlementmay be made only with the written eonsent of the Indemnified Party, which consent shall not beunreasonably withheld or delayed If the Indemnified Party otherwise assumes the defense of aClaim, it Shall have the right to settle such Claim only with the consent ofthe Company
Whether or not the Company chooses to defend or prosecute any Claim mvolvmg a thirdparty, all the parties to this Agreement shall cooperate in the defense or prosecution thereof andshall furnish such records information and testimony, and attend such conferences discoveryproceedings hearings, trials and appeals as may be reasonably requested in connectiontherewith
(c) ng/ll t0 Advancement of Expemes To tho. fullest extent permitted byapplicable Law, expenses (including legal fees) incurred by a Covered Person in defending anyclaim, demand action, suit or proceeding shall from time to time, be advanced by the Companyprior to the final disposition of such claim demand action suit or procwding upon receipt bythe Company of an undertaking by or on behalf cf the Covered Person to repay such amount if itshall be determined that the Covered Person is not entitled to be indemnified as authorized inparagraph (a) above
(d) Insurance The Company may purchase and maintain insurance, to theextent and in such amounts as the Members shall deem reasonable, on behalfof Covered Personsand such other Persons as the Members shall determme, against any liability that may be assertedagainst or expenses that may be incurred by any such Person in connection with the activities of
3.34376 2 16
the Company or such Indemnified Party(s) regardless of whether the Company would have thepower to indemnify such Person against such liability under the provisions of this AgreementThe Company may enter into indemnity contracts with (m. cred Persons and such other Personsas the Manager shall determine and adopt written procedures pursuant to which arrangements aremade for the advancement of expenses and the funding of obligations under this Sectmn IX andcontaining such other procedures regardmg mdemnification as are appropriate
(e) Non Excluszvzty of Rights The rights conferred on any Person by thisSccnon DC shall not be exclusive of any other rights whieh such Person may have or hereafteracquire under any statute provision of the Certificate, agreement, vote of Members or otherwise
(i) Amendment or Repeal Any repeal or modification of this Seem»: IX shallnot adversely affect any right or protection hereunder of any Person in respect of any act oromission occurring prior to the time ofsuch repeal or modification
(g) Changes m Law References 111 this Sectzon DC to Law shall be to suchLaw as it existed on the date this Agreement was executed or as such Law thereafter may bechanged; provided that (i) in the case 01 any change which limits the indemnification rights orthe rights to advancement of expenses which the Company may provide, the nghts toindemnification and to the advancement of expenses provided 1n this Section IX shall continue astheretofore agreed upon to the extent permitted by Law; and (ii) if such change permits theCompany without the requirement of any further action by the Members to provide broaderindemnification rights or rights to the advancement of expenses than the Company was permittedto provide prior to such change, then the rights to indemnification and the advancement ofexpenses shall be so broadened to the extent penmtted by Law
(h) Applicability The prov1sions of this Section IX shall be applicable to allactions suits or proceedings commenced after its adoption Whether such arise out of acts oromissions which occurred prior or subsequent to such adoption and shall continue as to a Personwho has ceased to be a Covered Person, and shall inure to the benefit of the heirs, personalrepresentatives successors and assigns of such Person
Section X
General Provisions
10 I Indulgences Em Neither the failure nor any delay on the part of any party toexucxsc any right remedy power or privilege under this Agreement shall Operate as a waiverthereof nor shall any single or partial exercise of any right, remedy power or privilege precludeany other or fisrther exercise of the same or of any other right remedy power or privilege, norshall any waiver of any right, remedy power or privilege with raped to any occurrence beconstmcd as a waiver of such right remedy power or privilege with respect to any otheroccurrence N0 waiver shall be effectlve unless it is in writmg and is signed by the partyasserted to have granted such waiver
10 2 Controlling Law [his Agreement and all questions relating to its validity,interpretation, performance and eniortement (ineluding, without limitation, provisions
334376 2 17
coueeming limitations of actions) shall be governed by and construed in accordance With theLaws of the Commonwealth of Pennsylvania
10 3 Notices All notices, requests demands and other communications required orpermitted under this Agreement shall be in writing and shall be deemed to have been duly given,made and received only when delivered (pexsonally by reputable courier service such as FederalExpress, or bv other messenger) or when deposited in the Lnited States mails, registered orcertified mail postage prepaid, return receipt requested, addressed as set forth below
Ifto the Company 1500 Locust Street, Unit 2808 Philadelphia PA 19102
If to a Member, to the address appearing for such Member on Schedule Aattached to this Agreement
Any party may alter the addrese to Which communications to such party are to be sent by givingnotice of such change of address to the other parties in conformity with the provisions of thisparagraph for the giving ofnouee
10 4 Bmdmg Nature ongreement No Asszgnment Ibis Agreement shall be bindingupon and inure to the benefit of the parties and their respective successors and assigns except thatno party may assign or transfer any of his, her or its rights or obligations under this Agreementwithout the written consent of the other Members
10 5 Executzon m Counterparts This Agreement may be executed in any number ofcounterparts, each of which shall be deemed to be an original as against any party whosesignature appears thereon and all ofwhich shall together constltute one and the same instrumentIf executed in multiple counteiparts, this Agreement shall become binding when any counterpartor counterparts at this Agreement, individually or taken together bear the signatures of all at theMembeis as signatories
10 6 Provzs'zons Separable The provisions of this Agreement are independent of andseparable from each other, and no provision shall be affected or rendered invalid orunenforceable by virtue of the fact that for any reason any other provision may be invalid orunexfibrceable in whole or in part
10 7 Entzre Agreement This Agreement contains the entire understanding among theparties to this Agrcument with respect to the subject matter of this Agreement and supersedes allprior and wnlempomneous agreements and understandings, inducements or conditions expressor implied, oral or mitten The express terms of this Agreement control and supersede anycourse of performance and/or usage of the trade inconsistent with any of the terms of thisAgreement
10 8 Amendment: or Modifications This Agreemth may not be amended or modifiedother than by an agreement in writing signed by all ofthe Members
334376 2 18
10 9 Headings The headings in this Agreement are for convenience only", they form nopart of this Agreement and shall not affect its interpretation
10 IO (render Em Words used in this Agreement regardless of the number and genderspecifically used, shall be deemed and construed to include any other number, singular or pluraland any other gender masculine feminine or neuter, as the context indicates is appropriate
10 11 Number of Davs In computing the number of days for purposes of thisAgreement, all days shall be counted, including Saturdays Sundays and holidays; providedhow ever that if the final day of any time period falls on a Saturday Sunday or holiday on whichfederal banks are or may elect to be closed then the final day shall be deemed to be the next daywhmh IS not a Saturday, Sunday or such holiday
10 12 Assurances Each Member shall execute all certificates and other documents andshall do all such tiling, ieeording publishing and other acts as the Members deem appropriate tocomply with anv Laws relating to the acquisition, operatiou or holding of the property of theCompanv
10 13 Specific Peiormance The parties recognize that irreparable injury will resultfrom a breach of any provision of this Agreement and that money damages will be Inadequate tofully remedy the injury Accordingly in the event of a breach or threatened breach of one ormore of the provisions ofthis Agreement any party who may be injured (in addition to any otherremedies which may be available to that party) shall be entitled to one or more preliminary orpermanent orders (1) restraining and enjoining any act which would constitute a breach1 or (ii)compelling the performance of any obligation which, if not performed would constitute abreach
10 I4 Estoppel Certificate Each Member shall Within ten (10) days after writtenrequest by any Member, deliver to the requesting Person a certificate stating, to the Member 5knowledge, that (a) this Agreement is in hill force and effect, (b) this Agreement has not beenmodified except by any instrument or instruments identified in the certificate, and (c) there is nodefault hereunder by the requesting Person, or ifthere is a default the nature and extent thereof
[signatures appear on next page]
334376 2 1‘)
WADUCT MEDICAL MAhAGEMENT, LLCOPERATING AGREEMENT
E‘E‘HEDIII E E
MemberName and Addmss Percentage Interests
Viaduct International LLC 67%
Quadrato Holdings LLC 25%
3 Howe LLC 8%
11\ WITNESS WHEREOF the undersigned have executed and del1vered this Agreementas of the date first above written
MEMBERS
Viaduct Intern onal LL
,/
uadrato Holdings LLC
g WW
3 Howe LLC
334376 2 20
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Jim can we possibly get
together in the coming
weeks I wanted to get 3
update on how things are
gomg
Sure brotha tried to a fewtimes recently Just pick a
a day
Ok |\ HI ten back later this
morning\ ith open days
a Thanks Pete
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Ag 2 2013
Jim lam freetoday next
week I am down the shore
In Sea Isle If you are
down we can meet any
day down there Then I am
good Aug 13 M 1516 Let
me know if arm, hng
works
A t, 1 NJ ‘ '
Hey Pete letslock in
August 13 Just let mea know where
Aug 8 2018
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Guys lunch Monday Mediaa ovations noon
Augh 2013 m
OJ]: us mm to make
sure 9 are good for noon
JV“: Yang
0 Yes we will bethere
a Yes quotationg
Aug 1.1 2018
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Good meeting yesterdayPete we will work over thenext week to get these
agreements cleaned up so
you know exactly what
you have in viaduct how
do we introduce our
technology to planet
0 fitness corporate??
Keith I can get you an intro
with a senior VP at planet
I also can get you a
meeting for the franchise
a a m!O 9 O 0- . 0
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<- om2 Peopde
Keith I can get you an intro
with a senior VP at planet
l also can get you a
meeting for the franchise
committee How are I
things coming with the
documents we talked
about
Ker 1“ a: H:
Pete perfect Jim0 documents”
Aug 25 2013 ..
No idea how I missed
this that 3 great news
Yep lspoke to firm Will
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2 Peo;le
No idea how I missed
this that 3 great newsYep I spoke to firm Will
‘5‘ have clarity this week
Sep 12 2018
Pete paperworkfor Vaduct
is done let s catch up next
0 week and go over it
Jim and I have a meeting
in Media Tuesday does
a Tuesday work for you ?
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U Tueeday work for you ?
Keith maguire
a Ksay 2 at quotations
Sep17 2018 5 38 PM
Keith maguire
Pete Jim and! havemeeting in Media at 1130should be over by 130latest we can meet after if
0 your still good
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Let me know if we are
good for 130
I
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Jim I am giving paperwork
to my lawyer tomorrow but
I didn I see anywhere
where it says how many
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Jim I am giving papen~ork
to my lawyer tomorrow but
Ididn 1 see anywhere
where it says how many
total shares there are in
the company I see where
it is 10k a share But not
where it says total number I
of shares
26 million worth That s
a current valuation
Sowhat / doloun
because if it is at the
current valuation then I
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Jim Young
Yes but that company was
worth less then a million,
this one is worth over 26We can talk through
Q tomorrow if you want?
0 0 O 0- . O
20
‘ v I A c L E A N
ViaCIean Capitalization Table Class B
Amount Units Owned
All About Care Inc $20 000 2
Patrick Kelly $20 000 2
Matthew and Jennifer Keelen $150 000 15
PKS LLC $150 000 15
F&H Strategies LLC $50 000 5
Tin Can Technologies LLC $150 000 15
David McElroy III 5100 000 10
McArthur Rentals $200 000 20
ACG 401K Plan Dmitry Kublanov $112 000 11 2
Kevin Maguire $75 000 75
Peter Ruggieri $250 000 25
Last Call LLC $125 000 12 5
Viaduct International 2,392 30
a ; Verizon ’4? 11 12 AM 4 28%[l:
< fl.“ €le 1'W%2 People
in the ass but I would
really appreciate getting
my money back and
moving on Last time I
texted you were supposed
to get back to me in a day
or 2 It has been 2
months
Keith maguire
Jim we need to fix this and
have better
communicationW
Jim Young
"2% Verizon ’4? 1l 12 AM ‘7 28%[
< 092 People >
JirfiYoung
She has all info shouldgive me a written response
a on best solution today
Wed Jan 8 11 51AM
Jim not trying to be a pain
in the ass but I would
really appreciate getting
my money back and
moving on Last timel
texted you were supposed
a .Verizon ‘8‘ 11 12 AM 4 28m:
fin. wm‘H-fifin- ..< W rustle fl:2 People >
Jim Young
Pete we have not yet
raised the balance of the
money but I can certainly
start getting payments out
to you ljust need to ask
the acct how to categorize
it because it is an LLC
which is no longer doing
business will ask on
a Thursday, she is in office
Fri Nov 15 7 43 AM
a Verizon '3' 11 12 AM 4 28%[
< we2 People >
Tue, 1 Iov 12 2 39 PM
Jim we meant on Jul 10th
Then on Aug 25th you
said give u a couple more
weeks It is now Nov12th
and I still haven t heard
from you What 3 the
story All I am asking for is
my money back I am not
asking for interest Seems
like it should be a great
deal for you Can you
please let me know what is
O I I O 0 I20
um Verizon ‘55" 11 12 AM 4 28%[
2 People >
Wed Aug 21 1O 54 AM
Jim haven t heard from
you since our meeting Do
you have the repayment
schedule in place?
Jim Young
Almost only got half
funding but should get the
0 rest within two weeks
Tue Nov 12 2 39 PM
Jim we meant on Ju|10th
.. Verizon 2-? 11 12 AM 4 28%[
2 People >
Keith maguire
Sorry for getting back alittle late jim can talk after
11 tomorrow or we can
meet in person mon or
o tues ?
Jim Young
Sorry guys missed the
text Was in Baltimore all
a dayLet’s get on a call
tomorrow I am still tied up
.u. Verizon 9 11 12AM 4 28%[
5;; i! i’i? ”I.w,2"
2 People >
I will get back to u about
Thursday I think I am tied
up midday Maybe we
could do early |wi|| be
back to u this afternoon
Jim Young
W 0k cool
Nay12019 913AM
Guys I am not available till
3pm tomorrow we can
meet or jump on a call
a Verizon ’5‘ 11 12 AM 4 28%[
2 People >
é Damn that SUCKS
Apr 29 2019 8 20 AM
Guys any Chance we can
meet or at least get on a
conference call this week
to talk about what can be
done going forward
Keith maguire
Pete I know Jim is coming
back from biz meeting in
Florida probably this
morning we will def catchmy.» .... .I.I.:.....--I.
.Iv Verizon ‘6‘ 11 12 AM 4 28%E
2 People >
Jim Young
a Yes sir
Jan 31 2019 10 36 AM
Guys Had pipe burst
down shore Won t be
back by 3 Any chance we
can get on a conference
call tomorrow morning
Just give me a time to call
and I can dial u both in
a Verizon ’4'? 11 12 AM ‘7 28%[
2 People >
.m 1 52 AM
Guys we were supposed
to have an update in a
couple weeks It has been
2 5 months Keith did call
last week but we didn t get
a Chance to talk Can I get
an update of where this
company stands I
understand that things are
moving lam still looking
to get bought out Please
let me know where that
stands Thanks Pete
a %Verizon ’6‘ 11 12 AM 4 28%[
< 092 People >
Keith maguire
Sorry Pete I meant to tellyou I have a meeting in
pennsauken at 10 then
a headed to city after
Jan 24 2019 8 52 AM
Guys we were supposed
to have an update in a
couple weeks It has been
2 5 months Keith did call
last week but we didn t oet
a,2 ”-5“
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