Exhibit 10.5

 

Execution Copy

 

21ST CENTURY ONCOLOGY INVESTMENTS, LLC

 

A Delaware Limited Liability Company

 

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EIGHTH AMENDED AND RESTATED

 

LIMITED LIABILITY COMPANY AGREEMENT

 

Effective as of September 9, 2016

 

THE COMPANY INTERESTS REPRESENTED BY THIS EIGHTH AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES
LAWS.  SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED
OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR
EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON
TRANSFERABILITY SET FORTH HEREIN.

 

THE COMPANY INTERESTS REPRESENTED BY THIS EIGHTH AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER SPECIFIED IN THE THIRD AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT,
DATED AS OF THE DATE HEREOF, BY AND AMONG THE COMPANY AND CERTAIN INVESTORS, AS
AMENDED OR MODIFIED FROM TIME TO TIME, AND THE COMPANY RESERVES THE RIGHT TO
REFUSE THE TRANSFER OF SUCH INTERESTS UNTIL SUCH TRANSFER IS IN COMPLIANCE WITH
SUCH SECURITYHOLDERS AGREEMENT.  A COPY OF THE SECOND AMENDED AND RESTATED
SECURITYHOLDERS AGREEMENT SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER OF
SUCH INTERESTS UPON WRITTEN REQUEST AND WITHOUT CHARGE.

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE I DEFINITIONS

2

Section 1.1

Definitions

2

Section 1.2

Terms Generally

14

ARTICLE II GENERAL PROVISIONS

15

Section 2.1

Formation

15

Section 2.2

Name

15

Section 2.3

Term

15

Section 2.4

Purpose; Powers

15

Section 2.5

Foreign Qualification

16

Section 2.6

Registered Office; Registered Agent; Principal Office; Other Offices

16

Section 2.7

No State-Law Partnership

16

ARTICLE III CAPITALIZATION; REDEMPTION RIGHTS

16

Section 3.1

Units; Initial Capitalization; Schedules

16

Section 3.2

Authorization and Issuance of Additional Units

17

Section 3.3

Authorization and Issuance of the Incentive Units; Service Providers

17

Section 3.4

Capital Accounts

18

Section 3.5

Negative Capital Accounts

18

Section 3.6

No Withdrawal

19

Section 3.7

Loans From Unitholders

19

Section 3.8

No Right of Partition

19

Section 3.9

Non-Certification of Units; Legend; Units Are Securities

19

ARTICLE IV DISTRIBUTIONS

19

Section 4.1

Distributions; Priority

19

Section 4.2

Priority over Form of Consideration

22

Section 4.3

Successors

22

Section 4.4

Tax Distributions

22

Section 4.5

Security Interest and Right of Set-Off

23

Section 4.6

Certain Distributions

23

ARTICLE V ALLOCATIONS

23

Section 5.1

Allocations

23

Section 5.2

Special Allocations

23

Section 5.3

Tax Allocations

24

Section 5.4

Unitholders’ Tax Reporting

25

Section 5.5

Indemnification and Reimbursement for Payments on Behalf of a Unitholder

25

ARTICLE VI MANAGEMENT

25

Section 6.1

The Board of Managers; Delegation of Authority and Duties

25

Section 6.2

Establishment of Board of Managers

27

Section 6.3

Board of Managers Meetings

29

 

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Page

 

 

 

Section 6.4

Chairman and Vice Chairman

30

Section 6.5

Approval or Ratification of Acts or Contracts

30

Section 6.6

Action by Written Consent

30

Section 6.7

Meetings by Telephone Conference or Similar Measures

30

Section 6.8

Officers

31

Section 6.9

Management Matters

31

Section 6.10

Consent Rights

32

Section 6.11

Securities in Subsidiaries

32

Section 6.12

Liability of Unitholders

32

Section 6.13

Indemnification by the Company

32

ARTICLE VII WITHDRAWAL; DISSOLUTION; TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION
OF NEW MEMBERS

33

Section 7.1

Unitholder Withdrawal

33

Section 7.2

Dissolution

33

Section 7.3

Transfer by Unitholders

34

Section 7.4

Admission or Substitution of New Members

34

Section 7.5

Compliance with Law

35

Section 7.6

Public Offering

35

ARTICLE VIII BOOKS AND RECORDS; FINANCIAL STATEMENTS AND OTHER INFORMATION; TAX
MATTERS

37

Section 8.1

Books and Records; Management Interviews

37

Section 8.2

Financial Statements and Other Information

37

Section 8.3

Fiscal Year; Taxable Year

39

Section 8.4

Certain Tax Matters

39

ARTICLE IX MISCELLANEOUS

41

Section 9.1

Schedules

41

Section 9.2

Governing Law

41

Section 9.3

Successors and Assigns

41

Section 9.4

Confidentiality

41

Section 9.5

Amendments

41

Section 9.6

Notices

42

Section 9.7

Counterparts

42

Section 9.8

Power of Attorney

42

Section 9.9

Entire Agreement

43

Section 9.10

Arbitration

43

Section 9.11

Waiver of Jury Trial

43

Section 9.12

Severability

44

Section 9.13

Creditors

44

Section 9.14

Waiver

44

Section 9.15

Further Action

44

Section 9.16

Delivery by Facsimile or Email

44

 

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Page

 

 

SCHEDULES AND EXHIBITS

 

 

 

 

Schedule A

—

Schedule of Units

Schedule B

—

Schedule of Members

Schedule C

—

Economic Interest of Class E Unitholders

Schedule D

—

Economic Interest of Class M Unitholders

Schedule E

—

Economic Interest of Class O Unitholders

Schedule F

—

Managers

 

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EIGHTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
21ST CENTURY ONCOLOGY INVESTMENTS, LLC
A Delaware Limited Liability Company

 

This EIGHTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of 21st
Century Oncology Investments, LLC (f/k/a Radiation Therapy Investments LLC), a
Delaware limited liability company (the “Company”), dated and effective as of
September 9, 2016 (this “Agreement”), is approved and adopted by the Board of
Managers of the Company on the date hereof with consent of the Majority
Preferred Stockholders in accordance with Section 9.5 of the Prior Agreement (as
defined below).  Any reference in this Agreement to Vestar or any other Member
shall include such Member’s Successors in Interest, to the extent such
Successors in Interest have become Substituted Members in accordance with the
provisions of this Agreement.

 

WHEREAS, the Company was formed as a limited liability company pursuant to the
Act by the filing of its Certificate of Formation with the Secretary of State of
the State of Delaware on October 9, 2007;

 

WHEREAS, the Company executed and delivered that certain Limited Liability
Company Agreement of the Company on October 10, 2007;

 

WHEREAS, on February 21, 2008, pursuant to that certain Agreement and Plan of
Merger (the “Merger Agreement”), dated as of October 19, 2007, by and among
21st Century Oncology, Inc. (f/k/a Radiation Therapy Services, Inc.), a Delaware
corporation (“Opco”), 21st Century Oncology Holdings, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Company (formerly known as
Radiation Therapy Services Holdings, Inc. “Holdings”), RTS MergerCo, Inc., a
Florida corporation and wholly-owned subsidiary of Holdings (“Merger Sub”), and
the Company (solely for purpose of Section 7.2 thereof), (i) Merger Sub merged
with and into Opco, with Opco surviving as a direct wholly-owned Subsidiary of
Radiation Therapy Services Holdings, Inc. (the “Parent”), and (ii) certain
Management Members either contributed common stock of Opco to the Company or
invested cash in the Company, in each case, in exchange for Preferred Units and
Class A Units of the Company pursuant to certain Management Stock Contribution
and Unit Subscription Agreements (the “Contribution Agreements”);

 

WHEREAS, the Company and its Members entered into a Second Amended and Restated
Limited Liability Company Agreement on March 25, 2008;

 

WHEREAS, the Company and its Members entered into a Third Amended and Restated
Limited Liability Company Agreement on June 11, 2012;

 

WHEREAS, the Company and its Members entered into a Fourth Amended and Restated
Limited Liability Company Agreement on December 9, 2013 (as amended by the First
Amendment (as defined below), the “Fourth Agreement”);

 

WHEREAS, the Board of Managers of the Company, with the consent of the Vestar
Majority Holders, approved and adopted Amendment No. 1 to the Fourth Agreement
on July 28, 2014 (the “First Amendment”);

 

WHEREAS, the Company and its Members entered into a Fifth Amended and Restated
Limited Liability Company Agreement on September 26, 2014 (the “Fifth
Agreement”) in connection with the issuance of Series A Convertible Preferred
Stock by Holdings (the “Convertible Preferred Stock”);

 

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WHEREAS, the Company and its Members entered into a Sixth Amended and Restated
Limited Liability Company Agreement on July 2, 2015 (the “Sixth Agreement”) in
connection with the issuance of SFRO Preferred Units;

 

WHEREAS, the Company and its Members entered into a Seventh Amended and Restated
Limited Liability Company Agreement on October 7, 2015 (the “Prior Agreement”);

 

WHEREAS, a Default Event (as defined in the Prior Agreement (without giving
effect to any amendment to the Certificate of Designations on or about the date
hereof)) has occurred prior to the date hereof (the “Prior Default Event”);

 

WHEREAS, on the date of this Agreement, Holdings is issuing additional
Convertible Preferred Stock (the “Additional Convertible Preferred Stock
Issuance”) and, in connection therewith and concurrently with the execution of
this Agreement, the Company, the Employee Majority Holders (as defined in the
Securityholders Agreement), the Majority Preferred Stockholders and the Vestar
Majority Holders are, in accordance with the terms thereof, amending and
restating the Second Amended and Restated Agreement, dated as of February 26,
2014 (the “Prior Securityholders Agreement”) as provided in the Third Amended
and Restated Securityholders Agreement, dated as of the date hereof (as amended
or modified from time to time, the “Securityholders Agreement”), in order to
memorialize certain governance changes resulting from the occurrence of the
Prior Default Event; and

 

WHEREAS, in connection with the Additional Convertible Preferred Stock Issuance
and the amendment and restatement of the Prior Securityholders Agreement, the
Board of Managers with the consent of the Majority Preferred Stockholders
desires to amend and restate the Prior Agreement as provided herein.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the parties hereto, each intending to be legally bound, agree that the
Prior Agreement is hereby amended and restated in its entirety as follows:

 

ARTICLE I
DEFINITIONS

 

Section 1.1                                                  Definitions.

 

Unless the context otherwise requires, the following terms shall have the
following meanings for purposes of this Agreement:

 

“30% Rule” means those restrictions set out in section 13 of the Canada Pension
Plan Investment Board Regulations, SOR/99-190, that prohibit CPPIB from
investing directly or indirectly in the securities of a corporation to which are
attached more than 30% of the votes that may be cast to elect the directors of
that corporation.

 

“AAA” has the meaning set forth in Section 9.10(a).

 

“Act” means the Delaware Limited Liability Company Act, 6 Del. L. Sections
18-101 et seq., as it may be amended from time to time, and any successor to the
Act.

 

“Additional Member” means any Person that has been admitted to the Company as a
Member pursuant to Section 7.4 by virtue of having received its Membership
Interest from the Company and not from any other Member or Assignee.

 

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“Additional Convertible Preferred Stock Issuance” has the meaning set forth in
the recitals hereof.

 

“Adjusted Capital Account Deficit” means, with respect to any Person’s Capital
Account as of the end of any taxable year, the amount by which the balance in
such Capital Account is less than zero.  For this purpose, such Capital Account
balance shall be (i) reduced for any items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6), and (ii) increased for any amount
such Person is obligated to contribute or is treated as being obligated to
contribute to the Company pursuant to Regulations
Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership)
or Regulations Sections 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).

 

“Affiliate” when used with reference to another Person means any Person (other
than the Company), directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with, such other Person.  In
addition, Affiliates of a Member shall include all partners, officers,
directors, employees and former partners, officers and employees of, all
consultants or advisors to, and all other Persons who directly or indirectly
receive compensation from, such Member.

 

“Agreement” has the meaning set forth in the preamble hereto.

 

“Assignee” means any Transferee to which a Member or another Assignee has
Transferred all or any portion of its interest in the Company in accordance with
the terms of this Agreement, but that is not a Member.

 

“Assumed Tax Rate” means, for any taxable year, the highest marginal effective
rate of federal, state and local income tax applicable to an individual resident
in New York, New York (or, if higher, a corporation doing business in New York,
New York), taking account of any differences in rates applicable to ordinary
income, dividends and capital gains and any allowable deductions in respect of
such state and local taxes in computing a Member’s liability for federal income
tax; provided that the Assumed Tax Rate for ordinary income initially shall be
set at 45 percent, with the right of the Vestar Majority Holders to request, by
written notice to the Company, a recomputation of the Assumed Tax Rate, which
recomputation shall remain in effect until such time as the Vestar Majority
Holders request a subsequent recomputation.

 

“Bankruptcy” means, with respect to any Person, the occurrence of any of the
following events: (i) the filing of an application by such Person for, or a
consent to, the appointment of a trustee or custodian of such Person’s assets;
(ii) the filing by such Person of a voluntary petition in Bankruptcy or the
seeking of relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or the filing of a pleading in any court of record
admitting in writing such Person’s inability to pay its debts as they become
due; (iii) the failure of such Person to pay its debts as such debts become due;
(iv) the making by such Person of a general assignment for the benefit of
creditors; (v) the filing by such Person of an answer admitting the material
allegations of, or such Person’s consenting to, or defaulting in answering, a
Bankruptcy petition filed against him in any Bankruptcy proceeding or petition
seeking relief under Title 11 of the United States Code, as now constituted or
as hereafter amended; or (vi) the entry of an order, judgment or decree by any
court of competent jurisdiction adjudicating such Person a bankrupt or insolvent
or for relief in respect of such Person or appointing a trustee or custodian of
such Person’s assets and the continuance of such order, judgment or decree
unstayed and in effect for a period of 60 consecutive calendar days.

 

“Board of Managers” means the Board of Managers established pursuant to
Section 6.2(a).

 

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“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required to close.

 

“Capital Account” has the meaning set forth in Section 3.4(a).

 

“Capital Contributions” means the amount of any cash or cash equivalents, or the
Fair Market Value of other property, that a Member contributes (or is deemed by
the Company to contribute) to the Company with respect to any Unit or other
Equity Securities issued pursuant to Article III (net of liabilities assumed by
the Company or to which such property is subject).

 

“CEO” means the Chief Executive Officer of the Company.

 

“Certificate” has the meaning set forth in Section 2.1.

 

“Certificate of Designations” has the meaning set forth in the Securityholders
Agreement.

 

“CFO” means the Chief Financial Officer of the Company.

 

“Change of Control” has the meaning set forth in the Securityholders Agreement.

 

“Class A Members” means the Members holding Class A Units.

 

“Class A Unitholders” means the Unitholders holding an Economic Interest in
Class A Units.

 

“Class A Units” means the Units having the rights and obligations specified with
respect to Class A Units in this Agreement.

 

“Class D Unitholders” means the Unitholders holding an Economic Interest in
Class D Units.

 

“Class D Units” means the Units having the rights and obligations specified with
respect to Class D Units in this Agreement.

 

“Class E Unitholders” means the Unitholders holding the Economic Interest in
Class E Units opposite such Unitholders’ names on Schedule C attached hereto.

 

“Class E Units” means the Units having the rights and obligations specified with
respect to Class E Units in this Agreement.

 

“Class G Unitholders” means the Unitholders holding an Economic Interest in
Class G Units.

 

“Class G Units” means the Units having the rights and obligations specified with
respect to Class G Units in this Agreement.

 

“Class M Unitholders” means the Unitholders holding the Economic Interest in
Class M Units opposite such Unitholders’ names on Schedule D attached hereto.

 

“Class M Units” means the Units having the rights and obligations specified with
respect to Class M Units in this Agreement.

 

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“Class MEP Fraction” means, as of any date of determination, the lesser of
(A) one and (B) a fraction, the numerator of which is the number of Class MEP
Units outstanding at the date of any such determination and the denominator of
which is the number of Class MEP Units authorized at the date of any such
determination, as each of the numerator and denominator may be adjusted in the
event of a recapitalization, split, dividend or other reclassification affecting
the Class MEP Units.

 

“Class MEP Unitholders” means the Unitholders holding an Economic Interest in
Class MEP Units.

 

“Class MEP Units” means the Units having the rights and obligations specified
with respect to Class MEP Units in this Agreement.

 

“Class N Unitholders” means the Unitholders holding an Economic Interest in
Class N Units.

 

“Class N Units” means the Units having the rights and obligations specified with
respect to Class N Units in this Agreement.

 

“Class O Unitholders” means the Unitholders holding the Economic Interest in
Class O Units opposite such Unitholders’ names on Schedule E attached hereto.

 

“Class O Units” means the Units having the rights and obligations specified with
respect to Class O Units in this Agreement.

 

“Code” means the United States Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.  Any reference herein to a particular
provision of the Code shall mean, where appropriate, the corresponding provision
in any successor statute.

 

“Common Stock” has the meaning set forth in the Securityholders Agreement.

 

“Company” has the meaning set forth in the preamble hereto.

 

“Company Minimum Gain” has the meaning set forth for the term “partnership
minimum gain” in Regulations Section 1.704-2(d).

 

“Company Sale” shall mean the dissolution of the Company in accordance with this
Agreement or the consummation of a transaction, whether in a single transaction
or in a series of related transactions that are consummated contemporaneously
(or consummated pursuant to contemporaneous agreements), with any other Person
or group of related Persons (other than Vestar) on an arm’s-length basis,
pursuant to which such Person or group of related Persons (i) acquires (whether
by merger, stock purchase, recapitalization, reorganization, redemption,
issuance of capital stock or otherwise) more than 50 percent of (A) the Units of
the Company or (B) the total number of shares of Opco or Parent’s common stock
outstanding (in each case assuming that all Equity Securities convertible into
or exercisable for the Units of the Company or for shares of common stock of
Opco or Parent have been so converted or exercised), or (ii) acquires assets
constituting all or substantially all of the assets of the Company’s
Subsidiaries on a consolidated basis; provided that in no event shall a Company
Sale be deemed to include any transaction effected for the purpose of
(x) changing, directly or indirectly, the form of organization or the
organizational structure of the Company or any of its Subsidiaries,
(y) contributing Equity Securities to entities controlled by the Company or
(z) issuing the Convertible Preferred Stock, or (iii) any Company Sale as
defined in the Certificate of Designations.

 

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“Compensation Committee” means the compensation committee of the Board of
Managers, if any.  For the avoidance of doubt, if no Compensation Committee has
been formed by the Board of Managers (or if the Compensation Committee has been
dissolved by the Board of Managers), then all actions and decisions permitted or
required to be taken by the Compensation Committee hereunder shall be taken by
the Board of Managers.

 

“Control” means, when used with reference to any Person, the power to direct the
management or Policies of such Person, directly or indirectly, by or through
stock or other equity ownership, agency or otherwise, or pursuant to or in
connection with an agreement, arrangement or other understanding (written or
oral); the terms “controlling” and “controlled” shall have meanings correlative
to the foregoing.

 

“Contribution Agreements” has the meaning set forth in the recitals hereof.

 

“Conversion” has the meaning set forth in Section 7.6(e).

 

“Convertible Preferred Stock” has the meaning set forth in the recitals hereof.

 

“Convertible Preferred Stockholders” has the meaning set forth in the
Securityholders Agreement.

 

“CPPIB” means the Canada Pension Plan Investment Board established under the
Canada Pension Plan Investment Board Act, S.C. 1997, c. 40.

 

“CPPIB Entity” means CPPIB and any Subsidiary thereof, as that term is defined
in the Canada Pension Plan Investment Board Act.

 

“Default Event” has the meaning set forth in the Securityholders Agreement.

 

“Depreciation” means, for each Fiscal Year or other period, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such year or other
period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such year or
other period, then Depreciation shall be an amount that bears the same ratio to
such beginning Gross Asset Value as the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, then Depreciation shall be calculated with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Board of Managers.

 

“Distributable Assets” means, with respect to any fiscal period, all cash
receipts of the Company (including from any operating, investing and financing
activities) and, if distribution thereof is determined to be necessary or
desirable by a majority of the Board of Managers, other assets of the Company
from any and all sources, reduced by cash operating expenses, contributions of
capital to Subsidiaries of the Company and payments (if any) required to be made
in connection with any loan to the Company, including any reserve for
contingencies or escrow required, in each case, as is determined in Good Faith
by the Board of Managers.

 

“Economic Interest” means a Member’s or Assignee’s share of the Company’s net
profits, net losses and distributions pursuant to this Agreement and the Act,
but shall not include any right to participate in the management or affairs of
the Company, including the right to vote in the election of

 

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Managers, vote on, consent to or otherwise participate in any decision of the
Members or Managers, or any right to receive information concerning the business
and affairs of the Company, in each case, except as expressly otherwise provided
in this Agreement or required by the Act.

 

“Equity Securities” means, as applicable, (i) any capital stock, membership
interests or other share capital, (ii) any securities directly or indirectly
convertible into or exchangeable for any capital stock, membership interests or
other share capital or containing any profit participation features, (iii) any
rights or options directly or indirectly to subscribe for or to purchase any
capital stock, membership interests, other share capital or securities
containing any profit participation features or to subscribe for or to purchase
any securities directly or indirectly convertible into or exchangeable for any
capital stock, membership interests, other share capital or securities
containing any profit participation features, (iv) any share appreciation
rights, phantom share rights or other similar rights, or (v) any Equity
Securities issued or issuable with respect to the securities referred to in
clauses (i) through (iv) above in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.

 

“Executive Committee” has the meaning set forth in Section 6.1(c).

 

“Exempt Employee Transfer” has the meaning set forth for such term in the
Securityholders Agreement.

 

“Exempt Individual Transfer” has the meaning set forth for such term in the
Securityholders Agreement.

 

“Exempt NYLIM Transfer” has the meaning set forth for such term in the
Securityholders Agreement.

 

“Exempt TCW Transfer” has the meaning set forth for such term in the
Securityholders Agreement.

 

“Fair Market Value” means, with respect to any asset or securities, the fair
market value for such assets or securities as between a willing buyer and a
willing seller in an arm’s length transaction occurring on the date of
valuation, taking into account all relevant factors determinative of value, as
is determined in Good Faith by the Board of Managers, and subject to the
approval of the Vestar Majority Holders.

 

“Fifth Agreement” has the meaning set forth in the recitals hereof.

 

“First Amendment” has the meaning set forth in the recitals hereof.

 

“Fiscal Quarter” means each fiscal quarter of the Company and its Subsidiaries,
ending on the last day of each of March, June, September and December of any
Fiscal Year.

 

“Fiscal Year” means the fiscal year of the Company and its Subsidiaries, ending
on December 31 of each calendar year.

 

“Floor Amount” means, as to each class of Incentive Units, the amount that would
be distributable to the Unitholders with respect to each such class of Incentive
Units pursuant to Section 4.1 in a hypothetical transaction in which the Company
sold all of its assets for Fair Market Value and distributed the proceeds
therefrom in liquidation of the Company pursuant to Article VII (as determined
immediately prior to the issuance of such Incentive Units and all other
Incentive Units of the same class that were issued

 

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as part of the same issuance).  The Floor Amount for each Class D and E Unit
issued on or after the date hereof and each Class MEP Unit issued on or before
the date hereof is equal to zero.

 

“Fourth Agreement” has the meaning set forth in the recitals hereof.

 

“Fund Indemnitors” has the meaning set forth in Section 6.13.

 

“GAAP” means accounting principles generally accepted in the United States of
America, consistently applied and maintained throughout the applicable periods.

 

“Good Faith” shall mean a Person having acted in good faith and in a manner such
Person reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to a criminal proceeding, having had no reasonable
cause to believe such Person’s conduct was unlawful.

 

“Governmental Entity” means the United States of America or any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government, including any court, in each case, having jurisdiction over the
Company or any of its Subsidiaries or any of the property or other assets of the
Company or any of its Subsidiaries.

 

“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:

 

(i)                                     The initial Gross Asset Value of any
asset contributed by a Unitholder to the Company shall be the gross Fair Market
Value of such asset on the date of the contribution.

 

(ii)                                  The Gross Asset Values of all Company
assets shall be adjusted to equal their respective gross Fair Market Values as
of the following times:

 

(A)                         the acquisition of an additional interest in the
Company after February 21, 2008 by a new or existing Unitholder in exchange for
more than a de minimis Capital Contribution, if the Board of Managers reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative Economic Interests of the Unitholders in the Company;

 

(B)                         the grant of an interest in the Company (other than
a de minimis interest) as consideration for the provision of services to or for
the benefit of the Company by an existing or a new Member acting in a partner
capacity or in anticipation of becoming a partner;

 

(C)                         the distribution by the Company to a Unitholder of
more than a de minimis amount of Company property as consideration for an
interest in the Company, if the Board of Managers reasonably determines that
such adjustment is necessary or appropriate to reflect the relative Economic
Interests of the Unitholders in the Company;

 

(D)                         the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); and

 

(E)                          such other times as the Board of Managers shall
reasonably determine to be necessary or advisable in order to comply with
Regulations promulgated under Subchapter K of Chapter 1 of the Code.

 

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(iii)                               The Gross Asset Value of any Company asset
distributed to a Unitholder shall be the gross Fair Market Value of such asset
on the date of distribution.

 

(iv)                              The Gross Asset Values of Company assets shall
be increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that the Board of Managers determine that an
adjustment pursuant to subparagraph (ii) of this definition of Gross Asset Value
is necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (iv).

 

(v)                                 With respect to any asset that has a Gross
Asset Value that differs from its adjusted tax basis, Gross Asset Value shall be
adjusted by the amount of Depreciation rather than any other depreciation,
amortization or other cost recovery method.

 

“Group Entity” means the Company, Holdings and each of their respective
subsidiaries.

 

“Holdings” has the meaning set forth in the recitals hereof.

 

“HSR Act” has the meaning set forth in Section 7.2(f).

 

“Income” means individual items of Company income and gain determined in
accordance with the definitions of Net Income and Net Loss.

 

“Incentive Units” means, as applicable, the Class D Units, the Class E Units,
the Class G Units, the Class M Units, the Class MEP Units, the Class N Units and
the Class O Units, and any other class of Units the Company authorizes after the
date hereof that are intended to constitute a “profits interest” in the Company
within the meaning of Revenue Procedure 93-27, 1993-2 C.B. 343, or any successor
Internal Revenue Service or Treasury Department regulation or other
pronouncement applicable at the date of issuance of such Incentive Units, as the
case may be.

 

“Initial Issuance Date” means February 21, 2008.

 

“IPO Consideration” has the meaning set forth in Section 7.6(b).

 

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof), any sale of receivables with recourse
against the Company or any of its Subsidiaries, any filing or agreement to file
a financing statement as a debtor under the Uniform Commercial Code or any
similar statute other than to reflect ownership by a third party of property
leased to the Company or any of its Subsidiaries under a lease that is not in
the nature of a conditional sale or title retention agreement.

 

“Loss” means individual items of Company loss and deduction determined in
accordance with the definitions of Net Income and Net Loss.

 

“Majority Preferred Stockholders” has the meaning set forth in the
Securityholders Agreement.

 

“Management Grant Agreements” means each executive grant agreement between the
Company and a Management Member granting Incentive Units.

 

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“Management Member” means any Member that is an employee of the Company or any
of its Subsidiaries.

 

“Manager” has the meaning set forth in Section 6.2(a).

 

“Member” means Vestar, the other Persons listed on Schedule B attached hereto
from time to time and each other Person who is hereafter admitted as a Member in
accordance with the terms of this Agreement and the Act.  A Person shall cease
to be a Member when such Person ceases to hold any Units.  The Members shall
constitute the “members” (as such term is defined in the Act) of the Company. 
Except as otherwise set forth herein or in the Act, the Members shall constitute
a single class or group of members of the Company for all purposes of the Act
and this Agreement.

 

“Member Minimum Gain” means minimum gain attributable to Member Nonrecourse Debt
determined in accordance with Regulations Section 1.704-2(i).

 

“Member Nonrecourse Debt” has the meaning set forth for the term “partner
nonrecourse debt” in Regulations Section 1.704-2 (b)(4).

 

“Member Nonrecourse Deduction” has the meaning set forth for the term “partner
nonrecourse deduction” in Regulations Section 1.704-2(i)(2).

 

“Membership Interest” means, with respect to each Member, such Member’s Economic
Interest and rights as a Member.

 

“Merger Agreement” has the meaning set forth in the recitals hereof.

 

“Merger Sub” has the meaning set forth in the preamble hereto.

 

“Net Income” or “Net Loss” means, for each Fiscal Year or other period, an
amount equal to the Company’s taxable income or loss for such Fiscal Year or
other period, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in such
taxable income or loss), with the following adjustments:

 

(i)                                     any income of the Company that is exempt
from federal income tax and not otherwise taken into account in computing Net
Income or Net Loss pursuant to this definition of Net Income or Net Loss shall
be added to such taxable income or loss;

 

(ii)                                  any expenditures of the Company described
in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2) (B) of the
Code expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Net Income or Net Loss pursuant to
this definition of Net Income or Net Loss shall be subtracted from such taxable
income or loss;

 

(iii)                               in the event the Gross Asset Value of any
Company asset is adjusted pursuant to subparagraph (ii) or (iii) of the
definition of Gross Asset Value, the amount of such adjustment shall be taken
into account as gain (if the adjustment increases the Gross Asset Value of the
asset) or loss (if the adjustment decreases the Gross Asset Value of the asset)
from the disposition of such asset for purposes of computing Net Income or Net
Loss;

 

10

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(iv)                              gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;

 

(v)                                 in lieu of the depreciation, amortization,
and other cost recovery deductions taken into account in computing such taxable
income or loss, Depreciation shall be taken into account for such Fiscal Year or
other period;

 

(vi)                              to the extent an adjustment to the adjusted
tax basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code
is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Unitholder’s interest in the Company, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and

 

(vii)                           notwithstanding any other provision of this
definition of Net Income or Net Loss, any items that are specially allocated
pursuant to Section 5.2 shall not be taken into account in computing Net Income
or Net Loss.  The amounts of the items of Income or Loss available to be
specially allocated pursuant to Section 5.2 shall be determined by applying
rules analogous to those set forth in this definition of Net Income or Net Loss.

 

“Notice” has the meaning set forth in Section 3.3(c).

 

“Officer” means each Person designated as an officer of the Company pursuant to
and in accordance with the provisions of Section 6.8, subject to any resolution
of the Board of Managers appointing such Person as an officer or relating to
such appointment.

 

“Opco” has the meaning set forth in the recitals hereof.

 

“Other Business” has the meaning set forth in Section 6.2(b)(iii).

 

“Parent” has the meaning set forth in the recitals hereof.

 

“Person” means an individual, a partnership (including a limited partnership), a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization, association or other
entity or a Governmental Entity.

 

“Preferred Member” means the Members holding Preferred Units.

 

“Preferred Manager” has the meaning set forth in the Securityholders Agreement.

 

“Preferred Unitholders” means the Unitholders holding an Economic Interest in
Preferred Units.

 

“Preferred Units” means the Units having the rights and obligations specified
with respect to Preferred Units in this Agreement.

 

“Prior Agreement” has the meaning set forth in the recitals hereof.

 

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“Prior Default Event” has the meaning set forth in the recitals hereof.

 

“Prior Securityholders Agreement” has the meaning set forth in the recitals
hereof.

 

“Proceeding” has the meaning set forth in Section 6.13.

 

“Public Offering” has the meaning set forth for such term in the Securityholders
Agreement.

 

“Qualified IPO” has the meaning set forth in the Securityholders Agreement.

 

“Qualified Merger” has the meaning set forth in the Securityholders Agreement.

 

“Recapitalization” has the meaning set forth in Section 7.6(a).

 

“Regulations” means the regulations, including temporary regulations,
promulgated by the United States Treasury Department under the Code, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).

 

“Regulatory Allocations” has the meaning set forth in Section 5.2(e).

 

“Securities” means any debt securities or Equity Securities of any issuer,
including common and preferred stock and interests in limited liability
companies (including warrants, rights, put and call options and other options
relating thereto or any combination thereof), notes, bonds, debentures, trust
receipts and other obligations, instruments or evidences of indebtedness, other
property or interests commonly regarded as securities, interests in real
property, whether improved or unimproved, interests in oil and gas properties
and mineral properties, short-term investments commonly regarded as money market
investments, bank deposits and interests in personal property of all kinds,
whether tangible or intangible.

 

“Securityholders Agreement” has the meaning set forth in the recitals hereof.

 

“SFRO Holdings Stock” means the stock received from Holdings for the
contribution of the SFRO Preferred Units.

 

“SFRO Preferred Unitholders” means the Unitholders holding an Economic Interest
in SFRO Preferred Units.

 

“SFRO Preferred Units” means the Units having the rights and obligations
specified with respect to SFRO Preferred Units in this Agreement.

 

“Sixth Amendment” has the meaning set forth in the recitals hereof.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association or business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability

 

12

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company, partnership, association or other business entity (other than a
corporation) if such Person or Persons shall be allocated a majority of limited
liability company, partnership, association or other business entity gains or
losses or shall be or control any managing director or general partner of such
limited liability company, partnership, association or other business entity. 
For purposes hereof, references to a “Subsidiary” of any Person shall be given
effect only at such times that such Person has one or more Subsidiaries and,
unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the
Company.

 

“Substituted Member” means any Person that has been admitted to the Company as a
Member pursuant to Section 7.4 by virtue of such Person receiving all or a
portion of a Membership Interest from a Member or its Assignee and not from the
Company.

 

“Successor in Interest” means any (i) trustee, custodian, receiver or other
Person acting in any Bankruptcy or reorganization proceeding with respect to,
(ii) assignee for the benefit of the creditors of, (iii) trustee or receiver, or
current or former officer, director or partner, or other fiduciary acting for or
with respect to the dissolution, liquidation or termination of, or (iv) other
executor, administrator, committee, legal representative or other successor or
assign of, any Unitholder, whether by operation of law or otherwise.

 

“Tax Distribution” has the meaning set forth in Section 4.4.

 

“Tax Matters Member” has the meaning set forth in Section 8.4(d).

 

“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange,
hypothecation, grant of a security interest or other direct or indirect
disposition or encumbrance of an interest (whether with or without
consideration, whether voluntarily or involuntarily or by operation of law). 
The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word
“Transfer” shall have the correlative meanings.

 

“Unit” has the meaning set forth in Section 3.1(a).

 

“Unitholder” means a Member or Assignee that holds an Economic Interest in any
of the Units.

 

“Unreturned Class A Capital” means, with respect to each Class A Unitholder, the
excess, if any, of (i) such Unitholder’s aggregate Capital Contributions made in
exchange for or on account of its Class A Units, over (ii) the aggregate amount
of all distributions made to such Unitholder pursuant to Section 4.1(g)(i) and
Section 4.1(h)(i).

 

“Unreturned Preferred Capital” means, with respect to each Preferred Unitholder,
the excess, if any, of (i) such Unitholder’s aggregate Capital Contributions
made in exchange for or on account of its Preferred Units, over (ii) the
aggregate amount of all distributions made to such Unitholder pursuant to or in
accordance with Section 4.1(b), Section 4.1(c)(i), Section 4.1(d)(i) and
Section 4.1(e)(i).

 

“Vestar” means Vestar Capital Partners V-A, L.P., a Cayman Islands exempted
limited partnership, Vestar Executive V, L.P., a Cayman Islands exempted limited
partnership, Vestar Holdings V, L.P., a Cayman Islands exempted limited
partnership, Vestar V and Vestar/RTS.

 

“Vestar Group” means, collectively, Vestar V, Vestar/RTS and their respective
Affiliates.

 

“Vestar Group Majority” means the holders of a majority of the Units then held
by members of the Vestar Group.

 

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“Vestar Majority Holders” means, at any time, the Members holding a majority of
the Units then held by the Vestar Unitholders.

 

“Vestar/RTS” means Vestar/Radiation Therapy Investments, LLC, a Delaware limited
liability company.

 

“Vestar Unitholders” means the Unitholders holding an Economic Interest in any
Units initially issued to Vestar.

 

“Vestar V” means Vestar Capital Partners V, L.P., a Cayman Islands exempted
limited partnership.

 

“Vested Class MEP Units” means Class MEP Units owned by a Unitholder that have
vested pursuant to the terms and conditions of the applicable Management Grant
Agreement.

 

Section 1.2                                    Terms Generally.  In this
Agreement, unless otherwise specified or where the context otherwise requires:

 

(a)                                 the headings of particular provisions of
this Agreement are inserted for convenience only and will not be construed as a
part of this Agreement or serve as a limitation or expansion on the scope of any
term or provision of this Agreement;

 

(b)                                 words importing any gender shall include
other genders;

 

(c)                                  words importing the singular only shall
include the plural and vice versa;

 

(d)                                 the words “include,” “includes” or
“including” shall be deemed to be followed by the words “without limitation”;

 

(e)                                  the words “hereof,” “herein” and “herewith”
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement;

 

(f)                                   references to “Articles,” “Exhibits,”
“Sections” or “Schedules” shall be to Articles, Exhibits, Sections or Schedules
of or to this Agreement;

 

(g)                                  references to any Person include the
successors and permitted assigns of such Person;

 

(h)                                 the use of the words “or,” “either” and
“any” shall not be exclusive;

 

(i)                                     wherever a conflict exists between this
Agreement and any other agreement (except for the Securityholders Agreement),
this Agreement shall control but solely to the extent of such conflict;

 

(j)                                    wherever a conflict exists between this
Agreement and the Securityholders Agreement, the Securityholders Agreement shall
control but solely to the extent of such conflict.

 

(k)                                 references to “$” or “dollars” means the
lawful currency of the United States of America;

 

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(l)                                     references to any agreement, contract or
schedule, unless otherwise stated, are to such agreement, contract or schedule
as amended, modified or supplemented from time to time in accordance with the
terms hereof and thereof; and

 

(m)                             the parties hereto have participated jointly in
the negotiation and drafting of this Agreement; accordingly, in the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party hereto by virtue
of the authorship of any provisions of this Agreement.

 

ARTICLE II
GENERAL PROVISIONS

 

Section 2.1                                    Formation.  The Company was
formed as a Delaware limited liability company on October 9, 2007 by the
execution and filing of a Certificate of Formation (the “Certificate”) by an
authorized person under and pursuant to the Act.  The Members agree to continue
the Company as a limited liability company under the Act, upon the terms and
subject to the conditions set forth in this Agreement.  The rights, powers,
duties, obligations and liabilities of the Members shall be determined pursuant
to the Act and this Agreement.  To the extent that the rights, powers, duties,
obligations and liabilities of any Member are different by reason of any
provision of this Agreement than they would be in the absence of such provision,
this Agreement shall, to the extent permitted by the Act, control.

 

Section 2.2                                    Name.  The name of the Company is
“21st Century Oncology Investments, LLC”, and all Company business shall be
conducted in that name or in such other names that comply with applicable law as
the Board of Managers may select from time to time.  The Board of Managers may
change the name of the Company at any time and from time to time.  Prompt
notification of any such change shall be given to all Members.

 

Section 2.3                                    Term.  The term of the Company
commenced on the date the Certificate was filed with the office of the Secretary
of State of the State of Delaware and shall continue in existence perpetually
until termination or dissolution in accordance with the provisions of
Section 7.2.

 

Section 2.4                                    Purpose; Powers.

 

(a)                                 General Powers.  The nature of the business
or purposes to be conducted or promoted by the Company is to engage in any
lawful act or activity for which limited liability companies may be organized
under the Act.  The Company may engage in any and all activities necessary,
desirable or incidental to the accomplishment of the foregoing.  Notwithstanding
anything herein to the contrary, nothing set forth herein shall be construed as
authorizing the Company to possess any purpose or power, or to do any act or
thing, forbidden by law to a limited liability company organized under the laws
of the State of Delaware.

 

(b)                                 Company Action.  Subject to the provisions
of this Agreement and except as prohibited by applicable law, (i) the Company
may, with the approval of the Board of Managers, enter into and perform any and
all documents, agreements and instruments, all without any further act, vote or
approval of any Member and (ii) the Board of Managers may authorize any Person
(including any Member or Officer) to enter into and perform any document on
behalf of the Company.

 

(c)                                  Merger.  Subject to the provisions of this
Agreement and the Securityholders Agreement, the Company may, with the approval
of the Board of Managers and without the need for any further act, vote or
approval of any Member, merge with, or consolidate into, another limited
liability company (organized under the laws of Delaware or any other state), a
corporation (organized under the laws

 

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of Delaware or any other state) or other business entity (as defined in
Section 18-209(a) of the Act), regardless of whether the Company is the survivor
of such merger or consolidation.

 

Section 2.5                                    Foreign Qualification.  Prior to
the Company’s conducting business in any jurisdiction other than the State of
Delaware, the Board of Managers shall cause the Company to comply, to the extent
procedures are available and those matters are reasonably within the control of
the Officers, with all requirements necessary to qualify the Company as a
foreign limited liability company in that jurisdiction.

 

Section 2.6                                    Registered Office; Registered
Agent; Principal Office; Other Offices.  The registered office of the Company
required by the Act to be maintained in the State of Delaware shall be the
office of the initial registered agent named in the Certificate or such other
office (which need not be a place of business of the Company) as the Board of
Managers may designate from time to time in the manner provided by law.  The
registered agent of the Company in the State of Delaware shall be the initial
registered agent named in the Certificate or such other Person or Persons as the
Board of Managers may designate from time to time in the manner provided by
law.  The principal office of the Company shall be at such place as the Board of
Managers may designate from time to time, which need not be in the State of
Delaware, and the Company shall maintain records at such place.  The Company may
have such other offices as the Board of Managers may designate from time to
time.

 

Section 2.7                                    No State-Law Partnership.  The
Unitholders intend that the Company shall not be a partnership (including a
limited partnership) or joint venture, and that no Unitholder, Manager or
Officer shall be a partner or joint venturer of any other Unitholder, Manager or
Officer by virtue of this Agreement, for any purposes other than as is set forth
in the last sentence of this Section 2.7, and this Agreement shall not be
construed to the contrary.  The Unitholders intend that the Company shall be
treated as a partnership for federal and, if applicable, state or local income
tax purposes, and each Unitholder and the Company shall file all tax returns and
shall otherwise take all tax and financial reporting positions in a manner
consistent with such treatment.

 

ARTICLE III
CAPITALIZATION; REDEMPTION RIGHTS

 

Section 3.1                                    Units; Initial Capitalization;
Schedules.

 

(a)                                 Units; Initial Capitalization.  Each
Member’s interest in the Company, including such Member’s interest, if any, in
the capital, income, gain, loss, deduction and expense of the Company and the
right to vote, if any, on certain Company matters as provided in this Agreement
shall be represented by units of limited liability company interest (each a
“Unit”).  The Company shall have ten authorized classes of Units, designated
SFRO Preferred Units, Preferred Units, Class A Units, Class D Units, Class E
Units, Class G Units, Class M Units, Class MEP Units, Class N Units and Class O
Units, with 100 SFRO Preferred Units, 546,182.27 Preferred Units, 10,360,448.07
Class A Units, 10 Class D Units, 1,000,000 Class E Units, 10 Class G Units,
100,000 Class M Units, 1,000,000 Class MEP Units, 10 Class N Units and 100,000
Class O Units authorized for issuance.  On the date hereof, the issued and
outstanding Units consist of 100 SFRO Preferred Units, 543,258.20 Preferred
Units, 10,308,594.21 Class A Units, 10 Class D Units, 1,000,000 Class E Units,
10 Class G Units, 4,346 Class M Units, 326,273.42 Class MEP Units, 10 Class N
Units and 2,593 Class O Units.  The ownership by a Unitholder of Units shall
entitle such Unitholder to allocations of profits and losses and other items and
distributions of cash and other property as is set forth in Article IV and
Article V.  The Company may not issue any fractional Units.

 

(b)                                 Schedule of Units; Schedule of Members.  The
aggregate number of Units of each class and the aggregate amount of cash Capital
Contributions that have been made by the Members and the Fair Market Value of
any property other than cash contributed by the Members with respect to the
Units (including, if applicable, a description and the amount of any liability
assumed by the Company or to which contributed property is subject) shall be set
forth on Schedule A attached hereto.  The Fair Market Value of

 

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any property contributed by any Management Member with respect to any Units
issued on the Initial Issuance Date shall be equal to the amounts set forth in
such Management Member’s Contribution Agreement as the consideration for the
issuance of the relevant Units.  The name and address of each Member shall be
set forth on Schedule B attached hereto.  Schedules A and B shall remain
strictly confidential and shall only be disclosed by the Company to Vestar and
the CEO.

 

Section 3.2                                    Authorization and Issuance of
Additional Units.  Subject to the provisions of Section 6.10, the Board of
Managers shall have the right to cause the Company to issue and/or create and
issue at any time after the date hereof, and for such amount and form of
consideration as the Board of Managers may determine, additional Units or other
Equity Securities of the Company (including issuing additional Preferred Units
and Incentive Units or creating other classes or series of Units or other Equity
Securities having such powers, designations, preferences and rights as may be
determined by the Board of Managers).  The Board of Managers shall have the
power to make such amendments to this Agreement in order to provide for such
powers, designations, preferences and rights as the Board of Managers in its
discretion deems necessary or appropriate to give effect to such additional
authorization or issuance; provided that any such amendment shall not reasonably
be expected to have a material and adverse effect on any Unitholder, in its
capacity as such, that would be borne disproportionately by such Unitholder
relative to other Unitholders holding Units of the same class under this
Agreement (unless such Unitholder consents in writing thereto).  Any Units that
are forfeited by, or repurchased by the Company from, any Person pursuant to the
provisions of the applicable agreement between such Person and the Company shall
be deemed to have been acquired by the Company and may be re-issued at such time
and upon such terms and subject to such conditions as the Board of Managers or
the Compensation Committee determines; provided, that Incentive Units may only
be re-issued to employees, officers, directors or other service providers of or
to the Company and its Subsidiaries.

 

Section 3.3                                    Authorization and Issuance of the
Incentive Units; Service Providers.

 

(a)                                 Authorization and Issuance of Incentive
Units.  Subject to Section 6.10(b), Incentive Units are authorized and reserved
for issuance to employees, officers, directors and other service providers of or
to the Company and its Subsidiaries, and the Board of Managers or the
Compensation Committee from time to time may issue such Units and establish such
vesting, forfeiture and repurchase criteria, and such Floor Amount in connection
with their issuance as the Board of Managers or the Compensation Committee in
its discretion determines (and as may be set forth in the applicable Management
Grant Agreement).

 

(b)                                 Profits Interests.  Each Person receiving
Incentive Units shall make a timely election under Section 83(b) of the Code
with respect to such Units upon their issuance, in a manner reasonably
prescribed by the Company.  The Company and each Person receiving Incentive
Units hereby acknowledges and agrees that each Person’s Incentive Units, as the
case may be, and the rights and privileges associated with such Units,
collectively are intended to constitute a “profits interest” in the Company
within the meaning of Revenue Procedure 93-27, 1993-2 C.B. 343, or any successor
Internal Revenue Service or Treasury Department regulation or other
pronouncement applicable at the date of issuance of such Incentive Units, as the
case may be.  For so long as Revenue Procedure 2001-43, 2001-2 C.B. 343, is
effective, the Company and each Person who receives Incentive Units, as the case
may be, hereby agrees (i) that all such Persons will be treated as Unitholders
and as partners for federal income tax purposes immediately upon issuance of
such Units and (ii) to comply with the provisions of Revenue Procedure 2001-43,
and neither the Company nor any such Person shall perform any act or take any
position inconsistent with the application of Revenue Procedure 2001-43.

 

(c)                                  Authorization of Safe Harbor Election.  By
executing this Agreement, each Member authorizes and directs the Company to
elect to have the “safe harbor” described in the proposed Revenue Procedure set
forth in Internal Revenue Service Notice 2005-43, 2005-24 I.R.B. 1221 (the

 

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“Notice”), apply to any interest in the Company Transferred to a service
provider by the Company on or after the effective date of such Revenue Procedure
in connection with services provided to the Company (and, to the extent that
then-applicable guidance permits, in connection with services provided to any
Subsidiary).  For purposes of making such safe harbor election, the Tax Matters
Member is hereby designated as the “partner who has responsibility for federal
income tax reporting” by the Company and, accordingly, for execution of a “safe
harbor election” in accordance with Section 3.03(1) of the Notice.  The Company
and each Member hereby agree to comply with all requirements of the safe harbor
described in the Notice, including the requirement that each Member shall
prepare and file all federal income tax returns reporting the income tax effects
of each safe harbor partnership interest issued by the Company in a manner
consistent with the requirements of the Notice.

 

(d)                                 Amendment by Tax Matters Member.  Each
Member authorizes the Tax Matters Member to amend this Section 3.3 to the extent
necessary to achieve substantially the same tax treatment with respect to any
profits interest in the Company Transferred to a service provider by the Company
in connection with services provided to the Company (and, to the extent that
then applicable guidance permits, in connection with services provided to any
Subsidiary) as is set forth in, as applicable, Revenue Procedure 93-27, Revenue
Procedure 2001-43 or Section 4 of the Notice (e.g., to reflect changes from the
rules set forth in the Notice in subsequent Internal Revenue Service or Treasury
Department guidance), provided that such amendment is not materially adverse to
any Member (as compared with the after-tax consequences that would result if the
provisions of the Notice applied to all profits interests in the Company
Transferred to a service provider by the Company in connection with services
provided to the Company or any of its Subsidiaries).

 

Section 3.4                                    Capital Accounts.

 

(a)                                 The Company shall maintain a separate
capital account for each Unitholder according to the rules of Regulations
Section 1.704-1(b)(2)(iv) (each a “Capital Account”).  The Capital Account of
each Unitholder shall be credited initially with an amount equal to such
Unitholder’s cash contributions and the Fair Market Value of other property
contributed to the Company by the Unitholder (net of any liabilities securing
such contributed property that the Company is considered to assume or take
subject to).

 

(b)                                 The Capital Account of each Unitholder shall
(i) be credited with all Income allocated to such Unitholder pursuant to
Section 5.1 and Section 5.2, and with the amount equal to such Unitholder’s cash
contributions and the Fair Market Value of other property contributed to the
Company by the Unitholder (net of any liabilities securing such contributed
property that the Company is considered to assume or take subject to) and
(ii) be debited with all Loss allocated to such Unitholder pursuant to
Section 5.1 or Section 5.2, and with the amount of cash and the Gross Asset
Value of any other property (net of liabilities assumed by such Unitholder and
liabilities to which such property is subject) distributed by the Company to
such Unitholder.

 

(c)                                  The Company may, upon the occurrence of the
events specified in Regulation Section 1.704-1(b)(2)(iv)(f), increase or
decrease the Capital Accounts of the Unitholders in accordance with the rules of
such Regulation and Regulation Section 1.704-1(b)(2) (iv)(g) to reflect a
revaluation of Company property.

 

Section 3.5                                    Negative Capital Accounts.  No
Unitholder shall be required to pay to any other Unitholder or the Company any
deficit or negative balance that may exist from time to time in such
Unitholder’s Capital Account (including upon and after dissolution of the
Company).

 

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Section 3.6                                    No Withdrawal.  No Person shall
be entitled to withdraw any part of such Person’s Capital Contributions or
Capital Account or to receive any distribution from the Company, except as
expressly provided herein.

 

Section 3.7                                    Loans From Unitholders.  Loans by
Unitholders to the Company shall not be considered Capital Contributions.  If
any Unitholder shall loan funds to the Company, then the making of such loans
shall not result in any increase in the Capital Account balance of such
Unitholder.  The amount of any such loans shall be a debt of the Company to such
Unitholder and shall be payable or collectible in accordance with the terms and
conditions upon which such loans are made.

 

Section 3.8                                    No Right of Partition.  No
Unitholder shall have the right to seek or obtain partition by court decree or
operation of law of any property of the Company or any of its Subsidiaries or
the right to own or use particular or individual assets of the Company or any of
its Subsidiaries, or, except as expressly contemplated by this Agreement, be
entitled to distributions of specific assets of the Company or any of its
Subsidiaries.

 

Section 3.9                                    Non-Certification of Units;
Legend; Units Are Securities.

 

(a)                                 Units shall be issued in non-certificated
form; provided that the Board of Managers may cause the Company to issue
certificates to a Member representing the Units held by such Member.  If any
Unit certificate is issued, then such certificate shall bear a legend as is set
forth in Section 9.2 of the Securityholders Agreement and also substantially in
the following form:

 

This certificate evidences a [SFRO Preferred] [Preferred]
[Class [A][D][E][G][M][MEP][N][O] Unit representing an interest in 21st Century
Oncology Investments, LLC and shall be a security within the meaning of
Article 8 of the Uniform Commercial Code.

 

The interest in 21st Century Oncology Investments, LLC represented by this
certificate is subject to restrictions on transfer set forth in (i) the [Then
Effective] Amended and Restated Limited Liability Company Agreement of 21st
Century Oncology Investments, LLC, dated as of [Applicable Date], by and among
21st Century Oncology Investments, LLC and each of the members from time to time
party thereto, as the same may be amended from time to time and the (ii) the
Second Amended and Restated Securityholders Agreement of 21st Century Oncology
Investments, LLC dated as of September 26, 2014, by and among 21st Century
Oncology Investments, LLC and some or all of the members from time to time party
thereto, as the same may be amended from time to time.

 

(b)                                 The Company hereby irrevocably elects that
all Units shall be “securities” governed by Article 8 of the Uniform Commercial
Code as in effect from time to time in the State of Delaware or analogous
provisions in the Uniform Commercial Code in effect in any other jurisdiction. 
This Section 3.9(b) shall not be amended without the prior written consent of
all of the Members, and any purported amendment to this Section 3.9(b) in
violation of the foregoing shall be null and void.

 

ARTICLE IV
DISTRIBUTIONS

 

Section 4.1                                    Distributions; Priority. 
Distributable Assets will be distributed at such times as are determined by the
Board of Managers, subject to Section 4.4, in the order and priority set forth
below:

 

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(a)                                 First, until such time as there have been
$19,000,000 in aggregate distributions pursuant to this clause (a), 100.000000%
to the SFRO Preferred Unitholders, pro rata in accordance with the respective
number of SFRO Preferred Units held by each such Unitholder immediately prior to
such distribution.

 

(b)                                 Second, until such time as there have been
$191,500,000 in aggregate distributions pursuant to this clause (b), 100.000000%
to the Preferred Unitholders pro rata in accordance with each such Unitholder’s
aggregate Unreturned Preferred Capital.

 

(c)                                  Third, until such time as there have been
$30,279,400 in aggregate distributions pursuant to this clause (c):
(i) 89.000000% to the Preferred Unitholders, pro rata in accordance with each
such Unitholder’s aggregate Unreturned Preferred Capital; (ii) 5.000000% to the
Class D Unitholders, pro rata in accordance with the respective number of
Class D Units held by each such Unitholder immediately prior to such
distribution; and (iii) 6.000000% to the Class E Unitholders, pro rata in
accordance with the respective number of Class E Units held by each such
Unitholder immediately prior to such distribution; provided that, any amount
that would have been distributable to a Class E Unitholder but for such Class E
Unitholder’s forfeiture of their Class E Units shall instead be distributed to
the Preferred Unitholders pursuant to clause (i) above.

 

(d)                                 Fourth, until such time as there have been
$259,220,600 in aggregate distributions pursuant to this clause (d):
(i) 86.975780% to the Preferred Unitholders, pro rata in accordance with each
such Unitholder’s aggregate Unreturned Preferred Capital; (ii) 5.000000% to the
Class D Unitholders, pro rata in accordance with the respective number of
Class D Units held by each such Unitholder immediately prior to such
distribution; (iii) 6.000000% to the Class E Unitholders, pro rata in accordance
with the respective number of Class E Units held by each such Unitholder
immediately prior to such distribution; provided that, any amount that would
have been distributable to a Class E Unitholder but for such Class E
Unitholder’s forfeiture of their Class E Units shall instead be distributed to
the Preferred Unitholders pursuant to clause (i) above; (iv) 1.720000% to the
Class G Unitholders, pro rata in accordance with the respective number of
Class G Units held by each such Unitholder immediately prior to such
distribution; and (v) 0.304220% to the Class M Unitholders, pro rata in
accordance with the respective number of Class M Units held by each such
Unitholder immediately prior to such distribution; provided that, any amount
that would have been distributable to a Class M Unitholder but for such Class M
Unitholder’s forfeiture of their Class M Units shall instead be distributed to
the Preferred Unitholders pursuant to clause (i) above.

 

(e)                                  Fifth, until such time as each Preferred
Unitholder’s Unreturned Preferred Capital has been reduced to zero:
(i) 87.046630% to the Preferred Unitholders, pro rata in accordance with each
such Unitholder’s aggregate Unreturned Preferred Capital; (ii) 5.000000% to the
Class D Unitholders, pro rata in accordance with the respective number of
Class D Units held by each such Unitholder immediately prior to such
distribution; (iii) 6.000000% to the Class E Unitholders, pro rata in accordance
with the respective number of Class E Units held by each such Unitholder
immediately prior to such distribution; provided that, any amount that would
have been distributable to a Class E Unitholder but for such Class E
Unitholder’s forfeiture of their Class E Units shall instead be distributed to
the Preferred Unitholders pursuant to clause (i) above; (iv) 1.720000% to the
Class G Unitholders, pro rata in accordance with the respective number of
Class G Units held by each such Unitholder immediately prior to such
distribution; and (v) 0.233370% to the Class O Unitholders, pro rata in
accordance with the respective number of Class O Units held by each such
Unitholder immediately prior to such distribution; provided that, any amount
that would have been distributable to a Class O Unitholder but for such Class O
Unitholder’s forfeiture of their Class O Units shall instead be distributed to
the Preferred Unitholders pursuant to clause (i) above.

 

(f)                                   Sixth, if any Class N Units remain
outstanding at the time of such distribution, until such time as there have been
$3,500,000 in aggregate distributions pursuant to this clause (f), 100.000000%

 

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to the Class N Unitholders, pro rata in accordance with the respective number of
Class N Units held by each such Unitholder immediately prior to such
distribution.

 

(g)                                  Seventh, until such time as there have been
$21,891,576 in aggregate distributions pursuant to this clause (g):
(i) 87.046630% to the Class A Unitholders, pro rata in accordance with each such
Unitholder’s Unreturned Class A Capital; (ii) 5.000000% to the Class D
Unitholders, pro rata in accordance with the respective number of Class D Units
held by each such Unitholder immediately prior to such distribution;
(iii) 6.000000% to the Class E Unitholders, pro rata in accordance with the
respective number of Class E Units held by each such Unitholder immediately
prior to such distribution; provided that, any amount that would have been
distributable to a Class E Unitholder but for such Class E Unitholder’s
forfeiture of their Class E Units shall instead be distributed to the Class A
Unitholders pursuant to clause (i) above; (iv) 1.720000% to the Class G
Unitholders, pro rata in accordance with the respective number of Class G Units
held by each such Unitholder immediately prior to such distribution; and
(v) 0.233370% to the Class O Unitholders, pro rata in accordance with the
respective number of Class O Units held by each such Unitholder immediately
prior to such distribution; provided that, any amount that would have been
distributable to a Class O Unitholder but for such Class O Unitholder’s
forfeiture of their Class O Units shall instead be distributed to the Class A
Unitholders pursuant to clause (i) above.

 

(h)                                 Eighth, until such time as each Class A
Unitholder’s Unreturned Class A Capital has been reduced to zero: (i) 87.280000%
to the Class A Unitholders, pro rata in accordance with each such Unitholder’s
Unreturned Class A Capital; (ii) 5.000000% to the Class D Unitholders, pro rata
in accordance with the respective number of Class D Units held by each such
Unitholder immediately prior to such distribution; (iii) 6.000000% to the
Class E Unitholders, pro rata in accordance with the respective number of
Class E Units held by each such Unitholder immediately prior to such
distribution; provided that, any amount that would have been distributable to a
Class E Unitholder but for such Class E Unitholder’s forfeiture of their Class E
Units shall instead be distributed to the Class A Unitholders pursuant to clause
(i) above; and (iv) 1.720000% to the Class G Unitholders, pro rata in accordance
with the respective number of Class G Units held by each such Unitholder
immediately prior to such distribution.

 

(i)                                     Ninth, the remainder to the Class A
Unitholders, Class D Unitholders, Class E Unitholders, Class G Unitholders and
Vested Class MEP Unitholders, divided as follows:

 

(i)                                     75.280000% to the Class A Unitholders
pro rata in accordance with the aggregate number of Class A Units held by each
such Unitholder immediately prior to such distribution;

 

(ii)                                  5.000000% to the Class D Unitholders, pro
rata in accordance with the respective number of Class D Units held by each such
Unitholder immediately prior to such distribution;

 

(iii)                               6.000000% to the Class E Unitholders, pro
rata in accordance with the respective number of Class E Units held by each such
Unitholder immediately prior to such distribution; provided that, any amount
that would have been distributable to a Class E Unitholder but for such Class E
Unitholder’s forfeiture of their Class E Units shall instead be distributed to
the Class A Unitholders pursuant to clause (i) above;

 

(iv)                              1.720000% to the Class G Unitholders, pro rata
in accordance with the respective number of Class G Units held by each such
Unitholder immediately prior to such distribution; and

 

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(v)                                 12.000000% to, (A) the Vested Class MEP
Unitholders in a percentage equal to the product of (x) 12.000000% multiplied by
(y) the Class MEP Fraction, to the Vested Class MEP Unitholders, pro rata in
accordance with the number of Vested Class MEP Units held by each such
Unitholder immediately prior to such distribution, and (B) the remainder of such
12.000000% to the Class A Unitholders, pro rata in accordance with the number of
Class A Units held by each such Unitholder immediately prior to such
distribution; provided, however, that with respect to clause (A) of this
Section 4.1(i)(v), any Vested Class MEP Unit shall share in distributions
pursuant to this Section 4.1(i)(v) only from and after the point at which the
aggregate amount of distributions to the Unitholders pursuant to this
Section 4.1(i) after the date of issuance of the Vested Class MEP Unit is equal
to the Floor Amount for such Vested Class MEP Unit and any amounts not
distributed to the holders of such Vested Class MEP Units by reason of the Floor
Amounts shall be distributed pursuant to clause (B) of this Section 4.1(i)(v).

 

Section 4.2                                    Priority over Form of
Consideration.  Notwithstanding any other provision in this Agreement, if the
Company makes a distribution pursuant to Section 4.1 that includes more than one
kind of asset (e.g., cash, equity or debt securities or any combination
thereof), then the assets available for distribution shall be distributed
ratably among all Unitholders entitled to participate in such distribution;
provided that, to the extent cash is included in such assets, such cash shall
first be distributed to the Preferred Unitholders if they so elect by vote of
holders of a majority of the Preferred Units.

 

Section 4.3                                    Successors.  For purposes of
determining the amount of distributions under Section 4.1, each Unitholder shall
be treated as having made the Capital Contributions and as having received the
distributions made to or received by its predecessors with respect to any of
such Unitholder’s Units.

 

Section 4.4                                    Tax Distributions.  Subject to
the Act and to any restrictions contained in any agreement to which the Company
is bound and notwithstanding the provisions of Section 4.1, no later than the
tenth day of each April, June and September of any calendar year and January of
the following calendar year, the Company shall, to the extent of available cash
of the Company, make a distribution in cash (each, a “Tax Distribution”) to each
Unitholder in an amount equal to the excess of (a) the product of (i) the
cumulative taxable income allocated by the Company to the Unitholder through the
end of the month immediately preceding the distribution date, in excess of the
cumulative taxable loss allocated by the Company to such Unitholder for that
period, to the extent that such taxable loss would be available (without regard
to any other Tax item of the Unitholder) to offset such taxable income, in each
case based upon (x) the information returns filed by the Company, as amended or
adjusted on or prior to the applicable date, and (y) estimated amounts, in the
case of periods for which the Company has not yet filed information returns, and
(ii) the Assumed Tax Rate applicable to each period, over (b) all prior
distributions to the Unitholders pursuant to Section 4.1 (other than clauses
(a), (b), (c)(i), (d)(i), (e)(i), (g)(i) and (h)(i) thereof) and this
Section 4.4.  All distributions made pursuant to this Section 4.4 to a
Unitholder shall be treated as advance distributions under Section 4.1 (other
than clauses (a), (b), (c)(i), (d)(i), (e)(i), (g)(i) and (h)(i) thereof) and
shall be taken into account in determining the amount subsequently distributable
to the Unitholder under Section 4.1.  In particular, if, at the time that the
Company makes any distribution under Section 4.1 (other than clauses (a), (b),
(c)(i), (d)(i), (e)(i), (g)(i) and (h)(i) thereof) or this Section 4.4, any
Unitholder has received a share of the aggregate distributions made pursuant to
such Section(s), as applicable, that is less than the share that it would have
received if all such distributions had been made pursuant to such Section(s), as
applicable, without regard to Section 4.4, then, notwithstanding such
Section(s), as applicable, distributions first shall be made 100 percent to the
Unitholders having such a shortfall in such amounts as are required so that each
Unitholder has received its appropriate share, determined under such Section(s),
as applicable, of all distributions made by the Company under such Section(s),
as applicable, and this Section 4.4.  For the avoidance of doubt, Tax
Distributions shall be made only with respect to income of the Company allocated
to the Unitholders (as opposed to income recognized by any Member with respect
to the issuance or vesting of such Member’s Units).  For the purpose of
determining the amount of distributions under Section 4.4,

 

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each Unitholder shall be treated as having been allocated the cumulative taxable
income and received the distributions made to or received by its predecessors
with respect to any of such Unitholder’s Units.

 

Section 4.5                                    Security Interest and Right of
Set-Off.  As security for any liability or obligation to which the Company may
be subject as a result of any act or status of any Unitholder, or to which the
Company may become subject with respect to the interest of any Unitholder, the
Company shall have (and each Unitholder hereby grants to the Company) a security
interest in all Distributable Assets distributable to such Unitholder to the
extent of the amount of such liability or obligation.  Whenever the Company is
to pay any sum to any Unitholder or any Affiliate or related Person thereof
pursuant to the terms of this Agreement, any amounts that such Unitholder or
such Affiliate or related Person owes to the Company may be deducted from that
sum before payment.

 

Section 4.6                                    Certain Distributions.  For
purposes of this Article IV, a distribution to a Member of property (other than
cash) shall be treated as a Tax Distribution pursuant to Section 4.4 (rather
than as, for example, a distribution pursuant to Section 4.1(a)), in an amount
equal to the hypothetical amount of tax that the Member would pay, at the
Assumed Tax Rate, if (i) such property were not treated as a distribution of
money pursuant to Section 731(c)(2) of the Code (to the extent that
Section 731(c)(2) otherwise applies) and (ii) the Member sold the property
immediately after receiving such distribution.

 

ARTICLE V
ALLOCATIONS

 

Section 5.1                                    Allocations.  Except as otherwise
provided in Section 5.2, Net Income and Net Loss (and, if necessary, individual
items of Income and Loss) shall be allocated annually (and at such other times
as the Board of Managers determines) to the Unitholders in such manner that the
Capital Account balance of each Unitholder shall, to the greatest extent
possible, be equal to the amount, positive or negative, that would be
distributed to such Unitholder (in the case of a positive amount) or for which
such Unitholder would be liable to the Company under this Agreement (in the case
of a negative amount), if (a) the Company were to sell the assets of the Company
for their Gross Asset Values, (b) all Company liabilities were satisfied
(limited with respect to each nonrecourse liability to the Gross Asset Values of
the assets securing such liability), (c) the Company were to distribute the
proceeds of sale pursuant to Section 4.1 (including to the holders of unvested
Class MEP Units that are treated as Unitholders pursuant to Section 3.3) and
(d) the Company were to dissolve pursuant to Article VII, minus such
Unitholder’s share of Company Minimum Gain and Member Minimum Gain, computed
immediately prior to the hypothetical sale of assets.

 

Section 5.2                                    Special Allocations.

 

(a)                                 Loss attributable to Member Nonrecourse Debt
shall be allocated in the manner required by Regulations Section 1.704-2(i).  If
there is a net decrease during a taxable year in Member Minimum Gain, Income for
such taxable year (and, if necessary, for subsequent taxable years) shall be
allocated to the Unitholders in the amounts and of such character as is
determined according to Regulations Section 1.704-2(i)(4).  This
Section 5.2(a) is intended to be a “partner nonrecourse debt minimum gain
chargeback” provision that complies with the requirements of Regulations
Section 1.704-2(i)(4), and shall be interpreted in a manner consistent
therewith.

 

(b)                                 Except as otherwise provided in
Section 5.2(a), if there is a net decrease in Company Minimum Gain during any
taxable year, each Unitholder shall be allocated Income for such taxable year
(and, if necessary, for subsequent taxable years) in the amounts and of such
character as is determined according to Regulations Section 1.704-2(f).  This
Section 5.2(b) is intended to be a “minimum gain chargeback” provision that
complies with the requirements of Regulations Section 1.704-2(f), and shall be
interpreted in a manner consistent therewith.

 

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(c)                                  If any Unitholder that unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) has an Adjusted Capital Account
Deficit as of the end of any taxable year, computed after the application of
Section 5.2(a) and Section 5.2(b) but before the application of any other
provision of this Article V, then Income for such taxable year shall be
allocated to such Unitholder in proportion to, and to the extent of, such
Adjusted Capital Account Deficit.  This Section 5.2(c) is intended to be a
“qualified income offset” provision as described in Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent
therewith.

 

(d)                                 Income and Loss described in clause (iv) of
the definition of Gross Asset Value shall be allocated in a manner consistent
with the manner that the adjustments to the Capital Accounts are required to be
made pursuant to Regulations Section 1.704-1 (b)(2)(iv)(m).

 

(e)                                  The allocations set forth in
Section 5.2(a) through Section 5.2(d) inclusive (the “Regulatory Allocations”)
are intended to comply with certain requirements of Section 1.704-1(b) and
1.704-2 of the Regulations.  The Regulatory Allocations may not be consistent
with the manner in which the Unitholders intend to allocate Income and Loss of
the Company or to make distributions.  Accordingly, notwithstanding the other
provisions of this Article V, but subject to the Regulatory Allocations, items
of Income and Loss of the Company shall be allocated among the Unitholders so as
to eliminate the effect of the Regulatory Allocations and thereby cause the
respective Capital Account balances of the Unitholders to be in the amounts (or
as close thereto as possible) they would have been if Income and Loss had been
allocated without reference to the Regulatory Allocations.  In general, the
Unitholders anticipate that this will be accomplished by specially allocating
other Income and Loss among the Unitholders so that the net amount of Regulatory
Allocations and such special allocations to each such Unitholder is zero.

 

(f)                                   Income and Loss of the Company shall be
allocated in the manner required by proposed Regulations Section 1.704
(b)-1(b)(4)(xii)(c) (or any successor guidance dealing with so-called
“forfeiture allocations”) from and after the time permitted by applicable final
or temporary guidance.

 

Section 5.3                                    Tax Allocations.

 

(a)                                 The income, gains, losses and deductions of
the Company shall be allocated for federal, state and local income tax purposes
among the Unitholders in accordance with the allocation of such income, gains,
losses and deductions among the Unitholders for purposes of computing their
Capital Accounts; except that if any such allocation is not permitted by the
Code or other applicable law, then the Company’s subsequent income, gains,
losses and deductions for tax purposes shall be allocated among the Unitholders
so as to reflect as nearly as possible the allocation set forth herein in
computing their Capital Accounts.

 

(b)                                 Items of Company taxable income, gain, loss
and deduction with respect to any property contributed to the capital of the
Company shall be allocated among the Unitholders in accordance with
Section 704(c) of the Code so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its Gross Asset Value, using the “remedial method” under Regulation
Section 1.704-3(d), unless otherwise agreed in writing by the Vestar Majority
Holders.

 

(c)                                  If the Gross Asset Value of any Company
asset is adjusted pursuant to the requirements of Regulations
Section 1.704-1(b)(2)(iv)(e) or (f), subsequent allocations of items of taxable
income, gain, loss and deduction with respect to such asset shall take account
of any variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner

 

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as under Section 704(c) of the Code using such method or methods as the Vestar
Group Majority may direct.

 

(d)                                 In addition to the consent rights set forth
in Section 6.10(a), the Vestar Group Majority shall have the sole and exclusive
right to determine the method used by the Company or any of its Subsidiaries to
make allocations pursuant to Section 704(c) of the Code (including any so-called
“reverse” Section 704(c) allocations).

 

(e)                                  Tax credits, tax credit recapture and any
items related thereto shall be allocated to the Unitholders according to their
interests in such items as reasonably determined by the Board of Managers taking
into account the principles of Regulations Sections 1.704-1(b)(4)(ii) and
1.704-1T(b)(4)(xi).

 

(f)                                   Allocations pursuant to this Section 5.3
are solely for the purposes of federal, state and local taxes and shall not
affect, or in any way be taken into account in computing, any Unitholder’s
Capital Account or share of Income, Loss, distributions or other Company items
pursuant to any provision of this Agreement.

 

Section 5.4                                    Unitholders’ Tax Reporting.  The
Unitholders acknowledge and are aware of the income tax consequences of the
allocations made pursuant to this Article V and, except as may otherwise be
required by applicable law or regulatory requirements, hereby agree to be bound
by the provisions of this Article V in reporting their shares of Company income,
gain, loss, deduction and credit for federal, state and local income tax
purposes.

 

Section 5.5                                    Indemnification and Reimbursement
for Payments on Behalf of a Unitholder.  If the Company is required by law to
make any payment to a Governmental Entity that is specifically attributable to a
Unitholder or a Unitholder’s status as such (including federal withholding
taxes, state or local personal property taxes and state or local unincorporated
business taxes), then such Unitholder shall indemnify the Company in full for
the entire amount paid (including interest, penalties and related expenses). 
The Board of Managers may offset distributions to which a Person is otherwise
entitled under this Agreement against such Person’s obligation to indemnify the
Company under this Section 5.5.  A Unitholder’s obligation to indemnify the
Company under this Section 5.5 shall survive termination, dissolution,
liquidation and winding up of the Company, and for purposes of this Section 5.5,
the Company shall be treated as continuing in existence.  The Company may pursue
and enforce all rights and remedies it may have against each Unitholder under
this Section 5.5, including instituting a lawsuit to collect such
indemnification, with interest calculated at a rate equal to 10 percent (but not
in excess of the highest rate per annum permitted by law).

 

ARTICLE VI
MANAGEMENT

 

Section 6.1                                    The Board of Managers; Delegation
of Authority and Duties.

 

(a)                                 Members, Board of Managers and Executive
Committee.  The Members shall possess all rights and powers as provided in the
Act and otherwise by applicable law.  Except as otherwise expressly provided for
herein, the Members hereby consent to the exercise by the Board of Managers of
all such powers and rights conferred on them by the Act with respect to the
management and control of the Company, provided that such rights and powers
shall be exercised on behalf of the Board of Managers exclusively by the
Executive Committee, except to the extent (i) such delegation of authority would
not be permitted under applicable Law (assuming for this purposes that the
Company is a Delaware corporation) and (ii) the power and authority is reserved
to another existing committee of the Board of Managers under its existing
charter, provided further that if the Executive Committee is dissolved in
accordance with Section

 

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6.1(c), all such powers and rights will be exercised by the Board of Managers. 
For the avoidance of doubt, any references in this Agreement granting permission
or authority to the Board of Managers shall be deemed to refer to the Executive
Committee (even if not included in such reference) to the extent consistent with
the first proviso in the immediately preceding sentence.  Notwithstanding the
foregoing and except as explicitly set forth in this Agreement, if a vote,
consent or approval of the Members is required by the Act or other applicable
law with respect to any act to be taken by the Company or matter considered by
the Board of Managers or the Executive Committee, each Member agrees that it
shall be deemed to have consented to or approved such act or voted on such
matter in accordance with a vote of the Board of Managers or the Executive
Committee, as the case may be, on such act or matter.  Each Class A Unitholder
shall have one vote for each Class A Unit held by such Unitholder.  Holders of
SFRO Preferred Units, Preferred Units and Incentive Units shall not have the
right to vote on any matter unless such right is expressly provided herein.  If
a vote, consent or approval of the Members is required by this Agreement, only
the Class A Members shall be entitled to vote, consent or approve unless a right
to vote, consent or approve is expressly provided herein to any other Member. 
Unless otherwise set forth in this Agreement, any vote, consent or approval of
any class of Units required by this Agreement shall require a majority of the
voting power of the applicable Units.  No Member, in its capacity as a Member,
shall have any power to act for, sign for or do any act that would bind the
Company.  The Members, acting through the Board of Managers or the Executive
Committee, as applicable, shall devote such time and effort to the affairs of
the Company as they may deem appropriate for the oversight of the management and
affairs of the Company.  Each Member acknowledges and agrees that no Member
shall, in its capacity as a Member, be bound to devote all of such Member’s
business time to the affairs of the Company, and that each Member and such
Member’s Affiliates do and will continue to engage for such Member’s own account
and for the account of others in other business ventures.

 

(b)                                 Delegation by Board of Managers and
Executive Committee.  Each of the Board of Managers and the Executive Committee
shall have the power and authority to delegate (in the case of the Board of
Managers, to the extent such rights and powers have not be delegated to the
Executive Committee in accordance with Section 2.1(a) and the Securityholders
Agreement) to one or more other Persons its rights and powers to manage and
control the business and affairs of the Company, including to delegate to agents
and employees of a Member, a Manager or the Company (including Officers), and to
delegate by a management agreement or another agreement with, or otherwise to,
other Persons.  Each of the Board of Managers and the Executive Committee may
authorize, to the extent of its rights and powers in accordance with
Section 6.1(a), any Person (including any Member, Officer or Manager) to enter
into and perform under any document on behalf of the Company. Notwithstanding
the foregoing and for the avoidance of doubt, all powers and rights of the Board
of Managers which are exercised by the Executive Committee in accordance with
Section 6.1(a) may only be delegated by the Executive Committee during the
period of its existence.

 

(c)                                  Committees.  The Board of Managers shall
have, during the period specified below, an executive committee (the “Executive
Committee”) and the Board of Managers may, from time to time, designate one or
more other committees (including the Compensation Committee).

 

(i)                                     The Executive Committee. The Executive
Committee shall be comprised of three Managers, a Manager nominated by the
Majority Preferred Stockholders in accordance with Section 2.1(b) of the
Securityholders Agreement, a Manager nominated by the Vestar V in accordance
with Section 2.1(b) of the Securityholders Agreement and the Chief Executive
Officer of Opco.  The Executive Committee shall have and may exercise all powers
and rights conferred on the Members by the Act with respect to the management
and control of the Company, except for such powers and rights that are reserved
for the Board of Managers in accordance with Section 6.1(a). The Executive
Committee shall conduct its proceedings in accordance with its charter adopted
September 26, 2014 (as the

 

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same may be amended or modified from time to time).  The Executive Committee
shall be dissolved upon the occurrence of the earlier of (i) a Qualified IPO,
(ii) a Qualified Merger and (iii) at the election of the Majority Preferred
Stockholders, a Default Event.

 

(ii)                                  Other Committees.  Each committee other
than the Executive Committee shall be comprised of at least three Managers, and,
if applicable, shall be constituted in accordance with Section 2.1(c) of the
Securityholders Agreement.  Except as otherwise required by applicable law, no
committee of the Board of Managers may bind the Board of Managers.  The Board of
Managers may dissolve any committee (other than the Executive Committee) at any
time, unless otherwise provided in the Securityholders Agreement or this
Agreement.  Notwithstanding anything to the contrary in the charters of the
other committees, while the Executive Committee is in existence, each such
committee shall report to the Executive Committee, and all matters in respect of
which any such committee makes a recommendations shall be decided by the
Executive Committee.  Each committee in existence as of the date hereof shall
conduct its proceedings in accordance with the charters for such committee as in
effect or as adopted, as applicable, on the date hereof.  Except in connection
with an initial Public Offering of Holdings, the charters of these committees
shall not be modified, and no new committees created, without the consent of the
Majority Preferred Stockholders.

 

Section 6.2                                    Establishment of Board of
Managers.

 

(a)                                 Managers.  There shall be established a
board of managers (the “Board of Managers”) composed of seven (7) persons (who,
for the avoidance of doubt, need not be members), or such other number of
persons as is determined in accordance with Section 2.1 of the Securityholders
Agreement, all of whom shall be individuals (each, a “Manager”) who shall be
elected by a majority vote of the holders of the Class A Units, voting together
as a single class, provided that the Board of Managers shall at all times be
constituted in accordance with Section 2.1 of the Securityholders Agreement, and
each such Unitholder shall have one vote for each Unit held by such Member.  The
Managers as of the date hereof are set forth on Schedule F attached hereto. 
Each Manager shall be a “manager” (as such term is defined in the Act) of the
Company but, notwithstanding the foregoing, no Manager shall have any rights or
powers beyond the rights and powers granted to such Manager in this Agreement. 
Any Manager may be removed from the Board of Managers at any time by the holders
of a majority of the Class A Units, but only in a manner consistent with
Section 2.1 of the Securityholders Agreement.  Each Manager shall remain in
office until his or her death, resignation or removal, and in the event of
death, resignation or removal of a Manager, the vacancy created shall be filled
by a majority vote of the holders of the Class A Units, voting together as a
single class, and otherwise in accordance with Section 2.1 of the
Securityholders Agreement.

 

(b)                                 Duties; Investment Opportunities; Conflicts
of Interest.

 

(i)                                     A Manager shall be personally liable to
the Company and the other Members for any loss incurred by such Person for acts
or omissions in the management of the Company only in the case of gross
negligence, willful misconduct, bad faith or breach of a duty expressly set
forth below by such Manager; but a Manager shall not be personally liable to the
Company or any Member for any other acts or omissions, including the negligence,
strict liability or other fault or responsibility (short of gross negligence,
willful misconduct, bad faith or as expressly set forth below) by such Manager. 
The Board of Managers and any member or committee thereof may consult with
counsel and accountants in respect of Company affairs and, provided the Board of
Managers (or such member or committee, as the case may be) acts in good faith
reliance upon the advice or opinion of such counsel or accountants, the Board of
Managers (or such member or committee, as the

 

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case may be) shall not be liable for any loss suffered by the Members or the
Company in reliance thereon.  Notwithstanding any other provision of this
Agreement or any duty otherwise existing at law or in equity, the parties hereby
agree that the Managers and the Members, in their capacities as Managers and
Members, as applicable, shall, to the maximum extent permitted by law, including
Section 18-1101(c) of the Act, owe no fiduciary duties to the Company, the
Members or any other Person bound by this Agreement; provided, however, that the
Managers shall act in accordance with the implied contractual covenant of good
faith and fair dealing.  Any amendment or modification of the provisions of this
Section 6.2(b) shall not adversely affect any rights or protections of a Manager
at the time of such amendment or modification.  Except as stated in the
preceding sentence and the other duties as may be expressly set forth in this
Agreement, a Manager shall not be subject to any duties in the management of the
Company. And, for the avoidance of doubt, in the event that there is a Company
Sale and the Board of Managers or any particular Manager, in such capacity,
takes any action to implement, undertake or facilitate such Company Sale at the
request of the Majority Preferred Stockholders, then such action shall not be
subject to the standards set forth in this Section 6.2(b), but instead shall be
considered actions taken to implement the contractual agreements of the parties
to this Agreement and not in a fiduciary capacity to the Members.

 

(ii)                                  In performing such Person’s duties, each
of the Managers and the officers of the Company shall be entitled to rely in
good faith on the provisions of this Agreement and on information, opinions,
reports or statements (including financial statements and information, opinions,
reports or statements as to the value or amount of the assets, liabilities,
profits or losses of the Company or any facts pertinent to the existence and
amount of assets from which distributions to Unitholders might properly be
paid), of the following other Persons or groups: (A) one or more officers or
employees of the Company or any of its Subsidiaries; (B) any attorney,
independent accountant or other Person employed or engaged by the Company or any
of its Subsidiaries; or (C) any other Person who has been selected with
reasonable care by or on behalf of the Company or any of its Subsidiaries, in
each case, as to matters which such relying Person reasonably believes to be
within such other Person’s professional or expert competence.  The preceding
sentence shall in no way limit any Person’s right to rely on information to the
extent provided in Section 18-406 of the Act.

 

(iii)                               The Members expressly acknowledge that
(A) Vestar, CPPIB and their respective Affiliates are permitted to have, and may
presently or in the future have, investments or other business relationships
with entities other than through the Company or any of its Subsidiaries (an
“Other Business”), (B) Vestar, CPPIB and their respective Affiliates may have or
may develop a strategic relationship with an Other Business, (C) none of Vestar,
CPPIB and their respective Affiliates will be prohibited by virtue of its
investment in the Company or any of its Subsidiaries or, if applicable, its
service on the Board of Managers or the Executive Committee from pursuing and
engaging in any such activities with Other Businesses, (D) none of Vestar, CPPIB
and its respective Affiliates shall be obligated to inform the Company or any of
its Subsidiaries of any such opportunity, relationship or investment relating to
Other Businesses, (E) the other Members will not acquire or be entitled to any
interest or participation in any Other Business except as provided in any
agreement with the Company or Subsidiary as a result of the participation
therein of Vestar, CPPIB or any of their respective Affiliates, and (F) the
involvement of any equityholder of a Member, CPPIB or their Affiliates in any
Other Business except as provided in any agreement with the Company or
Subsidiary will not constitute a conflict of interest by such Persons with
respect to the Company or its

 

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Members or any of its Subsidiaries.  Nothing in the preceding sentence shall
limit the confidentiality obligations of Section 9.4.

 

(c)                                  Absence.  A Manager may designate a Person
to act as his or her substitute and in his or her place at any meeting of the
Board of Managers.  Such Person shall have all power of the absent Manager, and
references herein to a “Manager” at a meeting shall be deemed to include his or
her substitute.  Notwithstanding anything in this Agreement to the contrary,
Managers, in their capacities as such, shall not be deemed to be “members” (as
such term is defined in the Act) of the Company.

 

(d)                                 No Individual Authority.  No Manager has the
authority or power to act for or on behalf of the Company, to do any act that
would be binding on the Company or to make any expenditures or incur any
obligations on behalf of the Company or authorize any of the foregoing, other
than acts that are expressly authorized by the Board of Managers.

 

(e)                                  Conflict.  Each provision of this
Section 6.2 is subject to the terms and provisions of the Securityholders
Agreement, and to the extent any such provisions apply, they are then to be
construed as being incorporated in this Agreement and made a part hereof.

 

(f)                                   Compensation of Directors; Expense
Reimbursement.  Managers that are also employees or Officers of the Company or
any of its Subsidiaries shall not receive any stated salary for services in
their capacity as Managers; provided, however, that, subject to Section 6.10,
nothing herein contained shall be construed to preclude any Manager from serving
the Company or any Subsidiary in any other capacity and receiving compensation
(including Incentive Units) therefor.  Managers that are not also employees or
Officers of the Company or any of its Subsidiaries may receive equity based
compensation and/or a stated salary for their services as Managers, in each
case, as is determined from time to time by the Board of Managers.  Managers
shall be reimbursed for any reasonable out-of-pocket expenses related to
attendance at each regular or special meeting of the Board of Managers (or any
committee thereof), subject to the Company’s requirements with respect to
reporting and documentation of such expenses.

 

Section 6.3                                    Board of Managers Meetings.

 

(a)                                 Quorum and Voting.  A majority of the total
number of Managers, including at least one Vestar Manager and one Preferred
Manager shall constitute a quorum for the transaction of business of the Board
of Managers, provided that if at any meeting of the Board a quorum is not
present, such meeting shall be adjourned by the Board of Managers (which
adjournment may be approved by the Board of Managers even if less than a quorum
is present) to a date no more than three business days after the initial
meeting, and at such adjourned meeting any majority of the total number of
Managers shall constitute a quorum for the transaction of business of the Board
of Managers. Except as otherwise provided in this Agreement or Section 2.3 of
the Securityholders Agreement, the act of a majority of the Managers present at
a meeting of the Board of Managers at which a quorum is present shall be the act
of the Board of Managers.  A Manager who is present at a meeting of the Board of
Managers at which action on any matter is taken shall be presumed to have
assented to the action unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
Person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting.  Such right to dissent shall not apply to a Manager who voted in
favor of such action.

 

(b)                                 Place and Waiver of Notice.  Meetings of the
Board of Managers may be held at such place or places as shall be determined
from time to time by resolution of the Board of Managers.  At all meetings of
the Board of Managers, business shall be transacted in such order as shall from
time to time be determined by resolution of the Board of Managers.  Attendance
of a Manager at a meeting shall constitute a

 

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waiver of notice of such meeting, except where a Manager attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.

 

(c)                                  Regular Meetings.  Regular meetings of the
Board of Managers may be held as from time to time shall be determined by the
Board of Managers.  After there has been such determination, and notice thereof
has once been given to each Manager, regular meetings of the Board of Managers
may be held without further notice being given.  Such notice need not state the
purpose or purposes of, nor the business to be transacted at, such meeting,
except as may otherwise be required by applicable law or provided for in this
Agreement.

 

(d)                                 Special Meetings.  Special meetings of the
Board of Managers may be called on at least 24 hours notice to each Manager by
any two Managers.  Such notice need not state the purpose or purposes of, nor
the business to be transacted at, such meeting, except as may otherwise be
required by applicable law or provided for in this Agreement.

 

(e)                                  Notice.  Notice of any special meeting of
the Board of Managers or other committee may be given personally, by mail,
facsimile, courier or other means and, if other than personally, shall be deemed
given when written notice is delivered to the office of the Manager at the
address of the Manager in the books and records of the Company.

 

Section 6.4                                    Chairman and Vice Chairman.  The
Board of Managers shall designate a Manager to serve as chairman.  Rob Rosner
shall serve as the initial chairman of the Board of Managers. The Board of
Managers may designate a Manager to serve as vice chairman.  The chairman shall
preside at all meetings of the Board of Managers.  If the chairman is absent at
any meeting of the Board of Managers, the vice chairman serve as interim
chairman for that meeting.  The chairman shall have no independent authority or
power to act for or on behalf of the Company, to do any act that would be
binding on the Company or to make any expenditure or incur any obligations on
behalf of the Company or authorize any of the foregoing.  The chairman shall not
have exclusive power to establish the agenda for any meeting.  Any matter
proposed for consideration and seconded by at least one Manager other than the
proposing Manager shall be deemed properly raised for consideration at any
meeting.

 

Section 6.5                                    Approval or Ratification of Acts
or Contracts.  Any act or contract approved or ratified by the Board of Managers
shall be as valid and as binding upon the Company and upon all the Members (in
their capacity as Members) as if it had been approved or ratified by each Member
of the Company.

 

Section 6.6                                    Action by Written Consent.  Any
action permitted or required by the Act, the Certificate or this Agreement to be
taken at a meeting of the Board of Managers or any committee designated by the
Board of Managers may be taken without a meeting if a consent in writing,
setting forth the action to be taken, is signed by a majority of the Managers or
representatives of such other committee, as the case may be, subject to
Section 2.3 of the Securityholders Agreement.  Such consent shall have the same
force and effect as a vote at a meeting and may be stated as such in any
document or instrument filed with the Secretary of State of the State of
Delaware, and the execution of such consent shall constitute attendance or
presence in person at a meeting of the Board of Managers or any such other
committee, as the case may be.

 

Section 6.7                                    Meetings by Telephone Conference
or Similar Measures.  Subject to the requirements of this Agreement for notice
of meetings, the Managers, or representatives of any other committee designated
by the Board of Managers, may participate in and hold a meeting of the Board of
Managers or any such other committee, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a Person participates in the meeting for

 

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the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.

 

Section 6.8                                    Officers.

 

(a)                                 Designation and Appointment.  Subject to
Section 6.10 and the Securityholders Agreement, the Board of Managers may, from
time to time, employ and retain Persons as may be necessary or appropriate for
the conduct of the Company’s business (subject to the supervision and control of
the Board of Managers), including employees, agents and other Persons (any of
whom may be a Member or Manager) who may be designated as Officers of the
Company, with such titles as and to the extent authorized by the Board of
Managers.  Any number of offices may be held by the same Person.  In its
discretion, the Board of Managers may choose not to fill any office for any
period as it may deem advisable.  Officers need not be residents of the State of
Delaware or Members.  Any Officers so designated shall have such authority and
perform such duties as the Board of Managers may from time to time delegate to
them.  The Board of Managers may assign titles to particular Officers.  Each
Officer shall hold office until his successor shall be duly designated and shall
qualify or until his death or until he shall resign or shall have been removed
in the manner hereinafter provided.  The salaries or other compensation, if any,
of the Officers of the Company shall be fixed from time to time by the Board of
Managers.

 

(b)                                 Resignation and Removal.  Any Officer may
resign as such at any time.  Such resignation shall be made in writing and shall
take effect at the time specified therein, or if no time is specified, at the
time of its receipt by the Board of Managers.  The acceptance of a resignation
shall not be necessary to make it effective, unless expressly so provided in the
resignation.  Any Officer may be removed as such, either with or without cause
at any time, subject to Section 6.10 and the Securityholders Agreement, by the
Board of Managers.  Designation of an Officer shall not of itself create any
contractual or employment rights.

 

(c)                                  Duties of Officers Generally.  The
Officers, in the performance of their duties as such, shall owe to the Company
duties of loyalty and due care of the type owed by the officers of a corporation
to such corporation and its stockholders under the laws of the State of
Delaware.

 

Section 6.9                                    Management Matters.

 

(a)                                 Transfer of Property.  All property owned by
the Company shall be registered in the Company’s name, in the name of a nominee
or in “street name” as the Board of Managers may from time to time determine. 
Any corporation, brokerage firm or transfer agent called upon to Transfer any
Securities to or from the name of the Company shall be entitled to rely on
instructions or assignments signed or purported to be signed by any Officer or
Manager without inquiry as to the authority of the Person signing or purporting
to sign such instructions or assignments or as to the validity of any Transfer
to or from the name of the Company.  At the time of any such Transfer, any such
corporation, brokerage firm or transfer agent shall be entitled to assume that
(i) the Company is then in existence and (ii) that this Agreement is in full
force and effect and has not been amended, in each case, unless such
corporation, brokerage firm or transfer agent shall have received written notice
to the contrary.

 

(b)                                 Existence and Good Standing.  The Board of
Managers may take all action which may be necessary or appropriate (i) for the
continuation of the Company’s valid existence as a limited liability company
under the laws of the State of Delaware (and of each other jurisdiction in which
such existence is necessary to enable the Company to conduct the business in
which it is engaged) and (ii) for the maintenance, preservation and operation of
the business of the Company in accordance with the provisions of this Agreement
and applicable laws and regulations.  The Board of Managers may file or cause to
be filed for recordation in the office of the appropriate authorities of the
State of Delaware, and in the proper office

 

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or offices in each other jurisdiction in which the Company is formed or
qualified, such certificates (including certificates of limited liability
companies and fictitious name certificates) and other documents as are required
by the applicable statutes, rules or regulations of any such jurisdiction or as
are required to reflect the identity of the Members and the amounts of their
respective capital contributions.

 

(c)                                  Investment Company Act.  The Board of
Managers shall use its best efforts to assure that the Company shall not be
subject to registration as an investment company pursuant to the Investment
Company Act of 1940, as amended.

 

Section 6.10                             Consent Rights.

 

(a)                                 Consent Rights.  The Company shall not, and
shall not permit any of its Subsidiaries to take or commit to take any action,
unless any required consent of the Majority Preferred Stockholders pursuant to
Section 2.3 of the Securityholders Agreement has been obtained.

 

(b)                                 Scope of Consent Rights.  The Members hereby
acknowledge and agree that the determination of the Majority Preferred
Stockholders as to whether to consent to any of the actions referenced in
Section 6.10(a) and described in Section 2.3 of the Securityholders Agreement
shall be made (i) in the sole discretion of such parties acting in its, his or
her own best interests and (ii) without regard to any fiduciary duty.

 

(c)                                  Termination.  The provisions set forth in
this Section 6.10 shall terminate as set forth in the Securityholders Agreement.

 

Section 6.11                             Securities in Subsidiaries.  The
Company shall vote, or cause to be voted, all of the securities it holds in any
direct or indirect Subsidiary of the Company as directed by the Board of
Managers, and in all respects in accordance with the Securityholders Agreement.

 

Section 6.12                             Liability of Unitholders.

 

(a)                                 No Personal Liability.  Except as otherwise
required by applicable law and as expressly set forth in this Agreement, no
Unitholder shall have any personal liability whatsoever in such Person’s
capacity as a Unitholder, whether to the Company, to any of the other
Unitholders, to the creditors of the Company or to any other third party, for
the debts, liabilities, commitments or any other obligations of the Company or
for any losses of the Company.  Each Unitholder shall be liable only to make
such Unitholder’s Capital Contribution to the Company, if applicable, and the
other payments provided for expressly herein.

 

(b)                                 Return of Distributions.  In accordance with
the Act and the laws of the State of Delaware, a member of a limited liability
company may, under certain circumstances, be required to return amounts
previously distributed to such member.  It is the intent of the Members that no
distribution to any Member pursuant to Article IV shall be deemed a return of
money or other property paid or distributed in violation of the Act.  The
payment of any such money or distribution of any such property to a Member shall
be deemed to be a compromise within the meaning of the Act, and the Member
receiving any such money or property shall not be required to return to any
Person any such money or property.  However, if any court of competent
jurisdiction holds that, notwithstanding the provisions of this Agreement, any
Member is obligated to make any such payment, such obligation shall be the
obligation of such Member and not of any Manager or other Member.

 

Section 6.13                             Indemnification by the Company. 
Subject to the limitations and conditions provided in this Section 6.13, each
Person who was or is made a party or is threatened to be made a party to or is

 

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involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or arbitral (each a “Proceeding”), or
any appeal in such a Proceeding or any inquiry or investigation that could lead
to such a Proceeding, by reason of the fact that he, she or it, or a Person of
which he, she or it is the legal representative, is or was a Unitholder, Officer
or Manager shall be indemnified by the Company to the fullest extent permitted
by applicable law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Company to provide broader indemnification rights than such law permitted the
Company to provide prior to such amendment) against all judgments, penalties
(including excise and similar taxes and punitive damages), fines, settlements
and reasonable expenses (including reasonable attorneys’ fees and expenses)
actually incurred by such Person in connection with such Proceeding, appeal,
inquiry or investigation, if such Person acted in Good Faith.  Reasonable
expenses incurred by a Person of the type entitled to be indemnified under this
Section 6.13 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding shall be paid by the Company in advance of the final
disposition of the Proceeding upon receipt of an undertaking by or on behalf of
such Person to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the Company.  Indemnification under
this Section 6.13 shall continue as to a Person who has ceased to serve in the
capacity which initially entitled such Person to indemnity hereunder.  The
rights granted pursuant to this Section 6.13 shall be deemed contract rights,
and no amendment, modification or repeal of this Section 6.13 shall have the
effect of limiting or denying any such rights with respect to actions taken or
Proceedings, appeals, inquiries or investigations arising prior to any
amendment, modification or repeal.  It is expressly acknowledged that the
indemnification provided in this Section 6.13 could involve indemnification for
negligence or under theories of strict liability.  The Company hereby
acknowledges that certain indemnitees under this Section 6.13 may have certain
rights to indemnification and/or insurance provided by affiliated investment
funds (collectively, “Fund Indemnitors”) of such indemnitees and the Company
intends such Fund Indemnitors to be secondary to the primary obligation of the
Company to indemnify such indemnitee as provided herein.  The Company hereby
agrees (i) that it is the indemnitor of first resort (i.e., its obligations to
indemnitees are primary and any obligation of the Fund Indemnitors to advance
expenses or to provide indemnification for the same expenses or liabilities
incurred by indemnitee are secondary) for the indemnification obligations
provided in this Section 6.13, (ii) that it shall be required to advance the
full amount of expenses incurred by any indemnitee hereunder and shall be liable
for the full amount of all expenses, judgments, penalties, fines and amounts
paid in settlement to the extent legally permitted and as required by the terms
of this Agreement (or any other agreement between the Company and any
indemnitee), without regard to any rights indemnitee may have against the Fund
Indemnitors, and, (iii) that it irrevocably waives, relinquishes and releases
the Fund Indemnitors from any and all claims against the Fund Indemnitors for
contribution, subrogation or any other recovery of any kind in respect thereof. 
The Company further agrees that no advancement or payment by the Fund
Indemnitors on behalf of any indemnitee with respect to any claim for which such
indemnitee has sought indemnification from the Company shall affect the
foregoing and the Fund Indemnitors shall have a right of contribution and/or be
subrogated to the extent of such advancement or payment to all of the rights of
recovery of such indemnitee against the Company.  The Company and each
indemnitee hereunder agree that the Fund Indemnitors are express third party
beneficiaries of the terms of this Section 6.13.

 

ARTICLE VII
WITHDRAWAL; DISSOLUTION; TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION OF NEW
MEMBERS

 

Section 7.1                                    Unitholder Withdrawal.  No
Unitholder shall have the power or right to withdraw or otherwise resign or be
expelled from the Company prior to the dissolution and winding up of the
Company, except pursuant to a Transfer permitted under this Agreement of all of
such Unitholder’s Units to an Assignee, a Member or the Company.

 

Section 7.2                                    Dissolution.

 

(a)                                 Events.  Subject to Section 6.10 and the
Securityholders Agreement, the Company shall be dissolved and its affairs shall
be wound up on the first to occur of (i) the majority vote of the Board

 

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of Managers, or (ii) the entry of a decree of judicial dissolution of the
Company under Section 18-802 of the Act.

 

(b)                                 Actions Upon Dissolution.  When the Company
is dissolved, the business and property of the Company shall be wound up and
liquidated by the Board of Managers or, in the event of the unavailability of
the Board of Managers or if the Board of Managers so determine, such Member or
other liquidating trustee as shall be named by the Board of Managers.

 

(c)                                  Priority.  A reasonable time shall be
allowed for the orderly winding up of the business and affairs of the Company
and the liquidation of its assets pursuant to Section 7.2 to minimize any losses
otherwise attendant upon such winding up.  Notwithstanding the generality of the
foregoing, within 120 calendar days after the effective date of dissolution of
the Company, the assets of the Company shall be distributed in the following
manner and order: (i) all debts and obligations of the Company, if any, shall
first be paid, discharged or provided for by adequate reserves; (ii)  amount
equal to all payment obligations of the Company and the Unitholders pursuant to
Section 4.3 of the Securityholders Agreement shall be paid second, in accordance
with Section 4.3 of the Securityholders Agreement and (iii) the balance shall be
distributed to the Unitholders in accordance with Section 4.1.

 

(d)                                 Cancellation of Certificate.  On completion
of the distribution of Company assets as provided herein, the Company is
terminated, and shall file a certificate of cancellation with the Secretary of
State of the State of Delaware, cancel any other filings made and take such
other actions as may be necessary to terminate the Company.

 

(e)                                  Return of Capital.  The liquidators shall
not be personally liable for the return of Capital Contributions or any portion
thereof to the Members (it being understood that any such return shall be made
solely from Company assets).

 

(f)                                   Hart-Scott-Rodino.  Notwithstanding any
other provision in this Agreement, in the event the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), is applicable to any
Member by reason of the fact that any assets of the Company will be distributed
to such Member in connection with the dissolution of the Company, the
dissolution of the Company shall not be consummated until such time as the
applicable waiting periods (and extensions thereof) under the HSR Act have
expired or otherwise been terminated with respect to each such Member.

 

Section 7.3                                    Transfer by Unitholders.  Any
Member who shall Transfer any Units in the Company shall cease to be a Member of
the Company with respect to such Units and shall no longer have any rights or
privileges of a Member with respect to such Units.  Any Member or Assignee who
acquires in any manner whatsoever any Units, irrespective of whether such Person
has accepted and adopted in writing the terms and provisions of this Agreement,
shall be deemed by the acceptance of the benefits of the acquisition thereof to
have agreed to be subject to and bound by all of the terms and conditions of
this Agreement that any predecessor in such Units or other interest in the
Company was subject to or by which such predecessor was bound.  No Member shall
cease to be a Member upon the collateral assignment of, or the pledging or
granting of a security interest in, its entire interest in the Company.  Any
Transfer and any related admission of a Person as a Member in compliance with
the provisions of the Securityholders Agreement and this Agreement shall be
deemed effective on such date that the Transferee or successor in interest
complies with the requirements of the Securityholders Agreement and this
Agreement.

 

Section 7.4                                    Admission or Substitution of New
Members.

 

(a)                                 Admission.  The Board of Managers shall have
the right, subject to Section 7.3, to admit as a Substituted Member or an
Additional Member any Person who acquires an interest in the

 

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Company, or any part thereof, from a Member or from the Company; provided that
the Board of Managers shall admit as a Substituted Member, subject to
Section 7.4(b), any Transferee who acquires an interest in the Company pursuant
to an Exempt Employee Transfer, an Exempt TCW Transfer, an Exempt NYLIM Transfer
or an Exempt Individual Transfer.  Concurrently with the admission of a
Substituted Member or an Additional Member, the Board of Managers shall
forthwith (i) amend Schedule B hereto to reflect the name and address of such
Substituted Member or Additional Member and to eliminate or modify, as
applicable, the name and address of the Transferring Member with regard to the
Transferred Units and (ii) cause any necessary papers to be filed and recorded
and notice to be given wherever and to the extent required showing the
substitution of a Transferee as a Substituted Member in place of the
Transferring Member, or the admission of an Additional Member, in each case, at
the expense, including payment of any professional and filing fees incurred, of
such Substituted Member or Additional Member, unless otherwise determined by the
Board of Managers.

 

(b)                                 Conditions and Limitations.  The admission
of any Person as a Substituted Member or an Additional Member shall be
conditioned upon (i) such Person’s written acceptance and adoption of all the
terms and provisions of this Agreement, either by (A) execution and delivery of
a counterpart signature page to this Agreement countersigned by a Manager on
behalf of the Company or (B) any other writing evidencing the intent of such
Person to become a Substituted Member or an Additional Member and such writing
is accepted by the Board of Managers on behalf of the Company and (ii) (at the
request of the Board of Managers) such Person’s execution and delivery of a
counterpart to the Securityholders Agreement.

 

(c)                                  Prohibited Transfers.  Other than pursuant
to a Company Sale, any Transfer of a Unit or an Economic Interest shall not be
permitted (and, if attempted, shall be void ab initio) if, in the determination
of the Board of Managers, (i) such a Transfer would cause the Company to become
ineligible for safe harbor treatment under Section 7704 of the Code and
Regulations Section 1.7704-1(h) or otherwise would pose a material risk that the
Company would be a “publicly traded partnership” as defined in Section 7704 of
the Code, or (ii) such Transfer would result in 50 percent or more of the
Company’s total “partnership interests” having been “sold or exchanged” in any
12-month period (within the meaning of Section 708(b)(1)(B) of the Code) and the
resulting termination of the Company pursuant to Section 708(b)(1)(B) would, in
the determination of the Board of Managers, have a more than immaterial adverse
effect on the Company or the Members.

 

(d)                                 Effect of Transfer to Substituted Member. 
Following the Transfer of any Unit that is permitted under this Section 7.4, the
Transferee of such Unit shall be treated as having made all of the Capital
Contributions in respect of, and received all of the distributions received in
respect of, such Unit, shall succeed to the Capital Account balance associated
with such Unit, shall receive allocations and distributions under Article IV,
Article V and Section 7.2 in respect of such Unit and otherwise shall become a
Substituted Member entitled to all the rights of a Member with respect to such
Unit.

 

Section 7.5                                    Compliance with Law. 
Notwithstanding any other provision hereof to the contrary, no sale or other
disposition of an interest in the Company may be made except in compliance with
all federal, state and other applicable laws, including federal and state
securities laws.  Nothing in this Section 7.5 shall be construed to limit or
otherwise affect any of the provisions of the Securityholders Agreement or the
Management Grant Agreements, and to the extent any such provisions apply, they
are then to be construed as being incorporated in this Agreement and made a part
hereof.

 

Section 7.6                                    Public Offering.

 

(a)                                 If the Board of Managers with the consent of
the Majority Preferred Stockholders pursuant to Section 6.10 approves a
Qualified IPO, a Qualified Merger (each as defined in the

 

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Securityholders Agreement), or another initial Public Offering, then, subject to
the Securityholders Agreement and without limiting the rights and privileges of
the Convertible Preferred Stockholders, the Board of Managers also may
authorize, at the time of such Qualified IPO, a Qualified Merger, or Public
Offering or at any time subsequent thereto, without the consent of any Member
and with respect to all or any portion of the Units, a recapitalization of, or a
transaction that effects the recapitalization of, the Company, whether involving
a merger, redemption, contribution of Units, share exchange or otherwise
(including a contribution of the Units to a newly formed corporation or a
Subsidiary of the Company, a distribution of the stock of a Subsidiary of the
Company and/or a liquidation of the Company) (a “Recapitalization”). 
Notwithstanding anything to the contrary herein, in the event that the Board of
Managers authorizes a Recapitalization in accordance with the terms and
conditions hereof, neither the Board of Managers nor any member of the Vestar
Group shall be required to require the dissolution or liquidation of the Company
in connection therewith.  All Unitholders shall take all actions in connection
with the consummation of such Recapitalization as the Board of Managers so
requests, including the voting of any Units as may be necessary to effect such
Recapitalization (including in connection with an amendment to this Agreement),
the approval of a merger or conversion of the Company or one or more of its
Subsidiaries with and into a corporation, and compliance with the requirements
of all laws and Governmental Entities, exchanges and other self-regulatory
organizations that are applicable to, or have jurisdiction over, such Qualified
IPO, a Qualified Merger, or Public Offering, as applicable.

 

(b)                                 In the Recapitalization, the Unitholders
will receive Common Stock, or the right to receive Common Stock, in exchange
for, or otherwise in satisfaction of, the Units then held by such Unitholders. 
The Common Stock issued (or the right to be issued Common Stock) to the
Unitholders in connection with any Recapitalization shall be allocated to each
Unitholder based on the dollar amount that such Unitholder would be entitled to
receive had an amount equal to the equity value of Holdings (as implied by the
price per share of Common Stock paid by the public in the Public Offering) been
distributed to the Unitholders pursuant to Section 4.1, after taking into
account all prior Distributions (including any proceeds of any Public Offering)
(the “IPO Consideration”).  For the avoidance of doubt, Section 3.7 of the
Securityholders Agreement shall apply to any Recapitalization.

 

(c)                                  Notwithstanding anything to the contrary
herein, the IPO Consideration payable pursuant to Section 7.6(b) in respect of
the Class D Units, the Class E Units, the Class M Units, the Class N Units and
the Class O Units shall be paid to each such Unitholder as follows: (i) each
Class M Unitholder in exchange for, or otherwise in satisfaction of, the Class M
Units held by such Unitholder, (ii) each Class N Unitholder in exchange for, or
otherwise in satisfaction of, the Class N Units held by such Unitholder,
(iii) each Class O Unitholder in exchange for, or otherwise in satisfaction of,
the Class O Units held by such Unitholder, (iv) each Class D Unitholder in
exchange for, or otherwise in satisfaction of, the Class D Units held by such
Unitholder, and (v) each Class E Unitholder in exchange for, or otherwise in
satisfaction of, the Class E Units held by such Unitholder, in each case, shall
receive (x) one-third (1/3) of such Person’s IPO Consideration in the form of
cash or Common Stock, as determined by the Board of Managers in its sole
discretion, and (y) two-thirds (2/3) of such Person’s IPO Consideration in the
form of (or arranging for the grant to such Unitholder of) a restricted stock
award or a restricted stock unit award for Common Stock under an equity
compensation plan then effect, taking into account any applicable requirements
of Code Section 409A.

 

(d)                                 Each Unitholder agrees that any Units not
allocated any Common Stock pursuant to this Section 7.6 shall be forfeited and
cancelled without further consideration effective as of the consummation of the
Recapitalization without the need for any further action by any person; provided
that the holders of any Class E Units or Class MEP Units that are not allocated
any Common Stock pursuant to this Section 7.6 shall be issued options to acquire
shares of Common Stock.  The number of shares of Common Stock and the exercise
price therefore granted pursuant to each such stock option shall substantially
replicate the economic entitlements of the holders of such Units with respect to
such Units

 

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prior to such Recapitalization (as determined by the Board of Managers (or the
Compensation Committee) (in its sole discretion)) (giving effect to any dilution
in connection with the issuance of equity and the establishment of equity
incentive plans in connection with such Recapitalization) and to the extent
applicable, shall be subject to vesting, forfeiture and Transfer restrictions
with respect to such stock options and Common Stock issued pursuant thereto that
applied to the applicable Units.

 

(e)                                  If the Board of Managers with the consent
of the Majority Preferred Stockholders pursuant to Section 6.10 approves a
Qualified IPO or another initial Public Offering, the SFRO Preferred Unitholders
shall have the right at their written election to receive Common Stock, in
exchange for, or otherwise in satisfaction of, the SFRO Preferred Units then
held by such SFRO Preferred Unitholders (the “Conversion”), subject to customary
“lock-up” periods requested by the managing underwriter for such offering.  The
aggregate number of shares of Common Stock issued to the SFRO Preferred
Unitholders in connection with a Conversion and the number of such shares to be
allocated to each SFRO Preferred Unitholder in connection with the Conversion
will be based on the dollar amount that such SFRO Preferred Unitholders would be
entitled to receive had an amount equal to the equity value of Holdings (as
implied by the price per share of Common Stock paid by the public in the Public
Offering) been distributed to the Unitholders pursuant to Section 4.1(a), after
taking into account all prior Distributions (including any proceeds of any
Public Offering).  For the avoidance of doubt, Section 3.7 of the
Securityholders Agreement shall apply to any Conversion.

 

ARTICLE VIII
BOOKS AND RECORDS; FINANCIAL STATEMENTS AND OTHER INFORMATION; TAX MATTERS

 

Section 8.1                                    Books and Records; Management
Interviews.

 

(a)                                 Books and Records.  The Company shall keep
at its principal executive office (i) correct and complete books and records of
account (which, in the case of financial records, shall be kept in accordance
with GAAP), (ii) minutes of the proceedings of meetings of the Members, the
Board of Managers and any committee of the Board of Managers, (iii) a current
list of the Managers, directors and officers of the Company and its Subsidiaries
and their respective residence addresses, and (iv) a record containing the names
and addresses of all Members, the total number and class of Units held by each
Member, and the dates when they respectively became the owners of record
thereof.  Any of the foregoing books, minutes or records may be in written form
or in any other form capable of being converted into written form within a
reasonable time.

 

(b)                                 Inspection of Property.  The Company shall
permit any representative designated by the Vestar Majority Holders, or by any
Member that owns in excess of 1.5% of the aggregate number of the total
Preferred Units and the Class A Units taken together, upon reasonable notice and
during normal business hours and at such other times as such Persons may
reasonably request, for any purpose reasonably related to such Member’s interest
as a member of the Company, to (i) visit and inspect any of the properties of
the Company and its Subsidiaries, (ii) examine any books, minutes and records of
the Company and its Subsidiaries (including business and financial records) and
make copies thereof or extracts therefrom, and (iii) discuss the affairs,
finances and accounts of the Company or any of its Subsidiaries with the
directors, officers, key employees and independent accountants of the Company
and its Subsidiaries, in each case, under such conditions and restrictions
(including a confidentiality undertaking or agreement) as the Board of Managers
may reasonably prescribe.

 

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Section 8.2                                    Financial Statements and Other
Information.

 

(a)                                 The Company shall, and shall cause each of
its Subsidiaries to, deliver to each Preferred Member and each Class A Member,
for so long as such Member (X) holds more than 1.5% of the aggregate number of
the Preferred Units and the Class A Units taken together, the items described in
this clause (a) or (Y) is an active employee of the Company, the items described
in subclauses (i) - (iii) of this clause (a):

 

(i)                                     as soon as available, but in any event
within 30 calendar days after the end of each calendar month in each Fiscal
Year, unaudited statements of income and cash flows of Opco and each of its
Subsidiaries for such monthly period and for the period from the beginning of
the Fiscal Year to the end of such month, and unaudited balance sheets of Opco
and each of its Subsidiaries as of the end of such monthly period, setting
forth, in each case, comparisons to the annual budget for such Fiscal Year and
to the corresponding period in the preceding Fiscal Year, and all such
statements shall be prepared in accordance with GAAP, subject to the absence of
footnote disclosures and to normal year-end adjustments for recurring accruals;

 

(ii)                                  as soon as available, but in any event
within 45 calendar days after each Fiscal Quarter during each Fiscal Year,
unaudited statements of income and cash flows of Opco and each of its
Subsidiaries for such quarterly period and for the period from the beginning of
the Fiscal Year to the end of such Fiscal Quarter, and unaudited balance sheets
of Opco and each of its Subsidiaries as of the end of such quarterly period,
setting forth, in each case, comparisons to the annual budget for such Fiscal
Year and to the corresponding period in the preceding Fiscal Year, and all such
statements shall be prepared in accordance with GAAP, subject to the absence of
footnote disclosures and to normal year-end adjustments for recurring accruals,
and shall be certified by the CEO and the CFO.  In addition, such financial
statements shall be accompanied by a brief written summary prepared by the CEO
and the CFO which summarizes performance highlights, lowlights, variances from
the annual budget for such Fiscal Year and the prior year, and an outlook for
the ensuing period;

 

(iii)                               as soon as available, but in any event
within 90 calendar days after the end of each Fiscal Year, statements of income
and cash flows of Opco and each of its Subsidiaries for such Fiscal Year, and
balance sheets of Opco and each of its Subsidiaries as of the end of such Fiscal
Year, setting forth, in each case, comparisons to the annual budget for such
Fiscal Year and to the preceding Fiscal Year, all prepared in accordance with
GAAP, and accompanied by an opinion, unqualified as to scope or compliance with
GAAP, of a nationally recognized independent accounting firm reasonably
acceptable to the Executive Committee, and certified by the CEO and the CFO;

 

(iv)                              at such time as any draft of the annual
business plan and budget is provided to the Board of Managers for its
consideration, a copy of such draft, and, as soon as practicable before the end
of each Fiscal Year, a copy of the annual budget approved by the Board of
Managers, including projected income statement, cash flow and balance sheet, on
a monthly basis for the ensuing Fiscal Year, together with underlying
assumptions and a brief qualitative description of the Company’s plan by the CEO
and the CFO in support of such budget;

 

(v)                                 promptly, but in any event within 10
calendar days, after the discovery of any default under any material agreement
to which the Company or any of its Subsidiaries is a party, any condition or
event that could reasonably be expected to result in any material liability
under any federal, state or local statute or regulation relating to public
health and

 

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safety, worker health and safety or pollution or protection of the environment
or any other material adverse change, event or circumstance affecting the
Company or any Subsidiary (including the filing of any material litigation
against the Company or any Subsidiary or the existence of any dispute with any
Person that involves any likelihood of such litigation being commenced);

 

(vi)                              promptly upon receipt thereof, any additional
reports, management letters or other detailed information concerning material
aspects of the Company’s or such Subsidiary’s operations or financial affairs
given to the Company or any Subsidiary by its independent accountants (and not
otherwise contained in other materials provided hereunder);

 

(vii)                           within 10 calendar days after generation
thereof, copies of any internal valuation memoranda or analyses;

 

(viii)                        within 10 calendar days after generation thereof,
a copy of the monthly management reporting package delivered to the Board of
Managers;

 

(ix)                              prior to the transmission thereof to the
public, copies of all press releases and other written statements made available
generally by the Company or any of its Subsidiaries to the public concerning
material developments in the Company’s and its Subsidiaries’ businesses; and

 

(x)                                 with reasonable promptness, such other
information and financial data concerning the Company and its Subsidiaries as
any Person entitled to receive information under this Section 8.2(a) may
reasonably request.

 

(b)                                 The Unitholders shall be supplied with all
other Company information necessary to enable each Unitholder to prepare its
federal, state and local income tax returns.

 

(c)                                  All determinations, valuations and other
matters of judgment required to be made for accounting purposes under this
Agreement shall be made in Good Faith by the Board of Managers and shall be
conclusive and binding on all Unitholders, their Successors in Interest and any
other Person, and to the fullest extent permitted by law, no such Person shall
have the right to an accounting or an appraisal of the assets of the Company or
any successor thereto.

 

Section 8.3                                    Fiscal Year; Taxable Year.  Each
of the Fiscal Year and the taxable year of the Company shall end on December 31
of each calendar year; provided that the taxable year of the Company shall end
on a different date if necessary to comply with Section 706 of the Code.

 

Section 8.4                                    Certain Tax Matters.

 

(a)                                 Preparation of Returns.  The Board of
Managers shall cause to be prepared all federal, state and local tax returns of
the Company for each year for which such returns are required to be filed and
shall cause such returns to be timely filed.  Except as other provided herein,
the Board of Managers shall determine the appropriate treatment of each item of
income, gain, loss, deduction and credit of the Company and the accounting
methods and conventions under the tax laws of the United States of America, the
several states and other relevant jurisdictions as to the treatment of any such
item or any other method or procedure related to the preparation of such tax
returns.  Except as specifically provided otherwise in this Agreement, the Board
of Managers may cause the Company to make or refrain from making any and all
elections permitted by such tax laws.

 

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(b)                                 Consistent Treatment.  Each Unitholder
agrees that it shall not, except as otherwise required by applicable law or
regulatory requirements, (i) treat, on its individual income tax returns, any
item of income, gain, loss, deduction or credit relating to its interest in the
Company in a manner inconsistent with the treatment of such item by the Company
as reflected on the Form K-1 or other information statement furnished by the
Company to such Unitholder for use in preparing its income tax returns or
(ii) file any claim for refund relating to any such item based on, or which
would result in, such inconsistent treatment.

 

(c)                                  Duties of the Tax Matters Member.  In
respect of an income tax audit of any tax return of the Company, the filing of
any amended return or claim for refund in connection with any item of income,
gain, loss, deduction or credit reflected on any tax return of the Company, or
any administrative or judicial proceedings arising out of or in connection with
any such audit, amended return, claim for refund or denial of such claim,
(A) the Board of Managers shall direct the Tax Matters Member to act for, and
such action shall be final and binding upon, the Company and all Unitholders,
except to the extent a Unitholder shall properly elect to be excluded from such
proceeding pursuant to the Code, (B) all expenses incurred by the Tax Matters
Member in connection therewith (including attorneys’, accountants’ and other
experts’ fees and disbursements) shall be expenses of, and payable by, the
Company, (C) no Unitholder other than the Tax Matters Member shall have the
right to (1) participate in the audit of any Company tax return, (2) file any
amended return or claim for refund in connection with any item of income, gain,
loss, deduction or credit (other than items which are not partnership items
within the meaning of Section 6231(a)(4) of the Code or which cease to be
partnership items under Section 6231(b)) of the Code reflected on any tax return
of the Company, (3) participate in any administrative or judicial proceedings
conducted by the Company or the Tax Matters Member arising out of or in
connection with any such audit, amended return, claim for refund or denial of
such claim, or (4) appeal, challenge or otherwise protest any adverse findings
in any such audit conducted by the Company or the Tax Matters Member or with
respect to any such amended return or claim for refund filed by the Company or
the Tax Matters Member or in any such administrative or judicial proceedings
conducted by the Company or the Tax Matters Member and (D) the Tax Matters
Member shall keep the Unitholders reasonably apprised of the status of any such
proceeding.  Notwithstanding the previous sentence, if a petition for a
readjustment to any partnership item included in a final partnership
administrative adjustment is filed with a District Court or the Court of Claims
and the IRS has elected to assess income tax against a Member with respect to
that final partnership administrative adjustment (rather than suspending
assessments until the District Court or Court of Claims proceedings become
final), such Member shall be permitted to file a claim for refund within such
period of time as to avoid application of any statute of limitations that would
otherwise prevent the Member from having any claim based on the final outcome of
that review.

 

(d)                                 Tax Matters Member.  The Company and each
Member hereby designate Vestar V as the initial “tax matters partner” for
purposes of Section 6231(a)(7) of the Code (the “Tax Matters Member”).  The
Board of Managers may remove or replace the Tax Matters Member at any time and
from time to time.

 

(e)                                  Certain Filings.  Upon the Transfer of an
interest in the Company (within the meaning of the Code), a sale of Company
assets or a liquidation of the Company, the Unitholders shall provide the Board
of Managers with information and shall make tax filings as reasonably requested
by the Board of Managers and required under applicable law.

 

(f)                                   Prior to July 3, 2022, without the consent
of the SFRO Preferred Unitholders, the Company shall not distribute the SFRO
Holdings Stock to a Unitholder other than an SFRO Preferred Unitholder to the
extent such distribution would cause the SFRO Preferred Unitholders to recognize
gain pursuant to Section 704(c)(1)(B) of the Code.

 

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ARTICLE IX
MISCELLANEOUS

 

Section 9.1                                    Schedules.  Without in any way
limiting the provisions of Section 8.2, a Manager may from time to time execute
on behalf of the Company and deliver to the Unitholders schedules that set forth
the then current Capital Account balances of each Unitholder and any other
matters deemed appropriate by the Board of Managers or required by applicable
law.  Such schedules shall be for information purposes only and shall not be
deemed to be part of this Agreement for any purpose whatsoever.

 

Section 9.2                                    Governing Law.  THIS AGREEMENT IS
GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE
GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER
JURISDICTION.  In the event of a direct conflict between the provisions of this
Agreement and any provision of the Certificate or any mandatory provision of the
Act, the applicable provision of the Certificate or the Act shall control.

 

Section 9.3                                    Successors and Assigns.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective Successors in Interest; provided that no Person
claiming by, through or under a Member (whether as such Member’s Successor in
Interest or otherwise), as distinct from such Member itself, shall have any
rights as, or in respect to, a Member (including the right to approve or vote on
any matter or to notice thereof).

 

Section 9.4                                    Confidentiality.  By executing
this Agreement, each Member expressly agrees to maintain, for so long as such
Person is a Member and at all times thereafter, the confidentiality of, and not
to disclose to any Person other than the Company, another Member or a Person
designated by the Company or any of their respective financial planners,
accountants, attorneys or other advisors, any information relating to the
business, financial structure, financial position or financial results, clients
or affairs of the Company, or any Subsidiary of the Company that shall not be
generally known to the public, except as otherwise required by applicable law or
by any regulatory or self-regulatory organization having jurisdiction and except
in the case of any Member who is employed by any entity controlled by the
Company in the ordinary course of its duties; provided, however, that to the
extent consistent with applicable law, a Member may provide its customary
reports to its stockholders, limited partners, members or other owners, as the
case may be, regarding its investment in the Company.  Notwithstanding the
provisions of this Section 9.4 to the contrary, in the event that any Member
desires to undertake any Transfer of its Membership Interest permitted by the
Securityholders Agreement, such Member may, upon the execution of a
confidentiality agreement (in form reasonably acceptable to the Company’s legal
counsel) by the Company and any bona fide potential Transferee, disclose to such
potential Transferee (unless such potential Transferee is a direct competitor of
the Company or its Affiliates) information of the sort otherwise restricted by
this Section 9.4 if such Member reasonably believes such disclosure is necessary
for the purpose of Transferring such Membership Interest to the bona fide
potential Transferee.

 

Section 9.5                                    Amendments.  Subject to
Section 2.1 and 2.3 of the Securityholders Agreement, the Board of Managers may,
to the fullest extent allowable under Delaware law, amend or modify this
Agreement; provided that if an amendment or modification (i) changes the order
of priority of distributions to any class of Units relative to any other class
of then outstanding Units, then such class of Members, by majority vote, must
approve such amendment or modification or (ii) changes the rights of the holders
of the same class of Units to share ratably in distributions of such class, then
the Members so differently treated must approve such amendment or modification,
provided further that no amendment may be made to this Agreement that is
inconsistent with the Securityholders Agreement (including the approval rights
and distribution priority of the Majority Preferred Stockholders thereunder or
that would otherwise derogate the Convertible Preferred Stockholders rights and
privileges under the Securityholders Agreement or the Certificate of
Designations) without the approval of the Majority Preferred Stockholders, and
provided further that no amendment shall be effective without the consent of
each Member that

 

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would be adversely affected by such amendment if such amendment (a) modifies the
limited liability of a Member, or (b) amends this Section 9.5.  For the
avoidance of doubt the Board of Managers may amend this Agreement without the
consent of any class of Members in order to provide for the creation and/or
issuance of, any other class of units or other securities (whether of an
existing or new class) that was issued in accordance with the Securityholders
Agreement and approved in accordance with this Agreement, including Section 6.10
hereof, and to make any such other amendments as it deems necessary or desirable
to reflect such additional issuances and to add parties to this Agreement as
contemplated by this Agreement.

 

Section 9.6                                    Notices.  Whenever notice is
required or permitted by this Agreement to be given, such notice shall be in
writing and shall be given to any Member at such Member’s address or facsimile
number shown in the Company’s books and records, or, if given to the Company, at
the following address:

 

21st Century Oncology Investments, LLC

c/o Vestar Capital Partners V, L.P.

245 Park Avenue

41st Floor

New York, NY 10167

Attention: James L. Elrod, Robert Rosner and General Counsel

Facsimile: (212) 808-4922

 

and

 

21st Century Oncology, Inc.

2234 Colonial Boulevard

Fort Myers, FL 33907

Attention: Dr. Dosoretz

Facsimile: (239) 931-7380

 

with a copy (which shall not constitute notice to the Company) to:

 

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention: Michael Movsovich, P.C. and Constantine Skarvelis, Esq.

Facsimile: (212) 446-6460

 

Each proper notice shall be effective upon any of the following: (a) personal
delivery to the recipient, (b) when sent by facsimile to the recipient (with
confirmation of receipt), (c) one Business Day after being sent to the recipient
by reputable overnight courier service (charges prepaid) or (d) three Business
Days after being deposited in the mails (first class or airmail postage
prepaid).

 

Section 9.7                                    Counterparts.  This Agreement may
be executed simultaneously in two or more separate counterparts, any one of
which need not contain the signatures of more than one party, but each of which
shall be an original and all of which together shall constitute one and the same
agreement binding on all the parties hereto.

 

Section 9.8                                    Power of Attorney.  Each Member
hereby irrevocably appoints each Manager as such Member’s true and lawful
representative and attorney-in-fact, each acting alone, in such Member’s name,
place and stead, (a) to make, execute, sign and file all instruments, documents
and certificates which, from time to time, may be required to set forth any
amendment to this Agreement or which may be required by this Agreement or by the
laws of the United States of America, the State of Delaware or any other state
in which the Company shall determine

 

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to do business, or any political subdivision or agency thereof and (b) to
execute, implement and continue the valid and subsisting existence of the
Company or to qualify and continue the Company as a foreign limited liability
company in all jurisdictions in which the Company may conduct business.  No
Manager, as representative and attorney-in-fact, however, shall have any rights,
powers or authority to amend or modify this Agreement when acting in such
capacity, except as expressly provided herein.  Such power of attorney is
coupled with an interest and shall survive and continue in full force and effect
notwithstanding the subsequent withdrawal from the Company of any Member for any
reason and shall survive and shall not be affected by the disability or
incapacity of such Member.

 

Section 9.9                                    Entire Agreement.  This
Agreement, and the other documents and agreements referred to herein or entered
into concurrently herewith embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein; provided that
such other agreements and documents shall not be deemed to be a part of, a
modification of or an amendment to this Agreement.  There are no restrictions,
promises, representations, warranties, covenants or undertakings, other than
those expressly set forth or referred to herein.  This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.  Notwithstanding any other provision in this Agreement, wherever
a conflict exists between this Agreement and the Securityholders Agreement, the
provisions of the Securityholders Agreement shall control, but solely to the
extent of such conflict.  For the avoidance of doubt, the Preferred Unitholders
acknowledge and agree that, effective as of the effectiveness of this Agreement,
the Unpaid Preferred Return (as defined in the Prior Agreement) is $0.

 

Section 9.10                             Arbitration.

 

(a)                                 Any dispute with regard to this Agreement
that is not resolved by mutual agreement, other than as provided in
Section 9.10(b), shall be resolved by binding arbitration before the American
Arbitration Association (“AAA”) in New York City pursuant to the rules of AAA. 
The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.
§§1-16 and shall be conducted in accordance with the rules and procedures of
AAA.  Any judgment upon the reward rendered by the arbitrator may be entered in
any court having jurisdiction thereof.  The arbitrator’s decision shall set
forth a reasoned basis for any award of damages or findings of liability.  The
arbitrator shall not have the power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive
damages, and each party hereby irrevocably waives any claim to such damages. 
The costs of AAA and the arbitrator shall be borne by the Company.  Each party
shall bear its own costs (including, without limitation, legal fees and fees of
any experts) and out-of-pocket expenses.

 

(b)                                 The parties hereby agree and stipulate that
in the event of any breach or violation of this Agreement by any other party
hereto, either threatened or actual, the non-breaching parties’ rights shall
include, in addition to any and all other rights available to any such
non-breaching party at law or in equity, the right to seek and obtain any and
all injunctive relief or restraining orders available to it in courts of proper
jurisdiction, so as to prohibit, bar, and restrain any and all such breaches or
violations by any other party hereto.  Each of the parties hereto further agrees
that no bond need be filed in connection with any request by any other party
hereto for a temporary restraining order or for temporary or preliminary
injunctive relief.

 

Section 9.11                             Waiver of Jury Trial.  EACH PARTY TO
THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (A) ARISING
UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL
TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.

 

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Section 9.12                             Severability.  Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

 

Section 9.13                             Securityholders Agreement. In case of
any inconsistency between the terms of this Agreement and the Securityholders
Agreement, the terms of the Securityholders Agreement shall govern.

 

Section 9.14                             Creditors and Third Party
Beneficiaries.  None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Company or any of its
Affiliates, and no creditor who makes a loan to the Company or any of its
Affiliates may have or acquire (except pursuant to the terms of a separate
agreement executed by the Company in favor of such creditor) at any time as a
result of making the loan any direct or indirect interest in Company profits,
losses, distributions, capital or property other than as a secured creditor. The
Majority Preferred Stock Holders are express third party beneficiaries of this
Agreement.

 

Section 9.15                             Waiver.  No failure by any party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute a waiver of any such breach or any other covenant,
duty, agreement or condition.

 

Section 9.16                             Further Action.  The parties agree to
execute and deliver all documents, provide all information and take or refrain
from taking such actions as may be necessary or appropriate to achieve the
purposes of this Agreement.

 

Section 9.17                             Delivery by Facsimile or Email.  This
Agreement, the agreements referred to herein, and each other agreement or
instrument entered into in connection herewith or therewith or contemplated
hereby or thereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine or email with scan or facsimile
attachment, shall be treated in all manner and respects as an original agreement
or instrument and shall be considered to have the same binding legal effect as
if it were the original signed version thereof delivered in person.  At the
request of any party hereto or to any such agreement or instrument, each other
party hereto or thereto shall re-execute original forms thereof and deliver them
to all other parties.  No party hereto or to any such agreement or instrument
shall raise the use of a facsimile machine or email to deliver a signature or
the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine or email as a defense to the
formation or enforceability of a contract, and each such party forever waives
any such defense.

 

Section 9.18                             30% Rule Compliance.

 

(a)                                 Notwithstanding any other provision of this
Agreement, no CPPIB Entity (each, an “Applicable Entity”) will be required or
permitted to make any investment in any Group Entity that would be reasonably
expected to cause any such Applicable Entity to be in breach of or to contravene
the 30% Rule (as supported by the written opinion of external legal counsel to
such Applicable Entity at its own cost).

 

(b)                                 The Group Entities and the Members will
co-operate with the relevant Applicable Entities (to the extent commercially
reasonable and provided that one or more of the Applicable Entities agree to
reimburse the Members for all reasonable out-of-pocket costs or expenses
incurred by them, if any, in respect of any such cooperation, excluding the cost
of acquiring any securities) to assist the Applicable Entities to comply with
the 30% Rule in relation to their investment in any Group Entity. In furtherance
of the foregoing, prior to the completion of any initial Public Offering, each
Member agrees to take any action

 

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or step reasonably requested by any Applicable Entity, including, without
limitation, a change in the authorized capital of a Group Entity, that is
necessary to avoid any breach or potential breach of the 30% Rule, or any
amendment or replacement of that rule, including, without limitation, any breach
or potential breach arising in connection with the potential exercise of any
rights of first refusal or first offer, any pre-emptive rights, any right or
obligation to transfer or exchange securities (including in connection with but
prior to the completion of any Public Offering (including a Qualified IPO), the
issuance of Equity Securities in any merger or other business combination
(including a Qualified Merger), or any option, warrant or other right or
obligation to purchase or acquire securities (including upon conversion of the
Convertible Preferred Stock), in each case existing or arising under this
Agreement or otherwise in relation to any Group Entity. Notwithstanding anything
contained in this Section 9.18, no Member shall be required to take any action
or step that has, or would reasonably be likely to have, a material adverse
effect on such Member, or that would reduce its ownership percentage in the
Company.

 

(c)                                  The Group Entities agree that they will
co-operate with any Applicable Entity (including, for greater certainty,
following the completion of an initial Public Offering by Holdings (including a
Qualified IPO)) and use reasonable efforts to provide such information or
certifications as may reasonably be required by the Applicable Entities in the
event the Applicable Entities make an application to the Ontario Securities
Commission for a discretionary order providing a prospectus exemption from
applicable Canadian securities laws to facilitate the resale of Registrable
Securities (as defined in the Securityholders Agreement) or any securities
issued in any merger or other business combination involving Holdings (including
a Qualified Merger).

 

[END OF PAGE]

 

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IN WITNESS WHEREOF, the undersigned have executed this Eighth Amended and
Restated Limited Liability Company Agreement as of the date first written above.

 

 

 

21st Century Oncology Investments, LLC

 

 

 

 

 

By:

/s/ James L. Elrod, Jr.

 

Name:

James L. Elrod, Jr.

 

Title:

President

 

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