<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1998
Commission File Number 333-57191
EVEREST HEALTHCARE SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-4045521
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
AMARILLO ACUTE DIALYSIS SPECIALISTS, L.L.C.
(Exact name of registrant as specified in its charter)
Texas 75-2600337
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
CON-MED SUPPLY COMPANY, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-3147024
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
CONTINENTAL HEALTH CARE, LTD.
(Exact name of registrant as specified in its charter)
Illinois 36-3084746
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
DIALYSIS SPECIALISTS OF CORPUS CHRISTI, L.L.C.
(Exact name of registrant as specified in its charter)
Texas 74-2749663
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
DIALYSIS SPECIALISTS OF SOUTH TEXAS, L.L.C.
(Exact name of registrant as specified in its charter)
Texas 74-2749689
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
<PAGE>
DUPAGE DIALYSIS LTD.
(Exact name of registrant as specified in its charter)
Illinois 36-3029873
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
EVEREST MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HEMO DIALYSIS OF AMARILLO L.L.C.
(Exact name of registrant as specified in its charter)
Texas 75-2592110
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HOME DIALYSIS OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Arizona 86-0711476
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
HOME DIALYSIS OF DAYTON, INC.
(Exact name of registrant as specified in its charter)
Ohio 31-1423002
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
LAKE AVENUE DIALYSIS CENTER, INC.
(Exact name of registrant as specified in its charter)
Indiana 36-3490713
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
MERCY DIALYSIS CENTER, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1589773
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
<PAGE>
NEW YORK DIALYSIS MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
New York 36-3702390
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
NORTH BUCKNER DIALYSIS CENTER, INC.
(Exact name of registrant as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
NORTHWEST INDIANA DIALYSIS, INC.
(Exact name of registrant as specified in its charter)
Indiana 36-3372131
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
OHIO VALLEY DIALYSIS CENTER, INC.
(Exact name of registrant as specified in its charter)
Indiana 36-3575844
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
WSKC DIALYSIS SERVICES, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-2668594
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
EVEREST NEW YORK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
New York Applied for
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
EVEREST ONE IPA, INC.
(Exact name of registrant as specified in its charter)
New York 13-3988854
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
EVEREST TWO IPA, INC.
(Exact name of registrant as specified in its charter)
New York Applied for
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
<PAGE>
EVEREST THREE IPA, INC.
(Exact name of registrant as specified in its charter)
New York Applied for
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ACUTE EXTRACORPOREAL SERVICES, L.L.C.
(Exact name of registrant as specified in its charter)
Delaware Applied for
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 North Scoville, Oak Park, Illinois 60302
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (708) 386-1000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
As of February 16, 1999, the number of shares outstanding of the Common Stock
of Everest Healthcare Services Corporation, par value $.001 per share, was
12,884,720.
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<PAGE>
PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheet
September 30, 1998 and December 31, 1998 (unaudited)............. 2
Condensed Consolidated Income Statement--(unaudited)
For the three months ended December 31, 1997 and 1998............ 3
Condensed Consolidated Statement of Cash Flow--(unaudited)
For the three months ended December 31, 1997 and 1998............ 4
Notes to the Condensed Consolidated Financial Statements............ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk.... 15
PART II--OTHER INFORMATION
Item 1. Legal Proceedings............................................. 15
Item 2. Changes in Securities and Use of Proceeds..................... 15
Item 6. Exhibits and Reports on Form 8-K.............................. 16
Note: Items 3, 4 and 5 of Part II are omitted because they are not
applicable.
</TABLE>
1
<PAGE>
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PART I--FINANCIAL INFORMATION
- - - - - - - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
EVEREST HEALTHCARE SERVICES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September December 31,
30, 1998 1998
------------ ------------
(unaudited)
ASSETS
- - - - - - - - - - - - - - - - - - - - - - ------
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 12,525,567 $ 9,514,424
Patient accounts receivable, less allowance of
$6,481,000 and $6,818,000 41,473,765 41,843,104
Other current assets............................... 12,072,099 13,357,627
------------ ------------
Total current assets............................. 66,071,431 64,715,154
Other assets:
Goodwill, net...................................... 58,815,302 58,334,770
Intangible assets, net............................. 26,446,720 25,990,273
Amounts due from affiliates........................ 16,643,738 14,772,774
Other.............................................. 2,983,319 2,643,816
------------ ------------
Total other assets............................... 104,889,079 101,741,633
Property and equipment, net.......................... 27,734,949 28,064,306
------------ ------------
Total assets..................................... $198,695,459 $194,521,093
============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
- - - - - - - - - - - - - - - - - - - - - - ------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable................................... $ 8,845,097 $ 7,953,103
Accrued liabilities................................ 19,148,881 15,438,883
Current portion of long-term debt.................. 606,624 637,733
Current portion of capital lease obligations....... 506,058 544,515
------------ ------------
Total current liabilities........................ 29,106,660 24,574,234
Long-term debt, less current portion ................ 108,146,981 108,020,939
Capital lease obligations, less current portion...... 311,408 162,722
Deferred income taxes................................ 1,500,000 1,513,104
Minority interests................................... 1,374,764 1,504,180
Stockholders' equity:
Common stock, $.001 par value, 20,000,000 shares
authorized; 12,884,720 shares issued and
outstanding....................................... 12,885 12,885
Additional paid-in capital......................... 55,171,224 55,171,224
Retained earnings.................................. 3,071,537 3,561,805
------------ ------------
Total stockholders' equity....................... 58,255,646 58,745,914
------------ ------------
Total liabilities and stockholders' equity....... $198,695,459 $194,521,093
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
EVEREST HEALTHCARE SERVICES CORPORATION
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
Three months ended
December 31,
------------------------
1997 1998
----------- -----------
<S> <C> <C>
Net revenues.......................................... $33,605,270 $39,868,685
Operating expenses:
Patient care costs.................................. 20,179,338 24,909,891
General and administrative.......................... 6,905,540 8,163,797
Provision for bad debts............................. 1,151,447 837,487
Depreciation and amortization....................... 1,392,274 2,356,217
----------- -----------
Total operating expenses.......................... 29,628,599 36,267,392
----------- -----------
Income from operations................................ 3,976,671 3,601,293
Nonoperating income (expense):
Interest expense.................................... (1,157,760) (2,958,944)
Interest income..................................... 409,442 534,543
Equity in earnings of unconsolidated subsidiaries... -- 126,660
Minority interests in earnings...................... (629,599) (300,016)
Other............................................... -- 39,588
----------- -----------
(1,377,917) (2,558,169)
----------- -----------
Income before income taxes............................ 2,598,754 1,043,124
Income taxes.......................................... 1,450,000 552,856
----------- -----------
Net income............................................ $ 1,148,754 $ 490,268
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
EVEREST HEALTHCARE SERVICES CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
December 31,
--------------------------
1997 1998
------------ ------------
<S> <C> <C>
Operating activities
Net income........................................ $ 1,148,754 $ 490,268
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for bad debts......................... 1,151,447 837,487
Depreciation and amortization................... 1,392,274 2,356,217
Equity in earnings of unconsolidated
subsidiaries................................... -- (126,660)
Minority interests in earnings.................. 629,599 300,016
Changes in operating assets and liabilities (net
of effect of acquisitions):
Patient and other accounts receivable......... (708,330) (1,212,759)
Other assets.................................. 1,323,610 (677,184)
Accounts payable, accruals, and other
liabilities.................................. 1,658,856 (4,601,993)
------------ ------------
Net cash provided by (used in) operating
activities................................. 6,596,210 (2,634,608)
Investing activities
Additions to property and equipment............... (2,331,000) (1,589,300)
(Increase) decrease in amounts due from
affiliates....................................... (2,130,608) 1,870,964
------------ ------------
Net cash provided by (used in) investing
activities................................. (4,461,608) 281,664
Financing activities
Proceeds from long-term debt...................... 15,250,000 20,550,000
Payments on long-term debt........................ (16,360,080) (20,698,933)
Payments on capital lease obligations............. (570,747) (186,266)
Distributions to members.......................... (600,000) (323,000)
------------ ------------
Net cash used in financing activities....... (2,280,827) (658,199)
Decrease in cash and cash equivalents............. (146,225) (3,011,143)
Cash and cash equivalents at beginning of period.. 2,456,669 12,525,567
------------ ------------
Cash and cash equivalents at end of period........ $ 2,310,444 $ 9,514,424
============ ============
Supplemental cash flow disclosures:
Income taxes paid................................. $ 349,700 $ 1,117,275
Interest paid..................................... 984,254 5,287,049
Distributions of notes receivable to members...... 7,208,831 --
Issuance of common stock to acquire minority
interests........................................ 26,610,000 --
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
EVEREST HEALTHCARE SERVICES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Reorganization
Effective November 30, 1997, Peak Healthcare, L.L.C. (Peak), the predecessor
to the Company, was reorganized whereby the following transactions occurred
simultaneously. The members of Peak contributed all of their interests in Peak
for an equal number of membership interests in Peak Liquidating, L.L.C. (Peak
Liquidating), a newly formed limited liability company. The operating agreement
and number and classes of interests of Peak Liquidating were identical to Peak.
Upon the exchange, Peak Liquidating, the sole member of Peak, contributed its
interests in Peak for shares of common stock of Everest Healthcare II, Inc.
(Everest II), a newly-formed subchapter C Corporation. The number of shares of
common stock of Everest II received by Peak Liquidating was equal to the number
of shares of Everest held by Peak. The number and class of authorized shares of
Everest II upon formation was identical to that of Everest. Following the
exchange, Peak was liquidated. Upon the consummation of these transactions,
Everest II issued shares of common stock, representing approximately 30% of the
shares of the Company, to the minority interest holders in Everest in exchange
for their shares of Everest common stock. The acquisition of minority interest
was treated as a purchase in accordance with generally accepted accounting
principles and goodwill of approximately $12.4 million was recognized. Upon the
consummation of these transactions, Everest became a wholly owned subsidiary of
Everest II. In March 1998, Everest was merged into Everest II. Upon the merger,
Everest II (the surviving entity) changed its name to Everest Healthcare
Services Corporation.
All references to the Company or Everest refer collectively to Peak and its
subsidiaries prior to the reorganization, and Everest Healthcare Services
Corporation and its subsidiaries subsequent to the reorganization.
2. Interim Financial Statements
The financial information at December 31, 1998 and for the three months ended
December 31, 1997 and 1998 is unaudited but includes all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of the financial position at such date and
the results of operations and cash flows for those periods. Results of
operations for the three months ended December 31, 1998 are not necessarily
indicative of the results that may be expected for the entire year. It is
suggested that these financial statements be read in conjunction with the
consolidated financial statements and the related notes thereto included in the
Company's Form 10-K as filed with the Securities and Exchange Commission on
December 29, 1998.
3. New Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" (SFAS 131). The provisions of SFAS 131
establish standards for the way companies report information about operating
segments in annual financial statements and require that such companies report
selected information about operating segments in interim financial reports
issued to shareholders. The provisions of SFAS 131 require the disclosure of
segment information be based on a "management approach" whereby disclosures are
made of information that is available and evaluated regularly by the chief
decision makers of the Company in deciding how to allocate resources and
assessing performance. Application of the provisions of SFAS 131 will be
required for fiscal year 1999. The Company operates in two business segments;
as a provider of chronic dialysis services and as a contract service provider
of extracorporeal services including perfusion, apheresis, and autotransfusion.
The Company believes that the adoption of SFAS 131 will not have a material
impact on its future disclosure requirements.
5
<PAGE>
In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132 (SFAS 132), "Employers' Disclosures
about Pensions and Other Postretirement Benefits." SFAS 132 revises the
previous disclosure requirements of pension and postretirement plans. The
Statement does not change the recognition or measurement of pension plans. The
Company is evaluating the disclosure requirements of SFAS 132 and believes that
its adoption will not have a material impact on its future disclosure
requirements.
4. Other Financial Information
The Company is a holding company with no independent assets or operations.
Therefore, the Company relies primarily upon payment from its subsidiaries for
the funds necessary to meet its obligations, including the payment of interest.
The ability of the subsidiaries to fund the obligations is subject to
significant restrictions, will be dependent upon the earnings of the
subsidiaries, and will be subject to applicable laws and approval by the
subsidiaries. Full separate statements of the Guarantor Subsidiaries have not
been presented as the guarantors are wholly owned subsidiaries of the Company.
Management does not believe that inclusion of such financial statements would
be material to investors. The guarantees of the Guarantor Subsidiaries are
full, unconditional, and joint and several.
6
<PAGE>
The following table sets forth the financial data at December 31, 1998 and
for the three months then ended:
<TABLE>
<CAPTION>
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenue............ $ -- $ 31,795,016 $ 8,073,669 $ -- $ 39,868,685
Patient care costs..... -- 19,418,842 5,491,049 -- 24,909,891
General and
Administrative
expenses.............. 4,770,728 2,419,943 973,126 -- 8,163,797
Provision for bad
debts................. -- 746,195 91,292 -- 837,487
Depreciation and
amortization.......... 458,442 1,575,267 322,508 -- 2,356,217
------------ ------------ ----------- ------------ ------------
Income (loss) from
operations............ (5,229,170) 7,634,769 1,195,694 -- 3,601,293
Interest expense, net.. 2,099,040 28,158 297,203 -- 2,424,401
Equity in earnings of
unconsolidated
subsidiaries.......... -- (126,660) -- -- (126,660)
Minority interest
expense............... -- 277,172 22,844 -- 300,016
Other.................. -- (39,588) -- -- (39,588)
------------ ------------ ----------- ------------ ------------
Income (loss) before
income taxes expense.. (7,328,210) 7,495,687 875,647 -- 1,043,124
Income tax expense..... -- 452,986 99,870 -- 552,856
------------ ------------ ----------- ------------ ------------
Net income (loss)...... $ (7,328,210) $ 7,042,701 $ 775,777 $ -- $ 490,268
============ ============ =========== ============ ============
Balance Sheet Data:
Assets:
Cash and cash
equivalents........... $ 8,413,678 $ 915,973 $ 184,773 $ -- $ 9,514,424
Patient accounts
receivable and other.. 33,740 38,583,590 7,872,628 (1,669,706) 44,820,252
Other current assets... 5,176,047 4,071,385 1,133,047 -- 10,380,479
Property and Equipment,
net................... 8,509,448 16,567,792 2,987,065 -- 28,064,305
Goodwill, net.......... 13,010,739 31,257,619 14,066,412 -- 58,334,770
Amounts due from
affiliates............ 45,960,922 (31,523,907) 335,759 -- 14,772,774
Investment in
affiliates............ 40,643,536 7,171,201 -- (46,100,367) 1,714,370
Other assets........... 7,229,129 18,106,510 1,999,849 (415,769) 26,919,719
------------ ------------ ----------- ------------ ------------
Total assets........... $128,977,239 $ 85,150,163 $28,579,533 $(48,185,842) $194,521,093
============ ============ =========== ============ ============
Liabilities and
Stockholders' Equity:
Current liabilities.... $ 5,736,946 $ 10,393,533 $10,113,461 $ (1,669,706) $ 24,574,234
Long-term liabilities.. 100,139,378 3,358,990 8,118,346 (415,769) 111,200,945
Total stockholders'
equity................ 23,100,915 71,397,640 10,347,726 (46,100,367) 58,745,914
------------ ------------ ----------- ------------ ------------
Total liabilities and
stockholders' equity.. $128,977,239 $ 85,150,163 $28,579,533 $(48,185,842) $194,521,093
============ ============ =========== ============ ============
Statement of Cash Flows
Data:
Operating activities:
Net income (loss)...... $ (7,328,210) $ 7,042,701 $ 775,777 $ -- $ 490,268
Adjustments to
reconcile net income
(loss) to net cash
provided by (used in)
operating activities:
Provision for bad
debts................ -- 746,195 91,292 -- 837,487
Depreciation and
amortization......... 458,442 1,575,267 322,508 -- 2,356,217
Equity in earnings of
unconsolidated
subsidiaries......... -- (126,660) -- -- (126,660)
Minority interest in
earnings............. -- 277,172 22,844 -- 300,016
Other................. -- -- -- -- --
Net change in
operating assets and
liabilities (net of
effect of
acquisitions)........ (844,509) (11,080,784) 5,433,357 -- (6,491,936)
------------ ------------ ----------- ------------ ------------
Net cash provided by
(used in) operating
activities........... (7,714,277) (1,566,109) 6,645,778 -- (2,634,608)
Investing Activities:
Additions to property
and equipment........ (274,775) (827,355) (487,170) -- (1,589,300)
Increase in amounts
due from affiliates.. (8,561,942) 10,768,665 (335,759) -- 1,870,964
------------ ------------ ----------- ------------ ------------
Net cash provided by
(used in) investing
activities........... (8,836,717) 9,941,310 (822,929) -- 281,664
Financing Activities:
Proceeds from notes
payable.............. 20,550,000 -- -- -- 20,550,000
Payments on notes
payable.............. (20,550,000) (335,199) -- -- (20,885,199)
Other................. -- -- (323,000) -- (323,000)
------------ ------------ ----------- ------------ ------------
Net cash provided by
(used in) financing
activities........... -- (335,199) (323,000) -- (658,199)
Increase (decrease) in
cash and cash
equivalents............ (16,550,994) 8,040,002 5,499,849 -- (3,011,143)
Cash and cash
equivalents at
beginning of period.... 816,398 10,385,316 1,323,853 -- 12,525,567
------------ ------------ ----------- ------------ ------------
Cash and cash
equivalents at end of
period................. $(15,734,596) $ 18,425,318 $ 6,823,702 $ -- $ 9,514,424
============ ============ =========== ============ ============
</TABLE>
7
<PAGE>
The following table sets forth the financial data at December 31, 1997 and
for the three months then ended:
<TABLE>
<CAPTION>
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenue............ $ -- $27,322,086 $6,283,184 $-- $ 33,605,270
Patient care costs..... -- 15,856,986 4,322,352 -- 20,179,338
General and
administrative
expenses.............. 4,288,897 1,689,814 926,829 -- 6,905,540
Provision for bad
debts................. -- 1,092,884 58,563 -- 1,151,447
Depreciation and
amortization.......... 161,743 978,107 252,424 -- 1,392,274
------------ ----------- ---------- ---- ------------
Income (loss) from
operations............ (4,450,640) 7,704,295 723,016 -- 3,976,671
Interest expense, net.. 333,498 82,986 331,834 -- 748,318
Equity in earnings of
unconsolidated
subsidiaries.......... -- -- -- -- --
Minority interest
expense............... -- 569,127 60,472 -- 629,599
Other.................. -- -- -- -- --
------------ ----------- ---------- ---- ------------
Income (loss) before
income taxes expense.. (4,784,138) 7,052,182 330,710 -- 2,598,754
Income tax expense..... -- 1,450,000 -- -- 1,450,000
------------ ----------- ---------- ---- ------------
Net income (loss)...... $ (4,784,138) $ 5,602,182 $ 330,710 $-- $ 1,148,754
============ =========== ========== ==== ============
Statement of Cash Flows
Data:
Operating activities:
Net income (loss)...... $ (4,784,138) $ 5,602,182 $ 330,710 $-- $ 1,148,754
Adjustments to
reconcile net income
(loss) to net cash
provided by (used in)
operating activities:
Provision for bad
debts................ -- 1,092,884 58,563 -- 1,151,447
Depreciation and
amortization......... 161,743 978,107 252,424 -- 1,392,274
Equity in earnings of
unconsolidated
subsidiaries......... -- -- -- -- --
Minority interest in
earnings............. -- 569,127 60,472 -- 629,599
Other................. -- -- -- -- --
Net change in
operating assets and
liabilities (net of
effect of
acquisitions)........ 9,665,792 (8,860,685) 1,469,029 -- 2,274,136
------------ ----------- ---------- ---- ------------
Net cash provided by
(used in) operating
activities........... 5,043,397 (618,385) 2,171,198 -- 6,596,210
Investing Activities:
Additions to property
and equipment........ (284,745) (1,639,139) (407,116) -- (2,331,000)
Acquisition of
businesses, net of
cash acquired........ -- -- -- -- --
Increase in amounts
due from affiliates.. (20,767,106) 18,636,498 -- -- (2,130,608)
------------ ----------- ---------- ---- ------------
Net cash provided by
(used in) investing
activities........... (21,051,851) 16,997,359 (407,116) -- (4,461,608)
Financing Activities:
Proceeds from notes
payable.............. 15,250,000 -- -- -- 15,250,000
Payments on notes
payable.............. (15,900,000) (1,030,827) -- -- (16,930,827)
Other................. (600,000) -- -- -- (600,000)
------------ ----------- ---------- ---- ------------
Net cash used in
financing
activities........... (1,250,000) (1,030,827) -- -- (2,280,827)
Increase (decrease) in
cash and cash
equivalents............ (17,258,454) 15,348,147 1,764,082 -- (146,225)
Cash and cash
equivalents at
beginning of period.... 816,398 316,418 1,323,853 -- 2,456,669
------------ ----------- ---------- ---- ------------
Cash and cash
equivalents at end of
period................. $(16,442,056) $15,664,565 $3,087,935 $-- $ 2,310,444
============ =========== ========== ==== ============
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the financial condition and results
of operations of the Company should be read in conjunction with the more
detailed information contained in the Consolidated Financial Statements and
notes thereto appearing elsewhere in this Report and in the Company's Report on
Form 10-K for the fiscal year ended September 30, 1998.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains certain "forward-looking statements" with respect to
results of operations and businesses of the Company. All statements other than
statements of historical facts included in this Report, including those
regarding market trends, the Company's financial position, business strategy,
projected costs, and plans and objectives of management for future operations,
are forward-looking statements. In general, such statements are identified by
the use of forward-looking words or phases including, but not limited to,
"intended," "will," "should," "may," "expects," "anticipates," and
"anticipated" or the negative thereof or variations thereon or similar
terminology. These forward-looking statements are based on the Company's
current expectations. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Because forward-
looking statements involve risks and uncertainties, the Company's actual
results could differ materially. See the "Risk Factors" section of the
Company's Registration Statement on Form S-4 (File No. 333-57191) for a
discussion of certain risks applicable to the Company and its business.
Overview
Everest is a leading provider of dialysis and other blood treatment services.
Founded in 1968 and principally owned by nephrologists, the Company has a long-
standing focus on developing strong relationships with physicians to provide
high-quality patient care. The Company is the nation's sixth-largest provider
of chronic dialysis outpatient services and serves approximately 5,700 patients
through 63 facilities in 12 states. Everest also contracts with 102 hospitals
in 11 states to provide a broad range of other extracorporeal blood treatment
services, including inpatient acute dialysis, perfusion, apheresis and auto-
transfusion (together, "Contract Services"). Pursuant to management contracts,
Everest provides management services to (i) a physician practice group
comprised of 26 nephrologists, primarily in the Chicago and northwest Indiana
areas, and (ii) certain minority-owned or unaffiliated dialysis facilities. For
the three months ended December 31, 1998, the Company derived 84.1% of its net
revenues from chronic dialysis services, 13.9% from Contract Services and 2.0%
from management services.
Sources of Revenues
The Company's net revenues from chronic dialysis services are derived from:
(i) in-center dialysis and home dialysis services including drugs and supplies;
and (ii) management contracts with hospital-based and other outpatient dialysis
programs. The majority of the Company's in-center and home dialysis services
are paid for under the Medicare End-Stage Renal Disease ("ESRD") program in
accordance with rates established by the Health Care Financing Administration
("HCFA"). Additional payments are provided by other third-party payors
(particularly by employer group health plans during the first thirty months of
treatment), generally at rates higher than those reimbursed by Medicare.
Everest is currently seeking to expand the portion of its revenues attributable
to non-government payors by entering into contracts with managed care companies
and other private payors. Because dialysis is an ongoing, life-sustaining
therapy used to treat a chronic condition, utilization of the Company's chronic
dialysis services is generally predictable and not subject to seasonal or
economic fluctuations. ESRD patients may receive up to 156 dialysis treatments
per year; however, due to hospitalization and no shows the Company's average
number of treatments per patient per year is 136. Unless the patient moves to
another dialysis facility, receives a kidney transplant or dies, the revenues
generated per patient per year can be estimated with reasonable accuracy.
9
<PAGE>
The Company's Contract Services revenues are derived from acute dialysis,
perfusion, apheresis and auto-transfusion services provided to hospitalized
patients pursuant to contracts with hospitals. Rates paid for such services are
negotiated with individual hospitals. Because extracorporeal blood treatment
services are required for patients undergoing major surgical procedures,
utilization of the Company's Contract Services is not subject to seasonal or
economic fluctuations.
The Company's revenues also include fees paid under management services
contracts. Management service fee revenue is recognized when earned. Management
service fees are based on contracted rates. The contracted rates are estimates
based upon the cost of services provided such as billing, accounting, technical
support, cash management and facilities management.
Acquisitions
Acquisitions of dialysis and Contract Services providers have been recorded
under purchase accounting with the purchase price being principally allocated
to fixed assets, accounts receivable and inventory based on respective
estimated fair market values at the date of acquisition. Any excess of the
purchase price over the fair value of identifiable assets (including
identifiable intangible assets) is allocated to goodwill, which is amortized
over 25 years. The results of these acquisitions have been included in the
results of operations from their respective acquisition dates. The Company
regularly evaluates the potential acquisition of, and holds discussions with,
various potential acquisition candidates; as a general rule, the Company does
not intend to publicly announce such acquisitions until a definitive agreement
has been reached.
During fiscal 1998, the Company acquired additional equity in three entities
in which it previously held a minority interest: (i) Hemo Dialysis of Amarillo,
L.L.C., which owns one outpatient and home dialysis facility located in
Amarillo, Texas (the Company's interest was increased from 30.0% to 100.0%);
(ii) Home Dialysis of Mount Auburn, Inc., which owns one home dialysis facility
located in Cincinnati, Ohio (the Company's interest was increased from 50.0% to
80.5%); and (iii) Dialysis Specialists of South Texas, L.L.C., which owns three
outpatient and home dialysis facilities in Corpus Christi, Texas (the Company's
interest was increased from 33.3% to 100.0%). In addition, effective April 1,
1998, the Company acquired 100.0% of North Buckner Dialysis Center, Inc., which
owns one outpatient dialysis facility in Dallas, Texas. These acquisitions
represented approximately 550 patients in the aggregate. Effective March 1,
1998, the Company acquired 70% of Perfusion Resource Association, L.L.C., a
Contract Services business with two hospitals under contract. In May 1998, the
Company developed and opened one outpatient dialysis facility located in Bronx,
New York, pursuant to the management agreement with MMC described below.
Pursuant to a Management Agreement with Montefiore Medical Center ("MMC"),
New York Dialysis Management, Inc., a wholly-owned subsidiary of the Company
("NYDM"), has been managing four dialysis facilities located in the Bronx, New
York (the "Facilities"). Under the original Management Agreement, NYDM had a
right of first refusal to purchase the Facilities and the right to operate them
(and in effect terminate the Management Agreement) in the event that MMC
received and proposed to accept a bona fide offer for the purchase of one or
all of the Facilities. After having been informed by MMC of the receipt of such
an offer early in 1998, NYDM exercised its right of first refusal and, as a
result, in July 1998, the parties entered into an Agreement to Amend and Not-
to-Compete (the "Agreement to Amend") and Amendment No. 3 to the Management
Agreement (the "Amendment"). Pursuant to the Agreement to Amend, NYDM paid an
amount equal to $19,216,000 to MMC in consideration for MMC's covenant not-to-
compete and other undertakings, including MMC's agreement to enter into the
Agreement. Contemporaneously with the execution of the Agreement to Amend and
the Amendment, MMC entered into a Medical Asset Purchase Agreement (the
"Purchase Agreement") pursuant to which it agreed to sell the Facilities'
medical assets to Everest Dialysis Services, Inc. ("EDS"), a corporation formed
for this purpose under the laws of the State of New York, and which is owned by
Craig Moore and Paul Balter, who are directors and officers of the Company. The
parties have made the filings necessary to obtain the approval of the New York
Public Health Council required for the consummation of the transactions
contemplated under the Purchase Agreement and the subsequent operation of
10
<PAGE>
the Facilities by EDS. If the parties are unable to obtain such approval, at
the option of NYDM, either NYDM and MMC will enter into a forty-year
Administrative Services Agreement or MMC will be required to make certain
payments to NYDM in exchange for the transfer by NYDM of the Facilities' non-
medical assets to MMC.
Results of Operations
Three Months Ended December 31, 1998 Compared to Three Months Ended December
31, 1997
Net Revenues. Net revenues increased $6.3 million or 18.8% to $39.9 million
for the three months ended December 31, 1998 from $33.6 million for the three
months ended December 31, 1997. This increase resulted primarily from a 22.2%
increase in the number of treatments from 118,700 for the three months ended
December 31, 1997 to 152,656 for the three months ended December 31, 1998. This
growth in treatments is the result of the acquisition and development of
various dialysis facilities and an 8.5% increase in same store treatments for
the three months ended December 31, 1998 over the three months ended December
31, 1997.
During the first quarter of fiscal 1999, the Company implemented a system to
gather patient-level data to refine its estimate of its contractual adjustments
(a component of the allowance for doubtful accounts). This patient-level
information has improved the Company's ability to better estimate its
adjustments to accounts receivable for contractual changes. Based upon this new
information, it was determined that the allowance for doubtful receivables was
underestimated by approximately $1.4 million. Also, based upon this new
information, the Company made a business decision to reduce approximately $1.4
million in discretionary compensation that was previously accrued, as the
financial results of the Company were not as previously anticipated. Overall,
there has not been a significant effect on the net income of the Company for
the year ended September 30, 1998 or for the three months ended December 31,
1998 for these estimates. In addition, the Company believes that the
contractual adjustment component of the allowance for doubtful accounts
(approximately $3.4 million of the $6.8 million allowance for doubtful
receivables) at December 31, 1998 accurately reflects the potential adjustments
to accounts receivable due to contractual changes. Additionally, the Company
incurred approximately $1.0 million in contractual adjustments related to this
new system and recognized a reduction in net revenues for the three months
ended December 31, 1998. The Company will continue to make refinements and
other modifications in the way it gathers and analyzes data for contractual
adjustments. As the Company continues to refine the way it estimates these
reserves it may cause additional adjustments to the financial results of the
Company in the periods they are discovered. The Company believes that these
refinements will not have a material effect on its future profitability.
Furthermore, the Company believes that this new system will ultimately enhance
the Company's profitability through improvements of collections of accounts
receivable. The net revenue per treatment was $217 for the first quarter of
fiscal 1999. Factoring in the $1.4 million of contractual adjustments the net
revenue per treatment would have been $226 as compared to $224 for the first
quarter of fiscal 1998.
Patient Care Costs. Patient care costs consist of costs directly related to
the care of patients, including direct and indirect labor, drugs and other
medical supplies and operational costs of the facilities. Patient care costs
increased $4.7 million or 23.3% to $24.9 million for the three months ended
December 31, 1998 from $20.2 million for the three months ended December 31,
1997. This increase resulted primarily from an increase in the number of
treatments performed during the period that caused a corresponding increase in
the use of labor, drugs and supplies. Patient care costs as a percentage of net
revenues increased from 60.1% in the first quarter of fiscal 1998 to 62.4% in
the first quarter of fiscal 1999 as a result of the contractual adjustments
that caused net revenues to increase less than costs. However, patient care
costs per treatment decreased from $141 for the three months ended December 31,
1997 to $138 for the three months ended December 31, 1998, a decrease of $3, or
2.2%. This decrease was achieved due to operating efficiencies resulting from
the Company's profit improvement programs.
11
<PAGE>
General and Administrative Expenses. General and administrative expenses
include corporate office costs and other administrative costs including
accounting, billing, quality assurance, facility costs, treasury and
information systems. General and administrative expenses increased $1.3 million
or 18.8% to $8.2 million for the three months ended December 31, 1998 from $6.9
million for the three months ended December 31, 1997. This increase is mainly
attributable to the continued growth of the corporate infrastructure, including
the expansion of information systems, Year 2000 costs and increased
professional fees. The increased costs related to the growth of the corporate
infrastructure were directly offset by the reduction of $1.4 million of
accruals related to discretionary compensation. As a result, general and
administrative expenses as a percentage of net revenue remained constant at
20.5%.
Provision for Bad Debts. The Company provides for doubtful patient
receivables in the period that the revenue is recognized. The provision is
based on management's estimate of the collectibility of the accounts receivable
based upon several factors such as payor mix and billing practices. Provision
for bad debts decreased $314,000 or 26.2% to $837,000 for the three months
ended December 1998 from $1.2 million for the three months ended December 1997.
This decrease was a result of the timing of the bad debt provision in fiscal
1998. Specifically, the Company increased its provision for bad debts by $1.2
million in the first quarter of fiscal 1998, which was a result of provisions
established for specific receivables due to price increases in July 1997.
Depreciation and amortization. Depreciation and amortization increased
approximately $1 million or 71.4% to $2.4 million for the three months ended
December 31, 1998 from $1.4 million for the three months ended December 31,
1997. The increase was due to increased amortization of goodwill as a result of
business acquisitions (including the purchase of minority interests) and due to
increased depreciation expense as a result of fixed asset purchases.
Income from Operations. Income from operations decreased $375,000 or 9.4% to
$3.6 million for the three months ended December 31, 1998 from $3.9 million for
the three months ended December 31, 1997. Income from operations as a
percentage of net revenues decreased to 9% for the three months ended December
31, 1998 as compared to 11.8% for the three months ended December 31, 1997. The
decrease was due to the increase in expenses described above.
Interest Expense, Net. Interest expense, net increased $1.7 million or 224%
to $2.4 million for the three months ended December 31, 1998 from $748,000 for
the three months ended December 31, 1997. The increase was attributable to the
interest associated with the Company's senior subordinated debt issued in May
1998, offset in part by a decrease in the net borrowings under the Company's
revolving bank credit facility.
Equity in Earnings of Unconsolidated Subsidiaries. Equity in earnings of
unconsolidated subsidiaries represents the Company's portion of earnings in
unconsolidated joint ventures. The Company recognized equity in earnings of
unconsolidated subsidiaries of approximately $127,000 for the three months
ended December 31, 1998. Throughout fiscal 1997 and into the first quarter of
fiscal 1998, the joint venture entities were start up in nature and as such,
the Company did not recognize any earnings.
Minority Interests in Earnings. Minority interests in earnings represents the
proportionate equity interests of other partners' in the Company's consolidated
entities that are not wholly owned. Minority interests in earnings decreased
approximately $330,000 or 52.4% to $300,000 for the three months ended December
31, 1998 as compared to $630,000 for the three months ended December 31, 1997.
The decrease is primarily attributable to the reorganization of the Company in
November 1997.
Income Taxes. Income taxes decreased approximately $885,000 or 63.2% to
$511,000 for the three months ended December 31, 1998 from $1.4 million for the
three months ended December 31, 1997 as a result of the factors discussed
above.
12
<PAGE>
Year 2000 Compliance by the Company and Others
Year 2000 compliance concerns the ability of certain computerized information
systems to properly recognize date-sensitive information as the year 2000
approaches. Systems that do not recognize such information could generate
erroneous data or cause systems to fail; this problem may occur as early as
calendar year 1999. The Company is at risk both for its own Year 2000
compliance and for the Year 2000 compliance of those with whom it does
business, particularly third party payors.
The Company has established a Year 2000 Task Force to study and address Year
2000 issues. The Task Force consists of the Company's Director of Technology
and Chief Information Officer, and representatives from all major areas of the
Company. The task force meets weekly. The Company has hired four consultants
that devote full time attention to Year 2000 issues. The Year 2000 Group of
PricewaterhouseCoopers Consultants has also been retained as an advisor for
Year 2000 issues.
The Task Force has formulated and begun to implement a plan with six stages,
as follows: (i) awareness, (ii) inventory, (iii) impact analysis, (iv)
remediation, (v) testing and (vi) implementation. Phases (i) through (v) are
currently in progress; the Company's goal is to complete all phases and be Year
2000 compliant by June 30, 1999.
The Company has five major information technology systems, the present
compliance of which is described below:
1. Client tracking system. This system is Year 2000 compliant.
2. Accounting package. The existing accounting package is not Year 2000
compliant. A Year 2000 upgrade will be available in the first quarter of
calendar 1999 and will be installed at that time.
3. Interim accounting package for Contract Services. This package is Year
2000 compliant.
4. Physician billing. The Company installed a new billing system which is
Year 2000 compliant.
5. Facilities billing. This system is not yet Year 2000 compliant. It has
been analyzed, and arrangements are being made with the vendor to upgrade
the system.
These systems would have been upgraded or replaced to support Company growth
irrespective of the Year 2000 issue. The process of upgrading or replacing
these systems was not accelerated by Year 2000 considerations.
The Company has started a full review of the Year 2000 compliance of its non-
information technology systems (i.e., embedded technology such as micro-
controllers).
The Company anticipates that the total amounts it will expend on Year 2000
issues are as follows:
<TABLE>
<S> <C>
Consultants................................................... $ 750,000
Hardware...................................................... 785,000
Software...................................................... 215,000
Bio-Med Embedded Technology................................... 100,000
----------
Total..................................................... $1,850,000
==========
</TABLE>
Management believes that the most significant risk to the Company of Year
2000 issues is the effect such issues may have on third-party payors, such as
Medicare. With respect to Medicare payments, neither HCFA nor its fiscal
intermediaries have any contingency plan in place. However, HCFA has mandated
that its fiscal intermediaries submit a draft of their contingency plans to it
and that they be prepared to ensure that no interruption of Medicare payments
results from Year 2000 related failures of their systems. The Task Force has
begun to consider worst case scenarios and contingency plans to deal with those
scenarios.
13
<PAGE>
There can be no assurance that Year 2000 issues will not have a material
adverse effect on the Company's business, results of operations and financial
condition.
Liquidity and Capital Resources
The Company requires capital primarily for the acquisition and development of
dialysis centers and Contract Services businesses, the purchase of property and
equipment for existing centers and to finance working capital requirements. At
December 31, 1998, the Company's working capital was $38.6 million.
The Company's net cash used in operating activities was $2.6 million for the
three months ended December 31, 1998. Cash used in operating activities
consists of net income increased by non-cash expenses such as depreciation,
amortization and the provision for bad debts and adjusted by the changes in
components of working capital, primarily receivables, payables and accrued
expenses. Accounts payable and other accrued liabilities decreased from
September 30, 1998 due to the semi-annual interest payment related to the
senior subordinated notes and due to a reduction of several accruals. The
Company's net cash provided by investing activities was $282,000 for the three
months ended December 31, 1998. The Company's principal sources and uses of
cash consist of investing activities related to purchases of new equipment and
leasehold improvements for existing dialysis centers, the development of de
novo dialysis centers and net advances due from affiliated entities. Net cash
used in financing activities was $658,000 for the three months ended December
31, 1998. The primary sources and uses of cash from financing activities were
net borrowings or repayments under the Company's credit facility.
The Company does not have any current material commitments for capital
expenditures.
On May 18, 1998, the Company refinanced its prior credit facility (the "Prior
Credit Facility") with the same commercial bank that provided the Prior Credit
Facility. The new credit facility (the "New Credit Facility") consists of two
separate facilities: (i) a $35.0 million revolving credit facility maturing on
May 15, 2001, which may be extended for two one-year periods at the issuing
bank's discretion (the "Working Capital Facility"); and (ii) a $70.0 million
acquisition financing facility maturing on May 15, 1999 (the "Acquisition
Facility"), which includes the right to convert all or a portion of the
borrowings outstanding thereunder to one or more five-year term loans (the
"Term Loans"). The total amount drawn under the New Credit Facility may not
exceed $100.0 million. The New Credit Facility contains operating and financial
covenants, including, without limitation, requirements to maintain leverage and
debt service coverage ratios and minimum tangible net worth. In addition, the
New Credit Facility includes customary covenants relating to the delivery of
financial statements, reports, notices and other information, access to
information and properties, maintenance of insurance, payment of taxes,
maintenance of assets, nature of business, corporate existence and rights,
compliance with applicable laws, including environmental laws, transactions
with affiliates, use of proceeds, limitation on indebtedness, limitations on
liens, limitations on certain mergers and sales of assets, limitations on
indebtedness, limitations on stock repurchases, and limitations on debt
payments and other distributions including prepayment or redemption of the
Company's senior subordinated notes. The New Credit Facility contains certain
events of default after expiration of applicable grace periods, including
defaults relating to: (i) nonpayment of principal, interest, fees or other
accounts; (ii) violation of covenants; (iii) material inaccuracy of
representations and warranties; (iv) bankruptcy; (v) material judgments; (vi)
certain ERISA liabilities; and (vii) actual or asserted invalidity of any loan
documents.
In November 1996, the Company issued notes in the aggregate principal amount
of $7.0 million as part of the purchase price for its acquisition of The
Extracorporeal Alliance. The notes bear interest at a variable rate equal to
the five-year Treasury note rate plus three percent and mature on October 31,
2002.
A significant component of the Company's growth strategy is the acquisition
and development of dialysis centers and the acquisition of Contract Services
businesses. The Company believes that the remaining net proceeds from the
offering of its senior subordinated notes (described in Part II, Item 2),
existing cash and funds from operations, together with funds available under
the New Credit Facility, will be sufficient to meet
14
<PAGE>
the Company's acquisition, development, expansion, capital expenditure and
working capital needs for at least the next twelve months. In order to finance
certain strategic acquisition opportunities, the Company may from time to time
incur additional short and long-term bank indebtedness and may issue equity or
debt securities, the availability and terms of which will depend on market and
other conditions. There can be no assurance that the Company will be successful
in implementing its growth strategy or that adequate sources of capital will be
available in the future as needed on terms acceptable to the Company.
Impact of Inflation
A substantial portion of the Company's net revenues is subject to
reimbursement rates that are regulated by the federal government and do not
automatically adjust for inflation. The Company is unable to increase the
amount it receives for the services provided by its dialysis businesses that
are reimbursed under the Medicare composite rate. Increased operating costs due
to inflation, such as labor and supply costs, without a corresponding increase
in reimbursement rates, may adversely affect the Company's earnings in the
future. However, part of the Company's growth strategy is to acquire additional
Contract Services businesses which are not directly dependent on reimbursement
from government agencies. In addition, the Company believes that the effect of
inflation is further mitigated by a recent change in current governmental
health care laws that extends the coordination of benefits period for ESRD
patients who are covered by an employer group health plan from 18 to 21 months
to 30 to 33 months before Medicare becomes the primary payor.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not engage in hedging or other market structure derivative
trading activities. Additionally, the Company's debt obligations are primarily
fixed-rate in nature and, as such, are not sensitive to changes in interest
rates. The Company does not believe that its market risk financial instruments
on December 31, 1998 would have a material effect on future operations or cash
flow.
- - - - - - - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
PART II--OTHER INFORMATION
- - - - - - - - - - - - - - - - - - - - - - --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to claims and suits in the ordinary course of
business, including those arising from patient treatment. The Company believes
it will be covered by malpractice insurance with respect to these claims and
does not believe that the ultimate resolution of pending proceedings will have
a material adverse effect on the Company. However, claims against the Company,
regardless of their merit or eventual outcome, could require management to
devote time to matters unrelated to the operation of the Company's business,
and may also have a material adverse effect on the Company's ability to attract
patients or expand its business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) On May 5, 1998, the Company sold (the "Initial Offering") its
$100,000,000 9 3/4% Senior Subordinated Notes due 2008, Series A (the "Private
Notes"). On October 2, 1998, the Company delivered in exchange (the "Exchange")
for the Private Notes its $100,000,000 9 3/4% Senior Subordinated Notes due
2008,
15
<PAGE>
Series B (the "Notes"). The net proceeds to the Company from the Initial
Offering were $95.2 million, after deducting the initial purchaser's discount
and offering expenses. The Company used $48.4 million of the net proceeds to
repay indebtedness under the Company's prior credit facility (the "Prior Credit
Facility") that bore interest at a weighted average rate of 8.99% per annum as
of June 30, 1998 and was to mature in May 2000. $7.2 million of the net
proceeds were used to repay loans made to the Company by certain of its
shareholders. $5.1 million of these loans bore interest at the prime rate plus
1% per annum and matured at various times throughout 1998. $2.1 million of
these loans bore interest at the prime rate plus 1% per annum and matured on
November 29, 2000. The Company used $19.2 million of net proceeds to acquire a
management services agreement and $4.7 million to acquire land and buildings.
Additionally, the Company used $5.4 million for working capital purposes. The
remaining $10.3 million of net proceeds will be used to finance future
acquisitions of dialysis facilities and Contract Services providers and for
working capital and general corporate purposes. Pending such uses, the net
proceeds have been and will be invested in cash and cash equivalents.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<C> <S>
3.41 Certificate of Incorporation of Everest Two IPA, Inc.
3.42 By-laws of Everest Two IPA, Inc.
3.43 Certificate of Incorporation of Everest Three IPA, Inc.
3.44 By-laws of Everest Three IPA, Inc.
3.45 Certificate of Formation of Acute Extracorporeal Services,
L.L.C.
27 Financial Data Schedule.
</TABLE>
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Everest Healthcare Services
Corporation
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Amarillo Acute Dialysis Specialists,
L.L.C.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
18
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Con-Med Supply Company, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Continental Health Care, Ltd.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Dialysis Specialists of Corpus
Christi, L.L.C.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Dialysis Specialists of South Texas,
L.L.C.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
DuPage Dialysis Ltd.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Everest Management, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
24
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Hemo Dialysis of Amarillo, L.L.C.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
25
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Home Dialysis of America, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Home Dialysis of Dayton, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Lake Avenue Dialysis Center, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Mercy Dialysis Center, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
New York Dialysis Management, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
North Buckner Dialysis Center, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Northwest Indiana Dialysis, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Ohio Valley Dialysis Center, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
33
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
WSKC Dialysis Services, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
34
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Everest New York Holdings, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Everest One IPA, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
36
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Everest Two IPA, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Everest Three IPA, Inc.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 16th day of
February, 1999.
Acute Extracorporeal Services,
L.L.C.
/s/ Craig W. Moore
By: _________________________________
Craig W. Moore
Chairman and Chief Executive
Officer
/s/ John B. Bourke
By: _________________________________
John B. Bourke
Chief Financial Officer
39
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <S>
3.41 Certificate of Incorporation of Everest Two IPA, Inc.
3.42 By-laws of Everest Two IPA, Inc.
3.43 Certificate of Incorporation of Everest Three IPA, Inc.
3.44 By-laws of Everest Three IPA, Inc.
3.45 Certificate of Formation of Acute Extracorporeal Services, L.L.C.
27 Financial Data Schedule.
</TABLE>
40
<PAGE>
Exhibit 3.41
CERTIFICATE OF INCORPORATION
OF
EVEREST TWO IPA, INC.
(UNDER SECTION 402 OF THE BUSINESS CORPORATION LAW)
FIRST: The name of the corporation is Everest Two IPA, Inc.
SECOND: The corporation is formed for the following purposes:
a. To function as an Independent Practice Association as
defined in 10 NYCRR 98.2(aa).
b. To arrange by contract for the delivery or provision of
health services by individuals, entities and facilities licensed or certified to
practice medicine and other health professions, and, as appropriate, ancillary
medical services and equipment, by which arrangements such health care providers
and suppliers will provide their services in accordance with and for such
compensation as may be established by a contract between the corporation and one
or more health maintenance organizations which have been granted a certificate
of authority pursuant to the provisions of Article 44 of the Public Health Law
of the State of New York, as amended.
c. To exercise the general powers and purposes authorized by
Section 202 of the Business Corporation Law which are to be exercised only as
powers and purposes incidental to accomplishing the primary Independent Practice
Association powers and purposes of the corporation.
d. Notwithstanding any other provision of this certificate to
the contrary, nothing contained herein shall authorize the corporation to
establish, operate, construct, lease or maintain a hospital or to provide
hospital service or health related service or to operate a drug maintenance
program, a certified home health agency, a hospice, or a health maintenance
organization or to provide a comprehensive health services plan as defined and
covered by Articles 28, 33, 36, 40 and 44, respectively of the Public Health
Law, or to solicit, collect or otherwise raise or obtain any funds,
contributions or grants from any source for the establishment or operation of
any hospital.
THIRD: The office of this corporation is to be located in the County of
Bronx, State of New York.
<PAGE>
FOURTH: The aggregate number of shares which this corporation shall have
authority to issue is 200 common shares, which shares are without par value.
FIFTH: The Secretary of the State of New York is hereby designated the
agent of this corporation upon whom process against this corporation may be
served. The post office address to which the Secretary of State shall mail a
copy of any process against this corporation served upon him as agent of this
corporation is Everest Healthcare Services, 1325 Morris Park Ave., Bronx, New
York 10461.
SIXTH: The duration of the corporation is to be perpetual.
SEVENTH: The corporation shall, to the fullest extent permitted by Article
7 of the Business Corporation Law, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify under said
Article from and against any and all of the expenses, liabilities, or other
matters referred to in or covered by said Article, and the indemnification
provided herein shall not be deemed exclusive or any other rights to which any
person may be entitled under any By-Law, resolution of directors or
shareholder's resolution, agreement, or otherwise, as permitted by said Article,
as to action in any capacity in which such person served at the request of the
corporation.
EIGHTH: The personal liability of the directors of the corporation is
eliminated to the fullest extent permitted by the provisions of paragraph (b) of
Section 402 of the Business Corporation Law, as the same may be amended and
supplemented.
Signed on July 24, 1997
/s/ E. Raymond Kolarsey
--------------------------------------
E. Raymond Kolarsey, Incorporator
Hinman, Straub, Pigors & Manning, P.C.
121 State Street
Albany, New York 12207-1693
<PAGE>
Exhibit 3.42
BY-LAWS
OF
EVEREST TWO IPA, INC.
---------------------
ARTICLE I
---------
IDENTIFICATION; OFFICES
-----------------------
SECTION 1.1. Name. The name of the corporation is Everest Two IPA, Inc.
(the "Corporation").
SECTION 1.2. Registered Offices; Other Offices. The registered office of
the Corporation in the State of New York shall be in Bronx, New York and in
Bronx County. The Corporation may have such other offices, either within or
outside of the State of New York, as the business of the Corporation may require
from time to time.
ARTICLE II
----------
SHAREHOLDERS
------------
SECTION 2.1. Annual Meeting. An annual meeting of the shareholders shall
be held on the last Wednesday in January of each year, or on such other date as
may be determined by resolution of the Board of Directors; provided, however,
that if in any year such date is a legal holiday, such meeting shall be held on
the next succeeding business day. At each annual meeting, the shareholders
shall elect a Board of Directors and transact such other business as may
properly be brought before the meeting.
SECTION 2.2. Special Meeting. A special meeting of the shareholders may
be called by the President of the Corporation, the Board of Directors, or by
such other officers or persons as the Board of Directors may designate.
SECTION 2.3. Place of Shareholder Meetings. The Board of Directors may
designate any place, either within or without the State of New York, as the
place of meeting for any annual meeting or for any special meeting. If no such
place is designated by the Board of Directors, the place of meeting will be the
principal business office of the Corporation.
<PAGE>
SECTION 2.4. Notice of Meetings. Unless waived as herein provided, whenever
shareholders are required or permitted to take any action at a meeting, written
notice of the meeting shall be given stating the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Such notice may be written or electronic. Such
written notice shall be given not less than ten (10) days nor more than sixty
(60) days before the date of the meeting to each shareholder entitled to vote at
the meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the shareholder at the shareholder's address
as it appears on the records of the Corporation. If transmitted electronically,
such notice is given when directed to the shareholders' electronic mail address
as supplied to the secretary of the Corporation.
When a meeting is adjourned to another time or place in accordance with
Section 2.5 of these By-Laws, notice need not be given of the adjourned meeting
if the time and place thereof are announced at the meeting in which the
adjournment is taken. At the adjourned meeting the Corporation may conduct any
business which might have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
SECTION 2.5. Quorum and Adjourned Meetings. Unless otherwise provided by
law or the Corporation's Certificate of Incorporation, a majority of the shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at a meeting of shareholders. If less than a majority of the shares
entitled to vote at a meeting of shareholders is present in person or
represented by proxy at such meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the original meeting. The shareholders
present at a meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of such number of shareholders as may leave less
than a quorum.
SECTION 2.6. Fixing of Record Date.
(a) For the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or for the
purpose of any other action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A
-2- By-Laws of Everest Two IPA, Inc.
<PAGE>
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting;
(b) For the purpose of determining shareholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is established by the Board of Directors, and
which date shall not be more than ten (10) days after the date on which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of New York, its principal office, or an
officer or agent of the Corporation having custody of the book in which the
proceedings of meetings of shareholders are recorded. Delivery to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by law, the
record date for determining shareholders' consent to corporate action in writing
without a meeting shall be the close of business on the day on which the Board
of Directors adopts the resolution taking such prior action; and
(c) For the purpose of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect to any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix the record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty (60) days prior to such
action. If no record date is fixed, the record date for determining the
shareholders for any such purpose shall be the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
SECTION 2.7. Voting List. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten (10) days before every
meeting of shareholders, a complete list of shareholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the place
-3- By-Laws of Everest Two IPA, Inc.
<PAGE>
of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
SECTION 2.8. Voting. Unless otherwise provided by the Certificate of
Incorporation, each shareholder shall be entitled to one vote for each share of
capital stock held by each shareholder. In all matters other than the election
of directors, the affirmative vote of the majority of shares present in person
or represented by proxy at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders. Directors shall be elected by
plurality of the votes of the shares present in person or represented by a proxy
at the meeting entitled to vote on the election of directors.
SECTION 2.9. Proxies. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be valid after the expiration of eleven (11)
months from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may remain irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
SECTION 2.10. Ratification of Acts of Directors and Officers. Except as
otherwise provided by law or by the Certificate of Incorporation of the
Corporation, any transaction or contract or act of the Corporation or of the
directors or the officers of the Corporation may be ratified by the affirmative
vote of the holders of the number of shares which would have been necessary to
approve such transaction, contract or act at a meeting of shareholders, or by
the written consent of shareholders in lieu of a meeting.
SECTION 2.11. Informal Action of Shareholders. Any action required to be
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those shareholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate with any
governmental body, if such action had been voted on by shareholders at a meeting
thereof, the certificate filed shall state, in lieu of any statement required by
law concerning any vote of shareholders, that written consent had been given in
-4- By-Laws of Everest Two IPA, Inc.
<PAGE>
accordance with the provisions of Section 615 of the Business Corporation Law of
New York, and that written notice has been given as provided in such section.
SECTION 2.12. Organization. Such person as the Board of Directors may
designate or, in the absence of such a designation, the president of the
Corporation or, in his or her absence, such person as may be chosen by the
holders of a majority of the shares entitled to vote who are present, in person
or by proxy, shall call to order any meeting of the shareholders and act as
chairman of such meeting. In the absence of the secretary of the Corporation,
the chairman of the meeting shall appoint a person to serve as secretary at the
meeting.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 3.1. Number and Tenure of Directors. The number of directors of the
Corporation shall be no less than one (1) or no more than seven (7) members.
Each director shall hold office until such director's successor is elected and
qualified or until such director's earlier resignation or removal. Any director
may resign at any time upon written notice to the Corporation.
SECTION 3.2. Election of Directors. Directors shall be elected at the
annual meeting of shareholders. In all elections for directors, every
shareholder shall have the right to vote the number of shares owned by such
shareholder for each director to be elected.
SECTION 3.3. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President
or at least one-third of the number of directors constituting the whole board.
The person or persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State of New York, as
the place for holding any special meeting of the Board of Directors called by
them .
SECTION 3.4. Notice of Special Meetings of the Board of Directors. Notice
of any special meeting of the Board of Directors shall be given at least one (1)
day previous thereto by written notice to each director at his or her address.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States Mail so addressed, with first-class postage thereon prepaid. If
sent by any other means (including facsimile, courier, or express mail, etc.),
such notice shall be deemed to be delivered when actually delivered to the home
or business address of the director.
SECTION 3.5. Quorum. A majority of the total number of directors fixed by
these By-Laws, or in the absence of a By-Law which fixes the number of
directors, the number stated in the Certificate of Incorporation or named by the
incorporators,
-5- By-Laws of Everest Two IPA, Inc.
<PAGE>
shall constitute a quorum for the transaction of business. If less than a
majority of the directors are present at a meeting of the Board of Directors, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
SECTION 3.6. Voting. The vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors,
unless the Business Corporation Law of the State of New York or the Certificate
of Incorporation requires a vote of a greater number.
SECTION 3.7. Vacancies. Vacancies in the Board of Directors may be filled
by a majority vote of the Board of Directors or by an election either at an
annual meeting or at a special meeting of the shareholders called for that
purpose. Any directors elected by the shareholders to fill a vacancy shall hold
office for the balance of the term for which he or she was elected. A director
appointed by the Board of Directors to fill a vacancy shall serve until the next
meeting of shareholders at which directors are elected.
SECTION 3.8. Removal of Directors. A director, or the entire Board of
Directors, may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors; provided,
however, that if cumulative voting obtains and less than the entire Board of
Directors is to be removed, no director may be removed without cause if the
votes cast against such director's removal would be sufficient to elect him if
then cumulatively voted at an election of the entire Board of Directors.
SECTION 3.9. Informal Action of Directors. Unless otherwise restricted by
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
SECTION 3.10. Participation by Conference Telephone. Members of the Board
of Directors, or any committee designated by such board, may participate in a
meeting of the Board of Directors, or committee thereof, by means of conference
telephone or similar communications equipment as long as all persons
participating in the meeting can speak with and hear each other, and
participation by a director pursuant to this Section 3.10 shall constitute
presence in person at such meeting.
ARTICLE IV
----------
WAIVER OF NOTICE
----------------
-6- By-Laws of Everest Two IPA, Inc.
<PAGE>
SECTION 4.1. Written Waiver of Notice. A written waiver of any required
notice, signed by the person entitled to notice, whether before or after the
date stated therein, shall be deemed equivalent to notice. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of
shareholders, directors or members of a committee of directors need be specified
in any written waiver of notice.
SECTION 4.2. Attendance as Waiver of Notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, and objects at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE V
---------
COMMITTEES
----------
SECTION 5.1 General Provisions. The Board of Directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member at any meeting of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the shareholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the By-Laws of the Corporation; and, unless the
resolution so provides, no such committee shall have the power or authority to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of merger.
-7- By-Laws of Everest Two IPA, Inc.
<PAGE>
ARTICLE VI
----------
OFFICERS
--------
SECTION 6.1. General Provisions. The Board of Directors shall elect a
President and a Secretary of the Corporation. The Board of Directors may also
elect a Chairman of the Board, one or more Vice Chairmen of the Board, one or
more Vice Presidents, a Treasurer, one or more Assistant Secretaries and
Assistant Treasurers and such additional officers as the Board of Directors may
deem necessary or appropriate from time to time. Any two or more offices may be
held by the same person. The officers elected by the Board of Directors shall
have such duties as are hereafter described and such additional duties as the
Board of Directors may from time to time prescribe.
SECTION 6.2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors at the regular meeting of
the Board of Directors held after each annual meeting of the shareholders. If
the election of officers is not held at such meeting, such election shall be
held as soon thereafter as may be convenient. New offices of the Corporation may
be created and filled and vacancies in offices may be filled at any time, at a
meeting or by the written consent of the Board of Directors. Unless removed
pursuant to Section 6.3 of these By-Laws, each officer shall hold office until
his successor has been duly elected and qualified, or until his earlier death or
resignation. Election or appointment of an officer or agent shall not of itself
create contract rights.
SECTION 6.3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed with or without cause by the
Board of Directors whenever, in its judgment, the best interests of the
Corporation would be served thereby. Removal without cause shall be without
prejudice to the contract rights, if any, of the person(s) so removed.
SECTION 6.4. Determination of the Chief Executive Officer. The Board of
Directors shall designate whether the Chairman of the Board, if one shall have
been chosen, or the President shall be the Chief Executive Officer of the
Corporation. If a Chairman of the Board has not been chosen, or if one has been
chosen but not designated Chief Executive Officer, then the President shall be
the Chief Executive Officer of the Corporation.
SECTION 6.5. President/Chief Executive Officer. The President/Chief
Executive Officer shall be the principal executive officer of the Corporation
and, subject to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the Corporation. The
President/Chief Executive Officer shall preside at all meetings of the
shareholder and at any meeting of the Board of Directors when the Chairman of
the Board is absent. The President/Chief Executive Officer shall see that orders
and resolutions of the Board of Directors are carried into effect and may sign
bonds, mortgages, certificates for shares and all other contracts and documents
requiring execution on behalf of the Corporation.
-8- By-Laws of Everest Two IPA, Inc.
<PAGE>
SECTION 6.6. The Chairman of the Board. The Chairman of the Board, if one
is chosen, shall be chosen from among the members of the board. If the Chairman
of the Board has not been designated Chief Executive Officer, the Chairman of
the Board shall perform such duties as may be assigned to the Chairman of the
Board by the Chief Executive Officer or by the Board of Directors.
SECTION 6.7. Vice Chairman of the Board. In the absence of the Chief
Executive Officer or in the event of his inability or refusal to act, if the
Chairman of the Board has been designated Chief Executive Officer, the Vice
Chairman, or if there be more than one, the Vice Chairmen, in the order
determined by the Board of Directors, shall perform the duties of the Chief
Executive Officer, and when so acting shall have all the powers of and be
subject to all the restrictions upon the Chief Executive Officer. At all other
times, the Vice Chairman or Vice Chairmen shall perform such duties and have
such powers as the Chief Executive Officer or the Board of Directors may from
time to time prescribe.
SECTION 6.8. The Vice President. The Vice President shall have such powers
and perform such duties as from time to time assigned by the Board of Directors
or the President. The Vice President shall have all the powers of and perform
all the duties of the President in the event of the President's absence or
inability to act.
SECTION 6.9. The Secretary. The Secretary shall attend and keep minutes of
the meetings of the Board of Directors, the shareholder and any standing
committee, as well as any additional meetings of the Corporation. The Secretary
shall give, or cause to be given, notice of all meetings of the shareholder and
the Board of Directors, and shall perform such other duties as may be prescribed
by the Board of Directors or the President. The Secretary shall have custody of
the corporate seal and shall affix it to all proper instruments when deemed
advisable by him or her. The Secretary shall be responsible for all of the books
and records of the Corporation except the financial books and records kept by
the Chief Financial Officer/Treasurer.
SECTION 6.10. The Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Chief Executive Officer or the Board of Directors may from time to time
prescribe.
SECTION 6.11. Chief Financial Officer/Treasurer. The Chief Financial
Officer shall have custody of the Corporation's funds and securities, shall keep
full and accurate account of receipts and disbursements in books and records
belonging to the Corporation and shall deposit all monies and other valuable
effects in the name of and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors. The Chief Financial Officer
shall disburse the funds of the
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<PAGE>
Corporation as may be ordered by the shareholder, taking proper vouchers for
such disbursements, and shall render to the President and shareholder, at
regular meetings, or when the shareholder so requires, an account of all his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation. The Chief Financial Officer may act on behalf of the
Corporation and sign documents requiring execution in connection with any
financial accommodations, subject to the control of the Board of Directors, and
agreements which may from time to time regulate any financial relationship of
the Corporation. The Chief Financial Officer may sign bonds, mortgages,
certificates for shares and all other contracts and documents requiring
execution on behalf of the Corporation, except as otherwise prohibited. The
Chief Financial Officer shall restore to the Corporation, in case of his or her
death, resignation, retirement or removal from office, all books, papers,
vouchers, money and other property of whatever kind in his or her possession or
under his or her control belonging to the Corporation. The Chief Financial
Officer may from time to time delegate any such duties to any Treasurer.
SECTION 6.12. The Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Chief Executive Officer or the Board of Directors may from time to
time prescribe.
SECTION 6.13. Duties of Officers May be Delegated. In the absence of any
officer of the Corporation, or for any other reason the Board of Directors may
deem sufficient, the Board of Directors may delegate the powers or duties, or
any of such powers or duties, of any officers or officer to any other officer or
to any director.
SECTION 6.14. Compensation. The Board of Directors shall have the
authority to establish reasonable compensation of all officers for services to
the Corporation.
ARTICLE VII
-----------
CERTIFICATES FOR SHARES
-----------------------
SECTION 7.1. Certificates of Shares. The shares of the Corporation shall
be represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in
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<PAGE>
the name of the Corporation by the Chairman or Vice Chairman of the Board of
Directors, Chief Executive Officer, or the President or Vice President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation representing the number of shares registered in
certificate form.
SECTION 7.2. Signatures of Former Officer, Transfer Agent or Registrar. In
case any officer who has signed a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if such person were such officer at the date of issue.
SECTION 7.3. Transfer of Shares. Transfers of shares of the Corporation
shall be made only on the books of the Corporation by the holder of record
thereof or by his, her or its legal representative, who shall furnish proper
evidence of authority to transfer, or by his, her or its attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and on surrender for cancellation of certificate for such
shares. Prior to due presentment of a certificate for shares for registration of
transfer, the Corporation may treat a registered owner of such shares as the
person exclusively entitled to vote, to receive notifications and otherwise have
and exercise all of the right and powers of an owner of shares.
SECTION 7.4. Lost, Destroyed or Stolen Certificates. Whenever a
certificate representing shares of the Corporation has been lost, destroyed or
stolen, the holder thereof may file in the office of the Corporation an
affidavit setting forth, to the best of his knowledge and belief, the time,
place, and circumstance of such loss, destruction or theft together with a
statement of indemnity sufficient in the opinion of the Board of Directors to
indemnify the Corporation against any claim that may be made against it on
account of the alleged loss of any such certificate. Thereupon the board may
cause to be issued to such person or such person's legal representative a new
certificate or a duplicate of the certificate alleged to have been lost,
destroyed or stolen. In the exercise of its discretion, the Board of Directors
may waive the indemnification requirements provided herein.
ARTICLE VIII
------------
DIVIDENDS
---------
SECTION 8. Dividends. The Board of Directors of the Corporation may declare
and pay dividends upon the shares of the Corporation's capital stock in any form
determined by the Board of Directors, in the manner and upon the terms and
conditions provided by law.
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<PAGE>
ARTICLE IX
----------
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
SECTION 9.1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 9.2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 9.3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by one or more officers or agents of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 9.4. Deposits. The funds of the Corporation may be deposited or
invested in such bank account, in such investments or with such other
depositaries as determined by the Board of Directors.
ARTICLE X
---------
AMENDMENTS
----------
SECTION 10. Amendments. These By-Laws may be adopted, amended or repealed
by either the Corporation's Board of Directors or its shareholders; provided,
however, regarding indemnification of directors, Article XI may only be amended
by the Corporation's shareholders.
ARTICLE XI
----------
INDEMNIFICATION
---------------
SECTION 11.1 Indemnification. The Corporation shall indemnify, in
accordance with and to the full extent now or hereafter permitted by law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without limitation, any
action by or in the right of the Corporation), by reason of his acting as a
director of the Corporation (and the Corporation, in the sole discretion of the
Board of Directors, may so indemnify a person by reason of the fact that he is
or was an officer or employee of the
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<PAGE>
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually and reasonably incurred by such person in respect thereof; provided,
however, that the Corporation shall not be obligated to indemnify any such
director (i) with respect to proceedings, claims or actions initiated or brought
voluntarily by such person and not by way of defense or brought against such
person in response to a proceeding, claim or action by such person against the
Corporation, or (ii) for any amounts paid in settlement of an action effected
without the prior written consent of the Corporation to such settlement or,
(iii) if liability was incurred because the director breached or failed to
perform a duty he owes to the corporation and the breach or failure to perform
constitutes (a) a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a material
conflict of interest, (b) a violation of criminal law, unless the director had
reasonable cause to believe his conduct was lawful or no reasonable cause to
believe his conduct was unlawful, (c) a transaction from which the director
derived an improper personal profit, or (d) willful misconduct. The termination
of a proceeding by judgment, order, settlement or conviction, or upon a plea of
no contest or an equivalent plea, shall not, by itself, create a presumption
that indemnification of the director or officer is not required. A director or
officer who seeks indemnification shall make a written request to the
Corporation. Such indemnification is not exclusive of any other right to
indemnification provided by law, agreement or otherwise.
SECTION 11.2 Determination of Right to Indemnification. Unless otherwise
provided by the Corporation's Certificate of Incorporation, these By-Laws, or
written agreement between the director or officer, the determination as to right
to indemnification shall be made by a majority vote of a quorum of the Board of
Directors consisting of directors not at the time parties to the same or related
proceedings. If a quorum of disinterested directors cannot be obtained, the
determination will be made by majority vote of a committee duly appointed by the
Board of Directors and consisting solely of two or more directors not at the
time parties to the same or related proceedings. Directors who are parties to
the same or related proceedings may participate in the designation of members of
the committee.
-13- By-Laws of Everest Two IPA, Inc.
<PAGE>
Exhibit 3.43
CERTIFICATE OF INCORPORATION
OF
EVEREST THREE IPA, INC.
(UNDER SECTION 402 OF THE BUSINESS CORPORATION LAW)
FIRST: The name of the corporation is Everest Three IPA, Inc.
SECOND: The corporation is formed for the following purposes:
a. To function as an Independent Practice Association as
defined in 10 NYCRR 98.2(aa).
b. To arrange by contract for the delivery or provision of
health services by individuals, entities and facilities licensed or certified to
practice medicine and other health professions, and, as appropriate, ancillary
medical services and equipment, by which arrangements such health care providers
and suppliers will provide their services in accordance with and for such
compensation as may be established by a contract between the corporation and one
or more health maintenance organizations which have been granted a certificate
of authority pursuant to the provisions of Article 44 of the Public Health Law
of the State of New York, as amended.
c. To exercise the general powers and purposes authorized by
Section 202 of the Business Corporation Law which are to be exercised only as
powers and purposes incidental to accomplishing the primary Independent Practice
Association powers and purposes of the corporation.
d. Notwithstanding any other provision of this certificate to
the contrary, nothing contained herein shall authorize the corporation to
establish, operate, construct, lease or maintain a hospital or to provide
hospital service or health related service or to operate a drug maintenance
program, a certified home health agency, a hospice, or a health maintenance
organization or to provide a comprehensive health services plan as defined and
covered by Articles 28, 33, 36, 40 and 44, respectively of the Public Health
Law, or to solicit, collect or otherwise raise or obtain any funds,
contributions or grants from any source for the establishment or operation of
any hospital.
THIRD: The office of this corporation is to be located in the County of
Bronx, State of New York.
<PAGE>
FOURTH: The aggregate number of shares which this corporation shall have
authority to issue is 200 common shares, which shares are without par value.
FIFTH: The Secretary of the State of New York is hereby designated the
agent of this corporation upon whom process against this corporation may be
served. The post office address to which the Secretary of State shall mail a
copy of any process against this corporation served upon him as agent of this
corporation is Everest Healthcare Services, 1325 Morris Park Ave., Bronx, New
York 10461.
SIXTH: The duration of the corporation is to be perpetual.
SEVENTH: The corporation shall, to the fullest extent permitted by Article
7 of the Business Corporation Law, as the same may be amended and supplemented,
indemnify any and all persons whom it shall have power to indemnify under said
Article from and against any and all of the expenses, liabilities, or other
matters referred to in or covered by said Article, and the indemnification
provided herein shall not be deemed exclusive or any other rights to which any
person may be entitled under any By-Law, resolution of directors or
shareholder's resolution, agreement, or otherwise, as permitted by said Article,
as to action in any capacity in which such person served at the request of the
corporation.
EIGHTH: The personal liability of the directors of the corporation is
eliminated to the fullest extent permitted by the provisions of paragraph (b) of
Section 402 of the Business Corporation Law, as the same may be amended and
supplemented.
Signed on July 24, 1997
/s/ E. Raymond Kolarsey
--------------------------------------
E. Raymond Kolarsey, Incorporator
Hinman, Straub, Pigors & Manning, P.C.
121 State Street
Albany, New York 12207-1693
<PAGE>
Exhibit 3.44
BY-LAWS
OF
EVEREST THREE IPA, INC.
-----------------------
ARTICLE I
---------
IDENTIFICATION; OFFICES
-----------------------
SECTION 1.1. Name. The name of the corporation is Everest Three IPA, Inc.
(the "Corporation").
SECTION 1.2. Registered Offices; Other Offices. The registered office of
the Corporation in the State of New York shall be in Bronx, New York and in
Bronx County. The Corporation may have such other offices, either within or
outside of the State of New York, as the business of the Corporation may require
from time to time.
ARTICLE II
----------
SHAREHOLDERS
------------
SECTION 2.1. Annual Meeting. An annual meeting of the shareholders shall be
held on the last Wednesday in January of each year, or on such other date as may
be determined by resolution of the Board of Directors; provided, however, that
if in any year such date is a legal holiday, such meeting shall be held on the
next succeeding business day. At each annual meeting, the shareholders shall
elect a Board of Directors and transact such other business as may properly be
brought before the meeting.
SECTION 2.2. Special Meeting. A special meeting of the shareholders may be
called by the President of the Corporation, the Board of Directors, or by such
other officers or persons as the Board of Directors may designate.
SECTION 2.3. Place of Shareholder Meetings. The Board of Directors may
designate any place, either within or without the State of New York, as the
place of meeting for any annual meeting or for any special meeting. If no such
place is designated by the Board of Directors, the place of meeting will be the
principal business office of the Corporation.
<PAGE>
SECTION 2.4. Notice of Meetings. Unless waived as herein provided, whenever
shareholders are required or permitted to take any action at a meeting, written
notice of the meeting shall be given stating the place, date and hour of the
meeting, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Such notice may be written or electronic. Such
written notice shall be given not less than ten (10) days nor more than sixty
(60) days before the date of the meeting to each shareholder entitled to vote at
the meeting. If mailed, notice is given when deposited in the United States
mail, postage prepaid, directed to the shareholder at the shareholder's address
as it appears on the records of the Corporation. If transmitted electronically,
such notice is given when directed to the shareholders' electronic mail address
as supplied to the secretary of the Corporation.
When a meeting is adjourned to another time or place in accordance with
Section 2.5 of these By-Laws, notice need not be given of the adjourned meeting
if the time and place thereof are announced at the meeting in which the
adjournment is taken. At the adjourned meeting the Corporation may conduct any
business which might have been transacted at the original meeting. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting.
SECTION 2.5. Quorum and Adjourned Meetings. Unless otherwise provided by
law or the Corporation's Certificate of Incorporation, a majority of the shares
entitled to vote, present in person or represented by proxy, shall constitute a
quorum at a meeting of shareholders. If less than a majority of the shares
entitled to vote at a meeting of shareholders is present in person or
represented by proxy at such meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the original meeting. The shareholders
present at a meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of such number of shareholders as may leave less
than a quorum.
SECTION 2.6. Fixing of Record Date.
(a) For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or for the
purpose of any other action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A
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<PAGE>
determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting;
(b) For the purpose of determining shareholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is established by the Board of Directors, and
which date shall not be more than ten (10) days after the date on which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation by delivery
to its registered office in the State of New York, its principal office, or an
officer or agent of the Corporation having custody of the book in which the
proceedings of meetings of shareholders are recorded. Delivery to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by law, the
record date for determining shareholders' consent to corporate action in writing
without a meeting shall be the close of business on the day on which the Board
of Directors adopts the resolution taking such prior action; and
(c) For the purpose of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect to any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix the record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty (60) days prior to such
action. If no record date is fixed, the record date for determining the
shareholders for any such purpose shall be the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
SECTION 2.7. Voting List. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten (10) days before every
meeting of shareholders, a complete list of shareholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of each shareholder.
Such list shall be open to the examination of any shareholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the place
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<PAGE>
of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
SECTION 2.8. Voting. Unless otherwise provided by the Certificate of
Incorporation, each shareholder shall be entitled to one vote for each share of
capital stock held by each shareholder. In all matters other than the election
of directors, the affirmative vote of the majority of shares present in person
or represented by proxy at the meeting and entitled to vote on the subject
matter shall be the act of the shareholders. Directors shall be elected by
plurality of the votes of the shares present in person or represented by a proxy
at the meeting entitled to vote on the election of directors.
SECTION 2.9. Proxies. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be valid after the expiration of eleven (11)
months from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may remain irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
SECTION 2.10. Ratification of Acts of Directors and Officers. Except as
otherwise provided by law or by the Certificate of Incorporation of the
Corporation, any transaction or contract or act of the Corporation or of the
directors or the officers of the Corporation may be ratified by the affirmative
vote of the holders of the number of shares which would have been necessary to
approve such transaction, contract or act at a meeting of shareholders, or by
the written consent of shareholders in lieu of a meeting.
SECTION 2.11. Informal Action of Shareholders. Any action required to be
taken at any annual or special meeting of shareholders of the Corporation, or
any action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those shareholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate with any
governmental body, if such action had been voted on by shareholders at a meeting
thereof, the certificate filed shall state, in lieu of any statement required by
law concerning any vote of shareholders, that written consent had been given in
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<PAGE>
accordance with the provisions of Section 615 of the Business Corporation Law of
New York, and that written notice has been given as provided in such section.
SECTION 2.12. Organization. Such person as the Board of Directors may
designate or, in the absence of such a designation, the president of the
Corporation or, in his or her absence, such person as may be chosen by the
holders of a majority of the shares entitled to vote who are present, in person
or by proxy, shall call to order any meeting of the shareholders and act as
chairman of such meeting. In the absence of the secretary of the Corporation,
the chairman of the meeting shall appoint a person to serve as secretary at the
meeting.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 3.1. Number and Tenure of Directors. The number of directors of
the Corporation shall be no less than one (1) or no more than seven (7) members.
Each director shall hold office until such director's successor is elected and
qualified or until such director's earlier resignation or removal. Any director
may resign at any time upon written notice to the Corporation.
SECTION 3.2. Election of Directors. Directors shall be elected at the
annual meeting of shareholders. In all elections for directors, every
shareholder shall have the right to vote the number of shares owned by such
shareholder for each director to be elected.
SECTION 3.3. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President
or at least one-third of the number of directors constituting the whole board.
The person or persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State of New York, as
the place for holding any special meeting of the Board of Directors called by
them.
SECTION 3.4. Notice of Special Meetings of the Board of Directors. Notice
of any special meeting of the Board of Directors shall be given at least one (1)
day previous thereto by written notice to each director at his or her address.
If mailed, such notice shall be deemed to be delivered when deposited in the
United States Mail so addressed, with first-class postage thereon prepaid. If
sent by any other means (including facsimile, courier, or express mail, etc.),
such notice shall be deemed to be delivered when actually delivered to the home
or business address of the director.
SECTION 3.5. Quorum. A majority of the total number of directors fixed by
these By-Laws, or in the absence of a By-Law which fixes the number of
directors, the number stated in the Certificate of Incorporation or named by the
incorporators,
-5- By-Laws of Everest Three IPA, Inc.
<PAGE>
shall constitute a quorum for the transaction of business. If less than a
majority of the directors are present at a meeting of the Board of Directors, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
SECTION 3.6. Voting. The vote of the majority of the directors present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless the Business Corporation Law of the State of New York or the
Certificate of Incorporation requires a vote of a greater number.
SECTION 3.7. Vacancies. Vacancies in the Board of Directors may be filled
by a majority vote of the Board of Directors or by an election either at an
annual meeting or at a special meeting of the shareholders called for that
purpose. Any directors elected by the shareholders to fill a vacancy shall hold
office for the balance of the term for which he or she was elected. A director
appointed by the Board of Directors to fill a vacancy shall serve until the next
meeting of shareholders at which directors are elected.
SECTION 3.8. Removal of Directors. A director, or the entire Board of
Directors, may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors; provided,
however, that if cumulative voting obtains and less than the entire Board of
Directors is to be removed, no director may be removed without cause if the
votes cast against such director's removal would be sufficient to elect him if
then cumulatively voted at an election of the entire Board of Directors.
SECTION 3.9. Informal Action of Directors. Unless otherwise restricted by
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or committee.
SECTION 3.10. Participation by Conference Telephone. Members of the Board
of Directors, or any committee designated by such board, may participate in a
meeting of the Board of Directors, or committee thereof, by means of conference
telephone or similar communications equipment as long as all persons
participating in the meeting can speak with and hear each other, and
participation by a director pursuant to this Section 3.10 shall constitute
presence in person at such meeting.
-6- By-Laws of Everest Three IPA, Inc.
<PAGE>
ARTICLE IV
----------
WAIVER OF NOTICE
----------------
SECTION 4.1. Written Waiver of Notice. A written waiver of any required
notice, signed by the person entitled to notice, whether before or after the
date stated therein, shall be deemed equivalent to notice. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of
shareholders, directors or members of a committee of directors need be specified
in any written waiver of notice.
SECTION 4.2. Attendance as Waiver of Notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, and objects at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE V
---------
COMMITTEES
----------
SECTION 5.1 General Provisions. The Board of Directors may, by resolution
passed by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member at any meeting of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the Corporation's property and assets, recommending
to the shareholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the By-Laws of the Corporation; and, unless the
resolution so provides, no such committee shall have the power or authority to
declare a dividend, to authorize the issuance of stock or to adopt a certificate
of merger.
-7- By-Laws of Everest Three IPA, Inc.
<PAGE>
SECTION 6.1. General Provisions. The Board of Directors shall elect a
President and a Secretary of the Corporation. The Board of Directors may also
elect a Chairman of the Board, one or more Vice Chairmen of the Board, one or
more Vice Presidents, a Treasurer, one or more Assistant Secretaries and
Assistant Treasurers and such additional officers as the Board of Directors may
deem necessary or appropriate from time to time. Any two or more offices may be
held by the same person. The officers elected by the Board of Directors shall
have such duties as are hereafter described and such additional duties as the
Board of Directors may from time to time prescribe.
SECTION 6.2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the Board of Directors at the regular meeting of
the Board of Directors held after each annual meeting of the shareholders. If
the election of officers is not held at such meeting, such election shall be
held as soon thereafter as may be convenient. New offices of the Corporation
may be created and filled and vacancies in offices may be filled at any time, at
a meeting or by the written consent of the Board of Directors. Unless removed
pursuant to Section 6.3 of these By-Laws, each officer shall hold office until
his successor has been duly elected and qualified, or until his earlier death or
resignation. Election or appointment of an officer or agent shall not of itself
create contract rights.
SECTION 6.3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed with or without cause by the
Board of Directors whenever, in its judgment, the best interests of the
Corporation would be served thereby. Removal without cause shall be without
prejudice to the contract rights, if any, of the person(s) so removed.
SECTION 6.4. Determination of the Chief Executive Officer. The Board of
Directors shall designate whether the Chairman of the Board, if one shall have
been chosen, or the President shall be the Chief Executive Officer of the
Corporation. If a Chairman of the Board has not been chosen, or if one has been
chosen but not designated Chief Executive Officer, then the President shall be
the Chief Executive Officer of the Corporation.
SECTION 6.5. President/Chief Executive Officer. The President/Chief
Executive Officer shall be the principal executive officer of the Corporation
and, subject to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the Corporation. The
President/Chief Executive Officer shall preside at all meetings of the
shareholder and at any meeting of the Board of Directors when the Chairman of
the Board is absent. The President/Chief Executive Officer shall see that
orders and resolutions of the Board of Directors are carried into effect and may
sign bonds, mortgages, certificates for shares and all other contracts and
documents requiring execution on behalf of the Corporation.
-8- By-Laws of Everest Three IPA, Inc.
<PAGE>
ARTICLE VI
----------
OFFICERS
--------
SECTION 6.6. The Chairman of the Board. The Chairman of the Board, if one
is chosen, shall be chosen from among the members of the board. If the Chairman
of the Board has not been designated Chief Executive Officer, the Chairman of
the Board shall perform such duties as may be assigned to the Chairman of the
Board by the Chief Executive Officer or by the Board of Directors.
SECTION 6.7. Vice Chairman of the Board. In the absence of the Chief
Executive Officer or in the event of his inability or refusal to act, if the
Chairman of the Board has been designated Chief Executive Officer, the Vice
Chairman, or if there be more than one, the Vice Chairmen, in the order
determined by the Board of Directors, shall perform the duties of the Chief
Executive Officer, and when so acting shall have all the powers of and be
subject to all the restrictions upon the Chief Executive Officer. At all other
times, the Vice Chairman or Vice Chairmen shall perform such duties and have
such powers as the Chief Executive Officer or the Board of Directors may from
time to time prescribe.
SECTION 6.8. The Vice President. The Vice President shall have such powers
and perform such duties as from time to time assigned by the Board of Directors
or the President. The Vice President shall have all the powers of and perform
all the duties of the President in the event of the President's absence or
inability to act.
SECTION 6.9. The Secretary. The Secretary shall attend and keep minutes of
the meetings of the Board of Directors, the shareholder and any standing
committee, as well as any additional meetings of the Corporation. The Secretary
shall give, or cause to be given, notice of all meetings of the shareholder and
the Board of Directors, and shall perform such other duties as may be prescribed
by the Board of Directors or the President. The Secretary shall have custody of
the corporate seal and shall affix it to all proper instruments when deemed
advisable by him or her. The Secretary shall be responsible for all of the books
and records of the Corporation except the financial books and records kept by
the Chief Financial Officer/Treasurer.
SECTION 6.10. The Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Chief Executive Officer or the Board of Directors may from time to time
prescribe.
SECTION 6.11. Chief Financial Officer/Treasurer. The Chief Financial
Officer shall have custody of the Corporation's funds and securities, shall keep
full and accurate account of receipts and disbursements in books and records
belonging to the Corporation and shall deposit all monies and other valuable
effects in the name of and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors. The Chief Financial Officer
shall disburse the funds of the
-9- By-Laws of Everest Three IPA, Inc.
<PAGE>
Corporation as may be ordered by the shareholder, taking proper vouchers for
such disbursements, and shall render to the President and shareholder, at
regular meetings, or when the shareholder so requires, an account of all his or
her transactions as Chief Financial Officer and of the financial condition of
the Corporation. The Chief Financial Officer may act on behalf of the
Corporation and sign documents requiring execution in connection with any
financial accommodations, subject to the control of the Board of Directors, and
agreements which may from time to time regulate any financial relationship of
the Corporation. The Chief Financial Officer may sign bonds, mortgages,
certificates for shares and all other contracts and documents requiring
execution on behalf of the Corporation, except as otherwise prohibited. The
Chief Financial Officer shall restore to the Corporation, in case of his or her
death, resignation, retirement or removal from office, all books, papers,
vouchers, money and other property of whatever kind in his or her possession or
under his or her control belonging to the Corporation. The Chief Financial
Officer may from time to time delegate any such duties to any Treasurer.
SECTION 6.12. The Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the Board of Directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and have such other
powers as the Chief Executive Officer or the Board of Directors may from time to
time prescribe.
SECTION 6.13. Duties of Officers May be Delegated. In the absence of any
officer of the Corporation, or for any other reason the Board of Directors may
deem sufficient, the Board of Directors may delegate the powers or duties, or
any of such powers or duties, of any officers or officer to any other officer or
to any director.
SECTION 6.14. Compensation. The Board of Directors shall have the
authority to establish reasonable compensation of all officers for services to
the Corporation.
ARTICLE VII
-----------
CERTIFICATES FOR SHARES
-----------------------
SECTION 7.1. Certificates of Shares. The shares of the Corporation shall
be represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in
-10- By-Laws of Everest Three IPA, Inc.
<PAGE>
the name of the Corporation by the Chairman or Vice Chairman of the Board of
Directors, Chief Executive Officer, or the President or Vice President, and by
the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary of the Corporation representing the number of shares registered in
certificate form.
SECTION 7.2. Signatures of Former Officer, Transfer Agent or Registrar. In
case any officer who has signed a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Corporation
with the same effect as if such person were such officer at the date of issue.
SECTION 7.3. Transfer of Shares. Transfers of shares of the Corporation
shall be made only on the books of the Corporation by the holder of record
thereof or by his, her or its legal representative, who shall furnish proper
evidence of authority to transfer, or by his, her or its attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation, and on surrender for cancellation of certificate for such
shares. Prior to due presentment of a certificate for shares for registration of
transfer, the Corporation may treat a registered owner of such shares as the
person exclusively entitled to vote, to receive notifications and otherwise have
and exercise all of the right and powers of an owner of shares.
SECTION 7.4. Lost, Destroyed or Stolen Certificates. Whenever a
certificate representing shares of the Corporation has been lost, destroyed or
stolen, the holder thereof may file in the office of the Corporation an
affidavit setting forth, to the best of his knowledge and belief, the time,
place, and circumstance of such loss, destruction or theft together with a
statement of indemnity sufficient in the opinion of the Board of Directors to
indemnify the Corporation against any claim that may be made against it on
account of the alleged loss of any such certificate. Thereupon the board may
cause to be issued to such person or such person's legal representative a new
certificate or a duplicate of the certificate alleged to have been lost,
destroyed or stolen. In the exercise of its discretion, the Board of Directors
may waive the indemnification requirements provided herein.
ARTICLE VIII
------------
DIVIDENDS
---------
SECTION 8. Dividends. The Board of Directors of the Corporation may
declare and pay dividends upon the shares of the Corporation's capital stock in
any form determined by the Board of Directors, in the manner and upon the terms
and conditions provided by law.
-11- By-Laws of Everest Three IPA, Inc.
<PAGE>
ARTICLE IX
----------
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
SECTION 9.1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 9.2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 9.3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by one or more officers or agents of the
Corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
SECTION 9.4. Deposits. The funds of the Corporation may be deposited or
invested in such bank account, in such investments or with such other
depositaries as determined by the Board of Directors.
ARTICLE X
---------
AMENDMENTS
----------
SECTION 10. Amendments. These By-Laws may be adopted, amended or repealed
by either the Corporation's Board of Directors or its shareholders; provided,
however, regarding indemnification of directors, Article XI may only be amended
by the Corporation's shareholders.
ARTICLE XI
----------
INDEMNIFICATION
---------------
SECTION 11.1 Indemnification. The Corporation shall indemnify, in
accordance with and to the full extent now or hereafter permitted by law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (including, without limitation, any
action by or in the right of the Corporation), by reason of his acting as a
director of the Corporation (and the Corporation, in the sole discretion of the
Board of Directors, may so indemnify a person by reason of the fact that he is
or was an officer or employee of the
-12- By-Laws of Everest Three IPA, Inc.
<PAGE>
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually and reasonably incurred by such person in respect thereof; provided,
however, that the Corporation shall not be obligated to indemnify any such
director (i) with respect to proceedings, claims or actions initiated or brought
voluntarily by such person and not by way of defense or brought against such
person in response to a proceeding, claim or action by such person against the
Corporation, or (ii) for any amounts paid in settlement of an action effected
without the prior written consent of the Corporation to such settlement or,
(iii) if liability was incurred because the director breached or failed to
perform a duty he owes to the corporation and the breach or failure to perform
constitutes (a) a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a material
conflict of interest, (b) a violation of criminal law, unless the director had
reasonable cause to believe his conduct was lawful or no reasonable cause to
believe his conduct was unlawful, (c) a transaction from which the director
derived an improper personal profit, or (d) willful misconduct. The termination
of a proceeding by judgment, order, settlement or conviction, or upon a plea of
no contest or an equivalent plea, shall not, by itself, create a presumption
that indemnification of the director or officer is not required. A director or
officer who seeks indemnification shall make a written request to the
Corporation. Such indemnification is not exclusive of any other right to
indemnification provided by law, agreement or otherwise.
SECTION 11.2 Determination of Right to Indemnification. Unless otherwise
provided by the Corporation's Certificate of Incorporation, these By-Laws, or
written agreement between the director or officer, the determination as to right
to indemnification shall be made by a majority vote of a quorum of the Board of
Directors consisting of directors not at the time parties to the same or related
proceedings. If a quorum of disinterested directors cannot be obtained, the
determination will be made by majority vote of a committee duly appointed by the
Board of Directors and consisting solely of two or more directors not at the
time parties to the same or related proceedings. Directors who are parties to
the same or related proceedings may participate in the designation of members of
the committee.
-13- By-Laws of Everest Three IPA, Inc.
<PAGE>
Exhibit 3.45
CERTIFICATE OF FORMATION
OF
ACUTE EXTRACORPOREAL SERVICES, L.L.C.
FIRST: The name of the limited liability company is ACUTE EXTRACORPOREAL
SERVICES, L.L.C. (the "Company").
SECOND: The address of the Company's registered office in the State of Delaware
is 1209 Orange Street, Wilmington, Delaware 19801 in the county of New
Castle. The name of the Company's registered agent is The Corporation
Trust Company.
THIRD: The latest date on which the Company is to dissolve is December 31,
2050.
FOURTH: The debts, obligations and liabilities of the Company, whether arising
in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the Company; and no member or manager of the Company
shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a member or acting as a manager
of the Company.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Formation of ACUTE EXTRACORPOREAL SERVICES, L.L.C. this 1st day of December,
1998.
/s/ Margaret M. Scholand
---------------------------------------
Margaret M. Scholand, Authorized Person
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<FISCAL-YEAR-END> SEP-30-1998
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0
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