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EXHIBIT 10.10
Limited Partnership Agreement
of
U.S. Lithotripsy, L.P.
THIS LIMITED PARTNERSHIP AGREEMENT is entered into and shall be
effective as of the 1st day of April, 1997, by and among Litho Management, Inc.,
a Texas Corporation, Healthtronics, Inc., a Georgia Corporation ("General
Partners"); and the Persons listed as Limited Partners in Exhibit A ("Limited
Partners").
WITNESSETH:
WHEREAS, the parties hereto agree to form a limited partnership for the
purpose hereinafter stated; and
WHEREAS, the parties hereto desire to set forth in writing the terms
and conditions of their agreement and intend to be legally bound by this
Agreement.
NOW, THEREFORE, for and in consideration of the above premises, and of
the following terms, conditions and mutual covenants of the Partners as
hereinafter stated, IT IS HEREBY AGREED:
SECTION 1
THE PARTNERSHIP
1.01 FORMATION. The Partners agree to form the Partnership as a
limited partnership pursuant to the Texas Revised Limited Partnership Act,
except as otherwise provided herein.
1.02 Name. The name of the Partnership shall be U.S. Lithotripsy,
L.P. All business of the Partnership shall be conducted in the name of the
Partnership. The General Partners may change the name of the Partnership upon
ten (10) days Notice to the Limited Partners.
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1.03 TERM. The term of the Partnership shall commence upon the date
of the filing of the original Certificate and shall continue for a period of
forty (40) years from December 31st of the year of the date of such filing, and
thereafter as may be extended by written unanimous agreement of the Partners,
unless sooner terminated in accordance with the provisions of this Agreement.
1.04 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Partnership shall be 000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx 00000.
The business office and the accounting records shall be maintained at the
principal place of business or such other place or places as the General
Partners may, from time to time, designate by Notice to all Limited Partners.
The business of the Partnership, or any part thereof, may be conducted at any
other place or places as the General Partners may hereafter determine. The
General Partners may change the principal place of business of the Partnership
to any other place, within or without the State, upon Notice to the Limited
Partners.
1.05 REGISTERED AGENT AND REGISTERED OFFICE. The registered agent
for purpose of service of process on the Partnership shall be Xxxxxx X. House
and the registered office of the Partnership in the State of Texas is located at
000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx, 00000. The registered agent shall
timely send Notice and copies of any and all service of process on the
Partnership to each General Partner. The General Partners may change the
Registered Agent and Registered Office to any other place within the State upon
(1) giving Notice to the Limited Partners, (2) filing with the State a
Certificate setting forth such change and (3) paying the filing fee thereon.
1.06 PURPOSE. The purpose of the Partnership is, without
limitation:
a. To set up limited partnerships or such other business entities
as may be appropriate under the circumstances with physicians, physician groups,
or other healthcare providers using the LithoTron(TM) Lithotripters, or any
parts thereof, or other similar equipment, consistent with the provisions of
those certain documents entitled Distributor Agreement, dated March 7, 1997, and
Entity Interest Agreement, dated March 7, 1997, and to perform all functions
necessary to carry out and comply with the applicable provisions and
requirements of those documents.
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b. The Partnership shall transact any and all other business
permitted by the laws of the State incidental or related to the purpose of the
Partnership, to be determined in the sole and absolute discretion of the General
Partners.
1.07 CERTIFICATES. The General Partners shall, from time to time,
execute, or cause to be executed, Certificates or other documents or cause to be
done all such filings, recordings, publishings, or other acts as may be
necessary or appropriate (1) to comply with the requirements for the formation
and operation of a limited partnership under the laws of the State, and under
the laws of any other jurisdictions in which the Partnership may conduct
business and (2) to establish and protect the limited liability of the Limited
Partners under the laws of the State, and under the laws of any other
jurisdictions in which the Partnership may conduct business. Prior to the time
that the Certificate is filed, no Person shall represent to third parties the
existence of the Partnership or hold himself out as a Partner.
a. EXECUTION OF CERTIFICATES. Each Certificate is required to be
filed with the State and shall be executed in the following manner:
1. The original Certificate shall be signed by all
General Partners;
2. A Certificate of amendment shall be signed by at
least one General Partner and by each other General Partner designated in the
Certificate as a new General Partner; and
3. A Certificate of cancellation shall be signed by all
General Partners.
b. AMENDMENT TO CERTIFICATE. A Certificate may be amended at any
time for any other purpose that the General Partners determine to be proper.
Within thirty (30) days after the happening of any of the following events, an
amendment to the Certificate reflecting the occurrence of such event or events
shall be filed:
1. The admission of a new General Partner;
2. The withdrawal of a General Partner;
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3. The continuation of the business pursuant to a
nonjudicial dissolution after the withdrawal of a General Partner; and
4. When the General Partners become aware that any statement
in a Certificate was false when made or that any other facts have changed which
make the Certificate inaccurate in any respect.
c. CANCELLATION OF CERTIFICATE. A Certificate shall be canceled
upon the dissolution and the commencement of winding up the Partnership or at
any time there are no Limited Partners. The cancellation of the Certificate
shall not affect the limited liability of the Limited Partners nor the rights
and responsibilities of the Partners as set forth in the Certificate or in this
Agreement during the period of winding up and prior to termination of the
Partnership. A Certificate of cancellation shall be filed with the State.
1.08 BUSINESS IN OTHER JURISDICTIONS. Prior to conducting any
business in any jurisdiction, the General Partners shall cause the Partnership
either to comply with all the requirements for the qualification of the
Partnership (1) to conduct business as a foreign limited partnership in such
jurisdiction, (2) to conduct business in such jurisdiction through other
partnerships or entities, (3) to constitute the Partnership as a limited
partnership under the laws of such jurisdiction, or (4) by such other means as
the General Partners, upon the advice of counsel to the Partnership, deem
appropriate to preserve the limited liability of the Limited Partners; provided,
however, that the Partnership shall not conduct business in a manner that, in
the opinion of counsel to the Partnership, would cause the Partnership to be
classified for federal income tax purposes as an association taxable as a
corporation and not as a partnership.
1.09 TITLE TO PROPERTY. All Property owned by the Partnership shall
be owned by the Partnership as an entity and the Partnership shall hold legal
title to all of its Property in the name of the Partnership and not in the name
of any Partner. No Partner shall have any ownership interest in any Property in
such Partner's individual name or right, and each Partner's Interest shall be
personal property for all purposes.
1.10 INDIVIDUAL OBLIGATIONS. The credit and assets of the
Partnership shall be used solely for the benefit of the Partnership. No asset
of the Partnership shall be transferred or encumbered for or in payment of any
individual obligation of any Partner.
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SECTION 2
PARTNERS AND PARTNERSHIP CAPITAL
2.01 PARTNERS. The name, address and Capital Contribution of each
Partner is set forth on the books and records of the Partnership. Each General
Partner and each Limited Partner shall be separately identified.
2.02 INITIAL PARTNERSHIP CAPITAL. The Initial Capital Contribution
of each Partner is separately set forth on Exhibit A and on the books and
records of the Partnership. The Partners shall pay their respective Initial
Capital Contributions simultaneously with the execution of this Agreement and
such payment shall be credited to their respective Capital Accounts on the books
of the Partnership. No Partner shall be required to make any Capital
Contribution in excess of such Partner's Initial Capital Contribution as set
forth in Exhibit A.
2.03 USE OF PARTNERSHIP CAPITAL. The Partnership Capital shall be
available solely for the use of the business of the Partnership; provided,
however, the General Partners may temporarily invest any or a part of the
Partnership Capital and interest thereon shall inure to the benefit of the
Partnership.
2.04 CAPITAL REQUIREMENTS. The General Partners shall determine
from time to time what additional capital, if any, is required in order to
accomplish the purposes of the Partnership. The General Partners shall have the
authority to borrow funds in the name of the Partnership to complete Partnership
objectives and in connection thereto retain, pledge or use so much of the
revenues or assets of the Partnership as the General Partners deem necessary to
satisfy the present and future capital needs of the Partnership.
2.05 INTEREST. No Partner shall receive interest on such Partner's
Capital Contributions or Capital Account.
2.06 WITHDRAWAL OF CAPITAL CONTRIBUTIONS. Except as otherwise
provide in this Agreement, no Partner shall be entitled to withdraw any part of
such Partner's Capital Contribution nor to demand or receive Property other than
cash in return for such Partner's Capital Contribution. No Partner shall
withdraw as a Partner from the Partnership without the written consent of all
Partners.
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2.07 RETURN OF CAPITAL CONTRIBUTIONS. Except as otherwise provided
in this Agreement, no Partner shall have any priority over any other Partner as
to the return of any part of such Partner's Capital Contribution. There is no
agreement for, nor time set for, the return of any Capital Contribution of any
Partner, other than upon dissolution and liquidation of the Partnership as
provided herein. To the extent funds are available, the General Partners shall
return the Capital Contributions of the Partners out of Operating Cash Flow or
out of proceeds of sale or refinancing of Property, after reserving sufficient
funds for payment of debts, working capital contingencies and replacements. To
the extent of available funds, the General Partners shall return the Capital
Contributions of the Partners at dissolution and termination as provided herein.
Each Partner shall look solely to the Property (assets of the Partnership) for
the return of such Partner's Capital Contribution. No Partner shall have any
personal liability for the repayment of any Capital Contributions of any
Partner.
2.08 NONRECOGNITION ON CAPITAL CONTRIBUTION. It is the intent of
all Partners that this Partnership shall comply in all respects with Code
Sections 721 and 722. No Partner, by virtue of this Agreement, shall acquire any
interest in the Capital Contribution of any other Partner. The amount of the
Capital Contributions shall only be material in computing the amount due the
respective Partners in the event that the Partnership is terminated and
liquidated as provided herein.
2.09 LOANS. Loans by any Partner to the Partnership shall not be
considered as Capital Contributions.
2.10 DEFAULT ON CAPITAL CONTRIBUTIONS. If a Partner fails to make
any Capital Contribution when due, such Partner shall be in default and the
Partnership may exercise all legal rights including, without limitation, the
commencement of an action to collect from such defaulting Partner by legal
process the entire amount of such Partner's unpaid Capital Contributions,
including those not currently in default, together with all court costs and
reasonable attorney fees.
2.11 COMPROMISE. Under certain circumstances, a Partner may be
required by State law to return to the Partnership, for the benefit of
Partnership creditors, any portion of such Partner's Capital Contribution
previously returned or distributed to such Partner, but only to the extent
necessary to discharge the Partnership's liabilities to creditors who extended
credit to the Partnership prior to such distribution. It is the intent of the
Partnership that no distribution to any Partner shall be deemed a return or
withdrawal of such Partner's
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Capital Contribution to the Partnership, even if such distribution is
accompanied in full or in part by a distributive share of Partnership income,
and that no Partner shall be obligated to pay any such amount to or for the
account of the Partnership or any creditor of the Partnership; provided,
however, if any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Partner is obligated to make any such payment,
such obligation shall be the obligation of such Partner and not of the General
Partners.
SECTION 3
ALLOCATIONS
3.01 NET PROFITS SHARING PERCENTAGES. After giving effect to the
special allocations set forth in Section 3.04, the Partners shall share in Net
Profits in accordance with the Net Profits Sharing Percentages set forth in
Exhibit A.
3.02 NET LOSSES SHARING PERCENTAGES. After giving effect to the
special allocations set forth in Section 3.04, the Partners shall share in Net
Losses in accordance with the Net Losses Sharing Percentages set forth in
Exhibit A. The Net Losses allocated pursuant to the Net Losses Sharing
Percentages shall not exceed the maximum amount of Net Losses that can be
allocated without causing any Limited Partner to have an improper deficit
Capital Account at the end of any tax year as set forth in Regulation Section
1.704-1(b)(2)(ii)(d)-the alternate test for economic effect. In the event any,
but not all, of the Limited Partners have deficit Capital Accounts as a result
of an allocation of Net Losses pursuant to the Net Losses Sharing Percentages,
then and in that event a limitation shall be applied on a Limited Partner by
Limited Partner basis in order to allocate the maximum Net Loss permissible to
each Limited Partner in accordance with Regulation Section 1.704-1(b)(2)(ii)(d);
provided however, all Net Losses in excess of such limitations shall be
allocated to the General Partners.
3.03 ANNUAL DETERMINATION. Except as otherwise provided herein, Net
Profits and Net Losses shall be determined at the close of each tax year of the
Partnership and thereafter shall be credited or charged to the respective
Capital Accounts of the respective Partners in the respective Net Profits
Sharing Percentages and Net Losses Sharing Percentages then in effect. After
giving effect to the special allocations set forth in Section 3.04, the
allocation of all income, gain, loss, deductions, credit and tax preference
items shall
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be determined by the Net Profits Sharing Percentages or Net Losses Sharing
Percentages, as the case may be.
3.04 SPECIAL ALLOCATIONS. Special allocations shall be made in the
following order:
a. MINIMUM GAIN CHARGEBACK. Except as otherwise provided
in Regulation Section 1.704-2(f), if there is a net decrease in Partnership
minimum gain during any tax year, each Partner shall be specially allocated
items of Partnership income and gain for such tax year, and, if necessary,
subsequent tax years, in an amount equal to such Partner's share of the net
decrease in Partnership minimum gain, determined in accordance with Regulations
Section 1.704-2(g). This provision is intended to comply with the minimum gain
chargeback requirement in Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
b. CHARGEBACK OF PARTNER NONRECOURSE DEBT MINIMUM GAIN.
Except as otherwise provided in Regulation Section 1.704-2(i)(4), if there is a
net decrease in Partner nonrecourse debt minimum gain attributable to
nonrecourse debt during any tax year, each Partner who has a share of the
nonrecourse debt minimum gain attributable to such nonrecourse debt, as
determined in accordance with Regulation Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such tax year, and,
if necessary, subsequent tax years, in an amount equal to such Partner's share
of the net decrease in nonrecourse debt minimum gain attributable to such
nonrecourse debt, as determined in accordance with Regulation Section
1.704-2(i)(4). The items to be allocated shall be determined in accordance with
Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2). This provision is intended
to comply with the minimum gain chargeback requirement in Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
c. QUALIFIED INCOME OFFSET. In the event any Limited
Partner receives any adjustments, allocations, or distributions described in
Regulation Section 1.704-l(b)(2)(ii)(d)(4), Regulation Section
1.704-l(b)(2)(ii)(d)(5), or Regulation Section 1.704-l(b)(2)(ii)(d)(6), then
and in that event items of Partnership income and gain shall be specially
allocated to each such Limited Partner in an amount sufficient to eliminate, to
the extent required by the Regulations, the Capital Account deficit of such
Limited Partner as quickly as possible. Such allocation shall be made only if
and to the extent that such Limited
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Partner would have a Capital Account deficit after all other allocations
provided for this Section have been made.
x. XXXXX INCOME ALLOCATION. In the event any Partner has
a deficit Capital Account at the end of any tax year which is in excess of (i)
the amount such Partner is obligated to restore pursuant to any provision of
this Agreement and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to Regulations Sections 1.074-2(g)(1) and 1.704-2(i)(5), then
and in that event each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as possible.
Such an allocation shall be made only if and to the extent that such Partner
would have a deficit Capital Account after all other allocations provided for in
the Section have been made.
e. NONRECOURSE DEDUCTIONS. Nonrecourse deductions shall
be allocated in accordance with the Net Profits Sharing Percentages set forth in
Exhibit A; provided, however, any nonrecourse deductions shall be specially
allocated to the General Partner or Partner who bears the economic risk of loss
with respect to the nonrecourse debt to which such nonrecourse deductions are
attributable in accordance with Regulation Section 1.704-2(i)(1).
f. SECTION 704(C) ADJUSTMENTS. With respect to any
Property that may be contributed to the Partnership by a Partner, the gain or
loss with respect to such Property shall be shared among the Partners to take
account of any variation between the income tax basis of such Property to the
Partnership and the Agreed Value of such Property at the time of contribution.
If the income tax basis of such contributed Property differs from the Agreed
Value of such Property, there may be, from time to time, differences between the
financial profits of the Partnership and the reportable Net Profits for federal
income tax purposes. In any tax year when: (1) the reportable Net Profits are
greater than the financial profits, and (2) such difference is due to the sale
of Property contributed by a Partner, or a part thereof, and is due to the
difference between the Agreed Value of such Property and the Partnership's
federal income tax basis in the Property, then and in that event such
contributing Partner shall be allocated with such difference in profits in
addition to any other distributable portion of the Partnership income which such
Partner may be required to then take into account. The Partnership shall
attribute to such contributing Partner such Partner's adjusted tax basis which
such Partner had, and which the Partnership now has, in such contributed
Property in accordance with Code Section 704(c). Notwithstanding the preceding
provisions in this Section, such contributing Partner shall be allocated and
shall report for federal income tax
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purposes all profit realized on the sale of such Property contributed by such
Partner due to the difference between such Partner's adjusted federal income tax
basis in such contributed Property and the Agreed Value of such contributed
Property. Any profit realized from the sale of such contributed Property in
excess of the Agreed Value shall be allocated to each Partner in accordance with
their respective Net Profits Sharing Percentages.
g. CURATIVE ALLOCATIONS. The allocations set forth
hereinabove are intended to comply with certain requirements of the Regulations.
It is the intent of the Partners that the General Partners shall make offsetting
special allocations of Partnership income, gain, loss, or deduction in whatever
manner the General Partners determine appropriate so that, after such offsetting
allocations are made, each Partner's Capital Account balance is, to the extent
possible, equal to the Capital Account balance such Partner would have had if
the regulatory allocations were not part of the Agreement and all Partnership
items were allocated pursuant to the Net Profits Sharing Percentages and the Net
Losses Sharing Percentages set forth in Exhibit A.
3.05 GAIN OR LOSS UPON SALE OF ASSETS. Except as otherwise provided
herein, in the event of the sale or taxable disposition of any Property which
results in a gain or loss, such gain or loss shall be credited to the Capital
Account of each Partner in accordance with the Partner's respective Net Profits
Sharing Percentage or Net Losses Sharing Percentage, as the case may be.
SECTION 4
DISTRIBUTIONS
4.01 DISTRIBUTIONS TO PARTNERS. Operating Cash Flow may be
distributed to the Partners, at any time and from time to time, as determined by
vote of the majority in interest of the General Partners. The Operating Cash
Flow and all other funds received from refinancing, sales, exchanges, etc.,
that the General Partners determine shall be distributed to the Partners, shall
be distributed pro rata in accordance with the Partners' Net Profits Sharing
Percentages in effect at such time.
4.02 DISTRIBUTIONS FROM CAPITAL ACCOUNTS. Except as otherwise
provided in this Agreement, there shall be no distribution from the Partners'
Capital Accounts unless the General Partners determine that excess funds are
available. Such distributions shall be
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pro rata in accordance with the Partners' Net Profits Sharing Percentages in
effect at such time.
4.03 LIMITATIONS ON DISTRIBUTIONS. A Partner shall not receive a
distribution from the Partnership to the extent that, after giving effect to the
distribution, all liabilities of the Partnership, other than liabilities to
Partners on account of their Interests, exceed the fair value of the Property.
4.04 DISTRIBUTION IN KIND. A Partner, regardless of the nature of
such Partner's Capital Contribution, shall have no right to demand and receive
any distribution from the Partnership in any form other than cash. No Partner
shall be compelled to accept a distribution of any asset in kind from the
Partnership to the extent that the percentage of the asset distributed to such
Partner exceeds a percentage of that asset which is equal to such Partner's Net
Profits Sharing Percentage.
4.05 AMOUNTS WITHHELD. Any and all amounts withheld pursuant to the
Code or any provision of any state or local tax law with respect to any payment,
distribution, or allocation to the Partners shall be treated as amounts
distributed to the Partners for all purposes under this Agreement. The General
Partners are authorized to withhold from distributions to the Partners and to
pay over to any federal, state, or local government any amounts required to be
so withheld pursuant to the Code or any provision of any other federal, state,
or local law and shall allocate any such amounts to the Partners with respect to
which such amount was withheld.
SECTION 5
GENERAL PARTNERS
5.01 DUTIES AND OBLIGATIONS.
a. The General Partners shall have a fiduciary duty and
responsibility for the safekeeping and use of all Property, whether or not in
the General Partners' immediate possession or control, and the General Partners
shall not employ, or permit another to employ, such Property in any manner
except for the exclusive benefit of the Partnership.
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b. The General Partners shall cause the Partnership to
conduct its business and operations separate and apart from that of any General
Partner, or any of its Affiliates, including, without limitation: (1) to
segregate Property and not allow Property to be commingled with the funds or
other assets of any General Partner, or any of its Affiliates; (2) to maintain
books and financial records of the Partnership separate from the books and
financial records of any General Partner, or any of its Affiliates, and observe
all Partnership procedures and formalities; (3) to cause the Partnership to pay
its liabilities from Property; and (4) to cause the Partnership to conduct its
dealings in the name of the Partnership, as a separate and independent entity.
c. The General Partners shall take all actions which may
be necessary or appropriate: (1) to continue the Partnership's valid existence
as a limited partnership under the laws of the State and of each other
jurisdiction in which such existence is necessary to protect the limited
liability of the Limited Partners or to enable the Partnership to conduct the
business in which it is engaged; and (2) to accomplish the Partnership's
purposes in accordance with the provisions of this Agreement and applicable
laws.
d. The General Partners shall have a fiduciary duty to
conduct the affairs of the Partnership in the best interests of the Partnership
and of the Limited Partners.
e. The General Partners shall cause the Partnership to
carry such insurance as is customary in the business and places in which the
Partnership is engaged.
5.02 AUTHORITY OF GENERAL PARTNERS. Unless specifically provided
otherwise in this Agreement, the General Partners shall be solely responsible
for the management of, and shall have the exclusive control over, the business
operations of the Partnership. There being more than one General Partner, unless
specifically stated otherwise, all decisions of the General Partners made under
the powers and authorities granted herein and otherwise effecting the
Partnership shall be made upon a vote of a majority in interest of the General
Partners. In addition to, and not in limitation of, the powers conferred by law,
the General Partners shall have the following rights, powers and authority,
acting for and on behalf of the Partnership, on such terms as the General
Partners may determine, in their discretion, to be necessary, convenient or
incidental to accomplish the purposes of the Partnership:
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a. To obtain LithoTron(TM) Lithotripters, or similar
equipment, or any part thereof, including, but not limited to, the shock head,
for limited partnerships comprised of medical doctors, doctor groups or other
health care providers and of which the General Partner, or a related party, may
serve as the General Partner.
b. To execute, change, amend, modify, or otherwise deal
with any and all agreements, contracts, documents, deeds, leases, mortgages,
deeds of trust, promissory notes, bills of sale, and instruments in connection
with managing the affairs of the Partnership.
c. To loan money, and to borrow money and execute any
evidences of indebtedness therefore on behalf of the Partnership.
d. To prepay, in whole or in part, refinance, recast,
increase, modify, extend or exchange any mortgages or liabilities which may now
or hereafter affect the Property, and in connection therewith to execute for and
on behalf of the Partnership any extensions, renewals, or modifications of such
encumbrances on any or all of the Property.
e. To own, hold, manage, maintain, finance, improve,
construct and operate any Property, and retain Persons and enter into agreements
on behalf of the Partnership with respect to the operation and management of the
Partnership business including, without limitation, the ownership, management
and operation of all or any portion of the Property, containing such terms,
provisions and conditions, including fees and expenses to be paid therefor by
the Partnership.
f. To make any and all elections for federal, state,
and local tax purposes including, without limitation, any election, if permitted
by applicable law: (1) to adjust the basis of Property pursuant to Code Sections
754, 734(b) and 743(b) in connection with transfer of any Interests and
Partnership distributions; (2) to extend the statute of limitations for
assessment of tax deficiencies against the Partners with respect to adjustments
to the Partnership's federal, state, or local tax returns; and (3) to represent
the Partnership and the Partners before taxing authorities or courts in tax
matters affecting the Partnership and the Partners in their capacities as
Partners, and to file any tax returns and to execute any agreements or other
documents relating to or affecting such tax matters, including agreements or
other documents that bind the Partners with respect to such tax matters or
otherwise affect the rights of the Partnership and Partners.
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g. To take, or refrain from taking, all actions, not
expressly set forth or limited by this Agreement, as may be necessary or
appropriate to accomplish the purposes of the Partnership.
h. To institute, prosecute, defend, settle, compromise
and dismiss lawsuits or other judicial or administrative proceedings brought on
or in behalf of, or against, the Partnership, or the Partners, in connection
with activities arising out of, connected with, or incidental to this Agreement,
and to engage counsel or others in connection therewith.
i. To distribute funds to the Partners by way of cash,
income, return of capital, or otherwise, in accordance with the provisions of
this Agreement.
j. To do or engage in any of the above with any General
Partner in that General Partner's individual capacity or with an entity in which
the General Partner, individually or otherwise, directly or indirectly, has an
interest.
n. To engage in any kind of activity and perform and
carry out contracts of any kind as may be lawfully carried on or performed by a
partnership under the laws of each state in which the Partnership is then formed
or qualified.
5.03 RELIANCE ON GENERAL PARTNERS. It is expressly understood and
agreed that every contract, agreement, deed, mortgage, lease, promissory note or
other instrument or document executed by the General Partners, with respect to
any Property, shall be conclusive evidence in favor of any and every Person
dealing with the Partnership and relying thereon or claiming thereunder, without
the duty of further inquiry, that (1) at the time or times of the execution or
delivery thereof, the Partnership was in full force and effect, (2) such
instrument or document was duly executed and authorized and is binding upon the
Partnership and all of the Partners thereof, and (3) the General Partners were
duly authorized and empowered to execute and deliver any and every such
instrument or document for and on behalf of the Partnership.
5.04 MANAGING PARTNER. The Managing Partner, if applicable, shall
solely have all the powers of the Majority in Interest of General Partners,
except that the following actions shall require the unanimous consent of the
General Partners, unless stated otherwise.
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If no Managing Partner is appointed, the following powers shall remain with the
General Partners:
a. To confess a judgment against the Partnership in an
amount in excess of Five Thousand Dollars ($5,000).
b. To admit a new General Partner.
c. To terminate the Partnership.
d. To purchase any asset for the Partnership in excess
of Fifty Thousand Dollars ($50,000).
e. To sell any Property with a fair market value in
excess of Fifty Thousand Dollars ($50,000).
f. To incur any Partnership obligation in excess of
Fifty Thousand Dollars ($50,000).
g. To release, assign or transfer a Partnership claim,
security or asset with a value in excess of Fifty Thousand Dollars ($50,000).
h. To make an assignment for the benefit of creditors or
filing a petition in bankruptcy or similar proceeding.
i. To enter into any contract or agreement with a
liability in excess of Fifty Thousand Dollars ($50,000) or a term over two (2)
years. This shall be done upon the vote of a majority in interest of the General
Partners.
j. To issue a check or draft over twenty-five Thousand
Dollars ($25,000). This shall be done upon the vote of a majority in interest of
the General Partners.
k. To enter into a related party transaction.
l. To appoint a new Managing Partner.
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5.05 MEETINGS OF GENERAL PARTNERS. In the event the Partnership has
more than one General Partner, any General Partner may at any time call a
meeting by sending Notice of a General Partners Meeting. The Notice shall
include the business purpose of the meeting. Any such meeting shall be held not
less than ten (10) days or more than thirty (30) days following mailing of the
Notice. The meeting shall be conducted by the Managing Partner pursuant to such
rules for the conduct of the meeting as the Majority in Interest of General
Partners deem appropriate. General Partners may vote in person or by proxy at
such meeting. Any action which may be taken by the General Partners at a meeting
may be taken without a meeting if a unanimous written consent of the General
Partners, setting forth the action taken, is signed by all of the General
Partners. Any such consent may be signed in counterpart, may be retroactive and
may be by facsimile communication, if such facsimile is followed by a hard copy
of the facsimile communication. The Managing Partner shall keep minutes and
records of all meetings and unanimous written consent.
5.06 TAX MATTERS PARTNER. In the event there is a sole General
Partner, then the General Partner shall be the Tax Matters Partner in accordance
with Code Section 6223 and, if applicable, any similar capacity under State or
local law. In the event there shall be more than one General Partner, then and
in that event, the Majority in Interest of General Partners shall appoint in
writing one General Partner as the Tax Matters Partner. A Notice of appointment
of Tax Matters Partner signed by the General Partners shall be sent to all
Partners to effect such appointment. The Tax Matters Partner may be similarly
removed by the Majority in Interest of General Partners. A new Tax Matters
Partner may be similarly appointed by the Majority in Interest of General
Partners.
5.07 LITIGATION. The General Partners shall prosecute and defend
such actions at law or in equity as the General Partners may deem necessary to
enforce or protect the interests of the Partnership. The Partnership and the
General Partners shall respond to any unappealed final decree, judgment or
decision of any court, board or authority having jurisdiction over the
Partnership or Property. The General Partners shall satisfy any such judgment
decree or decision first out of any insurance proceeds available therefor, next
out of assets of the Partnership, and finally out of the assets of the General
Partners.
5.08 SOLE AND ABSOLUTE DISCRETION. Unless specifically provided
otherwise in this Agreement, all actions which the General Partners may take and
all determinations that the General Partners may make pursuant to this Agreement
may be taken and made at the absolute discretion of the General Partners.
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5.09 LIABILITY. The General Partners shall have unlimited liability
for the recourse debts of the Partnership, and in the event that there should be
more than one General Partner, then and in that event the General Partners shall
each have joint liability for the debts of the Partnership. In the event that
there should be more than one General Partner, then and in that event each
General Partner hereby indemnifies the other General Partners for any loss,
cost, expense, or liability in excess of such other General Partners' pro rata
share, which shall be the fraction each General Partner's Net Losses Sharing
Percentage divided by the aggregate Net Losses Sharing Percentages then
allocable to all of the General Partners. Each General Partner hereby agrees to
reimburse the other General Partners for any such excess loss immediately upon
written demand and proof of same.
5.10 LIMITATION OF LIABILITY. The General Partners shall not be
personally liable to any Limited Partner:
a. For the return of Capital Contributions, the
repayment of any loans or advances to the Partnership by any Limited Partner, or
the payment of interest thereon.
b. For any act, omission, or decision that did not
constitute a breach of any provision of this Agreement that was done, omitted,
or made in good faith and without intent to defraud the Partnership,
notwithstanding that the act, omission, or decision may have, directly or
indirectly, caused loss or damage to the Limited Partners. The General Partners
shall be held harmless against loss, damages or liability as General Partners
only to the extent that the assets are not applied to the creditors of the
Partnership, other than creditors who are also a Partner.
5.11 INDEMNIFICATION OF GENERAL PARTNER(S).
a. The Partnership, the Partnership's receiver or the
Partnership's trustee (in the case of the Partnership's receiver or trustee, to
the extent of Property) shall indemnify, save harmless and pay all judgments and
claims against the General Partners or any officers or directors of the General
Partners relating to any liability or damage incurred by reason of any act
performed or omitted to be performed by the General Partners, officer or
director in connection with the business of the Partnership, including
attorneys' fees incurred by the General Partners, officer or director in
connection with the defense of any action based on any such act or omission,
which attorneys' fees may be paid as incurred.
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b. In the event of any action by any Partner against any
General Partner, including a Partnership derivative suit, the Partnership shall
indemnify, save harmless and pay all expenses of such General Partner, including
attorneys' fees, incurred in the defense of such action, if such General Partner
is successful in such action.
c. No General Partner shall be indemnified from any
liability for fraud, bad faith, willful misconduct or gross negligence.
5.12 STATUS OF GENERAL PARTNERS. The General Partners shall not be
required to devote full time or attention to the business of the Partnership.
The General Partners, and any of their Affiliates, shall be required to devote
so much time and attention to the business of the Partnership as the General
Partners deem, in their discretion to be reasonably necessary for the
Partnership purposes.
5.13 TAX CONTROVERSIES. Should there be any controversy with the
Internal Revenue Service or any other taxing authority involving the
Partnership, or an individual Partner, or Partners, the outcome of which may
adversely affect the Partnership, either directly or indirectly, the Partnership
may incur expenses it deems necessary and advisable in the interest of the
Partnership and its Partners to oppose such proposed deficiency, including,
without being limited thereto, attorney's fees and accounting fees. The
Partnership and the General Partners shall not be responsible for representing
the Limited Partners in tax controversies, or for the payment of tax
deficiencies or penalties resulting from tax controversies.
5.14 INDEPENDENT ACTIVITIES. The General Partners, and any
Affiliates, may engage in whatever activities the General Partners choose, of
any nature and description, whether or not competitive with the business of the
Partnership or otherwise, without having or incurring any obligation to offer
any interest in such activities to the Partnership or any Partner, provided that
any such activities are consistent with the provisions of those certain
documents entitled Distributor Agreement, dated March 7, 1997 and Entity
Interest Agreement, dated March 7, 1997. This Agreement, or any activity
undertaken pursuant hereto, shall not prevent the General Partners, or any
Affiliates, from engaging in such activities, or require the General Partners to
permit the Partnership or any Partner to
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participate in any such activities, and as a material part of the consideration
for the execution of this Agreement by the General Partners and the admission of
each Limited Partner, each Partner hereby waives, relinquishes and renounces any
such right or claim of participation.
SECTION 6
LIMITED PARTNERS
6.01 NO CONTROL OF BUSINESS. Unless specifically provided otherwise
in this Agreement, no Limited Partner shall have any right or authority to take
part in, or interfere in any manner with, the management or control of the
business and affairs of the Partnership, including the use of any Property, nor
shall any Limited Partner have any right or authority to act for or bind the
Partnership in any manner whatsoever.
6.02 NO PRIORITY. No Limited Partner shall have the right to demand
or receive Property other than cash in connection with any distribution, whether
upon liquidation of the Partnership or otherwise, and whether or not such
distribution shall constitute a return of such Partner's Capital Contribution or
Capital Account. No Limited Partner shall have priority over any other Partner
as to the return of Capital Contributions or to allocations of Net Profits or
Net Losses.
6.03 INDEPENDENT ACTIVITIES. Any Limited Partner, and any
Affiliate, may engage in whatever other profession or business activities, of
any nature and description, that they choose; provided, however, that any such
activities are consistent with the provisions of those certain documents
entitled Distributor Agreement, dated March 7, 1997 and Entity Interest
Agreement, dated March 7, 1997, and provided, further, however, in the event a
Limited Partner is determined to be in breach, in the discretion of the General
Partners, then and in that event the sole remedy of the Partnership, and all
other Partners, is the purchase of Defaulting Limited Partner's Interest as
provided in Section 10.14.
6.04 ACTIONS BY LIMITED PARTNERS. Unless specifically provided
otherwise in this Agreement, no Limited Partner shall have the right to: (1)
amend this Agreement; (2) dissolve the Partnership; (3) remove a General
Partner; (4) approve or disapprove the sale of all or a part of the Property; or
(5) elect any Person or Persons as additional General Partners of the
Partnership.
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6.05 LOANS. Any Limited Partner may lend money to the Partnership,
and receive or hold as collateral or security therefor any Property. As to such
loans or advances, such Limited Partner shall have the same rights as any other
general secured or unsecured creditor, as the case may be.
6.06 LIABILITY OF LIMITED PARTNERS. The Capital Contributions made
under the terms of this Agreement by the Limited Partners, as increased or
decreased by conventional accounting methods, shall be liable for the debts of
the Partnership, but the Limited Partners shall not otherwise be liable for any
of said debts. No Limited Partner shall be liable for the debts, liabilities,
contracts or any other obligations of the Partnership. Unless specifically
provided otherwise in this Agreement, a Limited Partner shall be liable only to
make such Limited Partner's Initial Capital Contributions and shall not be
required to lend or contribute any additional funds to the Partnership, or after
such Limited Partner's Capital Contribution has been made, to make any
additional Capital Contributions to the Partnership.
6.07 WITHDRAWAL. No Limited Partner shall have any right or
authority to withdraw from the Partnership at any time, or for any reason,
unless specifically provided otherwise in this Agreement.
6.08 TRUSTS; TRUSTEES. If any trust should become a Limited Partner
and should expire by the terms of the trust agreement, the Interest of the trust
estate shall automatically vest in the distributes beneficiary as a Limited
Partner and not as an assignee. The Partnership shall continue without
interruption and a revised Exhibit A shall be prepared, executed and attached
hereto. In the event of the death, incapacity, refusal to act or resignation of
any trustee, the successor trustee designated in the trust agreement or
appointed by a court of competent jurisdiction shall immediately succeed to the
trust estate, which shall continue, uninterrupted, as a Limited Partner.
6.09 POWER OF ATTORNEY. Each Limited Partner, by executing this
Agreement, does hereby irrevocably constitute and appoint each General Partner,
and each successor General Partner, with full power of substitution, his true
and lawful attorney-in-fact and agent with full power and authority in such
Limited Partner's name, place and stead and for such Limited Partner's use and
benefit, to execute for such Limited Partner one or more counterparts of this
Agreement and any amendments hereto and to execute, certify, acknowledge, swear
to, deliver, file and record in the appropriate public offices: (1) all
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Certificates and other instruments which the General Partners deem appropriate
to qualify or continue the Partnership as a limited partnership in the
jurisdiction in which the Partnership may conduct business; (2) all instruments
which the General Partners deem appropriate to reflect a change or modification
of the Partnership in accordance with the terms of this Agreement; (3) any other
instrument which is now or may hereafter be required by law to be filed on
behalf of the Partnership or is deemed appropriate by the General Partners to
carry out the provisions of this Agreement in accordance with its terms; and (4)
all conveyances and other instruments which the General Partners deem
appropriate to reflect the dissolution and termination of the Partnership. The
power of attorney granted herein is a special power of attorney coupled with an
interest, is irrevocable and shall survive the death, Incapacity, Bankruptcy,
Insolvency, dissolution or cessation of existence of a Limited Partner and shall
survive the delivery of an assignment by a Limited Partner of the whole or a
portion of such Limited Partner's Interests.
SECTION 7
REPRESENTATIONS AND WARRANTIES
7.01 PARTNERS' REPRESENTATIONS AND WARRANTIES. Each Partner hereby
represents and warrants the following as of the date of this Agreement, and
agrees that the following representations and warranties shall survive the
execution of this Agreement:
a. SUBCHAPTER K ELECTION. That no election shall be made
by such Partner for the Partnership to be excluded from the application of the
provisions of Subchapter K of the Code.
b. AUTHORIZATION. That each Partner has the requisite
power and authority for such Partner's execution of this Agreement and that such
execution constitutes a valid and binding obligation of such Partner. If any
Partner is a corporation or a partnership, that such Partner is duly organized
or duly formed, validly existing, in good standing under the laws of the
jurisdiction of its incorporation or formation and has the corporate or
partnership power and authority to own its property and carry on its business as
owned and carried on at the date hereof and as contemplated hereby. Such Partner
is duly licensed or qualified to do business and in good standing in each of the
jurisdictions in which the failure to be so licensed or qualified would have a
material adverse effect on such Partner's financial condition or such Partner's
ability to perform such Partner's obligations hereunder. Such
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Partner has the individual, corporate or partnership power and authority to
execute and deliver this Agreement and to perform such Partner's obligations
hereunder and, if such Partner is a corporation or partnership, the execution,
delivery and performance of this Agreement has been duly authorized by all
necessary corporate or partnership action.
c. CONFLICTS. That the execution, delivery and
performance of this Agreement will not violate, conflict with or result in a
breach of or constitute a default under any agreement, instrument or court order
which such Partner, or any Affiliate, may be bound and that no consent of any
third party not a Partner to the Agreement is required to fully effect this
Agreement.
d. LITIGATION. That, except as fully disclosed in
writing to all Partners, such Partner is not a party to or threatened with any
action, suit, investigation, litigation, proceeding or controversy before any
court or administrative agency, nor in default with respect to any judgment,
order, writ, injunction, decree, rule or regulation before any court or
administrative agency which might result in any adverse effect on
representations, statements and conditions set forth in this Agreement or the
ability of such Partner to perform such Partner's obligations herein.
e. ACCURACY OF INFORMATION. That, to the best of such
Partner's knowledge, this Agreement does not contain any false statements and
that this Agreement does not omit any material facts.
f. LEGAL RESPONSIBILITIES. That such Partner shall
comply, abide by and fully adhere with all applicable federal, state, local and
municipal laws, regulations and ordinances applicable to any responsibilities of
such Partner hereunder.
g. INVESTIGATION. That such Partner is acquiring its
Interest based upon such Partner's own investigation, and the exercise by such
Partner of its rights and the performance of its obligations under this
Agreement will be based upon such Partner's own investigation, analysis and
expertise. Such Partner's acquisition of its Interest is being made for such
Partners own account for investment, and not with a view to the sale or
distribution thereof.
h. GOVERNMENTAL AUTHORIZATIONS. That any registration,
filing with, or consent, approval, license, permit or other authorization or
order by any governmental or
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regulatory authority that is required in connection with the valid execution,
delivery, acceptance and performance by such Partner under this Agreement or the
consummation by such Partner of any transaction contemplated hereby has been
completed, made or obtained on or before the effective date of this Agreement.
i. BUSINESS RISK. That each Partner is informed and
knowledgeable of the risk involved in this venture, which may be considered
higher than the normal business or investment risk.
j. INCOME TAX. That each Partner is informed and
knowledgeable of the possible adverse income tax consequences in that the
Partnership's operating income will be used to pay operating expenses,
therefore, the Limited Partners may recognize taxable income in excess of any
distributions. The Limited Partners initial tax basis will be limited to their
capital contributions, whereas any tax losses that exceed any Limited Partner's
adjusted tax basis can not be deducted by such Limited Partner and will be
allocated to the General Partners.
7.02 LIMITED PARTNERS' REPRESENTATIONS AND WARRANTIES. Each Limited
Partner hereby represents and warrants the following as of the date of this
Agreement, and agrees that the following representations and warranties shall
survive the execution of this Agreement:
a. EXECUTION. That, on behalf of such Limited Partner,
such Limited Partner's successors, assigns, heirs and personal representatives
shall execute and deliver with acknowledgment or affidavit, if required, all
documents determined by the General Partners to be necessary or appropriate to
effect the statutory organization of the Partnership.
b. EXPERTISE. That each Limited Partner is a
sophisticated investor possessing an expertise in analyzing Be benefits and
risks associated with acquiring investments that are similar to the acquisition
of such Limited Partner's Interest.
c. INDEMNIFICATION BY LIMITED PARTNERS. That each
Limited Partner understands the meaning and legal consequences of the warranties
and representations contained in this Section, and hereby agrees to indemnify
and hold harmless the Partnership, each Limited Partner, the General Partners
and their agents and employees, from and against
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any and all loss, damage, liability or expense due to or arising out of a breach
of any such warranty or representation by such Limited Partner.
7.03 INDEMNIFICATION BY GENERAL PARTNERS. The General Partners
hereby agree to indemnify, hold harmless and defend the Partnership against any
and all loss, damage, liability or expense arising directly from or as a result
of the General Partners' gross negligence; gross misconduct; breach of fiduciary
duty; breach of a term, representation, condition or covenant of this Agreement;
or a breach of any warranty or representation contained in this Section.
SECTION 8
BOOKS, RECORDS AND REPORTS
8.01 BOOKS AND RECORDS. The Partnership shall maintain at the
Partnership's principal place of business separate books of accounts for the
Partnership which shall show a true and accurate record of all costs and
expenses incurred, all changes made, all credits made and received, and all
income derived in connection with the conduct of the Partnership and the
operation of the Partnership's business in accordance with generally accepted
accounting principles consistently applied, and, to the extent inconsistent
therewith, in accordance with this Agreement. Any Partner, or such Partner's
Representative, shall have the right, at any reasonable time during ordinary
business hours, to have access to inspect and copy, at the expense of such
Partner, such books or records. In addition to the above, the following books
and records shall also be maintained:
a. A current list in alphabetical order of the full name
and last known business address of each Partner. Each General Partner and each
Limited Partner shall be separately identified.
b. The then effective Limited Partnership Agreement and
all amendments thereto, together with any executed powers of attorney pursuant
to which any such document has been executed.
c. The Certificate and all amendments, together with any
executed powers of attorney pursuant to which any Certificate has been executed.
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d. Copies of all the Partnership's federal and state
income tax returns.
e. Copies of all financial statements of the Partnership
for the six (6) most recent years.
f. The amount of cash and a description and statement of
the Agreed Value of all and any property or services contributed by each Partner
and which each Partner has agreed to contribute.
g. The times at which, or events on the happening of
which, any additional Capital Contributions agreed to be made are to be made by
each Partner.
8.02 REPORTS AND INFORMATION. All Partners shall have the right to
obtain from the General Partners from time to time, upon reasonable demand, true
and full information regarding the state of the business and financial condition
of the Partnership and any other information as is just and reasonable.
8.03 TAX RETURNS. The General Partners shall, at the expense of the
Partnership, annually cause the Accountant to prepare and timely file within
ninety (90) days after each tax year of the Partnership (1) with the Internal
Revenue Service, the Partnership's U.S. Partnership Return of Income (Form
1065); and (2) with the State, the State partnership return. The General
Partners shall distribute to all the Partners, within ninety (90) days after
each tax year of the Partnership, duplicate copies of the Partnership's complete
tax returns (federal, state and local, if any) as dated, executed and filed with
the taxing authorities, and all information relating to the Partnership that is
necessary for the preparation of the Partners' income tax returns.
8.04 FILINGS WITH REGULATORY AGENCIES. The General Partners, at the
expense of the Partnership, shall cause to be prepared and timely filed with
appropriate federal and state regulatory and administrative bodies all reports
required to be filed with such entities under then current applicable laws,
rules and regulations. Any Partner shall be provided with a copy of any such
report upon request.
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SECTION 9
ADMINISTRATIVE PROVISIONS
9.01 EXPENSES INCURRED BY GENERAL PARTNERS. The General Partners
shall be entitled to receive reimbursement for any and all expenses and costs
incurred by the General Partners on behalf of the Partnership.
9.02 COMPENSATION OF PARTNERS. Unless determined otherwise by the
vote of a majority in interest of the Partners, no Partner shall receive any
compensation, salary, fee, draw or guaranteed payment under Code Section 7.07(c)
for services rendered to or on behalf of the Partnership or otherwise in his
capacity as a Partner, unless specifically provided otherwise in this Agreement
or subsequently agreed to in writing by all the Partners.
9.03 BANKING. The General Partners, and such other persons as the
General Partners shall determine, shall deposit all funds of the Partnership in
such banks, trust companies or other depositories as the General Partners may
select. For the purpose of deposit and collection for the account of the
Partnership, the General Partners, and any other person whom the General
Partners have authorized, may endorse, assign and deliver checks, drafts and
other orders for the payment of money payable to the order of the Partnership.
The General Partners, and other persons as the General Partners shall determine,
shall issue all checks, drafts and other orders for the payment of money, notes
and other evidences of indebtedness issued in the name of or payable by the
Partnership. The General Partners may authorize the opening and keeping of
general and special bank accounts with such banks, trust companies or other
depositories as the General Partners may select. The General Partners may make
such special rules and regulations with respect to such bank accounts, not
inconsistent with the provisions of this Agreement, as the General Partners may
deem expedient.
9.04 INQUIRIES. Any Partner shall have the right to submit to the
General Partners a question in writing concerning any item or matter, shown on
any report or statement or otherwise, and the General Partners shall prepare and
deliver to such Partner a written response, directly answering such question or
questions within fourteen (14) days after the receipt of such letter by the
General Partners.
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9.05 DEALING WITH THE PARTNERSHIP. The Partners, and any
Affiliates, shall have the right to contract or otherwise deal with the
Partnership for the sale or lease of property, the rendition of services and
other purposes, and to receive payments and fees from the Partnership in
connection therewith as the General Partners shall determine, provided, however,
that such payments or fees are disclosed and are on an arms-length basis and on
terms comparable to the payments or fees that would be paid to unrelated Persons
providing the same property, goods or services to the Partnership.
9.06 DISPUTE RESOLUTION. Subsequent to the execution of this
Agreement by the Partners, all claims, disputes, differences, controversies and
questions which may arise concerning the matters and obligations set forth in
this Agreement, or for the construction or application of this Agreement, or
concerning any liabilities created hereunder, or any act or omission of any
Partner, shall be resolved in the following manner and order; provided, however,
this Section shall not limit the right of any Partner to seek temporary
injunctive relief where an unacceptable interim period may exist between the
time of the dispute and the earliest time at which arbitration can be commenced.
a. The Partners shall consult and negotiate with each
other, in good faith, and, recognizing their mutual interest, attempt to reach a
just and equitable solution satisfactory to all the Partners. In the event the
Partners do not reach such solution within a period of thirty (30) days, then
upon Notice by a Partner to the other Partners, such dispute shall be submitted
to mediation.
b. The Partners shall then try in good faith to settle
the dispute by mediation in the State under the Commercial Mediation Rules of
the American Arbitration Association before resorting to arbitration. In the
event the Partners do not reach such solution within a period of thirty (30)
days, then upon Notice by a Partner to the other Partners, such dispute shall be
submitted to binding arbitration.
c. The dispute shall then be settled by binding
arbitration in the State in accordance with the applicable rules of the American
Arbitration Association and judgment upon the award rendered may be entered into
any court having jurisdiction thereof.
d. The prevailing Partners shall be entitled to their
costs including reasonable attorney fees.
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9.07 AMENDMENTS TO AGREEMENT. In addition to any amendments
otherwise authorized herein, amendments may be made to this Agreement from time
to time by the General Partners as follows:
a. WITHOUT CONSENT OF LIMITED PARTNERS. Without the
consent of the Limited Partners: (1) to add to the representations, duties or
obligations of the General Partners or to surrender any right or power granted
to the General Partners herein, for the benefit of the Limited Partners; (2) to
correct any error or resolve any ambiguity in or inconsistency among any of the
provisions hereof, or to make any other provision with respect to matters or
questions arising under this Agreement that is not inconsistent with the
provisions of this Agreement; (3) to delete or add any provision of this
Agreement required to be so deleted or added by any governmental authority for
the benefit or protection of the Limited Partners; (4) to change the name of the
Partnership, if such change is necessary to protect the limited liability of the
Limited Partners or to comply with applicable federal or state law or the rules
or regulations of any governmental agency; and (5) to the extent allowed by law,
to amend this Agreement and any Certificate so long as no Limited Partner is
materially and adversely affected or consent is given by the Limited Partners.
b. WITH CONSENT OF AFFECTED PARTNERS. Notwithstanding
any other provision of this Agreement, this Agreement may not be amended without
the consent of the Partner or Partners to be adversely affected by any amendment
to this Agreement: (1) to convert a Limited Partner's Interest into a General
Partner's Interest; (2) to modify the limited liability of a Limited Partner;
(3) to alter the Interest of a Partner in income, gain, losses, deductions,
credits or distributions, unless specifically provided for herein; (4) to
increase, add or alter any obligation of any Partner; or (5) to materially and
adversely affect any Partner's Interest.
c. AFTER CHANGE OF LAW. Without the consent of the
Limited Partners if there occurs any change of law that permits or requires an
amendment of this Agreement or of any other Partnership document under
applicable law, so long as no Partner is adversely affected or consent is given
by such Partner that is adversely affected.
d. RECORDING OF AMENDMENTS. In the event any amendments
are made to this Agreement or any other Partnership documents, there shall be
prepared and filed for recordation by the General Partners such documents and
Certificates as shall be required to
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be prepared and filed under the laws of the State. Within ten (10) days after
the request by the General Partners, the Limited Partners shall execute an
amended Certificate and such other documents and instruments as may be required
for the valid formation, continuance and existence of the Partnership as a
limited partnership.
SECTION 10
TRANSFERS
10.01 RESTRICTIONS ON TRANSFERS. The Interests represented by this
Agreement have not been registered under any securities laws and the
transferability of such Interests is restricted. Such Interests may not be
Transferred, nor will any assignee be recognized as having acquired any such
Interests by the Partnership for any purposes, unless (1) a registration
statement under the Securities Act of 1933, as amended, with respect to such
Interests shall then be in effect and such Transfer has been qualified under all
applicable securities laws of State, or (2) the availability of an exemption
from such registration and qualification shall be established to the
satisfaction of counsel to the Partnership. The Interests represented by this
Agreement are subject to further restrictions as to their Transfer as set forth
in this Agreement and agreed to by each Partner. Said restrictions provide,
among other things, that no assignee of an Interest shall have the right to
become a Limited Partner without the written consent of the General Partners,
which consent may be given or withheld in the sole and absolute discretion of
the General Partners.
10.02 PERMITTED TRANSFERS. A Partner may only Transfer all or any
portion of such Partner's Interest with the written consent of the General
Partners, which consent may be given or withheld in the sole and absolute
discretion of the General Partners; provided, however, the assignor Limited
Partner shall not be released from any of such assignor Limited Partner's
liability to the Partnership pursuant to this Agreement and shall continue to be
bound by the provisions of this Agreement; provided, further, however, a
Transfer shall not be treated as a Permitted Transfer unless and until the
following conditions are satisfied:
a. The transferor and transferee shall execute and
deliver to the Partnership such documents including, without limitation,
amendments to the Certificate, and instruments of conveyance as may be necessary
or appropriate in the opinion of counsel to the Partnership to effect such
Transfer and to confirm the agreement of the transferee to become a party to
this Agreement and to be bound by the provisions of this Agreement. In
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the case of a Transfer by death or involuntarily by operation of law, the
Transfer shall be confirmed by evidence to the Partnership of such Transfer, in
form and substance satisfactory to counsel to the Partnership. In all cases, the
Partnership shall be reimbursed by the transferor or transferee for all
reasonable expenses including, but not limited to, legal, filing, accounting and
publication expenses that the Partnership reasonably incurs in connection with
the admission of the transferee as a Partner.
b. The transferor shall furnish to the Partnership a
written opinion of qualified counsel, which counsel and opinion shall be
satisfactory to the Partnership, that the Transfer:
1. Will not cause the Partnership to terminate
for federal income tax purposes;
2. Is exempt from all applicable registration
requirements and that such Transfer will not violate any applicable laws
regulating the Transfer of securities; or such Interest shall be registered
under the Securities Act of 1933, as amended, and any applicable securities laws
of the State, at the expense of transferee or transferor;
3. Will not cause the Partnership to be deemed
to be an "investment company" under the Investment Company Act of 1940; and
4. For federal income tax purposes, will cause
the Partnership to be taxed as a partnership and the Partnership will not be
taxed as an association taxable as a corporation.
10.03 PROHIBITED TRANSFERS. Except as otherwise permitted by this
Agreement, no Partner shall have the right to voluntarily Transfer to any Person
such Partner's Interest, or any part thereof, without the prior written approval
of a majority in interest of the General Partners and any voluntary purported
Transfer of an Interest that is not a Permitted Transfer shall be null and void
ab initio and no force or effect whatever; provided, however, if the Partnership
is required to recognize a Transfer that is not a Permitted Transfer, or if the
General Partner elects to recognize a Transfer that is not a Permitted Transfer,
the Interest transferred shall be limited to the transferor's rights to
allocations and distributions as provided by this Agreement with respect to the
transferred Interests, which allocations and distributions may be applied,
without limiting any other legal
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or equitable rights of the Partnership, to satisfy any debts, obligations or
liabilities for damages that the transferor or transferee of such Interests may
have to the Partnership. The parties engaging or attempting to engage in a
Transfer or attempted Transfer of Interest that is not a Permitted Transfer
shall be liable to indemnify and hold harmless the Partnership from all costs,
liability and damages, including, without limitations, incremental tax
liability, attorney's fees and expenses as a result of such Transfer or
attempted Transfer.
10.04 PLEDGE OF INTEREST. No Partner shall have any right to pledge,
encumber or otherwise create a security interest in such Partner's Interest to
secure the payment of any indebtedness without the prior written approval of a
majority in interest of the General Partners, and any such pledge or
hypothecation shall be made pursuant to a pledge or hypothecation agreement that
requires the pledgee or secured party to be bound by all the terms and
conditions of this Section.
10.05 RIGHTS OF CREDITOR. On application to a court of competent
jurisdiction by any judgment creditor of a Partner, the court may charge the
Interest of such Partner with payment of the unsatisfied amount of the judgment
with interest thereon. To the extent so charged, the judgment creditor shall
have only the rights of an assignee of the Interest to receive, to the extent
assigned, only the distributions to which the assignor Partner would be
entitled. This provision shall not deprive any Partner of the benefit of any
exemption laws applicable to such Partner's Interest.
10.06 RIGHTS OF ASSIGNEE.
a. An assignee of an Interest, including an assignee of
a General Partner, shall have no right to become a Limited Partner unless a
majority in interest of the General Partners, consents in writing; provided,
however, in the event there is no General Partner, then and in that event all of
the Limited Partners must consent in writing.
b. An assignee who has become a Limited Partner has, to
the extent assigned, the rights and powers and is subject to the restrictions
and liabilities of a Limited Partner under this Agreement and the laws of the
State. An assignee who becomes a Limited Partner also is liable for the
obligations of the assignor to make and return Contributions as provided in this
Agreement; provided, however, such assignee shall not be obligated for
liabilities unknown to the assignee at the time such assignee became a Limited
Partner.
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c. If an assignee of an Interest becomes a Limited
Partner, the assignor is not released from the assignor's liability to the
Partnership pursuant to this Agreement.
d. An assignee who is not admitted as a Limited Partner
shall be entitled only to allocations and distributions with respect to such
Interests in accordance with the Agreement, and shall have no right to any
information or accounting of the affairs of the Partnership, shall not be
entitled to inspect the books or records of the Partnership and shall not have
any of the rights of a General Partner or a Limited Partner under this Agreement
or the laws of the State.
10.07 POWER OF ESTATE. In the event that a Partner who is an
individual dies or a court of competent jurisdiction adjudges such Partner to be
incompetent to manage such Partner's person or such Partner's property, then and
in that event such Partner' Representative may exercise all such Partner's
rights for the purpose of settling such Partner's estate or administering such
Partner's property, including any power such Partner had to give an assignee the
right to become a Limited Partner. In the event that a Partner is a corporation,
trust or other entity that is dissolved or terminated, then and in that event
the powers of such Partner may be exercised by such Partner's legal
representative or successor.
10.08 ADMISSION OF ASSIGNEE AS A LIMITED PARTNER. Subject to the
other provisions of this Section, a transferee of Interests may be admitted to
the Partnership as Limited Partner only upon: (1) the consent of a majority in
interest of the General Partners to such admission, which consent may be given
or withheld in the sole and absolute discretion of the General Partners; and (2)
the Interest, with respect to which the transferee is being admitted, satisfying
the requirements set forth hereinabove for a Permitted Transfer.
10.09 REQUIREMENTS. The transferor and transferee shall furnish the
Partnership with the transferee's taxpayer identification number, sufficient
information to determine the transferee's initial federal income tax basis in
the Interest transferred and any other information reasonably necessary to
permit the Partnership to file all required federal and state tax returns and
other required information statements or returns. The Partnership shall not make
any distribution otherwise provided for in this Agreement with respect to any
Transferred Interest until the Partnership has received such information.
10.10 ALLOCATIONS AND DISTRIBUTIONS. In the event that any Partner
Transfers such Partner's Interest in compliance with this Section, such
Interest's distributive share of
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Net Profits and Net Losses for the tax year including such Transfer shall be
divided and allocated between the transferor and the transferee by taking into
account their varying interests during such tax year in accordance with Code
Section 706(d), using any method permitted by law and selected by the General
Partners. All distributions on or before the date of such Transfer shall be made
to the transferor, and all distributions thereafter shall be made to the
transferee. The transferor Partner shall be required to reimburse the
Partnership for any expenses incurred in determining the distributive share of
the transferor Partner. Neither the Partnership nor the General Partners shall
incur any liability for making allocations and distributions in accordance with
the provisions of this Section, whether or not the General Partners or the
Partnership has knowledge of any Transfer of any Interest.
10.11 TRANSFER EXPENSES. Prior to the effective date of any
Permitted Transfer, any Partner who transfers all or any portion of such
Partner's Interest shall pay to the Partnership an amount equal to the expenses
incurred by the Partnership, the other Partners, and their Affiliates,
employees, agents, successors and assigns in connection with such Transfer,
including, without limitation, the expense of reviewing or obtaining any
necessary legal opinions, any attorneys' fees and expenses, the expense of
preparing any amended Certificates and amendments to this Agreement and any
other documentation, and recording fees, postage, telephone and other
miscellaneous expenses.
10.12 BASIS ADJUSTMENT. In the event of a Transfer of an Interest,
or on the death of any Partner, or in the event of the distribution of Property
to any Partner, the Partnership shall file an election, if requested by any
Partner, in accordance with applicable Regulations, to cause the basis of the
Property to be adjusted for federal income tax purposes as provided in Code
Sections 734, 743 and 754 and such Partner requesting the election shall bear
all costs associated therewith.
10.13 BUY AND SELL AGREEMENT. In the event that a written Buy and
Sell Agreement has been executed by all of the Partners, the terms of such
Agreement shall control over the provisions of this Section and this Agreement.
10.14 DEFAULTING LIMITED PARTNER. The General Partners may elect, at
any time the General Partners determine such competitive activity is not in the
best interests of the Partnership, or in violation of the provisions of those
certain written agreements entitled Distributor Agreement, dated March 7, 1997
and Entity Interest Agreement, dated March 7, 1997, such determination being in
the sole discretion of a majority in interest of the General
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Partners, to treat a breach of Section 6.03 as a default. Such election by the
General Partners shall be made by giving Notice to Defaulting Limited Partner of
such default. The Defaulting Limited Partner's Interest shall be purchased in
accordance with Section 10.15.
10.15 WITHDRAWING PARTNER. All withdrawing Limited Partners'
Interest, other than Permitted Transfers, shall be purchased in accordance with
this Section 10.15. The General Partners shall purchase the Interest of such
withdrawing Limited Partner for an amount equal to such withdrawing Limited
Partner's share of the book value of the Partnership (Partnership's book value
multiplied by such withdrawing Limited Partner's Net Profits Sharing
Percentage), if any, which shall be the amount of such withdrawing Limited
Partner's Capital Account as of the last day of the month immediately preceding
the month in which the Notice of default is given. There shall be no adjustments
to such purchase price, including, but not limited to, (1) goodwill, (2)
unbooked appreciation of Property, and (3) depreciation deductions. The General
Partners shall use their best efforts to admit a new Limited Partner in place of
such withdrawing Limited Partner, provided, however, any such new Limited
Partner shall be approved in writing by a Majority in Interest of Partners.
SECTION 11
WITHDRAWAL OF GENERAL PARTNER
11.01 EVENTS OF WITHDRAWAL. A General Partner shall cease to be a
General Partner of the Partnership upon the happening of any of the following
events:
a. The Bankruptcy of such General Partner.
b. In the case of a natural person who is a General
Partner, the death, Incapacity or Incompetence of such General Partner.
c. In the case of a General Partner that is a revocable
grantor-type trust (revocable living trust), the death of the trustor, grantor
or settlor, as described in Code Section 677, or in the event of joint grantors,
trustors or settlors, upon the last to die of such grantors, trustors or
settlors.
d. In the case of a General Partner that is a separate
partnership, the liquidation, dissolution and commencement of winding up of such
partnership.
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e. In the case of a General Partner that is a
corporation, the filing of a certificate of dissolution or its equivalent for
the corporation or the revocation of the corporation's charter.
f. In the case of a General Partner who is acting as a
General Partner by virtue of being a trustee of a trust, the termination of the
trust, but not merely the substitution of a new trustee.
g. In the case of a General Partner that is an estate,
the distribution by the fiduciary of the estate's entire Interest.
h. The involuntary Transfer by operation of law of such
General Partner's Interest.
i. In the event there is a Continuing General Partner,
then and in that event upon the approval of a written request of such General
Partner to retire; provided, however, in the event there is no Continuing
General Partner, then and in that event upon the agreement of all of the Limited
Partners to approve a request by such General Partner to retire.
j. The written agreement of all other Partners to remove
such General Partner after such General Partner has committed a material breach
of this Agreement or such General Partner's representations and warranties
hereunder, or committed any other act that would justify a decree of dissolution
of the Partnership under the laws of the State.
11.02 CONTINUANCE OF PARTNERSHIP. It is the intention of the
Partners that the Partnership not dissolve as a result of the cessation of any
General Partner's status as a General Partner; provided, however, that if it is
determined by a court of competent jurisdiction that the Partnership has
dissolved, the provisions of Section 12 shall govern. In the event there is a
Continuing General Partner after the withdrawal of Withdrawing General Partner,
then and in that event the Continuing General Partner shall continue the
Partnership and shall give Notice to the Representative of the Withdrawing
General Partner whether, in the sole and absolute discretion of Continuing
General Partner, such Withdrawing General Partner's Interest shall be (1) that
of an assignee or a Limited Partner and (2) purchased in accordance with Section
10.15; provided, however, in the event there is not a Continuing
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General Partner after the withdrawal of Withdrawing General Partner, then and in
that event the remaining Limited Partners may unanimously elect to continue the
Partnership, pursuant to this Agreement, by selecting a new General Partner,
provided that the Partnership obtains a written opinion of qualified tax counsel
that the new Partnership will be taxed as a Partnership and will not be taxed as
an association taxable as a corporation for federal income tax purposes and such
new General Partner shall be deemed to be the Continuing General Partner.
11.03 CONTINUED LIABILITY. If a General Partner ceases to be a
General Partner for any reason, such Withdrawing General Partner shall continue
to be liable as a General Partner for all liabilities and obligations of the
Partnership existing at the time such General Partner ceases to be a General
Partner, regardless of whether such liabilities and obligations were known or
unknown, actual or contingent. Withdrawing General Partner shall not be liable
as a General Partner for Partnership liabilities and obligations incurred by the
Partnership after such General Partner ceases to be a General Partner, other
than as any other Limited Partner or assignee and such loss shall be limited to
the Capital Account of such Withdrawing General Partner. Any and all
liabilities, obligations or damages to the Partnership of any General Partner
who ceases to be a General Partner shall be collectible by any legal means and
the Partnership is authorized, in addition to any other remedies, to apply any
amounts otherwise distributable or payable by the Partnership to such
Withdrawing General Partner to satisfy such Withdrawing General Partner's
obligations or liabilities to the Partnership.
11.04 DAMAGES. The Partnership may recover from the Withdrawing
General Partner damages for breach of this Agreement and offset the damages
against the amount otherwise distributable to such Withdrawing General Partner.
11.05 OTHER INTERESTS. In the event that at the time a General
Partner ceases to be a General Partner and such General Partner is also a
Limited Partner, then and in that event such cessation shall not affect such
General Partner's rights and obligations with respect to such Interests as a
Limited Partner other than the Partnership's right of offset for damages as
provided herein this Section.
11.06 ASSIGNEE. In the event a General Partner ceases to be a
General Partner
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without having transferred such General Partner's entire Interest as a General
Partner, such General Partner shall be treated as an unadmitted transferee of an
Interest and shall be an assignee, and not a Partner.
SECTION 12
DISSOLUTION AND WINDING UP
12.01 LIQUIDATING EVENTS. The Partnership shall not dissolve prior
to the occurrence of a Liquidating Event. The Partnership shall terminate and
shall dissolve and commence winding up its affairs upon the happening of the
first to occur of the following Liquidating Events:
a. At the time specified in the Certificate, unless
extended by written mutual agreement of all the Partners and an amended
Certificate is filed.
b. The sale of all or substantially all of the Property;
provided, however, in the event the Property shall consist primarily of cash or
other liquid assets, then and in that event such future termination shall be at
a date one month from and after the date of mailing of Notice by any Partner to
the General Partners.
c. The written agreement of all Partners to dissolve,
wind up and liquidate the Partnership.
d. The happening of any event that makes it unlawful or
impossible to carry on the business of the Partnership.
e. The withdrawal or removal of a General Partner, the
assignment by a General Partner of its entire Interest, or any other event that
causes a General Partner to cease to be a General Partner under the laws of the
State; provided, however, that any such event shall not constitute a Liquidating
Event if the Partnership is continued pursuant to this Agreement and (1) at the
time of such event there is at least one other General Partner and that General
Partner carries on the business of the Partnership, such remaining General
Partner is hereby authorized to carry on the business of the Partnership, or (2)
at the time of
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such event there is no other General Partner and within ninety (90) days after
such event all remaining Limited Partners agree in writing to continue the
business of the Partnership and to the appointment of one or more additional
General Partners.
f. The entry of a decree of judicial dissolution by a
court of competent jurisdiction whenever it is not reasonably practicable to
carry on the business in conformity with the Agreement.
12.02 WINDING UP. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purpose of winding up its affairs in
an orderly manner and shall proceed as follows:
a. Obtain an accurate inventory of all Property and
determine all liabilities.
b. Orderly sell the Property at the best prices
obtainable as promptly as is consistent with obtaining the fair market value.
c. Liquidate all Partnership receivables as far as
possible.
d. To the extent permitted by law, liquidate, pay and
discharge all Partnership debts and liabilities owing to creditors, including
Partners who are creditors, in the order of priority as provided by law.
e. Liquidate all Partnership liabilities owing to
Partners in respect to distributions required to be made by the Partnership to
the Partners.
f. Make the annual determination of the Net Profits and
Net Losses and credit or charge the Capital Account of each Partner as provided
for in this Agreement.
g. Establish adequate cash reserves, if necessary, for
the payment of any unliquidated liability, as determined by the General
Partners, provided that such withheld amounts shall be distributed to the
Partners as soon as feasible.
h. Distribute the remaining cash and unsold Property pro
rata in kind to the Partners in accordance with their respective positive
balance in their respective Capital Account. Upon liquidation of the
Partnership, or any Partner's Interest, liquidating
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distributions shall be made in accordance with the positive Capital Account
balances of the Partners, as determined after taking into account all Capital
Account adjustments for the Partnership tax year during which such liquidation
occurs by the end of such tax year or, if later, within ninety (90) days after
the date of such termination.
i. Provide Notice to each Partner and to all other
appropriate Persons with whom the Partnership regularly conducts business, as
determined in the discretion of the General Partner, within thirty (30) days of
the Liquidating Event.
j. Execute and file any and all necessary instruments
required to complete said termination, liquidation and dissolution in accordance
with the laws of the State.
12.03 COVENANTS AND OBLIGATIONS. No Partner shall take any action
that is inconsistent with, or not necessary to or appropriate for, winding up
the Partnership's business and affairs. All covenants and obligations in this
Agreement shall continue in full force and effect until such time as all of the
Property has been distributed pursuant to this Section and the Certificate has
been cancelled.
12.04 LIQUIDATING AGENT. Upon dissolution of the Partnership, the
General Partners, who have not wrongly triggered the Liquidating Event, shall
wind up the affairs of the Partnership and liquidate the Partnership; provided,
however, in the event there is no remaining General Partner that has not
wrongfully triggered the Liquidating Event, then and in that event the Majority
in Interest of Limited Partners may act in liquidation of the Partnership and
elect or appoint any Person to be the liquidating agent.
12.05 DEEMED LIQUIDATION. In the event the Partnership is deemed
liquidated for federal income tax purposes within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g):
a. In the event no Liquidating Event has occurred, then
and in that event the Property shall not be liquidated, the Partnership's
liabilities shall not be paid or discharged, and the Partnership's affairs shall
not be wound up. For federal income tax purposes only, the Partnership shall be
deemed to have distributed the Property in kind to the Partners who shall be
deemed to have assumed and taken the Property subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts and if any
General Partner's Capital Account has a deficit balance, after giving effect to
all
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contributions, distributions and allocations for all tax years, including the
tax year during which such deemed liquidation occurs, such General Partner shall
contribute to the capital of the Partnership the amount necessary to restore
such deficit balance to zero in compliance with Regulations Section
1.704-l(b)(2)(ii)(b)(3). The Partners shall be deemed to have immediately
thereafter recontributed the Property in kind to the Partnership, and the
Partnership shall be deemed to have assumed and taken the Property subject to
all such liabilities.
b. In the event a Liquidating Event has occurred, then
and in that event all distributions shall be made pursuant to this Section to
the Partners who have positive Capital Accounts in compliance with Regulations
Section 1.704-l(b)(2)(ii)(b)(2), and if any General Partner's Capital Account
has a deficit balance, after giving effect to all contributions, distributions
and allocations for all tax years, including the tax year during which such
liquidation occurs, such General Partner shall contribute to the capital of the
Partnership the amount necessary to restore such deficit balance to zero in
compliance with Regulations Section 1.704-l(b)(2)(ii)(b)(3). If any Limited
Partner has a deficit balance in such Limited Partner's Capital Account, after
giving effect to all contributions, distributions and allocations for all tax
years, including the tax year during which such liquidation occurs, such Limited
Partner shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever.
SECTION 13
OTHER PROVISIONS
13.01 ACKNOWLEDGEMENTS. Each Partner to this Agreement hereby
acknowledges receipt of a fully executed copy of this Agreement and further
acknowledges careful review of the representations, terms and conditions
contained herein.
13.02 ADDITIONAL DOCUMENTS. Each Partner, upon the request of the
General Partners, agrees to perform all further acts and execute, acknowledge
and deliver any documents that may be reasonably necessary, appropriate or
desirable to carry out the provisions of this Agreement.
13.03 AMENDMENTS. Unless specifically provided otherwise in this
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Agreement, this Agreement can be amended, terminated, rescinded, modified or
supplemented only by a written document executed by all of the Partners. Any
purported oral amendment, termination, rescission, modification or supplement
shall be void.
13.04 APPLICABLE LAW. The terms and provisions of this Agreement and
any dispute arising hereunder shall be construed by and governed by the laws of
the State of Texas, without giving effect to the conflicts of laws provisions
therein, regardless of where the Agreement is executed. Subject to the dispute
resolution provisions herein, the courts of the State of Texas shall have the
sole and exclusive jurisdiction in any case or controversy arising under this
Agreement or by reason of this Agreement.
13.05 ASSIGNMENT. No Partner shall have the power or right to assign
their respective duties and obligations hereunder unless such assignment is
specifically provided otherwise in this Agreement.
13.06 CONFIDENTIALITY. This is a confidential agreement among the
Partners. This Agreement shall not be filed of record with any city, county,
state or federal authority and the terms and conditions of this Agreement,
including, but not limited to, the identity of the Partners, shall be
confidential and shall not be disclosed to any other Person without the prior
written consent of the General Partners, except to the extent specifically
provided otherwise in this Agreement or required by applicable laws. The
Partners agree that no press release regarding this transaction will be issued
and no information regarding this transaction will be given to the news media.
13.07 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all of the Partners had executed the
same document. All counterparts shall be construed together and shall constitute
one agreement.
13.08 ENTIRE AGREEMENT. This Agreement is the entire agreement of
the Partners. There are no promises, representations, considerations,
conditions, understandings or agreements other than as expressly stated herein.
13.09 EXHIBITS. All Exhibits attached hereto, and any authorized and
duly executed amended Exhibits, are made a part hereof by reference and are
hereby incorporated into this Agreement as though fully rewritten herein at
length.
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13.10 EXPENSES, COSTS AND ATTORNEY'S FEES. In any legal action or
arbitration between the Partners to enforce any of the terms of this Agreement,
or to settle any dispute, controversy or claim arising out of or relating to
this Agreement, or the breach thereof, the prevailing Partner or Partners shall
be entitled to recover expenses and costs, including reasonable attorney's fees
from the Partner who unreasonably fails to perform any covenant of this
Agreement.
13.11 HEADINGS. The descriptive section headings contained herein
are for convenience only and are not intended to describe, interpret, include or
conclusively define all the subject matter in the sections accompanying such
headings and such headings should not be resorted to for interpretation of this
Agreement.
13.12 INTERPRETATION. All words used herein shall be interpreted as
singular or plural as the context may require. All pronouns, and any variations
thereof, used herein shall be interpreted as masculine, feminine or neuter as
the context may require.
13.13 NAME. The name "U.S. Lithotripsy, L.P." and any derivative
thereof, shall be owned by U.S. Lithotripsy, L.P., and the Partnership shall
have the exclusive right to use such name of the Partnership at no cost until
the Partnership receives Notice that it can no longer use such name.
13.14 PARTITION. No Partner shall have any right to partition any
Property, or Property hereinafter acquired by the Partnership, nor shall any
Partner have any right to any specific Property upon liquidation, dissolution or
winding up. The execution of this Agreement shall constitute a waiver of any and
all rights to partition that the Partners would otherwise have.
13.15 PREAMBLE CLAUSES. All representations, statements and
conditions set forth in the preamble clauses of this Agreement are hereby
incorporated into this Agreement as though fully rewritten herein at length.
13.16 SEVERABILITY. If any term, condition or portion of this
Agreement shall be held to be void, invalid or unenforceable, for any reason
whatsoever, the balance thereof shall nevertheless be carried into effect.
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13.17 SPECIFIC PERFORMANCE. Each Partner agrees with the other
Partners that the other Partners would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their specific
terms and that monetary damages would not provide an adequate remedy in such
event. Unless specifically provided otherwise in this Agreement, it is agreed
that, in addition to any other remedy to which the nonbreaching Partners may be
entitled, the nonbreaching Partners shall be entitled to injunctive relief to
prevent breaches of the provisions of this Agreement and specifically to enforce
the terms and provisions hereof in any action instituted in any court of the
State having jurisdiction thereof.
13.18 SUCCESSORS IN INTEREST. This Agreement shall be binding upon,
and inure to the benefit of, the Partners and their respective heirs, legatees,
legal representative, personal representatives, administrators, successors,
trustees and permitted assigns.
13.19 SURVIVAL. The covenants, representations end warranties of the
Partners set forth herein will be effective on the date hereof and shall survive
the execution of this Agreement.
13.20 TERMINATION. This Agreement shall cease and terminate upon the
earlier of (1) in accordance with the terms and conditions specifically provided
in this Agreement, or (2) the mutual agreement by all of the Partners evidenced
by an executed written agreement.
13.21 TIME. Time is of the essence with respect to this Agreement.
SECTION 14
DEFINED TERMS
Wherever used in this Agreement, the following capitalized terms, or
derivatives thereof, shall have the respective meanings set forth below, unless
specifically provided otherwise in this Agreement:
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"Accountant". The certified public accountant, accountant or
accounting firm which the General Partners employ on the behalf of the
Partnership for accounting and the preparation of financial statements
and income tax returns.
"Affiliate". With respect to any Person: (1) any Person directly or
indirectly controlling, controlled by or under common control with another
Person; (2) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interest of such Person; (3) any officer, director or general
partner of such Person; or (4) any Person who is an officer, director,
general partner, trustee or holder of ten percent (10%) or more of the voting
interests of any Person described in clauses (1) through (3) of this sentence.
The term "controls," and any derivative thereof, for the purpose of this defined
term, shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting interests, by contract or otherwise.
"Agreed Value". The fair market value of property contributed to the
Partnership by a Partner as such contributing Partner's Initial Capital
Contribution. The Agreed Value shall be the financial basis of such property and
shall be contributed in accordance with Code Section 704(c). In the event
subsequent additional Capital Contributions are made, then the fair market value
shall be agreed upon by all the Partners in writing. The Agreed Value of any
Property distributed to any Partner shall be adjusted to equal the fair market
value of such Property on the date of distribution as determined by the
distributee and the General Partners, provided, however, the determination of
the fair market value of such Property shall require the written consent of a
Majority in Interests of the Partners.
"Agreement". This Limited Partnership Agreement, and any subsequent
amendments thereto.
"Bankruptcy". As to any Person, a voluntary bankruptcy or an
involuntary bankruptcy. Voluntary bankruptcy means the inability to such Person
to pay such Person's debts as such debts become due, or an admission in writing
by such Person of such Person's inability to pay its debts or a general
assignment by such Person for the benefit of creditors; the filing of any
voluntary petition or answer by such Person seeking to adjudicate such Person a
bankrupt or insolvent, or seeking for such any liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of
such Person or
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such Person debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking, consenting to or acquiescing in
the entry of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for such Person or for any substantial part
of such Person's property; or corporate action taken by such Person to authorize
any of the actions set forth above. Involuntary bankruptcy means without the
consent or acquiescence of such Person, the entering of an order for relief or
approving a petition for relief or reorganization of any other petition seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation, or the filing of any such
petition against such Person which petition shall not be dismissed within ninety
(90) days, or, without the consent or acquiescence of such Person, the entering
of an order appointing a trustee, custodian, receiver or liquidator of such
Person or of all or any substantial part of the property of such Person, which
order shall not be dismissed within sixty (60) days.
"Capital Account". With respect to any Partner, as of any particular
date, the account established and maintained for such Partner, which shall
consist of such Partner's Initial Capital Contribution, increased by (1) such
Partner's distributive share of Net Profits and (2) any additional Capital
Contributions, and reduced by (1) such Partner's distributive share of Net
Losses and (2) the amount of cash and any other Property actually distributed to
such Partner, as reflected on the books and records of the Partnership. The
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-l(b), and shall be interpreted
and applied in a manner consistent with such Regulations. In the event the
General Partners shall determine that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are computed in
order to comply with such Regulations, the General Partners may make such
modification, provided that such modification will not, more likely than not,
have a material effect on the amounts distributed to any Partner upon the
dissolution of the Partnership. The General Partners shall (1) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership Capital reflected
on the Partnership's balance sheet, as computed for book purposes, in accordance
with Regulations Section 1.704-l(b)(2)(iv)(g), and (2) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-l(b).
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"Capital Contribution". With respect to any Partner, as of any
particular date, the Initial Capital Contribution and any subsequent additional
Capital Contributions of cash, property, services rendered or promissory note,
or other binding obligation to contribute cash or property, or to perform
services, which a Partner contributes to the Partnership by such Partner in his
capacity as a Partner.
"Cash Flow From Capital Transactions". The Partnership cash funds
realized from capital transactions, but after deducting cash funds used to pay
other expenses, debt payments, capital improvements and replacements, and less
all amounts set aside to create or restore reserves, as determined in the sole
discretion of the General Partners.
"Certificate". The Certificate of Limited Partnership required to be
filed with the State in order to form a limited partnership, and shall include
the Certificate as amended or restated.
"Code". The Internal Revenue Code of 1986, as amended, or corresponding
provisions of subsequent laws.
"Continuing General Partner". The General Partner or General Partners
remaining or selected in accordance with Section 11, as the case may be, after
the Withdrawal of Withdrawing General Partner.
"Death of A Limited Partner". This term shall include: (1) the death of
any individual Limited Partner; (2) the loss of the State corporate charter in
the event of a corporate Limited Partner, or the order of dissolution by a Court
of competent jurisdiction or by any recognized process of dissolution as
provided by the laws of the State; (3) the termination of any trust which is, or
should become, a Limited Partner where the beneficiary does not elect to become
a Limited Partner; (4) the death of the trustor, grantor or settlor, as
described in Code Section 677, of any revocable or grantor-type trust which is,
or should become, a Limited Partner, or in the event of joint grantors, trustors
or settlers, upon the last to die of such joint grantors, trustors or settlors;
and (5) the liquidation and dissolution of a partnership which is, or should
become, a Limited Partner where the Partners do not elect to become Limited
Partners.
"Defaulting Limited Partner". Any Limited Partner determined, in the
sole discretion of the General Partners, to be in breach of Section 6.03 which
breach shall trigger the provisions of Section 10.14 when Notice is given to
such Limited Partner.
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"Equipment. The recently designed LithoTron(TM) lithotripter
machine manufactured in Switzerland, or other similar equipment.
"Exhibit A". The exhibit attached to this Agreement and designated
"Exhibit A", or any authorized and duly executed amended Exhibit A, as the case
may be, then in force.
"General Partner". The General Partner or the General Partners, as the
case may be, named in the Certificate as a General Partner, and such Persons who
have subsequently become a General Partner pursuant to the terms of this
Agreement. In the event the Partnership should have more than one General
Partner at any given time, then the term General Partner shall mean the Majority
in Interest of such General Partners unless otherwise indicated.
"Incapacity". When referring to a General Partner, any General Partner
that is a natural person who is totally physically or mentally unable to perform
any services, a permanent disability, to the Partnership.
"Incompetence". When referring to a General Partner, any General
Partner that is a natural person who has been judicially declared to be mentally
incompetent, or who has had a guardian or conservator appointed for him or his
property.
"Initial Capital Contributions. The initial property contributed to the
Partnership by each Partner upon the execution of this Agreement. The nature and
method of such contribution shall be separately set forth in the books and
records of the Partnership.
"Initial Partnership Capital". The sum of the Initial Capital
Contributions to the Partnership by tall of he Partners as set forth in the
books and records of the Partnership.
"Initial Partnership Capital Interest". As to each Partner, the
percentage of Initial Partnership Capital in the Partnership to which each
respective Partner is entitled, as set forth in the books and records of the
Partnership, which is determined by dividing such Partner's Initial Capital
Contribution by the Initial Partnership Capital.
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"Interest". All interests owned by a Partner in the Partnership,
including but not limited to, such Partner's Capital Account, Net Profits
Sharing Percentage, Net Losses Sharing Percentage, the right to receive
distributions of Property, etc.
"Limited Partner". The Limited Partner or Limited Partners, as the case
may be, as set forth in Exhibit A.
"LithoTron(TM) Lithotripter". The recently designed LithoTron(TM)
lithotripter machine manufactured in Switzerland.
"Liquidating Event". Such an event as defined in Section 12.01.
"Majority in Interest of General Partners". One or more General
Partners who, at the time, are entitled to an aggregate of more than fifty
percent (50%) of the Net Profits Sharing Percentages of the Partnership then
allocable to the General Partners.
"Majority in Interest of Limited Partners". One or more Limited
Partners who, at the time, are entitled to an aggregate of more than fifty
percent (50%) of the Net Profits Sharing Percentages of the Partnership then
allocable to the Limited Partners.
"Majority in Interest of Partners". Partners who, at the time, are
entitled to an aggregate of more than fifty percent (50%) of the Net Profits
Sharing Percentages of the Partnership then allocable to the Partners.
"Managing Partner". In the event the Partnership has more than one
General Partner, then and in that event the Majority in Interest of General
Partners may appoint a General Partner as the Managing Partner. A Notice of
appointment of Managing Partner signed by the General Partners shall be sent to
all Partners to effect such appointment. The Managing Partner may be similarly
removed by the Majority in Interest of General Partners. A new Managing Partner
may be similarly appointed by the Majority in Interest of General Partners.
"Net Losses". The Partnership loss as reflected on the annual U.S.
Partnership Return of Income (Form 1065).
"Net Losses Sharing Percentages". The percentages set forth in Exhibit
A that the Partners shall share in the Net Losses of the Partnership.
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"Net Profits". The Partnership income as reflected on the annual
U.S. Partnership Return of Income (Form 1065).
"Net Profits Sharing Percentages". The percentages set forth in
Exhibit A that the Partners shall share in the Net Profits of the Partnership.
"Notice". Any notice or other communication required to be given under
this Agreement to any Partner shall be in writing and sent by certified mail,
return receipt requested, or by overnight courier addressed to such Partner at
such Partner's last known address, as reflected by the records of the
Partnership. Such notice or other communication shall be deemed to have been
given, delivered and received upon the earlier of (1) the expiration of
seventy-two (72) hours after such mailing or (2) actual receipt.
"Operating Cash Flow". The ordinary income (loss) of the Partnership as
determined annually for the U.S. Partnership Return of Income (Form 1065) and
as reflected on the books and records of the Partnership at the close of each
Partnership accounting year, subject to the following additions and
subtractions:
a. Add thereto: (1) the amount of depreciation
deductions taken in computing such ordinary income (loss); and (2) all
non-taxable receipts of the Partnership (excluding Capital Contributions and the
proceeds of any mortgages, or of any other Partnership obligations or loans,
security deposits, or net casualty proceeds, to the extent used to finance
capital improvements or replacements);
b. Subtract therefrom: (1) payments upon the principal
of any mortgages on Property; (2) expenditures for the acquisition of Property
and for capital improvements or replacements (except to the extent financed
through Capital Contributions, mortgages on Property or any other Partnership
obligations or reserves previously set aside by the General Partners for such
purposes); and (3) such reserves for capital improvements, replacements and for
repairs, and to meet anticipated expenses as the General Partners shall deem to
be reasonably necessary in the efficient conduct of the Partnership business;
and
c. Add thereto: any other funds (including amounts
previously set aside as reserves by the General Partners, where and to the
extent the General Partners no longer regard such reserves to be reasonably
necessary in the efficient conduct of the
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Partnership business, but not including amounts arising from the sale of
Property) deemed available for distribution and designated as Operating Cash
Flow by the General Partners.
"Partners". All General Partners and Limited Partners collectively.
"Partner" means any one of the Partners and shall include the Representatives of
an Incapacitated, Incompetent, deceased or Bankrupt Partner; and in case a trust
should be, or later become, a Partner, the term "Partner" shall mean the trust
as such and not any of the trustees thereof.
"Partnership". The limited partnership created and governed by this
Agreement and the partnership continuing the business of this Partnership in the
event of dissolution as herein provided.
"Partnership Capital". On any given date, the sum total of all
Partners' Initial Capital Contributions, increased by (1) the Partnership's Net
Profits and (2) any additional Capital Contributions and decreased bail (a) the
Partnership's Net Losses and (b) distributions to all Partners, as reflected on
the books and records of the Partnership.
"Permitted Transfer". A Transfer of an Interest as permitted by Section
10.02.
"Person". Any natural person, general partnership, limited partnership,
joint venture, trust, estate, association, corporation, limited liability
company, or other legal entity.
"Property". All, or a part of, the assets, funds, real property and
personal property, owned by the Partnership.
"Regulations". The Treasury Regulations, including Temporary
Regulations, promulgated under the Code, as such regulations may be amended from
time to time, and including corresponding provisions of succeeding regulations.
"Representative". The legal representative, personal representative,
executor, administrator, successor, trustee guardian, conservator or assign of a
Partner, or the authorized officers of a corporate Partner, if applicable, as
the facts dictate and the context of a paragraph may require.
"State". The State of Texas.
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"Transfer". The sale, purchase, assignment, transfer, hypothecation
gift, pledge, exchange, or any disposition of all or any part of an Interest by
a Partner to any Person.
"Withdrawing General Partner". That General Partner, or the heirs,
successors, assigns, beneficiaries, shareholders or partners of a General
Partner, as the facts dictate and the context may require, who ceases to be a
General Partner due to the occurrence of any event set forth in Section 11.01 or
any Liquidating Event as set forth in this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
"General Partners"
By: Litho Management, Inc.
a Texas corporation,
as general partner,
By: /s/ Xxxxxx X. House
-------------------------------
Xxxxxx X. House, President
By: HealthTronics, Inc.,
a Georgia corporation,
as general partner,
By: /s/ Xxx X. Xxxxx
-------------------------------
Xxx X. Xxxxx, President
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"Limited Partners"
/s/ Xxx X. Xxxxx
--------------------------------
HealthTronics, Inc.
a Georgia corporation
By: Xxx X. Xxxxx, President
/s/ Xxxx X. House, M.D.
--------------------------------
Xxxx X. House, M.D.
an individual
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
an individual
/s/ X. Xxxxxxxxx Hezmall
--------------------------------
X. Xxxxxxxxx Hezmall, M.D.
an individual
/s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx, M.D.
an individual
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On this 1st, day of April, 1997, the undersigned acknowledged the
foregoing to be the schedule referred to in the Limited Partnership Agreement of
U.S. Lithotripsy, L.P.
"General Partners"
By: Litho Management, Inc.,
a Texas corporation,
as general partner,
By: Xxxxxx X. House
--------------------------------------
Xxxxxx X. House, President
By: HealthTronics, Inc.,
a Georgia corporation,
a general partner,
By: /s/ Xxx X. Xxxxx
----------------------------------
Xxx X. Xxxxx, President
"Limited Partners"
/s/ Xxx X. Xxxxx
--------------------------------------
HealthTronics, Inc.
a Georgia corporation
By: Xxx X. Xxxxx, President
/s/ Xxxx X. House
--------------------------------------
Xxxx X. House, MD.
an individual
/s/ Xxxxx Xxxxxx
--------------------------------------
Xxxxx Xxxxxx
an individual
/s/ X. Xxxxxxxxx Hezmall
--------------------------------------
X. Xxxxxxxxx Hezmall
an individual
/s/ Xxxxx Xxxxx, M.D.
--------------------------------------
Xxxxx Xxxxx, M.D.
an individual
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