EXHIBIT 3.55
THE LIMITED PARTNERSHIP INTERESTS CREATED BY THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS. EXCEPT
AS SPECIFICALLY OTHERWISE PROVIDED IN THIS AGREEMENT, THE INTERESTS MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER SUCH ACTS
OR AN OPINION OF COUNSEL THAT SUCH TRANSFER MAY BE LEGALLY EFFECTED WITHOUT SUCH
REGISTRATION. ADDITIONAL RESTRICTIONS ON TRANSFER AND SALE ARE SET FORTH IN THIS
AGREEMENT.
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
ODESSA REGIONAL HOSPITAL, LP
(a Delaware Limited Partnership)
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
1.1 Act............................................................ 1
1.2 Additional Limited Partner..................................... 1
1.3 Adverse Terminating Event...................................... 1
1.4 Advisory Board................................................. 2
1.5 Affiliate...................................................... 2
1.6 Agreed Value................................................... 2
1.7 Agreement...................................................... 2
1.8 Approval of the Partners or Approved by the Partners........... 2
1.9 Bankruptcy..................................................... 2
1.10 Capital Account................................................ 2
1.11 Capital Contribution........................................... 3
1.12 Code........................................................... 3
1.13 Facility....................................................... 3
1.14 General Partner................................................ 3
1.15 IASIS.......................................................... 3
1.16 IASIS Affiliate................................................ 3
1.17 Limited Partner................................................ 3
1.18 Liquidator..................................................... 3
1.20 Memorandum..................................................... 3
1.21 Original Limited Partner....................................... 3
1.22 P.A............................................................ 3
1.23 Partners....................................................... 3
1.24 Partnership.................................................... 3
1.25 Person......................................................... 4
1.26 Qualified Purchaser............................................ 4
1.27 Retirement..................................................... 4
1.28 Sharing Percentage............................................. 4
1.29 Subsidiary..................................................... 4
1.30 Substituted Limited Partner.................................... 4
1.31 Terminating Event.............................................. 4
1.32 Treasury Regulations or Regulations............................ 4
1.33 Units.......................................................... 5
1.34 Valuation Price................................................ 5
2. FORMATION AND CONTINUATION OF PARTNERSHIP 5
2.1 Formation and Continuation..................................... 5
2.2 Name........................................................... 5
2.3 Principal Office............................................... 5
2.4 Term........................................................... 5
2.5 Registered Agent and Office.................................... 5
3. PURPOSES AND POWERS OF THE PARTNERSHIP; NATURE OF THE BUSINESS OF THE
PARTNERSHIP 5
3.1 Purposes....................................................... 5
ii
Page
3.2 Powers......................................................... 6
3.3 Authorization of Mergers....................................... 6
4. CAPITAL CONTRIBUTIONS, LOANS, CAPITAL ACCOUNTS 6
4.1 Capital Contributions.......................................... 6
4.2 Capital Accounts............................................... 6
4.3 Additional Provisions Regarding Capital Accounts............... 8
4.4 Loans.......................................................... 9
4.5 Additional Capital Contributions............................... 9
5. ALLOCATIONS 9
5.1 Allocations of Income and Losses............................... 9
6. DISTRIBUTIONS 10
6.1 Distribution of Excess Cash.................................... 10
7. BANK ACCOUNTS, BOOKS OF ACCOUNT, TAX COMPLIANCE AND FISCAL YEAR 10
7.1 Bank Accounts; Investments..................................... 10
7.2 Books and Records.............................................. 10
7.3 Determination of Profit and Loss; Financial Statements......... 10
7.4 Tax Returns and Information.................................... 11
7.5 Tax Audits..................................................... 11
7.6 Fiscal Year.................................................... 11
8. RIGHTS, OBLIGATIONS AND INDEMNIFICATION OF THE
GENERAL PARTNER 11
8.1 Rights of the General Partner as Manager....................... 11
8.2 Right to Rely on the General Partner........................... 13
8.3 Specific Limitations on the General Partner.................... 13
8.4 Additional Limitations on the Authority of the General Partner. 14
8.5 Management Obligations of the General Partner.................. 14
8.6 Indemnification of the General Partner......................... 15
8.7 Reimbursement.................................................. 16
8.8 Compensation of the General Partner............................ 16
8.9 Independent Activities......................................... 16
9. RIGHTS AND STATUS OF LIMITED PARTNERS 17
9.1 General........................................................ 17
9.2 Limitation of Liability........................................ 17
9.3 Bankruptcy; Death; Etc......................................... 17
10. MEETINGS AND MEANS OF VOTING 17
10.1 Meetings of the Partners....................................... 17
10.2 Vote By Proxy.................................................. 18
10.3 Conduct of Meeting............................................. 18
10.4 Action Without a Meeting....................................... 18
10.5 Closing of Transfer Record; Record Date........................ 18
11. ADVISORY BOARD 18
11.1 Advisory Board................................................. 18
11.2 Manner of Exercise of Advisory Board's Authority............... 19
11.3 Meetings of the Advisory Board................................. 19
iii
Page
12. TRANSFER OF UNITS AND ADDITIONAL LIMITED PARTNERS 19
12.1 Transfers by Limited Partners.................................. 19
12.2 Substituted Limited Partner.................................... 20
12.3 Basis Adjustment............................................... 20
12.4 Transfer by General Partner.................................... 21
12.5 Admission of Additional Limited Partners....................... 21
12.6 Transfer Procedures............................................ 21
12.7 Invalid Transfer............................................... 21
12.8 Distributions and Allocations in Respect of a Transferred
Ownership Interest........................................ 21
12.9 Additional Requirements of Admission to Partnership............ 22
12.10 Amendment to Exhibit B......................................... 22
12.11 No Participation in Secondary Market........................... 22
13. RIGHT TO LIQUIDATE OR PURCHASE PARTNERSHIP INTERESTS 22
13.1 Partnership's and General Partner's Right of First Refusal..... 22
13.2 Occurrence of Terminating Event or Adverse Terminating Event... 23
13.3 Payment for Partnership Interest............................... 24
13.4 Subsequent Legislation......................................... 25
13.5 Divorce of Limited Partner..................................... 26
13.6 Required Repurchase of Units................................... 26
13.7 Federal Income Tax Treatment................................... 27
13.8 Repurchased Units.............................................. 27
14. DISSOLUTION 27
14.1 Causes......................................................... 27
14.2 Reconstitution................................................. 27
14.3 Interim Manager................................................ 28
15. WINDING UP AND TERMINATION 28
15.1 General........................................................ 28
15.2 Court Appointment of Liquidator................................ 29
15.3 Liquidation.................................................... 29
15.4 Creation of Reserves........................................... 30
15.5 Final Statement................................................ 30
16. POWER OF ATTORNEY 30
16.1 General Partner as Attorney-in-Fact............................ 30
16.2 Nature of Special Power........................................ 30
17. MISCELLANEOUS 31
17.1 Notices........................................................ 31
17.2 Governing Law.................................................. 31
17.3 Successors and Assigns......................................... 31
17.4 Construction................................................... 31
17.5 Time........................................................... 31
17.6 Waiver of Partition............................................ 31
17.7 Entire Agreement............................................... 31
17.8 Amendments..................................................... 32
17.9 Severability................................................... 33
17.10 Gender and Number.............................................. 33
iv
Page
17.11 Exhibits....................................................... 33
17.12 Additional Documents........................................... 33
17.13 Section Headings............................................... 33
17.14 Counterparts................................................... 33
EXHIBIT A ALLOCATION OF PROFIT AND LOSS AND OTHER TAX MATTERS
EXHIBIT B LIST OF PARTNERS
EXHIBIT C NOTICE OF REDEMPTION
EXHIBIT D FORM OF JOINDER
EXHIBIT E FORM OF PLEDGE AGREEMENT
v
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
ODESSA REGIONAL HOSPITAL, LP
(a Delaware Limited Partnership)
This Amended and Restated Limited Partnership Agreement is entered into
and shall be effective as of the 31st day of January, 2001 by and between IASIS
Healthcare Holdings, Inc. ("General Partner"), as the General Partner, IASIS
Healthcare Corporation as the Original Limited Partner, and each other Person
whose name is set forth on Exhibit B attached to this Amended and Restated
Limited Partnership Agreement as the limited partners.
W I T N E S S E T H:
WHEREAS, the General Partner and the Original Limited Partner are parties
to that certain Limited Partnership Agreement of Odessa Regional Hospital, LP,
dated as of September 24, 1999, as amended (the "Original Partnership
Agreement");
NOW, THEREFORE, the General Partner, the Original Limited Partner and the
Limited Partners hereby amend and restate the Original Partnership Agreement as
follows:
1. DEFINITIONS
As used herein the following terms have the following meanings:
1.1 "ACT" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time.
1.2 "ADDITIONAL LIMITED PARTNER" means a Person who is admitted into the
Partnership as a Limited Partner pursuant to the terms of Section 12.5 hereof.
1.3 "ADVERSE TERMINATING EVENT" means, with respect to any Limited Partner
(other than IASIS or any IASIS Affiliate) or a person who owns an interest in a
P.A. which is a Limited Partner, any of the following:
(a) The Limited Partner or a person who owns an interest in a P.A.
which is a Limited Partner has breached the terms and conditions of this
Agreement, including without limitation, violating the transfer
restrictions set forth in Article 12, as determined in the reasonable
discretion of the General Partner; or
(b) The Limited Partner, or a person who owns an interest in a P.A.
which is a Limited Partner, has disrupted the affairs of the Partnership
or has acted adversely to the
1
best interests of the Partnership, as determined in the reasonable
discretion of the General Partner.
1.4 "ADVISORY BOARD" has the meaning set forth in Section 11.1.
1.5 "AFFILIATE" means, with respect to any Partner, (i) any Person that
directly or indirectly controls, is controlled by, or is under common control
with, a Partner, (ii) any entity of which a Partner owns 10% or more of the
outstanding voting securities, (iii) any entity of which a Partner is an
officer, director, or general partner, or (iv) any child, grandchild (whether
through marriage, adoption or otherwise), sibling (whether through adoption or
otherwise), parent or spouse of a Partner. As used in this definition of
"Affiliate," the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of an
entity whether through ownership of voting securities, by contract or otherwise.
1.6 "AGREED VALUE" means, unless otherwise defined herein, at any time,
(a) the product of (i) the aggregate earnings before interest, taxes,
depreciation, amortization and management fees ("EBITDA"), all determined in
accordance with generally accepted accounting principles, for the Partnership
for the most recently completed fiscal year ending on September 30, multiplied
by (ii) 5.4, minus (b) any long-term debt, including without limitation any
third party and intercompany debt, of the Partnership. For purposes of this
computation, normalized EBITDA for the most recently completed fiscal year shall
be used. The General Partner shall adjust actual results as appropriate to reach
such normalized EBITDA, including adjustments deemed appropriate as one-time or
prior year adjustments and for the impact of acquisitions and divestitures
during the year.
1.7 "AGREEMENT" means this Amended and Restated Limited Partnership
Agreement of Odessa Regional Hospital, LP, as from time to time amended pursuant
to Section 17.8 hereof.
1.8 "APPROVAL OF THE PARTNERS" or "APPROVED BY THE PARTNERS" means the
approval of those Partners (including the General Partner and Affiliates) who
have collective ownership interests of at least seventy-five percent (75%) of
the aggregate Sharing Percentage of all Partners at the time the proposed
Partnership action is being considered for approval.
1.9 "BANKRUPTCY" means, as to any Partner, the Partner's taking or
acquiescing to the taking of any action seeking relief under, or advantage of,
any applicable debtor relief, liquidation, receivership, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar law
affecting the rights or remedies of creditors generally, as in effect from time
to time. For the purpose of this definition, the term "acquiescing" shall
include, without limitation, the failure to file within the time specified by
law, an answer or opposition to any proceeding commenced against such Partner
under any such law and a failure to file, within thirty (30) days after its
entry, a petition, answer or motion to vacate or to discharge any order,
judgment or decree providing for any relief under any such law.
1.10 "CAPITAL ACCOUNT" shall have the meaning set forth in Section 4.2
hereof.
2
1.11 "CAPITAL CONTRIBUTION" means, as to any Partner, the amount of cash
or the Agreed Value (as defined in Exhibit A attached hereto) of all property
contributed to the Partnership by the Partner, which is set forth opposite such
Partner's name on the attached Exhibit B under the heading "Capital
Contribution."
1.12 "CODE" means the Internal Revenue Code of 1986, as amended from time
to time. All references herein to sections of the Code shall include any
provision or corresponding provisions of succeeding law.
1.13 "FACILITY" means Odessa Regional Hospital, a hospital located in
Odessa, Texas or any other health care facilities and related businesses owned,
leased or acquired by the Partnership, but excluding any hospital, health care
facility or related business that is no longer owned by the Partnership.
1.14 "GENERAL PARTNER" means IASIS Healthcare Holdings, Inc., a Delaware
corporation and an IASIS Affiliate, and any successor thereto, or any
replacement general partner of the Partnership, but excluding any Person who
ceases to be a general partner of the Partnership pursuant to this Agreement.
1.15 "IASIS" means IASIS Healthcare Corporation, a Delaware corporation,
and any successor in interest.
1.16 "IASIS AFFILIATE" means any Affiliate of IASIS (other than a natural
person).
1.17 "LIMITED PARTNER" means the Original Limited Partner, any Limited
Partner whose name is set forth on Exhibit B hereto, and any Substituted Limited
Partner or Additional Limited Partner, but excluding any Person who ceases to be
a limited partner of the Partnership pursuant to this Agreement. "LIMITED
PARTNERS" means all of the Persons who are limited partners of the Partnership
as defined in this Section 1.17.
1.18 "LIQUIDATOR" means the Person who liquidates the Partnership under
Article 15 hereof.
1.19 "MEMORANDUM" means the private placement memorandum dated as of
December 12, 2000, as amended from time to time, pursuant to which Units are
being offered to Qualified Purchasers.
1.20 "ORIGINAL LIMITED PARTNER" means IASIS Healthcare Corporation, Inc.,
a Delaware corporation, and any successor thereto.
1.21 "P.A." means a professional association.
1.22 "PARTNERS" means the General Partner and the Limited Partners,
collectively. "PARTNER" means any one of the Partners.
1.23 "PARTNERSHIP" means the limited partnership governed by this
Agreement.
3
1.24 "PERSON" means any individual, partnership, corporation, limited
liability company, trust or other entity.
1.25 "QUALIFIED PURCHASER" means, with respect to the Units, a person who
is: (a) a licensed physician in good standing with the Texas State Board of
Medical Examiners, a resident of the State of Texas, and a member of the active
medical staff of the Facility (as defined in the medical staff bylaws of the
facility as amended from time to time); (b) a Texas professional association or
professional corporation that is owned entirely by individuals described in
clause (a), above; or (c) an individual specifically designated by the General
Partner.
1.26 "RETIREMENT" means the status of a Limited Partner who has attained
the age of 62 and who is no longer engaged in the practice of medicine, either
full-time or part-time, in the state of Texas.
1.27 "SHARING PERCENTAGE" means, as to a Partner, the percentage obtained
by dividing the Units of such Partner (whether General Partner Units or Limited
Partner Units) by the total Units of all Partners at that time. The Partners
hereby agree that their Sharing Percentages shall constitute their "interests in
the Partnership profits" for purposes of determining their respective shares of
the Partnership in "excess nonrecourse liabilities" within the meaning of
section 1.752-3(a)(3) of the Regulations.
1.28 "SUBSIDIARY" means any partnership, corporation, limited liability
company or other business entity in which at least a majority of the economic
interests is owned, directly or indirectly, by the Partnership.
1.29 "SUBSTITUTED LIMITED PARTNER" means any Person admitted to the
Partnership pursuant to Section 12.2.
1.30 "TERMINATING EVENT" means, with respect to any Limited Partner (other
than IASIS or any IASIS Affiliate), or person who owns an interest in a P.A.
which is a Limited Partner, any of the following:
(a) The Limited Partner (or person who owns an interest in a P.A.
which is a Limited Partner) has died;
(b) The Limited Partner (or person who owns an interest in a P.A.
which is a Limited Partner) is in Bankruptcy; or
(c) The Limited Partner (or person who owns an interest in a P.A.
which is a Limited Partner) has ceased to be a Qualified Purchaser.
1.32 "TREASURY REGULATIONS" OR "REGULATIONS" means the regulations,
promulgated by the United States Department of the Treasury pursuant to and in
respect of provisions of the Code. All references herein to sections of the
Treasury Regulations or the Regulations shall
4
include any corresponding provision or provisions of succeeding, similar or
substitute proposed, temporary or final regulations.
1.33 "UNITS" means all or a certain percentage, as the context requires,
of the issued and outstanding ownership interests of the Partnership held by the
Partners. "UNIT" means any one of the Units. "GENERAL PARTNER UNITS" or "LIMITED
PARTNER UNITS" means Units held by the General Partner or the Limited Partners,
respectively.
1.34 "VALUATION PRICE" means the price per Unit as determined by dividing
the Agreed Value by the aggregate number of Units issued and outstanding as of
the end of the fiscal period utilized in calculating the Agreed Value.
2. FORMATION AND CONTINUATION OF PARTNERSHIP
2.1 FORMATION AND CONTINUATION. The Partnership was formed pursuant to the
Act, and the Certificate of Limited Partnership was filed in the office of the
Secretary of State of Delaware, on September 24, 1999, and the Partners have
complied with all other legal requirements to form and operate the Partnership.
The Partners hereby continue the existence of the Partnership. Except as stated
in this Agreement, the Act shall govern the rights and liabilities of the
Partners.
2.2 NAME. The name of the Partnership is "Odessa Regional Hospital, LP."
and the business of the Partnership shall be conducted under that name or such
other name or names as may be Approved by the Partners from time to time.
2.3 PRINCIPAL OFFICE. The principal office of the Partnership shall be
located at 000 Xxxx 0xx Xxxxxx, X.X. Xxx 0000, Xxxxxx, Xxxxx 00000 or at such
other place or places as the General Partner may from time to time determine.
2.4 TERM. The Partnership began on the date of the Original Partnership
Agreement and shall continue until the date on which the Partnership is
dissolved pursuant to Article 14 and thereafter, to the extent provided for by
applicable law, until wound up and terminated pursuant to Article 15 hereof.
2.5 REGISTERED AGENT AND OFFICE. The registered agent of the Partnership
shall be CT Corporation System, and the registered office of the Partnership
shall be located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The
registered office or the registered agent, or both, may be changed by the
General Partner from time to time upon filing the statement required by the Act.
The Partnership shall maintain at its registered office such records as may be
specified by the Act.
3. PURPOSES AND POWERS OF THE PARTNERSHIP; NATURE OF THE BUSINESS OF THE
PARTNERSHIP
3.1 PURPOSES. The purposes of the Partnership are (i) directly, or through
ownership of interests in other entities with the same purpose, to own,
construct, develop, manage, lease and
5
operate the Facility and other health care related services and businesses, so
long as the provision of such other services and businesses complies with all
applicable laws and regulations; (ii) to enter into, from time to time, such
financial arrangements as the General Partner may determine to be necessary,
appropriate or advisable (including, without limitation, borrowing money and
issuing evidences of indebtedness and securing the same by mortgage, deed of
trust, security interest or other encumbrance upon one or more or all of the
Partnership assets); (iii) to sell, assign, lease, exchange or otherwise dispose
of, or refinance or additionally finance, one or more or all of the Partnership
assets; (iv) to raise additional capital by issuance of additional limited
partnership interests in the Partnership as provided in Section 12.5; and (v)
generally to engage in such other businesses and activities and to do any and
all other acts and things that the General Partner deems necessary, appropriate
or advisable from time to time in furtherance of the purposes of the Partnership
as set forth in this Section 3.1 (subject to the provisions of Section 8.3 and
8.4 hereof), so long as such other businesses and activities and other acts and
things comply with all applicable laws and regulations.
3.2 POWERS. Subject to the limitations contained in this Agreement and in
the Act, the Partnership purposes may be accomplished by the General Partner
taking any action permitted under this Agreement that, in the good faith
judgment of the General Partner, is customary or reasonably related to
accomplishing such purposes.
3.3 AUTHORIZATION OF MERGERS. The Partnership is hereby authorized to
engage in any merger or consolidating transaction with any limited partnership
or other business entity as provided in Section 17-211 of the Act. Any such
merger or consolidation transaction may be approved solely by the General
Partner and does not require the consent of the Limited Partners or Approval of
the Partners. If the Partnership is the surviving or resulting limited
partnership in any merger or consolidation, this Agreement may be amended and/or
restated in connection with the agreement of merger or consolidation pursuant to
Section 17-211(g) of the Act.
4. CAPITAL CONTRIBUTIONS, LOANS, CAPITAL ACCOUNTS
4.1 CAPITAL CONTRIBUTIONS. Each Partner has contributed its, his or her
Capital Contribution to the capital of the Partnership. No Partner has borrowed
from the Partnership or any entity affiliated with the Partnership any amount of
that Partner's capital contribution.
4.2 CAPITAL ACCOUNTS. A Capital Account (herein so called) shall be
established and maintained for each Partner for the full term of this Agreement
in accordance with the capital accounting rules of section 1.704-1(b)(2)(iv) of
the Regulations. Each Partner shall have only one Capital Account, regardless of
the number or classes of Units or other interests in the Partnership owned by
such Partner and regardless of the time or manner in which such Units or other
interests were acquired by such Partner. The balance of each Partner's Capital
Account shall be:
(a) Increased by the amount of money contributed by such Partner to
the capital of the Partnership pursuant to this Article 4 and decreased by
the amount of money distributed to such Partner pursuant to Article 6
hereof;
6
(b) Increased by the fair market value of all property (determined
without regard to Section 7701(g) of the Code) contributed by such Partner
to the capital of the Partnership pursuant to this Article 4 (net of all
liabilities secured by such property that the Partnership is considered to
assume or take subject to under Section 752 of the Code) and decreased by
the fair market value of all property (determined without regard to
Section 7701(g) of the Code) distributed to such Partner by the
Partnership pursuant to Article 6 or 15 hereof (net of all liabilities
secured by such property that such Partner is considered to assume or take
subject to under Section 752 of the Code);
(c) Increased by the amount of each item of Partnership profit
allocated to such Partner pursuant to Section 3.1 of Exhibit A hereto;
(d) Decreased by the amount of each item of Partnership loss
allocated to such Partner pursuant to Section 3.1 of Exhibit A hereto; and
(e) Otherwise adjusted as follows:
(i) Effective immediately prior to any "Revaluation Event" (as
defined in Exhibit A hereto), the balances of all Partners' Capital
Accounts shall be adjusted to reflect the manner in which items of
profit or loss, as computed for book purposes, equal to the
"Unrealized Book Gain Or Loss" (as defined in Exhibit A hereto) then
existing with respect to each Partnership property (to the extent
not previously reflected in the Partners' Capital Accounts) would be
allocated among the Partners pursuant to Section 3.1 of Exhibit A
hereto if there were a taxable disposition of such property
immediately prior to such Revaluation Event for its fair market
value (as determined by the General Partner taking Section 7701(g)
of the Code into account (i.e., such value shall not be less than
the amount of Nonrecourse Liabilities (as defined in Exhibit A) to
which such property is subject));
(ii) With respect to items of Partnership profit and loss, the
balances of all the Partners' Capital Accounts shall be adjusted
solely for allocations of such items, as computed for book purposes,
under Section 3.1 of Exhibit A hereto and shall not be adjusted for
allocations of correlative Tax Items under Section 3.2 of Exhibit A
hereto; and
(iii) Immediately before giving effect under Section 4.2(b)
hereof to any adjustment attributable to the distribution of
property to a Partner, the balances of all the Partners' Capital
Accounts first shall be adjusted to reflect the manner in which
items of profit or loss, as computed for book purposes, equal to the
Unrealized Book Gain Or Loss existing with respect to the
distributed property (to the extent not previously reflected in the
Partners' Capital Accounts) would be allocated among the Partners
pursuant to Section 3.1 of Exhibit A hereto if there were a taxable
disposition of such property, on the date of such distribution, by
the Partnership for its fair market value at the time of such
distribution (as agreed to in writing by the Partners taking Section
7701(g) of the Code into account (i.e.,
7
such value shall not be agreed to be less than the amount of
Nonrecourse Liabilities to which such property is subject)).
4.3 ADDITIONAL PROVISIONS REGARDING CAPITAL ACCOUNTS.
(a) If a Partner pays any Partnership indebtedness or forgives any
Partnership indebtedness owing to such Partner, such payment or forgiveness
shall be treated as a cash contribution by that Partner to the capital of the
Partnership, and the Capital Account of such Partner shall be increased by the
amount so paid by such Partner.
(b) Except as otherwise provided herein, no Partner may contribute capital
to, or withdraw capital from, the Partnership. To the extent any monies which
any Partner is entitled to receive pursuant to the Agreement would constitute a
return of capital, each of the Partners consents to the withdrawal of such
capital.
(c) A loan by a Partner to the Partnership shall not be considered a
contribution of money to the capital of the Partnership, and the balance of such
Partner's Capital Account shall not be increased by the amount so loaned. No
repayment of principal or interest on any such loan, reimbursement made to a
Partner with respect to advances or other payments made by such Partner on
behalf of the Partnership or payments of fees to a Partner which are made by the
Partnership shall be considered a return of capital or in any manner affect the
balance of such Partner's Capital Account.
(d) No Partner with a deficit balance in its Capital Account shall have
any obligation to the Partnership or any other Partner to restore such deficit
balance. In addition, no venturer or partner in any Partner shall have any
liability to the Partnership or any other Partner for any deficit balance in
such venturer's or partner's capital account in the Partner in which it is a
partner or venturer. Furthermore, a deficit Capital Account balance of a Partner
(or a capital account of a partner or venturer in a Partner) shall not be deemed
to be a liability of such Partner (or of such venturer or partner in such
Partner) or a Partnership asset or property. The provisions of this Section
4.3(d) shall not affect any Partner's obligation to make capital contributions
to the Partnership that are required to be made by such Partner pursuant to this
Agreement.
(e) Except as otherwise provided herein, no interest shall be paid on any
capital contributed to the Partnership or the balance in any Partner's Capital
Account.
(f) All of the provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Section 1.704-1(b) of the
Regulations, and shall be interpreted and applied in a manner consistent with
the Regulations. If the General Partner determines that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities that
are secured by contributed or distributed property or that are assumed by the
Partnership or any of the Partners) are computed in order to comply with the
Regulations, the General Partner may make such modifications, provided that such
modifications are not likely to have a material effect on the amounts
distributable to any
8
Partner from the Partnership. The General Partner also shall make appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Section 1.704-1(b) of the Regulations.
4.4 LOANS. Any Limited Partner, with the consent of the General Partner,
may lend money to the Partnership. If the General Partner or, with the written
consent of the General Partner, any Limited Partner makes any loan or loans to
the Partnership, the amount of any such loan shall not be treated as a
contribution to the capital of the Partnership but shall be a debt due from the
Partnership. Any Partner's loan to the Partnership shall be repayable out of the
Partnership's cash and shall bear interest at prevailing market rates. None of
the Partners nor any of their Affiliates shall be obligated to loan money to the
Partnership.
4.5 ADDITIONAL CAPITAL CONTRIBUTIONS. If Additional Capital Contributions
(herein so called) are required for any expenditure of the Partnership, the
General Partner shall have the right to request the Partners to make Additional
Capital Contributions (pro rata in accordance with each Partner's Sharing
Percentage) to the Partnership in excess of its, his or her initial Capital
Contribution. If the General Partner makes such a request, no Partner shall be
required to make such Additional Capital Contribution, provided that if any
Partner elects not to make the Additional Capital Contribution (a
"Noncontributing Partner"), the other Partners (the "Contributing Partners")
shall have the right to contribute to the Partnership the amount of cash that
the Noncontributing Partner or Partners failed to contribute. The Partners shall
have thirty (30) days from the General Partner's request in which to elect to
make or not make such Additional Capital Contributions. Effective as of the end
of such thirty (30) day period, the Partners' Sharing Percentage shall be
adjusted, as follows:
Each Partner's Sharing Percentage thereafter shall be equal to a fraction
(converted to a percentage), the numerator of which is the amount of such
Partner's Capital Account and the denominator of which is the aggregate amount
of all Partners' Capital Accounts. The number of Units held by each Partner
shall be adjusted automatically to reflect any change in the Partners' Sharing
Percentages under this Section.
5. ALLOCATIONS
5.1 ALLOCATIONS OF INCOME AND LOSSES. All items of income or loss of the
Partnership shall be allocated to the Partners in accordance with the provisions
of Exhibit A attached hereto, which is hereby incorporated by reference for all
purposes of this Agreement.
9
6. DISTRIBUTIONS
6.1 DISTRIBUTION OF EXCESS CASH. Except as otherwise may be provided in
Section 15.3, or as otherwise may be prohibited or required by applicable law,
the General Partner may determine in its discretion the extent (if any) to which
the Partnership's cash on hand exceeds its current and anticipated needs,
including without limitation, for operating expenses, debt service, authorized
acquisitions, capital expenditures, and a reasonable contingency reserve. If
such an excess exists, the General Partner may cause the Partnership to
distribute such excess to the Partners quarterly; provided, that all
distributions pursuant to this Section 6.1 shall be made pro rata in accordance
with the Partners' respective Sharing Percentages.
Subject to the foregoing provisions of this Section 6.1 and to certain
limitations under the Act, the Partnership will use reasonable efforts to
distribute excess cash on a yearly basis in an amount sufficient to provide each
Partner with funds to pay income tax obligations on Partnership earnings as if
each Partner's Sharing Percentage of such earnings were fully taxable to such
Partner at the highest Federal income tax rate for individuals.
7. BANK ACCOUNTS, BOOKS OF ACCOUNT, TAX COMPLIANCE AND FISCAL YEAR
7.1 BANK ACCOUNTS; INVESTMENTS. The General Partner may (i) establish
one or more bank accounts as provided in Section 8.1(g) into which all
Partnership funds shall be deposited or (ii) deposit Partnership funds in a
central account established in the name of IASIS or an IASIS Affiliate, provided
that detailed separate entries are made on the books and records of the
Partnership and on the books and records of IASIS or such IASIS Affiliate with
respect to amounts received from the Partnership and deposited in such central
account for the account of the Partnership. The daily balances of the funds of
the Partnership deposited into such central account shall bear interest at a
current market rate. Funds deposited in the Partnership's bank accounts may be
withdrawn only to pay Partnership debts or obligations or to be distributed to
the Partners under this Agreement. Partnership funds, however, may be invested
in such securities and investments, as the General Partner may select, until
withdrawn for Partnership purposes.
7.2 BOOKS AND RECORDS. The General Partner shall keep books of account
and records relative to the Partnership's business. The books shall be prepared
in accordance with generally accepted accounting principles using the accrual
method of accounting. The accrual method of accounting shall also be used by the
Partnership for income tax purposes. The Partnership's books and records shall
at all times be maintained at the principal business office of the Partnership
or its accountants (and to the extent required by the Act, at the registered
office of the Partnership) and shall be available for inspection by the Limited
Partners or their duly authorized representatives during reasonable business
hours. The books and records shall be preserved for at least four (4) years
after the term of the Partnership ends.
7.3 DETERMINATION OF PROFIT AND LOSS; FINANCIAL STATEMENTS. All items
of Partnership income, expense, gain, loss, deduction and credit shall be
determined with respect to, and allocated in accordance with, this Agreement for
each Partner for each Partnership fiscal
10
year. Within one hundred twenty (120) days after the end of each Partnership
fiscal year, the General Partner shall cause to be prepared, at the
Partnership's expense, audited financial statements of the Partnership for the
preceding fiscal year, including, without limitation, a balance sheet, profit
and loss statement, statement of cash flows and statement of the balances in the
Partners' Capital Accounts, prepared in accordance with the terms of this
Agreement and generally accepted accounting principles consistently applied.
These financial statements shall be available for inspection and copying during
ordinary business hours at the reasonable request of any Partner, and will be
furnished to all Limited Partners and to any other Partner upon written request
therefor.
7.4 TAX RETURNS AND INFORMATION. The Partners intend for the
Partnership to be treated as a partnership, rather than as an association
taxable as a corporation, for federal income tax purposes. The General Partner
shall prepare or cause to be prepared all federal, state and local income and
other tax returns which the Partnership is required to file and shall furnish
such returns to the Limited Partners, together with a copy of each Limited
Partner's Form K-1 and any other information which any Limited Partner may
reasonably request relating to such returns, within the time required by law
(including any applicable extension periods available under the Code).
7.5 TAX AUDITS. The General Partner shall be the tax matters partner of
the Partnership under Section 6231(a)(7) of the Code. The General Partner shall
inform the Limited Partners of all matters which may come to its attention in
its capacity as tax matters partner by giving the Limited Partners notice
thereof within ten (10) days after becoming so informed. The General Partner
shall not take any action contemplated by Sections 6222 through 6232 of the Code
unless the General Partner has first given the Limited Partners notice of the
contemplated action and received the Approval of the Partners to the
contemplated action. This provision is not intended to authorize the General
Partner to take any action which is left to the determination of the individual
Partner under Sections 6222 through 6232 of the Code.
7.6 FISCAL YEAR. The Partnership fiscal year shall end on September 30
of each year.
8. RIGHTS, OBLIGATIONS AND INDEMNIFICATION OF THE GENERAL PARTNER
8.1 RIGHTS OF THE GENERAL PARTNER AS MANAGER. Subject to the
limitations imposed upon the General Partner in this Agreement (including,
without limitation, Sections 8.3 and 8.4) the General Partner shall have full,
exclusive and complete duty and right to manage and control, and, within its
discretion, shall make all decisions and take any necessary or appropriate
action in connection with the Partnership's business. Without limiting the
General Partner's power or authority under this Agreement or the Act, the
General Partner may (without obtaining the consent or approval of any Partners)
take or cause the Partnership to take the following actions if and when it deems
any such action to be necessary, appropriate or advisable, at the sole cost and
expense of the Partnership, subject however in all respects to the limitations
imposed on the General Partner in this Agreement (including, without limitation,
Sections 8.3 and 8.4):
11
(a) Borrow money from any source, including without limitation
from the General Partner, IASIS or an IASIS Affiliate and, if security
is required therefor, mortgage or subject to any other security device
any portion of the Partnership's property, obtain replacements of any
mortgage or other security device, and prepay, in whole or in part,
refinance, increase, modify, consolidate or extend any mortgage or
other security device, all of the foregoing on such terms and in such
amounts as the General Partner deems, in its sole discretion, to be in
the best interest of the Partnership;
(b) Acquire and enter into any contract of insurance which the
General Partner deems necessary and proper for the protection of the
Partnership, for the conservation of the Partnership's assets, or for
any purpose convenient or beneficial to the Partnership;
(c) Employ, from time to time on behalf of the Partnership,
individuals (including employees of the General Partner, the Limited
Partners, or any of their Affiliates) on such terms and for such
compensation as the General Partner shall determine (but not in an
amount which would be considered unreasonable based upon the scope of
an individual employee's duties and responsibilities), and enter into
agreements for the transfer of Partnership interests to such Persons as
provided in Article 12 hereof;
(d) Make decisions as to accounting principles and elections,
whether for book or tax purposes (and such decisions may be different
for each purpose);
(e) Set up or modify recordkeeping, billing and accounts
payable accounting systems;
(f) Alienate, mortgage, pledge or otherwise encumber, sell,
exchange, lease or purchase real and/or personal property in
fulfillment of the Partnership purposes and for the construction and
operation of the Facility and other Partnership property;
(g) Open checking and savings accounts, in banks or similar
financial institutions, in the name of the Partnership, deposit cash in
and withdraw cash from such accounts, and invest all funds not
immediately needed in the operation of the Partnership's business as
deemed appropriate by the General Partner;
(h) Adjust, arbitrate, compromise, xxx or defend, abandon, or
otherwise deal with and settle any and all claims in favor of or
against the Partnership, as the General Partner shall, in its sole
discretion, deem proper;
(i) Execute, on behalf of and in the name of the Partnership,
make, perform and carry out all types of contracts, leases, agreements,
instruments, notes, certificates, titles or other documents of any kind
or nature as deemed necessary and desirable by the General Partner,
including without limitation contracts, leases, other agreements and
documents and cash management systems with Affiliates of IASIS or any
Partner, and amend, extend, or modify any contract, lease, or agreement
at any time entered into by the Partnership, provided that the General
Partner uses its best efforts to insure that all such contracts,
leases, or agreements are representative of fair market value;
12
(j) Do all acts necessary or desirable to carry out the
business for which the Partnership is formed or which may facilitate
the General Partner's exercise of its powers hereunder;
(k) Admit additional Limited Partners in accordance with
Section 12.5 hereof;
(l) Merge the Partnership with another Person and take all
actions, including negotiating and entering into an agreement of merger
and an amendment and/or restatement of this Agreement, as the General
Partner determines are necessary or appropriate to effect such merger;
(m) Amend this Agreement to reflect the addition or
substitution of Partners, and amend the Agreement as provided in
Section 17.8; and
(n) Make distributions in accordance with the terms of this
Agreement, or refrain from making any distributions.
8.2 RIGHT TO RELY ON THE GENERAL PARTNER. No Person or governmental
body dealing with the Partnership shall be required to inquire into, or to
obtain any other documentation as to, the authority of the General Partner to
take any action permitted under Section 8.1. Furthermore, any Person dealing
with the Partnership may rely upon a certificate signed by the General Partner
as to the following:
(a) The identity of the General Partner or any Limited
Partner;
(b) The existence or nonexistence of any fact or facts that
constitute a condition precedent to acts by the General Partner or
which are in any other manner germane to the affairs of the
Partnership;
(c) The Persons who are authorized to execute and deliver any
instrument or document of the Partnership; or
(d) Any act or failure to act by the Partnership on any other
matter whatsoever involving the Partnership or any Partner.
8.3 SPECIFIC LIMITATIONS ON THE GENERAL PARTNER. Notwithstanding
anything to the contrary in this Agreement or the Act, without the prior written
approval of all of the Limited Partners to the specific act in question, the
General Partner shall have no right, power or authority to do any of the
following acts, each of which is considered outside the ordinary course of
Partnership business:
(a) To do any act in contravention of this Agreement;
(b) Except pursuant to Section 3.3 and/or Section 8.1(l)
hereof, to change or reorganize the Partnership into any other legal
form; or
13
(c) To knowingly perform any act that would subject any
Limited Partner to liability as a general partner in any jurisdiction.
8.4 ADDITIONAL LIMITATIONS ON THE AUTHORITY OF THE GENERAL PARTNER.
Without the prior Approval of the Partners, the General Partner shall have no
authority to do any of the following:
(a) Amend this Agreement (except as provided in Section 17.8);
(b) Change the nature of the business of the Partnership;
(c) Sell all or substantially all of the assets of the
Partnership; or
(d) Dissolve the Partnership.
The limitations in Section 8.3(b) and this Section 8.4 shall not be applicable
to any General Partner or any Liquidator in winding up and liquidating the
business of the Partnership under Article 15.
8.5 MANAGEMENT OBLIGATIONS OF THE GENERAL PARTNER. The General Partner
shall devote such time to the Partnership as may be necessary to manage and
supervise the Partnership business and affairs, but nothing in this Agreement
shall preclude the General Partner, at the expense of the Partnership, from
employing any IASIS Affiliate or a third party to provide management or other
services to the Partnership, subject always, however, to the control of the
General Partner. Any transaction between the Partnership and the General
Partner, IASIS or any IASIS Affiliate is hereby expressly authorized, provided
that the General Partner uses its best efforts to ensure that the terms of such
transactions are generally no less favorable to the Partnership than the terms
that would be made available to the Partnership in arm's length transactions
with independent third parties. The management obligations of the General
Partner shall include the following:
(a) The General Partner will provide management services in
such areas as long-range strategic and financial planning, management
planning, quality assurance programs, materials management, management
development, professional recruitment, performance appraisal systems,
personnel development, benefits administration, facilities development
and construction management and productivity improvement programs;
(b) The General Partner will provide management services in
areas such as budget control systems, financial reporting practices,
interfaces with lenders, contractual agreements, business office
procedures, accounts receivable and cash management, risk management
programs, financial modeling, capital planning, cost accounting
analysis and third-party reimbursement;
(c) The General Partner will provide marketing and corporate
communication management services in areas such as competitive
environment assessments, health
14
services marketing, management of community and public relations,
product-line analysis, new service development, management of
governmental affairs, market research and opinion attitude surveys;
(d) The General Partner will provide management services for
areas such as service utilization analysis, systems development, supply
and charge systems, manpower utilization and control systems, technical
clinical skills training, new product evaluation and educational
programs for clinical staff;
(e) The General Partner will provide management services for
areas such as medical staff orientation programs, medical staff issues,
Medicare and Medicaid cost reporting, quality assurance, practice
promotion and selection of physician private practice workshops;
(f) The Partnership may participate in IASIS's group
purchasing program, and each Partner agrees that all information with
regard to pricing or any other terms of the group purchasing program
will remain confidential; and
(g) The General Partner will encourage the exchange of written
materials between IASIS-affiliated hospitals (subject to
confidentiality requirements) and will provide the Partnership with
access to materials such as procedures manuals, bylaws, regulations and
rules.
8.6 INDEMNIFICATION OF THE GENERAL PARTNER.
(a) Except to the extent such indemnification may be
prohibited by law, the Partnership, its receiver, or its trustee shall
indemnify, hold harmless, and pay all judgments and claims against the
General Partner or its agents or employees relating to any liability or
damage incurred or suffered by the General Partner or its agents or
employees by reason of any act performed or omitted to be performed
(but not constituting willful misconduct or gross negligence) by the
General Partner or its agents or employees in connection with the
Partnership's business, including reasonable attorneys' fees and
expenses incurred by the General Partner in connection with the defense
of any claim or action based on any such act or omission, which
attorneys' fees may be paid as incurred. For purposes of this Section
8.6, the fact that an action, omission to act or decision is taken on
advice of counsel to the Partnership shall be evidence of good faith,
provided that all material facts were disclosed to such counsel.
(b) In the event any Limited Partner shall bring a legal
action against the General Partner, including a Partnership derivative
suit, the Partnership shall indemnify, hold harmless, and pay all
expenses of the General Partner, including but not limited to
attorneys' fees incurred in the defense of such action, unless the
General Partner shall be adjudicated guilty of gross negligence or
willful misconduct in connection with the performance of its duties as
General Partner to the Partnership.
15
(c) The Partnership shall indemnify, hold harmless, and pay
all expenses, costs or liabilities of the General Partner which (or
who) for the benefit of the Partnership makes any deposit, acquires any
option, makes any payment, or assumes any obligation in connection with
any property proposed to be acquired by the Partnership and which (or
who) suffers any financial loss as a result of such action.
(d) Any indemnification required herein to be made by the
Partnership shall be made promptly following the fixing of any loss,
liability, or damage incurred or suffered. If, at any time, the
Partnership has insufficient funds to provide such indemnification as
herein provided, it shall provide such indemnification if and as the
Partnership generates sufficient funds, and prior to any distribution
to the Partners.
Notwithstanding the foregoing provisions of this Section 8.6, the
General Partner shall not be indemnified by the Partnership from any liability
for actions or omissions that constitute willful misconduct or gross negligence
on the part of the General Partner.
8.7 REIMBURSEMENT. The General Partner shall be entitled to be
reimbursed for any and all reasonable costs and expenses incurred by it in
connection with managing and operating the Partnership and its properties and
business. Such reimbursement shall be paid by the Partnership, upon the written
application of the General Partner, as soon as funds are available therefor.
8.8 COMPENSATION OF THE GENERAL PARTNER. As compensation and
consideration for the performance of its duties and responsibilities as General
Partner, the General Partner shall be entitled to receive a monthly management
fee of two percent (2%) of the Partnership's net revenues for the preceding
month. Such management fee will be paid on or before the twentieth (20th) day of
each month after the month the Partnership starts to conduct business
operations. For purposes of this Section 8.8, the Partnership's net revenues
shall mean its gross revenues less its contractual adjustments, charity care and
administrative discounts as determined in accordance with generally accepted
accounting principles. The General Partner may contract with other parties
(including IASIS or any IASIS Affiliate) in rendering management services to the
Partnership.
8.9 INDEPENDENT ACTIVITIES. The General Partner and any of its
Affiliates may engage in or possess interests in other business ventures of
every nature and description, independently, and with others, whether such
activities are competitive with the Partnership or otherwise without having or
incurring any obligation to offer any interest in such activities to the
Partnership or any Partner. Neither this Agreement nor any activity undertaken
hereunder shall prevent the General Partner or any of its Affiliates from
engaging in such other activities or require the General Partner or any of its
Affiliates to permit the Partnership or any Limited Partner to participate in
such activities. Furthermore, as a material part of the consideration for the
General Partner executing this Agreement and admitting the Limited Partners to
the Partnership, the Limited Partners herein waive, relinquish and renounce any
right or claim of participation in any such activities.
16
9. RIGHTS AND STATUS OF LIMITED PARTNERS
9.1 GENERAL. The Limited Partners shall have the rights and the status
of limited partners under the Act. Except to the extent expressly otherwise
provided in this Agreement, the Limited Partners shall not take part in the
management or control of the Partnership business, or sign for or bind the
Partnership, such powers being vested exclusively in the General Partner.
9.2 LIMITATION OF LIABILITY. No Limited Partner shall have any personal
liability whatever, solely by reason of his, her or its status as a Limited
Partner of the Partnership, whether to the Partnership, the General Partner or
any creditor of the Partnership, for the debts of the Partnership or any of its
losses beyond the amount of the Limited Partner's obligation to contribute its
Capital Contribution to the Partnership as contemplated in Section 4.1 or the
return of distributions as required by the Act.
9.3 BANKRUPTCY, DEATH, ETC. Neither the Bankruptcy, death, disability
nor declaration of incompetence or incapacity of a Limited Partner shall
dissolve the Partnership, but the rights of a Limited Partner to share in the
profits and losses of the Partnership and to receive distributions of
Partnership funds shall, on the happening of such an event, devolve upon the
Limited Partner's estate, legal representative or successor in interest, as the
case may be, subject to this Agreement, and the Partnership shall continue as a
limited partnership under the Act. The Limited Partner's estate, representative
or successor in interest shall be entitled to receive distributions and
allocations with respect to such Limited Partner's interest in the Partnership
and shall be liable for all of the obligations of the Limited Partner.
Furthermore, the Limited Partner's estate, representative or successor in
interest 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 be entitled to any of the rights of a general partner
or limited partner under the Act or this Agreement unless such estate,
representative or successor in interest is admitted to the Partnership as a
Substituted Limited Partner in accordance with Section 12.2.
10. MEETINGS AND MEANS OF VOTING
10.1 MEETINGS OF THE PARTNERS. An annual meeting of the Partners shall
be held each year at a time and place selected by the General Partner, and in
any case within ninety (90) days of the completion of the audit of the
Partnership's financial statements for the immediately preceding fiscal year.
Special meetings of the Partners may be called by the General Partner and shall
be promptly called upon the written request of any one or more Limited Partners
who own in the aggregate 20% or more of the aggregate Sharing Percentages in the
Partnership owned by all Limited Partners, excluding any Sharing Percentage
owned by the General Partner or any of its Affiliates. The notice of any meeting
shall state the nature of the business to be transacted at such meeting, and
actions taken at any such meeting shall be limited to those matters specified in
the notice of the meeting. Notice of any meeting shall be given to all Partners
not less than ten (10) and not more than sixty (60) days prior to the date of
the meeting. Partners may vote in person or by proxy at such meeting.
Except as otherwise expressly provided in this Agreement or required by
the express provisions of the Act, the requisite vote of the Partners shall be
the Approval of the Partners,
17
which shall control all decisions for which the vote of the Partners is required
hereunder. Each Partner's voting rights shall be the same as that Partner's
Sharing Percentage at the time of the vote. The presence of any Partner at a
meeting shall constitute a waiver of notice of the meeting with respect to such
Partner. The Partners may, at their election, participate in any regular or
special meeting by means of conference telephone or similar communications
equipment by means of which all Persons participating in the meeting can hear
each other. A Partner's participation in a meeting pursuant to the preceding
sentence shall constitute presence in person at such meeting for all purposes of
this Agreement.
10.2 VOTE BY PROXY. Each Limited Partner may authorize any Person to
act on the Partner's behalf by proxy on all matters in which a Limited Partner
is entitled to participate, whether by waiving notice of any meeting, or voting
or participating at a meeting. Every proxy must be signed by the Limited Partner
authorizing such proxy or such Limited Partner's attorney-in-fact. No proxy
shall be valid after the expiration of eleven (11) months after the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Limited Partner executing it.
10.3 CONDUCT OF MEETING. Each meeting of Partners shall be conducted by
the General Partner or by a Person appointed by the General Partner. The meeting
shall be conducted pursuant to such rules as may be adopted by the General
Partner or the Person appointed by the General Partner for the conduct of the
meeting.
10.4 ACTION WITHOUT A MEETING. Notwithstanding anything to the contrary
in this Agreement, any action that may be taken at a meeting of the Partners may
be taken without a meeting if a consent in writing setting forth the action so
taken is Approved by the Partners, which consent may be executed in multiple
counterparts. In the event any action is taken pursuant to this Section 10.4, it
shall not be necessary to comply with any notice or timing requirements set
forth in Section 10.1. Prompt written notice of the taking of action without a
meeting shall be given to the Partners who have not consented in writing to such
action.
10.5 CLOSING OF TRANSFER RECORD; RECORD DATE. For the purpose of
determining the Partners entitled to notice of or to vote at any meeting of
Partners, any reconvening thereof, or to act by consent, the General Partner may
provide that the transfer record shall be closed for at least ten (10) days
immediately preceding such meeting (or such shorter time as may be reasonable in
light of the period of the notice) or the first solicitation of consents in
writing. If the transfer record is not closed and if no record date is fixed for
determining the Partners entitled to notice of or to vote at a meeting of
Partners or by consent, the date on which the notice of the meeting is mailed or
the first written consent is received by the General Partner shall be the record
date for such determination.
11. ADVISORY BOARD
11.1 ADVISORY BOARD. Effective for all purposes on the date of this
Agreement, the General Partner and the Limited Partners shall form an advisory
board of the Partnership (the "Advisory Board") comprised of the Category A
Directors and the Category B Directors (each as defined below, and collectively,
the "Directors"), all of whom must be natural persons. The
18
Advisory Board shall consist of the number of Directors as designated from time
to time by the General Partner, with the initial Advisory Board being composed
of nine (9) Directors. The Category A Directors shall be appointed by the
General Partner. The Category B Directors shall be elected by the Limited
Partners (other than the General Partner and its Affiliates). The number of
Category A Directors and Category B Directors shall be in a similar proportion
(rounded to the nearest whole numbers) as the number of Units owned by the
General Partner and its Affiliates (whether owned as a general partner or a
limited partner) bears to the number of Units owned by the Limited Partners
(other than the General Partner and its Affiliates); provided, however, that the
minimum number of Category B Directors shall be four (4). In the election of
Category B Directors by the Limited Partners, only the Units owned by the
Limited Partners (and not any Units owned by the General Partner and its
Affiliates) shall be considered in the voting. The Advisory Board shall be
created and operated to provide to the General Partner input, recommendations
and guidance on an advisory basis regarding the Facility's operation (e.g., new
programs and services, operating and capital budgets, facility and equipment
needs, quality assurance issues and strategic planning). Each individual
selected to serve on the Advisory Board shall serve for a term of one (1) year
and thereafter until his successor is appointed or elected, unless he sooner
resigns or is removed. A member of the Advisory Board may be removed without
cause by only the class of Partners that had the right to vote for his initial
appointment. The unexpired term of a removed member shall be filled by an
individual appointed by the class of Partners that had the right to vote on the
removed member's initial appointment to the Advisory Board. The Category A
Directors and the Category B Directors shall elect annually the Chairman of the
Advisory Board. The Advisory Board shall establish from time to time its meeting
schedule and the policies and procedures for the conduct of its meetings.
12. TRANSFER OF UNITS AND ADDITIONAL LIMITED PARTNERS
12.1 TRANSFERS BY LIMITED PARTNERS. Except as otherwise set forth in
this Article 12 and Article 13, a Limited Partner may not sell, assign,
transfer, pledge or hypothecate ("Transfer") all or any part of its interest in
the Partnership without the prior written consent of the General Partner. The
General Partner, in its sole discretion and with or without reasonable cause,
may withhold its consent with or without reasonable cause to any Transfer for
which such consent is required. If a Limited Partner receives the prior consent
of the General Partner, such Limited Partner may Transfer his interest in the
Partnership if the following conditions are satisfied:
(a) The Transfer is to a Qualified Purchaser and is with
respect to one or more Units;
(b) The Transfer will not result in the Partnership being
considered a "publicly traded partnership" within the meaning of
Section 7704 of the Code;
(c) The Limited Partner and its transferee execute,
acknowledge and deliver to the General Partner such instruments of
transfer and assignment with respect to such transaction as are in form
and substance satisfactory to the General Partner;
19
(d) Unless waived in writing by the General Partner, the
Limited Partner delivers to the General Partner an opinion of counsel
satisfactory to the General Partner, covering such securities and tax
laws and other aspects of the proposed Transfer as the General Partner
may reasonably request;
(e) The Limited Partner furnishes to the transferee a written
statement showing the name and taxpayer identification number of the
Partnership in such form and together with such other information as
may be required under Section 6050K of the Code and the Regulations
thereunder; and
(f) The Limited Partner pays the Partnership a transfer fee
that is sufficient to pay all reasonable expenses of the Partnership
(which shall include any and all expenses of the General Partner) in
connection with such transaction.
Any Limited Partner who thereafter Transfers all or any portion of his interest
in the Partnership shall promptly notify the General Partner of such Transfer
and shall furnish to the General Partner the name and address of the transferee
and such other information as may be required under Section 6050K of the Code
and the Regulations thereunder.
12.2 SUBSTITUTED LIMITED PARTNER. No Person taking or acquiring, by
whatever means, the interest of any Limited Partner in the Partnership, shall be
admitted as a Substituted Limited Partner without the consent of the General
Partner (which consent may be withheld in the sole discretion of the General
Partner) and unless such Person:
(a) Elects to become a Substituted Limited Partner by
delivering notice of such election to the Partnership;
(b) Executes, acknowledges and delivers to the Partnership
such other instruments as the General Partner may deem necessary or
advisable to effect the admission of such Person as a Substituted
Limited Partner, including, without limitation, the written acceptance
and adoption by such Person of the provisions of this Agreement by
executing a joinder in the form attached as Exhibit D and the execution
of the Pledge Agreement in substantially the form attached hereto as
Exhibit E, or such other form as the senior lender of IASIS shall
require from time to time; and
(c) Pays a transfer fee to the Partnership in an amount
sufficient to cover all reasonable expenses connected with the
admission of such Person as a Substituted Limited Partner.
12.3 BASIS ADJUSTMENT. Upon the Transfer of all or part of an interest
in the Partnership, at the request of the transferee of the interest, the
General Partner may, in its sole discretion, cause the Partnership to elect,
pursuant to Section 754 of the Code or the corresponding provisions of
subsequent law, to adjust the basis of the Partnership properties as provided by
Sections 734 and 743 of the Code.
20
12.4 TRANSFER BY GENERAL PARTNER. Notwithstanding any of the provisions
of this Agreement to the contrary, the General Partner and its Affiliates may,
without the consent of the Limited Partners, Transfer any or all of their Units
(whether Limited Partner or General Partner Units) to any IASIS Affiliate or any
third party, and may pledge, encumber, or otherwise give as collateral for loans
or other indebtedness, any of their interests in the Partnership, and the
pledgee or other holder of any such pledge, encumbrance, or security interest
may exercise its rights with respect thereto, including without limitation, its
rights to foreclose, transfer, convey, sell or assign such interests, without
the consent of, or notice to, any other Partner; provided, however, that any
such transferee of any or all of the General Partner's Units agrees in writing
to be bound by the terms of this Agreement by executing a joinder in the form
set forth as Exhibit D. In furtherance (and not in limitation) of the foregoing,
the General Partner may, without the consent of the Limited Partners, appoint a
substitute General Partner and/or additional General Partners.
12.5 ADMISSION OF ADDITIONAL LIMITED PARTNERS. The General Partner is
authorized to issue limited partnership interests in the Partnership to Persons
who are Qualified Purchasers and to admit them to the Partnership as Additional
Limited Partners, which in all instances shall comply with applicable securities
laws. The General Partner shall have complete discretion in determining the
consideration, which must be based on then current value, and the terms and
conditions with respect to the Partnership for admitting Additional Limited
Partners. The General Partner will not permit any Person to become an Additional
Limited Partner unless such Person certifies in writing to the General Partner
that the Person is a Qualified Purchaser and agrees to be bound by the terms of
this Agreement and executes a pledge agreement in substantially the form
attached hereto as Exhibit E, or such other form as the senior lender of IASIS
shall require from time to time. The General Partner shall do all things
necessary to comply with the Act and is authorized to do all things it deems to
be necessary or advisable in connection with the Partnership for admitting any
Additional Limited Partner, including, but not limited to, complying with any
statute, rule, regulation or guideline issued by any federal, state or other
governmental agency.
12.6 TRANSFER PROCEDURES. The General Partner may establish such
transfer procedures as it deems advisable, consistent with this Article 12, to
ensure that all conditions precedent to the admission of a Substituted Limited
Partner or Additional Limited Partner have been complied with.
12.7 INVALID TRANSFER. No Transfer of an interest in the Partnership
that is in violation of this Article 12 shall be valid or effective, and the
Partnership shall not recognize any improper Transfer for the purposes of making
allocations, payments of profits, return of capital contributions or other
distributions with respect to such Partnership interest, or part thereof. The
Partnership may enforce the provisions of this Article 12 either directly or
indirectly or through its agents by entering an appropriate stop transfer order
on its books or otherwise refusing to register or transfer or permit the
registration or transfer on its books of any proposed Transfers not in
accordance with this Article 12.
12.8 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF A TRANSFERRED
OWNERSHIP INTEREST. If any Partner Transfers any part of his interest in the
Partnership during any accounting period in compliance with the provisions of
this Article 12, Partnership income, gain,
21
deductions and losses attributable to such interest for that period shall be
divided and allocated between the transferor and the transferee by taking into
account their varying interests during the appropriate accounting period in
accordance with Code Section 706(d), using the daily proration method. All
Partnership distributions on or before the effective date of such Transfer shall
be made to the transferor, and all such Partnership distributions thereafter
shall be made to the transferee. Solely for purposes of making Partnership tax
allocations and distributions, the Partnership shall recognize a Transfer on the
day following the day of Transfer. Neither the Partnership nor the General
Partner shall incur any liability for making Partnership allocations and
distributions in accordance with the provisions of this Section 12.8, whether or
not the General Partner or the Partnership have knowledge of any Transfer of any
interest in the Partnership or part thereof where the transferee is not admitted
as a Substituted Limited Partner.
12.9 ADDITIONAL REQUIREMENTS OF ADMISSION TO PARTNERSHIP. The General
Partner shall not admit any Person as a Limited Partner if such admission would
have the effect of causing the Partnership to be re-classified for federal
income tax purposes as an association (taxable as a corporation under the Code),
would violate any Medicare or other health care law, rule or regulation, or
would not meet applicable exemptions from securities registration and securities
disclosure provided under federal and state securities laws.
12.10 AMENDMENT TO EXHIBIT B. The General Partner shall amend Exhibit B
attached to this Agreement from time to time to reflect the admission of any
successor General Partner, Substituted Limited Partners or Additional Limited
Partners, or the reduction or termination of any Partner's interest in the
Partnership.
12.11 NO PARTICIPATION IN SECONDARY MARKET. Notwithstanding anything
contained herein to the contrary, the Partnership shall not participate in the
establishment of, or the inclusion of Units on, an established securities market
for the Units within the meaning of Treasury Regulation Section 1.7704-1(b) or a
secondary market or the substantial equivalent thereof for the Units within the
meaning of Treasury Regulation Section 1.7704-1(c), and the Partnership shall
not recognize any transfers of Units (including a right to profits, losses and
distributions) made on any such market by redeeming the transferor Partner (in
the case of a redemption or repurchase by the Partnership) or admitting the
transferee partner or otherwise recognizing any rights of the transferee, such
as a right of the transferee to receive Partnership distributions (directly or
indirectly) or to acquire an interest in the capital or profits of the
Partnership, and any such transfers shall be void ab initio.
13. RIGHT TO LIQUIDATE OR PURCHASE PARTNERSHIP INTERESTS
13.1 PARTNERSHIP'S AND GENERAL PARTNER'S RIGHT OF FIRST REFUSAL.
Subject to the restrictions on transfer set forth in Article 12, if any Limited
Partner receives or obtains a bona fide offer from a third party to acquire in
any manner all or any part of its interest in the Partnership which offer the
Limited Partner intends to accept, the Limited Partner shall promptly notify the
General Partner in writing of the offer received, including the name of the
offeror, the number of whole or partial Units offered to be purchased, the
proposed acquisition price and the other terms and conditions of the offer. The
Partnership shall have the option for a period of sixty (60) days from the day
the General Partner receives notice of such offer to exercise its right
22
to acquire such Limited Partner's interest in the Partnership on the same terms
and conditions contained in the offer. The Partnership may exercise its option
by notifying the Limited Partner proposing to sell prior to the end of such
sixty (60) day period of its exercise of the option and shall thereafter acquire
such Limited Partner's interest within five (5) days following the expiration of
such sixty (60) day period (unless such exercise is subsequently revoked). If
the Partnership does not exercise its option, the General Partner shall have the
option to exercise its right to acquire such Limited Partner's interest in the
Partnership on the same terms and conditions within the same sixty (60) day
period. If the Partnership and the General Partner fail to or both indicate in
writing that they will not exercise the option, within the period provided, or
if either the Partnership or the General Partner exercises the option but fails
to effect the acquisition within the prescribed five (5) day period, the Limited
Partner, in accordance with and subject to the provisions of Article 12, may
convey or dispose of the part of the Partner's interest in the Partnership that
was the subject of the offer but only at the price, terms and conditions, and to
the party specified in the offer notice to the General Partner. If terms and
conditions more favorable to the proposed acquiror than, or in any material
manner different from, those offered to the Partnership and the General Partner
should be agreed to by the Limited Partner, the Partnership and the General
Partner shall again have the option to acquire the selling Limited Partner's
interest in the Partnership which is subject to the more favorable or different
acquisition terms in accordance with this Section 13.1. Neither the General
Partner nor the Partnership shall be liable or accountable to any Limited
Partner which attempts to transfer its interest in the Partnership for any loss,
damage, expense, cost, or liability resulting from the Partnership's or General
Partner's exercise or failure to exercise the acquisition option under this
Section 13.1, delay in notifying the Limited Partner of the Partnership's or the
General Partner's intention not to exercise the acquisition option, or its
enforcement of the requirements of this Section 13.1 in the event that it elects
not to exercise the acquisition option. The Partnership's or the General
Partner's failure to exercise the acquisition option or to indicate in writing
that it is electing not to exercise the option shall not be deemed a consent of
the General Partner to allow any third party transferee to become a Substituted
Limited Partner, such consent being controlled by the provisions of Section
12.2.
13.2 OCCURRENCE OF TERMINATING EVENT OR ADVERSE TERMINATING EVENT.
(a) In the event a Terminating Event shall occur with respect
to any Limited Partner (or person who owns an interest in a P.A. which
is a Limited Partner), such Partner or the Partner's successor or other
legal representative shall give written notice thereof to the
Partnership within thirty (30) days of the occurrence of such event.
Upon the receipt of such notice, the Partnership shall have the right,
but not the obligation, for the ensuing sixty (60) days to exercise the
right to purchase such Partner's interest in the Partnership. If the
Partnership has not received written notice of a Terminating Event with
respect to any Limited Partner (or person who owns an interest in a
P.A. which is a Limited Partner) as required under this Section
13.2(a), the Partnership will have the right to exercise the right to
purchase such Partner's interest in the Partnership for sixty (60) days
after the Partnership has actual knowledge of the occurrence of any
such event and gives written notice thereof to the Limited Partner.
Notwithstanding anything to the contrary in this Agreement, the failure
of a Limited Partner to notify the Partnership of
23
the occurrence of a Terminating Event as required under this Section
13.2(a) shall not constitute the occurrence of an Adverse Terminating
Event.
(b) In the event the General Partner determines that an
Adverse Terminating Event has occurred with respect to any Limited
Partner (or person who owns an interest in a P.A. which is a Limited
Partner) the Partnership shall give written notice thereof to such
Partner and, for a period of sixty (60) days from the date of such
notice, the Partnership shall have the right, but not the obligation,
to exercise the right to purchase such Partner's interest in the
Partnership.
(c) In the event the Partnership elects to purchase the
interest of a Limited Partner pursuant to this Section 13.2, the
Partnership shall consummate such purchase within the five (5) day
period following the expiration of the sixty (60) day exercise period.
(d) In the event the Partnership does not elect to exercise
its right to purchase such Partner's interest in the Partnership
pursuant to subsections (a) or (b) above, then the General Partner
shall have the right, but not the obligation, within the time period
indicated in Section 13.2(a) hereof to exercise its right to purchase
such Partner's interest, pursuant to the same terms provided in Section
13.3 hereof for Partnership purchases of such Partner's interest.
13.3 PAYMENT FOR PARTNERSHIP INTEREST.
(a) If any Limited Partner's interest in the Partnership is
purchased because of the occurrence of a Terminating Event, the amount
the Partnership will pay for each Unit owned by such Partner shall be
equal to the Valuation Price as of the day on which the sixty (60) day
exercise period began to run.
(b) If the Partnership purchases any Limited Partner's
interest in the Partnership as a result of an Adverse Terminating
Event, the amount to be paid by the Partnership to such Partner shall
be equal to the lesser of (i) the Valuation Price; or (ii) the amount
paid by the Limited Partner to acquire his Units less any distributions
to such Partner pursuant to Section 6.1 hereof.
(c) If the Partnership purchases any Limited Partner's
interest in the Partnership as provided in this Section 13.3, the
Partnership shall pay any such amounts owed therefor to such Partner or
its successor, at the discretion of the General Partner, in a lump sum
or in up to sixty (60) equal monthly payments with interest at the
"prime" rate as published from time to time in the Money Rates section
of the Wall Street Journal (the "Prime Rate") on the unpaid principal
balance or, provided that IASIS has a class of securities registered
under Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and is required to file reports pursuant to
Section 15(d) of the Exchange Act, in restricted or unrestricted shares
of such securities. If the General Partner exercises its discretion to
pay for a Partnership interest in monthly installments, the first such
installment will be paid to the Partner or his successor in interest on
the first
24
day of the month after thirty (30) days have expired since the
Partner's interest in the Partnership has been purchased. Each
subsequent installment shall be paid on the first day of each
successive month until the full amount owed to the Partner or his
successor in interest has been paid. The Partnership's obligation to
pay the Partner in monthly installments under this Section 13.3 will be
evidenced by a nonrecourse promissory note secured by the Partnership
interest purchased and executed by the General Partner on behalf of the
Partnership. If the General Partner exercises its discretion to pay for
a Partnership interest in the class of IASIS securities registered
under the Exchange Act, such securities shall be valued at the average
of the closing price of such securities for the fifteen (15) trading
days immediately prior to the day on which the sixty (60) day exercise
period began to run.
13.4 SUBSEQUENT LEGISLATION. If any Limited Partners are prohibited
from owning an interest in the Partnership as a result of the enactment of any
statute, regulation or other law or the judicial or administrative
interpretation of any existing or future statute, regulation or other law, the
General Partner shall attempt to restructure the Partnership or its ownership or
operations in order to comply with such enactment or interpretation in
accordance with the provisions of Section 17.8. If any Limited Partner shall be
so prohibited from owning an interest in the Partnership and the Partnership
cannot be so restructured, the Partnership will purchase all the Limited
Partner's interests in the Partnership as provided in this Section 13.4.
Additionally, if the enactment of any statute, regulation or other law relating
to physician ownership in the Partnership or the judicial or administrative
interpretation of any existing or future statute, regulation or law relating to
physician ownership in the Partnership shall have the effect of limiting
reimbursement of health care costs through government or other payor programs or
otherwise materially and adversely affects the manner in which the Partnership
or its Affiliates shall operate their businesses, the General Partner shall
attempt to restructure the Partnership in accordance with Section 17.8 to
eliminate the adverse effect and if the Partnership cannot be so restructured,
the General Partner, at its sole and absolute discretion, shall have the option
to cause the Partnership to purchase all of the Limited Partners' interests in
the Partnership as provided in this Section 13.4. The Partnership shall pay each
Limited Partner for his, her or its interest in the Partnership the Valuation
Price of such interest as of the day of such purchase. Such amount will be paid
to each Limited Partner at the sole and absolute discretion of the General
Partner, in a lump sum or in sixty (60) equal monthly payments with interest on
the unpaid principal balance at the Prime Rate or, provided that IASIS has a
class of securities registered under Section 12 of the Exchange Act and is
required to file reports pursuant to Section 15(d) of the Exchange Act, in
restricted or unrestricted shares of such securities. If the General Partner
exercises its discretion to pay for a Partnership interest in sixty (60) monthly
installments, the first such installment shall be paid to the Limited Partner on
the first day of the first month following the date that is thirty (30) days
after the date the Partner's interest in the Partnership terminated, with
subsequent installments paid on the first day of each successive month
thereafter until paid in full. The Partnership's obligation to pay the Limited
Partners in sixty (60) equal monthly installments under this Section 13.4 will
be evidenced by nonrecourse promissory notes secured by the Partnership
interests purchased and executed by the General Partner on behalf of the
Partnership. If the General Partner exercises its discretion to pay for a
Partnership interest in the class of IASIS securities registered under the
Exchange Act, such securities shall be valued at the average of the closing
price of such securities for the fifteen (15)
25
trading days immediately prior to the date of such purchase. Notwithstanding
anything to the contrary contained in this Section 13.4, the General Partner may
elect to dissolve the Partnership as provided in Section 14.1(d) hereof.
13.5 DIVORCE OF LIMITED PARTNER. In the event of a divorce of a Limited
Partner (or of a person who owns an interest in a P.A. which is a Limited
Partner) in which all or any part of the divorcing Limited Partner's interest in
the Partnership is awarded to the spouse, the divorcing Limited Partner (or
person) shall have the first and prior right to purchase from the spouse the
interest or portion thereof to be transferred to the spouse. In the event the
divorcing Limited Partner (or person) is unable or unwilling to exercise his
right to purchase such interest within sixty (60) days of the order or
settlement agreement effecting the award, the Partnership shall have the
exclusive right to purchase such interest for a period of sixty (60) days after
the expiration of such prior sixty (60) day period or the earlier receipt by the
Partnership of notice from the divorcing Limited Partner or person that he or
she is unable or unwilling to purchase such interest. The Partnership shall give
written notice to the spouse of its election to purchase such interest within
such sixty (60) day period. In the event of the purchase by either the divorcing
Limited Partner (or person) or the Partnership, the purchase price for such
interest shall be the Valuation Price as of the date on which the order or
settlement agreement effecting the award was dated, multiplied by the number of
Units (or fraction thereof) of the divorcing Limited Partner (or person) which
was awarded to the spouse. The last day of the month in which the order or
settlement agreement effecting the award was dated will be the time used as the
reference time for determining the last ended period for purposes of the
Valuation Price, and the purchase price so determined will be payable in the
manner described in Section 13.3(c).
13.6 REQUIRED REPURCHASE OF UNITS. Within 120 days after the Retirement
of a Limited Partner, such Limited Partner may require the Partnership to
repurchase his or her Units. A Limited Partner may exercise his right to require
the Partnership to repurchase his or her Units by giving notice to the
Partnership. A form of Notice of Redemption (herein so called) is attached
hereto as Exhibit C. Such Notice of Redemption may be given at any time after
March 16 of any calendar year, subject to the 120-day time period referenced
above. The purchase price of such Units shall be the Valuation Price as of the
date of receipt by the Partnership of the Notice of Redemption. The purchase
price shall be paid in cash by the Partnership ninety (90) days following
receipt by the Partnership of the Notice of Redemption. If the Partnership
cannot repurchase the Units noticed for repurchase hereunder because the
Partnership lacks sufficient cash or the Partnership is limited for legal
reasons, or because the exercise of such repurchase would cause the Partnership
to be treated as a publicly traded partnership for tax purposes, or is limited
by the provisions of a loan or credit agreement or indenture to which the
Partnership or an affiliate is subject, the Partnership shall repurchase as many
Units as possible, such repurchases to be allocated pro rata among the Limited
Partners who have so tendered Units. If the Partnership is unable to repurchase
any such Units, the obligation of the Partnership to make such repurchase in
that particular year shall terminate, and the Limited Partner who holds such
Units may exercise his or her right in the following year, subject to the same
limitations. If a natural disaster or other event occurs that has a material
adverse effect on the operations of the Partnership or any Subsidiary (as
determined by the General Partner in its sole discretion), the Partnership's
obligation to repurchase Units shall be suspended until the General Partner
determines that repairs have been completed or the operations stabilized, as
applicable.
26
13.7 FEDERAL INCOME TAX TREATMENT. In the event the Partnership
exercises the right to purchase any Partner's interest in the Partnership under
this Article 13, one hundred percent (100%) of all payments made by the
Partnership to such Partner hereunder in consideration for such Partner's
Partnership interest will, for federal income tax purposes, be classified as a
Code Section 736(b) payment except for such Partner's share of the Partnership's
"unrealized receivables," as defined in Code Section 751(c), which will be
classified as a Code Section 736(a)(1) payment. The General Partner shall
conclusively determine or cause to be determined any such Partner's share of
"unrealized receivables." Neither the Partnership nor the General Partner shall
be liable to any Person for any inaccuracy in determining any such Partner's
share of the Partnership's "unrealized receivables."
13.8 REPURCHASED UNITS. Any Partnership interest or other interest of a
Partner in the Partnership that is acquired by the Partnership as provided in
this Agreement shall not be deemed canceled and may be re-issued by the
Partnership.
14. DISSOLUTION
14.1 CAUSES. Each Partner expressly waives any right which it might
otherwise have to dissolve the Partnership except as set forth in this Article
14. The Partnership shall be dissolved upon the first to occur of the following:
(a) The Bankruptcy, dissolution or withdrawal of the General
Partner (other than the substitution of a General Partner pursuant to
Section 12.4) or any other occurrence which would legally disqualify
the General Partner from acting hereunder;
(b) The Approval by the Partners of an instrument dissolving
the Partnership;
(c) The dissolution of the Partnership by judicial decree; or
(d) The determination of the General Partner in its reasonable
discretion that a rule, ordinance, regulation, statute or government
pronouncement has or may be enacted that would make any material aspect
of this Agreement or the activities conducted by the Partnership
unlawful or eliminate or substantially reduce, either directly or
indirectly, the benefits that would accrue to the Partners (including
the General Partner) with respect to continuing the Partnership's
business.
Nothing contained in this Section 14.1 is intended to grant to any
Partner the right to dissolve the Partnership at will (by retirement,
resignation, withdrawal or otherwise), or to exonerate any Partner from
liability to the Partnership and the remaining Partners if it dissolves the
Partnership at will. Any dissolution at will of the Partnership, including
dissolution caused under Section 14.1(a), shall be in contravention of this
Agreement for purposes of the Act. Dissolution of the Partnership under Section
14.1(c) shall not constitute a dissolution at will.
14.2 RECONSTITUTION. If the Partnership is dissolved as a result of an
event described in Section 14.1(a), the Partnership may be reconstituted and its
business continued if, within ninety
27
(90) days after the date of dissolution, Limited Partners holding ninety percent
(90%) of the outstanding Units held by Limited Partners (including Units held as
limited partner by IASIS Affiliates) affirmatively elect to reconstitute the
Partnership, agree on the identity of the new general partner or partners, and
execute an instrument confirming such facts. If the Partnership is
reconstituted, an amendment to this Agreement shall be executed and an amended
Certificate of Limited Partnership filed of record.
14.3 INTERIM MANAGER. If the Partnership is dissolved as a result of an
event described in Section 14.1(a) and the General Partner is unable to continue
acting as the General Partner of the Partnership, those Partners who own Units
representing a majority of the aggregate Sharing Percentage of all of the
Partners (excluding that owned by the General Partner) may appoint an interim
manager of the Partnership, who shall have and may exercise only the rights,
powers and duties of a general partner necessary to preserve the Partnership
assets, until (a) the new general partner is elected under Section 14.2, if the
Partnership is reconstituted, or (b) a Liquidator is appointed under Section
15.1, if the Partnership is not reconstituted. The interim manager shall not be
liable as a general partner to the Limited Partners and shall, while acting in
the capacity of interim manager on behalf of the Partnership, be entitled to the
same indemnification rights as are set forth in Section 8.6. The interim manager
appointed as provided herein shall be entitled to receive such reasonable
compensation for its services as may be agreed upon by such interim manager and
those Partners who appointed the interim manager.
15. WINDING UP AND TERMINATION
15.1 GENERAL. If the Partnership is dissolved and is not reconstituted,
the General Partner (or in the event that the General Partner has withdrawn or
is deemed to be in Bankruptcy, a liquidator or liquidating committee selected by
those Limited Partners who own at least 67% of the aggregate Partners' Sharing
Percentage (excluding that owned by the General Partner)) shall commence to wind
up the affairs of the Partnership and to liquidate and sell the Partnership's
assets. The party or parties actually conducting such liquidation in accordance
with the foregoing sentence, whether the General Partner, a liquidator or a
liquidating committee, is herein referred to as the "Liquidator." The Liquidator
(if other than the General Partner) shall have sufficient business expertise and
competence to conduct the winding up and termination of the Partnership and, in
the course thereof, to cause the Partnership to perform any contracts which the
Partnership has or thereafter enters into. The Liquidator shall have full right
and unlimited discretion to determine the time, manner and terms of any sale or
sales of Partnership property under such liquidation, having due regard for the
activity and condition of the relevant market and general financial and economic
conditions. The Liquidator (if other than the General Partner) appointed as
provided herein shall be entitled to receive such reasonable compensation for
its services as shall be agreed upon by the Liquidator and those Limited
Partners who own at least 67% of the aggregate Partners' Sharing Percentage
(excluding that owned by the General Partner). If the General Partner serves as
the Liquidator, the General Partner shall not be entitled to receive any fee for
carrying out the duties of the Liquidator. The Liquidator may resign at any time
by giving fifteen (15) days prior written notice and may be removed at any time,
with or without cause, by written notice of Limited Partners who own at least
67% of the aggregate Partners' Sharing Percentage (excluding that owned by the
General Partner). Upon the death, dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who
28
shall have and succeed to all the rights, powers and duties of the original
Liquidator) will, within thirty (30) days thereafter, be appointed by those
Limited Partners who own at least 67% of the aggregate Partners' Sharing
Percentage (excluding that owned by the General Partner), evidenced by written
appointment and acceptance. The right to appoint a successor or substitute
Liquidator in the manner provided herein shall be recurring and continuing for
so long as the functions and services of the Liquidator are authorized to
continue under the provisions hereof, and every reference herein to the
Liquidator will be deemed to refer also to any such successor or substitute
Liquidator appointed in the manner herein provided. The Liquidator shall have
and may exercise, without further authorization or consent of any of the parties
hereto or their legal representatives or successors in interest, all of the
powers conferred upon the General Partner under the terms of this agreement to
the extent necessary or desirable in the good faith judgment of the Liquidator
to perform its duties and functions. The Liquidator (if other than the General
Partner) shall not be liable as a general partner to the Limited Partners and
shall, while acting in such capacity on behalf of the Partnership, be entitled
to the indemnification rights set forth in Section 8.6.
15.2 COURT APPOINTMENT OF LIQUIDATOR. If, within ninety (90) days
following the date of dissolution provided in Section 15.1, a Liquidator or
successor Liquidator has not been appointed in the manner provided therein, any
interested party shall have the right to make application to any United States
District Judge (in his or her individual and not judicial capacity) for the
United States District Court, Western District of Texas, for appointment of a
Liquidator or successor Liquidator, and the Judge, acting as an individual and
not in his judicial capacity, shall be fully authorized and empowered to appoint
and designate a Liquidator or successor Liquidator who shall have all the
powers, duties, rights and authority of the Liquidator herein provided.
15.3 LIQUIDATION. The Liquidator shall give all notices to creditors of
the Partnership and shall make all publications required by the Act. In the
course of winding up and terminating the business and affairs of the
Partnership, the assets of the Partnership (other than cash) shall be sold,
except as otherwise determined by the Liquidator, its liabilities and
obligations to creditors, including any Partners who made loans to the
Partnership as provided in Section 4.4 hereof, and all expenses incurred in its
liquidation shall be paid, and all resulting items of Partnership income, gain,
loss or deduction shall be credited or charged to the Capital Accounts of the
Partners in accordance with Article 5. Except as otherwise determined by the
Liquidator, all Partnership property shall be sold upon liquidation of the
Partnership and no Partnership property shall be distributed in kind to the
Partners. Thereafter, all Partnership assets shall be distributed among all
Partners having positive Capital Account balances (as determined after giving
effect to all adjustments attributable to allocations of items of profit and
loss realized by the Partnership during the fiscal year in question (including
items of profit and loss realized on the liquidation) and all adjustments
attributable to contributions and distributions of money and property effected
prior to such distribution), pro rata in accordance with such positive Capital
Account balances. This distribution shall be made no later than the end of the
fiscal year during which the Partnership is liquidated (or, if later, ninety
(90) days after the date on which the Partnership is liquidated). Upon the
completion of the liquidation of the Partnership and the distribution of all the
Partnership funds, the Partnership shall terminate and the General Partner (or
the Liquidator, as the case may be) shall have the authority to execute and
record all documents required to
29
effectuate the dissolution and termination of the Partnership. In the discretion
of the Liquidator, a pro rata portion of the distributions that would otherwise
be made to the Partners may instead be distributed to a trust established for
the benefit of the Partners for the purposes of liquidating Partnership
property, collecting amounts owed to the Partnership, and paying any contingent
or unforeseen liabilities or obligations of the Partnership or of the Partners
arising out of or in connection with the Partnership. The assets of any such
trust shall be distributed to the Partners from time to time, in the reasonable
discretion of the Liquidator, in the same proportions as the amount distributed
to such trust by the Partnership would otherwise have been distributed to the
Partners pursuant to this Agreement.
15.4 CREATION OF RESERVES. After making payment or provision for
payment of all debts and liabilities of the Partnership and all expenses of
liquidation, the Liquidator may set up such cash reserves as the Liquidator may
deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership.
15.5 FINAL STATEMENT. Within a reasonable time following the completion
of the liquidation, the Liquidator shall supply to each of the Partners a
statement which shall set forth the assets and the liabilities of the
Partnership as of the date of complete liquidation, each Partner's pro rata
portion of distributions under Section 15.3, and the amount retained as reserves
by the Liquidator under Section 15.4.
16. POWER OF ATTORNEY
16.1 GENERAL PARTNER AS ATTORNEY-IN-FACT. Each Limited Partner hereby
makes, constitutes, and appoints the General Partner, with full power of
substitution and resubstitution, his true or her and lawful attorney-in-fact for
him or her and in his or her name, place, and xxxxx and for his or her use and
benefit to sign, execute, certify, acknowledge, swear to, file, and record (a)
this Agreement and all agreements, certificates, instruments, and other
documents amending or changing this Agreement as now or hereafter amended which
the General Partner may deem necessary, desirable, or appropriate including,
without limitation, to reflect (i) the valid exercise by any General Partner of
any power granted to it under this Agreement; (ii) any amendments adopted by the
Partners in accordance with the terms of this Agreement; (iii) the valid
admission of any Substituted Limited Partner or Additional Limited Partner to
the Partnership; or (iv) the valid disposition by any Partner of his interest in
the Partnership; and (b) any certificates, instruments, or documents as may be
required by, or may be appropriate under, the laws of the States of Texas and
Delaware.
16.2 NATURE OF SPECIAL POWER. The power of attorney granted pursuant to
this Article 16:
(a) is a special power of attorney coupled with an interest
and is irrevocable;
(b) may be exercised by any such attorney-in-fact by listing
the Limited Partners executing any agreement, certificate, instrument,
or other document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for such Limited Partners;
and
30
(c) shall survive the death, disability, legal 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 his or her interest in the
Partnership, except that where the assignment is of such Limited
Partner's entire interest in the Partnership and the assignee, with the
consent of the General Partner, is admitted as a Substituted Limited
Partner, the power of attorney shall survive the delivery of such
assignment for the sole purpose of enabling any such attorney-in-fact
to effect such substitution.
17. MISCELLANEOUS
17.1 NOTICES. All notices given pursuant to this Agreement shall be in
writing and shall be deemed effective when personally delivered or upon being
placed in the United States mail, registered or certified with return receipt
requested, or when sent by prepaid telegram or facsimile followed by
confirmatory receipt. For purposes of notice, the addresses of the Partners
shall be as stated under their names on the attached Exhibit B; provided,
however, that each Partner shall have the right to change his address with
notice hereunder to any other location by the giving of thirty (30) days notice
to the General Partner in the manner set forth above.
17.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive federal laws of the United States and the
laws of the State of Delaware.
17.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Partners, and their respective heirs, legal
representatives, successors and permitted assigns; provided, however, that
nothing contained herein shall negate or diminish the restrictions set forth in
Articles 12 or 13 hereof.
17.4 CONSTRUCTION. Every covenant, term, and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Partner. The failure by any party to specifically
enforce any term or provision hereof or any rights of such party hereunder shall
not be construed as the waiver by that party of its rights hereunder. The waiver
by any party of a breach or violation of any provision of this Agreement shall
not operate as, or be construed to be, a waiver of any subsequent breach of the
same or other provision hereof.
17.5 TIME. Time is of the essence with respect to this Agreement.
17.6 WAIVER OF PARTITION. Notwithstanding any statute or principle of
law to the contrary, each Partner hereby agrees that, during the term of the
Partnership, he, she or it shall have no right (and hereby waives any right that
he or it might otherwise have had) to cause any Partnership property to be
partitioned and/or distributed in kind.
17.7 ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the Partners relating to the subject matter hereof, and all prior
agreements relative hereto which are
31
not contained herein are terminated. This Agreement supersedes, amends and
restates in its entirety the Original Partnership Agreement.
17.8 AMENDMENTS. Except as otherwise expressly provided in Section 8.1
and this Section 17.8, amendments or modifications may be made to this Agreement
only by setting forth such amendments or modifications in a document Approved by
the Partners, and any alleged amendment or modification herein which is not so
documented shall not be effective as to any Partner. The General Partner may,
without the consent of any Limited Partner, amend any provision of this
Agreement and execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection therewith to reflect:
(a) a change in the location of the principal place of
business of the Partnership not inconsistent with the provisions of
Section 3.2, or a change in the registered office or the registered
agent of the Partnership;
(b) admission of a Limited Partner or General Partner into the
Partnership or termination of any Limited Partner's or General
Partner's interest in the Partnership in accordance with this
Agreement;
(c) qualification of the Partnership as a limited partnership
under the laws of any state or that is necessary or advisable in the
opinion of the General Partner to ensure that the Partnership will not
be treated as an association or publicly traded partnership taxable as
a corporation for federal income tax purposes, provided, in either
case, such action shall not adversely affect any Limited Partner;
(d) a change (i) that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material respect; (ii)
that is necessary or desirable to satisfy any requirements, conditions
or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or contained in any federal
or state statute, compliance with any of which the General Partner
deems to be in the best interest of the Partnership and the Limited
Partners; or (iii) that is required or contemplated by this Agreement;
(e) an addition to the representations, duties, or obligations
of the General Partner;
(f) the clarification of an ambiguity or correction of any
provision herein that may be inconsistent with the manifest intent of
this Agreement;
(g) the deletion or addition of any provision the General
Partner believes is necessary in connection with any merger of the
Partnership with another Person (as contemplated by Section 3.3
herein); or
(h) a change to any provision in this Agreement required to be
so changed by the staff of the Securities and Exchange Commission or
other federal agency or by a state
32
securities commissioner or similar official, which change is deemed by
such commission, agency or official to be for the benefit or protection
of the Limited Partners.
However, no amendment or modification which disproportionately affects the
interest of any Partner in the capital, profits or losses of, or distributions
or allocations with respect to, the Partnership shall be effective as to any
Partner unless the same has been set forth in a document duly executed by such
Partner.
17.9 SEVERABILITY. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement or the
application thereof to any Person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, but the extent of such invalidity or
unenforceability does not destroy the basis of the bargain among the Partners as
expressed herein, then the remainder of this Agreement and the application of
such provision to other Persons or circumstances shall not be affected thereby,
but rather shall be enforced to the greatest extent permitted by law.
17.10 GENDER AND NUMBER. Whenever required by the context, as used in
this Agreement, the singular number shall include the plural and the neuter
shall include the masculine or feminine gender, and vice versa.
17.11 EXHIBITS. Each exhibit to this Agreement is incorporated herein
for all purposes.
17.12 ADDITIONAL DOCUMENTS. Each Partner, upon the request of the
General Partner, 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.
17.13 SECTION HEADINGS. The section headings appearing in this
Agreement are for convenience of reference only and are not intended, to any
extent or for any purpose, to limit or define the text of any section.
17.14 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original but all of which shall constitute but one
document.
33
IN WITNESS WHEREOF, the Partners have executed this Agreement as of the
effective date first referenced above.
GENERAL PARTNER:
IASIS HEALTHCARE HOLDINGS, INC.
By: /s/ Xxxxx Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
ORIGINAL LIMITED PARTNER:
IASIS HEALTHCARE CORPORATION
By: /s/ Xxxxx Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
LIMITED PARTNERS:
By: IASIS HEALTHCARE HOLDINGS, INC.,
Pursuant to Power of Attorney Granted by all Limited
Partners listed on Exhibit B hereto
By: /s/ Xxxxx Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
34
LIMITED PARTNERSHIP AGREEMENT
OF
ODESSA REGIONAL HOSPITAL, LP
EXHIBIT A
ALLOCATION OF PROFIT AND LOSS
AND OTHER TAX MATTERS
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS.................................................... 1
Section 1.1 Definitions.............................................. 1
ARTICLE II - SECTION 704 CAPITAL ACCOUNTS.................................. 6
Section 2.1 Section 704 Capital Accounts............................. 6
ARTICLE III - ALLOCATIONS OF PROFIT AND LOSS............................... 7
Section 3.1 Allocation Of Book Items................................. 7
Section 3.2 Allocation Of Tax Items.................................. 10
Section 3.3 Allocations Of Profit And Loss And Distributions
In Respect Of Interests Transferred...................... 10
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. All capitalized terms used herein shall have the
meanings assigned to them in the Limited Partnership Agreement of Odessa
Regional Hospital, LP Notwithstanding the foregoing, the following definitions
shall be applicable to the following terms as used in this Exhibit A.
(a) Adjusted Net Income Or Loss.
"Adjusted Net Income Or Loss" for any fiscal year (or portion
thereof) shall mean the excess (or deficit) of (x) the Gross Income for such
period (not including Gross Income (if any) allocated during such period
pursuant to Sections 3.1(a), 3.1(b) and 3.1(c) hereof) over (y) the Deductible
Expenses for such period (not including Deductible Expenses (if any) allocated
during such period pursuant to Sections 3.1(d) and 3.1(e) hereof) with the
following modifications:
(i) Any item of Partnership profit that is exempt from Federal income
tax and not otherwise taken into account in computing Adjusted Net Income
Or Loss pursuant to this Section 1.1(a) shall be treated as additional
Gross Income and, if not otherwise allocated pursuant to Section 3.1(a),
3.1(b) or 3.1(c) hereof, added to the amount otherwise calculated as
Adjusted Net Income Or Loss under this Section 1.1(a); and
(ii) Any Partnership expenditure that is described in section
705(a)(2)(B) of the Code (relating to Partnership expenditures that are
not deductible for Federal income tax purposes in computing taxable income
and not properly chargeable to capital), or treated as so described
pursuant to section 1.704-1(b)(2)(iv)(i) of the Regulations, and not
otherwise taken into account in computing Adjusted Net Income Or Loss
pursuant to this Section 1.1(a) shall be treated as an additional
Deductible Expense and, if not otherwise allocated
1
pursuant to Section 3.1(d) or 3.1(e) hereof, subtracted from the amount
otherwise calculated as Adjusted Net Income Or Loss under this Section
1.1(a).
(b) Agreed Value.
"Agreed Value" for purposes of this Exhibit A of any property
contributed to the capital of the Partnership shall mean the fair market value
of such property at the time of contribution (as determined by the General
Partner in good faith without regard to section 7701(g) of the Code (i.e.,
determined without regard to the amount of Nonrecourse Liabilities to which such
property is subject)).
(c) Book Basis.
The initial "Book Basis" of any Partnership property shall be equal
to the Partnership's initial adjusted tax basis in such property; provided,
however, that the initial "Book Basis" of any Partnership property contributed
to the capital of the Partnership shall be equal to the Agreed Value of such
property. Effective immediately after giving effect to the allocations of profit
and loss, as computed for book purposes, for each fiscal year under Section 3.1
hereof, the Book Basis of each Partnership property shall be adjusted downward
by the amount of Book Depreciation allowable to the Partnership for such fiscal
year with respect to such property. In addition, effective immediately prior to
any Revaluation Event, the Book Basis of each Partnership property shall be
further adjusted upward or downward, as necessary, so as to equal the fair
market value of such property at the time of such Revaluation Event (as agreed
to in writing by the Partners taking section 7701(g) of the Code into account
(i.e., such value shall not be agreed to be less than the amount of Nonrecourse
Liabilities to which such property is subject)).
(d) Book Depreciation.
The amount of "Book Depreciation" allowable to the Partnership for
any fiscal year with respect to any Partnership property shall be equal to the
product of (1) the amount of Tax Depreciation allowable to the Partnership for
such year with respect to such property, multiplied by (2) a fraction, the
numerator of which is the property's Book Basis as of the beginning of such year
(or the date of acquisition if the property is acquired during such year) and
the denominator of which is the property's adjusted tax basis as of the
beginning of such year (or the date of acquisition if the property is acquired
during such year). If the denominator of the fraction described in clause (2)
above is equal to zero, the amount of "Book Depreciation" allowable to the
Partnership for any fiscal year with respect to the Partnership property in
question shall be determined under any reasonable method selected by the General
Partner.
(e) Book Gain Or Loss.
"Book Gain Or Loss" realized by the Partnership in connection with
the disposition of any Partnership property shall mean the excess (or deficit)
of (1) the amount realized by the Partnership in connection with such
disposition (as determined under section 1001 of the Code) over (2) the Book
Basis of such property at the time of the disposition.
2
(f) Book/Tax Disparity Property.
"Book/Tax Disparity Property" shall mean any Partnership property
that has a Book Basis which is different from its adjusted tax basis to the
Partnership. Thus, any property that is contributed to the capital of the
Partnership by a Partner shall be a "Book/Tax Disparity Property" if its Agreed
Value is not equal to the Partnership's initial tax basis in the property. In
addition, once the Book Basis of a Partnership property is adjusted in
connection with a Revaluation Event to an amount other than its adjusted tax
basis to the Partnership, the property shall thereafter be a "Book/Tax Disparity
Property."
(g) Capital Account.
"Capital Account" shall have the meaning assigned to such term in
Section 4.2 of the Agreement.
(h) Capital Transaction.
"Capital Transaction" shall mean (1) any transaction pursuant to
which the Partnership borrows funds, all or part of the Partnership's properties
are sold, condemned, exchanged, abandoned or otherwise disposed of except in the
ordinary course of the Partnership's business, insurance proceeds or other
damages are recovered by the Partnership or any other transaction which, in
accordance with generally accepted accounting principles, is considered capital
in nature (including, without limitation, any transaction that is entered into
in connection with, or results in, the Liquidation of the Partnership).
(i) Deductible Expenses.
"Deductible Expenses" for any fiscal year (or portion thereof) shall
mean all items, as calculated for book purposes, which are allowable as
deductions to the Partnership for such period under Federal income tax
accounting principles (including Book Depreciation but excluding any expense or
deduction attributable to a Capital Transaction).
(j) Economic Risk Of Loss.
"Economic Risk Of Loss" borne by any Partner for any Partnership
liability shall mean the aggregate amount of economic risk of loss that such
Partner and all Related Persons to such Partner are treated as bearing with
respect to such liability pursuant to section 1.752-2 of the Regulations.
(k) Gross Income.
"Gross Income" for any fiscal year (or portion thereof) shall mean
the gross income derived by the Partnership from all sources (other than from
capital contributions and loans to the Partnership and other than from a Capital
Transaction) during such period, as calculated for book purposes in accordance
with Federal income tax accounting principles.
(l) Liquidation.
3
"Liquidation" of a Partner's Units or other interest in the
Partnership shall mean and be deemed to occur upon the earlier of (1) the date
upon which the Partnership is terminated under section 708(b)(1) of the Code,
(2) the date upon which the Partnership ceases to be a going concern (even
though it may continue in existence for the limited purpose of winding up its
affairs, paying its debts and distributing any remaining Partnership properties
to the Partners) or (3) the date upon which there is a liquidation of the
Partner's Units or other interest in the Partnership (but the Partnership is not
terminated) under section 1.761-1(d) of the Regulations. "Liquidation" of the
Partnership shall mean and be deemed to occur upon the earlier of (a) the date
upon which the Partnership is terminated under section 708(b)(1) of the Code or
(b) the date upon which the Partnership ceases to be a going concern (even
though it may continue in existence for the limited purpose of winding up its
affairs, paying its debts and distributing any remaining Partnership properties
to the Partners).
(m) Modified 752 Share Of Recourse Debt.
"Modified 752 Share of Recourse Debt" of any Partner shall mean, as
of any date, the Economic Risk Of Loss borne by such Partner with respect to
Recourse Debt of the Partnership (determined, as of the date in question, by
assuming, for purposes of section 1.752-2 of the Regulations, that the
Partnership constructively liquidates on such date (within the meaning of
section 1.752-2 of the Regulations) except that all Partnership properties shall
be deemed thereunder to be transferred in fully taxable exchanges for an
aggregate amount of cash consideration equal to their respective Book Bases and
such consideration shall be deemed thereunder to be used, in the appropriate
order of priority, in full or partial satisfaction of all Partnership
liabilities).
(n) Nonrecourse Deductions.
"Nonrecourse Deductions" shall mean any and all items of Book
Depreciation and other Deductible Expenses that are treated as "nonrecourse
deductions" under section 1.704-2(c) of the Regulations.
(o) Nonrecourse Liability.
"Nonrecourse Liability" shall mean any Partnership liability treated
as a "nonrecourse liability" under section 1.704-2(b)(3) of the Regulations.
Subject to the foregoing sentence, "Nonrecourse Liability" shall mean any
Partnership liability (or portion thereof) for which no Partner bears the
Economic Risk Of Loss.
(p) Partner Nonrecourse Debt Minimum Gain.
"Partner Nonrecourse Debt Minimum Gain" shall mean the amount of
Partnership "minimum gain" that is computed strictly in accordance with the
principles of section 1.704-2(i)(2) of the Regulations. A Partner's share of
such "Partner Nonrecourse Debt Minimum Gain" shall be calculated in accordance
with the provisions of section 1.704-2(i)(5) of the Regulations.
4
(q) Partner Nonrecourse Debt.
"Partner Nonrecourse Debt" shall mean any Partnership liability that
is treated as a "Partner nonrecourse debt" under section 1.704-2(b)(4) of the
Regulations.
(r) Partner Nonrecourse Deductions.
"Partner Nonrecourse Deductions" shall mean any and all items of
Book Depreciation and other Deductible Expenses that are treated as "partner
nonrecourse deductions" under section 1.704-2(i) of the Regulations.
(s) Partnership Minimum Gain.
"Partnership Minimum Gain" shall mean the amount of Partnership
"minimum gain" that is computed strictly in accordance with the principles of
section 1.704-2(d)(1) of the Regulations. A Partner's share of such "Partnership
Minimum Gain" shall be calculated in accordance with the provisions of section
1.704-2(g) of the Regulations.
(t) Recourse Debt.
"Recourse Debt" shall mean any Partnership liability (or portion
thereof) that is neither a Nonrecourse Liability nor a Partner Nonrecourse Debt.
(u) Related Person.
"Related Person" shall mean, as to any Partner, any person who is
related to such Partner (within the meaning of section 1.752-4(b) of the
Regulations).
(v) Revaluation Event.
"Revaluation Event" shall mean any of the following occurrences: (1)
the contribution of money or other property (other than a de minimis amount) by
a new or existing Partner to the capital of the Partnership as consideration for
the issuance of an additional Unit or other interest in the Partnership; (2) the
distribution of money or other property (other than a de minimis amount) by the
Partnership to a retiring or continuing Partner as consideration for a Unit or
other interest in the Partnership; or (3) the termination of the Partnership for
Federal income tax purposes under section 708(b)(1)(B) of the Code; provided,
however, under no circumstances shall the issuance of Units pursuant to Section
12.5 of the Agreement constitute a Revaluation Event; and provided further, that
the occurrence of an event described in clause (1) or (2) above shall not
constitute a Revaluation Event if the General Partner reasonably determines that
it is not necessary to adjust the Book Bases of the Partnership's assets or the
Partners' Capital Accounts in connection with the occurrence of any such event.
(w) Section 704 Capital Account.
"Section 704 Capital Account" shall have the meaning assigned to
such term in Section 2.1 hereof.
5
(x) Tax Depreciation.
"Tax Depreciation" for any fiscal year shall mean the amount of
depreciation, cost recovery or other amortization deductions allowable to the
Partnership for Federal income tax purposes for such year.
(y) Tax Items.
"Tax Items" shall mean, with respect to any property, all items of
profit and loss (including Tax Depreciation) recognized by or allowable to the
Partnership with respect to such property, as computed for Federal income tax
purposes.
(z) Unrealized Book Gain Or Loss.
"Unrealized Book Gain Or Loss" with respect to any Partnership
property shall mean the excess (or deficit) of (1) the fair market value of such
property (as agreed to in writing by the Partners taking section 7701(g) of the
Code into account (i.e., such value shall not be agreed to be less than the
amount of Nonrecourse Liabilities to which such property is subject)), over (2)
the Book Basis of such property.
ARTICLE II
SECTION 704 CAPITAL ACCOUNTS
Section 2.1 Section 704 Capital Accounts.
A "Section 704 Capital Account" (herein so called) shall be determined and
maintained for each Partner throughout the full term of the Agreement. The
balance of a Partner's Section 704 Capital Account shall be equal to such
Partner's Capital Account balance (as determined after giving effect to all
adjustments attributable to allocations of items of profit and loss realized by
the Partnership, and all adjustments attributable to contributions and
distributions of money and property effected, on or before the effective date of
such determination), modified as follows:
(a) Increased by the amount (if any) that such Partner is obligated to
contribute subsequently to the capital of the Partnership (as determined by the
Agreement or under section 1.704-1(b)(2)(ii)(c) of the Regulations), or is
deemed to be obligated to restore pursuant to sections 1.704-2(g)(i) and
1.704-2(i)(5) of the Regulations.
(b) Decreased by the items described in 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1-(b)(2)(ii)(d)(6) of the Regulations.
(c) Increased by the amount (if any) of such Partner's Modified 752 Share
of Recourse Debt.
6
The foregoing definition of "Section 704 Capital Account" is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
ARTICLE III
ALLOCATIONS OF PROFIT AND LOSS
Section 3.1 Allocation Of Book Items.
Subject to the provisions of Sections 3.2 and 3.3, all items of profit and
loss realized by the Partnership during each fiscal year shall be allocated
among the Partners (after giving effect to all adjustments attributable to all
contributions and distributions of money and property effected during such year)
in the manner prescribed in this Section 3.1.
(a) Pursuant to section 1.704-2(f) of the Regulations (relating to minimum
gain chargebacks), if there is a net decrease in Partnership Minimum Gain for
such year (or if there was a net decrease in Partnership Minimum Gain for a
prior fiscal year and the Partnership did not have sufficient amounts of Gross
Income and Book Gain during prior years to allocate among the Partners under
this Section 3.1), then items of Gross Income and Book Gain shall be allocated,
before any other allocation is made pursuant to the succeeding provisions of
this Section 3.1 for such year, to each Partner in an amount equal to such
Partner's share of the net decrease in such Partnership Minimum Gain (as
determined under sections 1.704-2(g)(2) of the Regulations). This Section 3.1(a)
is intended to comply with the minimum gain chargeback requirement in Section
1.704-2(f) of the Regulations, and shall be interpreted consistently therewith.
(b) Pursuant to section 1.704-2(i)(4) of the Regulations (relating to
minimum gain chargebacks), if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain with respect to a Partner Nonrecourse Debt for such year (or
if there was a net decrease in such Partner Nonrecourse Debt Minimum Gain for a
prior fiscal year and the Partnership did not have sufficient amounts of Gross
Income and Book Gain during prior years to allocate among the Partners under
this Section 3.1(b)), then items of Gross Income and Book Gain shall be
allocated, before any other allocation is made pursuant to the succeeding
provisions of this Section 3.1 for such year, to each Partner with a share of
such Partner Nonrecourse Debt Minimum Gain as of the first day of such year in
an amount equal to such Partner's share of the net decrease in such Partner
Nonrecourse Debt Minimum Gain (as required by sections 1.704-2(i)(4) of the
Regulations).
(c) Pursuant to section 1.704-1(b)(2)(ii)(d) of the Regulations (relating
to "qualified income offsets"), Partnership profit shall be allocated, before
any other allocation is made pursuant to the succeeding provisions of this
Section 3.1 for such year, among the Partners with deficit balances in their
Section 704 Capital Accounts (as determined after giving effect to all
adjustments attributable to the allocations provided for in Sections 3.1(a) and
3.1(b) hereof but before giving effect to any adjustment attributable to other
allocations provided for in succeeding
7
provisions of this Section 3.1) in amounts and the manner sufficient to
eliminate such deficit balances as quickly as possible.
(d) All Partner Nonrecourse Deductions attributable to a Partner
Nonrecourse Debt shall be allocated among the Partners bearing the Economic Risk
Of Loss for such debt; provided, however, that if more than one Partner bears
the Economic Risk Of Loss for such debt, the Partner Nonrecourse Deductions
attributable to such debt shall be allocated to and among such Partners, pro
rata in the same proportion that their Economic Risks Of Loss bear to one
another.
(e) All Nonrecourse Deductions shall be allocated among the Partners, pro
rata in accordance with their respective Sharing Percentages.
(f) Any Adjusted Net Income realized by the Partnership for such year and,
except as otherwise provided in Section 3.1(h) hereof any Book Gain derived from
a Capital Transaction occurring during such year, and not allocated pursuant to
Sections 3.1(a), 3.1(b) and 3.1(c) hereof, shall be allocated among the
Partners, as necessary, so as to cause the balances in their respective Section
704 Capital Accounts to be in the same ratio to one another as are their Sharing
Percentages, with all remaining amounts of Adjusted Net Income and Book Gain to
be allocated to the Partners, pro rata in accordance with their respective
Sharing Percentages.
(g) Any Adjusted Net Loss realized by the Partnership for such year and,
except as otherwise provided in Section 3.1(h) hereof any Book Loss derived from
a Capital Transaction occurring during such year and not allocated pursuant to
Sections 3.1(a), 3.1(b) and 3.1(c) hereof, shall be allocated among the
Partners, as necessary, so as to cause the balances in their respective Section
704 Capital Accounts to be in the same ratio to one another as are their Sharing
Percentages, with all remaining amounts of Adjusted Net Loss and Book Gain to be
allocated to the Partners, pro rata in accordance with their respective Sharing
Percentages.
(h) Book Gain Or Loss derived from a Capital Transaction that is entered
into in connection with, or results in, the Liquidation of the Partnership shall
be allocated among the Partners as follows in the following order of priority
(after giving effect to all adjustments attributable to allocations of items of
Partnership profit and loss made pursuant to the preceding provisions of this
Section 3.1 for such year and after giving effect to all adjustments
attributable to contributions and distributions or money and property effected
prior to such determination):
(i) Book Gain remaining after the allocations provided for in
Sections 3.1(a), 3.1(b) and 3.1(c) hereof shall be allocated as follows
and in the following order of priority:
(A) First: Book Gain equal to the deficit balance (if any) in
each Partner's Capital Account shall be allocated to such Partner.
(B) Second: An amount of Book Gain shall be allocated next
among the Partners to the least extent necessary to cause their
positive Capital Account balances to equal their respective Sharing
Percentages.
8
(C) Third: All remaining amounts of Book Gain shall be
allocated among the Partners, pro rata in accordance with their
respective Sharing Percentages.
(ii) Book Loss (if any) shall be allocated as follows and in the
following order of priority:
(A) First: Book Loss shall be allocated to the Partners to the
least extent necessary to cause the positive balances in their
Capital Accounts to be in the same proportion to one another as are
their respective Sharing Percentages.
(B) Second: Amounts of Book Loss shall be allocated next among
all of the Partners, pro rata in accordance with their respective
Sharing Percentages until the Capital Account balance of each
Partner equals zero.
(C) Third: Any remaining Book Loss shall be allocated to the
General Partner.
(i) For purposes of determining the nature (as ordinary or capital) of any
Partnership profit allocated among the Partners for Federal income tax purposes
pursuant to this Section 3.1, the portion of such profit required to be
recognized as ordinary income pursuant to sections 1245 and/or 1250 of the Code
shall be deemed to be allocated among the Partners in the same proportion that
they were allocated and claimed the Book Depreciation deductions, or basis
reductions, directly or indirectly giving rise to such treatment under sections
1245 and/or 1250 of the Code or in any other manner required by temporary or
final Regulations.
(j) The parties intend that the foregoing allocation provisions of this
Section 3.1 shall produce Capital Account balances of the Partners that will
permit liquidating distributions that are made in accordance with final Capital
Account balances under Section 15.3 of the Agreement to be made to the Partners,
pro rata in accordance with their respective Sharing Percentages. To the extent
that the tax allocation provisions of this Section 3.1 would fail to cause the
Partner's final Capital Account balances to be in such ratio, (i) such
provisions shall be amended by the General Partner if and to the extent
necessary to produce such result and (ii) taxable income and taxable loss of the
Partnership for prior open years (or items of Gross Income and Deductible
Expenses of the Partnership for such years) shall be reallocated among the
Partners to the extent it is not possible to achieve such result with
allocations of items of income (including Gross Income) and Deductible Expenses
for the current year and future years. This Section 3.1(j) shall control
notwithstanding any reallocation or adjustment of taxable income, taxable loss,
or items thereof by the Internal Revenue Service or any other taxing authority.
Section 3.2 Allocation Of Tax Items.
(a) Except as otherwise provided in the succeeding provisions of this
Section 3.2, each Tax Item shall be allocated among the Partners in the same
manner as each correlative item of profit or loss, as calculated for book
purposes, is allocated pursuant to the provisions of Section 3.1 hereof.
9
(b) The Partners hereby acknowledge that all Tax Items in respect of any
Book/Tax Disparity Property owned by the Partnership are required to be
allocated among the Partners in the same manner as under section 704(c) of the
Code (as specified in sections 1.704-1(b)(2)(iv) and 1.704-1(b)(2)(iv)(g) of the
Regulations) and that the principles of section 704(c) of the Code require that
such Tax Items must be shared among the Partners so as to take account of the
variation between the adjusted tax basis and Book Basis of each such Book/Tax
Disparity Property. Thus, notwithstanding anything in Section 3.1 or 3.2(a)
hereof to the contrary, the Partners' distributive shares of Tax Items in
respect of each Book/Tax Disparity Property shall be separately determined and
allocated among the Partners in accordance with the principles of section 704(c)
of the Code. For purposes of making tax allocations pursuant to section 704(c)
of the Code (including allocations pursuant to Section 1.704-1(b)(2)(iv) if a
Revaluation Event occurs), the General Partner in its sole discretion shall
determine the method or methods to be used by the Partnership.
Section 3.3 Allocations Of Profit And Loss And Distributions In Respect Of
Interests Transferred.
(a) If any Unit or other interest in the Partnership is transferred, or is
increased or decreased by reason of the admission of a new Partner or otherwise,
during any fiscal year, each item of Adjusted Net Income Or Loss, Book Gain Or
Loss and other Partnership profit and loss for such year shall be divided and
allocated among the Partners in question by taking account of their varying
interests in the Partnership during such year on a daily, monthly or other
basis, as determined by the General Partner using any permissible method under
section 706 of the Code and the Regulations thereunder.
(b) Distributions of Partnership properties in respect of a Unit or other
interest in the Partnership shall be made only to the persons or entities who,
according to the Partnership's books and records, are the holders of record of
the Units or other interests in the Partnership in respect of which such
distributions are made on the actual date of distribution. Neither the
Partnership nor the General Partner shall incur any liability for making
distributions in accordance with the provisions of the preceding sentence,
whether or not the Partnership or the General Partner has knowledge or notice of
any transfer or purported transfer of ownership of any Unit or other interest in
the Partnership.
(c) Notwithstanding any provision above to the contrary, Book Gain Or Loss
realized in connection with a sale or other disposition of any Partnership
properties shall be allocated solely among the parties owning Units or other
interests in the Partnership as of the date such sale or other disposition
occurs.
10
EXHIBIT B
LIMITED PARTNERSHIP AGREEMENT
OF
ODESSA REGIONAL HOSPITAL, LP
LIST OF PARTNERS
[ON FILE AT OFFICES OF THE GENERAL PARTNER]
11
EXHIBIT C
ODESSA REGIONAL HOSPITAL, LP
NOTICE OF REDEMPTION
Pursuant to Section 13.6 of the Partnership Agreement (the "Agreement") of
Odessa Regional Hospital, LP, a Delaware limited partnership (the
"Partnership"), the undersigned hereby provides notice to the Partnership of a
request for redemption of the Partnership Units.
In connection with the sale and redemption of my Units, I make the
following representations to the Partnership:
I am the legal and beneficial owner of the Units to be redeemed and I have
not conveyed, assigned, transferred, or pledged any direct or indirect
interest therein to any other person or entity.
Please complete the following information regarding the requested redemption:
NUMBER OF UNITS TO BE REDEEMED:
-----------------------------------------------
MULTIPLIED BY CURRENT VALUATION PRICE:$
---------------------------------------
TOTAL AMOUNT TO BE PAID FOR REDEMPTION:$
--------------------------------
ADDRESS FOR DELIVERY OF PAYMENT: SOCIAL SECURITY OR TAX ID NO.
--------------
OTHER INSTRUCTIONS:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
DATE: ,
------- ----- --------------------------------
Signature
--------------------------------
Signature
THIS COMPLETED FORM SHOULD BE SENT BY THE REQUIRED DATE.
TO: IASIS HEALTHCARE HOLDINGS, INC.
C/O IASIS HEALTHCARE CORPORATION
ATTN: XXXX X. XXXXX
000 XXXXXXXX XXXX, XXXXX X000
XXXXXXXX, XXXXXXXXX 00000
--------------------------------------------------------------------------------
FOR OFFICE USE ONLY
Valuation Price Verified: Units Redeemed Approved:
------------------------ ------
Approved:
----------------------------------- Date: / /
-----------
12