AGREEMENT OF LIMITED PARTNERSHIP
OF
PACIFIC MEDICAL LIMITED PARTNERSHIP
AGREEMENT
OF LIMITED PARTNERSHIP
OF
PACIFIC MEDICAL LIMITED PARTNERSHIP
TABLE OF CONTENTS
Article Heading Page
1. FORMATION..........................................1
2. NAME...............................................1
3. OFFICES............................................2
4. PURPOSE............................................2
5. TERM...............................................2
6. CERTAIN DEFINED TERMS..............................2
7. CAPITAL CONTRIBUTIONS..............................6
8. GUARANTIES.........................................7
9. CONDITIONS TO THE CAPITAL CONTRIBUTIONS OF THE
LIMITED PARTNERS...................................7
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
GENERAL PARTNER....................................7
11. ADMISSION OF LIMITED PARTNERS......................8
12. CAPITAL ACCOUNTS...................................8
13. ALLOCATIONS........................................9
14. DISTRIBUTIONS.....................................12
15. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS........13
16. LIMITED LIABILITY.................................13
17. TRANSFER OF INTERESTS AND ADMISSION OF PARTNERS...13
18. OPTIONAL PURCHASE OF LIMITED PARTNERSHIP INTERESTS
ON CERTAIN EVENTS.................................17
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19. SALE, ASSIGNMENT OR OTHER TRANSFER OF THE GENERAL
PARTNER'S INTEREST................................22
20. TERMINATION OF THE SERVICES OF THE
GENERAL PARTNER...................................22
21. MANAGEMENT AND OPERATION OF BUSINESS..............23
22. RESERVES..........................................25
23. INDEMNIFICATION AND EXCULPATION OF THE GENERAL
PARTNER...........................................25
24. DISSOLUTION OF THE PARTNERSHIP....................26
25. DISTRIBUTION UPON DISSOLUTION.....................27
26. BOOKS OF ACCOUNT, RECORDS AND REPORTS.............28
27. NOTICES...........................................29
28. AMENDMENTS........................................29
29. LIMITATIONS ON AMENDMENTS.........................29
30. MEETINGS, CONSENTS AND VOTING.....................29
31. SUBMISSIONS TO THE LIMITED PARTNERS...............30
32. ADDITIONAL DOCUMENTS..............................30
33. SURVIVAL OF RIGHTS................................30
34. INTERPRETATION AND GOVERNING LAW..................30
35. SEVERABILITY......................................31
36. AGREEMENT IN COUNTERPARTS.........................31
37. THIRD PARTIES.....................................31
38. POWER OF ATTORNEY.................................31
39. ARBITRATION.......................................32
40. CREDITORS.........................................32
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Schedule A............... Schedule of Partnership Interests
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THE LIMITED PARTNERSHIP INTERESTS REPRESENTED BY THIS LIMITED PARTNERSHIP
AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, UNDER THE HAWAII UNIFORM
SECURITIES ACT (MODIFIED), AS AMENDED, THE ARKANSAS SECURITIES ACT, AS AMENDED,
THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, AS AMENDED, THE LOUISIANA
SECURITIES LAW, AS AMENDED, THE TEXAS SECURITIES ACT OF 1957, AS AMENDED, OR
SIMILAR LAWS OR ACTS OF OTHER STATES IN RELIANCE UPON EXEMPTIONS UNDER THOSE
ACTS (THE "STATE LAWS"). THE SALE OR OTHER DISPOSITION OF THE LIMITED
PARTNERSHIP INTERESTS IS RESTRICTED AS STATED IN THE LIMITED PARTNERSHIP
AGREEMENT, AND IN ANY EVENT IS PROHIBITED UNLESS THE LIMITED PARTNERSHIP
RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE LIMITED PARTNERSHIP AND ITS
COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE APPLICABLE STATE LAWS. BY
ACQUIRING THE LIMITED PARTNERSHIP INTERESTS REPRESENTED BY THIS LIMITED
PARTNERSHIP AGREEMENT, THE LIMITED PARTNERS REPRESENT THAT THEY WILL NOT SELL OR
OTHERWISE DISPOSE OF THEIR RESPECTIVE LIMITED PARTNERSHIP INTERESTS WITHOUT
REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID ACTS AND THE RULES AND
REGULATIONS ISSUED THEREUNDER.
AGREEMENT
OF LIMITED PARTNERSHIP
OF PACIFIC MEDICAL
LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP is made as of January
23, 1995, by and among LITHOTRIPTERS, INC., a North Carolina corporation, and
the persons listed on Schedule A attached hereto as the Limited Partners.
1. FORMATION.
The Partnership was formed filing in the Office of the
Secretary of State of Hawaii on December 14, 1995 a Certificate of Limited
Partnership in accordance with the provisions of the Act.
2. NAME.
2.1 The name of the Partnership is "Pacific Medical Limited
Partnership."
2.2 The Partnership business shall be conducted under such
names as the General Partner may from time to time deem necessary or advisable,
provided that appropriate amendments to this Agreement and all necessary filings
under applicable assumed or fictitious name statutes or the Act are first
obtained.
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3. OFFICES.
3.1 The principal office of the Partnership shall be at 0000
Xxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000, or at such other place as the
General Partner may, from time to time, designate by notice to the Limited
Partners (the "Records Office").
3.2 The Partnership may have such additional offices as the
General Partner may, from time to time, deem necessary or advisable.
4. PURPOSE.
The purpose and business of the Partnership shall be to
operate a LithostarTM extracorporeal shock-wave lithotripter (or any other renal
stone treatment equipment) for lithotripsy of renal stones primarily in a
designated service area consisting of the island of Oahu, Hawaii or in such
other location(s) within or outside such state as the General Partner may
determine, in its sole discretion, to be in the best interests of the
Partnership and to engage in any and all activities incidental or related to the
foregoing, including biliary lithotripsy if the same is ever approved by the
FDA, upon and subject to the terms and conditions of this Agreement.
5. TERM.
The Partnership shall terminate on December 31, 2040, unless
sooner terminated as herein provided.
6. CERTAIN DEFINED TERMS.
Certain terms used in this Agreement shall have the following
meanings:
Act. The Act means the Hawaii Uniform Limited Partnership
Act, as then in effect.
Affiliate. An Affiliate is (i) any person, partnership,
corporation, association or other legal entity ("person") directly or indirectly
controlling, controlled by or under common control with another person; (ii) any
person owning or controlling 10% or more of the outstanding voting interest of
such other person; (iii) any officer, director or partner of such person; and
(iv) if such other person is an officer, director or partner, any entity for
which such person acts in such capacity.
Agreement. This Agreement of Limited Partnership, as the same
may be amended from time to time.
Bank. First-Citizens Bank & Trust Company.
Capital Account. The Partnership capital account of a Partner
as computed pursuant to Article 12 of this Agreement.
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Capital Contributions. All capital contributions made by a
Partner or his predecessor in interest which shall include, without limitation,
contributions made pursuant to Article 7 of this Agreement.
Capital Transaction. Any transaction which, were it to
generate proceeds, would produce Partnership Sales Proceeds or Partnership
Refinancing Proceeds.
Coach. The new or reconditioned self-propelled mobile vehicle
or tractor-trailer upfitted to house the LithostarTM. The Coach will be acquired
by the Partnership with the proceeds of the Loan, together with the proceeds
from the sale of the Units in the event the tractor-trailer model is purchased.
Code. The Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent, superseding revenue laws.
Equipment. The initial equipment to be acquired by the
Partnership for the operation of the LithostarTM Mobile System. The initial
equipment to be used in the operation of the LithostarTM Mobile System will
include the LithostarTM, the Coach and miscellaneous medical equipment and
supplies.
FDA. The Food and Drug Administration.
General Partner. The General Partner of the Partnership,
LITHOTRIPTERS, INC., a North Carolina corporation controlled by Xxxxxxx X.
Xxxxxx, M.D.
Guaranty. The Guaranty Agreement pursuant to which each
Limited Partner will guarantee a portion of the Partnership's obligation to the
Bank under the Loan. The form of the Guaranty is included in the Subscription
Packet accompanying the Memorandum.
Initial Limited Partner. Xx. Xxxxxxx X. Xxxxxx, a
resident of North Carolina and the majority shareholder of the General Partner.
The Initial Limited Partner is to be the only limited partner of the Partnership
until such time as the new Limited Partners are admitted to the Partnership, at
which time the Initial Limited Partner shall withdraw from the Partnership.
Limited Partners. The Limited Partners are those investors in
the Units admitted to the Partnership and any person admitted as a substitute
Limited Partner in accordance with the provisions of this Agreement.
LithostarTM. The new or reconditioned LithostarTM model
extracorporeal shock wave lithotripter manufactured by Siemens to be acquired by
the Partnership with the proceeds of the Loan.
LithostarTM Mobile System. The Coach with the installed and
operational LithostarTM.
Loan. The loan up to $1,652,014 from the Bank to the
Partnership. A portion of the Loan proceeds will be used by the Partnership to
(i) acquire the LithostarTM (up to $945,000), (ii) acquire and upfit the Coach
(up to $390,590), (iii) pay the Hawaii use tax on the Coach and the LithostarTM
(up to $53,424) and (iv) ship the Coach and the Lithostar(TM) to Hawaii (up to
$12,500). The
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remainder of the Loan proceeds will be used as initial start-up and working
capital (up to $250,000). The maximum amount of the Loan proceeds will be
reduced if the Partnership purchases a reconditioned Coach at a lower cost. The
Loan will be secured by the LithostarTM Mobile System, the Partnership's
accounts receivable and other Partnership assets, the guaranties of the General
Partner (and its shareholders), and the Limited Partner Guaranties.
Losses. The net loss (including Net Losses from Capital
Transactions) of the Partnership for each Year of the Partnership as determined
for federal income tax purposes.
Majority in Interest of the Limited Partners. The Limited
Partners who hold more than 50% of the Limited Partner Percentage Interests in
the Partnership.
Memorandum. The Confidential Private Placement Memorandum of
the Partnership dated January 8, 1996, as amended or as supplemented.
Net Gains from Capital Transactions. The gains realized by the
Partnership as a result of or upon any sale, exchange, condemnation or other
disposition of the capital assets of the Partnership (which assets shall include
Code Section 1231 assets) or as a result of or upon the damage or destruction of
such capital assets.
Net Losses from Capital Transactions. The losses realized by
the Partnership as a result of or upon any sale, exchange, condemnation or other
disposition of the capital assets of the Partnership (which shall include Code
Section 1231 assets) or as a result of or upon the damage or destruction of such
capital assets.
Nonrecourse Deductions. A deduction as set forth in Treasury
Regulations Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a
given Year equals the excess, if any, of the net increase, if any, in the amount
of Partnership Minimum Gain during such Year over the aggregate amount of any
Distributions during such Year of proceeds of a Nonrecourse Liability that are
allocable to an increase in Partnership Minimum Gain, determined according to
the provisions of Treasury Regulations Section 1.704-2(h).
Nonrecourse Liability. Any Partnership liability (or portion
thereof) for which no Partner bears the "economic risk of loss," within the
meaning of Treasury Regulations Section 1.704- 2(i).
Partners. The General Partner and the Limited Partners,
collectively, where no distinction is required by the context in which the term
is used herein.
Partner Minimum Gain. An amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Treasury Regulations Section 1.704- 2(i).
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Partner Nonrecourse Debt. Any nonrecourse debt (for the
purposes of Treasury Regulations Section 1.1001-2) of the Partnership for which
any Partner bears the "economic risk of loss," within the meaning of Treasury
Regulations Section 1.752-2.
Partner Nonrecourse Deductions. Deductions as described in
Treasury Regulations Section 1.704-2(i)(2). The amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for any Year equals the
excess, if any, of the net increase, if any, in the amount of Partner Minimum
Gain attributable to such Partner Nonrecourse Debt during such Year over the
aggregate amount of any Distributions during that Year to the Partner that bears
the economic risk of loss for such Partner Nonrecourse Debt to the extent such
Distributions are from the proceeds of such Partner Nonrecourse Debt and are
allocable to an increase in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704- 2(i).
Partnership. Pacific Medical Limited Partnership, a Hawaii
limited partnership.
Partnership Cash Flow. For the applicable period the excess,
if any, of (A) the sum of (i) all gross receipts from any source for such
period, other than from Partnership loans, Capital Transactions and Capital
Contributions, and (ii) any funds released by the Partnership from previously
established reserves, over (B) the sum of (i) all cash expenses paid by the
Partnership for such period; (ii) the amount of all payments of principal on
loans to the Partnership; (iii) capital expenditures of the Partnership; and
(iv) such reasonable reserves as the General Partner shall deem necessary or
prudent to set aside for future repairs, improvements or equipment replacement
or additions, or to meet working capital requirements or foreseen or unforeseen
future liabilities and contingencies of the Partnership; provided, however, that
the amounts referred to in (B)(i), (ii) and (iii) above shall be taken into
account only to the extent not funded by Capital Contributions, loans or paid
out of previously established reserves. Such term shall also include all other
funds deemed available for distribution and designated as "Partnership Cash
Flow" by the General Partner.
Partnership Interest. The interest of a Partner in the
Partnership as defined by the Act and this Agreement.
Partnership Minimum Gain. Gain as defined in Treasury
Regulations Section 1.704-2(d).
Partner Nonrecourse Deduction. Deductions as described in
Treasury Regulations Section 1.704-2(i)(2). The amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for any Year equals the
excess, if any, of the net increase, if any, in the amount of Partner Minimum
Gain attributable to such Partner Nonrecourse Debt during such Year over the
aggregate amount of any Distributions during that Year to the Partner that bears
the economic risk of loss for such Partner Nonrecourse Debt to the extent such
Distributions are from the proceeds of such Partner Nonrecourse Debt and are
allocable to an increase in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704- 2(i).
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Partnership Refinancing Proceeds. The cash realized from the
refinancing of Partnership assets after retirement of any secured loans and less
(i) payment of all expenses relating to the transaction and (ii) establishment
of such reasonable reserves as the General Partner shall deem necessary or
prudent to set aside for future repairs, improvements, or equipment replacement
or additions, or to meet working capital requirements or foreseen or unforeseen
future liabilities or contingencies of the Partnership.
Partnership Sales Proceeds. The cash realized from the sale,
exchange, casualty or other disposition of all or a portion of Partnership
assets after the retirement of all secured loans and less (i) the payment of all
expenses related to the transaction and (ii) establishment of such reasonable
reserves as the General Partner shall deem necessary or prudent to set aside for
future repairs, improvements, or equipment replacement or additions, or to meet
working capital requirements or foreseen or unforeseen future liabilities or
contingencies of the Partnership.
Percentage Interest. The interest of each Partner in the
Partnership, to be determined in the case of a Limited Partner by reference to
his Unit ownership based upon the Limited Partners holding an aggregate 80%
Percentage Interest in the Partnership, with each Unit sold representing an
initial 1% interest. The General Partner will own a 20% Percentage Interest in
the Partnership. The Partners' Percentage Interests in the Partnership as of the
date hereof are as set forth in Schedule A attached hereto. The Percentage
Interest of each Partner shall be adjusted as provided in Article 18.6.3.
Profit. The net income of the Partnership (including Net
Gains from Capital Transactions) for each Year of the Partnership as determined
for federal income tax purposes.
Pro Rata Basis. In connection with an allocation or
distribution, an allocation or distribution in proportion to the respective
Percentage Interests of the class of Partners to which reference is made.
Qualified Income Offset Item. An adjustment, allocation or
distribution described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) unexpectedly received by a
Partner.
Sales Commission. The $270 sales commission paid to Medtech
Investments, Inc. for each Unit sold, other than Units sold to the General
Partner and its Affiliates.
Service. The Internal Revenue Service.
Siemens. Siemens Medical Systems, Inc. and its Affiliates.
Units. The 80 equal limited partner interests in the
Partnership offered pursuant to the Memorandum for a price per Unit of $2,500 in
cash, plus a personal guaranty of 1% of the Partnership's obligations under the
Loan (up to a $16,520.14 principal guaranty obligation).
Year of the Partnership. An annual accounting period ending on
December 31 of each year during the term of the Partnership.
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7. CAPITAL CONTRIBUTIONS.
7.1 On or before the date of this Agreement, the General
Partner will contribute to the capital of the Partnership cash in an amount
equal to $__________.
7.2 Each Limited Partner hereby agrees to contribute and shall
contribute to the capital of the Partnership on the date of his admission to the
Partnership the amount set forth opposite his name on Schedule A attached hereto
in cash.
7.3 Except as otherwise provided herein, no interest shall be
paid on any contribution to the capital of the Partnership.
8. GUARANTIES.
Each Partner agrees to execute and deliver to the Partnership
on the date of his admission to the Partnership a Guaranty agreement in the
amount set forth opposite his or her name on Schedule A attached hereto.
9. CONDITIONS TO THE CAPITAL CONTRIBUTIONS OF
THE LIMITED PARTNERS.
The obligations of the Limited Partners to make cash Capital
Contributions hereunder are subject to the condition that the representations,
warranties, agreements and covenants of the General Partner set forth in Article
10 of this Agreement are and shall be true and correct or have been and will
have been complied with in all material respects on the date such Capital
Contributions are required to be made, except to the extent that any such
representation or warranty expressly pertains to an earlier date.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
THE GENERAL PARTNER.
10.1 The General Partner hereby represents and warrants to
the Limited Partners that:
(a) The Partnership is a limited partnership formed in
accordance with and validly existing under the Act and the other
applicable laws of the State of Hawaii;
(b) The interests in the Partnership of the Limited Partners
will have been duly authorized or created and validly issued and the
Limited Partners shall have no personal liability to contribute money
to the Partnership other than the amounts agreed to be contributed by
them in the manner and on the terms set forth in this Agreement,
subject, however, to such limitations as may be imposed under the Act;
(c) No material breach or default adverse to the Partnership
exists under the terms of any other material agreement affecting the
Partnership;
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(d) No material claim or litigation is pending or, to the
knowledge and belief of the General Partner, is threatened against the
General Partner or the Partnership in any court, commission,
administrative body or other authority, which could materially
adversely affect the Partnership, or the ability of the General Partner
to perform any of its obligations contemplated by this Agreement,
except as may be fully covered by liability insurance; and
(e) The General Partner is a North Carolina corporation formed
and existing under the laws of the State of North Carolina.
10.2 The General Partner hereby covenants to the Limited
Partners that:
(a) It will at all times act in a fiduciary manner with
respect to the Partnership, the LithostarTM Mobile System and the
Limited Partners;
(b) Except as provided in Article 19, it will serve as the
General Partner of the Partnership until the Partnership is terminated
without reconstitution;
(c) It will cause the Partnership to carry adequate public
liability, property damage and other insurance as is customary in the
business to be engaged in by the Partnership; and
(d) It will use its best efforts to assure that it meets all
net worth requirements which, in the opinion of counsel for the
Partnership, may, from time to time, be necessary to assure that the
Partnership is classified as a partnership for Federal income tax
purposes.
11. ADMISSION OF LIMITED PARTNERS.
The General Partner may permit the offer and sale of the Units
on the terms and conditions provided in the Memorandum and may admit persons
subscribing for Units as Limited Partners in the Partnership on the terms and
conditions set forth in this Article 11.
(a) The General Partner shall have approved of the admission
of said person in writing on such terms and conditions as the General
Partner shall determine;
(b) Said person shall have executed such documents or
instruments as the General Partner may deem necessary or desirable to
effect his admission as a Limited Partner;
(c) Said person shall have accepted and adopted all of the
terms and provisions of this Agreement, as then amended;
(d) Said person (if a corporation) shall deliver to the
General Partner a certified copy of a resolution of its Board of
Directors authorizing it to become a Limited Partner under the terms
and conditions of this Agreement; and
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(e) Said person upon request shall pay such reasonable
expenses as may be incurred in connection with its admission as a
Limited Partner.
12. CAPITAL ACCOUNTS.
A capital account shall be established for each Partner and
shall at all times be determined and maintained as provided by the Final
Treasury Regulations under Section 704(b) of the Code, as the same may be
amended. A Partner shall not be entitled to withdraw any part of his capital
account or to receive any distribution from the Partnership, except as provided
in Articles 14 and 25.
(a) Each Partners' capital account shall be increased by:
(i)The amount of his Capital Contribution pursuant
to Article 7; and
(ii)The amount of Profits allocated to him pursuant
to Article 13; and
(iii) The Partner's pro rata share (determined in the
same manner as such Partner's share of Profits and Losses
allocated pursuant to Article 13 hereof) of any income or gain
exempt from tax; and
(b) Each Partner's capital account shall be decreased by:
(i) The amount of Losses allocated to him
pursuant to Article 13; and
(ii) The amount of Partnership Cash Flow, Partnership
Sales Proceeds and Partnership Refinancing Proceeds
distributed to him pursuant to Article 14; and
(iii) The Partner's pro rata share of any other
expenditures of the Partnership which are not deductible in
computing Partnership Profits or Losses and which are not
added to the tax basis of any Partnership property, including,
without limitation, expenditures described in Section
705(a)(2)(B) of the Code. The Partner's pro rata share of such
expenditures, other than the Sales Commission, shall be
determined in the same manner as such Partner's share of
Profits and Losses allocated pursuant to Article 13. The
Partner's share of the Sales Commission shall be that amount
allocated to him pursuant to Article 13.
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13. ALLOCATIONS
(a) Nonrecourse Deductions. Nonrecourse Deductions shall
be allocated 20% to the General Partner and 80% to the Limited
Partners on a Pro Rata Basis.
(b) Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions shall be specially allocated to the Partner who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i).
(c) Profits and Losses.
(i) The Profits and Losses of the Partnership shall be
allocated 20% to the General Partner and 80% to the Limited Partners on
a Pro Rata Basis. In allocating Profits and Losses, Net Gains and
Losses from Capital Transactions (a part of Profits and Losses), if
any, shall be allocated first.
(ii) In no event shall Losses be allocated under this Article
13(c) to a Limited Partner if and to the extent that such allocation
would cause, as of the end of the Year, the negative balance in such
Limited Partner's Capital Account to exceed such Limited Partner's
share of Partnership Minimum Gain plus such Limited Partner's share, if
any, of Partner Minimum Gain. Any Losses which are not allocated to the
Limited Partner by virtue of the application of the preceding sentence
shall be allocated to the General Partner. For purposes of this Article
13(c), a Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items as provided in Article 13(d)(iii). All
items of income, gain, loss, deduction, or credit shall be allocated
among the Partners proportionately. Further, notwithstanding the
foregoing, after giving effect to the special allocations in Article
13(d), the General Partner shall be allocated at least 20% of all items
of income, gain, loss, deduction or credit.
(d) Special Allocations. The following special allocations
shall be made:
(i) Minimum Gain Chargeback. If there is a net decrease in
Partnership Minimum Gain during any Year, each Partner shall be
specially allocated items of Partnership income and gain for such Year
(and, if necessary, subsequent Years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section
1.704-2(g)(2). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated
to each Partner. The items to be so allocated shall be determined in
accordance with Treasury Regulations Section 1.704- 2(f). This Article
13(d)(i) is intended to comply with the minimum gain chargeback
requirement in such Section of the Regulations and shall be interpreted
consistently therewith.
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(ii) Partner Minimum Gain Chargeback. Notwithstanding any
other provision of this Article 13 except Article 13(d)(i), if there is
a net decrease in Partner Minimum Gain attributable to a Partner
Nonrecourse Debt during any Year, each Partner who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(f),
shall be specially allocated items of Partnership income and gain for
such Year (and, if necessary, subsequent Years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, to the extent required
by and determined in accordance with Treasury Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulations Section
1.704-2(i)(4). This Article 13(d)(ii) is intended to comply with the
minimum gain chargeback requirement in such Section of the Regulations
and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. If any Partner unexpectedly
receives any adjustment, allocation or distribution described in
Treasury Regulations Section 1.704- 1(b)(2)(ii)(d)(4) through (6) which
causes or increases a deficit balance in such Partner's Capital Account
(adjusted for this purpose in the manner provided in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)), items of Partnership income
and gain shall be specially allocated to each such Partner in an amount
and manner sufficient to eliminate, to the extent required by the
Regulations, the deficit Capital Account of such Partner as quickly as
possible, provided that an allocation pursuant to this Article
13(d)(iii) shall be made if and only to the extent that such Partner
would have a deficit Capital Account after all other allocations
provided for in this Article 13(d) have been tentatively made as if
this Article 13(d)(iii) were not in the Agreement. This provision is
intended to be a "qualified income offset," as defined in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d), such Regulations being
specifically incorporated herein by reference.
(iv) Sales Commission. The Sales Commission shall be allocated
to the Units which are not held by the General Partner and its
Affiliates in proportion to their respective Capital Contributions
represented by such Units (i.e., $270 in Sales Commissions per each
such Unit). The purpose of this Article 13(d)(iv) is to allocate the
Sales Commission to those Partners who actually bore the burden of
paying the Sales Commission.
(e) Ordering Provision. In applying the provisions of Articles
13 and 14 with respect to distributions and allocations, the following
ordering of priorities shall apply:
(i) Capital Accounts shall be deemed to be reduced by
Qualified Income Offset Items.
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(ii) Capital Accounts shall be reduced by Distributions of
Partnership Cash Flow under Article 14(a).
(iii) Capital Accounts shall be reduced by Distributions of
Partnership Sales Proceeds and Partnership Refinancing Proceeds under
Article 14(b).
(iv) Capital Accounts shall be increased by any Minimum Gain
Chargeback under Articles 13(d)(i) and (ii).
(v) Capital Accounts shall be increased by any Qualified
Income Offset under Article 13(d)(iii).
(vi) Capital Accounts shall be reduced by allocations of
Nonrecourse Deductions under Article 13(a).
(vii) Capital Accounts shall be reduced by allocations of
Partner Nonrecourse Deductions under Article 13(b).
(viii) Capital Accounts shall be increased by allocations of
Profits under Article 13(c).
(ix) Capital Accounts shall be reduced by allocations of
Losses under Article 13(c).
To the maximum extent permitted under the Code, allocations of
Profits and Losses shall be modified so that the Partners' Capital
Accounts reflect the amount they would have reflected if adjustments
required by Articles 13(d)(i), (ii) and (iii) had not occurred.
(f) Allocations Between Transferor and Transferee. In the
event of the transfer of all or any part of a Partner's interest (in
accordance with the provisions of this Agreement) in the Partnership at
any time other than at the end of a Year, or the admission of a new
Partner (in accordance with the terms of this Agreement), the
transferring Partner or new Partner's share of the Partnership's
income, gain, loss, deductions and credits, as computed both for
accounting purposes and for Federal income tax purposes, shall be
allocated between the transferor Partner and the transferee Partner (or
Partners), or the new Partner and the other Partners, as the case may
be, in the same ratio as the number of days in such Year before and
after the date of the transfer or admission; provided, however, that if
there has been a sale or other disposition of the assets of the
Partnership (or any part thereof) during such Year, then upon the
mutual agreement of all the Partners (excluding the new Partner and the
transferring Partner), the Partnership shall treat the periods before
and after the date of the transfer or admission as separate Years and
allocate the Partnership's net income, gain, net loss, deductions and
credits for each of such deemed separate Years. Notwithstanding the
foregoing, the Partnership's "allocable cash basis items," as that
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term is used in Section 706(d)(2)(B) of the Code, shall be allocated as
required by Section 706(d)(2) of the Code and the regulations
thereunder.
(g) Tax Withholding. The Partnership shall be authorized to
pay, on behalf of any Partner, any amounts to any federal, state or
local taxing authority, as may be necessary for the Partnership to
comply with tax withholding provisions of the Code or the other income
tax or revenue laws of any taxing authority. To the extent the
Partnership pays any such amounts that it may be required to pay on
behalf of a Partner, such amounts shall be treated as a cash
Distribution to such Partner and shall reduce the amount otherwise
distributable to such Partner.
14. DISTRIBUTIONS.
(a) Distribution of Partnership Cash Flow. Partnership Cash
Flow shall be distributed to the Partners within 60 days after the end
of each Year of the Partnership, or earlier in the discretion of the
General Partner, 20% to the General Partner and 80% to the Limited
Partners on a Pro Rata Basis.
(b) Distribution of Partnership Refinancing Proceeds and
Partnership Sales Proceeds. Partnership Refinancing Proceeds and
Partnership Sales Proceeds shall be distributed to the Partners within
60 days of the Capital Transaction giving rise to such proceeds, or
earlier in the discretion of the General Partner, 20% to the General
Partner and 80% to the Limited Partners on a Pro Rata Basis.
(c) Distribution in Liquidation. Upon liquidation of the
Partnership, all of the Partnership's property shall be sold and
Profits and Losses allocated accordingly. Proceeds from the liquidation
of the Partnership shall be distributed in accordance with Article 25.
15. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.
15.1 Management. The Limited Partners shall not take part in
the management of the business, nor transact any business for the Partnership,
nor shall they have power to sign for or to bind the Partnership. The General
Partner may, however, contract with one or more Limited Partners to act as the
local manager of the LithostarTM Mobile System. No Limited Partner may withdraw
from the Partnership except as expressly permitted herein.
15.2 Operation of LithostarTM Mobile System. The Limited
Partners shall not operate or utilize the LithostarTM Mobile System except
pursuant to (i) an Agreement with the Partnership; or (ii) any other arrangement
specifically approved by the General Partner.
16. LIMITED LIABILITY.
No Limited Partner shall be required to make any contribution
to the capital of the Partnership except as set forth in Article 7, nor shall
any Limited Partner in his capacity as such, be bound by, or personally liable
for, any expense, liability or obligation of the Partnership except to the
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extent of his (i) interest in the Partnership; (ii) Guaranties of Partnership
obligations; and (iii) obligation to return distributions made to him under
certain circumstances as required by the Act.
17. TRANSFER OF INTERESTS AND ADMISSION OF PARTNERS.
17.1 Transferability.
(a) The term "transfer" when used in this Agreement with
respect to a Partnership Interest includes a sale, assignment, gift,
pledge, exchange, or any other disposition.
(b) Except as otherwise provided herein, the General Partner
shall not at any time transfer or assign its interest or obligation as
General Partner, except that the General Partner may cause to be
admitted to the Partnership additional General Partners in order to
comply with Article 10.2(d).
(c) The Partnership Interest of any Limited Partner shall not
be transferred, in whole or in part, except in accordance with the
conditions and limitations set forth in Articles 17.2 or 18.
(d) The transferee of a Partnership Interest by assignment,
operation of law or otherwise, shall have only the rights, powers and
privileges enumerated in Article 17.3 or otherwise provided by law and
may not be admitted to the Partnership as a Limited Partner except as
provided in Article 17.4 or as a General Partner except as provided in
Article 17.5
(e) Notwithstanding any provision herein to the contrary, the
Partnership Agreement shall in no way restrict the issuance or
transfers of the stock of the General Partner.
17.2 Restrictions on Transfers by Limited Partners.
(a) All or part of a Partnership Interest may be transferred
by a Limited Partner only with the prior written approval of the
General Partner, which approval may be granted or denied in the sole
discretion of the General Partner. Units may only be transferred in
increments of one Unit unless all Units or portions thereof owned by a
Limited Partner are being transferred. In no event may a Partnership
Interest be transferred if such transfer would result in a default
under the Guaranties or a termination of the Partnership under Code
Section 708, nor may a Partnership Interest be transferred to a
"tax-exempt entity" (as defined in Code Section 168(h)) which would
affect the method or manner in which the Partnership may depreciate
Partnership assets.
(b) The General Partner shall not approve any transfer of a
Partnership Interest unless the proposed transferee shall have
furnished the General Partner with a sworn statement that:
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(i) proposes to acquire his Partnership Interest
as a principal, for investment and not with a view to resale
or distribution;
(ii) the proposed transferee meets such requirements
regarding sophistication, income and net worth as required by
applicable state and Federal securities laws;
(iii) the proposed transferee has met such net worth
and income suitability standards as have been established by
the General Partner;
(iv) the proposed transferee recognizes that
investment in the Partnership involves certain risks and has
taken full cognizance of and understands all of the risk
factors related to the purchase of a Partnership Interest; and
(v) the proposed transferee has met all other
requirements of the General Partner for the proposed transfer.
(c) A transfer of a Partnership Interest may be made only if,
prior to the date thereof, the Partnership upon request receives an
opinion of counsel, satisfactory in form and substance to the General
Partner, that neither the offering nor the proposed transfer will
violate any Federal or applicable state securities law or regulations
or any of the provisions of Article 17.2(b) hereof, will prevent the
Partnership from being entitled to use any method of depreciation which
the Partnership might otherwise be entitled to use, or will adversely
affect the status of the Partnership as a partnership for Federal
income tax purposes.
17.3 Rights of Transferee.
Unless admitted to the Partnership in accordance with Article
17.4, the transferee of a Partnership Interest or a part thereof or any right,
title or interest therein shall not be entitled to any of the rights, powers, or
privileges of his predecessor in interest, except that he shall be entitled to
receive and be credited or debited with his proportionate share of Partnership
income, gains, Profits, Losses, deductions, credits or Distributions.
17.4 Admission of Limited Partners.
A General Partner, or the transferee of all or part of the
Partnership Interest of either a General Partner or a Limited Partner, may be
admitted to the Partnership as a Limited Partner upon furnishing to the General
Partner all of the following:
(a) the written approval of a Majority in Interest all of the
Limited Partners except the assignor Partner, or the assignor Partner
alone, which approval may be granted or denied in the sole discretion
of such Partners or Partner (as the case may be);
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(b) the written approval of the General Partner, which
approval may be granted or denied in the sole discretion of the General
Partner;
(c) acceptance, in a form satisfactory to the General Partner,
of all the terms and conditions of this Agreement and any other
documents required in connection with the operation of the Partnership
pursuant to the terms of this Agreement;
(d) a power of attorney substantially identical to that
contained in Article 38;
(e) such other documents or instruments as may be required in
order to effect his admission as a Limited Partner; and
(f) payment of such reasonable expenses as may be incurred in
connection with his admission as a Limited Partner.
17.5 Admission of General Partners.
A Limited Partner, or the transferee of all or part of the
Partnership Interest of the General Partner, may be admitted to the Partnership
as a general partner upon furnishing to the General Partner all of the
following:
(a) the written approval of both the General Partner and a
Majority in Interest of the Limited Partners, which approval may be
granted or denied in the sole discretion of the Partners;
(b) such financial statements, guarantees or other assurances
as the General Partner may require with regard to the ability of the
proposed general partner to fulfill the financial obligations of a
general partner hereunder;
(c) acceptance, in form satisfactory to the General Partner,
of all the terms and provisions of this Agreement and any other
documents required in connection with the operation of the Partnership
pursuant to the terms of this Agreement;
(d) a certified copy of a resolution of its Board of Directors
(if it is a corporation) authorizing it to become a general partner
under the terms and conditions of this Agreement;
(e) a power of attorney substantially identical to that
contained in Article 38;
(f) such other documents or instruments as may be required in
order to effect its admission as a general partner; and
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(g) payment of such reasonable expenses as may be incurred in
connection with its admission as a general partner.
Notwithstanding the above, a transferee that controls or is
controlled by the General Partner or one or more of its Affiliates that receives
all or part of the Partnership Interest of the General Partner may be admitted
to the Partnership as a general partner upon complying with all the provisions
of Article 17.5 except for subparagraph 17.5(a). As long as the transferee is
controlled by the General Partner or one or more of its Affiliates, no Limited
Partner consents will be required to admit such transferee as a General Partner
to the Partnership.
17.6 Amendment of Certificate of Limited Partnership and
Qualification.
The General Partner shall take all steps necessary and
appropriate to prepare and record any amendments to the Certificate of Limited
Partnership, as may be necessary or appropriate from time to time to comply with
the requirements of the Act, including, without limitation, upon the admission
to the Partnership of any general partner pursuant to the provisions of Article
17.5, and may for this purpose exercise the power of attorney delivered to the
General Partner pursuant to Article 17.5 or 38. In addition, the General Partner
shall take all steps necessary and appropriate to prepare and record any and all
documents necessary to qualify the Partnership to do business in jurisdictions
where the Partnership is doing business, and may for this purpose exercise the
power of attorney delivered to the General Partner pursuant to Articles 17.4,
17.5 or 38.
17.7 Withdrawal of Initial Limited Partner.
Upon the date the first Limited Partner is admitted to the
Partnership in accordance with Article 11 of this Agreement, the Initial Limited
Partner shall withdraw from the Partnership, and thereupon his Capital
Contribution shall be returned and his Partnership Interest shall be reallocated
to the Limited Partners.
18. OPTIONAL PURCHASE OF LIMITED PARTNERSHIP
INTERESTS ON CERTAIN EVENTS.
18.1 Death.
18.1.1 Upon the death of a Limited Partner, the deceased
Limited Partner's executor, administrator, or other legal or personal
representative shall give written notice of that fact to the General
Partner. In such event, the executor, administrator or other legal or
personal representative of the deceased Limited Partner shall have a
period of ninety (90) days following the date of death (the "Response
Period") within which to locate a qualified investor approved of by the
General Partner, which approval can be granted or denied in the sole
discretion of the General Partner (a "Qualified Investor"), to purchase
the entire Partnership Interest of the deceased Limited Partner. In the
event the executor, administrator or other personal or legal
representative of the deceased Limited Partner locates a Qualified
Investor who is willing to purchase the entire Partnership Interest of
the deceased Limited Partner, he
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shall give notice of that fact in writing to the General Partner, which
notice shall state the name of the proposed transferee Qualified
Investor. Provided the requirements of Articles 17.2 and 17.4 (b)
through (f) are satisfied, the executor, administrator, or other legal
or personal representative of the deceased Limited Partner may then
transfer the Partnership Interest of the deceased Limited Partner to
the Qualified Investor specified in the notice free of the purchase
options granted in Article 18.1.2. If such conditions are satisfied,
the transferee Qualified Investor shall have the rights of a transferee
Limited Partner as set forth in Article 17.3 and shall become subject
to all obligations connected with the Partnership interest transferred.
The deceased Limited Partner's Guaranty shall remain an obligation of
his estate, unless the Bank agrees to release the estate from the
Guaranty in substitution of a like Guaranty from any transferee Limited
Partner.
18.1.2 In the event the requirements of Articles 17.2 and 17.4
(b) through (f) are not satisfied with respect to a proposed transferee
Qualified Investor, or the executor, administrator or other legal or
personal representative of the deceased Limited Partner fails to locate
a Qualified Investor to purchase the deceased Limited Partner's entire
Partnership Interest within the Response Period, the General Partner
shall have the option to purchase at the Closing (as defined below) the
Partnership Interest of the deceased Limited Partner (whose executor,
administrator or other legal or personal representative shall then
become obligated to sell such Partnership Interest) at the price
determined in the manner provided in Article 18.5 of this Agreement and
on the terms and conditions provided in Article 18.6 of this Agreement.
The General Partner shall have a period of thirty (30) days following
the date of the close of the Response Period (the "Option Period")
within which to notify in writing the deceased Limited Partner's
executor, administrator or other legal or personal representative,
whether the General Partner wishes to purchase all or a portion of the
Partnership Interest of the deceased Limited Partner. If the General
Partner does not elect to purchase the entire Partnership Interest of
the deceased Limited Partner before the expiration of the Option Period
and in the manner provided herein, the portion of the Partnership
Interest not purchased shall be held by the deceased Limited Partner's
executor, administrator, or other legal representative pursuant to the
terms of this Agreement.
18.2 Bankruptcy, Insolvency or Assignment for
Benefit of Creditors of a Limited Partner.
18.2.1 In the event that an involuntary or voluntary
proceeding under the Federal Bankruptcy Code, as amended, is filed for
or against any Limited Partner, or if any Limited Partner shall make an
assignment for the benefit of his creditors, or if any Limited Partner
has a receiver or custodian appointed for his assets, or any Limited
Partner generally fails to pay his debts when due, the insolvent
Limited Partner shall give written notice to the General Partner of the
commencement of any such proceeding or the occurrence of such event
within five days of the first notice to him of such commencement or
occurrence of such event. The insolvent Limited Partner or his trustee,
custodian, receiver or representative shall have a period of
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ninety (90) days following the date of the occurrence of one of such
events (the "Response Period") within which to locate a Qualified
Investor to purchase the entire Partnership Interest of the insolvent
Limited Partner. In the event the insolvent Limited Partner or his
trustee, custodian, receiver or other legal or personal representative
locates a Qualified Investor who is willing to purchase the entire
Partnership Interest of the insolvent Limited Partner, he shall give
notice of that fact in writing to the General Partner, which notice
shall state the name of the proposed transferee Qualified Investor.
Provided the requirements of Articles 17.2 and 17.4 (b) through (f) are
satisfied, the insolvent Limited Partner or his trustee, custodian,
receiver or representative may then transfer the Partnership Interest
of the insolvent Limited Partner to the Qualified Investor specified in
the notice free of the purchase options granted in Article 18.2.2. If
such conditions are satisfied, the transferee Qualified Investor shall
have the rights of a transferee Limited Partner as set forth in Article
17.3 and shall become subject to all obligations connected with the
Partnership Interest transferred. The insolvent Limited Partner shall
remain personally liable on his Guaranty, unless the Bank agrees to
release such Limited Partner from his Guaranty in substitution of a
like Guaranty from any transferee Limited Partner.
18.2.2 In the event the requirements of Articles 17.2 and 17.4
(b) through (f) are not satisfied with respect to a proposed transferee
Qualified Investor, or the insolvent Limited Partner, his trustee,
custodian, receiver or other legal or personal representative fails to
locate a Qualified Investor to purchase the insolvent Limited Partner's
Partnership Interest within the Response Period, the General Partner
shall have the option to purchase at the Closing (as defined below) the
Partnership Interest of the insolvent Limited Partner (which insolvent
Limited Partner or his trustee, custodian, receiver or other personal
or legal representative, as the case may be, shall then become
obligated to sell such Partnership Interest) at the price determined in
the manner provided in Article 18.5 of this Agreement and on the terms
and conditions provided in Article 18.6 of this Agreement. The General
Partner shall have a period of thirty (30) days following the date of
the close of the Response Period (the "Option Period") within which to
notify in writing the insolvent Limited Partner or his trustee,
custodian, receiver, or other legal or personal representative, whether
the General Partner wishes to purchase all or a portion of the
Partnership Interest of the insolvent Limited Partner. If the General
Partner does not elect to purchase the entire Partnership Interest of
the insolvent Limited Partner before the expiration of the Option
Period and in the manner provided herein, the portion of the
Partnership Interest not purchased shall be held by the insolvent
Partner, his trustee, custodian, receiver or other legal or personal
representative pursuant to the terms of this Agreement.
18.3 Default under Guaranties. Notwithstanding any other
provision in this Article 18 to the contrary, if any of the events outlined in
Articles 18.1 or 18.2 or any other defaulting event outlined in the Guaranty
(the "Defaulting Events") should occur with respect to a Limited Partner (the
"Defaulting Limited Partner"), and the General Partner determines (in its sole
discretion) that such event may result in default and acceleration of an
obligation secured by the Guaranty unless another guarantor acceptable to the
Lender can be substituted in the place of the Defaulting Limited Partner,
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then the General Partner shall have the right to immediately take the steps as
outlined in this Article 18.3 to prevent such default. Upon the General Partner
receiving notice of a Defaulting Event as provided above, the General Partner,
in its sole discretion, shall immediately have the right to either (i) sell the
entire Partnership Interest of the Defaulting Limited Partner to an investor
approved of by the General Partner, (ii) purchase for its own account the entire
Partnership Interest of the Defaulting Limited Partner, or (iii) sell the entire
Partnership Interest of the Defaulting Limited Partner to one or more of the
other Limited Partners. The Defaulting Limited Partner shall sell his
Partnership Interest to the purchaser at the purchase price determined in the
manner as provided in Article 18.5 and on the terms and conditions as provided
in Article 18.6. The transfer of the Partnership Interest, the payment of the
purchase price, and the assumption of the Defaulting Limited Partner's
obligations under his Guaranty (as provided in Article 18.5), shall be made at
such time as determined by the General Partner in order to avoid the default and
acceleration of the obligation secured by the Guaranty. Each Limited Partner
hereby makes, constitutes and appoints the General Partner, with full power of
substitution, his true and lawful attorney-in-fact, to take such actions and
execute such documents on his behalf to effect the transfer of his Partnership
Interest as provided in this Article 18.3, in the event such Limited Partner
becomes a Defaulting Limited Partner.
18.4 Divestiture Option. If state or federal regulations or
laws are enacted or applied, or if any other legal developments occur, which, in
the opinion of the General Partner, adversely affect (or potentially adversely
affect) the operation of the Partnership or the business of the Partnership in a
manner deemed substantial by the General Partner in its sole discretion (e.g.,
exclusion from any governmental health care program or any provider ownership
prohibition), the General Partner shall promptly either, in its discretion, (i)
take the steps outlined in this Article 18.4 to divest the Limited Partners of
their Partnership Interests, or (ii) dissolve the Partnership as provided in
Article 24.1(d). If the General Partner chooses option (i), it shall deliver a
written notice to all of the Limited Partners (the "Notice of Election") and
either sell the entire Partnership Interests of all of the Limited Partners to
one or more investors selected by it (including, without limitation, Affiliates
of the General Partner), and/or purchase such Partnership Interests for its own
account. In such event, the Limited Partners shall sell their Partnership
Interests to the purchaser or purchasers at the purchase price determined in the
manner as provided in Article 18.5 and be on the terms and conditions as
provided in Article 18.6. The transfer of the Partnership Interests, the payment
of the purchase prices, and the assumption of the Limited Partners' obligations
under their respective Guaranties (as provided in Article 18.5) shall be made at
such time as determined by the General Partner to be in the best interests of
the Partnership and its Limited Partners. If the General Partner chooses option
(ii), it shall proceed with reasonable promptness to dissolve and liquidate the
Partnership and no vote of the Limited Partners shall be required in that
connection. Each Limited Partner hereby makes, constitutes and appoints the
General Partner, with full power of substitution, his true and lawful
attorney-in-fact, to take such actions and execute such documents on his behalf
to effect the transfer of his Partnership Interest or the dissolution of the
Partnership, as the case may be, as provided in this Article 18.4.
18.5 Purchase Price. The purchase price to be paid for the
Partnership Interest of any Limited Partner whose interest is being purchased
(the "Retiring Limited Partner") pursuant to the provisions of Articles 18.1.2,
18.2.2, 18.3 or 18.4 shall be an amount equal to the Retiring Limited Partner's
share of the Partnership's book value, if any, (prorated in the event that only
a portion of his Partnership Interest is being purchased) as reflected by the
Capital Account of the Retiring Limited Partner (unadjusted for any appreciation
in Partnership assets and as reduced by
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depreciation deductions claimed by the Partnership for tax purposes). The
determination of the Retiring Limited Partner's Capital Account on the Valuation
Date (as defined below) shall be made by the Partnership's firm of certified
public accountants (the "Partnership Accountant") upon a review of the
Partnership books of account, and a formal audit is expressly waived. The
statement of the Partnership Accountant with respect to the Capital Account of
the Retiring Limited Partner on the Valuation Date shall be binding and
conclusive upon the Partnership, the purchaser and the Retiring Limited Partner
and his representative. The Valuation Date shall be the last day of the month
next preceding the month in which occurs: (i) the death of a Limited Partner, in
the case of a purchase by reason of death; (ii) the bankruptcy or insolvency of
a Limited Partner, in the case of a purchase by reason of such bankruptcy or
insolvency; (iii) the notice of a Defaulting Event as provided in Article 18.3,
in the case of a purchase occurring by reason of one of such events; or (iv) the
Notice of Election as provided in Article 18.4, in the case of a purchase by
reason thereof. The purchase price shall be paid at the Closing in cash (or by
certified or cashier's check). If as of the date of the Closing the Retiring
Limited Partner still has an outstanding personal obligation under the Guaranty
(the "Obligation"), the purchaser shall assume the portion of the Obligation as
is equal to the portion of the Partnership Interest being purchased, indemnify
the Retiring Limited Partner from such portion of the Obligation, and take such
steps deemed necessary by the General Partner to formally evidence the
assumption of such portion of the Obligation, including without limitation,
executing such documents and providing such financial information to the Bank
(as the case may be) to evidence the assumption of such portion of the
Obligation, and obtain if possible, the release of the Retiring Partner from
such portion of the Obligation.
18.6 Closing.
18.6.1 Closing of Purchase and Sale. The Closing of any
purchase and sale of a Partnership Interest pursuant to Articles 18.1.2
or 18.2.2 of this Agreement shall take place at the principal office of
the Partnership, or such other place designated by the General Partner,
on the date determined as follows (the "Closing"):
(a) In the case of a purchase and sale occurring by reason of
the death of a Limited Partner as provided in Article 18.1.2 of this
Agreement, the Closing shall be held on the thirtieth day (or if such
thirtieth day is not a business day, the next business day following
the thirtieth day) next following the last to occur of:
(i) Qualification of the executor or personal
administrator of the deceased Limited Partner's estate;
(ii) The date on which any necessary determination of
the purchase price of the Partnership Interest to be purchased
has been made, or
(iii) The date that coincides with the close of the
Option Period.
(b) In the case of a purchase and sale occurring by reason of
the bankruptcy or insolvency of a Limited Partner as provided in
Article 18.2.2 of this
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Agreement, the Closing shall be held on the thirtieth day (of if such
thirtieth day is not a business day, the next business day following
the thirtieth day) next following the later to occur of:
(i) The date on which any necessary determination of
the purchase price of the Partnership Interest to be purchased
has been made; or
(ii) The date that coincides with the close of the
Option Period.
At the Closing, the Limited Partner whose Partnership Interest is being
purchased (the "Transferring Partner") shall concurrently with tender
and receipt of the applicable purchase price, deliver to the purchaser
duly executed instruments of transfer and assignment, assigning good
and marketable title to the portion or portions of the Transferring
Partner's entire Partnership Interest thus purchased, free and clear
from any liens or encumbrances or rights of other therein (except with
respect to liens or rights associated with the Guaranties as otherwise
provided herein).
18.6.2 Terms and Conditions of Purchase. The Partnership
Interest of a Limited Partner shall not be transferred to any Partner
unless the requirements of Articles 17.2 and 17.4 (b) through (f) are
satisfied with respect to it. The purchaser shall be liable for all
obligations and liabilities connected with that portion of the
Partnership Interest transferred to it unless otherwise agreed in
writing.
18.6.3 Percentage Interests. The Percentage Interests of each
Partner who purchases all or a portion of the Partnership Interest of a
Limited Partner pursuant to the provisions of Article 18.3, shall be
increased by the Percentage Interest represented by that portion of the
Partnership Interest purchased by such Partner.
19. SALE, ASSIGNMENT OR OTHER TRANSFER OF THE GENERAL
PARTNER'S INTEREST.
19.1 The General Partner may not mortgage, pledge,
hypothecate, transfer, sell, assign or otherwise dispose of all or any part of
its interest in the Partnership, whether voluntarily, by operation of law or
otherwise (the foregoing actions being hereafter collectively referred to as
"Transfers" or singularly as a "Transfer") except as permitted by this Article.
19.2 If the General Partner makes a Transfer of its general
partner interest in the Partnership pursuant to this Article, it shall be liable
for all obligations and liabilities incurred by it as the General Partner of the
Partnership on or before the effective date of such Transfer, but shall not be
liable for any obligations or liabilities of the Partnership arising after the
effective date of the Transfer.
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19.3 No Transfer by the General Partner shall be permitted
unless:
(a) The certified public accountant for the Partnership shall
have delivered to the Partnership an opinion that the new general
partner of the Partnership has sufficient net worth (if necessary) and
meets all other published requirements of the Internal Revenue Service
necessary to assure that the Partnership will continue to be classified
as a partnership for Federal income tax purposes;
(b) Counsel for the Partnership shall have rendered an opinion
that none of the actions taken in connection with such Transfer will
cause the Partnership to be classified other than as a partnership for
Federal income tax purpose or will cause the termination or dissolution
of the Partnership and
(c) Such documents or instruments, in form and substance
satisfactory to counsel for the Partnership, shall have been executed
and delivered as may be required in the opinion of counsel for the
Partnership to effect fully any such Transfer.
20. TERMINATION OF THE SERVICES OF THE GENERAL
PARTNER.
If the General Partner shall be finally adjudged by a court of
competent jurisdiction to be liable to the Limited Partners or the Partnership
for any act of gross negligence or willful misconduct in the performance of its
duties under the terms of this Agreement, the General Partner may be removed and
another substituted with the consent of all of the Limited Partners. Such
consent shall be evidenced by a certificate of removal signed by all of the
Limited Partners. In the event of removal, the new general partner shall succeed
to all of the powers, privileges and obligations of the General Partner, and the
General Partner's interest in the Partnership shall become that of a Limited
Partner, and the General Partner shall maintain its same Percentage Interest in
the Partnership notwithstanding anything contained in the Act to the contrary.
In addition, in the event of removal, the new general partner shall take all
steps necessary and appropriate to prepare and record an amendment to the
Certificate of Limited Partnership to reflect the removal of the General Partner
and the admission of such new general partner.
21. MANAGEMENT AND OPERATION OF BUSINESS.
21.1 All decisions with respect to the management of the
business and affairs of the Partnership shall be made by the General Partner.
21.2 The General Partner shall be under no duty to devote all
of its time to the business of the Partnership, but shall devote only such time
as it deems necessary to conduct the Partnership business and to operate and
manage the Partnership in an efficient manner.
21.3 The General Partner may charge to the Partnership all
ordinary and necessary costs and expenses, direct and indirect, attributable to
the activities, conduct and management of the business of the Partnership. The
costs and expenses to be borne by the Partnership shall include, but are not
limited to, all expenditures incurred in acquiring and financing the Equipment,
legal and
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accounting fees and expenses, salaries of employees of the Partnership,
insurance premiums and interest.
21.4 In addition to, and not in limitation of, any rights and
powers covenanted by law or other provisions of this agreement, and except as
limited, restricted or prohibited by the express provisions of this Agreement,
the General Partner shall have any may exercise on behalf of the Partnership all
powers and rights necessary, proper, convenient or advisable to effectuate and
carry out the purposes, business and objectives of the Partnership. Such powers
shall include, without limitation, the following:
(a) To acquire a LithostarTM Mobile System;
(b) To acquire (i) a second LithostarTM system, or (ii) any
other assets related to the provisions of lithotripsy services
(collectively, the "Additional Assets"), at such times and at such
price and upon such terms, as the General Partner deems to be in the
best interest of the Partnership.
(c) To purchase, hold, manage, lease, license and dispose of
Partnership assets (including the LithostarTM Mobile System), including
the purchase, exchange, trade or sale of the Partnership's assets at
such price, or amount, for cash, securities or other property and upon
such terms, as the General Partner deems to be in the best interest of
the Partnership; provided, that should the Partnership assets be
exchanged or traded for securities or other property (the "Replacement
Property") the General Partner shall have the same powers with regard
to the Replacement Property as it does towards the traded property;
(d) To determine the travel itinerary and site locations for
the LithostarTM Mobile System;
(e) To borrow money for any Partnership purpose (including the
acquisition of the Additional Assets) and, if security is required
therefor, to subject to any security device any portion of the property
for the Partnership, to obtain replacements of any other security
device, to prepay, in whole or in part, refinance, increase, modify,
consolidate or extend any encumbrance or other security device;
(f) To deposit, withdraw, invest, pay, retain (including the
establishment of reserves in order to acquire the Additional Assets)
and distribute the Partnership's funds in any manner consistent with
the provisions of this Agreement;
(g) To institute and defend actions at law or in equity;
(h) To enter into and carry out contracts and agreements and
any or all documents and instruments and to do any and all such other
things as may be in furtherance of Partnership purposes or necessary or
appropriate to the conduct of the Partnership activities;
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(i) To execute, acknowledge and deliver any and all
instruments which may be deemed necessary or convenient to effect the
foregoing;
(j) To form a new limited partnership made up of qualified
investors to treat gallstone patients (if the FDA ever approves the
LithostarTM for such purpose), and to contract on behalf of the
Partnership with the new limited partnership for the use for a fee of
the LithostarTM for the treatment of the new limited partnership's
gallstone patients; and
(k) To engage or retain one or more persons to perform acts or
provide materials as may be required by the Partnership, at the
Partnership's expense, and to compensate such person or persons at a
rate to be set by the General Partner, provided that the compensation
is at the then prevailing rate for the type of services and materials
provided, or both. Any person, whether a Partner, an Affiliate of a
Partner or otherwise, including without limitation the General Partner,
may be employed or engaged by the Partnership to render services,
including, but not limited to, management services, professional
lithotripsy services, accounting services and legal services, or
provide materials; and if such person is a Partner or an Affiliate of a
Partner, he shall be entitled to, and shall be paid compensation for
said services or materials, anything in this Agreement to the contrary
notwithstanding, provided that the compensation to be received for such
services or materials is competitive in price and terms with then
prevailing rate for the type of services and/or materials provided. The
Partnership, pursuant to the terms of a Management Agreement, will
contract with the General Partner with respect to the supervision and
coordination of the management and administration of the day-to-day
operations of the LithostarTM Mobile System for a monthly fee equal to
the greater of 7.5% of Partnership Cash Flow per month or $8,000 per
month. All costs incurred by the General Partner except the costs of
employing one or more local physicians to supervise the management and
administration of the LithostarTM Mobile System, shall be paid by the
Partnership directly. The Partnership will also contract with qualified
physicians desiring to use the LithostarTM for the treatment of
patients. Owning an interest in the Partnership shall not be a
condition to using the LithostarTM. The General Partner and its
Affiliates may engage in or possess an interest in other business
ventures of any nature and description independently or with others,
including, but not limited to, the operation of a mobile lithotripsy
unit similar to the LithostarTM Mobile System, whether or not such
business ventures are in direct or indirect competition with the
Partnership, and neither the Partnership nor the Partners shall have
any right by virtue of this Agreement in and to said independent
ventures or to the income or profits derived therefrom.
21.5 In addition to other acts expressly prohibited or
restricted by this Agreement or by law, the General Partner shall have no
authority to act on behalf of the Partnership in:
(a) Doing any act in contravention of this Agreement or its
Certificate of Limited Partnership;
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(b) Doing any act which would make it impossible to carry on
the ordinary business of the Partnership;
(c) Possessing or in any manner dealing with the Partnership's
property or assigning the rights of the Partnership in the
Partnership's property for other than Partnership purposes;
(d) Admitting a person as a Limited Partner or a General
Partner except as provided in this Agreement; or
(e) Performing any act (other than an act required by this
Agreement or any act taken in good faith reliance upon counsel's
opinion) which would, at the time such act occurred, subject any
Limited Partner to liability as a general partner in any jurisdiction.
22. RESERVES.
The General Partner may cause the Partnership to create a
reserve account to be used exclusively for repairs and acquisition of Additional
Assets and for any other valid Partnership purpose. The General Partner shall,
in its sole discretion, determine the amount of payments to such reserve.
23. INDEMNIFICATION AND EXCULPATION OF THE
GENERAL PARTNER.
23.1 The General Partner is accountable to the Partnership as
a fiduciary and consequently must exercise good faith and integrity in handling
Partnership affairs. This is a rapidly developing and changing area of the law
and Limited Partners who have questions concerning the duties of the General
Partner should consult with their counsel. The General Partner and its
Affiliates shall have no liability to the Partnership which arises out of any
action or inaction of the General Partner or its Affiliates if the General
Partner or its Affiliates, in good faith, determined that such course of conduct
was in the best interest of the Partnership and such course of conduct did not
constitute gross negligence or willful misconduct of the General Partner or its
Affiliates. The General Partner and its Affiliates shall be indemnified by the
Partnership against any losses, judgments, liabilities, expenses and amounts
paid in settlement of any claims sustained by them in connection with the
Partnership, provided that the same were not the result of gross negligence or
willful misconduct on the part of the General Partner or its Affiliates.
23.2 The General Partner shall not be liable for the return of
the Capital Contributions of the Limited Partners, and upon dissolution, Limited
Partners shall look solely to the assets of the Partnership.
24. DISSOLUTION OF THE PARTNERSHIP.
24.1 The Partnership shall be dissolved and terminated and its
business wound up upon the occurrence of any one of the following events:
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(a) The expiration of its term on December 31, 2040;
(b) The filing by, on behalf of, or against the General
Partner of any petition or pleading, voluntary or involuntary, to
declare the General Partner bankrupt under any bankruptcy law or act,
or the commencement in any court of any proceeding, voluntary or
involuntary, to declare the General Partner insolvent or unable to pay
its debts, or the appointment by any court or supervisory authority of
a receiver, trustee or other custodian of the property, assets or
business of the General Partner or the assignment by it of all or any
part of its property or assets for the benefit of creditors, if said
action, proceeding or appointment is not dismissed, vacated or
otherwise terminated within ninety (90) days of its commencement;
(c) The joint determination of the General Partner and a
Majority in Interest of the Limited Partners that the Partnership
should be dissolved;
(d) The election of the General Partner to dissolve the
Partnership following the occurrence of an event described in Article
18.4;
(e) The sale, exchange or other disposition of all or
substantially all of the property of the Partnership without making
provision for the replacement thereof; and
(f) The dissolution, retirement, resignation, death,
disability or legal incapacity of a general partner, and any other
event resulting in the dissolution or termination of the Partnership
under the laws of the State of Hawaii; provided, that the events
described in Sections 425D-402(4) and (5) of the Act or any similar
provisions of any successor statute, shall not work a dissolution of
the Partnership except as expressly provided in (b) above.
24.2 Notwithstanding the provisions of Article 24.1, the
Partnership shall not be dissolved and terminated upon the retirement,
resignation, bankruptcy, assignment for the benefit of creditors, dissolution,
death, disability or legal incapacity of a general partner, and its business
shall continue pursuant to the terms and conditions of this Agreement, if any
general partner or general partners remain following such event; provided that
such remaining general partner or general partners are hereby obligated to
continue the business of the Partnership. If no general partner remains after
the occurrence of such event, the business of the Partnership shall continue
pursuant to the terms and conditions of this Agreement, if, within ninety (90)
days after the occurrence of such event, the Limited Partners unanimously agree
in writing to continue the business of the Partnership, and, if necessary, to
the appointment of one or more persons or entities to be substituted as the
general partner. In the event the Limited Partners agree to continue the
business of the Partnership, the new general partner or general partners shall
succeed to all of the powers, privileges and obligations of the General Partner,
and the General Partner's interest in the Partnership shall become a Limited
Partner's interest hereunder. Furthermore, in the event a remaining general
partner or the Limited Partners, as the case may be, agree to continue the
business of the Partnership as provided herein, the remaining general partner or
the newly appointed general partner or general partners, as the case may be,
shall take all steps necessary and appropriate to prepare and record an
amendment to the Certificate of
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Limited Partnership to reflect the continuation of the business of the
Partnership and the admission of a new general partner or general partners, if
any.
25. DISTRIBUTION UPON DISSOLUTION.
Upon the dissolution and termination of the Partnership, the
General Partner or, if there is none, a representative of the Limited Partners,
shall cause the cancellation of the Partnership's Certificate of Limited
Partnership, shall liquidate the assets of the Partnership, and shall apply and
distribute the proceeds of such liquidation in the following order of priority:
(a) First, to the payment of the debts and liabilities of
the Partnership, and the expenses of liquidation;
(b) Second, to the creation of any reserves which the General
Partner (or the representatives of the Limited Partners) may deem
reasonably necessary for the payment of any contingent or unforeseen
liabilities or obligations of the Partnership or of the General Partner
arising out of or in connection with the business and operation of the
Partnership; and
(c) Third, the balance, if any, shall be distributed to the
Partners in accordance with the Partners' positive Capital Account
balances after such capital accounts are adjusted as provided by
Article 13, and any other adjustments required by the Final Treasury
Regulations under Section 704(b) of the Code. Any General Partner with
a negative Capital Account following the distribution of liquidation
proceeds or the liquidation of its interest must contribute to the
Partnership an amount equal to such negative Capital Account on or
before the end of the Partnership's taxable year (or, if later, within
ninety days after the date of liquidation). Any capital so contributed
shall be (i) distributed to those Partners with positive Capital
Accounts until such Capital Accounts are reduced to zero, and/or (ii)
used to discharge recourse liabilities.
26. BOOKS OF ACCOUNT, RECORDS AND REPORTS.
26.1 Proper and complete records and books of account shall be
kept by the General Partner in which shall be entered fully and accurately all
transactions and such other matters relating to the Partnership's business as
are usually entered into records and books of account maintained by persons
engaged in businesses of a like character. The books and records of the
Partnership shall be prepared according to the accounting method determined to
be in the best interest of the Partnership by the General Partner. The
Partnership's fiscal year shall be the calendar year. The books and records
shall at all times be maintained at the Partnership's Records Office and shall
be open to the reasonable inspection and examination of the Partners or their
duly authorized representatives during reasonable business hours.
26.2 Within ninety (90) days after the end of each Year of the
Partnership, the General Partner shall send to each person who was a Limited
Partner at any time during such year such tax information, including, without
limitation, Federal tax Schedule K-1, as shall be reasonably necessary
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for the preparation by such person of his Federal income tax return. The General
Partner will also make available to the Limited Partners any other information
required by the Act.
26.3 The General Partner shall maintain at the Partnership's
Records Office copies of the Partnership's original Certificate of Limited
Partnership and any certificate of amendment, restated certificate or
certificate of cancellation with respect thereto and such other documents as the
Act shall require. The General Partner will furnish to any Limited Partner upon
request a copy of the Partnership's original Certificate of Limited Partnership
and any certificate of amendment, restated certificate, or certificate of
cancellation, if any.
26.4 The General Partner shall, in its sole discretion, make
for the Partnership any and all elections for federal, state and local tax
purposes including, without limitation, any election, if permitted by applicable
law, to adjust the basis of the Partnership's property pursuant to Code Section
754, 734(b) and 743(b), or comparable provisions of state or local law, in
connection with transfers of interests in the Partnership and Partnership
Distributions.
26.5 The General Partner is designated as the Tax Matters
Partner (as defined in Section 6231 of the Code) and to act in any similar
capacity under state or local law, and is authorized (at the Partnership's
expense): (i) to represent the Partnership and Partners before taxing
authorities or courts of competent jurisdiction in tax matters affecting the
Partnership or Partners in their capacity as Partners; (ii) to extend the
statute of limitations for assessment of tax deficiencies against Partners with
respect to adjustments to the Partnership's federal, state or local tax returns;
(iii) to execute any agreements or other documents relating to or affecting such
tax matters, including agreements or other documents that bind the Partners with
respect to such tax matters or otherwise affect the rights of the Partnership
and Partners; and (iv) to expend Partnership funds for professional services and
costs associated therewith. The General partner is authorized and required to
notify the federal, state or local tax authorities of the appointment of a Tax
Matters Partner in the manner provided in Treasury Regulations Section
301.6231(a)(7)-IT, as modified from time to time. In its capacity as Tax Matters
Partner, the General Partner shall oversee the Partnership tax affairs in the
manner which, in its best judgment, are in the interests of the Partners.
27. NOTICES.
All notices under this Agreement shall be in writing and shall
be deemed to have been given when delivered personally, or mailed by certified
or registered mail, postage prepaid, return receipt requested. Notices to the
General Partner shall be delivered at, or mailed to, its principal office.
Notices to the Partnership shall be delivered at, or mailed to, its principal
office with a copy to each of its business offices. Notice to a Limited Partner
shall be delivered to such Limited Partner, or mailed to the last address
furnished by him for such purposes to the General Partner. Limited Partners
shall give notice of a change of address to the General Partner in the manner
provided in this Article.
28. AMENDMENTS.
Subject to the provisions of Article 29, this Agreement is
subject to amendment only by written consent of the General Partner and a
Majority in Interest of the Limited Partners; provided,
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however, the consent of the Limited Partners shall not be required if such
amendments are ministerial in nature and do not contravene the provisions of
Article 29.
29. LIMITATIONS ON AMENDMENTS.
Notwithstanding the provisions of Article 28, no amendment to
this Agreement shall:
(a) Enlarge the obligations of any Partner under this
Agreement or convert the interest in the Partnership of any Limited
Partner into the interest of a general partner or modify the limited
liability of any Limited Partner, without the consent of such Partner;
(b) Amend the provisions of Articles 13, 14, 16 and 25 without
the approval of the Partners representing two-thirds of the aggregate
Percentage Interests in the Partnership; provided, however, that the
General Partner may at any time amend such Articles without the consent
of the Limited Partners in order to permit the Partnership allocations
to be sustained for Federal income tax purposes, but only if such
amendments do not materially affect adversely the rights and
obligations of the Limited Partners, in which case such amendments may
only be made as provided in this Article 29(c); or
(c) Amend this Article 29 without the consent of all Partners.
30. MEETINGS, CONSENTS AND VOTING.
30.1 A meeting of the Partnership to consider any matter with
respect to which the Partners may vote as set forth in this Agreement may be
called by the General Partner or by Limited Partners who hold more than
twenty-five percent (25%) of the aggregate interests in the Partnership held by
all the Limited Partners. Upon receipt of a notice requesting a meeting by such
Partner or Partners and stating the purpose of the meeting, the General Partner
shall, within ten (10) days thereafter, give notice to the Partners of a meeting
of the Partnership to be held at a time and place convenient to the Limited
Partners on a date not earlier than fifteen (15) days after receipt by the
General Partner of the notice requesting a meeting. The notice of the meeting
shall set forth the time, date, location and purpose of the meeting.
30.2 Any consent of a Partner required by this Agreement may
be given as follows:
(a) By a written consent given by the consenting Partner and
received by the General Partner at or prior to the doing of the act or
thing for which the consent is solicited, or
(b) By the affirmative vote by the consenting Partner to the
doing of the act or thing for which the consent is solicited at any
meeting called pursuant to this Article to consider the doing of such
act or thing.
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30.3 When exercising voting rights expressly granted under the
Articles of this Agreement, each Partner shall have that number of votes as is
equal to the Percentage Interest of such Partner at the time of the vote,
multiplied by 100.
31. SUBMISSIONS TO THE LIMITED PARTNERS.
The General Partner shall give the Limited Partners notice of
any proposal or other matter required by any provision of this Agreement or by
law to be submitted for consideration and approval of the Limited Partners. Such
notice shall include any information required by the relevant provision or by
law.
32. ADDITIONAL DOCUMENTS.
Each party hereto agrees to execute and acknowledge all
documents and writings which the General Partner may deem necessary or expedient
in the creation of this Partnership and the achievement of its purpose.
33. SURVIVAL OF RIGHTS.
Except as herein otherwise provided to the contrary, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their successor and assigns.
34. INTERPRETATION AND GOVERNING LAW.
When the context in which words are used in this Agreement
indicates that such is the intent, words in the singular number shall include
the plural and vise versa; in addition, the masculine gender shall include the
feminine and neuter counterparts. The Article headings or titles and the table
of contents shall not define, limit, extend or interpret the scope of this
Agreement or any particular Article. This Agreement shall be governed and
construed in accordance with the laws of the State of Hawaii without giving
effect to the conflicts of laws provisions thereof.
35. SEVERABILITY.
If any provision, sentence, phrase or word of this Agreement
or the application thereof to any person or circumstance shall be held invalid,
the remainder of this Agreement, or the application of such provision, sentence,
phrase, or word to persons or circumstances, other than those as to which it is
held invalid, shall not be affected thereby.
36. AGREEMENT IN COUNTERPARTS.
This Agreement may be executed in several counterparts, each
of which shall be deemed an original, but all of which shall constitute one and
the same instrument. In addition, this Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the signatures of each of the Partners to one of such counterpart
signature pages; all of such signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
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37. THIRD PARTIES.
The agreements, covenants and representations contained herein
are for the benefit of the parties hereto inter se and are not for the benefit
of any third parties including, without limitation, any creditors of the
Partnership.
38. POWER OF ATTORNEY.
Each Limited Partner hereby makes, constitutes and appoints
Xx. Xxxxxxx X. Xxxxxx, Xx. Xxxxxxxx X. Xxxxx and Xx. Xxx X. Xxxxx, severally,
with full power of substitution, his true and lawful attorneys-in-fact, for him
and in his name, place and stead and for his use and benefit to sign and
acknowledge, file and record, any amendments hereto among the Partners for the
further purpose of executing and filing on behalf of each Limited Partner, any
and all certificates of limited partnership or other documents necessary to
constitute the Partnership or to effect the continuation of the Partnership, the
admission or withdrawal of a general partner or a limited partner, the
qualification of the Partnership in a foreign jurisdiction (or amendment to such
qualification), the admission of substitute Limited Partners or the dissolution
or termination of the Partnership, provided such continuation, admission,
withdrawal, qualification, or dissolution and termination are in accordance with
the terms of this Agreement.
The foregoing power of attorney is a special power of attorney
coupled with an interest, is irrevocable and shall survive the death or legal
incapacity of each Limited Partner. It may be exercised by any one of said
attorneys by listing all of the Limited Partners executing any instrument over
the signature of the attorney-in-fact acting for all of them. The power of
attorney shall survive the delivery of an assignment by a Limited Partner of the
whole or any portion of his Unit. In those cases in which the assignee of, or
the successor to, a Limited Partner owning a Unit has been approved by the
Partners for admission to the Partnership as a substitute Limited Partner, the
power of attorney shall survive for the sole purpose of enabling the General
Partner to execute, acknowledge and file any instrument necessary to effect such
substitution.
This power of attorney shall not be affected by the subsequent
incapacity or mental incompetence of any Limited Partner.
39. ARBITRATION.
Any dispute arising out of or in connection with this
Agreement or the breach thereof shall be decided by arbitration in Honolulu,
Hawaii in accordance with the then effective commercial arbitration rules of the
American Arbitration Association, and judgment thereof may be entered in any
court having jurisdiction thereof.
40. CREDITORS.
None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Partnership.
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IN WITNESS WHEREOF, the parties have executed this Agreement
of Limited Partnership as of the day and year first above written.
GENERAL PARTNER:
LITHOTRIPTERS, INC., a North Carolina corporation
By: /s/ Xxxxxx Xxxxxxx
-----------------------------
Xxxxxx Xxxxxxx, M.D.,
President
ATTEST:
Xxxxxxx Xxxx
--------------------------
Secretary
[CORPORATE SEAL]
INITIAL LIMITED PARTNER:
Xxxxxxx X. Xxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxx, M.D.
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STATE OF NORTH CAROLINA )
)
COUNTY OF CUMBERLAND )
On this 1st day of April, 1996, before me, the undersigned Notary Public in
and for the County of Cumberland in the State of North Carolina, personally came
Xxxxxx Xxxxxxx, M.D., who, being by me duly sworn, said that he is President of
Lithotripters, Inc., the General Partner of Pacific Medical Limited Partnership,
that the seal affixed to the foregoing instrument in writing is the corporate
seal of the corporation, and that said writing was signed, sworn to, and sealed
by him in behalf of said corporation by its authority duly given. And the said
Xxxxxx Xxxxxxx, M.D. further certified that the facts set forth in said writing
are true and correct, and acknowledged said instrument to be the act and deed of
said corporation.
WITNESS my hand and notarial seal.
/s/ Xxxxxxx Xxxxx
-------------------------------------------
Notary Public
My commission expires:
0-0-00
---------------------------
XXXXX XX XXXXX XXXXXXXX )
)
COUNTY OF CUMBERLAND )
I, Xxxxxxx Xxxxx, a notary public, do hereby certify that Xxxxxxx X.
Xxxxxx, M.D., personally appeared before me this 1st day of April, 1996 and
acknowledged and swore to the due execution of the foregoing Limited Partnership
Agreement in his capacity as the initial limited partner.
/s/ Xxxxxxx Xxxxx
-------------------------------------------
Notary Public
My commission expires:
1-8-97
---------------------------
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COUNTERPART SIGNATURE PAGE
By signing this Counterpart Signature Page, the undersigned
acknowledges his or her acceptance of that certain Agreement of Limited
Partnership of Pacific Medical Limited Partnership, and his or her intention to
be legally bound thereby.
Dated this 1st day of April, 1996.
/s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Signature
Lithotripters, Inc
by Xxxxxx X. Xxxxxxx, VP and Treasurer
--------------------------------------------
Printed Name
STATE OF NORTH CAROLINA )
COUNTY OF CUMBERLAND )
BEFORE ME, the undersigned Notary Public in and for the State
and County set forth above, on the 1ST day of APRIL, 1996,
personally appeared ___________________, and, being by me first duly sworn,
stated that (s)he signed this Counterpart Signature Page for the purpose set
forth above and that the statements contained therein are true.
/s/ Xxxxxxx Xxxxx
-------------------------------------------
Signature of Notary Public
Xxxxxxx Xxxxx
-------------------------------------------
Printed Name of Notary
My Commission Expires:
1-8-97
---------------------------
[SEAL]
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SCHEDULE A
Schedule of Partnership Interests
PACIFIC MEDICAL LIMITED PARTNERSHIP
CONTRIBUTIONS OF CAPITAL TO THE PARTNERSHIP AND GUARANTIES
Cash Percentage
General Partner Contribution Interest
Lithotripters, Inc. $47,688 20%
Limited Partners
-----------------
Lithotripters, Inc. $47,250 21
Xxxxxxx Xxx 10,000 4
Xxxxxx Xxxxxxx 10,000 4
Xxxxxxx Xxxxx 10,000 4
Xxxx Xxxxx 10,000 4
Xxxxx Xxx 5,000 2
Xxxxxxx Xxxxxxxx 2,250 1
Xxxxx Xxxxxx 2,500 1
Xxxxxxxx Xxxxx 2,250 1
Xxxxxx Xxxxxx 2,250 1
Xxxxxxx Xxxxxx 2,250 1
Xxxxxx Xxxxxxx 2,250 1
Xxxxxxx Xxxxx 2,250 1
Xxxx Xxxxxxx 2,500 1
Xxxxxxx Xxxx 10,000 4
Xxxxx Kychenbecker 10,000 4
Xxxxxxx Xxxx Xxxxxxxx 10,000 4
Xxxxxxx Xxxxxxxxx 10,000 4
Xxx Xxxxx 2,250 1
Xxx Xxxxx 2,250 1
Xxx Xxxxxx 2,250 1
Xxxxxxx Xxxxxxx 2,250 1
Xxxxx Xxxxxx 2,250 1
J. Xxxxxx Xxxxx 2,250 1
Xxxxx X Xxxxxxxx 2,500 1
Xxxxx X. Xxxxxx 2,500 1
Xxxxx X. Xxxxxxx 2,500 1
Xxxx Xxxxx 2,250 1
Xxxxxxx Xxxx 2,250 1
Xxxxxx Xxxxxxx 2,250 1
Xxxx Xxxxxxxxx 2,500 1
Xxxxxx XxXxxxxx 2,250 1
Xxxxx Xxxxxxxxx 2,500 1
Xxxxx X. Xxxx 2,500 1
Xxxxxx X. Xxxxxxx 2,500 1
--------- ----
TOTAL: $238,438 100%
========= ====
