AGREEMENT OF LIMITED PARTNERSHIP
OF
TEXAS I PROSTATHERAPY LIMITED PARTNERSHIP
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, OR REGISTERED OR QUALIFIED UNDER
ANY STATE SECURITIES LAWS OR ACTS IN RELIANCE UPON EXEMPTIONS UNDER SUCH LAWS.
IN ADDITION, NO TRANSFERS OF LIMITED PARTNERSHIP INTERESTS MAY BE MADE WITHOUT
COMPLIANCE WITH THE RESTRICTIONS SET FORTH IN ARTICLE 16 HEREIN.
AGREEMENT
OF LIMITED PARTNERSHIP
OF
TEXAS I PROSTATHERAPY LIMITED PARTNERSHIP
TABLE OF CONTENTS
1. FORMATION..................................................1
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2. NAME.......................................................1
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3. OFFICES....................................................1
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4. PURPOSE....................................................1
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5. TERM.......................................................2
----
6. CERTAIN DEFINED TERMS......................................2
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7. CAPITAL CONTRIBUTIONS AND DILUTION OFFERINGS...............6
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8. CONDITIONS TO THE CAPITAL CONTRIBUTIONS OF CERTAIN LIMITED
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PARTNERS...................................................6
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9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GENERAL
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PARTNER....................................................7
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10. ADMISSION OF LIMITED PARTNERS..............................8
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11. CAPITAL ACCOUNTS...........................................8
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12. ALLOCATIONS................................................9
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13. DISTRIBUTIONS.............................................13
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l4. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................13
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15. LIMITED LIABILITY.........................................15
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16. TRANSFER OF INTERESTS AND ADMISSION OF PARTNERS...........16
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i
17. OPTIONAL PURCHASE OF LIMITED PARTNERSHIP INTERESTS ON
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CERTAIN EVENTS............................................20
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18. SALE, ASSIGNMENT OR OTHER TRANSFER OF THE GENERAL PARTNER'S
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INTEREST..................................................24
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19. TERMINATION OF THE SERVICES OF THE GENERAL PARTNER........25
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20. MANAGEMENT AND OPERATION OF BUSINESS......................26
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21. RESERVES..................................................29
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22. INDEMNIFICATION AND EXCULPATION OF THE GENERAL PARTNER
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.........................................................29
23. DISSOLUTION OF THE PARTNERSHIP............................29
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24. DISTRIBUTION UPON DISSOLUTION.............................31
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25. BOOKS OF ACCOUNT, RECORDS AND REPORTS.....................31
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26. NOTICES...................................................32
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27. AMENDMENTS................................................33
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28. LIMITATIONS ON AMENDMENTS.................................33
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29. MEETINGS, CONSENTS AND VOTING.............................33
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30. SUBMISSIONS TO THE LIMITED PARTNERS.......................34
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31. ADDITIONAL DOCUMENTS......................................34
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32. SURVIVAL OF RIGHTS........................................34
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33. INTERPRETATION AND GOVERNING LAW..........................34
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34. SEVERABILITY..............................................34
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35. AGREEMENT IN COUNTERPARTS.................................35
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36. THIRD PARTIES.............................................35
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ii
37. POWER OF ATTORNEY.........................................35
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38. ARBITRATION...............................................36
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39. CREDITORS.................................................36
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SCHEDULES
Schedule A - Schedule of Partnership Interests
iii
AGREEMENT
OF LIMITED PARTNERSHIP
OF
TEXAS I PROSTATHERAPY LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP (the "Agreement") is
made as of December 31, 1999, by and among PROSTATHERAPIES, INC., a Delaware
corporation (the "General Partner"), and persons listed on Schedule A attached
hereto as the Limited Partners.
1. FORMATION.
---------
The Partnership was formed pursuant to the filing in the
Office of the Secretary of State of Texas on or about August 11, 1997 of a
Certificate of Limited Partnership in accordance with the provisions of the Act.
2. NAME.
----
2.1 The name of the Partnership is "Texas I Prostatherapy 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.
3. OFFICES.
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3.1 The initial principal office of the Partnership shall be
at 0000 Xxxxxxx xx Xxxxx Xxxxxxx, Xxxxx X-000, Xxxxxx, Xxxxx 00000, or at such
other place as the General Partner may, from time to time, designate by notice
to the Limited Partners.
3.2 The Partnership may have such additional offices as the
General Partner may, from time to time, deem necessary or advisable.
4. PURPOSE.
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The purpose and business of the Partnership shall be: (i) to
acquire and operate one or more Prostatron(R) Mobile Systems for the treatment
of BPH primarily in the Service Area or in other location(s) as the General
Partner may determine, in its sole discretion, to be in the best interests of
the Partnership; (ii) to acquire and operate in the future any other urological
device(s) or equipment, provided that such equipment as of the date of
acquisition by the Partnership has received FDA premarket approval; (iii) to
acquire an interest in any business entity, including,
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without limitation, a limited partnership, limited liability company or
corporation, that engages in any business activity described in this Article 4;
and (iv) to engage in any and all activities incidental or related to the
foregoing, upon and subject to the terms and conditions of this Agreement.
5. TERM.
----
The Partnership shall terminate on December 31, 2047, 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 Texas Revised 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.
BHP. Benign prostatic hyperplasia.
Capital Account. The Partnership capital account of a Partner as computed
pursuant to Article 11 of this Agreement.
Capital Contributions. All capital contributions made by a
Partner or his or her 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.
Code. The Internal Revenue Code of 1986, as amended, or corresponding
provisions of subsequent, superseding revenue laws.
Dilution Offering. As provided in Article 7.4 of this
Agreement, the future offering of additional limited partnership interests in
the Partnership as determined by the General Partner. Except as otherwise
provided in Article 7.4, any successful Dilution Offering will proportionately
reduce the Percentage Interests of the then current Partners in the Partnership.
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Domestic Proceeding. Any divorce, annulment, separation or similar domestic
proceeding between a married couple.
Equipment. The equipment used in the operation of the
Prostatron(R) Mobile System, including the mobile coach, the Prostatron(R) and
miscellaneous medical equipment and supplies, and any similar additional
equipment acquired by the Partnership in the future.
FDA. The United States Food and Drug Administration.
General Partner. The general partner of the Partnership, Prostatherapies,
Inc., a Delaware corporation.
Initial Limited Partner. Xxxxx Xxxxxxx, M.D., a resident of Texas. 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 Limited
Partner in accordance with the provisions of this Agreement.
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 Percentage Interests in the Partnership
held by the Limited Partners.
Memorandum. The Confidential Private Placement Memorandum of the
Partnership dated June 22, 1999, 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.
Offering. The offer to potential investors of 320 Units pursuant to the
Memorandum.
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Partners. The General Partner and the Limited Partners, collectively, where
no distinction is required by the context in which the term is used herein.
Partnership. Texas I Prostatherapy Limited Partnership, a Texas 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 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 initially in the case of a Limited Partner by
reference to his or her Unit ownership based upon the Limited Partners holding
an aggregate 80% Percentage Interest in the Partnership, with each initial Unit
sold representing an initial 0.25% interest. The General Partner will initially
own a 20% Percentage Interest in the Partnership. A Partner's Percentage
Interest may be reduced by a future Dilution Offering. The Partners' Percentage
Interests in the Partnership as of the date hereof are as set forth in Schedule
A attached hereto. Any future adjustments in the Partners' Percentage Interests,
due to future Dilution Offerings or otherwise, will also be reflected by
amendments to Schedule A.
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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.
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.
Prostatron(R). The Prostatron(R) Praktis(R) Model
transurethral microwave thermotherapy device for treatment of BPH which is
manufactured by EDAP Technomed, Inc.. The Prostratron(R) will be acquired by the
Partnership with the proceeds of this Offering and the General Partner's initial
cash contributions upon the successful closing of this Offering.
Prostatron(R)Mobile System. The mobile coach with the installed and
operational Prostatron(R)and ultrasound system.
Sales Agency Agreement. The sales agency agreement through which MedTech
Investments, Inc., an Affiliate of the General Partner and a broker-dealer
company registered with the Securities and Exchange commission and a member of
the National Association of Securities Dealers, Inc. shall offer and sell up to
320 Units pursuant to the Memorandum.
Sales Commission. The $75 sales commission paid to MedTech Investments,
Inc. for each Unit sold.
Service. The Internal Revenue Service.
Service Area. The geographic region in which Partnership
operations are expected to be conducted and which is anticipated to consist of
various regions in the State of Texas. The General Partner has sole discretion
to expand the service area.
TUMT. Transurethral microwave thermotherapy.
Units. The 320 equal limited partner interests in the Partnership offered
pursuant to the Memorandum for a price per Unit of $1,875 in cash.
Year. An annual accounting period ending on December 31 of each year during
the term of the Partnership.
7. CAPITAL CONTRIBUTIONS AND DILUTION OFFERINGS.
--------------------------------------------
7.1 General Partner Contribution. On or before the date of
this Agreement, the General Partner will contribute to the capital of the
Partnership cash in the amount equal to 20% (up to $150,000) of the total cash
contributed to the Partnership by the Partners in the Offering made pursuant to
the Memorandum.
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7.2 Limited Partner Contribution. Each Limited Partner hereby
agrees to contribute and shall contribute to the capital of the Partnership on
the date of his or her admission to the Partnership the cash amount set forth
opposite his or her name on Schedule A attached hereto.
7.3 No Interest. Except as otherwise provided herein, no interest shall be
paid on any contribution to the capital of the Partnership.
7.4 Dilution Offerings. If the General Partner, in its sole
discretion, determines that it is in the best interest of the Partnership, the
General Partner may, from time to time, offer, sell and issue, for and on behalf
of the Partnership, additional limited partnership interests in the Partnership
(a "Dilution Offering") to investors who are not already Limited Partners
("Qualified Investors"). The primary purpose of any Dilution Offering would be
to raise additional capital for any legitimate Partnership purpose as set forth
in Article 4. Any limited partnership interests offered by the Partnership in a
Dilution Offering shall be sold in the manner and according to the terms
prescribed in the sole discretion of the General Partner; provided, however,
that any additional limited partnership interests offered in a Dilution Offering
will be sold for a price no lower than the highest price for which proportionate
limited partnership interests in the Partnership have been previously sold by
the Partnership unless otherwise determined by a vote of the General Partner and
a Majority in Interest of the Limited Partners. Notwithstanding the above, in
the event of a Dilution Offering, the General Partner may elect, in its sole
discretion, to prevent dilution of its Percentage Interest by either
contributing additional capital to the Partnership or purchasing additional
limited partnership interests in any Dilution Offering. Limited Partners shall
have no right to purchase additional limited partner interests in any Dilution
Offering or to make additional capital contributions or take any other action to
prevent dilution of their Percentage Interest. Any sale of additional limited
partnership interests will result in the proportionate dilution of the
Percentage Interests of the existing Partners. Any investor acquiring a limited
partnership interest in a Dilution Offering shall agree to be bound by the terms
of this Agreement, and shall be automatically admitted as a Limited Partner of
the Partnership. Any adjustment in the Partners' Percentage Interests resulting
from a Dilution Offering shall be set forth on an amended Schedule A to be
attached hereto.
8. CONDITIONS TO THE CAPITAL CONTRIBUTIONS OF CERTAIN
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LIMITED PARTNERS.
----------------
The obligations of any Limited Partners acquiring their
Partnership Interests in the Offering or a Dilution Offering 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 9 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.
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9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
------------------------------------------------
GENERAL PARTNER.
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9.1 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
Texas;
(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) Except as disclosed in the Memorandum or
documentation prepared in connection with a Dilution Offering, no
material breach or default adverse to the Partnership exists under the
terms of any other material agreement affecting the Partnership; and
(d) The General Partner is a Delaware corporation formed and
existing under the laws of the State of Delaware.
9.2 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 and the Limited Partners;
(b) Except as provided in Article 18, it will serve as the General
Partner of the Partnership until the Partnership is terminated without
reconstitution; and
(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.
10. ADMISSION OF LIMITED PARTNERS.
-----------------------------
The General Partner may permit the offer and sale of limited
partnership interests on the terms and conditions provided in the Memorandum or
future Dilution Offerings and may admit
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persons subscribing for interests as Limited Partners in the Partnership on the
terms and conditions set forth in this Article 10.
(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 or her 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
(e) Said person, upon request by the General Partner,
shall pay such reasonable expenses as may be incurred in connection
with its admission as a Limited Partner.
11. CAPITAL ACCOUNTS.
----------------
A Capital Account shall be established for each Partner and
shall at all times be determined and maintained in accordance with 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 or her
Capital Account or to receive any distribution from the Partnership, except as
provided in Articles 13 and 24.
(a) Each Partners' Capital Account shall be increased by:
(i) The amount of his or her Capital Contribution pursuant to
Article 7; and
(ii) The amount of Profits allocated to him or her pursuant to
Article 12; 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 12 hereof) of
any income or gain exempt from tax.
(b) Each Partner's Capital Account shall be decreased by:
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(i) The amount of Losses allocated to him or her pursuant to
Article 12; and
(ii) The amount of Partnership Cash Flow,
Partnership Sales Proceeds and Partnership Refinancing
Proceeds distributed to him or her pursuant to Article 13; 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 shall be determined in the same manner as such
Partner's share of Profits and Losses allocated pursuant to
Article 12.
12. ALLOCATIONS
(a) Nonrecourse Deductions. Nonrecourse Deductions shall be
allocated among the Partners in accordance with their respective
Percentage Interests.
(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 Regulations Section 1.704-2(i).
(c) Profits and Losses.
(i) The Profits and Losses of the
Partnership shall be allocated among the Partners in
accordance with their respective Percentage Interests. 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 12(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
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application of the preceding sentence shall be allocated to
the General Partner. For purposes of this Article 12(c), a
Partner's Capital Account shall be treated as reduced by
Qualified Income Offset Items as provided in Article
12(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 12(d), the General Partner
shall be allocated at least 1% of all items of income, gain,
loss, deduction or credit.
(d) Special Allocations. The following special allocations shall
be made:
(i) Partnership 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 12(d)(i) is intended to comply with
the minimum gain chargeback requirement in such Section of the
Regulations and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback.
Notwithstanding any other provision of this Article 12 except
Article 12(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
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determined in accordance with Treasury Regulations Section
1.704- 2(i)(4). This Article 12(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
12(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 12 have been
tentatively made as if this Article 12(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 Regulation 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 and are acquired in the
Offering in proportion to the respective capital contributions
represented by such Units (i.e., $75 in Sales Commissions per
each such Unit). The purpose of this Article 12(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 12
and 13 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.
(ii) Capital Accounts shall be reduced by
Distributions of Partnership Cash Flow under Article 13(a).
(iii) Capital Accounts shall be reduced by
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Distributions of Partnership Sales Proceeds and Partnership
Refinancing Proceeds under Article 13(b).
(iv) Capital Accounts shall be increased by
any Minimum Gain Chargeback under Articles 12(d)(i) and (ii).
(v) Capital Accounts shall be increased by any Qualified Income
Offset under Article 12(d)(iii).
(vi) Capital Accounts shall be reduced by
allocations of Nonrecourse Deductions under Article 12(a).
(vii) Capital Accounts shall be reduced by
allocations of Partner Nonrecourse Deductions under Article
12(b).
(viii) Capital Accounts shall be increased
by allocations of Profits under Article 12(c).
(ix) Capital Accounts shall be reduced by
allocations of Losses under Article 12(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 12(d)(i), (ii) and (iii) had not
occurred.
(f) Allocations Between Transferor and Transferee. In
the event of the transfer (other than the pledges of the General
Partner's interest permitted by Article 18 or Permitted Pledges
described in Article 16.2(b)) 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 the General
Partner may elect, in its sole discretion, to 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 term
is used in
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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.
13. DISTRIBUTIONS.
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(a) Distribution of Partnership Cash Flow.
Partnership Cash Flow shall be distributed to the Partners within 60
days after the end of each Year, or earlier in the discretion of the
General Partner, in proportion to their respective Percentage Interests
at the time of distribution.
(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, in proportion to
their respective Percentage Interests at the time of distribution.
(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 24.
l4. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.
------------------------------------------
14.1 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
Partnership may, however, contract with one or more Limited Partners to act as
the local medical director(s) of the Prostatron(R) Mobile System. No Limited
Partner may withdraw from the Partnership except as expressly permitted herein.
14.2 Operation of Prostatron(R) Mobile System. The Limited
Partners shall not operate or utilize the Partnership Prostatron(R) Mobile
System or other Partnership equipment except pursuant to (i) an agreement with
the Partnership; or (ii) any other arrangement specifically approved by the
General Partner.
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14.3 Outside Activities. The Limited Partners agree that they
owe fiduciary duties to the Partnership and, as a consequence, each Limited
Partner (that is not the General Partner or an Affiliate of the General Partner)
agrees that (s)he shall not engage in "Outside Activities" (as defined below) in
the "Market Area" (as defined below) while (s)he is a Limited Partner in the
Partnership and shall otherwise be subject to the provisions of this Article
14.3. The phrase "Outside Activities" means directly or indirectly owning,
leasing or subleasing a TUMT device (or any similar equipment or competing
devices used for treating BPH) or any other therapeutic equipment acquired by
the Partnership; provided that an ownership interest in the General Partner or
an Affiliate of the General Partner shall not constitute an Outside Activity.
Prohibited indirect ownership shall include without limitation the direct or
indirect ownership of any interest in a business venture (through stock
ownership, partnership interest ownership, ownership by or through a close
family member, or as otherwise determined in good faith by the General Partner)
involving the ownership, purchase, lease, sublease, promotion, management or
operation of a TUMT device (or similar equipment or competing devices used for
treating BPH) or other competing device or equipment, unless the General Partner
determines that such activity by the Limited Partners is not detrimental to the
best interests of the Partnership. Notwithstanding the above, Outside Activities
shall not include (i) ownership of less than 1% of the capital stock (calculated
on a fully diluted basis) of a corporation whose stock is publicly owned or
regularly traded on any public exchange, (ii) any ownership interest in an
entity engaging in an Outside Activity acquired before the date hereof;
provided, that the Limited Partner may not increase or enhance any such
previously held investment during the term of the Partnership, and (iii) any
other activity determined by the General Partner, in its sole discretion, not to
be detrimental to the best interests of the Partnership.
Upon the termination or transfer of a Limited Partner's
interest in the Partnership for any reason, including a transfer pursuant to
Article 17.3 hereof, the withdrawing Limited Partner shall not, for a period of
two (2) years following the date of withdrawal, engage in any Outside Activities
in any "Market Area" in which the Partnership is transacting business or within
the prior twelve months has transacted business (the "Restricted Facilities").
For the purposes of this Article 14.3, the term "Market Area" shall mean (i) the
area within a fifty (50) mile radius of any Restricted Facility, but if such
area is determined by a court of competent jurisdiction to be too broad, then it
shall mean (ii) the area within a thirty (30) mile radius of any Restricted
Facility, but if such area is determined by a court of competent jurisdiction to
be too broad then it shall mean (iii) the area within a fifteen (15) mile radius
of any Restricted Facility.
In the event a Limited Partner wishes and intends to engage in
an Outside Activity in a Market Area, he or she must provide written notice of
such intent to the General Partner prior to engaging in the Outside Activity.
The written notice shall be deemed an election by the Limited Partner to
withdraw from the Partnership (the "Notice of Withdrawal"), and shall give the
General Partner the purchase rights as provided in Article 17.3 hereof. After
the Notice of Withdrawal, the former Limited Partner may engage in an Outside
Activity in the Market Area only after waiting the period of two years specified
in this Article 14.3. In the event of breach of the waiting period, the
Partnership shall be entitled to any remedy at law or equity with respect to
such breach, including without limitation an injunction or suit for damages.
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If a Limited Partner during his or her participation in the
Partnership engages in an Outside Activity in a Market Area without first
notifying the General Partner in violation of this Article 14.3, the Limited
Partner shall be deemed to have given a Notice of Withdrawal on the date the
General Partner first becomes aware of the Limited Partner's Outside Activity in
the Market Area. Upon receiving a Limited Partner's Notice of Withdrawal or
equivalent thereof, the Partnership may invoke the purchase rights provided in
Article 17.3 and shall be entitled to any other remedy at law or equity
including without limitation an injunction or suit for damages.
14.4 Disclosure of Confidential Information. Each Limited
Partner acknowledges and agrees that his or her participation in the Partnership
under this Agreement necessarily involves his or her understanding of and access
to certain trade secrets and other confidential information pertaining to the
business of the Partnership. Accordingly, each Limited Partner (other than the
General Partner and its Affiliates that may also hold Limited Partner
Partnership Interests) agrees that at all times during his or her participation
in the Partnership as a Limited Partner and thereafter, (s)he will not, directly
or indirectly, without the express written authority of the Partnership, unless
required by law or directed by a applicable legal authority having jurisdiction
over the Limited Partner, disclose or use for the benefit of any person,
corporation or other entity (other than the Partnership), or the Limited
Partner, (i) any trade, technical, operational, management or other secrets, any
patient or customer lists or other confidential or secret data, or any other
proprietary, confidential or secret information of the Partnership or (ii) any
confidential information concerning any of the financial arrangements, financial
condition, hospital or physician contracts, third party payor arrangements,
quality assurance and outcome analysis programs, competitive status, customer or
supplier matters, internal organizational matters, technical abilities, or other
business affairs of or relating to the Partnership. The Limited Partners (other
than the General Partner and its Affiliates that may also hold Limited Partner
Partnership Interests) acknowledge that all of the foregoing constitutes
proprietary information, which is the exclusive property of the Partnership. In
the event of breach of this Article 14.4 as determined by the General Partner,
the Partnership shall be entitled to any remedy at law or equity with respect to
such breach, including without limitation, an injunction or suit for damages.
15. 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 or her capacity as such, be bound by, or personally
liable for, any expense, liability or obligation of the Partnership except to
the extent of his or her (i) interest in the Partnership and (ii) obligation to
return distributions made to him or her under certain circumstances as required
by the Act.
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16. TRANSFER OF INTERESTS AND ADMISSION OF PARTNERS.
-----------------------------------------------
16.1 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 (but does not include
the issuance of new Partnership Interests pursuant to a Dilution
Offering);
(b) Except as otherwise provided herein, the General Partner
shall not at any time transfer or assign its interest or obligation as
General Partner;
(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 16.2 or 17;
(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 16.3 or otherwise provided
by law and may not be admitted to the Partnership as a Limited Partner
except as provided in Article 16.4 or as a General Partner except as
provided in Article 16.5;
(e) Notwithstanding any provision herein to the
contrary, the Partnership Agreement shall in no way restrict the
issuance or transfers of stock of the General Partner or the merger of
the General Partner with another person or entity; and
(f) Notwithstanding any provision herein to the
contrary, the issuance of Partnership Interests pursuant to a Dilution
Offering and the admission of new Limited Partners pursuant to a
Dilution Offering shall be governed by the provisions of Article 7.4 of
this Agreement.
16.2 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.
(b) The General Partner shall not approve any
transfer of a Partnership Interest, except a pledge of any Partnership
Interest by the General Partner to any bank, insurance company or other
financial institution to secure payment of indebtedness (a "Permitted
Pledge"), or otherwise unless the proposed transferee shall have
furnished the General Partner with a sworn statement that:
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(i) The proposed transferee proposes to acquire his or her
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) Other than in the case of a Permitted Pledge, 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 require
registration under federal or applicable state securities laws or
regulations.
16.3 Rights of Transferee. Unless admitted to the Partnership
in accordance with Article 16.4, 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 or her predecessor in interest,
except that (s)he shall be entitled to receive and be credited or debited with
his or her proportionate share of Partnership income, gains, Profits, Losses,
deductions, credits or distributions.
16.4 Admission of Limited Partners. Except as otherwise
provided in Article 17, the 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 of
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 properly executed power of attorney substantially identical
to that contained in Article 37;
(e) Such other documents or instruments as may be required in
order to effect his or her admission as a Limited Partner; and
(f) Payment of such reasonable expenses as may be incurred in
connection with his or her admission as a Limited Partner.
16.5 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 consent of both the General Partner
and a Majority in Interest of the Limited Partners, which consent 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 37;
(f) Such other documents or instruments as may be required in
order to effect his, her or its admission as a general partner; and
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(g) Payment of such reasonable expenses as may be incurred in
connection with his, her or 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 16.5 except for subparagraph 16.5(a). As long as the transferee
either controls or 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.
16.6 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
16.5, and may for this purpose exercise the power of attorney delivered to the
General Partner pursuant to Article 16.5 or 37. 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 16.4,
16.5 or 37.
16.7 Fundamental Changes. In the event a plan is approved by
the General Partner and a Majority in Interest of the Limited Partners providing
for the merger or consolidation of the Partnership with another person or
entity, or the sale of all or substantially all of the Partnership Interests,
including without limitation the exchange of Partnership Interests for equity
interests in another person or entity or for cash or other consideration or
combination thereof, then and in such event, the Limited Partners shall be
obligated to take or refrain from taking, as the case may be, such actions as
the plan may provide, including, without limitation, executing such instruments,
and providing such information as the General Partner shall reasonably request.
Any plan described in this Article 16.7 may also effect an amendment to the
Partnership Agreement or the adoption of a new partnership agreement as provided
in Section 2.11 of the Act. The plan may also provide that the General Partner
and its Affiliates shall receive fees for services rendered in connection with
the operation of the Partnership or any successor entity following the
consummation of the transactions described in the plan, and neither the
Partnership nor the Partners shall have any right by virtue of this Agreement in
the income derived therefrom. Any securities or other consideration to be
distributed to the Partners pursuant to the plan shall be distributed in the
manner set forth in Article 24(c) as though the Partnership were being
liquidated. For this purpose only, the fair market value of the securities or
other consideration to be received pursuant to the plan shall be treated as
"Profits" and the capital accounts of the Partners shall be increased in the
manner provided in Article 11(a)(ii). No Partner shall be entitled to any
dissent, appraisal or similar rights in connection with a plan contemplated by
this Article 16.7.
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16.8 Withdrawal of Initial Limited Partner. Upon the date the
first Limited Partner is admitted to the Partnership in accordance with Article
10 of this Agreement, the Initial Limited Partner shall withdraw from the
Partnership, and thereupon his Capital Contribution shall be returned and his
Partnership Interest canceled and reallocated to the Limited Partners.
17. OPTIONAL PURCHASE OF LIMITED PARTNERSHIP INTERESTS
--------------------------------------------------
ON CERTAIN EVENTS.
-----------------
17.1 Death. 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.
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 17.6 of this Agreement and on the terms and
conditions provided in Article 17.7 of this Agreement. The General Partner shall
have a period of thirty (30) days following the date of notice of the death of
the Limited Partner (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. The General
Partner, in its sole discretion, may elect to assign its rights to purchase the
Partnership Interest of the deceased Limited Partner under this Article 17.1 to
the Partnership and, in such case, the Partnership shall have the same rights as
provided for the General Partner in this Article 17.1.
17.2 Bankruptcy, Insolvency or Assignment for Benefit of
Creditors of a Limited Partner. 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
(the "Notice of Insolvency") 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 General
Partner shall have the option to purchase at the Closing (as defined below) the
Partnership Interest of the insolvent Limited Partner (which the 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) at the
price determined in the manner provided in Article 17.6 of this Agreement and on
the terms and conditions provided in Article 17.7 of this Agreement. The General
Partner shall have a period of thirty (30) days following the date of the Notice
of Insolvency (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
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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.
The General Partner, in its sole discretion, may elect to assign its rights to
purchase the Partnership Interest of an insolvent Limited Partner under this
Article 17.2 to the Partnership and, in such case, the Partnership shall have
the same rights as provided for the General Partner in this Article 17.2.
17.3 Breach of Article 14.3. In the event the General Partner
either receives a Notice of Withdrawal as provided in Article 14.3 or receives
notice of a breach of Article 14.3 by or with respect to a Limited Partner (the
"Competing Limited Partner"), the General Partner may elect, in its sole
discretion, to treat such event as a default under this Agreement and enforce
the provisions of this Article 17.3. If the General Partner elects to enforce
the provisions of this Article 17.3, the General Partner shall give written
notice of such election (the "Notice of Default") to the Competing Limited
Partner within 180 days of the date the General Partner first received the
Notice of Withdrawal or notice of the defaulting event. The General Partner
shall have the option to purchase at the Closing (as defined below) the
Partnership Interest of the Competing Limited Partner (which the Competing
Limited Partner shall then become obligated to sell) at the price determined in
the manner provided in Article 17.6 of this Agreement and on the terms and
conditions provided in Article 17.7 of this Agreement. The General Partner shall
have a period of thirty (30) days following the date it sends the Notice of
Default (the "Option Period") within which to notify in writing the Competing
Limited Partner, whether the [General Partner] wishes to purchase all or a
portion of the Partnership Interest of the Competing Limited Partner. If the
General Partner does not elect to purchase the entire Partnership Interest of
the Competing 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 Competing Limited Partner pursuant to the terms
of this Agreement. The General Partner, in its sole discretion, may elect to
assign its rights to purchase the Partnership Interest of a Competing Limited
Partner under this Article 17.3 to the Partnership and, in such case, the
Partnership shall have the same rights as provided for the General Partner in
this Article 17.3.
17.4 Domestic Proceeding. In the event that a spouse of a
Limited Partner commences against a Limited Partner, or a Limited Partner is
named in, a Domestic Proceeding, the Limited Partner shall give written notice
(the "Notice of Domestic Proceeding") to the General Partner of the commencement
of any such proceeding within five days of the first notice to him of such
commencement. The General Partner shall have the option to purchase at the
Closing (as defined below) the Partnership Interest of the Limited Partner
involved in the Domestic Proceeding (which the Limited Partner shall then become
obligated to sell), at the price determined in the manner provided in Article
17.6 of this Agreement and on the terms and conditions provided in Article 17.7
of this Agreement. The General Partner shall have a period of thirty (30) days
following the date of the Notice of Domestic Proceeding (the "Option Period")
within which to notify in writing the Limited Partner involved in the Domestic
Proceeding, whether the General Partner
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wishes to purchase all or a portion of the Partnership Interest of such Limited
Partner. If the General Partner does not elect to purchase the Partnership
Interest of the Limited Partner involved in the Domestic Proceeding 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 such Limited Partner
pursuant to the terms of this Agreement. The General Partner, in its sole
discretion, may elect to assign its rights to purchase the Partnership Interest
of the Limited Partner involved in the Domestic Proceeding under this Article
17.4 to the Partnership and, in such case, the Partnership shall have the same
rights as provided for the General Partner in this Article 17.4.
17.5 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 (e.g., the enactment or application of
prohibitory physician self-referral legislation against the Partnership or its
Partners), the General Partner shall promptly either, in its sole discretion,
(i) take the steps outlined in this Article 17.5 to divest the Limited Partners
of their Partnership Interests, or (ii) dissolve the Partnership as provided in
Article 23.1(e). If the General Partner chooses option (i), it shall deliver a
written notice to all of the Limited Partners (the "Notice of Election") and
purchase such Partnership Interests for its own account. The purchase price to
be paid for each Partnership Interest shall be determined in the manner as
provided in Article 17.6 and shall be on the terms and conditions as provided in
Article 17.7. The transfer of the Partnership Interests, the payment of the
purchase price and the assumption of the Limited Partners' obligations under
their respective Guaranties (as provided in Article 17.6) 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. 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 17.5. The foregoing power of attorney shall not be
affected by the subsequent incapacity, mental incompetence, dissolution or
bankruptcy of any Limited Partner.
17.6 Purchase Price. The purchase price to be paid for the
Partnership Interest of any Limited Partner whose interest is being purchased
pursuant to the provisions of Articles 17.1, 17.2, 17.3, 17.4 or 17.5 (the
"Selling Limited Partner") shall be determined in the manner provided in this
Article 17.6. The purchase price for a Partnership Interest purchased pursuant
to the provisions of Articles 17.1, 17.2, 17.3, 17.4 or 17.5 shall be an amount
equal to the Limited Partner's share of the Partnership's book value, if any, as
reflected by the Limited Partner's capital account in the Partnership
(unadjusted for any appreciation in Partnership assets and as reduced by
depreciation deductions claimed by the Partnership for tax purposes) as of the
Valuation Date. The Valuation Date means the last day of the month immediately
preceding the month in which occurs: (i) the death of a Selling Limited Partner,
in the case of a purchase by reason of death; (ii) the bankruptcy or insolvency
of a Selling Limited Partner in the case of a purchase by reason of such
bankruptcy or insolvency; (iii) the Notice of Withdrawal or breach of Article 14
as provided in Article 17.3 in the case of a purchase by reason thereof; (iv)
the commencement of the Domestic Proceeding, in the case of a purchase by reason
thereof; or (v) the Notice of Election as provided in Article 17.5, in the
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in the case of a purchase by reason thereof. Any Limited Partner whose
Partnership Interest is purchased pursuant to the provisions of Article 17.1,
17.2, 17.3, 17.4 or 17.5 shall be entitled only to the purchase price which
shall be paid at the Closing in cash (or by certified or cashier's check) and
shall not be entitled to any Partnership distributions made after the Valuation
Date. The Partnership shall have the right to deduct the amount of any such
distributions made to the Selling Limited Partner after the Valuation Date from
the purchase price. The transfer of a Partnership Interest of a Selling Limited
Partner shall be deemed to occur as of the valuation Date, and the Selling
Limited Partner shall have no voting or other rights as a Limited Partner after
such date. Such price is likely to be considerably less than the fair market
value of the Limited Partner's interest in the Partnership and may not provide
any positive return on the Limited Partner's investment. Because Partnership
losses, depreciation deductions and Distributions reduce capital accounts, and
because appreciation in Partnership assets is not reflected in capital accounts,
it is the opinion of the General Partner that the option purchase price will be
nominal in amount.
17.7 Closing.
-------
17.7.1 Closing of Purchase and Sale. The Closing of any
purchase and sale of a Partnership Interest pursuant to Article 17.1,
17.2, 17.3, 17.4 or 17.5 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 17.1 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 occurrence of one of the events described in Article
17.2, 17.3, 17.4 or 17.5 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
later to occur of:
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(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, although not necessary to effect the transfer, the
Selling Limited 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 Selling Limited Partner's
entire Partnership Interest thus purchased, free and clear from any
liens or encumbrances or rights of others therein. The parties
acknowledge that occurrence of any of the triggering events described
in Article 17.1, 17.2, 17.3, 17.4 or 17.5 and compliance with all the
Articles of this Agreement, except the execution of the transfer
documents by the Selling Limited Partner as provided above in this
Article 17.7.1, are sufficient to effect the complete transfer of the
Selling Limited Partner's Partnership Interest and the Selling Limited
Partner shall be deemed to consent to admission of the transferee as a
substitute Limited Partner. Notwithstanding the date of the Closing or
whether a Closing is successfully held, the transfer of a Partnership
Interest of a Selling Limited Partner shall be deemed to occur as of
the Valuation Date as defined in Article 17.6. The deemed transfer is
effective regardless of whether the Selling Limited Partner performs
the duties set forth in this Article 17.7.1.
(c) In case of a purchase occurring by reason of the
occurrence of an event described in Article 17.5, the Closing shall be
held as soon as possible following the determination of the purchase
price.
17.7.2 Terms and Conditions of Purchase. The Partnership
Interest of a Limited Partner shall not be transferred to any Partner
unless the requirements of Articles 16.2 and 16.4 (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. SALE, ASSIGNMENT OR OTHER TRANSFER OF THE GENERAL
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PARTNER'S INTEREST.
------------------
18.1 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.
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18.2 If the General Partner makes a Transfer (other than a
mortgage, pledge or hypothecation) 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.
18.3 No Transfer by the General Partner shall be permitted unless:
(a) 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 purposes or will cause the
termination or dissolution of the Partnership under state law; and
(b) 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.
Notwithstanding the foregoing provisions of this Article 18.3,
the General Partner may pledge its interest in the Partnership to any bank,
insurance company or other financial institution to secure payment of
indebtedness.
19. 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.
20. MANAGEMENT AND OPERATION OF BUSINESS.
------------------------------------
20.1 All decisions with respect to the management of the
business and affairs of the Partnership shall be made by the General Partner.
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20.2 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.
20.3 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
or other Partnership property, legal and accounting fees and expenses, salaries
of employees of the Partnership, consulting and quality assurance fees paid to
independent contractors, insurance premiums and interest.
20.4 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 and 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 conduct the Offering and any Dilution Offering on behalf
of the Partnership;
(b) To acquire on behalf of the Partnership (i) one
or more Prostatron(R) Mobile Systems; (ii) any other urological
device(s) or equipment so long as such device has FDA premarket
approval at the time it is required by the Partnership; or (iii) any
other assets or equipment or an interest in another entity consistent
with the purposes of the Partnership as provided in Article 4
(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 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 exercise the option of the General Partner or the
Partnership to purchase a Limited Partner's Partnership Interest
pursuant to Article 17;
-26-
(e) To determine the travel itinerary and site locations for the
Prostatron(R)Mobile System or other Partnership technology;
(f) 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;
(g) 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;
(h) To institute and defend actions at law or in equity;
(i) 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;
(j) To execute, acknowledge and deliver any and all instruments
which may be deemed necessary or convenient to effect the foregoing;
(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 and provide materials, including, but
not limited to, management services, professional services, accounting
services, quality assessment services, legal services, marketing
services, maintenance services or provide materials; and if such person
is a Partner or an Affiliate of a Partner, (s)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 Partnership's
business for a monthly fee equal to the greater of 7.5% of net
Partnership Cash Flow per month or $8,000 per month (beginning as of
the Closing Date but not to be paid for more than four months before
the month in which Partnership's treatment
-27-
operations commence). All costs incurred by the General Partner under
the Management Agreement shall be paid or reimbursed by the Partnership
directly. The Partnership may also contract with healthcare facilities
and/or qualified physicians desiring to use its Prostatron(R) Mobile
System for the treatment of patients. Owning an interest in the
Partnership shall not be a condition to using the Prostatron(R) Mobile
System. 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 fixed-base or mobile TUMT unit, 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.
20.5 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 the
Partnership's Certificate of Limited Partnership;
(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.
21. 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.
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22. INDEMNIFICATION AND EXCULPATION OF THE GENERAL
PARTNER.
22.1 The General Partner is accountable to the Partnership as
a fiduciary and consequently must exercise good faith and integrity in handling
Partnership affairs. 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.
22.2 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.
23. DISSOLUTION OF THE PARTNERSHIP.
------------------------------
23.1 The Partnership shall be dissolved and terminated and its
business wound up upon the occurrence of any one of the following
events:
(a) The expiration of its term on December 31, 2047;
(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 determination of the General Partner that the Partnership
should be dissolved;
(d) The occurrence of an event described in a plan
approved by the General Partner and a Majority in Interest of the
Limited Partners pursuant to Article 16.7 resulting in the dissolution
of the Partnership;
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(e) The election of the General Partner to dissolve the
Partnership following the occurrence of an event described in Article
17.5;
(f) Except as otherwise provided in any plan approved
by the General Partner and a Majority in Interest of the Limited
Partners pursuant to Article 16.7, the sale, exchange or other
disposition of all or substantially all of the property of the
Partnership without making provision for the replacement thereof; or
(g) 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 Texas.
23.2 Notwithstanding the provisions of Article 23.1, 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, a Majority in Interest of the Limited
Partners 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 as
provided above 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 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.
24. 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;
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(b) Second, to the creation of any reserves which the
General Partner (or such 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 12, 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.
25. BOOKS OF ACCOUNT, RECORDS AND REPORTS.
-------------------------------------
25.1 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 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.
25.2 Within ninety (90) days after the end of each Year, 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 for the preparation by such
person of his or her federal income tax return. The General Partner will also
make available to the Limited Partners any other information required by the
Act.
25.3 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 or as otherwise required by law a copy of the Partnership's original
Certificate of Limited Partnership and any certificate of amendment, restated
certificate, or certificate of cancellation, if any.
-31-
25.4 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 Sections
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.
25.5 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)-1, as modified from time to time. In its capacity as Tax Matters
Partner, the General Partner shall oversee the Partnership's tax affairs in the
manner which, in its best judgment, is in the interests of the Partners.
26. 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 or her 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.
27. AMENDMENTS.
----------
Subject to the provisions of Article 28, this Agreement is
subject to amendment only by written consent of the General Partner and a
Majority in Interest of the Limited Partners; provided, 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 28. Further, no Limited
Partner consent shall be required to amend Schedule A to reflect the admission
of Partners as contemplated by the Offering, any Dilution Offering or as
otherwise herein permitted.
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28. LIMITATIONS ON AMENDMENTS.
-------------------------
Notwithstanding the provisions of Article 27, 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 Article 12, 13, 15 or 24
without the approval of the General Partner and a Majority in Interest
of the Limited Partners; 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 28(b); or
(c) Amend this Article 28 without the consent of all Partners.
29. MEETINGS, CONSENTS AND VOTING.
-----------------------------
29.1 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 generally 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.
29.2 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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29.3 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.
30. 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.
31. 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.
32. 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.
33. 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 Texas without giving
effect to the conflicts of laws provisions thereof.
34. 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.
35. 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
-34-
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.
36. 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.
37. POWER OF ATTORNEY.
-----------------
Each Limited Partner hereby makes, constitutes and appoints
Xxxxxx Xxxxxxx, M.D. and Xxxxx Xxxx, M.D., severally, with full power of
substitution, his or her true and lawful attorneys- in-fact, for him or her and
in his or her name, place and xxxxx and for his or her use and benefit to sign
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, legal
incapacity, dissolution or bankruptcy 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 or her 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
bankruptcy, dissolution, incapacity or mental incompetence of any Limited
Partner.
38. ARBITRATION.
-----------
Any dispute arising out of or in connection with this
Agreement or the breach thereof shall be decided by arbitration in Austin, Texas
in accordance with the then effective commercial
-35-
arbitration rules of the American Arbitration Association, and judgment thereof
may be entered in any court having jurisdiction thereof.
39. CREDITORS.
---------
None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Partnership.
[signature page follows]
-36-
IN WITNESS WHEREOF, the parties have executed this Agreement
of Limited Partnership as of the day and year first above written.
GENERAL PARTNER:
By: PROSTATHERAPIES, INC.,
a Delaware corporation
By:/s/ Xxxxxx Xxxxxxx, M.D.
---------------------------
Xxxxxx Xxxxxxx, M.D.
President
ATTEST:
_________________________ [CORPORATE SEAL]
Secretary
INITIAL LIMITED PARTNER:
-----------------------
/s/ Xxxxx Xxxxxxx, M.D.
-----------------------
Xxxxx Xxxxxxx, M.D.
-37-
STATE OF ____________________)
)
COUNTY OF __________________ )
On this _______ day of ___________, _____, before me, the
undersigned Notary Public in and for the County of _______________ in the State
of ___________________________, personally came Xxxxxx Xxxxxxx, M.D., who, being
by me duly sworn, said that he is President of Prostatherapies, Inc., the sole
general partner of Texas I Prostatherapy 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 Xxxx
Xxxxxxx, 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.
Notary Public
My commission expires:
---------------------------
STATE OF ________________ )
)
COUNTY OF ______________ )
I, _______________________________, a notary public in and for
the State and County set forth above, do hereby certify that Xxxxx Xxxxxxx,
M.D., personally appeared before me this _____ day of _____________, _____ and
acknowledged and swore to the due execution of the foregoing Limited Partnership
Agreement in his capacity as the initial limited partner.
Notary Public
My commission expires:
---------------------------
-38-
COUNTERPART SIGNATURE PAGE
By signing this Counterpart Signature Page, the undersigned
acknowledges his or her acceptance of that certain Agreement of Limited
Partnership of Texas I Prostatherapy Limited Partnership, and his or her
intention to be legally bound thereby.
Dated this _________ day of ___________________, _______.
Signature
Printed Name
STATE OF _______________ )
)
COUNTY OF _____________ )
BEFORE ME, the undersigned Notary Public in and for the State
and County set forth above, on the _______ day of __________________, _____,
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.
Signature of Notary Public
Printed Name of Notary
My Commission Expires:
---------------------------
[SEAL]
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SCHEDULE A-1
Schedule of Partnership Interests
Texas I Prostatherapy Limited Partnership
CONTRIBUTIONS OF CAPITAL TO THE PARTNERSHIP AND GUARANTIES
Cash Contribution Percentage Interest
General Partner
Prostatherapies, Inc. $147,488 20
0000 Xxxxxxx xx Xxxxx Xxxxxxx
Xxxxx X-000
Xxxxxx, XX 00000
Limited Partners
Xxxxxx Xxxxx 1,875 0.25
Xxxxxxx Xxxxxxxxx 30,000 4
Xxxx X. Xxxxxxx 1,875 0.25
Xxxxx Xxxx 7,500 1
Xxxxxxxxxxx Xxxxx 7,500 1
Xxxxxx X. Xxxxxxx 7,500 1
Xxxxx Xxxxxxx 30,000 4
Xxxxxx Xxxxxx 3,750 0.5
Xxxxxxx Xxxxxx 3,750 0.5
Xxxxxxx X. Xxxxxx 1,875 0.25
Xxxxxxx X. Xxxxx, III 7,500 1
Xxxxx Xxxxxxxx 3,750 0.5
Xxxxxxxxx X. Xxx 1,875 0.25
Xxxxxx Xxxxxx 7,500 1
Xxxx Xxxxxx 7,500 1
Xxxxxx X. Xxxxxxx 1,875 0.25
Xxxxx X. Hey 7,500 1
Xxx Xxxxxxxxx 5,625 0.75
Xxxxxxx Xxxxxxx 7,500 1
Xxxxxx Xxxxxxx 3,750 0.5
Xxxx Xxxxxxx 7,500 1
Cash Contribution Percentage Interest
Xxxxxx X. Xxxxxxx 7,500 1
Xxxxxx X. Xxx 7,500 1
Xxxxxx Xxxxxx 3,750 0.5
Xxxxx X. XxXxxxxxx 5,625 0.75
Xxxx Xxxxxxx 7,500 1
Xxxxxxx X. Xxxxx 3,750 0.5
Xxxxxxx Xxxxxx 9,375 1.25
Xxxxxx Xxxxx 3,750 0.5
M. Xxxxxxx Xxxxxx 7,500 1
Xxxx X. Xxxxxxxx 7,500 1
Xxxxxxx Risk 18,750 2.5
Xxxx Xxxxxxxxxxx 3,750 0.5
Xxxxx Xxxxxxx 7,500 1
Xxxxxxxx X. Xxxxxxxx 7,500 1
Xxxxxxx X. Xxxxxxx 7,500 1
Xxxxxxx Xxxxxxxxx 9,375 1.25
Xxxxxx Xxxxxxx 9,375 1.25
C. Xxxxxxx Xxxxxx 13,125 1.75
Xxxxxx X. Xxxxxx 7,500 1
Xxxxxxxx Tecauanhuey 7,500 1
Xxxxxxx X. Xxxxxxx 7,500 1
Xxxxx X. Xxxxx 7,500 1
Xxxxxxx Xxxxxx 1,875 0.25
Xxxxxx X. Xxxxx 1,875 0.25
Xxxxxxxx Xxxxxx 1,875 0.25
Xxxxxx Xxxxxx 7,500 1
Xxxxxx Xxxxxxx 1,875 0.25
Xxxxxxxx Xxxxx 5,625 0.75
Prostatherapies, Inc. 241,200 33.5
------- ----
TOTAL 737,438 100%
2
