AGREEMENT OF LIMITED PARTNERSHIP
OF
WHITE ROCK JV, LTD.
TABLE OF CONTENTS
Page
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ARTICLE I ORGANIZATIONAL MATTERS
1.1 Formation............................................................................... 1
1.2 Name.................................................................................... 1
1.3 Term.................................................................................... 1
1.4 Registered Office and Principal Office of Partnership;
Addresses of Partners................................................................... 2
1.5 Ownership............................................................................... 2
1.6 Title to Partnership Property........................................................... 2
1.7 Limits of Partnership................................................................... 2
ARTICLE II DEFINITIONS......................................................................... 2
ARTICLE III PURPOSE
3.1 Purposes and Scope...................................................................... 8
ARTICLE IV CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
4.1 Initial Capital Contributions........................................................... 8
4.2 Additional Capital Contributions........................................................ 8
4.3 Other Capital Contributions............................................................. 8
4.4 Defaults in Making Required Capital Contributions....................................... 8
4.5 Capital Accounts........................................................................ 9
4.6 Negative Capital Accounts............................................................... 12
4.7 Interest................................................................................ 12
4.8 No Withdrawal........................................................................... 12
4.9 Loans From Partners..................................................................... 12
ARTICLE V ALLOCATIONS
5.1 Allocations of Profits and Losses....................................................... 13
5.2 Special Allocations of Profits and Losses............................................... 14
5.3 Curative Allocations.................................................................... 15
5.4 Tax Allocations: Code Section 704(c)................................................... 16
5.5 Other Allocation Rules.................................................................. 16
ARTICLE VI DISTRIBUTIONS
6.1 Distributions........................................................................... 17
6.2 Make-Up Payments........................................................................ 17
6.3 Payments Not Deemed Distributions....................................................... 18
6.4 Withheld Amounts........................................................................ 18
ARTICLE VII MANAGEMENT OF THE PARTNERSHIP
7.1 Designation and Authority of General Partner............................................ 18
7.2 Major Decisions......................................................................... 19
7.3 Certificate of Limited Partnership...................................................... 20
7.4 Compensation and Reimbursement of General Partner....................................... 20
7.5 Partnership Funds....................................................................... 20
7.6 Duties.................................................................................. 20
7.7 Transactions with Affiliates............................................................ 20
7.8 Outside Activities; Conflicts of Interest............................................... 21
7.9 Resolution of Conflicts of Interest..................................................... 21
7.10 Indemnification......................................................................... 21
7.11 Liability of General Partner............................................................ 21
7.12 Reliance by General Partner............................................................. 22
7.13 Insurance............................................................................... 22
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability................................................................. 22
8.2 Management of Business.................................................................. 22
8.3 Outside Activities...................................................................... 22
8.4 Return of Capital....................................................................... 23
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting.................................................................. 23
9.2 Fiscal Year............................................................................. 23
9.3 Reports................................................................................. 23
ARTICLE X TAX MATTERS
10.1 Preparation of Tax Returns.............................................................. 24
10.2 Tax Elections........................................................................... 24
10.3 Tax Controversies....................................................................... 24
10.4 Organizational Expenses................................................................. 24
10.5 Taxation as a Partnership............................................................... 24
ARTICLE XI TRANSFERS OF PARTNERSHIP INTERESTS
11.1 Transfer Restrictions................................................................... 24
11.2 Transfers by General Partner............................................................ 25
11.3 Transfers by Limited Partners........................................................... 25
11.4 Additional Limitations on Transfers of Limited Partnership Interests.................... 25
11.5 Distributions and Allocations in Respect of Transferred Partnership
Interests............................................................................... 25
11.6 Admission of Initial and Substitute Limited Partners and Successor
General Partner......................................................................... 26
11.7 Prohibited Transfers.................................................................... 26
11.8 Specific Performance and Other Remedies................................................. 27
11.9 PHYMED Purchase Option.................................................................. 27
ARTICLE XII WITHDRAWAL AND REMOVAL OF GENERAL PARTNER
12.1 Events of Withdrawal.................................................................... 28
12.2 Removal................................................................................. 28
ARTICLE XIII DISSOLUTION AND WINDING UP
13.1 Dissolution............................................................................. 29
13.2 Continuation of the Partnership......................................................... 29
13.3 Liquidation............................................................................. 30
13.4 Distribution in Kind.................................................................... 31
13.5 Cancellation of Certificate of Limited Partnership...................................... 31
13.6 Return of Capital....................................................................... 31
ARTICLE XIV AMENDMENT OF AGREEMENT; CONSENTS
14.1 Amendment Procedures.................................................................... 32
14.4 Action Without a Meeting................................................................ 32
ARTICLE XV GENERAL PROVISIONS
15.1 Addresses and Notices................................................................... 32
15.2 Titles and Captions..................................................................... 32
15.3 Pronouns and Plurals.................................................................... 32
15.4 Further Action.......................................................................... 33
15.5 Binding Effect.......................................................................... 33
15.6 Integration............................................................................. 33
15.7 Creditors............................................................................... 33
15.8 Waiver.................................................................................. 33
15.9 Counterparts............................................................................ 33
15.10 Applicable Law.......................................................................... 33
15.11 Invalidity of Provisions................................................................ 33
EXHIBITS
Exhibit A - Percentage Interests
Exhibit B - Initial Capital Contributions
Exhibit C - MRI Lease
THE PARTNERSHIP INTERESTS REPRESENTED BY THIS LIMITED PARTNERSHIP AGREEMENT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE
SECURITIES ACTS IN RELIANCE UPON EXEMPTIONS UNDER THOSE ACTS. THE SALE OR OTHER
DISPOSITION OF THE PARTNERSHIP INTERESTS IS PROHIBITED UNLESS SUCH SALE OR
DISPOSITION IS MADE IN COMPLIANCE WITH ALL SUCH APPLICABLE ACTS. ADDITIONAL
RESTRICTIONS ON TRANSFER OF THE PARTNERSHIP INTERESTS ARE SET FORTH IN THIS
AGREEMENT.
AGREEMENT OF LIMITED PARTNERSHIP
OF
WHITE ROCK JV, LTD.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF WHITE ROCK JV, LTD. is entered
into as of December ____, 1999 (the "Commencement Date"), by and among PHYMED,
INC., an Oklahoma ("PHYMED"), as General Partner, and LDE Ventures, Inc., an
Illinois corporation ("LDE"), as Limited Partner.
Certain terms used in this agreement are defined in Article II hereof.
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Formation. Subject to the provisions of this Agreement, the
Partners hereby form the Partnership as a limited partnership pursuant to the
Texas Act. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Texas Act.
1.2 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, White Rock JV, Ltd. The
General Partner may change the name of the Partnership at any time and from time
to time and shall provide the Limited Partners with written notice of such name
change within twenty (20) days after such name change.
1.3 Term. The Partnership shall continue in existence until the close
of Partnership business on December 31, 2049, or until the earlier termination
of the Partnership in accordance with the provisions of Section 13.1(b). The
General Partner shall not commence or engage in any business on behalf of the
Partnership until after the Effective Date, other than matters necessary or
incidental to the organization of the Partnership.
1.4 Registered Office and Principal Office of Partnership;
Addresses of Partners.
(a) Partnership Offices. The registered office of the
Partnership in the State of Texas shall be 0000 Xxxxx Xxxx Xxxxx,
Xxxxxx, Xxxxx 00000, and the registered agent for service of process on
the Partnership at such registered office shall be Xxxxxx X. Xxxxxx or
such other registered office or registered agent as the General Partner
may from time to time designate. The principal office of the
Partnership shall be 0000 Xxxxx Xxxx Xxxxx, Xxxxxx, Xxxxx 00000, or
such other place as the General Partner may from time to time
designate. The General Partner shall notify each Limited Partner within
ten (10) days following the change of the location of the principal
office of the Partnership. The Partnership may maintain offices at such
other place or places as the General Partner deems advisable.
(b) Addresses of Partners. The address of each Partner shall
be the address of such Partner appearing on the signature pages to this
Agreement. A Partner may change its address at any time by giving all
of the other Partners ten (10) days prior written notice of such change
in address.
1.5 Ownership. The interest of each Partner in the Partnership shall be
personal property for all purposes. All property and interests in property, real
or personal, owned by the Partnership shall be deemed owned by the Partnership
as an entity, and no Partner, individually, shall have any ownership interests
in such property or interest except by having an ownership interest in the
Partnership as a Partner. Each of the Partners irrevocably waives, during the
term of the Partnership and during any period of its liquidation following any
dissolution, any right that it may have to maintain any action for partition
with respect to any of the property of the Partnership.
1.6 Title to Partnership Property. Legal title to all property of
the Partnership shall be held and conveyed in the name of the Partnership.
1.7 Limits of Partnership. The relationship between the parties hereto
shall be limited to the carrying on of the business of the Partnership in
accordance with the terms of this Agreement. Such relationship shall be
construed and deemed to be a limited partnership for the sole and limited
purpose of carrying on such business. Except as otherwise provided for or
contemplated in this Agreement, nothing herein shall be construed to create a
partnership between the Partners or to authorize any Partner to act as general
agent for any other Partner.
ARTICLE II
DEFINITIONS
The following definitions shall apply to the terms used in this
Agreement, unless otherwise clearly indicated to the contrary in this Agreement:
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments: (a)
any amounts that such Partner is, or is deemed to be, obligated to restore
pursuant to section 1.704-1(b)(2)(ii)(c) of the Regulations, the penultimate
sentence of section 1.704-2(g)(1) of the Regulations, or the penultimate
sentence of section 1.704-2(i)(5) of the Regulations, shall be credited to such
Capital Account; and (b) the items described in sections
1.704-1(b)(2)(ii)(d)(4), (5), and (6) of the Regulations shall be debited to
such Capital Account. The foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.
"Affiliate" means any Person that directly or indirectly controls, is
controlled by, or is under common control with, the Person in question. As used
in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"Agreement" means this Agreement of Limited Partnership of White Rock
JV, Ltd., as it may be amended, supplemented, or restated from time to time.
"Available Cash" of the Partnership as of any date means all cash funds
of the Partnership on hand from time to time after: (a) payment of all
Partnership Costs and Expenses that are due and payable as of such time; (b)
provision for payment of all Partnership Costs and Expenses that are reasonably
anticipated to become due and payable within 30 days following the date on which
Available Cash is being determined; and (c) provision for adequate reserves
(working capital and/or capital), the amount of such reserves to be established
by the General Partner and approved by a Super-Majority Interest.
"Average Daily Scans" means, with respect to a particular calendar
month, the quotient of (a) the aggregate number of scans performed by the MRI,
all Business Days for such calendar month, divided by (b) the number of Business
Days during such calendar month.
"Book Depreciation" has the meaning set forth in Section 4.5(b)(v).
"Book Value" has the meaning set forth in Section 4.5(c).
"Business Day" means any day during which the Center is open for
patient treating for at least 5 hours.
"Capital Account" means the capital account maintained for a Partner
pursuant to Section 4.5(a).
"Capital Contribution" means any cash or other property contributed by
a Partner to the Partnership pursuant to the provisions of this Agreement.
"Center" means the location in Dallas, Texas where the MRI is operated.
"Certificate" means the Certificate of Limited Partnership filed with
the Secretary of State of the State of Texas pursuant to Section 7.3, as such
Certificate may be amended or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Commencement Date" means December _____, 1999.
"Composite Sharing Ratio" of each Partner means, at any particular
time, the quotient (expressed as a percentage) of (a) the aggregate amount of
distributions since the Commencement Date to such Partner under Section 6.1(c)
hereof, divided by (b) the aggregate amount of distributions since the
Commencement Date to all Partners under Section 6.1(c) hereof.
"Event of Bankruptcy" means, with respect to any Partner or the
Partnership, any of the following acts or events:
(a) making an assignment for the benefit of creditors;
(b) filing a voluntary petition in bankruptcy;
(c) becoming the subject of an order for relief or being declared
insolvent or bankrupt in any federal or state bankruptcy or insolvency
proceeding;
(d) filing a petition or answer seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any statute, law or regulation;
(e) filing an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against it in a proceeding of
the type described in parts (a) through (d) of this definition;
(f) making an admission in writing of an inability to pay debts as
they mature;
(g) giving notice to any governmental body that insolvency has
occurred, that insolvency is pending, or that operations have been
suspended;
(h) seeking, consenting to, or acquiescing in the appointment of a
trustee, receiver, or liquidator of all or any substantial part of its
properties; or
(i) the expiration of 90 days after the date of the commencement of a
proceeding against such Person seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief
under any statute, law, or regulation if the proceeding has not been
previously dismissed, or the expiration of 60 days after the date of the
appointment, without such Person's consent or acquiescence, of a trustee,
receiver, or liquidator of such Person or of all or any substantial part of
such Person's properties, if the appointment has not previously been
vacated or stayed, or the expiration of 60 days after the date of
expiration of a stay, if the appointment has not been previously vacated.
"Excess Amount" has the meaning set forth in Section 5.1(a)(iii).
"General Partner" means PHYMED, Inc., in its capacity as the general
partner of the Partnership, or its successors or assigns.
"Limited Partners" means LDE Ventures, Inc., and any other Person who
has been admitted or is deemed to have been admitted as a limited partner in the
Partnership and whose admission has been reflected on the books and records of
the Partnership.
"Liquidator" has the meaning set forth in Section 13.3.
"Losses" has the meaning set forth in Section 4.5(b).
"MRI" means the magnetic resonance imaging machine operated by the
Partnership pursuant to the MRI Lease.
"MRI Lease" means that certain Lease, by and between the Partnership
and Prime Leasing, Inc., attached hereto as Exhibit C.
"Nonrecourse Deductions" has the meaning set forth in section
1.704-2(b)(1) of the Regulations.
"Option Notice" has the meaning set forth in Section 11.9(b).
"Partner" means a General Partner or a Limited Partner.
"Partner Minimum Gain" means partner nonrecourse debt minimum gain as
determined under the rules of section 1.704-2(i) of the Regulations.
"Partner Nonrecourse Deduction" has the meaning set forth in section
1.704-2(i)(1) and (2) of the Regulations.
"Partnership" means the limited partnership established pursuant to
this Agreement by the filing of the Certificate with the Secretary of State of
the State of Texas.
"Partnership Estimated Net Taxable Income" has the meaning set forth in
Section 6.4(a).
"Partnership Interest" means the interest acquired by a Partner in the
Partnership including, without limitation, such Partner's right: (a) to an
allocable share of the Profits, Losses, and other income, gains, losses,
deductions, and credits of the Partnership; (b) to a distributive share of the
assets of the Partnership; (c) if a Limited Partner, to vote on those matters
described in this Agreement; and (d) if the General Partner, to manage and
operate the Partnership.
"Partnership Minimum Gain" has the meaning set forth in section
1.704-2(d) of the Regulations.
"Percentage Interest" means the percentage interest of a Partner in
certain rights and obligations described in this Agreement. The Percentage
Interest of each Partner as of any date is set forth in Exhibit A attached
hereto, as such Exhibit may be revised from time to time to reflect adjustments
pursuant to Section 4.4, Section 4.5 and Article XI hereof.
"Person" means an individual or a corporation, partnership, trust,
estate, unincorporated organization, association, or other entity.
"Prime Rate" means the rate of interest announced from time to time by
Bank One, as its prime, reference or other similar rate.
"Profits" has the meaning set forth in Section 4.5(b).
"Purchase Price" has the meaning set forth in Section 11.9(c).
"Regulations" means the Department of Treasury Regulations promulgated
under the Code, as amended and in effect (including corresponding provisions of
succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 5.3.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor to such statute.
"Sharing Ratios" means, with respect to a particular calendar month,
the following percentages based on the Average Daily Scans performed by the MRI
for such month:
----------------------------------------------------------------------------
Average Daily Scans for Sharing Ratio for Sharing Ratio for LDE
Such Calendar Month PHYMED for Such for SuchCalendar Month
Calendar Month
----------------------------------------------------------------------------
5 or fewer 35.00% 65.00%
6 36.67% 63.33%
7 37.86% 62.14%
8 38.75% 61.25%
9 39.44% 60.56%
10 40.00% 60.00%
11 40.46% 59.54%
12 40.83% 59.17%
13 41.15% 58.85%
14 41.43% 58.57%
15 41.67% 58.33%
16 41.88% 58.12%
17 42.05% 57.95%
18 42.22% 57.78%
19 42.37% 57.63%
20 or more 42.50% 57.50%
The Partners hereby agree that the Sharing Ratios of the Partners shall
be automatically adjusted pursuant to Sections 4.4(c) and 6.2 hereof.
"Shortfall" has the meaning set forth in Section 4.2.
"Super-Majority Interest" means the owners of more than 85% of the
Percentage Interests of the Partners.
"Texas Act" means the Texas Revised Limited Partnership Act, Article
6132a-1 of Title 105 of the Texas Revised Civil Statutes, as it may be amended
from time to time, and any successor to such Texas Act.
"Transfer" has the meaning set forth in Section 11.1.
"Undistributed Priority Return" means, with respect to LDE on any
particular date, the amount in a special recordkeeping account maintained by the
Partnership for LDE equal to: (a) the product of (i) $18,750 multiplied by (ii)
the number of calendar months (and partial calendar months) from the
Commencement Date to such particular date; reduced (but not below zero) by: (b)
the sum of (i) aggregate amount of cash distributed to LDE pursuant to Section
6.1(a), plus (ii) the aggregate amount of UPR Elimination Payments to LDE which
have actually been made since the Commencement Date.
"UPR Elimination Payment" has the meaning set forth in Section 6.2.
ARTICLE III
PURPOSE
3.1 Purposes and Scope. Subject to the provisions of this Agreement,
the purpose of the Partnership are to:
(a) operate, lease, manage, improve, sell, transfer and otherwise
use the MRI to be located in Dallas, Texas;
(b) enter into contracts with respect to the use and operation of
the MRI, advertise and promote the use of the MRI; and
(c) do any and all other acts or things which may be incidental
or necessary to carry on the business of the Partnership as herein
contemplated.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
4.1 Initial Capital Contributions. On the Commencement Date, each
Partner shall be credited with making the Capital Contribution shown opposite of
its or his name on Exhibit B hereto, and in that regard, each Partner's Capital
Account as of the Commencement Date shall be the amount shown opposite of its or
his name on Exhibit B hereto.
4.2 Additional Capital Contributions. After the Capital Contributions
described in Section 4.1 have been made, if at any time, the Partnership does
not have sufficient cash funds on hand to pay its operating expenses (a
"Shortfall"), PHYMED shall make a Capital Contribution to the Partnership equal
to such Shortfall. LDE shall not be obligated to make any Capital Contribution
to the Partnership other than the Capital Contribution described in Section 4.1.
4.3 Other Capital Contributions. Except as provided in Sections 4.1 and
4.2 hereof, no Partner shall be required to make any Capital Contributions to
the Partnership without the unanimous consent of the Partners. If, however, the
Partners unanimously consent to making Capital Contributions in addition to
those set forth in Sections 4.1 and 4.2 hereof, the Capital Contributions
approved unanimously by the Partners shall become required Capital Contributions
pursuant to the terms of the mandate approved by the Partners.
4.4 Defaults in Making Required Capital Contributions.
(a) If a Partner reasonably determines that another Partner
has failed to make a Capital Contribution required under Section 4.1 or
Section 4.2, then the General Partner (or if the General Partner or its
Affiliate is the defaulting Partner, then a Partner that is not an
Affiliate of the General Partner) shall send a notice (the "Default
Notice") to the Partner failing to make such Capital Contribution and
to all other Partners, notifying the defaulting Partner of its failure
to make such Capital Contribution, the amount to be contributed, and
requesting that such Capital Contribution be made immediately. If a
Partner fails to make a Capital Contribution as required under Section
4.2 within five (5) Business Days after receiving such a Default
Notice, then the Partner failing to make such required Capital
Contribution and each of its Affiliates shall be in default (such
Partner is referred to as the "Defaulting Partner" and the amount that
such Partner failed to contribute is referred to as the "Default
Amount").
(b) If a Partner is a Defaulting Partner, then the Partners
that are not Defaulting Partners (the "Non-Defaulting Partners") may
advance an amount to the Partnership equal to the Default Amount. The
Partners acknowledge and agree that any such advance shall be deemed to
be a loan from the Non-Defaulting Partner to the Defaulting Partner (a
"Partner Default Loan"). Any such Partner Default Loan will be a
nonrecourse obligation of the Defaulting Partner, will bear interest at
the greater of (i) the Prime Rate plus 800 basis points per annum, or
(ii) fifteen percent per annum, will be secured by a first lien
priority security interest in the Defaulting Partner's Partnership
Interest, and will be repaid out of any and all distributions to which
the Defaulting Partner would otherwise be entitled from the Partnership
until all accrued interest and outstanding principal on such Partner
Default Loan has been paid in full. A Defaulting Partner may repay any
Partner Default Loan at any time before conversion of such loan into a
Capital Contribution.
(c) At any time after sixty (60) days following the date after
a Partner Default Loan has been made, a Non-Defaulting Partner making
such loan may elect, by providing notice to each Partner, to convert
the Partner Default Loan into a Capital Contribution in an amount equal
to the outstanding principal balance of such Partner Default Loan. The
accrued but unpaid interest on such Partner Default Loan shall remain
an obligation of the Defaulting Partner. Upon making such election, the
Sharing Ratio of the Defaulting Partner for each calendar month
following the date of such election shall be equal to 50 percent of
what it otherwise would be, and the Sharing Ratio of the Non-Defaulting
Partner shall be equal to the sum of (i) the Sharing Ratio that it
would have absent such election, plus (ii) the amount of Sharing Ratio
lost by the Defaulting Partner as a result of such election.
4.5 Capital Accounts.
(a) Maintenance Rules. The Partnership shall maintain for each
Partner a separate Capital Account in accordance with this Section 4.5,
which shall control the division of assets upon liquidation of the
Partnership as provided in Section 13.3. Each Capital Account shall be
maintained in accordance with the following provisions:
(i) Such Capital Account shall be increased by the
cash amount or Book Value of any property contributed by such
Partner to the Partnership pursuant to this Agreement, such
Partner's allocable share of Profits and any items in the
nature of income or gains which are specially allocated to
such Partner pursuant to Section 5.2 and Section 5.3, and the
amount of any Partnership liabilities assumed by such Partner
or which are secured by any property distributed to such
Partner.
(ii) Such Capital Account shall be decreased by the
cash amount or Book Value of any property distributed to such
Partner pursuant to this Agreement, such Partner's allocable
share of Losses and any items in the nature of deductions or
losses which are specially allocated to such Partner pursuant
to Section 5.2 and Section 5.3, and the amount of any
liabilities of the Partner assumed by the Partnership or which
are secured by any property contributed by such Partner to the
Partnership.
(iii) If all or a portion of an interest in the
Partnership is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred interest; provided, however, that if the transfer
causes a termination of the Partnership under section
708(b)(1)(B) of the Code, then the Partnership shall be deemed
to have contributed its assets to a new partnership in
exchange for all of the interests in the new partnership,
followed by a distribution of the interests in the new
partnership to the transferee Partner and the remaining
Partners of the Partnership in liquidation of the Partnership.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
section 1.704-1(b) of the Regulations and shall be interpreted and applied in a
manner consistent with such Regulations. If a Super-Majority Interest determines
that it is prudent to modify the manner in which the Capital Accounts, or any
increases or decreases to the Capital Accounts, are computed in order to comply
with such Regulations, the General Partner may authorize such modifications,
provided that it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Section 13.3 upon the dissolution and
liquidation of the Partnership.
(b) Definition of Profits and Losses. "Profits" and "Losses"
mean, for each fiscal year or other period, an amount equal to the
Partnership's taxable income or loss for such year or period,
determined in accordance with Code section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated
separately pursuant to Code section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profits and Losses pursuant to this Section 4.5(b)
shall be added to such taxable income or loss.
(ii) Any expenditures of the Partnership described in
Code section 705(a)(2)(B), or treated as Code section
705(a)(2)(B) expenditures pursuant to section
1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise
taken into account in computing Profits and Losses pursuant to
this Section 4.5(b), shall be subtracted from such taxable
income or loss.
(iii) If the Book Value of any partnership asset is
adjusted pursuant to Section 4.5(c)(ii) or Section
4.5(c)(iii), the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for
purposes of computing Profits and Losses.
(iv) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to
the Book Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its
Book Value.
(v) In lieu of the deduction for depreciation, cost
recovery or amortization taken into account in computing such
taxable income or loss, there shall be taken into account Book
Depreciation as defined in this Section 4.5(b)(v). "Book
Depreciation" for any asset means for any fiscal year or other
period an amount that bears the same ratio to the Book Value
of that asset at the beginning of such fiscal year or other
period as the federal income tax depreciation, amortization or
other cost recovery deduction allowable for that asset for
such year or other period bears to the adjusted tax basis of
that asset at the beginning of such year or other period. If
the federal income tax depreciation, amortization or other
cost recovery deduction allowable for any asset for such year
or other period is zero, then Book Depreciation for that asset
shall be determined with reference to such beginning Book
Value using any reasonable method selected by the General
Partner and approved by a Super-Majority Interest.
(vi) Notwithstanding any other provision of this
Section 4.5(b), any items that are specially allocated
pursuant to Section 5.2 or Section 5.3 shall not be taken into
account in computing Profits and Losses.
(c) Definition of Book Value. "Book Value" means for any asset
the asset's adjusted basis for federal income tax purposes, except as
follows:
(i) The initial Book Value of any asset contributed
by a Partner to the Partnership shall be the gross fair market
value of such asset, as determined by the General Partner and
approved by a Super-Majority Interest.
(ii) The Book Values of all Partnership assets shall
be adjusted to equal their respective gross fair market
values, as determined by the General Partner and approved by a
Super-Majority Interest, as of the following times: (A) on the
acquisition of an additional interest in the Partnership by
any new or existing Partner in exchange for more than a de
minimis capital contribution if the General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership; (B) on the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership
property as consideration for an interest in the Partnership
if the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership; and (C)
on the liquidation of the Partnership within the meaning of
section 1.704-1(b)(2)(ii)(g) of the Regulations.
(iii) The Book Value of any Partnership asset
distributed to any Partner shall be the gross fair market
value of such asset on the date of distribution.
(iv) The Book Values of Partnership assets shall be
increased (or decreased) to reflect any adjustment to the
adjusted basis of such assets pursuant to Code section 734(b)
or Code section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital
Accounts pursuant to section 1.704-1(b)(2)(iv)(m) of the
Regulations and Section 5.2(d); provided, however, that Book
Values shall not be adjusted pursuant to this Section
4.5(c)(iv) to the extent the General Partner determines that
an adjustment pursuant to Section 4.5(c)(ii) is necessary or
appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this Section
4.6(c)(iv).
(v) If the Book Value of an asset has been determined
or adjusted pursuant to Section 4.5(c)(i), 4.5(c)(ii), or
4.5(c)(iv), such Book Value shall thereafter be adjusted by
the Book Depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses.
4.6 Negative Capital Accounts. If any Partner has a deficit balance in
its Capital Account, such Partner shall have no obligation to restore such
negative balance or to make any Capital Contribution to the Partnership by
reason thereof, and such negative balance shall not be considered an asset of
the Partnership or of any Partner.
4.7 Interest. No interest shall be paid by the Partnership on Capital
Contributions or on balances in Capital Accounts.
4.8 No Withdrawal. No Partner shall be entitled to withdraw any part
of its Capital Contribution or its Capital Account or to receive any
distribution from the Partnership, except as provided in Section 6.1 and Article
XIII.
4.9 Loans From Partners. Except as provided in Section 4.3(c), loans
by a Partner to the Partnership shall not be considered Capital Contributions.
ARTICLE V
ALLOCATIONS
5.1 Allocations of Profits and Losses.
(a) Allocation of Profit Generally. After giving effect to the
allocations set forth in Section 5.2 and Section 5.3, Profits for any
Fiscal Year shall be allocated to the Partners in the following
manner:
(i) First, to each Partner with a negative balance in
its Adjusted Capital Account, pro rata in accordance with such
negative Adjusted Capital Account balances, until such
negative Adjusted Capital Account balances have been
eliminated;
(ii) Next, to LDE in the minimum amount necessary to
cause LDE positive Adjusted Capital Account balance to equal
its accrued but unpaid Undistributed Priority Return;
(iii) Next, to the Partners in the minimum amount
necessary to cause the ratios among their "Excess Amounts" to
equal the ratios among their Composite Sharing Ratios. For
purposes of this Agreement, LDE's "Excess Amount" equals the
positive balance in LDE's Capital Account (computed after the
allocation of Profits under subparagraphs (i) and (ii) of this
Section 5.1(a) for the Fiscal Year of the allocation), reduced
by the sum of LDE's Undistributed Priority Return (with LDE's
Undistributed Priority Return being computed after giving
effect to all Capital Contributions and all distributions that
took place during and before the Fiscal Year with respect to
which the allocation is being made), and PHYMED's "Excess
Amount" equals the positive balance in PHYMED's Capital
Account; and
(iv) Next, to the Partners in proportion to their
Composite Sharing Ratios.
(b) Allocation of Losses.
(i) After giving effect to the allocations set forth
in Section 5.2 and Section 5.3, and subject to the limitation
set forth in Section 5.1(b)(ii), Losses for any Fiscal Year
shall be allocated to the Partners in the following manner:
(A) First, in circumstances in which all
Partners have positive Excess Amounts, to the
Partners in the minimum amounts necessary to cause
their positive Excess Amounts to be in the same
ratios as their Percentage Interests, and in
circumstances in which one or more Partners, but not
all Partners, have positive Excess Amounts, to the
Partners with positive Excess Amounts in the minimum
amounts necessary to cause such Partners' positive
Excess Amounts to be in the same ratios as their
Percentage Interests;
(B) Next, to the Partners with positive
Excess Amounts pro rata in accordance with their
positive Excess Amounts, until such positive Excess
Amounts have been eliminated;
(C) Next, to LDE in the minimum amount
necessary to cause each such Partner's positive
Adjusted Capital Account balance to equal the sum of
such Partner's Undistributed Priority Return; and
(D) Next, to the Partners in proportion to
their Composite Sharing Ratios.
(ii) Notwithstanding anything to the contrary in
Section 5.1(b)(i):
(A) Except as set forth below, the Losses
allocated pursuant to Section 5.1(b)(i) hereof to any
Partner for any Fiscal Year shall not exceed the
maximum amount of Losses that may be allocated to
such Partner without causing such Partner to have an
Adjusted Capital Account Deficit at the end of such
Fiscal Year.
(B) If some but not all of the Partners
would have an Adjusted Capital Account Deficit as a
consequence of an allocation of Losses pursuant to
Section 5.1(b)(i) hereof, the limitations set forth
in this Section 5.1(b)(ii) shall be applied by
allocating Losses pursuant to this Section 5.1(b)(ii)
only to those Partners who would not have an Adjusted
Capital Account Deficit as a consequence of receiving
such an allocation of Losses (with the allocation of
such Losses among such Partners to be determined by
the General Partner, based on the allocation that is
most likely to effectuate the distribution priorities
set forth in Section 6.1 hereof).
(C) If no Partner may receive an additional
allocation of Losses pursuant to Section
5.1(b)(ii)(B) above, such additional Losses not
allocated pursuant to Section 5.1(b)(ii)(B) shall be
allocated among the Partners in a manner that is most
likely to effectuate the distribution priorities set
forth in Section 6.1 hereof, as determined by the
General Partner.
5.2 Special Allocations of Profits and Losses.
(a) Minimum Gain Chargeback--Partnership Nonrecourse
Liabilities. If there is a net decrease in Partnership Minimum Gain
during any Partnership taxable year, certain items of income and gain
shall be allocated (on a gross basis) to the Partners in the amounts
and manner described in section 1.704-2(f) and (j)(2)(i) and (iii) of
the Regulations, subject to the exemptions set forth in section
1.704-2(f)(2), (3), (4), and (5) of the Regulations. This Section
5.2(a) is intended to comply with the minimum gain chargeback
requirement (set forth in section 1.704-2(f) of the Regulations)
relating to Partnership nonrecourse liabilities (as defined in section
1.704-2(b)(3) of the Regulations) and shall be so interpreted.
(b) Minimum Gain Chargeback--Partner Nonrecourse Debt. If
there is a net decrease in Partner Minimum Gain during any Partnership
taxable year, certain items of income and gain shall be allocated (on a
gross basis) as quickly as possible to those Partners who had a share
of the Partner Minimum Gain (determined pursuant to section
1.704-2(i)(5) of the Regulations) in the amounts and manner described
in section 1.704-2(i)(4), (j)(2)(ii) and (iii) of the Regulations. This
Section 5.2(b) is intended to comply with the minimum gain chargeback
requirement (set forth in section 1.704-2(i)(4) of the Regulations)
relating to partner nonrecourse debt (as defined in section
1.704-2(b)(4) of the Regulations) and shall be so interpreted.
(c) Qualified Income Offset. If, after applying Section 5.2(a)
and Section 5.2(b), any Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain shall be specially
allocated (on a gross basis) to each such Partner in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit of
such Partner as quickly as possible. This Section 5.2(c) is intended to
comply with the "qualified income offset" requirement set forth in
section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be so
interpreted.
(d) Basis Adjustments. To the extent an adjustment to the tax
basis of any Partnership asset pursuant to section 734(b) or 743(b) of
the Code is required, pursuant to section 1.704-1(b)(2)(iv)(m) of the
Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset)
or loss (if the adjustment decreases such basis), and such gain or loss
shall be specially allocated to the Partners in a manner consistent
with the manner in which their Capital Accounts are required to be
adjusted pursuant to such section of the Regulations.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year shall be specially allocated among the Partners in
proportion to their Percentage Interests.
(f) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions shall be allocated pursuant to section 1.704-2(b)(4) and
(i)(1) of the Regulations to the Partner who bears the economic risk
of loss with respect to such deductions.
5.3 Curative Allocations. The allocations set forth in Section 5.1(b)
and Section 5.2(a) through Section 5.2(f) (the "Regulatory Allocations") are
intended to comply with certain requirements of the Regulations. It is the
intent of the Partners that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Partnership income, gain, loss, or deduction
pursuant to this Section 5.3. Therefore, notwithstanding any other provisions of
this Article V (other than the Regulatory Allocations), the General Partner
shall make such offsetting special allocations of Partnership income, gain,
loss, or deduction in whatever manner it determines appropriate so that, after
such offsetting allocations are made, each Partner's Capital Account balance is,
to the extent possible, equal to the Capital Account balance such Partner would
have had if the Regulatory Allocations were not part of the Agreement and all
Partnership items were allocated pursuant to Section 5.1(a). In exercising its
discretion under this Section 5.3, the General Partner shall take into account
future Regulatory Allocations under Sections 5.2(a) and 5.2(b) that, although
not yet made, are likely to offset other Regulatory Allocations previously made
under Sections 5.2(e) and 5.2(f).
5.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code section 704(c) and the Regulations
thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Partnership shall, solely
for tax purposes, be allocated among the Partners so as to take account
of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial Book Value
(computed in accordance with Section 4.4(c)(i)).
(b) If the Book Value of any Partnership asset is adjusted
pursuant to Section 4.4(c)(ii), subsequent allocations of income, gain,
loss and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income
tax purposes and its Book Value in the same manner as under Code
section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to allocations
made pursuant to this Section 5.4 shall be made by the General Partner
in any manner that reasonably reflects the purpose and intention of the
Agreement. Allocations pursuant to this Section 5.4 are solely for
purposes of federal, state, and local taxes and shall not affect or in
any way be taken into account in computing any Partner's Capital
Account or share of Profits, Losses, and other items or distributions
pursuant to any provision of this Agreement.
5.5 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses, or any
other item allocable to any period, Profits, Losses, and any such other
item shall be determined on a daily, monthly, or other basis, as
determined by the General Partner using any permissible method under
section 706 of the Code and the Regulations thereunder.
(b) For federal income tax purposes, every item of income,
gain, loss, and deduction shall be allocated among the Partners in
accordance with the allocations under Sections 5.1, 5.2, 5.3, and 5.4
of this Agreement.
(c) The Partners are aware of the income tax consequences of
the allocations made by this Article V and hereby agree to be bound by
the provisions of this Article V in reporting their shares of
Partnership income and loss for income tax purposes.
(d) It is intended that the allocations in Sections 5.1, 5.2,
5.3, and 5.4 effect an allocation for federal income tax purposes
consistent with section 704 of the Code and comply with any limitations
or restrictions therein.
(e) The Partners agree that their Percentage Interests
represent their respective interests in Partnership profits for
purposes of allocating excess nonrecourse liabilities (as defined in
section 1.752-3(a)(3) of the Regulations) pursuant to section
1.752-3(a)(3) of the Regulations.
ARTICLE VI
DISTRIBUTIONS
6.1 Distributions. The General Partner shall review the Partnership's
accounts promptly after the end of each calendar month to determine whether
there exists any Available Cash at such time. If there exists Available Cash at
such time, the General Partner shall promptly distribute all such Available
Cash. Except to the extent Section 13.3 or Section 13.4 are applicable, all
distributions pursuant to this Section 6.1 shall be made to the Partners in the
manner set forth below:
(a) First, to LDE to the extent LDE has accrued but unpaid
Undistributed Priority Return, in an amount up to LDE's accrued but
unpaid Undistributed Priority Return;
(b) Next, 100% to PHYMED until the total distributions to PHYMED
under this Section 6.1(b) equal the total UPR Elimination Payments
since the Commencement Date; and
(c) Next, to the Partners in proportion to their Sharing Ratios
for the immediately preceding calendar month.
6.2 Make-Up Payments. If, with respect to any calendar month, LDE has
accrued but unpaid Undistributed Priority Return on the fifteenth day following
said calendar month, then PHYMED shall make a cash payment directly to LDE no
later than the twentieth day following said calendar month in an amount
necessary to eliminate LDE's Undistributed Priority Return (a "UPR Elimination
Payment"). If PHYMED does not make the UPR Elimination Payment (if due) in full
by the twentieth day following each relevant calendar month, then LDE shall
notify PHYMED in writing of such failure. If PHYMED does not make the relevant
UPR Elimination Payment in full within five Business Days following the written
notice from LDE referred to in the immediately preceding sentence, then (a)
PHYMED shall continue to have an unconditional obligation to make the UPR
Elimination Payment (with interest at the greater of (i) 15 percent per annum,
or (ii) the LDE Rate on the date of such default plus 800 basis points, and (b)
PHYMED's Sharing Ratios for each calendar month after the date of failure to pay
the UPR Elimination Payment shall be equal to 50 percent of what it otherwise
would be, and the Sharing Ratio of LDE shall be equal to the sum of (i) the
Sharing Ratio that it would have absent such default by PHYMED, plus (ii) the
amount of Sharing Ratio lost by PHYMED as a result of such default.
6.3 Payments Not Deemed Distributions. Any amounts paid pursuant to
Section 7.4 shall not be considered distributions for purposes of this
Agreement.
6.4 Withheld Amounts.
(a) Notwithstanding any other provision of this Article VI to the
contrary, each Partner hereby authorizes the Partnership to withhold
and to pay over, or otherwise pay, any withholding or other taxes
payable by the Partnership with respect to such Partner as a result of
such Partner's participation in the Partnership. If and to the extent
that the Partnership shall be required to withhold or pay any such
taxes, such Partner shall be deemed for all purposes of this Agreement
to have received a payment from the Partnership as of the time such
withholding or tax is paid, which payment shall be deemed to be a
distribution with respect to such Partner's Partnership Interest to
the extent that the Partner (or any successor to such Partner's
Partnership Interest) is then entitled to receive a distribution.
(b) To the extent that the aggregate of such payments to a
Partner for any period exceeds the distributions to which such Partner
is entitled for such period, the amount of such excess shall be
considered a loan from the Partnership to such Partner. Such loan
shall bear interest (which interest shall be treated as an item of
income to the Partnership) at the lesser of the maximum rate permitted
by law or the LDE Rate, as determined hereunder from time to time,
until discharged by such Partner by repayment, which may be made in
the sole discretion of the General Partner out of distributions to
which such Partner would otherwise be subsequently entitled.
c) Any withholdings authorized by this Section 6.4 shall be made
at the applicable statutory rate under the applicable tax law unless
the General Partner shall have received an opinion of counsel or other
evidence satisfactory to the General Partner to the effect that a
lower rate is applicable, or that no withholding is applicable.
ARTICLE VII
MANAGEMENT OF THE PARTNERSHIP
7.1 Designation and Authority of General Partner.
(a) The Partners hereby designate PHYMED as the general partner
of the Partnership. PHYMED shall continue to serve as the General
Partner of the Partnership until such time as provided in the
Agreement.
(b) Subject to Section 7.2, the General Partner shall conduct,
direct, and exercise full control over all activities of the
Partnership and all management powers over the business and affairs of
the Partnership shall be vested in the General Partner.
7.2 Major Decisions. The General Partner shall not have the authority
to cause the Partnership to act on any matter constituting a Major Decision (or
which otherwise requires the approval of a Super-Majority Interest) until the
General Partner obtains the written approval of a Super-Majority Interest. The
term "Major Decision," as used in this Agreement means any decision with respect
to the following matters:
(a) approval of any contract between any Partner (or any
Affiliate of any Partner) and the Partnership;
(b) doing any act in contravention of the Agreement or failing to
do any act required by the Agreement;
(c) doing any act which would make it impossible to carry on the
ordinary business of the Partnership;
(d) executing or delivering any assignment for the benefit of
creditors of the Company;
(e) moving the MRI to any location other than the Center;
(f) engaging in any material activity not related to operation of
the MRI;
(g) selling, exchanging, leasing or otherwise transferring any
single asset of the Partnership with a fair market value in excess of
$1,000;
(h) acquiring any single asset of the Partnership with a fair
market value in excess of $1,000;
(i) placing any voluntary liens or encumbrances on Partnership
assets;
(j) entering into any contract, including any employment
contract;
(k) borrowing any money by the Partnership in excess of $1,000
(other than trade payables and liabilities incurred in the ordinary
course of business);
(l) confessing any judgment against the Partnership in connection
with any threatened or pending legal action;
(m) settling any claim in excess of $1,000 against the
Partnership;
(n) making any material decision concerning Partnership
accounting for book and federal income tax purposes or making any
significant election for federal income tax purposes;
(o) making the decision to institute any lawsuit and selecting
the attorneys to prosecute such a lawsuit;
(p) filing any voluntary petition in bankruptcy or receivership
with respect to the Partnership;
(q) lending any funds of the Partnership other than the deposit
of Partnership funds in a federally insured institution;
(r) making any other decision under this Agreement that
specifically requires the approval of a Super-Majority Interest; and
(s) obtaining any insurance coverage.
7.3 Certificate of Limited Partnership. The General Partner shall
file the Certificate with the Secretary of State of the State of Texas, and
shall cause to be filed such other certificates or documents (including, without
limitation, copies, amendments, or restatements of the Certificate) as may be
determined by the General Partner to be reasonable and necessary or appropriate
for the formation, qualification, or registration and operation of a limited
partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Texas and in any other state where the Partnership
may elect to do business.
7.4 Compensation and Reimbursement of General Partner. The General
Partner shall not be compensated for services rendered to the Partnership as a
General Partner. However, the Partnership shall reimburse the General Partner
for all reasonable expenses incurred by the General Partner on behalf of the
Partnership and/or for the benefit of the Partnership.
7.5 Partnership Funds. The funds of the Partnership shall be deposited
in such interest-bearing Partnership account or Partnership accounts as are
designated by the General Partner. All withdrawals from or charges against such
accounts shall be made by the General Partner or by its representative. Funds of
the Partnership may be invested as determined by the General Partner in
accordance with the terms and provisions of this Agreement.
7.6 Duties. The General Partner shall manage the Partnership and its
business and affairs in accordance with the terms of this Agreement to the best
of its ability, and shall use its good faith efforts to carry out the business
of the Partnership. The General Partner shall act honestly, in good faith and in
the best interest of the Partnership. The General Partner shall devote itself to
the business of the Partnership to the extent that it determines is necessary
for the efficient carrying on thereof.
7.7 Transactions with Affiliates. The General Partner may not, on
behalf of the Partnership, enter into any transaction, agreement or contract
with a Partner or with any Person that is an Affiliate of any Partner and/or the
Partnership unless the terms to the Partnership of any such transaction,
agreement, or contract involving the Partnership with a Partner or with any
Affiliate of a Partner and/or the Partnership shall be competitive with the
terms of similar transactions, agreements, or contracts obtained by persons in
the same business as the Partnership in arms-length agreements with unrelated
parties.
7.8 Outside Activities; Conflicts of Interest. The General Partner or
any Affiliate thereof and any director, officer, employee, agent, or
representative of the General Partner or any Affiliate thereof shall be entitled
to and may have business interests and engage in business activities in addition
to those relating to the Partnership, including business interests and
activities in the same business as the Partnership, except that neither the
General Partner nor any Affiliate shall be entitled to open an MRI imaging
center or have any interest in an MRI imaging center at any location within a
10-mile radius of the Center. Neither the Partnership nor any of the Partners
shall have any rights by virtue of this Agreement or the partnership
relationship created hereby in any business ventures of the General Partner, any
Affiliate thereof, or any director, officer, employee, agent, or representative
of either the General Partner or any Affiliate thereof.
7.9 Resolution of Conflicts of Interest. Unless otherwise expressly
provided in this Agreement or any other agreement contemplated herein, whenever
a conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership or any Limited Partner, on
the other hand, any action taken by the General Partner, in the absence of bad
faith by the General Partner, shall not constitute a breach of this Agreement or
any other agreement contemplated herein or a breach of any standard of care or
duty imposed herein or therein or under the Texas Act or any other applicable
law, rule, or regulation.
7.10 Indemnification. The Partnership shall indemnify and hold
harmless the General Partner and any director, officer, employee, agent, or
representative of the General Partner, against all liabilities, losses, and
damages incurred by any of them by reason of any act performed or omitted to be
performed in the name of or on behalf of the Partnership, or in connection with
the Partnership's business, including attorneys' fees and any amounts expended
in the settlement of any claims or liabilities, losses, or damages, to the
fullest extent permitted by the Texas Act (excluding, however, any losses or
damages resulting from the General Partner's negligence, gross negligence,
fraud, willful misconduct, or breach of this Agreement). The Partnership shall
indemnify and hold harmless any Limited Partner, employee, agent, or
representative of the Partnership, any Person who is or was serving at the
request of the Partnership acting through the General Partner as a director,
officer, partner, trustee, employee, agent, or representative of another
corporation, partnership, joint venture, trust, or other enterprise, but in no
event shall such indemnification exceed the indemnification permitted by the
Texas Act. Notwithstanding anything to the contrary in this Section 7.10, in no
event shall Limited Partners be subject to personal liability by reason of the
indemnification provisions of this Agreement.
7.11 Liability of General Partner.
(a) Neither the General Partner nor its directors, officers,
employees, agents, or representatives shall be liable to the
Partnership or any Limited Partner for errors in judgment or for any
acts or omissions that do not constitute negligence, gross negligence,
fraud, willful or wanton misconduct or breach of this Agreement.
(b) The General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its directors, officers,
employees, agents, or representatives.
7.12 Reliance by General Partner.
(a) The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers,
and other consultants and advisers selected by it, and any opinion of
any such Person as to matters which the General Partner believes to be
within such Person's professional or expert competence shall be full
and complete authorization and protection in respect of any action
taken or suffered or omitted by the General Partner hereunder in good
faith and in accordance with such opinion.
7.13 Insurance. The General Partner, on behalf of the Partnership
and at the Partnership's cost and expense, shall, during the entire term hereof,
obtain, maintain and keep in full force and effect, such insurance coverage as
the General Partner reasonably deems advisable, subject to Section 7.2.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
8.1 Limitation of Liability. A Limited Partner shall have no liability
under this Agreement except as provided herein or under the Texas Act.
8.2 Management of Business. No Limited Partner shall take part in the
control (within the meaning of the Texas Act) of the Partnership's business,
transact any business in the Partnership's name, or have the power to sign
documents for or otherwise bind the Partnership other than as specifically set
forth in this Agreement.
8.3 Outside Activities. A Limited Partner or any Affiliate thereof,
and any director, officer, employee, agent, or representative of such Limited
Partner or any Affiliate thereof, shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership. Neither the Partnership nor any of the other Partners
shall have any rights by virtue of this Agreement in any business ventures of
any Limited Partner, any Affiliate thereof, or any director, officer, employee,
agent, or representative of any Limited Partner or any Affiliate thereof.
8.4 Return of Capital. No Limited Partner shall be entitled to the
withdrawal or return of its Capital Contribution except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement.
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting. The General Partner shall keep or cause
to be kept appropriate books and records with respect to the Partnership's
business, which shall at all times be kept at the principal office of the
Partnership or such other office as the General Partner may designate for such
purposes. Any books and records maintained by the Partnership in the regular
course of its business, including books of account and records of Partnership
proceedings, may be kept on any information storage device, provided that the
books and records so kept are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained for financial reporting purposes on the accrual method of accounting.
9.2 Fiscal Year. The fiscal year of the Partnership shall be the
calendar year for tax and accounting purposes.
9.3 Reports.
(a) The General Partner shall deliver to each Partner, at the
Partnership's expense, not later than 90 days following the end of each
fiscal year, a balance sheet, an income statement, and an annual
statement of source and application of funds of the Partnership for
such fiscal year. Upon the request of any Partner, such financial
statements shall be audited by an independent accounting firm selected
by the requesting Partner, with the Partner requesting such audit
paying the entire cost of the audit.
(b) The General Partner shall deliver to each Partner, at the
Partnership's expense, not later than 45 days after the last day of
each calendar quarter during the term of this Agreement, other than the
last calendar quarter of the fiscal year in question, a balance sheet
together with a profit and loss statement for such calendar quarter
together with a cumulative profit and loss statement to date and with
comparative statements for the like periods immediately preceding.
(c) Within twenty days following each calendar month, the
General Partner shall deliver to each Partner a written report setting
forth: (i) the Sharing Ratio applicable to each Partner for the
immediately preceding month, (ii) the Composite Sharing Ratio for each
Partner as of the end of the immediately preceding month, (iii)
distributions for the immediately preceding month, setting forth the
amount distributed to each Partner under each of Sections 6.1(a), (b)
and (c), (iv) LDE's Undistributed Priority Return as of the end of the
immediately preceding month, (v) UPR Elimination Payments for the
immediately preceding month, and (vi) the maximum amount that could be
distributed in the upcoming month under Section 6.1(b).
ARTICLE X
TAX MATTERS
10.1 Preparation of Tax Returns. The General Partner shall arrange for
the preparation and timely filing of all returns of Partnership income, gains,
deductions, losses and other items necessary for federal, state and local income
tax purposes. The classification, realization and recognition of income, gains,
losses and deductions and other items shall be on the cash or accrual method of
accounting for federal income tax purposes, as the General Partner shall
determine in accordance with applicable law. The General Partner in its sole
discretion may pay state and local income taxes attributable to operations of
the Partnership and treat such taxes as an expense of the Partnership.
10.2 Tax Elections. Except as otherwise provided herein, the General
Partner shall determine whether to make any election available to the
Partnership under the Code.
10.3 Tax Controversies. Subject to the provisions hereof, PHYMED is
designated the "tax matters partner" (as defined in section 6231 of the Code),
and is authorized and required to represent the Partnership, at the
Partnership's expense, in connection with all examinations of the Partnership's
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Partnership funds for professional services and costs
associated therewith. Each Partner agrees to cooperate with PHYMED in connection
with such proceedings.
10.4 Organizational Expenses. The Partnership shall elect to deduct
expenses incurred in organizing the Partnership ratably over a 60-month period
as provided in section 709 of the Code.
10.5 Taxation as a Partnership. No election shall be made by the
Partnership or any Partner for the Partnership to be excluded from the
application of any of the provisions of Subchapter K, Chapter 1 of Subtitle A of
the Code or from any similar provisions of any state tax laws.
ARTICLE XI
TRANSFERS OF PARTNERSHIP INTERESTS
11.1 Transfer Restrictions. No Partnership Interest shall be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XI. Any transfer or purported transfer of
any Partnership Interest not made in accordance with this Article XI shall be
null and void. An alleged transferee shall have no right to require any
information or account of the Partnership's transactions or to inspect the
Partnership's books. The Partnership shall be entitled to treat the alleged
transferor of a Partnership Interest as the absolute owner thereof in all
respects, and shall incur no liability to any alleged transferee for
distributions to the Partner owning such Partnership Interest of record or for
allocations of income, gain, losses, deductions or credits or for transmittal of
reports and notices required to be given to holders of Partnership Interests.
The term "transfer" when used in this Article XI with respect to a Partnership
Interest, includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange, or any other disposition.
11.2 Transfers by General Partner. The General Partner may transfer
all, but not less than all, of its Partnership Interest to any Person only after
first obtaining the approval of a Super-Majority Interest, which approval may be
unreasonably withheld. Any permitted transfer by the General Partner of its
Partnership Interest under this Section 11.2 shall not constitute a withdrawal
of the General Partner under Article XII, Section 13.1(b), or any other
provision of this Agreement. If any such transfer is deemed to constitute a
withdrawal under such provisions or otherwise and results in the dissolution of
the Partnership under this Agreement or the laws of any jurisdiction to which
the Partnership or this Agreement is subject, the Partners hereby unanimously
consent to the reconstitution and continuation of the Partnership immediately
following such dissolution, pursuant to Section 13.2.
11.3 ransfers by Limited Partners. Except as provided in Section 11.4,
a Partnership Interest of a Limited Partner may be transferred at any time.
11.4 Additional Limitations on Transfers of Partnership Interests.
The General Partner (or the Limited Partners if the General Partner is the
transferor) may require, as a condition to any transfer of a Partnership
Interest of a Limited Partner, that, in the General Partner's (or Limited
Partners, if applicable) reasonable determination: (a) the transfer will not
jeopardize the treatment of the Partnership as a partnership for federal income
tax purposes; (b) the transfer will not result in or cause a termination of the
Partnership for federal income tax purposes; and (c) the transfer will not
violate the registration requirements of applicable securities laws or cause any
prior offer and sale of Partnership Interests to violate such requirements. The
General Partner (or Limited Partners, if applicable) may also require the
proposed transferee to deliver to the Partnership acceptable representations and
warranties respecting its status under applicable securities laws and its
investment intent with respect to the Partnership Interest, and may require the
transferor and transferee to supply such other documentation as the General
Partner (or Limited Partners, if applicable) may deem advisable in its sole
discretion.
11.5 Distributions and Allocations in Respect of Transferred
Partnership Interests. If any Partnership Interest is transferred during any
fiscal year in compliance with the provisions of this Article XI, Profits,
Losses, and all other items attributable to the transferred interest for such
period shall be divided and allocated between the transferor and the transferee
by taking into account their varying interests during the period in accordance
with Code Section 706(d), using any conventions permitted by law that are
reasonably selected by the General Partner.
11.6 Admission of Initial and Substitute Limited Partners and Successor
General Partner.
(a) Admission of Initial Limited Partners. On the Effective
Date, the General Partner shall admit LDE as the Limited Partner in the
Partnership. Each Limited Partner shall execute this Agreement (or a
counterpart thereof) and thereby agree to be bound by the terms hereof
as Limited Partner.
(b) Admission of Substitute Limited Partners. A transferee
(which may be the heir or legatee of a Limited Partner) or assignee of
a Limited Partner's Partnership Interest, or Person acquiring a
Partnership Interest pursuant to any foreclosure made upon any
permitted pledge or hypothecation of such Partnership Interest, shall
be entitled to receive the distributive share of the Partnership's
Profits, Losses, income, gains, losses, deductions, and credits
attributable to such Partnership Interest. To become a substitute
Limited Partner, the transferor and the transferee must notify the
General Partner in writing of such transfer. If acceptable to the
General Partner, such transferee, assignee, heir, or legatee shall
execute a counterpart of this Agreement, thereby agreeing to be bound
by the terms hereof as a Limited Partner with respect to the
Partnership Interest so transferred. Upon admission of a substitute
Limited Partner, such Limited Partner shall be subject to all of the
restrictions applicable to, shall assume all of the obligations of, and
shall attain the status of a Limited Partner under and pursuant to this
Agreement with respect to the Partnership Interest held by such Limited
Partner.
(c) Admission of Successor General Partner. A permitted
transferee of or successor to all of the Partnership Interest of the
General Partner pursuant to Section 11.2 shall be admitted to the
Partnership as the General Partner, effective as of the date of the
withdrawal or removal of the predecessor General Partner or the date of
transfer of such predecessor's Partnership Interest.
(d) Action by General Partner. In connection with the
admission of any substitute Limited Partner or successor General
Partner, the General Partner shall have the authority to take all such
actions as it deems necessary or advisable in connection therewith, and
the execution and filing with appropriate authorities of any necessary
documentation.
11.7 Prohibited Transfers. Any transfer or purported transfer,
whether by operation of law or otherwise, of a Partnership Interest shall be
null and void and of no legal effect unless it is permitted by this Article XI
or by other provisions of this Agreement.
11.8 Specific Performance and Other Remedies. It is expressly agreed
that the remedy at law for breach of any of the obligations to transfer a
Partnership Interest pursuant to this Article XI is inadequate in view of: (i)
the complexities and uncertainties in measuring the actual damages that would be
sustained by reason of the failure of a Partner to comply fully with each of
said obligations, and (ii) the uniqueness of the Partnership business and the
Partnership relationship. Accordingly, each of the aforesaid obligations to
transfer a Partnership Interest shall be, and is hereby expressly made,
enforceable by specific performance.
11.9 PHYMED Purchase Option.
(a) Purchase Option. At any time after thirty-six months from
the Commencement Date, PHYMED or its Affiliate shall have the right,
but not the obligation, to purchase all, but not less than all, of the
Partnership Interests held by LDE and its Affiliates for the Purchase
Price on the date the relevant Option Notice is sent.
(b) Option Notice. If PHYMED or its Affiliate desires to
exercise its option under Section 11.9(a), it shall give written notice
(the "Option Notice") to LDE stating its intention to exercise its
option under Section 11.9(a) and a proposed calculation of the Purchase
Price. The date of the Option Notice shall be the date such notice is
deemed given or made pursuant to Section 15.1.
(c) Calculation of Purchase Price.
(i) The "Purchase Price" as of the date of an Option
Notice equals the greater of (A) $1,000, or (B) the excess (if
any) of (I) the future value of $2,500,000 as of the date of
the Option Notice (using a 15% per annum interest factor,
compounded monthly, running from the Commencement Date to the
date of the Option Notice), over (II) the future value of each
distribution to LDE under Section 6.1 hereof and each UPR
Elimination Payment as of the date of the Option Notice (using
a 15% per annum interest factor (compounded monthly), running
from the date of distribution or payment to the date of the
Option Notice).
(ii)The Purchase Price shall be paid entirely in cash
at closing.
(d) Disagreement With Purchase Price. If LDE or its Affiliates
disagree with the proposed calculation of Purchase Price set forth in
the Option Notice, it shall give written notice to PHYMED (the
"Purchase Price Notice") to that effect within fifteen (15) days from
the date of the Option Notice. Such Purchase Price Notice shall state
the specific grounds for disagreement and a new calculation of Purchase
Price. If the parties cannot agree upon the Purchase Price within
fifteen (15) days after the date of the Purchase Price Notice, then the
parties shall submit the calculation of Purchase Price to a mutually
acceptable national independent accounting firm. The fees and expenses
of the national independent accounting firm shall be shared by the
parties equally.
(c) Closing. A Transfer described in this Section 11.9 shall
be consummated within thirty (30) days after the date on which the
Purchase Price is finally determined pursuant to Section 11.9(d), or if
there is no disagreement regarding the proposed calculation of Purchase
Price set forth in the Option Notice, then within thirty (30) days
after the date of the Option Notice.
ARTICLE XII
WITHDRAWAL AND REMOVAL OF GENERAL PARTNER
12.1 Events of Withdrawal. The General Partner may not voluntarily
withdraw from the Partnership at any time. The General Partner, however, will be
deemed to have withdrawn from the Partnership on the occurrence of any one of
the following events (each event herein referred to as an "Event of
Withdrawal"):
(a) The General Partner is removed as a general partner
pursuant to Section 12.2; or
(b) The General Partner transfers all of its right, title
and interest as General Partner pursuant to Section
12.2 Removal.
(a) A General Partner may be removed as General Partner at any
time: (i) after such Person commits an act of fraud or gross negligence
in its capacity as General Partner; (ii) after such Person commits a
material breach of this Agreement; (iii) after such Person engages in
intentional and willful misconduct against the interests of the
Partnership; (iv) after such Person suffers or is subject to an Event
of Bankruptcy; or (v) upon the unanimous vote of the Limited Partners
to remove the General Partner (which removal may be for any reason).
(b) Any such removal of that Person as the General Partner
shall be effective after the following two conditions have been
satisfied: (i) delivery of a removal notice to the General Partner from
all of the Limited Partners; and (ii) approval by LDE of a new General
Partner and the admission of such Person as a General Partner in the
Partnership.
(c) If a Person is removed as a General Partner but continues
to own a Partnership Interest, then the Partnership Interest shall be
converted into a Partnership Interest as a Limited Partner.
(d) If a Person is removed as General Partner, such Person
shall perform, execute and deliver or cause to be performed, executed
and delivered any and all acts, documents and assurances as the new
General Partner may reasonably require to evidence: (i) the removal of
the former General Partner; (ii) if applicable, a conversion of the
Partnership Interest of the former General Partner to a Partnership
Interest as a Limited Partner; and (iii) the admission of a new General
Partner.
(e) Notwithstanding anything to the contrary in Article XI, in
connection with the admission of a new General Partner, the Limited
Partners may assign Partnership Interests to such new General Partner
so that such new General Partner has at least a 1% Percentage Interest
in all items of Profit, Loss, income, gain, loss and deduction,
Partnership capital, and distributions. The Partnership Interest of a
Limited Partner that is assigned to such new General Partner shall be
converted into a Partnership Interest as a General Partner upon its
receipt by the new General Partner.
ARTICLE XIII
DISSOLUTION AND WINDING UP
13.1 Dissolution.
(a) Except as otherwise provided in this Agreement, no Partner
shall have the right to terminate this Agreement or dissolve the
Partnership by its express will or by withdrawal without the prior
written consent of the other Partners.
(b) The Partnership shall be dissolved upon the first to occur
of any of the following:
(i) the expiration of its term as provided in Section
1.3;
(ii) an election to dissolve the Partnership by a
Super-Majority Interest; or
(iii) any other event that, under the Texas Act, would
cause the Partnership's dissolution.
13.2 Continuation of the Partnership. Except as otherwise provided in
this Agreement, upon the occurrence of an event described in Section
13.1(b)(iii), if there remains at least one General Partner, the business of the
Partnership shall be carried on by such General Partner without dissolution if
approved by LDE. In all other cases, upon the occurrence of an event described
in Section 13.1(b), the Partnership shall be deemed to be dissolved and
reconstituted only if the remaining Partners unanimously elect to continue the
Partnership within 90 days of such event. If no election to continue the
Partnership is made within 90 days of such event, the Partnership shall conduct
only those activities necessary to wind up its affairs. If an election to
continue the Partnership is made upon the occurrence of an event described in
Section 13.1(b), then:
(a) if there is no remaining General Partner, then within such
90 day period a successor General Partner shall be selected by LDE;
(b) the Partnership shall be deemed to be reconstituted and
shall continue until the end of the term for which it is formed unless
earlier dissolved in accordance with this Article XIII;
(c) the departing General Partner shall be automatically
admitted to the Partnership as a Limited Partner and its former
Partnership Interest as a General Partner shall be automatically
converted to a Limited Partner's Partnership Interest; and
(d) all necessary steps shall be taken to amend or restate
this Agreement and the Certificate.
13.3 Liquidation.
(a) Upon dissolution of the Partnership, unless the
Partnership is continued under Section 13.2, the General Partner shall
be the liquidator (the "Liquidator"). The Liquidator shall be entitled
to receive such compensation for its services as may be approved by a
Super-Majority Interest.
(b) The Liquidator shall agree not to resign at any time
without 15 days prior written notice and may be removed at any time,
with or without cause, by notice of removal approved by a
Super-Majority Interest. Upon dissolution, removal, or resignation of
the Liquidator, a successor and substitute Liquidator (who shall have
and succeed to all rights, powers, and duties of the original
Liquidator) shall within 30 days thereafter be selected by a
Super-Majority Interest. The right to appoint a successor or substitute
Liquidator in the manner provided herein shall be recurring and
continuing for so long as the functions and services of the Liquidator
are authorized to continue under the provisions hereof, and every
reference herein to the Liquidator will be deemed to refer also to any
such successor or substitute Liquidator appointed in the manner herein
provided.
(c) Except as expressly provided in this Article XIII, the
Liquidator appointed in the manner provided herein shall have and may
exercise, without further authorization or consent of any of the
parties hereto, all of the powers conferred upon the General Partner
under the terms of this Agreement (but subject to all of the applicable
limitations, contractual and otherwise, upon the exercise of such
powers) to the extent necessary or desirable in the good faith judgment
of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be
reasonably required in the good faith judgment of the Liquidator to
complete the winding up and liquidation of the Partnership.
(d) Subject to Section 13.4, the Liquidator shall liquidate
the assets of the Partnership and apply and distribute the proceeds of
such liquidation in the following order of priority, unless otherwise
required by mandatory provisions of applicable law:
(i) to the payment of the expenses of terminating
transactions, including, without limitation, brokerage
commissions, legal fees, accounting fees and closing costs;
(ii) to the payment to creditors of the Partnership,
including Partners, in order of priority provided by law;
and
(iii) to the Partners and any assignees in accordance
with the positive balances in their respective Capital
Accounts as provided in section 1.704-1(b)(2)(ii)(b)(2) of
the Regulations; provided, however, that the Liquidator may
place in escrow a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount
determined by the Liquidator to be appropriate for such
purposes.
13.4 Distribution in Kind. Notwithstanding the provisions of Section
13.3 which require the liquidation of the assets of the Partnership, but subject
to the order of priorities set forth therein, if on dissolution of the
Partnership the Liquidator and a Super-Majority Interest determine that an
immediate sale of part or all of the Partnership's assets would be impractical
or would cause undue loss to the Partners and any assignees, the Liquidator may
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (other than those to Partners) and/or,
after obtaining the approval of a Super-Majority Interest, may distribute to the
Partners and assignees, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 13.3, undivided interests in such Partnership
assets as the Liquidator deems not suitable for liquidation. Any such
distributions in kind shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems reasonable
and equitable and to any joint operating agreements or other agreements
governing the operation of such properties at such time. The Liquidator and a
Super-Majority Interest shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
13.5 Cancellation of Certificate of Limited Partnership. Upon the
completion of the distribution of Partnership property as provided in Section
13.3 and Section 13.4, the Partnership shall be terminated, and the Liquidator
(or the General Partner and Limited Partners if necessary) shall cause the
cancellation of the Certificate in the State of Texas and of all qualifications
and registrations of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Texas and shall take such other actions as
may be necessary to terminate the Partnership.
13.6 Return of Capital. The General Partner shall not be personally
liable for the return of the Capital Contributions of Limited Partners, or any
portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
ARTICLE XIV
AMENDMENT OF AGREEMENT; CONSENTS
14.1 Amendment Procedures. All amendments to this Agreement shall
be in accordance with the following requirements: (a) amendments to this
Agreement may be proposed only by the General Partner or a Super-Majority
Interest; (b) a proposed amendment shall be effective upon its approval by all
of the Partners; and (c) the General Partner shall notify all Partners upon
final adoption of any such proposed amendment.
14.4 Action Without a Meeting. Any action that may be taken by
Limited Partners may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by Limited Partners owning not less than the
minimum Percentage Interests that would be necessary to authorize or take such
action pursuant to the terms of this Agreement. To the extent that the laws of
any jurisdiction to which the Partnership or the Partnership Agreement is
subject require that any action of Limited Partners under this Agreement be
unanimous, any action taken by Limited Partners pursuant to and in accordance
with the preceding sentence shall be deemed to constitute the act of all Limited
Partners and, in such event, each Limited Partner that does not execute such
written consent hereby agrees to be bound by the decision of those Limited
Partners executing such consent and hereby approves such action to the extent
such approval is required for such matter to be effective under the laws of such
jurisdiction. Prompt notice of the taking of such action shall be given to
Limited Partners who have not consented in writing to such action.
ARTICLE XV
GENERAL PROVISIONS
15.1 Addresses and Notices. Any notice, demand, request, or report
required or permitted to be given or made to a Partner under this Agreement
shall be in writing and shall be deemed given or made when delivered in person
or when sent by United States registered or certified mail to the Partner at the
address herein specified (i.e., the address shown on its signature page or as
changed pursuant to Section 1.4(b) hereof), regardless of any claim or any
Person who may have an interest in any Partnership Interest by reason of an
assignment or otherwise.
15.2 Titles and Captions. All article and section titles and captions
in this Agreement are for convenience only, shall not be deemed part of this
Agreement, and in no way shall define, limit, extend, or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
15.3 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs
shall include the plural and vice versa.
15.4 Further Action. The parties shall execute all documents,
provide all information, and take or refrain from taking all actions as may be
necessary or appropriate to achieve the purposes of this Agreement.
15.5 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives, and permitted assigns.
15.6Integration. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
15.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditors of
the Partnership.
15.8 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement, or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement,
or condition.
15.9 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart.
15.10 Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas, without regard to the
principles of conflicts of law.
15.11 Invalidity of Provisions. If any provision of this Agreement is
declared or found to be illegal, unenforceable, or void, in whole or in part,
then the parties shall be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable, or void, it
being the intent and agreement of the parties that this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.
GENERAL PARTNER: PHYMED, INC.,
an Oklahoma corporation
Address:
_________________________________ By:_________________________________
_________________________________ Name:_______________________________
Title:______________________________
LIMITED PARTNER: LDE VENTURES, INC.,
an Illinois corporation
Address:
_______________________ By: _______________________________
_______________________ Name: ______________________________
_______________________ Title: _____________________________
EXHIBIT A
---------
Initial Percentage Interests
----------------------------
PHYMED 65%
LDE 35%
