AMENDMENT NO. 1 TO LIMITED PARTNERSHIP AGREEMENT OF PRINCIPAL KNOX, L.P.
Exhibit 3.310
Amendment No. 1 to Limited Partnership Agreement of Principal Xxxx, X.X.,
effective as of April _, 2005 (this “Amendment”).
WHEREAS, PHC-Xxxx, Inc., as the General Partner (the “General Partner”), and Province
Healthcare Company, as the Limited Partner (the “Limited Partner”) are parties to that
certain Limited Partnership Agreement, dated as of January 1, 1999 (the “LP Agreement”): and
1. The LP Agreement shall be amended by adding new Section 16.16 thereto, which shall
read as follows:
“Certificates of Partnership Interests. All Partnership
interests in the Partnership shall be represented by certificate(s) issued by
the Partnership, shall be deemed “securities” within the meaning of Section
8-102 of Article 8 of the Delaware Uniform Commercial Code and shall be
governed by Article 8 of the Delaware Uniform Commercial Code.”
2. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of Delaware.
3. Except as amended hereby, the LP Agreement shall remain in full force and effect.
4. This Amendment may be executed in one or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same document.
| PHC-XXXX, INC., as General Partner | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx III | |||
| Name: | Xxxxxxx X. Xxxxxxxxx III | |||
| Title: | Executive Vice President and Secretary | |||
| PROVINCE HEALTHCARE COMPANY, as Limited Partner |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx III | |||
| Name: | Xxxxxxx X. Xxxxxxxxx III | |||
| Title: | Secretary | |||
Signature Page to Amendment No. 1 to LP Agreement of Principal Xxxx, X.X.
THE LIMITED PARTNERSHIP INTERESTS CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OF THE DELAWARE SECURITIES LAWS, AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS. EXCEPT
AS SPECIFICALLY OTHERWISE PROVIDED IN THIS AGREEMENT, THE INTERESTS MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL THAT SUCH
TRANSFER MAY BE LEGALLY EFFECTED WITHOUT SUCH REGISTRATION. ADDITIONAL RESTRICTIONS ON TRANSFER
AND SALE ARE SET FORTH IN THIS AGREEMENT.
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRINCIPAL XXXX, X.X.
PRINCIPAL XXXX, X.X.
(a Delaware limited partnership)
TABLE OF CONTENTS
| Page | ||||
1. DEFINITIONS |
1 | |||
2. FORMATION OF PARTNERSHIP |
3 | |||
2.1 Formation |
3 | |||
2.2 Name |
3 | |||
2.3 Principal Office |
3 | |||
2.4 Term |
4 | |||
2.5 Registered Agent and Office |
4 | |||
3. PURPOSES
AND POWERS OF THE PARTNERSHIP; NATURE OF THE BUSINESS OF THE PARTNERSHIP |
4 | |||
3.1 Purposes |
4 | |||
3.2 Powers |
4 | |||
4. CAPITAL CONTRIBUTIONS, LOANS, CAPITAL ACCOUNTS |
5 | |||
4.1 Capital Contributions |
5 | |||
4.2 Additional Capital Contributions |
5 | |||
4.3 Capital Accounts |
6 | |||
4.4 Additional Provisions Regarding Capital Accounts |
7 | |||
4.5 Loans |
9 | |||
5. ALLOCATIONS |
9 | |||
5.1 Allocations of Income and Losses |
9 | |||
6. DISTRIBUTIONS |
9 | |||
6.1 Distribution of Excess Cash |
9 | |||
7. BANK ACCOUNTS, BOOKS OF ACCOUNT, TAX COMPLIANCE
AND FISCAL YEAR |
9 | |||
7.1 Bank Accounts; Investments |
9 | |||
7.2 Books and Records |
10 | |||
7.3 Determination of Profit and Loss; Financial Statements |
10 | |||
7.4 Tax Returns and Information |
10 | |||
7.5 Tax Audits |
10 | |||
7.6 Fiscal Year |
11 | |||
8. MANAGEMENT OF THE PARTNERSHIP |
11 | |||
8.1 General Partner |
11 | |||
8.2 Appointment of Officers of the Partnership |
11 | |||
8.3 Governing Board |
11 | |||
8.4 Quality Assurance Program |
11 | |||
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| Page | ||||
8.5 Legal Compliance Program |
11 | |||
8.6 Advisory Boards |
11 | |||
8.7 Indemnification of General Partner, Governors and Officers |
12 | |||
9. RIGHTS AND STATUS OF LIMITED PARTNERS |
12 | |||
9.1 General |
12 | |||
9.2 Limitation of Liability |
13 | |||
9.3 Bankruptcy; Death; etc |
13 | |||
10. MEETINGS AND MEANS OF VOTING |
13 | |||
10.1 Meetings of the Partners |
13 | |||
10.2 Vote By Proxy |
14 | |||
10.3 Conduct of Meeting |
14 | |||
10.4 Action Without a Meeting |
14 | |||
10.5 Closing of Transfer Record; Record Date |
14 | |||
11. TRANSFER OF RIGHTS AND ADDITIONAL LIMITED
PARTNERS |
14 | |||
11.1 Transfer by General Partner |
14 | |||
11.2 Transfers by Limited Partners |
15 | |||
11.3 Substituted Limited Partner |
16 | |||
11.4 Basis Adjustment |
16 | |||
11.5 Admission of Additional Limited Partners |
16 | |||
11.6 Transfer Procedures |
16 | |||
11.7 Invalid Transfer |
17 | |||
11.8 Distributions and Allocations in Respect of a Transferred Ownership Interest |
17 | |||
11.9 Additional Requirements of Sales; Requirements for
Xxxxxxxxxx |
00 | |||
11.10 Amendment to Exhibit A |
17 | |||
12. RIGHT TO LIQUIDATE OR PURCHASE PARTNERSHIP
INTERESTS |
18 | |||
12.1 General Partner’s Right of First Refusal |
18 | |||
13. DISSOLUTION |
18 | |||
13.1 Causes |
18 | |||
13.2 Reconstitution |
19 | |||
13.3 Interim General Partner |
19 | |||
14. WINDING UP AND TERMINATION |
20 | |||
14.1 General |
20 | |||
14.2 Court Appointment of Liquidator |
21 | |||
14.3 Liquidation |
21 | |||
14.4 Creation of Reserves |
22 | |||
14.5 Final Statement |
22 | |||
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| Page | ||||
15. POWER OF ATTORNEY |
22 | |||
15.1 General Partner as Attorney-in-Fact |
22 | |||
15.2 Nature of Special Power |
22 | |||
16. MISCELLANEOUS |
23 | |||
16.1 Notices |
23 | |||
16.2 Governing Law |
23 | |||
16.3 Attorneys’ Fees |
23 | |||
16.4 Successors and Assigns |
23 | |||
16.5 Construction |
23 | |||
16.6 Time |
24 | |||
16.7 Waiver of Partition |
24 | |||
16.8 Entire Agreement |
24 | |||
16.9 Amendments |
24 | |||
16.10 Severability |
25 | |||
16.11 Gender and Number |
25 | |||
16.12 Exhibits |
25 | |||
16.13 Additional Documents |
25 | |||
16.14 Section Headings |
25 | |||
16.15 Counterparts |
25 | |||
iii
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRINCIPAL XXXX, X.X.
(a Delaware limited partnership)
THIS AGREEMENT OF LIMITED PARTNERSHIP (“Agreement”) is entered into as of January 1, 1999,
and shall be effective as of January 1, 1999, by and among PHC-Xxxx, Inc., a Nevada corporation,
as general partner (“Xxxx” or the “General Partner”), and Province Healthcare Company, a Delaware
corporation, as the limited partner (“PHC” or the “Limited Partner”). Xxxx and PHC are
collectively referred to herein as “Partners” or individually as a “Partner.”
WHEREAS, the parties hereto desire to form a limited partnership pursuant to the provisions
of the Delaware Revised Uniform Limited Partnership Act (the “Act”) and other relevant laws of
the State of Delaware, for the purposes and upon the terms, covenants and conditions hereinafter
set forth.
1. DEFINITIONS
As used herein the following terms have the following meanings:
1.1 “Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from time
to time.
1.2 “Additional Limited Partner” means a Person who is admitted into the Partnership
as a Limited Partner pursuant to the terms of Section 11.5 hereof.
1.3 “Affiliate” means, with respect to any Partner, (i) any Person that directly or
indirectly controls, is controlled by, or is under common control with, a Partner, (ii) any
entity of which a Partner owns ten percent (10%) or more of the outstanding voting securities,
(iii) any entity of which a Partner is an officer, director, or general partner, or (iv)
any child, grandchild (whether through marriage, adoption or otherwise), sibling (whether
through adoption or otherwise), parent or spouse of a Partner. As used in this definition of
“Affiliate,” the term “control” means possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity whether through ownership of
voting securities, by contract or otherwise.
1.4 “Agreement” means this Agreement of Limited Partnership of Principal
Xxxx, X.X., as amended from time to time pursuant to Section 16.9 hereof.
1.5 “Approval of the Partners” or “Approved by the Partners” means the
approval of those Limited Partners who, together with the General Partner, have collective
ownership interests of at least sixty-seven percent (67%) of the aggregate Sharing Percentage of
all Partners at the time the proposed Partnership action is being considered for approval.
1.6 “Bankruptcy” means, as to any Partner, the Partner’s taking or acquiescing
to the taking of any action seeking relief under, or advantage of, any applicable debtor relief,
liquidation, receivership, conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar law affecting the rights or remedies of creditors generally, as in effect
from time to time. For the purpose of this definition, the term “acquiescing” shall include,
without limitation, the failure to file, within thirty (30) days after its entry, a petition,
answer or motion to vacate or to discharge any order, judgment or decree providing for any relief
under any such law.
1.7 “Xxxx” means PHC-Xxxx, Inc., an Oregon corporation.
1.8
“Capital Account” shall have the meaning set forth in Section 4.3 below.
1.9 “Code” means the Internal Revenue Code of 1986, as amended from time to time. All
references herein to sections of the Code shall include any provision or corresponding provisions
of succeeding law.
1.10 “Facility” means collectively Xxxxxx Memorial Hospital with any other hospitals and
related businesses and facilities subsequently acquired or leased by the Partnership or its
subsidiaries, including Principal Xxxx, L.L.C., but excluding any hospital or related business or
facility that is no longer owned or leased by the Partnership or its subsidiaries, including
Principal Xxxx, L.L.C.
1.11 “General Partner” means PHC-Xxxx, Inc.
1.12 “Limited Partners” mean Province Healthcare Company, and any Substituted Limited
Partner or Additional Limited Partner, but excluding any Person who ceases to be a limited partner
of the Partnership pursuant to this Agreement. “Limited Partner” means any one of the
Limited Partners.
1.13 “Liquidator” means the Person who liquidates the Partnership under Article 14
hereof.
1.14 “Partners” means the General Partner and the Limited Partners, collectively. “Partner”
means any one of the Partners.
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1.15 “Partnership” means the limited partnership formed under this
Agreement.
1.16
“Person” means any individual, partnership, corporation, limited liability
company, trust or other entity.
1.17
“PHC” means Province Healthcare Company, a Delaware corporation.
1.18 “Sharing Percentage” means, as to a Partner, the percentage obtained by dividing
the Units of such Partner by an amount equal to the total Units of all Partners. The Partners
hereby agree that their Sharing Percentages shall constitute their interests in the Partnership
profits for purposes of determining their respective shares of the Partnership’s “excess
nonrecourse liabilities” (within the meaning of section 1.752-3(a)(3) of the Regulations).
1.19
“Substituted Limited Partner” means any Person admitted to the Partnership
pursuant to Section 11.3.
1.20
“Treasury Regulations” or “Regulations” means the regulations
promulgated by the United States Department of the Treasury pursuant to and in respect of
provisions of the Code. All references herein to sections of the Treasury Regulations or the
Regulations shall include any corresponding provision or provisions of succeeding, similar or
substitute proposed, temporary or final regulations.
1.21
“Units” means all or a certain percentage of the issued and
outstanding ownership interests of the Partnership held by the Partners. “Unit” means any one of
the Units.
2. FORMATION OF PARTNERSHIP
2.1 Formation. Xxxx and PHC formed the Partnership pursuant to the Act, and caused
the Certificate of Limited Partnership to be filed in the office of the Delaware Secretary of State
on December 11, 1998, and have complied with all other legal requirements to form and operate the
Partnership. Except as stated in this Agreement, the Act shall govern the rights and liabilities
of the Partners.
2.2 Name. The name of the Partnership is “Principal Xxxx, X.X.” and the business of
the Partnership shall be conducted under that name or such other name or names as may be determined
by the General Partner from time to time.
2.3 Principal Office. The principal office of the Partnership shall be located at
000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000 or at such other place or places as the
General Partner may from time to time determine.
3
2.4 Term. The Partnership began on the date the Certificate of Limited
Partnership was filed with the Delaware Secretary of State as provided in Section 2.1
hereof, and shall continue until the date on which the Partnership is dissolved pursuant to
Article 13 and thereafter, to the extent provided for by applicable law, until wound up and
terminated pursuant to Article 14 hereof.
2.5 Registered Agent and Office. The registered agent of the Partnership shall be
National Registered Agents, Inc., and the registered office of the Partnership shall be
located at 0 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000. The registered office or the registered
agent, or both, may be changed by the Managing General Partner, upon recommendation of the Manager,
from time to time upon filing the statement required by the Act. The Partnership shall maintain at
its registered office such records as may be specified by the Act.
3. PURPOSES AND POWERS OF THE PARTNERSHIP; NATURE OF THE BUSINESS OF THE PARTNERSHIP
3.1 Purposes. The purpose of the Partnership is to hold a sole membership
interest in Principal Xxxx, L.L.C., which shall, directly or indirectly through Affiliates: (i)
provide health care services in the Xxxx, Indiana area; (ii) lease, manage and operate the
Facilities and lease or own, manage and operate other health care related services and businesses;
(iii) acquire (through asset acquisition, stock acquisition, lease or otherwise) and develop other
property, both real and personal, in connection with providing health care related services,
including without limitation, general acute care hospitals, specialty care hospitals, nursing
homes, clinics, home health care agencies, health maintenance organizations, psychiatric facilities
and other health care providers; (iv) enter into, from time to time, such financial arrangements as
the General Partner may determine to be necessary, appropriate or advisable (including,
without limitation, borrowing money and issuing evidences of indebtedness and securing the same
by mortgage, deed of trust, security interest or other encumbrance upon one or more or all of the
Partnership assets); (v) sell, assign, lease, exchange or otherwise dispose of, or refinance or
additionally finance, one or more or all of the Partnership assets; (vi) raise additional capital
by issuance of additional limited partnership interests in the Partnership as provided in
Article 11; and (vii) generally engage in such other business and activities and do any and
all other acts and things that the General Partner deems necessary, appropriate or advisable from
time to time in furtherance of the purposes of the Partnership as set forth in this Section
3.1.
3.2 Powers. Subject to the limitations contained in this Agreement and in the Act, the
Partnership purposes may be accomplished by the General Partner taking any action permitted under
this Agreement that is customary or reasonably related to, and not inconsistent with, accomplishing
such purposes.
4
4. CAPITAL CONTRIBUTIONS, LOANS, CAPITAL ACCOUNTS
4.1 Capital Contributions. Xxxx shall contribute $1,000 cash and a promissory note
in the amount of $18,073 to the capital of the Partnership upon the formation of the Partnership in
consideration for a 1% general partner interest in the Partnership. PHC shall contribute its sole
membership interest in Principal Xxxx, L.L.C., a Delaware limited liability company, to
the capital of the Partnership upon the formation of the Partnership in consideration for a 99%
limited partner interest in the Partnership.
4.2 Additional Capital Contributions. If Additional Capital Contributions (herein so
called) are required for any expenditure of the Partnership, the General Partner shall have the
right to request the Partners to make Additional Capital Contributions (pro rata in accordance with
each Partner’s Sharing Percentage) to the Partnership in excess of their initial Capital
Contributions. If the Managing General Partner makes such a request, no Partner shall be required
to make such Additional Capital Contribution, provided that if any Partner elects not to make the
Additional Capital Contribution (a “Noncontributing Partner”), the other Partners (the
“Contributing Partners”) shall have the right to contribute to the Partnership the amount of cash
that the Noncontributing Partner or Partners failed to contribute. The Partners shall have
thirty (30) days from the General Partner’s request in which to elect to make or not
make such Additional Capital Contributions. Effective as of the end of such thirty (30)
day period, the Partners’ Sharing Percentages shall be adjusted, as follows: Each
Partner’s Sharing Percentage thereafter shall be equal to a fraction (converted to a percentage),
the numerator of which is equal to such Partner’s “Base Amount” and the denominator of which is
equal to the sum of the Base Amounts of all the Partners. For purposes hereof, each Partner’s Base
Amount shall be equal to the sum of (1) the amount of cash contributed to the Partnership by such
Partner in respect of the current call for capital (including amounts contributed on behalf of any
Noncontributing Partner or Partners), plus (2) the product of (x) the Partner’s Sharing Percentage
(as in effect immediately before the capital call in question) multiplied by (y) the “Value of the
Partnership” of the date of such capital call. For purposes of this Section 4.2, the
“Value of the Partnership” shall mean the product of the Partnership’s “EBITDAR” (hereinafter
defined) for the most recently completed fiscal year multiplied by five (5), less any Partnership
long term debt (including any capitalized leases and the current portion of long term debt), all as
determined in accordance with generally accepted accounting principles using the accrual method of
accounting applied on a basis consistent with the preceding period (using the Partnership’s
current accounting policies). Any questions with respect to accounting procedures
or valuation not controlled by this Agreement shall be resolved by the independent accountants
employed by the General Partner on behalf of the Partnership. “EBITDAR” shall mean the earnings for
the Partnership before deductions for interest, taxes, depreciation, amortization and
rental payments, but shall exclude nonrecurring and extraordinary items. The number of
5
Units held by each Partner shall be adjusted automatically to reflect any change in the
Partners’ Sharing Percentages under this section.
4.3 Capital Accounts. A Capital Account (herein so called) shall be established and
maintained for each Partner for the full term of this Agreement in accordance with the capital
accounting rules of section 1.704-l(b)(2)(iv) of the Regulations. Each Partner shall have only one
Capital Account, regardless of the number or classes of Units or other interests in the
Partnership owned by such Partner and regardless of the time or manner in which such Units or
other interests were acquired by such Partner. Pursuant to the basic capital accounting rules of
section 1.704-l(b)(2)(iv) of the Regulations, the balance of each Partner’s Capital Account shall
be:
(a) Increased by the amount of money contributed by such Partner(or such
Partner’s predecessor in interest) to the capital of the Partnership pursuant to this
Article 4 and decreased by the amount of money distributed to such Partner (or such
Partner’s predecessor in interest) pursuant to Article 6 hereof;
(b) Increased by the fair market value of each property (determined without regard to
section 770 1(g) of the Code) contributed by such Partner (or such Partner’s predecessor in
interest) to the capital of the Partnership pursuant to this Article 4 (net of all
liabilities secured by such property that the Partnership is considered to assume or take
subject to under section 752 of the Code) and decreased by the fair market value of each
property (determined without regard to section 770 1(g) of the Code) distributed to such
Partner (or such Partner’s predecessor in interest) by the Partnership pursuant to
Article 6 (net of all liabilities secured by such property that such Partner is
considered to assume or take subject to under section 752 of the Code);
(c) Increased by the amount of each item of Partnership profit allocated to such
Partner (or such Partner’s predecessor in interest) pursuant to Section 3.1 on
Exhibit B hereto;
(d) Decreased by the amount of each item of Partnership loss allocated to such Partner
(or such Partner’s predecessor in interest) pursuant to Section 3.1 on Exhibit
B hereto; and
(e) Otherwise adjusted as follows:
(i) Effective immediately prior to any “Revaluation Event” (as defined in
Exhibit B hereto), the balances of all Partners’ Capital Accounts shall be
adjusted to reflect the manner in which items of profit or loss, as computed for
book purposes, equal to the “Unrealized Book Gain Or Loss” (as defined in
Exhibit B hereto) then existing with
6
respect to each Partnership property (to the extent not previously reflected in the
Partners’ Capital Accounts) would be allocated among the Partners pursuant to Section
3.1 of Exhibit B hereto if there were a taxable disposition of such property
immediately prior to such Revaluation Event for its fair market value (as determined by
the Manager taking section 7701(g) of the Code into account);
(ii) With respect to items of Partnership profit and loss, the balances of all the
Partners’ Capital Accounts shall be adjusted solely for allocations of such items, as
computed for book purposes, under Section 3.1 of Exhibit B hereto and shall not be
adjusted for allocations of correlative Tax Items under Section 3.2 of Exhibit
B hereto;
(iii) Immediately before giving effect under Section 4.3(b) hereof to any
adjustment attributable to the distribution of property to a Partner, the balances of all
the Partners’ Capital Accounts first shall be adjusted to reflect the manner in which items
of profit or loss, as computed for book purposes, equal to the Unrealized Book Gain Or Loss
existing with respect to the distributed property (to the extent not previously reflected
in the Partners’ Capital Accounts) would be allocated among the Partners pursuant to
Section 3.1 of Exhibit B hereto if there were a taxable disposition of such
property, on the date of such distribution, by the Partnership for its fair market value at
the time of such distribution (as agreed to in writing by the Partners taking section 770
1(g) of the Code into account (i.e., such value shall not be agreed to be less than the
amount of Nonrecourse Liabilities to which such property is subject)); and
(iv) Upon the transfer of all or part of any Unit or other interest in the
Partnership, the Capital Account of the transferor Partner, to the extent attributable to
the transferred interest, shall carry over to the transferee Partner.
4.4 Additional Provisions Regarding Capital Accounts.
(a) If a Partner pays any Partnership indebtedness, such payment shall be treated as a cash
contribution by that Partner to the capital of the Partnership, and the Capital Account of such
Partner shall be increased by the amount so paid by such Partner.
(b) Except as otherwise provided herein, no Partner may contribute capital to, or withdraw
capital from, the Partnership. To the extent any monies which any Partner is entitled to receive
pursuant to the Agreement would constitute a return of capital, each of the Partners consents to
the withdrawal of such capital.
7
(c) A loan by a Partner to the Partnership shall not be considered a contribution of money to
the capital of the Partnership, and the balance of such Partner’s Capital Account shall not be
increased by the amount so loaned. No repayment of principal or interest on any
such loan, reimbursement made to a Partner with respect to advances or other payments made
by such Partner on behalf of the Partnership or payments of fees to a Partner which are made by the
Partnership shall be considered a return of capital or in any manner affect the balance of such
Partner’s Capital Account. No Partner shall make a loan to the Partnership unless such loan is
authorized pursuant to the provisions of this Agreement.
(d) No Partner with a deficit balance in its Capital Account shall have any obligation to the
Partnership or any other Partner to restore said deficit balance. In addition, no venturer or
partner in any Partner shall have any liability to the Partnership or any other Partner for any
deficit balance in such venturer’s or partner’s capital account in the Partner in which it is a
partner or venturer. Furthermore, a deficit Capital Account balance of a Partner (or a capital
account of a partner or venturer in a Partner) shall not be deemed to be a liability of such
Partner (or of such venturer or partner in such Partner) or a Partnership asset or property. The
provisions of this Section 4.4(d) shall not affect any Partner’s obligation to make capital
contributions to the Partnership that are required to be made by such Partner pursuant to this
Agreement.
(e) Except as otherwise provided herein, no interest shall be paid on any capital contributed
to the Partnership or the balance in any Partner’s Capital Account.
(f) All of the provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with section 1.704-1(b) of the Regulations, and shall be
interpreted and applied in a manner consistent with such Regulations. If the Managing General
Partner, upon the recommendation of the Manager, determines that it is prudent to modify the manner
in which the Capital Accounts, or any debits or credits thereto (including, without limitation,
debits or credits relating to liabilities that are secured by contributed or distributed property
or that are assumed by the Partnership or any of the Partners) are computed in order to comply with
the Regulations, the Managing General Partner may make such modifications, provided that such
modifications are not likely to have a material effect on the amounts distributable to any
Partner from the Partnership. The Managing General Partner, upon recommendation of the
Manager, shall also make appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with section 1.704-1(b) of the Regulations.
8
4.5 Loans. Any Partner may lend money to the Partnership. If any Partner makes
any loan or loans to the Partnership, the amount of any such loan shall not be treated as a
contribution to the capital of the Partnership but shall be a debt due from the Partnership. Any
Partner’s loan to the Partnership shall be repayable out of the Partnership’s cash and shall bear
interest at prevailing market rates. None of the Partners nor any of their Affiliates shall be
obligated to loan money to the Partnership.
5. ALLOCATIONS
5.1 Allocations of Income and Losses. All items of income or loss of the Partnership
shall be allocated to the Partners in accordance with the provisions of Exhibit B attached
hereto, which is hereby incorporated by reference for all purposes of this Agreement.
6. DISTRIBUTIONS
6.1 Distribution of Excess Cash. Except as may be otherwise provided in Section
14.3, or as may otherwise be prohibited or required by applicable law, the Manager may
determine in its reasonable judgment to what extent (if any) the Partnership’s cash on hand
exceeds its current and anticipated needs, including, without limitation, for operating expenses,
debt service, authorized acquisitions, capital expenditures, and a reasonable contingency reserve
as determined by the General Partner. If such an excess exists, the General Partner may cause the
Partnership to distribute such excess to the Partners pro rata in accordance with their respective
Sharing Percentages on a quarterly basis. Notwithstanding the foregoing, the General Partner may
distribute to the Partners an amount sufficient to cover federal, state and local income and other
taxes payable by them as a result of their participation in the Partnership relating to
Partnership’s activities, and shall distribute to the other Partners a prorata amount in
proportion to their respective Sharing Percentages.
7. BANK ACCOUNTS, BOOKS OF ACCOUNT, TAX COMPLIANCE AND FISCAL YEAR
7.1
Bank Accounts; Investments. The General Partner shall (i) establish one or more
bank accounts into which Partnership funds may be deposited or (ii) deposit funds in a central
account established in the name of PHC or an Affiliate, provided that detailed separate entries
are made on the books and records of the Partner and on the books and records of PHC or such
Affiliate of PHC with respect to amounts received from the Partnership and deposited in such
central account for the account of the Partnership and provided further that withdrawals from such
central account shall be made only for the purpose of disbursing funds to the Partnership, paying
Partnership costs, expenses, or liabilities, or making distributions to the Partners under this
Agreement. The funds of the Partnership deposited in such central account may be invested in such
securities and
9
investments as the General Partner, PHC or any Affiliate of PHC may select until such funds
are withdrawn for Partnership purposes in accordance with this Section 7.1.
7.2 Books and Records. The General Partner shall keep books of account and records
relative to the Partnership’s business. The books shall be prepared in accordance with generally
accepted accounting principles using the accrual method of accounting. The accrual method of
accounting also shall be used by the Partnership for income tax purposes. The Partnership’s books
and records shall at all times be maintained at the principal business office of the Partnership or
its accountants (and to the extent required by the Act, at the registered office of the
Partnership) and shall be available for inspection by the Limited Partners or their duly authorized
representatives during reasonable business hours. The books and records shall be preserved for
four years after the term of the Partnership ends.
7.3
Determination of Profit and Loss; Financial Statements. All items of Partnership
income, expense, gain, loss, deduction and credit shall be determined with respect to, and
allocated in accordance with, this Agreement for each Partner for each Partnership fiscal year.
Within one hundred twenty (120) days after the end of each Partnership fiscal year, the General
Partner shall cause to be prepared, at Partnership expense, financial statements of the Partnership
for the preceding fiscal year, including, without limitation, a balance sheet, profit and loss
statement, statement of cash flows and statement of the balances in the Partners’ Capital Accounts,
prepared in accordance with the terms of this Agreement and generally accepted accounting
principles consistently applied with prior periods. These financial statements shall be
available for inspection and copying during ordinary business hours at the reasonable request of
any Partner.
7.4 Tax Returns and Information. The Partners intend for the
Partnership to be treated as a partnership for tax purposes. The General Partner shall prepare or
cause to be prepared all federal, state and local income and other tax returns which the
Partnership is required to file and shall furnish such returns to the Limited Partners, together
with a copy of each Limited Partner’s Form K-l and any other information which any Limited Partner
may reasonably request relating to such returns, within the time required by law (including any
applicable extension periods available under the Code).
7.5 Tax Audits. The General Partner shall be the tax matters partner of the
Partnership under Section 6231(a)(7) of the Code. The General Partner shall inform the Limited
Partners of all matters which may come to its attention in its capacity as tax matters partner by
giving the Limited Partners notice thereof within thirty (30) days after becoming so informed. The
General Partner shall not take any action contemplated by Sections 6222 through 6231 of the Code
unless the General Partner has first given the Limited Partners notice of the contemplated action
and received the Approval of the Partners to the contemplated action. This
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provision is not intended to authorize the General Partner to take any action which is
left to the determination of an individual Partner under Sections 6222 through 6231 of the Code.
7.6 Fiscal Year. The Partnership fiscal year shall be the calendar year.
8. MANAGEMENT OF THE PARTNERSHIP
8.1 General Partner. The General Partner shall manage the day-to-day operations of the
Partnership and have the duty and right to act on behalf of the Partnership pursuant to the terms
of this Agreement.
8.2 Appointment of Officers of the Partnership. The General Partner shall appoint such
officers of the Partnership as it shall deem appropriate.
8.3 Governing Board. The General Partner shall establish a Governing Board for the
Facility. The General Partner shall determine the rules with respect to the appointment of
Governing Board members, vacancies, call and notice requirements for meetings, quorum and voting
procedures, minutes, reporting and other similar matters. The Governing Board shall have such
authority as may be required by the accreditation standards of the Joint Commission on
Accreditation of Healthcare Organizations or any successor organization exercising or performing
similar functions (“JCAHO”) and those required by law.
8.4 Quality Assurance Program. The Governing Board shall have the authority and
responsibility to develop programs to assure the quality of patient care rendered at the Facility.
In furtherance thereof, the Governing Board shall endeavor to develop and adopt, standardized (a)
criteria, policies and procedures regarding appointment, reappointment, alteration of staff status,
granting of clinical privileges, disciplinary action, matters relating to professional competency,
and such other matters referred to the Medical Staff of the Facility by the Governing Board, (b)
quality assurance, utilization review and professional peer review criteria, evaluations, policies
and procedures and (c) Medical Staff bylaws.
8.5 Legal Compliance Program. The Governing Board shall institute, and the General
Partner shall carry out and report to the Governing Board with respect to, a legal compliance
program to ensure the Partnership’s compliance with all statutes, laws, ordinances and government
rules and regulations to which it is subject, including, without limitation, the Medicare and
Medicaid Anti-Fraud and Abuse or Anti-Kickback Amendments to the Social Security Act (currently
codified in Section 1128B(b) of the Social Security Act), the federal “anti-dumping” law, the
so-called “Xxxxx” legislation and any Indiana laws corresponding in substance to the foregoing
federal laws.
8.6 Advisory Boards. The General Partner may establish one or more advisory boards,
which may be comprised of residents of the communities within
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the service area of the Facility. The General Partner shall determine the rules with respect
to the appointment of members to such advisory boards, vacancies, call and notice requirements for
meetings, quorum and voting procedures, minutes, reporting and other similar matters. The scope of
the activities of each such advisory board shall be determined by the General Partner in its sole
discretion.
8.7 Indemnification of General Partner, Governors and Officers. Article 11 of the Act
(“Article 11”) permits the Partnership to indemnify certain Persons who were, are or are threatened
to be made a named defendant or respondent in a proceeding because such Persons are or were a
general partner, limited partner, employee or agent of the Partnership. Certain of the indemnity
provisions of Article 11 are discretionary and others are mandatory. THE PARTNERSHIP DOES HEREBY
ELECT TO INDEMNIFY, AND DOES HEREBY AGREE TO INDEMNIFY, EACH PRESENT AND FUTURE GENERAL PARTNER,
EACH PRESENT AND FUTURE LIMITED PARTNER, EACH PRESENT AND FUTURE
MEMBER OF THE BOARD OF GOVERNORS OF THE PARTNERSHIP AND EACH PRESENT AND FUTURE OFFICER OF THE
PARTNERSHIP TO THE FULLEST EXTENT PERMITTED OR REQUIRED BY UNDER ARTICLE 11 IN ACCORDANCE WITH THE
PROVISIONS OF ARTICLE 11. The Partnership’s indemnity obligation hereunder may be specifically
enforced by any Person covered thereby by resort to any court of competent jurisdiction. Further,
the Partnership shall pay or reimburse the reasonable expenses of any Person covered by the
Partnership’s indemnity hereunder in advance of the final disposition of any proceeding to the
fullest extent permitted under Article 11 and subject to the conditions thereof. IF THE ACT OR ANY
OTHER APPLICABLE DELAWARE STATUTE IS HEREAFTER AMENDED TO AUTHORIZE A DELAWARE LIMITED PARTNERSHIP
TO FURTHER INDEMNIFY THE PERSONS COVERED BY THIS INDEMNITY, THE PARTNERSHIP SHALL, IN ADDITION TO
THE INDEMNITY PROVIDED HEREIN, INDEMNIFY SUCH PERSONS TO THE FULLEST EXTENT PERMITTED OR REQUIRED
UNDER SUCH AMENDED ACT OR OTHER STATUTE. Any repeal or modification of this Section or Article 11
which has the effect of limiting the indemnify hereunder shall be prospective only, and shall not
adversely affect any indemnity obligation existing hereunder at the time of any such repeal or
modification.
9. RIGHTS AND STATUS OF LIMITED PARTNERS
9.1 General. The Limited Partners have the rights and the status of limited partners
under the Act. Except to the extent expressly otherwise provided in this Agreement, the Limited
Partners shall not take part in the management or control of the Partnership business, or sign for
or bind the Partnership, such powers being vested exclusively in the General Partner and the
officers of the Partnership in accordance with the terms of this Agreement.
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9.2 Limitation of Liability. No Limited Partner shall have any personal liability
whatever, solely by reason of its status as a Limited Partner of the Partnership, whether to the
Partnership, the General Partner or any creditor of the Partnership, for the debts of the
Partnership or any of its losses beyond the amount of the Limited Partner’s obligation to
contribute its Capital Contribution to the Partnership.
9.3 Bankruptcy; Death; etc. Neither the Bankruptcy, death, disability nor declaration
of incompetence or incapacity of a Limited Partner shall dissolve the Partnership, but the rights
of a Limited Partner to share in the Profits and Losses of the Partnership and to receive
distributions of Partnership funds shall, on the happening of such an event, devolve upon the
Limited Partner’s estate, legal representative or successor in interest, as the case may be,
subject to this Agreement, and the Partnership shall continue as a limited partnership under the
Act. The Limited Partner’s estate, representative or successor in interest shall be entitled to
receive distributions and allocations with respect to such Limited Partner’s interest in the
Partnership and shall be liable for all of the obligations of the Limited Partner. Furthermore, the
Limited Partner’s estate, representative or successor in interest shall have no right to any
information or accounting of the affairs of the Partnership, shall not be entitled to inspect the
books or records of the Partnership, and shall not be entitled to any of the rights of a general
partner or limited partner under the Act or this Agreement unless such estate, representative or
successor in interest is admitted to the Partnership as a Substituted Limited Partner in accordance
with Section 11.3.
10. MEETINGS AND MEANS OF VOTING
10.1 Meetings of the Partners. Meetings of the Partners may be called by the General
Partner and shall be promptly called upon the written request of any one or more Limited Partners
who own in the aggregate twenty percent (20%) or more of the aggregate Sharing Percentage in the
Partnership. The notice of a meeting shall state the nature of the business to be transacted at
such meeting, and actions taken at any such meeting shall be limited to those matters specified in
the notice of the meeting. Notice of any meeting shall be given to all Partners not less than five
(5) and not more than thirty (30) days prior to the date of the meeting. Partners may vote in
person or by proxy at such meeting.
Except as otherwise expressly provided in this Agreement or required by the express provisions
of the Act (without regard to future amendment), the requisite vote of the Partners shall be the
Approval of the Partners which shall control all decisions for which the vote of the Partners is
required hereunder. Each Partner’s voting rights shall be the same as that Partner’s Sharing
Percentage at the time of the vote. The presence of any Partner at a meeting shall constitute a
waiver of notice of the meeting with respect to such Partner. The Partners may, at their election,
participate in any regular or special meeting by means of conference
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telephone or similar communications equipment means of which all Persons participating in the
meeting can hear each other. A Partner’s participation in a meeting pursuant to the preceding
sentence shall constitute presence in person at such meeting for all purposes of this Agreement.
10.2 Vote By Proxy. Each Limited Partner may authorize any Person to act on the
Partner’s behalf by proxy on all matters in which a Limited Partner is entitled to participate,
whether by waiving notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Limited Partner authorizing such proxy or such Limited Partner’s attorney-in-fact.
No proxy shall be valid after the expiration of eleven (11) months after the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Limited
Partner executing it.
10.3 Conduct of Meeting. Each meeting of Partners shall be conducted by the CEO or
other individual designated by the General Partner. The meeting shall be conducted pursuant to such
rules as may be adopted by the General Partner, or in the absence thereof, by the CEO or other
individual designated by the General Partner for the conduct of the meeting.
10.4 Action Without a Meeting. Notwithstanding anything to the contrary in this
Agreement, any action that may be taken at a meeting of the Partners may be taken without a meeting
if a consent in writing setting forth the action so taken is Approved by the Partners, which
consent may be executed in multiple counterparts. In the event any action is taken pursuant to this
Section 10.4, it shall not be necessary to comply with any notice or timing requirements set forth
in Sections 10.1 or 10.2. Prompt written notice of the taking of action without a meeting shall be
given to the Partners who have not consented in writing to such action.
10.5 Closing of Transfer Record; Record Date. For the purpose of determining the
Partners entitled to notice of or to vote at any meeting of Partners, any reconvening thereof, or
to act by consent, the General Partner may provide that the transfer record shall be closed for at
least ten (10) days immediately preceding such meeting (or such shorter time as may be reasonable
in light of the period of the notice) or the first solicitation of consents in writing. If the
transfer record is not closed and if no record date is fixed for determining the Partners entitled
to notice of or to vote at a meeting of Partners or by consent, the date on which the notice of the
meeting is mailed or the first written consent is received by the General Partner shall be the
record date for such determination.
11. TRANSFER OF RIGHTS AND ADDITIONAL LIMITED PARTNERS
11.1 Transfer by General Partner. The General Partner may withdraw from the
Partnership or transfer, convey, sell or assign all or any part of its interest in the Partnership
to any Person without the consent of the Limited Partners.
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11.2 Transfers by Limited Partners. Except as otherwise set forth in this Article
11, a Limited Partner may not sell, assign, transfer, pledge or hypothecate all or any part of
its interest in the Partnership without the prior consent of the General Partner. The General
Partner in its sole discretion may withhold its consent to any transfer for which such consent is
required with or without reasonable cause. If a Limited Partner receives the prior consent of the
General Partner, it may sell its interest in the Partnership if the following conditions are
satisfied:
(a) The sale, transfer or assignment is with respect to one (1) or more Units;
(b) The sale, transfer or assignment, when aggregated with any prior sales, transfers or
assignments of Partnership interests, does not result in a sale or exchange within a twelve (12)
month period of fifty percent (50%) or more of the total interests in the Partnership’s capital and
profits within the meaning of Code Section 708(b);
(c) The Limited Partner and its transferee execute, acknowledge and deliver to the General
Partner such instruments of transfer and assignment with respect to such transaction as are in form
and substance satisfactory to the General Partner;
(d) Unless waived in writing by the General Partner, the Limited Partner delivers to the
General Partner an opinion of counsel satisfactory to the General Partner, covering such securities
and tax laws and other aspects of the proposed transfer as the General Partner may reasonably
request;
(e) The Limited Partner has furnished to the transferee a written statement showing the name
and taxpayer identification number of the Partnership in such form and together with such other
information as may be required under Section 6050K of the Code and the Regulations thereunder; and
(f) The Limited Partner pays the Partnership a transfer fee that is sufficient to
pay all reasonable expenses of the Partnership (which shall include any and all expenses of the
General Partner and/or the Partnership) in connection with such transaction.
Any Limited Partner who thereafter sells, assigns or otherwise transfers all or any portion
of his interest in the Partnership shall promptly notify the General Partner of such transfer and
shall furnish to the General Partner the name and address of
the transferee and such other information as may be required under Section 6050K of the Code
and the Regulations thereunder.
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11.3 Substituted Limited Partner. No Person taking or acquiring, by whatever means the
interest of any Limited Partner in the Partnership, except as provided in Section 11.2
hereof, shall be admitted as a Substituted Limited Partner without the consent of the General
Partner (which consent may be unreasonably withheld) and unless such Person:
(a) Elects to become a Substituted Limited Partner by delivering notice of such election to
the Partnership;
(b) Executes, acknowledges and delivers to the Partnership such other instruments
as the General Partner may deem necessary or advisable to effect the admission of such Person as a
Substituted Limited Partner, including, without limitation, the written acceptance and adoption by
such Person of the provisions of this Agreement; and
(c) Pays a transfer fee to the Partnership in an amount sufficient to cover all reasonable
expenses connected with the admission of such Person as a Substituted Limited Partner.
11.4 Basis Adjustment. Upon the transfer of all or part of an interest in the
Partnership, at the request of the transferee of the interest the General Partner may, in its sole
discretion, cause the Partnership to elect, pursuant to Section 754 of the Code or the
corresponding provisions of subsequent law, to adjust the basis of the Partnership properties as
provided by Sections 734 and 743 of the Code.
11.5 Admission of Additional Limited Partners. The General Partner may issue limited
partnership interests in the Partnership to raise capital for the Partnership or for such other
purposes as may be determined appropriate to the General Partner, and may admit the purchasers of
such limited partnership interests to the Partnership as Additional Limited Partners, which
issuance shall comply with applicable securities laws. The General Partner will not permit any
Person to become an Additional Limited Partner unless such Person certifies in writing to the
General Partner that the Person agrees to be bound by the terms of this Agreement. The General
Partner shall do all things necessary to comply with the Act and is authorized to do all things it
deems to be necessary or advisable in connection with the Partnership for admitting any Additional
Limited Partner, including, but not limited to, complying with any statute, rule, regulation or
guideline issued by any federal, state or other governmental agency.
11.6 Transfer Procedures. The General Partner shall establish a transfer procedure
consistent with this Article 11 to ensure that all conditions precedent to the admission of
a Substituted Limited Partner or Additional Limited Partner have been complied with, and the
General Partner shall execute a certificate that such covenant has been complied with and shall,
upon the written request of any Limited Partner, deliver to such Limited Partner a copy thereof.
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11.7 Invalid Transfer. No transfer of an interest in the Partnership that is in
violation of this Article 11 shall be valid or effective, and the Partnership shall not recognize
any improper transfer for the purposes of making allocations, payments of profits, return of
capital contributions or other distributions with respect to such Partnership interest, or part
thereof. The Partnership may enforce the provisions of this Article 11 either directly or indirectly
or through its agents by entering an appropriate stop transfer order on its books or otherwise
refusing to register or transfer or permit the registration or transfer on its books of any
proposed transfers not in accordance with this Article 11.
11.8 Distributions and Allocations in Respect of a Transferred Ownership Interest. If
any Partner sells, assigns or transfers any part of his interest in the Partnership during any
accounting period in compliance with the provisions of this Article 11, Partnership income, gain,
deductions and losses attributable to such interest for the respective period shall be divided and
allocated between the transferor and the transferee by taking into account their varying interests
during the applicable accounting period using any permissible method under Code Section 706(d), and
the Regulations thereunder as determined by the General Partner. All Partnership distributions on
or before the effective date of such transfer shall be made to the transferor, and all such
Partnership distributions thereafter shall be made to the transferee. Solely for purposes of making
Partnership tax allocations and distributions, the Partnership shall recognize a transfer on the
day following the day of transfer. Neither the Partnership nor the General Partner shall incur any
liability for making Partnership allocations and distributions in accordance with the provisions of
this Section 11.8, whether or not the General Partner or the Partnership has knowledge of
any transfer of any interest in the Partnership or part thereof where the transferee is not
admitted as a Substituted Limited Partner.
11.9 Additional Requirements of Sales; Requirements for Repurchase. The General
Partner shall not admit any Person as a Limited Partner: if such admission would have the effect of
causing the Partnership to be re-classified for federal income tax purposes as an association
(taxable as a corporation under the Code); which would violate any Medicare or other health care
law, rule or regulation; or which would violate applicable exemptions from securities registration
and securities disclosure provisions under federal and state securities laws.
11.10 Amendment to Exhibit A. The General Partner shall amend Exhibit A
attached to this Agreement from time to time to reflect the admission of any additional or
successor General Partner, Substituted Limited Partners or Additional Limited Partners, or the
termination of any Partner’s interest in the Partnership.
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12. RIGHT TO LIQUIDATE OR PURCHASE PARTNERSHIP INTERESTS
12.1 General Partner’s Right of First Refusal. Subject to the restrictions on transfer
set forth in Article 11, if any Limited Partner receives or obtains an offer from a
third-party to acquire in any manner all or any part of its interest in the Partnership, which
offer the Limited Partner intends to accept, the Limited Partner shall promptly notify the General
Partner in writing of the offer received, including the name of the offeror, the number of whole or
partial Units offered to be purchased, the proposed purchase price and the other terms and
conditions of the offer. The General Partner shall have the option for a period of thirty (30) days
from the day it receives notice of such offer to purchase such Limited Partner’s interest in the
Partnership on the same terms and conditions contained in the offer. The General Partner may
exercise its option by notifying the Limited Partner proposing to sell prior to the end of such
thirty (30) day period of its intent to exercise the option; otherwise the Limited Partner, in
accordance with and subject to the provisions of Article 11, may convey or dispose of the
part of the Partner’s interest in the Partnership that was the subject of the offer but only at the
price, terms and conditions, and to the party specified in the offer notice to the General Partner.
If terms and conditions more favorable to the proposed purchaser than, or in any material manner
different from, those offered to the General Partner should be agreed to by the Limited Partner,
the General Partner shall again have the option to purchase the selling Limited Partner’s interest
in the Partnership which is subject to the more favorable or different purchase terms in accordance
with this Section 12.1. The General Partner may assign the rights under this Section
12.1 to the Partnership, in which event, the Limited Partner’s interest may be liquidated
(rather than purchased) by the Partnership. Neither the General Partner nor the Partnership shall
be liable or accountable to any Limited Partner which attempts to transfer its interest in the
Partnership for any loss, damage, expense, cost, or liability resulting from any General Partner’s
exercise or failure to exercise the purchase option under this Section 12.1, delay in
notifying the Limited Partner of any General Partner’s intention not to exercise the purchase
option, or its enforcement of the requirements of this Section 12.1 in the event that it elects not
to exercise the purchase option. The General Partner’s failure to exercise the purchase option or
to indicate in writing that it is electing not to exercise the option shall not be deemed a consent
of the General Partner to allow any third party transferee to become a Substituted Limited Partner,
such consent being controlled by the provisions of Section 11.2.
13. DISSOLUTION
13.1 Causes. Each Partner expressly waives any right which he or it might otherwise
have to dissolve the Partnership except as set forth in this Article 13. The Partnership
shall be dissolved upon the first to occur of the following:
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(a) The Bankruptcy, dissolution or any other occurrence which would legally disqualify any
General Partner from acting hereunder;
(b) The Approval by the Partners of an instrument dissolving the Partnership;
(c) The dissolution of the Partnership by judicial decree; or
(d) The withdrawal of a General Partner from the Partnership; or
(e) December 31, 2050.
Nothing contained in this Section 13.1 is intended to grant to any Partner the right to
dissolve the Partnership at will (by retirement, resignation, withdrawal or otherwise), or to
exonerate any Partner from liability to the Partnership and the remaining Partners if it dissolves
the Partnership at will. Any dissolution at will of the Partnership, including dissolution caused
under Section 13.l(d), shall be in contravention of this Agreement for purposes of the Act.
Dissolution of the Partnership under Section 13.(c) shall not constitute a dissolution at
will.
13.2 Reconstitution. If the Partnership is dissolved as a result of an event described
in Section 13.l(a) or 13.l(d), the Partnership may be reconstituted and its business continued if,
within ninety (90) days after the date of dissolution, all Limited Partners affirmatively elect to
reconstitute the Partnership, agree on the identity of the new general partner or partners, and
execute an instrument confirming such facts. If the Partnership is reconstituted, an amendment to
this Agreement shall be executed and an amended Certificate of Limited Partnership filed of record.
13.3 Interim General Partner. If the Partnership is dissolved as a result of an event
described in Section 13.l(a) or 13.l(d) and no General Partner remains, those Partners who own
Units representing a majority of the aggregate Sharing Percentage of all of the Partners may
appoint an interim manager of the Partnership, who shall have and may exercise only the rights,
powers and duties of a general partner necessary to preserve the Partnership assets, until (a) a
general partner is elected under Section 13.2, if the Partnership is reconstituted; or (b)
a Liquidator is appointed under Section 14.1, if the Partnership is not reconstituted. The
interim manager shall not be liable as a general partner to the Limited Partners and shall, while
acting in the capacity of interim manager on behalf of the Partnership, be entitled to the same
indemnification rights as are set forth in Article 8. The interim manager appointed as
provided herein shall be entitled to receive such reasonable compensation for its services as may
be agreed upon by such interim manager and those Partners who appointed the interim manager.
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14. WINDING UP AND TERMINATION
14.1 General. If the Partnership is dissolved and is not reconstituted, the General
Partner (or in the event that the General Partner has withdrawn or is deemed to be in Bankruptcy a
Liquidator or liquidating committee selected by those Partners who own at least sixty-seven percent
(67%) of the aggregate Partners’ Sharing Percentage (excluding that owned by the General Partner))
shall commence to wind up the affairs of the Partnership and, unless a different plan is adopted by
Approval of the Partners, to liquidate and sell the Partnership’s assets. The party or parties
actually conducting such liquidation in accordance with the foregoing sentence, whether the General
Partner, another General Partner, a Liquidator or a liquidating committee, is herein referred to as
the “Liquidator.” The Liquidator (if other than the General Partner) shall have sufficient business
expertise and competence to conduct the winding up and termination of the Partnership and, in the
course thereof, to cause the Partnership to perform any contracts which the Partnership has or
thereafter enters into. The Liquidator shall have full right and unlimited discretion to determine
the time, manner and terms of any sale or sales of Partnership property under such liquidation,
having due regard for the activity and condition of the relevant market and general financial and
economic conditions. The Liquidator (if other than the General Partner) appointed as provided
herein shall be entitled to receive such reasonable compensation for its services as shall be
agreed upon by the Liquidator and those Partners who own at least sixty-seven percent (67%) of the
aggregate Partners’ Sharing Percentage (excluding that owned by the General Partner or applicable
General Partner). If the General Partner serves as the Liquidator, the General Partner shall not be
entitled to receive any fee for carrying out the duties of the Liquidator. The Liquidator may
resign at any time by giving fifteen (15) days prior written notice and may be removed at any time,
with or without cause, by written notice of Partners who own at least sixty-seven percent (67%) of
the aggregate Partners’ Sharing Percentage (excluding that owned by the General Partner or
applicable General Partner). Upon the death, dissolution, removal or resignation of the Liquidator,
a successor and substitute Liquidator (who shall have and succeed to all the rights, powers and
duties of the original Liquidator) will, within thirty (30) days thereafter, be appointed by those
Limited Partners who own at least sixty-seven percent (67%) of the aggregate Partners’ Sharing
Percentage, excluding that owned by the General Partner or applicable General Partner, evidenced by
written appointment and acceptance. The right to appoint a successor or substitute Liquidator in
the manner provided herein shall be recurring and continuing for so long as the functions and
services of the Liquidator are authorized to continue under the provisions hereof, and every
reference herein to the Liquidator will be deemed to refer also to any such successor or substitute
Liquidator appointed in the manner herein provided. The Liquidator shall have and may exercise,
without further authorization or consent of any of the parties hereto or their legal
representatives or successors in interest, all of the powers conferred upon the General Partner
under the terms of this agreement to the extent necessary or
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desirable in the good faith judgment of the Liquidator to perform its duties and functions.
The Liquidator (if other than a General Partner) shall not be liable as a general partner to the
Limited Partners and shall, while acting in such capacity on behalf of the Partnership, be entitled
to the indemnification rights set forth in Section 8.10.
00.0 Xxxxx Xxxxxxxxxxx of Liquidator. If, within ninety (90) days following the date
of dissolution or other time provided in Section 14.1, a Liquidator or successor Liquidator has not
been appointed in the manner provided therein, any interested party shall have the right to make
application to any United States Federal District Judge (in his individual and not judicial
capacity) for the United States District Court of Delaware for appointment of a Liquidator or
successor Liquidator, and the Judge, acting as an individual and not in his judicial capacity,
shall be fully authorized and empowered to appoint and designate a Liquidator or successor
Liquidator who shall have all the powers, duties, rights and authority of the Liquidator herein
provided.
14.3 Liquidation. The Liquidator shall give all notices to creditors of the
Partnership and shall make all publications required by the Act. In the course of winding up and
terminating the business and affairs of the Partnership, the assets of the Partnership (other than
cash) shall be sold, its liabilities and obligations to creditors, including any Partners who made
loans to the Partnership as provided in Section 4.5 hereof, and all expenses incurred in
its liquidation shall be paid, and all resulting items of Partnership income, gain, loss or
deduction shall be credited or charged to the Capital Accounts of the Partners in accordance with
Article 4. Thereafter, all Partnership assets shall be distributed among all Partners
having positive Capital Account balances (as determined after giving effect to all adjustments
attributable to allocations of items of profit and loss realized by the Partnership during the
Fiscal Year in question (including items of profit and loss realized on the liquidation) and all
adjustments attributable to contributions and distributions of money and property effected prior to
such distribution), pro rata in accordance with such positive Capital Account balances. This
distribution shall be made no later than the end of the fiscal year during which the Partnership is
liquidated (or, if later, ninety (90) days after the date on which the Partnership is liquidated).
Upon the completion of the liquidation of the Partnership and the distribution of all the
Partnership funds, the Partnership shall terminate and the General Partner (or the Liquidator, as
the case may be) shall have the authority to execute and record all documents required to
effectuate the dissolution and termination of the Partnership. In the discretion of the Liquidator,
a pro rata portion of the distributions that would otherwise be made to the Partners may instead be
distributed to a trust established for the benefit of the Partners for the purposes of liquidating
Partnership property, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the Partners arising out of or in
connection with the Partnership. The assets of any such trust shall be distributed to the Partners
from
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time to time, in the reasonable discretion of the Liquidator, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been distributed to the
Partners pursuant to this Agreement.
14.4 Creation of Reserves. After making payment or provision for payment of all debts
and liabilities of the Partnership and all expenses of liquidation, the Liquidator may set up such
cash reserves as the Liquidator may deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership.
14.5 Final Statement. Within a reasonable time following the completion of the
liquidation, the Liquidator shall supply to each of the Partners a statement which shall set forth
the assets and the liabilities of the Partnership as of the date of complete liquidation, each
Partner’s pro rata portion of distributions under Section 14.3, and the amount retained as
reserves by the Liquidator under Section 14.4.
15. POWER OF ATTORNEY
15.1 General Partner as Attorney-in-Fact. Each Limited Partner hereby makes,
constitutes, and appoints the General Partner, with full power of substitution and resubstitutions,
his true and lawful attorney-in-fact for him and in his name, place, and xxxxx and for his use and
benefit to sign, execute, certify, acknowledge, swear to, file, and record (a) this Agreement and
all agreements, certificates, instruments, and other documents amending or changing this Agreement
as now or hereafter amended which the General Partner may deem necessary, desirable, or appropriate
including, without limitation, to reflect (i) the valid exercise by the General Partner of any
power granted to it under this Agreement; (ii) any amendments adopted by the Partners in accordance
with the terms of this Agreement; (iii)the valid admission of any Substituted Limited Partner or
Additional Limited Partner to the Partnership; or (iv) the valid disposition by any Limited Partner
of its interest in the Partnership; and (b) any certificates, instruments, or documents as may be
required by, or may be appropriate under, the laws of the State of Delaware.
15.2 Nature of Special Power. The power of attorney granted pursuant to this
Article 15:
(a) is a special power of attorney coupled with an interest and is irrevocable;
(b) may be exercised by any such attorney-in-fact by listing the Limited Partners executing
any agreement, certificate, instrument, or other document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for such Limited Partners; and
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(c) shall survive the death, disability, legal incapacity, Bankruptcy, insolvency,
dissolution, or cessation of existence of a Limited Partner and shall survive the delivery of an
assignment by a Limited Partner of the whole or a portion of its interest in the Partnership, except
that where the assignment is of such Limited Partner’s entire interest in the Partnership and the
assignee, with the consent of the General Partner, is admitted as a Substituted Limited Partner,
the power of attorney shall survive the delivery of such assignment for the sole purpose of
enabling any such attorney-in-fact to effect such substitution.
16. MISCELLANEOUS
16.1 Notices. All notices given pursuant to this Agreement shall be in writing and
shall be deemed effective when personally delivered or when placed in the United States mail,
registered or certified with return receipt requested, or when sent by prepaid telegram or
facsimile followed by confirmatory letter. For purposes of notice, the addresses of the Partners
shall be as stated under their names on the attached Exhibit A; provided, however, that
each Partner shall have the right to change his address with notice hereunder to any other location
by the giving of thirty (30) days notice to the General Partner in the manner set forth above.
16.2 Governing Law. This Agreement shall be governed by and construed in accordance
with the substantive federal laws of the United States and the laws of the State of Delaware.
16.3 Attorneys’ Fees. If any litigation is initiated by the Partnership against any
Partner or by any Partner against another Partner or the Partnership relating to this Agreement or
the subject matter hereof, the Person prevailing in such litigation shall be entitled to recover,
in addition to all damages allowed by law and other relief, all court costs and reasonable
attorneys’ fees incurred in connection therewith.
16.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the Partners, and their respective heirs, legal representatives, successors and
permitted assigns; provided, however, that nothing contained herein shall negate or diminish the
restrictions set forth in Articles 11 or 12 hereof.
16.5 Construction. Every covenant, term, and provision of this Agreement shall be
construed simply according to its fair meaning and not strictly for or against any Partner. The
failure by any party to specifically enforce any term or provision hereof or any rights of such
party hereunder shall not be construed as the waiver by that party of its rights hereunder. The
waiver by any party of a breach or violation of any provision of this Agreement shall not operate
as, or be construed to be, a waiver of any subsequent breach of the same or other provision hereof.
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16.6 Time. Time is of the essence with respect to this Agreement.
16.7 Waiver of Partition. Notwithstanding any statute or principle of law to the
contrary, each Partner hereby agrees that, during the term of the Partnership, he or it shall have
no right (and hereby waives any right that he or it might otherwise have had) to cause any
Partnership property to be partitioned and/or distributed in kind.
16.8 Entire Agreement. This Agreement contains the entire agreement among the Partners
relating to the subject matter hereof, and all prior agreements relative hereto which are not
contained herein are terminated.
16.9 Amendments. Except as otherwise expressly provided herein, amendments or
modifications may be made to this Agreement only by setting forth such amendments or modifications
in a document Approved by the Partners and any alleged amendment or modification herein which is not
so documented shall not be effective as to any Partner. The General Partner may, without the
consent of any other Partner, amend any provision of this Agreement and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in connection therewith to
reflect:
(a) a change in the name of the Partnership, a change in the location of the principal place
of business of the Partnership, or a change in the registered office or the registered agent of the
Partnership;
(b) admission of a Limited Partner into the Partnership or termination of any Limited
Partner’s interest in the Partnership in accordance with this Agreement;
(c) qualification of the Partnership as a limited partnership under the laws of any state or
that is necessary or advisable in the opinion of the General Partner to ensure that the Partnership
will not be treated as an association taxable as a corporation for federal income tax purposes,
provided, in either case, such action shall not adversely affect any Limited Partner;
(d) a change (i) that is of an inconsequential nature and does not adversely affect the
Partners in any material respect; (ii) that is necessary or desirable to satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any
federal or state agency or contained in any federal or state statute, compliance with any of which
the General Partner deems to be in the best interest of the Partnership and the Limited Partners;
or (iii) that is required or contemplated by this Agreement;
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(e) an addition to the representations, duties, or obligations of the General Partner; or
(f) a change to any provision in this Agreement required to be so changed by the staff of the
Securities and Exchange Commission or other federal agency or by a State Securities Commissioner or
similar official, which change is deemed by such commission, agency or official to be for the
benefit or protection of the Partners.
However, no amendment or modification which disproportionately affects the interest of any
Partner in the capital, Profits or Losses of, or distributions or allocations with respect to, the
Partnership shall be effective as to any Partner unless the same has been set forth in a document
duly executed by such Partner.
16.10 Severability. This Agreement is intended to be performed in accordance with, and
only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any
provision of this Agreement or the application thereof to any Person or circumstance shall, for any
reason and to any extent, be invalid or unenforceable, but the extent of such invalidity or
unenforceability does not destroy the basis of the bargain among the Partners as expressed herein,
the remainder of this Agreement and the application of such provision to other Persons or
circumstances shall not be affected thereby, but rather shall be enforced to the greatest extent
permitted by law.
16.11 Gender and Number. Whenever required by the context, as used in this Agreement,
the singular number shall include the plural and the neuter shall include the masculine or feminine
gender, and vice versa.
16.12 Exhibits. Each Exhibit to this Agreement is incorporated herein for all
purposes.
16.13 Additional Documents. Each Partner, upon the request of the General Partner,
agrees to perform all further acts and execute, acknowledge and deliver any documents that may be
reasonably necessary, appropriate or desirable to carry out the provisions of this Agreement.
16.14 Section Headings. The section headings appearing in this Agreement are for
convenience of reference only and are not intended, to any extent or for any purpose, to limit or
define the text of any section.
16.15 Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original but all of which shall constitute but one document.
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| GENERAL PARTNER: | ||||||
| PHC-XXXX, INC. | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxx
|
|||||
| Title: | Vice President/Secretary | |||||
| LIMITED PARTNER: | ||||||
| PROVINCE HEALTHCARE COMPANY | ||||||
| By: Name: |
/s/ Xxxxxx X. Xxxx
|
|||||
| Title: | Vice President/Secretary | |||||
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