Exhibit 3.18
AGREEMENT OF LIMITED PARTNERSHIP
OF
MRI ASSOCIATES, L.P.
TABLE OF CONTENTS
Page
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1. GENERAL PROVISIONS ............................................................ 1
1.1 Organization ......................................................... 1
1.2 Name ................................................................. 1
1.3 Business ............................................................. 1
1.4 Offices .............................................................. 1
1.5 Filings by Partnership ............................................... 1
1.6 Title to Assets ...................................................... 2
2. PARTNERS ...................................................................... 2
2.1 In General ........................................................... 2
2.2 Management of Partnership Affairs .................................... 3
2.3 Relationship Among the Partners ...................................... 3
3. CAPITAL ....................................................................... 4
3.1 General Partner ...................................................... 4
3.2 Limited Partners ..................................................... 4
3.3 Capital Account ...................................................... 5
3.4 Additional Contributions ............................................. 6
3.5 Return of Contributions .............................................. 6
3.6 Restrictions Relating to Partnership Capital ......................... 6
3.7 Offerings of Additional Interests in the Partnership ................. 6
3.8 Initial Limited Partner .............................................. 7
4. ALLOCATIONS AND DISTRIBUTIONS ................................................. 7
4.1 Determination of Profits and Losses .................................. 7
4.2 Allocation of Income, Gains, Losses, Deductibles and Credits ......... 8
4.3 Retroactive Allocations Not Permitted ................................ 8
4.4 Distributions from Partnership Operations ............................ 9
4.5 Distributions Not in the Ordinary Course ............................. 10
4.6 Distributions on Liquidation of the Partnership ...................... 10
4.7 Qualified Income Offset .............................................. 11
5. THE GENERAL PARTNER'S DUTIES AND COMPENSATION ................................. 12
5.2 Specific Rights and Powers ........................................... 12
5.3 Withdrawal of General Partner ........................................ 14
5.4 Compensation of the General Partner .................................. 15
5.5 Independent Activities ............................................... 16
6. RIGHTS AND LIABILITIES OF LIMITED PARTNERS .................................... 16
6.1 Control .............................................................. 16
6.2 Liability of Limited Partners ........................................ 17
6.3 Loans and Other Business Transactions with the Partnership ........... 17
6.4 Actions Requiring Consent of Limited Partners ........................ 17
6.5 Removal of a General Partner for Cause ............................... 18
6.6 Limited Partner Actions After General Partner Withdrawal ............. 18
6.7 Limited Partner Meetings and Voting .................................. 19
7. RECORDS REQUIRED TO BE MAINTAINED IN THE STATE OF INDIANA ..................... 21
7.1 Records .............................................................. 21
7.2 Other Records ........................................................ 21
7.3 Delivery to Limited Partner and Inspection; Financial Reports ........ 22
7.4 Books of Account ..................................................... 23
7.5 Fiscal Year .......................................................... 23
7.6 Federal Income Tax Elections ......................................... 23
7.7 Election to Adjust Basis ............................................. 23
8. TERM .......................................................................... 24
8.1 Basic Term ........................................................... 24
8.2 Dissolution .......................................................... 24
8.3 Liquidation .......................................................... 24
9. TRANSFERS OF LIMITED PARTNERS' PARTNERSHIP INTERESTS .......................... 25
9.1 Lifetime Transfers of Limited Partners' Partnership Interests ........ 25
9.2 General Partner's Right of First Refusal ............................. 26
9.3 Death, Bankruptcy or Incompetency of a Limited Partner ............... 26
9.4 Substitute Limited Partner ........................................... 27
9.5 Amendment for Transfer ............................................... 27
10. OPTION TO PURCHASE UNITS AT DESIGNATED INTERVALS .............................. 28
10.1 Grant of Options ..................................................... 28
10.2 Exercise of Option ................................................... 29
10.3 Option Price ......................................................... 29
10.4 Closing .............................................................. 29
11. MANDATORY BUY BACK OF LIMITED PARTNER'S INTEREST IN PARTNERSHIP ............... 30
12. ADJUSTED BOOK VALUE OF A PARTNERSHIP INTEREST ................................. 31
12.1 Adjusted Book Value is Agreed Fair Market Value ...................... 31
12.2 Adjusted Book Value of the Partnership ............................... 31
12.3 Value of Partnership Interest ........................................ 33
12.4 Fair Market Value Determination ...................................... 33
12.5 Costs of Determination of Adjusted Book Value ........................ 34
12.6 Miscellaneous ........................................................ 34
13. INDEMNIFICATION ............................................................... 35
13.1 Indemnification of the General Partner ............................... 35
13.2 Indemnification of the Partnership ................................... 36
13.3 Indemnification for Claims Regarding Medical Activities .............. 36
14. POWER OF ATTORNEY ............................................................. 36
14.1 Appointment of Attorney-in-Fact ...................................... 36
14.2 Nature of Power ...................................................... 37
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15. MISCELLANEOUS ................................................................. 38
15.1 Notices .............................................................. 38
15.2 Successors and Assigns ............................................... 38
15.3 Governing Law ........................................................ 38
15.4 Amendment ............................................................ 38
15.5 Entire Agreement ..................................................... 39
15.6 Titles and Captions .................................................. 39
15.7 Counterparts ......................................................... 39
15.8 Waiver ............................................................... 39
15.9 Severability ......................................................... 39
15.10 Creditors ............................................................ 39
15.11 Remedies ............................................................. 39
15.12 Authority ............................................................ 40
15.13 Attorneys' Fees ...................................................... 40
15.14 Pronouns ............................................................. 40
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AGREEMENT OF LIMITED PARTNERSHIP
OF
MRI ASSOCIATES, L.P.
This Agreement of Limited Partnership (this "Agreement") of MRI
Associates, L.P., is made and entered into as of February 4, 1992, by and
between American Health SERVICES Corp., a Delaware corporation qualified to do
business in Indiana (the "General Partner"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as the
initial limited partner (the "Initial Limited Partner").
1. GENERAL PROVISIONS
1.1 Organization. This limited partnership (the "Partnership") is
organized pursuant to the provisions of the Indiana Revised Uniform Limited
Partnership Act, Ind. Code ▇▇▇. Sections 23-16-1-1 - 23-16-12-6, as amended (the
"Act"), and the rights and liabilities of the General Partner and Limited
Partners shall be as provided in that law, except as otherwise expressly stated
herein.
1.2 Name. The name of the Partnership shall be MRI Associates,
L.P.
1.3 Business. The business of the Partnership is to operate and
manage a magnetic resonance imaging department (the "MRI Department") at the
Diagnostic Outpatient Center (the "Center") located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.4 Offices. The location of the principal place of business of
the Partnership shall be ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such
other place(s) as the General Partner may at any time or from time to time
determine. The General Partner may establish additional places of business of
the Partnership when and where required by the Partnership's business.
1.5 Filings by Partnership.
(a) Initial Filings. The General Partner shall execute
and acknowledge a certificate of limited partnership (the "Certificate of
Limited Partnership") and file the Certificate of Limited Partnership in the
office of the Indiana Secretary of State. Within a reasonable time following the
filing of the Certificate of Limited Partnership, the General Partner shall
cause a certified copy of the Certificate of Limited Partnership to be recorded
in the office of the Clerk of the Circuit Court of Lake County, Indiana.
(b) Amendments to Certificate. The General Partner shall
cause the Certificate of Limited Partnership to be amended (and when amended,
filed as required) from time to time as required by applicable law or this
Agreement.
(c) Periodic Filings and Reports. The General Partner and
the Limited Partners also shall execute all certificates and other documents and
do all filing, recording, publishing and other acts as may be appropriate to
comply with the requirements of law for the formation and operation of a limited
partnership in all other jurisdictions where the Partnership shall desire to
conduct business. Prior to conducting any business in any jurisdiction, the
Partnership shall comply with all requirements for the qualification of the
Partnership to conduct business as a limited partnership in such jurisdiction.
(d) Certificate of Dissolution or Cancellation. Upon
dissolution of the Partnership and the completion of the winding up of the
affairs of the Partnership, a certificate of cancellation of limited partnership
shall be filed in the office of, and on a form prescribed by, the Indiana
Secretary of State.
1.6 Title to Assets. Title to any assets acquired to effect the
purposes of the Partnership shall be deposited in the Partnership's name in such
bank account or accounts as may be designated by the General Partner.
Withdrawals of such funds shall be on the signatures of those persons authorized
by the General Partner. Funds of the Partnership shall not be commingled with
any other funds except that the General Partner may, after the closing of the
Offering (as defined herein), commingle funds of the Partnership with other
funds belonging to, or under the control of, the General Partner provided that
ledger entries with respect to such commingled funds are continuously made such
as to clearly and accurately show the interest of, the Partnership in such
commingled funds.
2. PARTNERS
2.1 In General. The Term "Partner" or "Partners" includes the
General Partner and Limited Partners.
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(a) General Partner. American Health Services Corp., a
Delaware corporation, shall be the General Partner.
(b) Limited Partner. The term "Limited Partner" means any
person or entity, excluding the Initial Limited Partner, who or which is
admitted to the Partnership as a limited partner. Provided, however, only the
following persons shall be admitted as Limited Partners:
(1) the General Partner or any Indiana subsidiary of the
General Partner;
(2) individuals approved by the General Partner in the
discretion of the General Partner who are residents of Indiana and are able to
meet the investor suitability standards established for Limited Partners; or
(3) Indiana professional corporations or professional
partnerships approved by the General Partner in its discretion, all of the
shareholders or partners of which, respectively, are individuals who meet the
requirements set forth in (2) above and which organizations were not formed for
the purpose of acquiring Units (as defined below). At all times, the Partnership
shall keep at its principal place of business a current list of full name and
last known business or residence address of each Partner set forth in
alphabetical order together with the contributions and the share in profits and
losses of each Partner.
2.2 Management of Partnership Affairs. The General Partner shall
be responsible for the formation, administration and management of the
Partnership. A Limited Partner shall have the right to be involved with respect
to the Partnership's affairs and business only as provided in Article 6 hereof;
however, no Limited Partner shall have any authority or right to act for or bind
the Partnership. Each of the Limited Partners, by execution of this Agreement,
consents to the exercise by the General Partner of the rights and powers
conferred on the General Partner by this Agreement and, otherwise, by law.
2.3 Relationship Among the Partners. Notwithstanding any other
provision contained herein, the relationship among the Partners created by this
Agreement shall be limited to the
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performance of this Agreement and shall not affect any other business or
activity of any partner. Except as specifically provided herein, nothing in this
Agreement shall be construed to authorize or require any Partner to act as
general agent for any other Partner. Nothing in this Agreement shall be
construed to require the General Partner or any Limited Partner to offer the
Partnership or the other Partners the opportunity to invest in any projects
identified by a Partner for investment or development, regardless of whether
they may compete with the Partnership or require a portion of the time of the
General Partner.
3. CAPITAL
3.1 General Partner. The General Partner's initial capital
contribution to the Partnership is One Hundred Dollars ($100.00) in cash upon
the formation of the Partnership.
3.2 Limited Partners.
(a) The Initial Limited Partner's capital contribution is
Ten Dollars ($10.00) in cash upon formation of the Partnership.
(b) Upon organization of the Partnership, the Partnership
shall make an offering (the "Offering") of units of limited partnership interest
in the Partnership (the "Units") in accordance with the Confidential Offering
Summary, dated February 4, 1992 (the "Summary").
(1) The Offering will be made under exemptions
from registration under applicable federal and state securities laws to no more
than twenty-five (25) purchasers who qualify as "Accredited Investors", as that
term is defined in Regulation D, C.F.R Section 230.501(a), promulgated under the
Securities Act of 1933, as amended, but as further limited by applicable state
securities laws, and who, by reason of their business or financial experience,
have the capacity to protect their own interests in connection with the
investment contemplated by the Offering.
(2) The Partnership will offer twenty-five (25)
Units at a cash price of $5.000 for each Unit to persons eligible to be Limited
Partners, as described in paragraph
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2.1(b), who (except as hereinafter provided with respect to any Units purchased
by the General Partner) purchase each not less than one (1) and not more than
five (5) Units, provided, however, the General Partner in its sole discretion
may approve a Limited Partner for admission upon the purchase of less than one
(1) Unit and fractional Units may be sold at the discretion of the General
Partner.
(3) Notwithstanding the foregoing, the General
Partner may purchase an unlimited number of the Units as a Limited Partner. The
General Partner shall in all respects be treated as a Limited Partner with
respect to the Units purchased by it and shall have the right to vote and
receive profits, losses and cash distributions with respect to the Units
purchased by it on the same basis as other Limited Partners.
(4) On or before the Expiration Date, as defined
in the Summary, the General Partner may elect, in its sole discretion, to
terminate the Offering and return all subscription funds to the subscribers.
3.3 Capital Account. A capital account shall be maintained for
each Partner in accordance with applicable Regulations of the Internal Revenue
Service, in particular Regulation 1.701(b)(2)(iv). In that regard, the account
of a Partner shall be:
(a) Increased by money contributed, the fair market value
of property contributed (minus liabilities secured by the property which are
assumed by the Partnership or to which the property in the hands of the
Partnership is subject), allocations to the Partner of Partnership income and
gain, but excluding the corresponding items of "tax" income and gain, each as
described in the applicable Regulations of the Internal Revenue Service;
(b) Decreased by money distributed, the fair market value
of property distributed (minus liabilities assumed by the Partnership or to
which the property remains subject in the hands of the Partnership), allocations
of expenditures which are neither deductible nor capitalizable, allocations of
partnership loss and deduction, including "book" loss and
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deduction, but excluding items of "tax". loss and deductions, each as described
in the applicable Regulations of the Internal Revenue Service.
3.4 Additional Contributions. No Partner shall be required to make
any additional capital contributions to the Partnership. However, a Partner may
be required to restore his or its negative capital account, as elsewhere
provided herein.
3.5 Return of Contributions. No time is agreed upon as to when the
contribution of each Partner is to be returned. No Partner shall have the right
to withdraw his or its capital, except upon liquidation of his or its interest
in the Partnership, and, then, only in accordance with this Agreement. No
Partner shall have the right to demand and receive property other than cash in
return for his or its capital contribution on notice to the other Partners or
otherwise.
3.6 Restrictions Relating to Partnership Capital. No Partner shall
be entitled to interest on his or its capital account. No Limited Partner shall
be entitled to a priority on any distribution from, or allocation by, the
Partnership over that of any other Limited Partner. No Partner shall have the
right to partition Partnership property. Except to the extent paragraph 4.1 is
applicable, any Partner who has a negative capital account shall be required to
restore the deficit by the end of the fiscal year of liquidation of his or its
interest in the Partnership (under any provision of this Agreement, or
otherwise), or within ninety (90) days after liquidation of the Partnership
interest, if later, or within the time required by applicable Indiana law, if
shorter.
3.7 Offerings of Additional Interests in the Partnership.
(a) After the termination of the Offering, the General
Partner may, from time to time, cause the Partnership to sell additional Limited
Partnership interests if the General Partner determines, in its sole discretion,
that the Partnership requires additional equity financing. The price of the
Units shall be determined by the General Partner, in its sole discretion. Such
Units may, to the extent permitted by applicable law, have one or more
preferences (i.e., income, distribution or voting preferences) to the Units
initially offered by
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the Partnership. In no event shall a Unit purchased pursuant to the Offering
represent less than one percent (1%) of the Partnership.
(b) Limited Partners shall have pro rata preemptive
rights (non assignable separately from the Units) to purchase UP to one-half
(l/2) of any additional Units offered pursuant to this paragraph 3.7 and shall
have not more than thirty (30) days after written notice from the General
Partner to exercise such pro rata preemptive rights and pay the price for the
Units exercised. The notice shall describe the offering of additional Units and
shall also describe the method of exercising preemptive rights.
(c) Purchasers of such additional Units shall be admitted
as Limited Partners upon the execution of an amendment to this Agreement. This
Agreement shall be amended as necessary to reflect any sale of additional Units
without the necessity of any Limited Partner's consent or signature.
3.8 Initial Limited Partner. The Initial Limited Partner shall
withdraw as a Limited Partner upon the closing of the Offering. The Initial
Limited Partner's capital contribution shall be returned in cash on the first
business day after the filing of an amended Certificate of Limited Partnership
and the Initial Limited Partner shall cease to be a limited partner by virtue of
having been the Initial Limited Partner. Each Limited Partner admitted to the
Partnership, by his or its admission, consents to the Initial Limited Partner's
withdrawal and waives and releases the Initial Limited Partner and the General
Partner from any right, claim or action that such Limited Partner may have
against the Initial Limited Partner or the General Partner as a consequence of
such withdrawal and return of capital.
4. ALLOCATIONS AND DISTRIBUTIONS.
4.1 Determination of Profits and Losses. The profits and losses of
the Partnership shall be determined for each fiscal year in accordance with the
accounting method followed by the Partnership for federal income tax purposes
and otherwise in accordance with generally accepted accounting principles and
procedures applied in a consistent manner.
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4.2 Allocation of Income. Gains, Losses, Deductibles and Credits.
(a) Allocations after capitalization of Partnership.
After the Initial Limited Partner with draws and the new Limited Partners are
admitted to the Partnership upon completion of the Offering, the following shall
apply for each fiscal year of the Partnership: one percent (1%) of the income,
gain, loss and deductions, and each item thereof, shall be allocated to each
Limited Partner for each Unit owned by that Limited Partner and the remaining
percentage of the income, gain, loss and deductions, and each item thereof,
shall be allocated to the General Partner.
(b) Allocation before Initial Limited Partner withdraws
as PARTNER. FOR THE period of the Partnership ending on the date of the
withdrawal of the Initial Limited Partner and the admission of the Limited
Partners acquiring Units in the Offering, ninety-nine (99%) percent of the
income, gain, loss and deductions, and each item thereof, shall be allocated to
the General Partner and one (1%) percent of the income, gain, loss and
deductions, and each item thereof, shall be allocated to the Initial Limited
Partner.
4.3 Retroactive Allocations Not Permitted. The profits, gains,
losses, expenses, deductions and credits of the Partnership are allocable to a
Partner only if they are paid or incurred by the Partnership during the portion
of the year such Partner is a member of the Partnership. As between a Limited
Partner and that Limited Partner's transferee, the General Partner may, in its
discretion, allocate all Partnership profit and loss between the transferring
Limited Partner and his or its transferee ratably on a daily basis.
Notwithstanding the foregoing, the General Partner shall in all events utilize
an accounting method for determining the allocable shares of the above items to
which the Limited Partners are entitled which complies with Section 706(d) of
the Internal Revenue Code and other applicable law, rules and regulations.
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4.4 Distributions from Partnership Operations.
(a) After the admission of the Limited Partners upon
completion of the Offering, the following shall apply:
(1) Distributions from operations shall be made
to the Partners, one percent (1%) to each Limited Partner for each Unit owned by
that Limited Partner and the remaining percentage to the General Partner.
(2) Distributions from the operations of the
Partnership for a fiscal year shall be made during or within ninety (90) days
following the end of the fiscal year. Distributions made within ninety (90) days
after the end of a fiscal year shall be deemed distributions for the prior
fiscal year unless specifically earmarked by the General Partner as
distributions for the current fiscal year.
(b) With respect to distributions made in accordance with
paragraph 4.4(a), such distributions shall only be made to Partners from the
"Distributable Cash Flow" of the Partnership. "Distributable Cash Flow" shall be
determined by the regularly employed independent accountant of the Partnership
using the accrual method of accounting. "Distributable Cash Flow" shall mean,
for the fiscal year for which a determination is being made, the gross receipts
of the Partnership received in the ordinary course of business less actual
payments and expenditures incurred in the ordinary course of business for proper
Partnership purposes. Payments and expenditures include, but are not limited to
the following:
(1) compensation paid to the General Partner
under this Agreement;
(2) reimbursements to the General Partner, or
affiliates, for out-of- pocket Partnership expenses incurred in connection with
the operation and management of the Partnership;
(3) principal and interest payments made on
Partnership indebtedness;
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(4) contributions, reservations, or allocations,
in amounts determined by the General Partner in its discretion, to Partnership
working capital, equipment purchases, replacements or repairs and contingency
reserves;
(5) obligations to third parties incurred in the
ordinary course of Partnership business.
(c) The General Partner shall use its best efforts to pay
Partnership obligations when due and shall not, in any material way, defer or
prepay obligations or otherwise engage in activity which would have the effect
of materially distorting Distributable Cash Flow for any period.
(d) The General Partner shall, in good faith, use its
best efforts to distribute to the Partners for each fiscal year of the
Partnership the Distributable Cash Flow available for that year, less any amount
the General Partner determines, in its sole discretion, should be retained by
the Partnership as working capital. No Partner shall have the right to demand
distributions.
4.5 Distributions Not in the Ordinary Course. The net cash
proceeds resulting from any financing or the refinancing of any loan secured by
property of the Partnership or from any voluntary or involuntary conversion of
the Partnership's property (other than the sale, exchange or other disposition
of all or substantially all of the Partnership's property) or from casualty
insurance proceeds or condemnation awards shall be applied to any reasonably
necessary restoration or repair of such property, to the repayment of any loan
secured by such property, and to reasonable reserves for working capital. The
balance of such net cash proceeds shall be distributed as provided in paragraph
4.6, as payments in partial (or if applicable, total), liquidation of the
Partnership.
4.6 Distributions on Liquidation of the Partnership. Upon complete
or partial liquidation of the Partnership, Partnership property, including the
proceeds received by the
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Partnership from the sale or other disposition of its assets, shall be applied
and distributed as follows:
(a) First, to the payment of debts and liabilities of the
Partnership and the expenses of liquidation in the order of priority as provided
by law;
(b) Then, to the setting up of such reserves as the
person required by law to wind up the Partnership's affairs may reasonably deem
necessary for any contingent liabilities or obligations of the Partnership,
provided that any such reserves shall be paid over by such person to an
independent escrow agent to be held by such agent or his successor for such
period as such person shall deem advisable for the purpose of applying such
reserves to the payment of such liabilities or obligations and, at the
expiration of such period, the balance of such reserves, if any, shall be
distributed as provided in paragraphs 4.6(c) through 4.6(e) below in the order
named;
(c) Then, to the repayment of any loans or advances that
may have been made by Limited Partners to the Partnership;
(d) Then, to the repayment of any loans or advances that
have been made by the General Partner to the Partnership;
(e) Then, within ninety (90) days after the date of
liquidation of the Partnership, the General Partner, or other liquidating
trustee, shall, after allocation of all items of income, gain, expense and
deduction in accordance with this Agreement, distribute, in cash or in kind, to
each of the Partners who have positive capital accounts the amount thereof. The
amounts of the positive capital accounts of the Partners, for purposes of this
paragraph, shall be determined after making all adjustments thereto which are
applicable for the year in which the liquidation occurs.
4.7 Qualified Income Offset. In the event any Partners
unexpectedly receive any adjustments, allocations, or distributions described in
subsections (4), (5) or (6) of Treasury Regulation Section 1.704-l(b)(2)(ii)(d),
items of Partnership income and gain shall be specially
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allocated to such Partners in an amount and manner sufficient to eliminate any
deficit balances in their capital accounts created by such adjustments,
allocations, or distributions as quickly as possible. Any special allocations of
items of income or gain pursuant to this paragraph 4.7 shall be taken into
account in computing subsequent allocations of profits pursuant to this Article
4, so that the net amount of any items SO allocated and the profits, losses and
all other items allocated to each Partner pursuant to this Article 4 shall, to
the extent possible, be equal to the net amount that would have been allocated
to each such Partner pursuant to the provisions of this Article 4 if such
unexpected adjustments, allocations or distributions had not occurred.
5. THE GENERAL PARTNER'S DUTIES AND COMPENSATION
5.1 Powers of the General Partner. Except as restricted by the
rights of the Limited Partners as described in this Agreement, the General
Partner shall have the exclusive right and power to manage and operate the
Partnership and to do all things necessary to carry out the purpose, business
and objectives of the Partnership.
5.2 Specific Rights and Powers. In addition to any other rights
and powers which it may possess pursuant to the Act, the General Partner shall
have, subject to the limitations elsewhere contained in this Agreement, all
specific rights and powers required for or appropriate to the operation and
management of the Partnership business, which, by way of illustration but not by
way of limitation, shall include the following rights and powers to the extent
that, in the General Partner's judgment, they are in furtherance of the best
interests of the Partnership:
(a) To take all action on behalf of the Partnership
necessary to accomplish the acquisition or lease of equipment, real property,
furniture, fixtures and related interests reasonably necessary to operate the
MRI Department, at such price, rental or amount for cash, securities or other
property, and upon such terms as it deems, in its sole discretion, to be in the
best interest of the Partnership and its purposes, including without limitation
to cause the
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Partnership to enter into an Exclusive Operating Agreement (the form of which is
attached hereto as Exhibit A) with the General Partner for the operation of the
MRI Department;
(b) To borrow money for Partnership purposes in the
ordinary course of the Partnership business, including borrowing from the
General Partner on market terms, approved by the General Partner, including
terms beyond the term of the Partnership;
(c) To acquire, enter into, perform or terminate any
contract of insurance which it deems necessary and proper for the protection of
the Partnership, for the conservation of its assets, or for any purpose
convenient or beneficial to the Partnership;
(d) To employ from time to time any persons or entities,
or whether affiliated with any Partner or not, for the operation and management
of the Partnership business, including, without limitation, accountants and
attorneys, on such terms and for such reasonable compensation as the General
Partner shall determine;
(e) To deposit or invest in bank or thrift accounts or
brokerage cash accounts such funds of the Partnership as are deemed from time to
time to be unnecessary for current operations;
(f) To prosecute, defend, settle or compromise any
actions or claims at the Partnership's expense as may be deemed necessary or
proper to enforce or protect the interest and property of the Partnership and to
satisfy any judgment or settlement;
(g) To establish and maintain reserve funds consistent
with the Partnership's operating and capital budgets or such greater amounts as
the General Partner deems is needed from capital and cash flow derived from the
Partnership's operations to provide for future maintenance, repair or
replacement of the assets of the Partnership and for general working capital
purposes:
(h) To pay any and all organizational expenses incurred
by the General Partner or the Partnership in the creation of the Partnership and
the Offering;
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(i) To pay any and all reasonable out-of-pocket expenses
incurred in connection with the operation and management of the Partnership;
(j) To enter into, execute, acknowledge, deliver, perform
and carry out contracts, ▇▇▇▇ of sale, assignments of leases and agreements of
every kind necessary or incidental to the accomplishment of the foregoing;
(k) To cause the Partnership to enter into such medical
or consulting services agreements as are appropriate to operate the MRI
Department and as described in the Summary;
(l) To serve as "Tax Matters Partner," with all attendant
rights and duties pertaining thereto as set forth in section 6221 through 6223
of the Internal Revenue Code and Treasury Regulations promulgated thereunder;
(m) To establish or modify the hours of operation of the
MRI Department;
(n) To admit additional limited partners to the
Partnership;
(o) To establish, approve, and administer, operating and
capital budgets for the Partnership each year during the term of the
Partnership; and
(p) To execute, acknowledge and deliver any and all
contracts, agreements, documents, instruments NECESSARY to effectuate the
foregoing. Notwithstanding any provision in this Agreement to the contrary, the
General Partner is not obligated to acquire, lease, or maintain any particular
MRI system, or a state-of-the-art MRI system or any other equipment or software
for the Partnership or the MRI Department.
5.3 Withdrawal of General Partner.
(a) At any time during the term of this Agreement, the
General Partner may, without approval or consent of the Limited Partners, sell,
assign, exchange, or otherwise transfer all or a part of its interest in the
Partnership ("General Partner Transfer").
(b) The General Partner shall be "deemed" to have
withdrawn from the Partnership upon the Partnership's dissolution and cessation
to exist, assignment for the benefit of creditors, filing of voluntary petition
in bankruptcy, judgment of bankruptcy or insolvency,
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withdrawal in violation of this agreement, removal for cause, General Partner
Transfer of all or a portion of its interest in the Partnership, or other event
of withdrawal described in the Act, particularly in section 23-16-5-2 of the
Act.
(c) Withdrawal of the General Partner in accordance with
this Agreement or a deemed withdrawal of the General Partner are referred to
hereinafter as "withdrawal."
(d) The withdrawal of a General Partner shall not entitle
it to be relieved from Partnership liabilities incurred while it was a Partner.
(e) The withdrawal of a General Partner shall not affect
its status, if any, as a Limited Partner in regard to Units it may hold.
5.4 Compensation of the General Partner. No salary or other
compensation shall be paid to the General Partner as compensation for services
rendered to the Partnership in its capacity as General Partner except as set
forth in this Agreement.
(a) The General Partner shall be entitled to
reimbursement for all reasonable out-of-pocket costs incurred in connection with
the Offering and the formation and establishment of the Partnership, including,
without limitation, legal and accounting fees, filing fees, printing, travel and
sustenance costs and other out-of-pocket costs and fees, as well as such
incurred by it prior to the closing of the Offering (the "Closing Date") in
connection with the development of the Partnership's business; and
(b) The General Partner shall be reimbursed, as an
expense of the Partnership, monthly for all of its reasonable out-of-pocket
expenses incurred in connection with the operation and management of the
Partnership, including without limitation the rent and other expenses associated
with leasing the G.E. Signa 1.5 Telsa MRI system or any other MRI system and any
other equipment necessary to the operation of the MRI Department, the rent under
the Net Ground Lease between Lakeshore Health System, Inc., d/b/a/ St. ▇▇▇▇
Medical Center, and American Health Services Corp. allocable to the MRI
Department, and rent payable to the General Partner for the space in the Center
in which the MRI Department is located; provided,
15
however, that in the event the Partnership is terminated pursuant to the
operation of paragraph 8.2(f) hereof, (1) the General Partner shall not be
entitled to reimbursement for any costs or expenses, (2) any such reimbursement
made by the Partnership prior to that time shall be returned to the Partnership
and (3) the General Partner shall reimburse the Partnership for any expenses
incurred by it prior to dissolution.
(c) The General Partner shall be entitled to receive, as
compensation for the management of the MRI Department and as an expense of the
Partnership, each month an amount which is equal to eight percent (8%) of the
collected "technical revenue" of the MRI Department. The term "technical
revenue" shall mean the gross receipts of the MRI Department, as collected, less
and excluding only the sums which may be payable pursuant to medical or
consulting services agreements that may be entered into by the Partnership.
Payment shall be made at such time or times as the General Partner may
determine.
5.5 Independent Activities.
The General Partner shall not be required to devote all of its
business time to the business of the Partnership but shall devote such time as
may be necessary for the discharge of the obligations and duties hereunder. The
General Partner may invest in or possess an interest in other business ventures
including ventures whose operations are similar to those of the Partnership and
the General Partner shall not be required to offer such business ventures or
investment opportunities to the Partnership.
6. RIGHTS AND LIABILITIES OF LIMITED PARTNERS.
6.1 Control. A Limited Partner shall not participate in the
control of the Partnership's business as the concept of participation in the
control of a partnership's business is defined in and interpreted under the Act.
(a) VOTING. A Limited Partner shall have the right to
vote with respect to the matters set forth in this Agreement, or as otherwise
provided in the Act.
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(b) Unit Voting. Each Limited Partner shall have one vote
for each Unit, except as restricted in this Agreement.
6.2 Liability of Limited Partners. The liability of each Limited
Partner to the Partnership shall be limited to his or its capital contribution.
6.3 Loans and Other Business Transactions with the Partnership. A
Limited Partner may, with the consent of the General Partner, lend money to and
transact other business with the Partnership on such terms as the Limited
Partner and the General Partner agree. No Limited Partner shall be permitted to
make a loan upon the security of Partnership property if, at the time such
secured loan is made, the assets of the Partnership are not sufficient to
discharge Partnership liabilities to non-Partners.
6.4 Actions Requiring Consent of Limited Partners.
(a) The Limited Partners shall have the right to approve
or disapprove the following matters, without the vote of the General Partner,
upon the affirmative vote or written consent of Limited Partners holding a
majority of the Units then outstanding, including Units held by the General
Partner in its capacity as Limited Partner, except as further limited by this
Agreement:
(1) sale, exchange or other transfer of all or
substantially all of the Partnership's assets not in the ordinary course of
business;
(2) when requested by the General Partner,
approval of its voluntary withdrawal as General Partner;
(3) removal of the General Partner in accordance
with this Agreement;
(4) change the nature of the Partnership's
business;
(5) continuation of the business of the
Partnership upon the withdrawal of the General Partner;
(6) if the business of the Partnership is to be
continued upon the withdrawal of the General Partner, admission of any new or
substitute general partners.
17
(b) For the purposes hereof, the General Partner shall
have no vote of its Limited Partner Units in regard to its removal as General
Partner, or in regard to the continuation of Partnership business upon the
General Partner's removal or in regard to the selection of a replacement General
Partner upon the General Partner's removal.
6.5 Removal of a General Partner for Cause.
(a) A General Partner may be removed for cause by the
written vote of a majority of the Limited Partner Units, other than Units held
by the General Partner as a Limited Partner. Removal for cause shall be deemed
to be a withdrawal of the General Partner. Cause for removal of a General
Partner shall exist only if the General Partner engages in fraud or willful
gross misconduct related to the General Partner's performance of its duties
hereunder.
(b) American Health Services Corp. may also be removed as
General Partner in accordance with Article 5 hereof.
(c) The removal of a General Partner hereunder shall be
effected by the designee of the Limited Partners sending of written notice
thereof to such General Partner and shall be effective ninety-one (91) days
after removal unless the notice specifies an earlier date.
6.6 Limited Partner Actions After General Partner Withdrawal.
Within ninety (90) days after the withdrawal of the General Partner, the Limited
Partners shall elect to continue or terminate the business of the Partnership.
If a majority of the Limited Partners' Units (other than those held by the
General Partner) do not elect to continue the business, the Partnership shall be
dissolved.
(a) If the Partnership is to be terminated, the Limited
Partners shall elect a liquidating trustee and proceed to have the affairs of
the Partnership wound up as provided herein.
(b) If the business of the Partnership is to be
continued, the Limited Partners shall elect a replacement General Partner under
paragraph 6.4 who accepts the designation as of the date of the withdrawal.
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(1) In that event the Partnership Agreement
shall be amended to admit the replacement General Partner and the subsequent
agreement shall otherwise be in form and substance similar to this Agreement.
(2) The General Partner, the General Partner who
has withdrawn, or who has been deemed to have withdrawn as a General Partner,
appoints the Limited Partners, and each of them, as its attorney-in-fact,
coupled with an interest, to execute and deliver and file on its behalf and on
behalf of the Partnership, an amendment to this Agreement and to the Certificate
of Limited Partnership, reflecting its withdrawal, the continuation of the
Partnership business and the substitution of the replacement General Partner.
(c) Prior to the effective date of withdrawal of the
General Partner, the successor General Partner shall purchase at least a one
percent (1%) interest in the Partnership as a General Partner from the
withdrawing General Partner for an amount equal to such General Partner's
capital account. Any remaining Partnership interest held by the withdrawing
General Partner shall be automatically converted to that of a Limited Partner
("Converted Limited Partner"), effective as of the date of withdrawal. Such
Converted Limited Partner shall share in the income, gain, loss, and deductions,
and each item thereof, in the same manner as its General Partner interest;
provided, however, that such Converted Limited Partner shall have no right to
participate in the management and affairs of the Partnership and, further, that
such event shall not affect any rights or liabilities of the withdrawn General
Partner which matured prior to such withdrawal or the value, if any, at the time
of such withdrawal of such withdrawn General Partner's Partnership interest.
6.7 Limited Partner Meetings and Voting. Meetings of the Limited
Partners shall be held at any place within Lake County, Indiana, stated in any
proper notice of a meeting as the person calling the meeting may designate.
(a) Meetings of the Limited Partners to vote on any
matters on which the Limited Partners are authorized to take action under this
Agreement may be called by either of
19
the General Partner or by one or more Limited Partners holding not less than ten
(10%) percent of the outstanding Units. The General Partner shall call at least
one meeting of the Limited Partners per year during the term of this Agreement.
(b) Upon a request in writing to the General Partner by
any person(s) entitled to call a meeting, the General Partner shall cause notice
to be given to the Limited Partners that a meeting will be held at a time
requested by the person calling the meeting, not less than fifteen (15) nor more
than sixty (60) days after notice is given to the General Partner of the
request.
(c) Written notice of the meeting shall be given to the
Limited Partners either personally or by first class mail not less than ten (10)
nor more than sixty (60) days before the date of the meeting. The notice shall
state the place, date and hour of the meeting and include a detailed statement
of the action proposed, including a verbatim statement of the wording of any
resolution proposed for adoption by the Limited Partners and of any proposed
amendment to this Agreement.
(d) The Partnership shall provide for proxies or written
consents which specify a choice between approval and disapproval or each matter
to be acted upon at the meeting.
(e) Limited Partners holding a majority of the Units
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of Partners. Limited Partner decisions shall be made by majority
vote of the Units outstanding, except when a higher vote percentage is required
by this Agreement.
(f) Any action which may be taken at any meeting of the
Partners may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by Partners having no less than the minimum
number of votes that would be necessary to authorize or take that action at a
meeting at which all entitled to vote thereon were present and voted.
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(g) In the event the General Partner, or Limited Partners
representing more than ten percent (10%) of the Units, request a meeting for the
purpose of discussing or voting on the matter, the notice of a meeting shall be
given in accordance herewith and no action shall be taken until the meeting is
held.
(h) Except as otherwise specifically provided in this
paragraph, meeting notices and procedures shall be in conformity with the Act,
as from time to time amended, or with any successor statutory provision.
7. RECORDS REQUIRED TO BE MAINTAINED IN THE STATE OF INDIANA
7.1 Records. The General Partner shall keep at the Partnership's
principal place of business the following Partnership documents:
(a) A current list of the full name and last known
business address of all Partners, separately identifying, in alphabetical order,
the General Partner and the Limited Partners;
(b) A copy of the Certificate of Limited Partnership and
all certificates of amendment thereto, together with executed copies of any
powers of attorney pursuant to which any certificate has been executed;
(c) Copies of the Partnership's federal, state, and local
income tax returns and reports, if any, for the six (6) most recent years;
(d) Copies of the original of this Agreement and all
amendments thereto;
(e) Copies of any financial statements of the Partnership
for the three (3) most recent years; and
(f) Any other documents required to be maintained by the
Partnership pursuant to the Act
7.2 Other Records. All other books and records, including the
books of account, of the Partnership, not required to be maintained at the
office of the Partnership under the Act may be maintained at the office of the
General Partner at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Provided, however, upon the reasonable request of a
Limited Partner, such other records shall be made available for the Limited
Partner at the office of the Partnership.
7.3 Delivery to Limited Partner and Inspection: Financial Reports.
(a) Upon the request of a Limited Partner, the General
Partner shall promptly deliver to the requesting Limited Partner, at the expense
of the Partnership, a copy of the information required to be maintained by
paragraphs 7.1(a), (b) or (d) hereof.
(b) Each Limited Partner has the right upon reasonable
request to inspect and copy (at the requesting Limited Partner's expense except
as provided in paragraph 7.3(a) hereof) the records of the Partnership during
normal business hours at the Partnership office.
(c) The General Partner, at the Partnership's expense,
shall promptly furnish to a Limited Partner a copy of any amendment to this
Agreement executed by the General Partner pursuant to a power of attorney from
the Limited Partner.
(d) The General Partner, at the Partnership's expense,
shall send to each Partner within ninety (90) days after the end of each taxable
year the information necessary for the Partner to complete that Partner's
federal and state income tax or information returns and there shall be included
with such information a copy of the Partnership's federal, state and local
income tax or information returns for the year.
(e) If the Partnership has more than thirty-five (35)
Limited Partners:
(1) the General Partner shall cause an annual
report to be sent to each of the Partners not later than one hundred twenty
(120) days after the close of the fiscal year; that report shall contain a
balance sheet as of the end of the fiscal year and an income statement and
statement of changes in financial position for the fiscal year; and
(2) upon the written request of Limited Partners
representing at least five percent (5%) of the Units, the General Partner shall
send to each Partner within thirty (30) days, an income statement of the Limited
Partnership for the initial three month, six-month, or
22
nine-month period of the current fiscal year ended more than thirty (30) days
prior to the date of the request and a balance sheet of the Partnership as of
the end of that period; and
(f) The financial statements referred to in paragraph
7.3(e) shall be accompanied by the report thereon, if any, of the independent
accountants engaged by the Partnership or, if there is no such report, the
certificate of the General Partner of the Partnership that such financial
statements were prepared without audit from the books and records of the
Partnership.
7.4 Books of Account. The Partnership shall keep at all times
during its existence proper and complete books of account in accordance with
generally accepted accounting principles, and such books shall be open for
inspection and copying by any Partner at any time during reasonable business
hours at that Partner's expense except as provided in paragraph 7.3 hereof. Such
books initially shall be kept on an accrual basis, provided, however, that the
General Partner may from time to time change the accounting basis on which such
books are kept as may be required or permitted by law.
7.5 Fiscal Year. The fiscal year of the Partnership shall end on
the 31st day of December in each year during the term of the Partnership.
7.6 Federal Income Tax Elections. All elections required or
permitted to be made by the Partnership under the Internal Revenue Code shall be
made by the General Partner in such manner as will, in its opinion, be most
advantageous to Partners holding at least a majority of the Units.
7.7 Election to Adjust Basis. In the event of a distribution of
property to a Partner or the transfer of an interest in the Partnership by sale,
exchange or upon the death of an individual, a Partner or cessation to exist of
a corporate Partner, the General Partner may, in its discretion, cause the
Partnership to file an election under Section 754 of the Internal Revenue Code
in accordance with the regulations issued thereunder to adjust the basis of
23
Partnership property in the manner provided in Section 734 and 743 of the
Internal Revenue Code.
8. TERM.
8.1 Basic Term. The Partnership shall commence on the date the
Certificate of Limited Partnership is filed with the Indiana Secretary of State
and shall continue for ten (10) years after such filing date, unless sooner
terminated or dissolved as provided in this Agreement, or unless extended by the
General Partner and all of the Limited Partners.
8.2 Dissolution. The Partnership shall be dissolved and its
affairs shall be wound up, and its assets liquidated, upon the happening of any
of the following:
(a) The affirmative vote or written consent of the
General Partner and Limited Partners holding at least a majority of the Units
outstanding;
(b) The sale of all or substantially all of the-assets of
the Partnership;
(c) The expiration of the term of the Partnership as
provided for in paragraph 8.1 above;
(d) The entry of a decree of judicial dissolution of the
Partnership under the Act;
(e) Ninety-one (91) days after the withdrawal of the
General Partner, unless the Limited Partners, before that date, elect to
continue the business of the Partnership, and elect a replacement General
Partner who consents to and accepts the designation as General Partner as of the
date of withdrawal;
(f) The General Partner fails or refuses to acquire the
interest of the Limited Partner(s) as required under Article 11 hereof by paying
the price therefor within the time therein specified; but such termination shall
not reduce or diminish any damage claims the Limited Partners may have against
the General Partner for breach of contract or otherwise.
8.3 Liquidation. Upon termination of the Partnership, the General
Partner or, if there is no General Partner, such other party as shall be
designated by the Limited Partners,
24
shall immediately proceed to file the Certificate of Cancellation as provided in
this Agreement, wind up the Partnership's affairs and liquidate the Partnership.
A reasonable time shall be allowed for the orderly liquidation of the
Partnership and the discharge of liabilities to its creditors so as to enable
the Partnership to minimize any losses attendant upon liquidation. Any gain or
loss on disposition of Partnership property in liquidation shall be credited or
charged to the Partners in accordance with the provisions of Article 4.
9. TRANSFERS OF LIMITED PARTNERS' PARTNERSHIP INTERESTS.
9.1 Lifetime Transfers of Limited Partners' Partnership Interests.
A Limited Partner during his or its lifetime may not transfer, sell, assign,
encumber of otherwise dispose ("Transfer") all or any part of his or its Units
or other economic interest as a Limited Partner in and to the Partnership, its
capital, profits and losses, except to individuals or entities (an "Eligible
Limited Partner") meeting the requirements set forth in paragraphs 2.1(l)-(4)
herein, contingent upon the following:
(a) the General Partner is satisfied that the assignment
will not impair the ability of the Partnership to be taxed as a partnership and
that the transfer does not violate applicable federal and state securities laws;
(b) if requested, such Limited Partner furnishes an
opinion of counsel, satisfactory in form and substance to the General Partner
and to the Partnership's counsel, to the effect that such assignment will not
violate federal or any state securities laws;
(c) the transferee represents that he is acquiring the
interest for his own account for investment and not with a view to the
distribution thereof;
(d) the transferee agrees to comply with the terms of
this Agreement and to execute any and all documents that the General Partner may
deem necessary in connection with the assignment and substitution;
(e) such assignment, taken together with other prior
transfers, shall not result in a termination of the Partnership for Federal
income tax purposes; and
25
(f) the General Partner consents thereto, which consent
may be withheld in its sole discretion.
9.2 General Partner's Right of First Refusal. A Limited Partner
may not Transfer all or any part of his or its Units or other economic interest
as a Limited Partner in and to the Partnership, its capital, profits and losses
unless and until the Limited Partner has first offered to sell all of his or its
Units to the General Partner at a price equal to the Adjusted Book Value
thereof, as determined under Article 12 of this Agreement, or the price offered
in a bona fide offer of a third party, whichever is less. The Limited Partner
shall notify the General Partner in writing of its or his intention to Transfer
his or its Units within ten (10) days of receiving a bona fide offer from a
third party for such Units or deciding to Transfer such Units. Such notice shall
set forth the terms and conditions of any bona fide offer from a third party.
The General Partner shall notify in writing the Limited Partner as to whether it
will exercise its right under this paragraph 9.2 to purchase the Limited
Partner's Units within thirty (30) days of receiving such notice. Any purchase
of Units by the General Partner under this paragraph 9.2 shall be completed
within ninety (90) days of the General Partner's receipt of the Limited
Partner's notice provided under this paragraph 9.2.
9.3 Death, Bankruptcy or Incompetency of a Limited Partner. Upon
the death, Bankruptcy or adjudication of incompetency, termination or
dissolution of a Limited Partner, the Partnership shall not be dissolved and the
personal representative, guardian or other successor-in-interest of such Limited
Partner shall have all of the rights of such Limited Partner for the sole
purpose of settling the estate or business of such Limited Partner and shall be
liable for all his or its liabilities and obligations to the Partnership. In
addition, such personal representative, guardian or other successor-in-interest
of such Limited Partner shall have the obligation to transfer the Limited
Partner's interest in the Partnership in accordance with the terms and
provisions of Article 9.
26
9.4 Substitute Limited Partner. No assignee or transferee of a
Unit, or part thereof, or any other person interested in the Partnership as a
prospective Limited Partner succeeding to the interest of a Limited Partner,
shall become a substitute Limited Partner with full rights as a Limited Partner
unless all of the following conditions are satisfied:
(a) the assigning or transferring Limited Partner so
provides in the instrument of assignment;
(b) the assignee or transferee executes such documents as
the General Partner may reasonably require so that he will be bound by all the
provisions of this Agreement, AS it may then be amended, any Certificate of
Limited Partnership, as it may then be amended, and any other agreement by which
the General Partner may reasonably require the substitute Limited Partner to be
bound;
(c) the assignee or transferee agrees to bear all costs
and expenses, including legal fees of the Partnership, incurred in effecting
such substitution;
(d) the assignee or transferee is an Eligible Limited
Partner;
(e) the legal opinions required in paragraph 9.1 take
into account that the person will be a substitute Limited Partner; and
(f) the General Partner shall have consented thereto,
which consent may be withheld in its sole discretion.
9.5 Amendment for Transfer. Each Partner hereby consents to the
execution and recordation on his or its behalf by the General Partner of any
amendment hereto any Certificate of Limited Partnership required for the purpose
of admitting as a Limited Partner the transferee of any Unit or interest in the
Partnership as provided above in this Article 9, and the execution and
recordation on his or its behalf of any other instruments required in connection
therewith, and the General Partner is hereby granted the right to admit such
transferee upon all of the terms set forth above. Each Partner agrees to
execute, at the request of the General Partner,
27
all documents necessary or desirable to effect the transfer of any Unit in the
Partnership pursuant to this Article 9.
10. OPTION TO PURCHASE UNITS AT DESIGNATED INTERVALS.
10.1 Grant of Options.
(a) Each Limited Partner (other than the General Partner
with respect to Limited Partnership Units owned by it) hereby grants an option
to the General Partner to purchase upon the terms and conditions set forth in
this Article 10 all or any number of the Units of such Limited Partner as
described herein.
(b) During each year the Partnership exists, from January
1 to January 31 inclusive (the "Designated Interval"), that occurs subsequent to
December 31, 1992, the General Partner shall have the option, exercisable for
any reason at the sole determination of the General Partner by notice to each
Limited Partner, to purchase pro rata from the Limited Partners (other than the
General Partner) and, upon exercise of such options, each such Limited Partner
shall sell all or such portion of such Limited Partner's Units in the
Partnership as the Article 10 Notice of Purchase (as defined below) specifies.
(c) The Article 10 Notice of Purchase shall be in writing
and shall state the number of Units to be acquired pursuant to the exercise of
this option. Except as limited under paragraph 10.1(a) above, each exercise of
this option shall extend to each Limited Partner pro rata in the ratio that each
Limited Partner's Units bears to the total number of Limited Partnership Units
held by all Limited Partners to whom the option extends. As a result of the
exercise of this option, fractional Units may be acquired by the General Partner
resulting in fractional Units being retained by the Limited Partners. Through
one or more exercises of this option, the entire interest of each Limited
Partner in this Partnership, may be acquired by the General Partner. The
purchase price to be paid by the General Partner, determined pursuant to
paragraph 10.3 hereof, shall be prorated and paid to each Limited Partner in the
same manner as above specified.
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(d) The payment to be made to such Limited Partners
pursuant to this Article is, and shall be conclusively deemed to be, in complete
payment and satisfaction of the Units or fractional Units of such Limited
Partner (and of any and all parties claiming by, through, or under such Limited
Partner) with respect to the Units or fractions of Units so purchased including,
without limitation, any rights against the Partnership and (insofar as the
affairs of the Partnership are concerned) against the Partners with respect to
Units or fractions of Units so purchased.
10.2 Exercise of Option. Exercise of the option granted in
paragraph 10.1 hereof shall be accomplished by written notice (the "Article 10
Notice of Purchase') delivered pursuant to paragraph 15.1 hereof to the Limited
Partners, or the authorized representatives or successors thereof. The General
Partner, if it decides to exercise such option, must exercise such option by
giving the Article 10 Notice to Purchase within the Designated Interval.
10.3 Option Price. The option price for each Limited Partnership
Unit, or fraction thereof, for purposes of this Article 10 shall be an amount
(the "Option Amount") equal to the "Adjusted Book Value" thereof, as determined
under Article 12 of this Agreement.
10.4 Closing. Within thirty (30) days after the Option Amount is
determined in accordance with Article 12 of this Agreement, or such later date
as determined by the General Partner with the agreement of the Limited Partners
or the Limited Partners' representatives or successors, as the case may be, the
General Partner shall pay to the Limited Partners (or the representative or
successor of either) the Option Amount for each of the Limited Partnership Units
(or fractional Units) as to which the option is then being exercised. The
closing shall take place at the office of the Partnership, and in exchange for
the Option Amount for each Unit purchased, each of the Limited Partners shall
execute and deliver to the General Partner an assignment of his or its interest,
free of liens and encumbrances, stating in such assignment that as to those
Units the General Partner may become a substituted Limited Partner.
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11. MANDATORY BUY BACK OF LIMITED PARTNER'S INTEREST IN PARTNERSHIP
(a) If under applicable federal or state law, or rules or
regulations promulgated thereunder, it becomes unlawful for physicians or other
health care providers who are Partners to refer patients to the MRI Department
or Partnership or should reimbursement by Medicare or Medicaid in connection
with such referrals becomes unlawful, the General Partner shall acquire, and the
Limited Partners shall sell, all of the Units at a price per Unit which is the
greater of $l,000 or the Adjusted Book Value of the Unit.
(1) The purchase and sale shall be effective as of the
date of such law, rule of regulation. From and after that date the Limited
Partners shall have no interest in the Partnership except as a creditor for the
payments for Units.
(2) If the General Partner defaults in its obligation to
purchase Units (and such defaults shall mean the Units are not purchased within
30 days after the price is determined under Article 8) then the Partnership
shall terminate in accordance with Article 8; however, termination shall not
release the General Partner from any claim by Limited Partners for damages or
sums due.
(b) Anything, contained in paragraph 11(a)(2) above to the
contrary notwithstanding if the law as adopted defers effectiveness to allow for
"ease-by-ease" approval by the applicable governing agency of an arrangement or
interest, the General Partner, upon notice to the Unit holders and upon advice
of counsel, may, in its discretion, apply for a ruling provided that from and
after the effective date of the law until a favorable ruling is obtained:
(1) Limited Partners shall have no right to vote Units;
(2) Limited Partners shall neither earn profits and
losses nor receive distributions; and
(3) Distributable cash flow shall be deposited in escrow.
If a favorable ruling is not obtained, the Units shall he purchased as
of the date the law is effective in accordance with paragraph (a) above. If a
favorable ruling is obtained,
30
the escrow will terminate and rights and interests of Limited Partners shall be
retroactively reinstated.
12. ADJUSTED BOOK VALUE OF A PARTNERSHIP INTEREST.
12.1 Adjusted Book Value is Agreed Fair Market Value. When the
interest of a Partner is to be acquired under this Agreement at a price which is
equal to the "Adjusted Book Value" thereof, the provisions of this Article shall
apply. The Partners agree, that as the interest in the Partnership lack
marketability, the "Adjusted Book Value" of interests reflect the fair market
value thereof.
12.2 Adjusted Book Value of the Partnership. First, the "Adjusted
Book Value" of the Partnership's assets and liabilities shall be determined as
of the effective date of withdrawal of the Partner, or exercise of the option,
or determination of the obligation to purchase and sell Partnership Units
whichever is applicable, by the then regularly employed independent accountant
of the Partnership, and such determination shall, if made in good faith, and if
not patently erroneous, be binding and conclusive upon the parties. The
"Adjusted Book Value" shall be equal to the Partnership book value after that
book value has been computed observing the adjustments hereinafter described.
Such computation shall be made by the independent accountant of the Partnership,
without audit, in accordance with the accrual method of accounting regardless of
the method of accounting actually employed by the Partnership; however, the
following shall be observed.
(a) No allowance of any kind shall be made for goodwill
or any similar intangible asset of the Partnership unless such goodwill or other
intangible asset shall have been acquired by purchase by the Partnership and
shall appear as an asset on the Partnership's books and records at the date of
termination.
(b) All accounts payable shall be valued at face amount,
less discounts allowable thereon.
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(c) All other liabilities shall be valued at face amount,
unless a contractual right to a discount has been obtained. No discount, or
valuation adjustment shall be made for favorable or unfavorable financing terms
or interest rates.
(d) All amounts receivable not theretofore written off
shall be valued at face amount less a reasonable reserve for non-collection, as
determined by the accountant.
(e) All furniture, fixtures, leasehold interests, and
equipment shall be valued at the greater of book value or fair market value.
(f) Inventory of supplies shall be computed at cost or
market value, whichever is lower.
(g) All unpaid and accrued federal, state, city, and
municipal taxes including, but not limited to, sales, payroll, unemployment
taxes, excise, franchise and income (but only to the extent such tax or taxes
are then applicable to Partnerships), shall be considered AS liabilities. No
special accrual of income taxes or capital gains taxes shall be made because of
any appraisal or fair market value adjustment to assets, nor for any recapture
of tax credits, nor for any potential savings to the Partnership or the
continuing Partner because of a Internal Revenue Code Section 754 basis
adjustment made as a result of the buy-out of the Partner.
(h) Real estate (for this purpose, a leasehold interest
is not real estate) shall be valued at fair market value.
(i) Contributions to any qualified pension profit sharing
or other qualified retirement plan for the benefit of Partnership employees (not
for employees of a Partner) for the fiscal year of the Partnership in which the
date of determination falls shall be accrued as a liability and shall be
prorated for such fiscal year in accordance with the prior accounting procedures
of the Partnership.
(j) Marketable securities shall be valued at fair market
value.
(k) In the event of any pending or known claims for
professional or other liability which are not fully covered by insurance, the
accountant shall accrue any estimated
32
loss therefrom as a liability of the Partnership to the extent such accrual
shall be required under the Statement of Financial Accounting Standards
applicable to Accounting For Contingencies, as the same shall be amended and
restated on the determination date. Each Partner and the Partnership agrees,
upon request of said accountants, to submit in connection with such
determination a certificate as to their knowledge of any pendency or probable
pendency or possible pendency of such claims. Said accountants shall be
authorized to take such action or actions as shall be required under said
Financial Accounting Standards for said accountants to make such determination
hereunder. The accountant shall consider, in making its estimate, the provisions
of this Agreement dealing with responsibility for professional claims which are
uninsured in whole or in part.
12.3 Value of Partnership Interest. The value of the Units (or
fraction thereof, as the case may be) or interest of the Partner whose interest
is being acquired shall be the value of his or its capital account after the
adjustments described above have been made as of the valuation date to the
assets and liabilities (and the net result reflected in the income and capital
accounts of the Partners), and after the income accounts have been merged into
the capital accounts.
12.4 Fair Market Value Determination. When values are to be
determined at fair market value, and a regular trading market for the asset does
not exist, the value of the asset shall be determined in accordance with this
paragraph. The fair market value of the asset shall be determined by mutual
agreement of the purchaser and the Partner(s) selling the Units or interest
being valued hereunder. The value so determined shall be submitted in writing,
signed by the selling Partner(s) and purchaser, to said accountants within ten
(10) days after said accountants shall make a written request for such
determination.
(a) If the selling Partner(s) and purchaser shall not agree
on the value within said ten (10) day period, they shall each promptly and
within five (5) days designate a qualified appraiser to value the property and,
if the appraisers cannot reach mutual agreement on such
33
value within fifteen (15) days, the appraisers shall within five (5) days
designate a third such qualified appraiser and a majority decision of such
appraisers shall be binding.
(b) In the event the appraisers cannot agree on the
choice of the third appraiser or, if the three appraisers cannot agree on the
valuation within fifteen (15) days after the date the third appraiser is
designated, either the purchaser or the selling Partner(s) shall refer the
matter to arbitration before three arbitrators in accordance with the Rules of
Conciliation and Arbitration of the American Arbitration Association, and the
decision of arbitration shall be final and binding on the parties.
(c) Notwithstanding any other provision contained in this
paragraph to the contrary, if such valuation shall be submitted for appraisal or
arbitration, the date of any closing of the purchase specified herein shall take
place within thirty (30) days after the determination of such value by appraisal
or arbitration if such determination by appraisal or arbitration shall not be
made before the closing date otherwise provided for herein.
12.5 Costs of Determination of Adjusted Book Value.
(a) All costs of determining the Adjusted Book Value and
the purchase price of a selling Partner's interest hereunder including, but not
limited to, accounting fees, appraisal fees, and other costs but excluding the
expenses of arbitration and excluding legal fees, shall be paid for by the
purchaser. Such costs, if paid for by the Partnership, shall not be taken into
account in determining the liabilities of the Partnership as of the valuation
date.
(b) Each party shall pay its legal expenses, provided,
however, in the event of arbitration, expenses shall be paid as determined under
those provisions of this Agreement dealing with arbitration.
12.6 Miscellaneous.
(a) No selling Partner shall have interest in the
Partnership after its withdrawal, or other event providing for the purchase of
Units hereunder, except as a creditor for the payment for his or its Units.
34
(b) The purchaser shall, upon purchase of the selling
Partner's Units, indemnify and save the withdrawing Partner harmless from any
Partnership liabilities appearing on the books of the Partnership as to which
the selling Partner was liable, and shall cause the same to be paid in
accordance with their terms.
13. INDEMNIFICATION.
13.1 Indemnification of the General Partner.
(a) The Partnership shall indemnify, defend and hold
harmless the General Partner and its agents and employees, if any, from and
against any loss, liability, damage, cost or expense (including legal fees and
expenses incurred in defense of any demands, claims or lawsuits) arising from
acts or omissions concerning the business or activities undertaken by or on
behalf of the Partnership from any source including, without limitation, any
demands, claims or lawsuits initiated by a Limited Partner (or assignee), so
long as such acts or omissions were taken in good faith and in a manner
reasonably believed by the General Partner to be in, or not opposed to, the best
interests of the Partnership; provided that no indemnity shall be made with
regard to an action or suit by or in the name of the Partnership or a Limited
Partner if the conduct which was the basis for such liability was found by a
court of competent jurisdiction, upon entry of a final judgment, to be the
result of gross negligence or reckless or intentional misconduct or breach of
fiduciary duty, unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that despite the
adjudication of liability but in view of all circumstances of the case, the
defendant or respondent is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper; and provided further that nothing
contained herein shall increase the liability of any Limited Partner to the
Partnership beyond the amount of the capital contributed by him or it, plus his
or its share of undistributed profits, if any, in the Partnership.
35
(b) The Partnership shall advance to any person entitled
to indemnification pursuant to this Article such funds as shall be required to
pay legal fees and expenses incurred in defense of any demands, claims or
lawsuits.
13.2 Indemnification of the Partnership. In the event the
Partnership is made a party to any claim, dispute or litigation or otherwise
incurs any loss or expense as a result of or in connection with any Partner's
(or assignee's) obligations or liabilities unrelated to the Partnership
business, such Partners or assignees cumulatively, jointly and severally, shall
indemnify and reimburse the Partnership for all loss and expense incurred,
including reasonable attorneys' fees. In no event shall this obligation be
deemed to constitute a limited partnership, a general partnership, or enlarge
the liability of any Limited Partner as a Limited Partner.
13.3 Indemnification for Claims Regarding Medical Activities. The
Partnership will not provide professional medical services and No Limited
Partner will provide medical services on behalf of the Partnership either in his
or its capacity as physician or as Limited Partner. However, if the Partnership,
the General Partner or any Limited Partner is sued as a result of the medical
activities of any other Limited Partner(s), then the Limited Partner(s) whose
activity resulted in a claim being made shall (jointly and severally) indemnify,
defend and hold harmless the Partnership, the General Partner, the other Limited
Partners and all of their officers, directors, agents and employees, if any,
from and against any loss, liability, damage, cost or expense (including without
limitation legal fees and expenses incurred in defense of any demands, claims or
lawsuits) arising from or related to that claim of medical malpractice.
14. POWER OF ATTORNEY.
14.1 Appointment of Attorney-in-Fact. Each Limited Partner hereby
grants to the General Partner a special power of attorney, constituting and
appointing the General Partner as the Limited Partner's attorney-in-fact, with
power and authority to act in his or its name and on his or its behalf to
execute, acknowledge and swear to in the execution, acknowledgment, filing and
delivering of the following documents:
36
(a) The Certificate of Limited Partnership, and any
amendment to the Certificate of Limited Partnership or this Agreement which,
under the laws of the State of Indiana or the laws of any other state are
required to be executed or filed or which the General Partner deems advisable to
execute, file or deliver;
(b) Any other instrument or document which may be
required to be filed or delivered under the laws of any state or by any
governmental agency, or which either General Partner deems advisable to file or
deliver; and
(c) Any instrument or document which may be required to
effect the continuation of the Partnership, the admission of additional or
substituted Limited Partners or general partners, or the dissolution and
termination of the Partnership (provided the continuation, admission or
dissolution and termination are in accordance with the terms of this Agreement),
or to reflect any deduction in the amount of capital contributions of Partners.
The General Partner shall promptly furnish to each Limited
Partner a copy of any amendment to this Agreement executed by it pursuant to a
power of attorney from the Limited Partners.
14.2 Nature of Power. The power of attorney granted by each Limited
Partner under this Article as limited by paragraph 14.1:
(a) Is a special power of attorney coupled with an
interest, is irrevocable, shall survive the death or incapacity of the granting
Limited Partner;
(b) May be exercised by the General Partner acting for
each Limited Partner by listing all of the Limited Partners executing any
instrument with a signature of the General Partner or one of the officers of the
General Partner acting as an attorney-in-fact for all of the Limited Partners;
and
(c) Shall survive an assignment by a Limited Partner of
all or any portion of his or its limited partnership interests in the
Partnership but only until the assignee of such limited partnership interests
shall (1) be admitted as a substitute Limited Partner and, (2)
37
execute and acknowledge a power of attorney similar to the one granted by each
limited partner pursuant to this Article.
15. MISCELLANEOUS.
15.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing, signed by or on behalf of the person
giving the notice, and shall be personally delivered or sent by first class
mail, postage prepaid, to the person or persons to whom such notice is to be
given, addressed, in the case of THE Partnership or the General Partner, to the
principal place of business of the Partnership and, if to a Limited Partner, to
the business or residence address set forth in the current list maintained by
the Partnership; provided, however, that each Limited Partner may from time to
time, by notice to the General Partner in accordance with this Agreement,
specify a different address to which notice to such Limited Partner shall be
delivered. All notices shall be deemed to have been sufficiently given or served
for all purposes when delivered personally or, if mailed, on the third (3rd) day
after deposit in the United States mail, postage and charges prepaid for
first-class mail, not including the day of deposit.
15.2 Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective executors, administrators, successors
and assigns.
15.3 Governing Law. This Agreement and all amendments hereto shall
be governed by the laws of the State of Indiana.
15.4 Amendment. Except as otherwise herein limited or provided,
this Agreement may be amended at any time or from time to time only by the vote
or written consent of the General Partner and those Limited Partners holding at
least a majority of the Units then outstanding; provided, however, that in no
event shall any provision of this Agreement be amended to change, without full
and adequate consideration therefor, the participation in profits, losses or
distributions of any Partner.
38
15.5 Entire Agreement. This Agreement contains the entire
understanding among the parties with respect to the subject matter hereof and
supersedes any prior understandings and agreements between them with respect
thereto.
15.6 Titles and Captions. Paragraph titles or captions contained in
this Agreement are inserted only as a matter of convenience and for reference
purposes and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provisions thereof.
15.7 Counterparts. This Agreement may be executed in several
counterparts and all so executed counterparts shall constitute one Agreement,
binding on all the parties hereto, notwithstanding that all the parties are not
signatories to the original or the same counterpart.
15.8 Waiver. No breach of any provision hereof shall be waived
unless in a writing signed by all the non-breaching Partners. Waiver of any one
breach shall not be deemed to constitute a waiver of any other breach of the
same or any other of the provisions hereof.
15.9 Severability. In the event that any provision of this
Agreement, in whole or in part (or the application of any provision to a
specific situation), is held to be invalid or unenforceable by the final
judgment of a court of competent jurisdiction after appeal or the time for
appeal has expired, such unenforceability shall be limited to such specific
provision or portion thereof (or to such situation), and this Agreement shall be
construed and applied in such manner as to minimize such unenforceability. This
Agreement shall otherwise remain in full force and effect.
15.10 Creditors None of the provisions of this Agreement shall be
for the benefit of or enforceable by any of the creditors of the Partnership or
the Partners.
15.11 Remedies The rights and remedies of the Partners hereunder
shall not be mutually exclusive, and the exercise by any Partner of any right to
which he or it is entitled shall not preclude the exercise of any other right he
or it may have.
39
15.12 Authority. Each individual executing this Agreement on behalf
of a partnership, corporation, pension plan or other entity warrants that he is
authorized to do so and that this Agreement will constitute the legally binding
obligation of the entity which he represents.
15.13 Attorneys' Fees. In the event of any litigation between the
parties to enforce any provision of this Agreement or otherwise with respect to
the subject matter hereof, the party who does not prevail shall pay to the
prevailing party all costs and expenses, including reasonable attorneys* fees,
incurred by the prevailing party.
15.14 Pronouns. All pronouns and any variations thereof shall be
deemed to refer to masculine, feminine, neuter, singular or plural, except where
the context of the Agreement clearly indicates otherwise.
40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENERAL PARTNER: INITIAL LIMITED PARTNER:
AMERICAN HEALTH SERVICES CORP.,
a Delaware corporation /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and
Chief Financial Officer
[APPROVED AND
FILED SEAL]
AMENDMENT TO THE
CERTIFICATE OF LIMITED PARTNERSHIP
OF MRI ASSOCIATES. L.P.
THE UNDERSIGNED, American Health Services Corp., a Delaware corporation
qualified to do business in the state of Indiana ("General Partner"), in
accordance with the provisions of Section 22-16-3-3 of the Indiana statutes,
hereby adopts the following amendment to the certificate of Limited Partnership
of MRI Associates, L.P., as filed with and approved by the office of the
Secretary of State on February 4, 1992.
1. The name of the Limited Partnership is MRI Associates, L.P.
2. Pursuant to paragraph 3.8 Of the Agreement of Limited
Partnership attached and incorporated by reference to the Certificate of Limited
Partnership, the Initial Limited Partner, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇, withdraws
from the Partnership as a result of certain Limited Partners being admitted to
the Partnership pursuant to the closing of the Offering on April 24, 1992.
IN WITNESS WHEREOF, the undersigned General Partner has executed the
foregoing amendment to the Certificate of Limited Partnership as of this
25th day of May, 1993.
GENERAL PARTNER:
AMERICAN HEALTH SERVICES CORP.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President and
Chief Financial Officer