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expressly state any mutually agreed-upon charitable purpose or
objective of the partnership.11
After the General Partnership acquired its 61-percent
interest, the Operating Partnership--which had long operated as a
successful for-profit enterprise and never held itself out as a
charity--never changed its organizing documents to acknowledge a
charitable purpose. Indeed, in at least one instance the
Operating Partnership agreement explicitly acknowledges the
partnership’s noncharitable objectives. Section 16.5.2 of the
Operating Partnership agreement, supra, in authorizing the
General Partnership to amend the Operating Partnership as
necessary to comply with legal requirements, specifies that this
authority may be exercised only if “such amendments do not alter
the economic objectives of the partnership or materially reduce
the economic return to the limited partners.”
11 The prefatory “Whereas” clauses to the General
Partnership agreement recite that RHS is entering into the
agreement to “insure the availability of high quality health
services in the most cost effective setting in which such
services can be rendered” and because “the use of an ambulatory
surgical center will contribute to RHS’s goal of providing
comprehensive health care services at an affordable price.” The
partnership agreement, however, does not reflect that this was a
mutual premise. The partnership agreement states as the purpose
of the partnership merely the acquiring of a 61-percent interest
in the Operating Partnership, stating that the General
Partnership “may engage in any and all other activities as may be
necessary, incidental or convenient to carry out the business of
the Partnership as contemplated by this Agreement.”
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