Exhibit 10.61
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AMENDED AND RESTATED
GENERAL PARTNERSHIP AGREEMENT
OF
CHILDRENS HEMOPHILIA SERVICES
DATED AND EXECUTED AS OF
NOVEMBER 10, 1998
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THIS AMENDED AND RESTATED GENERAL PARTNERSHIP AGREEMENT of CHILDRENS
HEMOPHILIA SERVICES (the "AGREEMENT" or "PARTNERSHIP AGREEMENT") is made and
entered into effective as of NOVEMBER 10, 1998, by and between CHILDRENS HOME
CARE, a California nonprofit public benefit corporation ("CHC"), AND HORIZON
HEALTH SYSTEMS, INC., a Tennessee corporation ("HHS"), as Partners of this
Partnership (as those terms are defined herein).
STATEMENTS OF FACT:
A. Childrens Hemophilia Services was formed as a general partnership
pursuant to the Act (as defined below) by CHC and Thomas J. McNulty, PharmD., an
individual, as the "Initial Partner" by their execution of the General
Partnership Agreement of CHC dated and adopted as of October 1, 1998 (the
"ORIGINAL PARTNERSHIP AGREEMENT").
B. CHC and HHS, as Partners of the Partnership, desire to amend and restate
the Original Partnership Agreement in its entirety, and to enter into and adopt
this Amended and Restated General Partnership Agreement of Childrens Hemophilia
Services effective as of the date hereof.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL TERMS, CONDITIONS, COVENANTS
AND AGREEMENTS SET FORTH HEREIN, AND WITH THE INTENTION OF BEING LEGALLY BOUND
HEREBY, THE PARTIES DO HEREBY AGREE AS FOLLOWS:
ARTICLE 1
FORMATION AND INTRODUCTORY MATTERS
1.1 FORMATION. A general partnership was formed on October 1, 1998, between
CHC and Thomas J. McNulty, PharmD., an individual, as the "Initial Partner,"
pursuant to the Uniform Partnership Act of California of 1994, Section 1600, EQ.
SEQ., of the California Corporations Code (the "ACT"). This Amended and Restated
General Partnership Agreement is hereby adopted as of November 10, 1998, as the
General Partnership Agreement of the Partnership and shall control the
organization and business affairs of the Partnership and the relationship,
rights and obligations of its Partners.
1.2 NAME. The name of the Partnership shall be "CHILDRENS HEMOPHILIA
SERVICES," or such other trade name or similar name as the Management Committee
shall from time to time determine to be in compliance with the Act and
applicable law.
1.3 PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
Partnership shall be located at 65 NORTH RAYMOND AVENUE, SUITE 305, PASADENA,
CALIFORNIA 91103, or at such other place or places as shall be determined by the
Partners within the County of Los Angeles, California.
1.4 BUSINESS AND PURPOSE. The general business and purpose of the
Partnership shall be to distribute pharmaceutical drugs, products and supplies
and to provide related services with a particular emphasis on the pediatric
population within a service area encompassed by a 100-mile radius of the City
and County of Los Angeles, California, and within the city limits of the City
Los Angeles, California (the "SERVICE AREA") to meet the blood factor infusion
therapy needs of patients of health care providers within the Service Area (the
"BUSINESS"). The Partnership may conduct any other lawful activity which the
Partnership deems is necessary,
incidental to or desirable in connection with the Business of the Partnership
and in maximizing the economic benefit of the Partnership, including, without
limitation, engaging in any and all lawful business activities related or
incidental thereto which are not otherwise specifically prohibited by this
Agreement. In accomplishing its purposes and carrying on its Business, the
Partnership may employ such personnel and obtain such other services and advice
that the Partnership may deem advisable.
1.5 TERM; TERMINATION. The term of the Partnership shall commence on
OCTOBER 1, 1998, and shall continue thereafter until the occurrence of any of
the events set forth in Article 11 hereof, at which time the Partnership shall
be terminated and dissolved in accordance with said Article 11.
1.6 STATUTORY FILINGS.
1.6.1 FICTITIOUS BUSINESS NAME STATEMENT. Promptly after the
commencement of the term of the Partnership, and upon any subsequent change in
its Partners, CHC shall sign and cause to be filed and published in Los Angeles
County, California, a Fictitious Business Name Statement pursuant to the
provisions of Section 17000, ET. SEQ., of the California Business and
Professions Code, registering the Partnership to conduct the Business under the
fictitious business name of "CHILDRENS HEMOPHILIA SERVICES" in said county, or
under any other trade names or such other similar names as the Management
Committee shall determine.
1.6.2 STATEMENT OF PARTNERSHIP AUTHORITY. Pursuant to Section 16303
of the Act, promptly after commencement of the term of the Partnership, the
Partners shall each sign and cause a Form GP-1, Statement of Partnership
Authority, to be filed in the office of the Secretary of State of California
and, if the Partners deem it necessary or appropriate, to cause the same to be
recorded in the Official Records of Los Angeles County, California, pursuant to
Section 16303 of the Act (the "STATEMENT OF Authority").
1.6.3 NECESSARY ACTS. The Partners shall execute, deliver, record,
file and publish, as appropriate, such other documents and instruments as may be
necessary or appropriate under the laws of any jurisdiction in which the
Partnership conducts its Business.
1.7 NO INDIVIDUAL AUTHORITY. Except as expressly set forth herein, no
Partner, acting alone or acting with any other non-Partner, shall have the
authority to act for, or to undertake or assume, any obligation, debt, duty or
responsibility on behalf of the Partnership.
1.8 TITLE TO PARTNERSHIP PROPERTY IN THE NAME OF THE PARTNERSHIP. All
Partnership Property owned, leased, consigned to or purchased by the Partnership
shall be held and owned, and conveyance made, in the name of the Partnership.
Partners have no ownership rights in specific Partnership Property and may not
transfer any interest in Partnership Property, either voluntarily or
involuntarily.
1.9 RECORD KEEPING DUTIES. Proper books and records shall be kept
regarding all Partnership transactions. The Management Committee may keep, or
cause to be kept, at the Partnership's principal office or such other place as
the Management Committee may direct, a record of all meetings, proceedings and
actions of the Management Committee and of committees appointed by the
Management Committee (if any). Such records may include the time and place that
the meeting was held or the action was taken, whether the meeting was regular or
special, and, if special, how authorized, the notice given, the names of those
present at committee
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meetings (if any), the Percentage Interests of the Partners represented at any
meetings of the Partners and the proceedings thereof.
ARTICLE 2
DEFINITIONS
Except as separately defined elsewhere in this Agreement, following are
the terms and their meanings as used in this Agreement:
2.1 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
2.1.1 Increase such Capital Account by any amounts which such
Partner is obligated to contribute to the Partnership (pursuant to the terms of
this Agreement or otherwise) or is deemed to be obligated to contribute to the
Partnership pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);
and
2.1.2 Reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions Regulations Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
2.2 "AFFILIATE" means any Person (defined below) which is controlling,
controlled by or under common control with a Partner, either directly or
indirectly, through one or more intermediaries. The term "CONTROL" (and any
derivation thereof) means, with respect to a corporation, the right to exercise,
directly or indirectly, more than FIFTY PERCENT (50%) of the voting rights
attributable to the controlled corporation and, with respect to any other Person
(other than a corporation), the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of the controlled
entity. For purposes of this Agreement, Childrens Hospital Los Angeles and
University Childrens Medical Group Inc., a tax-exempt California professional
corporation, shall each be deemed an affiliate of CHC.
2.3 "AGREEMENT" or "PARTNERSHIP AGREEMENT" means this Amended and
Restated General Partnership Agreement of the Partnership dated and adopted as
of November 10, 1998, as originally executed and as may be amended or restated
from time to time hereafter. Words such as "herein," "hereinafter," "hereto,"
"hereby" and "hereunder," when used with reference to this Agreement, refer to
this Agreement as a whole unless the context otherwise requires.
2.4 "BOOK DEPRECIATION" means for each Fiscal Year or other period, an
amount equal to the Depreciation, except that if the Gross Asset Value of any
asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, "book depreciation" with respect to such
asset shall be an amount which bears the same ratio to such beginning Gross
Asset Value as the Depreciation with respect to such asset for such year or
other period bears to such beginning adjusted tax basis. However, if the federal
income tax Depreciation with respect to such asset for such year is "zero," book
depreciation shall be determined with reference to such beginning Gross Asset
Value using any reasonable method selected by the Partnership.
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2.5 "BUSINESS" or "BUSINESS OF THE PARTNERSHIP" means the business of
the Partnership as defined in Section 1.4 hereof.
2.6 "CAPITAL ACCOUNT" means an account maintained by the Partnership
for each Partner, which shall be determined in accordance with Section 3.6
hereof.
2.7 "CAPITAL CONTRIBUTION" means the total contribution, in cash or
property, which a Partner has made or is obligated to make to the Partnership,
as set forth in Section 3.2 below, or as may be supplemented and identified on
EXHIBIT A attached hereto and made a part of this Agreement, which exhibit may
be amended or modified from time to time. All contributions of property shall be
valued at their initial Gross Asset Value.
2.8 "CODE" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision or provisions of any succeeding law.
2.9 "COMMITTEE MEMBER(S)" means one of four (4) Persons appointed by
the Partners to serve on the Management Committee (as defined below) pursuant to
Section 6.1 of this Agreement.
2.10 "DEPRECIATION" means, for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery reduction
allowable with respect to an asset for such Fiscal Year or other period.
2.11 "DISTRIBUTABLE CASH" means the portion of the cash in hand or in
bank accounts of the Partnership as the Management Committee deems, in its sole
discretion, is available for distribution to the Partners after reasonable
provision has been made for the current liabilities of the Partnership and a
reasonable allowance for Reserves.
2.12 "FISCAL YEAR" means the fiscal year of the Partnership for all tax
and accounting purposes, which shall be the year commencing on JULY 1 and ending
on JUNE 30 of each year.
2.13 "GROSS ASSET VALUE" means, with respect to any asset of the
Partnership, the asset's adjusted basis for federal income tax purposes, except
as follows:
2.13.1 The initial Gross Asset Value of any asset contributed
by a Partner to the Partnership shall be the gross fair market value of such
asset, as mutually agreed between the Partnership and the contributing Partner.
2.13.2 The Gross Asset Value of all Partnership assets shall
be adjusted to equal their respective gross fair market values, as mutually
agreed between the Partnership and the affected Partner(s) upon the occurrence
of the following events:
2.13.2.1 The acquisition of an additional Interest in the
Partnership by any new or existing Partner in exchange for a Capital
Contribution;
2.13.2.2 The distribution by the Partnership to a Partner
of cash or property as consideration for the acquisition of all or a portion of
such Partner's Interest in the Partnership if the Partnership reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership; and
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2.13.2.3 The liquidation of the Partnership within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g).
2.13.3 The Gross Asset Value of any Partnership asset distributed
to any Partner shall be the gross fair market value of such asset as mutually
agreed by the Partnership and the affected Partner(s) on the date of
distribution.
2.13.4 The Gross Asset Value of the Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code section 734(b) or Code section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and Section 4.9
hereof; provided, however, that Gross Asset Value shall not be adjusted pursuant
to this Section 2.13.4 to the extent the Partnership determines that an
adjustment pursuant to Section 2.13.2 above is necessary or appropriate in
connection with the transaction that would otherwise result in an adjustment
under this Section 2.13.4.
If the Gross Asset Value of an asset has been determined or
adjusted pursuant to Sections 2.13.1, 2.13.2 or 2.13.4 above, such Gross Asset
Value shall thereafter be adjusted by the Book Depreciation taken into account
with respect to such asset for purposes of computing profits and losses.
2.13.5 If the Partnership and any affected Partner pursuant to
Sections 2.13.1, 2.13.2 or 2.13.3 above are unable to agree on the Gross Asset
Value of any asset for purposes of this Agreement, a mutually acceptable
appraiser shall be selected by them for this purpose, and the value established
by such appraisal shall be binding on the Partnership and the affected Partner.
2.14 "MAJORITY IN INTEREST OF THE PARTNERS" means more than FIFTY
PERCENT (50%) of the Percentage Interests of the Partners.
2.15 "MANAGEMENT COMMITTEE" means, collectively, the four (4) Committee
Members appointed by the Partners to manage the Partnership pursuant to Section
6.1 of this Agreement acting together to manage the Partnership in accordance
with the terms and conditions of this Agreement. The Management Committee shall
be charged with those powers, duties and responsibilities as set forth in
Article 6 and elsewhere in this Agreement.
2.16 "NET PROFIT(S)" and "NET LOSSES(ES)" mean, for each Fiscal Year or
other period, an amount equal to the Partnership's taxable income or loss for
such year or period, determined in accordance with Code section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
2.16.1 Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Net Profits or Net
Losses shall be added to such taxable income or loss;
2.16.2 Any expenditures of the Partnership described in Code
section 705(b)(2)(B) or treated as Code section 705(b)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken
into account in computing Net Profits or Net Losses shall be subtracted from
such taxable income or loss;
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2.16.3 Gain or loss resulting from any disposition of Partnership
Property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the fair market value of such
property disposed of, notwithstanding that the adjusted tax basis of such
property differs from its fair market value; and
2.16.4 Notwithstanding any other provision of this subsection, any
items of income, gain, loss or deduction which are specifically allocated shall
not be taken into account in computing Net Profits or Net Losses.
2.17 "PARTNER" means a Person who has:
2.17.1 Been admitted to the Partnership as a Partner in accordance
with this Agreement, or is an assignee or transferee of an Interest and who has
become a Partner of the Partnership pursuant to Section 8.4 hereof;
2.17.2 Not dissociated or been expelled as a Partner or, if other
than an individual, been dissolved; and
2.17.3 Paid his or her Capital Contribution to the Partnership in
exchange for an Interest in the Partnership, or, in the case of a transferee
Partner, has succeeded to the Capital Account of the transferor Partner, and who
has executed and submitted to the Management Committee a counterpart signature
page to this Agreement.
Reference to a "PARTNER" shall be to any Partner of the Partnership
identified in Section 3.1 below or as otherwise supplemented and identified on
EXHIBIT A attached to and made a part of this Agreement, which exhibit may be
amended or modified from time to time.
2.18 "PARTNER NONRECOURSE DEBT" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
2.19 "PARTNER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a nonrecourse
liability of the Partnership, determined in accordance with Regulations Sections
1.704-2(i)(2) and (3).
2.20 "PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Regulations Section 1.704-2(i)(2). The amount of Partner Nonrecourse Deductions
with respect to a Partner Nonrecourse Debt for a Fiscal Year of the Partnership
equals the excess (if any) of the net increase (if any) in the amount of Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt
during that Fiscal Year over the aggregate amount of any distributions during
that Fiscal Year to the Partner that bears (or is deemed to bear) the economic
loss for such Partner Nonrecourse Debt to the extent such distributions are from
the proceeds of such Partner Nonrecourse Debt and are allocable to an increase
in Partner Nonrecourse Debt Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(2).
2.21 "PARTNERSHIP" means CHILDRENS HEMOPHILIA SERVICES, the California
general partnership formed pursuant to the Act and the terms and conditions of
this Agreement.
2.22 "PARTNERSHIP INTEREST" or "INTEREST" means all of a Partner's
interest in the Partnership, including the Partner's transferable interest and
all management and other rights.
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2.23 "PARTNERSHIP LOAN(S)" shall refer to any loans or advances made by
any Partner or its Affiliate to the Partnership which are approved by the
Management Committee. Such Partnership Loans shall accrue interest at the rate
agreed upon between the loaning Partner and the Management Committee.
2.24 "PARTNERSHIP MINIMUM GAIN" means the amount determined by
computing with respect to each nonrecourse liability of the Partnership, the
amount of gain (of whatever character), if any, that would be realized by the
Partnership if it disposed (in a taxable transaction) of Partnership Property
subject to such liability in full satisfaction thereof, and by then aggregating
the amounts so computed as set forth in Regulations Section 1.704-2(d).
2.25 "PARTNERSHIP PROPERTY" means any or all assets of the Partnership,
both tangible and intangible, or any portion thereof.
2.26 "PERCENTAGE INTEREST(S)" means a fraction, expressed as a
percentage, the numerator of which is the Capital Account owned by a Partner and
the denominator of which is the aggregate Capital Accounts of all of the
Partners. The Percentage Interests of the Partners shall be set forth on EXHIBIT
A attached hereto and made a part of this Agreement, which exhibit may be
amended from time to time by the Management Committee to reflect any change in
the Percentage Interest owned by a Partner or any change in the aggregate
Percentage Interests of all the Partners.
2.27 "PERSON" means an individual, corporation, business trust, estate,
trust, partnership, limited partnership, limited liability partnership, limited
liability company, association, joint venture, government, governmental
subdivision, agency, or instrumentality, or any other legal or commercial
entity.
2.28 "PRINCIPAL" means the natural Person which is in ultimate control
of a Partner.
2.29 "REGULATIONS" or "TREASURY REGULATIONS" means the federal income
tax regulations promulgated by the Treasury Department under the Code, as such
regulations may be amended from time to time. All references herein to a
specific section of the Regulations shall be deemed also to refer to any
corresponding provisions of succeeding Regulations.
2.30 "RESERVES" means funds set aside from Capital Contributions or
operating revenues as reserves. Such Reserves shall be maintained in amounts
reasonably deemed sufficient by the Management Committee for working capital and
the payment of taxes, insurance, debt service, repairs, replacements renewals,
or other costs or expenses incident to the Business of the Partnership, or in
the alternative, the Dissolution of the Partnership.
2.31 "RISK OF LOSS" reflects the meaning set forth in Treasury
Regulations Section 1.752-1(d)(3).
2.32 "SECRETARY OF STATE" means the Secretary of State of the State of
California.
2.33 "VOTE" means, except where superseded by another section of this
Agreement, or required by the terms of the Act, the Code or applicable
Regulations thereunder, votes of the Partners, wherein each Partner shall have
and cast a number of votes equal to that Partner's Percentage Interest. For this
purpose, each one percent (1%) of the Partner's Percentage Interest shall be
equal to one vote.
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ARTICLE 3
PARTNERS. CAPITAL AND FINANCING
3.1 NAMES AND ADDRESSES OF THE PARTNERS. The Partners of the
Partnership are CHC and HHS, unless and until additional Partners or transferee
Partners, as the case may be, are admitted to the Partnership in accordance with
this Agreement. The full names and current addresses of the Partners of the
Partnership are set forth on EXHIBIT A attached hereto and made a part of this
Agreement, which exhibit may be amended or modified from time to time.
3.2 PARTNER CAPITAL CONTRIBUTIONS. All Capital Contributions of the
Partners shall be set forth on EXHIBIT A attached hereto and made a part of this
Agreement, which exhibit may be amended or modified from time to time. The
Partners shall be required to make their Capital Contributions to the
Partnership immediately following the execution of this Agreement.
3.3 ADDITIONAL CAPITAL CONTRIBUTIONS AND LOANS. Except as shall be
expressly set forth herein, no Partner shall be required or permitted to make
any additional Capital Contributions to the Partnership or to make any loan or
cause to be loaned any money or other assets to the Partnership. Notwithstanding
the foregoing, a Partner shall be permitted to make an additional Capital
Contribution to the Partnership in order to maintain the relative proportions of
their respective Capital Accounts.
3.4 RIGHTS WITH RESPECT TO CAPITAL.
3.4.1 PARTNERSHIP CAPITAL. No Partner shall have the right to
withdraw or to receive any return of its Capital Contribution, and no Capital
Contribution may be returned in the form of property other than cash, except as
specifically provided for herein. 3.4.2 NO INTEREST ON CAPITAL CONTRIBUTIONS. No
Capital Contribution of any Partner shall bear any interest or otherwise entitle
the contributing Partner to any compensation for use of the contributed capital.
3.4.3 ESTABLISHMENT OF CAPITAL ACCOUNTS. A separate Capital Account
shall be established and maintained for each Partner. Sections 3.5 and 3.6 below
describe the appropriate accounting treatment for tax purposes of the Capital
Accounts.
3.4.4 NO PAYMENT OF SALARIES OR DRAWS. No Partner shall receive or be
entitled to receive any payment of salaries or draws with respect to its Capital
Contribution or the balance in its Capital Account or for services rendered on
behalf of the Partnership or otherwise in its capacity as a Partner, except as
expressly provided for in this Agreement or any other written agreement between
the Partnership and a Partner.
3.5 GENERAL RULES FOR DETERMINING CAPITAL ACCOUNTS. The Capital Account
of each Partner shall be determined as follows:
3.5.1 INCREASES. The Capital Account of a Partner shall be
increased by:
3.5.1.1 Such Partner's cash contributions;
3.5.1.2 The Gross Asset Value of property contributed by such
Partner (net of liabilities secured by such contributed property that the
Partnership is considered to assume or take subject to under Code section 752);
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3.5.1.3 All Net Profits of the Partnership allocated to
such Partner pursuant to Article 4 or other provisions of this Agreement; and
3.5.2 DECREASES. The Capital Account of a Partner shall be decreased
by:
3.5.2.1 The amount of cash distributed to such Partner;
3.5.2.2 The Gross Asset Value of all actual and deemed
distributions of property made to such Partner pursuant to this Agreement (net
of liabilities secured by such distributed property that the Partner is
considered to assume or take subject to under Code section 752);
3.5.2.3 All Net Losses of the Partnership allocated to such
Partner pursuant to Article 4 or other provisions of this Agreement.
3.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS.
3.6.1 TIME OF ADJUSTMENT FOR CAPITAL CONTRIBUTIONS. For
purposes of computing the balance in a Partner's Capital Account, no credit
shall be given for any Capital Contribution which such Partner is to make until
such contribution is actually made. "CAPITAL CONTRIBUTION" refers to the total
amount of cash and the Gross Asset Value (net of liabilities) of any property
contributed to the Partnership by that Partner and any subsequent contributions
of cash and the Gross Asset Value (net of liabilities) of any other property
subsequently contributed to the Partnership by that Partner.
3.6.2 INTENT TO COMPLY WITH TREASURY REGULATIONS. The
foregoing provisions of Sections 3.5 and 3.6 and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Section 1.704-1(b), and shall be interpreted and applied in a
manner consistent with such Regulations section. To the extent such provisions
are inconsistent with such Regulations section or are incomplete with respect
thereto, Capital Accounts shall be maintained in accordance with such
Regulations section.
3.7 TRANSFEREE'S CAPITAL ACCOUNT. In the event a Partner, transfers an
Interest in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred Interest.
ARTICLE 4
ALLOCATION OF NET PROFITS AND NET LOSSES
4.1 ALLOCATION OF NET PROFITS AND NET LOSSES. Except as otherwise
provided in this Article 4, Net Profits and Net Losses of the Partnership in
each Fiscal Year shall be allocated among the Partners in accordance with their
respective Percentage Interests in the Partnership.
4.2 RESIDUAL ALLOCATIONS. Except as otherwise provided in this
Agreement, all items of Partnership income, gain, loss, deduction, and any other
allocations not otherwise provided for shall be divided among the Partners in
the same proportions as they share Net Profits or Net Losses, as the case may
be, for the Fiscal Year.
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4.3 QUALIFIED INCOME OFFSET. If any Partner unexpectedly receives any
adjustments, allocation or distributions described in clauses (4), (5) or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d), items of Partnership income shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate the Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible. This Section 4.3 is
intended to constitute a "QUALIFIED INCOME OFFSET" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(d)(3).
4.4 MINIMUM GAIN CHARGEBACK. If there is a net decrease in Partnership
Minimum Gain during a Fiscal Year, each Partner will be allocated, before any
other allocation under this Article 4, items of income and gain for such Fiscal
Year (and if necessary, subsequent years) in proportion to and to the extent of
an amount equal to such Partner's share of the net decrease in Partnership
Minimum Gain determined in accordance with Regulations Section 1.704-2(g)(2).
This Section 4.4 is intended to comply with, and shall be interpreted
consistently with, the "MINIMUM GAIN CHARGEBACK" provisions of Regulations
Section 1.704-2(f).
4.5 PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Article 4, but except Section 4.4, if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner
Nonrecourse Debt during any Fiscal Year of the Partnership, each Partner who has
a share of the Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to such Partner's share of the net decrease in Partner Nonrecourse Debt Minimum
Gain attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i)(4). This Section
4.5 is intended to comply with a minimum gain chargeback requirement of that
Section of the Regulations and shall be interpreted consistently therewith.
4.6 PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions
for any Fiscal Year or other period shall be specially allocated to the Partner
who bears (or is deemed to bear) the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
4.7 SPECIAL ALLOCATIONS. Any special allocations of items of Net
Profits pursuant to Sections 4.4, 4.5 and 4.6 shall be taken into account in
computing subsequent allocations of Net Profits pursuant to Section 4.1, so that
the net amount of any items so allocated and the gain, loss and any other item
allocated to each Partner pursuant to Section 4.1 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 special allocations had not
occurred.
4.8 FEES TO PARTNERS OR AFFILIATES. Notwithstanding the provisions of
Section 4.1, in the event that any fees, interest, or other amounts paid to any
Partner or any Affiliate thereof pursuant to this Agreement or any other
agreement between the Partnership and any Partner or Affiliate thereof providing
for the payment of such amount, and deducted by the Partnership in reliance on
Code section 707(a) and/or Code section 707(c) , are disallowed as deductions to
the Partnership on its federal income tax return and are treated as Partnership
distributions, then:
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4.8.1 The Net Profits or Net Losses, as the case may be, for the
Fiscal Year in which such fees, interest, or other amounts were paid shall be
increased or decreased, as the case may be, by the amount of such fees,
interest, or other amounts that are treated as Partnership distributions; and
4.8.2 There shall be allocated to the Partner to which (or to whose
Affiliate) such fees, interest, or other amounts were paid, prior to the
allocations pursuant to Section 4.1, an amount of gross income for the Fiscal
Year equal to the amount of such fees, interest, or other amounts that are
treated as Partnership distributions.
4.9 SECTION 704(C) ALLOCATION. Any item of income, gain, loss, and
deduction with respect to any property (other than cash) that has been
contributed by a Partner to the capital of the Partnership and which is required
or permitted to be allocated to such Partner for income tax purposes under Code
section 704(c) so as to take into account the variation between the tax basis of
such property and its Gross Asset Value at the time of its contribution shall be
allocated to such Partner solely for income tax purposes in the manner so
required or permitted. In the event the Gross Asset Value of any Partnership
Property is adjusted in accordance with Section 2.13.2, subsequent allocations
of income, gain, loss and deduction with respect to such Partnership Property
shall take into account any variation between the adjusted basis of such
Partnership Property for federal income tax purposes and its Gross Asset Value
in the same manner as under section 704(c) and the Regulations promulgated
thereunder. Any elections or other decisions relating to such allocations shall
be made in any manner that reasonably reflects the purpose and intention of this
Agreement. To the extent permitted by Regulations Section 1.7041(b)(4)(i) , all
items of income, gain, loss and deduction for federal and state tax purposes
shall be allocated in accordance with the corresponding book items.
ARTICLE 5
DISTRIBUTIONS OF DISTRIBUTABLE CASH
5.1 DISTRIBUTIONS OF DISTRIBUTABLE CASH. Distributions from the
Partnership to the Partners shall be made from time to time to the extent
Distributable Cash is available as determined by the Management Committee. Prior
to the determination of the amount of distributions, provisions shall be made
for all known and reasonable obligations and liabilities of the Partnership,
whether or not such obligations and liabilities are due or contingent, except
that provision need not be made for any portion of any Partnership financing,
the amount of which can be reasonably expected to be satisfied from the proceeds
of the sale of the then remaining Property of the Partnership.
5.2 PRIORITY AND MANNER OF DISTRIBUTIONS TO PARTNERS. All distributions
of Distributable Cash shall be made by the Partnership pro rata to the Partners
in accordance with their applicable Percentage Interests as of the time of such
distribution.
5.3 TAX DISTRIBUTIONS. Except as otherwise may be prohibited by any
agreements between the Partnership and its lenders, within ninety (90) days
after the conclusion of each Fiscal Year, the Management Committee shall
determine and provide written notice to the Partners of the amount (the "TAX
LIABILITY SHORTFALL AMOUNT"), if any, by which (a) the aggregate federal and
California state tax liability (if any) incurred by the Partners with respect to
the net income of the Partnership for such preceding Fiscal Year (which tax
liability shall be determined by applying the highest effective corporate tax
rates then in effect for the Fiscal Year in question), EXCEEDS (b) the aggregate
distributions of Distributable Cash made by the Partnership with respect to such
Fiscal Year (including any distributions made to the Partners
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with respect to the final fiscal quarter of such Fiscal Year). The Management
Committee shall use all reasonable efforts to cause the Partnership to
distribute the Tax Liability Shortfall Amount to the Partners in the time and
manner required hereunder, including, but not limited to, borrowing on behalf of
the Partnership sufficient funds to enable the Partnership to distribute such
Tax Liability Shortfall Amount. Each such distribution shall be made to the
Partners as soon as practicable after such funds are available. It is the
objective of the Partners that while the Tax Liability Shortfall Amount will be
determined at the end of each Fiscal Year, to the extent possible and subject to
the foregoing, distributions will be made in respect thereof on a quarterly
basis to facilitate the Partners' ability to make quarterly estimated tax
payments with respect to their net income from the Partnership. At the end of
each Fiscal Year as contemplated above, final adjustments shall be made to
reflect the actual results of such Fiscal Year.
ARTICLE 6
MANAGEMENT OF THE PARTNERSHIP
6.1 MANAGEMENT OF THE PARTNERSHIP. Subject to the provisions of the Act
and to any limitations set forth in this Agreement (as may be amended from time
to time) relating to actions required to be approved by the Partners, the
Business and affairs of the Partnership shall be managed by, and all Partnership
powers shall be vested exclusively in, the Management Committee. The day-to-day
operations of the Partnership shall be implemented by a Partnership Manager
designated or appointed pursuant to Section 6.1.1 below, who shall conduct the
Business in accordance with and subject to the policies, procedures, decisions
and directives of the Management Committee.
6.1.1 DESIGNATION OF THE PARTNERSHIP MANAGER. The Partnership
Manager of the Partnership shall initially be THOMAS J. McNULTY, PharmD., an
individual, or his successor as appointed by the Management Committee pursuant
to Section 6.1.2 below.
6.1.2 ELECTION OF SUCCESSOR PARTNERSHIP MANAGER. Upon resignation
from office or removal from office by the Management Committee, a successor
Partnership Manager shall be appointed by the Management Committee.
6.1.3 MANAGEMENT COMMITTEE; APPOINTMENT OF COMMITTEE MEMBERS;
VOTING. The authorized number of Committee Members of the Partnership shall be
four (4), unless the Partners agree to increase or decrease the size of the
Management Committee proportionately from time to time. Each Partner (the
"APPOINTING PARTNER") shall appoint two (2) Committee Members. The initial
Committee Members shall be appointed by the Partners by a separate written
action of the Partners. Each initial Committee Member shall serve until his or
her successor is appointed by the Appointing Partner in accordance with this
Agreement. Each Partner shall cause its appointed Committee Member to comply
with the terms of this Agreement to be performed by such Committee Member. The
Committee Members shall exercise their authority collectively and exclusively
through the actions of the Management Committee. Each Committee Member shall
have one (1) vote on any decision of the Management Committee. Approval of the
Management Committee shall require a majority of the authorized number of the
Committee Members.
6.1.4 SUCCESSOR OR ALTERNATE COMMITTEE MEMBERS. Successor Committee
Members shall be appointed by the respective Appointing Partner at any time and
from time to time. Each Partner may, at any time, designate an alternate
Committee Member by prior notice to the other Partner, and such alternate
Committee Member will have all of the powers of the regular Committee Member in
the absence or inability of the regular Committee Member to serve.
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6.1.5 CHAIRMAN OF THE MANAGEMENT COMMITTEE. The Management
Committee shall have a chairman (the "CHAIRMAN"), who shall: (i) be one of the
Committee Members selected by a majority of the authorized number of the
Committee Members; (ii) preside at Management Committee meetings; and (iii)
exercise such rights or perform such duties as are otherwise provided in this
Agreement or as otherwise may be approved by the Management Committee. In the
event a Chairman resigns or is removed, a replacement Chairman shall be chosen
by the Management Committee.
6.1.6 DELEGATION OF AUTHORITY. The Management Committee may, by
written resolution from time to time, delegate any of its powers to the
Partnership Manager, to officers or employees of a Partner, or to any other
Person. Such delegation of powers may include the authority to execute and
deliver on behalf of the Partnership any note, mortgage, evidence of
indebtedness, contract, certificate, statement, conveyance or other instrument
in writing, and any assignment or endorsement thereof.
6.1.7 DUTIES OF COMMITTEE MEMBERS. Each Committee Member shall
serve on the Management Committee in good faith and in a manner such Committee
Member believes to be in the best interests of the Partnership and its Partners
and with such care, including reasonable inquiry as an ordinary prudent person
in a like position would use under similar circumstances.
6.1.8 OTHER ACTIVITIES OF COMMITTEE MEMBERS. Each Committee Member
need devote to the Business and affairs of the Partnership only such time and
attention as he shall deem necessary and appropriate in the exercise of his
reasonable judgment.
6.1.9 REMOVAL OF COMMITTEE MEMBERS. Any Committee Member may be
removed from office, with or without cause, only by the respective Appointing
Partner of such Committee Member.
6.2 POWERS AND AUTHORITY OF THE MANAGEMENT COMMITTEE. The Management
Committee shall have all of the rights, duties and powers as specified in this
Agreement, including without limitation, the general powers and duties of
management typically vested in the board of directors and the office of a chief
executive officer of a corporation. Matters requiring the approval of the
Management Committee shall include, without limitation, the following:
6.2.1 To select and remove all agents and employees of the
Partnership; prescribe the powers and duties for them as may not be inconsistent
with law, the Statement of Authority, or this Agreement; fix their compensation;
and require from any such agents and employees security for faithful service.
6.2.2 To conduct, manage and control the affairs and Business of
the Partnership and to make such rules not inconsistent with the law, the
Statement of Authority or this Agreement, as they may deem best.
6.2.3 To borrow money and incur indebtedness for the purposes of
the Partnership and to cause to be executed and delivered therefor, in the
Partnership's name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and securities
therefor.
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6.2.4 To enter into any and all agreements on behalf of the
Partnership with any other Person for any purpose necessary or appropriate to
the conduct of the Business of the Partnership, including, but not limited, to
agreements for management or other services, and the distribution or resale of
products and supplies. The fact that a Partner is directly or indirectly
affiliated or connected with any such Person shall not prohibit the Management
Committee from dealing with that Person.
6.2.5 To purchase liability and other insurance to protect the
Partnership Property and Business of the Partnership.
6.2.6 To approve detailed line-item budgets for the operation of
the Partnership and its Business.
6.2.7 To invest any funds of the Partnership temporarily (by
way of example, but not limitation) in time deposits, short-term governmental
obligations, commercial paper or other investments.
6.2.8 To engage accountants, legal counsel, managing agents or
other experts to perform services for the Partnership and to compensate them
from Partnership funds.
6.2.9 To pay reimbursement from the Partnership of all expenses of
the Partnership reasonably incurred and paid by the Management Committee on
behalf of the Partnership.
6.2.10 To amend, update or correct from time to time the
information contained in EXHIBIT A to the Agreement or on the Statement of
Authority and cause the same to be filed with the California Secretary of State.
6.2.11 To do and perform all other acts as may be necessary or
appropriate to the conduct of the Business of the Partnership.
6.3 POWERS, DUTIES AND RESPONSIBILITIES OF THE PARTNERSHIP MANAGER. The
Partnership Manager shall be charged with the rights, duties, powers and
responsibilities as specified in this Agreement, subject to the limitations set
forth in this Article 6 and elsewhere in this Agreement. The Partnership Manager
shall have the responsibility for conducting the day-to-day operations of the
Business of the Partnership and for implementing the decisions and directives of
the Management Committee in connection therewith, subject to the supervision,
direction and control of the Management Committee. The Partnership Manager shall
have the general powers and duties of management typically vested in the office
of a chief operating officer of a corporation.
6.4 RESTRICTIONS ON AUTHORITY; APPROVAL BY THE PARTNERS. The individual
Partners, the Committee Members, acting alone or collectively as the Management
Committee, and the Partnership Manager shall have no authority with respect to
the Partnership or its Business to do any of the following without the prior
unanimous Vote or written consent of the Partners:
6.4.1 Do any act in contravention of this Agreement;
6.4.2 Do any act that would make it impossible to carry out the
Partnership Business;
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6.4.3 Possess Partnership Property or assign the right of the
Partnership or its Partners in specific Partnership Property for anything other
than a Partnership purpose;
6.4.4 Make, execute or deliver any general assignments for the
benefit of creditors or any bond, guaranty, indemnity bond or surety bond;
6.4.5 Assign, transfer, pledge, compromise or release any
Partnership claim;
6.4.6 Confess a judgment;
6.4.7 Except for the power of the Management Committee to
amend or correct from time to time any information contained in EXHIBIT A to
this Agreement or in the Statement of Authority, to make any material amendment
or change to the Statement of Authority or to this Agreement, including, but not
limited to, any change in the authorized number of Committee Members or any
modification or enlargement of the rights or obligations of the Partners as set
forth herein;
6.4.8 Pursuant to Article 8 hereof, approve the sale, transfer,
assignment, hypothecation or encumbrance of any Partnership Interest by a
Partner, the admission of any new or transferee Partner to the Partnership, the
determination of the amount of any Capital Contribution to be made by any new
Partner, and the approval of a Partner's sale of all of its Interest in
accordance with Section 8.5 hereof;
6.4.9 The sale, exchange or other disposition of all or
substantially all of the Partnership Property, occurring as part of single
transaction or a series of related transactions as part of plan;
6.4.10 The merger of the Partnership with any other partnership or
business entity;
6.4.11 The termination or dissolution of the Partnership;
6.4.12 A change in the character of the Business of the
Partnership;
6.4.13 Any acquisitions of any rights or interests in another
entity;
6.4.14 All distributions to the Partners, which shall not be deemed
valid unless so approved in advance by the Partners;
6.4.15 Any contracts or agreements between the Partnership and any
third party including Affiliates in excess of Fifty Thousand Dollars
($50,000.00) and the approval of any material changes or amendments thereto or
renewals thereof;
6.4.16 Any transactions with an Affiliate;
6.4.17 Any amendment, modification, supplement, renewal or
termination for any reason of that certain Hemophilia Therapy Business
Management, Service and Sales Agreement dated as of November 10, 1998, by and
between HHS and the Partnership (the "HEMOPHILIA THERAPY MANAGEMENT AGREEMENT");
or
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6.4.18 Any amendment, modification, supplement, renewal or
termination for any reason of that certain Hemophilia Factor Services Agreement
dated as of November 10, 1998, by and among the Partnership, HHS and CHC (the
"HEMOPHILIA FACTOR SERVICES AGREEMENT").
6.5 MEETINGS OF THE MANAGEMENT COMMITTEE.
6.5.1 REGU1AR AND ANNUAL MEETINGS. Regular meetings of the
Management Committee shall be held at such time and day as may be designated by
the Management Committee. The regular annual meeting of the Management Committee
shall be held, without call or notice, immediately following each annual meeting
of the Partners of the Partnership as set forth in Article 7 hereof.
6.5.2 SPECIAL MEETINGS. Special meetings of the Management
Committee may be called by any Partner. Notice of any special meeting of the
Management Committee shall be given to each Committee Member by first class
mail, postage prepaid, at least ten (10) days in advance of the meeting or
delivered in person or by telephone or facsimile transmission at least seven (7)
days in advance of the meeting. No notice need be given to any Committee Member
who signs a waiver of notice, whether before or after the meeting, or who
attends the meeting without protesting the lack of notice prior to attending the
meeting or at its commencement.
6.5.3 PLACE OF MEETINGS. All meetings of the Management Committee
shall be held at the Partnership's principal executive office or any other place
within or without this state as may be designated for that purpose from time to
time by the Management Committee. Any meeting is valid wherever held if held by
the written consent of all Persons entitled to vote thereat, given either before
or after the meeting.
6.5.4 QUORUM. A majority of the authorized number of Committee
Members constitutes a quorum of the Management Committee for the transaction of
business, except to adjourn as provided in Section 6.5.8 hereof.
6.5.5 TRANSACTIONS AT MEETINGS OF THE MANAGEMENT COMMITTEE. Except
as otherwise provided in this Agreement or by law, every act or decision done or
made by a majority of the authorized number of Committee Members is the act of
the Management Committee; provided, however, that any meeting at which a quorum
was initially present may continue to transact business notwithstanding the
withdrawal of Committee Members if any action taken is approved by at least a
majority of the required quorum for such meeting.
6.5.6 TELEPHONIC PARTICIPATION. Committee Members may participate
in meetings through the use of a conference telephone or similar
communications equipment, as long as all Committee Members participating in the
meeting can hear one another. Participation in a meeting in this manner
constitutes presence in person at the meeting.
6.5.7 ACTION WITHOUT A MEETING. Any action required or permitted to
be taken by the Management Committee may be taken without a meeting if all
Committee Members shall unanimously consent in writing to that action. Such
action by written consent shall have the same force and effect as a unanimous
vote by the Management Committee. Such written consents shall be filed with the
minutes of the proceedings of the Management Committee.
6.5.8 ADJOURMENT. A majority of the Committee Members present at
any meeting, whether or not a quorum is present, may adjourn the meeting to
another time and place. If the meeting is adjourned for more than twenty-four
(24) hours, notice of the adjournment to
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another time and place must be given prior to the time of the adjourned meeting
to the Committee Members who were not present at the time of the adjournment.
6.6 COMPENSATION AND REIMBURSEMENT. Committee Members shall receive
such compensation for their services and reimbursement for their expenses as
shall be determined from time to time by resolution of the Management Committee
and approval by a Majority in Interest of the Partners of this Partnership. In
addition, the Partnership will reimburse the Committee Members for any direct
costs incurred by the Committee Members which are directly attributable to the
Partnership or to its Business, including, but not limited, to travel expenses
incurred to attend any regular or special meetings of the Management Committee
all in accordance with such reimbursement policies as may be adopted from time
to time by the Management Committee.
6.7 RIGHTS OF INSPECTION. Every Committee Member shall have the
absolute right at any reasonable time to inspect and copy all books, records and
documents of every kind, and to inspect the physical properties of the
Partnership. Such inspection by a Committee Member may be made in person or by
agent or attorney and includes the right to copy and obtain abstracts.
ARTICLE 7
PARTNERS' MEETINGS; PARTNERS' RIGHTS
7.1 MEETINGS OF THE PARTNERS. Meetings of the Partners may be called by
the Management Committee or, for any purpose set forth in Section 7.2 below, by
any Partner or Partners holding TEN PERCENT (10%) or more of the Percentage
Interests of the Partnership.
7.2 PURPOSE OF MEETINGS; VOTING RIGHTS. Any Partner or Partners
representing more than TEN PERCENT (10%) of the Percentage Interests of the
Partners may call a meeting of the Partners to Vote on any of the following:
7.2.1 The approval of any matter set forth in Section 6.4 of this
Agreement requiring the Vote of the Partners.
7.2.2 Any other matter set forth in this Agreement which requires
the Vote or written consent of a Majority in Interest or more of the Partners.
7.2.3 Any other legitimate purpose or business matter properly
brought before the meeting of the Partners.
Without limiting the generality of the foregoing, the Management
Committee may require the Partners to Vote on additional matters as provided
elsewhere herein. The Partners shall not have the right to Vote on whether to
enter into any transaction in which the Management Committee has an actual or
potential conflict of interest with the Partners or the Partnership, unless the
transaction falls within the scope of the voting rights granted in this Section
7.2 or the limitations on the Management Committee listed in Article 6 of this
Agreement.
7.3 PLACE OF MEETINGS. Meetings of the Partners shall be held at the
principal executive office of the Partnership, unless some other appropriate and
convenient location, either within or without the State of California, shall be
designated for that purpose from time to time by the Management Committee.
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7.4 NOTICE OF MEETINGS. Notice of meetings shall be given by the
Management Committee to the Partners in writing not less than ten (10) nor more
than sixty (60) days before the date of the meeting. Notice of any meeting of
Partners shall be delivered in accordance with Article 15 hereof and shall
specify the place, the day and the hour of the meeting, and (i) the general
nature of the business to be transacted, or (ii) those matters which the
Management Committee, at the date of mailing, intends to present for action by
the Partners.
7.5 VALIDATION OF PARTNERS' MEETINGS. The transactions of a meeting of
Partners which was not called or noticed pursuant to the provisions of this
Article 7 shall be valid as though transacted at a meeting duly held after
regular call and notice, if Partners holding in the aggregate a Majority in
Interest of the Partners are present, and if, either before or after the
meeting, each of the Partners entitled to Vote but not present (whether in
person or by proxy, as that term is used in the Act) at the meeting signs either
a written waiver of notice, a consent to the holding of such meeting or an
approval of the minutes thereof. All such waivers, consents or approvals shall
be filed with the records of the Partnership. Attendance shall constitute a
waiver of notice, unless objection shall be made.
7.6 ACTIONS WITHOUT A MEETING.
7.6.1 Any action which may be taken at any meeting of Partners may
be taken without a meeting and without prior notice if a consent in writing,
setting forth the action so taken, shall be unanimously agreed upon and signed
by all the Partners. Any Partner giving a written consent may revoke the consent
by a writing received by the Partnership prior to the time that written consents
of all the remaining Partners authorizing the proposed action have been filed
with the Partnership. Such revocation is effective upon its receipt by the
Partnership.
7.6.2 Unless the consents of all Partners have been given in
writing to any proposed action, any such action shall then require approval by
the Partners at a meeting duly called and held for such purpose.
7.7 QUORUM AND EFFECT OF VOTE. Each Partner shall have a number of
Votes equal to the Percentage Interest held by such Partner, provided that if,
pursuant to the Act or the terms of this Agreement, a Partner is not entitled to
Vote on a specific matter, then such Partner's number of Votes and Percentage
Interest shall not be considered for purposes of determining whether a quorum is
present, or whether approval by a Vote of the Partners has been obtained in
respect of such specific matter. Partners holding an aggregate of a Majority in
Interest of the Partners or more shall constitute a quorum at all meetings of
the Partners for the transaction of business, and the Vote of a Majority in
Interest of the Partners at any such meeting where a quorum is present shall be
required to approve any action, unless a greater Vote is required or a lesser
Vote is provided for by this Agreement or by the Act.
7.8 VOTE REQUIRED. The affirmative Vote of a Majority in Interest of
the Partners shall be required for any matter on which the Partners are entitled
to Vote.
ARTICLE 8
RESTRICTIONS ON TRANSFER OF INTERESTS;
RIGHT OF FIRST REFUSAL;
ADMISSION OF NEW PARTNERS AND TRANSFEREES
8.1 RESTRICTIONS ON TRANSFER OF PARTNERSHIP INTERESTS. Except as
provided in Section 8.5 below and Article 10 hereof, no Partnership Interest may
be transferred, conveyed,
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sold, hypothecated, encumbered or assigned without the prior unanimous Vote or
written consent of the Partners pursuant to Section 6.4.8 hereof.
8.2 TRANSFERS OF INTERESTS DURING FISCAL YEAR. If all or any portion of
an Interest is transferred during any Fiscal Year of the Partnership upon the
death of a Partner or by operation of law or in any other manner, all items of
income, gain, loss, cost, expense, deduction and credit with respect to the
Interest so transferred shall be prorated between the transferor and the
transferee in accordance with the number of days during the year each held the
Interest (or any permissible method under Code section 706 and the Regulations
promulgated thereunder). Notwithstanding the foregoing, distributions of
Distributable Cash allocated pursuant to Article 5 hereof shall be made to the
Person who was a Partner on the record date established pursuant thereto.
8.3 VOID TRANSFERS. Any transfer of a Partnership Interest which does
not satisfy the requirements of Section 8.1 above shall be null and void.
8.4 ADMISSION OF NEW PARTNERS AND TRANSFEREES. A Person or transferee
of a Partnership Interest may be admitted into the Partnership as a new Partner
only upon the prior unanimous Vote or written consent of the Partners pursuant
to Section 6.4.8 hereof and upon satisfaction of the following conditions:
8.4.1 The amount of Capital Contribution which must be paid by a
new Partner shall be determined by the unanimous Vote or written consent of the
Partners. In the case of a consented transfer of a Partnership Interest, the
Capital Account balance of the transferor shall succeed to the transferee.
8.4.2 A new Partner or transferee of a Partnership Interest shall
not be deemed admitted into the Partnership until (i) the Capital Contribution
required of such new Partner shall have been paid or the Capital Account has
been transferred between the transferor and transferee, and (ii) such new
Partner or transferee has become a party to this Agreement by his or her
execution and submission to the Management Committee of a counterpart signature
page to this Agreement.
8.5 RIGHT OF FIRST REFUSAL. This section sets forth the procedure by
which a Partner may sell all of its Interest in the Partnership, but does not
authorize a Partner to sell less than all of its Interest in the Partnership
without the unanimous Vote or written consent of the Partners. In the event a
Partner desires to sell all (but not less than all) of its Interest in the
Partnership, it shall first notify and fully inform the other Partners in
writing of the identity of the proposed buyer (the "BUYER") and the proposed
terms and conditions of such proposed sale (the "NOTICE OF PROPOSED SALE"). The
selling Partner shall afford the non-selling Partners the opportunity, within
thirty (30) days after receiving the Notice of Proposed Sale, to elect to
purchase such selling Partner's Interest on the same terms and conditions as set
forth in the Notice of Proposed Sale by delivery of its written notice to this
effect to the selling Partner. If more than one non-selling Partner desires to
purchase the selling Partner's Interest, each non-selling Partner shall purchase
that portion determined by multiplying the Interest being sold by a fraction,
the numerator of which is the existing Percentage Interest of the Partner
electing to purchase, and the denominator of which is the total of the
Percentage Interests of the Partners excluding the Interest being sold. If one
of the non-selling Partners does not elect to purchase its share of the selling
Partner's Interest, the entire Interest shall be sold to the other non-selling
Partners.
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In the event that one or more of the non-selling Partners shall so
elect to purchase the Interest of the selling Partner on such terms and
conditions, the closing of the purchase will take place according to the
proposed terms and conditions of the sale or, if not specified, within a
reasonable period (but not more than ninety (90) days) after such election to
purchase is made. In the event that none of the non-selling Partners elect to
purchase the Interest of the selling Partner within the 30-day period, the
selling Partner shall, upon obtaining the unanimous Vote or written consent of
the non-selling Partners, then be free to sell to the proposed Buyer all (but
not less than all) of such Interest on terms and conditions no less favorable
than offered to the non-selling Partners in the Notice of Proposed Sale within a
period of one hundred twenty (120) days after the end of such 30-day period. In
the event the sale does not take place to the proposed Buyer in compliance with
this section within such 120-day period, the selling Partner shall give written
notice to this effect to the non-selling Partners. Any subsequent proposed sale
by that Partner of its Interest in the Partnership will again require compliance
with the provisions of this Section 8.5.
ARTICLE 9
ADMINISTRATION AND ACCOUNTING MATTERS
9.1 MAINTENANCE OF BOOKS AND RECORDS. The Partnership shall cause the
books and records of the Partnership to be maintained in accordance with
generally accepted accounting principles and shall give reports to the Partners
in accordance with prudent business practices and the Act.
9.2 ANNUAL ACCOUNTING. Within one hundred twenty (120) days after the
close of each Fiscal Year of the Partnership, the Management Committee shall (i)
cause to be prepared and submitted to each Partner a balance sheet and income
statement for the preceding Fiscal Year of the Partnership (or portion thereof)
in substantial conformity with generally accepted accounting principles, and
(ii) provide to the Partners all information necessary for them to complete
federal and state tax returns.
The determination of the Management Committee as to adjustments to
the financial reports, books, records and returns of the Partnership before any
such inspection or copying, in the absence of fraud or gross negligence, shall
be final and binding upon the Partnership and all of the Partners if there is no
exception thereto within ninety (90) days after distribution of such financial
reports, books, records and returns of the Partnership to the Partners.
9.3 INSPECTION RIGHTS. Each Partner or his or her agent or attorney
shall have access to the Partnership's books and records. Former Partners and
their agents or attorneys shall have access to such books and records pertaining
to the period which they were Partners of the Partnership. This right of access
is intended to provide the opportunity to inspect and copy books and records
upon reasonable request and during normal business hours. The Partnership may
impose a reasonable charge, covering the costs of labor and material, for copies
of documents so furnished.
9.4 RIGHTS OF PARTNERS. Each Partner and the Partnership shall furnish
to a Partner and to the legal representative of a deceased Partner or Partner
under legal disability, both of the following:
9.4.1 Without demand, any information concerning the Partnership's
Business and affairs reasonably required for the proper exercise of the
Partner's rights and duties under this Agreement or under the Act; and
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9.4.2 On demand, any other information concerning the Partnership's
Business and affairs, except to the extent the demand or the information
demanded is unreasonable or otherwise improper under the circumstance.
9.5 TAX MATTERS HANDLED BY MANAGEMENT COMMITTEE. The Management
Committee shall designate an individual to act as the "TAX MATTERS PARTNER" (as
defined in Code section 6231) to represent the Partnership (at the Partnership's
expense) in connection with all examinations of the Partnership's affairs by tax
authorities, including resulting judicial and administrative proceedings, and to
expend Partnership funds for professional services and costs associated
therewith. In its capacity as Tax Matters Partner, the designated Committee
Member shall oversee the Partnership's tax affairs in the overall best interests
of the Partnership.
9.6 FEDERAL INCOME TAX ELECTIONS MADE BY MANAGEMENT COMMITTEE. The
Management Committee on behalf of the Partnership may make all elections for
federal income tax purposes, including but not limited to, the following:
9.6.1 USE OF ACCELERATED DEPRECIATION METHODS. To the extent
permitted by applicable law and regulations, the Partnership may elect to use an
accelerated depreciation method on any depreciable unit of the assets of the
Partnership.
9.6.2 ACCOUNTING METHOD . For financial reporting purposes, the
books and records of the Partnership shall be kept on the applicable method of
accounting as required by law applied in a consistent manner and shall reflect
all transactions of the Partnership and be appropriate and adequate for the
purposes of the Partnership.
9.6.3 OBLIGATIONS OF PARTNERS TO REPORT ALLOCATIONS. The Partners
are aware of the income tax consequences of the allocations made by this
Agreement and hereby agree to be bound by the provisions of this Section 9.6 in
reporting their shares of the Partnership income and loss for income tax
purposes.
9.6.4 TAX YEAR. The Management Committee will cause the Partnership
to elect the Fiscal Year as its taxable year.
9.6.5 OTHER ELECTIONS. The Management Committee shall have the
right in its sole discretion at any time to make or not to make such other
elections as are authorized or permitted by any law or regulation for income tax
purposes (including, but not limited to, any election under sections 734, 743
and 754 of the Code to adjust the basis of the Property of the Partnership in
the event of a Transfer of all or part of the Interest of any Partner).
Notwithstanding the above, no Partner, nor the Partnership, shall make an
election to be excluded from the application of Subchapter K of the Code or any
similar provisions of state law.
9.7 BANK ACCOUNTS; BANKING. The Management Committee shall establish
one or more depository accounts for the funds of the Partnership and designate
Persons authorized to deposit and draw against such accounts on behalf of the
Partnership. Cash balances on hand may be invested by the Management Committee
on behalf of the Partnership as provided for in this Agreement. Partnership
funds will not be commingled with the funds of any Committee Member, Partner or
any other party or used as compensating balances for any other obligations of
any Partner, Committee Member or any other party.
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ARTICLE 10
PARTNER DISSOCIATION
10.1 COVENANT NOT TO DISSOCIATE OR DISSOLVE. Notwithstanding any
provision of the Act, each Partner hereby covenants and agrees that the Partners
have entered into this Agreement based on their mutual expectation that all
Partners will continue as Partners and will carry out the duties and obligations
undertaken by them hereunder and that, except as otherwise expressly required or
permitted hereby, no Partner shall dissociate from the Partnership, be entitled
to demand or receive a return of such Partner's contributions or profits (or a
bond or other security for the return of such contributions or profits), or
exercise any power under the Act to dissolve the Partnership without the consent
of the other Partners. Notwithstanding any of the foregoing, this Section 10.1
shall not apply to any termination of the Partnership pursuant to Article 11
hereof.
10.2 DISSOCIATION OF A PARTNER; LIABILITY. A dissociation from the
Partnership by any Partner shall be a breach of this Agreement. Any Partner who
wrongfully dissociates is liable to the Partnership and to the other Partners
for damages and liabilities caused by the dissociation in addition to any other
obligations of the Partner to the Partnership or to the other Partners.
10.3 VOLUNTARY DISSOCIATION. Should a Partner exercise its power to
dissociate from the Partnership in contravention of this Agreement pursuant to
Section 16602(a) of the Act, it shall give all other Partners ninety (90) days
advance written notice of its intention to do so.
10.4 OPTION TO PURCHASE DISSOCIATED PARTNER'S INTEREST. On the
voluntary dissociation of a Partner pursuant to Section 10.3 above, the
remaining Partners shall have the option to purchase the Interest of the
dissociated Partner in the Partnership. The manner in which such option may be
exercised, the determination of the purchase price to be paid for the
dissociated Partner's Interest, and the method of payment therefor shall be in
accordance with Section 8.5 of this Agreement.
10.5 ASSUMPTION OF PARTNERSHIP OBLIGATIONS. On any purchase and sale of
a Partnership Interest under this Article 10, the remaining Partners shall
assume all Partnership obligations and shall protect, defend, and indemnify the
dissociated Partner and its officers, directors, employees and agents and the
property of any dissociated Partner from liability for any such obligations.
10.6 PUBLICATION OF NOTICE. On any purchase and sale of a Partnership
Interest under this Article 10, the remaining Partners shall, at their own cost
and expense, as soon as reasonably practicable after exercise of their option to
purchase the dissociating Partner's Interest, prepare, publish, file and serve
all notices as may be required by law to protect the dissociated Partner from
liability for future obligations of the Partnership Business.
ARTICLE 11
TERMINATION AND DISSOLUTION
11.1 TERMINATION AND DISSOLUTION. The Partnership shall be dissolved
upon the occurrence of any of the following events:
11.1.1 The affirmative Vote or written consent of all of the
Partners to terminate and dissolve the Partnership.
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11.1.2 The affirmative Vote or written consent of all of the
Partners to sell, exchange or otherwise dispose of all or substantially all of
the Partnership Property occurring as part of single transaction or a series of
related transactions as part of plan.
11.1.3 The termination for any reason of the Hemophilia Therapy
Management Agreement.
11.1.4 The termination for any reason of the Hemophilia Factor
Services Agreement.
11.1.5 After the initial forty-eight (48) months of Partnership
operations, either Partner may terminate the Partnership upon twelve (12) months
prior written notice to the other Partner(s).
11.1.6 An event that makes it unlawful for all or substantially
all of the Business of the Partnership to be continued, but a cure of illegality
within ninety (90) days after notice to the Partnership of the event is
effective retroactively to the date of the event for purposes of California
Corporations Code Section 16801.
11.1.7 On application by a Partner, the entry of a judicial
determination that any of the following apply:
(a) The economic purpose of the Partnership is likely to
be unreasonably frustrated;
(b) Another Partner has engaged in conduct relating to
the Partnership Business that makes it not reasonably practicable to carry on
the Business in partnership with that Partner; or
(c) It is not otherwise reasonably practicable to carry
on the Partnership Business in conformity with the Partnership Agreement.
11.2 STATEMENT OF DISSOLUTION. As soon as possible after the occurrence
of any of the events specified in Section 11.1 above, the Partnership shall
execute a Statement of Dissolution (Form GP-4) in such form as prescribed by the
Secretary of State, and cause the same to be filed in the office of the
Secretary of State pursuant to Section 16805 of the California Corporations
Code.
11.3 CONDUCT OF BUSINESS. Upon the filing of the Statement of
Dissolution with the Secretary of State, the Partnership shall cease to carry on
its Business, except insofar as may be necessary for the winding up of its
Business, but the Partnership's separate existence shall continue until the
Statement of Dissolution has been filed with the Secretary of State or until a
judicial determination dissolving the Partnership has been entered by a court of
competent jurisdiction.
11.4 DISTRIBUTION OF NET PROCEEDS UPON LIQUIDATION. The Partners shall
continue to divide Net Profits and Net Losses and Distributable Cash during the
winding-up period in the same manner and the same priorities as provided for in
Articles 4 and 5 hereof. The proceeds from the liquidation of Partnership
Property shall be applied in the following order:
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11.4.1 First, to the payment of creditors, in the order of
priority as provided by law, except to Partners on account of their Capital
Contributions.
11.4.2 Second, to the payment of loans or advances that may have
been made by any of the Partners for working capital or other requirements of
the Partnership.
11.4.3 Thereafter, to the Partners in accordance with their
positive Capital Account balances.
Where the distribution pursuant to this Section 11.4 consists both
of cash (or cash equivalents) and non-cash assets, the cash (or cash
equivalents) shall first be distributed, in a descending order, to fully satisfy
each category starting with the most preferred category above. In the case of
noncash assets, the distribution values are to be based on the fair market value
thereof as determined in good faith by the Management Committee, and the
shortest maturity portion of such non-cash assets (e.g., notes or other
indebtedness) shall, to the extent such non-cash assets are readily divisible,
be distributed, in a descending order, to fully satisfy each category above,
starting with the most preferred category.
ARTICLE 12
INDEMNIFICATION
12.1 INDEMNIFICATION OF THE PARTNERS AND THEIR PRINCIPALS. The
Partnership shall indemnify and hold harmless each of the Partners, the
Partnership Manager, the Committee Members, their Affiliates and each of their
respective partners, officers, directors, managers, trustees, employees, agents
and Principals (individually, an "INDEMNITEE") from and against any and all
losses, claims, demands, costs, damages, liabilities, joint and several,
expenses of any nature (including reasonable attorneys, fees and disbursements),
judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative, in which the Indemnitee is involved as a party arising out of
the Business of the Partnership, excluding liabilities to any Partner,
regardless of whether the Indemnitee continues to be a Partner, or a partner,
officer, director, manager, trustee, employee, agent or Principal of the Partner
at the time any such liability or expense is paid or incurred, to the fullest
extent permitted by the Act and all other applicable laws, PROVIDED that the
Partner or such Person acted in good faith, within what is reasonably believed
to be the scope of its authority and for a purpose which it reasonably believed
to be in the best interests of the Partnership and the Partners or otherwise in
compliance with the provisions of this Agreement; provided, however (i) that the
Partnership shall not be required to indemnify any Indemnitee, and any such
Indemnitee shall be liable, for any loss, expense or damage which the
Partnership may suffer as a result of (A) such Indemnitee's willful misconduct,
gross negligence or bad faith in failing to perform its duties hereunder, (B)
actions taken by such Indemnitee in violation of this Agreement, (C) the receipt
by such Indemnitee of any financial benefits to which it is not entitled
pursuant to this Agreement, or (D) the vote by such Indemnitee for a
distribution of funds of the Partnership in violation of this Agreement or the
Act; (ii) the Partnership shall not be required to indemnify any Indemnitee for
any breach of the provisions of this Agreement, or for any loss, expense or
damage which it may suffer as a result of the breach of this Agreement by the
Partner to which the Indemnitee is related; and (iii) any liability hereunder
shall be limited solely to the assets and properties of the Partnership, and no
Partner (or any Affiliate of any Partner) shall have any liability or obligation
hereunder.
12.2 EXPENSES. Expenses incurred by an Indemnitee in defending any
claim, demand, action, suit or proceeding subject to Section 12.1 above may,
from time to time, be advanced by
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the Partnership prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Partnership of an undertaking by or on
behalf of the Indemnitee to repay such amount if it shall be determined that
such Person is not entitled to be indemnified as authorized in Section 12.1.
12.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE. The indemnification provided
by Section 12.1 shall be in addition to any other rights to which those
indemnified may be entitled under any agreement, vote of the Partners, as a
matter of law or equity or otherwise, both as to action in the Indemnitee's
capacity as a Partner, as an Affiliate or as an officer, director, employee,
agent or Principal of a Partner and as to any action in another capacity, and
shall continue as to an Indemnitee who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors or assigns and
administrators of the Indemnitee.
12.4 ERRORS AND OMISSIONS INSURANCE. The Partnership may purchase and
maintain insurance, at the Partnership's expense, on behalf of the Partners and
such other Persons as the Partners shall determine, against any liability that
may be asserted against, or any expense that may be incurred by, such Person in
connection with the activities of the Partnership and/or the Partners' acts or
omissions as the Partners of the Partnership regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
12.5 ASSETS OF THE PARTNERSHIP. Any indemnification under Section 12.1
shall be satisfied solely out of the assets of the Partnership. No Partner shall
be subject to personal liability or required to fund or to cause to be funded
any obligation by reason of these indemnification provisions.
ARTICLE 13
INDEPENDENT ACTIVITIES; AGREEMENT NOT TO COMPETE
13.1 INDEPENDENT ACTIVITIES. Subject to Section 13.2 below, each of the
Partners and its Affiliates may engage in business and activities which are
competitive with the Business and activities of the Partnership, and neither
such Partner nor any of such Affiliates shall be under any obligation or duty to
account for or offer the benefit of any such business and activities to the
other Partners or the Partnership.
13.2 AGREEMENT NOT TO COMPETE. Each Partner and its Affiliates agree
that, during the term of this Agreement, it shall not compete with the
Partnership by providing any therapies, services, supplies or goods which are
being provided by the Partnership and encompassed within the definition of the
"Business" of the Partnership as contained in this Agreement to any patient who
has his or her principal residence in the Service Area, or any patient being
treated by a physician or hospital which has it principal place of business
within the Service Area. Notwithstanding the foregoing, the resale by CHC of
drugs acquired in wholesale transactions with the Partnership or HHS shall not
constitute a breach of this agreement not to compete.
No Partner shall be in violation of this Section 13.2 if it has
made reasonable inquiry of the patient and the patient has denied having a
principal residence which would cause the patient to be covered by these
restrictions. However, if the correct information is subsequently discovered
such that the patient should not have been provided therapies, services,
supplies or goods by the Partner, then the Partner shall so advise the patient
and shall use all reasonable efforts to encourage the patient to have such
therapies, services, supplies or goods, as
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the case may be, be provided by the Partnership, consistent with the right of
the patient to select his or her own health care provider.
ARTICLE 14
AMENDMENTS
14.1 Amendments. Except for EXHIBIT A to this Agreement which may be
modified and supplemented from time to time by the Management Committee without
the necessity of a formal amendment to this Agreement, the terms and provisions
of this Agreement shall not be modified or amended in any respect except by a
written instrument executed by the number of Partners bearing the Vote required
under Section 14.2 below.
14.2 VOTE REQUIRE. Proposed amendments to this Agreement shall be
adopted if consented to by the unanimous Vote of the Partners, unless a lesser
Vote is required by law or by this Agreement. Notwithstanding the foregoing, no
amendment to this Agreement may enlarge the obligations of any Partner hereunder
without the consent of such Partner, even if the requisite number of Partners
have consented thereto.
14.3 MANAGEMENT COMMITTEE'S RIG-HT TO REQUIRE WRITTEN RESPONSES. For
the purpose of obtaining a written Vote to approve or disapprove a proposed
amendment, the Management Committee may require written responses within a
specified time period (not less than 10 nor more than 60 days from the date of
any notice of a proposed amendment) and provide that the failure to respond
shall constitute a favorable or unfavorable Vote (as designated) for the
proposed amendment.
14.4 COPY OF AMENDMENT. The Management Committee shall promptly furnish
a copy of any amendment to this Agreement to each Partner on whose behalf the
Management Committee executed the amendment as attorney-in-fact and to any
Partner who did not Vote.
14.5 FILINGS. The Management Committee shall, within a reasonable time
after the effective date of any amendment to this Agreement, make any official
filings or publications required or desirable to reflect such amendment,
including a Statement of Amendment (Form GP-7).
ARTICLE 15
NOTICES
Any notice, demand or other communication required or permitted
hereunder shall be in writing and may be either (i) personally delivered, which
shall be deemed received at the time of actual receipt thereof; or (ii) sent by
registered or certified mail, with postage and charges prepaid, which shall be
deemed delivered three (3) business days after deposit in the United States
mail; or (iii) sent by overnight courier service, such as FedEx, with charges
prepaid, which shall be deemed delivered upon such courier service's record
delivery date of the same; or (iv) delivered by facsimile transmission, which
shall be deemed received at the time and date of transmission, provided an
original mechanical signed copy of such communication is also immediately
deposited in the United States mail with first class postage and charges
prepaid, and IN EACH CASE, addressed or delivered to a party at such party's
address as set forth below, or at such other address as that party may specify
by written notice given to the other in accordance with this Article:
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IF TO THE PARTNERSHIP, THEN TO EACH OF THE FOLLOWING PARTIES:
CHILDRENS HEMOPHILIA SERVICES
Attn: Thomas J. McNulty, PharmD., Partnership Manager
65 North Raymond Avenue, Suite 305
Pasadena, California 91103
Facsimile: (626) 577-1411
AND TO:
KYLE CALLAHAN
6820 Charlotte Pike, Suite 100
Nashville, Tennessee 37209
Facsimile: (615) 352-2588
AND TO:
Each of the Committee Members, addressed and delivered
separately to each Committee Member at such address as they
shall provide the Partnership from time to time,
WITH COURTESY COPIES TO EACH OF:
FRYE & HSIEH, LLP
Attn: Douglas J. Frye, Esq.
24955 Pacific Coast Highway, Suite A201
Malibu, California 90265-4747
Facsimile: (310) 456-0808
Thomas W. Bell, Jr., Esq.
1640 Century Center Parkway, Suite 101
Memphis, Tennessee 38134
Facsimile: (901) 385-3689
IF TO CHC, AS A PARTNER:
CHILDRENS HOME CARE
Attn: Thomas J. McNulty, PharmD., President
c/o 65 North Raymond Avenue, Suite 305
Pasadena, California 91103
Facsimile: (626) 577-1411
WITH A COURTESY COPY TO:
FRYE & HSIEH, LLP
Attn: Douglas J. Frye, Esq.
24955 Pacific Coast Highway, Suite A201
Malibu, California 90265-4747
Facsimile: (310) 456-0808
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IF TO HHS, AS A PARTNER:
HORIZON HEALTH SYSTEMS, INC.
Attn: Kyle Callahan, President
6820 Charlotte Pike, Suite 100
Nashville, Tennessee 37209
Facsimile: (615) 352-2588
WITH A COURTESY COPY TO:
Thomas W. Bell, Jr., Esq.
1640 Century Center Parkway, Suite 101
Memphis, Tennessee 38134
Facsimile: (901) 385-3689
Where courtesy copies are requested to be given, such copies shall not
constitute valid notice to the party where a copy is requested to be given. If
the United States Postal Service returns to the Partnership or the Management
Committee any notice as undeliverable, all future notices to that Partner shall
be deemed duly given if kept available for that Partner at the Partnership's
principal executive office for one (1) year.
ARTICLE 16
GENERAL PROVISIONS
16.1 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.
16.2 HEADINGS. The headings contained in this Agreement are inserted
for convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
16.3 VARIATION OF PRONOUNS; GENDER. All pronouns and any variations
thereof shall be deemed to refer to masculine, feminine, or neuter, singular or
plural, as the identity of the Person or Persons may require.
16.4 SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of the within Agreement.
16.5 ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with all
Exhibits, schedules and other appendices attached hereto and referred to herein,
constitutes the entire understanding of the parties hereto with respect to the
subject matter hereof, and no amendment, modification or alteration of the terms
hereof shall be binding unless the same be in writing, dated subsequent to the
date hereof and duly adopted in accordance with the provisions of this
Agreement.
16.6 FURTHER ACTION. Each Partner, upon request, agrees to perform all
further acts and execute, acknowledge and deliver any documents or instruments
which may be reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement.
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16.7 NO WAIVER TO SEEK REDRESS. The failure of any Partner to seek
redress for violation of or to insist upon the strict performance of any
covenant or condition of this Agreement shall not prevent a subsequent act,
which would have originally constituted a violation, from having the effect of
an original violation.
16.8 WAIVER OF ACT FOR PARTITION. No Partner shall, either directly or
indirectly, take any action to require partition or appraisement of the
Partnership or any of its assets or properties or cause the sale of any
Partnership property, and notwithstanding any provision of applicable law to the
contrary, each Partner (and his legal representatives, successors, or assigns)
hereby irrevocably waives any and all rights to maintain any action for
partition or to compel any sale with respect to his Partnership Interest, or
with respect to any asset or properties of the Partnership, except as expressly
provided in this Agreement.
16.9 CUMULATIVE REMEDIES. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by a party
hereto shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
16.10 BENEFIT AND BURDEN. Except as otherwise expressly permitted,
restricted or provided for in this Agreement, each and all. of the covenants,
terms, provisions and agreements contained herein shall be binding upon and
inure to the benefit of the Partners and their respective heirs, legatees,
personal and legal representatives, successors, transferees and assigns.
16.11 NO THIRD PARTY BENEFICIARIES. Except for the foregoing, no rights
or benefits under this Agreement are conferred upon, directly or indirectly, or
shall in any way inure to the benefit of, any third party who is not a signatory
to this Agreement.
16.12 LENDER IS RELIANCE. Any lender may rely upon the written
statement of the Partnership as to the intended use of the proceeds of any
borrowings of the Partnership, and such statements shall be conclusively binding
upon all parties hereto irrespective of the actual disposition or use of such
proceeds.
16.13 BINDING ARBITRATION OF DISPUTES. UNLESS OTHERWISE WAIVED BY THE
PARTNERS, AND EXCEPT FOR ANY DEADLOCK OF THE MANAGEMENT COMMITTEE, ANY DISPUTE,
CONTROVERSY OR CLAIM BETWEEN THE PARTNERS ARISING OUT OF OR RELATING TO THIS
AGREEMENT EITHER DURING OR AFTER THE TERM HEREOF (INCLUDING THE QUESTION AS TO
WHETHER ANY PARTICULAR MATTER IS ARBITRABLE) SHALL BE SOLELY AND FINALLY SETTLED
BY ARBITRATION CONDUCTED IN LOS ANGELES COUNTY, CALIFORNIA, IN ACCORDANCE WITH
THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN
FORCE (THE "RULES"). THE PARTNER REQUESTING ARBITRATION SHALL SERVE UPON THE
OTHER PARTNERS TO THE CONTROVERSY, DISPUTE OR CLAIM A WRITTEN DEMAND FOR
ARBITRATION STATING THE SUBSTANCE OF THE CONTROVERSY, DISPUTE OR CLAIM, THE
CONTENTION OF THE PARTNER REQUESTING ARBITRATION, AND THE NAME AND ADDRESS OF
THE ARBITRATOR APPOINTED BY IT. THE RECIPIENTS OF SUCH DEMAND SHALL WITHIN
TWENTY (20) DAYS AFTER SUCH RECEIPT APPOINT AN ARBITRATOR AND NOTIFY THE PARTNER
REQUESTING ARBITRATION OF THE IDENTITY OF THE ARBITRATOR SO SELECTED, AND THE
TWO ARBITRATORS SHALL APPOINT A THIRD, AND THE DECISION OR AWARD OF ANY TWO
ARBITRATORS SHALL BE FINAL AND BINDING UPON THE PARTIES. IN
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THE EVENT THAT THE TWO ARBITRATORS FAIL TO APPOINT A THIRD ARBITRATOR WITHIN
TWENTY (20) DAYS OF THE APPOINTMENT OF THE SECOND ARBITRATOR, EITHER ARBITRATOR,
OR ANY PARTY TO THE ARBITRATION, MAY APPLY TO A JUDGE OF THE UNITED STATES
DISTRICT COURT IN AND FOR THE CENTRAL DISTRICT OF THE STATE OF CALIFORNIA FOR
THE APPOINTMENT OF THE THIRD ARBITRATOR, AND THE APPOINTMENT OF SUCH ARBITRATOR
BY SUCH JUDGE ON SUCH APPLICATION SHALL HAVE PRECISELY THE SAME FORCE AND EFFECT
AS IF SUCH ARBITRATOR HAD BEEN APPOINTED BY THE TWO ARBITRATORS. IF FOR ANY
REASON THE THIRD ARBITRATOR CANNOT BE APPOINTED IN THE MANNER PRESCRIBED BY THE
PRECEDING SENTENCE, EITHER REGULARLY APPOINTED ARBITRATOR OR EITHER PARTY TO THE
ARBITRATION, MAY APPLY TO THE AMERICAN ARBITRATION ASSOCIATION FOR APPOINTMENT
OF THE THIRD ARBITRATOR IN ACCORDANCE WITH THE RULES. SHOULD THE PARTIES UPON
WHOM THE DEMAND FOR ARBITRATION HAS BEEN SERVED FAIL OR REFUSE TO APPOINT AN
ARBITRATOR WITHIN 20 DAYS, THE SINGLE ARBITRATOR SHALL HAVE THE RIGHT TO DECIDE
ALONE.
THE ARBITRATORS SHALL HAVE THE POWER TO GRANT ALL LEGAL AND
EQUITABLE REMEDIES AND AWARD COMPENSATORY DAMAGES PROVIDED BY CALIFORNIA LAW,
BUT SPECIFICALLY SHALL NOT HAVE THE POWER TO AWARD PUNITIVE DAMAGES. THE PARTIES
TO THE ARBITRATION SHALL BE ENTITLED TO CONDUCT DISCOVERY, AS MAY BE REASONABLY
LIMITED BY THE ARBITRATORS, UNDER THE CALIFORNIA CODE OF CIVIL PROCEDURE. THE
ARBITRATORS SHALL APPLY CALIFORNIA SUBSTANTIVE LAW AND THE CALIFORNIA EVIDENCE
CODE TO THE PROCEEDING. THE ARBITRATORS SHALL PREPARE IN WRITING AND PROVIDE TO
THE PARTIES AN AWARD INCLUDING FACTUAL FINDINGS AND THE REASONS ON WHICH THE
DECISION IS BASED. THE ARBITRATOR'S DECISION OR AWARD SHALL BE FINAL AND BINDING
UPON THE PARTIES. THE PARTNERS SHALL ABIDE BY ALL AWARDS RENDERED IN ARBITRATION
PROCEEDINGS, AND ALL SUCH AWARDS MAY BE ENFORCED AND EXECUTED UPON IN ANY COURT
HAVING COMPETENT JURISDICTION OVER THE PARTY AGAINST WHOM ENFORCE AND OF SUCH
AWARD IS SOUGHT. THE PARTNER OR PARTNERS LOSING THE DISPUTE WHICH WAS SUBMITTED
TO ARBITRATION SHALL PAY THE ADMINISTRATIVE CHARGES, ARBITRATORS' FEES, AND
RELATED EXPENSES OF ARBITRATION, AND EACH PARTNER'S LEGAL FEES INCURRED IN
CONNECTION WITH ANY SUCH ARBITRATION. THIS AGREEMENT TO ARBITRATE SHALL BE
SPECIFICALLY ENFORCEABLE UNDER THE PREVAILING ARBITRATION LAW.
16.14 WAIVER OF JURY TRIAL. WITH RESPECT TO ANY DISPUTE ARISING UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, AS TO WHICH NO
PARTNER INVOKES THE RIGHT TO ARBITRATION HEREIN PROVIDED, OR AS TO WHICH LEGAL
ACTION NEVERTHELESS OCCURS, EACH PARTNER HEREBY IRREVOCABLY WAIVES ALL RIGHTS IT
MAY HAVE TO DEMAND A JURY TRIAL. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND
VOLUNTARILY MADE BY THE PARTNERS, AND EACH PARTNER ACKNOWLEDGES THAT NONE OF THE
OTHER PARTNERS, MANAGERS, NOR ANY PERSON ACTING ON BEHALF OF THE OTHER PARTIES
HAS MADE ANY REPRESENTATION OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN
ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THE PARTNERS EACH FURTHER ACKNOWLEDGE
THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED)
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IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. EACH OF THE PARTNERS FURTHER
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THIS WAIVER PROVISION.
16.15 ATTORNEYS' FEES. In the event of any arbitration, litigation or
other dispute or proceeding arising as a result of or by reason of this
Agreement, the prevailing party in any such arbitration, litigation or other
dispute or proceeding shall be entitled to, in addition to any other damages
assessed, its reasonable attorneys' fees and all other out-of-pocket costs and
expenses incurred in connection with settling or resolving such dispute. The
reasonable attorneys' fees which the prevailing party is entitled to recover
shall include fees for prosecuting or defending any appeal and shall be awarded
for any supplemental proceedings until the final judgment is satisfied in full.
In addition to the foregoing award of attorneys' fees to the prevailing party,
the prevailing party in any lawsuit or arbitration procedure relating to this
Agreement shall be entitled to its reasonable attorneys' fees and costs incurred
in any post judgment proceedings to collect or enforce the judgment. THIS
ATTORNEYS' FEES PROVISION IS SEPARATE AND SEVERAL AND SHALL SURVIVE THE MERGER
OF THIS AGREEMENT INTO ANY JUDGMENT.
16.16 TIME IS OF THE ESSENCE. TIME IS EXPRESSLY DECLARED TO BE OF THE
ESSENCE with respect to the parties hereto and in connection with all acts or
things to be done or performed in connection herewith and of every provision
hereof in which time is an element.
16.17 COUNTERPARTS; FACSIMILE EXECUTION. This Agreement may be executed
in multiple counterparts each of which shall be deemed an original Agreement,
and all of which shall constitute one Agreement to be effective as of the date
of execution of this Agreement. The execution of this Agreement, and any notices
or documents required to be delivered hereunder, may be accomplished by
facsimile transmission, provided the original of such Agreement, notice or
document containing an original signature is delivered to the other party within
five (5) business days after such execution or facsimile transmission thereof.
16.18 GOVERNING LAW. This Agreement and any amendments or exhibits
hereto, and the rights and obligations of the parties hereunder, is executed
under and in conformity with the laws of the State of California relating to
general partnerships and is to be construed, enforced and governed in accordance
therewith without giving effect to any conflict of law provision.
(Continued and Signed on the Following Page)
-31-
SIGNATURES AND ACKNOWLEDGMENTS
OF THE PARTNERS
IN WITNESS WHEREOF, the parties hereto have caused this AMENDED AND
RESTATED GENERAL PARTNERSHIP AGREEMENT of CHILDRENS HEMOPHILIA SERVICES to be
duly and validly executed and delivered by a duly authorized representative as
of the day and year first above written.
FURTHER, WE, THE UNDERSIGNED, AS PARTNERS OF THE PARTNERSHIP, ACKNOWLEDGE
WE HAVE READ AND UNDERSTAND THE TERMS AND CONDITIONS OF THE FOREGOING AMENDED
AND RESTATED GENERAL PARTNERSHIP AGREEMENT OF CHILDRENS HEMOPHILIA SERVICES,
INCLUDING SPECIFICALLY, BUT NOT LIMITED TO, SECTION 10.1, "COVENANT NOT TO
DISSOCIATE OR DISSOLVE," AND SECTIONS 16.13 AND 16.14, "'BINDING ARBITRATION OF
DISPUTES," AND "WAIVER OF JURY TRIAL, RESPECTIVELY, AND, AS EVIDENCED BY OUR
SIGNATURES BELOW, THE UNDERSIGNED HEREBY ACCEPT, AND AGREE TO HE BOUND BY, THE
TERMS AND PROVISIONS CONTAINED HEREIN.
CHILDRENS HEMOPHILIA SERVICES
A California General Partnership
By Its Partners
"CHC"
CHILDRENS HOME CARE
A California Nonprofit Public Benefit
Corporation
By: /s/ Thomas J. McNulty
---------------------------------------
THOMAS J. McNULTY, PharmD.,
Its President
"HHS"
HORIZON HEALTH SYSTEMS, INC.
A Tennessee Corporation
By: /s/ Kyle Callahan
---------------------------------------
KYLE CALLAHAN
Its President
-32-
ACCEPTANCE BY PARTNERSHIP MANAGER
The undersigned hereby accepts his appointment as the Partnership Manager
of the Partnership, and hereby agrees to undertake the performance of his
duties, responsibilities and obligations in accordance with terms of this
Amended and Restated General Partnership Agreement and the applicable provisions
of the Act and California law, as any and all may be amended from time to time.
------------------------------------------
THOMAS J. McNULTY, PharmD.
EXHIBIT A
AMENDED AND RESTATED GENERAL PARTNERSHIP AGREEMENT
OF
CHILDRENS HEMOPHILIA SERVICES
NAMES AND ADDRESSES OF THE PARTNERS,
THEIR CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
- --------------------------------------------------------------------------------
NAMES AND ADDRESSES
OF THE PARTNERS OF CAPITAL PERCENTAGE
CHILDRENS HEMOPHILIA SERVICES CONTRIBUTION INTEREST
- --------------------------------------------------------------------------------
CHILDRENS HOME CARE TO BE 50.0%
6430 Sunset Boulevard, Suite 400 DETERMINED
Los Angeles, California 90028
Facsimile: (626) 577-1411
Attn: Thomas J. McNulty, President
- --------------------------------------------------------------------------------
HORIZON HEALTH SYSTEMS, INC. TO BE 50.0%
6820 Charlotte Pike, Suite 100 DETERMINED
Nashville, Tennessee 37209
Facsimile: (615) 352-2588
Attn: Kyle Callahan, President
- --------------------------------------------------------------------------------
TOTAL: $ 100.0%
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