|
Exhibit
3.68
THE LIMITED PARTNERSHIP INTERESTS
CREATED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY SECURITIES LAWS OF
ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACTS. EXCEPT AS SPECIFICALLY OTHERWISE PROVIDED IN THIS AGREEMENT,
THE INTERESTS MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHOUT REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL THAT
SUCH TRANSFER MAY BE LEGALLY EFFECTED WITHOUT SUCH REGISTRATION.
ADDITIONAL RESTRICTIONS ON TRANSFER AND SALE ARE SET FORTH IN THIS
AGREEMENT.
AMENDED AND
RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
COLUMBIA RIO GRANDE
HEALTHCARE, L.P.
(a Delaware Limited
Partnership)
TABLE OF
CONTENTS
|
|
|
|
|
|
|
| 1. |
|
DEFINITIONS |
|
1 |
|
|
|
|
|
|
1.1 |
|
“Act” |
|
1 |
|
|
1.2 |
|
“Additional Limited Partner” |
|
1 |
|
|
1.3 |
|
“Adverse Terminating Event” |
|
1 |
|
|
1.4 |
|
“Advisory Board” |
|
2 |
|
|
1.5 |
|
“Affiliate” |
|
2 |
|
|
1.6 |
|
“Agreed Value” |
|
2 |
|
|
1.7 |
|
“Agreement” |
|
2 |
|
|
1.8 |
|
“Approval of the Partners” or “Approved by
the Partners” |
|
2 |
|
|
1.9 |
|
“Bankruptcy” |
|
2 |
|
|
1.10 |
|
“Capital Account” |
|
2 |
|
|
1.11 |
|
“Capital Contribution” |
|
3 |
|
|
1.12 |
|
“Code” |
|
3 |
|
|
1.13 |
|
“Columbia” |
|
3 |
|
|
1.14 |
|
“Columbia Affiliate” |
|
3 |
|
|
1.15 |
|
“Columbia Sub” |
|
3 |
|
|
1.16 |
|
“Competing Business” |
|
3 |
|
|
1.17 |
|
“Facility” |
|
3 |
|
|
1.18 |
|
“Facilities” |
|
3 |
|
|
1.19 |
|
“General Partner” |
|
3 |
|
|
1.20 |
|
“Limited Partner” |
|
3 |
|
|
1.21 |
|
“Liquidator” |
|
3 |
|
|
1.22 |
|
“Memorandum” |
|
3 |
|
|
1.23 |
|
“Original Limited Partner” |
|
3 |
|
|
1.24 |
|
“Partners” |
|
4 |
|
|
1.25 |
|
“Partnership” |
|
4 |
|
|
1.26 |
|
“Person” |
|
4 |
|
|
1.27 |
|
“Qualified Purchaser” |
|
4 |
|
|
1.28 |
|
“Sharing Percentage” |
|
4 |
|
|
1.29 |
|
“Substituted Limited Partner” |
|
4 |
|
|
1.30 |
|
“Syndication Expenses” |
|
4 |
|
|
1.31 |
|
“Terminating Event” |
|
4 |
|
|
1.32 |
|
“Treasury Regulation” or
“Regulations” |
|
4 |
|
|
1.33 |
|
“Units” |
|
4 |
|
|
1.34 |
|
“Valuation Price” |
|
5 |
|
|
|
| 2. |
|
FORMATION AND CONTINUATION OF PARTNERSHIP |
|
5 |
|
|
|
|
|
|
2.1 |
|
Formation
and Continuation |
|
5 |
|
|
2.2 |
|
Name |
|
5 |
|
|
2.3 |
|
Principal
Office |
|
5 |
|
|
2.4 |
|
Term |
|
5 |
|
|
2.5 |
|
Registered Agent and Office |
|
5 |
i
|
|
|
|
|
|
|
| 3. |
|
PURPOSES AND POWERS OF THE PARTNERSHIP; NATURE OF THE BUSINESS
OF THE PARTNERSHIP |
|
5 |
|
|
|
|
|
|
3.1 |
|
Purposes |
|
5 |
|
|
3.2 |
|
Powers |
|
6 |
|
|
|
| 4. |
|
CAPITAL CONTRIBUTIONS, LOANS, CAPITAL ACCOUNTS |
|
6 |
|
|
|
|
|
|
4.1 |
|
Capital
Contributions |
|
6 |
|
|
4.2 |
|
Capital
Accounts |
|
6 |
|
|
4.3 |
|
Additional Provisions Regarding Capital Accounts |
|
7 |
|
|
4.4 |
|
Loans |
|
8 |
|
|
|
| 5. |
|
ALLOCATIONS |
|
9 |
|
|
|
|
|
|
5.1 |
|
Allocations of Income and Losses |
|
9 |
|
|
6. |
|
DISTRIBUTIONS |
|
9 |
|
|
6.1 |
|
Distribution of Excess Cash |
|
9 |
|
|
|
| 7. |
|
BANK ACCOUNTS, BOOKS OF ACCOUNT, TAX COMPLIANCE AND FISCAL
YEAR |
|
9 |
|
|
|
|
|
|
7.1 |
|
Bank
Accounts; Investments |
|
9 |
|
|
7.2 |
|
Books and
Records |
|
9 |
|
|
7.3 |
|
Determination of Profit and Loss; Financial
Statements |
|
10 |
|
|
7.4 |
|
Tax
Returns and Information |
|
10 |
|
|
7.5 |
|
Tax
Audits |
|
10 |
|
|
7.6 |
|
Fiscal
Year |
|
10 |
|
|
|
| 8. |
|
RIGHTS, OBLIGATIONS AND INDEMNIFICATION OF THE GENERAL
PARTNER |
|
10 |
|
|
|
|
|
|
8.1 |
|
Rights of
the General Partner as Manager |
|
10 |
|
|
8.2 |
|
Right to
Rely on the General Partner |
|
12 |
|
|
8.3 |
|
Specific
Limitations on the General Partner |
|
12 |
|
|
8.4 |
|
Additional Limitations on the Authority of the General
Partner |
|
12 |
|
|
8.5 |
|
Management Obligations of the General Partner |
|
13 |
|
|
8.6 |
|
Indemnification of the General Partner |
|
14 |
|
|
8.7 |
|
Reimbursement |
|
14 |
|
|
8.8 |
|
Compensation of the General Partner |
|
15 |
|
|
8.9 |
|
Independent Activities |
|
15 |
|
|
|
| 9. |
|
RIGHTS AND STATUS OF LIMITED PARTNERS |
|
15 |
|
|
|
|
|
|
9.1 |
|
General |
|
15 |
|
|
9.2 |
|
Limitation of Liability |
|
15 |
|
|
9.3 |
|
Bankruptcy; Death; Etc. |
|
15 |
ii
|
|
|
|
|
|
|
|
|
|
| 10. |
|
SPECIAL COVENANTS OF THE PARTNERS |
|
16 |
|
|
|
|
|
|
10.1 |
|
Non-ownership Provision |
|
16 |
|
|
10.2 |
|
Limitation |
|
16 |
|
|
|
| 11. |
|
MEETINGS AND MEANS OF VOTING |
|
16 |
|
|
|
|
|
|
11.1 |
|
Meetings
of the Partners |
|
16 |
|
|
11.2 |
|
Vote By
Proxy |
|
17 |
|
|
11.3 |
|
Conduct
of Meeting |
|
17 |
|
|
11.4 |
|
Action
Without a Meeting |
|
17 |
|
|
11.5 |
|
Closing
of Transfer Record; Record Date |
|
17 |
| 12. |
|
ADVISORY BOARD |
|
17 |
|
|
12.1 |
|
Advisory
Board |
|
17 |
|
|
12.2 |
|
Manner of
Exercise of Advisory Board’s Authority |
|
18 |
|
|
12.3 |
|
Meetings
of the Advisory Board |
|
18 |
|
|
|
| 13. |
|
TRANSFER OF UNITS AND ADDITIONAL LIMITED PARTNERS |
|
18 |
|
|
|
|
|
|
13.1 |
|
Transfers
by Limited Partners |
|
18 |
|
|
13.2 |
|
Substituted Limited Partner |
|
19 |
|
|
13.3 |
|
Basis
Adjustment |
|
20 |
|
|
13.4 |
|
Transfer
by General Partner |
|
20 |
|
|
13.5 |
|
Admission
of Additional Limited Partners |
|
20 |
|
|
13.6 |
|
Transfer
Procedures |
|
20 |
|
|
13.7 |
|
Invalid
Transfer |
|
20 |
|
|
13.8 |
|
Distributions and Allocations in Respect of a Transferred
Ownership Interest |
|
21 |
|
|
13.9 |
|
Additional Requirements of Admission to Partnership |
|
21 |
|
|
13.10 |
|
Amendment
to Exhibit “B” |
|
21 |
|
|
|
| 14. |
|
RIGHT TO LIQUIDATE OR PURCHASE PARTNERSHIP
INTERESTS |
|
21 |
|
|
|
|
|
|
14.1 |
|
Partnership’s and General Partner’s Right of First
Refusal |
|
21 |
|
|
14.2 |
|
Occurrence of Terminating Event or Adverse Terminating
Event |
|
22 |
|
|
14.3 |
|
Payment
for Partnership Interest |
|
23 |
|
|
14.4 |
|
Subsequent Legislation |
|
23 |
|
|
14.5 |
|
Divorce
of Limited Partner |
|
23 |
|
|
14.6 |
|
Federal
Income Tax Treatment |
|
24 |
|
|
|
| 15. |
|
DISSOLUTION |
|
24 |
|
|
|
|
|
|
15.1 |
|
Causes |
|
24 |
|
|
15.2 |
|
Reconstitution |
|
25 |
|
|
15.3 |
|
Interim
Manager |
|
25 |
iii
|
|
|
|
|
|
|
| 16. |
|
WINDING UP AND TERMINATION |
|
25 |
|
|
|
|
|
|
16.1 |
|
General |
|
25 |
|
|
16.2 |
|
Court
Appointment of Liquidator |
|
26 |
|
|
16.3 |
|
Liquidation |
|
26 |
|
|
16.4 |
|
Creation
of Reserves |
|
27 |
|
|
16.5 |
|
Final
Statement |
|
27 |
|
|
|
| 17. |
|
POWER OF ATTORNEY |
|
27 |
|
|
|
|
|
|
17.1 |
|
General
Partner as Attorney-in-Fact |
|
27 |
|
|
17.2 |
|
Nature of
Special Power |
|
27 |
|
|
|
| 18. |
|
MISCELLANEOUS |
|
28 |
|
|
|
|
|
|
18.1 |
|
Notices |
|
28 |
|
|
18.2 |
|
Governing
Law |
|
28 |
|
|
18.3 |
|
Successors and Assigns |
|
28 |
|
|
18.4 |
|
Construction |
|
28 |
|
|
18.5 |
|
Time |
|
28 |
|
|
18.6 |
|
Waiver of
Partition |
|
28 |
|
|
18.7 |
|
Entire
Agreement |
|
29 |
|
|
18.8 |
|
Amendments |
|
29 |
|
|
18.9 |
|
Severability |
|
30 |
|
|
18.10 |
|
Gender
and Number |
|
30 |
|
|
18.11 |
|
Exhibits |
|
30 |
|
|
18.12 |
|
Additional Documents |
|
30 |
|
|
18.13 |
|
Section
Headings |
|
30 |
|
|
18.14 |
|
Counterparts |
|
30 |
|
|
|
| EXHIBIT A |
|
ALLOCATION OF PROFIT AND LOSS AND OTHER TAX MATTERS |
| EXHIBIT
B |
|
LIST OF
PARTNERS |
iv
AMENDED AND
RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
COLUMBIA RIO GRANDE
HEALTHCARE, L.P.
(a Delaware Limited
Partnership)
This Amended and Restated
Limited Partnership Agreement is entered into and shall be
effective as of the 1st day of January, 1997 by and between Rio
Grande Regional Hospital, Inc. (“Columbia Sub”), as the
General Partner, HCA Health Services of Texas, Inc. as the Original
Limited Partner, and each other Person whose name is set forth on
Exhibit “B” attached to this Amended and
Restated Limited Partnership Agreement as the limited
partners.
W I T N E S S E T H
;
WHEREAS, the General Partner
and the Original Limited Partner are parties to that certain
Limited Partnership Agreement of Columbia Rio Grande Healthcare,
L.P., dated as of September 4, 1996 (the “Original
Partnership Agreement”);
WHEREAS, the parties hereto
desire to amend the Original Partnership Agreement, as provided
herein; and
NOW, THEREFORE, the General
Partner, the Original Limited Partner and the Limited Partners
hereby amend and restate the Original Partnership Agreement as
follows:
1. DEFINITIONS
As used herein the following
terms have the following meanings:
1.1 “ Act
” means the Delaware Revised Uniform Limited Partnership
Act, as amended from time to time.
1.2 “ Additional
Limited Partner ” means a Person who is admitted into
the Partnership as a Limited Partner pursuant to the terms of
Section 13.5 hereof.
1.3 “ Adverse
Terminating Event ” means, with respect to any
Limited Partner (other than Columbia or any Columbia Affiliate),
any of the following:
(a) The Limited Partner has
breached the terms and conditions of this Agreement, including
without limitation, violating the transfer restrictions set forth
in Article 13 , as determined in the reasonable discretion
of the General Partner; or
(b) The Limited Partner has
disrupted the affairs of the Partnership or has acted adversely to
the best interests of the Partnership, as determined in the
reasonable discretion of the General Partner.
1.4 “ Advisory
Board ” has the meaning set forth in
Section 12.1 .
1.5 “
Affiliate ” means, with respect to any Partner,
(i) any Person that directly or indirectly controls, is
controlled by, or is under common control with, a Partner,
(ii) any entity of which a Partner owns 10% or more of the
outstanding voting securities, (iii) any entity of which a
Partner is an officer, director, or general partner, or
(iv) any child, grandchild (whether through marriage, adoption
or otherwise), sibling (whether through adoption or otherwise),
parent or spouse of a Partner. As used in this definition of
“Affiliate,” the term “control” means
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of an entity whether
through ownership of voting securities, by contract or
otherwise.
1.6 “ Agreed
Value ” means, unless otherwise defined herein, at
any time, (a) the product of (i) the aggregate earnings
before depreciation, interest, taxes, amortization and intercompany
management fees (“EBDITA”), all determined in
accordance with generally accepted accounting principles, for the
Partnership for the most recently completed four (4) fiscal
quarters ending on either June 30 or December 31,
multiplied by (ii) 5.0, minus (b) any long-term debt,
including without limitation any third party and intercompany debt,
of the Partnership. For purposes of this computation, EBDITA shall
be adjusted as deemed appropriate by the General Partner for the
following: (i) one-time or prior year adjustments will be
eliminated and (ii) the impact of acquisitions and
divestitures during the year will be annualized.
1.7 “
Agreement ” means this Amended and Restated
Limited Partnership Agreement of Columbia Rio Grande Healthcare,
L.P., as from time to time amended pursuant to
Section 18.8 hereof.
1.8 “ Approval of
the Partners” or “Approved by the Partners
” means the approval of those Limited Partners who,
together with the General Partner and Affiliates, have collective
ownership interests of at least fifty-one percent (51%) of the
aggregate Sharing Percentage of all Partners at the time the
proposed Partnership action is being considered for
approval.
1.9 “
Bankruptcy ” means, as to any Partner, the
Partner’s taking or acquiescing to the taking of any action
seeking relief under, or advantage of, any applicable debtor
relief, liquidation, receivership, conservatorship, bankruptcy,
moratorium, rearrangement, insolvency, reorganization or similar
law affecting the rights or remedies of creditors generally, as in
effect from time to time. For the purpose of this definition, the
term “acquiescing” shall include, without limitation,
the failure to file within the time specified by law, an answer or
opposition to any proceeding commenced against such Partner under
any such law and a failure to file, within thirty (30) days
after its entry, a petition, answer or motion to vacate or to
discharge any order, judgment or decree providing for any relief
under any such law.
1.10 “ Capital
Account ” shall have the meaning set forth in
Section 4.2 hereof.
2
1.11 “ Capital
Contribution ” means, as to any Partner, the amount
of cash or the Agreed Value (as defined in Exhibit
“A” attached hereto) of all property contributed to
the Partnership by the Partner, which is set forth opposite such
Partner’s name on the attached Exhibit “B
” under the heading “Capital
Contribution.”
1.12 “ Code
” means the Internal Revenue Code of 1986, as amended
from time to time. All references herein to sections of the Code
shall include any provision or corresponding provisions of
succeeding law.
1.13 “
Columbia ” means Columbia/HCA Healthcare
Corporation, a Delaware corporation, and any successor in
interest.
1.14 “ Columbia
Affiliate ” means any Affiliate of Columbia (other
than a natural person).
1.15 “ Columbia
Sub ” means Rio Grande Regional Hospital, Inc., a
Texas corporation and a Columbia Affiliate, and any successor
thereto.
1.16 “ Competing
Business ” means any health care facility (which
shall include, without limitation, general acute care hospitals,
specialty hospitals, comprehensive rehabilitation facilities,
rehabilitation agencies, diagnostic imaging centers, inpatient or
outpatient psychiatric or substance abuse facilities, ambulatory or
other types of surgery centers and/or home health agencies) that is
located within twenty-five (25) miles of any
Facility.
1.17 “
Facility ” means any of Columbia Rio Grande
Regional Hospital, a 222-bed acute care hospital located in
McAllen, Texas, certain medical office buildings or any other
health care facilities and related businesses owned, leased or
acquired by the Partnership, but excluding any hospital, health
care facility or related business that is no longer owned by the
Partnership.
1.18 “
Facilities ” shall mean collectively each and
every such Facility.
1.19 “ General
Partner ” means Columbia Sub or any replacement
general partner of the Partnership, but excluding any Person who
ceases to be a general partner of the Partnership pursuant to this
Agreement.
1.20 “ Limited
Partner ” means the Original Limited Partner, any
Limited Partner whose name is set forth on Exhibit
“B” hereto, and any Substituted Limited Partner or
Additional Limited Partner, but excluding any Person who ceases to
be a limited partner of the Partnership pursuant to this Agreement.
“ Limited Partners ” means all of the
Persons who are limited partners of the Partnership as defined in
this Section 1.19 .
1.21 “
Liquidator ” means the Person who liquidates the
Partnership under Article 16 hereof.
1.22 “
Memorandum ” means the offering memorandum dated
as of September 5, 1996, pursuant to which 330 Units were
offered to Qualified Purchasers.
1.23 “ Original
Limited Partner ” means HCA Health Services of Texas,
Inc., a Texas corporation and a Columbia Affiliate, and any
successor thereto.
3
1.24 “
Partners ” means the General Partner and the
Limited Partners, collectively. “ Partner
” means any one of the Partners.
1.25 “
Partnership ” means the limited partnership
governed by this Agreement.
1.26 “ Person
” means any individual, partnership, corporation, limited
liability company, trust or other entity.
1.27 “ Qualified
Purchaser ” means, with respect to the Units, a
physician who is a member of the medical staff of any of the
Facilities (as defined in the medical staff bylaws of any such
Facility, as amended from time to time) or any management personnel
of Columbia or the Columbia Affiliates designated by the General
Partner as a qualified purchaser or Columbia or any Columbia
Affiliates, or other persons designated by the General
Partner.
1.28 “ Sharing
Percentage ” means, as to a Partner, the percentage
obtained by dividing the Units of such Partner by the total Units
of all Partners at that time. The Partners hereby agree that their
Sharing Percentages shall constitute their “interests in the
Partnership profits” for purposes of determining their
respective shares of the Partnership in “excess nonrecourse
liabilities” within the meaning of section 1.752-3(a)(3) of
the Regulations.
1.29 “
Substituted Limited Partner ” means any Person
admitted to the Partnership pursuant to Section 13.2
.
1.30 “
Syndication Expenses ” means all expenditures
classified as syndication expenses pursuant to Treasury Regulations
Section 1.709-2(b). Syndication Expenses shall be taken into
account under this Agreement at the time they would be taken into
account under the Partnership’s method of accounting if they
were deductible expenses.
1.31 “
Terminating Event ” means, with respect to any
Limited Partner (other than Columbia or any Columbia Affiliate),
any of the following:
(a) The Limited Partner has
died or become permanently disabled; or
(b) The Limited Partner is in
Bankruptcy.
1.32 “ Treasury
Regulation ” or “ Regulations ”
means the regulations, promulgated by the United States Department
of the Treasury pursuant to and in respect of provisions of the
Code. All references herein to sections of the Treasury Regulations
or the Regulations shall include any corresponding provision or
provisions of succeeding, similar or substitute proposed, temporary
or final regulations.
1.33 “ Units
” means all or a certain percentage, as the context
requires, of the issued and outstanding ownership interests of the
Partnership held by the Partners. “ Unit
” means any one of the Units. “ General
Partner Units ” or “ Limited Partner
Units ” means Units held by the General Partner, or
the Limited Partners, respectively.
4
1.34 “ Valuation
Price ” means the price per Unit as determined below.
The price per Unit at any given time shall be determined by
dividing the Agreed Value as of the end of the immediately
preceding fiscal period ending on either June 30 or
December 31 by the aggregate number of Units issued and
outstanding as of the end of such fiscal period.
2. FORMATION AND CONTINUATION OF
PARTNERSHIP
2.1 Formation and
Continuation . The Original Limited Partner and the General
Partner formed the Partnership pursuant to the Act, and caused the
Certificate of Limited Partnership to be filed in the office of the
Secretary of State of Delaware on September 4, 1996, and have
complied with all other legal requirements to form and operate the
Partnership. The Original Limited Partner hereby withdraws from the
Partnership and joins in the execution of this agreement for the
purposes of acknowledging such withdrawal. The Partners hereby
continue the existence of the Partnership. Except as stated in this
Agreement, the Act shall govern the rights and liabilities of the
Partners.
2.2 Name . The
name of the Partnership is “Columbia Rio Grande Healthcare,
L.P.”, and the business of the Partnership shall be conducted
under that name or such other name or names as may be Approved by
the Partners from time to time.
2.3 Principal
Office . The principal office of the Partnership shall be
located at One Park Plaza, Nashville, Tennessee 37203 or at such
other place or places as the General Partner may from time to time
determine.
2.4 Term . The
Partnership began on the date of the Original Partnership Agreement
and shall continue until the date on which the Partnership is
dissolved pursuant to Article 15 and thereafter, to the
extent provided for by applicable law, until wound up and
terminated pursuant to Article 16 hereof.
2.5 Registered Agent
and Office . The registered agent of the Partnership shall
be The Prentice-Hall Corporation System, Inc., and the registered
office of the Partnership shall be located at 1013 Centre Road,
Wilmington, Delaware 19805. The registered office or the registered
agent, or both, may be changed by the General Partner from time to
time upon filing the statement required by the Act. The Partnership
shall maintain at its registered office such records as may be
specified by the Act.
3. PURPOSES AND POWERS OF THE
PARTNERSHIP; NATURE OF THE BUSINESS OF THE PARTNERSHIP
3.1 Purposes .
The purposes of the Partnership are (i) to own, manage, lease
and operate the Facilities and other health care related services
and businesses; (ii) to acquire (through asset acquisition,
stock acquisition, lease or otherwise) and develop other property,
both real and personal, in connection with providing health care
related services, including without limitation, general acute care
hospitals, specialty care hospitals, nursing homes, clinics, home
health care agencies, health maintenance organizations, psychiatric
facilities and other health care providers; (iii) to enter
into, from time to time, such financial arrangements as the General
Partner may determine to be necessary, appropriate or advisable
(including, without limitation, borrowing money and issuing
evidences of indebtedness and securing the same by mortgage, deed
of trust, security interest or other encumbrance upon one or more
or all of the Partnership assets); (iv) to sell, assign,
lease, exchange or otherwise dispose of, or refinance or
additionally
5
finance, one or more or all of the
Partnership assets; (v) to raise additional capital by
issuance of additional limited partnership interests in the
Partnership as provided in Section 13.5 ; and
(vi) generally to engage in such other businesses and
activities and to do any and all other acts and things that the
General Partner deems necessary, appropriate or advisable from time
to time in furtherance of the purposes of the Partnership as set
forth in this Section 3.1 (subject to the provisions of
Section 8.3 and 8.4 hereof).
3.2 Powers .
Subject to the limitations contained in this Agreement and in the
Act, the Partnership purposes may be accomplished by the General
Partner taking any action permitted under this Agreement that, in
the good faith judgment of the General Partner, is customary or
reasonably related to accomplishing such purposes.
4. CAPITAL CONTRIBUTIONS, LOANS, CAPITAL
ACCOUNTS
4.1 Capital
Contributions . Each Partner has contributed its, his or
her Capital Contribution to the capital of the
Partnership.
4.2 Capital
Accounts . A Capital Account (herein so called) shall be
established and maintained for each Partner for the full term of
this Agreement in accordance with the capital accounting rules of
section 1.704-1(b)(2)(iv) of the Regulations. Each Partner shall
have only one Capital Account, regardless of the number or classes
of Units or other interests in the Partnership owned by such
Partner and regardless of the time or manner in which such Units or
other interests were acquired by such Partner. Pursuant to the
basic capital accounting rules of section 1.704-1(b)(2)(iv)(m) of
the Regulations, the balance of each Partner’s Capital
Account shall be:
(a) Increased by the amount
of money contributed by such Partner (or such Partner’s
predecessor in interest) to the capital of the Partnership pursuant
to this Article 4 and decreased by the amount of money
distributed to such Partner (or such Partner’s predecessor in
interest) pursuant to Article 6 hereof;
(b) Increased by the fair
market value of each property (determined without regard to section
7701(g) of the Code) contributed by such Partner (or such
Partner’s predecessor in interest) to the capital of the
Partnership pursuant to this Article 4 (net of all
liabilities secured by such property that the Partnership is
considered to assume or take subject to under section 752 of the
Code) and decreased by the fair market value of each property
(determined without regard to section 7701(g) of the Code)
distributed to such Partner (or such Partner’s predecessor in
interest) by the Partnership pursuant to Article 6 or
16 hereof (net of all liabilities secured by such property
that such Partner is considered to assume or take subject to under
section 752 of the Code);
(c) Increased by the amount
of each item of Partnership profit allocated to such Partner (or
such Partner’s predecessor in interest) pursuant to
Section 3.1 of Exhibit A hereto;
(d) Decreased by the amount
of each item of Partnership loss allocated to such Partner (or such
Partner’s predecessor in interest) pursuant to
Section 3.1 of Exhibit A hereto; and
6
(e) Otherwise adjusted as
follows:
(i) Effective immediately
prior to any “Revaluation Event” (as defined in
Exhibit A hereto), the balances of all Partners’
Capital Accounts shall be adjusted to reflect the manner in which
items of profit or loss, as computed for book purposes, equal to
the “Unrealized Book Gain Or Loss” (as defined in
Exhibit A hereto) then existing with respect to each
Partnership property (to the extent not previously reflected in the
Partners’ Capital Accounts) would be allocated among the
Partners pursuant to Section 3.1 of Exhibit A
hereto if there were a taxable disposition of such property
immediately prior to such Revaluation Event for its fair market
value (as determined by the General Partner taking section 7701(g)
of the Code into account (i.e., such value shall not be less than
the amount of nonrecourse liabilities to which such property is
subject));
(ii) With respect to items of
Partnership profit and loss, the balances of all the
Partners’ Capital Accounts shall be adjusted solely for
allocations of such items, as computed for book purposes, under
Section 3.1 of Exhibit A hereto and shall not be
adjusted for allocations of correlative Tax Items under
Section 3.2 of Exhibit A hereto;
(iii) Immediately before
giving effect under Section 4.2(b) hereof to any
adjustment attributable to the distribution of property to a
Partner, the balances of all the Partners’ Capital Accounts
first shall be adjusted to reflect the manner in which items of
profit or loss, as computed for book purposes, equal to the
Unrealized Book Gain Or Loss existing with respect to the
distributed property (to the extent not previously reflected in the
Partners’ Capital Accounts) would be allocated among the
Partners pursuant to Section 3.1 of Exhibit A
hereto if there were a taxable disposition of such property, on the
date of such distribution, by the Partnership for its fair market
value at the time of such distribution (as agreed to in writing by
the Partners taking section 7701(g) of the Code into account (i.e.,
such value shall not be agreed to be less than the amount of
Nonrecourse Liabilities to which such property is subject));
and
(iv) Upon the transfer of all
or part of any Unit or other interest in the Partnership, the
Capital Account of the transferor Partner, to the extent
attributable to the transferred interest, shall carry over to the
transferee Partner; provided, however, if the transfer causes the
termination of the Partnership for Federal income tax purposes
under section 708(b)(1)(B) of the Code, the Capital Account that
carries over to the transferee Partner shall be subject to
adjustment in accordance with Section 4.2(e)(i) hereof
in connection with the resulting constructive liquidation of the
Partnership for Federal income tax purposes.
4.3 Additional
Provisions Regarding Capital Accounts .
(a) If a Partner pays any
Partnership indebtedness or forgives any Partnership indebtedness
owing to such Partner, such payment or forgiveness shall be treated
as a cash contribution by that Partner to the capital of the
Partnership, and the Capital Account of such Partner shall be
increased by the amount so paid by such Partner.
7
(b) Except as otherwise
provided herein, no Partner may contribute capital to, or withdraw
capital from, the Partnership. To the extent any monies which any
Partner is entitled to receive pursuant to the Agreement would
constitute a return of capital, each of the Partners consents to
the withdrawal of such capital.
(c) A loan by a Partner to
the Partnership shall not be considered a contribution of money to
the capital of the Partnership, and the balance of such
Partner’s Capital Account shall not be increased by the
amount so loaned. No repayment of principal or interest on any such
loan, reimbursement made to a Partner with respect to advances or
other payments made by such Partner on behalf of the Partnership or
payments of fees to a Partner which are made by the Partnership
shall be considered a return of capital or in any manner affect the
balance of such Partner’s Capital Account.
(d) No Partner with a deficit
balance in its Capital Account shall have any obligation to the
Partnership or any other Partner to restore such deficit balance.
In addition, no venturer or partner in any Partner shall have any
liability to the Partnership or any other Partner for any deficit
balance in such venturer’s or partner’s capital account
in the Partner in which it is a partner or venturer. Furthermore, a
deficit Capital Account balance of a Partner (or a capital account
of a partner or venturer in a Partner) shall not be deemed to be a
liability of such Partner (or of such venturer or partner in such
Partner) or a Partnership asset or property. The provisions of this
Section 4.3(d) shall not affect any Partner’s
obligation to make capital contributions to the Partnership that
are required to be made by such Partner pursuant to this
Agreement.
(e) Except as otherwise
provided herein, no interest shall be paid on any capital
contributed to the Partnership or the balance in any
Partner’s Capital Account.
(f) All of the provisions of
this Agreement relating to the maintenance of Capital Accounts are
intended to comply with section 1.704-1(b) of the Regulations, and
shall be interpreted and applied in a manner consistent with such
Regulations. If the General Partner determines that it is prudent
to modify the manner in which the Capital Accounts, or any debits
or credits thereto (including, without limitation, debits or
credits relating to liabilities that are secured by contributed or
distributed property or that are assumed by the Partnership or any
of the Partners) are computed in order to comply with the
Regulations, the General Partner may make such modifications,
provided that such modifications are not likely to have a material
effect on the amounts distributable to any Partner from the
Partnership. The General Partner shall also make appropriate
modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with section 1.704-1(b) of the
Regulations.
4.4 Loans . Any
Limited Partner, with the consent of the General Partner, may lend
money to the Partnership. If the General Partner or, with the
written consent of the General Partner, any Limited Partner makes
any loan or loans to the Partnership, the amount of any such loan
shall not be treated as a contribution to the capital of the
Partnership but shall be a debt due from the Partnership. Any
Partner’s loan to the Partnership shall be repayable out of
the Partnership’s cash and shall bear interest at prevailing
market rates. None of the Partners nor any of their Affiliates
shall be obligated to loan money to the Partnership.
8
5. ALLOCATIONS
5.1 Allocations of
Income and Losses . All items of income or loss of the
Partnership shall be allocated to the Partners in accordance with
the provisions of Exhibit A attached hereto, which is hereby
incorporated by reference for all purposes of this
Agreement.
6. DISTRIBUTIONS
6.1 Distribution of
Excess Cash . Except as otherwise may be provided in
Section 16.3 , or as otherwise may be prohibited or
required by applicable law, the General Partner may determine in
its discretion the extent (if any) that the Partnership’s
cash on hand exceeds its current and anticipated needs, including
without limitation, for operating expenses, debt service,
authorized acquisitions, capital expenditures, and a reasonable
contingency reserve. If such an excess exists, the General Partner
may cause the Partnership to distribute such excess to the
Partners, pro rata in accordance with their respective Sharing
Percentages.
Subject to the foregoing
provisions of this Section 6.1 , it is the intent of
the Partners (but not guaranteed) that the Partnership will, at a
minimum, distribute excess cash on a yearly basis in an amount
sufficient to provide each Partner with funds to pay income tax
obligations on Partnership earnings as if each Partner’s
Sharing Percentage of such earnings were fully taxable to such
Partner at the highest Federal income tax rate for
individuals.
7. BANK ACCOUNTS, BOOKS OF ACCOUNT, TAX
COMPLIANCE AND FISCAL YEAR
7.1 Bank Accounts;
Investments . The General Partner may (1) establish
one or more bank accounts as provided in Section 8.1(g)
into which all Partnership funds shall be deposited or
(ii) deposit Partnership funds in a central account
established in the name of Columbia or a Columbia Affiliate,
provided that detailed separate entries are made on the books and
records of the Partnership and on the books and records of Columbia
or such Columbia Affiliate with respect to amounts received from
the Partnership and deposited in such central account for the
account of the Partnership. The daily balances of the funds of the
Partnership deposited into such central account shall bear interest
at a current market rate. Funds deposited in the
Partnership’s bank accounts may be withdrawn only to pay
Partnership debts or obligations or to be distributed to the
Partners under this Agreement. Partnership funds, however, may be
invested in such securities and investments, as the General Partner
may select, until withdrawn for Partnership purposes.
7.2 Books and
Records . The General Partner shall keep books of account
and records relative to the Partnership’s business. The books
shall be prepared in accordance with generally accepted accounting
principles using the accrual method of accounting. The accrual
method of accounting shall also be used by the Partnership for
income tax purposes. The Partnership’s books and records
shall at all times be maintained at the principal business office
of the Partnership or its accountants (and to the extent required
by the Act, at the registered office of the Partnership) and shall
be available for inspection by the Limited Partners or their duly
authorized representatives during reasonable business hours. The
books and records shall be preserved for at least four
(4) years after the term of the Partnership ends.
9
7.3 Determination of
Profit and Loss; Financial Statements . All items of
Partnership income, expense, gain, loss, deduction and credit shall
be determined with respect to, and allocated in accordance with,
this Agreement for each Partner for each Partnership fiscal year.
Within one hundred twenty (120) days after the end of each
Partnership fiscal year, the General Partner shall cause to be
prepared, at the Partnership’s expense, audited financial
statements of the Partnership for the preceding fiscal year,
including, without limitation, a balance sheet, profit and loss
statement, statement of cash flows and statement of the balances in
the Partners’ Capital Accounts, prepared in accordance with
the terms of this Agreement and generally accepted accounting
principles consistently applied. These financial statements shall
be available for inspection and copying during ordinary business
hours at the reasonable request of any Partner, and will be
furnished to all Limited Partners and to any other Partner upon
written request therefor.
7.4 Tax Returns and
Information . The Partners intend for the Partnership to be
treated as a partnership, rather than as an association taxable as
a corporation, for Federal income tax purposes. The General Partner
shall prepare or cause to be prepared all Federal, state and local
income and other tax returns which the Partnership is required to
file and shall furnish such returns to the Limited Partners,
together with a copy of each Limited Partner’s Form K-1 and
any other information which any Limited Partner may reasonably
request relating to such returns, within ninety (90) days
after the end of each Partnership fiscal year.
7.5 Tax Audits
. The General Partner shall be the tax matters partner of the
Partnership under Section 6231(a)(7) of the Code. The General
Partner shall inform the Limited Partners of all matters which may
come to its attention in its capacity as tax matters partner by
giving the Limited Partners notice thereof within ten
(10) days after becoming so informed. The General Partner
shall not take any action contemplated by Sections 6222 through
6232 of the Code unless the General Partner has first given the
Limited Partners notice of the contemplated action and received the
Approval of the Partners to the contemplated action. This provision
is not intended to authorize the General Partner to take any action
which is left to the determination of the individual Partner under
Sections 6222 through 6232 of the Code.
7.6 Fiscal Year
. The Partnership fiscal year shall be the calendar
year.
8. RIGHTS, OBLIGATIONS AND
INDEMNIFICATION OF THE GENERAL PARTNER
8.1 Rights of the
General Partner as Manager . Subject to the limitations
imposed upon the General Partner in this Agreement (including,
without limitation, Sections 8.3 and 8.4 ) the
General Partner shall have full, exclusive and complete duty and
right to manage and control, and, within its discretion, shall make
all decisions and take any necessary or appropriate action in
connection with the Partnership’s business. Without limiting
the General Partner’s power or authority under this Agreement
or the Act, the General Partner may (without obtaining the consent
or approval of any Partners) take the following actions if and when
it deems any such action to be necessary, appropriate or advisable,
at the sole cost and expense of the Partnership, subject however in
all respects to the limitations imposed on the General Partner in
this Agreement (including, without limitation, Sections 8.3
and 8.4 :
(a) Borrow money from any
source, including without limitation from the General Partner,
Columbia or a Columbia Affiliate and, if security is required
therefor, to mortgage or subject to any other security device any
portion of the Partnership’s property, to obtain replacements
of any mortgage or other security device, and to prepay, in whole
or in part, refinance, increase, modify, consolidate or extend any
mortgage or other security device, all of the foregoing on such
terms and in such amounts as the General Partner deems, in its sole
discretion, to be in the best interest of the
Partnership;
10
(b) Acquire and enter into
any contract of insurance which the General Partner deems necessary
and proper for the protection of the Partnership, for the
conservation of the Partnership’s assets, or for any purpose
convenient or beneficial to the Partnership;
(c) Employ, from time to time
on behalf of the Partnership, individuals (including employees of
the General Partner, the Limited Partners, or any of their
Affiliates) on such terms and for such compensation as the General
Partner shall determine (but not in an amount which would be
considered unreasonable based upon the scope of an individual
employee’s duties and responsibilities), and to enter into
agreements for the transfer of Partnership interests to such
Persons as provided in Articles 13 and 14
hereof;
(d) Make decisions as to
accounting principles and elections, whether for book or tax
purposes (and such decisions may be different for each
purpose);
(e) Set up or modify
recordkeeping, billing and accounts payable accounting
systems;
(f) Alienate, mortgage,
pledge or otherwise encumber, sell, exchange, lease or purchase
real and/or personal property in fulfillment of the Partnership
purposes and for the operation of the Facilities and other
Partnership property;
(g) Open checking and savings
accounts, in banks or similar financial institutions, in the name
of the Partnership, and deposit cash in and withdraw cash from such
accounts;
(h) Adjust, arbitrate,
compromise, sue or defend, abandon, or otherwise deal with and
settle any and all claims in favor of or against the Partnership,
as the General Partner shall, in its sole discretion, deem
proper;
(i) Execute, on behalf of and
in the name of the Partnership, make, perform and carry out all
types of contracts, leases, agreements, instruments, notes,
certificates, titles or other documents of any kind or nature as
deemed necessary and desirable by the General Partner, including
without limitation contracts, leases, other agreements and
documents and cash management systems with Affiliates of Columbia
or any Partner, and amend, extend, or modify any contract, lease,
or agreement at any time entered into by the Partnership, provided
that the General Partner uses its best efforts to insure that all
such contracts, leases, or agreements are representative of fair
market value; and
11
(j) Do all acts necessary or
desirable to carry out the business for which the Partnership is
formed or which may facilitate the General Partner’s exercise
of its powers hereunder.
8.2 Right to Rely on
the General Partner . No Person or governmental body
dealing with the Partnership shall be required to inquire into, or
to obtain any other documentation as to, the authority of the
General Partner to take any action permitted under
Section 8.1 . Furthermore , any Person dealing
with the Partnership may rely upon a certificate signed by the
General Partner as to the following:
(a) The identity of the
General Partner or any Limited Partner;
(b) The existence or
nonexistence of any fact or facts that constitute a condition
precedent to acts by the General Partner or which are in any other
manner germane to the affairs of the Partnership;
(c) The Persons who are
authorized to execute and deliver any instrument or document of the
Partnership; or
(d) Any act or failure to act
by the Partnership on any other matter whatsoever involving the
Partnership or any Partner.
8.3 Specific
Limitations on the General Partner . Notwithstanding
anything to the contrary in this Agreement or the Act, without the
prior written approval of all of the Limited Partners to the
specific act in question, the General Partner shall have no right,
power or authority to do any of the following acts, each of which
is considered outside the ordinary course of Partnership
business:
(a) To do any act in
contravention of this Agreement;
(b) To change or reorganize
the Partnership into any other legal form; or
(c) To knowingly perform any
act that would subject any Limited Partner to liability as a
general partner in any jurisdiction.
8.4 Additional
Limitations on the Authority of the General Partner .
Without the prior Approval of the Partners, the General Partner
shall have no authority to do any of the following:
(a) Amend this Agreement
(except as provided in Section 18.8 );
(b) Change the nature of the
business of the Partnership;
(c) Sell all or substantially
all of the assets of the Partnership; or
(d) Dissolve the
Partnership.
12
The limitations in Sections
8.3(b) and this Section 8.4 shall not be applicable
to any General Partner or any Liquidator in winding up and
liquidating the business of the Partnership under Article 16
.
8.5 Management
Obligations of the General Partner . The General Partner
shall devote such time to the Partnership as may be necessary to
manage and supervise the Partnership business and affairs, but
nothing in this Agreement shall preclude the General Partner, at
the expense of the Partnership, from employing any Columbia
Affiliate or a third party to provide management or other services
to the Partnership, always subject, however, to the control of the
General Partner. Any transaction between the Partnership and the
General Partner, Columbia or any Columbia Affiliate is hereby
expressly authorized provided that the terms of such transactions
are generally no less favorable to the Partnership than the terms
that would be made available to the Partnership in arm’s
length transactions with independent third parties. The management
obligations of the General Partner shall include the
following:
(a) The General Partner will
provide management services in such areas as: long-range strategic
and financial planning, management planning, quality assurance
programs, materials management, management development,
professional recruitment, performance appraisal systems, personnel
development, benefits administration, facilities development and
productivity improvement programs;
(b) The General Partner will
provide management services in areas such as: budget control
systems, financial reporting practices, interfaces with lenders,
contractual agreements, business office procedures, accounts
receivable and cash management, risk management programs, financial
modeling, capital planning, cost accounting analysis and
third-party reimbursement;
(c) The General Partner will
provide marketing and corporate communication management services
in areas such as: competitive environment assessments, health
services marketing, management of community and public relations,
product-line analysis, new service development, management of
governmental affairs, market research and opinion attitude
surveys;
(d) The General Partner will
provide management services for areas such as: service utilization
analysis, systems development, supply and charge systems, manpower
utilization and control systems, technical clinical skills
training, new product evaluation and educational programs for
clinical staff;
(e) The General Partner will
provide management services for areas such as: medical staff
orientation programs, medical staff issues, Medicare and Medicaid
cost reporting, quality assurance, practice promotion and selection
of physician private practice workshops;
(f) The Partnership may
participate in Columbia’s Group Purchasing Program, and each
Partner agrees that all information with regard to pricing or any
other terms of the Group Purchasing Program will remain
confidential; and
13
(g) The General Partner will
encourage the exchange of written materials between Columbia
affiliated hospitals subject to confidentiality requirements and
will provide the Partnership with access to materials such as:
procedures manuals, bylaws, regulations and rules.
8.6 Indemnification of
the General Partner .
(a) Except to the extent such
indemnification may be prohibited by law, the Partnership, its
receiver, or its trustee shall indemnify, hold harmless, and pay
all judgments and claims against the General Partner relating to
any liability or damage incurred or suffered by the General Partner
by reason of any act performed or omitted to be performed (but not
constituting willful misconduct or gross negligence) by the General
Partner or its agents or employees in connection with the
Partnership’s business, including reasonable attorneys’
fees incurred by the General Partner in connection with the defense
of any claim or action based on any such act or omission, which
attorneys’ fees may be paid as incurred.
(b) In the event any Limited
Partner shall bring a legal action against the General Partner,
including a Partnership derivative suit, the Partnership shall
indemnify, hold harmless, and pay all expenses of the General
Partner, including but not limited to attorneys’ fees
incurred in the defense of such action, unless the General Partner
shall be adjudicated guilty of gross negligence or willful
misconduct in connection with the performance of its duties as
General Partner to the Partnership.
(c) The Partnership shall
indemnify, hold harmless, and pay all expenses, costs or
liabilities of the General Partner which (or who) for the benefit
of the Partnership makes any deposit, acquires any option, makes
any payment, or assumes any obligation in connection with any
property proposed to be acquired by the Partnership and which (or
who) suffers any financial loss as a result of such
action.
(d) Any indemnification
required herein to be made by the Partnership shall be made
promptly following the fixing of any loss, liability, or damage
incurred or suffered. If, at any time, the Partnership has
insufficient funds to provide such indemnification as herein
provided, it shall provide such indemnification if and as the
Partnership generates sufficient funds, and prior to any
distribution to the Partners.
Notwithstanding the foregoing
provisions of this Section 8.6 , the General Partner
shall not be indemnified by the Partnership from any liability for
actions or omissions that constitute willful misconduct or gross
negligence on the part of the General Partner.
8.7
Reimbursement . The General Partner shall be entitled to
be reimbursed for any and all reasonable costs and expenses
incurred by it in connection with managing and operating the
Partnership and its properties and business. Such reimbursement
shall be paid by the Partnership, upon the written application of
the General Partner, as soon as funds are available
therefor.
14
8.8 Compensation of the
General Partner . As compensation and consideration for the
performance of its duties and responsibilities as General Partner,
the General Partner shall be entitled to receive a monthly
management fee of two percent (2%) of the Partnership’s
net revenues for the preceding month. Such management fee will be
paid on or before the twentieth (20th) day of each month after
the month the Partnership starts to conduct business operations.
For purposes of this Section 8.8 , the
Partnership’s net revenues shall mean its gross revenues less
its contractual adjustments, charity care and administrative
discounts as determined in accordance with generally accepted
accounting principles. The General Partner may contract with other
parties (including Columbia or any Columbia Affiliate) in rendering
management services to the Partnership.
8.9 Independent
Activities . The General Partner and any of its Affiliates
may engage in or possess interests in other business ventures of
every nature and description, independently, and with others,
whether such activities are competitive with the Partnership or
otherwise without having or incurring any obligation to offer any
interest in such activities to the Partnership or any Partner.
Neither this Agreement nor any activity undertaken hereunder shall
prevent the General Partner or any of its Affiliates from engaging
in such other activities or require the General Partner or any of
its Affiliates to permit the Partnership or any Limited Partner to
participate in such activities. Furthermore, as a material part of
the consideration for the General Partner executing this Agreement
and admitting the Limited Partners to the Partnership, the
Limit
|