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AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF COLUMBIA RIO GRANDE HEALTHCARE, L.P

Limited Partnership Agreement

AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF COLUMBIA RIO GRANDE HEALTHCARE, L.P | Document Parties: ALL OTHER PARTNERS EXCEPT COLUMBIA-SDH HOLDINGS, INC | HCA HEALTH SERVICES | ORIGINAL LIMITED | RIO GRANDE REGIONAL HOSPITAL, INC You are currently viewing:
This Limited Partnership Agreement involves

ALL OTHER PARTNERS EXCEPT COLUMBIA-SDH HOLDINGS, INC | HCA HEALTH SERVICES | ORIGINAL LIMITED | RIO GRANDE REGIONAL HOSPITAL, INC

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Title: AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF COLUMBIA RIO GRANDE HEALTHCARE, L.P
Governing Law: Delaware     Date: 8/2/2007

AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF COLUMBIA RIO GRANDE HEALTHCARE, L.P, Parties: all other partners except columbia-sdh holdings  inc , hca health services , original limited , rio grande regional hospital  inc
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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

 

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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

 

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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

 

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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

 

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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.

 

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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.

 

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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.

 

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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

 

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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

 

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(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.

 

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(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.

 

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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.

 

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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;

 

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(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

 

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(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.

 

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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

 

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(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.

 

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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


 
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