Exhibit 3.8
THIRD AMENDED AND
RESTATED
AGREEMENT OF LIMITED
PARTNERSHIP
OF
THE CAMP RECOVERY CENTERS,
L.P.
A CALIFORNIA LIMITED
PARTNERSHIP
TABLE OF CONTENTS
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Page
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SECTION 1 FORMATION AS LIMITED
PARTNERSHIP
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1
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1.1
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Name and
Principal Office
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1
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1.2
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Purpose
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1
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1.3
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Addresses of
the Partners
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1
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1.4
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Term of the
Partnership
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2
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1.5
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Required
Documents
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2
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SECTION 2 CAPITALIZATION OF THE
PARTNERSHIP
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2
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2.1
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Capital
Contributions
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2
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2.2
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Admission of
Substituted or Additional Limited Partners
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3
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2.3
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Withdrawal and
Return of Capital
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3
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2.4
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Loans to the
Partnership
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3
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2.5
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Limitation of
Liability
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4
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2.6
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Percentage
Interests
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4
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SECTION 3 PARTNERSHIP ACCOUNTING AND
DIVISION OF PROFITS
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4
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3.1
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Fiscal
Year/Accounting Method
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4
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3.2
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Definitions
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5
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3.3
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Allocation of
Income and Losses
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7
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3.4
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Non-Liquidating
Distributions
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10
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3.5
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Partnership
Records
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10
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3.6
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Partnership
Reports and Tax Information
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10
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3.7
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Tax Matters
Partner
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10
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3.8
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Valuation of
Distributions in Kind
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11
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SECTION 4 ADMINISTRATIVE
PROVISIONS
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11
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4.1
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Power of
Limited Partners
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11
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TABLE OF CONTENTS (CONT’D)
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Page
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4.2
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Management by
the General Partner
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11
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4.3
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Financial
Disclosures
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13
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4.4
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Reimbursement
of the Partners
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13
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4.5
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Fees and
Expenses
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13
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4.6
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Competing
Ventures
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13
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SECTION 5
TRANSFER OF A PARTNERSHIP INTEREST
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14
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5.1
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Compliance With
This Agreement
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14
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5.2
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Substituted
Limited Partner
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14
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5.3
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Additional
Limited Partners
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15
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5.4
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Removal of the
General Partner
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15
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SECTION 6
DISSOLUTION/TERMINATION OF PARTNERSHIP
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15
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6.1
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Dissolving
Events
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15
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6.2
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Successor
General Partner
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15
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6.3
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Winding Up of
the Partnership
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16
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6.4
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Incorporation
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17
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SECTION 7
LIABILITY AND INDEMNIFICATION OF THE GENERAL PARTNER
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18
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7.1
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Liability
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18
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7.2
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Indemnification
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18
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SECTION 8 POWER
OF ATTORNEY
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18
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SECTION 9
GENERAL PROVISIONS
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19
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9.1
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Special
Meetings
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19
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9.2
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Entire
Agreement
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19
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9.3
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Amendments
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19
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ii
TABLE OF CONTENTS (CONT’D)
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Page
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9.4
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Severability
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19
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9.5
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Counterparts
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19
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9.6
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Survival of
Rights
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19
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9.7
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Additional
Documents
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20
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9.8
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Arbitration and
Attorney’s Fees
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20
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9.9
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Notices
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20
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9.10
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Gender
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20
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EXHIBIT A
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EXISTING
LIMITED PARTNER COUNTERPART SIGNATURE PAGE FOR THIRD AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE CAMP RECOVERY
CENTERS, L.P.
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EXHIBIT B
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EXISTING
EMPLOYEE/CONTRACTOR LIMITED PARTNER COUNTERPART SIGNATURE PAGE FOR
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE
CAMP RECOVERY CENTERS, L.P.
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EXHIBIT C
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DECEMBER 1998
NEW INVESTMENT LIMITED PARTNER COUNTERPART SIGNATURE PAGE FOR THIRD
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE CAMP
RECOVERY CENTERS, L.P. A CALIFORNIA LIMITED PARTNERSHIP
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iii
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE CAMP RECOVERY CENTERS, L.P.
THE THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP (the “Agreement”) of
The Camp Recovery Centers, L.P., a California limited partnership
(the “Partnership”), executed among CRC Recovery, Inc.,
a Delaware corporation, as General Partner and the Existing
Partners, as defined herein, is amended and restated in its
entirety effective as of December 15, 1998 (the
“Effective Date”), by admitting the persons listed as
new December 1998 Investment Limited Partners who have executed
counterpart signatures pages in the forms attached as Exhibit C and
otherwise restating the Agreement in its entirety as set forth
herein.
IN CONSIDERATION OF the terms and
conditions herein, the Partners agree as follows:
SECTION 1
FORMATION AS LIMITED
PARTNERSHIP
1.1 Name and Principal Office
. The Partnership was formed as a limited partnership pursuant to
the California Revised Limited Partnership Act (the
“Act”) on September 7, 1995. The business of the
Partnership shall continue to be conducted under the name of The
Camp Recovery Centers, a California limited partnership. The
principal office of the Partnership is located at 1111 Middle
Avenue, Menlo Park, California 94025, or at such other place as may
be designated in writing by the General Partner.
1.2 Purpose . The purpose of
the Partnership is to operate the Camp and Azure Acres, to acquire
and operate one or more other alcohol and drug abuse treatment
facilities for adults and adolescents and to engage in any and all
such activities necessary or incidental to the
foregoing.
1.3 Addresses of the Partners
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(a) General Partner . The
name and place of business of the General Partner are as
follows:
CRC Recovery, Inc.
1111 Middle Avenue
Menlo Park, CA 94025
(b) Limited Partners . The
name and address of each of the Limited Partners is set forth on
his respective counterpart signature page attached
hereto.
1
1.4 Term of the Partnership .
The Partnership commenced as a Limited Partnership on
September 7, 1995, and shall continue until December 31,
2015, unless earlier dissolved and terminated in accordance with
Section 6 of this Agreement, by operation of law or unless
continued by agreement of all the Partners.
1.5 Required Documents
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(a) Partnership Documents .
The General Partner shall execute, acknowledge, and cause to be
filed, recorded and amended, as necessary, any amendments to the
Certificate of Limited Partnership of the Partnership, and any
other documents required, pursuant to applicable law.
(b) Other Documents . The
Limited Partners shall execute and acknowledge as requested by the
General Partner such documents as may be required from time to time
in order to reflect any change in the composition of the
Partnership or amendment of this Agreement agreed to by the
requisite Partners under this Agreement.
SECTION 2
CAPITALIZATION OF THE
PARTNERSHIP
2.1 Capital Contributions .
The Partners have made or shall make the capital contributions to
the Partnership as follows:
(a) General Partner . The
General Partner has previously made a capital contribution of
Twelve Thousand One Hundred Dollars ($12,100) to the Partnership.
The General Partner shall not be required to make any additional
Capital Contributions to the Partnership except as set forth in
this Section 2.1(a) or in Section 3.3(d).
(b) Limited Partners
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(i) (A) Each person identified as an
“Existing Limited Partner” on his counterpart signature
page attached hereto in the form of Exhibit A, has previously made
a capital contribution in that capacity to the Partnership as set
forth on such counterpart signature page.
(B) Each person identified as an
“Existing Employee/Contract Limited Partner” on his
counterpart signature page, attached hereto in the form of Exhibit
B, has previously made a capital contribution to the Partnership as
set forth on that counterpart signature page.
(ii) Except as otherwise set forth
in this Section 2.1(b)(ii), the General Partner shall hold one
or more closings not later than January (each of which is referred
to as a “Closing”) of the Partnership upon the
acceptance of subscriptions from investors, including any Existing
Partner, (each of those investors is referred to hereafter as a
“December 1998 New Investment Limited Partner”) for
interests as Limited Partners representing in the aggregate
not
2
less than One Million Five Hundred Thousand
Dollars ($1,500,000), the “Minimum Amount” and not more
than Three Million Dollars ($3,000,000), the “Maximum
Amount”. No December 1998 New Investment Limited Partner may
be admitted subsequent to January 31, 1999 (the “Final
Closing”), except as provided in Sections 2.2 or 5 or as
otherwise set forth in this Section 2.1(b)(ii), without the
consent of the General Partner and a Majority-in-Interest of the
Limited Partners. Notwithstanding the foregoing, if December 1998
New Investment Limited Partners have not committed to make
aggregate capital contributions to the Partnership equal to the
Maximum Amount by January 31, 1999, the General Partner, in
its sole discretion, may extend the date of the Final Closing to
April 1, 1999. Except as determined in the General
Partner’s discretion, the minimum subscription from a
December 1998 New Investment Limited Partner shall be Fifty
Thousand Dollars ($50,000).
(iii) The Capital Contribution of
each December 1998 New Investment Limited Partner, will be paid in
cash (or in the discretion of the General Partner by contribution
of property or cancellation of Partnership indebtedness to such
Partner) on or before the Closing at which the December 1998 New
Investment Limited Partner is admitted to the
Partnership.
2.2 Admission of Substituted or
Additional Limited Partners .
(a) The General Partner may without
the consent of any Limited Partner admit any Substituted Limited
Partner pursuant to Section 5.2 and admit any Additional
Limited Partner pursuant to Section 5.3.
(b) The admission of an additional
Limited Partner or a Substituted Partner shall not cause
dissolution of the Limited Partnership.
2.3 Withdrawal and Return of
Capital .
(a) Withdrawal of Capital . A
Limited Partner may not withdraw any portion of such Limited
Partner’s capital contribution to the Partnership except with
the prior written consent of the General Partner, or as otherwise
specifically provided in this Agreement. Except as provided in this
Agreement, the General Partner may not withdraw any portion of the
General Partner’s capital contribution to the Partnership
without the prior consent of a Majority-in-Interest of the Limited
Partners.
(b) Return of Capital Not
Guaranteed . The General Partner shall not be personally liable
for the return of the capital contributions of the Limited
Partners, or any portion thereof, except as provided by law or this
Agreement.
2.4 Loans to the Partnership
. Any permitted loan to the Partnership or permitted advance of
money for the benefit of the Partnership made by a Partner (a
“Lending Partner”) shall not increase the Lending
Partner’s Capital Account, entitle the Lending Partner to any
greater share of Partnership distributions, or subject the Lending
Partner to any greater proportion of Partnership Income or Losses.
The amount of the loan or advance shall be a debt owed by the
Partnership to the Lending Partner bearing interest and on other
terms and conditions as are agreed to by the Lending Partner and
the General Partner.
3
2.5 Limitation of Liability .
The liability of each Limited Partner for Partnership losses shall
in no event exceed, at any time, the aggregate amount of such
Limited Partner’s required capital contributions to the
Partnership. The foregoing shall not limit a Limited
Partner’s obligation to return Partnership distributions to
the extent required by Section 15666 of the Act.
2.6 Percentage Interests .
The Partners shall have Units as follows:
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Units
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General
Partner
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2400 + (.0002 x Proceeds)
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Existing Limited Partners based on their
respective Capital
Contributions as of
December 14, 1998
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8400 + (.0007 x
Proceeds) – Units allocable to December 1998 New Investment
Limited Partners
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December 1998 New Investment Limited Partners
based on their
respective Capital
Contributions
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1 Unit per $1,000 (minimum of 1,500 and maximum
of 3,000)
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Employee/Contract Limited Partners
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1200 + (.0001 x Proceeds)
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Existing Employee/Contract Limited Partners
admitted pursuant
to this Section 2.6 prior to the Effective
Date based on their
Units as of December 14,
1998
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292.15/484 x [1200 + Proceeds x (1/10,000 -
1/7,000)]
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In addition, for any year or part
thereof of the Partnership, the General Partner may, but shall not
be required to, allocate additional Units calculated as follows:
475.661157 + (Proceeds x 0.000125869) to one or more additional
Employee/Contract Limited Partners, other than
Dr. Barry W. Karlin and Daniel S. Newby, who perform
services for the Partnership or the General Partner in connection
with the Partnership’s business and who are admitted pursuant
to the provisions of Section 5.3. The Percentage Interest of
each Partner for any year or part thereof of the Partnership, shall
be the percentage determined by dividing the Partner’s total
Units (as adjusted pursuant to the provisions of this Agreement) by
the total Units of all of the Partners for such year or part
thereof.
SECTION 3
PARTNERSHIP ACCOUNTING AND
DIVISION OF PROFITS
3.1 Fiscal Year/Accounting
Method . The fiscal year of the Partnership shall be the
calendar year. Contributions by Partners shall be kept in a bank
account of the Partnership for the benefit of the Partnership to
assure application of such funds for Partnership purposes.
The
4
Partnership books shall be kept on the cash or
accrual basis as determined by the General Partner. Partnership
funds shall not be commingled with the funds of a General Partner
or any other person.
3.2 Definition.
(a) “ Affiliate ”
of a Partner means any person or entity that directly, or
indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with such Partner. For
purposes of this Agreement, Barry W. Karlin and Daniel S. Newby
shall be considered Affiliates of the General Partner.
(b) “ Azure Acres
” means the alcohol and drug abuse treatment facility
currently operated by the Partnership in Sebastpol, California,
known as Azure Acres and any and all related outpatient
facilities.
(c) “ Camp ”
means the alcohol and drug abuse treatment facility currently
operated by the Partnership in Scotts Valley, California, known as
the “Camp” and any and all related outpatient
facilities.
(d) “ Capital Account
” shall be maintained for each Partner. Each Partner’s
capital account in such capacity shall be:
(i) increased by (1) the
aggregate amount of cash contributions to the Partnership in such
capacity by such Partner, (2) such Partner’s share of
Partnership Income in such capacity, (3) the fair market value
of property contributed by the Partner in such capacity net of
liabilities secured by such property that the Partnership is
considered to assume or take subject to under Section 752 of
the Code, and (4) the amount of any other upward adjustment to
the Partner’s capital account required under Treasury
Regulation Section 1.704-1(b), or any successor thereto;
and
(ii) decreased by (1) cash
distributions to such Partner in such capacity from the Partnership
(other than to any Partner in repayment of any loan or advance),
(2) such Partner’s share of Partnership Losses in such
capacity, (3) the fair market value of property distributed to
the Partner in such capacity by the Partnership net of liabilities
secured by such property that such Partner is considered to assume
or take subject to under Section 752 of the Code, and
(4) the amount of any other downward adjustment to the
Partner’s capital account required under Treasury Regulation
Section 1.704-1(b), or any successor thereto.
For purposes of computing the
balance in a Partner’s capital account, no credit shall be
given for any capital contribution which the Partner is obligated
to make until such contribution is actually made. For purposes of
this Agreement, a transferee of any part of the interest of a
Partner who is admitted as a Partner shall be deemed to have made
the capital contributions which were made by the Partner with
respect to the interest to which the transferee succeeds and to
have received from the Partnership the credits, allocations and
charges received from the Partnership by such transferor Partner
with respect to the transferred interest.
5
Notwithstanding any other provision
in this Agreement, the capital accounts of the Partners shall be
maintained in accordance with Treasury Regulation
Section 1.704-1(b), or any successor thereto.
(e) “ Capital
Contribution ” means a contribution made by a Partner to
the capital of the Partnership pursuant to
Section 2.
(f) “ Closing ”
means the Closing at which one or more New Investment Limited
Partners are admitted to the Partnership pursuant to
Section 2.1(b)(ii).
(g) “ Code ”
shall mean the Internal Revenue Code of 1986, as
amended.
(h) “ December 1998 New
Investment Partner ” means a person who has executed a
counterpart signature page in the form attached as Exhibit
C.
(i) “ Distributable
Cash ” means any cash of the Partnership available after
paying all ordinary and necessary expenses of the Partnership
(including the Management Fee) and current amortization of any debt
of the Partnership, and after establishing reserves to meet current
or reasonably expected obligations of the Partnership and other
purposes and uses of the Partnership to the extent the General
Partner determines that such reserves are necessary or advisable;
provided, however, that Distributable Cash shall not include any
cash if the payment of such cash to the Partners would be
restricted or prohibited by any note, mortgage, deed of trust or
other agreement to which the Partnership is a party or by which the
Partnership is bound.
(j) “ Effective Date
” means December 15, 1998.
(k) “ Employee/Contract
Limited Partner ” means a person who performs services
for the General Partner or the Partnership and is allocated one or
more Units by the General Partner pursuant to
Section 2.6.
(1) “ Existing
Employee/Contract Limited Partner ” means a person who
was admitted as an Employee/Contract Limited Partner prior to the
Effective Date.
(m) “ Existing Limited
Partner ” means any Limited Partner, admitted to the
Partnership prior to the Effective Date other than an existing
Employee/Contract Limited Partner.
(n) “ Existing Partner
” means any Partner admitted to the Partnership prior to the
Effective Date.
(o) “ Final Closing
” has the meaning set forth in
Section 2.1(b)(ii).
(p) “ Income” and
“Losses .” The Partnership’s
“Income” and “Losses” shall be determined
as of December 31 or any other year end of each year of the
Partnership, and shall be deemed to mean the income and losses of
the Partnership for Federal income tax purposes as determined by
the General Partner on the advice of the certified public
accountant who prepares the Partnership’s federal income tax
returns. “Income” shall include income exempt from
Federal income taxation and “Losses” shall include
expenditures described in
6
Section 705(a)(2)(B) of the Code or treated
as such under Treasury Regulation Section 1.704-1(b). Income
or Losses upon the disposition of any property contributed to the
Partnership shall be determined with respect to the book basis of
such property instead of its income tax basis. Any items of gross
income allocated pursuant to Sections 3.3(c)(ii) or 3.3(c)(iii)
shall be excluded in determining Income or Losses for the year in
which allocated.
(q) “ Limited Partner
” means any person admitted as a Limited Partner.
(r) “ Majority-in-Interest
of the Limited Partners .” A “Majority-in-Interest
of the Limited Partners” shall mean as of any date, Limited
Partners who hold a majority of the Percentage Interests of all
Limited Partners as of that date.
(s) “ Maximum Amount
” has the meaning set forth in
Section 2.1(b)(ii).
(t) “ Minimum Amount
” has the meaning set forth in
Section 2.1(b)(ii).
(u) “ Management Fee
” has the meaning set forth in Section 4.5.
(v) “ Original Existing
Partner ” means any Partner who held Units on
December 31, 1997.
(w) “ Partner ”
means any of the Limited Partners or the General
Partners.
(x) “ Percentage
Interests ” has the meaning set forth in
Section 2.6.
(y) “ Proceeds ”
means the aggregate Capital Contributions committed to the
Partnership by the December 1998 New Investment Limited Partners
pursuant to Section 2.1(b)(ii).
(z) “ Substituted Limited
Partner ” has the meaning set forth in
Section 5.2.
(aa) “ Transfer ”
means any sale, exchange, transfer, gift, encumbrance, assignment,
pledge, mortgage or other hypothecation or disposition, whether
voluntary or involuntary; and
(bb) “ Units ”
have the meaning set forth in Section 2.6.
3.3 Allocation of Income and
Losses .
(a) Partnership Income .
Partnership Income shall be allocated among the Partners as
follows:
(i) First to the Partners in
proportion to and to the extent of the amount by which the
cumulative Loss allocations to them pursuant to first
Section 3.3(b)(iii) and then Section 3.3(b)(ii) exceed
cumulative income allocations to them pursuant to this
Section 3.3(a)(i);
7
(ii) Next, if such Income is from a
sale or disposition of substantially all the assets of the
Partnership:
(A) The first One Million One
Hundred Eighty Thousand Dollars ($1,180,000) of such Income shall
be allocated to the Original Existing Partners in proportion to and
to the extent of their respective Units as of December 31,
1997; and
(B) The next Three Million Nine
Hundred Eighty-Seven Thousand Dollars ($3,987,000) of such Income
shall be allocated to the Existing Partners in proportion to and to
the extent of their respective Units as of the date immediately
preceding the Effective Date;
(iii) The balance to the Partners in
accordance with their Percentage Interests.
(b) Partnership Losses .
Partnership Losses shall be allocated among the Partners as
follows:
(i) First, to the Partners in
proportion to and to the extent of the amount by which the
cumulative Income allocations to them pursuant to
Section 3.3(a)(iii) exceed the cumulative Loss allocations to
them pursuant to this Section 3.3(b)(i);
(ii) Next, to the Partners in
proportion to and to the extent of the positive balances in their
respective Capital Accounts;
(iii) The balance to the Partners in
accordance with their Percentage Interests.
(c) Compliance with Allocation
Requirements of the Code .
(i) Allocations of book and tax
items with respect to property contributed by any Partner shall be
made solely for federal income tax purposes as required by section
704(c) of the Code using the traditional method. Following any
revaluation of the Partnership’s assets and the adjustment of
any Partner’s Capital Account pursuant to Treasury Regulation
Section 1.704-1(b)(2)(iv)(f) to reflect such revaluation, the
Partners’ Capital Accounts shall be adjusted for various
items as computed for book purposes with respect to such revealed
assets as required by Treasury Regulation Section 1.704-1(b)
and the Partners’ shares of such items as computed for tax
purposes with respect to such items shall be determined as required
by Treasury Regulation Section 1.701-1(b).
(ii) Any provisions as are required
to have a “qualified income” offset within the meaning
of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), or any
successor thereto, and the provisions of that section defining a
qualified income offset are included in this Agreement.
8
(iii) Notwithstanding any other
provision of this Agreement to the contrary, if in any year there
is a net decrease in the amount of the Partnership’s Minimum
Gain (within the meaning of Treasury Regulation section
1.704-2(d))