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EXHIBIT 10.2
EXECUTION COPY
AGREEMENT OF
LIMITED PARTNERSHIP
OF
DISTRICT HOSPITAL PARTNERS, L.P.
(a District of Columbia Limited Partnership)
by and among
UHS of D.C., Inc.
and
THE XXXXXX XXXXXXXXXX UNIVERSITY
Dated as of April 2, 1997
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LIMITED PARTNERSHIP AGREEMENT
OF
DISTRICT HOSPITAL PARTNERS, L.P.
This LIMITED PARTNERSHIP AGREEMENT (the "Agreement") is made and
entered into as of April 2, 1997 (the "Effective Date"), by and among UHS of
D.C., Inc., a Delaware corporation, as the general partner and a limited partner
("UHS"), and THE XXXXXX XXXXXXXXXX UNIVERSITY, a congressionally chartered
institution in the District of Columbia, as a limited partner (the
"University"). The parties to this Agreement shall also be referred to
individually as a "Partner" and collectively as the "Partners."
R E C I T A L S
WHEREAS, The Xxxxxx Xxxxxxxxxx University is a highly regarded
university and academic medical center that has among its activities and
affiliates The Xxxxxx Xxxxxxxxxx University Hospital (the "Hospital"), The
Xxxxxx Xxxxxxxxxx University School of Medicine and Health Sciences (the "School
of Medicine"), and The Xxxxxx Xxxxxxxxxx University faculty practice plan (the
"Medical Faculty Associates").
WHEREAS, The Xxxxxx Xxxxxxxxxx University, through its School of
Medicine and Medical Faculty Associates, trains physicians and allied health
professionals through a program of classroom and clinical education that meets
high academic standards.
WHEREAS, The Hospital is a 501-bed tertiary care hospital licensed as
an acute care hospital in the District of Columbia, founded in 1944 and
maintaining a strong commitment to community service.
WHEREAS, UHS is an affiliate of Universal Health Services, Inc. ("UHS
Parent"), a nationally known health care organization that has expertise in
managing and operating hospitals, developing regional networks, and providing
efficient, cost-effective community health care.
WHEREAS, UHS and UHS Parent recognize the Hospital as an important
asset of the District of Columbia community, recognize the academic mission and
charitable purposes of the University and the School of Medicine, recognize the
Hospital's significant contributions to the community, and have committed to
provide community service.
WHEREAS, the Partners intend to bring their health care resources
together in order to create efficiencies, compete effectively in the health care
market, provide affordable, high quality health care services in the community,
and enhance the graduate and undergraduate medical education programs of the
School of Medicine as well as the Medical Faculty
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Associates and attending physicians. An ongoing clinical and academic
affiliation between the parties will meet their respective objectives by
improving the training of health care professionals and the delivery of high
quality health care services in the community.
WHEREAS, the Partners desire to form a limited partnership under the
laws of the District of Columbia for the purposes and on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Partners agree as follows:
1. Definitions. When used in this Agreement, the following terms shall
have the meanings set forth below:
1.1. "Act" means the District of Columbia Uniform Limited
Partnership Act of 1987, being District of Columbia Code Section 41-401 et seq.,
as amended.
1.2. "Adjusted Capital Account Deficit" means, with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which
such Partner is obligated to restore pursuant to any provision of this Agreement
or is deemed to be obligated to restore pursuant to the penultimate sentences of
Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations.
The foregoing definition of "Adjusted Capital Account Deficit" is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations and shall be interpreted consistently therewith.
1.3. "Agreement" means this Agreement of Limited Partnership,
as amended from time to time.
1.4. "Ancillary Agreements" means the Academic Affiliation
Agreement, the HMO Hospital Services Agreement, the Guaranty Agreement, the
Trademark License Agreement, the Parking Rental Agreement, the Management
Agreement, and the Ground Lease which the Partners intend to execute as of the
Transfer Date.
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1.5. "Assignee" means a Person acquiring a Transferred
Interest as set forth in Section 13.1.
1.6. "Bankruptcy" means the institution of any proceedings
under federal or state laws for relief of debtors, including filing of a
voluntary or involuntary petition in bankruptcy or the adjudication of a Person
as insolvent or bankrupt, or the assignment of a Person's property for the
benefit of creditors, or the appointment of a receiver, trustee or a conservator
of any substantial portion of the Person's assets or the seizure by a sheriff,
receiver, trustee or conservator of any substantial portion of the Person's
assets, and the failure, in the case of any of these events, to obtain the
dismissal of the proceeding or removal of the conservator, receiver or trustee
within thirty (30) days of the event.
1.7. "Capital Account" means, for any given Partner, an
account determined and maintained throughout the full term of the Partnership
for such Partner in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv). Subject to and in accordance with said Regulation, each
Partner's Capital Account balance at any time shall equal such Partner's Capital
Contribution increased by the Partner's allocable share of Partnership Profits,
and decreased by Distributions made to the Partner by the Partnership and the
Partner's allocable share of Partnership Losses. Upon the contribution to or
Distribution from the Partnership of property, including money, in connection
with the admission to or retirement from the Partnership of a Partner,
respectively, the assets of the Partnership shall be revalued on the books of
the Partnership to reflect the fair market value of such assets at the time of
the occurrence of such event, and the Capital Accounts of the Partners shall be
adjusted in the manner provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(f).
1.8. "Capital Contribution" means, for any given Partner, the
aggregate of the money and the fair market value of any property contributed by
the Partner to the capital of the Partnership (net of any liability secured by
such contributed property that the Partnership assumes or takes subject to as
primary obligor) pursuant to Section 3 hereof.
1.9. "Capital Plan" means the plan described in Section 3.7.2.
1.10. "Centers of Emphasis" means the six (6) clinical
programs at the Hospital that the University and UHS have identified as areas of
special emphasis and that are more fully described in Section 3.8.
1.11. "Chief Executive Officer" means an employee of either
UHS or an affiliate of UHS to manage, supervise and administer the day-to-day
operations of the Partnership.
1.12. "Code" means the Internal Revenue Code of 1986, as
amended, or corresponding provisions of any successor statute.
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1.13. "Depreciation" means, for each Fiscal Year, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable for federal income tax purposes with respect to an asset for such
Fiscal Year, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year, Depreciation shall be an amount which bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such Fiscal Year bears to
such beginning adjusted tax basis; provided, however, that if the adjusted basis
for federal income tax purposes of an asset at the beginning of such Fiscal Year
is zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
1.14. "Director" means a Person appointed to serve on the
Partnership Board.
1.15. "Distribution" means the aggregate of the money or the
fair market value of any property distributed to Partners with respect to their
Interests in the Partnership (net of any liability secured by such property that
the Partner assumes or takes subject to as primary obligor), other than payments
to Partners for services or as repayment of loans or advances.
1.16. "Fiscal Year" means the period defined in Section 6.1.
1.17. "General Partner" means initially UHS and includes any
successor, substitute or additional Person admitted to the Partnership as a
General Partner as provided in Section 13 of this Agreement.
1.18. "Gross Asset Value" means, with respect to any asset,
the asset's adjusted basis for federal income tax purposes, except the initial
Gross Asset Value of any asset contributed by a Partner to the Partnership shall
be the gross fair market value of such asset, as determined by the contributing
Partner and the General Partner, and the Gross Asset Value of any asset
distributed to any Partner shall be adjusted to equal its gross fair market
value as of the date of distribution, as determined by the General Partner and
the distributee partner, provided that the initial Gross Asset Values of the
assets contributed to the Partnership pursuant to Sections 3.1(b) and 3.1(c)
shall be as set forth in such Sections.
1.19. "Hospital" means the acute care hospital inpatient
facility located at 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X., or as renovated or
relocated as described in Section 3.7.2.
1.20. "Initial Capital Loan" means the initial capital loan of
UHS to the Partnership described in Section 3.1(c).
1.21. "Interest" means the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to
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which a Partner may be entitled as provided in this Agreement, subject to the
obligations of such Partner to comply with all of the terms and conditions of
this Agreement.
1.22. "Letter of Credit" means the irrevocable bank letter of
credit in the amount of Forty Million Dollars ($40,000,000) described in Section
3.9, as the same may be renewed or modified.
1.23. "Limited Partner" means initially UHS and the
University, and includes any successor, substitute or additional Person admitted
to the Partnership as a limited partner as provided in Section 13 of this
Agreement.
1.24. "Major Decisions" means any of the actions of the
Partnership requiring approval of a majority of the Directors appointed by UHS
and a majority of the Directors appointed by the University, as set forth in
Section 7.3.
1.25. "Management Agreement" means the agreement between UHS
or an affiliate of UHS and the Partnership for the provision of management
services to the Hospital which the Partners intend to execute as of the Transfer
Date.
1.26. "Nonrecourse Deductions" has the meaning set forth in
Section 1.704- 2(b)(1) and 1.704-2(c) of the Treasury Regulations.
1.27. "Nonrecourse Liability" has the meaning set forth in
Section 1.704- 2(b)(3) of the Treasury Regulations.
1.28. "Partner" means any General Partner or Limited Partner
of the Partnership.
1.29. "Partner Nonrecourse Debt" has the same meaning as the
term "partner nonrecourse debt" set forth in Section 1.704-2(b)(4) of the
Treasury Regulations.
1.30. "Partner Nonrecourse Debt Minimum Gain" means an amount,
with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum
Gain that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of
the Treasury Regulations.
1.31. "Partner Nonrecourse Deductions" has the same meaning as
the term "partner nonrecourse deductions" set forth in Sections 1.704-2(i)(1)
and 1.704-2(i)(2) of the Treasury Regulations.
1.32. "Partnership" means District Hospital Partners, L.P.,
the limited partnership organized pursuant to this Agreement.
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1.33. "Partnership Board" means the board of directors of the
Partnership which board shall serve in an advisory capacity to the Partnership
and the Partners, except for those Major Decisions requiring a vote of the
Partnership Board under Section 7.3 hereof.
1.34. "Partnership Minimum Gain" has the meaning set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Treasury Regulations.
1.35. "Percentage Interest" means, for purposes of allocating
all items of Profits and Losses among the Partners, a ratio, expressed in
percentages, reflecting a Partner's Interest in the Partnership relative to the
Interests of other Partners. The initial Percentage Interests of the Partners
are as set forth on Exhibit 1.35 hereto.
1.36. "Person" means any natural person, partnership,
corporation, association, trust, governmental agency or other legal entity.
1.37. "Profits" and "Losses" means, for each Fiscal Year or
other period, the Partnership's taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (including in such
taxable income or loss all items of income, gain, loss or deduction required to
be stated separately), increased by any income of the Partnership that is exempt
from federal income tax, and decreased by expenditures of the Partnership
described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv) of the Treasury Regulations.
Profits and Losses, depreciation, depletion, amortization, gain, and loss with
respect to any property (including intangibles) that under Sections
1.704-1(b)(2)(iv)(d) and (b)(2)(iv)(f) of the Treasury Regulations is properly
reflected on the books of the Partnership at a book value that differs from the
adjusted tax basis of such property shall be determined based on the book value
of such property, in accordance with the principles of Section
1.704-1(b)(2)(iv)(g) of the Treasury Regulations. Any items which are specially
allocated pursuant to the provisions of Sections 5.4 and 5.5 shall not be taken
into account in computing Profits and Losses.
1.38. "Project Fund" means the account established for the
purposes set forth in Section 3.7.2.
1.39. "Purposes" means the business and purposes of the
Partnership as described in Section 2.4.
1.40. "Service Area" of the Partnership means the area
described in Exhibit 1.40 to be attached hereto.
1.41. "Substitute Partner" means an Assignee admitted as a
Partner as set forth in Section 13.1.
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1.42. "UHS Contribution" means the initial Capital
Contribution of UHS as set forth in Section 3.1(c).
1.43. "Transfer" means any voluntary or involuntary sale,
assignment, transfer, exchange, lease, mortgage, charge, hypothecation, pledge
or other conveyance or encumbrance, including any transfer by operation of law
or otherwise.
1.44. "Transfer Date" means the Closing Date set forth in the
Contribution Agreement between the University and the Partnership.
1.45. "Transferred Interest" means an Interest that is subject
to a Transfer as set forth in Section 13.1.
1.46. "Treasury Regulation" means those regulations
promulgated pursuant to the Code.
1.47. "University Contribution" means the University's initial
Capital Contribution as set forth in Section 3.1(b).
1.48. "University Contribution Agreement" means the
Contribution Agreement between the University and the Partnership to be executed
as of the Transfer Date.
2. Organization of Partnership.
2.1. Formation.
(a) The Partners hereby form the Partnership
pursuant to the provisions of the Act, which shall govern the relationship of
the Partners except as expressly provided to the contrary herein;
(b) The Partners shall take any and all actions as
may from time to time be required under the laws of the District of Columbia to
give effect to the Partnership and to maintain it in good standing; and
(c) Except as provided herein, the Partnership shall
be managed by the General Partner of the Partnership, having the powers
specified in Section 7.1 hereof and subject to the limitations set forth in this
Agreement.
2.2. Name. The name of the Partnership shall be District
Hospital Partners, L.P.
2.3. Principal Place of Business. The principal place of
business of the Partnership shall be at the Hospital, which as of the date
hereof is located at 000 00xx Xxxxxx,
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X.X., Xxxxxxxxxx, X.X. The Partnership shall continuously maintain a principal
office in the District of Columbia, which office shall be located at its
principal place of business. The Partnership may also have such other offices or
places of business as the Partners may from time to time determine.
2.4. Purposes. The Purposes of the Partnership shall be (a) to
own and operate an acute care hospital in the District of Columbia known as The
Xxxxxx Xxxxxxxxxx University Hospital, (b) to provide or arrange for the
provision of health care services or related services, (c) to furnish
uncompensated and charity health care, (d) to develop and maintain an integrated
delivery system, (e) to develop Centers of Emphasis, (f) to support the academic
programs of the School of Medicine and the Medical Faculty Associates including
research and teaching and (g) to engage in any other business and do any and all
other acts and things agreed upon by the Partners and consistent with the
foregoing.
2.5. Term. The term of the Partnership shall commence as of
the Effective Date and shall continue for fifty (50) years (the "Term"), unless
dissolved, liquidated and terminated sooner pursuant to the provisions of
Section 14 hereof. At the end of the fifty (50) year term, UHS shall have right
to extend the Term for an additional five (5) year renewal term and four (4)
separate additional five (5) year renewal terms thereafter, provided that UHS
provides the University with eighteen (18) months written notice prior to the
end of the Term and each applicable renewal term thereafter.
2.6. Compliance With Securities Laws. Each Partner represents
and warrants that it has acquired or is acquiring its Interest for its own
account, and not with a view toward the resale thereof. Each of the parties
hereto is fully aware and acknowledges that the offer and sale of the Interest
which it has acquired or is acquiring has not been registered under the
Securities Act of 1933, as amended, nor registered or qualified under the
securities laws of any state or the District of Columbia. Each Partner
acknowledges and agrees that its Interest may not be sold, transferred, pledged,
or hypothecated without registration under such acts or an opinion of legal
counsel that such transfer may be legally effected without such registration.
Additional restrictions on Transfers of Interests are set forth in this
Agreement.
2.7. Resident Agent. The name and address of the Partnership's
resident agent in the District of Columbia shall be C T Corporation System, 0000
Xxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, until changed by the General
Partner.
3. Capitalization of Partnership.
3.1. Description, Timing and Value of Initial Capital
Contributions.
(a) Provided the conditions set forth in Subsection
(e) below are satisfied, each Partner shall make its initial Capital
Contribution to the Partnership on the Transfer Date unless otherwise mutually
extended by the Partners.
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(b) The University shall transfer and assign to the
Partnership, as its initial Capital Contribution (the "University
Contribution"), all of its rights, title and interest in and to the Assets as
defined in the University Contribution Agreement, subject to the obligations and
liabilities described in the University Contribution Agreement.
(c) UHS shall provide to the Partnership's Project
Fund, as its initial capital commitment, Eighty Million Dollars ($80,000,00).
Seventy-two Million Dollars ($72,000,000) of such initial capital commitment
shall be in the form of a Capital Contribution (the"UHS Contribution") and the
remaining eight million dollars ($8,000,000) shall be in the form of an initial
capital loan (the "Initial Capital Loan"). The UHS Contribution shall be
allocated between UHS's Interests as General Partner and as a Limited Partner in
accordance with the Percentage Interests of UHS set forth in Exhibit 1.35. Forty
Million Dollars ($40,000,000) shall be delivered by wire transfer of immediately
available funds to the Partnership's account as of the Transfer Date. The
remaining Forty Million Dollars ($40,000,000) of UHS' capital commitment will be
provided from time to time as required to fund capital expenditures in
accordance with the Capital Plan and shall be secured by the Letter of Credit.
The UHS Contribution and Initial Capital Loan shall be used only for the Project
Fund.
(d) UHS shall enter into a loan agreement with the
Partnership whereby UHS shall make the Initial Capital Loan. The Initial Capital
Loan amount shall be Eight Million Dollars ($8,000,000) and shall be added to
the Project Fund. The Initial Capital Loan shall be on a long term basis and
shall bear interest at a rate of twelve percent (12%) per annum to be paid by
the Partnership only to the extent that the Partnership has Profits.
(e) On or before the Transfer Date, the Partners
shall take the following actions and/or ensure that the following events occur
and such actions and events shall be conditions precedent to either Partner's
obligation to contribute its initial Capital Contribution:
(i) The University and the Partnership shall have executed and
performed all of the terms, covenants, representations and warranties set forth
in the University Contribution Agreement, as well as the terms, covenants,
representations and warranties set forth in this Agreement and the exhibits and
schedules attached hereto.
(ii) All parties shall have executed and delivered the
Ancillary Agreements.
(iii) UHS shall have delivered to the Partnership the Loan
Agreement.
(iv) The Partnership shall have executed and/or delivered or
caused to be delivered to each Partner the following:
a. A certificate of the General Partner certifying
that all consents and approvals that are required from any person, entity,
governmental body or regulatory agency
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in connection with the consummation of the transactions contemplated by this
Agreement by the Partnership have been obtained;
b. A certificate of the corporate secretary of the
General Partner certifying (i) the incumbency of the officers of the General
Partner from the Effective Date to the Transfer Date and bearing the authentic
signatures of all such officers who shall execute this Agreement and any
additional documents contemplated by this Agreement; and (ii) the minutes of the
meeting of the shareholders of UHS and the resolutions of the Board of Directors
of the General Partner authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, including the
transfer of the UHS Contribution, and that such minutes and resolutions have not
been amended or rescinded and remain in full force and effect;
c. A favorable original certificate of good standing
of the Partnership issued by the District of Columbia Department of Consumer and
Regulatory Affairs; and
d. Such other instruments, certificates, consents or
other documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof.
(v) UHS shall have executed and/or delivered or caused to be
delivered to the Partnership the following:
a. A favorable original certificate of good standing
issued by the Delaware Secretary of State;
b. A certificate of the President or any Vice
President of UHS certifying to the Partnership (i) the accuracy of the
representations and warranties set forth in Section 4 hereof and (ii) that all
consents and approvals that are required from any person, entity, governmental
body or regulatory agency in connection with (a) the transfer of the UHS
Contribution to the Partnership's Project Fund and (b) the execution, delivery
and performance of the Management Agreement;
c. A certificate of the corporate Secretary of UHS
certifying to the Partnership (i) the incumbency of the officers of UHS from the
Effective Date to the Transfer Date and bearing the authentic signatures of all
such officers who shall execute this Agreement and any additional documents
contemplated by this Agreement; (ii) as to the resolutions of the Board of
Directors of UHS authorizing (a) the transfer of the UHS Contribution by UHS to
the Partnership, (b) the execution, delivery and performance of this Agreement
and the Ancillary Agreements by UHS, and (c) the execution, delivery and
performance of the Ancillary Agreements; (iii) that such resolutions have not
been amended or rescinded and remain in full force and effect; and (iv) the
current Articles of Incorporation and Bylaws of UHS;
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d. Copies of the documents executed and/or delivered
in connection with the transfer of the UHS Contribution by UHS to the
Partnership which are identified in Exhibit 3.1(d)(v)d attached hereto, and
e. Such other certificates, consents, endorsements,
assignments, assumptions, evidences, and other documents or instruments as may
be reasonably requested by the Partnership in order to transfer the UHS
Contribution to the Partnership's Project Fund, to carry out the transaction
contemplated by this Agreement and to comply with the terms hereof.
(vi) The University shall have executed and/or delivered or
caused to be delivered to the Partnership and UHS the following:
a. A certificate of the corporate secretary of the
University certifying (i) the incumbency of the officers of the University from
the Effective Date to the Transfer Date and bearing the authentic signatures of
all such officers who shall execute this Agreement and any additional documents
contemplated by this Agreement; (ii) the minutes of the meeting of the Trustees
of the University and the resolutions of the Board of Trustees of the University
authorizing the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby,
including the transfer of the University Contribution; (iii) that such minutes
and resolutions have not been amended or rescinded and remain in full force and
effect; and (iv) the current Charter and Bylaws of the University;
b. A favorable original certificate of good standing
of the University issued by the District of Columbia Department of Consumer and
Regulatory Affairs or an applicable alternative certificate;
c. Such other instruments, certificates, consents or
other documents as may be reasonably necessary to carry out the transactions
contemplated by this Agreement and to comply with the terms hereof; and
d. Copies of the documents executed and/or delivered
in connection with the transfer of the University Contribution to the
Partnership, which are identified in the University Contribution Agreement.
(vii) On the Transfer Date, no action or proceeding shall be
pending or threatened wherein an unfavorable judgment, decree or order would, in
the reasonable opinion of legal counsel for either Partner, prevent or make
materially unfavorable the carrying out of this Agreement, or would cause the
transactions contemplated by this Agreement to be rescinded. In the event of the
receipt of any communication from any department or agency of government or any
other notice (a copy of which communication or notice shall be promptly
delivered to the Partnership and each Partner) prior to the closing with regard
to the
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transactions contemplated by this Agreement, which communication or notice
shall, in the reasonable opinion of legal counsel, threaten such an action or
proceeding, either Partner may terminate this Agreement by giving thirty (30)
days advance written notice to the other Partner. During such thirty (30) day
period, UHS and the University shall meet and confer in good faith to attempt to
resolve the issue which is the subject of the action or proceeding. In the event
the parties are unable to do so, or fail to agree to extend the thirty (30) day
period, either Partner may terminate this Agreement by giving written notice to
the other Partner and all parties shall thereupon be released from any and all
liability related to this Agreement.
(f) In the event that each of the conditions
precedent set forth in Subsection (e) above shall not have been satisfied by the
Transfer Date, the Partners shall not be required to make the University
Contribution or the UHS Contribution and the Partnership shall be dissolved,
pursuant to the provisions of Section 14.
3.2. Additional Limited Partners. Subject to the provisions of
Section 7.3 and Section 13, the Partnership may from time to time elect to offer
limited partnership interests to other Persons, as permitted by law. Any Limited
Partner admitted to the Partnership after the execution of this Agreement shall
make an initial Capital Contribution in an amount and at a time as determined by
the Partnership in exchange for its Limited Partnership Interest. A new Limited
Partner's initial Capital Contribution under this Section 3.2 shall, unless
otherwise determined by the Partnership, equal the following amount:
(i) the Percentage Interest of the new Partner,
multiplied by
(ii) the fair market value of all the Partnership's
assets (including any new Limited Partner's initial Capital Contribution) as of
the effective date of admission.
3.3. Additional Capital Requirements. It shall be the general
policy of the Partnership that all monies necessary to carry on the activities
of the Partnership shall be obtained first through funds derived from the
operation of the Partnership. To the extent funds derived from the Partnership
are not sufficient, it is the intent of the Partners that the Partners will
contribute an additional Forty-Five Million Dollars ($45,000,000) to the
Partnership in excess of the University Contribution, the UHS Contribution and
the Initial Capital Loan for Hospital operations over a ten (10) year period
following the Transfer Date. Additional capital including such Forty-five
Million Dollars ($45,000,000) will, at the election of the General Partner, be,
in whole or in part, in the form of additional Capital Contributions or capital
loans as described in Section 3.4 hereof or loans from non-Partners. No Partner
shall be required to provide additional capital to the Partnership for the
Capital Plan until the Project Fund is fully depleted.
3.4. Capital Contributions and Capital Loans. Partners may be
required to make additional Capital Contributions to the Partnership in the
amounts and at the times determined by the General Partner. No Partner may make
a voluntary Capital Contribution
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without the consent of the General Partner. All additional Capital Contributions
shall be made in accordance with each Partner's Percentage Interest in the
Partnership, unless the Partners agree otherwise. In the event a Partner fails
to make an additional Capital Contribution, the General Partner shall make the
Capital Contribution in accordance with Sections 3.4 and 3.6. The Partnership
may borrow funds from any of the Partners on reasonable terms and conditions
approved by the Partners at the time such loan or advance is obtained, subject
to Section 7.3. Such loans or advances shall not increase or otherwise affect
the Capital Accounts of any of the parties hereto. Funds loaned by a Partner to
the Partnership for purposes of satisfying the need for an additional Capital
Contribution shall accrue interest at the prime rate as determined from time to
time (as published in the Wall Street Journal) plus two percent (2%) per annum
and shall be repaid prior to any Distribution.
3.5. No Withdrawals from Capital Accounts. No Partner shall be
entitled to withdraw funds from its Capital Account, except pursuant to a
Distribution made in accordance with Section 5 or the liquidation of the
Partnership in accordance with Section 14, unless the Partners consent thereto.
3.6. Failure to Make Capital Contributions. The Interest of a
Partner who fails to make any required Capital Contribution or other payment to
the Partnership (subsequent to its initial Capital Contribution) shall be
reduced upon failure to make such Capital Contribution or payment, and each
Partner's Percentage Interest thereafter shall be recalculated.
3.7. Project Fund.
3.7.1. On the Transfer Date, the Partnership shall
establish the Project Fund, which the Partnership shall use to implement the
Capital Plan described in Section 3.7.2. The Project Fund shall consist of the
proceeds of the UHS Contribution and of the Loan Agreement and any additional
Capital Contributions as determined by the General Partner pursuant to Section
3.3 together with income on such funds.
3.7.2. The parties to this Agreement shall work
diligently to develop, approve, and implement a Capital Plan to be prepared by
the General Partner to substantially reconstruct, renovate and equip the
existing Hospital facility, using the Project Fund. Only after the Capital Plan
has been fully implemented and construction is complete, any funds remaining in
the Project Fund shall be used to develop an integrated delivery system
including, without limitation, linkage with the Medical Faculty Associates (as
that term is defined in the Academic Affiliation Agreement attached hereto as
Exhibit 3.7.2), development of a regional healthcare delivery infrastructure
(including expansion of an ambulatory care network) and continued development of
a primary care physician network.
3.7.3. The Project Fund shall not be used to pay
management fees under the Management Agreement, offset deficits in budget pools
under the HMO Hospital
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Service Agreement, make academic support payments under the Academic Affiliation
Agreement, or in any way fund operating deficits of the Partnership.
3.8. Centers of Emphasis. The parties to this Agreement intend
that within two (2) years following the Transfer Date, the General Partner shall
develop strategic, capital and operating plans for each of the Centers of
Emphasis to provide capital, marketing and faculty support for the Centers of
Emphasis, each of which shall be subject to the approval of the University under
Section 7.3 hereof. "Centers of Emphasis" are the following six (6) clinical
programs at the Hospital that have been identified by the University as areas of
special emphasis: (1) cardiovascular disease, (2) cancer treatment and research,
(3) emergency medicine, (4) minimally invasive surgery, (5) neurologic disease
and (6) women's health.
3.9. Letter of Credit. The Letter of Credit shall be issued in
favor of the Partnership, effective as of the Transfer Date. The Letter of
Credit may be drawn by the Partnership in the event UHS fails to contribute to
the Partnership the deferred portion of the UHS Contribution or fails to make
available the Initial Capital Loan as the same are required from time to time to
fund continuing capital expenditures in accordance with the Capital Plan. From
and after such time as UHS contributes any of the deferred portion of the UHS
Contribution and makes any portion or all of the Initial Capital Loan to the
Partnership, UHS shall have the right to reduce the stated amount of the Letter
of Credit such that the sum of contributions actually made to the Project Fund
from the UHS Contribution and the Initial Capital Loan and the stated amount of
the Letter of Credit equals Eighty Million Dollars ($80,000,000). The Letter of
Credit shall be in a form, and issued by a financial institution, reasonably
acceptable to the University. The University will review in good faith the need
for the continued existence of the Letter of Credit to secure the ongoing
obligation of UHS to complete the UHS Contribution, taking into consideration
the progress of construction under the Capital Plan, the credit rating of UHS,
and other factors.
UHS shall bear the cost of the Letter of Credit, except that
the University shall reimburse UHS on an annual basis for its cost of the Letter
of Credit plus fifty (50) basis points up to a maximum of 1.75% of the stated
amount of the Letter of Credit not to exceed eight million dollars ($8,000,000)
stated amount; provided that for each dollar of reduction in the amount of the
face amount of the Letter of Credit other than as a result of the cash funding
of UHS Contribution, the amount of the Letter of Credit with respect to which
the University is obligated to pay UHS its cost shall be reduced
correspondingly.
3.10 Initial Capital Loan. Only after UHS contributes all of
the deferred portion of the UHS Contribution, the Initial Capital Loan may be
drawn upon from time to time to fund continuing capital expenditures in
accordance with the Capital Plan or after completion of the Capital Plan
otherwise in accordance with Section 3.7.2.
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4. Representations and Warranties of UHS. UHS hereby represents and
warrants to the Partnership, which representations and warranties shall be true
and correct on the Effective Date, as follows:
4.1. Organization; Good Standing. UHS is a Delaware
corporation, duly organized, validly existing and in good standing under the
laws of Delaware with full corporate power and authority to carry on its
businesses. UHS is also duly qualified to carry on its businesses in the
District of Columbia.
4.2. Authority; Validity; No Breach. UHS has the full right,
power, legal capacity and authority, to execute, deliver and carry out the terms
of this Agreement and all documents and agreements necessary to give effect to
the provisions of this Agreement and to consummate the transactions contemplated
hereby. All corporate and other actions required to be taken by UHS to authorize
the execution, delivery and performance of this Agreement, all documents
executed by it necessary to give effect to this Agreement, and all transactions
contemplated hereby have been duly and properly taken or obtained or will be
duly and properly taken or obtained by UHS prior to the Transfer Date. No other
corporate or other action on the part of UHS is necessary to authorize the
execution, delivery and performance of this Agreement, all documents necessary
to give effect to this Agreement and all transactions contemplated hereby. Any
consent which has not been obtained would not have an adverse effect on the
transactions contemplated hereby.
This Agreement is, and the documents to be delivered at closing will
be, the lawful, valid and legally binding obligations of UHS in accordance with
their respective terms. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not, with or without
the giving of notice and/or the passage of time: (a) violate the Articles of
Incorporation or Bylaws of UHS, or any provision of law, statute, rule or
regulation to which UHS is subject; or (b) violate or conflict with any
judgment, order, writ or decree of any court applicable to UHS; which violation
or conflict would have a material adverse effect on the transactions
contemplated hereby.
4.3. Consents and Approvals. UHS has obtained each consent,
approval, permit, waiver, authorization or other action of or by any court,
governmental or nongovernmental person or entity, that is required in connection
with the execution, delivery or performance of this Agreement by UHS.
4.4. Solvency. UHS is not insolvent and will not be rendered
insolvent as a result of any of the transactions contemplated by this Agreement.
For purposes hereof, the term "solvency" means that: (a) the fair salable value
of UHS's tangible assets is in excess of the total amount of its liabilities
(including for purposes of this definition all liabilities, whether or not
reflected on a balance sheet prepared in accordance with generally accepted
accounting principles, and whether direct or indirect, fixed or contingent,
secured or unsecured, and disputed or undisputed); (b) UHS is able to pay its
debts or obligations in the
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ordinary course as they mature; and (c) UHS has capital sufficient to carry on
its businesses and all businesses in which it is about to engage.
4.5. Guaranty. UHS Parent will execute a guaranty agreement
with UHS (the "Guaranty Agreement"), a copy of which is attached hereto as
Exhibit 4.5.
4.6. Community Service. UHS recognizes the significant
contribution the University has made to the local community through its support
of uncompensated and indigent care at the Hospital. For at least two (2) years
from the Transfer Date, the Partnership shall maintain the Hospitals policies
for the treatment of indigent patients as such policies exist as of the Transfer
Date. Moreover, UHS recognizes as a member of the community the Partnership's
responsibilities for the treatment of indigent patients. Notwithstanding
anything in this Agreement or any Ancillary Agreement to the contrary, the
Partnership shall comply with all applicable laws and regulations relating to
uncompensated care and community service, including but not limited to the
requirements of any applicable Certificate of Need law.
5. Distributions and Allocations.
5.1. Distributions. Subject to Section 14 below, the General
Partner may make Distributions to the Partners of cash or other property of the
Partnership. No Distribution under this Section 5.1 shall be made, however,
unless the cash or property to be distributed is determined by the General
Partner, in accordance with sound business practices, to be in excess of the
Partnership's business needs, including for this purpose any and all reasonable
reserves for working capital or liabilities of the Partnership, such as the
Partnership's repayment obligations with respect to any Capital Loans, or other
reasonably foreseeable contingencies. All Distributions shall be in proportion
to the Partners' respective Percentage Interests.
5.2. Record Date for Distributions. Each Distribution to the
Partners pursuant to this Agreement shall be made to the Partners who are
holders of record of Interests as of the date such Distribution is approved.
5.3. Allocations of Profits and Losses. Except as otherwise
provided in Sections 5.4 and 5.5, Profits and Losses shall be allocated among
the Partners annually at the close of each Fiscal Year of the Partnership
according to their respective Percentage Interests.
5.4. Special Allocations. The following special allocations
shall be made in the following order:
5.4.1. Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-2(f) of the Treasury Regulations, notwithstanding any
other provision of this Section 5, if there is a net decrease in Partnership
Minimum Gain during any Fiscal Year, each
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Partner shall be specially allocated items of Partnership income and gain for
such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal
to such Partner's share of the net decrease in Partnership Minimum Gain,
determined in accordance with Treasury Regulations Section 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with Sections
1.704- 2(f)(6) and 1.704-2(j)(2) of the Treasury Regulations. This Section 5.4.1
is intended to comply with the minimum gain chargeback requirement in Section
1.704-2(f) of the Treasury Regulations and shall be interpreted consistently
therewith.
5.4.2. Partner Minimum Gain Chargeback. Except as
otherwise provided in Section 1.704-2(i)(4) of the Treasury Regulations,
notwithstanding any other provision of this Section 5, if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain attributable to a Partner
Nonrecourse Debt during any Fiscal Year, each Partner who has a share of the
Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of Partnership income and gain
for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Partner's share of the net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(i)(4) and
1.704-2(j)(2) of the Treasury Regulations. This Section 5.4.2 is intended to
comply with the minimum gain chargeback requirement in Section 1.704-2(i)(4) of
the Treasury Regulations and shall be interpreted consistently therewith.
5.4.3. Qualified Income Offset. In the event any
Partner unexpectedly receives any adjustments, allocations, or distributions
described in Section 1.704- 1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5),
or Section 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations, items of
Partnership income and gain shall be specially allocated to each such Partner in
an amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the Adjusted Capital Account Deficit of such Partner as
quickly as possible, provided that an allocation pursuant to this Section 5.4.3
shall be made only if and to the extent that such Partner would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Section
5 have been tentatively made as if this Section 5.4.3 were not in the Agreement.
5.4.4. Gross Income Allocation. In the event any
Partner has a deficit Capital Account at the end of any Fiscal Year which is in
excess of the sum of (i) the amount such Partner is obligated to restore
pursuant to any provision of this Agreement, and (ii) the amount such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences of
Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations, each such
Partner
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shall be specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible, provided that an allocation pursuant to
this Section 5.4.4 shall be made only if and to the extent that such Partner
would have a deficit Capital Account in excess of such sum after all other
allocations provided for in this Section 5 have been made as if this Section
5.4.4 were not in the Agreement.
5.4.5. Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the
Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Treasury Regulations Section 1.704-2(i)(1).
5.4.6. Nonrecourse Deductions. Nonrecourse Deductions
for any Fiscal Year shall be specially allocated among the Partners in
proportion to their Percentage Interests.
5.5. Curative Allocations. The allocations set forth in
Sections 5.4.1, 5.4.2, 5.4.3, 5.4.4, 5.4.5 and 5.4.6 (the "Regulatory
Allocations") are intended to comply with certain requirements of the Treasury
Regulations. It is the intent of the Partners that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Partnership income, gain, loss, or
deduction pursuant to this Section 5.5. Therefore, notwithstanding any other
provision of this Section 5 (other than the Regulatory Allocations), the General
Partner shall make such offsetting special allocations of Partnership income,
gain, loss, or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Partner's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Partner would have had if the Regulatory Allocations were not part of the
Agreement. In exercising its discretion under this Section 5.5, the General
Partner shall take into account future Regulatory Allocations under Section
5.4.1 and 5.4.2 that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Section 5.4.5 and 5.4.6.
5.6. Book Value/Tax Basis Differentials. In accordance with
Section 704(b) and 704(c) of the Code and the Treasury Regulations promulgated
thereunder, income, gain, loss, deductions and credit with respect to (i) any
property contributed to the capital of the Partnership, and (ii) any property
revalued on the Partnership's books in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), shall, solely for tax purposes, be allocated among
the Partners so as to take into account any variation between the adjusted basis
of such property to the Partnership for federal tax purposes and its value on
the books of the Partnership. The General Partner shall make such allocations
using the "remedial allocation method," as specified in Treasury Regulation
Section 1.704-3(d).
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5.7. Allocation in Respect of Interests Held for Partial Year.
In the event of a change in the Partners' Percentage Interests during any Fiscal
Year, Profits and Losses, if any, for such Fiscal Year shall be divided equally
among the months of such year, and each Partner shall participate in the
allocation for each month on the basis of its Percentage Interest as of the last
day of that month. Notwithstanding the foregoing, the Partnership shall in all
events utilize an accounting method for determining the allocable shares of the
above items to which the Partners are entitled that complies with Code Section
706(d) and the Treasury Regulations thereunder.
6. Reports, Books and Records.
6.1. Maintenance. The Partnership shall maintain complete and
accurate books and records, as required by the Act, at its principal office or
such other place or places as the General Partner may from time to time
determine. The Partnership shall adopt the same fiscal year as UHS uses in its
business, or such other fiscal year as is required to be adopted by the
Partnership for federal income tax purposes under Section 706 of the Code (a
"Fiscal Year").
6.2. Financial Statements and Income Tax Returns. The General
Partner shall cause to be prepared and delivered to each Partner, within one
hundred twenty (120) days after the expiration of each Fiscal Year, a balance
sheet and a profit and loss statement of the Partnership, a statement showing
the Capital Accounts, the Distributions and the share in the Profits and Losses
of each of the Partners for such Fiscal Year, and copies of all income tax
informational returns filed by or on behalf of the Partnership, together with
such additional tax information with respect to the Partnership's operations as
shall be necessary for the preparation by the Partners of their federal or state
income tax returns. Each of the Partners shall be entitled to request such
additional reports on the operations or financial condition of the Partnership
as they reasonably believe is appropriate.
6.3. Inspections. Each Partner of record shall have the right
to examine, at any reasonable time or times for all purposes, the books and
records of account, and the minutes and records of the Partnership, and to make
copies thereof at such Partner's expense. Such inspection may be made by any
agent or attorney of the Partner.
6.4. Tax Elections; Adjustment of Basis of Partnership. Upon
the Transfer of any Interest in the Partnership in the manner provided in
Section 743 of the Code, or a Distribution of property made in the manner
provided in Section 734 of the Code, in the reasonable discretion of the General
Partner, the Partnership may file an election under Section 754 of the Code to
adjust the basis of the assets of the Partnership under the circumstances and in
the manner provided in Sections 734 and 743. In the event of such election, the
General Partner shall take any and all necessary steps to consummate such
adjustment, including, without limitation, the filing of the election with the
income tax return of the Partnership for the first Fiscal Year to which the
election applies.
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The General Partner may (but need not), in its sole and absolute
discretion, make any other elections under the Code or the Treasury Regulations,
and the General Partner shall be absolved from all liability for any and all
consequences to any previously admitted or subsequently admitted partners
resulting from the making or failing to make any tax election.
6.5 Tax Matters Partner. The General Partner is hereby
designated as the "tax matters partners" in accordance with Section 6231(a)(7)
of the Code, and, in connection therewith and in addition to all other powers
given thereto, shall have all powers necessary and appropriate to perform such
role and to expend Partnership funds for professional services and costs
associated therewith.
7. Management of the Partnership.
7.1. Responsibilities and Authority of the General Partner.
The overall management and control of the Partnership and all of its affairs
shall be in the General Partner, except as otherwise set forth herein or in the
Management Agreement. The General Partner shall oversee the implementation of
the decisions of the Partners and the day-to-day management of the Partnership
by the Chief Executive Officer. The General Partner shall devote such attention
and business capacity to the affairs of the Partnership as may be reasonably
necessary to fully perform its duties as General Partner.
7.2. Partnership Board of Directors.
7.2.1. The board of directors of the Partnership
(the "Partnership Board") shall consist of six (6) Directors. Three (3)
Directors shall be appointed by the University and shall be University
Directors, and three (3) Directors shall be appointed by UHS and shall be UHS
Directors.
7.2.2. The University shall elect the initial
Chairman of the Partnership Board after consultation with UHS. Thereafter, the
Chairman shall be elected by the Partnership Board of Directors on the basis of
the Partners' Partnership Interests.
7.2.3. The initial Directors shall be as set forth
in Exhibit 7.2.3 attached hereto. The term of each of the initial Directors
shall be from the inception of the Partnership until the first meeting of the
Partners, at which time their successors shall be elected and qualified by the
University and UHS, respectively. The University and UHS shall retain the
discretion to replace any of their respective elected Directors during their
term as Directors. After the first meeting of the Partners, all Directors shall
serve for terms of one (1) year, or until their successors shall have been
elected and qualified or until the earlier of their death, removal, resignation
or disqualification. After the first meeting, each Partner shall annually elect
its class of Directors. Directors elected by a Partner shall be automatically
disqualified as Directors in the event that the Partner ceases to be a Partner.
There shall be no limitation on the number of terms a Director may serve.
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7.2.4. In all events, a Director shall hold office
until his successor has been elected and qualified.
7.2.5. An annual meeting of the Partnership Board
shall be held at the date, time and place determined by the Partnership Board.
Special meetings of the Partnership Board may be called by the Chairman, the
Partnership Board or any two (2) Directors by giving at least five (5) days
written notice to the Directors, except in the case of an emergency, which shall
require at least forty-eight (48) hours written notice, of the date, time, place
and purpose of the special meeting. Participation at any meeting may be by any
means of communication pursuant to which all Directors participating may
simultaneously hear each other.
7.2.6. Any Director may waive notice of any meeting.
Except as set forth in the following sentence, the waiver must be in writing,
signed by the Director entitled to the notice and filed with the minutes or
other records of the Partnership. A Director's attendance at or participation in
a meeting shall constitute a waiver of notice of that meeting unless the
Director is attending for the sole purpose of objecting to the notice. Neither
the business to be transacted at, nor the purpose of, any meeting of the
Directors (other than for special meetings) need be specified in the notice or
waiver of notice of the meeting.
7.2.7. The presence at a meeting of Directors
representing a majority of the total voting power of the Partnership Board shall
constitute a quorum for such meeting. If less than a quorum of the Directors is
present at a meeting, the Directors present shall adjourn the meeting to a
different time.
7.2.8. Except as otherwise provided in this
Agreement, the Directors appointed by a particular Partner shall, as a group,
have voting rights equivalent to that Partner's Percentage Interest. With the
exception of the Major Decisions described in Section 7.3, the affirmative vote
of a majority of the Percentage Interests represented at a meeting at which a
quorum is present shall be required for an action of the Directors.
7.2.9. The Partner which elected a Director may
remove the same Director with or without cause. A Director may resign at any
time by giving written notice to the Directors or to the Chairman. A resignation
is effective when the notice is given unless the notice specifies a future date.
The pending vacancy may be filled before the effective date, but the successor
shall not take office until the effective date.
7.2.10. A vacancy created by removal, death,
incapacity, resignation or an increase in the number of Directors or by any
other reason may be filled only by election by the Partner which elected such
Director or, in the case of an increase in the number of Directors, by the
Partner entitled to elect the new Directors. The individual elected to fill a
vacancy shall serve until the next annual appointment of Directors by the
Partners.
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7.2.11. A Director who is present at a meeting of the
Directors at which any official action is taken shall be conclusively presumed
to have assented to the action unless he announces his dissent at the meeting,
or his dissent is entered in the minutes of the meeting, or he files his written
dissent with the secretary of the meeting before the meeting is adjourned.
7.2.12. Any action required or permitted to be taken
at a meeting of the Directors may be taken without a meeting if a written
consent setting forth the action so taken is signed by each Director and is
filed with the minutes of proceedings of the Directors.
7.2.13. No Director shall receive a salary from the
Partnership solely on account of his service as a Director, but this shall not
preclude the Partnership from reimbursing Directors for expenses reasonably
incurred in connection with their service or from paying Directors for other
services rendered to the Partnership.
7.3. Major Decisions. While the University's Percentage
Interest is twenty percent (20%) or greater or if less than twenty percent
(20%), until the Capital Plan has been fully implemented (with respect to
Section 7.3(h) only), the approval of a majority of the Directors appointed by
the University and a majority of the Directors appointed by UHS shall be
required for the following actions:
(a) Material amendments to this Agreement;
(b) Sale or transfer of more than ten percent (10%)
of the assets of the Partnership;
(c) Addition of Partners to the Partnership or sale
of any Partnership Interest, provided that approval shall not be unreasonably
withheld;
(d) Incurrence of debt by the Partnership which
results in debt as a percentage of total capitalization in excess of fifty
percent (50%);
(e) Annual capital expenditures (not including those
incurred as part of the Project Fund) in excess of fifteen percent (15%) of the
net book value of the Partnership's total assets, with any unused portion to be
carried over to future years;
(f) Distributions to the Partners by the Partnership
except in accordance with this Agreement;
(g) Agreements between the Partnership and either the
University or UHS or any affiliate of either party, unless such agreements are
on terms and conditions at least as favorable as available from third parties;
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(h) Approval of the Project Fund and plans for the
support and development of the Centers of Emphasis, and material modifications
thereto; and
(i) Acceptance of a business opportunity pursuant to
Section 12.2.
7.4. Advisory Powers. In addition to the powers expressly set
forth in this Agreement, the Partnership Board shall advise the Partnership on
other matters affecting the Partnership. The Partnership Board shall receive
advice from the Hospital Board of Trustees regarding Hospital matters.
8. Hospital Board of Trustees. The Partnership shall establish a board
of twelve (12) trustees (the "Board of Trustees"). At least seven (7) of the
trustees will be residents of the Hospital service area so as to provide local
guidance to the policy and direction of the Hospital. The University and UHS
shall each appoint six (6) Trustees, provided that no more than four (4)
trustees shall be employed by or affiliated with the University and no more than
four (4) trustees shall be employed by or affiliated with UHS. No less than four
(4) trustees shall be members of the community who are not employed by or
affiliated with UHS or the University. The responsibilities of the Board of
Trustees shall be (a) establishing and maintaining accreditation and meeting
accreditating agency requirements relating to medical staff credentialing,
quality assurance, and oversight of Hospital responsibilities, (b) amending the
Hospitals medical staff bylaws, rules and regulations, (c) promoting community
involvement and community service and (d) advising the Partnership Board
regarding Hospital matters. The Bylaws of the Board of Trustees are attached
hereto as Exhibit 8.
9. Chief Executive Officer. The General Partner shall consult with the
University with respect to the selection of the Chief Executive Officer of the
Hospital. The Chief Executive Officer shall be appointed by, and shall serve at
the pleasure of, The Partnership Board. The Chief Executive Officer shall be
responsible for managing, supervising and administering the day-to-day
operations of the Partnership.
10. Reserve Powers. Notwithstanding anything in this Agreement or any
Ancillary Agreement to the contrary, and regardless of the Partnership Interest,
if any, held by the University, the following actions of the Partnership shall
require the approval of the University, which actions shall not affect the
University's status as a Limited Partner or provide the University with any
power to bind the Partnership:
10.1. Any material discontinuance, addition, or transfer
outside of the Washington Circle area of the District of Columbia of any
significant medical services provided at the Hospital as of the Transfer Date;
provided that the University's approval shall not be unreasonably withheld. For
purposes of this Section 10.1, the University's reasonable determination shall
take into account such factors as:
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(a) Whether the discontinuance, addition, or transfer of
services will materially adversely affect academic programs;
(b) Whether the continuation of a service would impose a
significant financial burden on the Partnership;
(c) Whether the services to be discontinued or transferred are
available in the community, subject to considerations of cost, quality, and
reasonable access by patients and physicians; and
(d) Whether the discontinuance, addition, or transfer of
services is in the financial and strategic interest of the Partnership;
10.2. Any material discontinuance, addition, or transfer
outside of the Washington Circle area of the District of Columbia of (a) any
programs of undergraduate and graduate medical education sponsored or offered by
The Xxxxxx Xxxxxxxxxx University at the Hospital as of the Transfer Date; (b)
clinical programs conducted by the Medical Faculty Associates at the Hospital as
of the Transfer Date; (c) Clinical Support Positions, as defined in the Academic
Affiliation Agreement; and (d) Centers of Emphasis;
10.3. Selection of Clinical Chiefs as provided in the Academic
Affiliation Agreement; and
10.4. Discontinuance of operation of an acute care hospital in
the Washington Circle area of the District of Columbia.
11. Confidential and Proprietary Information.
11.1. Confidential Information. Each Partner recognizes that
due to the nature of this Agreement, it will have access to information of a
proprietary nature owned by the Partnership, another Partner, and/or affiliates
of another Partner including but not limited to documents and programs (whether
or not completed or in use), operating manuals or similar materials that
constitute nonmedical systems, policies and procedures, and methods of doing
business, administrative, advertising or marketing techniques, financial
affairs, and other proprietary information (collectively, the "Confidential
Information"). Consequently, each Partner acknowledges and agrees that the
Partnership, the other Partner(s) and the affiliates of the other Partner(s)
respectively, have a proprietary interest in such Confidential Information and
that all such information constitutes confidential and proprietary information
and/or trade secret property of the respective party or parties. Each Partner
hereby expressly and knowingly waives any and all right, title and interest in
and to other parties' Confidential Information and agrees to return all copies
of Confidential Information to the provider(s) of such information at the
Partner's expense upon the expiration or earlier termination of this Agreement;
provided, however, that any Confidential Information developed and owned by
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the Partnership shall continue to be available for use by the Partners and their
affiliates following the expiration or termination of this Agreement.
Notwithstanding the foregoing, any Confidential Information used by the Partners
after the expiration or termination of this Agreement shall remain confidential
and proprietary and shall not be shown or disclosed to Persons other than the
Partner's affiliates without the prior written consent of the party or parties
furnishing the Confidential Information or except: (1) as required in
governmental filings or judicial, administrative or arbitration proceedings, or
(2) as otherwise required by law (including but not limited to in response to a
subpoena from a court or authorized governmental agency) (hereinafter the
"Confidentiality Exception"). All provider cost and rate information and other
comparable data deemed by a party to be proprietary shall only be furnished to
the other party or parties and their representatives (or, if deemed by counsel
to be appropriate in connection with compliance with applicable antitrust or
similar laws, to a neutral party), who shall not release it to any other Person
without a consent of the party or parties owning such data or unless a
Confidentiality Exception applies.
Each Partner further acknowledges and agrees that the Partnership,
other Partner(s), and other Partner(s)' affiliates, respectively, are entitled
to prevent their respective competitors from obtaining and utilizing the
Confidential Information. Therefore, each Partner agrees to hold the
Confidential Information in strictest confidence and to not disclose such
information or allow such information to be disclosed, directly or indirectly,
during and after the Term of this Agreement to any Person or entity other than
those Persons or entities who are legal and financial advisors or employees of
or are otherwise affiliated with the Partnership, a Partner or an affiliate of a
Partner, or the Partnership's affiliates (collectively, the "Partnership
Representatives") on a need to know basis, without the prior written consent of
the party or parties furnishing Confidential Information unless a
Confidentiality Exception applies. Further, each Partner shall require its
Partnership Representatives that receive the Confidential Information to abide
by the terms of this Section 11.1. Neither the Partnership, a Partner nor any of
the Partnership Representatives shall use Confidential Information other than in
connection with the business of the Partnership or a Partner's performance of
its obligations under this Agreement until expiration or earlier termination of
this Agreement. In addition, after the expiration or earlier termination of this
Agreement, no Partner shall disclose to anyone any Confidential Information
obtained by the Partner from the Partnership, a Partner or an affiliate of a
Partner, other than upon the prior written consent of the party or parties
providing the Confidential Information unless a Confidentiality Exception
applies.
11.2. The restrictions set forth in Section 11.1 above shall
not apply to any information which becomes publicly known through no fault of
the Partners and their affiliates which received or was given access to such
information by the other party or parties.
12. Rights and Duties of the Partners.
12.1. Indemnification.
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12.1.1. Actions by Third Persons. To the extent and
in the manner permitted by the laws of the District of Columbia, the Partnership
shall indemnify, defend and hold harmless any Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
other than an action by, or in the right of the Partnership, by reason of the
fact that such Person is or was a Director, trustee, officer, employee or agent
of the Partnership, or is or was a Partner (including the General Partner in its
role as Tax Matters Partner), or an officer, director, trustee, employee or
agent of such Partner, or is or was serving at the request of the Partnership as
a director, officer, employee or agent of another limited liability company,
corporation, partnership, joint venture, trust or other enterprise against
expenses (including but not limited to attorneys' fees, judgments, fines and
amounts paid in settlement) actually and reasonably incurred by such Person in
connection with such action, suit or proceeding (i) if such Person acted in good
faith and in a manner such Person reasonably believed to be in, or not opposed
to, the best interests of the Partnership, (ii) if the acts or omissions forming
the basis for such allegation were appropriately authorized by the Partnership,
and (iii) if, with respect to any criminal action or proceeding, such Person had
no reasonable cause to believe the conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contenders or its equivalent, shall not, of itself, create a
presumption that the Person did not act in good faith and in a manner which such
Person reasonably believed to be in or not opposed to, the best interests of the
Partnership and, with respect to any criminal action or proceeding, had
reasonable cause to believe that conduct was unlawful. Indemnification shall not
be permitted if a Partner has been adjudged liable for personal benefits
improperly received, willful misconduct, recklessness, or gross negligence with
respect to the business of the Partnership.
12.1.2. Determination. Any indemnification under the
provisions of Section 12.1.1 of this Agreement, unless ordered by a court, shall
be made available to the Director, trustee, Partnership only as authorized in
the specific case following a specific determination that indemnification of the
Director, trustee, Partner, officer, employee or agent is proper under the
circumstances because such Person has met the applicable standard of conduct set
forth in Section 12.1.1 of this Agreement. Such determination shall be made:
(a) by the Partners by the vote of a
majority in Percentage Interest consisting of Partners who were not parties to
such action, suit or proceeding; or
(b) if the disinterested Partners so
direct, by independent legal counsel in a written opinion.
12.1.3. Expense Advances. Expenses incurred by an
officer of the Partnership or Parties in defending a civil or criminal action,
suit or proceeding may be paid by the Partnership in advance of the final
disposition of such action, suit or proceeding, determined on a case-by-case
basis, if the action, suit or proceeding arises from the performance by such
officer or Partner of Partnership duties; and upon receipt of an
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undertaking by or on behalf of such officer or Partner to repay such amount if
it shall ultimately be determined that such officer or Partner is not entitled
to be indemnified by the Partnership as authorized by the provisions of this
Section 12. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the Partners deem appropriate.
12.1.4. Insurance. The Partnership may, to the full
extent permitted by the laws of the District of Columbia, but only to such
extent as may be determined by the Partners, purchase and maintain insurance on
behalf of any Person who is or was a Director, trustee, officer, employee or
agent of the Partnership, or is or was a Partner or an officer, director,
employee or agent of such Partner, or is or was serving at the request of the
Partnership as a partner, officer, employee or agent of another limited
liability company, corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against and incurred by such Person in
any such capacity or arising out of such Person's status as such, whether or not
the Partnership would have the power to indemnify such Person against such
liability under the provisions of this Section 12.
12.1.5. Continuation of Indemnification. The
indemnification and advancement of expenses provided by or granted pursuant to
this Section 12 shall continue as to a Person who has ceased to be a Director,
trustee, Partner, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such a Person.
12.2. Partnership Business Opportunities.
12.2.1. New Business Opportunities. The Partnership
shall have the first right to acquire, manage or operate any opportunity of a
Partner to engage in any healthcare or related activity within the Partnership's
Service Area which is not conducted by a Partner immediately after the Transfer
Date. Accordingly, if a Partner is presented such an opportunity, such Partner
shall offer the Partnership the first right to acquire, manage or operate such
activity. An offer under this Section 12.2.1 shall be based on a summary term
sheet prepared in good faith by the presenting Partner, or by the General
Partner if the opportunity was first made available to the Partnership. Such
term sheet shall describe the nature of the opportunity, its relationship to the
activities of the Partnership, and any other material terms and conditions of
the opportunity relevant to its consideration by the Partnership. The Partners
intend that a business opportunity of the Partnership may be pursued in whatever
manner best accomplishes the purposes of the Partnership including, but not
limited to, having ownership of assets used in the business in the name of one
or more Partners. The Partnership shall determine whether to act on the business
opportunity in accordance with Section 7.3(i). If the Partnership does not state
in writing to the proposing Partner that it is willing to acquire, manage or
operate the business opportunity within thirty (30) days after the Partnership's
receipt of the offer, or if the Partnership does not proceed with all due
diligence to consummate the transaction, either Partner may negotiate for and
acquire, manage or operate such business opportunity.
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12.2.2. Remedies. In the event of an actual or
threatened breach by the Partnership or a Partner of this Section 12.2 the
nonbreaching Partner or its affected affiliate shall be entitled to an
injunction restraining the breaching party from the prohibited conduct.
Notwithstanding any other provision of this Agreement, if a court of competent
jurisdiction should hold that the scope (geographic or otherwise) of the
foregoing covenants is unreasonable, then, to the extent permitted by law, the
court may prescribe a scope (geographic or otherwise) that is reasonable and
judicially enforceable. Nothing herein stated shall be construed as prohibiting
a nonbreaching Partner or any affiliate thereof from pursuing any other remedies
available to it for such breach or threatened breach, including, the recovery of
damages from any breaching party.
12.3. Covenant Not to Compete. As of the Transfer Date, the
Partners and their affiliates shall not, without the prior written consent of
the Partnership, own or operate, directly or indirectly, any healthcare related
business which may be competitive with the activities of the Partnership within
the Partnership's Service Area; provided, however, that this Section 12.3 shall
not apply to (i) the operations of the Partners and their respective affiliates
in place as of the Effective Date of this Agreement that are listed on Exhibit
12.3 hereto or (ii) the particular opportunities presented to the Partnership
under Section 12.2.1, which the Partnership has chosen not to pursue. To the
extent that any portion of the provisions of this Section 12.3 shall be deemed
by a court of competent jurisdiction to exceed the time or geographic limits or
any other limitations permitted by applicable law, then this Section 12.3 shall
be deemed reformed to the maximum extent permitted by applicable law.
12.4. Partnership Assets. The credit and assets of the
Partnership shall be used solely for the benefit of the Partnership and shall
not otherwise be used to further the personal gain of any of the Partners. Title
to and ownership of all of the assets of the Partnership shall at all times be
vested in and stand in the name of the Partnership. The General Partner shall
execute, file and record such documents which may become necessary to reflect
the Partnership's ownership of such property in such public offices as may be
required.
12.5 MFA Activities. The provisions of Sections 12.2 and 12.3
shall not apply to activities of the Medical Faculty Associates relating to the
type of health care services provided by the members of the Medical Faculty
Associates in their respective offices as of the Effective Date.
13. Transfer of Partnership Interests.
13.1. Restrictions on Transfer.
13.1.1. Restrictions on Transfers by UHS and the
University. Neither UHS nor the University may Transfer their respective
Interests in the Partnership unless the Partner desiring to Transfer its
Interest under this Section 13.1 obtains the prior written approval of the
nontransferring Partner, which approval shall not be unreasonably withheld.
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13.1.2. Limitations on Rights of Assignees. Transfers
of interests in the Partnership under this Section 13.1 shall be, and any
Person(s) acquiring a Transferred Interest (an "Assignee") shall acquire such
Transferred Interest in the Partnership, subject to all of the terms and
conditions of this Agreement. A Transfer of an Interest in the Partnership shall
not relieve the transferring Partner of its duties and obligations to the
Partnership unless the General Partner agrees in writing to release the
transferring Partner. An Assignee shall not be admitted as a Partner (a
"Substitute Partner") unless all the requirements of Section 13.3 of this
Agreement are satisfied. Absent admission as a Substitute Partner, Assignees
shall be permitted to receive only the share of the Partnership's income, gain,
deductions, credits and losses to which the transferring Partner was previously
entitled.
13.2. New Partners. New Partners may be admitted to the
Partnership upon satisfaction of the requirements of Sections 3.2 and 13.3 of
this Agreement and subject to the provisions of Section 7.3. As new Partners are
admitted, any adjustment in the Percentage Interests of existing Partners shall
be made as mutually agreed.
13.3. Substitution of Assignees and Admission of New Partners.
Subject to Section 13.1 hereof relating to Transfers of Interests and Section
13.2 hereof relating to the admission of new Partners, an Assignee may become a
Substitute Partner with all the rights and liabilities of any Partner under this
Agreement, and new Partners may be admitted to Partnership, if and only if (i)
the Assignee or new Partner executes and agrees to be bound by this Agreement in
the place of the transferring Partner or as a new Partner, as applicable; (ii)
in the event such Assignee is a corporation, partnership (general or limited),
trust or limited liability company, such Assignee or new Partner provides the
General Partner with evidence satisfactory to counsel for the Partnership of
such Assignee's or new Partner's authority to become a Partner under the terms
and conditions of this Agreement; (iii) the assignment or admission instruments,
documents or statements, if any, are prepared, executed, acknowledged, filed,
published and delivered as required by the Act or otherwise; (iv) the Assignee
or new Partner pays or obligates itself to pay any and all reasonable costs and
expenses, including attorneys' fees, incurred by the Partnership in connection
with such substitution or admission; and (v) the Partners and the Partnership
Board approve the admission of the new Partner, or the Assignee as a Substitute
Partner, under Section 7.3(c) of this Agreement, which approval shall not be
unreasonably withheld. The admission of such Assignee or new Partner shall not
cause a dissolution of the Partnership. In addition, this Agreement and Exhibit
1.34 hereto shall be amended to reflect the admission of new Partners and
reflect the reallocation of the existing Partners' respective Percentage
Interests in the Partnership without the necessity of any existing Partner's
signature.
13.4. Effective Date of Assignment or Admission. For the
purpose of allocating Partnership income, gains, deductions, credits and losses,
an Assignee or new Partner shall be treated as a Partner on such date as consent
of the nontransferring Partners to such Transfer as is required under this
Section 13 is obtained.
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14. Dissolution, Liquidation and Termination of the Partnership.
14.1. Limitations. The Partnership may be dissolved,
liquidated and terminated only pursuant to the provisions of this Section 14.
The Partners hereby irrevocably waive any and all other rights they may have to
cause a dissolution of the Partnership or a sale or partition of any or all of
its assets.
14.2. Exclusive Causes. The following events, and only the
following events, shall cause the Partnership to be dissolved, liquidated and
terminated pursuant to the provisions of this Section 14.2:
14.2.1. Expiration. The expiration of the Term of the
Partnership.
14.2.2. Consent. The consent of all Partners to
dissolve the Partnership.
14.2.3. Unlawful Event. The occurrence of any event
which makes it unlawful for the business of the Partnership to be carried on,
whether by the Partners or the Partnership.
14.2.4. Sale of All or Substantially All of
Partnership Assets. The sale of all or substantially all of the assets of the
Partnership and the receipt of all cash proceeds from such sale.
14.2.5. Failure to Execute and Close. The failure of
any of the parties to this Agreement to execute any of the Ancillary Agreements
or to close the transactions contemplated by Section 3 of this Agreement by
December 31, 1997 or by such later date mutually agreed to by the parties.
14.2.6. Expiration or Termination of Ground Lease.
The termination of the Ground Lease between the University and the Partnership
due to expiration or a breach by the University, unless otherwise approved by
the Partners.
14.2.7. Bankruptcy of a Partner. The Bankruptcy of
any Partner unless the Partnership is continued by the consent of the other
Partner(s).
14.2.8. Bankruptcy of the Partnership. The Bankruptcy
of the Partnership.
14.2.9. Judicial Dissolution. A decree of dissolution
rendered by a court of competent jurisdiction pursuant to District of Columbia
Code Section 41-482.
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14.2.10. Breach by a Partner. A material breach of
this Agreement by any Partner; provided, however, that the Partner alleged to
have breached this Agreement shall have twenty (20) business days to cure such
alleged breach to the satisfaction of a majority in Percentage Interest of the
nonbreaching Partners.
14.3. Liquidating Trustee; Continuation of Business. Upon the
dissolution of the Partnership, the General Partner shall act as the
"Liquidating Trustee" of the Partnership. During the period of the dissolution,
liquidation and termination of the Partnership pursuant to the provisions of
this Section 14, the business of the Partnership may be continued by the
Liquidating Trustee to the extent necessary to allow an orderly winding up of
the Partnership's affairs, including without limitation, the liquidation of the
Partnership pursuant to the provisions of Section 14.4 below.
14.4. Liquidation of Partnership. Upon the dissolution of the
Partnership pursuant to the provisions of Section 14.2 and within a reasonable
time thereafter, the . Liquidating Trustee shall wind up the Partnership's
business and affairs in the following manner.
14.4.1. The Liquidating Trustee shall obtain and
furnish an accounting with respect to all Partnership accounts and the Capital
Accounts of each Partner and with respect to the Partnership's assets and
liabilities and its operations from the date of the last financial statements of
the Partnership to the date of its liquidation.
14.4.2. To the extent the Liquidating Trustee deems
appropriate, all material, equipment, and real and personal property of the
Partnership of any kind or nature may be sold.
14.4.3. The Liquidating Trustee shall pay the
expenses of liquidation and the debts of the Partnership from the Partnership's
assets, including debts owing to the Partners in the order of priority provided
by law, except the claims of secured creditors whose obligations will be assumed
or otherwise transferred upon the liquidation or Distribution of the
Partnership's assets.
14.4.4. The Liquidating Trustee shall ascertain the
fair market value by appraisal or other reasonable means of all assets of the
Partnership not sold and intended to be distributed to the Partners in
connection with the liquidation, and each Partner's Capital Account shall be
charged or credited, as the case may be, as if such properly had been sold at
such fair market value and the gain or loss realized thereby had been allocated
to and among the Partners.
14.4.5. Remaining proceeds shall be paid to the
Partners who have net positive balances in their Capital Accounts, as determined
after taking into account all Capital
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Account adjustments for the Partnership's Fiscal Year, until all such balances
have been reduced to zero or, in the event proceeds are insufficient, pro rata
on account thereof.
14.4.6. In the event any proceeds remain after
Distributions pursuant to Sections 14.4.1 through 14.4.5 above, such proceeds
shall be distributed to the Partners according to their respective Percentage
Interests.
15. Miscellaneous.
15.1. Notices. Any and all notices or demands in connection
with this Agreement shall be in writing and served either personally, by
certified mail, return receipt requested, or by Federal Express or other
reputable overnight courier, at the respective addresses set forth opposite the
signatures of the Partners, or to such other addresses as any of them shall from
time to time designate. If served personally, service shall be conclusively
deemed made at the time of such service. If served by certified mail, service
shall be conclusively deemed made on the fourth business day after the deposit
thereof in the United States mail, postage prepaid, addressed pursuant to the
provisions of this Section 15.1. If served by Federal Express or other overnight
reputable courier, service shall be conclusively deemed made on the day after
transmittal thereof.
15.2. Hospital Name. Pursuant to the Trademark License
Agreement between the University and the Partnership, the Partnership shall
continue to use the name "The Xxxxxx Xxxxxxxxxx University Hospital" in
connection with the Hospital so long as it continues to operate the Hospital in
the Washington Circle area of the District of Columbia unless such name is
required to be changed to comply with applicable law. The University agrees that
it shall not license the name "The Xxxxxx Xxxxxxxxxx University Hospital" to, or
use the name in connection with, any entity, facility, or service without the
consent of the Partnership.
15.3. Attorneys' Fees. Should any party retain counsel to
enforce any of the provisions herein or protect its interest in any matter
arising under this Agreement, or to recover damages by reason of any alleged
breach of any provision of this Agreement, the losing party in any action
pursued in a court of competent jurisdiction (the formality of which is not
legally contested) shall pay to the prevailing party all costs, damages, and
expenses incurred by the prevailing party, including, without limitation,
attorneys' fees and costs incurred in connection therewith.
15.4. Interpretation. No provision of this Agreement is to be
interpreted for or against any party because that party or that party's legal
representative drafted such provision.
15.5. Waiver. No breach of any provision of this Agreement may
be, waived except in writing. Waiver of any one breach of any provision of this
Agreement shall not be
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deemed to be a waiver of any other breach of the same or any other provision of
this Agreement.
15.6. Severability. In the event that any covenant, condition
or other provision contained in this Agreement is held to be invalid, void or
illegal by any court of competent jurisdiction, the same shall be deemed
severable from the remainder of this Agreement and shall in no way affect,
impair or invalidate any other covenant, condition or other provision contained
in this Agreement so long as severance of the invalid provision does not
materially alter the rights and obligations of the parties. If such condition,
covenant or other provision shall be deemed invalid due to its scope or breadth,
such covenant, condition or other provision shall be deemed valid to the extent
of the scope or breadth permitted by law.
15.7. Additional Documents. In addition to the documents and
instruments to be delivered as provided in this Agreement, each of the parties
shall, from time to time at the request of the other parties, execute and
deliver to the other parties or the Partnership such other documents and shall
take such other action as may be reasonably required to carry out more
effectively the terms of this Agreement.
15.8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the District of Columbia.
15.9. Headings. Paragraph titles or captions contained in this
Agreement are inserted as a matter of convenience and for reference purposes
only, and in no way define, limit, interpret, extend or describe the scope of
this Agreement or any provision of this Agreement.
15.10. Survival of Obligations. All indemnities, and
continuing agreements and covenants contained or referred to in this Agreement
shall survive the execution and delivery of this Agreement, and it shall not be
a condition precedent to any indemnity set forth herein that the indemnified
party shall have made any payment on account of any claim, loss, damage,
obligation, liability, deficiency, penalty, cost or expense indemnified against
herein.
15.11. Amendment. The Partners acknowledge that the exhibits
to this Agreement will be finalized subsequent to the execution of this
Agreement. Subject to the provisions of Section 7.3, this Agreement may be
amended by the Partnership Board.
15.12. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
representatives, successors and permitted assigns.
15.13. Third Party Beneficiaries. Nothing in this Agreement
shall be for the benefit of anyone not a party to this Agreement.
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15.14. Incorporation. All exhibits attached to this Agreement
are incorporated herein by this reference.
15.15. Execution in Counterparts. This Agreement may be
executed in two (2) or more counterparts, each of which shall be an original
instrument, but all of which shall constitute one and the same agreement.
15.16. Entire Agreement. This Agreement, including any
exhibits, supersedes all previous written or oral agreements between the parties
hereto with respect to the subject matter hereof. Furthermore, upon the
attachment of the last exhibit to be attached to this Agreement, the Letter of
Intent, dated March 25, 1997, between the University and Universal Health
Services, Inc., shall be terminated and the parties thereto shall have no
further rights or obligations thereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
UHS of D.C., INC
000 Xxxxx Xxxxx Xxxx By: ________________________
X.X. Xxx 00000 Xxxxxxx X. Xxxxxx
King of Prussia, PA 19046-0958 Its: ________________________
Vice President
THE XXXXXX XXXXXXXXXX UNIVERSITY
0000 X Xxxxxx, X.X. By: ________________________
Xxxxx 000, Xxxx Xxxx Xxxxx X. Xxxx
Xxxxxxxxxx, XX 00000 Its: Vice President and Treasurer
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EXHIBIT 1.35
PERCENTAGE INTERESTS OF THE PARTNERS
GENERAL PARTNER
---------------
Name Interest
---- --------
UHS 1%
LIMITED PARTNERS
----------------
Name Interest
---- --------
UHS 79%
The University 20%
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EXHIBIT 7.2.3
-------------
INITIAL BOARD OF DIRECTORS
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