As filed with the Securities and Exchange Commission on May 1, 1996
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WestMed Venture Partners, L.P.
(Name of Registrant as Specified In Its Charter)
Daniel A. Etna, Esq.
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
WestMed Venture Partners, L.P.
May __, 1996
Dear Limited Partner:
We are pleased to send you the accompanying proxy statement relating
to a Special Meeting of Limited Partners of WestMed Venture Partners, L.P.
(the "Partnership") to be held on June __, 1996. The two matters to be
considered at the Special Meeting are described below and in greater detail
in the proxy statement.
The more significant matter, in the Partnership's view, is the
proposal to allow WestMed Venture Management, L.P. (the "Managing General
Partner"), the managing general partner of the Partnership and an affiliate
of Oppenheimer & Co., Inc. ("Opco"), to retain the services of a sub-
manager to assist the Managing General Partner in the performance of its
duties to the Partnership. When the Managing General Partner first took
over the management of the Partnership in June 1990, it maintained a full-
time staff of three portfolio managers, one investment analyst and utilized
Opco's research and administrative personnel. Since then, the Partnership
has progressed from an active investment phase to a time when relatively
limited funds remain available for venture capital investments. As the
Partnership has evolved, the demands placed upon the Managing General
Partner have changed as well. In response, the Managing General Partner,
over time, has been able to reduce the management resources dedicated to
the Partnership. Presently, the Managing General Partner maintains a full-
time staff of two portfolio managers, namely Philippe L. Sommer and Howard
S. Wachtler.
The Partnership anticipates that it will soon enter the distribution
phase when mature venture capital investments will be liquidated and the
net proceeds distributed to the partners. In response, the Managing
General Partner has recently determined that the efficient performance of
its management responsibilities to the Partnership no longer requires the
continued employment of Mr. Sommer and Mr. Wachtler on a full-time basis.
Under the sub-manager proposal, Mr. Sommer and Mr. Wachtler would end their
employment with the Managing General Partner on June 30, 1996. The
Managing General Partner would thereafter fulfill its management
responsibilities by (i) utilizing the services of Alsacia Venture
Management Inc., a corporation controlled by
<PAGE>
Mr. Sommer, pursuant to a sub-management agreement to provide services to
the Managing General Partner regarding the Partnership's venture capital
investments; (ii) utilizing the services, on a part-time basis, of
personnel employed by Opco or its affiliates; and (iii) retaining Mr.
Wachtler as a consultant on an as-needed basis.
The General Partners have unanimously approved the sub-manager
proposal as being in the best interest of the Partnership and the Limited
Partners. The General Partners believe that the sub-manager proposal will
provide continuity in management with no increase in any rate of fees
charged to the Partnership for management, investment advisory and
administrative services.
The second matter to be considered at the Special Meeting is a
proposed amendment to the Partnership Agreement to reduce the minimum
number of Individual General Partners from three to two. The General
Partners are proposing this amendment as a result of Alan F. Taylor's
intention to resign as an Individual General Partner effective upon
conclusion of the Special Meeting. Dr. Taylor's intention to resign is a
result of his decision to completely retire from business activities for
health-related reasons. Given the Partnership's long operational history
and the high degree of portfolio investments, the General Partners decided
not to seek a replacement to fill the vacancy to be created by Dr. Taylor's
resignation. The General Partners have unanimously approved the proposed
amendment to the Partnership Agreement as being in the best interest of the
Partnership and the Limited Partners.
It is important to the Partnership that you consider these proposals,
read the proxy statement and return the proxy card.
Thank you for your continued interest.
WestMed Venture Partners, L.P.
<PAGE>
PRELIMINARY PROXY STATEMENT
AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
WestMed Venture Partners, L.P.
____________
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
JUNE __, 1996
____________
To the Limited Partners of
WestMed Venture Partners, L.P.
Notice is hereby given that a Special Meeting of Limited Partners
(the "Meeting") of WestMed Venture Partners, L.P. (the "Partnership") will
be held at the offices of Oppenheimer & Co., Inc., on the ____ floor of
Oppenheimer Tower, World Financial Center, New York, New York on _______,
June __, 1996 at 10:00 A.M. for the following purposes:
(1) To approve or disapprove a proposal whereby WestMed Venture
Management, L.P. (the "Managing General Partner") would
retain Alsacia Venture Management Inc., as a sub-manager, to
provide services to the Managing General Partner regarding
the Partnership's venture capital investments;
(2) To approve or disapprove a proposal whereby paragraph 3.1.2
of the Partnership Agreement would be amended to reduce the
minimum number of Individual General Partners from three to
two; and
(3) To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The attached Proxy Statement describes each of the above
proposals in detail. The General Partners unanimously recommend that
Limited Partners vote to approve the foregoing proposals.
The General Partners of the Partnership have fixed the close of
business on ________, 1996 as the record date for the determination of
Limited Partners entitled to notice of and to vote at the Meeting or any
adjournment thereof.
A complete list of the Limited Partners entitled to vote at the
Meeting will be available and open to the examination of any Limited
Partner for any purpose germane to the Meeting during
<PAGE>
ordinary business hours from and after ________, 1996, at the office of the
Partnership located on the __ floor of Oppenheimer Tower, World Financial
Center, New York, New York.
You are cordially invited to attend the Meeting. Limited
Partners who do not expect to attend the Meeting in person are requested to
complete, date and sign the enclosed form of proxy and return it promptly
in the envelope provided for that purpose. The enclosed proxy is being
solicited by the General Partners on behalf of the Partnership.
By Order of the General Partners
Thomas E. White
A General Partner
New York, New York
Dated: May __, 1996
IMPORTANT
THE GENERAL PARTNERS URGE YOU TO MARK, SIGN AND RETURN THE ENCLOSED PROXY
AS SOON AS POSSIBLE IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON.
THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS PROVIDED FOR
YOUR CONVENIENCE.
<PAGE>
PRELIMINARY PROXY STATEMENT
AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
PROXY STATEMENT
WestMed Venture Partners, L.P.
Oppenheimer Tower
World Financial Center
New York, New York 10281
____________
Special Meeting of Limited Partners
June __, 1996
___________
This Proxy Statement is furnished to the limited partners (the
"Limited Partners") of WestMed Venture Partners, L.P., a Delaware limited
partnership (the "Partnership"), in connection with the solicitation of
proxies by the general partners (the "General Partners") of the Partnership
to be voted at the Special Meeting of Limited Partners (the "Meeting"), to
be held at the offices of Oppenheimer & Co., Inc. ("Opco") on the ____
floor of the Oppenheimer Tower, World Financial Center, New York, New York
on June __, 1996 at 10:00 A.M., and at any adjournments thereof. The
approximate mailing date of this Proxy Statement is May __, 1996.
All properly executed proxies received prior to the Meeting will
be voted at the Meeting in accordance with the instructions marked thereon
or otherwise as provided therein. Unless instructions to the contrary are
marked, proxies will be voted for the approval of the (i) proposal wherby
the Managing General Partner would retain the services of a sub-manager,
and (ii) proposal whereby the Partnership Agreement would be amended to
reduce the minimum number of Individual General Partners. Any proxy may be
revoked at any time prior to the exercise thereof by giving written notice
revoking the proxy to the Partnership at its principal office, by executing
a later dated proxy or by attending and voting at the Meeting.
The General Partners have fixed the close of business on
________, 1996 as the record date for the determination of Limited Partners
entitled to notice of and to vote at the Meeting and at any adjournment
thereof. Limited Partners on the record date will be entitled to one vote
for each interest held in the Partnership represented by a $500 capital
contribution to the Partnership (a "Unit"). As of May __, 1996, the
Partnership had outstanding
<PAGE>
66,929 Units. To the knowledge of management of the Partnership, no person
owned beneficially more than five percent (5%) of the outstanding Units at
such date.
The General Partners know of no business other than that
mentioned in Proposals 1 and 2 of the Notice of Meeting which will be
presented for consideration at the Meeting. If any other matter is
properly presented, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment. In the
event that the applicable quorum (the presence in person or by proxy of the
holders of a majority of the Units outstanding and entitled to vote) for
the Meeting or to act on any matter has not been obtained, the persons
named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require
the affirmative vote of the holders of a majority of the Units present in
person or by proxy at the Meeting (or any adjournment thereof). The
persons named as proxies will vote in favor of such adjournment those
proxies which they are entitled to vote in favor of Proposal 1 and will
vote against any such adjournment those proxies required to be voted
against Proposal 1.
Proposal 1 relating to the Managing General Partner's retention
of a sub-manager requires the affirmative vote of the holders of sixty-
seven percent (67%) or more of the outstanding Units present at the Meeting
if the holders of more than fifty percent (50%) of such Units are present
in person or by proxy; or more than fifty percent (50%) of the outstanding
Units, whichever is less (a "1940 Act Majority") in order to become
effective. Proposal 2 relating to the proposed amendment to the
Partnership Agreement reducing the minimum number of Individual General
Partners requires the affirmative vote of the holders of a majority of the
Units present in person or by proxy at the Meeting in order to become
effective. Abstentions and broker "non-votes" will be counted as present
for the purpose of determining a quorum and will have the same effect as a
vote against a proposal.
INTRODUCTION
Background
The Partnership, which has elected to be treated as a business
development company under the Investment Company Act of 1940, as amended
(the "1940 Act"), is currently managed by four General Partners, consisting
of three Individual General Partners and one Managing General Partner. The
three Individual General Partners are Robert A. Elliott, Alan F. Taylor,
M.B., Ch. B.,
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<PAGE>
D.C.H. and Thomas E. White. The Managing General Partner is WestMed
Venture Management, L.P., a Delaware limited partnership. The general
partner of the Managing General Partner is Medical Venture Holdings, Inc.
("MVH"), a Delaware corporation affiliated with Opco. The limited partners
of the Managing General Partner are Oppenheimer Holdings, Inc., a Delaware
corporation and the parent of Opco, MVP Holdings, Inc., a Delaware
corporation unaffiliated with Opco, and BSW, Inc., a Delaware corporation
in which each of Philippe L. Sommer and Howard S. Wachtler own one-third of
the outstanding equity. Messrs. Sommer and Wachtler, in their capacity as
officers of MVH, are principally responsible for managing the venture
capital investments of the Partnership.
As at December 31, 1995, the Partnership had: (i) made venture
capital investments aggregating approximately $28.4 million, or
approximately 95% of the original net proceeds of approximately $30
million; (ii) approximately $2.3 million available for new and follow-on
investments; and (iii) net assets of approximately $15.8 million. The
Partnership will terminate on December 31, 1997, subject to the right of
the General Partners to extend the term for up to two additional two-year
periods if they determine that such extensions are in the best interest of
the Partnership.
The Individual General Partners
The Individual General Partners have full authority over the
management of the Partnership and provide overall guidance and supervision
with respect to the operations of the Partnership and perform the various
duties imposed on the general partners of business development companies by
the 1940 Act. In addition to general fiduciary duties, the Individual
General Partners, among other things, supervise the management arrangements
of the Partnership, the custody arrangement with respect to portfolio
securities, the selection of accountants, fidelity bonding and the
activities of the Managing General Partner. As required by the 1940 Act, a
majority of the General Partners must be individuals who are not
"interested persons" of the Partnership as defined in the 1940 Act. In
1987, the Securities and Exchange Commission (the "Commission") issued an
order declaring that each of the Individual General Partners is not an
"interested person" of the Partnership as defined in the 1940 Act solely by
reason of his being a general partner of the Partnership.
The Managing General Partner
The Managing General Partner, subject to the supervision of the
Individual General Partners, has exclusive power and
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<PAGE>
authority to manage and control the Partnership's venture capital
investments. Subject to the supervision of the Individual General
Partners, the Managing General Partner is authorized to make all decisions
regarding the Partnership's venture capital investment portfolio,
including, among other things, authority to find, evaluate, structure,
monitor and liquidate such investments and to provide, or arrange for the
provision of, managerial assistance to the portfolio companies in which the
Partnership invests.
Meeting Agenda Summary
The principal item of business to be considered at the Meeting is
the proposal (the "Sub-Manager Proposal") whereby the Managing General
Partner would retain a sub-manager to provide services to the Managing
General Partner regarding the Partnership's venture capital investments.
As discussed below under "Proposal 1 -- Background", the Partnership
anticipates that it will soon enter the distribution phase when mature
venture capital investments will be liquidated and the net proceeds
distributed to the partners. In response thereto, the Managing General
Partner has recently determined that the efficient performance of its
management responsibilities owing to the Partnership no longer requires the
continued full-time employment of the two individuals (i.e., Messrs. Sommer
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and Wachtler) principally responsible for managing the venture capital
investments of the Partnership. Under the Sub-Manager Proposal, Messrs.
Sommer and Wachtler would end their employment with MVH, the general
partner of the Managing General Partner, on June 30, 1996. The Managing
General Partner would thereafter fulfill its aforesaid management
responsibilities by (i) utilizing the services of Alsacia Venture
Management Inc. ("Alsacia"), a corporation controlled by Mr. Sommer,
pursuant to a sub-management agreement to provide services to the Managing
General Partner regarding the Partnership's venture capital investments;
(ii) utilizing the services, on a part-time basis, of personnel employed by
Opco or its affiliates; and (iii) retaining Mr. Wachtler as a consultant on
an as-needed basis.
As discussed below under "Proposal 1 -- Basis for Recommendation
by the Individual General Partners", the Individual General Partners,
following their review of a number of alternatives to the existing
management arrangements of the Partnership, unanimously recommend that
Alsacia be retained as a sub-manager and Mr. Wachtler as a consultant. The
Individual General Partners believe that the management arrangements
contemplated by the Sub-Manager Proposal will provide the Partnership with
continuity in management with no increase in any
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<PAGE>
rate of fees charged to the Partnership for management, investment advisory
and administrative services.
The other item of business to be considered at the Meeting is the
proposal to amend the Partnership Agreement to reduce the minimum number of
Individual General Partners. As discussed below under "Proposal 2", the
amendment is being proposed as a result of Dr. Taylor's intention to resign
from his position as an Individual General Partner for health-related
reasons effective upon the conclusion of the Meeting.
PROPOSAL 1
Background
The Partnership was originally sponsored by Integrated Resources,
Inc. On June 27, 1990, the Managing General Partner acquired its managing
general partner interest in the Partnership from an affiliate of Integrated
Resources, Inc. Concurrently therewith, an Opco affiliated limited
partnership, of which MVH is the general partner, acquired the managing
general partner interest in WestMed Venture Partners 2, L.P. ("WVP 2"), a
business development company also sponsored by Integrated Resources, Inc.
Messrs. Sommer and Wachtler, and one other individual were principally
responsible for managing the venture capital investments of each of the
Partnership and WVP 2 prior to June 27, 1990.
In June 1990, when the Managing General Partner first began to
manage the Partnership, the Managing General Partner maintained a full-time
staff of three portfolio managers, one investment analyst and utilized
Opco's research and administrative personnel. Since then, the Partnership
has progressed from an active investment phase to a time when relatively
limited funds remain available for venture capital investments. See
"Introduction -- Background." As the Partnership has evolved, the demands
placed upon the Managing General Partner by the Partnership have changed as
well. In response thereto, the Managing General Partner, over time, has
been able to reduce the management resources dedicated to the Partnership.
Presently, the Managing General Partner maintains a full-time staff of two
portfolio managers, namely Messrs. Sommer and Wachtler.
The Partnership anticipates that it will soon enter the
distribution phase when mature venture capital investments will be
liquidated and the net proceeds distributed to the partners. In response
thereto, the Managing General Partner, has recently
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<PAGE>
determined that the efficient performance of its management
responsibilities owing to the Partnership no longer requires the continued
employment of Messrs. Sommer and Wachtler on a full-time basis.
The Sub-Manager Proposal
During 1995 and the first half of 1996, the Individual General
Partners, certain members of Opco's senior management, and Messrs. Sommer
and Wachtler held a series of meetings at which consideration was given to
alternative management arrangements for the Partnership. A number of
alternative arrangements were considered, including the possibility of
merging the Partnership with another venture capital fund.
Based upon these discussions, the Sub-Manager Proposal was
developed. Under the Sub-Manager Proposal, Messrs. Sommer and Wachtler
would end their employment with MVH on June 30, 1996. In connection
therewith, the Partnership and the Managing General Partner would enter
into a revised management agreement pursuant to which the Managing General
Partner would continue to provide, or arrange for the provision of,
management, administrative and investment advisory services to the
Partnership. The Managing General Partner and Alsacia would then enter
into a sub-management agreement pursuant to which Alsacia would provide
certain management services to the Managing General Partner with respect to
the Partnership's venture capital investments. In connection with its
entry into the sub-management agreement with Alsacia, the Managing General
Partner would restaff its existing venture capital investment committee
(the "Investment Committee") with two officers of MVH. Information
concerning the individual members of the Investment Committee in its
restaffed format is set forth below under "Information Concerning the
Managing General Partner."
Subject to the supervision and control of the Managing General
Partner and oversight of the Individual General Partners, Alsacia would
make recommendations regarding the Partnership's venture capital
investments and, among other things, assist the Managing General Partner in
finding, evaluating, structuring, monitoring and liquidating such
investments. Alsacia would also provide managerial assistance to the
Partnership's portfolio companies as requested by the Managing General
Partner. All recommendations made by Alsacia, including, without
limitation, those relating to portfolio company acquisitions and
dispositions, would be subject to prior approval by the Investment
Committee. The Managing General Partner would continue to have the sole
authority to make decisions concerning the Partnership's venture capital
investments. In consideration of the services to be
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<PAGE>
provided by Alsacia, the Managing General Partner would pay Alsacia a
portion of the (i) compensation which the Managing General Partner receives
under the revised management agreement and (ii) Venture Capital Fee (as
hereinafter defined) which the Managing General Partner receives under the
Partnership Agreement.
Pursuant to the Sub-Manager Proposal, the Managing General
Partner would also retain Mr. Wachtler to provide consulting services on an
as-needed basis with respect to certain portfolio companies of the
Partnership. In consideration for the services to be provided, Mr.
Wachtler would be paid a consulting fee on a per diem basis at the rate
typically paid to outside consultants for services relating to the
Partnership's portfolio companies (i.e., $1,500). The proposed consulting
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arrangement with Mr. Wachtler will not require the approval of the Limited
Partners.
The Individual General Partners requested and received from Opco
all materials and information they deemed relevant to make an informed
determination regarding the Sub-Manager Proposal. Such materials and
information related to, among other things, the alternatives to the
management arrangements contemplated by the Sub-Manager Proposal and the
nature, quality and extent of services to be provided to the Partnership by
the Managing General Partner and Alsacia. Upon the conclusion of their
deliberations, the Individual General Partners unanimously approved the
Sub-Manager Proposal. The precise terms of the arrangements with Alsacia
approved by the Individual General Partners are described below under
"Description of the Proposed Arrangements with the Managing General Partner
and Alsacia" and "Terms of Proposed Contracts with the Managing General
Partner and Alsacia."
Basis for Recommendation by the Individual General Partners
In approving the Sub-Manager Proposal, the Individual General
Partners gave primary consideration to two factors which led them to
believe that the management arrangements contemplated by the Sub-Manager
Proposal are in the best interest of the Limited Partners and the
Partnership. Set forth below is a discussion of such factors.
Continuity of Management Arrangements. The Individual General
Partners considered the fact that the management arrangements contemplated
by the Sub-Manager Proposal would help ensure that one of the principal
members of the Managing General Partner's present team of venture
capitalists will continue to provide management services with respect to
the Partnership's venture capital investments. The Individual General
Partners also considered the fact that there would be general continuity of
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<PAGE>
management in other respects under the Sub-Manager Proposal. In this
regard, the Individual General Partners would continue to have full
authority over the management of the Partnership and would perform the
various duties imposed on the general partners of business development
companies by the 1940 Act. The Managing General Partner, subject to the
supervision of the Individual General Partners, would continue to act as
the managing general partner of the Partnership and thereby have the sole
authority to make decisions concerning the Partnership's venture capital
investments. The Managing General Partner would also continue to have sole
authority for the management of the short-term investments of the
Partnership and would continue to provide, or arrange for the provision of,
certain administrative services to the Partnership. The Individual General
Partners also viewed as significant the fact that the Partnership would
continue to have access to the resources and capabilities of Opco and its
affiliates under the Sub-Manager Proposal.
Expenses Payable by the Partnership. In evaluating the Sub-
Manager Proposal, the Individual General Partners also considered the fact
that there would be no change in the rate of fees charged to the
Partnership for management, investment advisory and administrative
services, including the terms of the allocation of profits to the Managing
General Partner.
Description of the Proposed Arrangements with the Managing General Partner
and Alsacia
At their meeting on April 3, 1996, the Individual General
Partners approved a revised management agreement (the "Revised Management
Agreement") for the Partnership with the Managing General Partner, pursuant
to which the Managing General Partner would continue to provide, or arrange
for the provision of, management, administrative and investment advisory
services to the Partnership. The Revised Management Agreement, subject to
Limited Partner approval, would replace the existing management agreement
(the "Current Management Agreement") between the Partnership and the
Managing General Partner. The Current Management Agreement became
effective on June 27, 1990 and was most recently renewed by action of the
General Partners until June 27, 1996. The Revised Management Agreement
recognizes that the Managing General Partner will enter into a separate
sub-management agreement (the "Sub-Management Agreement") with Alsacia
pursuant to which Alsacia will provide certain management services to the
Managing General Partner with respect to the Partnership's venture capital
investments.
If the Revised Management Agreement and Sub-Management Agreement
are approved by the Limited Partners at the Meeting, they
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<PAGE>
will become effective on the date of approval by the Limited Partners and
will remain in effect for the following two years. A form of the Revised
Management Agreement, with a form of the Sub-Management Agreement attached
as Annex I thereto, is attached to this Proxy Statement as Exhibit A. All
---------
descriptions of the Revised Management Agreement and Sub-Management
Agreement contained herein are qualified in their entirety by reference to
the aforesaid attached forms thereof. If the Revised Management Agreement
and Sub-Management Agreement are not approved by the Limited Partners, the
Current Management Agreement will continue in effect and the Individual
General Partners will consider other alternatives, including the
continuance of the existing management arrangements or, subject to Limited
Partner approval, the dissolution of the Partnership.
Information Concerning the Managing General Partner. The
Managing General Partner is a Delaware limited partnership organized in
January 1990. The Managing General Partner maintains its principal office
at Oppenheimer Tower, World Financial Center, New York, New York 10281.
The Managing General Partner was formed for the principal purpose of
providing certain management, administrative and investment advisory
services to the Partnership under the Current Management Agreement. The
Managing General Partner has served as the managing general partner of the
Partnership since June 27, 1990 and has engaged in no other activities.
The Managing General Partner is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended.
The general partner of the Managing General Partner is MVH. The
limited partners of the Managing General Partner are Oppenheimer Holdings,
Inc., MVP Holdings, Inc. and BSW, Inc. MVP Holdings, Inc. and BSW, Inc.
were the general partners of the managing general partner of each of the
Partnership and WVP 2 from the dates of their respective organization until
June 27, 1990.
The following table sets forth information as of May __, 1996
concerning the directors and officers of MVH that are principally involved
with the operations of the Partnership. As discussed above, it is expected
that Messrs. Sommer and Wachtler will end their employment with MVH on June
30, 1996. The address of each such person is Oppenheimer Tower, World
Financial Center, New York, New York 10281
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<TABLE>
<CAPTION>
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Officer or
Director Principal Occupation During Past
Name Age Title Since Five Years or More
---- --- ----- ---------- ----------------------------------------
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<S> <C> <C> <C> <C>
Stephen M. McGrath, Sr.* 60 Vice President and Director June 1990 Mr. McGrath has been Executive Vice
President of Opco and director of its
Investment Banking Group since July
1985. He also served as President of
Oppenheimer Strategic Investments, Inc.
between May 1983 and April 1985. Mr.
McGrath was Senior Vice President of
Planning and Development at Warner-
Lambert until 1985 and has been a
director of Alliance Pharmaceutical
Corp. since June 1989. He also serves
as an executive officer and director of
certain current and/or former affiliates
of Opco.
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Philippe L. Sommer 44 Executive Vice President and June 1990 Mr. Sommer is a Managing Director of
Managing Director BSW, Inc., and a member of the Board of
Directors of BSW, Inc. and two portfolio
companies of WVP 2. He has been
involved in health-care industry
management for the past 17 years. He
was a Managing Director of MVP Holdings,
Inc. from April 1987 to June 1990. From
January 1982 to September 1986, he was a
Director of Business Development for
Pfizer Hospital Products Group ("HPG")
and as such was responsible for
directing HPG's merger and acquisition
activities for medium to larger
acquisitions, and for the financial
evaluation and valuation of all of HPG's
acquisition, venture and licensing
projects.
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Howard S. Wachtler 47 Executive Vice President and June 1990 Mr. Wachtler is a Managing Director of
Managing Director BSW, Inc., and a member of the Board of
Directors of BSW, Inc. and three
portfolio companies of the Partnership.
He has been involved in health-care
industry management for the past 23
years. From April 1988 to June 1990, he
was a general partner of WVP 2 and a
Managing Director of MVP Holdings, Inc.
from April 1987 to June 1990. From
November 1982 to October 1986, he was a
Director of Business Planning and
Development for HPG and as such was
responsible for all activities
associated with HPG's small acquisition
program, licensing and technology
program, and venture program. In
addition, Mr. Wachtler directed business
and strategic planning projects for HPG
worldwide.
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
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Officer or
Director Principal Occupation During Past
Name Age Title Since Five Years or More
---- --- ----- ---------- ----------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald A. Rothstein* 54 Vice President April 1996 Mr. Rothstein has been a Managing
Director of Opco since 1983. He is
primarily responsible for the creation
of Opco's international research
department and focuses upon the emerging
markets of Latin America and India. Mr.
Rothstein has served on Opco's
Management Committee since 1983 and is
also a member of Opco's Commitment and
Due Diligence Committees.
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* Member of the Investment Committee.
</TABLE>
MVH is also the general partner of the managing general partner
of WVP 2. WVP 2 is a Delaware limited partnership which has elected to be
treated as a business development company under the 1940 Act. As at
December 31, 1995, WVP 2 had: (i) made venture capital investments
aggregating approximately $14.2 million, or approximately 82% of the
original net proceeds of $17.3 million; (ii) approximately $6.2 million
available for new and follow-on investments; and (iii) net assets of
approximately $12.2 million. The compensation arrangements between WVP 2
and its managing general partner are identical in all material respects to
those between the Partnership and the Managing General Partner.
MVH is a wholly-owned subsidiary of Oppenheimer Holdings, Inc.,
the parent of Opco. Opco, a member of the New York Stock Exchange, Inc.,
the National Association of Securities Dealers, Inc. and all principal
United States securities exchanges, is a diversified investment banking and
securities firm, providing a broad range of services to individual,
corporate and institutional clients. Opco is registered as a broker-dealer
and investment adviser with the Commission, and also is registered as a
broker-dealer in all of the states of the United States and with the
Securities Association in the United Kingdom. Opco operates in the
capacity of broker and dealer for its customers, as well as trader for its
own account.
The services provided by Opco and its subsidiaries, and the
activities in which they are engaged, include investment banking,
securities brokerage, securities research, customer financing, securities
trading and arbitrage, corporate finance, real estate financing and
investment advisory services. Opco's investment banking activities include
an active engagement in the healthcare area. Opco provides public equity
and debt financing to
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<PAGE>
clients in the biotechnology, instrumentation, and pharmaceutical products
and services sectors in the healthcare field. Opco also provides private
financing, and merger, acquisition and divestiture assistance to healthcare
companies. Opco's Healthcare Investment Banking Group is supported by
Opco's securities research team which reports on public companies in the
human healthcare sector.
Compensation Payable to the Managing General Partner. The
compensation payable to the Managing General Partner in connection with the
operations of the Partnership is comprised of the following amounts:
Management Fee. The Managing General Partner is entitled to a
quarterly management fee computed at the annual rate of two percent (2%) of
the lesser of (i) the capital originally contributed to the Partnership by
the partners (net of selling commissions and organizational expenses paid
by the Partnership), reduced by capital distributed to partners, or (ii)
the Partnership's net asset value. Further information concerning this fee
is set forth below under "Terms of Proposed Contracts with the Managing
General Partner and Alsacia -- Management Fee."
Venture Capital Fee. The Managing General Partner is entitled to
a one-time fee (the "Venture Capital Fee") equal to five percent (5%) of
the gross proceeds from the sale of Units. A pro rata portion of this fee
becomes payable at the time of each venture capital investment based upon
the percentage of the original net proceeds, available for investment,
represented by such venture capital investment. For the fiscal years ended
December 31, 1995, 1994 and 1993, the venture capital fee incurred by the
Partnership aggregated $17,000, $40,000 and $10,000, respectively.
Annual Allocations. The profits and losses of the Partnership
are determined and allocated as of the end of, and within 75 days after the
end of, each fiscal year of the Partnership as follows:
The Partnership's net income and net realized gains from all
sources, including net income and gain, through the end of its most recent
fiscal year is allocated first to the Limited Partners (and to the Managing
General Partner to the extent of its capital contribution) until the
partners have been allocated an amount, which when added to amounts
previously allocated to them from all sources, equals a return of six
percent (6%) per annum, simple interest, on their total capital
contributions reduced by previous distributions made to the partners by the
Partnership (the "Priority Return").
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<PAGE>
Net income and net realized gains derived from venture capital
investments and not allocated as part of the Priority Return is allocated
to the Managing General Partner until together with all such income and
gains previously allocated to the Managing General Partner (reduced by net
realized losses of the Partnership from its venture capital investments
allocated to the Managing General Partner, as described in the following
paragraph) the Managing General Partner has been allocated on a cumulative
basis since inception of the Partnership twenty percent (20%) of the
Priority Return Excess (as defined below) as of the end of the
Partnership's most recent fiscal year (the "Venture Capital Allocation").
The balance of such income and gain is allocated between the Limited
Partners and the Managing General Partner pro rata based upon their
respective capital contributions. The "Priority Return Excess" is equal at
any one time to the excess of (i) the net income and net gains derived from
venture capital investments realized by the Partnership on a cumulative
basis since its inception through the last day of the period for which the
calculation is made (reduced by net realized losses of the Partnership from
its venture capital investments) over (ii) an amount equal to the Priority
Return as of such date less the cumulative net income and gains of the
Partnership through such date from non-venture capital investments.
Net realized losses of the Partnership from its venture capital
investments are allocated first to the Managing General Partner until the
cumulative amount allocated to the Managing General Partner pursuant to the
Venture Capital Allocation over the life of the Partnership has been
reduced to an amount equal to twenty percent (20%) of the Priority Return
Excess. Thereafter, such losses are allocated between the Limited Partners
and the Managing General Partner pro rata in accordance with their
respective capital contributions.
Net income and net realized gains or net realized losses for the
year from non-venture capital investments are allocated between the Limited
Partners and the Managing General Partner pro rata in accordance with their
respective capital contributions.
For the fiscal year ended December 31, 1995, the Managing General
Partner was allocated $13,000 of the Partnership's net increase in net
assets from operations. For the fiscal years ended December 31, 1994 and
1993, the Managing General Partner was allocated $39,000 and $10,000,
respectively, of the Partnership's net decrease in net assets from
operations.
Distributions. Other than distributions of cash (to the extent
available) to enable the Managing General Partner to
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discharge its estimated federal income tax liabilities, no distributions
may be made to the Managing General Partner until the partners have
received cash distributions equal to their respective Priority Returns.
After distributions to the partners equal such amount, the Managing General
Partner may be paid amounts allocated to it pursuant to the Venture Capital
Allocation in any particular year. Such payment, however, may only be made
to the extent that the cumulative amounts allocated to the Managing General
Partner through the end of the Partnership's most recent fiscal year
pursuant to the Venture Capital Allocation (reduced by previous payments)
are in excess of twenty percent (20%) of the net unrealized losses (i.e.,
- -
the excess of any unrealized losses over unrealized gain from all sources)
of the Partnership of the most recent fiscal year.
The Partnership did not make any cash distributions to the
Managing General Partner during the fiscal years ended December 31, 1995,
1994 and 1993.
Information Concerning Alsacia. Alsacia, a Delaware corporation,
is wholly-owned by Mr. Sommer. Alsacia maintains its principal office at
1165 Park Avenue, Suite 15-C, New York, New York 10128. Alsacia has filed
an application with the Commission to register as an investment adviser
under the Investment Advisers Act of 1940, as amended, and such
registration is a condition to its acting as the sub-manager for the
Partnership.
It is expected that, in addition to acting as the sub-manager for
the Partnership, Alsacia will also act as the sub-manager for WVP 2. Under
the proposed arrangement, the managing general partner of WVP 2 would pay
Alsacia a portion of the (i) compensation which WVP 2's managing general
partner receives under its management agreement with WVP 2 and (ii) venture
capital fee which WVP 2's managing general partner receives under WVP 2's
partnership agreement, as amended. The proposed change in the management
arrangements of WVP 2 is subject to the approval of the limited partners of
WVP 2.
Mr. Sommer is the sole director, officer and stockholder of
Alsacia. Mr. Sommer's address is 1165 Park Avenue, Suite 15-C, New York,
New York 10128. Information concerning Mr. Sommer is set forth above under
"Information Concerning the Managing General Partner."
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<PAGE>
Terms of Proposed Contracts with the Managing General Partner and Alsacia
Management Agreement. Under the Revised Management Agreement,
subject to the supervision of the Individual General Partners, the Managing
General Partner would continue to perform, or arrange for the performance
of, the administrative services necessary for the operation of the
Partnership. The Managing General Partner has arranged for Palmeri Fund
Administrators, Inc. ("PFA") to provide certain administrative services to
the Partnership. PFA, which is compensated by the Managing General
Partner, assists the Managing General Partner in the provision of
administrative services, including, among other things, accounting,
financial reporting and maintenance of the accounts and data files of the
Limited Partners. The address of PFA is 16-00 Route 208 South, Fair Lawn,
New Jersey 07410. The Managing General Partner would also, subject to the
overall supervision of the Individual General Partners, continue to
provide, or arrange for the provision of, management and investment
advisory services in connection with the Partnership's venture capital
investments and money market securities portfolio. Furthermore, the
Managing General Partner would continue to provide the Partnership with
office space, equipment and facilities and such other services as the
Managing General Partner, subject to review by the Individual General
Partners, from time to time determines to be necessary or useful to perform
its obligations under the Revised Management Agreement.
Management Fee. Pursuant to the Revised Management Agreement,
the Partnership would pay the Managing General Partner a management fee,
payable quarterly, calculated at the annual rate of two percent (2%) of the
lesser of (i) the capital originally contributed to the Partnership by the
partners (net of selling commissions and organizational expenses paid by
the Partnership), reduced by capital distributed to partners, or (ii) the
Partnership's net asset value. For purposes of calculating the management
fee pursuant to clause (i) of the immediately preceding sentence, the
phrase "capital distributed to partners" relates solely to distributions of
capital originally contributed to the Partnership by its partners and not
to distributions of capital allocated to partners as a function of the
distribution of the profits and losses of the Partnership. To the extent
not paid in cash when due, the management fee would accrue and interest
thereon at the annual rate of ten percent (10%) would be assessed. The fee
to be received by the Managing General Partner under the Revised Management
Agreement is identical to that received by the Managing General Partner
under the Current Management Agreement. As described below, it is
understood that the Managing General Partner proposes to enter into a Sub-
Management Agreement with Alsacia,
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<PAGE>
pursuant to which the Managing General Partner would compensate Alsacia for
certain management services out of, among other things, the compensation
that the Managing General Partner receives under the Revised Management
Agreement. For the fiscal years ended December 31, 1995, 1994 and 1993,
the management fees payable by the Partnership to the Managing General
Partner aggregated $268,000, $361,000 and $379,000, respectively.
Payment of Expenses. The Revised Management Agreement obligates
the Managing General Partner to continue to provide, or arrange for the
provision of, management and investment advisory services, to furnish the
Partnership with office space, equipment and facilities, and to pay the
compensation of all General Partners who are affiliated persons of the
Managing General Partner. The Managing General Partner would also continue
to bear the administrative and service expenses associated with managing
the Partnership's assets, including the expenses incurred in the management
of the investments of the Partnership. As is the case under the Current
Management Agreement, the Revised Management Agreement provides for the
payment by the Partnership of all other expenses incurred in the operation
of the Partnership, including, among other things, expenses of portfolio
transactions, valuation costs (including the quarterly calculation of net
asst value), expenses of printing reports and other documents distributed
to Limited Partners, Commission fees, interest, taxes, fees and actual out-
of-pocket expenses of General Partners who are not affiliated persons of
the Managing General Partner, fees for legal, auditing and consulting
services, litigation expenses, costs of printing proxies and other expenses
related to meetings of Limited Partners, and other expenses properly
payable by the Partnership.
Sub-Management Agreement. The Managing General Partner proposes
to enter into a separate Sub-Management Agreement with Alsacia, pursuant to
which Alsacia would, subject to the supervision and control of the Managing
General Partner and oversight of the Individual General Partners, make
recommendations regarding the Partnership's venture capital investments
and, among other things, assist the Managing General Partner in finding,
evaluating, structuring, monitoring and liquidating such investments.
Alsacia would also provide managerial assistance to the Partnership's
portfolio companies as requested by the Managing General Partner. All
recommendations made by Alsacia, including, without limitation, those
relating to portfolio company acquisitions and dispositions, would be
subject to prior approval by the Investment Committee. The Managing
General Partner would continue to have the sole authority to make decisions
concerning the Partnership's venture capital investments. The Managing
General Partner would also continue to have the sole authority for
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<PAGE>
the management of the Partnership's short-term investments. The Sub-
Management Agreement provides for the indemnification of Alsacia (including
its directors, officers and employees) by the Partnership in connection
with the performance of its services under the Sub-Management Agreement.
The terms of such indemnification will be identical to the terms of the
indemnification presently provided to the Managing General Partner by the
Partnership.
For the services rendered under the Sub-Management Agreement, the
Managing General Partner would pay to Alsacia a fee (the "Sub-Manager
Management Fee") equal to sixty-seven percent (67%) of the compensation
(the "Managing General Partner Fee") received by the Managing General
Partner under the Revised Management Agreement. Notwithstanding the
foregoing, in no event would the aggregate amount of the Sub-Manager
Management Fee and the fee (the "Other Fee") payable to the Sub-Manager
pursuant to its sub-management agreement (the "Other Agreement") with the
managing general partner of WVP 2: (i) during the first twelve months of
the Sub-Management Agreement and the Other Agreement be less than the
lesser of (A) $300,000 or (B) the aggregate amount of the Managing General
Partner Fee and the Other Fee payable for such period; and (ii) for each
successive twelve-month period thereafter, be less than the lesser of (Y)
$150,000 or (Z) the aggregate amount of the Managing General Partner Fee
and the Other Fee payable for such period. The Sub-Manager Management Fee
would be paid to Alsacia quarterly within five days after the payment by
the Partnership of the Managing General Partner Fee to the Managing General
Partner.
The Managing General Partner would also pay to Alsacia for
services rendered under the Sub-Management Agreement a fee (the "Sub-
Manager Venture Capital Fee") equal to sixty-seven percent (67%) of the
Venture Capital Fee received from time to time by the Managing General
Partner. The Sub-Manager Venture Capital Fee would be paid to Alsacia
within five days after the payment by the Partnership of the Venture
Capital Fee to the Managing General Partner. Further information
concerning the Venture Capital Fee is set forth above under "Description of
the Proposed Arrangements with the Managing General Partner and Alsacia --
Compensation Payable to the Managing General Partner."
Duration and Termination. If the Sub-Manager Proposal is
approved by the Limited Partners, the Revised Management Agreement and Sub-
Management Agreement would remain in force until two years after the date
of the approval by the Limited Partners. Like the Current Management
Agreement, each of the Revised Management Agreement and Sub-Management
Agreement would continue in effect
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<PAGE>
from year to year thereafter, provided that continuance is approved at
least annually by a 1940 Act Majority of Limited Partners or by the General
Partners, and that it is also approved, in either event, by a vote of a
majority of the Individual General Partners who are not "interested
persons" (as such term is defined in the 1940 Act) of the Partnership, cast
in person at a meeting called for the purpose of voting on the matter. The
agreements are not assignable and may be terminated without penalty on 60
days' written notice at the option of any party thereto or by the
Individual General Partners or the vote of the holders of a majority of
Units.
Amendment to Management Powers of Managing General Partner
Paragraph 5.1.2 of the Partnership Agreement sets forth certain
provisions with respect to the management powers of the Managing General
Partner. Paragraph 5.1.2 provides that the Managing General Partner is
granted the exclusive power and authority, subject to the supervision of
the General Partners, to manage and control the venture capital investments
of the Partnership. In connection with the Sub-Manager Proposal, the
General Partners recommend that paragraph 5.1.2 of the Partnership
Agreement be amended to authorize the Managing General Partner to retain
the services of a sub-manager to assist in the provision of the management
and advisory services required to be provided by the Managing General
Partner under the Partnership Agreement.
Paragraph 5.7 of the Partnership Agreement presently provides for
the indemnification of the Managing General Partner and its affiliates by
the Partnership. In connection with the Sub-Manager Proposal, the
Individual General Partners also recommend that paragraph 5.1.2 of the
Partnership Agreement be amended to permit the Partnership to similarly
indemnify a sub-manager retained by the Managing General Partner. Pursuant
to such authority, the Sub-Management Agreement will provide for the
indemnification, to the fullest extent permitted by law, of Alsacia and its
directors, officers and employees by the Partnership. The terms of such
indemnification will be identical to the terms of the indemnification
presently provided to the Managing General Partner under the provisions of
paragraph 5.7 of the Partnership Agreement.
As revised, paragraph 5.1.2 will provide as follows (with changes
in italics and deletions contained in brackets):
"5.1.2 The Managing General Partner is hereby granted the
exclusive power and authority from time to do the following:
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<PAGE>
(a) subject to the supervision of all of the General
Partners, to manage and control the venture capital investments
of the Partnership, including, but not limited to, the power to
make all decisions regarding the Partnership's venture capital
investment portfolio and, among other things, to find, evaluate,
structure, monitor and liquidate, upon dissolution or otherwise,
such investments, to provide, or arrange for the provision of,
managerial assistance to those Persons in which the Partnership
invests and in connection therewith to enter into, execute,
amend, supplement, acknowledge and deliver any and all contracts,
agreements or other instruments, including, but not limited to,
contracts with one or more banks, trust companies or other
investment advisers, including the General Partners and any of
their Affiliates, for the performance of such functions,
including the investment and reinvestment of all or part of the
Partnership's assets, execution of portfolio transactions, and
any or all administrative functions;
(b) subject to the supervision of all of the General
Partners, to manage and control the investments of the
Partnership in unaffiliated venture capital funds, including,
but not limited to, the power to make all decisions regarding
such investments, and, among other things, to find, evaluate,
structure, monitor and liquidate, upon dissolution or otherwise,
such investments; [and]
(c) to admit Additional Limited Partners to the Partnership
in accordance with paragraph 3.3.1; to admit an assignee of a
Limited Partner's interest to be a Substituted Limited Partner in
the Partnership, pursuant to and subject to the terms of
paragraph 8.3, without the consent of any Limited Partner[.]; and
(d) to retain the services of a sub-manager to assist the
Managing General Partner in providing the management and advisory
services required to be rendered by the Managing General Partner
to the Partnership, provided that the (i) services of any such
--------
sub-manager shall at all times be subject to the supervision and
control of the Managing General Partner and (ii) agreement
pursuant to which the services of such sub-manager are so
retained (which may provide for indemnification of such sub-
manager, to the fullest extent permitted by law, by the
Partnership in connection with the performance of services
thereunder) shall be
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<PAGE>
approved by a "1940 Act Majority" (as such term is defined in the
1940 Act) of Limited Partners and by the General Partners,
including a majority of the Independent General Partners.
The grant of exclusive power and authority to the Managing General Partner
under this paragraph 5.1.2 in no way limits the rights, powers or authority
of the Individual General Partners under this Agreement, the Partnership
Act or as otherwise provided by law."
The Partnership Agreement provides that the General Partners
proposing an amendment to the Partnership Agreement must submit an opinion
of counsel to the effect that such amendment is permitted by the Limited
Partnership Act of the State of Delaware, as amended, and the laws of any
other jurisdiction where the Partnership is qualified to do business, will
not impair the limited liability of the Limited Partners and will not
adversely affect the classification of the Partnership as a partnership for
federal income tax purposes. Counsel to the Partnership has delivered a
favorable opinion to the Partnership with respect to the foregoing.
The General Partners
Unanimously Recommend That Limited Partners Vote
To Approve The Sub-Manager Proposal.
PROPOSAL 2
The General Partners recommend the approval by the Limited
Partners of an amendment to paragraph 3.1.2 of the Partnership Agreement.
Paragraph 3.1.2 provides, in pertinent part, that the number of Individual
General Partners may range between three (3) and nine (9). The General
Partners recommend that paragraph 3.1.2 be amended to provide that the
number of Individual General Partners may range between two (2) and nine
(9). The affirmative vote of the holders of a majority of the outstanding
Units present in person or by proxy at the Meeting is required for approval
of the amendment.
The General Partners are proposing such amendment as a result of
Dr. Taylor's intention to resign from his position as an Individual General
Partner effective upon the conclusion of the Meeting. Dr. Taylor has
served as an Individual General Partner of each of the Partnership and WVP
2 since their organization in 1987 and 1988, respectively. Dr. Taylor's
intention to resign is a result of his decision to completely retire from
business activities for health-related reasons. Given the Partnership's
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<PAGE>
long operational history and the high degree of portfolio company
investment, the General Partners determined not to endeavor to seek a
replacement Individual General Partner to fill the vacancy to be created
by Dr. Taylor's resignation.
As revised, paragraph 3.1.2 will provide as follows (with changes
in italics and deletions contained in brackets):
3.1.2 The number of Individual General Partners shall be fixed
from time to time by the General Partners then in office provided,
however, that the number of Individual General Partners shall in no
event be less than two [three] or more than nine [(except prior to the
initial public offering of Units)]. A majority of the General
Partners shall at all times be Independent General Partners. If at
any time the number of Independent General Partners is less than a
majority of the General Partners, within 90 days thereafter action
shall be taken pursuant to paragraph 3.1.3 to restore the number of
Independent General Partners to a majority of the General Partners.
The Partnership Agreement provides that the General Partners
proposing an amendment to the Partnership Agreement must submit an opinion
of counsel to the effect that such amendment is permitted by the Limited
Partnership Act of the State of Delaware, as amended, and the laws of any
other jurisdiction where the Partnership is qualified to do business, will
not impair the limited liability of the Limited Partners and will not
adversely affect the classification of the Partnership as a partnership for
federal income tax purposes. Counsel to the Partnership has delivered a
favorable opinion to the Partnership with respect to the foregoing.
The General Partners
Unanimously Recommend That Limited Partners Vote
To Approve The Proposed Amendment
To Reduce The Minimum Number of
Individual General Partners.
ADDITIONAL INFORMATION
The expense of preparation, printing and mailing of the enclosed
form of proxy and accompanying Notice of Special Meeting will be borne by
the Partnership. The Partnership will reimburse banks, brokers and others
for their reasonable expenses in forwarding proxy solicitation material to
the beneficial owners of Units.
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<PAGE>
In order to obtain the necessary quorum at the Meeting, the
Partnership has retained Tritech to assist in the solicitation of proxies
primarily by contacting Limited Partners by telephone, mail and telegram.
It is anticipated that the cost of using Tritech to make supplementary
solicitation of Limited Partners will be approximately $2,500, plus out-of-
pocket expenses.
The Individual General Partners do not beneficially own any
Units. The directors, officers and employees of MVH beneficially own as a
group ten Units, or less than one-tenth of one percent of the total Units
outstanding. All such Units are beneficially owned by Mr. Sommer.
The Partnership is not required to hold annual meetings and the
General Partners do not expect to call or to hold such meetings. Proposals
which Limited Partners wish to present for possible inclusion in a proxy
statement and form of proxy for consideration at the next meeting of
Limited Partners, when and if such meeting is called, must be received by
the Partnership at its principal executive offices in New York, New York
within a reasonable time prior to the giving of notice of such meeting.
By Order of the General Partners
Thomas E. White
A General Partner
Dated: May __, 1996
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<PAGE>
(FORM OF PROXY CARD)
WestMed Venture Partners, L.P.
Oppenheimer Tower
World Financial Center
New York, New York 10281
THIS PROXY IS SOLICITED ON BEHALF OF
THE GENERAL PARTNERS.
The undersigned hereby appoints Philippe L. Sommer and Howard S. Wachtler,
each with the power to appoint his substitute, and hereby authorizes them
to represent and to vote, as designated herein, all units of limited
partnership interest of WestMed Venture Partners, L.P. (the "Partnership")
held of record by the undersigned on _______, 1996 at the special meeting
of the limited partners of the Partnership to be held on June __, 1996 or
any adjournment thereof.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned limited partner. If no direction is
made, this Proxy will be voted for Proposals 1 and 2.
1. To approve a proposal whereby WestMed Venture Management,
L.P. (the "Managing General Partner") would retain Alsacia
Venture Management Inc., as a sub-manager, to provide
services to the Managing General Partner regarding the
Partnership's venture capital investments.
[ ] For [ ] Against [ ] Abstain
2. To approve a proposal whereby paragraph 3.1.2 of the
Partnership Agreement would be amended to reduce the minimum
number of Individual General Partners from three to two.
[ ] For [ ] Against [ ] Abstain
<PAGE>
3. In the discretion of such proxies, upon such other business
as may properly come before the meeting or any adjournment
thereof.
Dated: _______________, 1996
x___________________________
(Signature)
x___________________________
(Signature, if held jointly)
Please sign exactly as name appears hereon. When units of
limited partnership are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Please Sign, Date and Return the Proxy Card Promptly Using the
Enclosed Envelope. Please mark boxes [ ] or [X].
<PAGE>
MANAGEMENT AGREEMENT Exhibit A
Management Agreement ("Agreement") made this ____ day of _______,
1996 by and between WESTMED VENTURE PARTNERS, L.P., a Delaware limited
partnership (the "Partnership"), and WESTMED VENTURE MANAGEMENT, L.P., a
Delaware limited partnership (the "Managing General Partner").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Partnership is a limited partnership organized on
February 5, 1987 under the Delaware Revised Uniform Limited Partnership Act
pursuant to a Certificate of Limited Partnership and is engaged in business
as a business development company under the Investment Company Act of 1940,
as amended (the "Investment Company Act");
WHEREAS, the Managing General Partner is the managing general
partner of the Partnership and is engaged principally in rendering
management, administrative and investment advisory services and is
registered as an investment adviser under the Investment Advisers Act of
1940, as amended;
WHEREAS, the Partnership desires to retain the Managing General
Partner to render management, administrative and investment advisory
services to the Partnership in the manner and on the terms hereinafter set
forth; and
WHEREAS, the Managing General Partner is willing to provide
management, administrative and investment advisory services to the
Partnership on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Partnership and the Managing General
Partner hereby agree as follows:
ARTICLE I
Duties of the Managing General Partner
The Partnership hereby employs the Managing General Partner to
act as the managing general partner for the Partnership and to furnish, or
arrange for the furnishing of, the management, administrative and
investment advisory services described below, subject to the supervision of
the individual general partners of the Partnership (the "Individual General
Partners"), for the period and on the terms and conditions set forth in
this Agreement. The
<PAGE>
Managing General Partner hereby accepts such employment and agrees during
such period, at its own expense except as otherwise specifically provided
in Article II(b) herein, to render, or arrange for the rendering of, such
services and to assume the obligations herein set forth for the
compensation provided for herein.
(a) General Management Services. The Managing General Partner
shall perform, or arrange for the performance of, the management and
administrative services necessary for the operation of the Partnership.
The Managing General Partner shall also perform, or arrange for the
provision of, services related to administering limited partners' accounts
and handling relations with limited partners. The Managing General Partner
shall provide the Partnership with office space, equipment and facilities
and such other services as the Managing General Partner, subject to review
by the Individual General Partners, shall from time to time determine to be
necessary or useful to perform its obligations under this Agreement. The
Managing General Partner shall also, on behalf of the Partnership, conduct
relations with custodians, depositories, transfer agents, other shareholder
service agents, accountants, attorneys, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and such other persons in any such
other capacity deemed by it to be necessary or desirable. The Managing
General Partner shall make reports to the Individual General Partners of
its performance of obligations hereunder and shall furnish advice and
recommendations with respect to such other aspects of the business and
affairs of the Partnership as it shall determine to be desirable.
(b) Investment Advisory Services With Respect to Venture Capital
Investments. Pursuant to the Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of July 2, 1987, as amended from
time to time (the "Partnership Agreement"), the Managing General Partner is
responsible for providing, or arranging for the provision of, investment
advisory services in connection with the Partnership's venture capital
investments (the "Venture Capital Investments"). The Managing General
Partner will provide, or will arrange for the provision of, management
services pursuant to this Article I(b) subject always to any restrictions
of the Partnership Agreement, the provisions of the Investment Company Act
and the statements relating to the Partnership's investment objectives,
investment policies and investment restrictions as the same are set forth
in the reports filed by the Partnership under the Securities Exchange Act
of 1934, as amended.
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<PAGE>
(c) Investment Advisory Services with Respect to Other
Investments. The Managing General Partner shall provide, or arrange for
the provision of, investment advisory services in connection with the money
market securities or other non-venture capital investments held by the
Partnership (the "Other Investments"). The Managing General Partner shall
provide the Partnership with such investment research, advice and
supervision as the latter may from time to time consider necessary for the
proper supervision of the Other Investments, and shall furnish continuously
an investment program for the Other Investments and shall determine from
time to time which securities shall be purchased, sold or exchanged and
what portion of the assets shall be held in the various money market
securities or cash, subject always to any restrictions of the Partnership
Agreement, the provisions of the Investment Company Act and the statements
relating to the Partnership's investment objectives, investment policies
and investment restrictions as the same are set forth in the reports filed
by the Partnership under the Securities Exchange Act of 1934, as amended.
The Managing General Partner shall also make determinations with respect to
the manner in which voting rights, rights to consent to corporate action
and any other rights pertaining to the Partnership's Other Investments
shall be exercised. Should the Individual General Partners at any time,
however, make any determinations with respect to a fixed investment policy
and notify the Managing General Partner thereof in writing, the Managing
General Partner shall be bound by such determination for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked. The Managing General Partner shall take,
on behalf of the Partnership, all actions which it deems necessary to
implement the investment policies determined as provided above, and in
particular to place all orders for the purchase or sale of portfolio
securities with respect to the Other Investments for the Partnership's
account with brokers or dealers selected by it, and to that end, the
Managing General Partner is authorized as the agent of the Partnership to
give instructions to the custodian of the Partnership as to deliveries of
securities and payments of cash for the account of the Partnership. In
connection with the selection of such brokers or dealers and the placing of
such orders with respect to the Other Investments of the Partnership, the
Managing General Partner is directed at all times to seek to obtain
execution and price within the policy guidelines determined by the
Individual General Partners. Subject to this requirement and the
provisions of the Investment Company Act, the Securities Exchange Act of
1934, as amended, and other applicable provisions of law, the Managing
General Partner may select brokers or dealers with which it or the
Partnership is affiliated.
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<PAGE>
ARTICLE II
Allocation of Charges and Expenses
(a) The Managing General Partner. The Managing General Partner
assumes and shall pay for maintaining the staff and personnel necessary to
perform its obligations under this Agreement, and shall, at its own
expense, provide the Partnership with office space, facilities, equipment
and personnel necessary to carry out its obligations hereunder. The
Managing General Partner will bear the administrative and service expenses
associated with the management of the investments of the Partnership, which
the Managing General Partner pursuant to the terms of this Agreement is
obligated to provide. The Managing General Partner shall pay all
compensation of general partners of the Partnership who are affiliated
persons of the Managing General Partner.
(b) The Partnership. The Partnership assumes and shall pay or
cause to be paid all other expenses of the Partnership not expressly
assumed by the Managing General Partner including, without limitation:
expenses of portfolio transactions, valuation costs (including the
quarterly calculation of net asset value), expenses of printing reports and
other documents distributed to limited partners, Securities and Exchange
Commission fees, interest, taxes, fees and actual out-of-pocket expenses of
general partners of the Partnership who are not affiliated persons of the
Managing General Partner, fees for legal, auditing and consulting services,
litigation expenses, costs of printing proxies and other expenses related
to meetings of limited partners, and other expenses properly payable by the
Partnership.
ARTICLE III
Compensation of the Managing General Partner
(a) Management Fee. For the services rendered, the facilities
furnished and the expenses assumed by the Managing General Partner, the
Partnership shall pay to the Managing General Partner compensation at the
annual rate of two percent (2%) of the lesser of (i) an amount equal to the
aggregate of the capital originally contributed to the Partnership by the
partners (net of selling commissions and organizational expenses which were
paid by the Partnership), reduced by distributions of such original capital
to the partners, or (ii) the net asset value of the Partnership determined
in the manner as set forth in the prospectus for the Partnership. Such fee
is payable quarterly. If the Managing General Partner shall serve for less
than the whole of any period specified in this Article, the compensation
paid to the Managing General Partner shall be prorated. To the extent that
the
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<PAGE>
Partnership does not have cash or readily marketable securities in an
amount sufficient to pay the management fee, the Partnership will accrue
such fee as a liability and pay the accrued fee at such time as it has
sufficient cash available to it. Interest on the amount of the accrued fee
will be assessed at the annual rate of ten percent (10%).
(b) Expense Limitations. In the event the operating expenses of
the Partnership, including amounts payable to the Managing General Partner
pursuant to Article III(a) hereof, for any fiscal year ending on a date on
which this Agreement is in effect exceed any expense limitations applicable
to the Partnership imposed by applicable state securities laws or
regulations thereunder, as such limitations may be raised or lowered from
time to time, the Managing General Partner shall reduce its management fee
by the extent of such excess and, if required pursuant to any such laws or
regulations, will reimburse the Partnership in the amount of such excess;
provided, however to the extent permitted by law, there shall be excluded
- -------- -------
from such expenses the amount of any interest, taxes, portfolio transaction
costs and extraordinary expenses (including, but not limited to, legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Partnership. Whenever the expenses of the
Partnership exceed a pro rata portion of the applicable annual expense
--- ----
limitations, the estimated amount of reimbursement under such limitations
shall be applicable as an offset against the quarterly payment of the fee
due to the Managing General Partner. Should two or more such expense
limitations be applicable as at the end of the last business day of the
quarter, that expense limitation which results in the largest reduction in
the Managing General Partner's fee shall be applicable.
ARTICLE IV
Sub-Management Agreement
It is understood that the Managing General Partner may enter into
a separate sub-management agreement, substantially in the form attached
hereto as Annex I (the "Sub-Management Agreement"), with Alsacia Venture
Management Inc., a Delaware corporation ("Alsacia"), pursuant to which
Alsacia will render certain management services to the Managing General
Partner in connection with the Managing General Partner's duties and
obligations hereunder regarding Venture Capital Investments and receive
from the Managing General Partner compensation for its services out of,
among other things, the compensation received hereunder by the Managing
General Partner pursuant to Article III.
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<PAGE>
ARTICLE V
Limitation of Liability of the Managing General Partner
As more fully described in paragraph 5.7 of the Partnership
Agreement, neither the Managing General Partner nor any of its Affiliates
(as such term is defined in the Partnership Agreement) shall be liable,
responsible or accountable in damages or otherwise for any loss or damage
incurred by reason of any act or omission performed or omitted by the
Managing General Partner or such Affiliate in good faith either on behalf
of the Partnership or in furtherance of the interests of the Partnership
and in a manner reasonably believed by it to be within the scope of
authority granted to it by or pursuant to this Agreement, or by the law or
by the Consent (as such term is defined in the Partnership Agreement) of
the limited partners, provided that the Managing General Partner or such
Affiliate was not guilty of negligence, misconduct or any other breach of
fiduciary duty with respect to such acts or omissions.
ARTICLE VI
Activities of the Managing General Partner
The services of the Managing General Partner are not deemed to be
exclusive, the Managing General Partner being free to render services to
others. It is understood that general partners and limited partners of the
Partnership are or may become interested in the Managing General Partner,
as partners or employees thereof or as directors, officers, employees or
shareholders of any partner of the Managing General Partner and that
partners or employees of or directors, officers, employees or shareholders
of any partner of the Managing General Partner are or may become interested
in the Partnership as partners.
ARTICLE VII
Duration and Termination of this Contract
This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof, and
thereafter but only so long as such continuance is specifically approved at
least annually by (i) the general partners of the Partnership, or by the
vote of a majority of the outstanding voting securities of the Partnership,
and (ii) a majority of those general partners who are not parties to this
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<PAGE>
Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment
of any penalty, by the Individual General Partners or by vote of a majority
of the outstanding voting securities of the Partnership, or by the Managing
General Partner, in each case on sixty days' written notice to the non-
terminating party or parties to this Agreement. This Agreement shall
automatically terminate in the event of its assignment.
ARTICLE VIII
Amendments of this Agreement
This Agreement may be amended by the parties only if such
amendment is specifically approved in accordance with the provisions of the
Investment Company Act.
ARTICLE IX
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting
securities", "assignment", "affiliated person" and "interested person",
when used in this Agreement, shall have the respective meanings specified
in the Investment Company Act.
ARTICLE X
Governing Law
This Agreement shall be construed in accordance with the laws of
the State of New York and the applicable provisions of the Investment
Company Act. To the extent that the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
WESTMED VENTURE PARTNERS, L.P.
By: WestMed Venture Management, L.P.
General Partner
By: Medical Venture Holdings, Inc.
General Partner
By: __________________________
Stephen M. McGrath
Vice President
WESTMED VENTURE MANAGEMENT, L.P.
By: Medical Venture Holdings, Inc.
General Partner
By: __________________________
Stephen M. McGrath
Vice President
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<PAGE>
SUB-MANAGEMENT AGREEMENT Annex I
Sub-Management Agreement ("Agreement") made this ___ day of
______, 1996 by and between WestMed Venture Management, L.P., a Delaware
limited partnership (the "Managing General Partner") and Alsacia Venture
Management Inc., a Delaware corporation (the "Sub-Manager"). Capitalized
terms used herein which are not otherwise defined shall have the meaning
ascribed to them in the Partnership Agreement (as hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, WestMed Venture Partners, L.P., a Delaware limited
partnership (the "Partnership"), is a limited partnership organized on
February 5, 1987 under the Delaware Revised Uniform Limited Partnership Act
pursuant to a Certificate of Limited Partnership and is engaged in business
as a business development company under the Investment Company Act of 1940,
as amended (the "Investment Company Act");
WHEREAS, the Managing General Partner is the managing general
partner of the Partnership and is responsible for providing, or for
arranging for the provision of, certain management services to the
Partnership under an Amended and Restated Agreement of Limited Partnership
of the Partnership dated as of July 2, 1987, as amended from time to time
(the "Partnership Agreement");
WHEREAS, the Managing General Partner has entered into a
Management Agreement dated _____________, 1996 (the "Management Agreement")
with the Partnership pursuant to which the Managing General Partner
provides management services to the Partnership;
WHEREAS, the Sub-Manager has been formed to engage principally in
rendering management services in the venture capital area and is registered
as an investment adviser under the Investment Advisers Act of 1940, as
amended;
WHEREAS, the Managing General Partner desires to retain the Sub-
Manager to render certain management services to the Managing General
Partner in connection with the Managing General Partner's duties and
obligations under the Management Agreement regarding venture capital
investments in the manner and on the terms hereinafter set forth;
WHEREAS, in connection with the retention of the Sub-Manager by
the Managing General Partner to render the aforesaid management services,
the Managing General Partner will restaff its
<PAGE>
existing venture capital investment committee (the "Investment Committee");
and
WHEREAS, the Sub-Manager is willing to provide such management
services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Managing General Partner and the Sub-
Manager hereby agree as follows:
ARTICLE I
Duties of the Sub-Manager
(a) General. The Managing General Partner hereby engages the
Sub-Manager to furnish the management services described below, subject to
the supervision and control of the Managing General Partner and oversight
of the Individual General Partners, for the period and on the terms and
conditions set forth in this Agreement. The Sub-Manager hereby accepts
such engagement and agrees during such period, at its own expense, except
as provided in Article II of the Management Agreement, to render such
services and to assume the obligations herein set forth for the
compensation provided for herein. The Sub-Manager will deliver to the
Managing General Partner sufficient activity reports and other information
to enable the Managing General Partner and the Individual General Partners
to assess the adequacy of the management services provided by the Sub-
Manager. The Sub-Manager shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Individual
General Partners, the Managing General Partner or the Partnership in any
way or otherwise be deemed an agent of the Individual General Partners, the
Managing General Partner or the Partnership.
(b) Management Services With Respect to Venture Capital
Investments. Subject to the supervision and control of the Managing
General Partner and oversight of the Individual General Partners, the Sub-
Manager will provide management services in connection with the
Partnership's venture capital investments (such investments, which consist
of all investments other than "Other Investments" as defined in the
Management Agreement, being referred to herein as the "Venture Capital
Investments"). In providing such services, the Sub-Manager shall make
recommendations regarding Venture Capital Investments and, among other
things, assist the Managing General Partner in finding, evaluating,
structuring,
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<PAGE>
monitoring and liquidating such investments. The Sub-Manager shall also
provide managerial assistance to Venture Capital Investments as requested
by the Managing General Partner. The Sub-Manager shall have no authority
to implement any recommendation regarding Venture Capital Investments,
including, without limitation, those relating to the acquisition or
disposition thereof, unless such recommendation shall have been approved by
the Investment Committee. The Managing General Partner shall at all times
have the sole authority to make decisions concerning Venture Capital
Investments. In addition to the foregoing restrictions on its authority,
the Sub-Manager will provide management services pursuant to this Agreement
subject always to any restrictions of the Partnership Agreement, the
provisions of the Investment Company Act and the statements relating to the
Partnership's investment objectives, investment policies and investment
restrictions as the same are set forth in the reports filed by the
Partnership under the Securities Exchange Act of 1934, as amended.
It is understood that the Managing General Partner performs, or
arranges for the provision of, certain administrative services to the
Partnership. The Sub-Manager shall use its best efforts to deliver to the
Managing General Partner, on a timely basis, all information necessary to
enable the Managing General Partner to provide, or arrange for the
provision of, such administrative services on a timely and efficient basis.
ARTICLE II
Allocation of Charges and Expenses
The Sub-Manager assumes and shall pay for maintaining the staff,
personnel, office space, equipment and facilities and statistical and
research services necessary to perform, and assumes and shall pay all
travel and entertainment expenses incurred in connection with the
performance of, its obligations under this Agreement. The Sub-Manager
shall not be required to incur any fees or expenses relating to the
retention of consultants and related persons for the purpose of evaluating
products or technology (including, without limitation, patents and
patentability issues) of any portfolio company or prospective portfolio
company of the Partnership. All such consulting fees and expenses shall be
payable by the Partnership or the Managing General Partner in a manner
consistent with prior practice.
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<PAGE>
ARTICLE III
Compensation of the Sub-Manager
(a) Sub-Manager Management Fee. For the services rendered under
this Agreement, the Managing General Partner shall pay to the Sub-Manager a
fee (the "Sub-Manager Management Fee") equal to 67% of the compensation
(the "WVM 1 Fee") received by the Managing General Partner pursuant to
Article III of the Management Agreement. Notwithstanding the foregoing, in
no event shall the aggregate amount of the Sub-Manager Management Fee and
the fee payable to the Sub-Manager pursuant to Article III(a) of that
certain sub-management agreement of even date herewith (the "Other
Agreement") by and between WestMed Venture Management 2, L.P. and the Sub-
Manager: (i) during the first twelve months of this Agreement be less than
the lesser of (A) $300,000 or (B) the aggregate amount of the (1) WVM 1 Fee
payable for such period and (2) WVM 2 Fee (as such term is defined in the
Other Agreement) payable for such period; and (ii) for each successive
twelve-month period thereafter be less than the lesser of (Y) $150,000 or
(Z) the aggregate amount of the (1) WVM 1 Fee payable for such period and
(2) WVM 2 Fee (as such term is defined in the Other Agreement) payable for
such period. The Sub-Manager Management Fee is payable quarterly to the
Sub-Manager within five days after the payment by the Partnership of the
WVM 1 Fee to the Managing General Partner. If the Sub-Manager shall serve
for less than the whole of any period specified in this Article, the Sub-
Manager Management Fee shall be prorated.
(b) Sub-Manager Venture Capital Fee. For the services rendered
under this Agreement, the Managing General Partner, in addition to the Sub-
Manager Management Fee, shall pay to the Sub-Manager a fee (the "Sub-
Manager Venture Capital Fee") equal to 67% of the compensation (the
"Venture Capital Fee") received by the Managing General Partner pursuant to
paragraph 5.6.1 of the Partnership Agreement. The Sub-Manager Venture
Capital Fee is payable to the Sub-Manager within five days after the
payment by the Partnership of the Venture Capital Fee to the Managing
General Partner.
ARTICLE IV
Limitation of Liability of the Sub-Manager;
Indemnification of the Sub-Manager
(a) Limitation of Liability. The Sub-Manager shall not be
liable, responsible or accountable in damages or otherwise for any loss or
damage incurred by reason of any act or omission performed or omitted by
the Sub-Manager in good faith either on
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<PAGE>
behalf of the Partnership or in furtherance of the interests of the
Partnership and in a manner reasonably believed by it to be within the
scope of authority granted to it by this Agreement or by the law or by the
Consent of the Limited Partners, provided that the Sub-Manager was not
guilty of negligence, misconduct or any other breach of fiduciary duty with
respect to such acts or omissions. As used in this Article IV, the term
"Sub-Manager" shall include the Sub-Manager and directors, officers and
employees of the Sub-Manager.
(b) Indemnification of the Sub-Manager by the Partnership. The
Partnership, out of its assets, and not out of the assets of the General
Partners, shall to the fullest extent permitted by applicable law indemnify
and hold harmless the Sub-Manager in the event that the Sub-Manager 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 (including any action by or in the right of
the Partnership), by reason of any acts or omissions or alleged acts or
omissions arising out of the Sub-Manager's activities as the Sub-Manager,
if such activities were performed in good faith on behalf of the General
Partners and in furtherance of the interests of the Partnership, and in a
manner reasonably believed by the Sub-Manager to be within the scope of the
authority conferred by this Agreement or by law or by the Consent of the
Limited Partners, against losses, damages or expenses for which the Sub-
Manager has not otherwise been reimbursed (including attorneys' fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Sub-Manager in connection with such action, suit or
proceeding, so long as the Sub-Manager was not guilty of negligence,
misconduct or any other breach of fiduciary duty with respect to such acts
or omissions and, with respect to any criminal action or proceeding, had no
reasonable cause to believe its conduct was unlawful, and provided that the
satisfaction of any indemnification and any holding harmless shall be from
and limited to Partnership assets and no Limited Partner shall have any
personal liability on account thereof. Notwithstanding the foregoing,
absent a court determination that the Sub-Manager was not liable on the
merits or guilty of disabling conduct within the meaning of Section 17(h)
of the Investment Company Act, the decision by the Partnership to indemnify
the Sub-Manager must be based upon the reasonable determination of
independent counsel or non-party Independent General Partners, after review
of the facts, that such disabling conduct did not occur. Expenses incurred
in connection with the preparation and presentation of a defense to any
claim, action, suit, or proceeding of the character described above shall
be paid by the Partnership from time to time in advance prior to final
disposition thereof
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<PAGE>
upon receipt of an undertaking by or on behalf of the Sub-Manager that such
amount will be paid over by it to the Partnership if it is ultimately
determined that the Sub-Manager is not entitled to indemnification under
this Article IV(b); provided, however, that (i) the Sub-Manager provides
-------- -------
appropriate security for such undertaking, (ii) the Sub-Manager is insured
against losses arising out of any such advance payments, or (iii) either a
majority of the General Partners who are neither interested persons of the
Partnership nor parties to the matter, or independent legal counsel in a
written opinion, determine, based upon a review of readily available facts
(as opposed to a full trial-type inquiry), that there is reason to believe
that the Sub-Manager will be found entitled to indemnification under this
Article IV(b).
ARTICLE V
Activities of the Sub-Manager
The services of the Sub-Manager are not to be deemed to be
exclusive, the Sub-Manager and its directors, officers and employees each
being free to render services to others (including, without limitation, to
one or more portfolio companies of the Partnership) subject to the
limitations contained in Article I(a) hereof. Notwithstanding the
foregoing, the Sub-Manager shall not provide services to any portfolio
company of the Partnership unless the Sub-Manager's arrangements with such
portfolio company are on terms and conditions satisfactory to the Managing
General Partner, in its sole and absolute discretion, so as to ensure that,
among other things, (i) the compensation payable by such portfolio company
to the Sub-Manager is for services separate and apart from those provided
by the Sub-Manager hereunder and (ii) such portfolio company understands
and agrees that the Sub-Manager in providing such services is acting
independently and not as an agent for the Partnership or the Managing
General Partner). The parties hereto hereby acknowledge that an individual
serving as an officer and director of one of the limited partners of the
Managing General Partner is interested in the Sub-Manager as a director,
officer, employee and shareholder.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above
written and shall remain in force until ______, 1998 and thereafter, but
only so long as such continuance is specifically approved at least annually
by (i) the Individual General Partners of the Partnership, or by the vote
of a majority of the outstanding voting securities of the Partnership, and
(ii)
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<PAGE>
a majority of those General Partners who are not parties to this Agreement
or interested persons of any such party cast in person at a meeting called
for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment
of any penalty, by the Individual General Partners or by vote of a majority
of the outstanding voting securities of the Partnership, or by the Sub-
Manager, in each case on sixty days' written notice to non-terminating
parties to this Agreement. This Agreement shall automatically terminate in
the event of its assignment.
ARTICLE VII
Amendments of this Agreement
This Agreement may be amended by the parties only if such
amendment is specifically approved in accordance with the provisions of the
Investment Company Act.
ARTICLE VIII
Definitions of Certain Terms
The terms "vote of a majority of the outstanding voting
securities", "assignment" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
ARTICLE IX
Governing Law
This Agreement shall be construed in accordance with the laws of
the State of New York and the applicable provisions of the Investment
Company Act. To the extent that the applicable laws of the State of New
York, or any of the provisions herein, conflict with the applicable
provisions of the Investment Company Act, the latter shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement on the date first above written.
WestMed Venture Management, L.P.
By: Medical Venture Holdings, Inc.
General Partner
By:______________________________
Name: Stephen M. McGrath
Title: Vice President
Alsacia Venture Management Inc.
By:______________________________
Name: Philippe L. Sommer
Title: President
The Partnership hereby agrees to
be bound by all of the terms and
conditions relating to and
obligations imposed upon the
Partnership under Articles II
and IV of this Agreement as if
the Partnership were a named
party hereto.
WestMed Venture Partners, L.P.
By: WestMed Venture Management, L.P.
Managing General Partner
By: Medical Venture Holdings, Inc.
General Partner
By:______________________________
Name: Stephen M. McGrath
Title: Vice President
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