AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant X
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X 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):
<TABLE>
<C> <S>
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:
X 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:
</TABLE>
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<PAGE>
WESTMED VENTURE PARTNERS, L.P.
May 17, 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 21, 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 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 have 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>
WestMed Venture Partners, L.P.
-------------------
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
JUNE 21, 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 39th floor of Oppenheimer Tower,
World Financial Center, New York, New York on Friday, June 21, 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
May 17, 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 ordinary business hours from and after May 31,
1996, at the office of the Partnership located on the 39th 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 17, 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>
PROXY STATEMENT
WESTMED VENTURE PARTNERS, L.P.
OPPENHEIMER TOWER
WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10281
-------------------
SPECIAL MEETING OF LIMITED PARTNERS
JUNE 21, 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 39th floor of the Oppenheimer Tower,
World Financial Center, New York, New York on June 21, 1996 at 10:00 A.M., and
at any adjournments thereof. The approximate mailing date of this Proxy
Statement is May 17, 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 May 17, 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 17, 1996, the Partnership had outstanding 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
<PAGE>
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.
THE PARTNERSHIP WILL PROMPTLY FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST
RECENT ANNUAL REPORT TO ANY LIMITED PARTNER UPON REQUEST. REQUESTS SHOULD BE
DIRECTED TO PALMERI FUND ADMINISTRATORS, INC. AT 1-800-821-0905.
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., 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 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
2
<PAGE>
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 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
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
3
<PAGE>
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 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 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 arrangement with Mr. Wachtler will not require the approval of the
Limited Partners.
4
<PAGE>
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 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 Current Management
Agreement was last approved by the Limited Partners on June 27, 1990 in
connection with the Managing General Partner's acquisition of the managing
general partner interest in the Partnership. See "Background." The Revised
Management Agreement recognizes that the Managing General Partner will enter
into a separate sub-management agreement (the "Sub-Management
5
<PAGE>
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 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 17, 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
<TABLE>
<CAPTION>
OFFICER OR
DIRECTOR PRINCIPAL OCCUPATION DURING PAST
NAME AGE TITLE SINCE FIVE YEARS OR MORE
- --------------------------- --- ---------------------- -------------- --------------------------------
<S> <C> <C> <C> <C>
Stephen M. McGrath, Sr.*... 60 Vice President and June 1990 Mr. McGrath has been Executive
Director 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.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
OFFICER OR
DIRECTOR PRINCIPAL OCCUPATION DURING PAST
NAME AGE TITLE SINCE FIVE YEARS OR MORE
- --------------------------- --- ---------------------- -------------- --------------------------------
<S> <C> <C> <C> <C>
Philippe L. Sommer......... 44 Executive Vice June 1990 Mr. Sommer is a Managing
President and Director of BSW, Inc., and a
Managing Director 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.
Howard S. Wachtler......... 47 Executive Vice June 1990 Mr. Wachtler is a Managing
President and Director of BSW, Inc., and a
Managing Director 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.
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.
</TABLE>
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* Member of the Investment Committee.
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. See
"Compensation Payable to the Managing General Partner."
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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 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").
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
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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 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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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, 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.
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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 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 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 management fee payable to the managing general partner of WVP 2 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 management fee payable to the managing general
partner of WVP 2] 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 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.
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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:
(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 approved by a "1940 Act
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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 long operational history and the
high degree of portfolio company investment, the General Partners have decided
not 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
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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.
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 17, 1996
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EXHIBIT A
MANAGEMENT AGREEMENT
Management Agreement ("Agreement") made this day of June, 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 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
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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.
(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.
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
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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 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.
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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.
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 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.
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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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on 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>
ANNEX I
SUB-MANAGEMENT AGREEMENT
Sub-Management Agreement ("Agreement") made this day of June, 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 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
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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,
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.
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
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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 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 upon receipt of an
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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) 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.
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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.
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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(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 May 17, 1996 at the special meeting of the limited partners
of the Partnership to be held on June 21, 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.
<TABLE>
<S> <C>
x ................................................. Date: .................. , 1996
(Signature(s))
x ................................................. Date: .................. , 1996
(Signature(s))
</TABLE>
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 X.
