MEDICAL PRACTICE PARTNERSHIP AGREEMENT

(State of North Carolina)

[// GUIDANCE: This template is designed for use by North-Carolina-licensed physicians forming a professional partnership (or PLLC/PC, as appropriate) to engage in the private practice of medicine. Attorneys should tailor bracketed placeholders, add schedules, and confirm compliance with the most current Board of Medical Examiners and Secretary of State requirements.]

TABLE OF CONTENTS

1. Definitions
2. Formation; Name; Purpose; Term
3. Capital Contributions; Ownership Interests
4. Management and Voting
5. Meetings; Records; Banking
6. Compensation; Distributions; Fee-Splitting Compliance
7. Compliance with Licensing & Corporate Practice Restrictions
8. Professional Liability Insurance
9. Representations & Warranties
10. Covenants
11. Restrictive Covenants
12. Admission of Additional Partners
13. Withdrawal, Dissociation, Expulsion
14. Dissolution; Liquidation
15. Events of Default
16. Remedies
17. Risk Allocation
18. Dispute Resolution
19. General Provisions
20. Execution Block

1. DEFINITIONS

For purposes of this Agreement, the following capitalized terms have the meanings set forth below. Terms defined in the singular include the plural and vice-versa.

“Agreement” means this Medical Practice Partnership Agreement, including all Schedules and Exhibits, as amended from time to time.

“Arbitration Rules” means the then-current Commercial Arbitration Rules of the American Arbitration Association (“AAA”), subject to the modifications set forth in Section 18.2.

“Capital Contribution” means the aggregate amount of cash, property, and services contributed, or agreed to be contributed, by a Partner to the Partnership, as reflected on Schedule 1 (Capital Accounts).

“Effective Date” means [EFFECTIVE DATE].

“Fee-Splitting Laws” means all North Carolina statutes, regulations, and ethical rules prohibiting the sharing of medical fees with or payment of consideration for referrals to persons or entities not licensed to practice medicine in North Carolina.

“Governing Law” has the meaning set forth in Section 18.1.

“Malpractice Claim” means any claim, demand, suit, arbitration, or governmental investigation alleging professional negligence, misconduct, or breach of the applicable standard of medical care by a Partner or the Partnership.

“Management Committee” has the meaning set forth in Section 4.1.

“Partner” or “Partners” means each physician listed in the execution block, and any Additional Partner admitted pursuant to Section 12.1.

“Partnership” means the professional partnership created under this Agreement and any successor entity formed pursuant hereto.

“Professional Services” means the practice of medicine within the meaning of N.C. Gen. Stat. § 90-1 et seq., as amended.

“Sharing Ratio” means, with respect to each Partner, the percentage interest in profits, losses, and distributions set forth opposite such Partner’s name on Schedule 1, as adjusted from time to time in accordance with this Agreement.

[// GUIDANCE: Add any specialty-specific or entity-specific terms as needed.]

2. FORMATION; NAME; PURPOSE; TERM

2.1 Formation. The Partners hereby form a professional [choose “general partnership” / “limited liability company” / “professional corporation”] under the laws of the State of North Carolina (the “State”) effective as of the Effective Date. The Partners shall execute, file, and record all certificates and documents required to perfect such formation, including any required with the North Carolina Secretary of State and the North Carolina Medical Board.

2.2 Name. The Partnership shall conduct business under the name “[PRACTICE NAME]” or such other name as the Partners may unanimously approve, provided the name complies with N.C. Gen. Stat. § 55D-20 et seq. and all applicable rules of the North Carolina Medical Board.

2.3 Purpose. The purpose of the Partnership is to own, operate, and manage a medical practice providing Professional Services, and to engage in any lawful activities ancillary thereto, all in compliance with the corporate practice of medicine doctrine, Fee-Splitting Laws, and other applicable law.

2.4 Principal Office. The principal office shall be located at [ADDRESS], or such other location in North Carolina as the Management Committee may designate.

2.5 Term. The Partnership shall commence on the Effective Date and continue until dissolved pursuant to this Agreement or as otherwise provided by law.

3. CAPITAL CONTRIBUTIONS; OWNERSHIP INTERESTS

3.1 Initial Contributions. Each Partner shall contribute the cash, property, or services described on Schedule 1 on or before the Effective Date. Failure to timely contribute constitutes an Event of Default under Section 15.1(a).

3.2 Additional Contributions. No Partner shall be required to make additional contributions without such Partner’s prior written consent. Voluntary additional contributions shall adjust Sharing Ratios only if unanimously approved.

3.3 Capital Accounts. A separate capital account shall be maintained for each Partner in accordance with generally accepted accounting principles (“GAAP”) and Internal Revenue Code regulations.

3.4 Ownership. Ownership and voting interests are limited to duly-licensed physicians pursuant to Section 7.2. Any attempted transfer to a non-physician is void ab initio.

4. MANAGEMENT AND VOTING

4.1 Management Committee. The Partnership shall be managed by a Management Committee consisting of [NUMBER] Partners elected annually by a majority in interest. Each Committee member must be a Partner in good standing.

4.2 Authority. The Management Committee has full power to manage the business and affairs of the Partnership, except for actions requiring Partner approval under Section 4.4.

4.3 Day-to-Day Operations. The Committee may appoint a Medical Director, Practice Administrator, or other officers to oversee daily operations, subject to the Committee’s supervision.

4.4 Major Decisions. The following require approval by Partners holding at least [SUPER-MAJORITY %] of the Sharing Ratios:
a. Merger, consolidation, or sale of substantially all assets;
b. Admission of Additional Partners;
c. Incurrence of indebtedness exceeding $[THRESHOLD];
d. Amendment of this Agreement.

4.5 Deadlock. If the Committee is deadlocked on any matter for more than [30] days, the matter shall be submitted to the Partners for resolution by majority vote.

5. MEETINGS; RECORDS; BANKING

5.1 Meetings. Regular Partner meetings shall be held at least [QUARTERLY] on notice of not less than [10] days. Special meetings may be called by any Partner with at least [10 %] Sharing Ratio.

5.2 Records. The Partnership shall maintain complete and accurate books and records at its principal office, including patient records in compliance with HIPAA and state privacy laws. Each Partner has access during business hours.

5.3 Banking. All funds shall be deposited in accounts held in the Partnership’s name. Disbursements require the signatures of any two Committee members or such other controls as adopted by resolution.

6. COMPENSATION; DISTRIBUTIONS; FEE-SPLITTING COMPLIANCE

6.1 Partner Compensation. Each Partner shall be entitled to (i) a fixed draw of $[AMOUNT] per [MONTH] (“Base Compensation”), and (ii) incentive compensation based on productivity formulas set forth on Schedule 2.

6.2 Profits and Losses. Net profits and losses shall be allocated among the Partners in proportion to their Sharing Ratios after deduction of Partner Compensation.

6.3 Distributions. Cash distributions shall be made quarterly, subject to (i) retention of reasonable reserves, (ii) compliance with any lender covenants, and (iii) satisfaction of malpractice insurance premiums.

6.4 Compliance with Fee-Splitting Laws. No distribution or payment shall violate Fee-Splitting Laws. The Partnership shall not share fees with, or pay for patient referrals to, any person or entity not permitted under North Carolina law or the AMA Code of Medical Ethics.

[// GUIDANCE: Confirm compensation methodology with current OIG guidance to mitigate Stark Law/Anti-Kickback risk.]

7. COMPLIANCE WITH LICENSING & CORPORATE PRACTICE RESTRICTIONS

7.1 Active Licensure. Each Partner shall maintain an active, unrestricted license to practice medicine in North Carolina and any other jurisdictions where the Partnership provides Professional Services.

7.2 Ownership Restrictions. Equity and voting interests may be held only by individuals holding such active licenses, or by professional entities wholly owned by such individuals, in conformance with the North Carolina Professional Corporation Act and any applicable Board rules.

7.3 Scope of Practice. All Professional Services shall be personally rendered by licensed physicians or properly supervised mid-level practitioners as permitted by law.

7.4 Compliance Officer. The Partnership shall designate a Compliance Officer responsible for monitoring adherence to all federal and state healthcare regulations, including HIPAA, Stark, Anti-Kickback, and OSHA.

8. PROFESSIONAL LIABILITY INSURANCE

8.1 Coverage Requirement. The Partnership shall obtain and maintain occurrence-based (or, if claims-made, tail-covered) professional liability insurance with limits of not less than $[1,000,000] per claim and $[3,000,000] aggregate, or such higher limits as the Partners may determine.

8.2 Individual Coverage. Each Partner shall be named as an insured under the Partnership’s policy. If a Partner maintains separate coverage, such policy shall (i) meet the limits above, and (ii) name the Partnership and all other Partners as additional insureds.

8.3 Tail Coverage. Upon withdrawal or dissolution, each Partner shall obtain tail coverage for not less than [5] years, at such Partner’s cost, unless covered by Partnership policy.

9. REPRESENTATIONS & WARRANTIES

Each Partner represents and warrants, as of the Effective Date and on a continuing basis:

a. Licensing. Partner holds an active, unrestricted North Carolina medical license and is in good standing.
b. No Sanctions. Partner is not currently, nor has Partner ever been, excluded, debarred, or otherwise ineligible to participate in Medicare, Medicaid, or any federal healthcare program.
c. No Investigations. Partner is not subject to any pending disciplinary action, malpractice claim, or governmental investigation that would materially impair Partner’s ability to perform hereunder.
d. Authority. Partner has full power and authority to enter into and perform this Agreement.
e. Non-Contravention. Execution and performance of this Agreement does not violate any other agreement or legal obligation of Partner.

9.2 Survival. The representations and warranties in this Section shall survive Partner withdrawal, dissolution, and termination of this Agreement.

10. COVENANTS

10.1 Maintenance of License and Good Standing. Each Partner shall (i) maintain licensure, board certification (if applicable), DEA registration, and hospital privileges, and (ii) complete all CME requirements.

10.2 Compliance with Laws and Policies. Partners shall comply with all Partnership bylaws, compliance plans, and applicable federal, state, and local laws.

10.3 Continuing Efforts. Partners shall devote their professional time and best efforts to the Partnership during normal business hours, except for reasonable vacation, CME, and civic activities.

10.4 Notice of Events. Partners shall promptly notify the Management Committee of: (i) any threat or filing of a Malpractice Claim; (ii) any notice of investigation or disciplinary action; or (iii) any other event that could constitute an Event of Default.

11. RESTRICTIVE COVENANTS

11.1 Non-Competition. During the term of the Partnership and for [18] months following a Partner’s withdrawal or expulsion, such Partner shall not establish, own more than [5 %] of, or be employed by, a competing medical practice within a radius of [10] miles of any Partnership office.

11.2 Non-Solicitation. For the same period, Partner shall not solicit (i) Partnership patients, or (ii) employees or contractors.

11.3 Reasonableness; Reformation. The Parties acknowledge that these restrictions are reasonable. If a court of competent jurisdiction determines any restriction to be unenforceable, the court is authorized to modify such restriction to the minimum extent necessary to render it enforceable.

[// GUIDANCE: Tailor scope, duration, and geography to comply with NC common-law reasonableness standards; North Carolina generally disfavors overly broad physician non-competes.]

12. ADMISSION OF ADDITIONAL PARTNERS

12.1 Admission Requirements. A physician may be admitted as an Additional Partner upon:
a. Unanimous approval of the existing Partners;
b. Execution of a joinder agreement;
c. Contribution of agreed capital; and
d. Delivery of representations and warranties comparable to Section 9.

12.2 Adjustments. Upon admission, Schedule 1 shall be updated to reflect revised Sharing Ratios and capital accounts.

13. WITHDRAWAL, DISSOCIATION, EXPULSION

13.1 Voluntary Withdrawal. A Partner may withdraw upon not less than [90] days’ written notice.

13.2 Mandatory Withdrawal. A Partner shall be deemed withdrawn upon death, permanent disability, or revocation of medical license.

13.3 Expulsion. The Partnership may expel a Partner upon occurrence of an Event of Default described in Section 15.1, by vote of Partners holding at least [75 %] of the Sharing Ratios (excluding the affected Partner).

13.4 Redemption of Interest. Upon withdrawal or expulsion, the Partnership shall redeem the Partner’s interest at Fair Market Value (“FMV”) determined under Schedule 3, payable in [equal quarterly installments over 24 months] with interest at the Prime Rate + [1 %].

14. DISSOLUTION; LIQUIDATION

14.1 Dissolution Events. The Partnership shall dissolve upon:
a. Unanimous written consent of the Partners;
b. The sale of all or substantially all assets; or
c. Entry of a decree of judicial dissolution.

14.2 Winding Up. The Management Committee (or a liquidating trustee appointed by the Partners) shall wind up the affairs, collect receivables, satisfy liabilities, and distribute remaining assets in accordance with Sharing Ratios.

14.3 Survival. Sections 8 (Insurance), 11 (Restrictive Covenants), 17 (Risk Allocation), 18 (Dispute Resolution), and 19 (General Provisions) survive dissolution.

15. EVENTS OF DEFAULT

15.1 Defined. The following constitute “Events of Default”:
a. Failure to make required Capital Contribution within [30] days of due date;
b. Suspension, revocation, or restriction of medical license;
c. Exclusion from any federal healthcare program;
d. Gross negligence, willful misconduct, or unethical conduct;
e. Filing for bankruptcy, receivership, or assignment for benefit of creditors;
f. Breach of this Agreement not cured within [30] days after written notice.

15.2 Notice and Cure. Except for immediate Events under 15.1(b)–(e), the non-defaulting Partners shall provide written notice and an opportunity to cure within the applicable period.

16. REMEDIES

16.1 Expulsion; Suspension. Upon an uncured Event of Default, the non-defaulting Partners may (i) suspend the defaulting Partner’s voting and distribution rights, or (ii) expel the Partner in accordance with Section 13.3.

16.2 Damages. The defaulting Partner shall be liable for all damages, costs, and reasonable attorneys’ fees incurred by the Partnership.

16.3 Injunctive Relief. Because monetary damages may be inadequate, the Partnership and Partners are entitled to temporary, preliminary, and permanent injunctive relief to enforce this Agreement, without posting bond, to the extent permitted by law.

17. RISK ALLOCATION

17.1 Indemnification for Malpractice.
a. Individual Indemnity. Each Partner (“Indemnifying Partner”) shall indemnify, defend, and hold harmless the Partnership and the other Partners from and against any Malpractice Claim arising out of the Indemnifying Partner’s negligent or wrongful acts or omissions, to the extent not covered by insurance.
b. Partnership Indemnity. Subject to Section 17.2, the Partnership shall indemnify each Partner for any Malpractice Claim arising from acts or omissions within the scope of Partnership duties.

17.2 Limitation of Liability. Except as prohibited by law, the liability of the Partnership and each Partner for non-economic damages in any Malpractice Claim shall not exceed the statutory cap on non-economic damages in effect under North Carolina law as of the date of the alleged injury (currently $[CAP AMOUNT], subject to statutory adjustments). Nothing herein limits recovery of economic damages or punitive damages where permitted by law.

17.3 Insurance Offset. Amounts payable under this Section shall be reduced by insurance proceeds actually received.

17.4 Force Majeure. Neither the Partnership nor any Partner shall be liable for failure to perform due to causes beyond their reasonable control, including acts of God, war, pandemic, or governmental orders. Such party shall use commercially reasonable efforts to mitigate and resume performance.

18. DISPUTE RESOLUTION

18.1 Governing Law; Forum. This Agreement and any dispute arising hereunder are governed by the internal laws of the State of North Carolina, without regard to conflict-of-laws principles.

18.2 Arbitration. Except as provided in Sections 16.3 and 18.3, any dispute shall be resolved by binding arbitration in [COUNTY], North Carolina before a single arbitrator mutually selected by the Parties and governed by the Arbitration Rules. The arbitrator shall render a reasoned award and may award attorneys’ fees to the prevailing party.

18.3 Provisional Remedies. Notwithstanding Section 18.2, a party may seek temporary or preliminary injunctive relief in the state courts of North Carolina to protect confidential information, enforce restrictive covenants, or preserve the status quo pending arbitration.

18.4 Jury Trial Waiver. TO THE EXTENT NOT RESOLVED BY ARBITRATION AND IF PERMITTED BY LAW, THE PARTIES KNOWINGLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT. [// GUIDANCE: Delete if client prefers to retain jury rights.]

19. GENERAL PROVISIONS

19.1 Amendments. This Agreement may be amended only by a written instrument signed by Partners holding at least [SUPER-MAJORITY %] of Sharing Ratios, unless a higher threshold is required herein.

19.2 Waiver. No waiver is effective unless in writing and signed by the waiving party. A waiver on one occasion is not a waiver on any subsequent occasion.

19.3 Assignment. No Partner may assign this Agreement or any rights hereunder without prior written consent of all other Partners.

19.4 Successors and Assigns. Subject to Section 19.3, this Agreement binds and benefits the Parties and their respective heirs, executors, administrators, successors, and permitted assigns.

19.5 Severability. If any provision is held invalid or unenforceable, the remaining provisions remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to achieve its intent.

19.6 Entire Agreement. This Agreement, together with all Schedules and Exhibits, constitutes the entire agreement among the Parties regarding its subject matter and supersedes all prior agreements, written or oral.

19.7 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original. Signatures delivered by electronic means (e.g., DocuSign, PDF) are deemed originals for all purposes.

19.8 Notices. All notices must be in writing and delivered (i) personally, (ii) via certified mail (return receipt), or (iii) by nationally recognized overnight courier, to the addresses on Schedule 4. Notice is effective on receipt or refusal.

20. EXECUTION BLOCK

IN WITNESS WHEREOF, the undersigned Partners have executed this Medical Practice Partnership Agreement as of the Effective Date.

[OPTIONAL NOTARY ACKNOWLEDGMENT BLOCK]
State of North Carolina, County of __
Acknowledged, sworn, and subscribed before me this ___ day of __, 20__.

Notary Public
My Commission Expires: _____

SCHEDULE 1 – CAPITAL CONTRIBUTIONS AND SHARING RATIOS

[Insert Table]

SCHEDULE 2 – COMPENSATION FORMULA

[Relative value unit (RVU) formula, productivity metrics, call-pay schedule, etc.]

SCHEDULE 3 – FAIR MARKET VALUE (FMV) BUYOUT FORMULA

[Valuation methodology, discounts, payment terms]

SCHEDULE 4 – NOTICE ADDRESSES

[Addresses, emails, fax numbers]