STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
7/30/86 at 1:11 pm
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EASTON MERIDIAN LIMITED PARTNERSHIP
LIMITED PARTNERSHIP AGREEMENT
AND CERTIFICATE
LIMITED PARTNERSHIP AGREEMENT AND CERTIFICATE dated as of July 30, 1986
by and among MERIDIAN NURSING CENTERS, INC., a Maryland corporation ("MNC"), as
a General Partner, and MERIDIAN, INC., a Maryland corporation ("Meridian"), as a
Limited Partner.
Preliminary Statement
Whereas, the parties hereto desire to form Easton Meridian Limited
Partnership (the "Partnership") as a limited partnership under the laws of the
State of Maryland, the purpose of this Limited Partnership Agreement and
Certificate (this "Agreement") is to set out the rights, obligations and duties
of the General Partner and the Limited Partner.
NOW, THEREFORE, it is hereby agreed that the Agreement and Certificate
of Limited Partnership of Easton Meridian Limited Partnership shall be as
follows:
ARTICLE I
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Formation, Name, Resident Agent and Purpose
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Section 1.1 Formation
The parties hereto hereby agree to form a limited partnership know as
Easton Meridian Limited Partnership as a Maryland limited partnership pursuant
to the provisions of the Maryland Revised Uniform Limited Partnership Act as
embodied in Title 10 of the Corporations and Associations Article of the
Annotated Code of Maryland, as amended from time to time.
Section 1.2 Name, Office, and Resident Agent
The Partnership shall conduct business under the name and style of
EASTON MERIDIAN LIMITED PARTNERSHIP. The principal office of the Partnership
shall be ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Partnership shall have such
other or additional offices as may, from time to time, be determined necessary
by the General Partner. The name and address of the resident agent of the
Partnership is Meridian Nursing Centers, Inc., ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
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Section 1.3 Purpose
The purposes of the Partnership are (i) to own and lease a nursing
center in Easton, Maryland (the "Project"), and (ii) to do and perform all acts
necessary, incidental, or convenient to carry out the Partnership's business
purpose.
Section 1.4 Term and Dissolution
A. The Partnership shall continue in full force and effect until
December 30, 2036, except that the Partnership shall be dissolved and wound up
prior to that date upon the happening of (a) the sale or other disposition of
all or substantially all the assets of the Partnership and the collection in
full of the sales price of the assets, (b) the death or withdrawal from the
Partnership of the General Partner, or (c) the election to dissolve the
Partnership made in writing by the General Partner with the Consent of the
Limited Partners. Whenever the Consent of the Limited Partners is required, such
Consent will exist upon the concurrence of Limited Partners whose respective
Percentage Interests comprise a majority in the aggregate of the total
Percentage Interests of all Limited Partners in the Partnership.
B. Upon dissolution of the Partnership, the General Partner (or the
trustee, receiver, successor, or legal representative of a General Partner if
such General Partner is unable or unwilling to do so) shall, unless the
Partnership is continued pursuant to Article IV, liquidate the Partnership
assets and apply and distribute the proceeds thereof in accordance with Section
6.3 Notwithstanding the foregoing, in the event the General Partner or its
representative shall determine that an immediate sale of part or all of the
Partnership's assets would cause undue loss to the Partners, the General Partner
or its representative may, in order to avoid such loss, either (i) defer
liquidation of, and withhold from distribution for a reasonable time, any assets
of the Partnership except those necessary to satisfy the Partnership debts and
obligations, or (ii) distribute the assets to the Partners in kind; provided,
however, that the proceeds of any sale or other disposition of Partnership
assets shall be distributed in the fiscal year of the Partnership in which the
proceeds are collected by the Partnership.
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ARTICLE II
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Partners and Capital
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Section 2.1 Partners and Capital
A. The persons whose names are set forth in Section 2.1.B are hereby
admitted as Partners of the Partnership. Meridian shall contribute to the
Partnership as its capital contribution as a Limited Partner all of Meridian's
right, title and interest in and to the Project. The Partners agree, subject to
the completion of an appraisal, that the value of the Project upon contribution
to the Partnership by Meridian is $7,053,065 (the "Gross Asset Value of the
Project"). MNC shall contribute to the Partnership as its capital contribution
as a General Partner cash in an amount equal to 1.0101% of the Gross Asset Value
of the Project.
B. The names, addresses, Percentage Interests, and type of interests
(i.e. whether General or Limited) of the Partners are as follows:
Percentage and
Type Interest
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Meridian Nursing Centers, Inc. ▇% ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Meridian, Inc. 99% Limited
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
100%
C. The General Partner shall have the right to admit any person or
persons as additional Limited Partners as the General Partner, in its sole
discretion, deems appropriate.
Section 2.2 No Interest on Capital Contribution
No interest shall be paid on any capital contribution to the
Partnership. Any Partner may, however, loan to the Partnership such additional
funds as may be agreed upon by the General Partner, with interest and on such
terms as the General Partner may determine. The amount of any such loan shall
not increase the Partner's Capital Account or affect in any way his share in the
profits, losses, or distributions of the Partnership.
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Section 2.3 Withdrawal of Capital
No partner shall have the right to withdraw from the Partnership all or
any part of his capital contribution until December 31, 2036. No Partner shall
have any right to demand and receive property (other than cash) of the
Partnership in return of his capital contribution except as may be specifically
provided in this Agreement or as may be otherwise agreed to by the General
Partner with the Consent of the Limited Partners.
Section 2.4 Capital Account
A. The Partnership shall establish and maintain for each Partner a
Capital Account. Each Partner's Capital Account shall be increased by:
(a) the amount of its cash capital contributions to the Partnership;
(b) the fair market value of property contributed by it to the
Partnership net of liabilities securing such contributed property that the
Partnership assumes or takes subject to);
(c) allocations to it of Partnership income and gain (or items
thereof), including income and gain except from tax and, in the case of property
that is reflected on the books of the Partnership at a book value that differs
from its adjusted basis for federal income tax purposes, solely the amount of
income and gain recognized by the Partnership for book purposes with respect to
such property; and
and shall be decreased by:
(d) the amount of money distributed to it by the Partnership,
(e) the fair market value of property distributed to it by the
Partnership (net of liabilities securing such distributed property that such
Partner assumes or takes subject to),
(f) allocations to it of expenditures of the Partnership described in
Section 705(a)(2)(B) or the Code, and
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(g) allocations of Partnership loss and deduction (or items thereof),
including, in the case of property that is reflected on the books of the
Partnership at a book value that differs from its adjusted basis for federal
income tax purposes, solely the amount of loss and deduction recognized by the
Partnership for book purposes with respect to such property.
Each Partner's Capital Account shall be further adjusted as may be necessary in
order for the Partners' Capital Accounts to be determined and maintained in
accordance with Income Tax Regulations SS1.704-1(b)(2)(iv), including
subparagraph (r) to the extent determined appropriate by the Partners.
B. In the event of any transfer of an interest in the Partnership, the
transferee shall succeed to the Capital Account of the transferor in respect of
the interest transferred.
Section 2.5 Obligation to Return Capital Contribution
No Partner shall be personally liable for the return of the capital
contributions of the Partners, or any portion thereof, it being expressly
understood that any such return of contributions shall be made solely from the
Partnership assets.
Section 2.6 No Liability of Limited Partners
No Limited Partners shall be liable for any debts, liabilities,
contracts or obligations of the Partnership. After his capital contribution has
been made, no Limited Partner shall be obligated to make any further
contributions to the capital of the Partnership except as otherwise required
under Section 6.3.B or by the Maryland Revised Uniform Limited Partnership Act.
Section 2.7 Extraordinary Contributions
If the Partnership has at any time a liability arising out of a tort or
a liability which is not customarily incurred by the Partnership in the ordinary
course of the Partnership's business and which cannot be satisfied from Net Cash
Flow or net proceeds from a Capital Transaction, such liability shall be solely
the liability of the General Partner to the extent the assets of the Partnership
are insufficient to pay such liability. In such cases, the General Partner shall
make an Extraordinary Contribution to the Partnership as soon as practicable, in
an amount sufficient to satisfy such liability. Notwithstanding the provisions
of Article VI, all losses of the Partnership which are funded by Extraordinary
Contributions shall be allocated to the General Partner.
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ARTICLE III
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Rights, ▇▇▇▇▇▇, and Duties of the General Partner
-------------------------------------------------
Section 3.1 Authorized Acts
Subject to the provisions of this Agreement, the General Partner for,
in the name and on behalf of the Partnership is hereby authorized:
(i) To acquire by purchase, lease or otherwise any interest in real or
personal property or in any other partnership, corporation or other business
entity which may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership.
(ii) To construct, rehabilitate, demolish, rebuild, repair, operate,
maintain, finance and improve, and to own, sell, convey, assign, mortgage or
lease any or all of the real estate and any personal property necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership.
(iii) To borrow money and issue evidences of indebtedness in
furtherance of any or all of the purposes of the Partnership, and to secure the
same by mortgage, pledge or other lien any assets of the Partnership.
(iv) To prepay in whole or in part, refinance, recast, increase, modify
or extend any mortgages affecting the assets of the Partnership and in
connection therewith to execute any extensions, renewals or modifications of any
such mortgages on the assets of the Partnership.
(v) To employ a management company, including a company owned wholly or
partially by any one or more affiliated persons, or who is a General Partner or
an affiliate of a General Partner, to manage the assets of the Partnership and
to pay reasonable compensation for such services, provided the General Partners
(if more than one) shall act unanimously in connection therewith.
(vi) To execute any note, mortgage and/or loan agreement in order to
secure a loan to the Partnership.
(vii) To enter into any kind of activity and to perform and carry out
contracts of any kind necessary to or in connection with, or incidental to the
accomplishment of the purposes of the Partnership, so long as said activities
and contracts may be lawfully carried on or performed by a partnership under the
laws of the State of Maryland.
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Section 3.2 Business Management and Control
A. The General Partner shall be responsible for the management and
operation of the business and affairs of the Partnership. The General Partner
shall devote to the day-to-day management and operation of the business and
affairs to the Partnership as much of its time as it, in the sole discretion,
determines to be reasonably necessary for the efficient operation of the
Partnership.
B. The General Partner shall be fully and entirely reimbursed by the
Partnership for any and all reasonable out-of-pocket costs and expenses incurred
by the General Partner in connection with the management and supervision of the
Partnership business; provided, however, that, with respect to any such
reimbursement, the General Partner shall deliver to the Partnership such
invoices and receipts as are necessary to substantiate such out-of-pocket costs
and expenses.
C. In furtherance of the provisions of this Section 3.2, the General
Partner may contract with any person, firm, or corporation, including, without
limitation, persons affiliated with the General Partner, at reasonable and
competitive rates of compensation, commission, or remuneration, for the
performance of any and all services which may at any time be necessary, proper,
convenience, or advisable to carry on the business of the Partnership.
Section 3.3 Indemnification
The Partnership shall indemnify and save harmless the General Partner,
to the extent of the assets of the Partnership, for any act which it performed
in good faith and reasonably believed was within the scope of the authority
conferred upon it by this Agreement. In the event that the assets of the
Partnership are insufficient for such purpose, no Limited Partner shall be
obligated to contribute capital to the Partnership.
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ARTICLE IV
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Termination of a General Partner's Interest
-------------------------------------------
Section 4.1 Sale of a General Partner's Interest
A. The General Partner may not, without the Consent of the Limited
Partners and then only upon admission of a substitute General Partner who
satisfies the requirements of Section 4.2, withdraw as a General Partner of the
Partnership, nor sell any portion of his interest as a General Partner of the
Partnership.
B. In the event that the General Partner withdraws from the Partnership
or sells, transfers or assigns his entire interest pursuant to Section 4.1.A, he
shall be and shall remain liable for all obligations and liabilities incurred by
him as General Partner before such withdrawal, sale, transfer or assignment
shall have become effective, but shall be free of any obligation or liability
incurred on account of the activities of the Partnership from and after the time
such withdrawal, sale, transfer or assignment shall have become effective.
C. The General Partner may at any time designate additional persons to
be General Partners, whose interest in the Partnership shall be such as agreed
upon by the General Partner and such Additional General Partner, provided that
the interest of the Limited Partners shall not be affected thereby. Such
additional Persons shall become successor or Additional General Partners only
upon meeting the conditions provided in Section 4.2.
D. In the event of any withdrawal by the General Partner or sale of the
General Partner's interest in contravention of the Agreement, the Partnership
may recover from such General Partner damages for breach of the Agreement, and
offset the damages against the amount otherwise distributable to him.
Section 4.2 Admission of a Successor or Additional General Partner
A person shall be admitted as a General Partner of the Partnership only
if the following terms and conditions are satisfied:
A. The admission of such persons shall have been consented to by the
General Partner and by such number of Limited Partner as are then required under
the Maryland Revised Uniform Limited Partnership Act to consent to ratify
admission of a General Partner, but in any event, such admission shall have
received the Consent of the Limited Partners;
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B. The successor and additional person shall have accepted and agreed
to be bound by all the terms and provisions of this Agreement, by executing such
documents or instruments that may be required or appropriate to effect the
admission of such person as a General Partner and such documents shall have been
filed for recordation and all other actions required in connection with such
admission shall have been performed;
C. If a successor or additional person is a corporation, it shall have
provided the Partnership with evidence satisfactory to counsel for the
Partnership of its authority to become a General Partner and to be bound by the
terms and provisions of this Agreement; and
D. Counsel for the Partnership shall render an opinion that the
admission of the successor or additional person is in conformity with the
Maryland Revised Uniform Limited Partnership Act and that none of the actions
taken in connection with the admission of the successor person will cause the
termination or dissolution of the Partnership, or will impair the limited
liability of the Limited Partners, or will cause it to be classified other than
as a partnership for federal income tax purposes under the rules and regulations
of the Internal Revenue Service promulgated at that time.
Section 4.3 Death or Incapacity of a General Partner
A. Upon the occurrence of any event described in Section 10-402, Title
10 of the Corporations and Associations Articles of the Annotated Code of
Maryland involving all General Partners (if there then be more than one) or the
sole General Partner (if there then be only one), the Partnership shall be
dissolved unless it is continued pursuant to Section 4.3.B hereof. In the event
that the Partnership is continued pursuant to Section 4.3.B, the General Partner
who has suffered an event described in Section 10-402, Title 10 of the
Corporations and Associations Article, or his successor in interest, shall have
his interest converted to that of a Limited Partner.
B. If an event described in Section 4.3.A occurs, the remaining
Partners may elect by unanimous consent to continue the business of the
Partnership in accordance with the provisions of this Agreement. If the
remaining Partners do not so elect, the Partnership shall be dissolved and
liquidated pursuant to Section 6.3.
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ARTICLE V
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Transferability of Limited Partner Interests
--------------------------------------------
Section 5.1 Assignability of Limited Partner Interests
A. Except as provided in this Article V, no Limited Partner shall have
the right to sell, assign, pledge, or transfer all or any portion of his
interest in the Partnership.
B. In the event of the death or incapacity of any Limited Partner, his
legal representatives shall have the same rights as the Limited Partner to
transfer his interest, pursuant to this Article V. The death or incapacity of a
Limited Partner shall not dissolve or terminate the Partnership.
Section 5.2 Restrictions
A. No limited Partner shall have the right to sell any portion of his
interest in the Partnership without first offering to sell such interest to the
General Partner and to any other Limited Partners (the "Right of First
Refusal"); provided, however, that a Limited Partner shall have the absolute and
unrestricted right to sell or gratuitously transfer any portion of his interest
in the Partnership to his spouse, children, grandchildren, sisters, brothers,
father, mother, father-in-law or mother-in-law without giving the Partners a
right of first refusal. Notwithstanding the first sentence of this Section
5.2.A, a Limited Partner which is a family trust may sell assign, or transfer
his or its interest without restriction, provided that the transferee shall be
bound by all the terms and conditions of this Agreement, including any amendment
hereto.
▇. ▇▇▇▇▇ to consummating any sale of his interest in the Partnership, a
Limited Partner must obtain and submit to the General Partner and any other
Limited Partners a bona fide written offer from the person desiring to purchase
any or all of his interest. For a period of 30 days from the receipt of the
written offer, the General Partner and any other Limited Partners shall have the
option to purchase any or all of the interest of the Limited Partner, in
proportion to the remaining Partners' Percentage Interests or as they may
otherwise decide between them, at the price and upon the payment and other terms
set forth in the written offer. The option shall be exercised by giving written
notice to the selling Limited Partner within 30 days of the receipt by the
General Partner and any other Limited Partners of the written offer to purchase.
If the option is not exercised, the selling Limited Partner shall be free to
complete the sale according to the terms of the written offer within six months
of communicating the written offer to the other Partners. If the sale is not
consummated during such period, the selling Limited Partner must again comply
with the Right of First Refusal provisions contained herein.
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C. Notwithstanding Section 5.2.A, an individual Limited Partner may, by
written instrument, designate any person (including a corporate trustee) to
become the assignee of all of his interest, as a Limited Partner, immediately
upon his death. Such an assignee if he shall then be living, shall become a
Substitute Limited Partner immediately upon the assignor's death without
requirement of any action on the part of the legal representative of the
assignor Partner; and such legal representative and the estate of such deceased
Partner shall have no interest whatsoever in the Partnership; provided, however,
that the estate of the deceased Partner shall remain liable for the liabilities
of the deceased Partner to the Partnership. Any such designation must be filed
with the General Partner during such Partner's lifetime. Such designation may be
revoked from time to time and a new such designation made and filed with the
General Partner. The Partnership need not recognize such designated assignee as
a Substitute Limited Partner until (i) duly notified in writing of the death of
the assignor Partner and (ii) furnished with a legal opinion acceptable to the
General Partner to the effect that such designation is valid under the
applicable laws of the estate and intestate succession.
D. The General Partner may require, as a condition of any sale,
transfer, exchange, or other disposition of any interest in the Partnership,
that the transferor assume all costs incurred by the Partnership in connection
therewith.
E. The Limited Partners' interests in the Partnership have been issued
without registration under the Maryland Securities Act and may not be sold or
transferred without compliance with the registration provisions of that Act or
applicable exemptions therefrom. No Limited Partner shall have the right to
demand that the Limited Partners' interests in the Partnership be registered as
securities, or to sell or transfer his Limited Partner interest without first
obtaining an opinion of counsel that such sale or transfer is exempt from
registration under the Maryland Securities Act.
F. Any sale, exchange, transfer, or other disposition in contravention
of the provisions of this Section 5.2 shall be void and ineffectual and shall
not bind or be recognized by the Partnership.
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Section 5.3 Substitute Limited Partners
A. No Limited Partner shall have the right to substitute an assignee
as a Limited Partner in his place. The General Partner shall, however, have the
right in its exclusive discretion to consent to the admission of an assignee of
the interest of a Limited Partner as a Substitute Limited Partner.
B. Any Substitute Limited Partner shall, as a condition of receiving
any interest in the Partnership, agree to be bound by the provisions of this
Agreement and to make any representations contained in this Agreement to the
same extent as the Limited Partners.
ARTICLE VI
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Profit, Loss and Distributions
------------------------------
Section 6.1 Profits and Losses
A. Allocation of Net Income and Loss. Except as otherwise provided in
this Section 6.1, all net income and net loss (excluding gains and losses from
Capital Transactions), for each fiscal year shall be allocated to the Partners
in accordance with their Percentage Interests. For purposes of determining the
Partnership's net income or net loss for each fiscal year, there shall be taken
into account for such fiscal year, in lieu of federal income tax depreciation
deductions. Depreciation computed in accordance with Section 6.1.▇.
▇. Allocation of Gain on a Capital Transaction. For purposes of this
Article VI, a "Capital Transaction" means any sale, exchange, condemnation,
casualty or other disposition of the Project or a refinancing of any mortgage
loan on the Project, the proceeds from which are not Net Cash Flow (as defined
in Section 6.2). The gain, if any, resulting from a Capital Transaction shall be
allocated:
First, to all Partners having negative balances in their Capital
Accounts prior to any distribution under Section 6.3, in proportion to
such negative balances, the portion of such gain as is necessary to
increase all such balances to zero;
Second, to each Partner who has received or will receive a distribution
out of the proceeds of such Capital Transaction under Section 6.3, the
excess of the distribution over the positive balance in such Partner's
capital account (after the allocation under First above) in proportion
to the respective amounts of such excess; and
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Third, the balance of such gain, to the Partners according to their
Percentage Interests.
C. Allocation of Loss on a Capital Transaction. The loss, if any,
resulting from a Capital Transaction, shall be allocated:
First, to all Partners having positive balances in their capital
accounts, in proportion to such positive balances, the portion of the
loss as is necessary to reduce all such balances to zero; and
Second, the balance of such loss, to the Partners according to their
Percentage Interests.
E. Allocation Among Partners or Classes of Partners. Except as
otherwise provided herein, all net income, net loss and gains or losses from
Capital Transactions allocated to the Partners or a class of Partners shall be
shared by the Partners or the members of the class in the ratios of their
Percentage Interests, one to the other.
F. Section 754 Election. All allocations of net income, net loss and
gain or loss on a Capital Transaction pursuant to this Section 6.1 shall be
made without regard to any elections made by the Partnership under Section 754
of the Code. After such allocations are made, however, appropriate adjustments
shall be made in the net income, net loss and gain or loss on a Capital
Transaction so allocated to each Partner to give effect to such elections.
G. Allocation of Gain Attributable to Depreciation Recapture. To the
extent that any portion of a gain from a Capital Transaction is treated as
ordinary income pursuant to Sections 1245 or 1250 of the Internal Revenue Code,
such ordinary income shall be allocated among the Partners in accordance with
their Percentage Interests.
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H. Determination of Capital Account Balances. For purposes of Sections
6.1.B, and C, Capital Accounts shall, except as otherwise specifically provided
therein, be determined as of the last day of the fiscal year in which a Capital
Transaction occurs, after giving effect to allocations pursuant to Section 6.1.A
and distributions during and within 60 days after such fiscal year pursuant to
Section 6.2.B and D, but before giving effect to the allocation of any gain or
loss from such Capital Transaction; provided that in applying Selection 6.1.B
First, capital accounts shall be determined prior to the distribution of the
proceeds of the Capital Transaction resulting in the gain being allocated
therein. If more than one Capital Transaction occurs in any fiscal year, the
gain or loss therefrom shall be allocated in the order in which such Capital
Transactions occur. For purposes of Section 6.1.B, the Capital Account of any
Partner shall be determined after adding any amounts required to be contributed
by such Partner to discharge Partnership obligations, including any amounts
required to be contributed by any Limited Partner pursuant to Section 6.3.B.
I. Allocations to the General Partner. Notwithstanding anything to the
contrary that may be expressed or implied in this Agreement, if at any time the
allocation provisions of Section 6.1 do not result in the allocation to the
General Partner(s) of an aggregate of at least 1% of the net income, net loss or
gain or loss on a Capital Transaction being allocated, the General Partner(s)
shall be allocated 1% thereof.
J. Definition of Depreciation. For purposes of this Article VI,
"Depreciation" shall be, for any fiscal year, an amount which bears the same
ratio to the Gross Asset Value of the Project as of the beginning of such fiscal
year as the federal income tax depreciation deduction for such year bears to the
adjusted tax basis of the Project as of the beginning of such year. For the
first fiscal year of the Partnership, the Gross Asset Value of the Project shall
be as provided in Section 2.1.B. For each fiscal year thereafter, the Gross
Asset Value of the Project shall be as provided in Section 2.1.B, reduced by
Depreciation for all prior fiscal years.
K. Special Rule for Determining Gain or Loss from a Capital
Transaction. For purposes of this Article VI, gain or loss from a Capital
Transaction shall be computed by reference to the Gross Asset Value of the
Project (as reduced by Depreciation), notwithstanding that the adjusted tax
basis of the Project differs from such Gross Asset Value.
L. Tax Allocations; Section 704(c). In accordance with Internal Revenue
Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss,
and deduction with respect to the Project shall, solely for tax purposes, be
allocated among the Partners so as to take account of the variation between the
adjusted basis of the Project to the Partnership for federal income tax purposes
and its initial Gross Asset Value as provided in Section 2.1.B. For example, in
determining how to allocate depreciation for tax purposes between Meridian and
MNC, such allocations shall be made in order that MNC be allocated, to the
extent possible, the amount of depreciation deductions which it would have been
allocated if the adjusted tax basis of the Project on the date of its
contribution had been equal to the Gross Asset Value of the Project as of that
date. Furthermore, upon a Capital Transaction, gain for income tax purposes
shall first be allocated to Meridian in the amount of the Section 704(c) Amount
(as hereinafter defined) before any taxable gain is allocated to MNC. The
"Section 704(c) Amount", as of the date of any Capital Transaction, shall be
equal to the excess of (a) the Gross Asset Value of the Project less
Depreciation incurred to date, over (b) the adjusted tax basis of the Project.
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Any elections or other decisions relating to such allocations shall be
made by the General Partner in any manner that reasonably reflects the purpose
and intention of this Agreement. Allocations pursuant to this Section 6.1.L are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Partner's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.
Section 6.2 Distributions Prior to Termination of the Partnership.
A. Definition of Net Cash Flow. For purposes of this Agreement, the
term "Net Cash Flow" for any calendar year or fraction of a calendar year, shall
mean the excess, if any, of (1) the sum of (A) the net income of the Partnership
for such calendar year or fraction thereof, plus (B) any funds previously set
aside as reserves by the General Partner to the extent that it no longer
reasonably regards such reserves as necessary in the efficient control of the
Partnership business, over (2) the such of (A) all amounts payable in such
calendar year or fraction thereof on account of the amortization (i.e. principal
payments) of any debts of the Partnership (including, without limitation loans
secured by mortgages on the Project) other than repayments out of the proceeds
of any Capital Transaction (as defined in Section 6.1.B), plus (3) the amount of
any funds set aside as reserves or used for capital expenditures by the General
Partner plus (C) any other cash expenditures which have not been deducted in
determining net income of the Partnership.
B. Net Cash Flow shall be determined separately for each calendar year
or portion thereof and shall not be cumulative. Net Cash Flow shall be
distributed to the Partners in accordance with their Percentage Interests.
Distributions of Net Cash Flow to the Partners shall be made at such reasonable
intervals during the fiscal year as shall be determined by the General Partner,
but in any event shall be distributed no less often than annually and no later
than 90 days after the close of each fiscal year.
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C. Distributions Among a Class. Except as otherwise provided herein,
all distributions to a class of Partners shall be shared by the members of the
class in the ratio of their Percentage Interests, one to the other.
D. Distributions of Proceeds of a Capital Transaction. To the extent
that cash is available for distribution from the proceeds of a Capital
Transaction, such cash shall be distributed as follows:
First, to the discharge, to the extent required by any lender or
creditor (other than a lender or creditor who is also Partner), of debts and
obligations of the Partnership;
Second, to fund reserves for contingent liabilities to the extent
deemed necessary by the General Partner;
Third, to the repayment of any loan made by a Partner to the
Partnership;
Fourth, to the Partners an amount equal to their aggregate capital
contributions, less any amounts previously distributed to them pursuant to this
clause Fourth;
Fifth, the balance thereof, to the Partners according to their
Percentage Interests.
E. Notwithstanding the foregoing, in no event shall the General Partner
receive under Sections 6.2.B and 6.2.D less than 1% of the aggregate of the
amounts distributed to the Limited Partners under Sections 6.2.B and 6.2.D. In
the event that the amount distributable to the General Partners does not equal
at least 1% of the aggregate amount distributable to the Limited Partners
without regard to this provision, then the amounts otherwise distributable to
the Limited Partner shall be reduced in proportion to the amount each Limited
Partner would have received absent this Section 6.2.E, in order to assure the
General Partner of its 1% share.
Section 6.3 Distributions and Payment Upon Termination and Winding Up
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A. Upon termination and winding up of the Partnership, the remaining
assets of the Partnership as determined by the remaining or surviving General
Partner(s) remaining after payment of all liabilities of the Partnership, and
funding all reserves, to the extent deemed necessary by the General Partner,
shall be distributed to the Partners in accordance with their respective Capital
Account balances determined after all allocations pursuant to Section 6.1 and
all prior distributions pursuant to Section 6.2, but before any distributions
pursuant to this Section 6.3.
B. In the event that a Partner's interest in the Partnership is
liquidated within the meaning of Treasury Regulation ss. 1.704-1(b)(2)(ii)(g)
and if, following the liquidation, such Partner has a deficit balance in its
Capital Account after giving effect to all Capital Account adjustments through
the Partnership's taxable year in which such liquidation occurs (other than
adjustments made pursuant to this Section 6.3.B), then such Partner shall be
unconditionally obligated to contribute to the capital of the Partnership, by
the end of the Partnership's taxable year during which such liquidation occurs
or, if later, within ninety (90) days after the date of liquidation, an amount
equal to the deficit balance in his Capital Account, which amount shall be paid
to creditors of the Partnership or distributed to other Partners in accordance
with their positive Capital Account balances and the provisions of Section 6.3.A
of this Agreement.
ARTICLE VII
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Books and Records, Accounting, Tax Elections, Etc.
--------------------------------------------------
Section 7.1 Books, Records, and Reports
A. The General Partner shall keep or cause to be kept complete and
accurate books and records of the Partnership and supporting documentation of
transactions with respect to the conduct of the Partnership's business, which
shall be maintained in accordance with sound accounting practices and shall be
available at the principal office of the Partnership for examination by any
Partner, or his duly authorized representatives, at any and all reasonable times
during normal business hours at the office of the Partnership. In the event such
books of account and other records are requested to be examined by a firm of
certified public accountants, the Partner requesting the examination shall pay
the expense of the examination.
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Section 7.2 Bank Accounts
The bank accounts of the Partnership shall be maintained in such
banking institutions as the General Partner shall determine. Withdrawals shall
be made only in the regular course of business.
Section 7.3 Tax Elections
Subject to the provisions of Section 7.4, all elections required or
permitted to be made by the Partnership under the Internal Revenue Code shall be
made by the General Partner.
Section 7.4 Special Basis Adjustments
In the event of a transfer of all or any part of the interest of any
Partner, including a transfer upon the death of a Partner, and a transfer of an
interest pursuant to Article V, the Partnership, upon request of the transferor
or transferee shall elect, pursuant to Section 754 of the Internal Revenue Code
of 1954, as amended (or corresponding provisions of succeeding law), to adjust
the basis of the Partnership's property. Notwithstanding anything contained in
Article VI of this Agreement, any adjustments made pursuant to Section 754 shall
affect only the successor in interest. Each Partner will furnish the Partnership
with all information necessary to give effect to such election.
Section 7.5 Fiscal Year and Accounting Method
The fiscal year and accounting method to be used by the Partnership
shall be determined by the General Partner.
ARTICLE VIII
------------
General Provisions
------------------
Section 8.1 Notices
A. Any and all notices called for under this Agreement shall be deemed
adequately given only if in writing and sent by registered or certified mail,
postage prepaid, to the party or parties for whom such notices are intended.
B. All such notices in order to be effective shall be addressed to a
Partner's last address of record on the Partnership books. The address of the
Partnership shall be its principal office.
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Section 8.2 Word Meanings
The singular shall include the plural and the masculine gender shall
include the feminine and neuter, and vice versa, unless the context otherwise
requires.
Section 8.3 Binding Provisions
A. The covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, the heirs, legal representatives, successors, and
assigns of the respective parties hereto.
B. None of the provisions of this Agreement shall be for the benefit
of, or enforceable by, any creditor of the Partnership.
Section 8.4 Applicable Law
This Agreement shall be construed and enforced in accordance with the
laws of Maryland.
Section 8.5 Paragraph Titles
Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provision hereof.
Section 8.6 Amendment Procedure
This Agreement may be modified or amended only with the consent of all
of the Partners, except that the General Partner may admit Limited Partners to
the extent permitted by Section 2.1.C without the consent of the Limited
Partners.
Section 8.7 Entire Agreement
This Agreement sets forth all (and is intended by all parties hereto to
be an integration of all) of the promises, agreements, conditions,
understandings, warranties and representations among the parties hereto with
respect to the Partnership, the Partnership business, and the Property, and
there are no promises, agreements, conditions, understandings, warranties, or
representations, oral or written, express or implied, among them other than as
set forth herein.
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Section 8.8 Other Business Activities
Any of the Partners may engage in and possess any interest in other
business or real estate ventures of every nature and description, independently
or with others, and neither the Partnership nor the Partners shall have any
rights in and to said independent ventures or the income or profits derived
therefrom.
Section 8.9 Power of Attorney
Each of the Limited Partners hereby constitutes and appoints the
General Partner, as his true and lawful attorney, and in his name, place and
▇▇▇▇▇, to make, execute, sign, acknowledge and file (a) any Amended Certificate
of Limited Partnership, (b) any other certificate or other instrument which may
be required to be filed by the Partnership, (c) any and all amendments or
modification of any of the foregoing, including, without limitation, amendments
of the Limited Partnership Agreement necessary to effect the addition,
substitution or withdrawl of one or more Limited Partners pursuant to the
Partnership Agreement and (d) all documents which may be required to effect the
dissolution and termination of the Partnership and cancellation of its
Certificate of Limited Partnership, as amended from time to time.
WITNESS the execution under seal the 30th day of July, 1986.
ATTEST: GENERAL PARTNER
MERIDIAN NURSING CENTERS, INC.
[Signature Illegible] By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------- ------------------------------------
Chairman
ATTEST: LIMITED PARTNER
MERIDIAN, INC.
[Signature Illegible] By: [Signature Illegible]
---------------------------------- ------------------------------------
President
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EASTON MERIDIAN LIMITED PARTNERSHIP
THIRD AMENDMENT TO THE
LIMITED PARTNERSHIP AGREEMENT
AND CERTIFICATE
THIRD AMENDMENT dated as of November 24, 2003 by and among Meridian
Health, Inc. ("Meridian"), a Pennsylvania corporation (successor by merger to
Meridian, Inc., a Maryland corporation), as the General Partner and a Limited
Partner, and Meridian Healthcare, Inc. ("Healthcare"), a Pennsylvania
corporation (successor by merger to Meridian Nursing Centers, Inc., a Maryland
corporation), as converting Limited Partner.
Preliminary Statement
Easton Meridian Limited Partnership (the "Partnership") was formed
pursuant to a Limited Partnership Agreement and Certificate dated and filed July
30, 1986 with the Maryland State Department of Assessments and Taxation (the
"Agreement and Certificate"). A First Amendment to the Agreement and Certificate
was dated December 30, 1986 and filed December 31, 1986 with the Maryland State
Department of Assessments and Taxation. A Second Amendment to the Agreement and
Certificate was dated February 27, 1987 and filed April 21, 1987 with the
Maryland State Department of Assessments and Taxation.
The purposes of this Third Amendment to the Agreement and Certificate
are (i) to convert Healthcare's entire 1% interest as a Limited Partner to that
of a General Partner, (ii) to change the resident agent of the Partnership from
Meridian to The Corporation Trust Incorporated, and (iii) to continue the
Partnership as it currently exists without any other changes to the Agreement
and Certificate.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises of the parties hereto and other good and valuable consideration, the
parties agree as follows:
1. Healthcare's entire 1% interest as a Limited Partner is hereby
converted to a 1% interest as a General Partner. As a result, Healthcare shall
have a 1% interest as a General Partner, and Meridian shall retain its 1%
interest as a General Partner and a 98% interest as a Limited Partner.
2. Except as otherwise provided herein, the Agreement and Certificate
as filed and recorded with the Maryland State Department of Assessments and
Taxation shall remain unchanged and the parties hereto ratify, confirm and agree
to be bound by all the terms and provisions of the Agreement and Certificate as
amended hereby.
3. This Third Amendment may be executed in counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all of the parties have not signed the original or the same
counterpart.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the undersigned have affixed their signatures as of
the date first above written.
WITNESS: GENERAL PARTNER:
MERIDIAN HEALTH, INC.
/s/ [illegible] By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Treasurer
WITNESS: GENERAL PARTNER:
MERIDIAN HEALTHCARE, INC.
/s/ [illegible] By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Treasurer
WITNESS: CONVERTING LIMITED PARTNER:
MERIDIAN HEALTHCARE, INC.
/s/ [illegible] By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- ----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
and Treasurer
WITNESS: LIMITED PARTNER:
MERIDIAN HEALTH, INC.
/s/ [illegible] By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Treasurer
3