Exhibit 10.13
Limited Partnership Agreement
OF
GLADSTONE DEVELOPMENT, LIMITED PARTNERSHIP
TABLE OF CONTENTS
Article Page
I. DEFINITIONS 1
II. ORGANIZATIONAL MATTERS 5
2.01 Formation 5
2.02 Name 6
2.03 Principal Office 6
2.04 Term 6
2.05 Filings 6
2.06 Company Property 6
III. PURPOSE 6
3.01 Purpose of the Company 6
IV. CAPITAL CONTRIBUTIONS 6
4.01 Capital Contributions 6
4.02 Capital Accounts 6
4.03 Deficit Capital Balance 7
4.04 Allocation 8
4.05 Interest 8
4.06 No Withdrawal 8
4.07 Loans 8
4.08 Additional Capital Contributions 8
4.09 Company Unit Represented by Certificate 8
4.10 Form of Certificate 8
4.11 Neither Responsible for Other's Commitments 8
V. ALLOCATIONS AND DISTRIBUTIONS 9
5.01 Allocation Among Class A Unit Holders 9
5.02 Allocation Among Class B Unit Holders 9
5.03 Allocation of Start Up Costs 9
5.04 Allocation of Losses 9
5.05 Allocation of Profits 10
5.06 Distributions 10
5.07 Allocation in the Event of Transfer 11
5.08 Qualified Income Offset 11
VI. MANAGEMENT AND OPERATION OF BUSINESS 12
6.01 General Partner 12
6.02 Removal of General Partner 12
6.03 Management of Company 12
6.04 Restrictions on the Authority of the General Partner 12
6.05 Outside Activities 13
6.06 Management Fee 14
6.07 Administrative Compensation 14
6.08 Devotion of Time 14
6.09 Indemnification 15
6.10 Cost Reimbursement 15
VII. BOOKS, RECORDS, ACCOUNTING AND REPORTS 16
7.01 Books and Records 16
7.02 Accounting 16
7.03 Fiscal Year 16
VIII. TAX MATTERS 16
8.01 Tax Matters Partner 16
8.02 Taxation as a Partnership 17
IX. TRANSFER OF UNITS 17
9.01 Transfer 17
9.02 Transfer of Units by a Partner 17
9.03 Option to Company to Purchase Unit(s) on Lifetime Transfer
18
9.04 Option to Partners to Purchase Unit(s) on Lifetime Transfer
19
9.05 Termination of Restrictions on Lifetime Transfer 19
9.06 Option to Company to Purchase Unit(s) on Death 19
9.07 Option to Partners to Purchase Unit(s) on Death 20
9.08 Termination of Restrictions on Transfer at Death 20
9.09 Restrictions on Transfers 21
9.10 Issuance of Certificates 21
9.11 Compliance With Applicable Law 21
9.12 Lost, Stolen or Destroyed Certificates 21
X. ADMISSION OF SUBSTITUTE AND ADDITIONAL PARTNERS 21
10.01 Admission of Substitute Partners 21
10.02 Admission of Additional Partners 22
XI. DISSOLUTION 22
11.01 Events Causing Dissolution 22
11.02 Procedure on Dissolution 23
11.03 Filing Certificate of Cancellation 24
11.04 Return of Capital 24
11.05 Withdrawal of Limited Partner . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 24
XII. AMENDMENT OF AGREEMENT, MEETINGS, RECORD DATE 24
12.01 Amendments 24
12.02 Limitations on Amendments 24
12.03 Meetings 24
12.04 Adjournment 24
12.05 Waiver of Notice; Consent to Meeting; Approval of Minutes
25
12.06 Quorum 25
12.07 Action Without a Meeting 25
XIII. POWER OF ATTORNEY 25
13.01 Power of Attorney 25
XIV. GENERAL PROVISIONS 27
14.01 Notices 27
14.02 Captions 27
14.03 Pronouns and Plurals 27
14.04 Binding Effect 27
14.05 Integration 27
14.06 Waiver 27
14.07 Counterparts 28
14.08 Applicable Law 28
14.09 Invalidity of Provisions 28
14.10 Limitation of Liability 28
SIGNATURE PAGE 28
Limited Partnership Agreement
OF
GLADSTONE DEVELOPMENT, LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT (the "Agreement") is made and entered
into this day of , 1997, by and among
GLADSTONE DEVELOPMENT, LIMITED PARTNERSHIP, a Florida Limited Partnership (the
"Company"), and the persons, partnerships, corporations or other entities who
execute this Agreement, and thereby agree to contribute to the capital of the
Company and to be bound by the provisions of the Agreement (each of whom,
whether the holder of Class B Units or Class A Units, are sometimes referred to
as "Partner").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement (except as may be otherwise expressly provided
herein or unless the context otherwise requires), the following terms shall have
the following meanings.
1.01 Act. The term "Act" shall mean the Florida Revised Uniform Limited
Partnership Act (1986), Fla.Stat. Sec. 620.101, et seq., as it may be amended
from time to time, and any successor to such act.
1.02 Affiliate. The term "Affiliate" shall mean any Person (as defined
in Section 1.24) who directly or indirectly controls, is controlled by, or is
under common control with, such Person. As used in this definition of
"Affiliate," the term "control" means either (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise, or (ii) a direct or indirect equity interest of ten
percent (10%) or more in the entity.
1.03 Agreement. The term "Agreement" shall mean this Limited Partnership
Agreement, as it may be amended or supplemented from time to time.
1.04 Certificate of Limited Partnership. The term "Certificate of Limited
Partnership" shall mean the Certificate of Limited Partnership of this Company,
filed with the Florida Department of State in accordance with the Act.
1.05 Assignee. The term "Assignee" shall mean a Person to whom one (1)
or more Units have been transferred, by transfer or assignment or otherwise, in
a manner permitted under this Agreement, and who has agreed to be bound by the
terms of this Agreement but who has not become a Substitute Partner.
1.06 Business Day. The term "Business Day" shall mean the days Monday
through Friday of each calendar week, except legal holidays recognized as such
by either the government of the United States or of the State of Florida .
1.07 Capital Account. The term "Capital Account" shall mean a separate
capital account established for each Partner by the Company pursuant to Section
4.02 hereof and maintained in the manner and for the purposes provided in
ARTICLE IV.
1.08 Capital Contribution. The term "Capital Contribution" shall mean the
sum of the total amount of cash and the total value of property contributed or
services rendered, or a promissory note or other binding obligation to
contribute cash or property or to perform services contributed to the Company
by all Partners, or any one (1) Partner, as the case may be (or the
predecessor holders of any Units of any such Partners).
1.09 Class B Unit. The term "Class B Unit" shall mean a Unit representing
an interest in the Company, other than a Class A Unit, issued from time to time
to those Partners who have executed a certain Joint Venture Agreement and have
timely remitted the appropriate funds thereunder.
1.10 Class A Unit. The term "Class A Unit" shall mean a Unit representing
an interest in the Company, other than a Class B Unit, issued to COVENTRY
CORPORATION, a Kansas corporation, d/b/a Coventry Corporation of the Republic,
Inc., upon the formation of the Company.
1.11 Code. The term "Code" shall mean the Internal Revenue Code of 1986,
as amended (or any corresponding provisions of succeeding law).
1.12 Company. The term "Company" shall mean this limited partnership
formed by the filing of the Company's Certificate of Limited Partnership with
the Florida Department of State.
1.13 Company Property. The term "Company Property" shall mean all
property, whether real or personal, tangible or intangible, and whether owned,
leased or acquired by the Company from time to time.
1.14 Distributable Cash Funds. The term "Distributable Cash Funds" shall
mean all the cash funds of the Company other than (i) Net Cash Proceeds and (ii)
proceeds from a Sale in connection with a dissolution of the Company under
Section 11.02, which the General Partner, in the General Partner's sole
discretion, determines are not (i) needed for the payment of existing or
anticipated Company obligations and expenditures, including capital
expenditures, (ii) required by law to be reserved, or (iii) needed for repair
or replacement of Company Property (whether for capital or non-capital
items). The General Partner shall use good faith efforts, in light of the
existing and anticipated
financial conditions, in determining the availability of Distributable Cash
Funds for payment to the Partners to enable them to pay their federal and
state income tax liability that may be imposed upon the Partner's share of
the Company's Profits and Losses.
1.15 Initial Capital Contribution. The term "Initial Capital
Contribution" means for purposes of this Agreement, with respect to any Partner,
the amount of money contributed to and received by the Company with respect to
the Units held by such Partner as set forth on Schedule "1."
1.16 Joint Venture Agreement. The term "Joint Venture Agreement" shall
mean for purposes of this Agreement, that certain joint venture agreement
between the General Partner and Affiliates of the Class B Unit Holders, to
which this Agreement has been attached and entitled Exhibit 3.1.
1.17 General Partner. The term "General Partner" shall mean that Person
or those Persons named or appointed as General Partner(s) of the Company
pursuant to Section 6.01.
1.18 Majority-in-Interest. The term "Majority-in-Interest" shall mean,
with respect to any agreement or vote of the Partners, one (1) or more of the
Partners whose combined Sharing Ratios in the Class B and Class A Units, at the
time of any such agreement or vote, exceed ninety-two percent (92%) of the then
outstanding Class B and Class A Units held by all Partners.
1.19 Partner. The term "Partner" shall mean those individuals executing
this Agreement as Partners of the Company on the signature pages attached
hereto.
Provided, the term "Limited Partner" shall mean only those Persons who have
subscribed for and acquired one or more Class B Units.
1.20 Net Cash Proceeds. The term "Net Cash Proceeds" shall mean the net
cash (including both principal and interest) realized by the Company from a
Sale, after retirement of applicable mortgage debt, payment of all expenses
related to the transaction, payment of or provision for, Company debts and
obligations, and establishment and maintenance of such reserves as the
General Partner, in its sole discretion, may deem necessary or appropriate
for anticipated capital gain taxes, obligations, contingencies, capital
improvements, replacements and working capital of the Company.
1.21 Return. The term "Return" shall mean that point in time when cash
distributions remitted from the Company to the Class B Unit holders equal the
aggregate Initial Capital Contributions of the Class B Unit holders.
1.22 A Unit Period Return Amount. The term "A Unit Period Return
Amount"
shall mean an amount payable to each holder of Class A Units and which shall
accrue until Return for any fiscal year at an annual rate equal to ten percent
(10%) of such Class A Unit Holder's Initial Capital Contribution.
1.23 B Unit Period Return Amount. The term "B Unit Period Return Amount"
shall mean an amount payable to each holder of Class B Units and which shall
accrue until Return for any fiscal year at an annual rate equal to ten percent
(10%) of such Class B Unit Holder's Initial Capital Contribution.
1.24 Person. The term "Person" shall mean any natural person, limited
liability company, partnership, corporation, trust, association or other legally
recognized entity.
1.25 Prime Rate. The term "Prime Rate" means the prime rate in effect
from time to time as published in the Money Rates Section of the Wall Street
Journal, or its successor.
1.26 Project Facility. The term "Project Facility" shall mean any
facility operated or licensed by Sterling House Corporation, the ownership and
operation of which is intended to be the primary business purpose of the
Company.
1.27 "Profits" and "Losses". The terms "Profits" and "Losses" shall mean
respectively, at all times during the existence of the Company, the income or
loss of the Company for federal income tax purposes and income of the Company
exempt from tax for such purpose, determined as of the close of the Company's
calendar year, including, without limitation, each item of Company income, gain,
loss, deduction and credit.
1.28 Record Holder. The term "Record Holder" shall mean the Person in
whose name each Unit is registered on the books and records of the Company as of
the close of business on a particular Business Day.
1.29 Sale. The term "Sale" shall mean and include the sale, exchange,
condemnation or similar eminent domain taking, casualty or other disposition of
all or any portion of the Company Property which is not in the ordinary course
of business, and the sale of easements, rights of way or similar interests in
the Company Property or any other similar items which in accordance with the
accounting methods used by the Company are attributable to capital; provided,
however, that the term "Sale" shall not refer to any transaction to the extent
gain or loss is not recognized, or is elected not to be recognized, under any
applicable section of the Code.
1.30 Sharing Ratio. The term "Sharing Ratio" shall mean for any Partner
the proportion obtained by dividing (i) the number of Units (either Class B
Units, Class A Units, or both, as the case may be) held by such Partner in the
Company by (ii) the sum of all Units (either Class B Units, Class A Units, or
both, as the case may be) issued and outstanding in the Company; provided, that
in the event of any assignment by a Partner of a Unit in the Company, the
Sharing
Ratio of such Partner shall be proportionately reduced, based upon the number of
Units assigned compared to the total number of Units owned by such Partner, and
the assignee of such Unit or Units shall succeed to a proportionate share of the
Sharing Ratio of his assignor that is attributable to the Unit or Units
transferred to such Assignee.
1.31 Start Up Costs. The term "Start Up Costs" shall mean all costs and
expenses delineated under Section 195 (c)(1) of the Code.
1.32 Substitute Partner. The term "Substitute Partner" shall mean an
Assignee of the Unit(s) who has been admitted as a Partner pursuant to the
provisions of this Agreement, in place of his/her assignor. A Substitute
Partner, upon his/her admission as such, shall replace and succeed to the
rights, privileges and liabilities of the Partner from whom he acquired his/
her Unit(s) to the extent of the Unit(s) so transferred.
1.33 Supermajority-in-Interest. The term "Supermajority-in-Interest"
shall mean, with respect to any agreement or vote of the Partners, one (1) or
more of the Partners whose combined Sharing Ratios as to each Class B and Class
A Units, then outstanding at the time of any such agreement or vote, equal or
exceeds ninety-nine percent (99%) of each of the Class B and Class A Units held
by all Partners.
1.34 Tax Matter Partner. The term "Tax Matter Partner" shall mean the
Person designated pursuant to Section 8.01.
1.35 Treasury Regulations. The term "Treasury Regulations" shall mean the
Income Tax regulations promulgated under the Code, as such Regulations may be
amended (including corresponding provisions of succeeding regulations).
1.36 Unit. The term "Unit" shall collectively mean the Class B Units and
the Class A Units and any fraction of such Units.
ARTICLE II.
ORGANIZATIONAL MATTERS
2.01 Formation. The Company shall be formed as a limited
partnership pursuant to the provisions of the Act. The rights and obligations
of the Partners, and the affairs of the Company, shall be governed first by the
mandatory provisions of the Act, second by the Company's Certificate of Limited
Partnership , third by this Agreement and fourth by the optional provisions of
the Act. In the event of any conflict among the foregoing, the conflict shall
be resolved in the order of priority set forth in the preceding sentence.
2.02 Name. The name of the Company shall be "GLADSTONE DEVELOPMENT,
LIMITED PARTNERSHIP."
2.03 Principal Office. The principal office of the Company in the
State of Florida shall be located at 0000 X.X. 00xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxx
00000. The Company may also maintain offices at such other place or places as
the General Partner deems advisable.
2.04 Term. The Company shall commence upon the filing for record
of the Company's Certificate of Limited Partnership with the Florida Secretary
of State and shall continue thereafter for 100 years unless earlier terminated
by law or until the earlier dissolution in accordance with ARTICLE XI.
2.05 Filings. Upon the request of the General Partner, the Partners
shall immediately execute and deliver all such certificates and other
instruments conforming hereto as shall be necessary for the General Partner
to accomplish all filing, recording, publishing and other acts appropriate to
comply with all requirements for the formation and operation of a limited
partnership under the laws of the State of Florida and for the formation,
qualification and operation of a limited partnership in all jurisdictions
where the Company shall propose to conduct business.
2.06 Company Property. All property owned by the Company, whether
real or personal, tangible or intangible, shall be deemed to be owned by the
Company as an entity, and no Partner, individually, shall have any ownership of
such property. The Company shall hold its assets in its own name. No Limited
Partner shall have the right to require the partition or sale of any property
owned by the Company. The interest of any Partner in the Company (as
represented by their A Units or B Units) will be personal property for all
purposes.
ARTICLE III.
PURPOSE
3.01 Purpose of the Company. The purpose for which the Company is
formed is the transaction of any and all lawful business for which limited
partnerships may be organized under the Act.
ARTICLE IV.
CAPITAL CONTRIBUTIONS
4.01 Capital Contributions. Each Partner shall contribute to the
capital of the Company an amount equal to such Partner's Capital Contribution in
exchange for a corresponding number of Units as set forth on Schedule "1"
attached hereto. Each Partner shall be credited with an initial capital account
equal to the amount of their respective Initial Capital Contribution.
4.02 Capital Accounts. A separate Capital Account shall be
maintained by the Company for each of the Partners in accordance with the
capital
accounting rules of Section 704(b) of the Code, and the Treasury Regulations
thereunder. Adjustments shall be made in each Partner's Capital Account as
required by the capital accounting rules of Section 704(b) of the Code and the
Treasury Regulations.
Upon any contribution of money or other property to the Company (other than
a de minimis amount) as consideration for an interest in the Company, or upon
the dissolution of the Company or a distribution of money or other property
(other than a de minimis amount) by the Company as consideration for an
interest in the Company, the book values of Company Property and the Capital
Accounts of the Partners may be adjusted in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), if in the discretion of the General
Partner such adjustment would be helpful in maintaining compliance with the
requirements of Treasury Regulations Section 1.704-1(b). If any Company
Property is to be distributed in kind, such property shall be distributed on
the basis of its fair market value, as determined by the General Partner,
after the Partners' Capital Accounts have
been adjusted to reflect the manner in which any unrealized gain and loss with
respect to such Company Property (that had not been reflected in the Capital
Accounts previously) would be allocated among the Partners if there were a
taxable disposition of the Company Property for its fair market value. These
provisions and other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Treasury Regulations Section 1.704-
1(b), and shall be interpreted and applied in a manner consistent with such
Section of the Treasury Regulations.
4.03 Deficit Capital Account Balance. In the event that, following
the liquidation (as defined in Treasury Regulations Section 1.704-1(b)(2)(ii)
(g)) of a Partner's interest in the Company (whether or not in connection
with the
dissolution and termination of the Company), and after crediting any gain or
charging any loss pursuant to Article V hereof, such Partner shall have a
deficit
balance in its Capital Account, such Partner shall contribute in cash to the
capital of the Company (by the later of the last day of the taxable year in
which
such liquidation takes place or the date 90 days after the date on which such
liquidation takes place) an amount equal to the amount of such deficit balance;
provided, however, that:
1) the Limited Partner shall have no obligation to make a contribution
to the Company pursuant to this Section 4.03, unless it has previously delivered
to the General Partner an irrevocable written election to subject itself to such
an obligation;
2) if the Limited Partner delivers such a written election to the
General Partner, the amount that the Limited Partner shall be required to
contribute to the Company pursuant to this Section 4.03 shall not exceed a sum
equal to such Partner's Initial Capital Contribution; and
3) although the Partners are not aware of any possible impact of the
provision contained in clauses "(i)" and "(ii)" above on the Capital Account of
the General Partner, if any election made by the Limited Partner in accordance
with clause "(i)" above results in an increase in the deficit balance, if any,
of the Capital Account of the General Partner, then such election shall not be
effective and the Limited Partner shall have no obligation to make any
contribution to the Partnership pursuant to this Section 4.03
4.04 Allocation. Any item of income, loss and deduction with
respect to any Company Property that has been contributed by a Partner to the
Capital of the Company and which is required to be allocated for income tax
purposes under Section 704(c) of the Code, so as to take into account the
variation between the tax basis of such Company Property and its agreed upon
fair market value at the time of its contribution, shall be allocated to the
Partners
solely for income tax purposes in the manner so required. Elections under
Section 704(c) shall be made at the discretion of the General Partner.
4.05 Interest. No interest shall be paid by the Company on Capital
Contributions, on balances in a Partner's Capital Account, or on any other funds
distributed or distributable under this Agreement. To the extent that the
General Partner may loan additional funds to the Company, the General Partner
agrees to charge annual interest on any outstanding balance at a rate that is no
more than 275 basis points above the Prime Rate. Provided, the General Partner
shall be entitled to collateralize the repayment of such indebtedness by taking
a secured first mortgage, or such lesser position as the General Partner may
choose, in any property of the Company, including any Project Facility.
4.06 No Withdrawal. Except as otherwise required under mandatory
provisions of the Act, no Partner shall have the right to a withdrawal, or to
receive any return of such Partner's Capital Contribution, except as
specifically provided for herein. Except as otherwise expressly
provided in ARTICLE V and Section 11.02 hereof, no Partner shall have
priority over any other Partner,
either as to the return of such Partner's Capital Contribution or as to income,
gains, losses, deductions or credits.
4.07 Loans. Nothing in this Agreement shall prevent any Partner
from making secured or unsecured loans to the Company by agreement with the
Company. The Company may upon an affirmative vote of a Supermajority-in-
Interest make loans to any Partner or any Affiliate of any Partner.
No Partner shall at
any time be required to loan additional amounts to the Company.
4.08 Additional Capital Contributions. There shall be no additional
contributions of capital required of any Limited Partner.
4.09 Company Unit Represented by Certificate. Within thirty (30)
days of the date of this Agreement, the General Partner shall issue and deliver
to each Partner a certificate evidencing their respective ownership of the Units
transferred by the Company to the Partners (hereinafter referred to as
"Certificate").
4.10 Form of Certificate. The form of Certificate to be issued by
the Company may be written, typewritten, mimeographed or printed and otherwise
in such form and design as may be determined by the General Partner in its
discretion.
4.11 Neither Responsible for Other's Commitments. Neither the
Partners nor the Company shall be responsible or liable for any indebtedness or
obligations of the other Partners incurred either before or after the execution
of this Agreement, except as to those responsibilities or obligations incurred
or assumed by a Partner pursuant to the terms of this Agreement.
ARTICLE V.
ALLOCATIONS AND DISTRIBUTIONS
5.01 Allocation Among Class A Unit Holders. Each Class A Unit
holder shall share Company items of costs, credits, income, revenues, gain, loss
and distributions allocated, charged or credited to the Class A Units as a class
hereunder in accordance with the proportion of the Sharing Ratio which
each Class
A Unit holder bears relative to the aggregate Sharing Ratios of all Class A Unit
holders.
5.02 Allocation Among Class B Unit Holders. Each Class B Unit
holder shall share Company items of costs, credits, income, revenues, gain, loss
and distributions allocated, charged or credited to the Class B Units as a class
hereunder in accordance with the proportion which the Sharing Ratio of
each Class
B Unit holder bears relative to the aggregate Sharing Ratios of all Class B Unit
holders.
5.03 Allocation of Start Up Costs. Except as otherwise expressly
provided, all Start Up Costs of the Company, whether immediately
expensed during
any fiscal year or amortized over a greater period of time, shall be computed in
accordance with tax accounting principles consistently applied, using such
methods of amortization or expense as the General Partner determines to use for
federal income tax purposes, and shall be allocated in the order and proportions
among the Partners as follows:
A) First, Until B Unit Capital Accounts Equal Zero:
Class A Units 0%
Class B Units 100%
B) Thereafter:
Class A Units 100%
Class B Units 0%
5.04 Allocation of Losses. Except as otherwise expressly provided,
all Losses of the Company for each fiscal year shall be computed in accordance
with tax accounting principles consistently applied, using such methods of
accounting for depreciation and other items as the General Partner determines to
use for federal income tax purposes, and shall be allocated in the order and
proportions among the Partners as follows:
A) First, Until B Unit Capital Accounts Equal Zero:
Class A Units 0%
Class B Units 100%
B) Thereafter:
Class A Units 100%
Class B Units 0%
5.05 Allocation of Profits. Except as otherwise expressly provided,
all Profits of the Company for each fiscal year computed in accordance with tax
accounting principles consistently applied, using such methods of accounting for
depreciation and other items as the General Partner determines to use for
federal income tax purposes, shall be allocated among the Partners as follows:
A) Prior to Return:
Class A Units 40%
Class B Units 60%
B) After Return:
Class A Units 51%
Class B Units 49%
5.06 Distributions, Period Return Amounts, and Special Allocations.
A) Interim distributions, if made, shall be distributed to the Partners
out of Distributable Cash Funds as follows:
Prior to Return:
Class A Units 40%
Class B Units 60%
After Return:
Class A Units 51%
Class B Units 49%
B) In the event of a Sale or distributions in connection with a
dissolution of the Company in accordance with ARTICLE XI, the Company shall also
distribute to the Partners out of Net Cash Proceeds in accordance with Section
5.06(A).
C) Notwithstanding the provisions of Section 5.06 (A), to the extent
that there are Distributable Cash Funds available at any time prior to Return,
then before any funds shall be distributed to the holders of Class A Units,
there
shall first be remitted to the holders of Class B Units an amount equal to their
B Unit Period Return Amount. To the extent that such B Unit Period Return
Amount
is not paid in any fiscal year, it shall accumulate and the obligation to pay
the same shall carry over into the next and other succeeding years until paid.
Notwithstanding the provisions of Section 5.05 (A) or of the preceding sentence
of this Section 5.06 (C), to the extent that there are Distributable Cash Funds
available at any time prior to Return but after full payment of all B Unit
Period
Return Amounts then owing, then before any additional funds shall be distributed
to the holders of Class B Units, there shall first be remitted to the holders of
Class A Units an amount equal to their A Unit Period Return Amount. To the
extent that such A Unit Period Return Amount is not paid in any fiscal year, it
shall accumulate and the obligation to pay the same shall carry over into the
next and other succeeding years until paid. It is understood and agreed that
sums
received as the payment of the B Unit Period Return Amount shall constitute a
return of capital and not of income or profits to the extent that such payments
would not decrease the Class B Unit Holder's capital account below zero.
Further, any distribution that is in excess of any B Unit Holder's capital
account shall be deemed to be a "gross income" (as that term is defined under
Section 61 of the Code) allocation to the extent of such distribution.
D) It is understood and agreed that distributions, including the B Unit
Period Return Amount, may be, but shall not be required to be, made at least
quarterly. No distribution to the Partners shall be made in kind, in lieu of
cash.
5.07 Allocation in the Event of Transfer. In the event of an
assignment of a Partner's interest in the Company pursuant to ARTICLE IX, all
Profits and Losses of the Company for federal, state and local income tax
purposes shall, unless otherwise required by applicable Treasury Regulations, be
determined monthly and shall be allocated to the Partners in accordance with
their Sharing Ratios in Class B Units and Class A Units, as the case may be, on
the first (1st) day of such month; provided, however, a Partner transferring all
or a portion of his Units at any time during a month is deemed to have
transferred the Units as of the first (1st) day of the month following the
transfer; provided, further, that gain or loss on a sale or other disposition of
all or a substantial portion of the assets of the Company shall be allocated to
the Partners of record on the day of such sale or other disposition.
Notwithstanding any of the foregoing, the General Partner may allocate such
items
on some other reasonable basis if it determines, in its sole discretion, that
the Company's methods of allocating such items does not satisfy the
requirements of
Section 706 of the Code and the Treasury Regulations promulgated thereunder.
5.08 Qualified Income Offset. Notwithstanding anything in this
ARTICLE V to the contrary, in the event a Partner unexpectedly receives any
adjustment, allocation or distribution described in Section
1.704(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations, which causes or
increases the deficit balance in such Partner's capital account, then items of
income and gain shall be allocated to such Partner or Partners in an amount and
manner sufficient to eliminate the deficit balances in their Capital Accounts as
quickly as possible.
ARTICLE VI.
MANAGEMENT AND OPERATION OF BUSINESS
6.01 General Partner. The Company shall have one (1) General
Partner who is a Partner of the Company. The initial General Partner of the
Company shall be the corporation named in the Certificate of Limited
Partnership
and who shall serve as General Partner of the Company until such time as it
resigns and withdraws from the Company or is removed in accordance with Section
6.02. In the event the General Partner resigns, the replacement General Partner
shall be selected by a vote of a Supermajority-in-Interest of the Partners.
6.02 Removal of General Partner. A Supermajority-in-Interest of the
Unit holders shall have the right to remove a General Partner, but only for
cause, and to choose a new General Partner. The replacement General Partner
shall be selected by a vote of a Majority-in-Interest of the Unit holders. The
replacement General Partner's appointment shall be further conditioned upon the
Partners obtaining the full release of all then outstanding guaranties to which
the then replaced General Partner and its Affiliates are parties.
6.03 Management of Company. The management of the Company shall be
vested solely with the General Partner, chosen in accordance with this
Agreement,
who shall have full authority and discretion to conduct the ordinary and usual
business and affairs of the Company, to take any action of any kind and to do
anything and everything such General Partner deems necessary, subject to the
restrictions set forth in this Agreement. The General Partner shall be imposed
with a fiduciary duty to conduct the business and affairs of the Company in the
best interests of the Company and of the Partners, including the safekeeping and
use of all Company funds and assets for the exclusive benefit of the Company
whether or not the same shall be in the immediate possession or control of the
General Partner. Provided, the preceding sentence shall not be construed as
prohibiting the General Partner from contracting with an Affiliate (for example,
BCI Construction, Inc.) provided that the General Partner believes in good faith
that the terms of such agreement are commercially reasonable. No Limited
Partner shall take part in or interfere in any manner with the conduct or
control
of the business of the Company or have any right or authority to act for or bind
the Company unless such Limited Partner has been expressly authorized by the
General Partner in writing to act as an agent of the Company for a particular
matter, transaction or series of same.
6.04 Restrictions on the Authority of the General Partner. Subject
to the provisions of this Agreement, except as herein provided, the General
Partner shall not be authorized to do any of the following acts without the
prior consent of all of the Partners:
A) Any act in contravention of this Agreement or the Certificate of
Limited Partnership of the Company;
B) Any act which would make it impossible or impractical for the
Company to conduct the ordinary business of the Company;
C) Confess judgment against the Company; or
D) Possess, sell or otherwise dispose of any property of the Company,
except in the ordinary course of business.
6.05 Outside Activities.
A) Each Partner, including the General Partner, and such Partner's
Affiliates may have business interests and engage in business activities in
addition to those relating to the Company. However, during the term of the Joint
Venture Agreement, no Partner shall directly or indirectly own, operate,
develop,
construct, manage or participate in the ownership, development, construction,
operation or management of any assisted living, dementia or other specialty care
facility for the elderly located in the "Territory", as such term is defined by
the Joint Venture Agreement. In addition, as long as SGH and Partner or any
Affiliate of any Partner own directly or indirectly any beneficial interest in
the Company, and for a period of one (1) year thereafter, such Partner or their
Affiliate shall not directly or indirectly own, operate, develop, construct,
manage or participate in the ownership, development, construction, operation or
management of any assisted living, dementia or other specialty care facility for
the elderly located within twenty five (25) miles from any Project Facility
owned by the Company. The restrictions set forth in this Section 6.05 are
subject to the following exceptions:
1) such restrictions shall not be considered violated by reason
of Partner or their Affiliates developing, owning and/or constructing nursing
home facilities which require a certificate of need or the equivalent; and
2) such restrictions shall not be considered violated by reason
of any Partner or any Affiliate of any Partner owning less than a five percent
(5%) interest in a legal entity that owns, develops, constructs, operates or
manages any assisted care or dementia or other special care facilities and whose
shares of stock are traded on a nationally recognized stock exchange or traded
in the over-the-counter market.
B) Each Partner hereby agrees that the restrictions set forth in this
Section 6.05 are founded on valuable consideration and are reasonable in
duration
and geographic area in view of the circumstances under which this Agreement is
executed and that such restrictions are necessary to protect the legitimate
interests of the Company and its Partners. In the event that any provision of
this Section 6.05 is determined to be invalid by any arbitrator or court of
competent jurisdiction, the provisions of this Section 6.05 shall be deemed to
have been amended and the parties agree to execute any documents and take
whatever action is necessary to evidence such amendment, so as to eliminate or
modify any such invalid provision and to carry out the intent of this Section
6.05 to render the terms of this Section 6.05 enforceable in all respects as so
modified.
C) Each Partner acknowledges and agrees that irreparable injury may
result to the other Partners and/or the Company if a Partner breaches any
covenant contained in this Section 6.05 and that the remedy at law for the
breach
of any such covenant will be inadequate. Therefore, if any Partner shall engage
in any act in violation of any of the provisions of this Section 6.05, the other
Partners and the Company (or any or all of them) shall be entitled, in addition
to such other remedies and damages as may be available to any or all of them at
law or under this Agreement, to injunctive relief to enforce the provisions of
this Section 6.05.
D) Neither the Company nor the other Partners shall have any rights by
virtue of this Agreement or the relationship contemplated herein to share or
participate in any other business ventures or activities of such Partner or such
Partner's Affiliates.
6.06 Management Fee. In consideration of the performance of the on-
going day to day management of each Project Facility, the Company shall, no less
frequently than monthly pay to the General Partner (or its subcontractor) an
amount equal to seven percent (7%) of the gross revenue realized by the Company
for each accounting period (hereinafter "Management Fee"). To the extent not
paid, the Management Fee shall be cumulative from month to month and from fiscal
year to fiscal year.
6.07 Administrative Compensation. In consideration for the rendering of
certain administrative activities during the initial operation phase of the
Project Facility, the Company shall pay to the General Partner (or its
subcontractor), by no later than the initial funding of the construction
financing for the Project Facility a one time fee in the amount of Twenty
Thousand Dollars ($20,000) (hereinafter "Administrative Compensation"). It is
understood and agreed that the Administrative Compensation is intended to
compensate the General Partner for its efforts and is in addition to any
reimbursement for any and all direct costs incurred by the General Partner on
behalf of the Company during the initial operation phase of the Project
Facility.
The General Partner may contract with or assign to another party, including an
Affiliate of Sterling House Corporation, all or a portion of the responsibility
for performing such activities.
6.08 Devotion of Time. The General Partner shall not be expected
to devote its entire time or attention to the Company's business, but only such
time and effort as is required for the sound and proper management of the
Company.
6.09 Indemnification.
A) Company Indemnity. To the maximum extent permitted by law, the
Company shall indemnify and hold harmless the General Partner, all Partners,
their respective Affiliates, and the employees and agents of the Company (each,
an "Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorney's fees and disbursements), judgments, fines, settlements, penalties and
other expenses actually and reasonably incurred by the Indemnitee in connection
with any and all claims, demands, actions, suits, or proceedings, civil,
criminal, administrative or investigative, in which the Indemnitee may be
involved, or threatened to be involved, as a party or otherwise, by reason of
the fact that the Indemnitee is or was a Limited Partner or the General
Partner of the Company or is or was an employee or agent of the Company,
including
Affiliates of the foregoing, arising out of or incidental to the business of the
Company, provided (i) the Indemnitee's conduct did not constitute willful
misconduct or recklessness, (ii) the action is not based on breach of this
Agreement, (iii) the Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Company and within the scope of such Indemnitee's authority, and (iv) with
respect to a criminal action or proceeding, the Indemnitee had no reasonable
cause to believe Indemnitee's conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere, or its equivalent, shall not, in and of itself,
create
a presumption or otherwise constitute evidence that the Indemnitee acted in a
manner contrary to that specified above.
B) Advancement of Expenses. Expenses incurred by an Indemnitee in
defending any claim, demand, action, suit or proceeding subject to this Section
6.09 may, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the
Company of an undertaking by or on behalf of the Indemnitee to repay such
amount(s) if it shall ultimately be determined that such Person is not entitled
to be indemnified as authorized in this Section 6.09.
C) Non-Exclusivity. The indemnification provided by this Section 6.09
shall be in addition to any other rights to which the Indemnitee may be entitled
under any agreement, vote of the Partners, as a matter of law or equity, or
otherwise, and shall inure to the benefit of the successors, assignees, heirs,
personal representatives and administrators of the Indemnitee.
D) Insurance. The Company may purchase and maintain insurance, at the
Company's expense, on behalf of any Indemnitee against any liability that may be
asserted against or expense that may be incurred by an Indemnitee in connection
with the activities of the Company regardless of whether the Company would have
the power to indemnify such Indemnitee against such liability under the
provisions of this Agreement.
6.10 Cost Reimbursement In consideration for the execution of any guaranty
by the General Partner, for any Project Facility, if and as required for any
third party construction of initial permanent financing of such facility, the
Company shall reimburse the General Partner an amount equal to its direct costs
paid to third parties for providing such guaranty (hereinafter the "Cost
Reimbursement"). It is understood and agreed that the Cost Reimbursement is
non- refundable and fully earned upon execution of each such guaranty. In
the event
any Project Facility is thereafter refinanced, the General Partner shall not be
obligated to execute a guaranty for the same, absent the reimbursement of any
additional direct costs paid to third parties.
ARTICLE VII.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
7.01 Books and Records. Appropriate books and records with respect
to the Company's business, including, without limitation, all books and records
necessary to provide to the Partners any information, lists and copies of
documents required to be provided pursuant to the Act shall at all times be kept
at the principal office of the Company or at such other places as agreed to by
the Partners. Without limiting the foregoing, the following shall be maintained
at the Company's principal office: (i) a current list of the full name and last
known business address of each Limited Partner and General Partner; (ii) copies
of records that would enable a Limited Partner to determine the relative voting
rights of the Partners; (iii) a copy of the Certificate of Limited Partnership
, and any amendments thereto; (iv) copies of the Company's federal, state and
local income tax returns and reports, if any, for the then three (3) most recent
years; (v) a copy of this Agreement; and (vi) copies of any financial statements
of the Company for the then three (3) most recent fiscal years. Any records
maintained by the Company in the regular course of its business may be kept on,
or be in the form of, magnetic tape, photographs or any other information
storage
device, provided that the records so kept are convertible into clearly legible
written form within a reasonable period of time. Upon reasonable request, each
Limited Partner shall have the right, during ordinary business hours, to inspect
and copy any of such records at the requesting Limited Partner's expense.
7.02 Accounting. The books of the Company for regulatory and
financial reporting purposes shall be maintained on either a cash or accrual
basis of accounting, which shall be determined by the General Partner. The
Company books for purposes of maintaining and determining Capital Accounts shall
be maintained in accordance with the provisions of this Agreement, Section 704
of the Code and, to the extent not inconsistent therewith, the principles
described above for financial reporting and regulatory purposes.
7.03 Fiscal Year. The fiscal year of the Company shall be the
calendar year, unless otherwise determined by a Majority-in-Interest vote of the
Partners.
ARTICLE VIII.
TAX MATTERS
8.01 Tax Matters Partner. The Partners hereby appoint the General
Partner, as the "Tax Matters Partner" (hereinafter referred to as the "TMP") as
defined in Section 6231(a)(7) of the Code. The TMP is authorized to take such
actions and to execute all statements and forms on behalf of the Company which
may be permitted or required by the applicable provision of the Code or the
Treasury Regulations, and the Partners shall take all other actions that may be
necessary or appropriate to effect the designation of the General Partner as the
TMP. In the event of an audit of the Company's income tax returns by the
Internal Revenue Service, the TMP may, at the expense of the Company,
retain accountants and other professionals to participate or
assist in the audit process. All expenses incurred by the TMP in such capacity
as TMP shall be expenses of the Company and paid from Company funds. The TMP
may be changed by a vote of a Majority-in-Interest of the Partners.
8.02 Taxation as a Partnership. No election shall be made by the
Company or any Partner for the Company to be excluded from the application of
any provision of Subchapter K, Chapter 1, of Subtitle A of the Code or from any
similar provisions of any state tax laws.
ARTICLE IX.
TRANSFER OF UNITS
9.01 Transfer.
A) The term "transfer," when used in this ARTICLE IX with respect to a
Unit, shall be deemed to refer to a transaction by which the Partner assigns all
or a portion of such Partner's Unit(s), or any interest therein, to another
Person, or by which the holder of a Unit assigns the Unit to another Person or
Assignee, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, transfer by will or intestate succession, exchange, or
any other disposition.
B) No Units shall be transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this ARTICLE IX. Any
transfer or purported transfer of any Units not made in accordance with this
ARTICLE IX shall be null and void. If there is an involuntary transfer by
operation of law or otherwise and such involuntary transfer is not made in
accordance with this ARTICLE IX, then the Assignee shall not be a Substitute
Partner, and shall have no right to participate in the Company's affairs as a
Partner thereof, but instead, shall only be entitled to receive the share of
profits, losses or other distributions by way of income and/or the return of
capital to which the transferring Partner would otherwise be entitled at the
time said transferring Partner would be entitled to receive the same and such
Assignee shall not have any right to participate in the business or affairs
of the Company, including the right to vote on, consent to, or otherwise
participate in any decision of the Partners.
9.02 Transfer of Units by a Partner.
A) Except as provided in Section 9.03 hereto, no Units may be
transferred by a Partner unless the following conditions are first satisfied:
1) The consent of each Partner has been obtained, which may be
granted or withheld in each Partner's sole discretion, such consent to be
evidenced by a written instrument, dated and signed by the Partner;
2) The transferee and each Partner execute and file all documents
necessary for the transferee to be a Substitute Partner and be bound by the
terms hereof and such transferee is admitted as a Substitute Partner; and
3) The Company receives a written opinion from the Company's
legal counsel that such transfer would not materially adversely affect the
classification of the Company as a partnership for federal and state income tax
purposes or cause the Company to be treated as a publicly-traded partnership.
B) The transfer restrictions on all Units shall be conspicuously noted
by an appropriate legend on each Certificate issued to a Partner.
C) In no event shall any Unit be transferred to a minor or any
incompetent except by will or intestate succession and in full compliance with
the provisions of this ARTICLE IX.
D) The Company need not recognize, for any purpose, any transfer of all
or any fraction of a Unit unless there shall have been filed with the Company
and recorded on the Company's books a duly executed and acknowledged
counterpart of
the instrument of assignment and such instrument evidences the written
acceptance
by the Assignee of all of the terms and provisions of this Agreement and such
Assignee expressly represents that such assignment was made in accordance with
all applicable laws and regulations.
E) Any holder of a Unit (including a transferee thereof) shall be
deemed conclusively to have agreed to comply with and be bound by all terms and
conditions of this Agreement, with the same effect as if such holder had
executed an express acknowledgment thereof, whether or not such holder in
fact has
executed such an express acknowledgment.
9.03 Option to Company to Purchase Unit(s) on Lifetime Transfer.
Subject to Section 11.01(F), in the event a Partner (hereinafter referred to as
the "Selling Partner") receives a bona fide offer from a prospective buyer to
acquire any or all of his or her Unit(s), which offer the Selling Partner
intends
to accept, the Selling Partner shall first transmit to the Company and the other
Partners, not less thirty (30) days prior to the time the proposed sale of the
Unit(s) is to be consummated, written notice (hereinafter referred to as the
"Notice") by certified mail of his or her intention to make such disposition of
his or her Unit(s). The Notice shall set out the terms and conditions of the
intended disposition, including the purchase price payable for such Unit(s) by
the prospective buyer. Within fifteen (15) days following the giving of the
Notice, the Partners shall be polled by the General Partner. An affirmative
vote
of the Partners holding a Majority-in-Interest, excluding the Selling Partner's
Units, for purposes of both voting and determining the number of Unit(s)
outstanding, shall authorize the General Partner and entitle the Company to
purchase such Unit(s) at a per Unit price equal to and upon the same terms and
conditions as are set forth in the Notice.
9.04 Option to Partners to Purchase Unit(s) on Lifetime Transfer.
If any Unit owned by the Selling Partner is not purchased by the Company in
accordance with the provisions of Section 9.03, then the Unit(s) not so
purchased
shall then be offered for sale and shall be subject to an option on the part of
each of the other Class B and Class A Unit holders to purchase a "proportionate
share" of any or all of such Unit(s) which option shall be exercised, if at all,
in writing within fifteen (15) days of the polling of the Partner pursuant to
the provisions of Section 9.03. Such Partners shall be entitled to purchase
such
Unit(s) at a per Unit price equal to and upon the same terms and conditions as
are set forth in the Notice. For purposes of this Section, the term
"proportionate share" shall mean the Unit(s) offered for sale which the
proportion of the Sharing Ratio of each Class B and Class A Unit holder bears to
the aggregate Sharing Ratios (other than the Unit(s) offered for sale) of all
Class B and Class A Unit holders. In addition, if any Unit offered for sale is
not purchased by the Partner(s) first entitled thereto, the term "proportionate
share" shall include the Unit or Units not purchased by the Partner(s) first
entitled thereto which the Sharing Ratio of each Partner bears to the aggregate
Sharing Ratios (other than the Sharing Ratio of the Unit(s) offered for sale) of
all Class B and Class A Unit holders other than the Partner(s) otherwise first
entitled to so purchase the Unit(s) but who has/have declined to purchase the
Unit(s).
9.05 Termination of Restrictions on Lifetime Transfer. If any Unit
owned by the Selling Partner is not purchased by the Company in accordance with
the provisions of Section 9.03, or if any or all are not purchased by the other
Partners in accordance with the provisions of Section 9.04, then the Units that
are not so purchased may then still only be duly transferred to the Person set
forth in the Notice upon obtaining the prior written consent of all the Partners
pursuant to the terms and conditions of Section 10.01. If consent of all the
Partners is not obtained, then the Assignee of the Selling Partner's Units shall
not be entitled to any of the rights granted to a Partner hereunder other than
the right to receive all or part of the share of profits, losses, cash
distribution or returns of capital to which the Selling Partner would otherwise
be entitled. In no event shall such transfer be on terms or conditions other
than those set forth in the Notice. If any terms or conditions change or differ
from those set forth in the Notice, said Unit(s) must then be resubmitted for
sale to the Company and the Partners on the basis of the changed terms and
conditions pursuant to Sections 9.03 and 9.04 herein. Notwithstanding any such
transfer or disposition of a Selling Partner's Unit(s) to a third party, the
restrictions imposed by this Agreement shall continue to apply to the Unit(s)
owned by such transferee or Assignee and to any remaining Unit(s) owned by the
Selling Partner, and the Assignee or transferee shall, prior to the transfer of
such Unit(s), agree to be bound by this Agreement.
9.06 Option to Company to Purchase Unit(s) on Death. Subject to
Section 11.01(F), in the event of the death of any Partner (except in the case
of the death of a Person holding a Unit or Units as a joint tenant with the
right
of survivorship vested with another Partner), all of the Unit(s) of such Partner
shall be subject to an option to purchase as provided in this Section. Within
ninety (90) days after the appointment of the legal representative of the
deceased Partner or one hundred twenty (120) days after the death of such
Partner, whichever occurs first, the General Partner shall calculate a proposed
option price for the deceased Partner's Unit(s) by determining the product of
his
or her Sharing Ratio multiplied by the estimated market value of the Company on
the last day of the calendar month immediately preceding the date of death,
including goodwill and going concern value, plus the share of cash on hand,
prepaid expenses, accounts receivable (less a reserve for doubtful accounts),
less the deceased Partner's estate's share of debts, obligations and other
liabilities of the Company. The proposed option price shall then be
communicated
to the deceased Partner's legal representative or, if none, to his or her next
of kin. The purchase price to be paid by the Company shall be payable in cash,
or its equivalent, unless different terms are desired by the deceased Partner's
estate and are agreed to by the Company. If the parties are unable to agree as
to the option price within fifteen (15) days following the communication of the
proposed option price, the Company and the legal representative of the deceased
Partner's estate shall then select a mutually agreeable appraiser to determine
the option price. If the Company and the deceased Partner's estate cannot agree
on the appraiser to be selected, then each shall select an appraiser. The two
appraisers shall in turn select a third appraiser who shall determine the option
price. If they cannot agree on a third appraiser, then the option price shall
be the average of their two respective appraisals. The fees of all appraisers
shall be borne by the deceased Partner's estate. Each appraiser selected
hereunder shall be a reputable appraisal firm which has substantial experience
in appraising commercial real estate, which shall mean that a minimum the
appraiser must be state certified, a member in good standing with the American
Institute of Real Estate Appraisers and a member in good standing with the
Appraisal Institute. Within fifteen (15) days after the option price has been
determined, the Partners shall be polled by the General Partner at which time
all of the Units of such deceased Partner shall be offered for sale to the
Company
at the option price and under the terms agreed to by the deceased Partner's
estate if other than cash terms. A Majority-In-Interest of the Partners,
excluding the deceased Partner's Units for both purposes of voting and
determination of Units outstanding, shall decide within fifteen (15) days from
the date polled whether the Company shall exercise its option.
9.07 Option to Partners to Purchase Unit(s) on Death. If any Unit
owned by a deceased Partner is not purchased by the Company in accordance with
the provisions of Section 9.06, then the Units not so purchased shall be offered
for sale and shall be subject to an option on the part of each of the Class B
and
Class A Unit holders to purchase a proportionate share (as defined in Section
9.04) of any or all of such Units, which option shall be exercised, if at all,
at the time of the polling of the Class B and Class A Unit holders pursuant to
the provisions of Section 9.06. The purchase price to be paid and the terms of
payment shall be equal to, determined and calculated in accordance with the
provisions set forth in Section 9.06.
9.08 Termination of Restrictions on Transfer at Death. If any Unit
owned by the deceased Partner is not purchased by the Company in accordance with
Section 9.06 or is not purchased by the Partners in accordance with the
provisions of Section 9.07, then the Unit(s) not so purchased shall be
transferred pursuant to the testamentary disposition of the deceased Partner or
by the laws of intestacy, as the case may be. Notwithstanding, the restrictions
imposed by this Agreement shall also thereafter apply to the Units owned by any
such transferee or Assignee of the Units and the Assignee or transferee shall,
prior to the transfer of such Unit(s), agree in writing to be bound by this
Agreement.
9.09 Restrictions on Transfers. Notwithstanding the other
provisions of this ARTICLE IX, no transfer of any Unit of any Partner in the
Company shall be made (including any transfer from one Partner to another
Partner) if the transfer (i) would violate applicable federal and state
securities laws or rules and regulations of the Securities and Exchange
Commission, any state securities commission or any other governmental authority
with jurisdiction over the transfer, (ii) would materially adversely affect the
classification of the Company as a partnership for federal or state income tax
purposes, or (iii) would affect the Company's qualification as a Limited
Partnership under the Act.
9.10 Issuance of Certificates. Upon the transfer of a Unit in
accordance with ARTICLE IX, the Company shall, if certificates have been issued,
issue replacement certificates. All certificates shall contain legends required
by this Agreement or otherwise required by law.
9.11 Compliance With Applicable Law. The restrictions on transfer
contained in this ARTICLE IX are intended to comply (and shall be interpreted
consistently) with the restrictions on transfer set forth in the Act.
9.12 Lost, Stolen or Destroyed Certificates. The Company may issue
a new certificate in place of any certificate previously issued if the record
holder of any purportedly lost, stolen or destroyed certificate: (i) makes
proof
by affidavit that a previously issued certificate has been lost, stolen, or
destroyed; (ii) requests the issuance of a new Certificate before the Company
has
notice that the Units evidenced by such certificate have been acquired by a
purchaser for value in good faith and without notice of an adverse claim; and
(iii) if required by the Company, delivers to the Company a bond with surety or
sureties acceptable to the Company, to indemnify the Company against any claim
that may be made on account of the alleged loss, destruction or theft of the
certificate. The Company shall be entitled to treat such Record Holder as the
Partner or Assignee in fact of any Units and, accordingly, shall not be required
to recognize any equitable or other claim or interest in or with respect to the
Units on the part of any other Person, regardless of whether it has actual or
other notice thereof.
ARTICLE X.
ADMISSION OF SUBSTITUTE AND ADDITIONAL PARTNERS
10.01 Admission of Substitute Partners. Upon a transfer of a
Unit by a Partner in accordance with ARTICLE IX (but not otherwise), the
transferor shall have the power to give, and by transfer of any Certificate
issued shall be deemed to have given, the transferee the right to apply to
become
a Substitute Partner with respect to the Unit(s) acquired, subject to the
conditions of and in the manner permitted under this Agreement. A transferee of
a Certificate representing a Unit shall be an Assignee with respect to the
transferred Unit (whether or not such transferee is a Partner or Substitute
Partner with respect to other previously acquired Units) unless and until all of
the following conditions are satisfied:
A) The instrument of assignment sets forth the intentions of the
assignor that the Assignee succeed to the assignor's interest as a Substitute
Partner in such assignor's place;
B) The assignor and Assignee shall have fulfilled all other
requirements of this Agreement;
C) The Assignee shall have paid all reasonable legal fees and filing
costs incurred by the Company in connection with such Assignee's substitution as
a Partner; and
D) The Partners shall have unanimously approved such substitution in
writing, which approval may be granted or withheld by each Partner in such
Partner's sole and absolute discretion and may be arbitrarily withheld, and the
books and records of the Company have been modified to reflect the admission.
The admission of an Assignee as a Substitute Partner with respect to a
transferred Unit shall become effective on the date the Partners give their
unanimous written consent to the admission and the books and records of the
Company have been modified to reflect such admission. Any Partner who transfers
all of such Partner's Units with respect to which such Partner had been admitted
as a Partner shall cease to be a Partner of the Company upon a transfer of such
Units in accordance with ARTICLE IX and the execution of a counterpart of this
Agreement by the transferee and shall have no further rights as a Partner in or
with respect to the Company (whether or not the Assignee of such former Partner
is admitted to the Company as a Substitute Partner).
10.02 Admission of Additional Partners. The admission of new
Partners to the Company shall be accomplished only by the prior written approval
of the Partners holding at least a Supermajority-in-Interest. A supplemental
agreement in terms satisfactory to the General Partner, shall be executed by the
Company and each new Partner setting forth (i) the amount of contribution to the
capital of the Company to be remitted by the new Partner, and (ii) the number of
Unit(s) to be owned by such new Partner. Each such supplemental agreement shall
be attached to this Agreement as an exhibit.
ARTICLE XI.
DISSOLUTION
11.01 Events Causing Dissolution. The Company shall be
dissolved and its affairs shall be wound up only upon the occurrence of any of
the following events:
A) The expiration of the period fixed for the duration of the Company
by the Certificate of Limited Partnership ;
B) The unanimous written agreement of all the Partners;
C) The bankruptcy of the Company;
D) The sale or other disposition of all or substantially all of the
Company's assets;
E) A court decree shall be issued finding that other circumstances
exist which render a dissolution of the Company equitable or required by law;
F) Upon the death, retirement, resignation, expulsion, bankruptcy or
dissolution of a Limited Partner, or the occurrence of any other event which
terminates the continued partnership of a Partner in the Company (any such
events being referred to herein as an "Event of Dissolution"), unless there
are at least
two (2) remaining Partners and the Partners then holding at least a Majority-In-
Interest of the Units unanimously agree to continue the Company and the
unanimous written consent of the General Partner. If the requisite number of
Partners so elect to continue the Company, the Company shall continue until the
expiration of the term for which it was formed or until the occurrence of
another
Event of Dissolution, in which event any remaining Partners and the General
Partner shall again elect whether to continue the Company pursuant to this
Section 11.01(F); or
G) The withdrawal of the General Partner, unless within 90 days after
the withdrawal, all of the Limited Partners agree in writing to continue the
business of the Company and to the appointment of a successor General Partner.
If all of the Limited Partners so elect to continue the Company, the Company
shall continue until the expiration of the term for which it was formed, until
the occurrence of an Event of Dissolution, in which event any remaining Partners
and the General Partner may again elect whether to continue the Company pursuant
to this Section 11.01(F), or the withdrawal of such successor General Partner,
in which event the Limited Partners may again elect whether to continue the
Company pursuant to this Section 11.01(G).
11.02 Procedure on Dissolution. Upon dissolution of the
Company, the General Partner, and if there is no General Partner, then the
Partners, shall proceed with reasonable promptness to wind up the business
affairs of the Company and to liquidate the Company's business and assets by
selling all of the Company's assets. The proceeds from the sale of the assets
of the Company shall be distributed in the following order of priority:
A) FIRST, to the payment to its creditors of all debts and liabilities
of the Company in the order of priority prescribed by law, except those
liabilities owed to Partners of the Company on account of their contributions;
B) SECOND, to the establishment of reserves for any contingent
liabilities or obligations of the Company, as deemed necessary by the General
Partner or the Partners, as the case may be;
C) THIRD, to the repayment of any loans (including principal and
accrued but unpaid interest thereon) that have been made by any Partner to the
Company and to any other liabilities due and owing to Partners;
D) FOURTH, to all Partners with positive balances in their Capital
Accounts to the extent required to reduce said Capital Accounts down to zero;
and
E) The balance, if any, shall be distributed among the Partners in
accordance with the allocation provisions then in effect as set forth in Section
5.06.
11.03 Filing Certificate of Cancellation. Upon the completion
of the distribution of Company Property as provided in Section 11.02, a
Certificate of Cancellation shall be filed as required by the Act, and each
Partner agrees to take whatever action may be advisable or proper to carry out
the provisions of this ARTICLE XI.
11.04 Return of Capital. The return of Capital Contributions
shall be made solely from Company Property.
11.05 Withdrawal of Limited Partner. A Limited Partner may not
withdraw from the Company at any time absent the approval of all Partners.
ARTICLE XII.
AMENDMENT OF AGREEMENT; MEETINGS; RECORD DATE
12.01 Amendments. All amendments to this Agreement shall
require a Supermajority-in-Interest vote.
12.02 Limitations on Amendments. Notwithstanding any other
provision of this Agreement, no amendment to this Agreement may (i) enlarge the
obligations of any Partner under this Agreement, or (ii) amend this Section
12.02, Section 12.01, or Section 10.01(D), without the unanimous approval of all
Partners.
12.03 Meetings. Meetings of the Company may be called by the
General Partner or by Partners holding not less than twenty percent (20%) of the
Units by giving at least ten (10) days prior written notice and not more than
sixty (60) days written notice of the time, place and purpose of the meeting to
all Partners.
12.04 Adjournment. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting, if the time and
place thereof are announced at the meeting at which the adjournment is taken,
unless such adjournment shall be for more than forty-five (45) days. At the
adjourned meeting, the Company may transact any business which might have been
transacted at the original meeting. If the adjournment is for more than forty-
five (45) days, a notice of the adjourned meeting shall be given in accordance
with this Section 12.04.
12.05 Waiver of Notice; Consent to Meeting; Approval of
Minutes. The transactions of any meeting of the Company, however called and
noticed, and whenever held, are as valid as though conducted at a meeting duly
held after regular call and notice, if a quorum is present either in person or
by proxy, and if, either before or after the meeting, each of the Partners
entitled to vote, but not present in person or by proxy, approves by signing a
written waiver of notice or an approval to the holding of the meeting or an
approval of the minutes thereto. All waivers, consents, and approval shall be
filed with the Company records or made a part of the minutes of the meeting.
Attendance of a Partner at a meeting shall constitute a waiver of notice of the
meeting, except when such Partner objects, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened; and except that attendance at a meeting is not a waiver of any right
to object to the consideration of matters required to be included in the notice
of the meeting, but not so included, if the objection is expressly made at the
meeting.
12.06 Quorum. The holders of more than fifty percent (50%) of
the Units entitled to vote represented in person or by proxy, shall constitute
a quorum at a meeting of Partners. The Partners present at a duly called or
held
meeting at which a quorum is present may continue to participate at such meeting
until adjournment, notwithstanding the withdrawal of enough Partners to leave
less than a quorum, if any action taken (other than adjournment) is approved by
the requisite percentage of Units of Partners specified in this Agreement. In
the absence of a quorum, any meeting of Partners may be adjourned from time to
time by a majority vote of the Partners represented either in person or by proxy
entitled to vote, but no other matters may be proposed, approved or disapproved,
except as provided in Section 12.04.
12.07 Action Without a Meeting. Any action that may be taken
by any vote of the Partners may be taken without a meeting if a consent to such
action is signed by Partners holding Units representing not less than the
minimum
number of votes that would be necessary to otherwise authorize or take such
action at a meeting at which all Units entitled to vote thereon were present and
voted. Prompt notice of the taking of any action without a meeting shall be
given to those Partners who have not consented in writing.
ARTICLE XIII.
POWER OF ATTORNEY
13.01 Power of Attorney.
A) Each Partner by his execution or adoption of this Agreement, to the
extent permitted by law, hereby irrevocably and indefinitely makes, constitutes
and appoints the General Partner, individually and jointly, of the Company, his
or her true and lawful attorney-in-fact, to make, execute, sign, acknowledge,
elect, deliver, file for recording at the appropriate public offices or to
publish:
1) The Certificate of Limited Partnership ;
2) This Agreement;
3) Any statement of intent to dissolve or amendment thereof,
instruments and documents which may be required under law, or by any state or
governmental agency, or as may be appropriate for the conduct of Company
business, its continuation or its dissolution in termination of the Company
pursuant to the terms of this Agreement;
4) Any amendments to this Agreement and/or Certificate of Limited
Partnership which have been approved pursuant to the provisions of this
Agreement and applicable law;
5) The election to continue the Company upon the death,
retirement, resignation, expulsion, bankruptcy or dissolution of a Partner;
6) The correction of any erroneous statement in this Agreement
and/or the Certificate of Limited Partnership ; and
7) Any agreements or certificates required to admit additional
Partners into the Company.
Without limitation, this power of attorney shall include amendment of the
Certificate of Limited Partnership and this Agreement to reflect:
1) A change in the name or address of the Company or its resident
agent;
2) The correction or clarification of an incorrect or erroneous
statement in this Agreement or the Certificate of Limited Partnership (or any
amendment of either of both of them); and
3) The amendment of this Agreement or the Certificate of Limited
Partnership where the effect of such amendment does not actually or potentially
materially adversely affect the right of the Partners.
Provided, however, that the General Partner in its capacity as said
attorney-in-fact shall only take actions and execute documents in accordance
with the provisions of this Agreement and shall not take any action for a
Partner
which would in any way increase the liability of a Partner beyond the liability
set forth in this Agreement or in his or her Subscription Agreement.
B) It is expressly acknowledged and agreed by each Partner that this
power of attorney is coupled with an interest and that it shall survive his or
her death or incapacity (to the extent permitted by law) and the sale,
assignment or transfer by a Partner of all or any part of his Unit(s).
ARTICLE XIV.
GENERAL PROVISIONS
14.01 Notices. Any notice, demand, request or report required
or permitted to be given or made to a Partner under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class mail to the Partner at the address set forth on Schedule "1" or
such address as a Partner may hereafter provide to Company in writing. Any
notice, payment, or report to be given or sent to a Partner hereunder shall be
deemed conclusively to have been given or sent, upon mailing of such notice,
payment, or report to the address shown on the records of the Company,
regardless of any claim of any Person who may have an interest in the Unit by
reason of an assignment or otherwise.
14.02 Captions. All "ARTICLE" and "Section" captions in this
Agreement are for convenience only. They shall not be deemed part of this
Agreement and in no way define, limit, extend or describe the scope or intent of
any provisions hereof. Except as specifically provided otherwise, references to
"ARTICLES" and "Sections" are to ARTICLES and Sections of this Agreement.
14.03 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
14.04 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assignees.
14.05 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
14.06 Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, duty,
agreement or condition.
14.07 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute an agreement binding on all
the parties hereto, notwithstanding that all such parties are not signatories to
the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing such party's signature hereto, independently
of the signature of any other party.
14.08 Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Florida, without
regard to its principles of conflict of laws.
14.09 Invalidity of Provisions. If any provision of this
Agreement is or becomes invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not be affected thereby.
14.10 Limitation of Liability. Anything herein to the contrary
notwithstanding, except as otherwise expressly agreed to in writing, a Limited
Partner shall not be personally liable for any debts, liabilities, or
obligations
of the Company, whether to the Company, to any of the other Partners, or the
creditors of the Company, beyond the Capital Account of the Limited Partner,
together with the Limited Partner's share of the assets and undistributed
profits of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the _____ day of , 1997.
PARTNERS:
COVENTRY CORPORATION
a Kansas corporation, d/b/a
Coventry Corporation of the Republic,
Inc.,
as General Partner
By
Xxxxxx X. Xxxx, President
ELDERLY LIVING/PCJ, LIMITED
PARTNERSHIP
a Florida limited partnership
By: C.R. Development, Inc., General
Partner
By
Xxxxxxx X. Xxxxxxx, President
Schedule "1"
to
Limited Partnership Agreement
OF
GLADSTONE DEVELOPMENT, LIMITED PARTNERSHIP
Number of Units Consideration Subscriber
98 Class A Coventry Corporation
x/x
Xxxxxxxx Xxxxx Xxxxxxxxxxx
Xxxxx 000
000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxx 00000
902 Class B
The Remittance of up to $200,000 Elderly Living/PCJ, Limited
as provided by the Joint Venture Partnership
Agreement Suite 200 E
0 Xxxxxxxx Xxxxxxx Xxxxx Xxxxx Xxxxx Xxxxx, Xxxxxxx
00000
