SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Meridian Healthcare Growth and Income Fund Limited Partnership
(Name of Registrant as Specified In Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| No fee required.
|X| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction: $ 50,000,000
(5) Total fee paid: $ 10,000
|_| Fee paid previously with preliminary materials: N/A
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
300 East Lombard Street
Suite 1200
Baltimore, Maryland 21202
(410) 727-4083
Fax (410) 625-2694
March 28, 2005
Dear Investors:
Brown Healthcare, Inc. and Meridian Healthcare Investments, Inc.
(collectively, the "General Partners"), on behalf of Meridian Healthcare Growth
and Income Fund Limited Partnership (the "Fund"), are writing to request your
consent to three proposals presented for your consideration. You are being asked
to approve (1) the sale of all or substantially all of the real property and
other assets owned by each of the seven limited partnerships of which the Fund
owns 98.99% of the limited partnership interests, each of which partnerships
owns and operates a single skilled nursing facility (each a "Facility" and,
collectively, the "Facilities"), (2) the amendment of the Limited Partnership
Agreement, and (3) the winding-up, dissolution and liquidation of the Fund.
Proposal One: Sale of the Facilities. You are being asked to approve
the sale of the Facilities, pursuant to the Asset Purchase Agreement dated as of
February 11, 2005 (the "Purchase Agreement"), by and among FC Properties VI,
LLC, a Delaware limited liability company ("Purchaser"), and Plainfield Meridian
Limited Partnership, Caton Manor Meridian Limited Partnership, Frederick
Meridian Limited Partnership, Hamilton Meridian Limited Partnership,
Randallstown Meridian Limited Partnership, Mooresville Meridian Limited
Partnership, and Spencer Meridian Limited Partnership, all Maryland limited
partnerships and subsidiaries of the Fund (collectively, the "Seller") and to
grant the General Partners the authority to take all other actions necessary or
advisable in connection with or relating to the Purchase Agreement (the "Sale").
o We believe that the aggregate gross purchase price for the
Facilities of $50,000,000, as provided in the Purchase
Agreement, represents an attractive sales price for the
Facilities, given due consideration to the financial
condition, results of operations, business and prospects of
the Fund, and particularly in light of the current economic
and regulatory environments.
o The average age of the Fund's Facilities is 27 years. A sale
at this time will avoid capital improvements required at the
Facilities, which would have an adverse impact on the Fund's
ability to maintain or increase distributions to the
Investors.
Proposal Two: Amendment of Limited Partnership Agreement. You are also
being asked to approve an amendment of the Agreement of Limited Partnership of
the Fund dated as of December 8, 1987 (as amended, supplemented or otherwise
modified from time to time, the
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"Partnership Agreement") to permit the General Partners to sell all or
substantially all of the Fund's assets without first obtaining the consent of
the registered holders of assignee units of ownership interests in the Fund if,
and solely to the extent that, the Sale is not consummated (the "Amendment").
While the General Partners intend to complete the Sale, if approved by
Investors, it is possible that the Sale will not be concluded due to the
inability to satisfy certain conditions of the Purchase Agreement or for other
reasons. In that event, the General Partners believe that the Amendment may
provide the Fund with greater flexibility in negotiating with subsequent
potential purchasers of the Fund's assets, who may otherwise discount their
offers to purchase the Facilities because of delays, costs, and uncertainties
related to the requirement to seek Investor approval of a sale of all or
substantially all of the Fund's assets.
Proposal Three: Approval of Liquidation. Finally, you are being asked
to approve the liquidation, dissolution and winding up of the Fund pursuant to
Article 8 of the Partnership Agreement following the consummation of the Sale
(the "Liquidation," and together with the Sale and the Amendment, the
"Transaction").
Assuming approval of the Transaction by the Investors, after
consummation of the Sale, the Fund will, in accordance with Article 8 of the
Partnership Agreement, liquidate, dissolve and distribute its net assets, if
any, to the Fund's Investors. The General Partners presently estimate that such
distribution (after establishing the liquidating trust and funding a reserve for
certain expenses, and prior to any reduction due to state or local tax
withholding) will equal approximately $20.00 per Unit, although the actual
amount distributed per Unit will vary depending on factors, including, but not
limited to, the actual amounts of the reserve, transaction expenses, prorated
expenses, and final terms of the Purchase Agreement. In addition to this
distribution, you will receive your pro rata beneficial interest in the
liquidating trust to be established by the Fund to facilitate post-closing
matters among the parties.
We have enclosed a Consent Solicitation Statement dated March 28, 2005
(the "Solicitation Statement") and a form for indicating whether or not you wish
to grant your consent to any or all of the Proposals (the "Consent Form").
The record date for determining those Investors entitled to vote on the
Proposals has been set by the Administrative General Partner pursuant to the
Partnership Agreement as March 1, 2005. As of March 1, 2005, the Fund has
1,540,040 Units issued and outstanding, which are held by 1,601 Investors.
Accordingly, Investors holding more than 50% or 770,021 Units must consent to
each of the Proposals in order for it to be approved by the Investors.
The Solicitation Statement contains a complete discussion of the
advantages and disadvantages of the Transaction and other aspects of the
Proposals under the heading "GENERAL PARTNERS' RECOMMENDATION." After carefully
weighing the terms and conditions of the Proposals, as well as alternative
courses of action, we have concluded that the Transaction, including the
subsequent dissolution, liquidation and winding-up of the Fund is advisable and
in the best interests of the Fund and the Investors.
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Therefore, we recommend that you approve all of the Proposals by
signing and returning the enclosed Consent Form in the accompanying postage
prepaid envelope, by overnight courier or by facsimile to the address or
facsimile number below. Your participation is extremely important. Please note
that this solicitation will expire at 5:00 p.m., Eastern Standard Time, on April
22, 2005, unless extended by the General Partners in their sole discretion.
If you have any questions or would like additional copies of the
enclosed materials, please feel free to contact Robert Huether, Asset Manager,
or Yolanda Harris, Investor Services Coordinator, at 300 East Lombard Street,
Suite 1200, Baltimore, Maryland 21202; telephone number (410) 727-4083;
facsimile number (410) 625-2694.
YOUR VOTE IS IMPORTANT
Please Sign, Date and Return the Enclosed Consent Form PRIOR TO April 22, 2005
Sincerely,
Meridian Healthcare Growth and Income Fund Limited Partnership
By: Brown Healthcare, Inc. By: Meridian Healthcare Investments, Inc.
Administrative General Partner Development General Partner
By: By:
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
CONSENT SOLICITATION STATEMENT
INTRODUCTION
This Consent Solicitation Statement (this "Solicitation Statement") is
being furnished to the registered holders (the "Investors") of assignee units of
limited partnership interests ("Units") in Meridian Healthcare Growth and Income
Fund Limited Partnership, a Delaware limited partnership (the "Fund"), as of
5:00 P.M. Eastern Standard Time on March 1, 2005 (the "Record Date"), in
connection with the solicitation of consents (the "Solicitation"), upon the
terms and subject to the conditions described in this Solicitation Statement and
the accompanying form of consent (the "Consent Form"), by Brown Healthcare,
Inc., a Maryland corporation, (the "Administrative General Partner"), and
Meridian Healthcare Investments, Inc., a Maryland corporation, (the "Development
General Partner" and together with the Administrative General Partner, the
"General Partners"), on behalf of the Fund. Investors are being asked to consent
to the following three proposals:
1. The sale of the seven skilled nursing facilities (the "Facilities")
owned and operated by the Operating Partnerships (as defined below) and
all of the rights in the real property on which the Facilities are
located and all of the interests in or rights to use, if any, certain
personal property located at the Facilities and/or used primarily in
connection with the operation of the Facilities, pursuant to the Asset
Purchase Agreement dated as of February 11, 2005 (the "Purchase
Agreement"), by and among FC Properties VI, LLC, a Delaware limited
liability company ("Purchaser"), and Plainfield Meridian Limited
Partnership, Caton Manor Meridian Limited Partnership, Frederick
Meridian Limited Partnership, Hamilton Meridian Limited Partnership,
Randallstown Meridian Limited Partnership, Mooresville Meridian Limited
Partnership, and Spencer Meridian Limited Partnership, all Maryland
limited partnerships and subsidiaries of the Fund (each an "Operating
Partnership" and, collectively, the "Seller") (the "Sale") and the
grant to the General Partners, or any one of them, through their
officers, employees, and agents, of the authority to negotiate,
execute, and deliver all documents, agreements, instruments, and
certificates, and pay all fees, expenses and disbursements, and take
any and all other actions as they or any one of them may deem necessary
or advisable in connection with or relating to the Sale.
2. The amendment of the Agreement of Limited Partnership of the Fund dated
as of December 8, 1987 (as amended, supplemented or otherwise modified
from time to time, the "Partnership Agreement") to permit the General
Partners to sell all or substantially all of the assets owned by the
Operating Partnerships (the "Fund Property") without first obtaining
the consent of the Investors if, and solely to the extent that, the
Sale is not consummated for any reason (the "Amendment").
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3. The liquidation, dissolution and winding-up of the Fund pursuant to
Article 8 of the Partnership Agreement following the consummation of
the Sale (the "Liquidation," and together with the Sale and the
Amendment, the "Transaction").
The Purchase Agreement (excluding the schedules and exhibits thereto)
is attached as Annex I hereto and incorporated herein by reference. The purchase
price pursuant to the Purchase Agreement is $50,000,000. Upon consummation of
the Sale and the payment of the Escrow Funds to the Escrow Agent (see
"DESCRIPTION OF THE TERMS OF THE PURCHASE AGREEMENT -- Escrow Agreement"), the
Fund will receive gross aggregate consideration of approximately $48,400,000, as
adjusted by the prorations described in the Purchase Agreement, including, but
not limited to, proration of taxes, rents and security deposits. After the
consummation of the Sale (the "Closing Date"), the Fund will, in accordance with
Article 8 of the Partnership Agreement, dissolve as soon as all financial
accounting is complete and, thereafter, the General Partners will commence the
liquidation and winding up of the Fund and will file a certificate of
cancellation under the Delaware Revised Uniform Limited Partnership Act. The net
assets (including net proceeds of the Sale), after establishing a liquidating
trust (see "DESCRIPTION OF THE TERMS OF THE PURCHASE AGREEMENT -- Establishment
of Liquidating Trust") and funding the reserve for payment of expenses relating
to the business of the Fund and the ownership, operation, management and
maintenance of the Facilities prior to closing and payment of prorated expenses
and the transaction expenses, will be distributed to the Partners and the
Investors in accordance with Section 4.4 of the Partnership Agreement in
proportion to their respective Capital Accounts. The General Partners presently
estimate that the net cash proceeds from the Sale (after payment of the Escrow
Funds to the Escrow Agent, taking into account the establishment of the
Liquidating Trust and creation of a reserve for payment of unassumed liabilities
and obligations relating to the business of the Fund and the ownership,
management, operation and maintenance of the Facilities prior to the Closing,
and the payment of transaction expenses and prorated expenses) will be
approximately $31,000,000, or approximately $20.00 per Unit (depending on the
actual amount of such reserve and expenses) prior to any reduction due to state
or local tax withholding. There can, however, be no assurances that this will be
the actual amount distributed to Investors because such reserves have not yet
been established and the amount of expenses of consummating the Transaction is
not final. To date, based on the first admission date, the Fund has distributed
approximately $34.00 per Unit from operations, cash reserves and refinancing
proceeds. Consequently the General Partners believe that, from inception of the
investment to the closing of the Sale of the Facilities, an Investor who
originally invested $25.00 per Unit should receive total cash distributions of
approximately $54.00 per Unit. (See "LIQUIDATION OF PARTNERSHIP; DISTRIBUTION OF
PROCEEDS.")
The General Partners intend to consummate the Sale pursuant to the
terms and conditions of the Purchase Agreement if the Investors approve the
Sale. However, the General Partners are also recommending that the Investors
approve the Amendment, to permit the General Partners to sell all or
substantially all of the Fund Property in the future without first obtaining the
consent of Investors, in the event, and solely to the extent that, the Sale is
not consummated for any reason. In that event, the General Partners believe that
the Amendment may provide the Fund with greater flexibility in negotiating with
subsequent potential purchasers of the Fund's assets, who may otherwise discount
their offers to purchase the Facilities because of delays, costs, and
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uncertainties related to the requirement to seek Investor approval of a sale of
all or substantially all of the Fund's assets.
The vote required to approve the Sale, Amendment and Liquidation will
require the consent of Investors owning more than 50% of the outstanding Units,
which is not less than the minimum vote that would be necessary to authorize or
take such action at a meeting at which all Investors entitled to vote thereon
were present.
This Solicitation Statement and the enclosed Consent Form are first
being mailed to Investors on or about March 28, 2005.
This Solicitation Statement, including the Purchase Agreement
(excluding schedules and exhibits) attached hereto as Annex I and the Amendment
attached hereto as Annex II and incorporated herein by reference, contain
important information that should be read before any decision is made with
respect to the Transaction. All summaries and other information in this
Solicitation Statement are qualified in their entirety by reference to the
Purchase Agreement attached hereto as Annex I (excluding schedules and exhibits)
and the Amendment attached hereto as Annex II, as applicable. Investors are
urged also to read the full text of the Purchase Agreement and the Amendment in
their entirety.
THE GENERAL PARTNERS RECOMMEND THAT INVESTORS CONSENT TO ALL OF THE
PROPOSALS.
THIS SOLICITATION OF CONSENTS WILL EXPIRE AT 5:00 P.M., EASTERN
STANDARD TIME, ON APRIL 22, 2005 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY THE
GENERAL PARTNERS IN THEIR SOLE DISCRETION. CONSENT FORMS MAY BE REVOKED AT ANY
TIME UNTIL THE EXPIRATION DATE, BUT MAY NOT BE REVOKED THEREAFTER. See
"DESCRIPTION OF THE SOLICITATION -- Revocation of Instructions" below.
Questions and requests for assistance or additional copies of the
Solicitation documents may be directed to the Administrative General Partner at
the Fund's principal executive office at 300 East Lombard Street, Suite 1200,
Baltimore, Maryland 21202, Attention: Robert Huether, Asset Manager or Yolanda
Harris; Investor Services Coordinator, Telephone Number: (410) 727-4083;
Facsimile Number: (410) 625-2694.
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DESCRIPTION OF THE SOLICITATION
Purpose of the Solicitation
In the accompanying Consent Form, the General Partners on behalf of the
Fund are soliciting consents from Investors for the purpose of approving the
proposed Sale, Amendment and Liquidation. See "DESCRIPTION OF THE TERMS OF THE
PURCHASE AGREEMENT," "DESCRIPTION OF THE SALE," "THE AMENDMENT" and "USE OF
PROCEEDS."
The cost of preparing, assembling, printing and mailing this
Solicitation Statement and the enclosed Consent Form, and the cost of soliciting
Consent Forms, will be borne by the Fund. Solicitation of the Consent Forms will
be made initially by mail. In addition to solicitation by mail, Consent Forms
may also be solicited, on behalf of the Fund, in person, by telephone or by
facsimile by directors, officers or other regular employees of any General
Partner. No additional compensation will be paid to directors, officers or other
regular employees of such General Partner for such services.
Expiration Date; Extension; Amendment
This Solicitation Statement is furnished in connection with the
solicitation of Consent Forms by the General Partners, on behalf of the Fund, to
the Transaction, as contemplated by the Purchase Agreement. The Solicitation
will expire at 5:00 p.m., Eastern Standard Time, on the Expiration Date, unless
extended by the General Partners in their sole discretion. The Fund expressly
reserves the right, in the sole discretion of the General Partners, (i) to
extend the Expiration Date, from time to time, until the Requisite Consents (as
defined below) have been obtained, and (ii) to amend, at any time or from time
to time, before the Requisite Consents are obtained, any terms of the
Solicitation. As promptly as practicable following any such extension or any
material amendment to this Solicitation, notice thereof shall be given by the
Fund to each Investor in writing.
Record Date; Requisite Consents
The Fund has fixed the close of business on March 1, 2005, as the
Record Date for determining the Investors entitled to notice of and to consent
to the Sale, Amendment and Liquidation. Only Investors on the Record Date or
their duly designated proxies may execute and deliver a Consent Form.
As of the Record Date, there were 1,540,040 Units outstanding held by
approximately 1,601 holders of record. Each Investor is entitled to one vote per
Unit. In order to consummate the Transaction, the General Partners are seeking
the consent of the Investors owning more than 50% of the issued and outstanding
Units or 770,021 Units (the "Requisite Consents") to each of the (i) Sale, (ii)
Amendment, and (iii) Liquidation. Failure to obtain Investor consent for the
Sale will delay the Liquidation, which will not occur until after all of the
Facilities and other Fund Property have been sold.
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Consent Procedures
INVESTORS WHO DESIRE TO CONSENT TO THE TRANSACTION SHOULD DO SO BY
MARKING THE "CONSENT" BOX FOR EACH OF THE (A) SALE, (B) AMENDMENT, AND (C)
LIQUIDATION, ON THE CONSENT FORM INCLUDED HEREWITH, AND COMPLETING, SIGNING,
DATING AND DELIVERING THE CONSENT FORM TO THE FUND BY MAIL IN THE
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE, BY OVERNIGHT
COURIER OR BY FACSIMILE AT THE ADDRESS OR FACSIMILE NUMBER SET FORTH ABOVE AND
ON THE CONSENT FORM, ALL IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN
AND THEREIN.
All Consent Forms that are properly completed, signed and delivered to
the Fund and not properly revoked (See "DESCRIPTION OF THE SOLICITATION --
Revocation of Instructions" below) prior to the Expiration Date, will be given
effect in accordance with the specifications thereof. IF A CONSENT FORM IS
DELIVERED AND NONE OF THE "CONSENT," "DOES NOT CONSENT" OR "ABSTAIN" BOXES ARE
MARKED WITH RESPECT TO ANY OF THE (A) SALE, (B) AMENDMENT OR (C) LIQUIDATION,
BUT THE CONSENT FORM IS OTHERWISE PROPERLY COMPLETED AND SIGNED, THE UNITHOLDER
WILL BE DEEMED TO HAVE CONSENTED TO THE MATTER TO WHICH SUCH NON-VOTE RELATES.
Consent Forms must be executed in the same manner as the name(s) in
which ownership of the Units is registered. If the Units to which a Consent Form
relates are held by two or more joint holders, all such holders must sign the
Consent Form. If a Consent Form is signed by a trustee, partner, manager,
executor, administrator, guardian, attorney-in-fact, officer of a corporation,
or other person acting in a fiduciary, agency or representative capacity, such
person must so indicate when signing and must submit with the Consent Form
evidence satisfactory to the Fund of authority to execute the Consent Form.
The execution and delivery of a Consent Form will not affect an
Investor's right to sell or transfer the Units (subject to Article VII and other
applicable provisions of the Partnership Agreement and the requirements of
Federal and applicable state securities laws). All Consent Forms received by the
Fund (and not properly revoked) prior to the Expiration Date will be effective
notwithstanding a record transfer of such Units subsequent to the Record Date,
unless the Investor revokes such Consent Form prior to 5:00 p.m., Eastern
Standard Time, on the Expiration Date by following the procedures set forth
under the heading "DESCRIPTION OF THE SOLICITATION -- Revocation of
Instructions" below.
All questions as to the validity, form and eligibility (including time
of receipt) of a Consent Form, consent procedures, interpretations of the terms
and conditions of this Solicitation, and any other applicable matter will be
determined by the General Partners in their sole discretion, which determination
will be conclusive and binding on the Investors. The Administrative General
Partner, in its sole discretion, on behalf of the Fund, reserves the right to
reject any or all Consent Forms that are not properly executed, dated or are
otherwise not in proper form, and such rejected Consent Forms will not be
counted as a vote on any matter presented to the Investors. The Administrative
General Partner, in its sole discretion, on behalf
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of the Fund, also reserves the right to waive any delivery defects or
irregularities or conditions as to applicable Consent Forms and upon such waiver
to count such Consent Forms in connection with the matters presented to a vote
of Investors. Unless waived by the Administrative General Partner, in its sole
discretion, the delivery of any Consent Form that is the subject of a delivery
defect or irregularity or failure of a delivery condition will not be deemed to
have been made until and unless all such defects, irregularities or failed
conditions have been cured by the applicable Investor prior to the Expiration
Time, however, none of the General Partners, any of their respective affiliates
or any other persons shall be under any duty to give any notification of any
such defects, irregularities or failed conditions, or waivers thereof, to the
applicable Investor, nor shall any of them incur any liability for failure to
give such notification.
Revocation of Instructions
Any Investor who has delivered a Consent Form to the Fund may revoke
any voting instructions set forth in such Consent Form by delivering to the
Administrative General Partner a written notice of revocation prior to 5:00
p.m., Eastern Standard Time, on the Expiration Date. In order to be effective, a
notice of revocation of any voting instructions set forth in a Consent Form must
(a) contain the name of the Investor who delivered the Consent Form, (b) be in
the form of a subsequent Consent Form with such Investor's voting choice as to
each matter submitted to a vote of Investors clearly marked either as "CONSENT"
or "DOES NOT CONSENT" or "ABSTAIN", as the case may be, (c) be signed by the
Investor thereof in the same manner as such Investor's signature appears on the
records of the Fund, (d) bear a date that is later than the date of the Consent
Form that is being revoked, and (e) be received by the Administrative General
Partner prior to 5:00 p.m. Eastern Standard Time, on the Expiration Date at its
address set forth on the Consent Form. A purported notice of revocation that
lacks any of the required information, is dispatched or delivered to an improper
address or is not received in a timely manner will not be effective to revoke
the voting instructions set forth in a Consent Form previously given. A
revocation of the voting instructions set forth in a Consent Form can only be
accomplished in accordance with the foregoing procedures. NO INVESTOR MAY REVOKE
THE VOTING INSTRUCTIONS SET FORTH IN A CONSENT FORM AFTER 5:00 P.M., EASTERN
STANDARD TIME, ON THE EXPIRATION DATE.
No Dissenting Investors' Rights
Under the Delaware Revised Uniform Limited Partnership Act and under
the Partnership Agreement, Investors do not have dissenter's appraisal rights in
connection with the Sale.
INTERESTS OF CERTAIN PERSONS
The terms of the Sale were determined through arm's length negotiations
between the General Partners, the Seller and the Purchaser, as applicable. In
considering the recommendations of the General Partners in favor of the
Transaction you should be aware that an affiliate of the Development General
Partner is currently the manager of the Facilities and the Purchaser and Seller
have agreed that Purchaser will negotiate with such affiliate for the purpose of
entering into contracts pursuant to which the affiliate or another affiliate of
the Development General Partner will manage the Facilities for Purchaser
following the Closing. In addition, if
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the Transaction is completed and the Liquidating Trust created, the
Administrative General Partner will administer the Liquidating Trust without
profit.
DESCRIPTION OF THE FACILITIES
The Fund owns a 98.99% limited partner interest in each of seven
limited partnerships (each an "Operating Partnership" and, collectively, the
"Operating Partnerships"). The Administrative General Partner and the
Development General Partner each own 0.505% general partner interests in each of
the Operating Partnerships. Each of the Operating Partnerships owns and operates
a single skilled nursing facility (each a "Facility" and collectively, the
"Facilities"). Summary characteristics of the Facilities are described below.
o Caton Manor. Caton Manor is owned by Caton Manor Meridian Limited
Partnership and located at 3330 Wilkins Avenue in Baltimore City,
Maryland. Caton Manor is a 168-bed skilled nursing facility
located on 0.92 acres, constructed in 1972, consisting of an "L"
shaped four-story plus basement masonry structure containing a
total of 48,660 square feet. All 168 beds are comprehensive care
beds and are all Medicare-certified. All rooms are semi-private.
o College View. College View is owned by Frederick Meridian Limited
Partnership and located at 700 Toll House Avenue in Frederick,
Maryland. College View is a 137-bed skilled nursing facility
located on 1.13 acres, originally constructed in 1966, consisting
of a two-story plus partial basement masonry structure, the second
floor was added in 1968, containing a total of 52,661 square feet.
All 137 beds are comprehensive care beds and all are
Medicare-certified.
o Hamilton Center. Hamilton Center is owned by Hamilton Meridian
Limited Partnership and located at 6040 Harford Road in Baltimore
City, Maryland. Hamilton Center is a 104-bed skilled nursing
facility located on 1.06 acres, constructed in 1972, consisting of
a "T" shaped two-story plus partial basement masonry structure
containing 22,082 square feet. All 104 beds are comprehensive care
beds and all are Medicare-certified. The facility contains two
private rooms, 15 semi-private rooms, 4 three-person rooms and 15
four-person rooms.
o Mooresville Center. Mooresville Center is owned by Mooresville
Meridian Limited Partnership and located at 550 Glenwood Road in
Mooresville, North Carolina. Mooresville Center is a 160-bed
skilled nursing facility located on 11.38 acres, originally
constructed with 100 beds in 1988 with a 60-bed addition completed
in 1992 consisting of a one-story slab on grade building
containing a total of 47,657 square feet. Mooresville Center
contains 130 beds for skilled care and intermediate care
residents, all of which are Medicare-certified. The facility also
contains 30 beds in the Home for the Aged wing. There are 8
private rooms and 76 semi-private rooms.
o Randallstown Center. Randallstown Center is owned by Randallstown
Meridian Limited Partnership and located at 9109 Liberty Road in
Randallstown, Maryland. Randallstown Center is a 215-bed skilled
nursing facility located on 2.83 acres,
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constructed in 1971 consisting of a rectangular-shaped two-story
plus partial basement masonry structure containing a total of
72,780 square feet. All 215 beds are comprehensive care beds and
all are Medicare-certified; however, on December 29, 2004,
Randallstown Center requested the temporary de-licensure of 45
comprehensive care beds for a period of up to 12 months. The
facility contains 23 private rooms and 96 semi-private rooms.
o Salisbury Center. Salisbury Center is owned by Spencer Meridian
Limited Partnership and located at 710 Julian Road in Salisbury,
North Carolina. Salisbury Center is a 180-bed skilled nursing
facility located on 6.02 acres, originally constructed with 120
beds in 1988 with a 60-bed addition completed in 1991 consisting
of a one-story slab on grade building containing a total of 50,500
square feet. Salisbury Center contains 160 beds for skilled care
and intermediate care residents, all of which are
Medicare-certified. The facility also contains 20 beds in the Home
for the Aged wing. There are 16 private rooms and 82 semi-private
rooms.
o The Woodlands. The Woodlands is owned by Plainfield Meridian
Limited Partnership and located at 1400 Woodland Avenue in
Plainfield, New Jersey. The Woodlands is a 140-bed skilled nursing
facility located on 6.52 acres, constructed in 1989 consisting of
a two-story slab on grade building containing a total of 54,000
square feet. The Woodlands contains 120 comprehensive care beds,
all of which are Medicare-certified, and 20 residential care beds.
There are 12 private rooms, 46 semi-private rooms, and 9 four-bed
rooms.
DESCRIPTION OF THE TERMS OF THE PURCHASE AGREEMENT
Parties to the Purchase Agreement
The Purchase Agreement has been entered into between FC Properties VI,
LLC ("Purchaser") and Plainfield Meridian Limited Partnership, Caton Manor
Meridian Limited Partnership, Frederick Meridian Limited Partnership, Hamilton
Meridian Limited Partnership, Randallstown Meridian Limited Partnership,
Mooresville Meridian Limited Partnership and Spencer Meridian Limited
Partnership, all Maryland limited partnerships and subsidiaries of the Fund
(collectively, "Seller"). Pursuant to the Purchase Agreement, the Seller has
agreed to sell all of its rights in the real property on which the Facilities
are located (the "Real Property") and all of its interests in or rights to use,
if any, the equipment, furniture, furnishings, fixtures, inventory, vehicles, if
any, patient records and reports, certain contracts, certain trade names,
trademarks, software and other intangible property, all bank accounts, cash,
cash equivalents, securities and accounts receivable (including third party
settlements), prepaid accounts, workers' compensation receivables and dividends,
real estate and insurance escrows, and tangible personal property owned and
or/leased by Seller and located at the Facilities and/or used primarily in
connection with the operation of the Facilities (with the exception of certain
excluded assets as set forth in the Purchase Agreement) (the "Personal
Property") to Purchaser. The summary contained in this Solicitation Statement is
qualified in its entirety by reference to the Purchase Agreement, which is
attached as Annex I hereto and is incorporated herein by reference, which the
Investors should read in its entirety.
-8-
The Fund is a Delaware limited partnership with its principal executive
office at 300 East Lombard Street, Suite 1200, Baltimore, Maryland 21202;
Telephone Number (410) 727-4083. For a description of the Fund and the
Facilities, see the Fund's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 (the "Fund's 10-K") and Quarterly Report on Form 10-Q for the
period ended September 30, 2004 (the "Fund's 10-Q"), copies of which are being
mailed to Investors together with this Solicitation Statement and are
incorporated herein by reference.
Purchaser is a Delaware limited liability company with its principal
executive office at 1035 Powers Place, Alpharetta, GA 30004; Telephone Number
(770) 754-9660.
Properties and Assets Being Transferred
The Purchase Agreement provides that at the closing of the Sale (the
"Closing"), the Seller will convey, transfer and assign to the Purchaser all of
the Real Property and all of the Personal Property.
Purchase Price
The gross aggregate purchase price for the Facilities is approximately
$50,000,000, plus the payment of the Operating Partnerships' net working
capital, as provided in the Purchase Agreement (the "Net Working Capital"),
which will be paid at the Closing (collectively, the "Purchase Price"). Taxes,
rents, security deposits and other proratable items for each of the Facilities
will be prorated between the Purchaser and the Seller. The Seller has agreed to
pay fifty percent (50%) of any escrow or closing charges of the title company,
other than abstracting costs and the premiums for the title policy, which shall
be paid by the Purchaser. Purchaser has agreed to pay all other costs related to
title insurance, surveys and recording fees, due diligence reports, sales taxes
and transfer taxes.
Assumption of Liabilities and Obligations of the Seller
At the Closing, Purchaser will cause its designee to assume all of the
Seller's obligations under certain contracts and leases as set forth in the
Purchase Agreement and the obligation to pay to the Seller the Net Working
Capital, as set forth in the Purchase Agreement (the "Assumed Liabilities").
At the Closing, subject to adjustment within fifteen (15) days
following the Closing, Seller will provide Purchaser's designee with an
accounting of all funds, if any, belonging to patients at the Facilities which
are held by Seller in a custodial capacity and an accounting of all advance
payments received by it pertaining to patients at the Facilities. At the
Closing, subject to adjustment within fifteen (15) days following Closing,
Seller will transfer any such funds to a bank account designated by Purchaser
and Purchaser will acknowledge receipt of such funds and expressly assume all of
Seller's financial and custodial obligations with respect thereto. It is the
intent of the parties that as a result of Purchaser's assumption of such
obligations, Seller will be relieved of all fiduciary and custodial obligations
with respect to such funds and that Purchaser will assume all such obligations
and be directly accountable to the patients with respect thereto. Purchaser and
Purchaser's designee will indemnify and hold Seller harmless from all
liabilities, claims, expenses and demands (including attorney's fees) arising in
connection with such funds.
-9-
Prorations
Seller will receive a credit for any real and personal property taxes
and assessments actually paid by the Seller for the period from and after the
Closing Date. The Purchaser will receive a credit for any accrued but unpaid
real estate taxes and assessments applicable to any period before the Closing
Date, even if such taxes are not yet due and payable. Such prorations will be
based on the tax year of the municipality in which the Real Property or Personal
Property is located. Charges for water, fuel, gas, oil, heat, electricity and
other utilities, operating charges and prepaid service contracts, and all other
costs and expenses related to ownership and operation of the Real Property and
Personal Property shall be prorated at the Closing. All revenues and income,
including but not limited to patient rentals, as well as all Medicare and
Medicaid reimbursements will be prorated as of the Closing Date, to the extent
not included in the calculation of Net Working Capital, as set forth in the
Purchase Agreement. All prorations are subject to readjustment sixty (60) days
after Closing, after which time all prorations will be final.
The Fund will reserve and transfer to the Liquidating Trust (as defined
below) a certain amount of the proceeds of the Sale for the purposes of
satisfying any obligations and liabilities relating to the business of the Fund
and the ownership, management, operation and maintenance of the Facilities prior
to the Closing. The actual amount of such reserve and expenses will be
determined by the General Partners at the Closing. (See "-- Establishment of
Liquidating Trust")
Closing and Conditions to Closing
The Purchase Agreement provides that the closing of the Sale (the
"Closing") will occur on the date which is the last day of the calendar month in
which Fund receives the Requisite Consents, but not later than December 31, 2005
(provided that if such date of receipt of the Requisite Consents is less than 10
business days before the end of the calendar month, then the Closing shall be on
the last day of the next calendar month), unless extended by mutual agreement by
the Seller and the Purchaser.
Under the Purchase Agreement, the Closing is subject to the
satisfaction of certain conditions, including that: (i) the representations and
warranties made by the parties in the Purchase Agreement and related documents
are true and correct in all material respects at and as of the Closing, and each
of the parties shall have performed and complied in all material respects with
all covenants required by the Purchase Agreement and related documents to be
performed and complied with by such party prior to the Closing; (ii) none of the
Facilities shall have suffered substantial damage, destruction or loss that
would, according to estimates of third party contractors or insurance adjusters,
cost more than 5% of the Purchase Price to repair; (iii) Purchaser or its
designee shall have obtained approval for the transfer of all licenses (or the
issuance of new licenses in replacement thereof) to operate the Facilities; (iv)
no injunction, judgment, order, decree, ruling or charge shall be in effect
under applicable law that would prevent the Sale or cause the Sale to be
rescinded after Closing, (v) title to the Real Property will be marketable, free
of liens, and encumbrances except those expressly allowed pursuant to the
Purchase Agreement, (iv) Seller shall have obtained the Requisite Consents; and,
(v) Genesis Eldercare Network Services, Inc. (the "Manager") shall have,
contingent upon the closing of the
-10-
Sale,waived any rights it might have with respect to purchase of the Real
Property and Personal Property whether arising under management agreements with
the Seller or otherwise.
Representations and Warranties; Covenants; Engineering and Environmental Audit
The Purchase Agreement contains representations and warranties with
respect to the Seller and the Facilities which generally are customary in a
transaction of this type including, without limitation, representations by the
Seller that, subject to the consent of the Investors, it has the authority to
enter into the Purchase Agreement and that it has all necessary consents to
consummate the Sale (subject to obtaining the Requisite Consents of the
Investors as described herein) and that it has good and marketable title to the
Real Property. The Seller also has covenanted, among other things, to grant to
the Purchaser access to the Real Property and all books, records and reports
related to the Facilities (subject to protection of certain proprietary
materials) during the period prior to the Closing and to allow the Purchaser to
conduct engineering audits and other inspections and investigations of the Real
Property and Personal Property. The Purchaser has agreed to indemnify the Seller
for all liabilities, costs, claims, losses and damages imposed upon the Seller
in connection with such audits and the entry upon the Facilities by the
Purchaser's employees, agents and independent contractors.
The Purchase Agreement may be terminated (a) upon the mutual written
consent of the Seller and the Purchaser, (b) by either party if the conditions
to its obligations are not satisfied, (c) by either party if it is not then in
material breach of the Purchase Agreement and the other party is then in breach
of the Purchase Agreement, and such breach remains uncured for more than ten
(10) days after such party has received notice specifying in reasonable detail
the nature of such breach from the party seeking to terminate the Purchase
Agreement, (d) or by Purchaser upon timely notice following Seller's failure or
refusal to cure objections to matters of title, survey or environmental reports
as set forth in the Purchase Agreement. In the event of a default by the Seller
under the Purchase Agreement, the sole remedies of the Purchaser shall be to
pursue such remedies for breach of contract as may be available at law or in
equity, subject to the limitations set forth in the Purchase Agreement. In the
event of a default by the Purchaser, the Seller is released from its obligation
to sell the respective Real Property and Personal Property and is entitled to
retain the $1,000,000 earnest money deposit (the "Deposit") paid by the
Purchaser at the signing of the Purchase Agreement as liquidated damages.
Regulatory Requirements
To the best knowledge of the Fund, other than applicable requirements
under the federal securities laws and the Delaware Revised Uniform Limited
Partnership Act, there are no federal or state regulatory requirements which
must be complied with, nor are there any governmental consents or approvals that
must be obtained, in connection with the Transaction, other than requirements
relating to (i) the Requisite Consents, (ii) the liquidation and dissolution of
the Fund following consummation of the Sale, and (iii) any applicable federal,
state, or local requirements to transfer or terminate the licenses and/or
provider agreements to operate as a health care facility, certifications to
participate in the Medicare and Medicaid programs, and zoning permits. The Fund
intends to comply with all requisite regulatory requirements.
-11-
Reserve
The Fund will reserve and assign to the liquidating trust an estimated
amount of the gross proceeds of the Sale for the purpose of satisfying Fund
obligations and liabilities relating to the business of the Fund and ownership,
management, operation and maintenance of the Facilities prior to the Closing
Date and the dissolution and liquidation of the Fund. The actual amount of such
reserve and expenses will be determined by the General Partners at or after the
Closing.
Indemnification
Subject to the limitations set forth in the Purchase Agreement, Seller
will, jointly and severally, indemnify, exculpate and hold Purchaser and its
partners, directors, officers, employees and agents (collectively, "Purchaser
Indemnified Parties") harmless from and against any and all losses, damages,
costs, expenses, liabilities, obligations and claims of any kind (including,
without limitation, costs of investigation, reasonable attorneys' fees and other
legal costs and expenses) ("Purchaser Indemnified Losses") which Purchaser
Indemnified Parties may at any time suffer or incur, or become subject to, as a
result of or in connection with: (i) any and all financial obligations of Seller
with respect to the period prior to the Closing Date and relating to the Real
Property, Personal Property, the Facilities or the operation thereof (except as
expressly assumed by Purchaser); (ii) any accidents occurring at the Real
Property or the Facilities prior to the Closing Date; and, (iii) any material
breach or inaccuracy of any of the representations or warranties made by a
Seller in or pursuant to the Purchase Agreement. The aggregate liability of the
Seller for Purchaser Indemnified Losses and any other obligations of the
Purchaser to survive Closing pursuant to the Purchase Agreement will not exceed
an amount of Five Hundred Thousand dollars ($500,000) and Seller will only be
liable for indemnification pursuant to the Purchase Agreement if the aggregate
Purchaser Indemnified Losses and other obligations and liabilities exceed Fifty
Thousand Dollars ($50,000). Seller's indemnification obligation will not apply
to any physical damage to, or condition of, the Real Property or Personal
Property. The Seller's indemnification obligations under the Purchase Agreement
will terminate on the first anniversary of the Closing Date.
Subject to the limitations set forth in the Purchase Agreement,
Purchaser will indemnify, exculpate and hold Seller and their respective
stockholders, partners, directors, officers, employees and agents (collectively,
"Seller Indemnified Parties") harmless from and against any and all losses,
damages, costs, expenses, liabilities, obligations and claims of any kind
(including, without limitation, costs of investigation, reasonable attorneys'
fees and other legal costs and expenses) ("Seller Indemnified Losses") which
Seller Indemnified Parties may at any time suffer or incur, or become subject
to, as a result of or in connection with: (i) any and all financial obligations
relating to the Real Property, the Personal Property, the Facilities or the
operation thereof arising or accruing after the Closing Date; (ii) any breach or
inaccuracy of any of the representations or warranties made by a Purchaser in or
pursuant to the Purchase Agreement, or (iii) any duties, obligations,
liabilities, losses or other expenses (including attorney's fees and court
costs) arising in any connection with the Facilities, the Real Property, the
Personal Property, certain contracts, licenses to operate the Facilities and/or
the residents, patients and other occupants of the Facilities during or with
respect to the period from and after the Closing. The liability of the Purchaser
for Seller Indemnified Losses pursuant to the Purchase Agreement will not exceed
an amount of Five Hundred Thousand dollars ($500,000)
-12-
and Purchaser will only be liable for indemnification pursuant to the Purchase
Agreement if the aggregate Purchaser Indemnified Losses exceed Fifty Thousand
Dollars ($50,000). Seller's indemnification obligation will not apply to any
physical damage to, or condition of, the Real Property or Personal Property.
Escrow Agreement
Pursuant to the terms of the Purchase Agreement, at the Closing
Purchaser and Seller will enter into an escrow agreement (the "Escrow
Agreement") with LandAmerica Financial Group, Inc. as the escrow agent (the
"Escrow Agent"). At the Closing Seller will deposit $500,000 (the "Escrow
Funds") with the Escrow Agent and deliver the Escrow Agreement, such amount and
any interest earned thereon will be held by the Escrow Agent to secure Seller's
indemnification obligation pursuant to the Purchase Agreement. Immediately
following the Closing Seller will assign all of its rights and obligations under
the Escrow Agreement (including the right to receive the Escrow Funds, less the
amount of any claims for Purchaser Indemnified Losses) to the Liquidating Trust
and the Liquidating Trust will assume any obligations of the Seller under the
Escrow Agreement.
The Seller will have the right to receive the Escrow Funds (less the
amount of any pending claims for indemnification for Purchaser Indemnified
Losses and claims for indemnification for Purchaser Indemnified Losses
previously paid to Purchaser), if any, from the Escrow Agent within ten (10)
business days after the first anniversary of the Closing Date, or, if later,
upon the final resolution of any claims for indemnification for Purchaser
Indemnified Losses pending as of the first anniversary of the Closing Date.
Establishment of the Liquidating Trust
Prior to consummation of the Sale, the Fund will establish a
liquidating trust which will be a statutory business trust organized under the
laws of the State of Delaware (the "Liquidating Trust") to hold several
contingent assets of the Fund including the right to receive any remaining
Escrow Funds following the termination of the escrow on the one-year anniversary
of the Closing Date. The Liquidating Trust also will assume the Fund's
obligations and will be responsible for:
o satisfying any outstanding obligations and liabilities relating to the
business of the Fund and the ownership, management, operation and
maintenance of the Facilities prior to the Closing;
o satisfying any other obligations of the Fund under the Purchase Agreement.
Promptly after the establishment of the Liquidating Trust, the Fund
will assign to the Liquidating Trust all of the Fund's interest in the
contingent assets described below, including the right to receive the Escrow
Funds, if any, and all of the Fund's rights, duties and obligations under the
Escrow Agreement and the Purchase Agreement. Immediately prior to the Closing,
the Fund will distribute to the Investors, effective upon the Closing and on a
pro rata basis based upon each Investor's ownership of Units as of the time of
such distribution, all of the beneficial interests in the Liquidating Trust.
-13-
The Liquidating Trust will not engage in any ongoing trade or business
and its activities will be specifically limited to conserving and protecting any
assets transferred to it and paying or distributing such assets, including
holding such assets for the benefit of the holders of beneficial interests in
the Liquidating Trust, enforcing the rights of the beneficiaries to such assets,
satisfying any obligations under the Purchase Agreement and Escrow Agreement,
pursuing any claims and demands that have been transferred to it by the Fund,
making liquidating distributions to the holders of beneficial interests in the
Liquidating Trust and taking such other actions as may be necessary to conserve
and protect the Liquidating Trust corpus and provide for the orderly liquidation
thereof. The Administrative General Partner will administer the Liquidating
Trust without profit together with a trustee who is licensed to act as a trustee
under Delaware law. Beneficial interests in the Liquidating Trust will not be
certificated but will be maintained in book-entry format by the Liquidating
Trust. Beneficial interests in the Liquidating Trust will not have voting or
dividend rights and will not bear a stated rate of interest. In addition, the
beneficial interests in the Liquidating Trust will not be transferable, except
by will, intestate succession or by operation of law.
Prior to the Liquidation, the Fund will contribute an estimated amount
of the gross proceeds of the Sale to the Liquidating Trust to enable the
Liquidating Trust to satisfy its obligations, including those described above.
Pursuant to the terms of the liquidating trust agreement, the Administrative
General Partner, as the administrator of the Liquidating Trust, may only permit
the Liquidating Trust to use such funds for these purposes. However, the
Liquidating Trust may distribute such funds to the Investors once such
obligations are satisfied. As soon as the Liquidating Trust has satisfied the
obligations for which it is created, which is expected to occur approximately
twelve months after the completion of the Transaction, it will be liquidated and
all of its remaining assets will be distributed to the beneficiaries of the
Liquidating Trust.
Contingent Assets
The contingent assets of the Fund to be transferred to the Liquidating
Trust include the rights to:
o all claims or demands of any nature which have been or may be
asserted by or on behalf of the Fund or the Seller and which arise
out of events occurring prior to the Closing with respect to the
material contracts of the Seller; and
o receive the Escrow Funds (less the amount of any pending claims
for indemnification for Purchaser Indemnified Losses and claims
for indemnification for Purchaser Indemnified Losses previously
paid to Purchaser), if any, from the Escrow Agent within ten (10)
business days after the first anniversary of the Closing Date, or,
if later, upon the final resolution of any claims for
indemnification for Purchaser Indemnified Losses pending as of the
first anniversary of the Closing Date.
The Administrative General Partner, as the administrator of the
Liquidating Trust, will evaluate any claims that are assigned to the Liquidating
Trust and determine if it would be in the best interests of the Investors, as
the beneficiaries of the Liquidating Trust, to pursue such claims.
-14-
Distributions by the Liquidating Trust
The Administrative General Partner does not intend to cause the
Liquidating Trust to make any distribution until all of the Liquidating Trust's
obligations under the Purchase Agreement, the Escrow Agreement and any
obligations and liabilities relating to the business of the Fund and the
ownership, management, operation and maintenance of the Facilities prior to
Closing are satisfied; provided, however, that interim distributions of cash may
be made so long as such distributions may be made without detriment to the
conservation and protection of the Liquidating Trust corpus. As soon as the
Liquidating Trust has satisfied the obligations for which it is created, which
is expected to occur approximately twelve months after the completion of the
Sale, it will be liquidated and all of its remaining assets will be distributed
to the holders of beneficial interests of the Liquidating Trust.
DESCRIPTION OF THE SALE
The terms of the Partnership Agreement require the General Partners to
conduct the affairs of the Fund in the best interests of the Fund, including the
ownership and use all Fund assets for the benefit of the Fund. The exercise of
such fiduciary duties obligates the General Partners to evaluate, from time to
time, whether or not, in the reasonable judgment of the General Partners, it
would be in the best interests of the Fund and its Investors to effectuate a
sale or refinancing of all or a portion of the Fund Property. To satisfy their
obligations under the Partnership Agreement and the investment objectives
established at the formation of the Fund, the General Partners have regularly
evaluated different strategies involving the sale of some or all of the Fund
Property with a view towards maximizing the value of the Units of the Fund.
In connection with such ongoing evaluations, the General Partners have,
from time to time, received various indications of interest from potential
purchaser of some or all of the Fund Property. In the third quarter of 2004 the
Fund received a preliminary acquisition proposal from the Purchaser regarding
the purchase of the Facilities. In response to such preliminary proposal,
representatives of the General Partners participated in discussions and meetings
with representatives of the Purchaser. The parties entered into a formal letter
of intent pursuant to which they agreed to negotiate a definitive agreement for
the sale of the Facilities by the Fund to the Purchaser for approximately
$50,000,000. During the fourth quarter of 2004 and the first quarter of 2005
representatives of the General Partners and representatives of the Purchaser
conducted numerous negotiations regarding such definitive agreement. During
February 2005 representatives of the General Partners, including its legal
advisors, presented the material terms and conditions of the Purchase Agreement
and the contemplated Transaction to the General Partners, including the results
of financial and valuation analysis of the Fund and the proposed Transaction.
The General Partners discussed the information presented by its representatives
and advisors, asked questions of those representatives and advisors and
considered the terms of the Purchase Agreement and the fiduciary duties of the
General Partners with respect to the proposed Transaction.
After due consideration, the Board of Directors of the Administrative
General Partner and the Board of Directors of the Development General Partner
unanimously approved the Purchase Agreement and the related ancillary
agreements, recommended that the Transaction be approved by the Investors and
directed the Purchase Agreement and the Transaction be submitted to the
-15-
Investors for approval. On February 11, 2005, the Purchaser and Seller
finalized and executed the Purchase Agreement. On February 16, 2005 the General
Partners filed a Form 8-K with the SEC disclosing the entry into the Purchase
Agreement.
Upon consummation of the Sale and the payment of the Escrow Funds to
the Escrow Agent, the Fund will receive gross aggregate consideration of
approximately $48,400,000, as adjusted by the prorations described in the
Purchase Agreement, including, but not limited to, proration of taxes, rents and
security deposits. The net assets (including net proceeds of the Sale), after
establishing the Liquidating Trust and funding the reserve for payment of
expenses relating to the business of the Fund and the ownership, operation,
management and maintenance of the Facilities prior to closing and payment of
prorated expenses and the transaction expenses, will be distributed to the
Partners and the Investors in accordance with Section 4.4 of the Partnership
Agreement in proportion to their respective Capital Accounts. The General
Partners presently estimate that the net cash proceeds from the Sale (after
payment of the Escrow Funds to the Escrow Agent, taking into account the
establishment of the Liquidating Trust and creation of a reserve for payment of
unassumed liabilities and obligations relating to the business of the Fund and
the ownership, management, operation and maintenance of the Facilities prior to
the Closing, and the payment of transaction expenses and prorated expenses) will
be approximately $31,000,000, or approximately $20.00 per Unit (depending on the
actual amount of such reserve and expenses) prior to any reduction due to state
or local tax withholding. There can, however, be no assurances that this will be
the actual amount distributed to Investors because such reserves have not yet
been established and the amount of expenses of consummating the Transaction is
not final. To date, based on the first admission date, the Fund has distributed
approximately $34.00 per Unit from operations, cash reserves and refinancing
proceeds. Consequently the General Partners believe that, from inception of the
investment to the closing of the Sale of the Facilities, an Investor who
originally invested $25.00 per Unit should receive total cash distributions of
approximately $54.00 per Unit.
Background and Reasons for the Sale
In connection with their evaluation of the Purchase Agreement and the
Sale, the General Partners, among other things:
o Reviewed certain publicly available business and financial information
relating to the Fund that they deemed to be relevant;
o Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities, capital requirements and prospects of the Fund;
o Conducted discussions with members of management of the Fund and
the Operating Partnerships concerning the matters described above;
o Performed various valuation analyses that they deemed relevant,
including review of certain comparable sales, and analysis of the
secondary market transfer prices for the Units;
-16-
o Reviewed other financial studies and analyses and took into
account other matters that they deemed necessary, including their
assessment of general economic, market and monetary conditions and
specific economic and market conditions affecting the domestic
skilled nursing industry.
In view of the variety of factors considered with their evaluation of
the Sale and the Transaction, the General Partners did not quantify or otherwise
assign relative weights to the various factors that it considered or determine
that any factor was of particular importance in reaching its determination that
the Sale is fair to and in the best interests of the Investors. Rather, the
General Partners made their determination based on the totality of the
information they considered.
Under the terms of the Purchase Agreement, the Purchaser will purchase the Real
Property and the Personal Property for an aggregate purchase price of
approximately $50,000,000, as further adjusted by the prorations described
therein. The General Partners presently estimate that the net cash proceeds from
the Sale (after payment of the Escrow Funds to the Escrow Agent, taking into
account the establishment of the Liquidating Trust and creation of a reserve for
payment of unassumed liabilities and obligations relating to the business of the
Fund and the ownership, management, operation and maintenance of the Facilities
prior to the Closing, and the payment of transaction expenses and prorated
expenses) will be approximately $31,000,000, or approximately $20.00 per Unit
(depending on the actual amount of such reserve and expenses) prior to any
reduction due to state or local tax withholding. There can, however, be no
assurances that this will be the actual amount distributed to Investors because
such reserves have not yet been established and the amount of expenses of
consummating the Transaction is not final. See "DESCRIPTION OF THE TERMS OF THE
PURCHASE AGREEMENT-Closing and Conditions to Closing."
THE AMENDMENT
Currently Section 5.4 of the Partnership Agreement prohibits the
General Partners from selling all, or substantially all, of the Fund Property
without the consent of the Investors. Assuming Investor approval of the Sale,
the Fund intends to sell the Real Property and Personal Property pursuant to the
Purchase Agreement and proceed with the Liquidation. However, if the Sale were
not consummated for any reason the General Partners believe the value that could
be realized in a sale of the Fund Property would be substantially increased if
the requirement to obtain Investor consent to any such sale were removed. In
order to facilitate the future negotiation and sale of any remaining Facilities
in the event, and solely to the extent, that Investors do not consent to the
Sale or if the Sale is otherwise not consummated for any reason, the General
Partners deem it advisable to amend the Partnership Agreement to allow them to
sell the Fund Property without first obtaining Investor Consent.
If consent of the Investors is obtained pursuant to this Solicitation
Statement, the General Partners further reserve the right to amend the
Partnership Agreement to the extent necessary to consummate the Sale, provided
that substantially the same legal and economic effect to the Investors of the
Sale is achieved. The Amendment will apply retroactively to any and all other
actions of the Investors taken by written consent in lieu of a meeting. The
Partnership
-17-
Agreement requires that Investors holding more than 50% of the outstanding
Units consent to any amendment of the Partnership Agreement.
LIQUIDATION OF PARTNERSHIP; DISTRIBUTION OF PROCEEDS
The General Partners presently estimate that the net cash proceeds from
the Sale (after payment of the Escrow Funds to the Escrow Agent, taking into
account the establishment of the Liquidating Trust and creation of a reserve for
payment of unassumed liabilities and obligations relating to the business of the
Fund and the ownership, management, operation and maintenance of the Facilities
prior to the Closing, and the payment of transaction expenses and prorated
expenses) will be approximately $31,000,000, or approximately $20.00 per Unit
(depending on the actual amount of such reserve and expenses) prior to any
reduction due to state or local tax withholding. There can, however, be no
assurances that this will be the actual amount distributed to Investors because
such reserves have not yet been established and the amount of expenses of
consummating the Transaction is not final.
The Seller will transfer to the Purchaser, in connection with the Sale,
upon the Closing, a prorated portion of rents, security deposits and other
proratable items in accordance with the Purchase Agreement. To the extent any
cash remains in the account of the Fund after the Sale creation of the
Liquidating Trust and the establishment of a reserve for payment of obligations
and liabilities relating to the business of the Fund and the ownership,
management, operation and maintenance of the Facilities prior to the Closing,
the transaction expenses and prorated expenses, the Fund intends to liquidate,
dissolve and wind-up the Fund as soon as practicable after the Closing and to
distribute net remaining cash proceeds to the Unitholder in accordance with the
terms of the Fund Agreement. Section 4.4 of the Partnership Agreement provides
that net remaining cash proceeds will be distributed in proportion to the
capital accounts of the General Partners and the Investors after the allocations
for profits and loss from the Sale as provided in Sections 4.1A and B of the
Partnership Agreement. Section 4.4C of the Partnership Agreement provides that
such distributions will be made by the end of the taxable year of liquidation of
the Fund or, within 90 days of the date of liquidation, whichever is later.
GENERAL PARTNERS' RECOMMENDATION
The Board of Directors of the Development General Partner and the Board
of Directors of the Administrative General Partner have unanimously approved the
Transaction, and directed that the Sale, Amendment and Liquidation be submitted
to the Fund's Investors for consent with the recommendation that Investors
consent to all aspects of the Transaction.
After careful consideration, the General Partners have determined that
the Purchase Agreement and the Sale are fair to and in the best interest of the
Fund and the Investors. The General Partners recommend that Investors vote to
"Consent" to approval of the Sale, Amendment and Ancillary Transaction.
In making the determination that the Transaction is fair to and in the
best interests of the Investors, and the decision to approve the Purchase
Agreement and to recommend to the Investors that they vote their Units in favor
of adoption of the Transaction, the General Partners
-18-
identified and considered a number of factors which weighed in favor of the
approval of the Transaction and the adoption of the Purchase Agreement,
including the following:
o The General Partners' belief that the aggregate gross purchase
price for the Fund's Facilities of $50,000,000, represents an
attractive sales price for the Facilities.
o The terms and conditions of the Purchase Agreement, including the
fact that the terms were determined through arm's length
negotiations;
o Information with respect to the financial condition, results of
operations, business and prospects of the Fund, particularly in
light of the current economic and regulatory environments;
o The fact that the Sale will not occur without the consent of Investors
holding at least a majority of the Units; and
o The fact that although there is no established trading market for
the Units, the per Unit consideration as a result of the
Transaction significantly exceeds the prices that have been paid
in the limited secondary market during the past two years.
The General Partners also considered the following factors in their
deliberations concerning the Purchase Agreement:
o The fact that because Investors would receive only cash as a
result of the Transaction, and not a continuing interest in any of
the Facilities, Investors would not have the opportunity to
participate in any future growth prospects with respect to the
Facilities; and
o The fact that the Facilities are being offered for sale at a time
when federal and state budgetary pressures with respect to
government funded programs such as Medicaid and Medicare, which
represent significant portions of the Facilities' revenues, create
uncertainty regarding future funding levels;
o It is not possible to quantify the effect of potential
legislative, regulatory or governmental initiatives on the
Facilities. Accordingly, there can be assurance that the impact of
these changes or any future healthcare legislation will not
adversely affect the Facilities.
After due consideration, the General Partners concluded that the
benefits to the Investors of the Sale outweighed the negative factors.
Valuation. The General Partners believe that the aggregate gross
purchase price for the Facilities of approximately $50,000,000 represents an
attractive sales price. Investors or potential buyers of skilled nursing
facilities typically analyze an acquisition of a property based on its expected
cash yield. The Purchase Price represents a multiple of seven times the Fund's
2004 net operating income and seven and one half times its expected 2005 net
operating income. The General Partners believe that the values reflected in the
Purchase Price for each of the
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Facilities are available from the Purchaser because the skilled nursing
investment market nationwide is favorable, as there is more demand or capital
looking for those types of investments than there are skilled nursing facilities
for sale. A sale at this time takes advantage of such pent-up demand.
Property Age. The average age of the Facilities is 27 years. As such,
operating results in recent years have begun to be adversely affected by the
cost of capital expenditures required to maintain the Facilities. Over the next
two years the General Partners estimate a minimum of three to four million
dollars will be needed for sprinkler systems, roofs, parking lots, windows,
generators, elevators and other mechanical equipment. Capital expenditure
requirements in future years likely will adversely impact the Fund's ability to
increase or maintain the level of distributions to Investors.
FOR THE FOREGOING REASONS, THE GENERAL PARTNERS HAVE DETERMINED THAT
THE SALE, AMENDMENT AND ANCILLARY TRANSACTIONS ARE IN THE BEST INTERESTS OF
INVESTORS AND RECOMMEND THAT INVESTORS "CONSENT" TO THE SALE, AMENDMENT AND
ANCILLARY TRANSACTIONS.
ACCOUNTING TREATMENT
The Sale will be accounted for as a sale of assets. The Fund estimates
that the Sale of the Facilities will result in a taxable gain of approximately
$15,000,000 to the Fund or approximately $10.00 per Unit.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is generally applicable to United States
individuals and does not address all of the tax consequences that may be
relevant to other classes of Investors, including corporations, foreign
individuals and entities, and entities that are subject to special treatment
under the Internal Revenue Code of 1986, as amended (the "Tax Code"), including,
but not limited to, regulated investment companies, financial institutions, life
insurance companies, and tax-exempt organizations. INVESTORS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS TO DETERMINE THE TAX CONSEQUENCES OF THE TRANSACTION IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.
Material Federal Income Tax Considerations of the Sale and Liquidation
The Sale will be a taxable transaction to the Investors. Each of the
seven Operating Partnerships will recognize gain or loss on the Sale equal to
the difference between the amount realized by such Operating Partnership on the
Sale (generally, the cash received plus any liabilities of the Operating
Partnership assumed by the Purchaser) over its adjusted tax basis in the
Facilities. Such gain or loss will be allocated to the Fund in the manner
provided by the profit and loss allocation provisions of the Operating
Partnership's partnership agreement and as required by Sections 704(b) and
704(c) of the Code and the Treasury Regulations thereunder. Gain on the Sale
should generally be treated as capital gain or depreciation recapture income,
unless the Facilities have been held primarily for sale to customers in the
ordinary course of business (i.e., as "dealer" property). In addition, a portion
of the gain on the Sale may be taxable as ordinary income to the extent the
Investor's share of "unrealized receivables" is in excess of
-20-
the Investor's share of the basis attributable to those assets. Any loss on the
Sale should be deductible as an ordinary loss.
Because the Facilities have been held for more than one year, any
capital gain would generally be taxed to an individual Investor at a maximum
rate of 15%. However, the Fund anticipates that most of such gain will be
attributable to prior depreciation deductions that are not otherwise required to
be taxed as ordinary depreciation recapture income and, thus, will be taxed at a
maximum rate of 25%.
The Fund's distributive share of each Operating Partnership's gain or
loss on the Sale will be allocated to Investors in the manner provided by the
profit and loss allocation provisions of the Partnership Agreement and as
required by Sections 704(b) and 704(c) of the Code and the Treasury Regulations
thereunder. Such gain or loss will correspondingly increase or decrease each
Investor's tax basis in his interest in the Fund. Such basis will also be
decreased by a constructive distribution of money equal to the reduction in the
Investor's share of the liabilities (if any) of the Fund as a result of the
Sale. Upon distribution of the proceeds of the Sale to the Investors, an
Investor will recognize gain to the extent that the Investor's share of the
proceeds (as determined under the Partnership Agreement) is greater than the
Investor's tax basis in his interest in the Fund (as adjusted for the Investor's
allocable share of gain or loss on the Sale). To the extent an Investor has any
unused passive activity losses under Section 469 of the Code that are
attributable to the Facilities (i.e., passive activity losses not previously
deducted against passive activity or other taxable income of such Investor),
such losses would be deductible in full as a result of the Sale if the Investor
is deemed to have made a complete disposition of his interest in such passive
activity. In addition, gain resulting from the Sale would be passive activity
income for such an Investor, so that any unused passive activity losses would be
available to offset such Investor's allocable share of such gain.
Upon liquidation of the Operating Partnerships and the Fund, the
Investor will recognize a gain to the extent that the basis of his interest in
the Fund is less than the amounts distributed to him in liquidation (assuming
such Investor is distributed only cash in such liquidation), and will recognize
a loss to the extent the basis of his interest in the Fund exceeds the amounts
distributed. Such gain or loss will be capital gain or loss, assuming the
Investor held his interest as a capital asset. The applicable tax rate for such
capital gain or loss will depend on the Investor's holding period in his or her
interest, but generally will be taxed at a maximum rate of 15% if the Investor
held his or her interest in the Fund for more than one year.
Any gain recognized by an Investor may also be subject to state and
local income taxes. Because the Facilities are located in North Carolina,
Maryland, and New Jersey, an Investor will be subject to income tax in those
states on the Investor's allocable share of the net income and gain from the
Sale of the Facilities. The Fund generally will be required to withhold and pay
over to these states a portion of the proceeds of the Sale otherwise payable to
certain non-resident Investors in order to satisfy state withholding obligations
imposed on the Fund. In general, the non-resident withholding tax rates range
from 4.85% (Maryland) to 9% (New Jersey rate for non-individual investors). The
rate for North Carolina depends on the amount of income and ranges from 6% to
8.25%.
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Material Federal Income Tax Considerations of the Receipt of Interests
in the Liquidating Trust.
The Fund has organized the Liquidating Trust in a manner that it
believes will permit the Liquidating Trust to be classified as a "liquidating
trust" under the Treasury Regulations and a grantor trust under the Tax Code.
For federal income tax purposes, the transfer of assets by the Fund to the
Liquidating Trust, followed by the issuance to the Investors of beneficial
interests in the Liquidating Trust, will be treated as though the Fund had
distributed the transferred assets (including the amount contributed to the
Escrow) to the Investors on a pro rata basis and the Investors had then
contributed such assets to the Liquidating Trust. The characterization of such
deemed distribution will be determined in accordance with the rules described
above in "Material Federal Income Tax Considerations of the Sale and
Liquidation." An Investor will not recognize gain or loss on the deemed
contribution of the assets to the Liquidating Trust.
In general, an Investor will have an initial basis in the assets deemed
distributed to him equal to the lesser of the Fund's basis, immediately prior to
the distribution, in such assets deemed distributed to him or his basis in his
Units immediately prior to the deemed distribution, increased to reflect any
gain required to be recognized in connection with the deemed distribution. Upon
the deemed contribution of the assets to the Liquidating Trust, the Liquidating
Trust will have the same adjusted basis in its assets as the Investors had in
those assets prior to the transfer to the Liquidating Trust.
The Liquidating Trust generally will not be subject to tax. Instead,
each Investor, as a beneficiary of the Liquidating Trust, will be required to
report on his income tax return his pro rata share of the income, deductions and
credits of the Liquidating Trust (including for purposes of the alternative
minimum tax) regardless of whether the Liquidating Trust makes any distributions
to the Investor. In addition, an Investor may be subject to state or local tax
in jurisdictions where an Investor resides and in each state or local
jurisdiction in which the Liquidating Trust has assets. Distributions by the
Liquidating Trust to an Investor, whether made currently or in connection with
the dissolution of the Liquidating Trust, will not be taxable to such Investor
for federal income tax purposes.
Any loss recognized by an Investor as a result of the Investor's
beneficial interest in the Liquidating Trust will generally be treated as a
capital loss. An individual may deduct capital losses not offset by capital
gains against his ordinary income only up to a maximum annual amount of $3,000.
Because the Liquidating Trust will not conduct any business, it does not appear
that losses incurred as a result of the Investor's beneficial interest in the
Liquidating Trust would be subject to limitation under the "passive loss" or "at
risk" rules. However, each Investor should consult with his tax advisor
regarding the application of the at risk and passive loss rules (including
whether and to what extent the ownership of beneficial interests in the
Liquidating Trust constitutes a passive activity) in light of his particular tax
situation.
-22-
SELECTED FINANCIAL DATA
Revenues and net earnings (loss) information for the Fund furnished
below is for the years ended December 31:
Years Ended December 31,
2003 2002 2001 2000 1999
--------------------------------------------------------------------------
(Dollars in thousands - except per Unit amounts)
Statement of Earnings Data
Net revenue $63,849 $61,920 $59,933 $55,764 $51,278
Net earnings 2,326 2,384 2,191 2,282 2,865
Net earnings per assignee Unit-basic $ 1.50 $ 1.53 $ 1.41 $ 1.47 $ 1.84
Operating Data
Payor mix (as a percent of revenue):
Medicaid and Medicare 85% 84% 83% 80% 84%
Private 15% 16% 17% 20% 16%
Occupancy percentage 88.2% 89.9% 90.0% 86.2% 87.9%
Patient Days Available 403,000 403,000 406,000 430,000 429,000
Balance Sheet Data
Total assets $45,323 $45,839 $48,777 $49,398 $48,646
Property and equipment, net of
accumulated depreciation 31,207 31,231 31,927 32,934 33,346
Debt, including loan payable to
Development General Partner 23,786 24,169 24,588 24,964 23,742
Partners' capital 15,450 15,311 16,233 17,348 18,372
Revenues and net earnings (loss) information for the Fund furnished below is for
the interim period ended September 31, 2004:
9 months ended
September 30, 2004
------------------
Net revenue $48,722
Net earnings 1,995
Net earnings per assignee Unit-basic $ 1.28
Operating Data
Payor mix (as a percent of revenue):
Medicaid and Medicare 85%
Private 15%
Occupancy percentage 85.60%
Patient Days Available 300,027
Balance Sheet Data
Total assets $44,372
Property and equipment, net of
accumulated depreciation 30,344
Debt, including loan payable to
Development General Partner 23,437
Partners' capital 15,695
The above selected financial data should be read in conjunction with
the Fund's financial statements and accompanying notes in the Fund's Form 10-K
and the Fund's Form 10-Q incorporated by reference in this Solicitation
Statement.
-23-
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Outstanding Voting Securities; Record Date
As of the Record Date, there were 1,540,040 Units outstanding, which
represent all of the voting securities of the Fund. Each Unit is entitled to one
vote. Only Investors of record as of the Record Date will be entitled to notice
of and to execute and deliver a Consent Form.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the Record Date, the beneficial
ownership of Units of the Fund by persons or entities beneficially owning more
than 5% of the Units, the individual directors and officers of the
Administrative General Partner, the individual directors and officers of the
Development General Partner and all of the directors and officers of each of the
Administrative General Partner and the Development General Partner as a group.
Name Title of Class Amount of Units Percent of
Beneficially Owned Class
Brown Healthcare Holding Co., Inc. Units of Limited 40 .0026%
300 East Lombard Street Partnership Interests
Suite 1200
Baltimore, Maryland 21202
Meridian Healthcare Investments, Inc. General Partner N/A 50%
515 Fairmount Avenue Interest
Towson, Maryland 21286
Brown Healthcare, Inc. General Partner N/A 50%
300 East Lombard Street Interest
Suite 1200
Baltimore, Maryland 21202
Directors and Officers of
Administrative General Partner as
a Group*
Directors and Officers of
Development General Partner as
a Group*
* - Less than 1%
-24-
MARKET FOR UNITS; DISTRIBUTIONS
There is no established public trading market for the Units.
The Fund declared quarterly cash distributions to Investors for 1999
through the fourth quarter of 2004 as set forth in the following table:
Quarter 2004 2003 2002 2001 2000 1999
- ------- ---- ---- ---- ---- ---- ----
1st 0.3750 0.3750 0.5313 0.5313 0.5313 0.5313
2nd 0.3750 0.3750 0.5313 0.5313 0.5313 0.5313
3rd 0.3750 0.3750 0.5313 0.5313 0.5313 0.5313
4th 0.3750 0.3750 0.2813 0.5313 0.5313 0.5313
Totals 1.5000 1.5000 1.8750 2.1251 2.1251 2.1250
RECOMMENDATION OF GENERAL PARTNERS
The General Partners believe that the Sale, Amendment and Liquidation
are in the best interests of the Investors and strongly recommend that the
Investors "CONSENT" to the Sale, Amendment and Liquidation.
PLEASE SIGN AND RETURN THE ENCLOSED CONSENT FORM INDICATING YOUR
CONSENT TO THE SALE, AMENDMENT AND ANCILLARY TRANSACTIONS.
OTHER MATTERS
There are no matters other than as set forth in this Statement for
which Consent Forms are being solicited.
INCORPORATION BY REFERENCE
The following documents, which have been previously filed by the Fund
with the Securities and Exchange Commission, are hereby incorporated herein by
reference:
(1) The Fund's Form 10-K for the fiscal year ended December 31, 2003;
(2) The Fund's Form 10-Q for the interim period ended September 30,
2004; and
(3) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, since the end of the fiscal year
covered by the Annual Report referred to in (1) above.
-25-
Pursuant to the regulations of the Securities and Exchange Commission,
the Fund will provide to each Investor of record on the Record Date, without
charge and upon written or oral request of such person, copies of all reports
(excluding exhibits) filed pursuant to Sections 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, since the end of the fiscal year covered by
the Annual Report in (1) above.
A copy of the Fund's Form 10-K for the fiscal year ended December 31,
2003 and the Fund's Form 10-Q for the interim period ended September 30, 2004,
are being sent to Investors concurrently with this Solicitation Statement.
Meridian Healthcare Growth and Income Fund Limited Partnership
By: Brown Healthcare, Inc. By: Meridian Healthcare Investments, Inc.
Administrative General Partner Development General Partner
By: By:
-26-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CONSENT FORM
The undersigned, a holder of the number of assignee units of ownership
interests ("Units") in Meridian Healthcare Growth and Income Fund Limited
Partnership (the "Fund") listed below, with respect to all of such Units, does
hereby
1. The sale of all of the rights in the real property on which each of the
Facilities owned and operated by the Operating Partnerships of the Fund are
located and all of the interests in or rights to use, if any, certain personal
property located at the Facilities and/or used primarily in connection with the
operation of the Facilities, pursuant to the Asset Purchase Agreement dated as
of February 11, 2005 by and among FC Properties VI, LLC, a Delaware limited
liability company and Plainfield Meridian Limited Partnership, Caton Manor
Meridian Limited Partnership, Frederick Meridian Limited Partnership, Hamilton
Meridian Limited Partnership, Randallstown Meridian Limited Partnership,
Mooresville Meridian Limited Partnership, and Spencer Meridian Limited
Partnership each Maryland limited partnerships and subsidiaries of the Fund
(each an "Operating Partnership" and, collectively, the "Seller") (the "Sale")
and the grant to the General Partners, or any one of them, through their
officers, employees, and agents, of the authority to negotiate, execute, and
deliver all documents, agreements, instruments, and certificates, and pay all
fees, expenses and disbursements (including, but not limited to, real estate
broker commissions), and take any and all other actions as they or any one of
them may deem necessary or advisable in connection with or relating to the Sale.
|_| CONSENT |_| DOES NOT CONSENT |_| ABSTAINS
2. To the Amendment to the Agreement of Limited Partnership of the Fund,
dated as of December 8, 1987 (as amended, supplemented or otherwise modified
from time to time) (the "Partnership Agreement") to permit the General Partners
to sell all of substantially all of the assets of the Fund without first
obtaining Investor consent(the "Amendment").
|_| CONSENT |_| DOES NOT CONSENT |_| ABSTAINS
3. To the liquidation, dissolution and winding-up of the Fund pursuant to
Article 8 of the Partnership Agreement following the consummation of the Sale
(the "Liquidation").
|_| CONSENT |_| DOES NOT CONSENT |_| ABSTAINS
The Units represented by this Consent will be deemed to have been voted
in accordance with the election specified by the holder named below. IF NO
ELECTION IS SPECIFIED, ANY OTHERWISE PROPERLY COMPLETED AND SIGNED CONSENT FORM
WILL BE DEEMED TO BE A CONSENT TO EACH OF THE SALE, THE AMENDMENT AND THE
ANCILLARY TRANSACTIONS, AS APPLICABLE. BY EXECUTION HEREOF, THE UNDERSIGNED
ACKNOWLEDGES RECEIPT OF THE CONSENT SOLICITATION STATEMENT.
THIS CONSENT IS SOLICITED BY THE GENERAL PARTNERS ON BEHALF OF THE FUND.
The Fund reserves the right to waive any conditions to, or modify the
terms of, the Solicitation (as defined in the Solicitation Statement).
Capitalized terms not defined in this Consent Form will have the meanings
ascribed to them in the Consent Solicitation Statement.
-27-
THE GENERAL PARTNERS RESERVE THE RIGHT TO CONTINUE TO NEGOTIATE THE
TERMS OF THE SALE AND TO ABANDON THE SALE IF THE PARTIES DO NOT FINALIZE
MUTUALLY AGREEABLE TERMS, OR ANY CONDITIONS TO CONSUMMATION OF THE SALE DO NOT
OCCUR, EXPIRE OR TERMINATE.
A Consent Form given, if effective, will be binding upon the holder of
the Units who gives such Consent Form and upon any subsequent transferees of
such Units, subject only to revocation by the delivery of a written notice of
revocation by the Investor, executed and filed in the manner and within the time
period described in the Consent Solicitation Statement.
IN ORDER TO COUNT, THIS CONSENT FORM MUST BE RECEIVED BY THE FUND PRIOR
TO 5:00 P.M., EASTERN STANDARD TIME, ON APRIL 22, 2005, UNLESS EXTENDED BY THE
GENERAL PARTNERS IN THEIR SOLE DISCRETION.
This fully completed and executed Consent Form should be sent by mail
in the self-addressed, postage-paid envelope enclosed for that purpose, or by
overnight courier, or by facsimile, to the Fund, as follows:
If delivered by mail or by courier, to: If delivered by facsimile, to:
Brown Healthcare, Inc. Brown Healthcare, Inc.
Attn: Robert Huether Attn: Robert Huether
300 East Lombard Street, Suite 1200 Facsimile Number: (410) 625-2694
Baltimore, Maryland 21202 Telephone Number: (410) 727-4083
THIS CONSENT FORM CONTINUES AND MUST BE SIGNED ON THE NEXT
PAGE
-28-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED
PARTNERSHIP
Please sign your name(s) below in the same manner as the name(s) in
which ownership of the Units is registered. When Units are held by two or more
joint holders, all such holders must sign. When signing as attorney-in-fact,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized partner. If a limited liability company, please sign in the limited
liability company name by the members or the duly authorized manager.
Units Owned: ______________
Date: ____________________, 2005
Signature: __________________________________
Name: _________________________
(Please Print)
Street Address: _______________________________
Signature if held jointly: ________________________________
Name: _________________________
(Please Print)
Street Address: _______________________________
IF YOU HAVE ANY QUESTIONS REGARDING THE PROPER NAME OF THE OWNER, THE NUMBER OF
UNITS OR METHOD OF EXECUTION, PLEASE CONTACT ROBERT HUETHER OR YOLANDA HARRIS AT
(410) 727-4083.
-29-