EXHIBIT 10.6
PROMISSORY NOTE
$8,500,000 September 3, 1998
FOR VALUE RECEIVED, ET SUB-MERIDIAN LIMITED PARTNERSHIP,
L.L.P., a Virginia limited partnership ("Maker"), promises to pay to the order
of Meridian Healthcare, Inc. ("Holder") at 148 West State Street, Kennett
Square, Pennsylvania 19348 or at such other place as Holder of this Note may
from time to time designate, the principal amount of EIGHT MILLION FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($8,500,000), together with interest on the unpaid
principal amount hereof from the date hereof until paid in full, payable in the
manner and at the times as hereinafter provided.
1. Payment of Interest; Principal and Maturity Date. This Note shall
bear interest on the unpaid principal amount hereof at a rate per annum
(computed on the basis of a 360 day year and of the actual number of days
elapsed) as follows (the "Applicable Interest Rate"):
(i) for the period commencing on the date
hereof and ending on September 3, 1999, a
rate per annum equal to eight percent (8%);
(ii) for the period commencing on September
1, 1999 and ending on September 3, 2000, a
rate per annum equal to nine percent (9%);
and
(iii) from and after September 3, 2000, a
rate per annum equal to ten percent (10%).
From and after the date hereof, through and including the day on which this Note
is paid in full, Maker shall pay to Holder monthly in arrears commencing on the
first day of October, 1998 and on the first day of each and every month
thereafter (such date in any particular month being referred to as the "Due
Date"), payments of interest only in the amount of interest accrued for the
preceding month on the unpaid principal amount at the Applicable Interest Rate.
Maker shall repay the outstanding principal balance of this Note as follows: (i)
on September 3, 1999, Maker shall pay to Holder the sum of Three Million Five
Hundred Thousand Dollars ($3,500,000) as a prepayment of the outstanding
principal balance hereof and (ii) the entire unpaid principal balance of this
Note, together with all accrued and unpaid interest shall be due and payable in
full on September 3, 2003 (the "Maturity Date"). All payments hereunder shall be
made in lawful money of the United States of America, without offset.
2. Prepayment. The unpaid principal amount of this Note may be prepaid
in whole or in part on any Due Date, without premium or penalty. Principal paid
or prepaid shall not be advanced again by Holder to Maker. No prepayment shall
entitle any person to be subrogated to the rights of Holder unless and until
this Note has been paid in full.
3. Default. The failure to pay the principal, any interest or any other
sum payable hereunder (whether upon the Maturity Date hereof, upon any interest
payment date, upon acceleration or otherwise) within five (5) days after written
notice from Holder of failure to pay any such sum when due shall constitute an
event of default ("Event of Default") hereunder.
Upon the occurrence of any such Event of Default hereunder, at the option of
Holder, the entire principal amount hereof, and all accrued and unpaid interest
thereon, shall be accelerated and shall be immediately due and payable without
demand or notice, interest shall be due on such overdue amounts (including
overdue interest) from its due date to the date on which it is paid at a rate
equal to the Applicable Interest Rate plus two percent (2%) (the "Default
Rate"), and in addition thereto, and not in substitution therefor, Holder shall
be entitled to exercise any one or more of the rights and remedies provided by
applicable law. Failure to exercise such option or to pursue such other remedies
shall not constitute a waiver of such option or such other remedies or of the
right to exercise any of the same in the event of any subsequent Event of
Default hereunder.
4. Late Charges; Costs and Expenses. In the event Maker fails to fully
pay any installment of interest or otherwise fails to repay this Note within
five (5) business days of the Maturity Date, Maker agrees to pay Holder, at
Holder's option, on demand a late charge of five percent (5%) of the scheduled
payment. Holder may, at its option, apply any late payment (either full or
partial) in the following manner: first to interest, then to principal, and
finally to any late charges.
5. No Waiver by Holder. No single or partial exercise by Holder of any
right hereunder, or under any agreement given as security for this Note or
pertaining hereto, shall preclude any other or further exercise thereof or the
exercise of any other rights. No delay or omission on the part of Holder in
exercising any right hereunder shall operate as a waiver of such right or of any
other right under this Note.
6. Interest Not to Exceed Maximum Permitted by Law. This Note and all
agreements between Maker and Holder relating hereto are hereby expressly limited
so that in no contingency or event whatsoever, whether by reason of acceleration
or otherwise, shall the amount paid or agreed to be paid to Holder for the use,
forbearance or detention of money hereunder exceed the maximum amount
permissible under applicable law. If from any circumstance whatsoever
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, then, ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstance Holder shall ever
receive interest, or any thing which might be deemed interest under applicable
law, which would exceed the highest lawful rate, such amount which would be
excessive interest shall be applied to the reduction of the principal amount
owing on account of this Note and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal of this Note, such
excess shall be refunded to Maker; and if any clause or provision contained in
this Note operates or would prospectively operate to invalidate this Note, then
such clause or provision only shall be held ineffective as though not herein
contained, and the remainder of this Note shall remain operative and in full
force and effect. All sums paid or agreed to be paid to Holder for the use,
forbearance or detention of the indebtedness of Maker to Holder shall, to the
extent permitted by applicable law, be deemed to be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full so that the actual rate of interest on account of such indebtedness is
uniform throughout the term thereof. The terms and provisions of this paragraph
shall control and supersede every other provision of this Note and all other
agreements between Maker and Holder.
7. Date of Performance. Any payment on this Note coming due on a
Saturday, a Sunday, or a day which is a legal holiday in the place at which a
payment is to be made hereunder shall be made on the next succeeding day which
is a business day in such place, and any such extension of the time of payment
shall be included in the computation of interest hereunder.
8. Use of Proceeds. Maker hereby declares, represents and warrants that
the proceeds of the indebtedness evidenced hereby will be used only for business
purposes.
9. References. Whenever used herein, the words "Maker" and "Holder"
shall be deemed to include their respective successors and assigns.
10. Governing Law. This Note shall be governed by and construed under
and in accordance with the laws of the State of Maryland (but not including the
choice of law rules thereof).
11. Limitation of Recourse. Holder agrees that no partner or member of
Maker (other than ElderTrust, a Maryland real estate investment trust
("ElderTrust"), the general partner of Maker) will have any personal or
corporate liability to Holder with respect to this Note or any obligation or
liability arising therefrom or in connection therewith. Holder shall not seek a
deficiency judgment against any partner (other than ElderTrust) or member of
Maker (in its personal or corporate capacity) or against any officer, director,
shareholder, employee, partner or member of a partnership, corporation or
limited liability company which is a partner or member in Maker and will not
seek or have recourse to the personal or corporate assets of any partner or
member of Maker (other than Eldertrust) or of any officer, director,
shareholder, employee or partner of a partnership or corporation which is a
partner or member in Maker.
12. Waiver. Maker and all sureties, endorsers, guarantors and any other
party now or hereafter liable for the payment of this Note in whole or in part,
hereby severally (i) waive demand, presentment for payment, notice of dishonor
and of nonpayment, protest, notice of protest, notice of intent to accelerate,
notice of acceleration and all other notices (except any notices which are
specifically required by this Note), filing of suit and diligence in collecting
this Note or enforcing any of the security herefor; (ii) agree to any
substitution, subordination, exchange or release of any such security or the
release of any party primarily or secondarily liable hereon; (iii) agree that
the holder hereof shall not be required first to institute suit or exhaust its
remedies hereon against Maker or others liable or to become liable hereon or to
perfect or enforce its rights against them or any security herefor; (iv) consent
to any extensions or postponements of time of payment of this Note for any
period or periods of time and to any partial payments, before or after maturity,
and to any other indulgences with respect hereto, without notice thereof to any
of them; (v) waive the benefit of all homestead and similar exemptions as to
this Note; (vi) agree that their liability under this Note shall not be affected
or impaired by any determination that any security interest or lien taken by
Holder to secure this Note is invalid or unperfected; and (viii) hereby
subordinate any and all rights against Maker and any of the security for the
payment of this Note, whether by subrogation, agreement or otherwise, until this
Note is paid in full
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed as of the day and year first hereinabove set forth.
MAKER:
ET SUB-MERIDIAN LIMITED PARTNERSHIP, L.L.P.
By: ET Meridian, L.L.C.,
General Partner
By: /s/ D. Lee McCreary, Jr.
---------------------------------
D. Lee McCreary, Jr.
Vice President