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EXHIBIT 10.117
SECURED PROMISSORY NOTE
$3,300,000.00 ALBANY, NEW YORK
JANUARY 14, 2000
FOR VALUE RECEIVED, CLINTON BROOKSIDE DRIVE, LLC, a New York limited
liability company with an office for the transaction of business at 250 South
Clinton Street, Syracuse, New York 13202 (the "Borrower") promises to pay to the
order of KEY CORPORATE CAPITAL INC., a Michigan corporation with an office for
the transaction of business at 127 Public Square, 6th Floor, Cleveland, Ohio
44114 (the "Lender") the principal sum of Three Million Three Hundred Thousand
Dollars ($3,300,000.00), or so much thereof as may be advanced from time to time
in accordance with the terms of a building loan agreement dated of even date
herewith (the "Building Loan Agreement") and a development agreement dated of
even date herewith (the "Development Agreement"),with interest on the unpaid
principal balance of such amount from the date of this Note or such advance, as
the case may be, at the Interest Rate (as hereinafter defined). This Note
evidences a loan (the "Loan") made, or so much thereof as may be made, by Lender
to Borrower, in the principal amount hereof, and is secured by (a) a mortgage
and security agreement from Borrower to Lender dated of even date herewith in
the amount of $3,300,000.00 (the "Mortgage"), which creates a lien on certain
real property located in the Town of Clinton, County of Oneida, State of New
York (the "Real Property"), (b) a guaranty of payment and performance dated of
even date herewith from Alterra Healthcare Corporation ("Alterra") to Lender
(the "Guaranty"), (c) a limited recourse guaranty dated of even date herewith
from Assisted Living Equities, LLC ("ALE") (Alterra and ALE being sometimes
hereinafter referred to collectively as the "Guarantor" (provided, however, that
Guarantor shall mean Alterra once the Limited Recourse Guaranty is terminated))
to Lender (the "Limited Recourse Guaranty"), (d) a security agreement dated of
even date herewith from Borrower to Lender (the "Security Agreement") which,
together with financing statements executed in connection therewith (the
"Financing Statements") creates a lien security interest in certain personal
property (the "Personal Property") more particularly described in the Security
Agreement, (e) an assignment of rents and leases dated of even date herewith
from Borrower to Lender (the "Assignment") which conditionally assigns all rents
and absolutely assigns all leases in respect of the Real Property to Lender, (f)
an assignment of contract documents dated of even date herewith (the "Contract
Assignment") from Borrower to Lender, (g) a hazardous substances indemnity
agreement (the "Indemnity Agreement") dated of even date herewith from the
Borrower in favor of Lender, and (h) such other security as may now or hereafter
be given to Lender by Borrower and/or the Guarantors as collateral for the Loan
(the Building Loan Agreement, the Development Agreement, the Mortgage, the
Guaranty, the Limited Recourse Guaranty, the Security Agreement, the Financing
Statements, the Assignment, the Contract Assignment, the Indemnity Agreement,
this
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Note and such other documents evidencing such other security which may hereafter
be given as further security for, or in connection with, the Loan being
hereinafter collectively referred to as the "Loan Documents").
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DEFINITIONS
Except as otherwise defined herein, capitalized terms used herein shall
have the following definitions:
"Adjusted Prime Rate" shall mean a rate per annum equal to the greater
of (a) the Prime Rate or (b) the Federal Funds Effective Rate plus one-half of
one percent (1/2%). Any change in the Adjusted Prime Rate shall be effective
immediately from and after such change in the Adjusted Prime Rate.
"Advance" shall mean each advance of Loan proceeds by Lender to the
Borrower, each of which will be treated separately for purposes of computing
interest and each of which will accrue interest at the Interest Rate selected by
Borrower pursuant to an Interest Rate Election.
"Business Day" means a day on which banks are not required or
authorized to close in Cleveland, Ohio and, if the applicable Business Day
relates to an Advance bearing interest at or with reference to the LIBOR Rate, a
day on which dealings are carried on in the London interbank Eurodollar market.
"Certificate of Occupancy" shall mean the document, temporary or
permanent, first issued by the local governmental authority certifying that the
Improvements (as defined in the Mortgage) are sufficiently completed to permit
occupancy.
"Completion Date" shall mean the date of admission of the first
resident of the Facility.
"Debt Service Coverage Ratio" shall mean the ratio of (i) net income
before interest expense (including capital leases), taxes, depreciation and
amortization to (ii) the sum of current maturities of long term debt, capital
lease payments and interest expense on the Loan. For the purposes of calculating
the Debt Service Coverage Ratio, it shall be assumed that the Borrower is
required to make monthly payments of principal in the amount of Three Thousand
One Hundred Twelve Dollars and 50/100 ($3,112.50) commencing February 1, 2001,
notwithstanding the actual amortization schedule set forth in Article V hereof.
"Default Interest Rate" shall mean the lesser of (a) the Prime Rate
plus four percent (4%) per annum or (b) the highest rate permitted by law.
"Extended Term" shall mean the period beginning on February 2, 2002 and
ending on February 1, 2004.
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"Extended Term Maturity Date" shall mean February 1, 2004.
"Election Notice" shall mean the Advance and/or Interest Rate Election
Notice which may be used by the Borrower when the Borrower is seeking an Advance
and/or electing a Prime Rate or a LIBOR Rate, said Election Notice to be in the
form of Exhibit "B" attached hereto and when delivered, to have been completed
by the Borrower to indicate an Advance amount (if applicable), an Interest Rate,
and, if such Advance is a LIBOR Rate Advance, an Interest Period. An Election
Notice shall be provided by Borrower to Lender at least three (3) business days
prior to each requested advance. The Election Notice may be delivered to the
Lender by telecopy as provided in the Loan Documents.
"Eurocurrency Reserve Percentage" means, for any Interest Period in
respect of any Advance, as of any date of determination of the Interest Rate,
the aggregate of the then stated required maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves), expressed as a
decimal, applicable to such Interest Period (if more than one such percentage is
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) by the
Board of Governors of the Federal Reserve System, any successor thereto, or any
other banking authority, domestic or foreign, to which the Lender is subject in
respect to eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Federal Reserve Board) or in respect of any
other category of liabilities including deposits by reference to which the
interest rate on Advances is determined or any category of extension of credit
or other assets that include the Advances. For purposes hereof, such reserve
requirements shall include, without limitation, those imposed under Regulation D
of the Federal Reserve Board and the Advances shall be deemed to constitute
Eurocurrency Liabilities subject to such reserve requirements without benefit of
credits for proration, exceptions or offsets which may be available from time to
time to any Lender under said Regulation D.
"Facility" shall mean the adult home facility to be located on the Real
Property.
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank (or any successor) on such day as
being the weighted average of the interest rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the "Federal Funds Effective
Rate" as of the Closing Date.
"Initial Term" shall mean the period beginning on the date of the first
Advance and ending on February 1, 2002.
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"Initial Term Maturity Date" shall mean February 1, 2002.
"Interest Period" means, with respect to any Prime Rate Advance, the
period commencing on the date an Advance is made pursuant to an Election Notice
indicating that such Advance is a Prime Rate Advance and ending on the date a
LIBOR Interest Rate is selected for such Advance pursuant to a subsequent
Election Notice for such Advance. "Interest Period" means, with respect to any
LIBOR Rate Advance, the period commencing on the date an Advance is made
pursuant to an Election Notice indicating that such Advance is a LIBOR Rate
Advance having aduration of either 30, 60, 90 or 180 days and ending on the last
day of the Interest Period selected by Borrower, provided that if upon the
expiration of such Interest Period, Borrower has failed to timely deliver to
Lender a subsequent Election Notice, then the Interest Rate with respect to such
Advance shall be an Interest Rate having the duration of 30 days (unless at such
time, the Lender shall have determined that dollar deposits of the relevant
amount for the relevant Interest Period for such LIBOR Rate Advance is not
available to Lender in the applicable London interbank market or that, by reason
of circumstances affecting such market, adequate and reasonable means do not
exist for ascertaining the LIBOR Rate applicable to such Interest Period, in
which event the Interest Rate with respect to such Advance shall be the Adjusted
Prime Rate, but only until a new Interest Rate is selected by Borrower pursuant
to an Election Notice with respect to such Advance). The duration of each
Interest Period for any LIBOR Rate Advance shall be thirty, sixty or ninety or
one hundred eighty days, in each case as the Borrower shall select upon notice,
as set forth herein, provided that:
(i) no Interest Period with respect to a LIBOR Rate Advance shall be
selected which ends after the Initial Term Maturity Date or, in the
event the Borrower elects to continue the Loan for the Extended Term,
the Extended Term Maturity Date;
(ii) the Interest Rate that shall be in effect in the event that
Lender has declared Borrower in default (after the expiration of all
applicable notice and cure periods) under the Building Loan Agreement,
the Development Agreement or any other Loan Document shall be the
Default Interest Rate;
(iii) if any Interest Period would otherwise expire on a day which is
not a London Banking Day, such Interest Period shall expire on the next
London Banking Day, provided that if any Interest Period would
otherwise expire on a day which is not a London Banking Day but is a
day of the month after which no further London Banking Day occurs in
such month, such Interest Period shall expire on the next preceding
London Banking Day; and
(iv) if the Borrower fails to so select the duration of any Interest
Period, the duration of such Interest Period shall be thirty days.
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"Interest Rate" shall mean (a) during the Initial Term, a rate of
interest equal to either (i) the Prime Rate or (ii) the thirty, sixty, ninety,
or one hundred eighty day LIBOR Rate, in each case as selected by the Borrower
pursuant to an Interest Rate Election, plus two and eighty-five hundredths
percent (2.85%), (b) during the Extended Term, a rate of interest equal to
either (i) the Prime Rate or (ii) the thirty, sixty, ninety, or one hundred
eighty day LIBOR Rate, in each case as selected by the Borrower pursuant to an
Interest Rate Election, plus two and seventy-five hundredths percent (2.75%).
Notwithstanding the preceding sentence (i) (unless Borrower is entitled to a
lower Interest Rate pursuant to (ii) below, in which event such lower interest
rate will apply) from and after the first day of the month next succeeding the
date on which the Project achieves Stabilization, such rate shall be reduced to,
and shall thereafter be equal to: (a) if the project achieves Stabilization
during the period which is twelve (12) months after the Completion Date, a rate
of interest equal to either (i) the Prime Rate or (ii) the thirty, sixty, ninety
or one hundred eighty day LIBOR Rate, in each case as selected by the Borrower
pursuant to an Interest Rate Election, plus two and five tenths percent (2.50%),
(b) if the Project achieves Stabilization during the period which commences on
the first day of the thirteenth (13th) month after the Completion Date and
concluding on the last day of the twenty-fourth (24th) month after the
Completion Date, a rate of interest equal to either (i) the Prime Rate or (ii)
the thirty, sixty, ninety or one hundred eighty day LIBOR Rate, in each case as
selected by the Borrower pursuant to the Interest Rate Election, plus two and
six tenths percent (2.60%), and (c) if the Project achieves Stabilization during
the period which commences on the first day of the twenty-fifth (25th) month
after the Completion Date and ending on the last day of the thirty-sixth (36th)
month after the Completion Date, a rate of interest equal to either (i) the
Prime Rate or (ii) the thirty, sixty, ninety or one hundred eighty day LIBOR
Rate, in each case as selected by the Borrower pursuant to an Interest Rate
Election, plus two and seven tenths percent (2.70%); (ii) from and after the
first day of the month next succeeding the date on which the project achieves a
Debt Service Coverage Ratio of not less than 1.6 to 1.0 for a period of three
(3) consecutive months, and regardless of the date on which Stabilization
occurs, such rate shall be reduced to, and thereafter be equal to, a rate of
interest equal to either (i) the Prime Rate or (ii) the thirty, sixty, ninety or
one hundred eight day LIBOR Rate, in each case as selected by the Borrower
pursuant to an Interest Rate Election, plus two and forty-five hundredths
percent (2.45%); and (iii) (unless Borrower is entitled to a lower Interest Rate
pursuant to (i) or (ii) above, in which event such lower interest rate will
apply) from and after the first day of the month next succeeding the date on
which Borrower has submitted to Lender and Lender has approved (which approval
shall not be unreasonably withheld or delayed) a commitment for a permanent loan
take-out with respect to the Loan from a lender other than Lender, which
commitment does not include any covenants or requirements other than those
already attained by Borrower on the date of Lender's approval of such
commitment, and regardless of the date on which Stabilization occurs, such rate
shall be reduced to, and thereafter be equal to, a rate of interest equal to
either (i) the Prime Rate or (ii) the thirty, sixty, ninety or one hundred
eighty day LIBOR Rate, in each case as selected by Borrower pursuant to an
Interest Rate Election, plus two and fifty-five hundredths percent (2.55%).
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"Interest Rate Election" shall mean a written election on the part of the
Borrower to choose the thirty, sixty, ninety or one hundred eighty day LIBOR
Rate as the reference rate for the determination of the Interest Rate to be
charged on an Advance.
"LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Rate Advance, the quotient of: (x) the per annum rate of interest,
determined by the Lender in accordance with its usual procedures (which
determination shall be conclusive absent demonstrative error) as of
approximately 11:00 a.m. (London time) two Business Days prior to the beginning
of such Interest Period, appearing on Page 3750 of the Telerate Service (or any
successor or substitute page of such Service, or any successor to or substitute
for such Service providing rate quotations comparable to those currently
provided on such page of such Service, as determined by the Lender from time to
time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) as the rate in the London interbank
market for dollar deposits in immediately available funds for an amount
comparable to such LIBOR Rate Advance and with a maturity comparable to the
Interest Period selected by Borrower with respect to such LIBOR Rate Advance
divided by (y) a number equal to 1.00 minus the Eurocurrency Reserve Percentage.
In the event that such rate quotation is not available for any reason, then the
rate (for purposes of clause (x) hereof) shall be the rate, determined by the
Lender as of approximately 11:00 a.m. (London time) two Business Days prior to
the beginning of such Interest Period pertaining to such LIBOR Rate Advance, to
be the average of the per annum rates at which dollar deposits in immediately
available funds in an amount comparable to such LIBOR Rate Advance and with a
maturity comparable to such Interest Period are offered to the prime banks by
leading banks in the London interbank market. The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Percentage. In respect of any LIBOR Rate Advance, in the event that
Lender shall have determined that dollar deposits of the relevant amount for the
relevant Interest Period for such LIBOR Rate Advance is not available to Lender
in the applicable London interbank market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate applicable to such Interest Period, as the case may
be, Lender shall promptly give notice of such determination to Borrower and (a)
any notice of a new LIBOR Rate Advance previously given by Borrower and not yet
borrowed shall be deemed a notice to make a Prime Rate Advance, and (b) Borrower
shall be obligated either to prepay, or to convert to a Prime Rate Advance, any
outstanding LIBOR Rate Advance on the last day of the then current Interest
Period with respect thereto.
"LIBOR Rate Advance" shall mean an Advance with respect to which
interest is payable at an interest rate determined by reference to the LIBOR
Rate.
"London Banking Days" means any day on which commercial banks are open
for business in London, England.
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"Prime Rate" shall mean the rate of interest set, determined or
announced on a periodic basis by Key Bank National Association as its "Prime
Rate" which rate of interest is not necessarily the lowest rate charged by Key
Bank National Association on loans and other credits which may be extended by
Key Bank National Association at rates both above and below the Prime Rate
(although such other loans and credits shall have no bearing on the
determination of the Prime Rate for purposes hereof).
"Prime Rate Advance" shall mean an Advance with respect to which
interest is payable at an interest rate determined by reference to the Prime
Rate.
"Project" shall mean an assisted living project to be constructed on
the Real Property and operated by the Borrower.
"Real Property" shall mean 115 Brookside Drive, Town of Clinton, Oneida
County, New York 13323.
"Stabilization" shall mean the achievement of a Debt Service Coverage
Ratio of not less than 1.4 to 1.0 for a period of not less than three (3)
consecutive calendar months.
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II
INTEREST
(a) COMPUTATION OF INTEREST. Interest on the outstanding principal
balance of this Note shall be computed on the basis of "a 360-day year for the
actual number of days elapsed" (such phrase, as used throughout this Note, shall
mean that in computing interest for the subject period, the interest rate shall
be multiplied by a fraction, the denominator of which is 360 and the numerator
of which is the actual number of days elapsed from the date of the first
disbursement of the Loan or the date of the preceding interest and/or principal
due date, as the case may be, to the date of the next interest and/or principal
due date). Interest shall accrue until the Loan is repaid.
(b) INTEREST RATE CHANGE PROCEDURES. The Interest Rate calculated
hereunder for an Interest Period with respect to a LIBOR Rate Advance shall
remain constant for the Interest Period. In the event of a change in the LIBOR
Rate, the Interest Rate will change on the first day following the expiration of
each Interest Period. The Interest Rate calculated hereunder for an Interest
Period with respect to a Prime Rate Advance shall change on the first Business
Day following the date Lender changes the Prime Rate.
(c) IMPLEMENTATION OF DEFAULT INTEREST RATE. Upon the occurrence and
during the continuance of an Event of Default (hereinbelow defined), the
computation of interest under this Note shall immediately and without further
action by Lender be based upon the Default Interest Rate.
III
PROCEDURES FOR ADVANCES AND ELECTION NOTICES
(a) ADVANCES. Provided that no Event of Default (hereinafter defined)
has occurred, Advances shall be made available to the Borrower during the period
from the date hereof through February 1, 2002. Each Advance shall be either a
Prime Rate Advance or a LIBOR Rate Advance, as selected by Borrower pursuant to
an Election Notice. Information with regard to any Advance shall be recorded and
maintained by Lender in its internal records and such records shall be
conclusive as to the information set forth therein, absent demonstrative error.
(b) PROCEDURE FOR ADVANCES AND ELECTION NOTICES. Borrower may obtain
an Advance by delivering an Election Notice signed by any one of the Authorized
Individuals on the Schedule of Authorized Individuals attached hereto as Exhibit
"C" setting forth the amount of the Advance requested, and indicating an
Interest Period
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(which with respect to LIBOR Rate Advance must terminate no later than the
Initial Term Maturity Date or, in the event that Borrower elects to continue the
Loan for the Extended Term, the Extended Term Maturity Date) for such Advance.
Said Interest Rate as determined in accordance with the terms of this Note at
the beginning of the Interest Period with respect to LIBOR Rate Advance shall
remain in effect until expiration of the Interest Period chosen by the Borrower
for that Advance. With respect to each LIBOR Rate Advance, prior to the end of
each Interest Period, if Borrower will not be repaying the amount of that
Advance remaining unpaid, Borrower shall provide an Election Notice designating
a new Interest Period for that Advance. If Borrower fails to provide the
Election Notice to Lender prior to the expiration of any Interest Period with
respect to any Advance, and does not repay that Advance, interest shall accrue
on that Advance at the rate applicable to a LIBOR Rate, having an Interest
Period of thirty days until the Borrower delivers an Election Notice. The
Interest Rate as determined in accordance with the terms of this Note with
respect to a Prime Rate Advance shall remain in effect until a new Election
Notice is delivered to Lender indicating that Borrower has selected a LIBOR Rate
with respect to such Advance. Subject to the satisfaction by Borrower with the
conditions set forth in Article III(c) hereof, Advances shall be made to
Borrower by Lender within five (5) days of Lender's receipt of a properly
completed Election Notice. Any Advance shall be deposited by Lender in an
account to be opened by Borrower for that purpose with Lender (the "Advance
Account") and the deposit of any Advance in the Advance Account by Lender
(absent manifest error) shall be conclusive as to the receipt of said Advance by
Borrower and Borrower will be responsible for repaying any Advance so made
pursuant to the terms of this Note.
(c) ADVANCES BY LENDER. Advances hereunder shall be made in
accordance with, and shall be subject to the terms of the Building Loan
Agreement and the Development Agreement. In addition, Lender may make Advances
pursuant to the terms hereof, for the purpose of paying any sums which have
become due and payable hereunder or under any other Loan Document. Any such
Advance shall bear interest at the Interest Rate utilizing a LIBOR Rate
reference with an Interest Period of thirty days.
IV
LIBOR RESERVE REQUIREMENT
If because of the introduction of or any change in or because of any
judicial, administrative or other governmental interpretation of any law or
regulation, there shall be any increase in the direct cost to Lender of making,
funding, maintaining or allocating capital to any LIBOR Rate Advance, then
Borrower shall from time to time upon demand by Lender pay Lender additional
moneys sufficient to compensate Lender for such increased cost.
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Any amount or amounts payable by Borrower to Lender pursuant to this
Article shall be paid by Borrower to Lender within ten (10) days of receipt by
Borrower from Lender of a statement setting forth the amount or amounts due and
the basis for the determination from time to time of such amount or amounts,
which statement shall be conclusive and binding upon Borrower absent
demonstrative error.
V
PAYMENT OF PRINCIPAL AND INTEREST
Borrower shall pay interest at the applicable Interest Rate in arrears
on the sums advanced under this Note beginning on February 1, 2000 and said
payments of interest only shall continue through February 1, 2002. Borrower has
the right to extend the Loan to the Extended Term Maturity Date. In the event
that Borrower desires to extend the term of the Loan to the Extended Term
Maturity Date, Borrower shall provide Lender with a written notice of such
election not fewer than thirty (30) days prior to the Initial Term Maturity
Date, which election notice shall be accompanied by the payment to Lender of a
modification fee in an amount equal to .25% of the outstanding principal balance
of the Note (provided, however, that if the outstanding principal balance of the
Note on the date of the commencement of the Extended Term exceeds the
outstanding principal balance of the Note in respect of which the payment of the
modification fee was calculated, the Borrower shall pay to Lender on the date of
the commencement of the Extended Term an additional modification fee equal to
.25% of the difference between such principal balance). In the event of such
election, commencing on February 1, 2002, and continuing on the first day of
each month thereafter, monthly payments of principal and interest shall be due.
The interest portion of each monthly payment shall be calculated based on the
Interest Rate. The principal portion of each monthly payment shall be Three
Thousand One Hundred Twelve Dollars and 50/100 ($3,112.50) each month. In
addition, on the Extended Term Maturity Date, Borrower shall pay Lender the
outstanding principal balance of this Note, together with accrued interest
thereon and any other sums due hereunder.
VI
COVENANTS
So long as the Loan is outstanding, Borrower covenants that it shall:
(a) During the period commencing with the first day of the sixteenth
(16th) month after the Completion Date and concluding with the last day of the
eighteenth (18th) month after the Completion Date, (1) achieve a 75% occupancy
rate (based on the number of units comprising the Project), and (2) achieve and
sustain for each full month a Debt Service Coverage Ratio of not less than 1.0
to 1.0 provided that this covenant shall be deemed to be satisfied
(notwithstanding the failure of Borrower to
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meet the tests set forth above) if by the last day of the twenty-first (21st)
month after the Completion Date, Borrower (1) achieves 75% occupancy rates and
(2) achieves and sustains for one full calendar month a Debt Service Coverage
Ratio of not less than 1.0 to 1.0.
(b) During the period commencing with the first day of the nineteenth
(19th) month after the Completion Date and concluding with the last day of the
twenty-fourth (24th) month after the Completion Date, (1) achieve an 85%
occupancy rate (based on the number of units comprising the Project) and (2)
achieve and sustain for each full month a Debt Service Coverage Ratio of not
less than 1.2 to 1.0, provided that this covenant shall be deemed to be
satisfied (notwithstanding the failure of Borrower to meet the tests set forth
above) if by the last day of the thirtieth (30th) month after the Completion
Date (or the last day of the twenty-seventh (27th) month after the Completion
Date, if Events of Default have occurred and are continuing under more than
forty percent (40%) of the credit facilities extended by Lender pursuant to the
master loan commitment issued by Lender to ALS-Northeast, LLC dated May 5,
1998), Borrower (1) achieves an 85% occupancy rate, (2) achieves and sustains
for one full calendar month a Debt Service Coverage Ratio of not less that 1.2
to 1.0, and (3) during the period commencing with the first day of the
nineteenth (19th) month after the Completion Date and concluding with the last
day of the thirtieth (30th) month after the Completion Date, achieves and
sustains for each full month a Debt Service Coverage Ratio of not less that 1.0
to 1.0.
(c) During the period commencing with the first day of the
twenty-fifth (25th) month after the Completion Date and concluding with the last
day of the thirty-sixth (36th) month after the Completion Date, (1) achieve a
90% occupancy rate (based on the number of units comprising the Project) and (2)
achieve and sustain a minimum Debt Service Coverage Ratio of not less than 1.4
to 1.0, provided that this covenant shall be deemed to be satisfied
(notwithstanding the failure of Borrower to meet the tests set forth above) if
by the last day of the forty-second (42nd) month after the Completion Date (or
the last day of the thirty-ninth (39th) month after the Completion Date, if
Events of Default have occurred and are continuing under more than forty percent
(40%) of the credit facilities extended by Lender pursuant to the master loan
commitment issued by Lender to ALS-Northeast, LLC dated May 5, 1998), Borrower
(1) achieves a 90% occupancy rate, (2) achieves and sustains for one full
calendar month a Debt Service Coverage Ratio of not less than 1.4 to 1.0, and
(3) from and after the first day of the twenty-fifth (25th) month after the
Completion Date, achieves and sustains for each full month a Debt Service
Coverage Ratio of not less than 1.0 to 1.0.
(d) Cause Alternative Living Services-New York, Inc. to fully
subordinate all management fees payable to it pursuant to the Property
Management Services Agreement between it and Clinton Sterling Cottage Operator,
Inc. to the payment of all debt service and other payments due to Lender in
respect of the Loan.
(e) Cause Alterra to maintain:
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(i) a minimum net worth of One Hundred Five Million Dollars
($105,000,000.00), which minimum net worth requirement shall
be increased on the first day of each fiscal quarter,
commencing October 1, 1999, by an amount equal to fifty
percent (50%) of Alterra's net income for the immediately
preceding fiscal quarter, and shall be further increased in
the event of any equity offering by Alterra in an amount
equal to seventy-five percent (75%) of the net proceeds of
such equity offering;
(ii) a minimum ratio of (a) the sum of Alterra funded
non-convertible debt, plus funded non-convertible debt
guaranteed by Alterra plus any other contingent liabilities
of ALS not otherwise reflected on Alterra's balance sheet to
(b) Alterra's total capitalization (including all debt
specified in clause (e)(ii)(a) above) of not less than .7 to
1.0 on a rolling four (4) quarter basis; and
(iii) a minimum ratio of (a) the sum of Alterra's net income
before extraordinary items, plus income taxes, plus interest
expense to (b) interest expense of not less than 1.75 to 1.0
through December 1999 and 2.0 to 1.0 from January 1, 2000
through the balance term of the Loan on a rolling four (4)
quarter basis.
For purposes of this Article, whenever any accounting term is used
herein and is not otherwise defined, it shall be interpreted in accordance with
generally accepted accounting principles.
VII
GENERAL CONDITIONS
(a) METHOD OF PAYMENT. All payments under this Note are payable at
127 Public Square, 6th Floor, Cleveland, Ohio 44114, or at such other place as
Lender shall notify Borrower in writing. Lender reserves the right to require
any payment on this Note, whether such payment is of a regular installment or
represents a prepayment, to be by wired federal funds or other immediately
available funds or to be paid at a place other than the above address.
(b) APPLICATION OF PAYMENTS RECEIVED. Except as may otherwise be
provided in this Note, all payments received by Lender on this Note shall be
applied by Lender to any unpaid Late Payment Charges or Prepayment Penalty (each
hereinbelow defined), accrued and unpaid interest then due and owing and the
reduction of principal of this Note, in such order and in such amounts as Lender
may determine from time to time.
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(c) LATE PAYMENT CHARGES. If Borrower fails to pay any amount of
principal and/or interest on this Note for ten (10) days after such payment
becomes due, whether by acceleration or otherwise, Lender may, at its option,
impose a late payment charge (the "Late Payment Charge") computed by multiplying
the amount of each past due payment by four (4%) percent. Until any and all Late
Payment Charges are paid in full, the amount thereof shall be added to the
indebtedness secured by any of the Loan Documents. The Late Payment Charge is
not a penalty and is deemed to be liquidated damages for the purpose of
compensating Lender for the difficulty in computing the actual amount of damages
incurred by Lender as a result of the late payment by Borrower.
(d) PREPAYMENT PENALTY. During the Initial Term, the principal
balance may be prepaid in whole or in part at any time without premium or
penalty. During the Extended Term, the principal balance may be prepaid in whole
or in part, provided, however, that Borrower shall pay Lender the actual
breakage fees incurred by Lender with respect to any LIBOR Rate Advances being
prepaid when the Interest Period for those Advances are greater that thirty (30)
days. Lender shall pay any actual breakage fees with respect to any LIBOR Rate
Advances being prepaid when the Interest Periods for those Advances are thirty
(30) days or less.
(e) REFUSAL TO MAKE FURTHER ADVANCES, ACCELERATION AND DEFAULT. If:
(1) Borrower fails to pay any sum due on this Note within ten
(10) days of the date the same is due; or
(2) Borrower shall fail to perform any other covenant,
obligation or agreement required to be performed by Borrower under this
Note, thirty (30) days after Lender has given written notice of such
failure to Borrower or if such failure is capable of cure but cannot be
reasonably cured in thirty (30) days, the failure of Borrower to
commence to cure such failure within thirty (30) days and thereafter
prosecute the same with due diligence; or
(3) Any material warranty or representation made or given by
Borrower or any material financial or other statement submitted by or
on behalf of Borrower or any Guarantor in any instrument furnished in
compliance with or in reference to this Note or the Loan Documents was
false or misleading in any material respect as of the date when made;
or
(4) Borrower or any Guarantor shall generally not be paying
debts as they become due or file a petition or seek relief under or
take advantage of any insolvency law; make an assignment for the
benefit of creditors; commence a proceeding for the appointment of a
receiver, trustee, liquidator, custodian or conservator of Borrower or
any Guarantor or of the whole or substantially all of
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Borrower or any Guarantor's property or of any material portion of the
collateral pledged as security for this Note; or if Borrower or any
Guarantor shall file a petition or an answer to a petition under any
chapter of the Bankruptcy Reform Act of 1978, as amended (or any
successor statute thereto), or file a petition or seek relief under or
take advantage of any other similar law or statute of the United States
of America, any state thereof, or any foreign country or subdivision
thereof; or
(5) A court of competent jurisdiction shall enter an order,
judgment or decree appointing or authorizing a receiver, trustee,
liquidator, custodian or conservator of Borrower or any Guarantor or of
the whole or substantially all of Borrower or any Guarantor's property,
or any material portion of the collateral pledged as security for this
Note, or enter an order for relief against Borrower or any Guarantor in
any case commenced under any chapter of the Bankruptcy Reform Act of
1978, as amended (or any successor statute thereto), or grant relief
under any other similar law or statute of the United States of America,
any state thereof, or any foreign country or subdivision thereof and
the same is not stayed or discharged within one hundred twenty (120)
days of entry; or
(6) Under the provisions of any law for the relief or aid of
debtors, a court of competent jurisdiction or a receiver, trustee,
liquidator, custodian or conservator shall assume custody or control or
take possession from Borrower or any Guarantor of all or substantially
all of Borrower or any Guarantor's property or any material portion of
any collateral pledged as security for this Note; or
(7) There is commenced against Borrower or any Guarantor any
proceeding for any of the foregoing relief or if a petition is filed
against Borrower or any Guarantor under any chapter of the Bankruptcy
Reform Act of 1978, as amended (or any successor statute thereto), or
under any other similar law or statute of the United States of America,
any state thereof, or any foreign country or subdivision thereof, and
such proceeding or petition remains undismissed for a period of one
hundred eighty (180) days or if Borrower or any Guarantor by any act
indicates consent to, approval of or acquiescence in any such
proceeding or petition; or
(8) Lender receives a notice to creditors with regard to a
bulk transfer by Borrower or any Guarantor pursuant to Article VI of
the Uniform Commercial Code or if the Borrower shall dissolve,
terminate its existence, fail, cease normal business operation or
otherwise discontinue its existence; or
(9) An "Event of Default", as said term is defined in any of
the other Loan Documents, shall have occurred and continues beyond any
applicable notice and/or cure period;
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then, and in any such event (an "Event of Default"), Lender may, at its option
refuse to make any further advances hereunder and declare the entire unpaid
balance of this Note together with interest accrued thereon and any other sums
due hereunder or under the Loan Documents, to be immediately due and payable and
Lender may proceed to exercise any rights or remedies that it may have under
this Note or any other Loan Documents, or such other rights and remedies which
Lender may have at law, equity or otherwise. In the event of such acceleration,
Borrower may discharge its obligations to Lender by paying:
(i) the unpaid principal balance hereof as at the date of
such payment, plus
(ii) accrued interest computed in the manner set forth
above, plus
(iii) any Late Payment Charge and Prepayment Penalty computed
in the manner set forth above, plus
(iv) any other sum due and owing Lender under this Note or
any other Loan Document.
(e) COSTS AND EXPENSES ON DEFAULT. After the occurrence of an Event
of Default, in addition to principal, interest, and any Late Payment Charge,
Lender shall be entitled to collect all reasonable costs of collection,
including, but not limited to, reasonable attorneys' fees, incurred in
connection with the protection or realization of collateral or in connection
with any of Lender's collection efforts, whether or not suit on this Note or any
foreclosure proceeding is filed, and all such reasonable costs and expenses
shall be payable on demand and until paid shall also be secured by the Loan
Documents and by all other collateral held by Lender as security for Borrower's
obligations to Lender.
(f) NO WAIVER BY KEY CORPORATE CAPITAL INC. No failure by any
Guarantor of the Loan to make any payments shall be deemed a waiver or release
of Borrower's obligations hereunder. No failure on the part of Lender or other
holder hereof to exercise any right or remedy hereunder, whether before or after
the happening of an Event of Default, shall constitute a waiver thereof, and no
waiver of any past default shall constitute waiver of any future default or of
any other default. No failure to accelerate the Loan evidenced hereby by reason
of an Event of Default hereunder, or acceptance of a past due installment, or
indulgence granted from time to time shall be construed to be a waiver of the
right to insist upon prompt payment thereafter, or shall be deemed to be a
novation of this Note or as a waiver of such right of acceleration or any other
right, or be construed so as to preclude the exercise of any right which Lender
may have, whether by the laws of the state governing this Note, by agreement or
otherwise; and Borrower and each endorser or Guarantor hereby expressly waive
the benefit of any statute or rule of law or equity which would produce a result
contrary to or in conflict with the foregoing. This Note may not be changed
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orally, but only by an agreement in writing signed by the party against whom
such agreement is sought to be enforced.
(g) FINANCIAL INFORMATION. Borrower will advise Lender in writing if
it operates on other than a calendar year basis. Borrower will at all times keep
proper books of record and account in which full, true and correct entries shall
be made in accordance with sound accounting principles and will deliver to
Lender, within one hundred fifty (150) days after the end of its fiscal year, a
copy of the compiled or, if available, audited financial statements of Borrower
relating to such fiscal year, such statements to include (a) the balance sheet
of Borrower, at the end of such fiscal year and (b) the related income statement
and statement of changes in the financial position of Borrower, for such fiscal
year, prepared by such certified public accountants as may be reasonably
satisfactory to Lender. Borrower will also provide Lender with copies of
quarterly internally prepared financial statements and if requested by Lender a
covenant compliance certificate within thirty (30) days of the conclusion of the
last day of each quarter. Borrower will also provide Lender during the Project
lease-up period with such monthly lease-up information as Lender shall
reasonably request. Borrower also agrees to deliver to Lender within fifteen
(15) days after filing same, a copy of Borrower's income tax return and also,
from time to time, such other financial information with respect to Borrower as
Lender may reasonably request.
Borrower will cause Alterra to keep proper books of record and account
in which full, true and correct entries shall be made in accordance with
generally accepted accounting principles and will cause Alterra to deliver to
Lender, within one hundred twenty (120) days after the end of its fiscal year, a
copy of the annual audited financial statements of Alterra relating to such
fiscal year, such statements to include (a) the balance sheet of Alterra, at the
end of such fiscal year and (b) the related income statement and statement of
changes in the financial position of Alterra, for such fiscal year, prepared by
Alterra's certified public accountants. Borrower will also cause Alterra to
provide Lender with copies of quarterly internally prepared financial statements
within sixty (60) days of the conclusion of the last day of each of Alterra's
fiscal quarters.
Borrower will cause ALE to keep proper books of record and account in
which full, true and correct entries shall be made in accordance with sound
accounting principles and will cause ALE to deliver to Lender within one hundred
fifty (150) days after the end of its fiscal year, a copy of the annual compiled
or, if available, reviewed financial statements of ALE relating to such fiscal
year, such statements to include (a) the balance sheet of ALE, at the end of
such fiscal year and (b) the related income statement and statement of changes
in the financial position of ALE, for such fiscal year, prepared by such
certified public accountants as may be reasonably satisfactory to Lender.
(h) WAIVER BY BORROWER. Borrower and each endorser of this Note
hereby waives presentment, protest, demand, diligence, notice of dishonor and of
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nonpayment, and waives and renounces all rights to the benefits of any
moratorium, appraisement, exemption and homestead now provided or which may
hereafter be provided by any federal or state statute, including but not limited
to exemptions provided by or allowed under the Bankruptcy Code of 1978, both as
to itself personally and as to all of its or their property, whether real or
personal, against the enforcement and collection of the obligations evidenced by
this Note and any and all extensions, renewals and modifications hereof.
(i) COMPLIANCE WITH USURY LAWS. It is the intention of the parties to
conform strictly to the usury laws, whether state or federal, that are
applicable to this Note. All agreements between Borrower and Lender, whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of maturity hereof or otherwise, shall the amount paid or agreed to be paid to
Lender or the holder hereof, or collected by Lender or such holder, for the use,
forbearance or detention of the money to be loaned hereunder or otherwise, or
for the payment or performance of any covenant or obligation contained herein,
or in any of the Loan Documents, exceed the maximum amount permissible under
applicable federal or state usury laws. If under any circumstances whatsoever
fulfillment of any provision hereof or of the Loan Documents, at the time
performance of such provision shall be due, shall involve exceeding the limit of
validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity; and if under any circumstances Lender or other
holder hereof shall ever receive an amount deemed interest by applicable law,
which would exceed the highest lawful rate, such amount that would be excessive
interest under applicable usury laws shall be applied to the reduction of the
principal amount owing hereunder or to other indebtedness secured by the Loan
Documents and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal and such other indebtedness, the excess
shall be deemed to have been a payment made by mistake and shall be refunded to
Borrower or to any other person making such payment on Borrower's behalf. All
sums paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the indebtedness of Borrower evidenced hereby, outstanding from
time to time shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by law, be
amortized, pro-rated, allocated and spread from the date of disbursement of the
proceeds of this Note until payment in full of the Loan evidenced hereby and
thereby so that the actual rate of interest on account of such indebtedness is
uniform throughout the term hereof and thereof. The terms and provisions of this
paragraph shall control and supersede every other provision of all agreements
between Borrower, any endorser or Guarantor and Lender.
(j) GOVERNING LAW; SUBMISSION TO JURISDICTION. This Note shall be
governed by and construed under the laws of the State of New York. To the extent
permitted by applicable law, Borrower and each endorser hereby submits to
personal jurisdiction in said state for the enforcement of Borrower's
obligations hereunder or under any other Loan Document and waives any and all
personal rights under the law
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of any other state to object to jurisdiction within such state for the purposes
of litigation to enforce such obligations of Borrower.
(k) WAIVER OF JURY TRIAL. BORROWER HEREBY EXPRESSLY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE
OF ACTION (1) ARISING UNDER THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) CONNECTED WITH OR
RELATED TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR THE LOAN, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
BORROWER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND KEY
CORPORATE CAPITAL INC. MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF BORROWER'S CONSENT TO THE WAIVER
OF ITS RIGHT TO TRIAL BY JURY.
(l) NOTICES. Any notices required or permitted to be given hereunder
shall be: (i) personally delivered or (ii) given by registered or certified
mail, postage prepaid, return receipt requested, or (iii) forwarded by overnight
courier service or (iv) sent by telecopy (with hard copy to follow by another
accepted method), in each instance addressed to the addresses set forth at the
head of this Note, or such other addresses as the parties may for themselves
designate in writing as provided herein for the purpose of receiving notices
hereunder. All notices shall be in writing and shall be deemed given, in the
case of notice by personal delivery or overnight courier, upon tender of
delivery, and in the case of mail, three business days after postmark and in the
case of telecopy, upon receipt of such telecopy independently confirmed by other
than sender's machine. A copy of any notice issued hereunder shall be sent to
ALE at 250 South Clinton Street, Syracuse, New York 13202 (Attention: Neil A.
Rube) and to Alterra at 10000 Innovation Drive, Milwaukee, Wisconsin 53226
(Attention: Mark Ohlendorf).
(m) ENTIRE AGREEMENT. This Note and the other Loan Documents
constitute the entire understanding between Borrower and Lender and to the
extent that any writings not signed by Lender or oral statements or
conversations at any time made or had shall be inconsistent with the provisions
of this Note and the other Loan Documents, the same shall be null and void.
(n) ALE OBLIGATIONS. ALE's obligations under this Note and the Loan
Documents shall terminate if ALE no longer has an interest in Borrower.
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IN WITNESS WHEREOF, Borrower has executed this instrument the date
first above written.
CLINTON BROOKSIDE DRIVE, LLC
By: ASSISTED LIVING EQUITIES, LLC,
its member
By: |S| Neil A. Rube
------------------------------------------
Neil A. Rube, Executive Committee Member
STATE OF NEW YORK )
) ss.:
COUNTY OF ONONDAGA )
On this __ day of January, 2000, before me, the undersigned, a Notary
Public in and for said State, personally appeared NEIL A. RUBE, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
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Notary Public
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