<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 1-11999
ALTERRA HEALTHCARE CORPORATION
DELAWARE 39-1771281
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10000 INNOVATION DRIVE
MILWAUKEE, WI
53226
(Address of principal executive offices)
(Zip Code)
(414) 918-5000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
AS OF MARCH 31, 2000, THERE WERE 22,109,810 SHARES OF THE REGISTRANT'S
COMMON STOCK, PAR VALUE $0.01, OUTSTANDING.
(Number of shares outstanding of each class of the issuer's classes of common
stock, as of the latest practical date.)
<PAGE> 2
ALTERRA HEALTHCARE CORPORATION
INDEX
Part I. Financial Information
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 2000 (unaudited) and December 31,
1999..................................................................................... 1
Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2000 and 1999.................................................................. 2
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999.................................................................. 3
Notes to Condensed Consolidated Financial Statements..................................... 4 - 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................................... 6 - 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk............................... 13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K......................................................... 13-14
</TABLE>
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- --------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 16,089 $ 18,728
Accounts receivable, net............................................ 7,003 7,150
Notes receivable, net............................................... 32,978 32,530
Land held for sale.................................................. 9,501 9,501
Other current assets................................................ 41,325 41,320
----------- -----------
Total current assets............................................ 106,896 109,229
----------- -----------
Property and equipment, net........................................... 908,815 863,163
Restricted cash and investments....................................... 28,485 28,325
Goodwill, net......................................................... 5,071 5,106
Other assets.......................................................... 66,628 55,574
----------- -----------
Total assets.................................................... $ 1,115,895 $ 1,061,397
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term obligations....................... $ 10,094 $ 9,945
Short-term notes payable............................................ 15,009 29,009
Accounts payable - trade............................................ 3,616 11,036
Accounts payable - construction..................................... 3,726 6,616
Accrued expenses.................................................... 46,763 37,972
Deferred rent and refundable deposits............................... 7,477 9,199
----------- -----------
Total current liabilities...................................... 86,685 103,777
----------- -----------
Long-term obligations, less current installments...................... 639,630 563,072
Convertible debt...................................................... 228,600 228,600
Deferred gain on sale and other....................................... 11,887 11,592
Minority interest..................................................... 3,745 3,713
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized;
none issued or outstanding...................................... -- --
Common stock, $.01 par value; 100,000,000 shares
authorized; issued 22,111,671 shares of which
22,100,032 were outstanding on March 31, 2000 and
December 31, 1999............................................... 221 221
Treasury stock, $.01 par value; 11,639 shares in 2000 and 1999..
(163) (163)
Additional paid-in capital...................................... 179,385 179,362
Accumulated deficit............................................. (34,095) (28,777)
----------- -----------
Total stockholders' equity.................................... 145,348 150,643
----------- -----------
Total liabilities and stockholders' equity.................... $ 1,115,895 $ 1,061,397
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
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ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
2000 1999
--------------- --------------
<S> <C> <C>
Revenue:
Resident service fees.................................................................. $ 101,445 $ 77,122
Management fees and other.............................................................. 5,111 5,769
-------------- --------------
Operating revenue.................................................................... 106,556 82,891
Operating expenses:
Residence operations................................................................... 66,186 47,099
Lease expense.......................................................................... 20,247 14,459
Lease income........................................................................... (8,729) (4,889)
General and administrative............................................................. 10,976 9,618
Depreciation and amortization.......................................................... 7,669 4,025
-------------- --------------
Total operating expenses............................................................. 96,349 70,312
-------------- --------------
Operating income..................................................................... 10,207 12,579
-------------- --------------
Other income (expense):
Interest expense, net.................................................................. (16,918) (6,464)
Equity in (losses) income of unconsolidated affiliates................................ (2,376) 82
Minority interest in losses of consolidated subsidiaries............................... 509 2,295
-------------- --------------
Total other expense, net............................................................ (18,785) (4,087)
-------------- --------------
(Loss) income before income taxes and the cumulative effect of a change in accounting
principle.............................................................................. (8,578) 8,492
Income tax benefit (expense)............................................................. 3,260 (3,227)
-------------- --------------
(Loss) income before the cumulative effect of a change in accounting principle........... (5,318) 5,265
-------------- --------------
Cumulative effect of a change in accounting principle, net of tax benefit of $2,409
(see Note 4) .......................................................................... -- (3,837)
-------------- --------------
Net (loss) income........................................................................ $ (5,318) $ 1,428
============== ==============
Earnings per common share - basic and diluted:
(Loss) income before cumulative effect of a change in accounting principle........... $ (0.24) $ 0.24
============== ==============
Cumulative effect on prior periods (to December 31, 1998) of changing to a different
method .............................................................................. -- $ (0.18)
============== ==============
Net (loss) income per common share - basic and diluted............................... $ ( 0.24) $ 0.06
============== ==============
Weighted average common shares outstanding:
Basic................................................................................ 22,103 22,068
============== ==============
Diluted.............................................................................. 22,103 22,551
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE> 5
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income................................................................... $(5,318) $1,428
Adjustments to reconcile net (loss) income to net cash provided by operating activities
net of acquisitions:
Depreciation and amortization....................................................... 7,669 4,025
Amortization of deferred financing.................................................. 1,616 547
Deferred income taxes............................................................... (3,282) (1,015)
Equity in net loss from investments in unconsolidated affiliates.................... 2,376 (82)
Minority interest in losses of consolidated subsidiaries............................ (509) (2,295)
Tax effect of stock options exercised............................................... 22 460
Decrease (increase) in net resident receivables..................................... 147 (2,136)
Decrease in pre-opening costs...................................................... -- 7,856
Decrease income tax receivable..................................................... 4,335 --
Decrease (increase) in other current assets......................................... 568 (1,502)
Decrease in accounts payable trade.................................................. (7,420) (3,544)
Increase in accrued expenses and deferred rent..................................... 9,176 3,393
Decrease in accrued development reserve costs..................................... (1,695) --
Changes in other assets and liabilities, net........................................ (3,146) 1,123
----------- -----------
Net cash provided by operating activities............................................. 4,539 8,258
----------- -----------
Cash flows (used by) investing activities:
Payments for property, equipment and project development costs...................... (20,556) (69,969)
Increase in notes receivable, net of reserve...................................... (6,099) (13,097)
Changes in investments in and advances to unconsolidated affiliates................. (1,761) (500)
Purchase of limited partnership interests........................................... -- (15,235)
Increase in short-term investments................................................. -- (1,565)
----------- -----------
Net cash used in investing activities................................................. (28,416) (100,366)
----------- -----------
Cash flows from (used by) financing activities:
Repayments of short-term borrowings................................................. (30,000) --
Repayments of long-term obligations................................................. (1,662) (45,122)
Proceeds from issuance of debt...................................................... 54,029 128,863
Payments for financing costs........................................................ (1,672) (3,905)
Proceeds from sale/leaseback transactions........................................... -- 8,401
Issuance of common stock and other capital contributions............................ 2 645
Contributions by minority partners and minority stockholders........................ 541 4,000
----------- -----------
Net cash provided by financing activities............................................. 21,238 92,882
----------- -----------
Net decrease in cash and cash equivalents............................................. 2,639 774
----------- -----------
Cash and cash equivalents:
Beginning of period................................................................. 18,728 40,621
=========== ===========
End of period....................................................................... $16,089 $41,395
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest, including amounts capitalized............................... $14,012 $6,130
=========== ===========
Cash paid during period for income taxes, net of refunds............................ $ (4,270) $2,499
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 6
ALTERRA HEALTHCARE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The condensed consolidated balance sheets as of March 31, 2000 and
December 31, 1999, the condensed consolidated statements of operations for the
three months ended March 31, 2000 and 1999, and the condensed consolidated
statements of cash flows for the three months ended March 31, 2000 and 1999
contained in this Quarterly Report on Form 10-Q include the accounts of Alterra
Healthcare Corporation ("Alterra" or the "Company") and our affiliates which are
under our common financial control. All significant intercompany accounts have
been eliminated in consolidation. In our opinion, all adjustments (consisting
only of normal recurring items) necessary for a fair presentation of these
condensed consolidated financial statements have been included. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the full fiscal year.
The condensed consolidated financial statements do not include all
information and footnotes necessary for a complete presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. The accompanying condensed consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in our Annual Report on Form
10-K, for the year ended December 31, 1999, as amended.
(2) ACQUISITIONS
During the quarter ended March 31, 2000, we reacquired fee interests in
12 residences which were previously leased from a healthcare real estate
investment trust ("REIT"). This acquisition, which has been accounted for as a
purchase, had a purchase price of $27.7 million, all of which was paid in cash.
These residences, along with seven residences reacquired in December 1999, were
subsequently financed through $60.0 million of mortgage financing which closed
during the first quarter of 2000.
(3) FINANCING
In February 2000 the Company borrowed an additional $20.0 million under
an existing bridge loan (the "Bridge Loan"). Simultaneously with this additional
advance, the interest rate on this loan increased to 10% per annum. As
additional security for the Bridge Loan, we granted the bridge lender mortgages
on six residences. Of the $20.0 million additional advance on the Bridge Loan,
$4.1 million was placed in escrow to facilitate the funding of the remaining
construction costs with respect to the mortgaged residences. A facility fee of
$800,000 was paid to the bridge lender upon the closing of the amended Bridge
Loan.
In March 2000 the Company, together with Manor Care, Inc., reduced to $60
million the $200 million financing commitment made by a bank syndicate to
provide construction financing to the Company's development joint venture with
Manor Care, Inc. As a result the Company has established in the 1999 financial
statements a $5.0 million reserve against its note receivable from this joint
venture to reflect the estimated realizable value. An additional $2.0 million
reserve was established in the 1999 financial statements for costs associated
with exiting development projects which we will not continue due to this
reduction in this credit facility.
4
<PAGE> 7
(4) CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE
In the first quarter of 1999 we adopted the Statement of Position No.
98-5, "Reporting on the Costs of Start-up Activities." This Statement provides
guidance on the financial reporting of start-up activities and organization
costs. It requires costs of start-up activities and organization costs to be
expensed when incurred. Our prior practice was to capitalize these costs and
amortize them over a one-year period after residence opening in the case of
start-up costs and five years in the case of organizational costs. The
cumulative effect of the accounting change reflected in the condensed
consolidated statement of operations for the three months ended March 31, 1999
was $3.8 million, net of tax.
(5) NET (LOSS) INCOME PER COMMON SHARE
The following table summarizes the computation of basic and diluted net
(loss) income per share amounts presented in the accompanying consolidated
statements of operations (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
2000 1999
---------------- --------------
<S> <C> <C>
Numerator:
Numerator for basic and diluted (loss) income per share before
cumulative effect of a change in accounting principle............... $(5,318) $5,265
Cumulative effect of a change in accounting principle.................. -- (3,837)
----------- --------------
Numerator for basic and diluted net (loss) income per share.......... $(5,318) $1,428
=========== ==============
Denominator:
Denominator for basic net (loss) income per common share-weighted
average shares...................................................... 22,103 22,068
Effect of dilutive securities:
Employee stock options.............................................. -- 483
----------- --------------
Denominator for diluted net (loss) income per common share-weighted
average shares plus assumed conversions.............................. 22,103 22,551
=========== ==============
Basic (loss) income per common share before cumulative effect of a
change in accounting principle...................................... $ (0.24) $ 0.24
Cumulative effect of a change in accounting principle.................. -- (0.17)
----------- -------------
Basic net (loss) income per common share............................... $ (0.24) $ 0.06
=========== =============
Diluted (loss) income per common share before cumulative effect of a
change in accounting principle...................................... $ (0.24) $ 0.24
Cumulative effect of a change in accounting principle.................. -- (0.18)
----------- -------------
Diluted net (loss) income per common share .......................... $ (0.24) $ 0.06
=========== =============
</TABLE>
Shares issuable upon the conversion of convertible subordinated
debentures have been excluded from the computation because the effect of their
inclusion would be anti-dilutive.
(6) RECLASSIFICATIONS
Reclassifications have been made in the 1999 financial statements to
conform with the 2000 financial statement presentation.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
We are a leading national assisted living company operating assisted
living residences and providing assisted living services in 28 states. Our
growth in recent years has had a significant impact on our results of operations
and accounts for most of the changes in our results between 2000 and 1999. As of
March 31, 2000 and 1999, we operated or managed 465 and 369 residences with
aggregate capacity of 21,526 and 15,841 residents, respectively. We, together
with other parties who have purchased interests in some of our development
residences, were also constructing or developing 40 additional residences with
additional capacity for 2,066 residents as of March 31, 2000.
During the fourth quarter of 1999 we began to implement several strategic
initiatives designed to strengthen our balance sheet and to enable us to focus
on stabilizing and enhancing our core business operations. The principal
components of these strategic initiatives include:
- Reduced Development Activity. In light of the competitive
environment and tightening capital markets, we elected to
significantly reduce the scope of our assisted living
development activities. Specifically, in the fourth quarter of
1999 and the first quarter of 2000 we have discontinued
development activity with respect to a substantial number of
development sites.
- Reduced Reliance upon Joint Venture Arrangements. In order to
simplify our capital structure, we have elected to reduce our
utilization of joint venture development arrangements and other
off-balance sheet ownership and development structures (so-called
"black box" structures). Historically, these arrangements were a
source of fee income for us and served to reduce the adverse impact
on our earnings of start-up losses associated with our substantial
volume of newly-opened residences. We believe, however, that we can
improve our future cash flow and liquidity by retaining 100% of the
revenue and operating cash flow from more of our residences. No new
joint venture arrangements were established during the first
quarter of 2000.
- Deleveraging of our Balance Sheet. We are seeking to strengthen and
deleverage our balance sheet and to address our short and long-term
capital needs by securing an additional equity or equity-linked
investment. We have entered into a definitive agreement pursuant to
which we expect to issue a minimum of $138 million of convertible
senior debentures and convertible preferred shares. This
transaction is expected to close during the second quarter of 2000.
- Focus on Cash Flow. As our portfolio of assisted living residences
stabilizes and matures, we intend to focus on cash flow. In this
regard we will seek to own (as opposed to lease) as much of our
real estate as we can, given our capital constraints. Ownership of
a greater percentage of our residences will increase depreciation
and amortization expenses but only impact our operating cash flow
to the extent of any related interest expense. During the fourth
quarter of 1999 and first quarter of 2000, we purchased a total of
19 facilities previously leased from a healthcare REIT.
We are currently seeking to address both our short and long-term liquidity
requirements. The combination of a difficult financing and operating environment
for healthcare service companies has significantly reduced our access to credit.
A number of our traditional financing sources, including commercial banks and
other secured lenders, have substantially reduced their lending activities to
the healthcare sector. In addition, the credit availability under our credit
facilities has either been reduced or eliminated due to a variety of factors,
including our request for modifications of some of our financial covenants in
some of our credit agreements. To address our need for capital, we have entered
into a definitive agreement pursuant to which we expect to issue at least $138.0
million of convertible senior debentures and convertible preferred shares. We
currently anticipate that this transaction will close during the second quarter
of 2000. The transaction is contingent upon our ability to modify certain
covenants in our credit agreements and our ability to obtain requisite
regulatory approvals.
6
<PAGE> 9
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999
Residence Service Fees. Residence service fees for the three months
ended March 31, 2000 were $101.4 million, representing an increase of $24.3
million or 32% from the $77.1 million for the comparable 1999 period.
Substantially all of this increase resulted from the addition of newly
constructed residences and other residences acquired by us. We operated or
managed 465 and 369 residences at March 31, 2000 and 1999, respectively.
Other Revenues. Other revenues for the three months ended March 31,
2000 were $5.1 million, a decrease of $700,000 from the $5.8 million of other
revenue for the three months ended March 31, 1999. The decrease is attributable
to fewer development fees in the 2000 period which were partially offset by
increased ongoing management fees on residences which were either managed for
third parties or for entities in which we held a minority ownership position.
Management fees include charges for transitional services to recruit and train
staff, initial and recurring fees for use of our name and branding, initial and
recurring fees for use of our methodologies, services for assisting with finance
processing, and ongoing management services provided to operate the residence.
Residence Operating Expenses. Residence operating expenses for the
three months ended March 31, 2000 increased to $66.2 million from $47.1 million
in the three-month period ended March 31, 1999, due to the increased number of
residences operated during the 2000 period. Operating expenses as a percentage
of residence service fees for the three months ended March 31, 2000 and 1999
were 65.2% and 61.1%, respectively. This percentage increase resulted primarily
from increases in labor and employee benefit related costs due to increased
competition for personnel. The increase in marginal expenses was also impacted
by a slower lease-up of residences in some areas of the country.
Lease Expense. Lease expense for the three months ended March 31, 2000
was $20.2 million, compared to $14.5 million in the comparable period in 1999.
This increase was primarily attributable to the utilization of additional
sale/leaseback financing and synthetic lease financing totaling $258.9 million
during the twelve-month period ended March 31, 2000.
Lease Income. We earned $8.7 million of lease income for the three
months ended March 31, 2000, compared to $4.9 million for the comparable period
in 1999, on residences owned or leased by us and leased or subleased to
unconsolidated joint ventures. Lease payment obligations of the unconsolidated
joint venture entities are generally equivalent to the debt service payable by
us on the leased residences, and thereby offset our costs associated with
obtaining and maintaining financing for these residences.
General and Administrative Expense. For the three months ended March
31, 2000, general and administrative expenses were $11.0 million, compared to
$7.8 million before a $1.8 million write-off associated with our name change for
the comparable 1999 period, representing an increase as a percentage of
operating revenue from 9.4% in the 1999 period to 10.3% in the 2000 period. The
$3.2 million increase in expenses in the 2000 period was primarily attributable
to salaries, related payroll taxes and employee benefits for additional
corporate personnel retained to support the increased number of unconsolidated
residences we manage.
Depreciation and Amortization. Depreciation and amortization for the
three months ended March 31, 2000, was $7.7 representing an increase of $3.6
million, or 90.5%, from the $4.0 million of depreciation and amortization for
1999. This increase resulted primarily from depreciation of fixed assets on the
larger number of new residences that were owned by us during the three months
ended March 31, 2000, versus the comparable 1999 period. In addition, we
acquired 19 residences with a capacity for 944 residents in December 1999 and
January 2000 which were previously leased by us from a healthcare REIT. Since we
now own these properties, our depreciation expense is higher.
7
<PAGE> 10
Interest Expense, Net. Interest expense, net of interest income, was
$15.6 million for the three months ended March 31, 2000, prior to $1.4 million
of bank amendment fees paid in the quarter compared to $6.5 million of net
interest expense for 1999. Gross interest expense (before interest
capitalization and interest income) for the 2000 period was $18.3 million prior
to the amendment fees paid compared to $9.8 million for the 1999 period, an
increase of $8.5 million. This increase is primarily attributable to an increase
in the amount of mortgage financing used in 2000 as compared to 1999. We
capitalized $1.2 million of interest expense in the 2000 period compared to $2.5
million in the 1999 period. This decrease in capitalized interest is a result of
our decision to reduce development and construction activity in 2000. Our
average construction in progress balance was $81.6 million during the three
months ended March 31, 2000, compared to $138.0 million in the 1999 period.
Interest income for the 2000 period was $1.5 million as compared to $791,000 for
the 1999 period. This increase was due to interest on additional restricted cash
balances in place in 2000 related primarily to lease financing transactions.
Equity in (Losses) Income of Unconsolidated Affiliates. Equity in
losses of unconsolidated affiliates for the three months ended March 31, 2000,
was $(2.4) million, representing an increase of $(2.5) million from $82,000 of
income for the comparable 1999 period. The increase was primarily attributable
to the increase in the number of residences in unconsolidated entities which are
in various stages of lease-up during the 2000 period. During the first quarter
of 2000 we had an average of 91 residences held in these unconsolidated joint
venture arrangements compared to an average of 52 residences held in similar
joint venture arrangements during the comparable 1999 period. The increase in
equity in losses of unconsolidated affiliates was also impacted by a slower
lease-up of residences in some areas of the country.
Minority Interest in Losses of Consolidated Subsidiaries. Minority
interest in losses of consolidated subsidiaries for the three months ended March
31, 2000, was $509,000, representing a decrease of $1.8 million from $2.3
million for the comparable 1999 period. The decrease was primarily attributable
to the decrease in the number of residences in various stages of lease-up that
were owned by us in consolidated joint venture arrangements during the 2000
period. During the first quarter of 2000, we had an average of 12 residences
held in these consolidated joint venture arrangements compared to an average of
31 residences held in similar joint venture arrangements during the comparable
1999 period.
Income Taxes. For the three months ended March 31, 2000, we recorded a
current income tax provision of $53,000 which was offset by the recognition of a
$3.3 million deferred tax asset resulting in a current income tax benefit of
$3.3 million. During the three months ended March 31, 1999, we recorded a
current income tax provision of $2.8 million which was offset by the recognition
of $400,000 of deferred tax liability resulting in a current income tax expense
of $3.2 million before the effect of a cumulative change in accounting principle
of $3.8 million.
Cumulative Effect of Change in Accounting Principle. During the first
quarter of 1999 we incurred a cumulative effect of a change in accounting
principle of $3.8 million relating to the adoption of SOP 98-5, which requires
that costs of start-up activities and organization costs be expensed as
incurred.
Net Income (Loss). As a result of the foregoing, net loss for the three
months ended March 31, 2000, was $5.3 million compared to net income of $1.4
million for 1999.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, we had approximately $16.1 million in unrestricted
cash and cash equivalents and $20.2 million of working capital compared to
unrestricted cash and cash equivalents of $18.7 million and working capital of
$5.4 million at December 31, 1999.
8
<PAGE> 11
For the three months ended March 31, 2000 and 1999, cash flows from
operations were $4.5 million versus $8.3 million, respectively.
During the first quarter of 2000 we closed on approximately $54.0
million of new debt financing. Additionally, financing was provided through
$541,000 of minority joint venture partner contributions and $20.0 million of
bridge loan financing.
Net cash provided by these financing activities together with cash from
operations was used during the three months ended March 31, 2000, to fund $20.6
million in construction and development activity, and $6.1 million of
construction bridge financing that we provided to others under third-party
development arrangements.
Historically, we have financed our operations and growth through a
combination of various forms of real estate financing (mortgage, synthetic lease
and sale/leaseback financing), capital contributions from joint venture partners
and the sale of our securities (common stock and convertible debentures) and, to
a lesser extent, cash from operations. At March 31, 2000, we had $893.3 million
of outstanding debt principally consisting of $228.6 million of convertible
debentures having a weighted average interest rate of 5.86%, $222.6 million of
fixed rate debt having a weighted average interest rate of 7.53%, capitalized
lease obligations of $67.2 million having a weighted average interest rate of
9.93%, $325.9 million of variable rate debt having a weighted average interest
rate of 8.79%, a bridge loan of $34.0 million having a weighted average interest
rate of 10%, and short-term borrowings of approximately $15.0 million. Through
March 31, 2000, we have also entered into approximately $893.7 million of
sale/leaseback and synthetic lease financings. In addition, we have guaranteed
an aggregate of $114.0 million of indebtedness of joint venture and other
off-balance sheet third-party entities.
We have the following three series of convertible subordinated debentures
outstanding:
- $143.8 million aggregate principal amount of 5.25% convertible
subordinated debentures due December 15, 2002. These convertible
debentures bear interest at 5.25% per annum payable semi-annually
on June 15 and December 15 of each year. The conversion price is
$28.75, which is equivalent to a conversion ratio of 34.8 shares
of common stock per $1,000 in principal amount of the convertible
debentures. The convertible debentures are redeemable at our
option commencing on December 31, 2000, at specified premiums.
The holders of the convertible debentures may require us to
repurchase the convertible dentures at 101% of face value upon a
change of control, as defined in the convertible debenture;
- $50.0 million aggregate principal amount of 7.00% convertible
subordinated debentures due June 1, 2004. These convertible
debentures bear interest at 7.00% per annum payable semi-annually
on June 1 and December 1 of each year. The conversion price is
$20.25, which is equivalent to a conversion ratio of 49.4 shares
of common stock per $1,000 in principal amount of the convertible
debentures. The convertible debentures are redeemable at our
option commencing on June 15, 2000, at specified premiums; and
- $35.0 million aggregate principal amount 6.75% convertible
subordinated debentures due June 30, 2006. These convertible
debentures bear interest at 6.75% per annum payable semi-annually
on June 30 and December 30 of each year. The conversion price is
$20.38, which is equivalent to a conversion ratio of 49.3 shares
of common stock per $1,000 principal amount of the convertible
debentures. The convertible debentures are redeemable at our
option commencing on July 15, 1999, at specified premiums.
Our principal credit and financing agreements, including our
convertible debentures and our synthetic lease agreements, include cross-default
provisions that provide that a material default under our other credit
facilities constitute a default under that credit or financing agreement.
Accordingly, any
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<PAGE> 12
material default arising under one of our credit or financing agreements could
result in many of our other major credit and financing arrangements being in
default. In addition, our principal credit agreements and debt instruments
include various financial covenants and other restrictions, including: (i) fixed
charge coverage requirements, typically measured on a trailing four quarter
basis and which generally increase over the term of the applicable credit
agreement; (ii) maximum leverage ratios which limit our aggregate senior
indebtedness to total capitalization; (iii) various minimum net worth or
tangible net worth requirements; (iv) in some cases, property specific debt
service coverage requirements and similar financial covenants of the type
referenced above applicable to individual properties or to the pool of
residences financed by the applicable lender; and (v) the maintenance of
operating and other reserves for the benefit of the residences serving as
collateral for the applicable lender. Additionally, under some of our credit and
sale/leaseback facilities we are required to secure lender or lessor consent
prior to engaging in mergers, business combinations or change in control
transactions. As noted below, as a result of the non-recurring charges taken in
the fourth quarter of 1999 and reductions in our expected future earnings
resulting from our decision to reduce development and utilization of off-balance
sheet joint venture structures, we would have been in violation of net worth and
fixed charge coverage covenants imposed by several of our lenders had we not
secured modifications or waivers of these covenants.
Our operations and remaining construction activity will require
significant additional capital resources in the future in order to fund: (i) our
remaining construction of 40 assisted living and Alzheimer's care residences;
(ii) our purchase from the third party joint venture partners of minority and
majority equity interests in assisted living residences operated by us; (iii)
our ongoing debt service obligations, including maturities of our long-term debt
and refinancing of short term debt; and (iv) our obligation to finance the
operations of third party development partners.
We expect to fund a portion of our capital and liquidity requirements
from cash on hand, cash generated from operations, financing under existing debt
and lease commitments and, to a limited extent, equity from our joint venture
development partners. Our ability to utilize previously secured non-binding
financing commitments from REITs and other lenders has become substantially
limited due in part to our requests and receipt of modifications of some of the
lenders' financial covenants, the volatility in the capital markets and factors
affecting the assisted living industry generally. In particular, one of our
construction loan facilities has delayed advances due on ongoing construction
pending the resolution of a number of loan facility capacity and residence
construction issues. In addition, many healthcare REITs and lenders are
currently not extending new financing and the property level underwriting
requirements of some of our lenders are being more strictly applied.
Accordingly, our ability to secure financing on acceptable terms has become
increasingly difficult. We currently expect to have access to no more than $50
to $70 million of additional mortgage financing from existing construction loan
facilities during the twelve-month period ending December 31, 2000. We do not
expect to have access to any significant sale/leaseback financing during the
twelve-month period ending December 31, 2000.
On April 26, 2000, we entered into a purchase agreement pursuant to
which we expect to issue at least $138.0 million of convertible senior
debentures and convertible preferred shares to several investors, including
investment entities established by significant existing shareholders of ours as
well as an investment vehicle of Messrs. Daniel Baty and William Colson, senior
executives and directors of Holiday Retirement Corporation and Emeritus
Corporation (together the "Investors").
The transaction consists of: (i) $133.0 million of Series A and Series
B convertible senior debentures ($42.5 million of Series A debentures and $90.5
million of Series B debentures) with a conversion price of $4.00 per share, a
9.75% semi-annual payment-in-kind ("PIK") coupon and a seven year maturity, and
(ii) $5.0 million of Series A convertible preferred shares with a conversion
price of $4.00 per share and a 9.75% semi-annual PIK dividend and a mandatory
redemption in seven years. The Series A debentures and Series A preferred shares
will be convertible at any time at the holder's option into shares of our common
stock. The Series B debentures will be convertible at any time at the holder's
option into non-voting Series B preferred shares having rights (other than
voting rights) substantially
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<PAGE> 13
similar to our common stock. We may call the debentures and the Series A
preferred shares at any time after three years if our common stock trades at an
average price of at least $8.00 per share for the then preceding 30 trading day
period. As part of the transaction the Investors will have the option to
purchase up to an additional $65.0 million of Series B debentures for an
aggregate transaction amount of approximately $200.0 million.
The definitive agreement is subject to several closing conditions
including: (i) receipt of covenant modifications from several of our lenders and
lessors, (ii) Hart-Scott-Rodino compliance, (iii) receipt of all appropriate
regulatory and other necessary approvals, (iv) other customary closing
conditions, and (v) a closing by no later than May 31, 2000. No assurances can
be made that the transaction will be consummated or, if consummated, completed
on a timely basis and on terms acceptable to us.
We will use the proceeds from this transaction to: (i) finance the
completion of residences currently under construction, (ii) repay interim bridge
indebtedness provided by one of the Investors, (iii) acquire a recently built
portfolio of 14 of our managed assisted living residences from one of the
Investors, (iv) selectively acquire third-party equity interests in some of our
joint-venture arrangements, including joint-venture interests held by affiliates
of some of the Investors, and (v) for working capital and other general
corporate purposes.
Pending the purchase of these convertible securities, we have taken
several steps to maintain sufficient operational liquidity. These steps have
included: (i) stopping and/or slowing construction in progress in order to
reduce construction related spending; (ii) borrowing $44.0 million pursuant to
bridge loan financing provided by one of the Investors; and (iii) allowing
construction related payables to build up over normal levels. Notwithstanding
these measures, one of our principal construction lenders has delayed making
further advances on five residences currently in construction. As a result,
liens have been filed on these construction projects resulting in defaults under
the operative construction loan credit agreements. Although we have obtained
waivers through June 30, 2000 of these defaults, payment of these suppliers and
contractors will need to be effected in 2000 in order to permanently resolve
these defaults. In addition, additional liens or lawsuits may be filed by
contractors and subcontractors unless the advances under the credit facility are
resumed, which additional liens or lawsuits will in turn result in further
defaults under the operative credit agreements. Moreover, although the stopping
or slowing of construction in progress has helped to preserve operating
liquidity, upon resuming construction we may incur increased costs in order to
complete construction.
Due to the fourth quarter 1999 non-recurring charges and the
anticipated reduction in our projected earnings due to planned reduction in
development activity and reduced utilization of off-balance sheet joint venture
structures, we would have been in violation of some of the financial covenants
in our major credit facilities. However, we have obtained from these lenders
either suspensions, amendments or waivers of net worth or fixed charge coverage
covenants in order to avoid any actual default under these agreements and
provide relief to us through June 30, 2000. These suspensions, amendments and
waivers impose various conditions on us, including the requirement to secure
equity or equity-linked funding of at least $100.0 million on or before June 30,
2000. To obtain these accommodations from our lenders, we have: (i) agreed to
pay various fees both in form of cash and other consideration as well as
established additional cash reserves; (ii) increased the pricing on some of our
financing, some of which increases are permanent and others of which are
temporary pending the completion of our contemplated equity transaction; (iii)
shortened the maturity dates on some of our financing; (iv) delayed or waived
our receipt of management fees and reimbursement of operating costs of
residences serving as collateral; and (v) consented to the reduction of existing
financing commitments of some of our lenders.
If we are unable to satisfy the conditions to the pending proposed
equity transaction (including obtaining necessary lender and lessor waivers and
amendments) or are otherwise unable to consummate this investment transaction,
we will need to seek to address our significant short and long-term liquidity
shortfall through various measures, which may include further debt
restructuring, sale of assets on an
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<PAGE> 14
expedited basis, the surrender of collateral to some of our lenders and further
reduction of overhead generally. However, we are not able to provide any
assurance that, without a significant equity transaction, we will be able to
satisfy our short-term or long-term liquidity needs. In addition to the
requirement imposed by several of our lenders that we complete a $100.0 million
or greater equity transaction by June 30, 2000, our $44.0 million bridge loan is
due on June 30, 2000 (if an equity transaction is not completed prior to that
date). As we are seeking to complete the pending equity transaction we will need
access to further advances under our construction lines, further extensions of
terms by construction-related creditors and access to further bridge financing.
We can provide no assurance that we will be able to reach an accommodation with
all of our lenders and lessors to secure needed interim funding. Likewise, we
can provide no assurance that we will have the ability to satisfy our
significant ongoing capital needs if the pending equity transaction is not
closed in a timely manner.
IMPACT OF INFLATION
To date inflation has not had a significant impact on us. Inflation
could, however, affect our results of operations due to our dependence on our
senior resident population who generally rely on liquid assets and relatively
fixed incomes to pay for our services. As a result, we may not be able to
increase residence service fees to account fully for increased operating
expenses. In structuring our fees we attempt to anticipate inflation levels, but
there can be no assurance that we will be able to anticipate fully or otherwise
respond to any future inflationary pressures. In addition, given the amount of
construction and development activity which we anticipate, inflationary
pressures could affect our cost of new product deployment and financing. There
can be no assurances that financing will be available on terms acceptable to us.
FORWARD-LOOKING STATEMENTS
The statements in this quarterly report relating to matters
that are not historical facts are forward-looking statements based on
management's belief and assumptions using currently available information.
Although we believe that the expectations reflected in these forward-looking
statements are reasonable, we cannot give any assurances that these expectations
will prove to be correct. These statements involve a number of risks and
uncertainties, including, but not limited to, substantial debt and operating
lease payment obligations, operating losses associated with new residences, our
need for additional financing and liquidity, our ability to implement our new
strategic initiatives and improve cash flow, risks associated with development
and construction, risks associated with acquisitions, competition, governmental
regulation, and other risks and uncertainties detailed in the reports filed by
us with the Securities and Exchange Commission. Should one or more of these
risks materialize (or the consequences of a development worsen), or should the
underlying assumptions prove incorrect, actual results could differ materially
from those forecasted or expected. We assume no duty to publicly update these
statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and equity prices. Changes in these factors may
cause fluctuations in the Company's earnings and cash flows.
We performed a sensitivity analysis which presents the hypothetical
change in fair value of those financial instruments held by us at March 31,
2000, which are sensitive to changes in interest rates. Market risk is estimated
as the potential change in fair value resulting from an immediate hypothetical
one-percentage point parallel shift in the yield curve. The fair value of the
debt included in the analysis is $408.1 million. Although not expected, a
one-percentage point change in the interest rates would have caused our annual
interest expense to change by approximately $3.8 million. Accordingly, a
significant increase in LIBOR based interest rates could have a material adverse
effect on our earnings.
Although a majority of our debt and lease payment obligations as of or
during the three months ended March 31, 2000, are not subject to floating
interest rates, indebtedness that we may incur in the future may bear interest
at a floating rate. Debt and annual operating lease payment obligations will
continue to increase as we complete our pending development and construction
activity. We expect to refinance $130.8 million of our fixed rate debt in 2000
and, as a result, convert this into variable rate debt.
We do not presently use financial derivative instruments to manage
interest costs. We do not use foreign currency exchange rate forward contracts
or commodity contracts and do not have foreign currency exposure as of March 31,
2000.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2.1 Purchase Agreement dated as of April 26, 2000 between the Registrant
and RDVEPCO, L.L.C., a Michigan limited liability company, Group One
Investors, L.L.C., a Michigan limited liability company, and Holiday
Retirement 2000, LLC, a Washington limited liability company
(incorporated by reference to Exhibit 99.2 of the Registrant's Form
8-K filed May 5, 2000).
4.1 Amended and Restated First Supplemental Indenture dated as of
December 19, 1997 by and between the Registrant and United States
Trust Company of New York, as Trustee.
4.2 Amended and Restated Second Supplemental Indenture dated as of
January 2, 1998 by and between the Registrant and United States
Trust Company of New York, as Trustee.
4.3 Amendment to Rights Agreement made as of April 26, 2000 between
Registrant and American Stock Transfer & Trust Company, as Rights
Agent.
10.1 Loan Agreement dated as of January 28, 2000 between AHC Purchaser,
Inc. and GMAC Commercial Mortgage Corporation.
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<PAGE> 16
10.2 Second Amended and Restated Loan Agreement dated as of April 26,
2000 between Registrant and RDVEPCO, L.L.C.
10.3 Amended Schedule of Mortgages and Security Agreements, Secured
Promissory Notes and Guaranties ("Loan Documents") which are
substantially in the form of Key Corporate Capital, Inc., Loan
Documents attached as Exhibits 10.116, 10.117 and 10.118 to the
Registrant's Form 10-K for the period ending December 31, 1999.
10.4 First Amendment to Credit Agreement, First Amendment to Guaranty
Agreement and Suspension and Waiver Agreement dated as of March 30,
2000 between the Borrowers named therein, HCR/Alterra Development,
LLC, the Registrant, Manor Care, Inc., Bank of America, N.A., as
Administrative Agent, and the Lenders named in the Credit Agreement.
11.1 Statement Regarding Computation of Net Income Per Share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K: The Registrant has filed no reports with
the Securities and Exchange Commission on Form 8-K during the
quarter ended March 31, 2000.
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<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milwaukee, State of
Wisconsin, on the 15th day of May, 2000.
ALTERRA HEALTHCARE CORPORATION
Date: May 15, 2000 By: /s/ Mark W. Ohlendorf
-------------------------------------------------
Mark W. Ohlendorf
Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer)
15
<PAGE> 1
EXHIBIT 4.1
AMENDED AND RESTATED
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 19, 1997
TO
INDENTURE
DATED AS OF DECEMBER 19, 1997
BETWEEN
ALTERRA HEALTHCARE CORPORATION
AND
UNITED STATES TRUST COMPANY OF NEW YORK
AS TRUSTEE
---------------------------------------
5.25% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2002
---------------------------------------
<PAGE> 2
AMENDED AND RESTATED
FIRST SUPPLEMENTAL INDENTURE
AMENDED AND RESTATED FIRST SUPPLEMENTAL INDENTURE, dated as of December
19, 1997 between Alterra Healthcare Corporation, a Delaware corporation (the
"Company"), and United States Trust Company of New York, a New York State
banking corporation (the "Trustee"), to that certain Indenture, dated as of
December 19, 1997, between the Company (previously named Alternative Living
Services, Inc.) and the Trustee (the "Indenture").
WHEREAS, the parties hereto have entered into the Indenture which
provides for the issuance by the Company of the individual series of securities
thereunder, upon the Company and Trustee entering into a supplemental indenture
to the Indenture authorizing such series; and
WHEREAS, the Company has issued its first series of securities
thereunder, designated its 5.25% Convertible Subordinated Debentures Due 2002
(the "Debentures"), pursuant to the First Supplemental Indenture dated as of
December 19, 1997 (the "First Supplemental Indenture");
WHEREAS, the Company wishes to amend and restate the First Supplemental
Indenture in its entirety as herein provided; and
WHEREAS, all acts necessary to constitute this Amended and Restated
First Supplemental Indenture as a valid, binding and legal obligation of the
Company have been done and performed.
NOW, THEREFORE, witnesseth that, in consideration of the premises and
of the covenants contained herein, it is hereby agreed as follows:
ARTICLE ONE
The Terms of the Debentures
In accordance with Sections 2.01 and 2.02 of the Indenture, the Company
will issue a Global Debenture in the aggregate principal amount of $125,000,000.
Each Debenture shall be substantially in the following form:
<PAGE> 3
ALTERRA HEALTHCARE CORPORATION
5.25% Convertible Subordinated Debenture Due 2002
ALTERRA HEALTHCARE CORPORATION, a Delaware corporation,
promises to pay to
SPECIMEN
or registered assigns, the principal sum of 125,000,000 Dollars, on December 15,
2002
Cusip 02145K AB3
Interest Payment Dates: June 15 and December 15
Record Dates: June l and December 1
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: April 7, 2000
ALTERRA HEALTHCARE CORPORATION
By: ___________________________________________________
William F. Lasky
Chief Executive Officer, President and Director
By: ___________________________________________________
John D. Peterson
Vice President, Assistant Secretary and Controller
[SEAL]
CERTIFICATE OF AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies that this is one
of the Securities referred to in the within mentioned Indenture.
By: _______________________________________
Authorized Signatory
[SEAL]
Dated: _______________, 2000
-2-
<PAGE> 4
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
-3-
<PAGE> 5
ALTERRA HEALTHCARE CORPORATION
5.25% Convertible Subordinated Debenture Due 2002
1. Interest. Alterra Healthcare Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on June 15 and December 15 of each year beginning June 15, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 19, 1997;
provided that, if there is no existing Default in the payment of interest, and
if this Security is authenticated between a record date referred to on the face
hereof and the next succeeding interest payment date, interest shall accrue from
such interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are the registered Holders of the
Securities at the close of business on the June 1 or December 1 next preceding
the interest payment date. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay principal and
interest by its check payable in such money. It may mail an interest check to a
Holder's registered address.
The final installment of principal of and premium, if any, on this
Security shall be payable only upon surrender of this Security at the office or
agency of the Trustee in the Borough of Manhattan, City and State of New York.
Payments of principal of and premium, if any, and interest on this Security
shall be made at the office or agency of the Trustee maintained in the Borough
of Manhattan, City and State of New York or, in the case of any such payments
other than the final payment of principal and premium, if any, at the Company's
option, by check mailed to the Person entitled thereto at such Person's address
last appearing on the Company's register.
3. Registrar and Agents. Initially, United States Trust Company of New
York will act as Registrar, Paying Agent, Conversion Agent and agent for service
of notices and demands. The Company may change any Registrar, co-registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands
without notice. The Company or any of its Subsidiaries may act as Paying Agent
or Conversion Agent. The address of United States Trust Company of New York is
114 West 47th Street, New York, New York 10036-1532.
4. Indenture; Limitations. The Company issued the Securities under an
Indenture dated as of December 19, 1997 (the "Indenture") between the Company
and United States Trust Company of New York (the "Trustee"). Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code Sections 77aaa-77bbbb) as in effect on the date of the
IndEnture. The Securities are subject to all such terms, and the Holders of the
Securities are referred to the Indenture and said Act for a statement of them.
Reverse of Security
Page 1 of 9
<PAGE> 6
The Securities are general unsecured obligations of the Company limited
to $125,000,000 aggregate principal amount. The Indenture imposes certain
limitations on the ability of the Company to, among other things, make payments
in respect of its Capital Stock, merge or consolidate with any other Person and
sell, lease, transfer or otherwise dispose of its properties or assets.
In the event the Company issues any additional 5.25% Convertible
Subordinated Debentures Due 2002 pursuant to another Supplemental Indenture (the
"Additional Debentures") in substantially the form hereof within 30 days of the
date hereof, such Additional Debentures shall be of the same series as the
Securities issued hereunder.
5. Redemption by the Company. Subject to Section 7 herein, the Company
may redeem the Securities, in whole or from time to time in part, at its option
at any time on or after December 31, 2000 (provided, however, the Company may
not exercise its option to redeem any Securities unless the Company has
sufficient authorized shares to give effect to full conversion of the
Securities), at a redemption price equal to 100% of the principal amount
thereof, plus accrued interest to the Redemption Date (the "Redemption Price"),
and, notwithstanding anything in the Indenture to the contrary, including,
without limitation, Section 3.01 thereof, the Securities may only be redeemed by
the Company at the Redemption Price set forth in this Section 5 and not at the
redemption price set forth in Section 3.01 of the Indenture (which Section 3.01,
as it relates to the redemption price for the Securities, is amended by this
Section 5).
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days, but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 principal amount may be redeemed in part, but only in whole
multiples thereof. On and after the Redemption Date interest ceases to accrue on
Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such Security into
shares of common stock of the Company commencing 180 days after December 19,
1997 and thereafter at any time prior to maturity, subject to the following
provisions of this Section 7. If the Security is called for redemption, the
Holder may convert it at any time before the close of business on the date fixed
for such redemption. The initial conversion price is $28.75 per share, subject
to adjustment in certain events. In the event the Holder of this Security seeks
to convert all or any portion of this Security into Common Stock at a time when
the Company does not have sufficient authorized shares of Common Stock to
satisfy such conversion, such conversion shall not be permitted, in which event
the Holder will have the right to require the Company to repurchase this
Security for an amount payable in cash equal to the principal amount of this
Security plus accrued interest. The Company has agreed to seek stockholder
approval at its 1998 Annual Meeting of Stockholders of an amendment to its
Restated Certificate of Incorporation ("Certificate") increasing the number of
authorized shares of Common Stock to an amount at least sufficient to permit the
conversion of all the Securities. Until such date as the Company's Certificate
has been so amended, the Company will not (i) exercise its right to voluntarily
redeem the Debentures pursuant to Section 5 hereof or (ii) issue additional
shares of Common
Reverse of Security
Page 2 of 9
<PAGE> 7
Stock or securities convertible into or exchangeable for Common Stock except for
(A) employee stock options to acquire Common Stock granted under the Company's
existing stock option plans and (B) shares of Common Stock issuable upon
conversion of any Security or Other Debentures or upon the exercise of stock
options.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security; (2) surrender the Security to the
Conversion Agent; (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent; and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of common stock issued on
conversion; provided, however, that if a Security is surrendered for conversion
after the record date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest falling due to
such interest payment date will be paid to the Person in whose name the Security
is registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record payment date to the opening of business on the corresponding
interest payment date must be accompanied by payment of an amount equal to the
interest payable on such interest payment date. A Holder may convert a portion
of a Security if the portion is $1,000 principal amount or an integral multiple
thereof.
To determine the number of shares issuable upon conversion of a
Security, divide the principal amount to be converted by the conversion price in
effect on the conversion date. The Company will deliver a check for any
fractional share.
If the Company is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the right to convert a Security
into shares of common stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another Person.
8. Certain Rights to Require Repurchases of Securities by the Company.
(a) In the event of any Change in Control (as defined below) occurring after the
date of issuance of the Securities and on or prior to maturity thereof, each
Holder shall have the right, at such Holder's option, to require the Company to
purchase, and upon the exercise of such right, the Company shall, subject to the
provisions of the Indenture, purchase, all or any part of such Holder's
Securities on the date (the "Repurchase Date") that is 75 days after the date
the Company gives notice of the Change in Control at a price in cash (the
"Repurchase Price") equal to 101% of the principal amount thereof, together with
accrued and unpaid interest to the Repurchase Date. In connection with the
exercise of the repurchase right by a Holder prior to a Redemption Date, a
Holder's right to exercise his repurchase right shall terminate at the close of
business on the Business Day prior to the Redemption Date.
(b) On or before the fifteenth (15th) day after the occurrence
of a Change in Control, the Company or, at the request of the Company, the
Trustee shall give notice of the occurrence of the Change in Control and of the
repurchase right set forth herein arising as a result thereof to the Trustee and
each Holder of the Securities at such Holder's registered address. Such notice
shall state: (1) the event constituting the Change in Control and the date
thereof;
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<PAGE> 8
(2) the Repurchase Date; (3) the date by which the repurchase right must be
exercised; (4) the Repurchase Price; and (5) the procedures a Holder must follow
to exercise a repurchase right. No failure of the Company to give the foregoing
notice shall limit any Holder's right to exercise a repurchase right.
Each Holder desiring to exercise the repurchase right shall deliver to
the Company and to the Trustee on or before the tenth (10th) day prior to the
Repurchase Date (1) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Security or Securities (or portion of a Security) to be repurchased and a
statement that an election to exercise the repurchase right is being made
thereby and (2) the Security or Securities with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company. Such
written notice shall be irrevocable. If the Repurchase Date falls between any
record date and the next succeeding interest payment date, Securities to be
repurchased must be accompanied by payment from the Holder of an amount equal to
the interest thereon which the registered Holder thereof is to receive on such
interest payment date. A Holder that fails to exercise a repurchase right in
accordance with the terms hereof shall waive such repurchase right but the
rights of such Holder to receive principal of and interest on the Securities and
all other rights of such Holder shall not be affected thereby.
In the event that a repurchase right is exercised with respect to less
than the entire principal amount of a surrendered Security, the Company shall
execute and deliver to the Trustee and the Trustee shall authenticate for
issuance in the name of the Holder a new Security or Securities in the aggregate
principal amount of the unrepurchased portion of such surrendered Security.
On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in the Indenture) an amount of
money sufficient to pay the Repurchase Price of the Securities which are to be
repurchased on the Repurchase Date.
(c) If any Security surrendered for repurchase shall not be so
purchased on the Repurchase Date, the principal shall, until purchased, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate per annum borne by such Security.
(d) For purposes hereof, a "Change in Control" will occur
when: (1) all or substantially all of the Company's assets are sold as an
entirety to any person or related group of persons; (2) there shall be
consummated any consolidation or merger of the Company (A) in which the Company
is not the continuing or surviving corporation (other than a consolidation or
merger with a wholly-owned subsidiary of the Company in which all Common Stock
outstanding immediately prior to the effectiveness thereof are changed into or
exchanged for the same consideration) or (B) pursuant to which the Common Stock
is converted into cash, securities or other property, in each case other than a
consolidation or merger of the Company in which the holders of the Common Stock
immediately prior to the consolidation or merger have, directly or indirectly,
at least a majority of the common stock of the continuing or surviving
corporation immediately after such consolidation or merger; or (3) any person,
or any persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof, acquires beneficial ownership (as defined
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<PAGE> 9
in Rule 13d-3 under the Exchange Act) of at least 50% of the total voting power
of all classes of capital shares of the Company entitled to vote generally in
the election of directors of the Company.
(e) Notwithstanding clause (d)(3) of the foregoing definition,
a Change in Control will not be deemed to have occurred solely by virtue of the
Company, any Subsidiary, any employee share purchase plan, share option plan, or
other share incentive plan or program, retirement plan or automatic dividend
reinvestment plan; or any substantially similar plan of the Company or any
Subsidiary or any Person holding securities of the Company for or pursuant to
the terms of any such employee benefit plan, filing or becoming obligated to
file a report under or in response to Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act disclosing beneficial
ownership by it of shares or securities of the Company, whether at least 50% of
the total voting power referred to in clause (d)(3) of the foregoing definition
or otherwise. A recapitalization or a leveraged buyout or similar transaction
involving members of management or their affiliates will constitute a Change in
Control if it meets the foregoing definition.
Notwithstanding the foregoing, a Change in Control as described above
will not be deemed to have occurred if: (i) the Current Market Price of the
Common Stock on the date of a Change in Control is at least equal to 105% of the
Conversion Price in effect immediately preceding the time of such Change in
Control; or (ii) all of the consideration (excluding cash payments for
fractional shares) in the transaction giving rise to such Change in Control to
the holders of Common Stock consists of common shares that are, or immediately
upon issuance will be, listed on a national securities exchange or quoted on the
Nasdaq National Market, and as a result of such transaction the Securities will
become convertible solely into such common shares of common stock; or (iii) the
consideration in the transaction giving rise to such Change in Control to the
holders of Common Stock consists of cash, securities that are, or immediately
upon issuance will be, listed on a national securities exchange or quoted on the
Nasdaq National Market, or a combination of cash and such securities, and the
aggregate fair market value of such consideration (which, in the case of such
securities, shall be equal to the average of the daily Closing Prices of such
securities during the ten (10) consecutive Trading Days commencing with the
sixth Trading Day following consummation of such transaction) is at least 105%
of the Conversion Price in effect on the date immediately preceding the closing
date of such transaction.
If a Change in Control shall have occurred under clause (d)(2) above,
the Company shall deliver to the Trustee the Officers' Certificate and Opinion
of Counsel as well as the notices called for under the Indenture.
For purposes of this definition of Change in Control, "Current Market
Price" on any date means the average daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more than ten
Trading Days before, and ending not later than, the date in question; and
"Trading Day", with respect to any stock exchange or securities market, means
any Monday, Tuesday, Wednesday, Thursday or Friday on which such stock exchange
or securities market is open for business.
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<PAGE> 10
9. Subordination. This Security is subordinated to all Senior
Indebtedness of the Company. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holders of Securities. Any Securityholder by accepting this Security agrees
to the subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of any instrument relating to the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
This Security shall rank pari passu with the Company's 7% Convertible
Subordinated Debentures due 2004 and 6.75% Convertible Subordinated Debentures
due 2006 (collectively, the "Other Debentures").
10. Denominations, Transfer, Exchange. This Security is one of a duly
authorized issue of Securities of the Company designated as its 5.25%
Convertible Subordinated Debentures due 2002 limited in aggregate principal
amount to $125,000,000. The Securities are in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. A
Holder may register the transfer of or exchange Securities in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption or
register the transfer of or exchange any Securities for a period of 15 days
before a selection of Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
12. Unclaimed Money. If money for the payment of principal or interest
on any Securities remains unclaimed for three years, the Trustee and the Paying
Agent will pay the money back to the Company at its request. After that, Holders
may look only to the Company for payment.
13. Discharge Prior to Redemption or Maturity. The Indenture will be
discharged and canceled except for certain sections thereof upon payment of all
the Securities, or upon the irrevocable deposit with the Trustee of funds or
U.S. Government Obligations maturing on or before such payment date or
Redemption Date, sufficient to pay principal, premium, if any, and interest on
such payment or redemption.
14. Amendment and Waiver. Subject to certain exceptions, without notice
to the Holders of the Securities, the Indenture or the Securities may be amended
with the consent of the Holders of at least a majority in principal amount of
the Securities then outstanding and any existing default or compliance with any
provision may be waived with the consent of the Holders of a majority in
principal amount of the Securities then outstanding. Without the consent of or
notice to any Securityholder, the Company may amend the Indenture or the
Securities to, among
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<PAGE> 11
other things, provide for uncertificated Securities, to establish another series
of securities as permitted by the Indenture, to cure any ambiguity, defect or
inconsistency or make any other change that does not adversely affect the rights
of any Securityholder.
15. Successors. When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
16. Defaults and Remedies. If an Event of Default, as defined in the
Indenture, occurs and is continuing, the Trustee or the Holders of a majority in
principal amount of Securities may declare all the Securities to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Securities may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it,
subject to the provisions of the TIA, before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power with respect to the Securities. The Company is required to
file periodic reports with the Trustee as to the absence of any Default or Event
of Default.
17. Trustee Dealings with the Company. United States Trust Company of
New York, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
18. No Recourse Against Others. No stockholder, director, officer or
incorporator, as such, past, present or future, of the Company or any successor
corporation or trust shall have any liability for any obligation of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. This waiver and
release are part of the consideration for the issuance of the Securities.
19. Authentication. This Security shall not be valid until the Trustee
or an authenticating agent appointed by the Trustee signs the certificate of
authentication on the other side of this Security.
20. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to
Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. IT ALSO WILL FURNISH THE TEXT OF THIS
SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: ALTERRA HEALTHCARE
CORPORATION, 10000 INNOVATION DRIVE, MILWAUKEE, WISCONSIN 53226, ATTENTION:
CHIEF FINANCIAL OFFICER.
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<PAGE> 12
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
For value received, I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
----------------------------------------------------------
----------------------------------------------------------
................................................................................
................................................................................
................................................................................
(Print or type assignee's name, address and zip code)
and irrevocably appoint.........................................................
.................................................. agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date:...........................................................................
Your signature:.................................................................
Sign exactly as your name appears on the other
side of this Security)
Signature Guaranteed By:........................................................
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<PAGE> 13
CONVERSION NOTICE
To convert this Security into shares of common stock of the Company, check the
box:
---------------
---------------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
------------------------------------------------------
$
------------------------------------------------------
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
--------------------------------------------------------------
--------------------------------------------------------------
................................................................................
................................................................................
................................................................................
(Print or type other person's name, address and zip code)
- --------------------------------------------------------------------------------
Date:...........................................................................
Your signature:.................................................................
(Sign exactly as your name appears on the other
side of this Security)
Signature Guaranteed By:........................................................
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated First Supplemental Indenture to be duly executed, all as of
the date first written above.
ALTERRA HEALTHCARE CORPORATION
By: /s/ William F. Lasky
----------------------------------------
Name: William F. Lasky
Title: Chief Executive Officer and President
UNITED STATES TRUST COMPANY OF
NEW YORK, AS TRUSTEE
By: /s/ Christine C. Collins
----------------------------------------
Authorized Signatory
<PAGE> 1
EXHIBIT 4.2
AMENDED AND RESTATED
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF JANUARY 2, 1998
TO
INDENTURE
DATED AS OF DECEMBER 19, 1997
BETWEEN
ALTERRA HEALTHCARE CORPORATION
AND
UNITED STATES TRUST COMPANY OF NEW YORK
AS TRUSTEE
---------------------------------------
5.25% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2002
---------------------------------------
<PAGE> 2
AMENDED AND RESTATED
SECOND SUPPLEMENTAL INDENTURE
AMENDED AND RESTATED SECOND SUPPLEMENTAL INDENTURE, dated as of January
2, 1998 between Alterra Healthcare Corporation, a Delaware corporation (the
"Company"), and United States Trust Company of New York, a New York State
banking corporation (the "Trustee"), to that certain Indenture, dated as of
December 19, 1997, between the Company (previously named Alternative Living
Services, Inc.) and the Trustee (the "Indenture").
WHEREAS, the parties hereto have entered into the Indenture which
provides for the issuance by the Company of the individual series of securities
thereunder, upon the Company and Trustee entering into a supplemental indenture
to the Indenture authorizing such series; and
WHEREAS, the Company has issued its second series of securities
thereunder, designated its 5.25% Convertible Subordinated Debentures Due 2002
(the "Debentures"), pursuant to the Second Supplemental Indenture dated as of
January 2, 1998 (the "Second Supplemental Indenture");
WHEREAS, the Company wishes to amend and restate the Second
Supplemental Indenture in its entirety as herein provided; and
WHEREAS, all acts necessary to constitute this Amended and Restated
Second Supplemental Indenture as a valid, binding and legal obligation of the
Company have been done and performed.
NOW, THEREFORE, witnesseth that, in consideration of the premises and
of the covenants contained herein, it is hereby agreed as follows:
ARTICLE ONE
The Terms of the Debentures
In accordance with Sections 2.01 and 2.02 of the Indenture, the Company
will issue a Global Debenture in the aggregate principal amount of $18,750,000.
Each Debenture shall be substantially in the following form:
<PAGE> 3
ALTERRA HEALTHCARE CORPORATION
5.25% Convertible Subordinated Debenture Due 2002
ALTERRA HEALTHCARE CORPORATION, a Delaware corporation,
promises to pay to
SPECIMEN
or registered assigns, the principal sum of 18,750,000 Dollars, on December 15,
2002
Cusip 02145K AB3
Interest Payment Dates: June 15 and December 15
Record Dates: June l and December 1
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: April 7, 2000
ALTERRA HEALTHCARE CORPORATION
By: __________________________________________________
William F. Lasky
Chief Executive Officer, President and Director
By: ___________________________________________________
John D. Peterson
Vice President, Assistant Secretary and Controller
[SEAL]
CERTIFICATE OF AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee, certifies that this is one
of the Securities referred to in the within mentioned Indenture.
By: _______________________________________
Authorized Signatory
[SEAL]
Dated: __________, 2000
-2-
<PAGE> 4
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH NOMINEE OF THE
DEPOSITARY, OR BY THE DEPOSITARY OR NOMINEE OF SUCH SUCCESSOR DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
-3-
<PAGE> 5
ALTERRA HEALTHCARE CORPORATION
5.25% Convertible Subordinated Debenture Due 2002
1. Interest. Alterra Healthcare Corporation, a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on June 15 and December 15 of each year beginning June 15, 1998.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 19, 1997;
provided that, if there is no existing Default in the payment of interest, and
if this Security is authenticated between a record date referred to on the face
hereof and the next succeeding interest payment date, interest shall accrue from
such interest payment date. Interest will be computed on the basis of a 360-day
year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are the registered Holders of the
Securities at the close of business on the June 1 or December 1 next preceding
the interest payment date. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay principal and
interest by its check payable in such money. It may mail an interest check to a
Holder's registered address.
The final installment of principal of and premium, if any, on this
Security shall be payable only upon surrender of this Security at the office or
agency of the Trustee in the Borough of Manhattan, City and State of New York.
Payments of principal of and premium, if any, and interest on this Security
shall be made at the office or agency of the Trustee maintained in the Borough
of Manhattan, City and State of New York or, in the case of any such payments
other than the final payment of principal and premium, if any, at the Company's
option, by check mailed to the Person entitled thereto at such Person's address
last appearing on the Company's register.
3. Registrar and Agents. Initially, United States Trust Company of New
York will act as Registrar, Paying Agent, Conversion Agent and agent for service
of notices and demands. The Company may change any Registrar, co-registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands
without notice. The Company or any of its Subsidiaries may act as Paying Agent
or Conversion Agent. The address of United States Trust Company of New York is
114 West 47th Street, New York, New York 10036-1532.
4. Indenture; Limitations. The Company issued the Securities under an
Indenture dated as of December 19, 1997 (the "Indenture") between the Company
and United States Trust Company of New York (the "Trustee"). Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein.
The terms of the Securities include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15
U.S. Code Sections 77aaa-77bbbb) as in effect on the date of the
IndEnture. The Securities are subject to all such terms, and the Holders of the
Securities are referred to the Indenture and said Act for a statement of them.
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<PAGE> 6
The Securities are general unsecured obligations of the Company limited
to $18,750,000 aggregate principal amount. The Indenture imposes certain
limitations on the ability of the Company to, among other things, make payments
in respect of its Capital Stock, merge or consolidate with any other Person and
sell, lease, transfer or otherwise dispose of its properties or assets.
The Securities shall be deemed to be of the same series as the
$125,000,000 principal amount of 5.25% Convertible Subordinated Debentures Due
2002 issued by the Company on December 19, 1997 pursuant to that certain
Supplemental Indenture dated as of December 19, 1997.
5. Redemption by the Company. Subject to Section 7 herein, the Company
may redeem the Securities, in whole or from time to time in part, at its option
at any time on or after December 31, 2000 (provided, however, the Company may
not exercise its option to redeem any Securities unless the Company has
sufficient authorized shares to give effect to full conversion of the
Securities), at a redemption price equal to 100% of the principal amount
thereof, plus accrued interest to the Redemption Date (the "Redemption Price"),
and, notwithstanding anything in the Indenture to the contrary, including,
without limitation, Section 3.01 thereof, the Securities may only be redeemed by
the Company at the Redemption Price set forth in this Section 5 and not at the
redemption price set forth in Section 3.01 of the Indenture (which Section 3.01,
as it relates to the redemption price for the Securities, is amended by this
Section 5).
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days, but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 principal amount may be redeemed in part, but only in whole
multiples thereof. On and after the Redemption Date interest ceases to accrue on
Securities or portions of them called for redemption.
7. Conversion. A Holder of a Security may convert such Security into
shares of common stock of the Company commencing 180 days after December 19,
1997 and thereafter at any time prior to maturity, subject to the following
provisions of this Section 7. If the Security is called for redemption, the
Holder may convert it at any time before the close of business on the date fixed
for such redemption. The initial conversion price is $28.75 per share, subject
to adjustment in certain events. In the event the Holder of this Security seeks
to convert all or any portion of this Security into Common Stock at a time when
the Company does not have sufficient authorized shares of Common Stock to
satisfy such conversion, such conversion shall not be permitted, in which event
the Holder will have the right to require the Company to repurchase this
Security for an amount payable in cash equal to the principal amount of this
Security plus accrued interest. The Company has agreed to seek stockholder
approval at its 1998 Annual Meeting of Stockholders of an amendment to its
Restated Certificate of Incorporation ("Certificate") increasing the number of
authorized shares of Common Stock to an amount at least sufficient to permit the
conversion of all the Securities. Until such date as the Company's Certificate
has been so amended, the Company will not (i) exercise its right to voluntarily
redeem the Debentures pursuant to Section 5 hereof or (ii) issue additional
shares of Common
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<PAGE> 7
Stock or securities convertible into or exchangeable for Common Stock except for
(A) employee stock options to acquire Common Stock granted under the Company's
existing stock option plans and (B) shares of Common Stock issuable upon
conversion of any Security or Other Debentures or upon the exercise of stock
options.
To convert a Security, a Holder must (1) complete and sign the
conversion notice on the back of the Security; (2) surrender the Security to the
Conversion Agent; (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent; and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made on conversion
for interest accrued hereon or for dividends on shares of common stock issued on
conversion; provided, however, that if a Security is surrendered for conversion
after the record date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest falling due to
such interest payment date will be paid to the Person in whose name the Security
is registered at the close of business on such record date and any Security
surrendered for conversion during the period from the close of business on any
regular record payment date to the opening of business on the corresponding
interest payment date must be accompanied by payment of an amount equal to the
interest payable on such interest payment date. A Holder may convert a portion
of a Security if the portion is $1,000 principal amount or an integral multiple
thereof.
To determine the number of shares issuable upon conversion of a
Security, divide the principal amount to be converted by the conversion price in
effect on the conversion date. The Company will deliver a check for any
fractional share.
If the Company is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the right to convert a Security
into shares of common stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another Person.
8. Certain Rights to Require Repurchases of Securities by the Company.
(a) In the event of any Change in Control (as defined below) occurring after the
date of issuance of the Securities and on or prior to maturity thereof, each
Holder shall have the right, at such Holder's option, to require the Company to
purchase, and upon the exercise of such right, the Company shall, subject to the
provisions of the Indenture, purchase, all or any part of such Holder's
Securities on the date (the "Repurchase Date") that is 75 days after the date
the Company gives notice of the Change in Control at a price in cash (the
"Repurchase Price") equal to 101% of the principal amount thereof, together with
accrued and unpaid interest to the Repurchase Date. In connection with the
exercise of the repurchase right by a Holder prior to a Redemption Date, a
Holder's right to exercise his repurchase right shall terminate at the close of
business on the Business Day prior to the Redemption Date.
(b) On or before the fifteenth (15th) day after the occurrence
of a Change in Control, the Company or, at the request of the Company, the
Trustee shall give notice of the occurrence of the Change in Control and of the
repurchase right set forth herein arising as a result thereof to the Trustee and
each Holder of the Securities at such Holder's registered address. Such notice
shall state: (1) the event constituting the Change in Control and the date
thereof;
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<PAGE> 8
(2) the Repurchase Date; (3) the date by which the repurchase right must be
exercised; (4) the Repurchase Price; and (5) the procedures a Holder must follow
to exercise a repurchase right. No failure of the Company to give the foregoing
notice shall limit any Holder's right to exercise a repurchase right.
Each Holder desiring to exercise the repurchase right shall deliver to
the Company and to the Trustee on or before the tenth (10th) day prior to the
Repurchase Date (1) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal amount of the
Security or Securities (or portion of a Security) to be repurchased and a
statement that an election to exercise the repurchase right is being made
thereby and (2) the Security or Securities with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company. Such
written notice shall be irrevocable. If the Repurchase Date falls between any
record date and the next succeeding interest payment date, Securities to be
repurchased must be accompanied by payment from the Holder of an amount equal to
the interest thereon which the registered Holder thereof is to receive on such
interest payment date. A Holder that fails to exercise a repurchase right in
accordance with the terms hereof shall waive such repurchase right but the
rights of such Holder to receive principal of and interest on the Securities and
all other rights of such Holder shall not be affected thereby.
In the event that a repurchase right is exercised with respect to less
than the entire principal amount of a surrendered Security, the Company shall
execute and deliver to the Trustee and the Trustee shall authenticate for
issuance in the name of the Holder a new Security or Securities in the aggregate
principal amount of the unrepurchased portion of such surrendered Security.
On or prior to the Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in the Indenture) an amount of
money sufficient to pay the Repurchase Price of the Securities which are to be
repurchased on the Repurchase Date.
(c) If any Security surrendered for repurchase shall not be so
purchased on the Repurchase Date, the principal shall, until purchased, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate per annum borne by such Security.
(d) For purposes hereof, a "Change in Control" will occur
when: (1) all or substantially all of the Company's assets are sold as an
entirety to any person or related group of persons; (2) there shall be
consummated any consolidation or merger of the Company (A) in which the Company
is not the continuing or surviving corporation (other than a consolidation or
merger with a wholly-owned subsidiary of the Company in which all Common Stock
outstanding immediately prior to the effectiveness thereof are changed into or
exchanged for the same consideration) or (B) pursuant to which the Common Stock
is converted into cash, securities or other property, in each case other than a
consolidation or merger of the Company in which the holders of the Common Stock
immediately prior to the consolidation or merger have, directly or indirectly,
at least a majority of the common stock of the continuing or surviving
corporation immediately after such consolidation or merger; or (3) any person,
or any persons acting together which would constitute a "group" for purposes of
Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof, acquires beneficial ownership (as defined
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Page 4 of 9
<PAGE> 9
in Rule 13d-3 under the Exchange Act) of at least 50% of the total voting power
of all classes of capital shares of the Company entitled to vote generally in
the election of directors of the Company.
(e) Notwithstanding clause (d)(3) of the foregoing definition,
a Change in Control will not be deemed to have occurred solely by virtue of the
Company, any Subsidiary, any employee share purchase plan, share option plan, or
other share incentive plan or program, retirement plan or automatic dividend
reinvestment plan; or any substantially similar plan of the Company or any
Subsidiary or any Person holding securities of the Company for or pursuant to
the terms of any such employee benefit plan, filing or becoming obligated to
file a report under or in response to Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report) under the Exchange Act disclosing beneficial
ownership by it of shares or securities of the Company, whether at least 50% of
the total voting power referred to in clause (d)(3) of the foregoing definition
or otherwise. A recapitalization or a leveraged buyout or similar transaction
involving members of management or their affiliates will constitute a Change in
Control if it meets the foregoing definition.
Notwithstanding the foregoing, a Change in Control as described above
will not be deemed to have occurred if: (i) the Current Market Price of the
Common Stock on the date of a Change in Control is at least equal to 105% of the
Conversion Price in effect immediately preceding the time of such Change in
Control; or (ii) all of the consideration (excluding cash payments for
fractional shares) in the transaction giving rise to such Change in Control to
the holders of Common Stock consists of common shares that are, or immediately
upon issuance will be, listed on a national securities exchange or quoted on the
Nasdaq National Market, and as a result of such transaction the Securities will
become convertible solely into such common shares of common stock; or (iii) the
consideration in the transaction giving rise to such Change in Control to the
holders of Common Stock consists of cash, securities that are, or immediately
upon issuance will be, listed on a national securities exchange or quoted on the
Nasdaq National Market, or a combination of cash and such securities, and the
aggregate fair market value of such consideration (which, in the case of such
securities, shall be equal to the average of the daily Closing Prices of such
securities during the ten (10) consecutive Trading Days commencing with the
sixth Trading Day following consummation of such transaction) is at least 105%
of the Conversion Price in effect on the date immediately preceding the closing
date of such transaction.
If a Change in Control shall have occurred under clause (d)(2) above,
the Company shall deliver to the Trustee the Officers' Certificate and Opinion
of Counsel as well as the notices called for under the Indenture.
For purposes of this definition of Change in Control, "Current Market
Price" on any date means the average daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing not more than ten
Trading Days before, and ending not later than, the date in question; and
"Trading Day", with respect to any stock exchange or securities market, means
any Monday, Tuesday, Wednesday, Thursday or Friday on which such stock exchange
or securities market is open for business.
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<PAGE> 10
9. Subordination. This Security is subordinated to all Senior
Indebtedness of the Company. To the extent and in the manner provided in the
Indenture, Senior Indebtedness must be paid before any payment may be made to
any Holders of Securities. Any Securityholder by accepting this Security agrees
to the subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of any instrument relating to the
Senior Indebtedness or extension or renewal of the Senior Indebtedness.
This Security shall rank pari passu with the Company's 7% Convertible
Subordinated Debentures due 2004 and 6.75% Convertible Subordinated Debentures
due 2006 (collectively, the "Other Debentures").
10. Denominations, Transfer, Exchange. This Security is one of a duly
authorized issue of Securities of the Company designated as its 5.25%
Convertible Subordinated Debentures due 2002 limited in aggregate principal
amount to $143,750,000 (including the $125,000,000 principal amount of 5.25%
Convertible Subordinated Debentures due 2002 issued on December 19, 1997). The
Securities are in registered form without coupons in denominations of $1,000
principal amount and integral multiples thereof. A Holder may register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption or register the transfer
of or exchange any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes.
12. Unclaimed Money. If money for the payment of principal or interest
on any Securities remains unclaimed for three years, the Trustee and the Paying
Agent will pay the money back to the Company at its request. After that, Holders
may look only to the Company for payment.
13. Discharge Prior to Redemption or Maturity. The Indenture will be
discharged and canceled except for certain sections thereof upon payment of all
the Securities, or upon the irrevocable deposit with the Trustee of funds or
U.S. Government Obligations maturing on or before such payment date or
Redemption Date, sufficient to pay principal, premium, if any, and interest on
such payment or redemption.
14. Amendment and Waiver. Subject to certain exceptions, without notice
to the Holders of the Securities, the Indenture or the Securities may be amended
with the consent of the Holders of at least a majority in principal amount of
the Securities then outstanding and any existing default or compliance with any
provision may be waived with the consent of the Holders of a majority in
principal amount of the Securities then outstanding. Without the consent of or
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<PAGE> 11
notice to any Securityholder, the Company may amend the Indenture or the
Securities to, among other things, provide for uncertificated Securities, to
establish another series of securities as permitted by the Indenture, to cure
any ambiguity, defect or inconsistency or make any other change that does not
adversely affect the rights of any Securityholder.
15. Successors. When a successor assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor will be
released from those obligations.
16. Defaults and Remedies. If an Event of Default, as defined in the
Indenture, occurs and is continuing, the Trustee or the Holders of a majority in
principal amount of Securities may declare all the Securities to be due and
payable immediately in the manner and with the effect provided in the Indenture.
Holders of Securities may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it,
subject to the provisions of the TIA, before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the Securities then outstanding may direct the Trustee in its exercise
of any trust or power with respect to the Securities. The Company is required to
file periodic reports with the Trustee as to the absence of any Default or Event
of Default.
17. Trustee Dealings with the Company. United States Trust Company of
New York, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
18. No Recourse Against Others. No stockholder, director, officer or
incorporator, as such, past, present or future, of the Company or any successor
corporation or trust shall have any liability for any obligation of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a Security
by accepting a Security waives and releases all such liability. This waiver and
release are part of the consideration for the issuance of the Securities.
19. Authentication. This Security shall not be valid until the Trustee
or an authenticating agent appointed by the Trustee signs the certificate of
authentication on the other side of this Security.
20. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to
Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. IT ALSO WILL FURNISH THE TEXT OF THIS
SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: ALTERRA HEALTHCARE
CORPORATION, 10000 INNOVATION DRIVE, MILWAUKEE, WISCONSIN 53226, ATTENTION:
CHIEF FINANCIAL OFFICER.
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<PAGE> 12
ASSIGNMENT FORM
If you the Holder want to assign this Security, fill in the form below and have
your signature guaranteed:
For value received, I or we assign and transfer this Security to
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
-------------------------------------------------------
-------------------------------------------------------
................................................................................
................................................................................
................................................................................
(Print or type assignee's name, address and zip code)
and irrevocably appoint.........................................................
.................................................. agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date:...........................................................................
Your signature:.................................................................
(Sign exactly as your name appears on the other
side of this Security)
Signature Guaranteed By:........................................................
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<PAGE> 13
CONVERSION NOTICE
To convert this Security into shares of common stock of the Company, check the
box:
---------------
---------------
To convert only part of this Security, state the principal amount to be
converted (which must be a minimum of $1,000 or any multiple thereof):
-----------------------------------------------------
$
-----------------------------------------------------
If you want the Security certificate, if any, made out in another person's name,
fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
----------------------------------------------------------------
----------------------------------------------------------------
................................................................................
................................................................................
................................................................................
(Print or type other person's name, address and zip code)
- --------------------------------------------------------------------------------
Date:...........................................................................
Your signature:.................................................................
(Sign exactly as your name appears on the other
side of this Security)
Signature Guaranteed By:........................................................
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Second Supplemental Indenture to be duly executed, all as
of the date first written above.
ALTERRA HEALTHCARE CORPORATION
By: /s/ William F. Lasky
-----------------------------------------
Name: William F. Lasky
Title: Chief Executive Officer and President
UNITED STATES TRUST COMPANY OF
NEW YORK, AS TRUSTEE
By: /s/ Christine C. Collins
-----------------------------------------
Authorized Signatory
<PAGE> 1
EXHIBIT 4.3
AMENDMENT TO RIGHTS AGREEMENT
This Amendment (the "Amendment") is made as of the 26th day of April,
2000, to the Rights Agreement dated as of December 10, 1998 (the "Rights
Agreement') between ALTERRA HEALTHCARE CORPORATION, a Delaware corporation
formerly known as Alternative Living Services, Inc. (the "Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent (the "Rights Agent").
WITNESSETH:
WHEREAS, the Board of Directors of the Company on December 10, 1998,
authorized the issuance of certain rights to purchase Common Stock of the
Company and declared a dividend of such rights; and
WHEREAS, as of December 10, 1998, the Company and the Rights Agent
entered into the Rights Agreement to set forth their mutual agreements with
respect to the rights authorized by the Board of Directors on December 10, 1998;
and
WHEREAS, the Board of Directors of the Company on April 25, 2000
authorized an amendment to the terms of the Rights Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. All terms used in this Amendment which are not defined in this
Amendment have the meaning given those terms in the Agreement.
2. Section 1(a) of the Rights Agreement is hereby amended and
restated in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as
such term is hereinafter defined) who or
which, together with all Affiliates and
Associates (as such terms are hereinafter
defined) of such Person, shall be the
Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the
Common Shares of the Company then
outstanding, but shall not include (i) the
Company, (ii) any Subsidiary (as such term
is hereinafter defined) of the Company,
(iii) any employee benefit plan of the
Company or any Subsidiary of the Company,
(iv) any entity holding Common Shares for or
pursuant to the terms of any such plan or
(v) any Exempt Person. Notwithstanding the
foregoing, no Person shall become an
"Acquiring Person" as the result of an
acquisition of Common Shares by the Company
which, by reducing the number of shares
outstanding, increases the proportionate
number of shares beneficially owned by such
Person to 15% or more of the Common Shares
of the Company then outstanding; provided,
however, that if a Person shall become the
Beneficial Owner of 15% or more of
<PAGE> 2
the Common Shares of the Company then
outstanding by reason of share purchases by
the Company and shall, after such share
purchases by the Company, become the
Beneficial Owner of any additional Common
Shares of the Company, then such Person
shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board
of Directors of the Company determines in
good faith that a Person who would otherwise
be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this
paragraph (a), has become such
inadvertently, and such Person divests as
promptly as practicable a sufficient number
of Common Shares so that such Person would
no longer be an "Acquiring Person", as
defined pursuant to the foregoing provisions
of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
3. Section 1 of the Rights Agreement is hereby amended by adding
a new Section 1(g)-1 to read in its entirety as follows:
"(g)-1 "Exempt Person" shall mean (i) each Purchaser
(as defined in that certain Purchase Agreement (the
"Purchase Agreement") dated as of April 26, 2000 (the
"Purchase Date") by and among the Company and each
such Purchaser referenced therein, including any
permitted assignee of any Purchaser (each a "First
Tier Owner" and, collectively, the "First Tier
Owners"); (ii) the Affiliates and Associates of each
such First Tier Owner; and (iii) any Person not
covered by (ii), above, who or which is the
Beneficial Owner of Common Shares beneficially owned
by a First Tier Owner solely by reason of the
relationship of such Person to such First Tier Owner
or to any Affiliate or Associate of such First Tier
Owner (each Person described in this clause (iii), a
"Second Tier Owner"); provided, however, any such (x)
First Tier Owner, (y) Affiliate and Associate of each
such First Tier Owner, and (z) Second Tier Owner
(each such Person described in the foregoing clauses
(x), (y) and (z), a "Subject Owner") shall cease to
be an Exempt Person at the time that such Subject
Owner is the Beneficial Owner of a percentage of the
outstanding Common Shares of the Company that is more
than the sum of (A) the lowest percentage of the
outstanding Common Shares of the Company beneficially
owned by such Subject Owner at the close of business
on the Purchase Date (including for purposes thereof
the Common Shares that may be beneficially owned by
such Subject Owner, upon or after such date,
resulting from (1) the purchase or the exercise of
any exchange, conversion, put or similar right or
feature (including, without limitation, the right to
receive securities in the form of dividends or
interest), of (a) the securities to be purchased by
any First Tier Owner or for which any such First Tier
Owner has an option to purchase pursuant to the
Purchase Agreement (the "Purchased Securities") or
(b) the securities so issued or issuable pursuant to
such rights or features (the "Derivative Securities")
or the payment of any
<PAGE> 3
interest or dividends in respect of the Purchased
Securities or Derivative Securities and (2) all First
Tier Owners being deemed a "group" within the meaning
of Rule 13d-5 under the Exchange Act solely as a
result of their acquisition of Purchased Securities
pursuant to the Purchase Agreement) or at any time
thereafter, (B) any increase in such percentage
referred to in the foregoing clause (A) caused solely
by the acquisition of Common Shares by the Company,
and (C) 1%.
4. This Amendment shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such
state applicable to contracts to be made and performed
entirely within such state.
5. The Amendment may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together
constitute but one and the same instrument.
6. If any term, provision, covenant or restriction of this
Amendment is held by a court of competent jurisdiction or
other authority to be invalid, illegal, or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
of this First Amendment shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
7. Except as specifically set forth in this Amendment, the Rights
Agreement shall remain in full force and effect.
[SIGNATURES ON NEXT PAGE]
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ALTERRA HEALTHCARE CORPORATION
By: /s/ William F. Lasky
----------------------------------------
Name: William F. Lasky
------------------------------
Title: President & CEO
-----------------------------
Attest:
/s/ Mark W. Ohlendorf
----------------------------
----------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Herbert J. Lemmer
----------------------------------------
Name: Herbert J. Lemmer
------------------------------
Title: Vice President
-----------------------------
Attest:
/s/ Susan Silber
----------------------------
----------------------------
<PAGE> 1
Exhibit 10.1
(Alterra / Meditrust)
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of January 28, 2000
by and between AHC PURCHASER, INC., a Delaware corporation (together with its
successors and assigns, "Borrower"), and GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation (together with its successors and assigns, "Lender").
RECITALS
A. Borrower has requested that Lender make a total of sixteen (16)
loans to Borrower, as provided herein, in the aggregate principal amount of
Sixty Million Dollars ($60,000,000) (collectively, the "Loan").
B. This Agreement is intended to state and set forth the terms,
provisions and conditions upon which Lender will make the Loan to Borrower.
NOW, THEREFORE, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS.
1.1 As used in this Agreement, the capitalized terms set forth in
Schedule I attached hereto shall have the meanings set forth therein unless the
context hereof shall otherwise indicate.
1.2 Singular terms shall include the plural forms and vice versa, as
applicable, of the terms defined.
1.3 Terms contained in this Agreement shall, unless otherwise defined
herein or unless the context otherwise indicates, have the meanings, if any,
assigned to them by the Uniform Commercial Code in effect in the State of
Kansas.
1.4 All accounting terms used in this Agreement shall be construed in
accordance with GAAP, except as otherwise specified.
1.5 All references to other documents or instruments shall be deemed
to refer to such documents or instruments as they may hereafter be extended,
renewed, modified, or amended and all replacements and substitutions therefor.
1.6 All references herein to "Medicaid" and "Medicare" shall be
deemed to include any successor program thereto.
<PAGE> 2
ARTICLE II
TERMS OF THE LOAN
2.1 THE LOAN. Borrower has agreed to borrow the Loan from Lender, and
Lender has agreed to make the Loan to Borrower, subject to Borrower's compliance
with and observance of the terms, conditions, covenants, and provisions of this
Agreement and the other Loan Documents, and Borrower has made the covenants,
representations, and warranties herein and therein as a material inducement to
Lender to make the Loan.
2.2 SECURITY FOR THE LOAN. The Loan will be evidenced, secured and
guaranteed by the Loan Documents.
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, and to make the Loan to
Borrower, Borrower represents and warrants to Lender as follows:
3.1 EXISTENCE, POWER AND QUALIFICATION. Borrower is a duly organized
and validly existing Delaware corporation, has the power to own its properties
and to carry on its business as is now being conducted, and is duly qualified to
do business and is in good standing in every jurisdiction in which the character
of the properties owned by it or in which the transaction of its business makes
its qualification necessary.
3.2 POWER AND AUTHORITY. Borrower has full power and authority to
borrow the indebtedness evidenced by the Notes and to incur the Loan Obligations
provided for herein, all of which have been authorized by all proper and
necessary action. All consents, approvals, authorizations, orders or filings of
or with any court or governmental agency or body, if any, required for the
execution, delivery and performance of the Loan Documents by Borrower have been
obtained or made.
3.3 DUE EXECUTION AND ENFORCEMENT. Each of the Loan Documents to
which Borrower and Guarantor are a party has been duly executed and delivered by
such party, constitutes a valid and legally binding obligation of Borrower and
Guarantor, and will be, enforceable in accordance with its terms (except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium, or other laws relating to the rights of creditors
generally, by general principles of equity and by regulatory restrictions
applicable to operators of assisted living/adult home facilities) and does not
violate, conflict with, or constitute any default under any law, government
regulation, decree, judgment, Borrower's or Guarantor's articles of
organization/incorporation, partnership agreement or operating agreement, as
applicable, or any other agreement or instrument binding upon Borrower and
Guarantor.
3.4 SINGLE PURPOSE ENTITY. Borrower is a Single Purpose Entity.
2
<PAGE> 3
3.5 PENDING MATTERS.
(a) Operations; Financial Condition. No action or investigation
is pending or, to the best of Borrower's knowledge, threatened before or by any
court or federal, state or local government administrative agency which might
result in any material adverse change in the financial condition, operations or
prospects of Borrower. Neither Borrower nor Guarantor are in violation of any
agreement, the violation of which might reasonably be expected to have a
material adverse effect on its business or assets, and neither Borrower nor
Guarantor are in violation of any order, judgment, or decree of any court, or
any statute or governmental regulation to which it is subject, the violation of
which could reasonably be expected to have a material adverse effect on the
operation of any Facility or on any of the Mortgaged Property.
(b) Condemnation or Casualty. There are no proceedings pending,
or, to the best of Borrower's knowledge, threatened, to acquire through the
exercise of any power of condemnation, eminent domain or similar proceeding any
part of any Land, the related Improvements or any interest therein, or to enjoin
or similarly prevent or restrict the use of the Land or the operation of any
Facility in any manner. None of the Improvements is subject to any unrepaired
casualty or other damage, except as reported in the engineering reports prepared
for each Facility by EMG and dated as follows:
<TABLE>
<CAPTION>
Facility Date of Report
-------- --------------
<S> <C>
Ann Arbor 12/23/99
Bowling Green 12/23/99
Mansfield 12/27/99
Northampton Manor 12/23/99
Montgomery I 12/23/99
Montgomery II 12/23/99
New Braunfels 12/27/99
Deland 12/21/99
Leesburg 12/20/99
West Melbourne I 12/22/99
West Melbourne II 12/22/99
Port Orange Date blank; Date of ground survey 12/13/99
Tequesta I 12/22/99
Tequesta II 12/22/99
Abilene 12/22/99
Hays 12/22/99
Wichita 12/22/99
Stuart 12/20/99
Sussex 12/23/99
</TABLE>
3.6 FINANCIAL STATEMENTS ACCURATE. All financial statements
heretofore or hereafter provided by Borrower and Guarantor are and will be true
and complete in all material respects as
3
<PAGE> 4
of their respective dates and fairly present the respective financial condition
of Borrower and Guarantor and each Facility, and there are no material
liabilities, direct or indirect, fixed or contingent, as of the respective dates
of such statements which are not reflected therein or in the notes thereto or in
a written certificate delivered with such statements. The financial statements
of Borrower have been prepared on an accounting basis consistent with
Guarantor's audited financial statements. There has been no material adverse
change in the financial condition, operations, or prospects of Borrower and
Guarantor since the dates of such statements except as fully disclosed in
writing with the delivery of such statements. All financial statements of the
operations of each Facility heretofore or hereafter provided to Lender are and
will be true and complete in all material respects as of their respective dates.
3.7 COMPLIANCE WITH FACILITY LAWS.
(a) Each of the Facilities are duly licensed and operated as
follows:
(i) with respect to the Ann Arbor Facility, as a
36-unit "home for the aged" under the applicable laws of the State of Michigan;
(ii) with respect to the Bowling Green Facility, as a
37-unit "residential care facility" under the applicable laws of the State of
Ohio;
(iii) with respect to the Mansfield Facility, as a
42-unit "residential care
facility" under the applicable laws of the State of Ohio;
(iv) with respect to the Northampton Manor Facility, as
a 113-unit "personal care facility" under the applicable laws of the
Commonwealth of Pennsylvania;
(v) with respect to the Montgomery I Facility, as a
48-unit "personal care facility" under the applicable laws of the Commonwealth
of Pennsylvania;
(vi) with respect to the Montgomery II Facility, as a
72-unit "personal care facility" under the applicable laws of the Commonwealth
of Pennsylvania;
(vii) with respect to the New Braunfels Facility, as
a 37-unit "personal care facility" under the applicable laws of the State of
Texas;
(viii) with respect to the Deland Facility, as a
42-unit "assisted living facility" under the applicable laws of the State of
Florida;
(ix) with respect to the Leesburg Facility, as a 42-
unit "assisted living facility" under the applicable laws of the State of
Florida;
(x) with respect to the West Melbourne I Facility, as a
38-unit "assisted living facility" under the applicable laws of the State of
Florida;
4
<PAGE> 5
(xi) with respect to the West Melbourne II Facility, as
a 42-unit "assisted living facility" under the applicable laws of the State of
Florida;
(xii) with respect to the Port Orange Facility, as a 42-
unit "assisted living facility" under the applicable laws of the State of
Florida;
(xiii) with respect to the Tequesta I Facility, as a
42-unit "assisted living facility" under the applicable laws of the State of
Florida;
(xiv) with respect to the Tequesta II Facility, as a
42-unit "assisted living facility" under the applicable laws of the State of
Florida;
(xv) with respect to the Abilene Facility, as a 26-unit
"adult care home" under the applicable laws of the State of Kansas;
(xvi) with respect to the Hays Facility, as a 33-unit
"adult care home" under the applicable laws of the State of Kansas;
(xvii) with respect to the Wichita Facility, as a 26-unit
"adult care home" under the applicable laws of the State of Kansas;
(xviii) with respect to the Stuart Facility, as a 42-unit
"assisted living facility" under the applicable laws of the State of Florida;
and
(xix) with respect to the Sussex Facility, as a 20-unit
"community based residential facility" under the applicable laws of the State of
Wisconsin.
(b) Borrower has acquired, and Guarantor has leased the Ann
Arbor Facility, the Bowling Green Facility, the Mansfield Facility, the
Northampton Manor Facility, the Montgomery Facilities, the Tequesta II Facility,
the Abilene Facility, the Hays Facility and the Wichita Facility, and Guarantor
is the lawful owner of all operating, healthcare and assisted living Permits for
the Ann Arbor Facility, the Bowling Green Facility, the Mansfield Facility, the
Northampton Facility, the Montgomery Facilities and the Tequesta II Facility,
and Guarantor and Borrower are the lawful owners of all operating, healthcare
and assisted living Permits for the Abilene Facility, the Hays Facility, and the
Wichita Facility. Borrower has acquired, and Assisted Living Properties, Inc., a
Kansas corporation, has leased the New Braunfels Facility, the Deland Facility,
the Leesburg Facility, the West Melbourne Facilities, the Port Orange Facility,
the Tequesta I Facility and the Stuart Facility, and Assisted Living Properties,
Inc. is the lawful owner of all operating, healthcare and assisted living
Permits for such Facilities. Borrower has acquired, and ALS Leasing, Inc., a
Delaware corporation, has leased the Sussex Facility, and ALS Leasing, Inc. is
the lawful owner of all operating, healthcare and assisted living Permits for
the Sussex Facility.
(c) All Permits for the Facilities (i) are in full force and
effect, (ii) constitute all of the material permits, licenses and certificates
required for the use, operation and occupancy
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thereof, (iii) have not been pledged as collateral for any other loan or
Indebtedness, (iv) are held free from restrictions or any encumbrance which
would materially adversely affect the use or operation of the applicable
Facility, and (v) are not provisional, probationary or restricted in any way.
Borrower and Lessee, as well as the operation of each Facility, are in
compliance in all material respects with the provisions of all laws, rules,
regulations and published interpretations to which each Facility is subject. No
waivers of any laws, rules, regulations, or requirements (including, but not
limited to, minimum foot requirements per bed or unit) are required for any
Facility to operate at its current licensed bed capacity. All Reimbursement
Contracts (if any) are in full force and effect with respect to the Facility,
and Borrower and Lessee are in good standing with all the respective agencies
governing the above-described licenses, program certifications, and
Reimbursement Contract (if any). Borrower and Lessee are current in the payment
of all so-called provider specific taxes or other assessments with respect to
such Reimbursement Contracts (if any). Borrower will maintain, and will cause
Lessee to maintain (without allowing to lapse), the Certificate of Need, if
applicable, and any required Permits. In the event that Lender acquires the
Facility through foreclosure or otherwise, neither Lender nor a subsequent
manager, a subsequent lessee or any subsequent purchaser (through foreclosure or
otherwise) must obtain a Certificate of Need prior to applying for and receiving
a license to operate the Facility and certification to receive Medicare and
Medicaid payments (and its successor programs) for patients having coverage
thereunder (if any), provided that no service or bed unit complement is changed.
3.8 MAINTAIN UNIT CAPACITY. Neither Borrower nor Lessee nor the
holder of any Permit for any Facility has granted to any third party the right
to reduce the number of licensed bed/units in the Facility or to apply for
approval to transfer the right to any and all of the licensed Facility
units/beds to any other location.
3.9 MEDICARE AND MEDICAID. The Facilities have no patient
reimbursement agreements, Medicare or Medicaid cost reports or surveys or
provider agreements.
3.10 THIRD-PARTY PAYORS. There is no threatened or pending revocation,
suspension, termination, probation, restriction, limitation, or nonrenewal
affecting Borrower, Lessee or any Facility or any participation or provider
agreement with any third-party payor, including Medicare, Medicaid, Blue Cross
and/or Blue Shield, if applicable, and any other private commercial insurance
managed care and employee assistance program (such programs, the "Third-Party
Payors' Programs") to which Borrower or Lessee presently is subject. All
Medicare (if any), Medicaid (if any), and private insurance cost reports and
financial reports submitted by Borrower or Lessee are and will be materially
accurate and complete and have not been and will not be misleading in any
material respects. No cost reports for the Facility remain "open" or unsettled,
except as otherwise disclosed in writing.
3.11 GOVERNMENTAL PROCEEDINGS AND NOTICES. Neither Borrower nor Lessee
nor the Facility is currently the subject of any proceeding by any governmental
agency that would, and no notice of any violation has been received from a
governmental agency that would, directly or indirectly, or with the passage of
time, have a material adverse impact on Borrower's ability to accept and/or
retain residents or result in the imposition of a fine in excess of $5,000 (with
respect
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to a Facility or Facilities or with respect to Borrower) or a governmental
sanction, or modify, limit or annul or result in the transfer, suspension,
revocation or imposition of probationary use of any of the Permits or would
result in the appointment of a receiver or manager.
3.12 PHYSICAL PLANT STANDARDS. Each Facility and the use thereof
complies in all material respects with applicable local, state and federal
building codes, fire codes, zoning codes, use restrictions, health care, health
care facility and other similar regulatory requirements (the "Physical Plant
Standards"), and no material waivers of Physical Plant Standards exist at any
Facility.
3.13 PLEDGES OF RECEIVABLES. Neither Borrower nor Lessee has pledged
its Accounts as collateral security for any loan or indebtedness other than, if
applicable, the Loan.
3.14 PAYMENT OF TAXES AND PROPERTY IMPOSITIONS. Borrower and Guarantor
have filed or have obtained appropriate extensions for filing of all federal,
state, and local tax returns which they are required to file and have paid, or
made adequate provision for the payment of, all taxes which are shown pursuant
to such returns or are required to be shown thereon or to assessments received
by Borrower or Guarantor, including, without limitation, provider taxes. All
such returns are complete and accurate in all respects. Borrower has paid or
made adequate provision for the payment of all insurance premiums, applicable
water and sewer charges, government assessments or charges, ground rents (if
applicable) and Taxes (as defined in the Mortgage) with respect to the Mortgaged
Property.
3.15 TITLE TO MORTGAGED PROPERTY. Borrower has good and marketable
title to all of the Mortgaged Property, subject to no lien, mortgage, pledge,
encroachment, zoning violation, or encumbrance, except Permitted Encumbrances,
which Permitted Encumbrances do not and will not materially interfere with the
security intended to be provided by the Mortgage or the current use or operation
of the Land and or the current ability of any Facility to generate net operating
income sufficient to service the Loan allocated to such Facility as shown on
Schedule III. All Improvements situated on the Land are situated wholly within
the boundaries of the Land, and no neighboring properties encroach onto the
Land.
3.16 PRIORITY OF MORTGAGE. Each Mortgage constitutes a valid first
lien against the real and personal property described therein, prior to all
other liens or encumbrances, including those which may hereafter accrue,
excepting only Permitted Encumbrances, which Permitted Encumbrances do not and
will not materially and adversely affect (a) the ability of Borrower to pay in
full the principal of and interest on the respective Notes when due, (b) the
security (and its value) intended to be provided by the Mortgage or (c) the
current use of the Land and the Improvements.
3.17 LOCATION OF CHIEF EXECUTIVE OFFICE. The location of Borrower's
principal place of business and chief executive office is set forth on Exhibit B
hereto.
3.18 DISCLOSURE. All information furnished or to be furnished by
Borrower and Guarantor to Lender in connection with the Loan or any of the Loan
Documents, is, or will be at the time the
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same is furnished, accurate and correct in all material respects and complete
insofar as completeness may be necessary to provide Lender with true and
accurate knowledge of the subject matter.
3.19 TRADE NAMES. Except as shown on Exhibit G attached hereto and
incorporated herein, neither Borrower nor any Facility, which will operate under
the trade names shown on Exhibit G, has ever changed its name, been known by any
other name or been a party to a merger, reorganization or similar transaction
since the date acquired by Borrower or an Affiliate thereof.
3.20 ERISA. As of the date hereof and throughout the term of this
Agreement,
(a) Borrower is not and will not be an "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), subject to Title I of ERISA, and none of the
assets of Borrower constitutes or will constitute "plan assets" (within the
meaning of Department of Labor Regulation Section 2510.3-101) of one or more
such plans, and
(b) Borrower is not and will not be a "governmental plan"
within the meaning of Section 3(32) of ERISA, and transactions by or with
Borrower are not and will not be subject to state statutes applicable to
Borrower regulating investments of and fiduciary obligations with respect to
governmental plans.
The execution and delivery of the Loan Documents, and the
borrowing of indebtedness hereunder, does not constitute a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code"). Borrower shall not engage in a non-exempt
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code, as such sections relate to Borrower, or in any transaction that would
cause any obligation or action taken or to be taken hereunder or the exercise by
Lender of any of its rights under the Loan Documents) to be a non-exempt
prohibited transaction under ERISA.
3.21 OWNERSHIP. The ownership interests in Borrower are correctly and
accurately set forth on Exhibit C hereto.
3.22 COMPLIANCE WITH APPLICABLE LAWS. Each Facility and its operations
and the Land and Improvements comply in all material respects with all covenants
and restrictions of record and applicable laws, ordinances, rules and
regulations, including, without limitation, the Americans with Disabilities Act
and the regulations thereunder, and all laws, ordinances, rules and regulations
relating to zoning, setback requirements and building codes. There are no
waivers of any building codes currently in existence for any Facility except for
waivers with respect to parking requirements, in which case each Facility
complies with the applicable parking requirement resulting from such waiver.
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3.23 SOLVENCY. Borrower is solvent for purposes of 11 U.S.C.
Section548, and the borrowing of the Loan and acquisition of the Mortgaged
Property will not render Borrower insolvent for purposes of 11 U.S.C.
Section548.
3.24 OTHER INDEBTEDNESS. Borrower has no outstanding Indebtedness,
secured or unsecured, direct or contingent (including any guaranties), other
than (a) the Loan, (b) indebtedness which represents trade payables or accrued
expenses incurred in the ordinary course of business of owning and operating the
Facility and the Mortgaged Property, and (c) indebtedness secured by purchase
money liens or represented by equipment or vehicle leases, provided that (i) the
aggregate amount of such indebtedness incurred with respect to any one Facility,
together with the rental income from all leases (other than the Lease Agreements
and resident agreements) of space in such Facility entered into by Borrower as
landlord or by Lessee as sublessor, does not exceed Two Hundred Fifty Thousand
Dollars ($250,000) with respect to the Montgomery Facilities or the Northampton
Manor Facility or One Hundred Thousand Dollars ($100,000) with respect to any
other Facility, and (ii) the indebtedness secured by such liens is used for the
purchase of equipment which is unique to, or necessary for the operation of, the
Mortgaged Property for its Intended Use; no other debt will be secured (senior,
subordinate or pari passu) by the Mortgaged Property.
3.25 OTHER OBLIGATIONS. Borrower has no material financial obligation
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Borrower is a party or by which Borrower or the Mortgaged
Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of the Mortgaged Property, (b) obligations under the
Mortgage and the other Loan Documents., and (c) obligations permitted under
Section 3.24(c) hereof.
3.26 FRAUDULENT CONVEYANCES. Borrower (a) has not entered into this
Agreement or any of the other Loan Documents with the actual intent to hinder,
delay, or defraud any creditor and (b) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated by the Loan Documents, the fair saleable value of
Borrower's assets exceeds and will, immediately following the execution and
delivery of the Loan Documents and acquisition of the Mortgaged Property, be
greater than Borrower's probable liabilities, including the maximum amount of
its contingent liabilities or its debts as such debts become absolute and
mature. Borrower's assets do not and, immediately following the execution and
delivery of the Loan Documents and acquisition of the Mortgaged Property will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur debts and liabilities (including, without
limitation, contingent liabilities and other commitments) beyond its ability to
pay such debts as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of Borrower).
3.27 WARRANTY OF TITLE. Borrower represents and warrants that Borrower
is the fee simple owner of the Facilities. The Land encumbered by each Mortgage
exists as a separate single tax parcel, except that the West Melbourne
Facilities are located on two separate but contiguous tax parcels.
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3.28 REPRESENTATIONS AND WARRANTIES. Borrower agrees that its
representations and warranties and covenants contained herein are true and
correct as of the date hereof and shall survive closing of the Loan and the
assignment and delivery of the Loan to Investor. Borrower agrees that Investor
shall be a third party beneficiary of the representations, warranties and
covenants set forth herein.
3.29 LEASE AGREEMENT. Each Lease Agreement is in full force and
effect, and there are no defaults (either monetary or nonmonetary) by Borrower
or Lessee thereunder.
3.30 LICENSES. Borrower has obtained (in its own name and/or in
Lessee's name, and in any event, in the name of the person(s) as required under
all applicable legal requirements) all Permits necessary to use and operate the
Mortgaged Property and the Facility for its Intended Use, and all such Permits
are in full force and effect. The Intended Use being made of the Mortgaged
Property and the Facility is in conformity in all material respects with the
certificate of occupancy and/or Permits for such property and any other
restrictions, covenants or conditions affecting such property. The Mortgaged
Property and the Facility contain all equipment necessary to use and operate
such property for its Intended Use.
3.31 APPLICABLE LAWS. Borrower and each Mortgaged Property and the
Facility (and the operation thereof) are in compliance in all material respects
with the applicable provisions of all laws, statutes, regulations, ordinances,
orders, standards, restrictions and rules of any federal, state or local
government or quasi-governmental body, agency, board or authority having
jurisdiction over the operation of the Mortgaged Property and the Facility,
including, without limitation: (a) health care and fire safety codes, (b) laws
regulating the handling and disposal of medical or biological waste, (c) the
applicable provisions of all laws, rules, regulations and published
interpretations thereof to which Borrower or the Mortgaged Property and the
Facility are subject by virtue of its Intended Use, (d) all criteria established
to classify the Mortgaged Property and the Facility as "housing for older
persons" under the Fair Housing Amendments Act of 1988, and (e) each of the
following:
(i) Title VIII of the Civil Rights Act of 1968, as
amended, 42 U.S.C. Sections 3601 et seq. (1996),
(ii) Title VII of the Consumer Credit Protection Act,
as amended, 15 U.S.C. Sections 1691 - 1691f(1996), and
(iii) Section 527 of the National Housing Act, as
amended, 12 U.S.C. Section 1735f-5 (1996).
3.32 MEDICARE/MEDICAID. Borrower does not currently participate in any
Medicaid or Medicare programs or any other third party payor's programs, or
other similar provider payment programs in connection with the operations of any
Mortgaged Property and any Facility.
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3.33 PENDING PROCEEDINGS. Neither Borrower nor Lessee nor the holder
of any Permit nor any Mortgaged Property nor any Facility are subject to any
proceeding, suit or investigation by any federal, state or local government or
quasi-governmental body or agency or any other administrative or investigative
body, and neither Borrower nor Lessee nor the holder of any Permit has received
any notice from any such agency which, (a) may result in the imposition of a
material fine or alternative, interim or final sanction against Borrower, Lessee
or the holder of any Permit, (b) would have a material adverse effect on
Borrower or Lessee or the operation of the Mortgaged Property and the Facility,
(c) would result in the appointment of a receiver or manager, (d) would affect
Borrower's or Lessee's ability to accept and/or retain residents for the
Mortgaged Property, or (e) would result in the revocation, transfer, surrender,
suspension or other impairment of any Permit for the Mortgaged Property.
3.34 EXECUTION OF DOCUMENTS. Neither the execution and delivery of the
Notes, any Mortgage or any other Loan Documents, Borrower's performance
thereunder, the recordation of any Mortgage, nor the exercise of any remedies by
Lender against Borrower, Guarantor or the Mortgaged Property, in accordance with
applicable health care laws, will adversely affect the Permit.
3.35 FEDERAL PROGRAMS; ANTITRUST LAW. Neither Borrower nor Lessee is a
participant in any federal program whereby any federal, state or local,
government or quasi-governmental body or agency, may have the right to recover
funds by reason of the advance of federal funds. Neither Borrower nor Lessee has
received notice of, and neither is aware of, any violation of applicable
antitrust laws.
3.36 CERTIFICATE OF NEED. In the event any existing management
agreement is terminated or Lender acquires any Mortgaged Property through
foreclosure or otherwise, neither Borrower, Lender, any subsequent manager, nor
any subsequent purchaser (through foreclosure or otherwise) must obtain a
certificate of need from any applicable state health care regulatory authority
or agency (other than giving such notice required under the applicable state law
or regulation) prior to applying for any applicable Permit, provided that no
service is changed and the unit complement is not changed.
3.37 TENANT ROSTER. Each tenant roster for each Mortgaged Property,
dated December 31, 1999, and submitted by Borrower to Lender, contains no
errors, and is true, complete and correct as of the date thereof and accurately
states both the gross potential rents (if requested in writing by Lender) and
the actual leased unit rents for the Mortgaged Property within a tolerance range
of seven and one-half percent (7.5%).
3.38 PROPERTY CONDITION. Each Mortgaged Property is in good and
habitable condition and there are no deficiencies in the repair or maintenance
of the Mortgaged Property that threaten the health or safety of its tenants and
their invited guests. There is no material uncured violation at the Mortgaged
Property of any building or housing code or similar law or ordinance, and the
physical configuration of the Mortgaged Property is not in material violation of
the Americans With Disabilities Act.
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3.39 ZONING. The existing use of each Mortgaged Property is consistent
with the zoning classification of such property or is a legal non-conforming use
that is permitted notwithstanding any inconsistency with such classification.
Except as shown on the surveys delivered by Borrower to Lender and for which
exceptions Lender has obtained affirmative title insurance coverage (in
jurisdictions where such insurance is available), the Mortgaged Property does
not violate any density or building setback requirements of applicable zoning
law. No proceedings are pending or, to the best knowledge of Borrower and
Guarantor, threatened, which would result in a change of zoning of any Mortgaged
Property.
3.40 INVESTMENT QUALITY. Neither Borrower nor any of its Affiliates
knows of any fact or circumstance affecting Borrower, Guarantor, Lessee or the
Mortgaged Property that Borrower has not disclosed to Lender, which fact or
circumstance materially and adversely affects or could materially and adversely
affect Borrower's or Guarantor's ability, respectively, to meet its obligations
under the Loan and the Loan Documents in a timely manner.
3.41 ACCESS. The Land does not share ingress and egress through an
easement or private road or share on site or off site recreational facilities
and amenities that are not located on the Land and under the exclusive control
of Borrower, or where there is such shared ingress and egress or amenities which
are offsite or not under Borrower's exclusive control, there exists an easement
or joint use and maintenance agreement, a copy of which has been delivered to
Lender, under which (a) access to and use and enjoyment of the easement or
private road and/or recreational facilities and amenities is perpetual, and (b)
there are no provisions providing that the failure to pay any maintenance fee
will result in a loss of usage of the easement.
ARTICLE IV
AFFIRMATIVE COVENANTS OF BORROWER
Borrower agrees with and covenants unto Lender that until the Loan
Obligations have been paid in full, Borrower shall:
4.1 PAYMENT OF LOAN/PERFORMANCE OF LOAN OBLIGATIONS. Duly and
punctually pay or cause to be paid the principal and interest of each Note in
accordance with its terms and duly and punctually pay and perform or cause to be
paid or performed all Loan Obligations hereunder and under the other Loan
Documents.
4.2 MAINTENANCE OF EXISTENCE. Maintain its existence as a Delaware
corporation, and, in each jurisdiction in which the character of the property
owned by it or in which the transaction of its business makes qualification
necessary, maintain good standing.
4.3 MAINTENANCE OF SINGLE PURPOSE.
(a) Maintain its existence as a Single Purpose Entity;
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(b) Cause its board of directors to hold appropriate meetings
(or act by unanimous consent) to authorize all appropriate corporate actions
and, in authorizing such actions, to observe all corporate formalities; and
(c) At all times cause there to be at least one duly appointed
member of its board of directors (an "Independent Director") reasonably
satisfactory to Lender who shall not have been at the time of such individual's
initial appointment, and may not have been at any time during the preceding five
years, and shall not be at any time while serving as such director either (i) an
owner of any of its equity interests, or an officer, director, partner or
employee of, it or any of its shareholders, principals, subsidiaries or
affiliates, (ii) a customer of, or supplier to, it or any of its shareholders,
principals, subsidiaries or affiliates, (iii) a person controlling or under
common control with any such shareholder, principal, director, employee,
supplier or customer, or (iv) a member of the immediate family of any such
shareholder, principal, director, employee, supplier or customer. As used
herein, the term "control": means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policy of a person,
whether through ownership of voting securities, by contract or otherwise.
4.4 ACCRUAL AND PAYMENT OF TAXES. During each fiscal year, make
accurate provision for the payment of all current tax liabilities of all kinds
(including, without limitation, federal and state income taxes, franchise taxes,
payroll taxes, provider taxes (to the extent necessary to participate in and
receive maximum funding pursuant to Reimbursement Contracts, if any) and Taxes
(as defined in the Mortgage)), all required withholding of income taxes of
employees, all required old age and unemployment contributions, and all required
payments to employee benefit plans, and pay the same when they become due.
4.5 INSURANCE. Maintain or cause Lessee to maintain the following
insurance coverages with respect to the Mortgaged Property and each Facility:
(a) Insurance against loss or damage by fire, casualty and
other hazards as now are or subsequently may be covered by an "all risk" policy
or a policy covering "special" causes of loss, with such endorsements as Lender
may from time to time reasonably require and which are customarily required by
institutional lenders of similar properties similarly situated, including,
without limitation, building ordinance law, lightning, windstorm, civil
commotion, hail, riot, strike, water damage, sprinkler leakage, collapse,
malicious mischief, explosion, smoke, aircraft, vehicles, vandalism, falling
objects and weight of snow, ice or sleet, and covering the Facility in an amount
equal to 100% of the full insurable replacement value of the Facility (exclusive
of footings and foundations below the lowest basement floor) without deduction
for depreciation. The determination of the replacement cost amount shall be
adjusted annually to comply with the requirements of the insurer issuing the
coverage or, at Lender's election, by reference to such indexes, appraisals or
information as Lender determines in its reasonable discretion, and, unless the
insurance required by this paragraph shall be effected by blanket and/or
umbrella policies in accordance with the requirements of this Agreement, the
policy shall include inflation guard coverage that ensures that the policy
limits will be increased over time to reflect the effect of inflation. Each
policy shall, subject to Lender's approval, contain (i) a replacement cost
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endorsement, without deduction for depreciation, (ii) either an agreed amount
endorsement or a waiver of any co-insurance provisions, and (iii) an ordinance
or law coverage or enforcement endorsement if the Improvements or the use of the
Mortgaged Property constitutes any legal nonconforming structures or uses, and
shall provide for deductibles in such amounts as Lender may permit in its sole
discretion.
(b) Commercial general liability insurance under a policy
containing "Comprehensive General Liability Form" of coverage (or a comparably
worded form of coverage) and the "Broad Form CGL" endorsement (or a policy which
otherwise incorporates the language of such endorsement), providing coverage on
an occurrence (not "claims made") basis, which policy shall include, without
limitation, coverage against claims for personal injury, bodily injury, death
and property damage liability with respect to the Facility and the operations
related thereto, whether on or off the Mortgaged Property, and the following
coverages: Employee as Additional Insured, Product Liability/Completed
Operations; Broad Form Contractual Liability, Independent Contractor, Personal
Injury and Advertising Injury Protection, Medical Payment (with a minimum limit
of $5,000 per person), Broad Form Cross Suits Liability Endorsement, where
applicable, hired and non-owned automobile coverage (including rented and leased
vehicles), and, if any alcoholic beverages shall be sold, manufactured or
distributed in the Facility, liquor liability coverage, all of which shall be in
such amounts as Lender may from time to time reasonably require, but not less
than One Million Dollars ($1,000,000) per occurrence, Two Million Dollars
($2,000,000) in the aggregate and with umbrella coverage not less than Five
Million Dollars ($5,000,000). If such policy shall cover more than one property,
such limits (other than the umbrella coverage) shall apply on a "per location"
basis. If any swimming pool is located at any Facility in the future, such
umbrella coverage shall be increased to Ten Million Dollars ($10,000,000). Such
liability policy shall delete the contractual exclusion under the personal
injury coverage, if possible, and if available, shall include the following
endorsements: Notice of Accident, Knowledge of Occurrence, and Unintentional
Error and Omission.
(c) Professional liability insurance coverage in an amount
equal to not less than One Million Dollars ($1,000,000) per occurrence and One
Million Dollars ($1,000,000) in the aggregate and insuring Borrower for acts
occurring prior to the date of the Loan.
(d) Business interruption insurance (i) covering the same
perils of loss as are required to be covered by the property insurance required
under Section 4.5(a) above, (ii) in an amount equal to the projected annual net
income from the Facility plus carrying costs and extraordinary expenses of the
Mortgaged Property for a period of twelve (12) months, based upon Borrower's
reasonable estimate thereof as approved by Lender, (iii) including either an
agreed amount endorsement or a waiver of any co-insurance provisions, so as to
prevent Borrower, Lender and any other insured thereunder from being a
co-insurer, and (iv) providing that any covered loss thereunder shall be payable
to Lender.
(e) During the period of any new construction on the Premises,
a so-called "Builder's All-Risk Completed Value" or "Course of Construction"
insurance policy in non-reporting form for any improvements under construction,
including, without limitation, for demolition and
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increased cost of construction or renovation, in an amount equal to 100% of the
estimated replacement cost value on the date of completion, including "soft
cost" coverage, and Workers' Compensation Insurance covering all persons engaged
in such construction, in an amount at least equal to the minimum required by
law. In addition, each contractor and subcontractor shall be required to provide
Lender with a certificate of insurance for (i) workers' compensation insurance
covering all persons engaged by such contractor or subcontractor in such
construction in an amount at least equal to the minimum required by law, and
(ii) general liability insurance showing minimum limits of at least $5,000,000,
including coverage for products and completed operations. Each contractor and
subcontractor also shall cover Borrower and Lender as an additional insured
under such liability policy and shall indemnify and hold Borrower and Lender
harmless from and against any and all claims, damages, liabilities, costs and
expenses arising out of, relating to or otherwise in connection with its
performance of such construction.
(f) If the Facility contains steam boilers, steam pipes, steam
engines, steam turbines or other high pressure vessels, insurance covering the
major components of the central heating, air conditioning and ventilating
systems, boilers, other pressure vessels, high pressure piping and machinery,
elevators and escalators, if any, and other similar equipment installed in the
Improvements, in an amount equal to one hundred percent (100%) of the full
replacement cost of the Facility, which policies shall insure against physical
damage to and loss of occupancy and use of the Improvements arising out of an
accident or breakdown covered thereunder.
(g) Flood insurance with a deductible not to exceed Three
Thousand Dollars ($3,000), or such greater amount as may be satisfactory to
Lender in its sole discretion, and in an amount equal to the full insurable
value of the Facility or the maximum amount available, whichever is less, if the
Facility is located in an area designated by the Secretary of Housing and Urban
Development or the Federal Emergency Management Agency as having special flood
hazards.
(h) Workers' compensation insurance or other similar insurance
which may be required by governmental authorities or applicable legal
requirements in an amount at least equal to the minimum required by law, and
employer's liability insurance with a limit of One Hundred Thousand Dollars
($100,000) per accident and per disease per employee, and Five Hundred Thousand
Dollars ($500,000) in the aggregate for disease arising in connection with the
operation of the Mortgaged Property.
(i) Such other insurance coverages, in such amounts, and such
other forms and endorsements, as may from time to time be reasonably required by
Lender and which are customarily required by institutional lenders to similar
properties, similarly situated, including, without limitation, coverages against
other insurable hazards (including, by way of example only, earthquake, sinkhole
and mine subsidence), which at the time are commonly insured against and
generally available.
All insurance required under this Section 4.5 shall have a
term of not less than one year and shall be in the form and amount and with
deductibles as, from time to time, shall be
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reasonably acceptable to Lender, under valid and enforceable policies issued by
financially responsible insurers either licensed to transact business in the
State where the Facility is located, or obtained through a duly authorized
surplus lines insurance agent or otherwise in conformity with the laws of such
State, with (a) a rating of not less than the third (3rd) highest rating
category by either Standard & Poor's Ratings Group, Duff & Phelps Credit Rating
Co., Moody's Investors Service, Inc., Fitch Investors Service, Inc. or any
successors thereto, or (b) an A-:V rating in Best's Key Rating Guide; provided,
however, that if the initial principal balance of the Loan is greater than Seven
Million Five Hundred Thousand Dollars ($7,500,000.00), such insurer must, in
lieu of such Best's rating, have a long term senior debt rating of at least "A"
by Standard & Poor's Ratings Group. Certificates of Insurance shall be delivered
to and held by Lender, and, upon Lender's reasonable request, originals or
certified copies of all insurance policies shall be delivered to Lender. All
such policies shall name Lender as an additional insured, shall provide for loss
payable solely to Lender and shall contain: (a) standard "non-contributory
mortgagee" endorsement or its equivalent relating, inter alia, to recovery by
Lender notwithstanding the negligent or willful acts or omissions of Borrower
and notwithstanding (i) occupancy or use of the Facility for purposes more
hazardous than those permitted by the terms of such policy, (ii) any foreclosure
or other action taken by Lender pursuant to the Mortgage upon the occurrence of
an Event of Default, or (iii) any change in title or ownership of the Facility;
and (b) a provision that such policies shall not be canceled or amended,
including, without limitation, any amendment reducing the scope or limits of
coverage, or failed to be renewed, without at least thirty (30) days prior
written notice to Lender in each instance. With respect to insurance policies
which require payment of premiums annually, not less than thirty (30) days prior
to the expiration dates of the insurance policies obtained pursuant to this
Agreement, Borrower shall pay such amount, except to the extent Lender is
escrowing sums therefor pursuant to the Loan Documents. Not less than thirty
(30) days prior to the expiration dates of the insurance policies obtained
pursuant to this Agreement, certificates evidencing renewals of such policies
bearing notations evidencing the payment of premiums or accompanied by other
evidence reasonably satisfactory to Lender of such payment shall be delivered by
Borrower to Lender. Borrower shall not carry separate insurance, concurrent in
kind or form or contributing in the event of loss, with any insurance required
under this Section 4.5. If the limits of any policy required hereunder are
reduced or eliminated due to a covered loss, Borrower shall pay the additional
premium, if any, in order to have the original limits of insurance reinstated,
or Borrower shall purchase new insurance in the same type and amount that
existed immediately prior to the loss.
If Borrower fails to maintain and deliver to Lender the
certificates of insurance required by this Agreement, Lender may, at its option,
procure such insurance and Borrower shall pay or, as the case may be, reimburse
Lender for, all premiums thereon promptly, upon demand by Lender, with interest
thereon at the Default Rate from the date paid by Lender to the date of
repayment and such sum shall constitute a part of the Loan Obligations.
The insurance required by this Agreement may, at the option of
Borrower, be effected by blanket and/or umbrella policies issued to Borrower or
to an Affiliate of Borrower covering the Facility and the properties of such
Affiliate; provided that, in each case, the policies otherwise comply with the
provisions of this Agreement and allocate to the Facility, from time to time,
the coverage specified by this Agreement, without possibility of reduction or
coinsurance by
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<PAGE> 17
reason of, or damage to, any other property (real or personal) named therein. If
the insurance required by this Agreement shall be effected by any such blanket
or umbrella policies, Borrower shall furnish to Lender certificates of insurance
showing the amount of the insurance provided under such policies which is
applicable to the Facility.
Neither Lender nor its agents or employees shall be liable for
any loss or damage insured by the insurance policies required to be maintained
under this Agreement; it being understood that (a) Borrower shall look solely to
its insurance company for the recovery of such loss or damage, (b) such
insurance company shall have no rights of subrogation against Lender, its agents
or employees, and (c) Borrower shall use its best efforts to procure from such
insurance company a waiver of subrogation rights against Lender. If, however,
such insurance policies do not provide for a waiver of subrogation rights
against Lender (whether because such a waiver is unavailable or otherwise), then
Borrower hereby agrees, to the extent permitted by law and to the extent not
prohibited by such insurance policies, to waive its rights of recovery, if any,
against Lender, its agents and employees, whether resulting from any damage to
the Facility, any liability claim in connection with the Facility or otherwise.
If any such insurance policy shall prohibit Borrower from waiving such claims,
then Borrower must obtain from such insurance company a waiver of subrogation
rights against Lender.
Net proceeds of insurance or condemnation (after payment of Lender's
reasonable costs and expenses) received at any time other than the last twelve
(12) months of the Loan term (a) in an amount less than $250,000, shall be made
available, and (b) in the amount of $250,000 or more may be made available, in
Lender's sole discretion, to Borrower for Borrower's repair, restoration and
replacement of the Improvements, Equipment and Inventory damaged or taken on the
following terms and subject to Borrower's satisfaction of the following
conditions:
(i) The aggregate amount of all such proceeds shall not
exceed the aggregate amount of all such Loan Obligations.
(ii) At the time of such loss or damage and at all
times thereafter while Lender is holding any portion of such proceeds, there
shall exist no Default or Event of Default;
(iii) The Improvements, Equipment, and Inventory for
which loss or damage has resulted shall be capable of being restored to its
preexisting condition and utility in all material respects with a value equal to
or greater than that which existed prior to such loss or damage and such
restoration shall be capable of being completed prior to the earlier to occur of
(A) the expiration of business interruption insurance as determined by an
independent inspector or (B) the Maturity Date;
(iv) Within thirty (30) days from the date of such
loss or damage Borrower shall have given Lender a written notice electing to
have the proceeds applied for such purpose;
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(v) Within sixty (60) days following the date of
notice under the preceding subparagraph (c) and prior to any proceeds being
disbursed to Borrower, Borrower shall have provided to Lender all of the
following:
(A) complete plans and specifications for
restoration, repair and replacement of the Improvements, Equipment and Inventory
damaged to the condition, utility and value required by (ii) above,
(B) if loss or damage exceeds $50,000,
fixed-price or guaranteed maximum cost bonded construction contracts with a
bondable contractor for completion of the repair and restoration work in
accordance with such plans and specifications,
(C) builder's risk insurance for the full
cost of construction with Lender named under a standard mortgagee loss-payable
clause,
(D) such additional funds as in Lender's
reasonable opinion are necessary to complete such repair, restoration and
replacement, and
(E) copies of all material permits and licenses
necessary to complete the work in accordance with the plans and specifications;
(vi) Lender may, at Borrower's expense, retain an
independent inspector to review and approve plans and specifications and
completed construction and to approve all requests for disbursement, which
approvals shall be conditions precedent to release of proceeds as work
progresses;
(vii) No portion of such proceeds shall be made
available by Lender for architectural reviews or for any other purposes which
are not directly attributable to the cost of repairing, restoring or replacing
the Improvements, Equipment and Inventory for which a loss or damage has
occurred unless the same are covered by such insurance;
(viii) Borrower shall diligently pursue such work and
shall complete such work prior to the earlier to occur of the expiration of
business interruption insurance or the Maturity Date;
(ix) The Facility continues to achieve the Debt Service
Coverage requirements set forth in Section 4.13 below;
(x) Each disbursement by Lender of such proceeds and
deposits shall be funded subject to conditions and in accordance with
disbursement procedures which a commercial construction lender would typically
establish in the exercise of sound banking practices and shall be made only upon
receipt of disbursement requests on an AIA G702/703 form (or similar form
approved by Lender) signed and certified by Borrower and, if required by Lender,
its architect and general contractor with appropriate invoices and lien waivers
as required by Lender; and
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<PAGE> 19
(xi) Lender shall have a first lien security interest
in all building materials and completed repair and restoration work and in all
fixtures and equipment acquired with such proceeds, and Borrower shall execute
and deliver such mortgages, deeds of trust, security agreements, financing
statements and other instruments as Lender shall request to create, evidence, or
perfect such lien and security interest.
In the event and to the extent such proceeds become available
during the last twelve (12) months of the Loan term or are not permitted or
required to be used for the repair, restoration and replacement of the
Improvements, Equipment and Inventory for which a loss or damage has occurred,
or in the event Borrower fails to timely make the election to have insurance
proceeds applied to the restoration of the Improvements, Equipment, or
Inventory, or, having made such election, fails to timely comply with the terms
and conditions set forth herein, or, if the conditions set forth herein for such
application are otherwise not satisfied, then Lender shall be entitled without
notice to or consent from Borrower to apply such proceeds, or the balance
thereof, at Lender's option either (a) to the full or partial payment or
prepayment of the Loan Obligations (without premium) in the manner aforesaid, or
(b) to the repair, restoration and/or replacement of all or any part of such
Improvements, Equipment and Inventory for which a loss or damage has occurred.
Borrower agrees to give Lender written notice of any loss in
excess of $10,000 in connection with the Improvements, the Equipment or the
Inventory not more than one (1) Business Day after Borrower has knowledge
thereof.
Borrower appoints Lender as Borrower's attorney-in-fact to
cause the issuance of an endorsement of any insurance policy to bring Borrower
into compliance herewith and, as limited above, at Lender's sole option, to make
any claim for, receive payment for, and execute and endorse any documents,
checks or other instruments in payment for loss, theft, or damage covered under
any such insurance policy; provided, however, that in no event will Lender be
liable for failure to collect any amounts payable under any insurance policy.
If the Mortgaged Property is sold at a foreclosure sale or
Lender acquires title to the Mortgaged Property, Lender shall automatically
succeed to all rights of Borrower in and to any insurance policies and unearned
insurance premiums and in and to the proceeds resulting from any damage to the
Mortgaged Property prior to such sale or acquisition.
4.6 FINANCIAL AND OTHER INFORMATION. Provide Lender, or cause Lessee
to provide to Lender, at its address set forth in Section 8.7 and at GMAC
Commercial Mortgage Corporation, 2200 Woodcrest Place, Suite 305, Birmingham,
Alabama 35209, the following financial statements and information on a
continuing basis during the term of the Loan:
(a) Within ninety (90) days after the end of each fiscal year
of each Facility and Borrower (if different from such Facility) unaudited
financial statements of the operations of such Facility and Borrower, which
statements shall be prepared on an accounting basis consistent with Guarantor's
audited financial statements, and shall include a balance sheet and a statement
of
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<PAGE> 20
income and expenses for the year then ended, certified by a financial officer of
Borrower to be true and correct in all material respects;
(b) Within one hundred twenty (120) days after the end of each
fiscal year of Guarantor, audited consolidated financial statements of Guarantor
prepared by KPMG Peat Marwick or any other nationally recognized accounting firm
or independent certified public accountant reasonably acceptable to Lender,
which consolidated statements shall be prepared in accordance with GAAP and
shall include a balance sheet and a statement of income and expenses for the
year then ended. In lieu of its obligations hereunder, Guarantor may submit to
Lender, upon its filing thereof, a copy of Form 10K as filed with the United
States Securities and Exchange Commission;
(c) Within one hundred twenty (120) days after the end of each
fiscal year of Borrower, and at any other time upon Lender's request, an
accounting of all security deposits held pursuant to all Leases, including the
name of the institution (if any) and the names and identification number of the
accounts (if any) in which such security deposits are held and the name of the
person to contact at such financial institution, along with any authority or
release necessary for Lender to access information regarding such accounts;
(d) Within forty-five (45) days after the end of each of the
first three fiscal quarters, and within ninety (90) days after the end of the
fourth fiscal quarter of each Facility and Borrower (if different from such
Facility), unaudited financial statements of the operations of such Facility and
Borrower prepared on an accounting basis consistent with Guarantor's audited
financial statements, which statements shall include a balance sheet and
statement of income and expenses for the quarter then ended, and shall be
certified as true and correct in all material respects by a financial officer of
Borrower;
(e) Within forty-five (45) days after the end of each of the
first three fiscal quarters, and within one hundred twenty (120) days after the
end of the fourth fiscal quarter of Guarantor, unaudited interim financial
statements of Guarantor, prepared on an accounting basis consistent with
Guarantor's audited financial statements, which shall include a balance sheet
and statement of income and expenses for the quarter then ended, and shall be
certified as true and correct in all material respects by a financial officer of
Guarantor. In lieu of its obligations hereunder, Guarantor may submit to Lender
a copy of Form 10Q as filed by Guarantor with the United States Securities and
Exchange Commission;
(f) Within forty-five (45) days of the end of each fiscal
quarter of each Facility, a statement of the number of bed days available and
the actual resident days incurred for such quarter, together with, if
applicable, quarterly census information of such Facility as of the end of such
quarter in sufficient detail to show patient-mix (i.e., private, Medicare,
Medicaid, and V.A.), if applicable, on a daily average basis for such year
through the end of such quarter, certified by a financial officer of Borrower
and Guarantor to be true and correct. Such statements of each Facility shall be
accompanied by a summary showing the information described in Exhibit D;
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<PAGE> 21
(g) Within one hundred twenty (120) days after the end of each
fiscal year of Borrower, and at any other time upon Lender's request, an
accounting of all security deposits held by Borrower or Lessee, including the
name of the institution (if any) and the names and identification numbers of the
accounts (if any) in which such security deposits are held and the name of the
person to contact at such financial institution, along with any authority or
release necessary for Lender to access information regarding such accounts;
(h) Within ten (10) days of filing or receipt, all Medicare
and/or Medicaid cost reports and any amendments thereto filed with respect to
the Facility, if any, and all responses, audit reports, or other inquiries with
respect to such cost reports;
(i) Within ten (10) days of receipt, a copy of the Medicaid
Rate Calculation Worksheet (or the equivalent thereof), if any, issued by the
appropriate Medicaid Agency for the Facility;
(j) Within ten (10) days of receipt, any and all notices
(regardless of form) from any and all licensing and/or certifying agencies that
the Facility license and/or the Medicare and/or Medicaid certification of the
Facility (if any) is being downgraded to a substandard category, revoked, or
suspended or that any such action is pending or being considered;
(k) Upon Lender's request, evidence of payment by Borrower or
Lessee of any applicable provider bed taxes or similar taxes, which taxes
Borrower agrees to pay or cause Lessee to pay; and
(l) Within one hundred twenty (120) days after the end of each
of Lessee's fiscal years, and more frequently if reasonably requested by Lender,
an aged accounts payable report for the Facility (if requested in writing by
Lender) and an aged accounts receivable report for the Facility in sufficient
detail to show amounts due from each class of patient-mix, if applicable, (i.e.,
private, Medicare, Medicaid and V.A.), by the account age classifications of 30
days, 60 days, 90 days, 120 days, and over 120 days.
Lender reserves the right to require that the annual financial
statements of Borrower be audited by a nationally recognized accounting firm or
independent certified public accountant acceptable to Lender if (a) a monetary
default continues beyond the applicable cure period, (b) if Lender has
reasonable grounds to believe that the unaudited financial statements do not
accurately represent the financial condition of Borrower, on an accounting basis
consistent with Guarantor's audited financial statements, or (c) Borrower fails
to provide in a timely manner the statements, schedules and reports required in
this Section 4.6.
Lender further reserves the right to require such other
financial information of Borrower, Lessee, Guarantor and/or the Facility, in
such form and at such other times (including monthly or more frequently) as
Lender shall reasonably require, and Borrower agrees promptly to provide or to
cause to be provided, such information to Lender. All financial statements must
be
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in the form and detail as Lender may from time to time reasonably request,
provided, however, that Lender will make reasonable efforts to use Borrower's
existing forms of reports for all purposes.
4.7 COMPLIANCE CERTIFICATE. At the time of furnishing the quarterly
operating statements required under the foregoing Section, furnish to Lender a
compliance certificate in the form attached hereto as Exhibit E executed by a
financial officer of Borrower and of Lessee.
4.8 BOOKS AND RECORDS. Keep and maintain at all times at the
Facility, and upon Lender's reasonable request make available at Borrower's
office, complete and accurate books of account and records (including copies of
supporting bills and invoices) adequate to reflect correctly the results of the
operation of the Facility, and copies of all written contracts, subleases (if
any), and other instruments which affect the Mortgaged Property, which books,
records, contracts, subleases (if any) and other instruments shall be subject to
examination and inspection at any reasonable time by Lender (upon reasonable
advance notice, which for such purposes only may be given orally, except in the
case of an emergency or following an Event of Default, in which case no advance
notice shall be required); provided, however, that if an Event of Default has
occurred and is continuing, Borrower shall deliver to Lender upon written demand
all books, records, contracts, subleases (if any) and other instruments relating
to the Facility or its operation and Borrower authorizes Lender to obtain a
credit report on Borrower at any time. Any such inspections by Lender shall be
subject to confidentiality requirements relating to resident records imposed by
law in the respective jurisdiction in which each Facility is located.
4.9 PAYMENT OF INDEBTEDNESS. Duly and punctually pay or cause to be
paid all other Indebtedness now owing or hereafter incurred by Borrower in
accordance with the terms of such Indebtedness, except such Indebtedness owing
to those other than Lender which is being contested in good faith and with
respect to which any execution against properties of Borrower has been
effectively stayed and for which reserves and collateral for the payment and
security thereof have been established as determined by Lender in its sole
discretion.
4.10 RECORDS OF ACCOUNTS. Maintain complete copies of all records,
including records pertaining to the Accounts of Borrower, at the principal place
of business of Borrower as set forth in this Agreement.
4.11 CONDUCT OF BUSINESS. Conduct, or cause Lessee to conduct, the
operation of each Facility at all times in a manner consistent with the level of
operation of the Facility as of the date hereof, including without limitation,
the following:
(a) to maintain the standard of care for the residents of the
Facility at all times at a level necessary to ensure quality care for the
residents of the Facility in accordance with customary and prudent industry
standards;
(b) to operate the Facility in a prudent manner and in
compliance in all material respects with applicable laws and regulations
relating thereto and cause all Permits, Reimbursement Contracts, and any other
agreements necessary for the use and operation of the Facility or as may
22
<PAGE> 23
be necessary for participation in the Medicaid, Medicare, or other applicable
reimbursement programs if Lessee, with prior written consent of Lender, which
consent may be withheld in its sole discretion, elects to participate in any
such program to remain in effect without reduction in the number of licensed
beds authorized for use in the Medicaid, Medicare, or other applicable
reimbursement programs;
(c) to maintain sufficient Inventory and Equipment of types
and quantities at the Facility to enable Lessee adequately to perform operations
of the Facility for its Intended Use;
(d) to keep all Improvements and Equipment located on or used
or useful in connection with the Facility in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needed and proper repairs, renewals, replacements, additions, and improvements
thereto to keep the same in good operating condition;
(e) to maintain sufficient cash in the operating accounts of
the Facility in order to satisfy the working capital needs of the Facility; and
(f) to keep all required Permits current and in full force and
effect.
4.12 PERIODIC SURVEYS. Furnish or cause Lessee to furnish to Lender,
within thirty (30) days of receipt, a copy of any Medicare, Medicaid, or other
licensing agency survey or report and any statement of deficiencies and/or any
other report indicating that any action is pending or being considered to
downgrade any Facility to a substandard category, and within the time period
required by the particular agency for furnishing a plan of correction also
furnish or cause to be furnished to Lender a copy of the plan of correction
generated from such survey or report for such Facility, and correct or cause to
be corrected any deficiency, the curing of which is a condition of continued
licensure or for full participation in Medicaid, Medicare or other reimbursement
program pursuant to any Reimbursement Contract for existing residents or for new
residents to be admitted with Medicaid or Medicare coverage, if Borrower or
Lessee, with the prior written consent of Lender, which consent may be withheld
in its sole discretion, elects to participate in any such program, by the date
required for cure by such agency (plus extensions granted by such agency).
4.13 DEBT SERVICE COVERAGE REQUIREMENTS.
(a) Maintain (commencing with the closing of the Loan), and,
within forty-five (45) days after the end of each fiscal quarter of each
Facility, provide evidence satisfactory to Lender of the achievement of, the
following Debt Service Coverage for the Facilities ratios until the Loan
Obligations are paid in full:
(i) a Debt Service Coverage for the Facilities, after
deduction of Actual Management Fees, of not less than 1.10 to 1.0 based on a
rolling twelve (12) month period, tested quarterly; and
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<PAGE> 24
(ii) a Debt Service Coverage for the Facilities, after
deduction of Assumed Management Fees, of not less than 1.25 to 1.0 based on a
rolling twelve (12) month period, tested quarterly.
(b) If the Facilities fail for two consecutive quarters to
achieve or provide evidence of achievement of the Debt Service Coverage for the
Facilities, upon fifteen (15) days written notice to Borrower, Borrower will
deposit with Lender additional cash or other liquid collateral in an amount
which, when added to the first number of the debt service coverage calculation,
would have resulted in the noncomplying debt service coverage requirement having
been satisfied. If such failure continues for four (4) consecutive quarters
after deposit of the requisite additional cash or other liquid collateral, upon
fifteen (15) days written notice to Borrower, Borrower will deposit with Lender
additional cash or other liquid collateral (with credit for amounts currently
being held by Lender pursuant to the foregoing sentence), in an amount which, if
the same had been applied on the first day of the first quarter for which such
noncompliance of the debt service coverage requirement occurred to reduce the
outstanding principal indebtedness of the Loan Obligations, would have resulted
in the noncomplying debt service coverage requirement having been satisfied, and
Borrower agrees promptly to provide such additional cash or other liquid
collateral. Such additional collateral will be held by Lender in a standard
custodial account, and shall constitute additional collateral for the Loan
Obligations and an "Account" as defined in this Agreement, and, upon the
occurrence of an Event of Default, may be applied by Lender, in such order and
manner as Lender may elect, to the reduction of the Loan Obligations. Borrower
shall not be entitled to any interest earned on such additional collateral.
Provided that there is no outstanding Default or Event of Default, such
additional collateral which has not been applied to the Loan Obligations will be
released by Lender at such time as Borrower provides Lender with evidence that
the required debt service coverage requirements outlined above have been
achieved and maintained (without regard to any cash deposited pursuant to this
Section 4.13) as of the end of each of two (2) consecutive quarters.
4.14 OCCUPANCY. Maintain or cause to be maintained at all times a
daily average annual (calender year) occupancy for the Facilities, on a combined
basis for all Facilities, of eighty percent (80%) or more (based on the number
of beds available at each Facility with the minimum number of beds available at
any Facility remaining at or in excess of the number of beds set forth in the
Facility description in Schedule I); provided, however, that failure to maintain
such occupancy level shall not constitute an Event of Default if, at such time,
the Debt Service Coverage for the Facilities ratios are being achieved.
4.15 CAPITAL EXPENDITURES. Maintain and cause Lessee to maintain the
Facilities in good condition and make minimum capital expenditures for each
Facility in each fiscal year in the average amount of $250.00 per unit, which
average shall be determined based on total capital expenditures for all
Facilities, (which capital expenditures may include those necessary for ordinary
repairs and routine maintenance), commencing the first year of the Loan term
and, within ninety (90) days of the end of such fiscal year, provide evidence
thereof satisfactory to Lender. In determining whether or not such requirement
has been met, with respect to each Facility, Lender will carry forward to the
next year(s) the excess amount of capital expenditures made for such
24
<PAGE> 25
Facility in excess of $250.00 per unit in any one year. In the event that
Borrower shall fail to do so, Borrower shall, upon Lender's written request,
immediately establish and maintain a capital expenditures reserve fund with
Lender equal to the difference between the required amount per unit and the
amount per unit actually spent by Borrower. Borrower grants to Lender a right of
setoff against all moneys in the capital expenditures reserve fund, and Borrower
shall not permit any other Lien to exist upon such fund. The proceeds of such
capital expenditures reserve fund will be disbursed monthly upon Lender's
receipt of satisfactory evidence that Borrower has made the required capital
expenditures. Upon Borrower's failure to adequately maintain the Facility in
good condition, Lender may, but shall not be obligated to, make such capital
expenditures and may apply the moneys in the capital expenditures reserve fund
for such purpose. To the extent there are insufficient moneys in the capital
expenditures reserve fund for such purposes, all funds advanced by Lender to
make such capital expenditures shall constitute a portion of the Loan
Obligations, shall be secured by the Mortgage and shall accrue interest at the
Default Rate until paid. Upon an Event of Default, Lender may apply any moneys
in the capital expenditures reserve fund to the Loan Obligations, in such order
and manner as Lender may elect. For any partial fiscal year during which the
Loan is outstanding, the required expenditure amount shall be prorated by
multiplying the total of the required amount per unit by a fraction, the
numerator of which is the number of days during such year for which all or part
of the Loan is outstanding and the denominator of which is the number of days in
such year.
4.16 [INTENTIONALLY OMITTED]
4.17 UPDATED APPRAISALS. For so long as the Loan remains outstanding,
if any Event of Default shall occur hereunder, or if, in Lender's judgment, a
material depreciation in the value of any Mortgaged Property shall have
occurred, then in any such event, Lender may cause such Mortgaged Property to be
appraised by an appraiser selected by Lender, and in accordance with Lender's
appraisal guidelines and procedures then in effect, and Borrower agrees to
cooperate in all respects with such appraisals and furnish to the appraisers all
requested information regarding the Mortgaged Property and the Facility.
Borrower agrees to pay all reasonable costs incurred by Lender in connection
with such appraisal which costs shall be secured by the relevant Mortgage and
shall accrue interest at the Default Rate until paid.
4.18 COMPLY WITH COVENANTS AND LAWS. Comply, and cause Lessee to
comply in all material respects, with all applicable covenants and restrictions
of record and all laws, ordinances, rules and regulations and keep the Facility
and the Mortgaged Property in compliance in all material respects with
applicable laws, ordinances, rules and regulations, including, without
limitation, the Americans with Disabilities Act and regulations promulgated
thereunder, and laws, ordinances, rules and regulations relating to zoning,
health, building codes, setback requirements, Medicaid and Medicare laws, if
applicable, and keep the Permits for the Facility in full force and effect.
4.19 TAXES AND OTHER CHARGES. Subject to Borrower's right to contest
the same as set forth in Section 9(d) of the Mortgage, pay and cause Lessee to
pay all taxes, assessments, charges, claims for labor, supplies, rent, and other
obligations which, if unpaid, might give rise to a Lien against property of
Borrower, except Liens to the extent permitted by this Agreement.
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4.20 COMMITMENT LETTER. Provide all items and pay all amounts required
by the Commitment Letter. If any term of the Commitment Letter shall conflict
with the terms of this Agreement, this Agreement shall govern and control. As to
any matter contained in the Commitment Letter, and as to which no mention is
made in this Agreement or the other Loan Documents, the Commitment Letter shall
continue to be in effect and shall survive the execution of this Agreement and
all other Loan Documents.
4.21 CERTIFICATE. Upon Lender's written request, furnish Lender with a
certificate stating that Borrower has complied with and is in compliance with
all terms, covenants and conditions of the Loan Documents to which Borrower is a
party and that there exists no Default or Event of Default or, if such is not
the case, that one or more specified events have occurred, and describing such
event.
4.22 NOTICE OF FEES OR PENALTIES. Notify Lender, within fifteen (15)
days of Borrower's knowledge thereof, of the assessment or threat of assessment
by any state or any Medicare, Medicaid, health or licensing agency of any
material fines or penalties against Borrower, Lessee or the Facility.
4.23 LOAN CLOSING CERTIFICATION. Immediately notify Lender, in
writing, in the event any representation, warranty or covenant contained herein
or in that certain Loan Closing Certification, executed by Borrower for the
benefit of Lender of even date herewith, becomes untrue in any material respect.
4.24 LEASE AGREEMENT.
(a) Maintain each Lease Agreement, and cause Lessee to
maintain each Lease Agreement to which it is a party, in full force and effect
and timely perform, and cause Lessee to perform all of their respective
obligations thereunder and not permit the termination or amendment of any Lease
Agreement unless the prior written consent of Lender is first obtained (which
consent shall not be unreasonably withheld or delayed); provided, however, that
Lender's prior consent shall not be required for termination of a Lease
Agreement in accordance with its terms upon issuance of a license to Guarantor
to operate the relevant Facility, or in the event of emergency situations (i.e.
termination of the applicable Facility's operating Permit) or for the
termination of license.
(b) In the event that bankruptcy or insolvency proceedings are
instituted by or against Lessee, terminate the Lease Agreement (to the extent
permitted by the applicable bankruptcy court having jurisdiction over such
proceedings), upon written instruction received from Lender.
4.25 PUBLIC HEALTH AND SAFETY NOTICES. Provide any servicer of the
Loan with notice of any incident reported to any public health or safety
provider or any claim referred to its liability insurance provider immediately
after such claim is made.
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ARTICLE V
NEGATIVE COVENANTS OF BORROWER
Until the Loan Obligations have been paid in full, Borrower shall not:
5.1 ASSIGNMENT OF LICENSES AND PERMITS. Assign or transfer or permit
any other party to assign or transfer any of its or their interest in the
Permits, or Reimbursement Contracts, if any, (including rights to payment
thereunder) pertaining to the Facility, or assign, transfer, or remove or permit
any other person to assign, transfer, or remove any records pertaining to the
Facility including, without limitation, resident records, medical and clinical
records (except for removal of such resident records as directed by the
residents owning such records) without Lender's prior written consent, which
consent may be granted or refused in Lender's sole discretion.
5.2 NO LIENS; EXCEPTIONS. Create, incur, assume or suffer to exist
any Lien upon or with respect to the Facility or any of its properties, rights,
income or other assets relating thereto, including, without limitation, the
Mortgaged Property, whether now owned or hereafter acquired, other than the
following permitted Liens ("Permitted Encumbrances"):
(a) Liens at any time existing in favor of Lender;
(b) Liens which are listed in Exhibit F attached hereto;
(c) Inchoate Liens arising by operation of law for the
purchase of labor, services, materials, equipment or supplies, provided payment
shall not be delinquent and, if such Lien is a lien upon any of the Land or
Improvements, such Lien must be fully disclosed to Lender and bonded off and
removed from the Land and Improvements within thirty (30) days of its creation
in a manner satisfactory to Lender;
(d) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for money borrowed or
for credit received with respect to property acquired) entered into in the
ordinary course of business as presently conducted or to secure obligations for
surety or appeal bonds;
(e) Liens for current year's taxes, assessments or
governmental charges or levies not yet due and payable; and
(f) Liens securing indebtedness permitted under Section 3.24.
5.3 MERGER, CONSOLIDATION, ETC. Except as otherwise provided in the
Mortgage, consummate any merger, consolidation or similar transaction, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions), all or substantially all of its assets (whether now or
hereafter acquired), without the prior written consent of Lender, which consent
may be granted or refused in Lender's sole discretion.
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5.4 MAINTAIN SINGLE PURPOSE ENTITY STATUS.
(a) Engage in any business or activity other than the
ownership, leasing, operation, management and maintenance of the Mortgaged
Property, and activities incidental thereto;
(b) Acquire or own any material assets other than (i) the
Mortgaged Property, and (ii) such incidental machinery, equipment, fixtures and
other personal property as may be necessary for the operation of the Mortgaged
Property;
(c) Merge into or consolidate with any person or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, without in
each case Lender's consent;
(d) Fail to preserve its existence as a corporation, validly
existing and in good standing under the laws of the jurisdiction of its
organization or formation, or without the prior written consent of Lender,
amend, modify, terminate or fail to comply with the provisions of its articles
of incorporation and bylaws, as same may be further amended or supplemented, if
such amendment, modification, termination or failure to comply would adversely
affect its ability to perform its obligations hereunder, under the note or any
other document evidencing or securing the Loan;
(e) Own any subsidiary or make any investment in, any person
without the consent of Lender;
(f) Commingle its assets with the assets of any of its
shareholders, principals, affiliates or of any other person;
(g) Incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Loan, trade payables
incurred in the ordinary course of business, and obligations permitted under
Section 3.24(c) hereof, provided same are paid when due;
(h) Fail to maintain its records, books of account and bank
accounts separate and apart from those of its shareholders, principals and
affiliates, the affiliates of any of its shareholders, principals and any other
person;
(i) Enter into any contract or agreement with any of its
shareholders, principals or affiliates, or the affiliates of any of its
shareholders or principals, except upon terms and conditions that, taken as a
whole with respect to the underlying transaction, are intrinsically fair and
substantially similar to those that would be available on an arms-length basis
with third parties;
(j) Seek its dissolution or winding up in whole, or in part;
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(k) Maintain its assets in such a manner that it will be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any of its shareholders, principals and affiliates, the affiliates
of any of its shareholders, principals or any other person;
(l) Hold itself out to be responsible for the debts of another
person;
(m) Make any loans or advances to any third party, including
any of its shareholders, principals or affiliates, or the affiliates of any of
its shareholders or principals;
(n) Fail to file its own tax returns;
(o) Agree to, enter into or consummate any transaction which
would render it unable to confirm that (i) it is not an "employee benefit plan"
as defined in Section 3(32) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Section 3(32) of ERISA; (B) it is not
subject to state statutes regulating investments and fiduciary obligations with
respect to governmental plans; and (iii) less than twenty-five (25) percent of
each of its outstanding class of equity interests are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2);
(p) Fail either to hold itself out to the public as a legal
person separate and distinct from any other person or to conduct its business
solely in its own name in order not (A) to mislead others as to the identity
with which such other party is transacting business, or (B) to suggest that it
is responsible for the debts of any third party (including any of its
shareholders, principals or affiliates, or any general partner, principal or
affiliate thereof);
(q) Fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations; or
(r) Cause or permit its board of directors to take any action
which, under the terms of any certificate of incorporation, bylaws or any voting
trust agreement with respect to any common stock, requires a vote of the board
of directors unless at the time of such action there shall be at least one
member of the board of directors who is an Independent Director.
5.5 CHANGE OF BUSINESS; CHANGE OF USE. Make any material change in
the nature of its business as it is being conducted as of the date hereof or
change the use of any Facility from its Intended Use; provided, however, that
Borrower may engage in activities closely related to and compatible with
assisted living/adult home facilities and offer additional services not offered
on the date hereof to the extent permitted with respect to assisted living/adult
home facilities and under applicable Permits.
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5.6 CHANGES IN ACCOUNTING. Change its methods of accounting, unless
such change is permitted by GAAP, and provided such change does not have the
effect of curing or preventing what would otherwise be an Event of Default or
Default had such change not taken place.
5.7 ERISA FUNDING AND TERMINATION. Permit (a) the funding
requirements of ERISA with respect to any employee plan to be less than the
minimum required by ERISA at any time, or (b) any employee plan to be subject to
involuntary termination proceedings at any time.
5.8 TRANSACTIONS WITH AFFILIATES. Enter into any transaction with any
Affiliate of Borrower other than in the ordinary course of its business and on
fair and reasonable terms no less favorable to Borrower than those it could
obtain in a comparable arms-length transaction with a Person not an Affiliate.
5.9 TRANSFER OF OWNERSHIP INTERESTS. Except as otherwise provided in
the Mortgage, permit a change in the majority ownership of the stock of Borrower
as of the date of this Agreement unless the written consent of Lender is first
obtained, which consent may be granted or refused in Lender's sole discretion.
5.10 LEASE OR MANAGEMENT AGREEMENT. Lease, enter into or permit any
Lessee to enter into any Management Agreement or any sublease for any portion of
the Facility, except as permitted under the applicable Mortgage and Assignment
of Leases and Rents, or enter into any operating lease for the Facility (other
than the Lease Agreements), unless Borrower first notifies Lender and provides
Lender a copy of the proposed lease, sublease or management agreement, obtains
Lender's written consent thereto, which consent shall not be unreasonably
withheld, and obtains and provides Lender with a subordination agreement in form
satisfactory to Lender, as determined by Lender in its sole reasonable
discretion, from such lessee, sublessee or manager subordinating to all rights
of Lender.
5.11 PLACE OF BUSINESS. Change its chief executive office or its
principal place of business, as set forth on Exhibit B hereto, without first
giving Lender at least thirty (30) days prior written notice thereof and
promptly providing Lender such information and amendatory financing statements
as Lender may request in connection therewith.
5.12 ACQUISITIONS. Directly or indirectly, purchase, lease, manage,
own, operate, or otherwise acquire any property or other assets (or any interest
therein) which are not used in connection with the ownership, leasing, operation
or maintenance of the Facility.
5.13 PARTICIPATION IN MEDICARE/MEDICAID; TRANSFER OF LICENSE
(a) Without the prior written consent of Lender, which may be
granted or withheld in its discretion, participate or permit any operator or
manager of the Mortgaged Property to participate, in Medicare and Medicaid, or
any provider agreement under Medicare and Medicaid, or accept any residents
whose ability to reside in the Mortgaged Property requires that Borrower,
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the Mortgaged Property or any operator or manager participate in Medicare,
Medicaid or any similar provider program; or
(b) (i) Transfer any Permit to any location other than the
Mortgaged Property for which it is issued or pledge any Permit as collateral
security for any other loan or indebtedness, (ii) rescind, withdraw, modify, or
otherwise alter any Permit if doing so would have a material adverse effect on
the Mortgaged Property, or (iii) pledge any receivables as collateral security
for any other loan or Indebtedness or allow any operator or manager to do so.
ARTICLE VI
ENVIRONMENTAL HAZARDS
6.1 PROHIBITED ACTIVITIES AND CONDITIONS. Except for matters covered
by a written program of operations and maintenance approved in writing by Lender
(an "O&M Program") or matters described in Section 6.2, Borrower shall not cause
or permit any of the following:
(a) The presence, use, generation, release, treatment,
processing, storage (including storage in above ground and underground storage
tanks), handling, or disposal-of any Hazardous Materials in, on or under the
Land or any Improvements;
(b) The transportation of any Hazardous Materials to, from, or
across the Land or the Improvements;
(c) Any occurrence or condition on the Land or in the
Improvements or any other property of Borrower that is adjacent to the Land,
which occurrence or condition is or may be in violation of Hazardous Materials
Laws; or
(d) Any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Land, the Improvements or any property
of Borrower that is adjacent to the Land.
The matters described in clauses (a) through (d) above are referred to
collectively in this Article VI as "Prohibited Activities and Conditions" and
individually as a "Prohibited Activity and Condition."
6.2 EXCLUSIONS. Notwithstanding any other provision of Article VI to
the contrary, "Prohibited Activities and Conditions" shall not include the safe
and lawful use and storage of quantities of (a) pre-packaged supplies, medical
waste, cleaning materials and petroleum products customarily used in the
operation and maintenance of comparable Facilities, (b) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for
consumer use and used by occupants of the Facility; and (c) petroleum products
used in the operation and maintenance of motor vehicles from time to time
located on the Land's parking areas, so long as all of the foregoing are used,
stored, handled, transported and disposed of in compliance with Hazardous
Materials Laws.
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6.3 PREVENTIVE ACTION. Borrower shall take all appropriate steps
(including the inclusion of appropriate provisions in any Leases approved by
Lender which are executed after the date of this Agreement) to prevent its
employees, agents, contractors, tenants and occupants of the Facility from
causing or permitting any Prohibited Activities and Conditions.
6.4 O & M PROGRAM COMPLIANCE. If an O&M Program has been established
with respect to Hazardous Materials, Borrower shall comply in a timely manner
with, and cause all tenants, subtenants, employees, agents, and contractors of
Borrower and any other persons present on the Land or in the Improvements to
comply with the O&M Program. All costs of performance of Borrower's obligations
under any O&M Program shall be paid by Borrower, and Lender's out-of-pocket
costs incurred in connection with the monitoring and review of the O&M Program
and Borrower's performance shall be paid by Borrower upon demand by Lender. Any
such out-of-pocket costs of Lender which Borrower fails to pay promptly shall
become an additional part of the Loan Obligations.
6.5 BORROWER'S ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing:
(a) Neither Borrower nor Guarantor nor Lessee has at any time
caused or permitted any Prohibited Activities and Conditions.
(b) No Prohibited Activities and Conditions exist or have
existed.
(c) The Land and the Improvements do not now contain any
underground storage tanks, and, to the best of Borrower's knowledge after
reasonable and diligent inquiry, the Land and the Improvements have not
contained any underground storage tanks in the past. If there is an underground
storage tank located on the Land or the Improvements which has been previously
disclosed by Borrower to Lender in writing, that tank complies with all
requirements of Hazardous Materials Laws.
(d) Borrower, Guarantor and Lessee have complied with all
Hazardous Materials Laws, including all requirements for notification regarding
releases of Hazardous Materials. Without limiting the generality of the
foregoing, Borrower has obtained all Environmental Permits required for the
operation of the Land and the Improvements in accordance with Hazardous
Materials Laws now in effect and all such Environmental Permits are in full
force and effect. No event has occurred with respect to the Land and/or
Improvements that constitutes, or with the passing of time or the giving of
notice would constitute, noncompliance with the terms of any Environmental
Permit.
(e) There are no actions, suits, claims or proceedings pending
or, to the best of Borrower's knowledge after reasonable and diligent inquiry,
threatened that involve the Land and/or the Improvements and allege, arise out
of, or relate to any Prohibited Activity and Condition.
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(f) Neither Borrower nor Guarantor nor Lessee have received any
complaint, order, notice of violation or other communication from any
Governmental Authority with regard to air emissions, water discharges, noise
emissions or Hazardous Materials, or any other environmental, health or safety
matters affecting the Land, the Improvements or any other property of Borrower
that is adjacent to the Land. The representations and warranties in this Article
VI shall be continuing representations and warranties that shall be deemed to be
made by Borrower throughout the term of the Loan evidenced by the Note, until
the Loan Obligations have been paid in full.
6.6 NOTICE OF CERTAIN EVENTS. Borrower shall, and shall cause Lessee,
to promptly notify Lender in writing of any and all of the following that may
occur:
(a) The discovery by Borrower or Lessee of any Prohibited
Activity and Condition.
(b) The receipt by Borrower or Lessee or knowledge of any
complaint, order, notice of violation or other communication from any
Governmental Authority or other person with regard to present, or future alleged
Prohibited Activities and Conditions or any other environmental, health or
safety matters affecting the Land, the Improvements or any other property of
Borrower or Lessee that is adjacent to the Land.
(c) Any representation or warranty in this Article VI which
becomes untrue at any time after the date of this Agreement.
Any such notice given by Borrower or Lessee shall not relieve
Borrower of, or result in a waiver of, any obligation under this Agreement, the
Note, or any of the other Loan Documents.
6.7 COSTS OF INSPECTION. Borrower shall pay promptly the costs of any
environmental inspections, tests or audits ("Environmental Inspections")
required by Lender in connection with any foreclosure or deed in lieu of
foreclosure, or, if required by Lender, as a condition of Lender's consent to
any "Transfer" (as defined in the Mortgage), or required by Lender following a
reasonable determination by Lender that Prohibited Activities and Conditions may
exist. Any such costs incurred by Lender (including the fees and out-of-pocket
costs of attorneys and technical consultants whether incurred in connection with
any judicial or administrative process or otherwise) which Borrower fails to pay
promptly shall become an additional part of the Loan Obligations as provided in
Section 7 of the Mortgage.
The results of all Environmental Inspections made by Lender shall
at all times remain the property of Lender and Lender shall have no obligation
to disclose or otherwise make available to Borrower or any other party such
results or any other information obtained by Lender in connection with its
Environmental Inspections unless Lender intends to take any legal action against
Borrower to enforce its rights under Section 12.19 of the Note, pursuant to or
as a result of such Environmental Inspections. Borrower acknowledges that Lender
cannot control or otherwise ensure the truthfulness or the accuracy of the
results of any of its Environmental Inspections and that the
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release of such results to prospective bidders at a foreclosure sale of the
Mortgaged Property and the Improvements located therein may have a material and
adverse effect upon the amount which a party may bid at such sale. Borrower
agrees that Lender shall have no liability whatsoever as a result of delivering
the results of any of its Environmental Inspections to any third party in
accordance with the terms of this Section 6.7, and Borrower hereby releases and
forever discharges Lender from any and all claims, damages or causes of action
arising out of, connected with, or incidental to the results of, the delivery of
any of Lender's Environmental Inspections.
6.8 REMEDIAL WORK. If any investigation, site monitoring,
containment, clean-up, restoration or other remedial work ("Remedial Work") is
necessary to comply with any Hazardous Materials Laws or order of any
Governmental Authority that has or acquires jurisdiction over the Land, the
Improvements or the use, operation or improvement of the Mortgaged Property
under any Hazardous Materials Laws, Borrower shall, by the earlier of (a) the
applicable deadline required by Hazardous Materials Laws or (b) 30 days after
notice from Lender demanding such action, begin performing the Remedial Work,
and thereafter diligently prosecute it to completion, and shall in any event
complete such work by the time required by applicable Hazardous Materials Laws.
If Borrower fails to begin on a timely basis or diligently prosecute any
required Remedial Work, Lender may, at its option, cause the Remedial Work to be
completed, in which case Borrower shall reimburse Lender on demand for the cost
of doing so. Any reimbursement due from Borrower to Lender shall become part of
the Loan Obligations.
6.9 COOPERATION WITH GOVERNMENTAL AUTHORITIES. Borrower shall
cooperate with any inquiry by any Governmental Authority and shall comply with
any governmental or judicial order which arises from any alleged Prohibited
Activity and Condition.
6.10 INDEMNITY.
(a) Borrower shall hold harmless, defend and indemnify (i)
Lender, (ii) any prior owner or holder of the Note, (iii) the officers,
directors, partners, agents, shareholders, employees and trustees of any of the
foregoing, and (iv) the heirs, legal representatives, successors and assigns of
each of the foregoing (together, the "Indemnitees") against all proceedings,
claims, damages, losses, expenses, penalties and costs (whether initiated or
sought by any Governmental Authority or private parties), including fees and out
of pocket expenses of attorneys and expert witnesses, investigatory fees, and
remediation costs, whether incurred in connection with any judicial or
administrative process or otherwise, arising directly or indirectly from any of
the following:
(A) Any breach of any representation or warranty
of Borrower in this Article VI,
(B) Any failure by Borrower to perform any of its
obligations under this Article VI,
(C) The existence or alleged existence of
any Prohibited Activity and Condition,
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(D) The presence or alleged presence of
Hazardous Materials in, on, or around under the Land, the Improvements or any
property of Borrower that is adjacent to the Land, or
(E) Actual or alleged violation of any
Hazardous Materials Laws.
(b) Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. Notwithstanding anything contained
herein, any Indemnitee may elect to defend any claim or legal or administrative
proceeding at Borrower's expense if such Indemnitee has reason to believe that
its interests are not being adequately represented or diverge from other
interests being represented by such counsel (but Borrower shall be obligated to
bear the expense of at most only one such separate counsel). Nothing contained
herein shall prevent an Indemnitee from employing separate counsel in any such
action at any time and participating in the defense thereof at its own expense.
(c) Borrower shall not, without the prior written consent of
those Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim") settle or compromise the Claim if the settlement (i)
results in the entry of any judgment that does not include as an unconditional
term the delivery by the claimant or plaintiff to Lender of a written release of
those Indemnitees, satisfactory in form and substance to Lender or (ii) may
materially and adversely affect any Indemnitee, as determined by such Indemnitee
in its sole discretion.
(d) The liability of Borrower to indemnify the Indemnitees
shall not be limited or impaired by any of the following, or by any failure of
Borrower or any guarantor to receive notice of or consideration for any of the
following:
(i) Any amendment or modification of any Loan Document,
(ii) Any extensions of time for performance required by
any of the Loan Documents,
(iii) The accuracy or inaccuracy of any representations
and warranties made by Borrower under this Agreement or any other Loan Document,
(iv) The release of Borrower or any other person, by
Lender or by operation of law, from performance of any other obligation under
any of the Loan Documents,
(v) The release or substitution in whole or in part of
any security for the Loan Obligations,
(vi) Lender's failure to properly perfect any lien or
security interest given as security for the Loan Obligations, and
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(vii) Any provision in any of the Loan Documents
limiting Lender's recourse to property securing the Loan or limiting the
personal liability of Borrower or any other party for payment of all or any part
of the Loan.
(e) Borrower shall, at its own cost and expense, do all of the
following:
(i) Pay or satisfy any judgment or decree that may be
entered against any Indemnitee or Indemnitees in any legal or administrative
proceeding incident to any matters against which Indemnitees are entitled to be
indemnified under this Article VI,
(ii) Reimburse Indemnitees for any expenses paid or
incurred in connection with any matters against which Indemnitees are entitled
to be indemnified under this Article VI, and
(iii) Reimburse Indemnitees for any and all expenses,
including reasonable fees and costs of attorneys and expert witnesses, paid or
incurred in connection with the enforcement by Indemnitees of their rights under
this Article VI, or in monitoring and participating in any legal or
administrative proceeding.
(f) In any circumstances in which the indemnity under this
Article VI applies, Lender may employ its own legal counsel and consultants to
prosecute, defend or negotiate any claim or legal or administrative proceeding
and Lender, with the prior written consent of Borrower (which shall not be
unreasonably withheld, delayed or conditioned) may settle or compromise any
action or legal or administrative proceeding. Borrower shall reimburse Lender
upon demand for all costs and expenses incurred by Lender, including all costs
of settlements entered into in good faith, and the reasonable fees and out of
pocket expenses of such attorneys and consultants.
(g) The provisions of this Article VI shall be in addition to
any and all other obligations and liabilities that Borrower may have under the
applicable law or under the other Loan Documents, and each Indemnitee shall be
entitled to indemnification under this Article VI without regard to whether
Lender or that Indemnitee has exercised any rights against the Land and/or the
Improvements or any other security, pursued any rights against any guarantor, or
pursued any other rights available under the Loan Documents or applicable law.
If Borrower consists of more than one person or entity, the obligation of those
persons or entities to indemnify the Indemnitees under this Article VI shall be
joint and several. The obligations of Borrower to indemnify the Indemnitees
under this Article VI shall survive any repayment or discharge of the Loan
Obligations, any foreclosure proceeding, any foreclosure sale, any delivery of
any deed in lieu of foreclosure, and any release of record of the lien of the
Mortgage.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
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7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default" hereunder:
(a) The failure by Borrower to pay any installment of
principal, interest, or other payments required under any Note, within five (5)
days after the same becomes due; or
(b) Borrower's violation of any covenant set forth in Article V
hereof; or
(c) Borrower's failure to deliver or cause to be delivered the
financial statements and information set forth in Section 4.6 above within the
times required and such failure is not cured within thirty (30) days following
Lender's written notice to Borrower thereof; or
(d) The failure of Borrower properly and timely to perform or
observe any covenant or condition set forth in this Agreement (other than those
specified in this Section 7.1) or any other Loan Documents which is not cured
within any applicable cure period as set forth herein or, if no cure period is
specified therefor, is not cured within thirty (30) days of Lender's notice to
Borrower of such Default; provided, however, that if such default cannot be
cured within such thirty (30) day period, such cure period shall be extended for
an additional sixty (60) days, as long as Borrower is diligently and in good
faith prosecuting said cure to completion; or
(e) The filing by Borrower, Lessee or Guarantor of a voluntary
petition, or the adjudication of any of the aforesaid Persons, or the filing by
any of the aforesaid Persons of any petition or answer seeking or acquiescing,
in any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief for itself under any present or future federal,
state or other statute, law or regulation relating to bankruptcy, insolvency or
other relief for debtors, or if any of the aforesaid Persons should seek or
consent to or acquiesce in the appointment of any trustee, receiver or
liquidator for itself or of all or any substantial part of its property or of
any or all of the rents, revenues, issues, earnings, profits or income thereof,
or the mailing of any general assignment for the benefit of creditors or the
admission in writing by any of the aforesaid Persons of its inability to pay its
debts generally as they become due; or
(f) The entry by a court of competent jurisdiction of an order,
judgment, or decree approving a petition filed against Borrower, Lessee or
Guarantor which petition seeks any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future federal, state or other statute, law or regulation relating to
bankruptcy, insolvency, or other relief for debtors, which order, judgment or
decree remains unvacated and unstayed for an aggregate of sixty (60) days
(whether or not consecutive) from the date of entry thereof, or the appointment
of any trustee, receiver or liquidator of any of the aforesaid Persons or of all
or any substantial part of its properties or of any or all of the rents,
revenues, issues, earnings, profits or income thereof, which appointment shall
remain unvacated and unstayed for an aggregate of sixty (60) days (whether or
not consecutive); or
(g) Unless otherwise permitted hereunder or under any other
Loan Documents, the sale, transfer, lease, assignment, or other disposition,
voluntarily or involuntarily, of the
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Mortgaged Property, or any part thereof, or, except for Permitted Encumbrances
as described in Section 5.2 above, any further encumbrance of the Mortgaged
Property, unless the prior written consent of Lender is obtained, which consent
may be withheld for any reason; or
(h) The failure of Borrower to take the corrective measures
required in this Agreement within the time periods specified following Lender's
demand because the Debt Service Coverage for the Facilities has not been met; or
(i) Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of Borrower, Lessee or
Guarantor pursuant to or in connection with this Agreement (including, without
limitation, representations and warranties contained herein or in any of the
Loan Documents) or as an inducement to Lender to make the Loan to Borrower, (i)
proves to have been false in any material respect at the time when the facts
therein set forth were stated or certified, or (ii) proves to have omitted any
substantial contingent or unliquidated liability or claim against Borrower or
Guarantor, or (iii) on the date of execution of this Agreement there shall have
been any material adverse change in any of the facts previously disclosed by any
such certificate, statement, representation, warranty or audit, which change
shall not have been disclosed to Lender in writing at or prior to the time of
such execution; or
(j) The failure of Borrower to correct or cause Lessee to
correct, within the time deadlines set by any applicable Medicare, Medicaid or
licensing agency, any deficiency which would result in the following actions by
such agency with respect to the Facility:
(i) a termination of any Reimbursement Contract or any
Permit; or
(ii) a ban on new admissions generally or on admission
of patients otherwise qualifying for Medicare or Medicaid coverage; or
(k) Borrower or the Facility should be assessed fines or
penalties by any state or any Medicare, Medicaid, health or licensing agency
having jurisdiction over such Persons or the Facility in excess of $25,000 which
are not paid within the time specified therefor; or
(l) A final judgment shall be rendered by a court of law or
equity against Borrower in excess of $25,000, and the same shall remain
undischarged for a period of thirty (30) days, unless such judgment is either
(i) fully covered by collectible insurance and such insurer has within such
period acknowledged such coverage in writing, or (ii) although not fully covered
by insurance, enforcement of such judgment has been effectively stayed, such
judgment is being contested or appealed by appropriate proceedings and Borrower
or Guarantor, as the case may be, has established reserves adequate for payment
in the event such Person is ultimately unsuccessful in such contest or appeal
and evidence thereof is provided to Lender; or
(m) The occurrence of any material adverse change in the
financial condition or prospects of Borrower or Guarantor, or the existence of
any other condition which, in Lender's reasonable determination, constitutes a
material impairment of any such Person's ability to operate
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<PAGE> 39
the Facility or of such Person's ability to perform their respective obligations
under the Loan Documents, and is not remedied within thirty (30) days after
written notice; or
(n) The termination of any Lease Agreement except in accordance
with its terms in connection with the issuance to Guarantor of a license to
operate the relevant Facility; or
(o) The occurrence of a default under any Lease Agreement which
remains uncured after any applicable cure period; or
(p) The termination of any management or operating agreement
for the Facility without the prior written consent of Lender; or
(q) The occurrence of an Event of Default under any of the
Notes or other Loan Documents executed in connection therewith, as listed and
described on Schedule III attached hereto.
Notwithstanding any provision in this Section 7.1, all
requirements of notice shall be deemed eliminated if Lender is prevented from
declaring an Event of Default by bankruptcy or other applicable law. The cure
period, if any, shall then run from the occurrence of the event or condition of
Default rather than from the date of notice.
7.2 REMEDIES. Upon the occurrence of any one or more of the foregoing
Events of Default, Lender may, at its option:
(a) Declare the entire unpaid principal of the Loan Obligations
to be, and the same shall thereupon become, immediately due and payable, without
presentment, protest or further demand or notice of any kind, all of which are
hereby expressly waived;
(b) Proceed to protect and enforce its rights by action at law
(including, without limitation, bringing suit to reduce any claim to judgment),
suit in equity and other appropriate proceedings including, without limitation,
for specific performance of any covenant or condition contained in this
Agreement;
(c) Exercise any and all rights and remedies afforded by the
laws of the United States, the states in which any of the Land or other
Mortgaged Property is located or any other appropriate jurisdiction as may be
available for the collection of debts and enforcement of covenants and
conditions such as those contained in this Agreement and the Loan Documents;
(d) Exercise the rights and remedies of setoff and/or banker's
lien against the interest of Borrower in and to every account and other property
of Borrower which is in the possession of Lender or any person who then owns a
participating interest in the Loan, to the extent of the full amount of the
Loan; or
(e) Exercise its rights and remedies pursuant to any other Loan
Documents.
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ARTICLE VIII
MISCELLANEOUS
8.1 WAIVER. No remedy conferred upon, or reserved to, Lender in this
Agreement or any of the other Loan Documents is intended to be exclusive of any
other remedy or remedies, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity. Exercise of or omission to exercise any right of
Lender shall not affect any subsequent right of Lender to exercise the same. No
course of dealing between Borrower and Lender or any delay on Lender's part in
exercising any rights shall operate as a waiver of any of Lender's rights. No
waiver of any Default under this Agreement or any of the other Loan Documents
shall extend to or shall affect any subsequent or other then existing Default or
shall impair any rights, remedies or powers of Lender.
8.2 COSTS AND EXPENSES. Borrower will bear all taxes, fees and
expenses (including reasonable attorneys' fees and expenses of counsel for
Lender) in connection with the Loan, the Notes, the preparation of this
Agreement and the other Loan Documents (including any amendments hereafter
made), and in connection with any modifications thereto and the recording of any
of the Loan Documents. If, at any time, a Default occurs or Lender becomes a
party to any suit or proceeding in order to protect its interests or priority in
any Mortgaged Property for any of the Loan Obligations or its rights under this
Agreement or any of the Loan Documents, or if Lender is made a party to any suit
or proceeding by virtue of the Loan, this Agreement or any Mortgaged Property
and as a result of any of the foregoing, Lender employs counsel to advise or
provide other representation with respect to this Agreement, or to collect the
balance of the Loan Obligations, or to take any action in or with respect to any
suit or proceeding relating to this Agreement, any of the other Loan Documents,
the Lease Agreements, any Mortgaged Property, Borrower, any Guarantor or Lessee
or to protect, collect, or liquidate any of the security for the Loan
Obligations, or attempt to enforce any security interest or lien granted to
Lender by any of the Loan Documents, then in any such events, all of the actual
attorney's fees arising from such services, including attorneys' fees for
preparation of litigation and in any appellate or bankruptcy proceedings, and
any expenses, costs and charges relating thereto shall constitute additional
obligations of Borrower to Lender payable on demand of Lender. Without limiting
the foregoing, Borrower has undertaken the obligation for payment of, and shall
pay, all recording and filing fees, revenue or documentary stamps or taxes,
intangibles taxes, and other taxes, expenses and charges payable in connection
with this Agreement, any of the Loan Documents, the Loan Obligations, or the
filing of any financing statements or other instruments required to effectuate
the purposes of this Agreement, and should Borrower fail to do so, Borrower
agrees to reimburse Lender for the amounts paid by Lender, together with
penalties or interest, if any, incurred by Lender as a result of underpayment or
nonpayment. Such amounts shall constitute a portion of the Loan Obligations,
shall be secured by the Mortgage and shall bear interest at the Default Rate
from the date advanced until repaid.
8.3 PERFORMANCE OF LENDER. At its option, upon Borrower's failure to
do so, Lender may make any payment or do any act on Borrower's behalf that
Borrower or others are inquired to do to remain in compliance with this
Agreement or any of the other Loan Documents, and Borrower agrees to reimburse
Lender, on demand, for any payment made or expense incurred by Lender
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<PAGE> 41
pursuant to the foregoing authorization, including, without limitation,
reasonable attorneys' fees, and until so repaid any sums advanced by Lender
shall constitute a portion of the Loan Obligations, shall be secured by the
Mortgage and shall bear interest at the Default Rate from the date advanced
until repaid.
8.4 INDEMNIFICATION. Borrower shall, at its sole cost and expense,
protect, defend, indemnify and hold harmless the Indemnified Parties from and
against any and all claims, suits, liabilities (including, without limitation,
strict liabilities), actions, proceedings, obligations, debts, damages, losses,
costs, expenses, diminutions in value, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement, punitive damages, foreseeable and
unforeseeable consequential damages, of whatever kind or nature (including but
not limited to reasonable attorneys' fees and other costs of defense) imposed
upon or incurred by or asserted against Lender by reason of (a) ownership of the
Notes, the Mortgage, the Mortgaged Property or any interest therein or receipt
of any Rents; (b) any amendment to, or restructuring of, the Loan Obligations
and/or any of the Loan Documents; (c) any and all lawful action that may be
taken by Lender in connection with the enforcement of the provisions of the
Mortgage or the Notes or any of the other Loan Documents, whether or not suit is
filed in connection with same, or in connection with Borrower, Lessee, any
guarantor and/or any partner, joint venturer, member or shareholder thereof
becoming a party to a voluntary or involuntary federal or state bankruptcy,
insolvency or similar proceeding; (d) any accident, injury to or death of
persons or loss of or damage to property occurring in, on or about the Land, the
Improvements or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (e) any use, nonuse or
condition in, on or about the Land, the Improvements or any part thereof or on
the adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (f) any failure on the part of Borrower, Lessee, or any
guarantor to perform or comply with any of the terms of this Agreement or any of
the other Loan Documents; (g) any claims by any broker, person or entity
claiming to have participated in arranging on behalf of Borrower the making of
the Loan evidenced by the Notes; (h) any failure of the Mortgaged Property to be
in compliance with any applicable laws; (i) performance of any labor or services
or the furnishing of any materials or other property with respect to the Land,
the Improvements or any part thereof; (j) the failure of any person to file
timely with the Internal Revenue Service an accurate Form 1099-b, statement for
recipients of proceeds from real estate, broker and barter exchange
transactions, which may be required in connection with the Mortgage, or to
supply a copy thereof in a timely fashion to the recipient of the proceeds of
the transaction in connection with which the Loan is made; (k) any
misrepresentation made to Lender in this Agreement or in any of the other Loan
Documents; (l) any tax on the making and/or recording of the Mortgage, the Notes
or any of the other Loan Documents; (m) the violation of any requirements of the
Employee Retirement Income Security Act of 1974, as amended; (n) any fines or
penalties assessed or any corrective costs incurred by Lender if the Facility or
any part of the Mortgaged Property is determined to be in violation of any
covenants, restrictions of record, or any applicable laws, ordinances, rules or
regulations; or (o) the enforcement by any of the Indemnified Parties of the
provisions of this Section 8.4; provided, however, that no indemnity shall be
required for any such damages, costs, liabilities, losses or judgments arising
from the gross negligence or willful misconduct of the Indemnified Party. Any
amounts payable to Lender by reason of the application of this Section 8.4 shall
become immediately due and payable and shall constitute a portion of the
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Loan Obligations, shall be secured by the Mortgage and shall accrue interest at
the Default Rate. The obligations and liabilities of Borrower under this Section
8.4 shall survive any termination, satisfaction, assignment, entry of a judgment
of foreclosure or exercise of a power of sale or delivery of a deed in lieu of
foreclosure of the Mortgage. For purposes of this Section 8.4, the term
"Indemnified Parties" means Lender and any Person who is or will have been
involved in the origination of the Loan, any Person who is or will have been
involved in the servicing of the Loan, any Person in whose name the encumbrance
created by the Mortgage is or will have been recorded, any Person who may hold
or acquire or will have held a full or partial interest in the Loan (including,
without limitation, the Investor and any investor in any securities backed in
whole or in part by the Loan) as well as the respective directors, officers,
shareholder, partners, members, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including, without limitation, any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan or the Mortgaged Property, whether during
the term of the Mortgage or as a part of or following a foreclosure of the Loan
and including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of Lender's assets and business).
8.5 HEADINGS. The headings of the Sections of this Agreement are for
convenience of reference only, are not to be considered a part hereof, and shall
not limit or otherwise affect any of the terms hereof.
8.6 SURVIVAL OF COVENANTS. All covenants, agreements, representations
and warranties made herein and in certificates or reports delivered pursuant
hereto shall be deemed to have been material and relied on by Lender,
notwithstanding any investigation made by or on behalf of Lender, and shall
survive the execution and delivery to Lender of the Note and this Agreement.
8.7 NOTICES, ETC. Any notice or other communication required or
permitted to be given by this Agreement or the other Loan Documents or by
applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery (to the person or department if one is
specified below) with receipt acknowledged by the recipient thereof, (b) three
(3) Business Days following the date deposited in the U.S. mail, certified or
registered, with return receipt requested, or (c) one (1) Business Day following
the date deposited with Federal Express or other national overnight carrier, and
in each case addressed as follows:
If to Borrower:
AHC Purchaser, Inc.
c/o Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Attention: Chief Financial Officer
Fax: (414) 918-5055
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With a copy to:
Alan C. Leet, Esq.
Rogers & Hardin
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, GA 30303
Fax: (404) 525-2224
provided, however, that failure to send such copies shall not render any such
notice or other communications invalid.
If to Lender:
GMAC Commercial Mortgage Corporation
650 Dresher Road
P.O. Box 1015
Horsham, Pennsylvania 19044-8015
Attn: Servicing Department
with a copy to:
Kelly M. Wrenn, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
601 13th Street, NW, Suite 1000 South
Washington, DC 20005-3807
provided, however, that failure to send such copies shall not render any such
notice or other communications invalid.
Either party may change its address to another single address by notice given as
herein provided, except any change of address notice must be actually received
in order to be effective.
8.8 BENEFITS. All of the terms and provisions of this Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns. No Person other than Borrower or Lender shall be
entitled to rely upon this Agreement or be entitled to the benefits of this
Agreement.
8.9 PARTICIPATION. Borrower acknowledges that Lender may, at its
option, sell participation interests in the Loan or to other participating banks
or Lender may (but shall not be obligated to) assign its interest in the Loan to
its affiliates or to other assignees, including, without limitation, the Federal
Home Loan Mortgage Corporation (the "Assignee"). Borrower agrees with each
present and future participant in the Loan or Assignee of the Loan that if an
Event of Default should occur, each present and future participant or Assignee
shall have all of the rights and
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remedies of Lender with respect to any deposit due from Borrower. The execution
by a participant of a participation agreement with Lender, and the execution by
Borrower of this Agreement, regardless of the order of execution, shall evidence
an agreement between Borrower and said participant in accordance with the terms
of this Section. If the Loan is assigned to the Assignee, the Assignee will
engage an underwriter (the "Underwriter"), who will be responsible for the due
diligence, documentation, preparation and execution of certain documents.
Borrower agrees that Lender may, at its sole option and without notice to or
consent of Borrower, assign its interest in the Loan to the Assignee for
inclusion in a Real Estate Mortgage Investment Conduit ("REMIC") and, in such
event, Borrower agrees to provide the Assignee with such information as may be
reasonably required by the Underwriter in connection therewith or by an investor
in any securities backed in whole or in part by the Loan or any rating agency
rating such securities. Borrower irrevocably waives any and all right it may
have under applicable law to prohibit such disclosure, including, but not
limited to, any right of privacy, and consents to the disclosure of such
information to the Assignee, the Underwriter, to potential investors in the
REMIC, and to such rating agencies.
8.10 SUPERSEDES PRIOR AGREEMENTS; COUNTERPARTS. This Agreement and
the instruments referred to herein supersede and incorporate all
representations, promises, and statements, oral or written, made by Lender in
connection with the Loan. This Agreement may not be varied, altered, or amended
except by a written instrument executed by an authorized officer of Lender and
Borrower. This Agreement may be executed in any number of counterparts, each of
which, when executed and delivered, shall be an original, but such counterparts
shall together constitute one and the same instrument.
8.11 LOAN AGREEMENT GOVERNS. The Loan is governed by terms and
provisions set forth in this Loan Agreement and the other Loan Documents and in
the event of any irreconcilable conflict between the terms of the other Loan
Documents and the terms of this Loan Agreement, the terms of this Loan Agreement
shall control; provided, however, that in the event there is any apparent
conflict between any particular term or provision which appears in both this
Loan Agreement and the other Loan Documents, and it is possible and reasonable
for the terms of both this Loan Agreement and the Loan Documents to be performed
or complied with, then, notwithstanding the foregoing, both the terms of this
Loan Agreement and the other Loan Documents shall be performed and complied
with.
8.12 CONTROLLING LAW. THE PARTIES HERETO AGREE THAT THE VALIDITY,
INTERPRETATION, ENFORCEMENT AND EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF KANSAS AND THE
PARTIES HERETO SUBMIT (AND WAIVE ALL RIGHTS TO OBJECT) TO NON-EXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF KANSAS, FOR THE ENFORCEMENT OF ANY AND ALL
OBLIGATIONS UNDER THE LOAN DOCUMENTS, EXCEPT THAT IF ANY SUCH ACTION OR
PROCEEDING ARISES UNDER THE CONSTITUTION, LAWS OR TREATIES OF THE UNITED STATES
OF AMERICA, OR IF THERE IS A DIVERSITY OF CITIZENSHIP BETWEEN THE PARTIES
THERETO, SO THAT IT IS TO BE BROUGHT IN A UNITED STATES DISTRICT COURT, IT SHALL
BE BROUGHT IN THE
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS OR ANY SUCCESSOR FEDERAL
COURT HAVING ORIGINAL JURISDICTION.
8.13 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY WAIVE ANY RIGHT
THAT THEY MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF,
DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE LOAN OR (B) IN ANY WAY CONNECTED WITH OR PERTAINING OR
RELATED TO OR INCIDENTAL TO ANY DEALINGS OF LENDER AND/OR BORROWER WITH RESPECT
TO THE LOAN DOCUMENTS OR IN CONNECTION WITH THIS AGREEMENT OR THE EXERCISE OF
EITHER PARTY'S RIGHTS AND REMEDIES UNDER THIS AGREEMENT OR OTHERWISE, OR THE
CONDUCT OR THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES
WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE. BORROWER AND LENDER AGREE THAT EITHER PARTY MAY FILE A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND
BARGAINED AGREEMENT OF EITHER PARTY HERETO TO IRREVOCABLY WAIVE THEIR RIGHTS TO
TRIAL BY JURY AS AN INDUCEMENT OF LENDER TO MAKE THE LOAN AND THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER
(WHETHER OR NOT MODIFIED HEREIN) BETWEEN BORROWER AND LENDER SHALL INSTEAD BE
TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.14 NONRECOURSE. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, OR
IN ANY OF THE OTHER LOAN DOCUMENTS EVIDENCING THE LOAN, THE LIABILITY OF
BORROWER FOR THE PAYMENT OF PRINCIPAL AND INTEREST AND AGREED CHARGES, AND THE
OBSERVANCE AND PERFORMANCE OF ALL OF THE TERMS, COVENANTS, AND CONDITIONS AND
PROVISIONS OF THE NOTE AND THE OTHER LOAN DOCUMENTS, SHALL BE LIMITED TO THE
EXTENT PROVIDED IN THE MORTGAGE AND THE NOTES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 46
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be properly executed, by their respective duly authorized representatives, as of
the date first above written.
BORROWER:
WITNESS: AHC PURCHASER, INC., a Delaware corporation
/s/ Marc A. Bulson By: /s/ David M. Boitano (Seal)
- ------------------------------- ----------------------------------
David M. Boitano
Print Name: Marc A. Bulson Vice President
--------------------
LENDER:
WITNESS: GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation
/s/ R. Andrew Lien By: /s/ Philip A. Brooks (Seal)
- -------------------------------- -----------------------------------
Philip A. Brooks
Print Name: R. Andrew Lien Senior Vice President
---------------------
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<PAGE> 47
SCHEDULE I
DEFINITIONS
"ACCOUNTS" has the meaning given to that term in the Mortgage.
"ACTUAL MANAGEMENT FEES" means actual management fees paid or
incurred in connection with operation of the Facility.
"AFFILIATE" means, with respect to any Person, (a) each Person
that controls, is controlled by or is under common control with such Person, (b)
each Person that, directly or indirectly, owns or controls, whether beneficially
or as a trustee, guardian or other fiduciary, more than forty-nine percent (49%)
of the Stock of such Person, and (c) each of such Person's officers, directors,
members, joint venturers and partners.
"ASSIGNMENT OF LEASES AND RENTS" means those certain
Assignments of Leases and Rents of even date herewith executed in connection
with the Loan by Borrower in favor of Lender with respect to each Facility.
"ASSIGNMENTS OF LICENSES, PERMITS AND CONTRACTS" means,
collectively, those certain Assignments of Licenses, Permits and Contracts of
even date herewith executed by Lessee for the benefit of Lender.
"ASSUMED MANAGEMENT FEES" means imputed management fees of
five percent (5%) of net resident revenues of the Facility (which shall be
reduced by those expenses normally compensated as part of management fees and
separately paid by Borrower and otherwise included in net income and also for
any Medicare and Medicaid contractual adjustments, if Borrower elects, in its
sole discretion, to participate in such programs).
"BUSINESS DAY" means a day on which commercial banks are not
authorized or required by law to close in New York, New York.
"CLOSING DATE" means the date of this Agreement.
"COMMITMENT LETTER" means the commitment letter issued by
Lender to Borrower dated January 19, 2000.
"CROSS-COLLATERALIZATION AND CROSS-DEFAULT AGREEMENTS" means
the Cross-Collateralization, Cross-Default and Mortgage Modification Agreements,
or the Cross-Collateralization, Cross-Default and Deed of Trust Modification
Agreement, as applicable, of even date herewith executed by Borrower in favor of
Lender with respect to each Mortgaged Property.
SCHEDULE I-1
<PAGE> 48
"DEBT SERVICE COVERAGE FOR THE FACILITIES" means a ratio in
which the first number is the sum in the aggregate for all Facilities of net
pre-tax income of Borrower from the operations of the Facilities as set forth in
the quarterly statements provided to Lender (without deduction for Actual
Management Fees or management expenses paid or incurred in connection with the
operation of the Facilities), calculated based upon the preceding twelve (12)
months, plus interest expense and non-cash expenses or allowances for
depreciation and amortization of the Facilities for said period to the extent
deducted in determining net income, less either Assumed Management Fees or
Actual Management Fees, as applicable, and the second number is the sum of the
actual principal amounts due (even if not paid) on the Loan (but which shall not
include that portion associated with the balloon payment of the Loan) for the
applicable period plus the interest amount due on the Loan for the applicable
period. In calculating "pre-tax income", Extraordinary Income and Extraordinary
Expenses shall be excluded.
"DEFAULT" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both, would
constitute an Event of Default.
"DEFAULT RATE" means a per annum rate equal to the lesser of
the interest rate on the Note plus five percent (5%) per annum or the maximum
rate permitted by applicable law.
"ENVIRONMENTAL PERMIT" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Land and/or the
Improvements.
"EQUIPMENT" has the meaning given to that term in the
Mortgage.
"EVENT OF DEFAULT" means any "Event of Default" as defined
in Article VII hereof.
"EXTRAORDINARY INCOME AND EXTRAORDINARY EXPENSES" means
material items of a character significantly different from the typical or
customary business activities of Borrower which would not be expected to recur
frequently and which would not be considered as recurring factors in any
evaluation of the ordinary operating processes of Borrower's business.
"EXHIBIT" means an Exhibit to this Agreement, unless the
context refers to another document, and each such Exhibit shall be deemed a part
of this Agreement to the same extent as if it were set forth in its entirety
wherever reference is made thereto.
"FACILITIES" means all of the facilities named and described
in Schedule II attached hereto and made a part hereof.
"FACILITY" means, collectively and individually, each facility
named and described in Schedule II attached hereto and made a part hereof.
SCHEDULE I-2
<PAGE> 49
"GAAP" means, as in effect from time to time, generally
accepted accounting principles consistently applied as promulgated by the
American Institute of Certified Public Accountants.
"GOVERNMENTAL AUTHORITY" means any board, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision of any of them, that has or acquires jurisdiction over the
Land and/or the Improvements or the use, operation or improvement of the
Mortgaged Property.
"GUARANTOR" means Alterra Healthcare Corporation, Inc., a
Delaware corporation.
"GUARANTY AGREEMENT" means, with respect to each Loan, that
certain Exceptions to Nonrecourse and Additional Collateral Guaranty of even
date herewith executed by Guarantor for the benefit of Lender pursuant to which
Guarantor has made certain guarantees with respect to such Loan.
"HAZARDOUS MATERIALS" means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel and oil,
explosives, flammable materials, radioactive materials, polychlorinated
biphenyls ("PCBs") and compounds containing them, lead and lead-based paint,
asbestos or asbestos-containing materials in any form that is or-could become
friable, underground storage tanks, whether empty or containing any substance,
any substance the presence of which on the Land or in the Improvements is
prohibited by any federal, state or local authority, any substance that requires
special handling, any medical products or devices, including those materials
defined as "medical waste" or "biological waste" under relevant statutes or
regulations pertaining to Hazardous Materials Laws, and any other material or
substance now or in the future defined as a "hazardous substance," "hazardous
material," "hazardous waste," "toxic substance," "toxic pollutant,"
"contaminant," or "pollutant" within the meaning of any Hazardous Materials Law.
"HAZARDOUS MATERIALS LAWS" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that relate
to Hazardous Materials and apply to Borrower or to the Land and/or the
Improvements. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601,
et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, and their state analogs.
"IMPROVEMENTS" has the meaning given to that term in the
Mortgage.
"INDEBTEDNESS" means any (a) obligations for borrowed money,
(b) obligations, payment for which is being deferred by more than thirty (30)
days, representing the deferred purchase price of property other than accounts
payable arising in connection with the purchase of inventory customary in the
trade and in the ordinary course of Borrower's business, (c) obligations,
SCHEDULE I-3
<PAGE> 50
whether or not assumed, secured by Liens or payable out of the proceeds or
production from the Accounts and/or property now or hereafter owned or acquired,
and (d) the amount of any other obligation (including obligations under
financing leases) which would be shown as a liability on a balance sheet
prepared in accordance with GAAP.
"INTENDED USE" means, with respect to each Facility, the use
for which such Facility is licensed/operated as described in Section 3.7.
"INVENTORY" has the meaning given to that term in the
Mortgage.
"INVESTOR" means the Federal Home Loan Mortgage Corporation, a
publicly held government-sponsored enterprise, and any other purchaser of all or
a portion of the Loan, whether by participation or otherwise.
"LAND" has the meaning given to that term in the Mortgage.
"LEASE AGREEMENT" means, individually and collectively:
(a) with respect to each of the New Braunfels Facility, the
Deland Facility, the Leesburg Facility, the West Melbourne Facilities, the Port
Orange Facility, the Tequesta I Facility and the Stuart Facility, until a
license to operate such Facility is issued to Guarantor by the applicable
regulatory authority, the Lease of even date herewith by and between Borrower,
as landlord, and Assisted Living Properties, Inc., a Kansas corporation, as
lessee, pursuant to which such lessee has leased such Facility and the related
Mortgaged Property in its entirety (except for the Lease Agreement for the
Tequesta I Facility, as to which such Lessee has leased the Tequesta I Facility
and a portion of the Land constituting the related Mortgaged Property) and,
after the issuance of such license to Guarantor, the lease effective upon
issuance of such license by and between Borrower, as landlord, and Guarantor, as
lessee, pursuant to which Guarantor will lease such Facility and the related
Mortgaged Property in its entirety (except for the Lease Agreement for the
Tequesta I Facility, as to which such Lessee has leased the Tequesta I Facility
and a portion of the Land constituting the related Mortgaged Property);
(b) with respect to the Sussex Facility, until a license to
operate such Facility is issued to Guarantor by the applicable regulatory
authority, the Lease of even date herewith by and between Borrower, as landlord,
and ALS Leasing, Inc., a Delaware corporation, as lessee, pursuant to which such
lessee has leased such Facility and the related Mortgaged Property in its
entirety and, after the issuance of such license to Guarantor, the lease
effective upon issuance of such license by and between Borrower, as landlord,
and Guarantor, as lessee, pursuant to which Guarantor will lease such Facility
and the related Mortgaged Property in its entirety; and
(c) with respect to each of the Ann Arbor Facility, the
Bowling Green Facility, the Mansfield Facility, the Northampton Manor Facility,
the Montgomery Facilities, the Tequesta II Facility, the Abilene Facility, the
Hays Facility and the Wichita Facility, the Lease of even date herewith by and
between Borrower, as landlord, and Guarantor, as lessee, pursuant to which
SCHEDULE I-4
<PAGE> 51
Guarantor has leased such Facility and the related Mortgaged Property in its
entirety (except for the Lease Agreement for the Tequesta II Facility, as to
which such Lessee has leased the Tequesta II Facility and a portion of the Land
constituting the related Mortgaged Property).
"LESSEE" means, individually and collectively:
(a) with respect to each of the New Braunfels Facility, the
Deland Facility, the Leesburg Facility, the West Melbourne Facilities, the Port
Orange Facility, the Tequesta I Facility and the Stuart Facility, until a
license to operate such Facility is issued to Guarantor by the applicable
regulatory authority, Assisted Living Properties, Inc., a Kansas corporation,
and, after the issuance of such license to Guarantor, Guarantor;
(b) with respect to the Sussex Facility, until a license to
operate such Facility is issued to Guarantor by the applicable regulatory
authority, ALS Leasing, Inc., a Delaware corporation, and, after the issuance of
such license to Guarantor, Guarantor; and
(c) with respect to each of the Ann Arbor Facility, the
Bowling Green Facility, the Mansfield Facility, the Northampton Manor Facility,
the Montgomery Facilities, the Tequesta II Facility, the Abilene Facility, the
Hays Facility and the Wichita Facility, Guarantor.
"LESSEE'S SECURITY AGREEMENTS" means the respective Lessee's
Security Agreements of even date herewith by and between Lessee and Lender.
"LESSEE'S SUBORDINATION AGREEMENTS" means the respective
Lessee's Subordination and Attornment Agreements of even date herewith,
pertaining to each Facility, by and among Borrower, Lessee and Lender.
"LIEN" means any voluntary or involuntary mortgage, security
deed, deed of trust, lien, pledge, assignment, security interest, title
retention agreement, financing lease, levy, execution, seizure, judgment,
attachment, garnishment, charge, lien or other encumbrance of any kind,
including those contemplated by or permitted in this Agreement and the other
Loan Documents.
"LOAN" means , individually, with respect to each Facility,
the loan made by Lender to Borrower as of the date hereof in the amount set
forth on Schedule III hereto, and, collectively, all sixteen (16) loans in the
aggregate principal amount of Sixty Million Dollars ($60,000,000) made by Lender
to Borrower as of the date hereof.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, the Lease Agreements, the Assignments of Licenses, Permits and Contracts,
the Guaranty Agreements, the Mortgage, the Assignments of Leases and Rents, the
Lessee's Security Agreements, the Lessee's Subordination Agreements, the
Cross-Collateralization and Cross-Default Agreements and the Stock Pledge
Agreement, together with any and all other documents executed by Borrower or
others, evidencing, securing or otherwise relating to the Loan.
SCHEDULE I-5
<PAGE> 52
"LOAN OBLIGATIONS" means, with respect to each Loan, the
aggregate of all principal and interest owing from time to time under the Note
evidencing such Loan and all expenses, charges and other amounts from time to
time owing under such Note, this Agreement, or the other Loan Documents
pertaining to such Loan and all covenants, agreements and other obligations from
time to time owing to, or for the benefit of, Lender pursuant to such Loan
Documents.
"MATURITY DATE" means February 1, 2005.
"MEDICAID" means that certain program of medical assistance,
funded jointly by the federal government and the States, for impoverished
individuals who are aged, blind and/or disabled, and/or members of families with
dependent children, which program is more fully described in Title XIX of the
Social Security Act (42 U.S.C. Sections 1396 et seq.) and the regulations
promulgated thereunder.
"MEDICARE" means that certain federal program providing health
insurance for eligible elderly and other individuals, under which physicians,
hospitals, skilled nursing homes, home health care and other providers are
reimbursed for certain covered services they provide to the beneficiaries of
such program, which program is more fully described in Title XVIII of the Social
Security Act (42 U.S.C. Sections 1395 et seq.) and the regulations
promulgated thereunder.
"MORTGAGE" means, collectively, and individually with respect
to each Facility, those certain Mortgages or Deeds of Trust and Security
Agreements, of even date herewith, from Borrower to or for the benefit of
Lender, encumbering the specific real property described in Exhibits "A-1"
through "A-16" hereto".
"MORTGAGED PROPERTY" has the meaning given to that term in the
Mortgage.
"NOTE" means, with respect to each Loan, the Promissory Note
of even date herewith in the principal amount of such Loan payable by Borrower
to the order of Lender.
"NOTES" means the sixteen (16) Notes of even date herewith,
each of which evidences a single Loan, as listed and described in Schedule III.
"O&M PROGRAM" means a written program of operations and
maintenance established or approved in writing by Lender relating to any
Hazardous Materials in, on or under the Land or the Improvements.
"PERMITS" has the meaning given to that term in the Mortgage.
"PERMITTED ENCUMBRANCES" has the meaning given to that term in
Section 5.2 hereof.
"PERSON" means any natural person, firm, corporation,
partnership, limited liability company, trust and any other form of legal
entity.
SCHEDULE I-6
<PAGE> 53
"PROCEEDS" has the meaning given to that term in the Mortgage.
"REIMBURSEMENT CONTRACTS" has the meaning given to that term
in the Mortgage.
"RENTS" has the meaning given to that term in the Mortgage.
"SINGLE PURPOSE ENTITY" means a Person which owns no interest
or property other than the Mortgaged Property or interests in Borrower.
"STOCK" means all shares, options, warrants, general or
limited partnership interests, membership interests, participations or other
equivalents (regardless of how designated) in a corporation, limited liability
company, partnership or any equivalent entity, whether voting or nonvoting,
including, without limitation, common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement of
even date herewith executed by AHC Purchaser Holding, Inc., a Delaware
corporation, in favor of Lender.
SCHEDULE I-7
<PAGE> 54
SCHEDULE II
DEFINITION OF FACILITY
"FACILITY" means, individually and collectively:
(a) the facility known as "Clare Bridge of Ann Arbor" or
"Alterra Clare Bridge of Ann Arbor," presently a 36-bed, 36-unit home for the
aged, located at 750 Eisenhower Parkway, Ann Arbor, Michigan 48103, as it may
now or hereafter exist, together with any other general and specialized care
facilities, if any (including any Alzheimer's care unit, subacute, and nursing
home facility), now or hereafter operated on the Land (the "Ann Arbor
Facility");
(b) the facility known as "Sterling House of Bowling Green" or
"Alterra Sterling House of Bowling Green," presently a 37-bed, 37-unit
residential care facility, located at 121 N. Wintergarden Road, Bowling Green,
Ohio 43402, as it may now or hereafter exist, together with any other general
and specialized care facilities, if any (including any Alzheimer's care unit,
subacute, and nursing home facility), now or hereafter operated on the Land (the
"Bowling Green Facility");
(c) the facility known as "Sterling House of Mansfield" or
"Alterra Sterling House of Mansfield," presently a 42-bed, 42-unit residential
care facility, located at 1841 Middle Bellville, Mansfield, Ohio 44904, as it
may now or hereafter exist, together with any other general and specialized care
facilities, if any (including any Alzheimer's care unit, subacute, and nursing
home facility), now or hereafter operated on the Land (the "Mansfield
Facility");
(d) the facility known as "Wynwood of Northampton Manor" or
"Alterra Wynwood of Northampton Manor," presently a 113-bed, 113-unit personal
care facility, located at 65 Newtown-Richboro Road, Richboro, Pennsylvania
18954, as it may now or hereafter exist, together with any other general and
specialized care facilities, if any (including any Alzheimer's care unit,
subacute, and nursing home facility), now or hereafter operated on the Land (the
"Northampton Manor Facility");
(e) the facility known as "Clare Bridge of Montgomery" or
"Alterra Clare Bridge of Montgomery," presently a 48-bed, 48-unit personal care
facility, located at 1089 Horsham Road, North Wales, Pennsylvania 19454 (the
"Montgomery I Facility"), and the facility known as "Wynwood of Montgomery" or
"Alterra Wynwood of Montgomery," presently a 72-bed, 72-unit personal care
facility, located at 1091 Horsham Road, North Wales, Pennsylvania 19454 (the
"Montgomery II Facility"), as each may now or hereafter exist, together with any
other general and specialized care facilities, if any (including any Alzheimer's
care unit, subacute, and nursing home facility), now or hereafter operated on
the Land (collectively, the "Montgomery Facilities");
(f) the facility known as "Sterling House of New Braunfels" or
"Alterra Sterling House of New Braunfels," presently a 37-bed, 37-unit personal
care facility, located at 2457 Loop
Schedule II-1
<PAGE> 55
337, New Braunfels, Texas 78130, as it may now or hereafter exist, together with
any other general and specialized care facilities, if any (including any
Alzheimer's care unit, subacute, and nursing home facility), now or hereafter
operated on the Land (the "New Braunfels Facility");
(g) the facility known as "Sterling House of Deland" or
"Alterra Sterling House of Deland," presently a 42-bed, 42-unit assisted living
facility, located at 1210 N. Stone Street, Deland, Florida 32724, as it may now
or hereafter exist, together with any other general and specialized care
facilities, if any (including any Alzheimer's care unit, subacute, and nursing
home facility), now or hereafter operated on the Land (the "Deland Facility");
(h) the facility known as "Sterling House of Leesburg" or
"Alterra Sterling House of Leesburg," presently a 42-bed, 42-unit assisted
living facility, located at 700 South Lake Street, Leesburg, Florida 34748, as
it may now or hereafter exist, together with any other general and specialized
care facilities, if any (including any Alzheimer's care unit, subacute, and
nursing home facility), now or hereafter operated on the Land (the "Leesburg
Facility");
(i) the facility known as "Sterling House of West Melbourne"
or "Alterra Sterling House of West Melbourne," presently a 42-bed, 38-unit
assisted living facility, located at 7200 Greenboro Drive, West Melbourne,
Florida 32904 (the "West Melbourne I Facility"), and the facility known as
"Sterling House of West Melbourne" or "Alterra Sterling House of West
Melbourne," presently a 42-bed, 42-unit assisted living facility, located at
7300 Greenboro Drive, West Melbourne, Florida 32904 (the "West Melbourne II
Facility"), as each may now or hereafter exist, together with any other general
and specialized care facilities, if any (including any Alzheimer's care unit,
subacute, and nursing home facility), now or hereafter operated on the Land
(collectively, the "West Melbourne Facilities");
(j) the facility known as "Sterling House of Port Orange" or
"Alterra Sterling House of Port Orange," presently a 42-bed, 42-unit assisted
living facility, located at 955 Village Trail Drive, Port Orange, Florida 32127,
as it may now or hereafter exist, together with any other general and
specialized care facilities, if any (including any Alzheimer's care unit,
subacute, and nursing home facility), now or hereafter operated on the Land (the
"Port Orange Facility");
(k) the facility known as "Sterling House of Tequesta" or
"Alterra Sterling House of Tequesta," presently a 42-bed, 42-unit assisted
living facility, located at 205 Village Boulevard, Tequesta, Florida 33469 (the
"Tequesta I Facility"), and the facility known as "Sterling House of Tequesta"
or "Alterra Sterling House of Tequesta," presently a 42-bed, 42-unit assisted
living facility, located at 211 Village Boulevard, Tequesta, Florida 33469 (the
"Tequesta II Facility"), as each may now or hereafter exist, together with any
other general and specialized care facilities, if any (including any Alzheimer's
care unit, subacute, and nursing home facility), now or hereafter operated on
the Land (collectively, the "Tequesta Facilities");
(l) the facility known as "Sterling House of Abilene"or
"Alterra Sterling House of Abilene," presently a 33-bed, 26-unit adult care
home, located at 1102 N. Vine Street, Abilene, Kansas 67410, as it may now or
hereafter exist, together with any other general and specialized care
Schedule II-2
<PAGE> 56
facilities, if any (including any Alzheimer's care unit, subacute, and nursing
home facility), now or hereafter operated on the Land (the "Abilene Facility");
(m) the facility known as "Sterling House of Hays" or "Alterra
Sterling House of Hays," presently a 33-bed, 33-unit adult care home, located at
1801 E. 27th Street, Hays, Kansas 67601, as it may now or hereafter exist,
together with any other general and specialized care facilities, if any
(including any Alzheimer's care unit, subacute, and nursing home facility), now
or hereafter operated on the Land (the "Hays Facility");
(n) the facility known as "Sterling House of Wichita" or
"Alterra Sterling House of Wichita," presently a 30-bed, 26-unit adult care
home, located at 8600 E. 21st Street, Wichita, Kansas 67206, as it may now or
hereafter exist, together with any other general and specialized care
facilities, if any (including any Alzheimer's care unit, subacute, and nursing
home facility), now or hereafter operated on the Land (the "Wichita Facility");
(o) the facility known as "Sterling House of Stuart" or
"Alterra Sterling House of Stuart," presently a 42-bed, 42-unit assisted living
facility, located at 3401 S.E. Aster Lane, Stuart, Florida 34994, as it may now
or hereafter exist, together with any other general and specialized care
facilities, if any (including any Alzheimer's care unit, subacute, and nursing
home facility), now or hereafter operated on the Land (the "Stuart Facility");
and
(p) the facility known as "WovenHearts of Sussex," "Sterling
House of Sussex" or "Alterra Sterling House of Sussex," presently a 20-bed,
20-unit community based residential facility, located at W240 N6351 Maple
Avenue, Sussex, Wisconsin 53089, as it may now or hereafter exist, together with
any other general and specialized care facilities, if any (including any
Alzheimer's care unit, subacute, and nursing home facility), now or hereafter
operated on the Land (the "Sussex Facility").
Schedule II-3
<PAGE> 57
SCHEDULE III
DESCRIPTION OF LOANS
"LOAN" means, individually and collectively:
(a) the loan in the principal sum of Two Million Eight Hundred
Fifty Thousand and No/100 Dollars ($2,850,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Mortgage and
Security Agreement dated as of even date herewith, encumbering the real property
in Washtenaw County, Michigan on which the Ann Arbor Facility is situated;
(b) the loan in the principal sum of Two Million Eight Hundred
Sixty Thousand and No/100 Dollars ($2,860,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Open-End
Mortgage and Assignment of Rents dated as of even date herewith, encumbering the
real property in Wood County, Ohio on which the Bowling Green Facility is
situated;
(c) the loan in the principal sum of Two Million Four Hundred
Thousand and No/100 Dollars ($2,400,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that certain Open-End Mortgage and
Assignment of Rents dated as of even date herewith, encumbering the real
property in Richland County, Ohio on which the Mansfield Facility is situated;
(d) the loan in the principal sum of Nine Million One Hundred
Sixty-five Thousand and No/100 Dollars ($9,165,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Open-End
Mortgage and Security Agreement dated as of even date herewith, encumbering the
real property in Bucks County, Pennsylvania on which the Northampton Manor
Facility is situated;
(e) the loan in the principal sum of Ten Million One Hundred
Forty Thousand and No/100 Dollars ($10,140,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Open-End
Mortgage and Security Agreement dated as of even date herewith, encumbering the
real property in Montgomery County, Pennsylvania on which the Montgomery
Facilities are situated;
(f) the loan in the principal sum of Two Million Four Hundred
Thousand and No/100 Dollars ($2,400,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that
Schedule III-1
<PAGE> 58
certain Deed of Trust and Security Agreement dated as of even date herewith,
encumbering the real property in Comal County, Texas on which the New Braunfels
Facility is situated;
(g) the loan in the principal sum of Two Million Seven Hundred
Thousand and No/100 Dollars ($2,700,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that certain Mortgage and Security
Agreement dated as of even date herewith, encumbering the real property in
Volusia County, Florida on which the Deland Facility is situated;
(h) the loan in the principal sum of Two Million Eight Hundred
Thousand and No/100 Dollars ($2,800,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that certain Mortgage and Security
Agreement dated as of even date herewith, encumbering the real property in Lake
County, Florida on which the Leesburg Facility is situated;
(i) the loan in the principal sum of Six Million Eight Hundred
Thousand and No/100 Dollars ($6,800,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that certain Mortgage and Security
Agreement dated as of even date herewith, encumbering the real property in
Brevard County, Florida on which the West Melbourne Facilities are situated;
(j) the loan in the principal sum of Two Million Nine Hundred
Thousand and No/100 Dollars ($2,900,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that certain Mortgage and Security
Agreement dated as of even date herewith, encumbering the real property in
Volusia County, Florida on which the Port Orange Facility is situated;
(k) the loan in the principal sum of Five Million Six Hundred
Thousand and No/100 Dollars ($5,600,000.00) evidenced by that certain Promissory
Note dated as of even date herewith from Borrower to Lender in the principal
amount of the loan, which loan is secured by that certain Mortgage and Security
Agreement dated as of even date herewith, encumbering the real property in Palm
Beach County, Florida on which the Tequesta Facilities are situated;
(l) the loan in the principal sum of Two Million One Hundred
Twenty-eight Thousand and No/100 Dollars ($2,128,000.00) evidenced by that
certain Promissory Note dated as of even date herewith from Borrower to Lender
in the principal amount of the loan, which loan is secured by that certain
Mortgage and Security Agreement dated as of even date herewith, encumbering the
real property in Dickinson County, Kansas on which the Abilene Facility is
situated;
(m) the loan in the principal sum of One Million Eight Hundred
Eighty-two Thousand and No/100 Dollars ($1,882,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is
Schedule III-2
<PAGE> 59
secured by that certain Mortgage and Security Agreement dated as of even date
herewith, encumbering the real property in Ellis County, Kansas on which the
Hays Facility is situated;
(n) the loan in the principal sum of One Million Three Hundred
Sixty-one Thousand and No/100 Dollars ($1,361,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Mortgage and
Security Agreement dated as of even date herewith, encumbering the real property
in Sedgwick County, Kansas on which the Wichita Facility is situated;
(o) the loan in the principal sum of Two Million Eight Hundred
Sixty Thousand and No/100 Dollars ($2,860,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Mortgage and
Security Agreement dated as of even date herewith, encumbering the real property
in Martin County, Florida on which the Stuart Facility is situated; and
(p) the loan in the principal sum of One Million One Hundred
Fifty-four Thousand and No/100 Dollars ($1,154,000.00) evidenced by that certain
Promissory Note dated as of even date herewith from Borrower to Lender in the
principal amount of the loan, which loan is secured by that certain Mortgage and
Security Agreement dated as of even date herewith, encumbering the real property
in Waukesha County, Wisconsin on which the Sussex Facility is situated.
Schedule III-3
<PAGE> 60
EXHIBIT A
LEGAL DESCRIPTIONS
A-1
<PAGE> 61
EXHIBIT B
BORROWER'S CHIEF EXECUTIVE OFFICE
AND PRINCIPAL PLACE OF BUSINESS
8600 E. 21st Street
Wichita, Kansas 67206
B-1
<PAGE> 62
EXHIBIT C
OWNERSHIP INTERESTS
<TABLE>
<CAPTION>
% of Ownership
Shareholder in Borrower
----------- -----------
<S> <C>
AHC Purchaser Holding, Inc., a Delaware corporation 100
</TABLE>
C-1
<PAGE> 63
EXHIBIT D
QUARTERLY FINANCIAL STATEMENT AND CENSUS DATA
Facility Name:
------------------------------------------------------------------
Management Company:
-------------------------------------------------------------
Report Date:
--------------------------------------------------------------------
<TABLE>
<CAPTION>
QUARTER QUARTER QUARTER QUARTER 12 MONTHS
ENDING ENDING ENDING ENDING ENDING
(DATE) (DATE) (DATE) (DATE) (DATE)
<S> <C> <C> <C> <C> <C>
CENSUS DATA
Total Number of Beds: ________ ________ ________ ________ ________
Number of Days in Period: ________ ________ ________ ________ ________
Total Patient Days Available: ________ ________ ________ ________ ________
Patient Utilization Days:
Medicaid ________ ________ ________ ________ ________
Private ________ ________ ________ ________ ________
Medicare ________ ________ ________ ________ ________
Other ________ ________ ________ ________ ________
Total Utilization Days: ________ ________ ________ ________ ________
CASH FLOW ANALYSIS
Total Routine Patient Revenue: ________ ________ ________ ________ ________
Total Net Revenue: ________ ________ ________ ________ ________
Total Expenses: ________ ________ ________ ________ ________
Pre-Tax Income: ________ ________ ________ ________ ________
ADD BACK
Depreciation and Amortization: ________ ________ ________ ________ ________
Interest on Mortgage: ________ ________ ________ ________ ________
Facility Lease Expense (if applicable): ________ ________ ________ ________ ________
Management Fees: ________ ________ ________ ________ ________
Extraordinary Items: ________ ________ ________ ________ ________
Net Operating Income: ________ ________ ________ ________ ________
</TABLE>
I hereby certify the above to be true and correct. Dated this ____ day
of _________, _____.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT E
COMPLIANCE CERTIFICATE
GMAC Commercial Mortgage Corporation
2200 Woodcrest Place, Suite 305
Birmingham, Alabama 35209
RE: Loan Agreement dated January ___, 2000 (together with
amendments, if any, the "Loan Agreement"), by and between GMAC
Commercial Mortgage Corporation, as Lender, and AHC Purchaser,
Inc., as Borrower
The undersigned officer of the above-named Borrower, does hereby certify that
for the quarterly financial period ending ____________________:
1. No Default or Event of Default has occurred or exists except
____________________.
2. The Debt Service Coverage for the Facility after deduction of
Actual Management Fees for the preceding twelve (12) months (or such lesser
period as shown have elapsed following the closing of the Loan) through the end
of such period was:
Required: 1.10 to 1.0
Actual: _____ to 1.0
THE MANNER OF CALCULATION IS ATTACHED.
3. The Debt Service Coverage for the Facility after deduction of
Assumed Management Fees for the preceding twelve (12) months (or such lesser
period as shall have elapsed following the closing of the Loan) through the end
of such period was:
Required: 1.25 to 1.0
Actual: _____ to 1.0
THE MANNER OF CALCULATION IS ATTACHED.
4. The fiscal year to date average daily occupancy for the Facility:
Required: Not less than 80%
Actual: __________
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5. The capital expenditures per unit was: [ANNUAL COMPLIANCE
CERTIFICATE ONLY]
Required: $250 per unit.
Actual: $______ per unit.
EVIDENCE OF SUCH CAPITAL EXPENDITURES IS ATTACHED.
6. Capitalized terms not defined herein shall have the meanings
given to such terms in the Loan Agreement.
7. The Persons owning interests, and percentage of ownership in
(a) Borrower and (b) Guarantor as of the date hereof are set forth below:
8. All information set forth in this Certificate is true and
correct in all material respects (a) as of the date of this Certificate with
respect to Paragraph 1, and (b) as of the end of the quarter for which the
information is provided in all other Paragraphs.
AHC PURCHASER, INC., a Delaware corporation,
Borrower
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
ALTERRA HEALTCHCARE CORPORATION, a Delaware
corporation, Lessee
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Dated this the _____ day of _____________, 200__.
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EXHIBIT F
PERMITTED LIENS
I. The real property on which is situated the Abilene Facility as more
particularly described in Exhibit "A-1" attached hereto:
1. Taxes for the year 2000 and all subsequent years. None now due
and payable.
2. Easement granted City of Abilene, Kansas by instrument date
August 8, 1995 and recorded in Misc. Book 230, Page 950.
Grants a permanent and perpetual easement for utility purposes
on the West 10 feet of the property.
3. The burden of joint easement for ingress, egress, and parking,
dated November 10, 1997, by and between The City of Abilene,
Kansas, a municipal corporation and Sterling House
Corporation, filed November 13, 1997 and recorded in Misc.
Book 237, Page 450.
4. Terms and Provisions of Easement granted Sterling House
Corporation by instrument dated November 10, 1997 and recorded
in Misc. Book 237, Page 458. (Affects Parcel C only.)
5. Rights of residents, as of the date hereof, as residents only,
pursuant to unrecorded leases.
II. The real property on which is situated the Ann Arbor Facility as more
particularly described in Exhibit "A-2" attached hereto:
1. Easement of sanitary sewer facilities as recorded in Liber
2238, page 907, Washtenaw County Records.
2. Grant of Easement to the City of Ann Arbor for sanitary sewer
as recorded in Liber 1784, page 569, Washtenaw County Records.
3. Cranbrook Subdivision Escrow Agreement between the City of Ann
Arbor and Cranbrook Venture as recorded in Liber 2155, page
988, Washtenaw County Records.
4. Subject to the terms and conditions of an Easement Agreement
as recorded in Liber 2238, page 895, Washtenaw County Records.
5. Declaration of Covenants as recorded in Liber 2279, page 589,
Washtenaw County Records.
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6. Easement for watermains, storm sewers, sanitary sewers and
drainage over the lot as shown in the Master Deed recorded in
Liber 3016, page 455 through 492, both inclusive, Washtenaw
County Records.
7. Private Easement granted to Michigan Bell Telephone Company as
recorded in Liber 1204, page 397, Washtenaw County Records.
8. Subject to a Underground Right of Way Agreement in favor of
the Detroit Edison Company as recorded in Liber 2257, page
287, Washtenaw County Records.
9. Subject to the rights of the co-owners of Brookhaven
Condominium, in general common elements and limited common
elements, as set forth in the Master Deed recorded in Liber
3016, page 455 through 492, both inclusive, Washtenaw County
Records, and as described in Act 59 of the Public Acts of
1978, as amended, and all of the terms and conditions,
regulations, restrictions, easements and other matters as set
forth in the above described Master Deed and Statute.
10 Taxes for year 2000 and subsequent years not yet due and
payable.
11. Rights of residents in possession, as of the date hereof, as
residents only, under unrecorded residency agreements.
III. The real property on which is situated the Bowling Green Facility as
more particularly described in Exhibit "A-3" attached hereto:
1. Taxes and assessments for the full year 2000 are a lien but
not yet due and payable.
2. If applicable, said premises are subject to unpaid charges, if
any, for sewer and/or water services provided to said
premises.
3. Zoning regulations, if any, imposed by the zoning designation
applicable to the premises as set forth on the zoning
endorsement which is a part of Lender's title policy.
4. Rights of residents in possession as of the date hereof, as
residents only, under unrecorded residency agreements.
IV. The real property on which is situated the Deland Facility as more
particularly described in Exhibit "A-4" attached hereto:
1. Any claim that any portion of said lands are sovereign lands
of the State of Florida, including submerged, filled or
artificially exposed lands and lands accreted to such lands.
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2. Taxes and assessments for the year 2000 and subsequent years,
not yet due and payable.
3. Rights of residents in possession as of the date hereof, as
residents only, under any unrecorded residency agreements.
4. The plat of Scarlett's Subdivision, recorded in Deed Book G,
Page 660, Public Records of Volusia County, Florida.
V. The real property on which is situated the Hays Facility as more
particularly described in Exhibit "A-5" attached hereto:
1. All assessments and taxes due for the 2nd half of year 1999,
due and payable, but not delinquent.
2. The lien of any special taxes or assessments entered after the
date hereof, none, now due and payable.
3. Covenants, conditions and restrictions as contained in Plat
and Dedication of Sternberg First Addition to the City of
Hays, Kansas, filed in Book 407 of OGL, page 451, relating to
land use and building types; fencing; Architectural Control
Committee; easement; nuisances; recreational vehicles;
outbuildings; utilities and media services.
4. A utility easement over the East 10 feet of the land and over
the West 20 feet of the land, as shown on the aforesaid
Sternberg First Additional to the City of Hays, Kansas.
5. A 75 foot building setback line over the South line of the
land from the centerline of 27th Street as shown on the
aforesaid Plat.
VI. The real property on which is situated the Leesburg Facility as more
particularly described in Exhibit "A-6" attached hereto:
1. Any claim that any portion of said lands are sovereign lands
of the State of Florida, including submerged, filled or
artificially exposed lands and lands accreted to such lands.
2. Taxes and assessments for the year 2000 and subsequent years
not yet due and payable.
3. Rights of residents in possession as of the date hereof, as
residents only, under any unrecorded residency agreements.
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4. Potable Water Utility Easement by Sterling House Corporation,
a Kansas corporation, to the City of Leesburg, Florida, and
filed in Official Records Book 1506, Page 1102, Public Records
of Lake County, Florida.
5. Ingress/Egress and Lighting Easement by Meditrust Company,
LLC, a Delaware limited liability company (successor by merger
to Meditrust of Florida, Inc.), to ALS-Clare Bridge, Inc., a
Delaware corporation, filed in Official Records Book 1667,
Page 1607, Public Records of Lake County, Florida.
6. The burdens and the terms and conditions of Reciprocal
Retention and Drainage Easement by and between Meditrust
Company, LLC, a Delaware limited liability company (successor
by merger to Meditrust of Florida, Inc.), and ALS-Clare
Bridge, Inc., a Delaware corporation, filed in Official
Records Book 1667, Page 1595, Public Records of Lake County,
Florida.
7. Restrictive Covenants recorded July 5, 1978, in Official
Records Book 654, Page 971, of the Public Records of Lake
County, Florida. Restrictions concerning nursing homes and
professional offices were removed by Release of Restrictive
Covenants, dated May 31, 1996, and recorded June 6, 1996, in
Official Records Book 1442, Page 397, Public Records of Lake
County, Florida.
8. Matters as disclosed in and by virtue of that certain
ALTA/ACSM Land Title Boundary Survey prepared by McGlohorn
Land Surveyor, Inc., dated January 14, 2000, last revised
1/19/2000, as follows:
a) encroachment of sod (plus or minus) 6 feet over
northern boundary line.
b) encroachment of mitered end section of drainage pipe
approximately 0.51 feet over southern property line.
VII. The real property on which is situated the Mansfield Facility as more
particularly described in Exhibit "A-7" attached hereto:
1. Plat Volume 22, Page 83 shows a 40 foot building setback line
on Middle Bellville, Straub Road and Sequoia and an 8 foot
easterly utility easement.
2. The premises are subject to a right of way, filed for record
February 9, 1912, established by instrument recorded in Volume
7, Page 446 of Richland County Records.
3. The premises are subject to an easement, filed for record July
14, 1978, established by the instrument recorded in Volume
775, Page 451 of Richland County Records.
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4. The premises are subject to an easement, filed for record May
31, 1978, established by the instrument recorded in Volume
773, Page 23 of Richland County Records.
5. The premises are subject to an easement, filed for record
November 21, 1977, established by the instrument recorded in
Volume 764, Page 321 of Richland County Records.
6. The premises are subject to an easement, from Sterling House
to Multi Cannel TV Cable Company filed for record December 31,
1997, established by the instrument recorded in Volume 0561,
Page 403 of Richland County Records.
7. The premises are subject to an easement, from Sterling House
to Ohio Edison Company filed for record February 6, 1998,
established by the instrument recorded in Volume 0568, Page
536 of Richland County Records.
8. The survey done by Nick E. Nigh Registered Surveyor Number
7384 of Peterman Associates dated December 24, 1999 and being
Project No. 97-1283 shows the following:
(A) Overhead electrical line crossing the North property line.
(B) Cable line crossing over the Northeast property line.
(C) Storm sewer and sanitary sewer crossing over the East
property line.
9. Taxes for the year 1999 are a lien, but not yet due and
payable.
10. Rights of residents in possession as of the date hereof, as
residents only, under unrecorded residency agreements.
VIII. The real property on which is situated the Montgomery I and II
Facilities as more particularly described in Exhibit "A-8" attached
hereto:
1. Taxes or special assessments which are not shown except as
otherwise specifically set forth herein, as existing liens by
the public record.
2. Title to that portion of premises lying within the bed of
Horsham Road is subject to public and private rights therein.
3. Deed of Release to County of Montgomery as in Deed Book 1155
page 194.
4. Rights granted to the Philadelphia Electric Co. as in Deed
Book 1160 page 28.
5. Rights granted to the Peco Energy Co. as in Deed Book 5142
page 1086.
6. Rights granted to Bell Atlantic-Pennsylvania, Inc. as in Deed
Book 5150 page 1621.
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7. Declaration of Covenants and Restrictions as in Deed Book 5138
page 771.
8. Land Development Agreement as in Deed Book 5138 page 776; and
First Amendment thereto recorded in Deed Book 5161 page 1766.
9. Tapping Fee and Development Agreement as in Deed Book 5138
page 1760.
10. Deed of Declaration of Public Water Easement as in Deed Book
5140 page 1201.
11. Tapping Fee and Development Agreement Clare Bridge of
Montgomery, Phase 2 as in Deed Book 5180 page 1399.
12. Land Development Agreement as in Deed Book 5182 page 527.
13. Declaration of Covenants and Restrictions as in Deed Book 5182
page 548.
14. Conditions disclosed on Plan recorded in Land Site Plan Book 3
page 225 and in Land Site Plan Book 3 page 480:
a) Building set back lines
b) Easement of Wetlands Boundary
c) Future Widening of Horsham Road
d) Easement of 20 feet wide sanitary sewer easement over
Northeast
e) Notes
IX. The real property on which is situated the New Braunfels Facility as
more particularly described in Exhibit "A-9" attached hereto:
1. Standby fees, taxes and assessments by any taxing authority
for the year 2000 and subsequent years, and subsequent taxes
and assessments by any taxing authority for prior years due to
change in land usage or ownership.
2. Liens and leases that affect the title to the land, but that
are subordinate to the lien of the insured mortgage.
3. The following matters and all terms of the documents creating
or offering evidence of the matters.
a. Water Quality Control Zoning or ruling orders issued
by the Water Quality Board of Texas, the
Environmental Protection Agency, or any other
governmental agencies having jurisdiction over
subject property due to the location of subject
property over the Edward's Underground Aquifer or its
Recharge Zone.
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b. Aerial easement five feet on each side of all
easements and streets and extended upward as required
for the purpose of utilities as recited on map and
plat recorded in Volume 12, Page 65, Comal County Map
and Plat Records.
c. 25 foot building setback line and a 20 foot utility
easement along Loop 337; a 20 foot utility easement
along the rear and a private 20 foot access along the
rear property line as shown on map and plat recorded
in Volume 12, page 65, Comal County, Texas Map and
Plat Records.
d. Reservation of an easement for a right of access to
utilities as shown on plat and set out in Doc
#9606024962, Official Public Records, Comal County,
Texas.
e. Rights of residents in possession, as of the date
hereof, as residents only, pursuant to unrecorded
leases.
X. The real property on which is situated the Northampton Manor Facility
as more particularly described in Exhibit "A-10" attached hereto:
1. Taxes or special assessments which are not shown as existing
liens except as otherwise specifically set forth herein by the
public records.
2. Title to that portion of premises lying within the bed of
Newtown - Richboro Road (S.R. 332) is subject to public and
private rights therein.
3. Agreement as in Deed Book 2580 page 436.
4. Public Water Improvement Agreement as in Deed Book 2847 page
1.
5. Sanitary Sewer Improvement Agreement as in Deed Book 2847 page
34.
6. Rights granted to Philadelphia Electric Company as in Deed
Book 2858 page 78.
7. Restrictions and Reservations as in Land Record Book 79 page
1265.
8. Deed of Dedication (Roadway Right of Way) as in Land Record
Book 92 page 421.
9. Rights granted to The Bell Telephone Company of Pennsylvania
as in Land Record Book 127 page 2365 and Land Record Book 172
page 403.
10. Deed of Dedication (Public Water and Sanitary Sewer
Facilities) as in Land Record Book 291 page 1072.
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11. Reservations as in Land Record Book 386 page 2086 and Land
Record Book 395 page 532.
12. Deed of Temporary Construction and Grading Easement as in Land
Record Book 924 page 1089.
13. Conditions of an Easement Agreement as in Land Record Book 924
page 1095.
14. Deed of Dedication (Public Water and Sanitary Sewer
Facilities) as in Land Record Book 1190 page 1547.
15. Final Plan recorded in Plan Book 223 page 76, shows the
following:
a) Future road widening line
b) Notes
c) Building setback lines
16. Final Plan of Willow Bend as recorded in Plan Book 248 page 97
shows the following:
a) Building set back lines
b) 30 foot wide sanitary sewer easement extends through
premises
c) Notes
d) Detention basin.
17. Plan as recorded in Plan Book 274 page 41, shows the following:
a) Building set back lines
b) Easement of driveway extending onto lands adjoining
to the West.
18. Plan recorded in Plan Book 278 page 29, shows the following:
a) Notes
b) Existing sanitary sewer easement
c) Requirement of building set back lines
d) Easement of utility poles and guy wire along
Newton-Richboro Road
e) Easement of drive extending onto lands adjoining to
the West
f) Utility easement
g) Permanent grading and stormwater management easement
h) Detention basin.
19. Rights of access to Center Street are not insured. The Plan as
recorded in Plan Book 278 page 29 shows as "wood barrier"
being erected along the end of Center Street.
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20. Conditions disclosed by a Survey made for Northampton Manor by
Anderson Engineering Associates, Inc., dated 10/22/1996,
revised 11/6/1996, as follows:
a) Surveyor's Notes
b) Public Utilities servicing premises
c) Detention Basin located on Tax Parcel 31-24-221
d) Building setback lines
e) Sanitary Sewer on Northerly portion of property
f) Stormwater management easement
g) Temporary stone parking
h) Portion of decks, fences and concrete pads encroach
into grading and stormwater management easement but
do not substantially impair the use of that easement
i) Ultimate right-of-way line encroaches on southerly
property line
j) 8" VCP on Southerly portion of property
k) 18" RCP on Southerly and Westerly portion of property
l) Driveway encroaches on the northeastern boundary of
subject premises.
21. Rights of residents in possession, as of the date hereof, as
residents only, pursuant to unrecorded leases.
XI. The real property on which is situated the Port Orange Facility as more
particularly described in Exhibit "A-11" attached hereto:
1. Any claim that any portion of said lands are sovereign lands
of the State of Florida, including submerged, filled or
artificially exposed lands and lands accreted to such lands.
2. Taxes or special assessments for the year 2000 and subsequent
years not yet due and/or payable.
3. Rights of residents as of the date hereof, as residents only,
under any unrecorded residency agreements.
4. Countryside PUD (Planned Unit Development) Agreement filed
December 18, 1981 in Official Records Book 2317, page 1531,
and First Amendment to Countryside PUD Agreement filed March
23, 1987 in Official Records Book 2954, page 1529, Public
Records of Volusia County, Florida.
5. Restrictions, reservations and easements as indicated and/or
shown on the recorded plat of said subdivision, recorded in
Map Book 45, Page 161, Public Records of Volusia County,
Florida, which easements are as follows:
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(a) 10 foot wide conservation easement to City of Port
Orange along the southern boundary of the insured
parcel.
(b) 12 foot wide drainage and utility easement to City of
Port Orange along the southern boundary of the
insured parcel.
(c) 7.5 foot wide drainage and utility easement to City
of Port Orange along the eastern and western
boundaries of the insured parcel.
(d) 10 foot wide underground utility easement to City of
Port Orange and pedestrian access easement to
Countryside Residential Homeowners Association.
6. Amended and Restated Declaration of Residential Covenants and
Restrictions, Countryside Planned Unit Development filed
February 7, 1989 in Official Records Book 3258, page 1454,
Public Records of Volusia County, Florida.
7. City of Port Orange Standard Form of Subdivision Improvement
Agreement between the City of Port Orange, and Coastline
Enterprises, Inc., filed in Official Records Book 2754, page
1488, Public Records of Volusia County, Florida.
XII. The real property on which is situated the Stuart Facility as more
particularly described in Exhibit "A-12" attached hereto:
1. Any claim that any portion of said lands are sovereign lands
of the State of Florida, including submerged, filled or
artificially exposed lands and lands accreted to such lands.
2. Taxes or special assessments for the year 2000 and subsequent
years, not yet due and/or payable.
3. Rights of residents as of the date hereof, as residents only,
under any unrecorded residency agreements.
4. Easement recorded in Official Records Book 1189, page 1272,
Public Records of Martin County, Florida.
5. Resolution Number 137-A-95 of the City Commission City of
Stuart, Florida, regarding Easement Exchange Agreement
recorded in Official Records Book 1154, Page 2606, Public
Records of Martin County, Florida.
6. Declaration of Common Use; Access and Maintenance for Lift
Station; Water Mains and Drainage Easement recorded in
Official Records Book 1154, Page 2617, Public Records of
Martin County, Florida.
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7. Grant of Easement recorded in Official Records Book 1172, Page
2685, Public Records of Martin County, Florida.
XIII. The real property on which is situated the Sussex Facility as more
particularly described in Exhibit "A-13" attached hereto:
1. General taxes for the year 1999, due and payable on 3/31/2000,
and subsequent years thereto.
2. Terms, conditions, restrictions and provisions, relating to
the use and maintenance of the easement described as Parcel B
of the subject premises as contained in Easement recorded as
Document No. 2014740 and First Amendment to Easement Agreement
recorded as Document No. 2163800.
3. Utility Easement granted to Wisconsin Gas and Electric Company
recorded as Document No. 135720, at Vol. 191, Page 222.
4. Utility Easement granted to Wisconsin Gas and Electric Company
recorded as Document No. 256180 at Vol. 338, page 101.
5. Utility Easement granted to Wisconsin Telephone Company and
the Lisbon Telephone Corporation recorded as Document No.
458971, at Vol. 740, page 1.
6. Ingress and Egress Easement set forth in Certified Survey Map
No. 7557.
7. Rights of residents in possession as of the date hereof, as
residents only, under unrecorded residency agreements.
XIV. The real property on which is situated the Tequesta I and II Facilities
as more particularly described in Exhibit "A-14" attached hereto:
1. Any claim that any portion of said lands are sovereign lands
of the State of Florida, including submerged, filled or
artificially exposed lands and lands accreted to such lands.
2. Taxes and assessments for the year 2000 and subsequent years,
not yet due and payable.
3. The rights of residents in possession as of the date hereof as
residents only, under unrecorded residency agreements.
4. Standard Developer Agreement by and between Loxahatchee River
Environmental Control District, and Sterling House
Corporation, filed in Official Records Book 10047, Page 650,
Public Records of Palm Beach County, Florida.
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5. Matters contained in Notice of Lien Rights filed by
Loxahatchee River Environmental Control District recorded in
Official Records Book 4984, Page 1254, Revised Notice of Lien
Rights filed in Official Records Book 7048, Page 655 and
Second Revised Notice of Lien Rights filed in Official Records
Book 7187, Page 1712, Public Records of Palm Beach County,
Florida.
6. Standard Developer Agreement by Loxahatchee River
Environmental Control District, filed in Official Records Book
9233, Page 1404, of the Public Records of Palm Beach County,
Florida.
7. Developer Agreement by and between Sterling House Corporation,
and Tequesta Water Department, filed in Official Records Book
9334, Page 1615, of the Public Records of Palm Beach County,
Florida.
8. Developer's Agreement by and between Village of Tequesta,
Florida, and Sterling House Corporation, a Kansas corporation,
filed in Official Records Book 10159, Page 56, of the Public
Records of Palm Beach County, Florida.
9. Water Service Agreement by and between Sterling House
Corporation, and Tequesta Water Department, filed in Official
Records Book 10302, Page 1123, Public Records of Palm Beach
County, Florida.
10. Unity of Title Agreement by and between Meditrust Company LLC,
a Delaware limited liability company, successor by merger to
Meditrust of Florida, Inc., a New York corporation, and
Village of Tequesta, filed in Official Records Book 10430,
Page 1942, Public Records of Palm Beach County, Florida.
11. The burdens and terms and conditions of Reciprocal Retention
and Drainage Easement by Meditrust Company LLC, a Delaware
limited liability company (successor by merger to Meditrust of
Florida, Inc.), to ALS-Clare Bridge, Inc., a Delaware
corporation, filed in Official Records Book 10845, Page 137,
Public
Records of Palm Beach County, Florida.
12. Parking, Ingress/Egress and Utilities Easement by Meditrust
Company LLC, a Delaware limited liability company (successor
by merger to Meditrust of Florida, Inc.), to ALS-Clare Bridge,
Inc., a Delaware corporation, filed in Official Records Book
10845, Page 169, Public Records of Palm Beach County, Florida.
13. Sewer Easement Deed Between Meditrust Company, LLC a Delaware
limited liability company (successor by merger to Meditrust of
Florida, Inc.), and Loxahatchee River Environmental Control
District, filed in O.R. Book 10846, page 86, Public Records of
Palm Beach County, Florida.
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14. The plat of Sterling House of Tequesta as recorded on May 19,
1998, in Plat Book 82, page 102, Public Records of Palm Beach
County, Florida.
15. Declaration of Easement Between Assisted Living Properties,
Inc. and The Village of Tequesta recorded in Official Records
Book 10005, Page 346, Public Records of Palm Beach County,
Florida, as disclosed by that certain Bill of Sale between
Assisted Living Properties, Inc., and Village of Tequesta,
filed in Official Records Book 10005, Page 344, Public Records
of Palm Beach County, Florida.
16. Easement in favor of Florida Power and Light, recorded in
Official Records Book 9728, Page 1872, Public Records of Palm
Beach County, Florida.
XV. The real property on which is situated the West Melbourne I and II
Facilities as more particularly described in Exhibit "A-15" attached
hereto:
1. Any claim that any portion of said lands are sovereign lands
of the State of Florida, including submerged, filled or
artificially exposed lands and lands accreted to such lands.
2. Taxes or special assessments for the year 2000 and subsequent
years, not yet due and/or payable.
3. Rights of residents in possession, as of the date hereof, as
residents only, under any unrecorded residency agreements.
4. Restrictions, covenants, conditions and easements shown on the
plat of Greenboro Acres, recorded on May 4, 1983, in Plat Book
29, Pages 66 and 67, of the Public Records of Brevard County,
Florida, which shows an easement of 14 feet along the front
lot line property line for public utility and drainage
easement purposes as set out and reserved on said plat.
5. Easement to Florida Power & Light Company, dated December 13,
1996, filed in Official Records Book 3629, page 1165, Public
Records of Brevard County, Florida.
6. Easement to Florida Power & Light Company, dated January 30,
1998, filed in Official Records Book 3780, Page 1910, Public
Records of Brevard County, Florida.
7. Grant of Easement by Meditrust of Florida, Inc. to the City of
West Melbourne, dated March 20, 1998, filed in Official
Records Book 3815, Page 2608, Public Records of Brevard
County, Florida.
XVI. The real property on which is situated the Wichita Facility as more
particularly described in Exhibit "A-16" attached hereto:
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1. Easement to Kansas Gas and Electric Company over the North 5
feet of the South 55 feet of the Southwest Quarter recorded in
Film 457 at Page 213 as shown granted on the recorded plat in
the office of the Sedgwick County Register of Deeds.
2. Utility Easement to the City of Wichita recorded on Film 476
at Page 309 and as shown and granted on the recorded plat in
the office of the Sedgwick County Register of Deeds.
3. Drainage Easement to the City of Wichita recorded on Film 1809
at Page 1321 in the office of the Sedgwick County Register of
Deeds.
4. Vacation order for vacation of drainage easement and
dedication of additional drainage easement recorded on Film
1809 at Page 1285, of aforesaid records.
5. Building Setback Lines, Easements and Access control minimum
pad elevation established by and shown on recorded plat of
said subdivision in the office of the Sedgwick County Register
of Deeds.
6. Avigational Easement for "Navigable Airspace" as recorded on
Film 1289 at Page 1352 in the office of the Sedgwick County
Register of Deeds.
7. Terms, Conditions and Restrictions (deleting any restrictions
indicating any preference, limitation or discrimination based
on age, color, religion, sex, handicap, financial status or
national origin) as contained in the Declaration of
Restrictions, Covenants and Conditions (which do not contain a
forfeiture or reverter clause) on Film 172 at Page 879 in the
office of the Sedgwick County Register of Deeds.
8. Terms, Conditions and Restrictions (deleting any restrictions
indicating any preference, limitation or discrimination based
on age, color, religion, sex, handicap, financial status or
national origin) as contained in the Declaration of
Restrictions, Covenants and Conditions (which do not contain a
forfeiture or reverter clause) on Film 1289 at Page 1351 in
the office of the Sedgwick County Register of Deeds.
9. Encroachment of a cedar fence over the North line and a chain
link fence over the east line as disclosed by the survey of
Armstrong Land Survey, P.A. dated January 17, 1996, last
revised ___________, 2000.
10. Any special assessment arising from Certificate on Film 1289
at Page 1353 (Misc.), and Resolution on Film 1349 at Page 875
(Sewer) all in the office of the Sedgwick County Register of
Deeds.
11. Rights of residents in possession as of the date hereof, as
residents only; under unrecorded residency agreements.
F-14
<PAGE> 80
12. Real Estate Taxes and Special Assessments for the year 1999
and subsequent years, a lien due and/or payable but not
delinquent.
F-15
<PAGE> 81
EXHIBIT G
LIST OF PRIOR TRADE NAMES
<TABLE>
<CAPTION>
FACILITY OWNER FROM DATE OF LEASEHOLDER PRIOR TRADE NAME/DBA
ACQUISITION BY ALTERRA
HEALTHCARE CORPORATION'S
AFFILIATES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alterra Clare Meditrust Acquisition Company, LLC, ALS Leasing, Inc. Alterra Clare Bridge of Ann Arbor;
Bridge of Ann successor by merger to Meditrust (prior) Clare Bridge of Ann Arbor; Alterra
Arbor Acquisition Corporation III Clare Bridge; Clare Bridge; Alterra
Alterra Healthcare Assisted Living Properties, Inc.;
Alternative Living Services-Midwest, Corporation (current) Assisted Living Properties, Inc.
Inc.
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Bowling
House of successor by merger to Meditrust of Properties, Inc. Green; Sterling House of Bowling
Bowling Green Ohio, Inc. (prior) Green; Alterra Sterling House;
Sterling House
York Development, L.P. Alterra Healthcare
Corporation (current)
Sterling House Corporation
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Mansfield;
House of successor by merger to Meditrust of Properties, Inc. Sterling House of Mansfield; Alterra
Mansfield Ohio, Inc. (prior) Sterling House; Sterling House
Sterling House Corporation Alterra Healthcare
Corporation (current)
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Meditrust Acquisition Company LLC, ALS Leasing, Inc. Alterra Wynwood of Northampton
Wynwood of successor by merger to Meditrust (prior) Manor; Wynwood of Northampton
Northampton Acquisition Corporation III Manor; Alterra Wynwood;
Manor Alterra Healthcare Wynwood; Alterra Wynwood of
CCCI/ Corporation (current) Northampton; Wynwood of
Northampton Limited Partnership Northampton;
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Clare Meditrust Acquisition Company LLC, ALS Leasing, Inc. Alterra Clare Bridge of
Bridge of successor by merger to Meditrust (prior) Montgomery; Clare Bridge of
Montgomery Acquisition Corporation III/ Montgomery; Alterra Clare Bridge;
Alterra Healthcare Clare Bridge
Clare Bridge of Montgomery, a Corporation (current)
Pennsylvania General Partnership
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Meditrust Acquisition Company LLC, ALS Leasing, Inc. Alterra Wynwood of Montgomery;
Wynwood of successor by merger to Meditrust (prior) Wynwood of Montgomery; Alterra
Montgomery Acquisition Corporation III Wynwood; Wynwood
Alterra Healthcare
Clare Bridge of Montgomery, a Corporation (current)
Pennsylvania General Partnership
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
G-1
<PAGE> 82
<TABLE>
<CAPTION>
FACILITY OWNER FROM DATE OF LEASEHOLDER PRIOR TRADE NAME/DBA
ACQUISITION BY ALTERRA
HEALTHCARE CORPORATION'S
AFFILIATES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alterra Sterling T and F Properties LP Assisted Living Alterra Sterling House of New
House of New Properties, Inc. Braunfels; Sterling House of New
Braunfels Meditrust of Texas, Inc. Braunfels; Alterra Sterling House;
Sterling House
Sherwood Development, LLC
Sterling House Corporation
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Deland;
House of Deland successor by merger to Meditrust of Properties, Inc. Sterling House of Deland; Alterra
Florida, Inc. Sterling House; Sterling House
Sterling House Corporation
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Leesburg;
House of successor by merger to Meditrust of Properties, Inc. Sterling House of Leesburg; Alterra
Leesburg Florida, Inc. Sterling House; Sterling House
Sterling House Corporation
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of W.
House of W. successor by merger to Meditrust of Properties, Inc. Melbourne II; Sterling House of W.
Melbourne II Florida, Inc. Melbourne II; Alterra Sterling
(7200 Greenboro House of W. Melbourne; Sterling
Drive) Kenneth P. Saundry a/k/a Kenneth P. House of W. Melbourne; Alterra
Saundry, Sr. Sterling House; Sterling House
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of W.
House of W. successor by merger to Meditrust of Properties, Inc. Melbourne I; Sterling House of W.
Melbourne I Florida, Inc./ Melbourne I; Alterra Sterling House
(7300 Greenboro of W. Melbourne; Sterling House of
Drive) Sterling House Corporation W. Melbourne; Alterra Sterling
House; Sterling House
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Port
House of Port successor by merger to Meditrust of Properties, Inc. Orange; Sterling House of Port
Orange Florida, Inc. Orange; Alterra Sterling House;
Sterling House
Claremont Development, L.P.
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Tequesta;
House of successor by merger to Meditrust of Properties, Inc. Sterling House of Tequesta; Alterra
Tequesta Florida, Inc. Sterling House of Tequesta I;
(205 Village Sterling House of Tequesta I;
Boulevard) Sterling House Corporation Alterra Sterling House; Sterling
House
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
G-2
<PAGE> 83
<TABLE>
<CAPTION>
FACILITY OWNER FROM DATE OF LEASEHOLDER PRIOR TRADE NAME/DBA
ACQUISITION BY ALTERRA
HEALTHCARE CORPORATION'S
AFFILIATES
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Tequesta
House of successor by merger to Meditrust of Properties, Inc. II; Sterling House of Tequesta II;
Tequesta II Florida, Inc. Alterra Sterling House of Tequesta;
(211 Village Sterling House of Tequesta; Alterra
Boulevard) Sterling House Corporation Sterling; Sterling House
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling Meditrust of Kansas, Inc. Assisted Living Alterra Sterling House of Abilene
House of Abilene Properties, Inc. II; Sterling House of Abilene II;
II Sterling House Corporation (prior) Alterra Sterling House of Abilene;
Sterling House of Abilene; Alterra
Alterra Healthcare Sterling House; Sterling House
Corporation (current)
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling Meditrust of Kansas, Inc. Assisted Living Alterra Sterling House of Hays;
House of Hays Properties, Inc. Sterling House of Hays; Alterra
Hays Assisted Living, L.L.C. (prior) Sterling House; Sterling House
Alterra Healthcare
Corporation (current)
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling Meditrust of Kansas, Inc. Assisted Living Alterra Sterling House of Wichita;
House of Wichita Properties, Inc. Sterling House of Wichita; Alterra
Sterling House Corporation (prior) Sterling House; Sterling House
Alterra Healthcare
Corporation (current)
- ----------------------------------------------------------------------------------------------------------------------------
Alterra Sterling New Meditrust Company LLC, Assisted Living Alterra Sterling House of Stuart;
House of Stuart successor by merger to Meditrust of Properties, Inc. Sterling House of Stuart; Alterra
Florida, Inc. Sterling House; Sterling House
Sterling House Corporation
- ----------------------------------------------------------------------------------------------------------------------------
Alterra New Meditrust Company LLC, ALS Leasing, Inc. Alterra Sterling House of Sussex;
WovenHearts of successor by merger to Meditrust of Sterling House of Sussex; Alterra
Sussex Florida, Inc./ Sterling House; Sterling House;
WovenHearts of Sussex;
ALS/ WovenHearts
WovenHearts Sussex, LLC
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
G-3
<PAGE> 1
EXHIBIT 10.2
SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") made
and entered into as of this 26th day of April, 2000 between ALTERRA HEALTHCARE
CORPORATION, a Delaware corporation (the "Company"), and RDVEPCO, L.L.C., a
Michigan limited liability company ("Lender").
Recitals:
---------
The parties entered into a Loan Agreement dated as of December 13, 1999
pursuant to which the Company borrowed from Lender on December 14, 1999 the sum
of Fourteen Million Dollars ($14,000,000.00) (the "Original Loan Agreement").
The parties entered into an Amended and Restated Loan Agreement (the
"First Amended Loan Agreement") dated as of February 3, 2000 to amend the terms
of the Original Loan Agreement and on February 4, 2000, the Company borrowed an
additional Twenty Million Dollars ($20,000,000.00), for a total increased loan
amount of Thirty-Four Million Dollars ($34,000,000.00) (the "$34 Million Loan").
The parties wish to amend and restate the First Amended Loan Agreement on
the terms and conditions set forth herein.
NOW, THEREFORE, the parties promise and agree as follows:
ARTICLE I
Definitions
-----------
In addition to terms defined elsewhere in this Agreement, the following
definitions shall apply for purposes of this Agreement:
"Alterra Equity Transaction" shall mean the consummation of the
transaction contemplated by the Purchase Agreement.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Business Day" means a day other than a Saturday, a Sunday or a day
on which banking institutions in the City of Grand Rapids, Michigan are
authorized by law, regulation or executive order to remain closed. If a
payment date is not a Business Day, payment may be made on the next
succeeding day that is a Business Day.
<PAGE> 2
"Collateral Real Estate" means, collectively, the Original
Collateral Real Estate, the First Additional Collateral Real Estate and
the Second Additional Collateral Real Estate.
"Contract" means any contract, agreement, undertaking or commitment
(written or oral, formal or informal, firm or contingent) to which the
Company or any of its Subsidiaries is a party or by which the Company, any
of its Subsidiaries, or any of their respective assets are bound, and
which has current operative or executory effect.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"First Additional Collateral Real Estate" means the parcels of
improved real estate owned by the Company identified on Exhibit A to this
Agreement.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are applicable
to the circumstances as of the date of determination.
"Governmental Authority" means the United States, any state or
municipality, the government of any foreign country, any subdivision of
any of the foregoing, or any authority, department, commission, board,
bureau, agency, court, or instrumentality of any of the foregoing.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate
swap agreements, currency exchange or interest rate cap agreements and
currency exchange or interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against
fluctuations in currency exchange or interest rates.
"Holder" means the Lender and any subsequent holder of the $34
Million Note and/or the $25 Million Note.
"Holding" means AHC Purchaser Holding, Inc., a Delaware
corporation.
"Indebtedness" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing obligations in respect of a lease that would
at such time be required to be capitalized on a balance sheet in
accordance with GAAP or the balance deferred and unpaid of the purchase
price of any property (other than contingent or "earnout" payment
obligations) or representing any
2
<PAGE> 3
Hedging Obligations, except any such balance that constitutes an accrued
expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, as well as all indebtedness of others secured by a
Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person) and, to the extent not otherwise included, the
guarantee, whether or not conditional, by such Person of any indebtedness
of any other Person.
"Initial Disbursement" shall have the meaning set forth in
Section 2.1.
"Initial Disbursement Date" shall have the meaning set forth in
Section 2.1.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement
to sell or give a security interest in and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"LLCs" means those limited liability companies to be vested with fee
simple title to the properties comprising the Second Additional Collateral
Real Estate as identified on Exhibit B to this Agreement at the time of
the Second Disbursement.
"Material Adverse Effect" shall have the meaning set forth in the
Purchase Agreement.
"Mortgage Modifications" shall mean the amendments to the existing
mortgages or deeds of trust and related assignments of leases and rents,
if applicable, encumbering the Original Collateral Real Estate and the
First Additional Collateral Real Estate, as contemplated under Article IV
hereof.
"New Mortgages" shall mean the mortgages, deeds of trust and related
assignments of leases and rents, if applicable, encumbering the Second
Additional Collateral Property and being delivered at the Second
Disbursement.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Original Collateral Real Estate" means the parcels of unimproved
real estate owned by the Company identified on Exhibit C to this
Agreement.
"Permitted Liens" means (i) Liens for taxes and assessments or
governmental charges or levies not at the time due, (ii) easements that do
not impair or restrict the
3
<PAGE> 4
Company's or Subsidiary's use and enjoyment of the property affected
thereby, and (iii) those certain mechanic's and materialmen's liens set
forth on Exhibit D to this Agreement and referenced in the lawsuits
referenced on Schedule 3.1(ee) of the Purchase Agreement, and (iv) such
other mechanic's, materialmen's, laborer's supplier's and other similar
liens, inchoate or filed, arising or resulting from construction
activities at or on the Second Additional Collateral Real Estate of which
the amount claimed pursuant to such liens, in the aggregate, does not
exceed $500,000.00.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Purchase Agreement" means that certain Purchase Agreement of even
date between the Company, the Lender and the other Purchasers party
thereto with respect to the Alterra Equity Transaction.
"Purchasers" means those investor-parties to the Purchase
Agreement.
"Second Additional Collateral Real Estate" means the parcels of
improved and unimproved real estate owned by the LLCs identified on
Exhibit E to this Agreement.
"Second Disbursement" shall have the meaning set forth in Section
2.1.
"Second Disbursement Date" shall have the meaning set forth in
Section 2.1.
"Subsidiary" means any corporation, partnership, limited
partnership, limited liability company, association or other business
entity of which securities or other ownership interests representing more
than fifty percent (50%) of the ordinary voting power are, at the time as
of which any determination is being made, owned or controlled by the
Company or one or more Subsidiaries of the Company.
"SEC" means the Securities and Exchange Commission.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"1933 Act" means the Securities Act of 1933, as amended.
ARTICLE II
$25 Million Loan and $34 Million Loan; $25 Million Note and $34 Million Note;
- -----------------------------------------------------------------------------
$25 Million Note Closing Date; Fees
-----------------------------------
2.1. $25 Million and $34 Million Loan; $25 Million Note and $34 Million
Note. On December 14, 1999 pursuant to the Original Loan Agreement, Lender
disbursed to Company the sum of Fourteen Million Dollars ($14,000,000.00) in
principal amount evidenced by a
4
<PAGE> 5
promissory note in the form of Exhibit B to the Original Loan Agreement (the
"Original Note"). On February 4, 2000 pursuant to the First Amended Loan
Agreement, Lender loaned to the Company the additional sum of Twenty Million
Dollars ($20,000,000.00) and, in connection therewith, Lender cancelled the
Original Note and, in substitution therefor, the Company delivered to Lender the
promissory note in the form of Exhibit C to the First Amended Loan Agreement
(the "Original $34 Million Note"). Under and subject to the terms and conditions
of this Agreement, the Company shall deliver an amended and restated promissory
note in the form of Exhibit F attached hereto (the "$34 Million Note") to extend
the maturity of the Original $34 Million Note and the Company shall borrow from
Lender up to an additional Twenty Five Million Dollars ($25,000,000.00) (the
"$25 Million Loan"). The $34 Million Loan and the $25 Million Loan shall
collectively be referred to herein as the "Loans". At the time of the initial
disbursement (the "Initial Disbursement") under the $25 Million Note of Six
Million Three Hundred Four Thousand and No/100 Dollars ($6,304,000.00), the
Company shall execute and deliver to Lender: (i) a promissory note in the form
of Exhibit G attached hereto (the "$25 Million Note"), the terms and conditions
of which are incorporated in and made a part of this Agreement; (ii) the $34
Million Note, the terms of which are incorporated in and made a part of this
Agreement; (iii) the Mortgage Modifications; and (iv) the Amended and Restated
Stock Pledge and Amended and Restated Guaranty described in Article IV. On the
date (the "Second Disbursement Date") of the next occurring disbursement of
Seven Million Six Hundred Ninety-Six Thousand and No/100 Dollars ($7,696,000.00)
of the $25 Million Dollar Loan (the "Second Disbursement"), the Company shall
execute and deliver to Lender (i) the New Mortgages, and (ii) the LLCs and
ALS-WovenHearts, Inc. shall guaranty the Loans upon and subject to the terms and
conditions hereinafter set forth. The funds disbursed at the Second Disbursement
shall be disbursed directly to or paid for the benefit of the Company and in
accordance with the attached Schedule 2.1. The remainder of the $25 Million Loan
shall be advanced by Lender and disbursed by Lender to or paid for the benefit
of the Company, in each case as approved by Lender in its absolute discretion,
to discharge Liens against and pay construction costs related to the Second
Additional Collateral Real Estate (as described on Exhibit B as "To Be
Developed") and for such other purposes in each case as approved by Lender in
its absolute discretion. This is not a revolving credit agreement and any part
of the principal of either the $34 Million Note or the $25 Million Note which
has been repaid from time to time may not be reborrowed. The $34 Million Note
and the $25 Million Note hereinafter shall collectively be referred to as the
"Notes". At the $25 Million Note Closing, Lender shall cancel the Original $34
Million Note.
2.2. Closing; Closing Date. The closing of the $25 Million Loan (the "$25
Million Note Closing") and the Initial Disbursement Date shall occur at 10:00
a.m. at the offices of Rogers & Hardin on or before April 26, 2000 or such other
time and place as the parties may agree in writing (the "$25 Million Note
Closing Date") upon satisfaction of the terms and conditions under this
Agreement as set forth in Article IV, below.
2.3. Fees. In addition to the fees previously paid pursuant to the
Original Loan Agreement and the First Amended Loan Agreement, on or before the
$25 Million Note Closing, the Company agrees to pay to the Lender a commitment
fee of Five Hundred Thousand and No/100 Dollars ($500,000.00). If not paid prior
to the $25 Million Note Closing, the Company agrees that Lender may deduct the
commitment fee due on or before the $25 Million Note
5
<PAGE> 6
Closing Date from the proceeds of the $25 Million Loan. On the third (3rd) day
of each month, starting with May 3, 2000, Company shall pay to Lender facility
fees equal to Thirteen Thousand Three Hundred Thirty Three and No/100 Dollars
($13,333.00), multiplied by a fraction, the numerator of which is the amount by
which the outstanding principal amount of the $34 Million Note at such date
exceeds Fourteen Million Dollars ($14,000,000.00) and the denominator of which
is One Million Dollars ($1,000,000.00). None of such facility fees shall be
prorated in the event of prepayment of the Notes. If any facility fee is not
paid when due, interest shall accrue thereon at the Default Interest Rate, as
defined in Section 3.1(a).
ARTICLE III
Terms of the Loans and the Notes
--------------------------------
3.1. Interest Rate; Payment; Usury.
------------------------------
(a) Provided that no Event of Default has occurred and is continuing
and subject to the other provisions of this Agreement: (i) during the
period from and including February 4, 2000 to, but not including, the date
on which all outstanding principal and accrued and unpaid interest and
fees on the Loans have been paid in full, principal amount of the Loans
outstanding from time to time shall bear interest at the rate of ten
percent (10%) per annum. During any period that an Event of Default shall
have occurred and be continuing, interest on principal amount of the Loans
outstanding from time to time shall accrue at a rate equal to fifteen
percent per annum (15%) (the "Default Interest Rate"). Notwithstanding
anything contained herein to the contrary, in no event shall the interest
rate on the Loans, including the Default Interest Rate, exceed the highest
rate permitted by applicable law. Interest on the Loans, including
interest at the Default Interest Rate, shall be based on a 360 day year
and interest shall accrue and be payable for the actual number of calendar
days elapsed. Interest on the principal amount outstanding from time to
time shall be payable monthly in arrears beginning on April 30, 2000 and
on the last day of each month thereafter until the principal and all
accrued interest and facility fees have been paid in full.
(b) It is the intention of the Company and Lender to conform
strictly to applicable usury laws now or hereafter in force, and any
interest payable under this Agreement or the Notes shall be subject to
reduction to an amount not to exceed the maximum non-usurious amount for
commercial loans allowed under such applicable usury laws as now or
hereafter construed by the courts having jurisdiction over such matters.
In the event such interest (whether designated as interest, service
charges, points, or otherwise) does exceed the maximum legal rate, it
shall be (i) canceled automatically to the extent that such interest
exceeds the maximum legal rate; (ii) if already paid, at the option of the
Holder, either be rebated to the Company or credited on the principal
amount of the Loans; or (iii) if the Loans have been prepaid in full, then
such excess shall be rebated to the Company. It is further agreed, without
limitation of the foregoing, that all calculations of the rate of interest
contracted for, charged, or received under this Agreement and the Notes
that are made for the purpose of determining whether such rate exceeds the
6
<PAGE> 7
maximum legal rate, shall be made, to the extent permitted by applicable
law, by amortizing, prorating, allocating, and spreading throughout the
full stated term of the Loans (and any extensions of the term thereof that
may be hereafter granted) all such interest at any time contracted for,
charged, or received from the Company or otherwise by the Holder so that
the rate of interest on account of the Loans, as so calculated is uniform
throughout the term thereof. If the Company is exempt or hereafter becomes
exempt from applicable usury statutes or for any other reason the rate of
interest to be charged on the Loans is not limited by law, none of the
provisions of this paragraph shall be construed so as to limit or reduce
the interest or other consideration payable under this Agreement or the
Notes or under the instrument securing payment thereof. The terms and
provisions of this paragraph shall control and supersede every other
provision of all agreements between the parties hereto.
3.2. Maturity.
---------
(a) $34 MILLION NOTE. Unless the same shall become due earlier as a
result of acceleration of the maturity, the $34 Million Note shall mature
on the earlier of (i) the Initial Closing (as such term is defined in the
Purchase Agreement) of the Alterra Equity Transaction or (ii) the initial
closing of a Financing Proposal that is a Superior Proposal (as such terms
are defined in the Purchase Agreement) or (iii) February 2, 2001, at which
time the outstanding principal balance of the $34 Million Loan and all
accrued and unpaid interest and facility fees shall become due and
payable.
(b) $25 MILLION NOTE. Unless the same shall become due earlier as a
result of acceleration of the maturity, the $25 Million Note shall mature
on the earlier of (i) the Initial Closing (as such term is defined in the
Purchase Agreement) of the Alterra Equity Transaction or (ii) the Initial
Closing of a Financing Proposal that is a Superior Proposal (as such terms
are defined in the Purchase Agreement) or (iii) June 30, 2000, at which
time the outstanding principal balance of the $25 Million Loan and all
accrued and unpaid interest shall become due and payable.
3.3. Prepayments; Partial Releases.
------------------------------
(a) The Company may from time to time prepay the Loans, in whole or
in part, at any time. Any partial prepayment shall be applied first to
interest which is accrued and unpaid, including interest on any delinquent
facility fees, then to the payment of any facility fees that are due and
payable and then to principal.
(b) As to the First Additional Collateral Real Estate, attached
hereto as Schedule 3.3 is a schedule of each release price (the "Release
Prices") applicable to each parcel. From and after the payment in full of
all amounts owed under the $25 Million Note, upon payment by the Company
of the Release Price applicable to any particular parcel of First
Additional Collateral Real Estate and during such time as no Default or
Event of Default is then outstanding, Holder shall cause any and all
mortgages, deeds of trust, assignments of leases and rents, UCCs and other
security documents encumbering
7
<PAGE> 8
such First Additional Collateral Real Estate to be released and marked
satisfied of record. No such partial release shall limit or impair the
right of Lender in any other collateral pledged hereunder.
(c) Upon the payment in full of all sums due and owing under the $25
Million Note, provided no Default or Event of Default is then outstanding,
Holder shall deliver to the Company the original, cancelled $25 Million
Note, cause any and all New Mortgages, UCCs and other security documents
encumbering each or any of the Second Additional Collateral Real Estate
properties to be released and marked satisfied of record and cancel and
release the Guaranties of the LLCs and ALS-WovenHearts, Inc., and the
collateral assignments of LLC interests and any other security interests
related solely to the Second Additional Collateral Real Estate.
3.4. Manner of Payment. The Company shall make payments in respect of the
Loans (including principal and interest) by wire transfer of immediately
available funds to the account specified by the Holder.
3.5. Events of Default. Each of the following constitutes an "Event
of Default":
(i) default for five (5) days in the payment when due of
interest or any facility fee on the Loans;
(ii) default in payment when due of the principal of the Loans;
(iii) failure of the Company to pay on or before the due date
thereof any construction or other costs and expenses with respect to the
First Additional Collateral Real Estate required in order for such
properties to receive governmental approval for occupancy as assisted
living facilities, elder care facilities or Alzheimer care units (provided
nothing herein shall be deemed or construed as creating an obligation of
Lender to fund any construction or pay any Liens with respect to any of
the Collateral Real Estate or as creating an obligation of the Company to
fund any construction or pay any Liens with respect to any of the Second
Additional Collateral Real Estate);
(iv) failure by the Company for 15 days after notice from the Holder
to comply with the provisions described under Article VI hereof; provided,
however, if the curing of such failure may not reasonably be accomplished
within such time frame, the Company shall have such additional time as is
necessary to effect such cure (not to exceed 30 days);
(v) failure by the Company to comply with any of the covenants
described in Sections 6.1 (a)(i), (a)(ii) and (c) and 6.2 (a) and (b) (no
notice or opportunity to cure being applicable) or failure by the Company
for 30 days after notice from the Holder to comply with any of its other
covenants or agreements in this Agreement or the Notes; provided, however,
if the curing of such failure may not reasonably be accomplished within
such time frame, the Company shall have such additional time as is
necessary to effect such cure (not to exceed 60 days);
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(vi) any of the representations or warranties of the Company set
forth in the Original Loan Agreement, First Amended Loan Agreement, or
this Agreement or incorporated herein by reference or set forth in any
statement or schedule delivered pursuant to the Original Loan Agreement,
First Amended Loan Agreement, or this Agreement was untrue or incorrect in
any material respect as of the date of execution of the Original Loan
Agreement, First Amended Loan Agreement, or this Agreement, respectively
or as of the $25 Million Note Closing Date as if made on such date;
(vii) default by the Company or any of its Subsidiaries under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of the Company or
any of its Subsidiaries, whether such Indebtedness now exists, or is
created after the date hereof, which default results in the acceleration
of such Indebtedness prior to its express maturity (or if such default
consists of a failure to pay upon the express maturity date) and the
principal amount of such Indebtedness, together with the principal amount
of any other such Indebtedness the maturity of which has been so
accelerated, aggregates $5,000,000 or more (or, from and after the Second
Disbursement Date, as to ALS-WovenHearts, Inc. and each LLC, in any
amount);
(viii) failure by the Company or any of its Subsidiaries to pay
final judgments aggregating in excess of $1,000,000 (or, from and after
the Second Disbursement Date, as to ALS-WovenHearts, Inc. and each LLC, in
any amount), which judgments are not paid, discharged or stayed for a
period of 45 days (or, from and after the Second Disbursement Date, as to
ALS-WovenHearts, Inc. and each LLC, 5 days, except with respect to the
Permitted Liens);
(ix) the Company or any of its Subsidiaries pursuant to or within
the meaning of Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become due; or
(x) a court of competent jurisdiction enters an order or decree in
an involuntary case or proceeding under any Bankruptcy Law that:
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(a) is for relief against the Company or any of its
Subsidiaries;
(b) appoints a custodian of the Company or any of its
Subsidiaries or for all or substantially all of the property of the
Company or any of its Subsidiaries; or
(c) orders the liquidation of the Company or any of its
Subsidiaries;
and the order or decree remains unstayed and in effect for 60
consecutive days.
(xi) From and after the Second Disbursement Date, any of the
Company's interest in any LLC becoming subject to any Lien
or other charge or encumbrance other than in favor of
Lender.
(xii) From and after the Second Disbursement Date, any interest in
any LLC becoming owned directly or indirectly by anyone
other than the Company.
(xiii) Any default or any event of default occurring under any
agreement between Lender and the Company and/or any of its
Subsidiaries, including those described in Section 4.1, but
expressly excluding defaults under the Purchase Agreement.
(xiv) Any foreclosure, forfeiture or similar Lien enforcement
proceeding (but expressly excluding such actions involving
any Permitted Lien) existing whereby any sale or other
action by which the Company's or, after the Second
Disbursement Date, any LLC's or WovenHearts' interest in any
Collateral Real Estate may be involuntarily transferred and
such sale or other action (including, but not limited, to a
public or private sale or judicial hearing) has been
scheduled and not indefinitely adjoined no later than ten
(10) days before the scheduled sale or other action.
3.6. Acceleration.
-------------
(a) Declaration of Acceleration. If any Event of Default occurs and
is continuing, the Holder may, upon notice to the Company, declare the
Loans to be due and payable immediately; and upon any such declaration all
principal and interest on the Loans shall become immediately due and
payable; provided, however, in the case of an Event of Default arising
from certain events of bankruptcy or insolvency described in clauses (ix)
and (x) of Section 3.5 hereof, with respect to the Company or any
Subsidiary, the Loans shall ipso facto become due and payable without
further action or notice on the part of the Holder.
(b) Rescission. At any time after a declaration of acceleration with
respect to the Loans, the Holder may, in its sole discretion, rescind and
cancel such declaration and
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its consequences. No such rescission shall affect any subsequent Default
or impair any right with respect thereto.
3.7. Other Remedies. If an Event of Default occurs and is continuing, the
Holder may pursue any available remedy to collect the payment of principal and
interest (including interest at the Default Interest Rate) on the Loans and to
enforce the performance of any provision of the Notes or this Agreement and any
other agreement related to any Loan. A delay or omission by the Holder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
3.8. Waiver Of Past Defaults. The Holder may waive any existing Default or
Event of Default and its consequences under this Agreement. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
3.9. Priorities. Any sums collected by the Holder hereunder and under the
Notes shall be applied first to all costs and expenses of collection, including
reasonable attorneys' fees, then to accrued and unpaid interest (including at
the Default Interest Rate to the extent applicable), then to facility fees, and
then to principal.
ARTICLE IV
Conditions
----------
4.1. Conditions to Lender's Obligations. Lender's obligation to make
advances under the $25 Million Loan shall be subject to the prior satisfaction
of the following conditions, except to the extent waived by Lender in writing:
(a) Prior to or contemporaneously with the Initial Disbursement,
Company shall have paid to the Lender the commitment fee due on or before
the $25 Million Note Closing Date required pursuant to Section 2.3, above,
and shall have reimbursed Lender for the fees and expenses for which
Company is liable pursuant to the terms of Section 7.4, below, to the
extent documented to Company as of the Closing.
(b) Prior to or contemporaneously with the Initial Disbursement,
with respect to each parcel of the Original Collateral Real Estate and the
First Additional Collateral Real Estate, Company shall have executed and
caused to be duly recorded the Mortgage Modifications.
(c) Prior to or contemporaneously with the Second Disbursement, with
respect to the Second Additional Collateral Real Estate:
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(i) Company shall have provided evidence reasonably
satisfactory to Lender that the costs incurred by the Company
through March 31, 2000 for the Second Additional Collateral Real
Estate aggregated not less than ($24,900,000.00) and the cost
required to be expended in order to receive governmental approval
for occupancy thereof is not in excess of Sixteen Million Two
Hundred Thousand and No/100 Dollars ($16,200,000.00) plus
remobilization costs, interest, penalties, costs for additional
materials, change orders and to repair deterioration occasioned as a
result of the slowdown/cessation of construction activities and all
other costs, all of which shall not exceed $2,000,000.00 in the
aggregate;
(ii) at the time of any disbursement, none of the such
Collateral Real Estate shall be subject to any Lien unacceptable to
Lender other than Permitted Liens;
(iii) prior to or contemporaneously with the Second
Disbursement, Company shall have provided to Lender surveys,
environmental reports and such other matters as reasonably required
by Lender relating to the Second Additional Collateral Real Estate
and Lender shall be satisfied therewith in its sole discretion;
(iv) prior to or contemporaneously with the Second
Disbursement, Lender shall have received the commitment for the
issuance by Chicago Title Insurance Company of an ALTA lender's
policy of title insurance (without standard exceptions and with such
endorsement as directed by Lender) with respect to each of the
Second Additional Collateral Real Estate (collectively, the
"Additional Title Commitments");
(v) prior to or contemporaneously with the Second
Disbursement, as to the Second Additional Collateral Real Estate
designated as "To Be Developed" on Exhibit B, the Company, as sole
member of the LLC's vested with title to the Second Additional
Collateral Real Estate shall have executed and caused to be duly
recorded the New Mortgages in favor of Lender in forms reasonably
acceptable to Lender and its counsel encumbering each of such
properties and shall have executed and filed Forms UCC 1 with
respect to the personal property located and to be located at each
of such properties in forms reasonably acceptable to Lender and its
counsel and shall have provided evidence of each of the foregoing
requirements to Lender; and
(vi) prior to or contemporaneously with the Second
Disbursement, as to the Second Additional Collateral Real Estate
designated as "Not To Be Developed" on Exhibit B, Company, as sole
member of the LLCs and sole shareholder of ALS-WovenHearts, Inc.,
shall have executed and caused to be duly recorded the New
Mortgages, in forms reasonably acceptable to Lender and its counsel
and shall have provided evidence of each of the foregoing
requirements to Lender.
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(d) Prior to or contemporaneously with the First Disbursement,
Holding shall have executed and delivered an amended and restated guaranty
and the Company shall have executed and delivered an amended and restated
stock pledge agreement with respect to the stock of Holding. Holding shall
have guaranteed the Loans in form and substance satisfactory to Lender and
its counsel.
(e) Prior to or simultaneously with the Second Disbursement, the
LLCs and WovenHearts shall have executed and delivered guaranties of the
Loans and the Company shall have pledged to Lender as collateral security
for the performance of its obligations pursuant to this Agreement and the
Notes its interests in the LLCs in form and substance satisfactory to
Lender and its counsel.
(f) At each disbursement, as applicable, Lender shall have received
an opinion of Rogers & Hardin, counsel to Company, Holding,
ALS-WovenHearts, Inc. and the LLCs, in form and substance acceptable to
the Lender and its counsel and opinions of local counsel reasonably
satisfactory to Lender and its counsel with respect to the validity and
enforceability of each form of the Mortgage Modifications and New
Mortgages, as applicable.
(g) Each of the representations and warranties of the Company set
forth in this Agreement or incorporated herein by reference and of the
Company, Holding, ALS-WovenHearts, Inc. and each LLC set forth in any
other agreement and statement or schedule delivered pursuant to this
Agreement are true and correct in all material respects as of the date of
execution of this Agreement, as of the date of each advance under the $25
Million Loan, and as of the $25 Million Note Closing Date, as if made on
each such date.
(h) At each disbursement, as applicable, the Company shall not be in
default with respect to any of its covenants and agreements set forth in
Article VI of this Agreement or set forth elsewhere in this Agreement.
(i) At each disbursement, no Default or Event of Default shall have
occurred and be continuing.
4.2. Waiver. Lender may waive in writing any of the conditions to its
obligations set forth in Section 4.1 in its sole discretion.
4.3. Conditions to Closing. Both Lender's and the Company's obligations
hereunder shall be subject to the prior satisfaction of the following condition,
except to the extent waived by both Lender and the Company in writing:
(a) The Company and Purchasers shall have executed and delivered the
Purchase Agreement.
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ARTICLE V
Representations and Warranties
------------------------------
5.1. Representations and Warranties of the Company. In order to induce the
Lender to enter into this Agreement, the Company represents and warrants to the
Lender, which representations and warranties shall survive the Closing and be
independent of any investigation or lack of investigation of Company made by or
on behalf of Lender, as follows with such representations and warranties to be
effective as to the Company and WovenHearts and Holding as of the date of this
Agreement and with such representations and warranties as to the LLCs to be
effective as of the Initial Disbursement Date:
(a) Organization and Standing; Issued and Outstanding Shares. Each
of the Company, the LLCs, ALS-WovenHearts, Inc. ("WovenHearts") and
Holding is duly incorporated or formed, as the case may be, and validly
existing under the laws of the State of Delaware, and has all requisite
power and authority to own or lease its properties and assets and to
conduct its business as it has been and is proposed to be conducted. Each
of the Company, the LLCs, WovenHearts and Holding is qualified to do
business and in good standing in each jurisdiction in which the failure to
so qualify could have a material adverse effect upon its assets,
properties, liabilities, financial condition, results of operations or
business. Holding has no Subsidiaries other than AHC Purchaser, Inc., all
of the issued and outstanding shares of which are owned by Holding. The
Certificate of Incorporation or Operating Agreement, as applicable, and
amendments thereto of each of Holding, WovenHearts, the LLCs and AHC
Purchaser, Inc., are in the form previously provided to Lender. The issued
and outstanding capital stock of Holding is as set forth in Schedule
5.1(a). As of the Initial Disbursement Date, the Company will own 100% of
the membership interests and be the sole member of each of the LLCs. The
Company owns 100% of the shares of capital stock of WovenHearts.
(b) Indebtedness and Contracts of Holding and LLCs. Except for such
Contracts or Indebtedness as are contemplated hereby or thereby as set
forth on Schedule 5.1(b), the LLCs and Holding have no Indebtedness and
are not a party to any Contracts (whether formal or informal, written or
oral, firm or contingent), other than (i) the pledge by Holding of the
capital stock of AHC Purchaser, Inc., delivered in connection with the
recent financing provided by GMAC, and (ii) those Contracts to be assigned
by the LLCs to Lender as provided in Section 4.1(c)(v) of this Agreement
on the Initial Disbursement Date.
(c) Capacity of the Company; Consents; Execution of Agreements. The
Company has the requisite power, authority, and capacity to enter into
this Agreement and the agreements contemplated hereby and to perform the
transactions and obligations to be performed by the Company hereunder and
thereunder. Holding, WovenHearts and the LLCs have the requisite power,
authority and capacity to enter into the agreements contemplated hereby,
as applicable, and to perform the transaction and obligations to be
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performed by Holding, WovenHearts and the LLCs thereunder, as applicable.
Except as described on Schedule 5.1(c) hereto, no consent, authorization,
approval, license, permit or order of, or filing with, any Person or
Governmental Authority is required in connection with the execution and
delivery of this Agreement or the performance by the Company, Holding, the
LLCs, or WovenHearts of the transactions and obligations to be performed
by it hereunder, except as contemplated by this Agreement. The failure to
obtain any of the consents described on Schedule 5.1(c) prior to the $25
Million Note Closing Date will not have a material adverse effect upon the
Company's assets, properties, liabilities, financial condition, results of
operations or business. The execution and delivery of this Agreement and
the performance of the transactions and obligations contemplated hereby by
the Company have been (or, with respect to the LLCs will be) duly
authorized by all requisite action of the Company, the LLCs, WovenHearts
and Holding, as applicable. This Agreement has been duly executed and
delivered by a duly authorized officer of the Company and constitutes, or
when executed and delivered will constitute, a valid and legally binding
agreement of the Company, enforceable in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws, both state and federal,
affecting the enforcement of creditors' rights or remedies in general from
time to time in effect and the exercise by courts of equity powers or
their application of principles of public policy.
(d) Status of Notes. The Notes to be issued hereunder, when issued
by the Company to the Lender pursuant to the terms of this Agreement, will
be duly authorized and validly issued.
(e) Conflicts; Defaults. The execution and delivery of this
Agreement and the execution by the LLCs, Holding and WovenHearts of a
guaranty of the Loans and the pledge by Company of the membership
interests of the LLCs and the shares of Holding to secure the Company's
obligations hereunder and under the Notes, and the performance by the
Company, the LLCs, WovenHearts and Holding of the transactions and
obligations contemplated hereby and thereby to be performed by each will
not: (i) violate, conflict with, or constitute a default under any of the
terms or provisions of its certificate of incorporation or bylaws or its
Operating Agreement, as applicable, or any provisions of, or result in the
acceleration of any obligation under, any Contract, note, debt instrument,
security agreement, or other instrument to which the Company, the LLCs,
Holding, WovenHearts or any other Subsidiary is a party or by which the
Company, the LLCs, Holding, WovenHearts or any other Subsidiary or any of
their respective assets is bound, except for such conflicts, violations,
breaches or defaults which would not have, or reasonably be expected to
have, a Material Adverse Effect; (ii) result in the creation or imposition
of any Liens or claims upon the assets of the Company, Holding,
WovenHearts or any other Subsidiary or their issued and outstanding
capital stock (except as contemplated by this Agreement); (iii) constitute
a violation of any law, statute, judgment, decree, order, rule, or
regulation of a Governmental Authority applicable to the Company, the
LLCs, Holding, WovenHearts or any other Subsidiary; or (iv) constitute an
event which, after notice or lapse of time or both, would result in any of
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the foregoing. None of the Company, the LLCs, Holding, WovenHearts or AHC
Purchaser, Inc. is presently in violation of any provision of its
certificate of incorporation or bylaws as to such corporations or its
certificate of formation or operating agreement as to each LLC. None of
the Company, the LLCs, Holding, WovenHearts or any Subsidiary is presently
in default in any material respect under any of the terms or provisions of
any of its material Contracts, notes, debt instruments, security
agreements, or other instruments, except for the matters set forth on
Schedule 3.1(j) of the Purchase Agreement and except for such defaults
which would not have, or reasonably be expected to have a Material Adverse
Effect, or any order, judgment, or decree relating to it or its business
or by which it or any of its assets is bound.
(f) Periodic Reports. The Company has timely filed with the SEC all
periodic reports heretofore required to be filed by it pursuant to the
1934 Act and all such periodic reports (including the financial statements
or information forming a part thereof) are complete and comply, in all
material respects, with the requirements of the SEC applicable to such
periodic reports and financial statements.
(g) Compliance with Laws. The Company, WovenHearts and the LLCs are
not in violation of, nor do any of their operations violate in any
respect, any statute, law, or regulation of any Governmental Authority
applicable to the Company, any of their assets, or the conduct of its
business ("Applicable Laws"), the violation of which reasonably could be
anticipated to have a Material Adverse Effect upon the Company's or a
Material Adverse Effect upon the LLCs' assets, properties, liabilities,
financial condition, results of operations or business, and no material
expenditures are or, based on present requirements, will be required of
the Company or the LLCs in order for it to comply or remain in compliance
with any Applicable Laws.
(h) Litigation. Except as set forth in Schedule 3.1(ee) to the
Purchase Agreement, the Company is not a party to any material legal
action, suit, claim, investigation or proceeding which is not adequately
described in a periodic report heretofore filed by the Company with the
SEC and, to the best of the Company's knowledge and belief after due
inquiry, there exist no facts or circumstances which reasonably could be
anticipated to result in any such action, suit, claim, investigation, or
proceeding. None of the LLCs are a party to any material legal action,
suit, claim, investigation or proceeding which are not listed on Schedule
3.1(ee) of the Purchase Agreement and, to the best of the Company's
knowledge and belief after due inquiry, there exist no facts or
circumstances which reasonably could be anticipated to result in any such
action, suit, claim, investigation or proceeding, other than the Permitted
Liens.
(i) Taxes. The Company has prepared and duly and timely filed with
each appropriate Governmental Authority, all material federal, state,
municipal, local and foreign tax returns, information returns and other
reports required to be filed on or before the date of this Agreement and
has paid all material taxes required to be paid by the Company prior to
the date of this Agreement in respect of the periods covered by such
returns and reports, except such taxes as are being contested in good
faith.
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(j) Environmental Compliance. The LLCs and the Company and its
Subsidiaries are in compliance with all applicable federal, state and
local laws and requirements (including permit requirements) relating to
the protection of health or the environment in connection with the
ownership, operation and condition of its properties and business, except
where failure to comply would not have material adverse effect.
(k) Securities Laws. No consent, authorization, approval, permit, or
order of or filing with any Governmental Authority is required in order
for the Company to execute and deliver this Agreement or to offer, issue,
sell, or deliver the $25 Million Note. Based in part on the
representations of the Lender and under the circumstances contemplated
hereby and under current laws and regulations, the offer, issuance, sale
and delivery of the Note to the Lender is exempt from the prospectus
delivery and registration requirements of the 1933 Act.
(l) Hedging Obligations. The LLCs and the Company and its
Subsidiaries do not have any outstanding Hedging Obligations except to the
extent entered into pursuant to and in compliance with any credit
agreements to which they may be a party.
(m) Disclosure. The Company has fully responded to all written
requests for information and has accurately answered, to the best of the
Company's knowledge and belief after due inquiry, all written questions
from the Lender concerning the assets, properties, liabilities, financial
condition, results of operations, business and prospects of the Company,
and has not knowingly withheld any facts relating thereto which it
reasonably believed to be material with respect to the assets, properties,
liabilities, financial condition, results of operations, business or
prospects of the Company. No information in this Agreement, or in any
Schedule or Exhibit attached to this Agreement or delivered to Lender in
connection herewith, contains any untrue statement of a material fact or
when considered together with all such information delivered to the Lender
omits to state any material fact necessary in order to make the statements
made in the light of the circumstances under which they were made, when
taken as a whole, not misleading. The disclosures made in writing by the
Company in connection with this Agreement do not contain any untrue
statement of a material fact nor omit to state a material fact necessary
to make the statements made therein not misleading. There is no fact or
circumstance relating to the Company which materially and adversely
affects or in the future may, in the reasonable business judgment of the
Company, be expected materially and adversely to affect the same which has
not been set forth in this Agreement or the Schedules hereto.
(n) Changes in Circumstances. Since December 31, 1999, and except as
set forth or referenced in the Purchase Agreement, Company has not
suffered any material adverse change in its assets, properties,
liabilities, financial condition, results of operations, business or
prospects.
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(o) Contracts. Except for this Agreement, the Purchase Agreement and
the agreements contemplated hereby, the Company has filed all material
contracts required to be filed by Item 601(b)(10) of Regulation S-K under
the 1933 Act and the 1934 Act.
(p) Second Additional Collateral Real Estate. The amounts set forth
(and the evidence provided in support) in Section 4.1(c)(i) and the
amounts set forth on Exhibit D are true, correct and complete in all
material respects.
5.2 Representations and Warranties of the Lender. The Lender represents
and warrants to the Company that:
(a) Investment Intent. The Notes are being acquired for its own
account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933
Act. The Lender understands that the Notes have not been registered under
the 1933 Act by reason of its issuance in a transaction exempt from the
registration and prospectus delivery requirements of the 1933 Act pursuant
to Section 4(2) thereof. It further understands that the Notes will bear
the following legend and agrees that it will hold the Notes subject
thereto:
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAW. NEITHER THIS NOTE NOR ANY PORTION
HEREOF OR INTEREST HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY SHALL
HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH
EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE,
AMONG OTHER THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY).
(b) Capacity of the Lender; Execution of Agreement. Lender has all
requisite power, authority, and capacity to enter into this Agreement, and
to perform the transactions and obligations to be performed by it
hereunder. This Agreement has been duly authorized, executed and delivered
by it and constitutes its valid and legally binding obligation,
enforceable in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws, both state and federal, affecting the enforcement of
creditors' rights or remedies in general from time to time in effect and
the exercise by courts of equity powers or their application of principles
of public policy.
(c) Accredited Investor. The Lender and each member of Lender is an
"accredited investor" as defined in Rule 501 (a) of Regulation D
promulgated under the 1933 Act.
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ARTICLE VI
Covenants and Agreements
------------------------
6.1. Affirmative Covenants. So long as any Indebtedness remains
outstanding under this Agreement and the Notes, the Company covenants and agrees
that it will and will cause each Subsidiary to:
(a) Certain Information and SEC Reports. Furnish to Lender in form
and substance satisfactory to Lender:
(i) within five (5) days after the Company learns of the
commencement or overtly threatened commencement of any material
claim or suit, legal or equitable, or of any administrative,
arbitration, or other similar proceeding against the Company or any
of its Subsidiaries, or any of their respective businesses, assets,
or properties which claim or proceeding, if determined adversely to
the Company or such Subsidiary, would be likely to have a material
adverse effect on the Company and its Subsidiaries, taken as a
whole, written notice of the nature and extent of such suit or
proceeding or, as to each LLC individually;
(ii) within five (5) days after the Company learns of any
circumstance or event which reasonably can be expected to have a
material adverse effect on the assets, properties, liabilities,
financial condition, results of operations, business, or prospects
of the Company and its Subsidiaries taken as a whole, or, as to each
LLC individually, written notice of the nature and extent of such
circumstance or event;
(iii) simultaneous with the transmission thereof to Company's
shareholders, copies of (or notice from an EDGAR watch service of)
all financial statements, proxy statements, reports and any other
general written communications which the Company sends to its
shareholders and copies (or notice from an EDGAR watch service of)
of all registration statements and all regular, special or periodic
reports which it files with the SEC or with any securities exchange
on which any of its securities are then listed, and copies of all
press releases and other statements made available generally by the
Company to the public concerning material developments in the
Company's businesses; and
(vii) within ten (10) days after the Holder makes a reasonable
request therefor, such other data relating to the business, affairs
and financial condition of the Company or any of its Subsidiaries.
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(b) Taxes. Pay and discharge all taxes and other governmental
charges before the same shall become overdue, unless and to the extent
only that such payment is being contested in good faith.
(c) Insurance. Maintain insurance coverage on its physical assets
and against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the
event of acquisition of additional property, real or personal, or of
incurrence of additional risks of any nature, increase such insurance
coverage in such manner and to such extent as prudent business judgment
and present practice would dictate.
(d) Examination of Books. Permit the Lender, through its authorized
attorneys, accountants and representatives, to examine the Company's
books, accounts, records, ledgers and assets of every kind and description
at all reasonable times upon oral or written request of the Lender, at the
Company's cost and expense (provided that so long as the Company shall not
be in default, the Company shall be obligated to pay for no more than one
(1) such examination per year).
(e) Notification of Events of Default, Acceleration or Material
Adverse Effect. Promptly notify the Lender of any condition or event which
constitutes, or with the passage of time and/or the giving of notice would
constitute, an Event of Default under this Agreement or of any
acceleration of the maturity of any Indebtedness aggregating $5 million or
more of the Company, and promptly inform Lender of the existence or
occurrence of any condition or event (other than conditions having an
effect on the economy in general) which could reasonably be anticipated to
have a Material Adverse Effect upon the Company's financial condition.
(f) Maintenance of Licenses. Maintain in good standing all licenses
required by any Governmental Authority that may be necessary or required
for the Company and its Subsidiaries to carry on their respective
businesses, where the failure to maintain such licenses would have a
Material Adverse Effect on the Company and its Subsidiaries taken as a
whole (or, after the Second Disbursement Date, as to each LLC
individually).
(g) ERISA Compliance. Comply with all material requirements imposed
by ERISA as presently in effect or hereafter promulgated, including but
not limited to, the minimum funding requirements of any defined
contribution employee benefit plan ("Pension Plan").
(h) Compliance with Law. Comply in all material respects with all
applicable laws, rules, regulations and orders of any Governmental
Authority, such compliance to include, without limitation, paying before
the same become delinquent all taxes, assessments, and governmental
charges imposed upon it or upon its property, including without limitation
the Collateral Real Estate, except to the extent that compliance with any
of the foregoing is then being contested in good faith by appropriate
legal proceedings and with respect to which adequate financial reserves
have been established
20
<PAGE> 21
on the books and records of the Company and except where the failure to
comply would not have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole (or, as to each LLC individually).
(i) [INTENTIONALLY DELETED]
(j) Title Insurance. At the request of Lender, the Company shall
purchase mortgagee title insurance for the Lender pursuant to the
Additional Title Commitments furnished pursuant to this First Amended Loan
Agreement and to the Title Commitments furnished pursuant to the Original
Loan Agreement.
6.2. Negative Covenants. The Company covenants and agrees that so long as
any Indebtedness remains outstanding under this Agreement and the Notes, without
the prior written consent of Lender, Company will not:
(a) No Mergers, Etc. Enter into any merger or consolidation or sell,
lease, transfer or dispose of all, substantially all, or any material part
of its assets, except in the ordinary course of its business.
(b) Limitations on Indebtedness. Become or remain obligated, or
suffer or permit any Subsidiary to become or remain obligated, for any
Indebtedness, except:
(i) Indebtedness arising pursuant to this Agreement; and
(ii) other Indebtedness, whether now outstanding or hereafter
incurred, provided that the sum of all of the Indebtedness of the
Company and the Subsidiaries at any time outstanding on a
consolidated basis (excluding, however, any Indebtedness arising as
a result of acquisitions or business combinations effected after the
date of this Agreement) does not exceed the amount of Indebtedness
set forth in the Financial Model dated on or about April 24, 2000
delivered by the Company to Lender.
(c) Limitations on Mortgages. Create or permit to exist any Lien on
the Collateral Real Estate, other than Permitted Liens and mortgages in
favor of Lender.
ARTICLE VII
Miscellaneous
-------------
7.1. Waiver and Amendments. No failure or delay on the part of Lender in
the exercise of any power or right, and no course of dealing between Company and
Lender, shall operate as a waiver of such power or right, nor shall any single
or partial exercise of any power or right preclude other or further exercise
thereof or the exercise of any other power or right. Remedies provided for
herein are cumulative and not exclusive of any remedies which may be available
to the Lender at law or in equity. No notice to or demand on the Company
required hereunder or under the Notes
21
<PAGE> 22
shall in any event entitle Company to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of Lender to
any other or further action and any circumstances without notice or demand. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement or the Notes shall in any event be effective unless the same
shall be in writing and signed and delivered by Lender. Any waiver of any
provision of this Agreement or the Notes, and any consent to any departure by
Company from the terms of any provision of this Agreement or the Notes, shall be
effective only in the specific instance and for the specific purpose for which
given.
7.2. Notices. All notices and other communications required or permitted
under this Agreement shall be in writing and, if mailed by prepaid registered or
certified mail, return receipt requested, shall be deemed to have been received
on the earlier of the date shown on the receipt or three (3) Business Days after
the post-mark date thereof. Notices may be given by recognized overnight courier
services and shall be deemed to have been received as of the regularly scheduled
time for delivery established by such courier service. In addition, notices
hereunder may be delivered by hand in which event the notice shall be deemed
effective when delivered or by telecopy in which case it shall be deemed
effective upon confirmation of transmission. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
If to Company:
--------------
Alterra Healthcare Corporation
10000 Innovation Drive
Milwaukee, Wisconsin 53226
Attention: President
Fax: (414) 918-5055
With a copy to:
---------------
Rogers & Hardin
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia, 30303
Attn: Alan Leet, Esq.
Fax: (404) 525-2224
22
<PAGE> 23
If to Lender:
-------------
RDVEPCO, L.L.C.
c/o RDV Corporation
126 Ottawa Avenue, N.W.
500 Grand Bank Building
Grand Rapids, Michigan 49503
Attention: Robert H. Schierbeek, Treasurer
Fax: (616) 454-4654
With a copy to:
---------------
EDP Management Company
190 River Avenue
Suite 300
Holland, Michigan 49423
Fax: (616) 494-8110
and
Hecht & Lentz
333 Bridge, N.W., Suite 330
Grand Rapids, MI 49504
Attention: David M. Hecht, Esq.
Fax: (616) 776-7203
Any party hereto may change the address to which notices shall be directed under
this Section by giving written notice of such change to the other parties.
7.3. Restriction on Transfer. The Lender acknowledges that the Notes have
not been registered under the Securities Act of 1933, as amended, (the "1933
Act") or the securities laws of any state. Accordingly, the Notes may not be
sold or otherwise disposed of or transferred, unless such sale, disposition or
transfer is registered under the 1933 Act and applicable state securities laws
or unless the Company has received an opinion of counsel reasonably acceptable
to the Company that such sale, disposition or transfer is exempt from such
registration. The Notes shall bear a restrictive legend to the foregoing effect.
7.4. Expenses. Company shall reimburse Lender for all of its reasonable
out-of-pocket expenses incurred in the negotiation, preparation, execution and
delivery of this Agreement, the Notes and other documents contemplated hereby
and all related due diligence, including, without limitation, the expenses of
legal counsel and accountants. Company shall also reimburse Holder for all of
its out-of-pocket expenses incurred in the administration, waiver, modification
and enforcement of any of its rights under this Agreement and the Notes,
including, without limitation, the reasonable expenses of legal counsel and
accountants. In addition, Company shall be
23
<PAGE> 24
responsible for any documentary taxes, if any, incurred in connection with the
transactions contemplated by this Agreement and the Notes.
7.5. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction, shall as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
7.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan without giving effect to any
choice or conflict of law provision or rule (whether of the State of Michigan or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Michigan.
7.7. Successors and Assigns. This Agreement shall be binding upon Company
and Lender and their respective successors and assigns, and shall inure to the
benefit of Company and Lender and their successors and assigns.
7.8. Headings. Headings used in this Agreement are for convenience
only and shall not be used in connection with the interpretation of any
provision hereof.
7.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute one and the same instrument.
* * * * * * * * * * * * *
24
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned thereunto duly authorized as of the date first
written above.
THE COMPANY:
ALTERRA HEALTHCARE CORPORATION
By: /s/ William F. Lasky
-----------------------------
William F. Lasky
Title: President
25
<PAGE> 26
LENDER:
RDVEPCO, L.L.C.
By: RDV Altco, L.L.C.,
a member
By: EDP Assisted Living Properties,
L.L.C., a member
By: /s/ Robert Haveman
-----------------------------
Its: Authorized Agent
-----------------------------
26
<PAGE> 27
Exhibit A
---------
First Additional Collateral Real Estate
1. Corona, CA
2. Leawood, KS
3. Topeka, KS
4. Lynchburg, VA
5. Lebanon I, TN [RELEASED]
6. Lebanon II, TN [RELEASED]
<PAGE> 28
Exhibit B
---------
Second Additional Collateral Real Estate
To Be Developed:
- ----------------
1. W. Melbourne, FL
2. Valley Station, KY
3. Kenosha, WI
4. New Castle, DE
5. Frederick, MD
6. Irving Valley Ranch, TX
7. Ft. Wayne-Dupont, IN
Not to Be Developed:
- --------------------
8. Gloucester, NJ
9. Hamilton, NJ
10. Murfreesboro, TN
11. Greenwood, IN
Danville, VA
<PAGE> 29
Exhibit C
---------
Original Collateral Real Estate
1. Temecula, CA
2. Novato, CA
3. Apple Valley, CA
4. Moorpark, CA
5. Palmdale, CA
6. Arvada I, CA
7. Goldsboro, NC
8. Greenville, NC
9. Hendersonville, NC
10. Henderson, NV
11. Cordova, TN
12. Chesapeake, VA
13. Centerville, GA
14. Columbus, GA
15. Valdosta, GA
16. Holt, MI
17. Tulsa, OK
18. Easley, SC
19. Sumter, SC
<PAGE> 30
Exhibit D
Mechanic's and Materialmen's Liens
<TABLE>
<CAPTION>
LIEN FILED BY SITE LOCATION DATE FILED AMOUNT STATUS
<S> <C> <C> <C> <C>
Phase One Electric, Inc.* Fort Wayne, IN 2/14/00 $54,402.30* Lien Filed
G.R. Roberts Construction, Fort Wayne, IN 2/28/00 $67,257.00 Lien Filed
Inc.
Continuing Care Concepts, Inc. Gloucester, NJ 3/24/00 $269,808.50 Lien Filed
Continuing Care Concepts, Inc. Gloucester, NJ 3/24/00 $275,407.50 Lien Filed
Continuing Care Concepts, Inc. Hamilton, NJ 3/24/00 $258,871.00 Lien Filed
American Automatic Sprinkler, Irving-Valley 1/24/00 $37,468.90 Lien Filed
Inc. Ranch, TX
Arrington Roofing Company, Irving-Valley 2/10/00 $34,967.70 Threatened
Inc. Ranch, TX
Dynaten Corporation Irving-Valley 1/14/00 $55,602.00 Threatened
Ranch, TX
Houston-Stafford Electrical Irving-Valley 2/29/00 $40,288.00 Lien Filed
Contractors Ranch, TX
Ike Painting Irving-Valley 1/13/00 $15,968.61 Threatened
Ranch, TX
Wickes Direct Irving-Valley 3/24/00 $15,042.52 Lien Filed
Ranch, TX
Drawdy Brothers Construction Melbourne, FL 1/13/00 $14,848.00 Threatened
Continuing Care Concepts, Inc. New Castle, DE 3/29/00 $804,598.05 Civil
Summons
American Builders & Valley Station, KY 2/22/00 $77,096.31 Lien Filed
Contractors Supply Co.
Bullins Construction Inc. Valley Station, KY ______ $40,333.39 Lien Filed
Frontier Enterprises, Inc. Valley Station, KY 9/23/99 $43,810.07 Lien Filed
Kentucky-Indiana Lumber Co., Valley Station, KY 9/28/99 $233,318.89 Lien Filed
Inc.
KFP, Inc. d/b/A Big Lumber Co Valley Station, KY 12/31/99 $24,275.36 Lien Filed
Plumbers Supply Co. Valley Station, KY 1/24/00 $83,708.95 Lien Filed
TJ Excavating Valley Station, KY 2/29/00 $7,014.00 Threatened
Vincent Construction Valley Station, KY 2/02/00 $96,104.42 Lien Filed
Grinnell, Inc. Valley Station, KY 1/5/00 $45,634.00 Threatened
(CBC)
Grinned, Inc. Valley Station, KY 1/5/00 $15,079.00 Threatened
(SH)
Hughes Supply, Inc. West Melbourne, FL 3/16/00 $1,344.28 Lien Filed
McLaughlin, Ben G. West Melbourne, FL 2/24/00 $44,397.91 Lien Filed
W. Parmenter Excavating, Inc. West Melbourne, FL _____ $________ Lien Filed
</TABLE>
* This Lien has been paid in full. The Company is awaiting receipt of an
executed lien release, which release shall be filed or record.
<PAGE> 31
Exhibit E
---------
The LLCs
1. Clare Bridge of West Melbourne LLC
2. Clare Bridge Cottage of Valley Station LLC
3. Clare Bridge of Kenosha LLC
4. Clare Bridge of New Castle LLC
5. Clare Bridge of Frederick LLC
6. Clare Bridge of Irving Valley LLC
7. Clare Bridge of Fort Wayne LLC
8. Clare Bridge Cottage of Gloucester LLC
9. Wynwood of Hamilton LLC
10. Clare Bridge Cottage of Greenwood LLC
<PAGE> 32
Exhibit F
---------
$34 Million Note
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW. NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST
HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAW, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY
SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH
EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER
THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY).
AMENDED AND RESTATED PROMISSORY NOTE
------------------------------------
$34,000,000.00 Atlanta, Georgia
April 26, 2000
WHEREAS, ALTERRA HEALTHCARE CORPORATION, a Delaware corporation (the
"Company") previously executed and delivered that certain Promissory Note dated
February 3, 2000, in the amount of $34,000,000.00 to Lender (the "Original
Note") with respect to a loan made pursuant to that certain Amended and Restated
Loan Agreement between Company and Lender of even date therewith;
WHEREAS, the Company and Lender are entering into a Second Amended and
Restated Loan Agreement of even date herewith (the "Second Amended Loan
Agreement") whereby the parties have agreed, among other things, to amend the
maturity date of the Original Note; and
WHEREAS, as a condition of the Second Amended Loan Agreement, the Company
has agreed to execute and deliver this Amended and Restated Promissory Note in
substitution for the Original Note and by acceptance hereof Lender agrees to
return the Original Note marked "cancelled" to the Company.
IN CONSIDERATION OF THE FOREGOING, AND FOR VALUE RECEIVED, the Company
promises to pay to the order of RDVEPCO, L.L.C., a Michigan limited liability
company (the "Lender"), c/o RDV Corporation, 126 Ottawa Avenue, 500 Grand Bank
Building, Grand Rapids, Michigan 49503, Attn: President, or such other place as
designated in writing by the Holder, the principal sum of Thirty Four Million
and No/100 Dollars ($34,000,000.00) together with interest on the principal
balance outstanding from time to time in accordance with the provisions of this
Note. This Note has been executed and delivered pursuant to the Second Amended
Loan Agreement, the terms and conditions of which are incorporated herein by
reference.
<PAGE> 33
Unless otherwise indicated herein, capitalized terms used in this Note have the
same meanings set forth in the Second Amended Loan Agreement.
1. Interest Rate; Payment; Usury.
------------------------------
(a) Provided that no Event of Default has occurred and is continuing
and subject to the other provisions of this Note, interest shall accrue
under this Note from the date of the last payment under the Original Note
through the date of this Note and continuing through the date on which all
outstanding principal and accrued and unpaid interest on this Note have
been paid in full. The principal amount outstanding from time to time
under this Note shall bear interest at the rate of ten percent (10%) per
annum. During any period that an Event of Default shall have occurred and
be continuing, interest on this Note shall accrue at a rate equal to
fifteen percent per annum (15%) (the "Default Interest Rate").
Notwithstanding anything contained herein to the contrary, in no event
shall the interest rate on this Note, including the Default Interest Rate,
exceed the highest rate permitted by applicable law. Interest on this Note
shall be based on a 360 day year and interest shall accrue and be payable
for the actual number of calendar days elapsed. Interest shall be payable
monthly in arrears beginning on April 30, 2000 and on the last day of each
month thereafter until the principal and all accrued interest on this Note
have been paid in full.
(b) It is the intention of the Company and Lender to conform
strictly to applicable usury laws now or hereafter in force, and any
interest payable under the Second Amended Loan Agreement or this Note
shall be subject to reduction to an amount not to exceed the maximum
non-usurious amount for commercial loans allowed under such applicable
usury laws as now or hereafter construed by the courts having jurisdiction
over such matters. In the event such interest (whether designated as
interest, service charges, points, or otherwise) does exceed the maximum
legal rate, it shall be (i) canceled automatically to the extent that such
interest exceeds the maximum legal rate; (ii) if already paid, at the
option of the Holder, either be rebated to the Company or credited on the
principal amount of this Note; or (iii) if this Note has been prepaid in
full, then such excess shall be rebated to the Company. It is further
agreed, without limitation of the foregoing, that all calculations of the
rate of interest contracted for, charged, or received under the Second
Amended Loan Agreement and this Note that are made for the purpose of
determining whether such rate exceeds the maximum legal rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating, and spreading throughout the full stated term of this Note
(and any extensions of the term thereof that may be hereafter granted) all
such interest at any time contracted for, charged, or received from the
Company or otherwise by the Holder so that the rate of interest on account
of this Note, as so calculated is uniform throughout the term hereof. If
the Company is exempt or hereafter becomes exempt from applicable usury
statutes or for any other reason the rate of interest to be charged on the
this Note is not limited by law, none of the provisions of this paragraph
2
<PAGE> 34
shall be construed so as to limit or reduce the interest or other
consideration payable under the Second Amended Loan Agreement or this Note
or under the instruments securing payment thereof. The terms and
provisions of this paragraph shall control and supersede every other
provision of all agreements between the Company and the Lender.
2. Maturity. Unless the same shall become due earlier as a result of
acceleration of the maturity, this Note shall mature on the earlier of (i) the
Initial Closing (as such term is defined in the Purchase Agreement) of the
Alterra Equity Transaction, or (ii) the Initial Closing of a Financing Proposal
that is a Superior Proposal (as such terms are defined in the Purchase
Agreement), or (iii) February 2, 2001. Upon the earlier to occur of the
foregoing, the outstanding principal balance of this Note and all accrued and
unpaid interest shall become due and payable.
3. Prepayments. The Company may from time to time prepay this Note, in
whole or in part, at any time. Any partial prepayment shall be applied first to
interest which is accrued and unpaid and then to principal.
4. Manner of Payment. The Company shall make payments in respect of this
Note (including principal and interest) by wire transfer of immediately
available funds to the account specified by the Holder.
5. Events of Default; Acceleration. The maturity of this Note is subject
to acceleration if an Event of Default occurs and is continuing as set forth in
the Second Amended Loan Agreement.
6. Collection Expenses. In the event Company fails to pay any installment
of interest or principal when due, Company shall pay to the Holder, in addition
to the amounts due, all costs of collection, including reasonable attorneys'
fees.
7. Company Waivers. Company, for itself and its successors and assigns,
hereby waives demand, presentment, protest, diligence, notice of dishonor and
any other formality in connection with this Note and expressly agrees that this
Note, or any payment hereunder, may be extended from time to time and that the
Holder may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Company hereunder.
8. Governing Law. All questions concerning the construction, validity and
interpretation of this Note shall be governed by and construed in accordance
with the domestic laws of the State of Michigan, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Michigan or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Michigan.
9. Amendment and Waiver. The provisions of this Note may be amended and
waived only with the prior written consent of the Company and the Holder.
3
<PAGE> 35
IN WITNESS WHEREOF, the Company has executed this Note on the date first
written above.
ALTERRA HEALTHCARE CORPORATION
By:
----------------------------
Name: William F. Lasky
Title: President
4
<PAGE> 36
Exhibit G
---------
$25 Million Note
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAW. NEITHER THIS NOTE NOR ANY PORTION HEREOF OR INTEREST
HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE SAME IS REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAW, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AND THE COMPANY
SHALL HAVE RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH
EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER
THINGS, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY).
PROMISSORY NOTE
---------------
$25,000,000.00 Atlanta, Georgia
April 26, 2000
FOR VALUE RECEIVED, ALTERRA HEALTHCARE CORPORATION, a Delaware corporation
("Company"), promises to pay to the order of RDVEPCO, L.L.C., a Michigan limited
liability company (the "Lender"), c/o RDV Corporation, 126 Ottawa Avenue, 500
Grand Bank Building, Grand Rapids, Michigan 49503, Attn: President, or such
other place as designated in writing by the Holder, the principal sum of Twenty
Five Million and No/100 Dollars ($25,000,000.00) together with interest on the
principal balance outstanding from time to time in accordance with the
provisions of this Note. This Note has been executed and delivered pursuant to
that certain Second Amended and Restated Second Amended Loan Agreement between
the Company and the Lender dated of even date herewith (the "Second Amended Loan
Agreement"), the terms and conditions of which are incorporated herein by
reference. Unless otherwise indicated herein, capitalized terms used in this
Note have the same meanings set forth in the Second Amended Loan Agreement.
1. Interest Rate; Payment; Usury.
(a) Provided that no Event of Default has occurred and is continuing
and subject to the other provisions of this Note, during the period
commencing on the date of funding hereunder through, but not including,
the date on which all outstanding principal and accrued and unpaid
interest on this Note have been paid in full, the principal amount
<PAGE> 37
outstanding from time to time under this Note shall bear interest at the
rate of ten percent (10%) per annum. During any period that an Event of
Default shall have occurred and be continuing, interest on this Note shall
accrue at a rate equal to fifteen percent per annum (15%) (the "Default
Interest Rate"). Notwithstanding anything contained herein to the
contrary, in no event shall the interest rate on this Note, including the
Default Interest Rate, exceed the highest rate permitted by applicable
law. Interest on this Note shall be based on a 360 day year and interest
shall accrue and be payable for the actual number of calendar days
elapsed. Interest shall be payable monthly in arrears beginning on April
30, 2000 and on the last day of each month thereafter until the principal
and all accrued interest on this Note have been paid in full.
(b) It is the intention of the Company and Lender to conform
strictly to applicable usury laws now or hereafter in force, and any
interest payable under the Loan Agreement or this Note shall be subject to
reduction to an amount not to exceed the maximum non-usurious amount for
commercial loans allowed under such applicable usury laws as now or
hereafter construed by the courts having jurisdiction over such matters.
In the event such interest (whether designated as interest, service
charges, points, or otherwise) does exceed the maximum legal rate, it
shall be: (i) canceled automatically to the extent that such interest
exceeds the maximum legal rate; (ii) if already paid, at the option of the
Holder, either be rebated to the Company or credited on the principal
amount of this Note; or (iii) if this Note has been prepaid in full, then
such excess shall be rebated to the Company. It is further agreed, without
limitation of the foregoing, that all calculations of the rate of interest
contracted for, charged, or received under the Loan Agreement and this
Note that are made for the purpose of determining whether such rate
exceeds the maximum legal rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating, and spreading
throughout the full stated term of this Note (and any extensions of the
term thereof that may be hereafter granted) all such interest at any time
contracted for, charged, or received from the Company or otherwise by the
Holder so that the rate of interest on account of this Note, as so
calculated is uniform throughout the term hereof. If the Company is exempt
or hereafter becomes exempt from applicable usury statutes or for any
other reason the rate of interest to be charged on the this Note is not
limited by law, none of the provisions of this paragraph shall be
construed so as to limit or reduce the interest or other consideration
payable under the Second Amended Loan Agreement or this Note or under the
instruments securing payment thereof. The terms and provisions of this
paragraph shall control and supersede every other provision of all
agreements between the Company and the Lender.
2. Maturity. Unless the same shall become due earlier as a result of
acceleration of the maturity, this Note shall mature on the earlier of (i) the
Closing (as such term is defined in the Purchase Agreement) of an Alterra Equity
Transaction, or (ii) the Initial Closing of a Financing Proposal that is a
Superior Proposal (as such terms are defined in the Purchase Agreement), or
(iii) June 30, 2000. Upon the earlier to occur of the foregoing, the outstanding
principal balance of this Note and all accrued and unpaid interest shall become
due and payable.
2
<PAGE> 38
3. Prepayments. The Company may from time to time prepay this Note, in
whole or in part, at any time. Any partial prepayment shall be applied first to
interest which is accrued and unpaid and then to principal.
4. Manner of Payment. The Company shall make payments in respect of this
Note (including principal and interest) by wire transfer of immediately
available funds to the account specified by the Holder.
5. Events of Default; Acceleration. The maturity of this Note is subject
to acceleration if an Event of Default occurs and is continuing as set forth in
the Second Amended Loan Agreement.
6. Collection Expenses. In the event Company fails to pay any installment
of interest or principal when due, Company shall pay to the Holder, in addition
to the amounts due, all costs of collection, including reasonable attorneys'
fees.
7. Company Waivers. Company, for itself and its successors and assigns,
hereby waives demand, presentment, protest, diligence, notice of dishonor and
any other formality in connection with this Note and expressly agrees that this
Note, or any payment hereunder, may be extended from time to time and that the
Holder may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Company hereunder.
8. Governing Law. All questions concerning the construction, validity and
interpretation of this Note shall be governed by and construed in accordance
with the domestic laws of the State of Michigan, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Michigan or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Michigan.
9. Amendment and Waiver. The provisions of this Note may be amended and
waived only with the prior written consent of the Company and the Holder.
3
<PAGE> 39
IN WITNESS WHEREOF, the Company has executed this Note on the date first
written above.
ALTERRA HEALTHCARE CORPORATION
By:
----------------------------
Name: William F. Lasky
Title: President
<PAGE> 40
Schedule 3.3
RELEASE PRICES FOR FIRST ADDITIONAL
-----------------------------------
COLLATERAL REAL ESTATE
----------------------
<TABLE>
<CAPTION>
CONSTRUCTION % TOTAL RELEASE
FACILITIES COSTS VALUE PRICES
<S> <C> <C> <C>
Corona, CA 5,200,000 0.286216 4,672,105.78
Topeka, KS 3,931,257 0.216383 3,532,172.43
Leawood, KS 4,657,830 0.256374 4,184,973.75
Lynchburg, VA 4,378,995 0.241027 3,934,453.84
18,168,082 1.0 16,323,705.80*
</TABLE>
* $16,323,705.80 is the current principal balance of the $20 million additional
loan advanced pursuant to the First Amended Loan Agreement.
<PAGE> 41
Schedule 5.1 (a)
----------------
Capitalization of Holding
<TABLE>
<CAPTION>
Holding Shares
------- ------
Authorized Issued
---------- ------
<S> <C> <C>
Common Stock, $0.01 par value 2,857 1,857
Convertible Preferred Stock, $0.01 par value 1,000 1,000
</TABLE>
<PAGE> 42
Schedule 5.1 (b)
----------------
NONE
7
<PAGE> 43
Schedule 5.1 (c)
----------------
NONE
8
<PAGE> 1
EXHIBIT 10.3
AMENDED SCHEDULE OF MORTGAGES AND SECURITY AGREEMENTS,
SECURED PROMISSORY NOTES, AND GUARANTIES ("LOAN DOCUMENTS")
WHICH ARE SUBSTANTIALLY IN THE FORM OF KEY CORPORATE CAPITAL, INC.
LOAN DOCUMENTS ATTACHED AS EXHIBITS 10.116, 10.117 AND 10.118 TO THE
REGISTRANT'S FORM 10-K FOR THE PERIOD ENDING 12/31/99
<TABLE>
<CAPTION>
MORTGAGOR FACILITY NAME LOCATION MORTGAGE DATE OF
--------- ------------- -------- -------- -------
AMOUNT MORTGAGE
------ --------
<S> <C> <C> <C> <C>
Ithaca Bundy Road, LLC Alterra Clare Bridge Cottage of 101 Bundy Road $3,325,800 3/17/99
Ithaca Ithaca, NY
14850-9252
Ithaca Trumansburg Road, LLC Alterra Sterling House of Ithaca 103 Bundy Road $2,862,608 3/17/99
Ithaca, NY
14850-9252
Niagara Nash Road, LLC Alterra Sterling House of Niagara 6751 Nash Road $3,420,000 10/20/99
North Tonawanda, NY
14120
Niagara SC Wheatfield, LLC Alterra Clare Bridge Cottage of 6741 Nash Road $3,367,010 10/20/99
Niagara North Tonawanda, NY
14120
Clinton Brookside Drive, LLC Alterra Clare Bridge Cottage of 115 Brookside Drive $3,300,000 1/14/00
Clinton Clinton, NY 13323
Glastonbury Fairway Crossing, Alterra Clare Bridge of 1824 Manchester Road $5,447,129 4/21/00
LLC Glastonbury Glastonbury, CT
</TABLE>
<PAGE> 1
Exhibit 10.4
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, FIRST AMENDMENT TO GUARANTY
AGREEMENT AND SUSPENSION AND WAIVER AGREEMENT (hereinafter, the "Agreement") is
entered into as of March 30, 2000 among the Borrowers party hereto, HCR/Alterra
Development, LLC, a Delaware limited liability company (the "Parent"), Alterra
Healthcare Corporation, a Delaware corporation ("Alterra"), Manor Care, Inc., a
Delaware corporation ("HCR"), Bank of America, N.A., as Administrative Agent (in
such capacity, the "Administrative Agent") and the Lenders. Capitalized terms
used herein and not otherwise defined herein shall have the respective meanings
given to them in the Credit Agreement.
RECITALS
--------
WHEREAS, the Borrowers party thereto, the Parent, the Administrative
Agent, The Chase Manhattan Bank, as syndication agent, Deutsche Bank AG New York
and/or Cayman Islands Branches and Bank United, F.S.B., as co-agents and the
Lenders are parties to that certain Credit Agreement dated as of September 30,
1999 (as amended or modified from time to time, the "Credit Agreement");
WHEREAS, Alterra entered into that certain Guaranty Agreement dated as of
September 30, 1999 in favor of the Administrative Agent, on behalf of the
Lenders (as amended or modified from time to time, the "Alterra Guaranty
Agreement") and HCR entered into that certain Guaranty Agreement dated as of
September 30, 1999 in favor of the Administrative Agent, on behalf of the
Lenders (the "HCR Guaranty Agreement");
WHEREAS, Alterra advised the Administrative Agent that its initial
estimates indicated that the financial statements for the fourth (4th) quarter
of fiscal year 1999 and for the entirety of fiscal year 1999 (collectively, the
"1999 Financial Statements") may result in a failure of Alterra to comply with
(a) Section 4.9(a) and Section 4.9(b) of the Alterra Guaranty Agreement and (b)
certain financial covenants contained in those agreements identified on Schedule
1 attached hereto (such failures, collectively, the "Alterra Potential Covenant
Breaches");
WHEREAS, Alterra further acknowledged that following delivery of the Final
1999 Financials as required by the Alterra Guaranty Agreement, if in fact the
1999 Financials actually result in the failure of Alterra to comply with (a)
Section 4.9(a) and Section 4.9(b) of the Alterra Guaranty Agreement and (b) with
certain financial covenants for the fiscal period ending December 31, 1999
contained in those agreements identified on Schedule 1 attached hereto, such
failures would constitute (or with notice, time or both, ripen into) Events of
Default under each of the Alterra Guaranty Agreement, the HCR Guaranty Agreement
and the Credit Agreement (such Events of Default, collectively, the "Actual
Breaches) (the Alterra Potential Covenant Breaches and the Actual Breaches may
be referred to collectively herein as the "Acknowledged Events of Default");
<PAGE> 2
WHEREAS, subject to the terms and conditions of that certain Waiver
Agreement dated as of February 25, 2000 among the Borrowers party thereto, the
Parent, Alterra, HCR, Bank of America, N.A., as Administrative Agent and the
Lenders party thereto, the Lenders waived the Acknowledged Events of Default for
the period from December 31, 1999 through April 14, 2000 so long as the Tangible
Net Worth of Alterra and its Subsidiaries on a consolidated basis as of December
31, 1999 was not less than $90,000,000;
WHEREAS, the Credit Parties have requested that the Lenders (a) suspend
the application of Sections 4.9(a) and 4.9(b) of the Alterra Guaranty Agreement
for the fourth (4th) fiscal quarter of 1999, (b) permanently waive the
Acknowledged Events of Default resulting from Alterra's failure to comply with
the financial covenants contained in those agreements referenced in Schedule 1
attached hereto, (c) continue to make available to the Pool A Borrowers the
Loans provided under the Credit Agreement and (d) amend certain terms of the
Alterra Guaranty Agreement as set forth herein;
WHEREAS, the Lenders are willing to comply with the foregoing requests,
based upon and subject to the terms and conditions specified in this Agreement;
WHEREAS, the parties hereto also wish to amend certain terms of the Credit
Agreement as more fully set forth below.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Reaffirmation of Existing Debt. The Credit Parties acknowledge and
confirm that (a) the Borrowers' obligations to repay the outstanding principal
amount of the Loans is unconditional and not subject to any offsets, defenses or
counterclaims, (b) the Administrative Agent, on behalf of the Lenders, has a
valid and enforceable first priority perfected security interest in the
Collateral, (c) the Administrative Agent and the Lenders have performed fully
all of their respective obligations under the Credit Agreement and the other
Credit Documents, and (d) by entering into this Agreement, the Administrative
Agent and the Lenders do not waive or release (except for the Suspension (as
defined below) and the Waiver (as defined below) contained herein) any term or
condition of the Credit Agreement or any of the other Credit Documents or any of
their rights or remedies under such Credit Documents or applicable law or any of
the obligations of any Credit Party thereunder.
2. Suspension. Subject to the other terms and conditions of this
Agreement, the Lenders hereby (a) suspend the applicability of Sections 4.9(a)
and 4.9(b) of the Alterra Guaranty Agreement for the fourth (4th) fiscal quarter
of 1999 (the "Suspension") and (b) permanently waive the Acknowledged Events of
Default resulting from Alterra's failure to comply with the financial covenants
contained in those agreements referenced in Schedule 1 attached hereto (the
"Waiver"), such that the Acknowledged Events of Default are void and no longer
existing as of December 31, 1999. Except for the Suspension and Waiver contained
herein, this Agreement does not modify or affect the obligations of the Credit
Parties to comply fully with all terms, conditions and covenants contained in
the Credit Documents. The Suspension and Waiver contained herein is a one time
waiver and suspension and is limited to
2
<PAGE> 3
the Suspension and Waiver specifically described herein, and nothing contained
in this Agreement shall be deemed to constitute a waiver or suspension of any
other rights or remedies the Administrative Agent or any Lender may have under
the Credit Agreement or any other Credit Document or under applicable law.
3. Amendments to the Credit Agreement.
(a) Revolving Committed Amount. The definition of "Revolving
Committed Amount" set forth in Section 1.1 of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
"Revolving Committed Amount" means Sixty Million Dollars
($60,000,000)(as such aggregate maximum amount may be reduced from time to
time as provided in Section 3.4).
(b) Section 7.1(d) of the Credit Agreement is hereby amended by
deleting the reference to "Section 7.1(c)" in Section 7.1(d) of the Credit
Agreement and replacing such reference with "Section 7.1(b)".
(c) Schedule 2.1(a)(i). Schedule 2.1(a)(i) of the Credit Agreement
is hereby amended and restated in its entirety to read as provided on
Schedule 2.1(a)(i) attached hereto.
4. Amendments to the Alterra Guaranty Agreement.
(a) Amended Definition. The definition of "Tangible Net Worth" set
forth in Section 1.1 of the Alterra Guaranty Agreement is hereby amended
and restated in its entirety to read as follows:
"Tangible Net Worth" means, at any time, the sum of Net Worth
(defined as shareholder's equity as defined by GAAP) before the
$54,500,000 of charges taken by Alterra in fiscal year 1999 in
connection with the termination of substantially all of Alterra's
new construction and development activity and repurchase of joint
venture interests less the total of (a) all assets which would be
classified as intangible assets under GAAP, including without
limitation, goodwill, trademarks, trademark applications, trade
names, service marks, patent applications and licenses, and deferred
charges, (b) pre-opening costs, organizational costs and deferred
financing costs and (c) advances or loans made to or receivables
from any unconsolidated Affiliates of which Alterra owns less than
fifty percent (50%) or any stockholder of Alterra or any Affiliate.
The deduction in (a) above shall be reduced to the extent of that
goodwill in an amount not to exceed $25,000,000 which may result
from Alterra's buyout of joint ventures interests after December 31,
1999.
(b) EBITDAR to Interest and Rent. Section 4.9(b) of the Alterra
Guaranty Agreement is hereby amended and restated in its entirety to read
as follows:
3
<PAGE> 4
(b) Ratio of EBITDAR to Interest and Rent.
(i) Prior to Alterra's receiving gross proceeds of at least
$100,000,000 from the issuance of (x) shares of its capital stock or
(y) convertible debt securities of Alterra with a maturity of at
least five years and no redemption, retirement, sinking fund or
similar requirements and no cash interest payments for at least five
years (the receipt of which shall be evidenced by a certificate
delivered to the Administrative Agent in a form satisfactory to the
Administrative Agent),
(A) During each of the periods noted below, the ratio of
EBITDAR to the sum of Interest plus Rent, measured quarterly
as of the last day of each fiscal quarter of the Consolidated
Parties shall be greater than or equal to:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal Quarters ending March 31, 2000,
June 30, 2000 and September 30, 2000 0.80 to 1.0
</TABLE>
(B) During each of the periods noted below, as of the end of
each fiscal quarter of the Consolidated Parties, the ratio of
EBITDAR, for the twelve month period ending on such date, to
the sum of Interest plus Rent, for the twelve month period
ending on such date, shall be greater than or equal to:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From October 1, 2000 to and
including December 31, 2000 0.90 to 1.0
From January 1, 2001 to and
including March 31, 2001 1.0 to 1.0
From April 1, 2001 to and
including June 30, 2001 1.10 to 1.0
From July 1, 2001 to and
including September 30, 2001 1.15 to 1.0
From October 1, 2001 to and
including December 31, 2001 1.20 to 1.0
From January 1, 2002 to and
including June 30, 2002 1.35 to 1.0
From July 1, 2002 and thereafter 1.40 to 1.0
</TABLE>
4
<PAGE> 5
(ii) After Alterra's receiving gross proceeds of at least
$100,000,000 from the issuance of (x) shares of its capital stock or
(y) convertible debt securities of Alterra, with a maturity of at
least five years and no redemption, retirement, sinking fund or
similar requirements and no cash interest payments for at least five
years (the receipt of which shall be evidenced by a certificate
delivered to the Administrative Agent in a form satisfactory to the
Administrative Agent).
(A) During each of the periods noted below, the ratio of
EBITDAR to the sum of Interest plus Rent, measured quarterly
as of the last day of each fiscal quarter of the Consolidated
Parties shall be greater than or equal to:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal Quarter ending
March 31, 2000 0.65 to 1.0
Fiscal Quarters ending June 30,
2000 and September 30, 2000 0.80 to 1.0
</TABLE>
(B) During each of the periods noted below, as of the end of
each fiscal quarter of the Consolidated Parties, the ratio of
EBITDAR, for the twelve month period ending on such date, to
the sum of Interest plus Rent, for the twelve month period
ending on such date, shall be greater than or equal to:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From October 1, 2000 to and
Including December 31, 2000 0.85 to 1.0
From January 1, 2001 to and
Including March 31, 2001 0.95 to 1.0
From April 1, 2001 to and
Including June 30, 2001 1.0 to 1.0
From July 1, 2001 to and
Including September 30, 2001 1.10 to 1.0
From October 1, 2001 to and
Including December 31, 2001 1.15 to 1.0
From January 1, 2002 to and
Including March 31, 2002 1.20 to 1.0
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
From April 1, 2002 and thereafter 1.25 to 1.0
</TABLE>
5. Conditions Precedent. The effectiveness of this Agreement is subject to
the satisfaction of each of the following conditions (in form and substance
satisfactory to the Administrative Agent):
(a) The Administrative Agent shall have received executed
counterparts of this Agreement duly executed by the Credit Parties, the
Administrative Agent and the Required Lenders.
(b) The Administrative Agent shall have received satisfactory
evidence that the lenders party to each of the agreements identified on
Schedule 1 attached hereto shall have waived any and all defaults and
events of default arising from Alterra's failure to comply with the
financial covenants contained in such agreements.
(c) Copy of the resolution (in form and substance satisfactory to
the Administrative Agent) of the Parent, as general partner of each of the
Pool A Borrowers, authorizing each of the Pool A Borrowers to execute and
deliver this Agreement, certified by the co-secretaries of the Parent to
be true and correct and in force and effect as of the date hereof.
(d) Each Lender that executes this Agreement and delivers its
signature page to this Agreement to the Administrative Agent on or before
5:00 p.m., Eastern time, on March 28, 2000 shall have received an
amendment fee in an amount equal to 0.125% of the Revolving Commitment of
such Lender (prior to the effectiveness of this Agreement).
(e) Payment by the Credit Parties of all legal fees and expenses of
the Administrative Agent contained in those certain invoices provided to
the Credit Parties as of the date hereof.
(f) The Administrative Agent shall have received such other
documents and information as it deems reasonably necessary.
6. Miscellaneous.
(a) The term "Credit Agreement" as used in each of the Credit
Documents shall hereafter mean the Credit Agreement as amended by this
Agreement, and the term "Alterra Guaranty Agreement" as used in each of
the Credit Documents shall hereafter mean the Alterra Guaranty Agreement
as amended by this Agreement. Except as herein specifically agreed, the
Credit Agreement and the obligations of the Credit Parties thereunder and
under the other Credit Documents are hereby ratified and confirmed and
shall remain in full force and effect according to their terms, and the
Alterra Guaranty Agreement and the obligations of Alterra thereunder are
hereby ratified and confirmed and shall remain in full force and effect
according to its terms.
(b) Each Credit Party hereby represents and warrants with respect to
itself as follows:
6
<PAGE> 7
(i) Such Credit Party has taken all necessary action to
authorize the execution, delivery and performance of this Agreement.
(ii) This Agreement has been duly executed and delivered by
such Credit Party and constitutes each such Credit Party's legal, valid
and binding obligations, enforceable in accordance with its terms, except
as such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(iii) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or governmental
authority or third party is required in connection with the execution,
delivery or performance by such Credit Party of this Agreement.
(c) Each Operative Party hereby represents and warrants with respect
to itself to the Lenders that (i) the representations and warranties of
such Operative Party set forth in Section 6 of the Credit Agreement are
true and correct as of the date hereof and (ii) other than the Suspension
and Waiver, no unwaived event has occurred and is continuing which
constitutes a Default or Event of Default. Alterra hereby represents and
warrants to the Lenders that (i) the representations and warranties of
Alterra set forth in Section 3 of the Alterra Guaranty Agreement are true
and correct as of the date hereof and (ii) other than the Suspension and
Waiver, no unwaived event has occurred and is continuing which constitutes
a Default or an Event of Default under the Alterra Guaranty Agreement. HCR
hereby represents and warrants to the Lenders that (i) the representations
and warranties of HCR set forth in Section 3 of the HCR Guaranty Agreement
are true and correct as of the date hereof and (ii) other than the
Suspension and Waiver, no unwaived event has occurred and is continuing
which constitutes a Default or Event of Default.
(d) The Guarantors (i) acknowledge and consent to all of the terms
and conditions of this Agreement, (ii) affirm all of their obligations
under the Credit Documents and (iii) agree that this Agreement and all
documents executed in connection herewith do not operate to reduce or
discharge the Guarantors' obligations under the Credit Agreement or the
other Credit Documents.
(e) This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all
of which shall constitute one and the same instrument. Delivery of an
executed counterpart of this Agreement by telecopy shall be effective as
an original and shall constitute a representation that an executed
original shall be delivered. Upon satisfaction of the conditions
identified in Section 5 hereof, the effectiveness of this Agreement shall
be retroactive to December 31, 1999.
(d) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
7
<PAGE> 8
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Remainder of page intentionally left blank]
8
<PAGE> 9
Each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
BORROWERS: CLARE BRIDGE OF AKRON L.P.,
- ----------
a Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF ARLINGTON L.P.,
a Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 10
CLARE BRIDGE OF BAINBRIDGE L.P.,
a Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF BINGHAM FARMS L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF CARROLLWOOD L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 11
CLARE BRIDGE OF FT. MYERS L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF HOUSTON L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 12
CLARE BRIDGE OF JEFFERSON TOWNSHIP L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF LIVONIA L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF PARMA L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 13
CLARE BRIDGE OF RICHARDSON L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
CLARE BRIDGE OF TUSCAWILLA L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 14
CLARE BRIDGE OF WESTCHASE L.P., a
Delaware limited partnership
By: HCR/Alterra Development, LLC,
a Delaware limited liability company, its sole
general partner
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 15
GUARANTORS: HCR/ALTERRA DEVELOPMENT, LLC,
- ----------- a Delaware limited liability company
By: /s/ Douglas G. Haag
Title: Co-Vice President
By: /s/ Mark Ohlendorf
Title: Co-Vice President
ALTERRA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Mark Ohlendorf
Title: Sr. Vice President
MANOR CARE, INC., a Delaware corporation
By: /s/ Douglas G. Haag
Title: Co-Vice President
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 16
LENDERS: BANK OF AMERICA, N.A.,
- -------- as Administrative Agent and as a Lender
By: /s/ F. Scott Singhoff
Title: Managing Director
THE CHASE MANHATTAN BANK
By: /s/ Dawn Lee Lum
Title: Vice President
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLAND BRANCHES
By:
Name:
-----------------------------
Title:
-----------------------------
BANK UNITED, F.S.B.
By:
Name:
-----------------------------
Title:
-----------------------------
COMERICA BANK
By: /s/ Colleen M. Murphy
Title: Vice President
NATIONAL CITY BANK
By:
Name:
-----------------------------
Title:
-----------------------------
THE HUNTINGTON NATIONAL BANK
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 17
By: /s/ Daniel E. Crane
Title: Vice President
BANK OF MONTREAL
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
THE BANK OF NEW YORK
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 18
Schedule 1
----------
1. Master Loan Agreement dated January 8, 1999 among ALS West, Inc., Alterra
and Guaranty Federal Bank, F.S.B.
2. Master Construction Line of Credit Agreement dated as of October 6, 1998
among Alterra, ALS National, Inc. (pursuant to Joinder Agreement), Key
Corporate Capital, Inc., as Administrative Agent and the Co-Agents and
other Lending Institutions named therein.
3. Guaranty dated as of August 31, 1999 made by Alterra in favor of Key
Corporate Capital, Inc., as Administrative Agent
4. Participation Agreement dated as of July 16, 1999 among AHC Tenant, Inc.,
as Lessee, Pita General Corporation, as Owner, Alterra, as Guarantor,
SELCO Service Corporation, as Equity Investor, ZC Specialty Insurance
Company, as Surety, Bank One, N.A. (formerly, the First National Bank of
Chicago), as Trustee and Greenwich Capital Financial Products, Inc., as
Noteholder.
5. Guaranty of Payment Agreement dated September 28, 1998 made by Alterra for
the benefit of Bank United, as agent.
6. Secured Promissory Notes made by project-specific entities to Key
Corporate Capital, Inc. and delivered pursuant to that certain Master Loan
Agreement issued by Key Corporate Capital, Inc. to ALS-Northeast, LLC
dated May 5, 1998.
<PAGE> 19
SCHEDULE 2.1(a)(i)
LENDERS AND COMMITMENT PERCENTAGES
<TABLE>
<CAPTION>
Revolving
Revolving Commitment
Operations Contact Credit Contact Commitments Percentage
------------------ -------------- ----------- ----------
<S> <C> <C> <C>
Bank of America, N. A. Bank of America, N. A. $15,000,000.00 25.000000000%
Corporate Credit Services 700 Louisiana Street, 8th
NC1-001-15-01 Floor
One Independence Center Houston, Texas 77002-2700
101 North Tryon Street Attn: Scott Singhoff
Charlotte, NC 28255-0001 Telephone: (713) 247-6961
Attn: Rita Quesada-Rodgers Telecopy: (713) 247-6719
Telephone: (704) 386-9371
Facsimile: (704)-409-00023
The Chase Manhattan Bank The Chase Manhattan Bank $12,000,000.00 20.000000000%
1 Chase Manhattan Plaza - 270 Park Avenue, 48th
8th Floor Floor
New York, New York 10081 New York, New York 10017
Attn: Renee Pierre Louis, Attn: Dawn Lee Lum,
Vice President Vice President
Telephone: (212) 552-7322 Telephone: (212) 270-2472
Facsimile: (212) 552-7500 Facsimile: (212) 270-3279
Bank United, F.S.B Bank United, F.S.B $7,500,000.00 12.500000000%
3200 SW Freeway 3200 SW Freeway
Suite 2970 Suite 2940
Houston, Texas 77027 Houston, Texas 77027
Attn: Debbie Cook Attn: William Roberson,
Telephone: (713) 543-6033 Director
Facsimile: (713) 543-6063 Telephone: (713) 543-7745
Facsimile: (713) 543-4162
Deutsche Bank Deutsche Bank $7,500,000.00 12.500000000%
31 West 52nd Street, 24th 31 West 52nd Street, 24th
Floor Floor
New York, NY 10019-2601 New York, NY 10019-2601
Attn: Richard Agnolet Attn: Sue Pearson
Telephone: (212) 469-4113 Telephone: (212) 469-7140
Facsimile: (212) 469-4138 Facsimile: (212) 469-8701
Comerica Bank Comerica Bank $4,500,000.00 7.500000000%
500 Woodward Avenue Two Mid-America Plaza
MC3266 Suite 616
Detroit, Michigan 48226 Oakbrook Terrace,
Attn: Karen Leja, Customer Illinois 60181
Assistant Attn: Colleen M. Murphy,
Telephone: (313) 222-7805 Vice President
Facsimile: (313) 222-3420 Telephone: (630) 645-7376
Facsimile: (630) 575-2164
Bank of Montreal Bank of Montreal $4,500,000.00 7.500000000%
115 South LaSalle Street 115 South LaSalle Street
Chicago, IL 60603-3801 Chicago, IL 60603-3801
Attn: Attn: Heather Turf
Telephone: (312) Telephone: (312) 750-3466
Facsimile: (312) Facsimile: (312) 750-3702
The Bank of New York The Bank of New York $4,500,000.00 7.500000000%
One Wall Street One Wall Street
New York, NY 10286 New York, NY 10286
Attn: Attn: Edward Dougherty
Telephone: (212) Telephone: (212) 635-7842
Facsimile: (212) Facsimile: (212) 635-6434
</TABLE>
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 20
<TABLE>
<CAPTION> Revolving
Revolving Commitment
Operations Contact Credit Contact Commitments Percentage
------------------ -------------- ----------- ----------
<S> <C> <C> <C>
National City Bank National City Bank $3,000,000.00 5.000000000%
1900 E. 9th Street 1900 E. 9th Street
Locator #2077 Locator #2077
Cleveland, OH 44114 Cleveland, OH 44114
Attn: Revett Vickerstaff, Attn: Janice E. Focke,
Manager Vice President and Senior
Telephone: (216) 488-7080 Lending Officer
Facsimile: (216) 488-7110 Telephone: (216) 575-2836
Facsimile: (216) 222-0003
The Huntington National The Huntington National $1,500,000.00 2.500000000%
Bank Bank
300 Madison Avenue, Suite 300 Madison Avenue, Suite
900 900
Toledo, OH 43603 Toledo, OH 43603
Attn: Jennifer Harville Attn: Daniel E. Crane
Telephone: (614) 480-2948 Telephone: (419) 321-1087
Facsimile: (614) 480-2533 Facsimile: (419) 321-1053
Total $60,000,000 100%
</TABLE>
FIRST AMENDMENT TO CREDIT AGREEMENT,
FIRST AMENDMENT TO GUARANTY AGREEMENT
AND SUSPENSION AND WAIVER AGREEMENT
<PAGE> 1
EXHIBIT 11.1 COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
2000 1999
------------- -------------
<S> <C> <C>
Basic:
Net income attributable to common shares........... $ (5,318) $ 1,428
============= =============
Weighted average common shares outstanding......... 22,103 22,068
============= =============
Per share amount................................... $ (0.24) $ 0.06
============= =============
Diluted:
Net income......................................... $ (5,318) $ 1,428
Net effect of convertible debentures based on the
if-converted method, assuming 100% conversion:
$35,000,000, 6.75%, due 2006................... 391 391
$50,000,000, 7.0%, due 2004.................... 587 587
$143,750,000, 5.25%, due 2002.................. 1,295 1,295
------------- -------------
Net income (loss) attributable to common shares.... $ (3,045) $ 3,701
============= =============
Weighted average common shares outstanding......... 22,103 22,068
Net effect of convertible debentures based on the
if-converted method, assuming 100% conversion:
$35,000,000, 6.75%, due 2006................... 1,717 1,717
$50,000,000, 7.0%, due 2004.................... 2,469 2,469
$143,750,000, 5.25%, due 2002.................. 5,000 5,000
Net effect of dilutive stock options based
on the Treasury stock method, using average
market price...................................... 88 483
------------- -------------
Totals......................................... 31,377 31,737
============= =============
Per share amount................................... $ (0.10) $0.12
============= =============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statements of operations of
Alterra Healthcare Corporation filed with the Company's Form 10-Q for the
period ended March 31, 2000 and is qualified in its entirety by reference
to such financial statements and related footnotes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> MAR-31-2000
<PERIOD-END> JAN-01-2000
<CASH> 16,089
<SECURITIES> 0
<RECEIVABLES> 7,003
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 106,896
<PP&E> 958,307
<DEPRECIATION> (49,492)
<TOTAL-ASSETS> 1,115,895
<CURRENT-LIABILITIES> 86,685
<BONDS> 868,230
0
0
<COMMON> 179,443
<OTHER-SE> (34,095)
<TOTAL-LIABILITY-AND-EQUITY> 1,115,895
<SALES> 106,556
<TOTAL-REVENUES> 106,556
<CGS> 0
<TOTAL-COSTS> 96,349
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,918
<INCOME-PRETAX> (8,578)
<INCOME-TAX> 3,260
<INCOME-CONTINUING> (5,318)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,318)
<EPS-BASIC> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
