Exhibit 10.132

SUBORDINATED PROMISSORY NOTE

$           December 31, 2001

 

          FOR VALUE RECEIVED, the undersigned, Alterra Healthcare Corporation ,
a Delaware Corporation (the "Company" or " Maker "), hereby promises and agrees
to pay to the order of ____________________________________________ (hereinafter
referred to as "Payee," which term shall mean the holder at any particular time
of this Note), the original principal sum of
_______________________________________________ Dollars ($___________), or so
much thereof as may be outstanding from time to time, together with interest as
hereinafter provided. This Note is one of several Subordinated Promissory Notes
(collectively, the "Subordinated Notes") dated the date hereof and issued by
Maker pursuant to Section 5 of that certain Settlement Agreement, Mutual Release
and Assignment dated as of December 31, 2001, between Maker, Manor Care, Inc.,
Health Care and Retirement Corporation of America, HCR/Alterra Development, LLC,
Margolick Financial Group LP, certain Delaware limited partnerships and the
limited partners thereof, including the original Payee hereof (the "Settlement
Agreement"). THIS NOTE AND THE OTHER SUBORDINATED NOTES ARE SUBORDINATED AND
JUNIOR IN RANKING TO CERTAIN OTHER INDEBTEDNESS OF THE COMPANY IN THE MANNER SET
FORTH HEREIN.

          From the date hereof until this Note is paid in full, all principal
and all accrued and unpaid interest hereunder, compounded semi-annually as of
each July 1 and January 1, shall bear interest at the rate of nine percent
(9.0%) per annum (the "Interest Rate"), except that upon the occurrence and
during the continuance of an Event of Default (as hereinafter defined), such
amounts shall bear interest at the rate of eleven percent (11.0%) per annum,
compounded semi-annually as of each July 1 and January 1 (the "Default Rate").

          Subject to any earlier acceleration of this Note, interest accrued
during the first two years after the date hereof ("First Two Years Accrued
Interest") shall not be payable until the Maturity Date. Commencing on the date
which is thirty (30) months after the date hereof, and thereafter on each June
30, and December 31, until the Maturity Date, Maker shall pay to Payee all
accrued but unpaid interest hereunder (other than the First Two Years Accrued
Interest). On December 31, 2008 (the "Maturity Date"), Maker shall pay to Payee
all principal and accrued and unpaid interest hereunder (including the First Two
Years Accrued Interest).

          Interest shall be computed based on the premise that a year contains
twelve (12) thirty (30) day months and 360 days. Interest for a partial month
shall be charged on the actual number of days elapsed.

          The principal and interest on this Note shall be payable in
immediately available funds in lawful money of the United States which shall be
legal tender for public and private debts at the time of payment. Any payment by
other than immediately available funds, which Payee, at its option, elects to
accept, shall be subject to collection, and interest shall continue to accrue
until the funds by which payment is made are available to Payee for its use.

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          All payments hereunder shall be payable to the order of Payee in
accordance with the Wiring Instructions on Exhibit A attached hereto and
incorporated herein, or at such place, in such manner, and to such person as
shall be designated in writing from time to time by Payee. All payments shall be
applied first to expenses and fees, then to interest and then to principal.

          This Note may be prepaid in whole or in part at any time without
penalty upon no less than five (5) days prior written notice. Partial
prepayments shall be applied to principal and shall not postpone the due date of
any subsequent payments unless Payee shall otherwise agree in writing.

          If any payment of principal and/or interest is not paid within
five (5) days after its due date, Maker agrees to pay to Payee as a late charge,
and in addition to the amount of such payment, a sum equal to five percent (5%)
of the amount of such delinquent payment.

          Maker promises to pay all costs incurred by Payee in connection with
the enforcement of any provision of this Note or any amendment, waiver,
modification or supplement hereto, or in the protection of, realization upon, or
collection of this Note, or for the enforcement of any guaranty hereof,
regardless of whether suit is filed hereon. Such costs shall include, but not be
limited to, the reasonable fees and expenses of its outside counsel and, in the
case of salaried counsel employed by the Payee, the cost (as reasonably
determined by the Payee) of the services of such counsel calculated on an hourly
basis.

          In no event shall the amount of interest due or payable hereunder
exceed the maximum amount of interest allowed by applicable law or otherwise
violate applicable law, and in the event any payment is made which exceeds such
maximum lawful amount, then the amount of such excess sum shall be credited as a
payment of principal. It is the express intent hereof that Maker shall not pay
and Payee shall not receive, directly or indirectly, interest in excess of what
may lawfully be paid by Maker under applicable law.

          Maker hereby represents and warrants that the execution and delivery
of this Note does not violate any of the terms and provisions of the
organizational documents of Maker, or of any agreement, judgment, decree, or
other instrument to which Maker is a party, by which Maker is bound, or which
binds any of Maker's assets.

          Any of the following shall constitute an "Event of Default" hereunder:
(a) Maker's failure to pay any amount due as herein agreed within five (5) days
after its due date; (b) the dissolution or termination of existence of Maker;
(c) if any representation and warranty of Maker contained herein shall have been
untrue when made; (d) the occurrence of any of the following events: (i) Maker
makes a general assignment or general arrangement for the benefit of creditors,
(ii) a petition for adjudication of bankruptcy or for reorganization or
rearrangement is filed by Maker, (iii) a petition for adjudication of bankruptcy
or for reorganization or rearrangement is filed against Maker and is not
dismissed within 90 days, (iv) a trustee or receiver is appointed to take
possession of substantially all of Maker's assets and possession is not restored
to Maker within 60 days, or (v) substantially all of Maker's assets are
subjected to attachment, execution or other judicial seizure which is not
discharged within 60 days or (e) default by Maker in payment of amounts due
Payee under any other notes held by Payee and originally issued by Maker
pursuant to or in connection with the Settlement Agreement. Upon the occurrence
of any Event of Default, the entire unpaid balance of this Note or any extension
or renewal thereof shall, at the option of the Payee, become immediately due and
payable without notice or demand.

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Upon the occurrence and during the continuance of an Event of Default, the Payee
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set-off and apply any and all indebtedness at any time
owing by the Payee or any direct or indirect subsidiary of the Payee to or for
the credit of the account of the Maker against any and all of the obligations of
the Maker now or hereafter existing under this Note or otherwise irrespective of
whether the Payee shall have made any demand under this Note and although such
obligations may be unmatured. The Payee agrees promptly to notify the Maker
after any such set-off and application, provided , that, the failure to give
such notice shall not affect the validity of such set-off and application.
Although the Payee may in its discretion take any act to confirm, indicate, or
otherwise evidence a set-off, such act shall not be deemed to be necessary for
an effective set-off. The rights of the Payee under this paragraph are in
addition to other rights and remedies (including, without limitation, other
rights of set-off), which the Payee may have.

          Except as otherwise expressly set forth herein, the Maker and all
endorsers, guarantors, and sureties of this Note (collectively the "Obligors")
severally (a) waive all applicable exemption rights, whether under the laws of
Delaware or otherwise, and also waive demand, presentment for payment, notice of
nonpayment, protest, notice of protest, notice of acceleration, and diligence in
collecting this Note, (b) agree to the release of any party primarily or
secondarily liable hereon and agree that it will not be necessary for any holder
hereof, in order to enforce payment of this Note by any party, to first
institute suit against any other Obligor, and (c) consent to any one or more
extensions or postponements of time of payment of this Note on any terms or any
other indulgences with respect thereto. THE PLEADING OF ANY STATUTE OF
LIMITATIONS AS A DEFENSE TO ANY DEMAND AGAINST THE MAKER OR THE OBLIGORS IS
HEREBY EXPRESSLY WAIVED. Any acknowledgment, waiver, new promise, payment of
principal or interest or otherwise by any Obligor, with respect to the
Obligations hereunder, shall be deemed to be made as agent of each other Obligor
for the purposes hereof, and shall, if the statute of limitations in favor of
any Obligor against the Payee shall have commenced to run, toll the running of
such statute of limitations, and if such statute of limitations shall have
expired, prevent the operation of such statute.

          Subordination and Ranking . This Note shall rank (i) subordinate to
the Company's Senior Indebtedness (hereinafter defined) to the extent and in the
manner provided herein and (ii)  pari passu to the other Subordinated Notes.

          The Company agrees, and each holder of this Note by such holder's
acceptance hereof likewise agrees, that the payment of the principal of,
premium, if any, and interest on the Note (all of the foregoing, a "Payment or
Distribution") is subordinated and junior in right of payment, to the extent and
in the manner provided herein, to the prior payment in full in cash of all
Senior Indebtedness whether outstanding on the date hereof or hereafter created,
incurred, assumed or guaranteed. A Payment or Distribution shall include any
asset of any kind or character, and may consist of cash, securities or other
property, by set-off or otherwise, and shall include, without limitation, any
purchase, redemption or other acquisition of the Note.

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          The Senior Indebtedness of the Company shall continue to be Senior
Indebtedness and entitled to the benefit of these subordination provisions
irrespective of any amendment, modification or waiver of any term of any
instrument relating to refinancing of the Senior Indebtedness. No right of any
holder of any Senior Indebtedness to enforce subordination as herein provided
shall at any time or in any way be affected or impaired by any failure to act on
the part of the Company, the holders of the Subordinated Notes, or the holders
of the Senior Indebtedness, or by any noncompliance by the Company, or the
holders of the Subordinated Notes with any of the terms, provisions and
covenants of the Subordinated Notes, regardless of any knowledge thereof that
any such holder of Senior Indebtedness may have or be otherwise charged with.

          No Payment or Distribution shall be made by the Company on account of
principal of, premium, if any, or interest on the Note, whether upon stated
maturity, upon redemption or acceleration, or otherwise, or on account of the
purchase or other acquisition of the Note, whether upon stated maturity, upon
redemption or acceleration, or otherwise, if there shall have occurred and be
continuing a default with respect to any Senior Indebtedness permitting the
acceleration thereof or with respect to the payment of any Senior Indebtedness
and (a) such default is the subject of a judicial proceeding or (b) written
notice of such default has been given to the Company by any holder or holders of
any Senior Indebtedness, unless and until such default or event of default shall
have been cured or waived or shall have ceased to exist. As of the date of
issuance of the Subordinated Notes, such defaults are in existence and have not
been cured or waived.

          Upon any acceleration of the principal of any of the Note or any
payment by the Company or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due or to become due upon all Senior Indebtedness
shall first be paid in full in cash, or payment thereof provided for to the
satisfaction of the holders thereof, before any Payment or Distribution is made
on account of the principal of (and premium, if any) or interest on the Note;
and (subject to the power of a court of competent jurisdiction to make other
equitable provision, which shall have been determined by such court to give
effect to the rights conferred in this Note upon the Senior Indebtedness and the
holder hereof with respect to the Note, by a lawful plan of reorganization or
readjustment under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by the Company or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than securities of the Company as reorganized or
readjusted or securities of the Company or any other company, trust or
corporation provided for by a plan of reorganization or readjustment, the
payment of which is junior or otherwise subordinate, at least to the extent
provided in this Note with respect to the Note to the payment of all Senior
Indebtedness at the time outstanding and to the payment of all securities issued
in exchange therefor to the holders of the Senior Indebtedness at the time
outstanding, and the rights of the holders of Senior Indebtedness of the Company
are not altered by such plan of reorganization or readjustment), to which the
holder of the Note would be entitled except for the subordination provisions of
this Note, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such Payment or
Distribution directly to the holders of Senior Indebtedness of the Company or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any Payment or Distribution is made to the holder of the
Note.

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          In the event that, notwithstanding the foregoing, any Payment or
Distribution by the Company of any kind or character, (whether such payment
shall be in cash, property or securities) which is prohibited by the foregoing,
shall have been made to the holder of the Note before all Senior Indebtedness is
paid in full in cash, or provision is made for such payment to the satisfaction
of the holders thereof, and if such fact shall have been made known to such
holder, then and in such event such Payment or Distribution shall be paid over
by such holder or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in cash, after giving effect to
any concurrent Payment or Distribution to or for the holders of such Senior
Indebtedness, and, until so delivered, the same shall be held in trust by any
holder of the Note as the property of the holders of Senior Indebtedness.

          The holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the holders of the Subordinated Notes,
without incurring responsibility to the holders of the Subordinated Notes and
without impairing or releasing the obligations of the holders of the
Subordinated Notes to the holders of Senior Indebtedness: (i) change the manner,
place or terms of payment or change or extend the time of payment of, or renew
or alter, Senior Indebtedness, or otherwise amend in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any person liable in any manner for the collection
of Senior Indebtedness; (iv) apply any amounts received to any liability of the
Company owing to holders of Senior Indebtedness; and/or (v) exercise or refrain
from exercising any rights against the Company and any other person.

          Subrogation of Notes . Subject to the payment in full in cash of all
amounts then due (whether by acceleration of the maturity thereof or otherwise)
on account of all Senior Indebtedness at the time outstanding, the holders of
the Subordinated Notes shall be subrogated to the rights of the holders of
Senior Indebtedness to receive Payments or Distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of, premium, if any, and interest on the Subordinated Notes shall be
paid in full; and, for the purposes of such subrogation, no Payments or
Distributions to the holders of Senior Indebtedness to which the holders of the
Subordinated Notes would be entitled except for the subordination provisions of
the Subordinated Notes, and no payments over pursuant to the subordination
provisions of the Subordinated Notes to the holders of Senior Indebtedness by
holders of the Subordinated Notes, shall, as between the Company, the Company's
creditors other than holders of Senior Indebtedness, and the holders of the
Subordinated Notes, be deemed to be a payment by the Company to or on account of
the Senior Indebtedness. It is understood that the subordination provisions of
this Note are and are intended solely for the purpose of defining the relative
rights of the holder of the Note, on the one hand, and the holders of Senior
Indebtedness, on the other hand.

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          Nothing contained in this Note is intended to or shall impair, as
among the Company, its creditors other than the holders of Senior Indebtedness,
and the holder of the Note, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of the Note the principal of, premium, if
any, and interest on the Note as and when the same shall become due and payable
in accordance with its terms, or is intended to or shall affect the relative
rights of the holder of the Note and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
holder of the Note from exercising all remedies otherwise permitted by
applicable law upon default under this Note, subject to the rights, if any,
pursuant to this Note of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.

          For purposes of the provisions of this Note, the following terms shall
have the meaning set forth below:

          " Convertible Indebtedness " means the principal, premium, if any, and
interest on the Company's Series A, Series B and Series C 9.75% Convertible
Pay-In-Kind Debentures due 2007, the Company's 5.25% Convertible Subordinated
Debentures due 2002, the Company's 7% Convertible Subordinated Debentures due
2004, and the Company's 6.75% Convertible Subordinated Debentures due 2006.

          "Indebtedness"

as applied to any person, means, without duplication: (i) all indebtedness for
borrowed money whether or not evidenced by a promissory note, draft or similar
instrument; (ii) that portion of obligations with respect to any lease that is
properly classified as a liability on a balance sheet in accordance with
generally accepted accounting principles; (iii) notes payable and drafts
accepted representing extensions of credit; (iv) any balance owed for all or any
part of the deferred purchase price of property or services, which purchase
price is due more than six months from the date of incurrence of the obligation
in respect thereof (except any such balance that constitutes (a) a trade payable
or an accrued liability arising in the ordinary course of business or (b) a
trade draft or note payable issued in the ordinary course of business in
connection with the purchase of goods or services), if and to the extent such
debt would appear as a liability upon a balance sheet of such person prepared in
accordance with generally accepted accounting principles; (v) any debt of others
described in the preceding clauses (i) through (iv) which such person has
guaranteed or for which it is otherwise liable; and (vi) any deferral,
amendment, renewal, extension, supplement or refunding of any of the foregoing
indebtedness; provided , however , that, in computing the "Indebtedness" of any
person, there shall be excluded any particular indebtedness if, upon or prior to
the maturity thereof and at the time of determination of such indebtedness,
there shall have been deposited with a depository in trust money (or evidences
of indebtedness if permitted by the instrument creating such indebtedness) in
the necessary amount to pay, redeem or satisfy such indebtedness as it becomes
due, and the amount so deposited shall not be included in any computation of the
assets of such person.

          " Senior Indebtedness " means the principal, premium, if any, and
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such proceeding), fees,
charges, expenses, reimbursement and indemnification obligations, and all other
amounts payable under or in respect of Indebtedness of the Company, whether any
such Indebtedness exists as of the date of this Note or shall hereafter be
created, incurred, assumed or guaranteed, as may be amended from time to time
and any renewals, extensions, refundings, amendments and modifications of any
such indebtedness or obligations or of the instruments creating or evidencing
such indebtedness or obligations or guarantees, including, without limitation,
the Convertible Indebtedness; provided , however , that Senior Indebtedness
shall not include (A) Indebtedness owed to a Subsidiary, or, (B) Indebtedness of
the Company which is expressly pari passu (such as other Subordinated Notes) or
expressly subordinated to this Note.

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          " Subsidiary " means with respect to any person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more Subsidiaries of such person (or a combination thereof) and
(ii) any partnership (a) the sole general partner or managing general partner of
which is such person or a Subsidiary of such person or (b) the only general
partners of which are such person or one or more Subsidiaries of such person (or
any combination thereof).

          This Note is deemed to be a contract under the laws of Delaware
(except for the conflict of law provisions thereof) and shall be governed by,
and construed in accordance with, the laws of such jurisdiction. Wherever
possible each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Note. If any action arising out of this Note is commenced in state or Federal
court located in Delaware, each Party signatory hereto hereby consents to the
jurisdiction of any such court in any such action and to the laying of venue in
Delaware. Any process in such action shall be duly served if mailed by
registered mail, postage prepaid, to the Maker at its address given herein or
its last known business address, or if otherwise served in accordance with law.
Any other notice or demand hereunder may be made by hand delivery or certified
or registered mail, return receipt requested, to such address, with the same
effect as if delivered in person.

[Signature(s) on next page.]

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          IN WITNESS WHEREOF, the undersigned, with full power and authority to
do so, intending that this Note shall constitute an instrument under seal, has
caused these presents to be executed, delivered, and sealed on the day and year
first above written.

WITNESS:

 

 

/s/ Mark W. Ohlendorf

MAKER:

Alterra Healthcare Corporation

,

A Delaware Corporation
By: /s/ Steven Vick
Name: Steven Vick
Title: President and COO

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SCHEDULE OF NOTEHOLDERS

 

NOTEHOLDER

AMOUNT

Arbor Investments Property Trust

209,966.39

Alice Berlin Revocable Trust

69,988.80

Ann Berman-Feld

17,687.61

Jonathon S. Berman

26,324.21

Madeleine H. Berman Property Trust

16,914.94

Mandell L. Berman L. Property Trust

23,913.82

Jerome S. Bookstein Trust

17,497.20

Miles E. Brasch

34,994.40

Harold Brode Revocable Trust

57,290.00

Mark Brode

13,997.76

Seymour Brode Trust

34,994.40

Harry Burnett and Sallie Charles

13,997.76

Delray Investors, LLC

13,997.76

Dorrell Group, LLC

97,984.32

Irwin and Judith Elson JTWROS

69,988.80

GFC Profit Sharing Plan & Trust

34,994.40

Herbert N. Glass Trust

6,998.88

Ed Goldberg Family Trust

153,975.36

Louis Gordon Trust

34,994.40

Stephen Grand Property Trust

34,994.40

Gregory R. and Susan G. Greenfield

13,997.76

Michael Gutt

13,997.76

David Guz Trust

13,997.76

David Handleman

17,497.20

Paul Harris

21,061.07

Stuart Harris

20,845.40

Robert Herdoiza

34,994.40

Mark Hutton Trust

35,881.85

Stephen B. Hutton

6,998.88

Simon S. Indianer Trust

13,997.76

Wayne Jones

34,994.40

Gerald Katz

27,995.52

Klein Properties

20,996.64

Harley Kripke

69,988.80

Howard J. Leshman Revocable Trust

13,997.76

H. Barry Levine Trust

34,269.38

Michael Maddin Revocable Living Trust

34,994.40

New Wellington Investors, LLC

34,994.40

Arthur S. Nusbaum Revocable Trust

13,997.76

Irving Nusbaum Trust

41,993.28

Robert S. Nusbaum Trust

13,997.76

Ronald S. Plaine Trust

6,399.84

Jack Jay Pomeroy Revocable Trust

13,997.76

Keith Pomeroy Revocable Trust

76,987.68

Emanuel Ravet Revocable Trust

34,994.40

Jay Richman Revocable Living Trust

13,997.76

Pamela Rider

13,997.76

Joseph C. and Susan A. Roebuck

41,993.28

Marvin Rubin Trust

12,469.22

Sandra Rubin Trust

12,469.22

Brenda Saperstein

4,952.36

Merton and Beverly Segal JTWROS

27,995.52

Joel H. Shapiro

79,574.41

Robert S. Sher Trust

17,497.20

Irving S. Stahl Revocable Living Trust

13,997.76

Daniel Stewart Trust

34,994.40

Richard P. Sutkin Trust

6,998.88

Terry and Darlene Taylor

13,997.76

Alexander Topelson

10,498.32

Jorge F. Topelson

10,498.32

Robert Vidal Trust

23,703.76

Eliot M. and Ilene Wolf

6,998.88