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EXHIBIT 10.9
ALTERRA HEALTHCARE CORPORATION
10000 INNOVATION DRIVE
MILWAUKEE, WISCONSIN 53226
WAIVER AND AMENDMENT NO.3 TO CREDIT AGREEMENT
March 28, 2000
Firstar Bank, National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
Alterra Healthcare Corporation, a Delaware corporation (the
"Borrower"), hereby agrees with you as follows:
1. Definitions. Reference is made to that certain Revolving Credit
Agreement dated as of August 19, 1997, as amended by the Amendment thereto dated
February 27, 1999 and the Second Amendment thereto dated September 9, 1999 (the
"Credit Agreement") between the Borrower and you (the "Bank"), pursuant to which
the Borrower has issued its Revolving Credit Note dated August 19, 1997, as
amended (the "Original Note"). All capitalized terms used and not otherwise
defined herein shall have the meanings given to such terms by the Credit
Agreement as amended hereby.
2. Background. The Borrower has requested that the Maturity Date of the
Revolving Credit Facility be extended to April 30, 2000 and that certain
financial covenants in the Credit Agreement be waived and amended as set forth
below. The Bank has agreed to such amendments and waivers subject to all of the
terms and conditions of this Agreement. Any additional loans made pursuant to
the Credit Agreement as amended hereby, together with the unpaid balance of the
Original Note, shall be evidenced by a new promissory note of the Borrower in
the form of Exhibit A annexed hereto (the "New Note") to be dated as of the date
hereof in the principal amount of $15,000,000 which shall be executed by the
Borrower and delivered to the Bank against the return of the Original Note to
the Borrower. Accrued interest on the Original Note outstanding on the date of
issuance of the New Note shall be included in interest due on the New Note on
the first interest payment date specified therein or in the Credit Agreement.
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3. Amendments to Credit Agreement. Subject to all of the terms and
conditions hereof, upon execution and delivery of this Agreement, the Credit
Agreement shall be amended, effective as of December 31, 1999, as follows:
(a) All references to the Credit Agreement in the Credit
Agreement, the Note and all other documents related thereto shall refer
to the Credit Agreement as amended hereby.
(b) All references in the Credit Agreement to the Note issued
thereunder and the loans evidenced thereby shall refer to the New Note
issued hereunder and the loans evidenced thereby (including the unpaid
balance of the Original Note).
(c) The date of March 31, 2000 set forth in Section 1.1 of the
Credit Agreement (the "Maturity Date") is hereby amended to April 30,
2000.
(d) Clause (iii) of Section 2.2 of the Credit Agreement is
amended to read as follows: "(iii) do not require the approval of any
governmental agency, other entity or person;"
(e) Clause (iii) of Section 2.3 of the Credit Agreement is
hereby amended to read as follows:
(iii) not liquidate, dissolve, merge or consolidate with or into
another entity if, as a result of such merger or consolidation,
the stockholders of the Borrower immediately prior to such merger
or consolidation do not own in excess of fifty percent (50%) of
the outstanding voting stock of the surviving corporation, or its
parent company, immediately following such merger or
consolidation.
(f) The second sentence of Section 2.4 of the Credit Agreement
is hereby amended to read as follows:
The Borrower will not, without the prior written consent of the
Bank, redeem, purchase or retire any of its capital stock (other
than the redemption of stock issued in connection with the
proposed equity transaction referred to in Section 4.1(i) below)
or pay dividends or make other payments or distributions of a
similar nature (other than pay-in-kind dividends payable in
connection with the proposed equity transaction referred to in
Section 4.1(i) below).
(g) Section 2.12 of the Credit Agreement is amended such that
the Borrower shall be required to deliver quarterly financial
statements within 60 days after
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the end of each of the first three fiscal quarters in each fiscal year,
and within 120 days after the end of the fourth fiscal quarter in each
fiscal year.
(h) Section 2.14 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
2.14 FINANCIAL STATUS. The Borrower will maintain at all times:
(i) on a consolidated basis with all subsidiaries, at all times
during the term of this Agreement measured quarterly beginning
with the quarter ending December 31, 1999, a minimum Tangible Net
Worth of not less than the sum of $80,000,000 plus fifty percent
(50%) of the Borrower's net income (if positive) for each
subsequent quarter (beginning with the quarter ending March 31,
2000) plus seventy-five percent (75%) of the net proceeds to the
Borrower of any equity capital (or equity equivalent) securities
offering received during such quarter.
(ii) at the end of each fiscal quarter set forth in the table
below, a ratio of EBITDAR to the sum of Interest plus Rent for
the fiscal quarter then ended of not less than the ratio set
forth opposite such fiscal quarter in the table below:
QUARTER ENDING RATIO
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March 31, 2000 0.65:1
June 30, 2000 0.80:1
September 30, 2000 0.90:1
(iii) at the end of each fiscal quarter set forth in the table
below, a ratio of EBITDAR to the sum of Interest plus Rent for
the four fiscal quarters then ended of not less than the ratio
set forth opposite such fiscal quarter in the table below:
QUARTER ENDING RATIO
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December 31, 2000 0.95:1
March 31, 2001 1.0:1
June 30, 2001 1.05:1
September 30, 2001 1.15:1
December 31, 2001 1.25:1
Thereafter 1.25:1
The terms used in this Section 2.14 will have the meanings set
forth in a supplement entitled "Financial Definitions", a copy of
which the Borrower hereby acknowledges having received
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with this Agreement and which is incorporated herein by
reference.
(i) Section 4.1(g) of the Credit Agreement is hereby amended
by adding the following at the end of clause (i) thereof:
as compared to the business, properties, financial condition or
affairs of the Borrower as reflected in the financial
projections prepared by management of Borrower consisting of,
among other things, a projected balance sheet, income statement
and cash flow statement for its fiscal years ended December 31,
1999 through December 31, 2003 delivered to the Bank on or
about February 2, 2000.
(j) Section 4.1 of the Credit Agreement is hereby amended by
adding two additional subparagraphs (h) and (i) thereto, reading in
their entirety as follows:
(h) CROSS DEFAULT TO BANK UNITED CREDIT FACILITY. An "Event of
Default" shall occur under the Amended and Restated Financing and
Security Agreement dated February 12, 1999, as amended and in
effect from time to time, between ALS Holdings, Inc. et al (as
Borrower) and Bank United (as Agent).
(i) EQUITY TRANSACTION. The Borrower shall fail to complete an
equity transaction (which may consist of the issuance and sale of
additional equity securities or the conversion of outstanding
indebtedness) resulting in additional cash equity to the Borrower
in the amount of at least $100,000,000, all on such terms and
conditions as shall be reasonably satisfactory to the Bank, by
not later than June 30, 2000.
(k) Section 4.5 of the Credit Agreement is hereby deleted in
its entirety.
(l) The Financial Definitions Supplement to the Credit
Agreement is hereby amended by deleting the definitions of "Debt
Service Coverage Ratio" and "Eligible Account" and by inserting therein
the following new definitions:
2. The term "EBITDAR" shall mean earnings before interest, taxes,
depreciation, amortization, and Rent, plus the dollar amount of
the Borrower's minority interest in losses of unconsolidated
subsidiaries.
3. The term "Interest" shall mean the sum of all interest expense
(as defined by GAAP), net of interest income.
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4. The term "Rent" shall mean lease expense as defined pursuant
to GAAP.
5. The term "Tangible Net Worth" shall mean, at any time, the sum
of shareholders' equity as defined by GAAP less the total of (a)
all assets which would be classified as intangible assets under
GAAP, including goodwill (other than goodwill resulting from the
purchase of joint venture interests currently held by joint
venture partners), 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 consolidated affiliates of which the
Borrower owns less than fifty percent (50%) or any stockholder of
the Borrower or any affiliate.
(m) Section 2(a) of Appendix 1 to the Credit Agreement is
hereby amended to read as follows:
Promptly upon transmission thereof or other filing with the
SEC, copies of all annual, quarterly or current reports that
the Company files with the SEC. In addition, the Company shall
cause Live Edgar(TM) or another third-party service bureau
regularly offering such "watch" services to promptly notify via
e-mail a representative designated by the Bank of all
registration statements filed by the Company with the SEC.
4. Waiver. The Borrower was not in compliance with the "Minimum Net
Profit" requirement of Section 2.14 of the Credit Agreement for the quarter
ended December 31, 1999. The Bank hereby waives such covenant violation for the
quarter ended December 31, 1999. The Bank also waives any default existing
7pursuant to the cross-default provision in Section 4.1(d) and the material
adverse change clause in Section 4.1(g), in each case as of December 31, 1999.
5. Conditions. Notwithstanding any other provision of this Agreement,
this Agreement shall not become effective unless and until it has been signed by
all parties to the Credit Agreement.
6. Representations and Warranties. Except for the representation in
Section 2.12 that there has been no material adverse change in the Borrower's
financial condition since the last financial statements delivered to you, the
Borrower hereby repeats and reaffirms the representations and warranties set
forth in Article II of the Credit Agreement. The Borrower also represents and
warrants that the execution, delivery and performance of this Agreement
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and the other documents required hereby are within the corporate powers of the
Borrower, have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the stockholders of the
Borrower; (ii) violate any provision of the articles of incorporation or by-laws
of the Borrower or of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or any subsidiary; (iii) require the consent or
approval of, or filing or registration with, any governmental body, agency or
authority; or (iv) result in any breach of or constitute a default under, or
result in the imposition of any lien, charge or encumbrance upon any property of
the Borrower or any subsidiary pursuant to, any indenture or other agreement or
instrument under which the Borrower or any subsidiary is a party or by which it
or its properties may be bound or affected. This Agreement constitutes, and each
of the documents required herein when executed and delivered hereunder will
constitute, legal, valid and binding obligations of the Borrower or other
signatory enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy or similar laws affecting the
enforceability of creditors' rights generally.
7. Confirmation of Agreements. Except as expressly provided above, the
Credit Agreement shall remain in full force and effect. This Agreement does not
constitute a waiver or Agreement of any term, condition or covenant in the
Credit Agreement other than as specifically set forth above. Nothing contained
in this Agreement or in any other document, or any course of dealing with the
Borrower, shall be construed to imply that there is any agreement by the Bank to
provide any waiver or agree to any Agreement in the future. This Agreement shall
not release, discharge or satisfy any present or future debts, obligations or
liabilities to the Bank of the Borrower or of any debtor, guarantor or other
person or entity liable for payment or performance of any of such debts,
obligations or liabilities of the Borrower, or any mortgage, security interest,
lien or other collateral or security for any of such debts, obligations or
liabilities of the Borrower or such debtors, guarantors or other persons or
entities, or waive any default except as expressly provided herein, and the Bank
expressly reserves all of its rights and remedies with respect to the Borrower
and all such debtors, guarantors or other persons or entities, and all such
mortgages, security interests, liens and other collateral and security. This is
an amendment and not a novation. The Borrower acknowledges and agrees that the
obligations under the Credit Agreement and Note exist and are owing with no
offset, defense or counterclaim assertible by the Borrower and that the Credit
Agreement and the Note are valid, binding and fully enforceable according to
their respective terms.
8. Miscellaneous. The Borrower shall be responsible for the payment of
all fees and out-of-pocket disbursements incurred by the Bank in connection with
the preparation, execution, delivery, administration and enforcement of this
Agreement including all costs of collection, and including without limitation
the reasonable fees and disbursements of counsel for the Bank, whether or not
any transaction contemplated by this Agreement is consummated. The provisions of
this Agreement shall inure to the benefit of any holder of the Note, and shall
inure to the benefit of and be binding upon any successor to any of the parties
hereto. All agreements, representations and warranties made herein shall survive
the execution of this Agreement and the making of the loans under the Credit
Agreement, as so amended. This
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Agreement shall be governed by and construed in accordance with the internal
laws of the State of Wisconsin. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement is solely for the benefit of the
parties hereto and their permitted successors and assigns. No other person or
entity shall have any rights under, or because of the existence of, this
Agreement.
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If the foregoing is satisfactory to you, please sign the form of
acceptance below and return a signed counterpart hereof to the Borrower.
Very truly yours,
ALTERRA HEALTHCARE CORPORATION
(Corporate Seal)
By: /s/ Mark W. Ohlendorf
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Title: Senior Vice President
Agreed to as of the date first above written.
FIRSTAR BANK, NATIONAL ASSOCIATION
By: /s/ Dale L. Welke
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Title: Vice President
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EXHIBIT A
NOTE
$15,000,000 March 28, 2000
FOR VALUE RECEIVED, Alterra Healthcare Corporation, a Delaware
corporation ("Borrower"), promises to pay to the order of Firstar Bank, National
Association ("Bank"), without setoff or counterclaim, the principal sum of
Fifteen Million Dollars ($15,000,000) at the Main Office of the Bank in
Milwaukee, Wisconsin, on the Maturity Date (as defined in the Credit Agreement
referred to below).
The unpaid principal balance of this Note shall bear interest at the
Prime Rate announced by the Bank and in effect from time to time (with the rate
changing as and when such Prime Rate changes).
Interest is payable monthly in arrears on the last day of each month,
beginning with the first such day occurring after the date hereof, and all
accrued and unpaid interest shall be due and payable on the Maturity Date.
Interest will be computed for the actual number of days principal is
unpaid, using a daily factor obtained by dividing the stated interest rate by
360. Principal and interest not paid when due shall bear interest from and after
the due date until paid at a rate of two percent (2%) per annum plus the rate
otherwise payable hereunder. All amounts payable under this Note and the Credit
Agreement shall be payable in lawful money of the United States of America.
Without affecting the liability of the Borrower or any indorser, surety
or guarantor, the Bank may, without notice, renew or extend the time for
payment, accept partial payments, release or impair any collateral security for
the payment of this Note, or agree not to sue any party liable on it.
The Borrower agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses, and waives presentment, protest,
demand, and notice of dishonor.
This Note shall be governed by the internal laws of the State of
Wisconsin, except to the extent superseded by federal law.
This Note constitutes the Note issued under a Revolving Credit
Agreement dated as of August 19, 1997, as amended from time to time (the "Credit
Agreement"), between the
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undersigned and Firstar Bank, National Association, to which Credit Agreement
reference is hereby made for a statement of the terms and conditions on which
loans evidenced hereby were or may be made, and for a description of the
conditions upon which this Note may be prepaid, in whole or in part, or its
maturity accelerated. This Note is entitled to the benefits of the Credit
Agreement and all collateral documents related thereto.
ALTERRA HEALTHCARE CORPORATION
By:
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Title:
(CORPORATE SEAL)
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