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EXHIBIT 10.10
ALTERRA HEALTHCARE CORPORATION
10000 INNOVATION DRIVE
MILWAUKEE, WISCONSIN 53226
AMENDMENT NO. 5 TO CREDIT AGREEMENT
May 31, 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 through Amendment No. 4
thereto dated April 30, 2000 (the "Credit Agreement") between the Borrower and
you (the "Bank"). 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 June 30, 2000 and that certain
financial covenants in the Credit Agreement be amended as set forth below. The
Bank has agreed to such amendments subject to all of the terms and conditions of
this Agreement.
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 the date hereof, 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) The date of May 31, 2000 set forth in Section 1.1 of the
Credit Agreement (the "Maturity Date") is hereby amended to June 30,
2000.
(c) Clause (i) of Section 1.1 of the Credit Agreement is
hereby amended and restated as follows:
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"(i) $15,000,000 until the date of consummation of the sale of the
Initial Securities (as defined in the Purchase Agreement defined
below), and $10,000,000 from and after such date (the "Loan Amount"),".
(d) Section 2.14 of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
(a) Debt Service Coverage Ratio. The Debt Service
Coverage Ratio, as of the last day of each fiscal quarter of
Borrower, shall be greater than or equal to:
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Fiscal Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
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2000 0.75 to 1.0 0.75 to 1.0 0.75 to 1.0 0.75 to 1.0
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2001 0.75 to 1.0 0.82 to 1.0 0.91 to 1.0 1.0 to 1.0
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2002 1.06 to 1.0 1.13 to 1.0 1.19 to 1.0 1.25 to 1.0
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(b) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of Borrower, shall be less than
or equal to 0.75 to 1.0.
(c) Invested Equity. At all times the sum of (i) Net
Worth plus (ii) the outstanding amount of the Debentures (as
defined in the Purchase Agreement) shall be greater than or equal
to $110,000,000, increased on a cumulative basis as of the end of
each fiscal quarter of Borrower commencing with the fiscal
quarter ending March 31, 2000 by (A) an amount equal to 50% of
Net Income (to the extent positive) for the fiscal quarter then
ended plus (B) an amount equal to 75% of the proceeds from any
Equity Issuance subsequent to December 31, 1999, and 75% of the
amount of any pay-in-kind dividends or coupons issued subsequent
to December 31, 1999.
(e) The Financial Definitions Supplement to the Credit
Agreement is hereby amended by incorporating the following definitions
in the appropriate alphabetical order:
"Capital Stock" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or business entity,
any and all shares, interests, participations, rights or other
equivalents (however designated) of capital stock, (iii) in the case of
a limited liability company, membership interests and (v) any other
interest or participation that confers on a Person the right to receive
a share of the profits and losses of, or distribution of assets of, the
issuing Person.
"Capital Lease" means, as applied to any Person, any lease
of any Property (whether real, personal or mixed) by that Person as
lessee which, in
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accordance with GAAP, is or should be accounted for as a capital
lease on the balance sheet of that Person.
"Consolidated Parties" means a collective reference to
Borrower and its Subsidiaries, and "Consolidated Party" means any one
of them.
"Debt Service Coverage Ratio" means, (i) as of the end of
the fiscal quarter ending March 31, 2000, for the three month period
ending on such date, (ii) as of the end of the fiscal quarter ending
June 30, 2000, for the six month period ending on such date, (iii) as
of the end of the fiscal quarter ending September 30, 2000, for the
nine month period ending on such date and (iv) as of the end of each
fiscal quarter of Borrower beginning with the fiscal quarter ending
December 31, 2000, for the four fiscal quarter period ending on such
date, the ratio of (a) the sum of (I) EBITDA for such period plus (II)
Rental Expense for such period, as determined in accordance with GAAP
to (b) the sum of (I) cash Interest net of Interest income for such
period plus (II) Rental Expense for such period, as determined in
accordance with GAAP.
"EBITDA" means, for any period, with respect to the
Consolidated Parties on a consolidated basis, the sum of (i) Net Income
for such period plus (ii) the following to the extent deducted in
computing such Net Income: (a) income tax expense, (b) interest
expense, (c) depreciation and amortization expense, (d) non-cash
non-recurring losses arising out of the ordinary course of business
(including without limitation any adjustments to Borrower's book tax
valuation allowance), (e) cash non-recurring net losses related to the
sale of assets in an amount not to exceed $25 million and (f) cash
non-recurring losses in connection with any charges related to the
reduction or elimination of overhead costs or restructuring of
Borrower's stock option program in an amount not to exceed $10 million,
all as determined in accordance with GAAP minus (iii) the following to
the extent added in computing such Net Income: (a) income tax benefit
and (b) Interest income and (c) extraordinary or non-recurring gains,
all as determined in accordance with GAAP.
"Equity Issuance" means any issuance by a Consolidated
Party to any Person of (a) shares of its Capital Stock or other equity
interests, (b) any shares of its Capital Stock or other equity
interests pursuant to the exercise of options (other than Capital Stock
issued to employees and directors pursuant to employees or directors
stock option plans and Capital Stock issued to consultants) or
warrants, (c) any shares of its Capital Stock or other equity interests
pursuant to the conversion of any debt securities to equity or (d) any
convertible debt securities evidenced by debentures. The amount of any
Equity Issuance shall be the sum of (a) the net cash proceeds derived
from such issuance (exclusive of any indebtedness or debentures
cancelled in connection with their conversion to equity), plus (b) the
amount of any indebtedness or debentures cancelled, retired or
exchanged in connection with the issuance, plus (c) the amount for
which any TPI-HCR Assignee (as defined in the Purchase Agreement) shall
be given a credit against the purchase price for such securities
pursuant to Section 8.1 of the Purchase Agreement plus (d) the amount
for which any remaining holders of the
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TPI-HCR Membership Interests (as defined in the Purchase Agreement)
shall be given a credit against the purchase price for such securities
pursuant to Section 8.2 of the Purchase Agreement or (e) the amount for
which any TPI Member (as defined in the Purchase Agreement) shall be
given a credit against the purchase price for such securities pursuant
to Section 9.1 of the Purchase Agreement.
"Funded Indebtedness" means, with respect to any Person,
without duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest
payments are customarily made (expressly excluding, however, the amount
of convertible securities of the Consolidated Parties (including the
Debentures as defined in the Purchase Agreement) outstanding on such
date), (c) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by such
Person (other than trade debt incurred in the ordinary course of
business and due within twelve months of the incurrence thereof) which
would appear as liabilities on a balance sheet of such Person, (e) the
principal portion of all obligations of such Person under Capital
Leases, (f) the maximum amount of all standby letters of credit issued
or bankers' acceptances facilities created for the account of such
Person and, without duplication, all drafts drawn thereunder (to the
extent unreimbursed), (g) the principal portion of all obligations of
such Person under Synthetic Leases, (h) all Indebtedness of another
Person of the type referred to in clause (a)-(g) above secured by (or
for which the holder of such Funded Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on, or payable out
of the proceeds of production from, property owned or acquired by such
Person, whether or not the obligations secured thereby have been
assumed, (i) all Guaranty Obligations of such Person with respect to
Indebtedness of the type referred to in clauses (a)-(g) above of
another Person and (j) Indebtedness of the type referred to in clauses
(a)-(g) above of any partnership or unincorporated joint venture in
which such Person is legally obligated or has a reasonable expectation
of being liable with respect thereto.
"Guaranty Obligations" means, with respect to any Person,
without duplication, any obligations of such Person (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing or intended to
guarantee any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or provide
funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance
sheet condition of such other Person (including without limitation keep
well agreements, maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other person, (iii) to lease or purchase property,
securities or services primarily for the purpose of assuring
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the holder of such Indebtedness, or (iv) to otherwise assure or hold
harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall (subject
to any limitations set forth therein) be deemed to be an amount equal
to the outstanding principal amount (or maximum principal amount, if
larger) of the Indebtedness in respect of which such Guaranty
Obligation is made.
"Hedging Agreement" means any interest rate protection
agreement or foreign currency exchange agreement.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily
made, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such
Person (other than customary reservations or retentions of title under
agreements with suppliers entered into in the ordinary course of
business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by such
Person (other than trade debt incurred in the ordinary course of
business and due within six months of the incurrence thereof or such
longer period, if the payment of which is being contested in good
faith) which would appear as liabilities on a balance sheet of such
person, (e) all obligations of such Person under take-or-pay or similar
arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on,
or payable out of the proceeds of production from, Property owned or
acquired by such Person, whether or not the obligations secured thereby
have been assumed, (g) all Guaranty Obligations of such person, (h) the
principal portion of all obligations of such Person under Capital
Leases, (i) all obligations of such Person under Hedging Agreements,
(j) all obligations of such Person to repurchase any securities which
repurchase obligation is related to the issuance thereof, (k) the
maximum amount of all standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (l) all preferred Capital Stock issued by such Person
and required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date, (m) all other
obligations of such person under any arrangement or financing structure
classified as debt (for tax purposes) by any nationally recognized
rating agency, (n) the principal portion of all obligations of such
Person under Synthetic Leases and (o) the Indebtedness of any
partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer.
"Interest" means, for any period, with respect to the
Consolidated Parties on a consolidated basis, interest expense net of
interest income (including the amortization of debt discount and
premium and the interest component under Capital Leases and the implied
interest component under Synthetic Leases but excluding the
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amortization of deferred financing costs, amendment fees paid and
bridge loan fees paid), as determined in accordance with GAAP.
"Leverage Ratio" means, as of the end of any fiscal quarter
of Borrower, for the four fiscal quarter period ending on such date
with respect to the Consolidated Parties on a consolidated basis, the
ratio of (a) Funded Indebtedness of the Consolidated Parties on a
consolidated basis on the last day of such period to (b) the sum of (i)
Funded Indebtedness plus (ii) Net Worth as of such date plus (iii) the
amount of convertible securities of the Consolidated Parties (including
the Debentures (as defined in the Purchase Agreement)) outstanding on
such date plus (iv) book equity which exists in entities for which
guaranties are included in the definition of Funded Indebtedness.
"Net Income" means, for any period, with respect to the
Consolidated Parties on a consolidated basis, net income (excluding
extraordinary items) after Interest expense, income taxes and
depreciation and amortization, all as determined in accordance with
GAAP (net of sublease income with respect to such operating leases).
"Net Worth" means, as of any date with respect to the
Consolidated Parties on a consolidated basis, shareholder's equity or
net worth, as determined in accordance with GAAP excluding the impact
of net non-recurring losses occurring after December 31, 1999.
"Operating Leases" means, as applied to any Person, any
lease (including, without limitation, leases which may be terminated by
the lessee at any time) of any Property (whether real, personal or
mixed) which is not a Capital Lease other than any such lease in which
that Person is the lessor.
"Person" means any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or
other enterprise (whether or not incorporated) or any governmental
authority.
"Purchase Agreement" means that certain Purchase Agreement
dated as of April 26, 2000 by and among Borrower, as seller, 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, as purchasers, as amended pursuant to First
Amendment thereto.
"Property" means, any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Rental Expense" means, for any period, with respect to the
Consolidated Parties on a consolidated basis, rental expense under
operating leases, as determined in accordance with GAAP (net of
sublease income with respect to such operating leases).
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"Subsidiary" means, as to any Person at any time, (a) any
corporation more than 50% of whose Capital Stock of any class or
classes having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of whether
or not at such time, any class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at such time owned by such Person directly or
indirectly through subsidiaries, and (b) any partnership, association,
joint venture or other entity of which such Person directly or
indirectly through subsidiaries owns at such time more than 50% of the
Capital Stock.
"Synthetic Lease" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease
for purposes of GAAP.
(f) Section 2 of Appendix 1 to the Credit Agreement is
hereby amended by adding an additional subparagraph d. thereto, reading
in its entirety as follows:
d. Mortgages. By not later than June 30, 2000, the Borrower
shall have delivered to the Bank (i) valid and enforceable
mortgages or assignments of existing mortgages on the real
properties identified on Schedule 1 hereto, (ii) such title
insurance endorsements insuring the lien of such mortgages or
mortgage assignments as the Bank shall reasonably require, and
(iii) such other certificates and other documents as the Bank
may reasonably require in connection with such mortgages or
mortgage assignments, all in form and substance satisfactory to
the Bank.
(g) A new Schedule 1 to Appendix 1 of the Credit Agreement
is hereby added in the form of Schedule 1 attached to this Agreement.
4. Conversion of Loans to Revolving Credit and Term Loans. Upon
consummation of the sale of the Initial Securities (as defined in the Purchase
Agreement) and satisfaction by Borrower of the requirements of section 3(f)
above, and so long as no default shall then exist under the Credit Agreement,
the outstanding loans under the Credit Agreement shall be converted to (i) a
revolving credit facility of up to $5,000,000 maturing on June 30, 2001, and
(ii) a term loan in the principal amount of $5,000,000 maturing on June 30,
2001. The Borrower and the Bank shall execute and deliver an amendment to the
Credit Agreement, promissory notes, and all other documents and instruments as
may be necessary or appropriate to carry out the foregoing conversion.
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.
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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 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
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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 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.
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/ Kristin A. Ferge
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Title: Vice President
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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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