<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
[X] Amendment to Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999
OR
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______________ to
_______________.
COMMISSION FILE NUMBER 1-11999
ALTERRA HEALTHCARE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S><C>
DELAWARE 39-1771281
(State of Incorporation) (I.R.S. Employer Identification No.)
10000 INNOVATION DRIVE
MILWAUKEE, WI 53226
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(414) 918-5000
(Registrant's Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
<S> <C>
Common Stock, Par Value $.01 Per Share American Stock Exchange
5.25% Convertible Subordinated Debenture Due 2002 American Stock Exchange
Series A Junior Preferred Stock Purchase Rights American Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was $94,056,168 as of March 24, 2000. The number of outstanding
shares of the Registrant's Common Stock was 22,100,032 shares as of March 24,
2000.
<PAGE> 2
EXPLANATORY NOTE
This Report on Form 10-K/A amends and restates in their entirety the
following Items of the Annual Report on Form 10-K of Alterra Healthcare
Corporation (the "Company") for the fiscal year ended December 31, 1999 (the
"1999 Form 10-K").
Items 10, 11, 12 and 13 of the 1999 Form 10-K have been amended to provide
information which was to be incorporated by reference to the Company's proxy
statement to be filed with the Securities and Exchange Commission in connection
with the 2000 Annual Meeting of Stockholders.
2
<PAGE> 3
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Richard W. Boehlke 51 Director
Timothy J. Buchanan 46 Vice Chairman and Director
Gene E. Burleson 59 Director
Robert Haveman 52 Director
William F. Lasky 45 President, Chief Executive Officer and Director
William G. Petty, Jr. 54 Chairman and Director
Jerry L. Tubergen 46 Director
Steven L. Vick 41 Chief Operating Officer and Director
Anthony R. Geonnotti, Jr. 41 Senior Vice President
G. Faye Godwin 59 Executive Vice President
Pamela Edwards Klein 45 Senior Vice President
Thomas E. Komula 44 Senior Vice President and Chief Administrative Officer
Mark W. Ohlendorf 40 Senior Vice President, Chief Financial Officer and Treasurer
Paul C. Pebley 41 Senior Vice President
John D. Peterson 34 Vice President and Controller
</TABLE>
RICHARD W. BOEHLKE has served as a director of the Company since May 1996
and served as the Vice Chairman of the Board of the Company from May 1996 until
August 1998. Mr. Boehlke is the President and Chief Executive Officer of Harbor
Airlines, Inc., a commuter airlines serving the northwestern region of the
United States. Mr. Boehlke served as President and Chief Executive Officer of
New Crossings International Corporation ("Crossings"), an assisted living
company which he founded in 1984, until Crossings merged with the Company in May
1996.
TIMOTHY J. BUCHANAN has served as the Vice Chairman of the Board of the
Company since August 1998 and served as the President and a director of the
Company from October 1997 to August 1998. Mr. Buchanan served as the Chairman of
the Board, Chief Executive Officer, and a director of Sterling House Corporation
("Sterling") since he co-founded Sterling with Steven Vick in 1991. Mr. Buchanan
founded BCI Construction, Inc. in 1984 and served as its President until
February 1997. BCI Construction, Inc. was wholly owned by Mr. Buchanan prior to
its
3
<PAGE> 4
acquisition by Sterling in 1994. Mr. Buchanan serves on the Oklahoma Assisted
Living Task Force -- Department of Human Resources, Aging Division. He is also a
former member of the National Governing Board of The Assisted Living Federation
of America ("ALFA").
GENE E. BURLESON, a private investor, has served as a director of the
Company since July 1995. Mr. Burleson served as the Chief Executive Officer and
a director of Vitalink Pharmacy Services, Inc. from February 1997 to August
1997. He served as Chairman of the Board of GranCare, Inc. ("GranCare") from
January 1994 to November 1997 and as Chief Executive Officer of GranCare from
December 1990 to February 1997. Mr. Burleson also currently serves on the Board
of Directors of Mariner Post-Acute Network, Inc. ("Mariner"), a diversified
provider of long-term and specialty health care services and successor by merger
of GranCare, Deckers Outdoor Corporation, a shoe manufacturer, and Walnut
Financial Services, a small business investment company.
ROBERT HAVEMAN has served as a director of the Company since May 1995. Mr.
Haveman has served as the President and Treasurer of EDP Management Company,
LLC, a privately held investment management firm, since April 1997 and as the
Secretary/Treasurer of the Prince Corporation, an automotive interior trim
manufacturer, since 1987.
WILLIAM F. LASKY has served as Chief Executive Officer of the Company since
April 1996 and served as President of the Company from December 1993 to October
1997 and from August 1998 to the present. Mr. Lasky is a member of the National
Governing Board and a former Chairman of ALFA and is a licensed nursing home
administrator.
WILLIAM G. PETTY, JR. has served as Chairman of the Board of the Company
since December 1993 and served as Chief Executive Officer of the Company from
December 1993 to April 1996. He has served as a Managing Director of Beecken,
Petty & Company, the general partner of a private health care investment fund,
since September 1996. Mr. Petty served as the Vice Chairman of GranCare from
July 1995 to November 1997. Mr. Petty also served as Chairman of the Board,
Chief Executive Officer and President of Evergreen Healthcare, Inc. from June
1993 to July 1995, the date of its merger with GranCare. Mr. Petty also
currently serves on the Board of Directors of Mariner.
JERRY L. TUBERGEN has served as a director of the Company since May
1995. He has served as President and Chief Executive Officer of RDV Corporation,
a private financial management firm, since its formation in 1991. Mr. Tubergen
also currently serves on the Board of Directors of the Orlando Magic, Ltd., an
NBA franchise, and Genmar Holdings, Inc., a manufacturer and marketer of
motorized pleasure boats.
STEVEN L. VICK has served as the Chief Operating Officer and a director of
the Company since October 1997. He served as the President and a director of
Sterling since he co-founded Sterling with Mr. Buchanan in 1991.
ANTHONY R. GEONNOTTI, JR. has served as Senior Vice President of the
Company since April 2000. From February 1999 to April 2000, Mr. Geonnotti served
as Vice President of Construction and Development. Previously, Mr. Geonnotti
served as Divisional Vice President of Development September 1996 to February
1999.
G. FAYE GODWIN has served as Executive Vice President of the Company since
October 1997. From April 1996 to October 1997, Ms. Godwin served as Senior Vice
President of the Company and from May 1995 to April 1996, Ms. Godwin served as
the Vice President of Operations of the Company. Previously, Ms. Godwin served
as the Chief Operating Officer of Standish Care, Inc., a publicly-held assisted
living company, from February 1994 to May 1995.
PAMELA EDWARDS KLEIN has served as Senior Vice President of the Company
since October 1998. From August 1995 to October 1998, Ms. Klein served as Vice
President of Corporate Development and, from December 1993 to August 1995,
served as the Director of Market Development for the Company.
THOMAS E. KOMULA has served as a Senior Vice President of the Company since
July 1996, as Secretary of the Company since October 1997, as Chief
Administrative Officer of the Company since November 1999 and served as Chief
Financial Officer and Treasurer of the Company from August 1996 to November
1999. Prior to joining the Company, he served as the Chief
Financial Officer of MedRehab, Inc., a privately-held rehabilitation company,
from March 1994 to April 1996. From September 1993 to March 1994, he was a
partner at Arthur Andersen LLP.
4
<PAGE> 5
MARK W. OHLENDORF has served as Senior Vice President of the Company since
October 1997 and as Chief Financial Officer since November 1999. He served as
the Chief Financial Officer of Sterling from April 1997 to October 1997. Mr.
Ohlendorf served as Vice President, Chief Financial Officer and Treasurer of
Vitas Healthcare Corporation from December 1990 to April 1997. Mr. Ohlendorf is
a Certified Public Accountant.
PAUL C. PEBLEY has served as Senior Vice President Corporate Marketing
Services since November 1999. Mr. Pebley served as Vice President of Marketing
of Alterra from August 1998 to November 1999. Prior to joining the Company in
August 1998, Mr. Pebley served as Regional Director of Sales and Marketing for
Hilton Hotels Corporation since prior to 1994.
JOHN D. PETERSON has served as Vice President and Controller of the Company
since May 1997. Prior to joining the Company, Mr. Peterson served as Corporate
Controller of MedRehab, Inc., a private rehabilitation company, from September
1995 through December 1996. From January 1997 through May 1997, Mr. Peterson was
a financial system consultant for a health care company. From September 1988 to
December 1996, Mr. Peterson was an accountant at Arthur Andersen LLP, last
serving as a manager in the audit division.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a)
of the Securities Exchange Act of 1934 requires the Company's director,
executive officers, and persons who own beneficially more than 10% of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of such securities of the Company. Directors, executive
officers and greater than 10% stockholders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and representations that no other reports
were required, all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than 10% beneficial owners were
complied with during 1999, except that Mr. Burleson did not report his
acquisition of 5,000 shares of Common Stock in February 1999, his exercise of
options to acquire 16,026 shares of Common Stock in April 1999 and his
acquisition of 5,000 shares of Common Stock in May 1999 until he filed his Form
4 on June 11, 1999; Ms. Godwin did not report the acquisition of 1,000 shares of
Common Stock in May 1999 by her spouse until she filed her Form 4 on July 12,
1999; Mr. Haveman did not report the acquisition of 75,000 shares of Common
Stock in May 1999 until he filed his Form 4 on June 11, 1999; Mr. Peterson did
not report the acquisition of 500 shares of Common Stock in May 1999 until he
filed his Form 4 on June 11, 1999 and Mr. Tubergen did not report the
acquisition (through indirect ownership) of 2,000 shares Common Stock in May
1999 until he filed his Form 4 on June 11, 1999.
5
<PAGE> 6
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation awarded
or paid by the Company for services rendered during each of the years in the
three year period ended December 31, 1999 to its Chief Executive Officer and to
its other most highly compensated executive officers other than the Chief
Executive Officer who are required to be included therein ("Named Executives").
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS (1)
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS(#)
--------------------------- ---- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
William F. Lasky(2) 1999 $442,920 -- -- --
President and Chief 1998 360,469 -- -- 227,027
Executive Officer 1997 282,185 $92,750 -- 72,381
Timothy J. Buchanan(3) 1999 170,734 -- -- --
Vice Chairman 1998 262,077 -- -- 34,054
1997 32,428 63,740 -- --
Steven L. Vick(4) 1999 273,367 -- -- --
Chief Operating Officer 1998 229,327 -- -- 44,757
1997 28,351 46,890 -- --
Thomas E. Komula 1999 272,643 -- -- --
Chief Administrative Officer 1998 207,200 -- -- 42,432
1997 180,000 45,000 -- 5,000
G. Faye Godwin 1999 214,685 -- -- --
Executive Vice President 1998 182,200 -- -- 28,378
1997 155,000 38,750 -- 1,625
Mark W. Ohlendorf(5) 1999 221,743 -- -- --
Chief Financial Officer 1998 200,254 -- -- 30,811
1997 24,403 53,363 -- 11,149
</TABLE>
- --------------------
(1) Represents options granted under the Company's Amended and Restated
1995 Incentive Compensation Plan (the "1995 Plan"). Generally, subject
to accelerated vesting upon a change in control, one-fourth of the
options become exercisable on each of the first through fourth
anniversaries of the grant date, except with respect to (i) options
granted to these individuals in 1998 which became exercisable 50% on
the second anniversary of the grant date, 75% on the third anniversary
of the grant date and 100% on the fourth anniversary of the grant date
and (ii) options granted to Mr. Lasky in 1997 which become exercisable
on January 30, 2001.
(2) Mr. Lasky has served as the Company's President since prior to
1996 and became the Company's Chief Executive Officer in May 1996.
(3) Mr. Buchanan joined the Company as an executive officer in October
1997, has served as Vice Chairman since August 1998, and served as
President of the Company from October 1997 to August 1998.
(4) Mr. Vick joined the Company as an executive officer in October 1997.
(5) Mr. Ohlendorf joined the Company as an executive officer in October
1997.
6
<PAGE> 7
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted to senior management during 1999.
1999 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information concerning the value of
options exercised by the Named Executives during 1999 and the value at December
31, 1999 of unexercised options held by each such officer.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY(1)
NUMBER OF OPTIONS OPTIONS AT
SHARES AT 12-31-99 12-31-99
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- --------------- -------------
<S> <C> <C> <C> <C>
William F. Lasky................ -- -- 148,068/299,408 $515,706/--
Timothy J. Buchanan............. -- -- 22,000/34,054 --/--
Steven L. Vick.................. -- -- 22,000/44,757 --/--
Thomas E. Komula................ -- -- 27,067/49,788 --/--
G. Faye Godwin.................. -- -- 39,925/36,308 57,845/--
Mark W. Ohlendorf............... -- -- 115,574/36,386 --/--
</TABLE>
- ------------------
(1) Calculated on the basis of the fair market value of the underlying
securities on December 31, 1999 ($7.9065 per share) minus the exercise
price.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 10, 2000 by: (i)
each person known by the Company to own more than 5% of the outstanding shares
of Common Stock: (ii) each of the Company's directors; (iii) each of the
Company's executive officers included in the Summary Compensation Table included
elsewhere herein; and (iv) all of the Company's directors and executive officers
as a group. Except as otherwise noted, the person or entity named has sole
voting and investment power over the shares indicated.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY OWNED(1)
-----------------------------------------------
NAME NUMBER PERCENT
- ---- --------- -------
<S> <C> <C>
AR Investments, Ltd. (2)...................................... 2,167,900 9.8%
Dimensional Fund Advisors, Inc. (3)........................... 1,915,900 8.7
HBK Investments L.P. (4)...................................... 1,529,834 6.5
Warburg Pincus Asset Management, Inc. (5)..................... 1,263,100 5.7
Transamerica Corporation and
Transamerica Investment Services, Inc. (6).................... 1,149,900 5.2
</TABLE>
7
<PAGE> 8
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY OWNED(1)
-----------------------------------------------
NAME NUMBER PERCENT
- ---- --------- -------
<S> <C> <C>
Robert Haveman (7)+........................................... 795,412 3.6
Timothy J. Buchanan (8)+...................................... 794,907 3.6
Steven L. Vick (9)+++.......................................... 724,195 3.3
Jerry L. Tubergen (10)+....................................... 695.117 3.1
William F. Lasky (11)+++....................................... 557,625 2.5
Richard W. Boehlke (12)+...................................... 433,711 2.0
William G. Petty, Jr.(13)+++................................... 135,658 *
Mark Ohlendorf (14)++.......................................... 115,574 *
Gene E. Burleson (15)+........................................ 46,167 *
G. Faye Godwin (16)++.......................................... 48,042 *
Thomas E. Komula (17)++........................................ 33,567 *
All Executive Officers and Directors as a Group
(15 Persons)(18).............................................. 4,472,038 19.6
</TABLE>
+ Director of the Company.
++ Executive officer of the Company. See "Management of the Company".
* Less than 1%.
(1) Information as to the beneficial ownership of Common Stock has either
been furnished to the Company by or on behalf of the indicated persons
or is taken from reports on file with the Securities and Exchange
Commission.
(2) Based upon a Schedule 13D filed on January 18, 2000, as amended on
January 26, 2000 and February 25, 2000, by AR Investments Limited, a
Cayman Islands corporation ("AR Investments"), RH Investments Limited,
a Cayman Islands corporation ("RH Investments"), VXM Investments
Limited, a Cayman Islands corporation ("VXM Investments"), LXB
Investments Limited, a Cayman Islands corporation ("LXB Investments"),
HR Investments Limited, a Cayman Islands corporation ("HR
Investments"), Barry Trust, a Guernsey, Channel Islands trust, Rachel
Trust, a Guernsey, Channel Islands trust, Vivian Trust, a Guernsey,
Channel Islands trust, Lillian Trust, a Guernsey, Channel Islands
trust, Henry Trust, a Guernsey, Channel Islands trust, The Monument
Trust Company Limited, a Guernsey, Channel Islands corporation, IPC
Advisors S.A.R.L., a Luxemburg corporation, LMR Investments Limited, a
Cayman Islands corporation, The LMR Family Trust, a Cayman Islands
Trust and Caledonian Bank & Trust Limited, a Cayman Islands corporation
(collectively, the "Reporting Persons"), AR Investments, RH
Investments, VXM Investments, LXB Investments, and HR Investments own
an aggregate of 2,167,900 shares of Common Stock. According to the
Schedule 13D, each Reporting Person may be deemed to be a beneficial
owner of all 2,167,900 shares of Common Stock held by the Reporting
Persons. The Reporting Persons as a group have sole power to vote or to
direct the vote and sole power to dispose or to direct the disposition
of the 2,167,900 shares of Common Stock. The principal place of
business of the Reporting Person is c/o Unsworth & Associates,
Herengracht 483,1017 BT, Amsterdam, The Netherlands.
(3) Based upon its Schedule 13G filed on February 12, 1999, as amended
February 3, 2000, Dimensional Fund Advisors, Inc. is an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940. Its principal place of business is 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401 Dimensional Fund Advisors, Inc. has sole voting
power with respect to all of the shares of the Company's Common Stock
held by it.
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<PAGE> 9
(4) Based upon its Schedule 13G filed on April 14, 1998, as amended
December 31, 1998 and January 25, 2000, by HBK Investments L.P.
("Investments") and HBK Finance L.P. ("Finance"), HBK Master Fund L.P.
("Master") owns $9,645,000 principal amount of the 7% Convertible
Subordinated Debentures of the Company due 2004 (the "7% Debentures"),
which are convertible into shares of the Company's Common Stock.
Assuming conversion of such 7% Debentures, Investments (pursuant to
Investment Management Agreements among the parties) will have sole
voting power and sole dispositive power with respect to the 476,296
shares of the Company's Common Stock issuable to Master.
In addition, Master owns $9,370,000 principal amount of the 6.75%
Convertible Subordinated Debentures of the Company due 2006 (the "6.75%
Debentures"), which are convertible into shares of the Company's Common
Stock. Assuming conversion of such 6.75% Debentures, Investments
(pursuant to Investment Management Agreements among the parties) will
have sole voting power and sole dispositive power with respect to the
459,764 shares of the Company's Common Stock issuable Master.
Finally, Master owns $17,071,000 principal amount of the 5.25%
Convertible Subordinated Debentures of the Company due 2002 (the "5.25%
Debentures, which are convertible into shares of the Company's Common
Stock. Assuming conversion of such 5.25% Debentures, Investments
(pursuant to Investment Management Agreements among the parties) will
have sole voting power and sole dispositive power with respect to the
593,774 shares of the Company's Common Stock issuable to Master.
The principal place of business of Master, Investments, and Finance is
777 Main Street, Suite 2750, Fort Worth, Texas 76102.
(5) Based upon its Schedule 13G filed on January 13, 1999, Warburg Pincus
Asset Management, Inc. ("Warburg Pincus") is an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940.
Its principal place of business is 466 Lexington Avenue, New York, New
York 10017. Of the total shares of the Company's Common Stock held by
Warburg Pincus, it has sole voting power with respect to only 1,034,000
of such shares.
(6) Based upon their Schedule 13G filed on February 16, 1999, as amended
January 22, 2000, Transamerica Investment Services, Inc. ("TIS") is an
investment adviser registered under Section 203 of the Investment
Advisers Act of 1940 and is a subsidiary of Transamerica Corporation
("Transamerica"). Transamerica's principal place of business is 600
Montgomery Street, San Francisco, California 94111, and TIS' principal
place of business is 1150 Olive Street, Los Angeles, California 90015.
Transamerica may be deemed to be the beneficial owner of 1,149,900
shares of the Company's Common Stock, of which 125,000 shares are owned
directly by Transamerica. The remaining 1,024,900 shares of the
Company's Common Stock, including 744,500 of such shares, are
beneficially owned by direct and indirect subsidiaries of Transamerica.
TIS is deemed to be the beneficial owner of 1,149,000 shares of the
Company's Common Stock pursuant to separate arrangements whereby TIS
acts as investment adviser to certain individuals and entities,
including two insurance company subsidiaries of Transamerica. Each of
the individuals and entities for which TIS acts as investment adviser
has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the securities held
or purchased pursuant to such arrangements.
(7) Includes (i) 437,082 shares held by two non-profit corporations (the
"Non-profit Corporations") for which Mr. Haveman serves as officer and
(ii) options to acquire 22,167 shares exercisable within 60 days of
April 10, 2000. Mr. Haveman disclaims beneficial ownership of the
shares held by the Non-profit Corporations. Also includes 145,678
shares of Common Stock issuable upon conversion of the Company's 7%
Debentures, 24,691 of which are held by Mr. Haveman directly and
120,987 of which are held by a trust for which Mr. Haveman serves as
trustee.
(8) Includes (i) 154,600 shares owned beneficially by Mr. Buchanan's
spouse, Meredith Gail Buchanan; (ii) 50,000 shares owned jointly with
Mr. Buchanan's spouse, Meredith Gail Buchanan (iii) 22,000 shares held
in trust for Mr. Buchanan's children for which trusts Mr. Buchanan is
sole trustee; (iv) 11,000 shares beneficially owned by The Buchanan
Family Foundation of which Mr. Buchanan is the sole trustee; and (v)
22,000 shares issuable upon the exercise of options that are
exercisable on or within 60 days of April 10, 2000.
9
<PAGE> 10
(9) Includes (i) 674,495 shares owned jointly with Mr. Vick's spouse, Susan
C. Vick; (ii) 16,700 shares held in trust for Mr. Vick's children for
which trusts Mr. Vick is the sole trustee; (iii) 11,000 shares
beneficially owned by The Vick Foundation of which Mr. Vick is the sole
trustee; and (iv) 22,000 shares issuable upon the exercise of options
that are exercisable on or within 60 days of April 10, 2000.
(10) Includes (i) 439,521 shares held by trusts for which he serves as
trustee (the "Trusts") and (ii) options to acquire 14,422 shares
exercisable within 60 days of April 10, 2000. The co-trustees of the
Trust also serve as trustee of a trust holding 59,361 shares. Also
includes 22,222 shares of Common Stock, issuable upon conversion of the
Company's 7% Debentures held by RDV Corporation Supplemental Executive
Retirement Plan of which Mr. Tubergen is a beneficiary.
(11) Mr. Lasky's beneficial ownership includes shares held by a corporation
owned by Mr. Lasky and David Burr by virtue of his position as an
officer and majority shareholder of such corporation and options to
acquire 148,068 shares exercisable within 60 days of April 10, 2000.
(12) Includes options to acquire 2,000 shares exercisable within 60 days of
April 10, 2000.
(13) Includes options to acquire 92,628 shares exercisable within 60 days of
April 10, 2000.
(14) Represents options to acquire 115,574 shares exercisable within 60 days
of April 10, 2000.
(15) Includes options to acquire 6,141 shares exercisable within 60 days of
April 10, 2000.
(16) Includes (i) 1,000 shares held jointly with Ms. Godwin's spouse, Roy
Godwin and (ii) options to acquire 47,042 shares exercisable within 60
days of April 10, 2000.
(17) Includes options to acquire 29,567 shares exercisable within 60 days of
April 10, 2000.
(18) Includes options to acquire 569,655 shares exercisable within 60 days
of April 10, 2000. Also includes 33,171 shares and options to acquire
18,192 shares exercisable within 60 days of April 10, 2000, which were
held by an executive officer of the Company who resigned subsequent to
April 10, 2000.
10
<PAGE> 11
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company provides payroll processing and financial statement
preparation services to six dementia care residences in Wisconsin for a
partnership that is 50% owned and controlled by Mr. Lasky, the Company's
President and Chief Executive Officer. Pursuant to this arrangement, the Company
charges an annual fee of $10,000. Accrued fees owing to the Company by this
partnership for previously provided management services were $715,000 and
$581,000 at December 31, 1999 and 1998, respectively.
The Company leases an assisted living residence (in Tacoma, Washington)
from the 2010 Union L.P., of which Richard W. Boehlke, a director of the
Company, is the 99% general partner. Lease payments by the Company to this
partnership aggregated $673,122 in 1999.
In December 1999, the Company entered into a bridge loan arrangement
with an affiliated group (the "Bridge Lender") in connection with the Company's
repurchase of 19 Alterra residences then leased from a health care REIT (the
"REIT Residences"). Pursuant to this arrangement, the Company borrowed $14.0
million (the "Tranche A Loan") for working capital purposes and $30.0 million
(Tranche B Loan") as bridge financing for its initial purchase of seven REIT
Residences in December 1999. The Tranche A Loan has a term of up to 12 months
and bore interest at an initial annual rate of 8% for the first three months, 9%
for the next three months and increasing thereafter by 0.5% per month. The
Tranche A Loan is secured by mortgages on certain land and a stock pledge of a
subsidiary corporation (the "Holding Subsidiary") formed to serve as the holding
company for the subsidiary formed to acquire the REIT Residences. The Tranche B
Loan had a term of up to six months, bore interest at an annual rate of 10% for
the first three months and at a rate escalating by 0.5% per month thereafter.
The Tranche B Loan was secured by mortgages on the seven REIT Residences
acquired with the proceeds from the Tranche B Loan.
In February 2000, the Company acquired the remaining 12 REIT
Residences. In connection therewith, the Company obtained $60.0 million of
mortgage financing from one of its bank lenders, and utilized $30.0 million of
the proceeds to purchase the 12 REIT Residences and $30.0 million to repay the
Tranche B Loan.
In connection with this bridge loan arrangement, the Bridge Lender was
paid commitment and loan fees aggregating $820,000, acquired a $1.0 million
redeemable, convertible preferred stock interest in the Holding Subsidiary and
was given the right to co-invest in certain future Alterra equity transactions
by converting its Tranche A Loan receivable into an equity investment in
Alterra. The Holding Subsidiary preferred stock acquired by the Bridge Lender
accrues dividends at 8% per annum, is convertible at any time after December 31,
2000 into common shares of the Holding Subsidiary representing approximately 35%
of the outstanding common stock of the Holding Subsidiary and may be redeemed by
Holding Subsidiary at any time for an amount equal to the fair market value of
the Subsidiary Preferred at that time provided that such fair market value shall
in no event exceed the sum of (i) its stated value of $1.0 million (ii) the
accrued and unpaid dividends thereon and (iii) a redemption premium of $1.5
million if redeemed on or before March 31, 2000, increasing by $300,000 per
month thereafter.
In February 2000 the Company borrowed an additional $20.0 million from
the Bridge Lender by amending and increasing the amount borrowed under its
Tranche A Loan. Upon amending the Tranche A Loan, the interest rate on this loan
increased to 10% per annum. As additional security for the Tranche A Loan, the
Company granted the bridge lender mortgages on six residences. Of the $20.0
million additional advance on the Tranche A 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 Tranche A Bridge Loan.
Jerry L. Tubergen, a member of the Board of Directors of the Company, and
certain of his affiliates, hold equity interests in the Bridge Lender.
The Company believes that each of the foregoing transactions was on
terms substantially similar to those that it could have obtained from
unaffiliated third parties. In the case of related party transactions, it is the
Company's policy to enter into such agreements on terms, which in the opinion of
the Company, are substantially similar to those that could otherwise be obtained
from unrelated third parties, and that all such transactions be approved by a
majority of the disinterested members of the Board.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALTERRA HEALTHCARE CORPORATION.
By: /s/ Mark W. Ohlendorf
-----------------------------------
Mark W. Ohlendorf
Senior Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary
Dated May 1, 2000
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