SIXTH AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS
THIS SIXTH AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS, dated as of
January 15, 1999 (this "Amendment"), is entered into by and between BROOKDALE
LIVING COMMUNITIES, INC., a Delaware corporation (the "Borrower"), and LaSALLE
NATIONAL BANK, a national banking association (the "Bank").
WITNESSETH
WHEREAS, Borrower has previously executed and delivered to the Bank a
certain Note dated April 27, 1998 in the original principal amount of up to
Fifteen Million Dollars ($15,000,000.00) (the "Original Note") evidencing a
certain loan (the "Loan") set forth more fully in and governed by a certain Loan
Agreement of that same date to which the Bank is also a party (the "Original
Loan Agreement");
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Amended and Restated Note dated
July 16, 1998 increasing the principal amount of the Loan by $10,000,000.00, on
an interim basis only, from $15,000,000.00 to $25,000,000.00 (the "Amended and
Restated Note") and a certain First Amendment to Loan Agreement and Documents of
that same date to which the Bank is also a party (the "First Amendment") that
(a) increased the principal amount of the Loan on an interim basis as aforesaid
and (b) permitted a portion of the Loan to be reserved for the issuance of
standby Letters of Credit by the Bank to and for the benefit of municipalities
and other governmental units in connection with projects developed by Borrower
from time to time as set forth more fully therein;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Second Amendment to Loan
Agreement and Documents dated October 14, 1998 to which the Bank is also a party
(the "Second Amendment") wherein (a) the Bank consented to the Borrower's
proposed issuance of a convertible subordinated and unsecured note to OZ Master
Fund, Ltd. in the principal amount of Ten Million Dollars ($10,000,000.00), (b)
the Bank permitted the Borrower to guarantee financing from other financial
institutions to certain Subsidiaries of Borrower in connection with certain
development projects located in Xxx Xxxx, Xxx Xxxx (Xxxxxxx Xxxx Xxxx), Xxxx
Ellyn, Illinois and Raleigh, North Carolina, which projects were to be
originally financed by Nomura Asset Capital Corporation, (c) the Event of
Default set forth in Section 7.01(O) of the Loan Agreement was modified and
restructured, and (d) the Interim Maturity Date was extended to November 3,
1998;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Third Amendment to Loan
Agreement and Documents dated October 20, 1998 to which the Bank is also a party
(the "Third Amendment") wherein (a) the Maximum Revolving Loan Commitment was
frozen at $24,953,750.00, (b) the Interim Maturity Date was extended to November
3, 1998, (c) it was agreed that, on the Interim Maturity Date (x) the
outstanding principal balance of the Loan was to be reduced to $10,000,000.00,
and (y) the principal amount of the Loan and Maximum Revolving Loan Commitment
were to be decreased from $25,000,000.00 to an amount not to exceed
$10,000,000.00, (d) the Interim Interest Rate and the Revised Default Rate were
adjusted, and (e) certain additional changes to the Maximum Revolving Loan
Commitment were mandated based upon the Stock Price of the Company from time to
time, all of the foregoing as set forth more fully in and subject to the terms
and conditions of the Third Amendment;
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WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Fourth Amendment to Loan
Agreement and Documents dated November 3, 1998 to which the Bank is also a party
(the "Fourth Amendment") wherein (a) the Interim Maturity Date was extended to a
date certain which was the first to occur of (x) the earlier of November 30,
1998, or (y) the date on which Borrower closed on the Offering (as defined in
the Fourth Amendment), and (b) it was agreed that, on the Interim Maturity Date
(x) the outstanding principal balance of the Loan was to be reduced to zero
($0.00) provided that the Offering had closed, (y) the outstanding principal
balance of the Loan was to be reduced to $10,000,000.00 regardless of whether
the Offering had closed, and (z) the principal amount of the Loan and Maximum
Revolving Loan Commitment were to be decreased from $25,000,000.00 to an amount
not to exceed $10,000,000.00 regardless of whether the Offering had closed, all
of the foregoing as set forth more fully in and subject to the terms and
conditions of the Fourth Amendment;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Third Amended and Restated Note
dated December 21, 1998 (the "Third Amended and Restated Note") and a certain
Fifth Amendment to Loan Agreement and Documents of that same date to which the
Bank is also a party (the "Fifth Amendment") wherein the principal amount of the
Loan and the Maximum Revolving Loan Commitment was increased from $10,000,000.00
to $15,000,000.00, as set forth more fully in and subject to the terms and
conditions of the Fifth Amendment (the Original Loan Agreement, as amended by
the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment and the Fifth Amendment is herein referred to as the "Loan
Agreement");
WHEREAS, subject to the terms and conditions of this Amendment,
Borrower has requested the Bank to increase the principal amount of the Loan and
of the Maximum Revolving Loan Commitment by $10,000,000.00, from $15,000,000.00
to $25,000,000.00, to which the Bank is willing to agree subject to the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Incorporation of Recitals. The above and foregoing recitals are
incorporated into and made a part of this Amendment. All capitalized
terms used herein, if not otherwise specifically defined, shall have
the meanings and definitions prescribed in the Loan Agreement and the
Documents referred to therein.
2. Use of Loan Proceeds. Borrower reaffirms and covenants that the Loan
has been used and will continue to be used by Borrower solely for
working capital or in connection with the acquisition, leasing or
development of Real Property. Borrower further covenants that the
$10,000,000.00 increase in the principal amount of the Loan and Maximum
Revolving Loan Commitment granted pursuant to this Amendment shall be
used solely (a) for the purposes aforesaid, (b) to fund expenses
relating to Borrower's Real Property located in New York, New York
(Battery Park City), (c) to support Borrower's acquisition of real
property located in Quincy, Massachusetts, the facility located thereon
and the leasing of the real property and facility to a Subsidiary, and
(d) to fund other working capital needs of Borrower and its operations
and its Subsidiaries.
3. Outstanding Principal Balance of Loan. For purposes of this Amendment
and the Loan Agreement, the outstanding principal balance of the Loan
at any time shall be the sum of (a) all amounts of the Loan Advances
made under the Loan Agreement remaining unpaid plus (b) all outstanding
LC Reserves (as defined in the First Amendment and herein).
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4. Interim Maturity Date. The term "Interim Maturity Date" is hereby
amended and restated to mean a date certain which is the first to occur
of (a) Xxxxx 00, 0000, (x) a date certain which is the date on which
Borrower closes on the refinancing or restructuring of three letters of
credit currently extended by LaSalle. National Bank and BankOne in the
approximate amount of $65,000,000.00 in connection with bonds issued
with respect to Real Property located in Lisle, Illinois (The
Devonshire) and Des Plaines, Illinois (The Heritage), but only if as a
result thereof, Borrower or an Affiliate or a Subsidiary receives the
return of the cash collateral currently pledged as security for said
letters of credit, (c) a date certain which is the date on which
Borrower closes on the restructuring of two recent lease transactions,
but only if as a result thereof, Borrower or an Affiliate or a
Subsidiary receives the return of the cash invested in said
transactions, or (d) a date certain which is the date on which Borrower
closes on any offering of Borrower's Stock.
5. Increased Loan Commitment; Reduction. As of the date of this Amendment,
the Loan Agreement and the Documents are hereby amended to increase the
principal amount of the Loan and Maximum Revolving Loan Commitment from
$15,000,000.00 to an amount not to exceed $25,000,000.00 until the
Interim Maturity Date on which date, without further notice or demand
(a) Borrower shall pay amounts necessary to reduce the outstanding
principal balance of the Loan to $15,000,000.00 or less, and (b) the
Maximum Revolving Loan Commitment shall be permanently reduced to an
amount not to exceed $15,000,000.00. The Maximum Revolving Loan
Commitment shall also be permanently reduced to an amount not to exceed
$15,000,000.00 upon a Voluntary Permanent Reduction (as defined herein)
by Borrower pursuant to Section 12. Notwithstanding the foregoing, in
the event the Interim Maturity Date is the same date as the Maturity
Date, the outstanding principal balance of the Loan together with any
accrued but unpaid interest thereon and any other costs or amounts owed
to the Bank hereunder shall be due and paid in full on such date.
6. Letters of Credit. Provided Borrower is otherwise in compliance with
all terms and conditions of the Loan Agreement, the Documents and this
Amendment, the Bank agrees to issue from time to time from the date of
this Amendment to and including April 1, 1999, standby letters of
credit (a "Letter of Credit" and, collectively, the "Letters of
Credit") for the account of Borrower to and for the benefit of
municipalities and other units of government in order to guarantee
Borrower's completion of public improvements required by those entities
in connection with Borrower's development projects, all subject to the
conditions of this Section 6 and which, when added to: (a) the
aggregate amount of all other Letters of Credit outstanding, issued or
approved by the Bank as of the proposed issuance date, and (b) the
aggregate amount of Loan Advances outstanding as of the proposed
issuance date, will not exceed the Maximum Revolving Loan Commitment in
effect as of the proposed issuance date. The Letters of Credit shall
also be subject to the following conditions:
a. Application and Agreement. As a condition of the Bank's
obligation to issue a particular Letter of Credit, Borrower, through
the Authorized Borrower Representative, shall notify the Bank of the
particulars of the Letter of Credit not less than three (3) business
days in advance, and Borrower shall provide such borrowing resolutions
and information, and execute such applications, documents and
agreements as are required by the Bank, including without limitation,
the Bank's standard form of application and credit agreement. ("LC
Documents").
b. Reserve. The stated amount of each Letter of Credit issued
by the Bank shall reduce the amount of the Maximum Revolving Loan
Commitment then in effect in accordance with the terms of this
Agreement on a dollar for dollar basis ("LC Reserve").
c. Expiry. The Bank shall not issue any Letter of Credit with
an expiry date later than April 1, 1999.
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d. Fee. Borrower shall pay the Bank a fee in the amount of one
percent (1%) per annum of the stated amount of each Letter of Credit
issued by the Bank at the request of Borrower, fully earned and payable
quarterly in advance. If the Letter of Credit expires during the
quarter, the fee shall be pro-rated based upon the number of days in
the quarter that the Letter of Credit is outstanding. As a condition to
the issuance of each Letter of Credit, Borrower shall pay the Bank the
quarterly portion of the Letter of Credit fee stated in the preceding
sentence.
e. Payment. Each drawing under the Letter of Credit (an "LC
Drawing") shall constitute a Loan Advance under the Loan Agreement and
shall be payable in accordance with the terms and provisions of the
Loan Agreement with respect to other Loan Advances. Borrower's
obligation to pay all LC Drawings shall be absolute, irrevocable,
unconditional and without setoff under any and all circumstances
whatsoever, including, without limitation, any of the following,
whether or not with notice to, or the consent of, Borrower:
(i) Any lack of validity or enforceability of a Letter of
Credit, the Loan Agreement, or any of the LC Documents;
(ii) The existence of any claim, set-off, defense or
other right which Borrower may have at any time against the
beneficiary of a Letter of Credit, the Bank or any other
person or entity, whether in connection with the transactions
contemplated herein or therein or any unrelated transaction;
(iii) Any statement or any other document presented under
a Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever;
(iv) Payment by the Bank under a Letter of Credit against
presentation of a draft or certificate which does not comply
with the terms of the Letter of Credit;
(v) Any failure, omission, delay or lack on the part of
the Bank or any party to any of the LC Documents to enforce,
assert or exercise any right, power or remedy conferred upon
the Bank or any such party under the LC Documents, or any
other acts or omissions on the part of the Bank or any such
party;
(vi) The voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or
substantially all the assets of Borrower, the receivership,
insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition with
creditors or readjustment or other similar proceedings
affecting Borrower or any of the assets of Borrower, or any
allegation or contest of the validity of this Amendment, the
Loan Agreement, the Letter of Credit or any of the LC
Documents, in any such proceeding; or
(vii) Any other event or action that would, in the
absence of this clause, result in the release or discharge by
operation of law of Borrower from the performance or
observance of any obligation, covenant or agreement contained
in this Amendment, the Loan Agreement, the Letter of Credit
or any of the LC Documents.
f. LC Documents. Each Letter of Credit shall be governed by
and subject to the LC Documents required to be executed by Borrower for
each such Letter of Credit. In the event of any conflict between any of
the terms of the LC Documents and any of the terms of this Amendment,
the terms of this Amendment shall control.
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7. Interest Rate. Except as provided in Section 8 of this Amendment, Loan
Advances under the Loan Commitment shall bear interest at the Prime
Rate plus one-half of one percent (0.50%) per annum. As set forth in
the Fifth Amendment, the Interim Interest Rate is no longer applicable
and accordingly, all references to Interim Interest Rate in the Loan
Agreement are hereby deleted.
8. Default Rate. The Loan Agreement is hereby amended to provide that any
Obligation of the Borrower under this Amendment, the Loan Agreement or
any of the other Documents which is not paid when due, whether at
stated maturity, by acceleration or otherwise, shall, without notice,
bear interest payable on demand at the then Prime Rate plus four
percent (4.0%). In addition, after the occurrence of any other Event of
Default and delivery to the Borrower of the Bank's notice to charge
post-default interest, all Obligations of the Borrowers hereunder shall
bear interest at the rate provided for in the immediately preceding
sentence. The Revised Default Rate, Preliminary Default Rate and
Modified Rate are no longer applicable and accordingly, all references
to Revised Default Rate, Preliminary Default Rate and Modified Rate in
the Loan Agreement are hereby deleted.
9. Decrease of Loan Commitment Based on Stock Price. If at any time that
any portion of the loan remains outstanding and the closing price of
Borrower's publicly traded shares of stock as quoted on the NASDAQ (the
"Stock Price") (the date of the occurrence described herein is
hereafter referred to as the "Trigger Date") is:
a. Less than $12.50 per share but not less than $10.00, the
principal amount of the Loan and the Maximum Revolving Loan Commitment shall,
without further notice, be decreased to $5,000,000.00 and Borrower shall pay
within one business day of the Trigger Date, without further notice or demand,
amounts necessary to reduce the outstanding principal balance of the Loan to
$5,000,000.00.
b. Less than $10.00 per share, the principal amount of the
Loan and the Maximum Revolving Loan Commitment shall, without further notice, be
decreased to zero ($0.00) and Borrower shall pay within one business day of the
Trigger Date, without further notice or demand, amounts necessary to reduce the
outstanding principal balance of the Loan to zero ($0.00). If any amount of the
outstanding principal balance of the Loan is comprised of LC Reserves, Borrower
shall provide the Bank with cash collateral in an amount equal to the
outstanding LC Reserve to secure the amount of the outstanding principal balance
comprised of the LC Reserve.
If the outstanding principal balance of the Loan is not reduced to the
applicable amount by the close of the next business day immediately
following the Trigger Date or if Borrower fails to provide the Bank
with sufficient cash collateral as required in subsection (b) herein,
Borrower shall be considered in default under the Loan Agreement and,
in addition to all other rights and remedies available to the Bank
under the Loan Agreement, the Documents, at law or equity, any and all
amounts outstanding under the Loan Agreement shall, without notice,
bear interest payable on demand at the default rate of interest set
forth in Section 8 of this Amendment.
10. Maturity Date. The term "Maturity Date" is hereby amended and restated
to mean (a) the Interim Maturity Date as to any and all amounts of the
outstanding principal balance of the Loan in excess of $15,000,000.00,
and (b) April 26, 1999 as to the outstanding principal balance of the
Loan at or below $15,000,000.00 together with any accrued but unpaid
interest thereon and any other costs or amount owed to the Bank under
the Loan Agreement as amended hereby.
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11. Execution Note. Contemporaneous with the execution of this Agreement,
the Borrower has executed and delivered a Fourth Amended and Restated
Note in the principal sum of up to $25,000,000.00 evidencing the Loan
as amended by this Amendment, which Fourth Amended and Restated Note
shall replace and supersede the Third Amended and Restated Note.
12. Payment of Fees. Contemporaneous with and as a condition to the
execution of this Amendment, Borrower shall pay the Bank a fee in the
amount of $100,000.00 (the "Fee"), which Fee is deemed fully earned by
the Bank at the time Borrower and the Bank execute this Amendment, as
additional consideration for increasing the amount of the Loan and
Maximum Revolving Loan Commitment. If the outstanding principal balance
of the Loan and the Maximum Revolving Loan Commitment is reduced to
$15,000,000.00 or less on or prior to April 1, 1999, regardless of
whether such reduction is made voluntarily or pursuant to Section 5,
and if the Borrower is not otherwise in default under the Loan
Agreement or the Documents, fifty percent (50%) of the Fee shall be
refunded to Borrower; provided that if the reduction to $15,000,000.00
by Borrower is made voluntarily, in order for Borrower to obtain the
refund, Borrower must provide Bank with written notification that
Borrower desires to effectively reduce the Maximum Revolving Loan
Commitment to $15,000,000.00 or less (the "Voluntary Permanent
Reduction"). Upon receipt by Bank of Borrower's written notice of a
Voluntary Permanent Reduction, the Maximum Revolving Loan Commitment
shall be permanently reduced to an amount not to exceed $15,000,000.00.
If Borrower fails to provide Bank with such written notification, the
Maximum Revolving Loan Commitment shall remain at $25,000,000.00 and
Borrower shall not be entitled to the refund set forth in the preceding
sentence. Borrower shall also pay the reasonable legal fees of Bank
counsel in connection with the preparation of this Amendment and
matters related thereto. In addition to the Fee, Borrower shall
continue to be obligated to pay the Bank the Unused Commitment Fee in
the amount of one-quarter of one percent (1/4%) per annum of the
average unused Maximum Revolving Loan Commitment, excluding the LC
Reserve, and as otherwise set forth in the Loan Agreement, as amended
by this Amendment.
13. NASDAQ Registration. If at any time that any portion of the loan
remains outstanding and Borrower's publicly traded shares of stock
cease to be quoted on the NASDAQ, Borrower shall be considered to be in
default under the Loan Agreement.
14. Information. Borrower shall provide Bank, upon request, with copies of
all documentation and information concerning the Subordinated Note and
the outside financing referred to in this Amendment.
15. Year 2000 Problem. Borrower reaffirms and covenants that Borrower and
its Subsidiaries have reviewed the areas within their business and
operations which could be adversely affected by, and have developed or
are developing a program to address on a timely basis, the "Year 2000
Problem" (that is, the risk that computer applications used by Borrower
and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), and have made related appropriate inquiry of
material suppliers and vendors. Based on such review and program,
Borrower believes that the "Year 2000 Problem" will not have a material
adverse effect on Borrower. From time to time, at the request of the
Bank, Borrower and its Subsidiaries shall provide to the Bank such
updated information or documentation as is requested regarding the
status of their efforts to address the Year 2000 Problem.
16. Reaffirmation. To the extent any term(s) or condition(s) in the Loan
Agreement or any of the Documents shall contradict or be in conflict
with the amended terms of the Loan as set forth herein, such terms and
conditions are hereby deemed modified and amended accordingly, upon the
effective date hereof, to reflect the terms of the Loan as so amended
herein. All terms of the Loan Agreement and the Documents, as amended
hereby, shall be and remain in full force and effect and shall
constitute the legal, valid, binding and enforceable obligations of
Borrower to the Bank. As of the date of this Amendment, Borrower herein
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restates, ratifies and reaffirms each and every term and condition set
forth in the Loan Agreement and the Documents as amended herein. There
are no other changes to the Documents, including without limitation the
Loan Agreement, except for the changes specifically set forth herein.
Notwithstanding the foregoing, Borrower acknowledges and agrees that in
addition to amending certain terms and conditions of the Loan, this
Amendment restates certain terms and conditions previously set forth in
the Loan Agreement. Any terms or conditions set forth in the Loan
Agreement that are not specifically amended or modified by this
Amendment, even if not specifically restated herein, shall remain
binding on the parties hereto.
17. No Waiver. No failure or delay on the part of the Bank in exercising
any right, power or remedy hereunder or under any other Documents shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy
hereunder or under any other Document. The remedies herein provided and
under any other Document are cumulative and not exclusive of any
remedies provided by law.
18. Certification. To further induce the Bank to enter into this Amendment,
Borrower represents and warrants to the Bank as follows: (a) Borrower
is empowered to perform all acts and things undertaken and done
pursuant to this Amendment and has taken all corporate or other action
necessary to authorize the execution, delivery and performance of the
of this Amendment; (b) the officers of Borrower executing this
Amendment have been duly elected or appointed and have been fully
authorized to execute the same at the time executed; (c) this
Amendment, when executed and delivered, will be the legal, valid and
binding obligation of Borrower, enforceable against it in accordance
with its respective terms; and (d) Borrower is delivering to the Bank
contemporaneously herewith, a certificate of Borrower's Secretary
certifying as to the resolutions of the Executive Committee of
Borrower's Board of Directors approving this Amendment and the
incumbency and signatures of the officers of Borrower signing this
Amendment.
19. Absence Of Claim. To further induce the Bank to enter into this
Amendment, Borrower hereby acknowledges and agrees that, as of the date
hereof, there exists no right of offset, defense, counterclaim or
objection in favor of Borrower as against the Bank with respect to the
Obligations to the Bank.
20. Illinois Law To Govern. This Amendment and each transaction
contemplated hereunder shall be deemed to be made under and shall be
construed and interpreted in accordance with the laws of the State of
Illinois.
21. Binding Effect. The terms, provisions and conditions of this Amendment
shall be binding upon and inure to the benefit of each respective party
and their respective legal representatives, successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
-------------------------------------
Print Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
ATTEST:
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Print Name: Xxxxxx X. Xxxxxx
Title: Secretary
BANK:
LaSALLE NATIONAL BANK
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Print Name: Xxxxx X. Xxxxx
Title: Commercial Banking Officer
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