EXHIBIT 10.32.1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of October 19, 2004 (this "AGREEMENT"), is
entered into by and between BROOKDALE LIVING COMMUNITIES, INC., a Delaware
corporation (the "BORROWER", formerly known as BLC Senior Holdings, Inc.), and
LaSALLE BANK NATIONAL ASSOCIATION, a national banking association (the "BANK").
In consideration of the covenants, agreements and provisions set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS; RULES OF CONSTRUCTION.
1.01 Definitions. The following words and phrases, as used herein, shall
have the following respective meanings:
"AFFILIATE" shall mean any Person which, directly or indirectly, owns or
controls, on an aggregate basis, including all beneficial ownership and
ownership or control as a trustee, guardian or other fiduciary, the outstanding
Stock having ordinary voting power to elect a majority of the board of directors
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation have or might have voting power by reason of the happening of
any contingency) of the Borrower, or which controls, is controlled by or is
under common control with the Borrower or any stockholders of the Borrower. For
purposes hereof, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of management and policies, whether
through the ownership of voting securities, by contract or otherwise.
"AUTHORIZED BORROWER REPRESENTATIVE" shall mean Xxxx X. Xxxxxxx, Xxxx X.
Xxxxx, R. Xxxxxxx Xxxxx, Xxxxxxx X. Xxxxxx or such other person or persons
approved by resolution of the Board of Directors of the Borrower from time to
time, a certified copy of which resolution shall be delivered to the Bank.
"BANK" shall mean LaSalle Bank National Association, a national banking
association, with its principal place of business at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000.
"BORROWER" shall mean Brookdale Living Communities, Inc., a Delaware
corporation having its principal place of business at 000 X. Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000.
"BUSINESS DAY" shall mean any calendar day, other than a Saturday, Sunday
or other day in which the Bank's downtown Chicago, Illinois office is authorized
to close for domestic business.
"CAPITAL LEASE" shall mean, as to any Person, a lease of any interest in
any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, by such Person as lessee that is, or should be, in accordance with
Financial Accounting Standards Board Statement No. 13, as amended from time to
time, or, if such Statement is not then in effect, such statement of GAAP as may
be applicable, recorded as a "capital lease" on the balance sheet of the
Borrower prepared in accordance with GAAP.
"CASH DEBT SERVICE" means the sum of the following, without duplication,
determined on a cash basis, based upon the Financial Statements and the
financial statements to be provided by
Borrower hereunder: (a) lease expenses of Borrower for such period, plus (b)
interest expense of Borrower for such period in connection with Interest Rate
Agreements, plus (c) interest expense of Borrower for such period in connection
with all Debt (d) the aggregate amount of principal payments by Borrower for
such period in connection with all Debt, plus (e) interest expense of Borrower
for such period in connection with loans from Stockholders of Borrower.
"CLOSING" shall have the meaning specified in Section 3.01.
"CONTINGENT LIABILITY" AND "CONTINGENT LIABILITIES" shall mean,
respectively, each obligation and liability of such Person and all such
obligations and liabilities of such Person incurred pursuant to any agreement,
undertaking or arrangement by which such Person: (a) guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the indebtedness, dividend, obligation or other liability of any
other Person in any manner (other than by endorsement of instruments in the
course of collection), including without limitation, any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b)
guarantees the payment of dividends or other distributions upon the shares or
ownership interest of any other Person; (c) undertakes or agrees (whether
contingently or otherwise): (i) to purchase, repurchase, or otherwise acquire
any indebtedness, obligation or liability of any other Person or any or any
property or assets constituting security therefor, (ii) to advance or provide
funds for the payment or discharge of any indebtedness, obligation or liability
of any other Person (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, working capital or other financial condition of any other Person, or
(iii) to make payment to any other Person other than for value received; (d)
agrees to lease property or to purchase securities, property or services from
such other Person with the purpose or intent of assuring the owner of such
indebtedness or obligation of the ability of such other Person to make payment
of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (f) undertakes or agrees otherwise to assure a creditor against
loss. The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.
"DEBT" shall mean at any time (a) all Obligations of such Person, (b) all
Capital Lease obligations of such Person, (c) all other debt, secured or
unsecured, created, issued, incurred or assumed by such Person for money
borrowed or for the deferred purchase price of any fixed or capital asset, (d)
indebtedness secured by any Lien existing on property owned by such Person
whether or not the Indebtedness secured thereby has been assumed, and (e) all
Contingent Liabilities of such Person whether or not reflected on its balance
sheet.
"DEBT SERVICE COVERAGE RATIO" shall mean EBITDAR divided by Cash Debt
Service, tested by the Bank on a quarterly basis.
"DEPRECIATION" shall mean the total amounts added to depreciation,
amortization, obsolescence, valuation and other proper reserves, as reflected on
the Borrower's financial statement and determined in accordance with GAAP.
"EBITDAR" shall mean, for any period, the sum of the following: (a) Net
Income (excluding extraordinary and unusual items and income or loss
attributable to equity in any Affiliate or Subsidiary)
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for such period, plus (b) Interest Charges, plus (c) income taxes payable or
accrued, plus (d) Depreciation for such period, plus (e) all lease payments for
all properties or facilities owned or leased by the Borrower or any Subsidiary
of the Borrower during such period, plus (f) all other non-cash charges, minus
(g) that portion of net income arising out of the sale of assets outside of the
ordinary course of business (to the extent not previously excluded under clause
(a) of this definition), in each case to the extent included in determining Net
Income for such period.
"EMPLOYEE BENEFIT PLAN" shall mean any employee benefit plan (within the
meaning of Section 3(3) of ERISA) and any other profit sharing, deferred
compensation, bonus, stock option, stock ownership, stock purchase, employment,
consulting, incentive, vacation, sick leave, salary continuation, service award,
severance pay, insurance, or other retirement, welfare or fringe benefit plan,
agreement or practice, that is (or within the last five years was) established,
maintained or contributed to by the Borrower or by any ERISA Affiliate of the
Borrower. For purposes of this definition, an ERISA Affiliate is any
corporation, trade or business that is considered a single employer, or
otherwise aggregated, with the Borrower under Section 414(b), (c), (m), (n), or
(o) of the Code or Section 4001(b)(1) of ERISA.
"ENVIRONMENTAL LAWS" shall mean any federal, state or local law, statute,
ordinance, order, decree, rule or regulation relating to releases, discharges,
emissions or disposals to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use, handling or disposal of polychlorinated
biphenyls, asbestos or urea formaldehyde, to the treatment, storage, disposal or
management of Hazardous Substances, to exposure to toxic, hazardous or other
controlled, prohibited or regulated substances and to the transportation,
storage, disposal, management or release of gaseous or other liquid substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 USC Section 9601 et seq., the Resource, Conservation and Recovery Act
of 1976, as amended by the Hazardous Solid Waste Amendments of 1984, 42 USC
Section 6901 et seq., the Toxic Substances Control Act, 15 USC Section 2601 et
seq., the Occupational Safety and Health Act of 1970, 29 USC Section 651 et
seq., the Clean Air Act of 1966, as amended, 42 USC Section 7401 et seq., and
the Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 USC Section 1251 et seq., the Illinois Environmental Protection Act, as
amended (415 ILCS 5/1 et seq.) and all rules, regulations and guidance documents
promulgated pursuant thereto or published thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, together with any successor statutes of similar import, together with
all regulations thereunder, in each case as amended from time to time.
"EVENT OF DEFAULT" shall have the meaning specified in Section 7.01.
"FINANCIAL STATEMENTS" shall mean any of the audited consolidated
financial statements of the Borrower for its most recently ended fiscal year,
the unaudited consolidated financial statements for the most recently ended
quarter of the Borrower, the internally prepared monthly cash flow statements of
the Borrower and its Subsidiaries, and any other information and data concerning
the financial affairs of the Borrower and its Subsidiaries (including without
limitation pro forma financial statements), copies of which have previously been
furnished to the Bank in connection with loans made to Borrower by the Bank.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
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"GENERAL LETTER OF CREDIT" and "GENERAL LETTERS OF CREDIT" shall (a) mean,
respectively, a letter of credit and all such letters of credit issued by the
Bank, in its sole discretion, upon the execution and delivery by the Borrower
and the acceptance by the Bank of a Master Letter of Credit Agreement and an
application for Letter of Credit, and as further set forth in Section 2.02 of
this Agreement, as reduced, renewed or revised from time to time hereof or in
accordance with the terms thereof or hereof, or the Master Letter of Credit
Agreement, (b) include the Outstanding Old Brookdale General Letters of Credit
described in Section 2.02 hereof, and (c) exclude the Lifecare Letters of
Credit.
"GENERAL LETTER OF CREDIT OBLIGATIONS" shall mean, at any time, an amount
equal to the aggregate of the original face amounts of all General Letters of
Credit not to exceed, in the aggregate, the Maximum General Letter of Credit
Obligation, minus the sum of (i) the amount of any reductions in the original
face amount of any General Letter of Credit which did not result from a draw
thereunder, (ii) the amount of any payments made by the Bank with respect to any
draws made under a General Letter of Credit for which the Borrower has
reimbursed the Bank, (iii) the amount of any payments made by the Bank with
respect to any draws made under a General Letter of Credit which have been
converted to a Revolving Loan as set forth in Section 2.02, and (iv) the portion
of any issued but expired General Letter of Credit which has not been drawn by
the beneficiary thereunder. For purposes of determining the outstanding General
Letter of Credit Obligations at any time, the Bank's acceptance of a draft drawn
on the Bank pursuant to a General Letter of Credit shall constitute a draw on
the applicable General Letter of Credit at the time of such acceptance.
"GOVERNMENTAL AUTHORITY" shall mean the United States of America, any
state, territory or district thereof, and any other political subdivision or
body politic created pursuant to any applicable Law, and any court, agency,
department, commission, board, bureau or instrumentality of any of the
foregoing.
"HAZARDOUS SUBSTANCES" shall mean (i) any hazardous or toxic substance,
chemical or waste, or any pollutant or contaminant defined as such in any now or
hereafter existing Environmental Law, (ii) asbestos, (iii) radon, (iv)
petroleum, its derivative by-products and other hydrocarbons, (v)
polychlorinated biphenyls, (vi) explosives, (vii) radioactive materials and
(viii) any additional substances or materials which at any time are classified
or considered to be hazardous or toxic under any Environmental Laws.
"INTEREST CHARGES" shall mean, for any period, the sum of (a) all
interest, charges and related expenses payable with respect to that fiscal
period to a lender in connection with borrowed money or the deferred purchase
price of assets that are treated as interest in accordance with GAAP, plus (b)
the portion of rent payable with respect to that fiscal period under Capital
Leases that should be treated as interest in accordance with GAAP, plus (c) all
charges paid or payable (without duplication) during that period with respect to
any Interest Rate Agreements.
"INTEREST RATE AGREEMENTS" shall mean any interest rate protection
agreement, interest rate swap or other interest rate hedge arrangement (other
than any interest rate cap or other similar agreement or arrangement pursuant to
which the Borrower has no credit exposure to the Bank) to or under which the
Borrower or any Subsidiary of the Borrower is a party or beneficiary.
"LAWS" shall mean any federal, state or local law, statute, ordinance,
order, decree, rule or regulation.
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"LETTER(s) OF CREDIT" shall mean any one or more General Letters of Credit
and/or Lifecare Letter of Credit.
"LIFECARE LETTERS OF CREDIT" shall have the meaning ascribed to it in
Section 2.03 hereof.
"LOAN ADVANCE" any disbursement of a Revolving Loan.
"LOAN DOCUMENTS" shall mean this Agreement, the Note, the Master Letter of
Credit Agreement, the Purchasing Card Documents and any other documents,
instruments or certificates to be executed and delivered hereunder or in
connection herewith by or on behalf of the Borrower or any of its Affiliates.
"MAXIMUM GENERAL LETTER OF CREDIT OBLIGATION" shall mean $10,000,000.
"MASTER LETTER OF CREDIT AGREEMENT" shall have the meaning ascribed to it
in Section 2.02 hereof.
"MAXIMUM REVOLVING LOAN COMMITMENT" shall mean the principal amount of Ten
Million and 00/100 Dollars ($10,000,000.00).
"NET INCOME" shall mean, during each fiscal quarter of the Borrower and
each Subsidiary of the Borrower, all revenues, including resident fees and all
management fees, generated from all facilities and properties owned, leased or
managed by the Borrower and any Subsidiaries of Borrower, less facility
operating expenses of all facilities and properties owned, leased or managed by
the Borrower and any Subsidiaries of Borrower, all as reflected on the
consolidated financial statements of the Borrower and its Subsidiaries required
to be delivered to the Bank pursuant to this Agreement.
"NOTE" shall mean the Revolving Note in form attached hereto as EXHIBIT A
and further described in Section 2.01 (E) hereof.
"OBLIGATIONS" shall mean all of Borrower's liabilities, obligations and
indebtedness to the Bank of any and every kind and nature, including the
Revolving Credit Loans, Letters of Credit, Purchasing Card Program, Interest
Rate Agreements, Borrower's other liabilities and obligations to the Bank under
this Agreement, and Borrower's liabilities and obligations to the Bank under any
other agreement, document or instrument (including , without limitation, any
Interest Rate Agreements and any guaranty to the Bank of another Person's
Obligations), whether heretofore, now or hereafter owing, arising, due or
payable by or from such Person to the Bank, howsoever evidenced, created,
incurred, acquired or owing, and whether joint, several, primary, secondary,
direct, contingent, fixed or otherwise.
"OLD BROOKDALE" means PSLT-BLC Properties Holdings, Inc., a Delaware
corporation, formerly known as Brookdale Living Communities, Inc., whose State
of Delaware identification number is 2657740 and F.E.I.N. is 00-0000000.
"OLD BROOKDALE LOAN AGREEMENT" means the Loan Agreement dated March 31,
2004 between Old Brookdale and the Bank.
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"ORDINARY COURSE OF BUSINESS" shall mean, with respect to Borrower, or any
Subsidiary, such debt, financing or other obligations incurred by the Borrower
or any Subsidiary in the normal operation and course of its business,
specifically excluding, however, any indebtedness, liabilities, guarantees or
obligations incurred in connection with the acquisition or development of real
estate, or which is prohibited under other provisions of this Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PERSON" shall mean any individual, corporation, partnership, association,
limited liability company, limited liability partnership, joint-stock company,
trust, unincorporated association, joint venture, court, Governmental Authority,
or any other similar entity.
"PRIME RATE" shall mean the floating per annum rate of interest which at
any time, and from time to time, shall be most recently announced by the Bank as
its Prime Rate, which is not intended to be the Bank's lowest or most favorable
rate of interest at any one time. The effective date of any change in the Prime
Rate shall for purposes hereof be the date the Prime Rate is changed by the
Bank. The Bank shall not be obligated to give notice of any change in the Prime
Rate.
"PURCHASING CARD PROGRAM" shall mean the credit facilities provided by the
Bank to Borrower and its employees from time to time pursuant to which the Bank
has opened certain accounts and issued certain purchasing cards to employees of
Borrower to provide or arrange for billing and other services to the Borrower,
in accordance with and subject to the terms set forth more fully in the
agreements and documents that now or hereafter govern such facilities (the
"PURCHASING CARD DOCUMENTS"). Except or otherwise set forth herein, the
Purchasing Card Program is governed by the Purchasing Card Documents.
"QUALIFIED PLAN" shall have the meaning ascribed in Section 4.11(A)
hereof.
"REAL PROPERTY" shall mean any improved or unimproved real property now or
hereafter owned or leased by Borrower.
"REPORTABLE EVENT" shall mean any of the events described in Section 4043
of ERISA, other than any such event for which the thirty (30) day notice
requirement has been waived.
"REVOLVING INTEREST RATE" shall mean the Prime Rate plus 1.0 % per annum.
"REVOLVING LOAN" and "REVOLVING LOANS" shall mean, respectively, each
direct advance and the aggregate of all such direct advances from the Revolving
Loan Commitment from time to time made by the Bank to the Borrower under and
pursuant to this Agreement, as set forth in Section 2.1 of this Agreement.
"REVOLVING LOAN AVAILABILITY" shall mean at any time the Revolving Loan
Commitment less the General Letter of Credit Obligations.
"REVOLVING LOAN COMMITMENT" shall mean the principal amount of up to Ten
Million and 00/100 Dollars ($10,000,000.00).
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"REVOLVING LOAN MATURITY DATE" means May 31, 2005 with respect to the
balance of all Revolving Loans outstanding on that date.
"STOCK" shall mean all shares, options, interests, membership interests,
participations or other equivalents, howsoever designated, of or in a
corporation, partnership, limited liability company or similar entity, whether
voting or nonvoting, including common stock, warrants, preferred stock,
convertible debentures or notes, partnership interests and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
of the foregoing.
"STOCKHOLDER" shall mean any Person that owns directly any Stock.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, limited liability company or similar entity of which fifty percent
(50%) or more of the outstanding Stock having ordinary voting power is at the
time, directly or indirectly, owned by such Person and/or one or more of such
Person's Subsidiaries (irrespective of whether, at the time, Stock of any other
class or classes of such entity shall have or might have voting power by reason
of the happening of any contingency).
"SUPPLEMENTAL DOCUMENTATION" means all agreements, instruments, documents,
financing statements, warehouse receipts, schedules of accounts assigned,
certificates of title and other written matter necessary or requested by the
Bank to create, evidence, enforce, or to consummate the transactions
contemplated in or by this Agreement and the other Loan Documents.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of Illinois, including any and all amendments thereto from
time to time, except to the extent that the Uniform Commercial Code provides for
application of the law of a different state.
1.02 Rules of Construction. Whenever it is provided in this Agreement that
a party "may" perform an act or do anything, it shall be construed that such
party "may, but shall not be obligated to," so perform or so do. The following
words and phrases shall be construed as follows: (i) "at any time" shall be
construed as "at any time or from time to time;" (ii) "any" shall be construed
as "any and all;" (iii) "include" and "including" shall be construed as
"including but not limited to;" and (iv) "will" and "shall" shall each be
construed as mandatory. Except as otherwise specifically indicated herein, all
references to Article, Section and Sub-Section numbers and letters shall refer
to Articles, Sections and Sub-Sections of this Agreement; all references to
Exhibits and Schedules shall refer to the Exhibits and Schedules attached to
this Agreement. The words "hereby", "hereof", "hereto", "herein" and "hereunder"
and any similar terms shall refer to this Agreement as a whole and not to any
particular Article, Section or Sub-Section. The word "hereafter" shall mean
after the date this Agreement is executed and delivered by the parties hereto,
and the word "heretofore" shall mean before such date. Words of the masculine,
feminine or neuter gender shall mean and include the correlative words of other
genders, and words importing the singular number shall mean and include the
plural number and vice versa. The Article headings are inserted in this
Agreement for convenience only and are not intended to, and shall not be
construed to limit, enlarge or affect the scope or intent of this Agreement or
the meaning of any provision hereof. Any accounting terms used in this Agreement
which are not specifically defined shall have the meaning customarily given them
in accordance with GAAP; provided, however, that, in the event that changes in
generally accepted accounting principles shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrower's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such
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changes shall be followed in defining such accounting terms only from and after
such date as the Borrower and the Bank shall have amended this Agreement to the
extent necessary to reflect any such changes in the financial covenants and
other terms and conditions of this Agreement. Unless otherwise stated in this
Agreement, any reference to the "financial statements" or "Financial Statements"
of the Borrower shall mean the consolidated financial statements of the
Borrower. All other capitalized words and phrases not otherwise specifically
defined shall, when the context so indicates, have the meanings assigned to such
terms in the UCC to the extent the same are used or defined therein.
ARTICLE II. THE LOANS.
2.01 Revolving Loans.
(A) Revolving Loan Commitment. Subject to the terms and conditions
of this Agreement and the other Loan Documents, and in reliance upon the
representations and warranties of the Borrower set forth herein and in the
other Loan Documents, the Bank agrees to make an unsecured loan facility
available to the Borrower, pursuant to which the Bank shall make such
Revolving Loans at such times as the Borrower may from time to time
request until, but not including, the Revolving Loan Maturity Date, and in
such amounts as the Borrower may from time to time request, provided,
however, that the aggregate principal balance of all Revolving Loans
outstanding at any time shall not exceed the Revolving Loan Availability.
Revolving Loans made by the Bank may be repaid and, subject to the terms
and conditions hereof, borrowed again up to, but not including the
Revolving Loan Maturity Date unless the Revolving Loans are otherwise
terminated or extended as provided in this Agreement. The Revolving Loans
shall be used by the Borrower solely (i) for working capital, (ii) in
connection with the acquisition, leasing or development of Real Property,
or (iii) for the issuance of the General Letters of Credit by the Bank to
the extent permitted hereunder. Except for disbursements made in
connection with General Letters of Credit, the proceeds of each Revolving
Loan shall be disbursed by deposit to the Borrower's operating account
pursuant to instructions provided by the Borrower, unless other
arrangements are agreed upon between the Bank and the Borrower.
(B) Revolving Loan Interest and Payments. Except as otherwise
provided in this Section 2.1(b), the principal amount of the Revolving
Loans outstanding from time to time shall bear interest at the Revolving
Interest Rate. Accrued and unpaid interest on the unpaid principal balance
of all Revolving Loans outstanding from time to time shall be due and
payable monthly, in arrears, commencing on November 1, 2004 and continuing
on the first day of each calendar month thereafter, and on the Revolving
Loan Maturity Date. Any amount of principal or interest on the Revolving
Loans which is not paid when due, whether at stated maturity, by
acceleration or otherwise, shall bear interest payable on demand at the
Default Rate.
(C) Revolving Loan Principal Repayments.
(i) Mandatory Principal Prepayments. All Revolving Loans
hereunder shall be repaid by the Borrower on the Revolving Loan
Maturity Date, unless payable sooner pursuant to the provisions of
this Agreement. In the event the aggregate outstanding principal
balance of all Revolving Loans and General Letter of Credit
Obligations hereunder exceed the Revolving Loan Availability, the
Borrower shall, without notice or
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demand of any kind, immediately make such repayments of the
Revolving Loans or take such other actions as shall be necessary to
eliminate such excess.
(ii) Optional Prepayments. In addition to the Mandatory
Prepayment, the Borrower may from time to time prepay the Revolving
Loans, in whole or in part, without any prepayment penalty
whatsoever.
(D) All outstanding Revolving Loans 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 the Revolving Loan Maturity
Date. If any payment falls due on a day which is not a Business Day,
payment shall be made on the next Business Day, and interest shall accrue
until such later date.
(E) The Revolving Loans and the General Letter of Credit Obligations
shall be evidenced by a single Revolving Note (together with any and all
renewal, extension, modification or replacement notes executed by the
Borrower and delivered to the Bank and given in substitution therefor, the
"NOTE") in the form of Exhibit "A" attached hereto, duly executed by the
Borrower and payable to the order of the Bank. At the time of the initial
disbursement of a Revolving Loan and at each time an additional Revolving
Loan shall be requested hereunder or a repayment made in whole or in part
thereon, an appropriate notation thereof shall be made on the books and
records of the Bank. All amounts recorded shall be, absent demonstrable
error, conclusive and binding evidence of (i) the principal amount of the
Revolving Loans advanced hereunder and the amount of all General Letter of
Credit Obligations, (ii) any unpaid interest owing on the Revolving Loans,
and (iii) all amounts repaid on the Revolving Loans or the General Letter
of Credit Obligations. The failure to record any such amount or any error
in recording such amounts shall not, however, limit or otherwise affect
the obligations of the Borrower under the Note to repay the principal
amount of the Revolving Loans, together with all interest accruing
thereon.
2.02 General Letters of Credit. Subject to the terms and conditions of
this Agreement and upon the execution by the Borrower and the Bank of a Master
Letter of Credit Agreement dated the date of this Agreement (as amended from
time to time, the "MASTER LETTER OF CREDIT AGREEMENT") and, the upon the
execution and delivery by the Borrower, and the acceptance by the Bank, in its
sole and absolute discretion, of, in each case, an application for letter of
credit, the Bank agrees to issue or reissue for the account of the Borrower out
of the Revolving Loan Availability, such General Letters of Credit in the
standard form of the Bank and otherwise in form and substance acceptable to the
Bank, from time to time during the term of this Agreement, provided that the
General Letter of Credit Obligations may not at any time exceed in the aggregate
the Maximum General Letter of Credit Obligation and provided, further, that no
General Letter of Credit shall have an expiration date later than May 31, 2005,
unless otherwise authorized by the Bank in writing. The Bank has issued certain
letters of credit (the "OUTSTANDING OLD BROOKDALE GENERAL LETTER OF CREDIT")
under the Old Brookdale Loan Agreement and a certain Master Letter of Credit
Agreement dated March 31, 2004 (the "OLD BROOKDALE MLCA") for the account of Old
Brookdale, identified in Schedule 2.02 hereto, which Outstanding Old Brookdale
General Letters of Credit are deemed General Letters of Credit issued out of the
Revolving Loan Availability under this Agreement, and are otherwise deemed
General Letters of Credit subject to and governed by the terms and conditions of
this Agreement and the Master Letter of Credit Agreement. The amount of any
payments made by the Bank with respect to draws made by a beneficiary under a
General Letter of Credit shall be deemed to have been converted to a Revolving
Loan as of the date such
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payment was made by the Bank to such beneficiary. Upon the occurrence of an
Event of a Default and at the option of the Bank, all General Letter of Credit
Obligations shall be converted to Revolving Loans, all without demand,
presentment, protest or notice of any kind, all of which are hereby waived by
the Borrower.
2.03 Lifecare Letters of Credit. In addition to General Letters of Credit,
the Bank hereby makes a credit facility available to Borrower for the purpose of
issuing standby letters of credit to the Illinois Department of Public Health
and to other state agencies required in order to operate Borrower's Lifecare
facilities (separately, a "Lifecare Letter of Credit" and, if more than one, the
"Lifecare Letters of Credit"); provided, however, the maximum aggregate stated
amount of any and all Lifecare Letters of Credit shall not exceed Eight Million
Six Hundred Thousand and 00/100 Dollars ($8,600,000.00) [the "Lifecare Letters
of Credit Cap"]. Lifecare Letters of Credit may be issued, cancelled and
reissued form time to time up to the Lifecare Letters of Credit Cap and, except
for the provisions of this Section 2.03, shall be issued under, governed by and
subject to the terms of the Master Letter of Credit Agreement. The Bank has
issued certain stand by letters of credit (the "Old Brookdale IDPH Letters of
Credit") set forth in Section 2.03 for the account of Old Brookdale to the to
the Illinois Department of Public Health in the aggregate stated amount of Six
Million Six Hundred Forty Thousand and 00/100 Dollars ($6,640,000.00), the
reimbursement obligations for which have been assumed by Borrower. The Old
Brookdale Letters of Credit constitute and are deemed Lifecare Letters of Credit
issued under this Agreement and the Master Letter of Credit Agreement and are
included under the Lifecare Letters of Credit Cap. The Lifecare Letters of
Credit are not a part of nor shall any draws thereunder be credited against the
Revolving Loan Availability. The Lifecare Letters of Credit set forth in Section
2.03 have an initial expiration date of February 28, 2005, which the Bank has
agreed, upon expiration, to renew and reissue with an expiration date of May 31,
2005. No Lifecare Letter of Credit shall have an expiration date later than May
31, 2005, unless otherwise authorized by the Bank in writing.
2.04 Master Letter of Credit Agreement. Notwithstanding any provision of
this Agreement or any Loan Documents to the contrary, this Agreement and the
Master Letter of Credit Agreement shall be and remain binding upon Borrower
until all Letters of Credit have expired and are no longer outstanding, and
further, until the Bank has no liability to any Person arising out of or in
connection with any of the Letters of Credit and the Bank has been reimbursed in
full for all amounts due the Bank from the Borrower under this Agreement arising
out of any draws against the Letters of Credit. In the event of any conflict
between the terms and provisions of this Agreement and the terms and provisions
of this Master Letter of Credit Agreement, the terms and provisions of the
Master Letter of Credit Agreement shall control.
2.05 Interest Rate; Calculation. Except as provided in Section 2.06,
Revolving Credit Loans shall bear interest per annum at the Revolving Credit
Loans Interest Rate. Interest shall be calculated on the basis of a 360-day year
consisting of twelve (12) 30-day months, counting the actual number of days
elapsed, and shall be paid monthly in arrears.
2.06 Default Rate. Any Obligation of the Borrower hereunder or under any
of the other Loan 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 interest rate then in effect with respect thereto plus
three percent (3%). 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 Borrower hereunder shall bear interest at the
rate provided for in the immediately preceding sentence.
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2.07 Excessive Rate. If, at any time, the interest rate and other charges
imposed hereunder shall be deemed by any competent Governmental Authority to
exceed the maximum rate of interest permitted by any applicable Laws, for such
time as the interest and such charges would be deemed excessive, its application
shall be suspended and there shall be charged instead the maximum rate of
interest and charges permissible under such Laws.
2.08 Prepayment. The Borrower may prepay the outstanding amounts of the
Revolving Loan from time to time in whole or in part on any Business Day without
penalty or premium. Borrower may reborrow any amounts prepaid, provided the
conditions set forth in Section 3.02 hereof are satisfied.
2.09 Application of Payments. All payments, which are not prepayments,
received from the Borrower for payment on the Revolving Loan shall be applied by
the Bank first to unpaid interest due and payable on the Revolving Loan, and
second the reduction of the principal outstanding on the Revolving Loan.
2.10 No Setoff. All payments received or due from the Borrower hereunder
shall be paid directly to the Bank without setoff or counterclaim in immediately
available funds. The Bank shall send the Borrower statements of all amounts due
hereunder, which statements shall be considered correct and conclusively binding
on the Borrower absent manifest error.
2.11 Bank Fees. The Borrower shall pay the Bank a fee (the "UNUSED
COMMITMENT FEE") in the amount of one-eighth of one percent (1/8%) per annum of
the average unused Maximum Revolving Loan Commitment amount hereunder. For
purposes of determining the Unused Commitment Fee, the Maximum Revolving Loan
Commitment will be deemed to have been used, in part, by the amount of any
General Letters of Credit issued and outstanding from time to time. The Unused
Commitment Fee shall accrue as of the date of this Agreement and shall be
payable quarterly in arrears, commencing on December 31, 2004, and continuing on
the last day of each March, June and September thereafter and at maturity, and
shall be calculated on the basis of a 360-day year consisting of twelve (12)
30-day months, counting the actual number of days elapsed.
ARTICLE III. CONDITIONS PRECEDENT
The obligation of the Bank to make the Revolving Loan is subject to the
following conditions precedent:
3.01 Conditions Precedent to Initial Loan Advance. The Borrower shall have
delivered or caused to be delivered to the Bank on or before the date of, but
prior to, the disbursement of any Loan Advance pursuant to the Revolving Loan
Commitment (hereinafter called the "CLOSING"), the following:
(A) the Note, duly executed by the Borrower;
(B) a certificate of the secretary or an assistant secretary of the
Borrower, dated the date of the Closing, as to incumbency, and resolutions
of the Board of Directors of Borrower approving the transaction
contemplated hereby;
(C) a certificate, dated as of the most recent date practicable, of
the Secretary of State of Delaware and the Secretary of State of Illinois
as to the good standing of the Borrower;
11
(D) a Solvency and Business Purpose Affidavit, in form and substance
satisfactory to the Bank, duly executed by the Borrower;
(E) an opinion of counsel to the Borrower in form and substance
satisfactory to the Bank; and
(F) such other documents, certificates or evidence as the Bank may
reasonably request to consummate the transactions contemplated hereby.
3.02 Condition Precedent to Subsequent Loan Advances. At the time of the
Closing, at the time of each subsequent request for and disbursement under the
Revolving Loan Commitment and on the last day of each fiscal quarter of the
Borrower after the date hereof, each of the following statements shall be true:
(A) The representations and warranties set forth in this Agreement
are true and correct in all material respects unless otherwise disclosed
to and approved by the Bank in writing, in its sole discretion, since the
prior Loan Advance.
(B) No Event of Default shall have occurred and be continuing, and
no event shall have occurred and be continuing that, with the giving of
notice or passage of time or both, would be an Event of Default.
(C) No material adverse change shall have occurred in the financial
condition of the Borrower since the date of this Agreement.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
To induce the Bank to consummate the transactions contemplated hereby, the
Borrower represents and warrants to the Bank as follows:
4.01 The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has the lawful power and
authority to own its properties and to carry on its business as now conducted,
and possesses all material permits necessary to operate the business it
conducts. Borrower is duly qualified to conduct business as a foreign
corporation and is in good standing in the State of Illinois and in each other
jurisdiction in which such qualification is required for the conduct of
Borrower's business. Each Subsidiary of Borrower is qualified to conduct
business and is in good standing in each jurisdiction in which such
qualification is required for the conduct of such Subsidiary's business.
Borrower's state organization number for the State of Delaware is 3791519 and
its state organization number for the State of Illinois is 0000-000-0.
Borrower's F.E.I.N. is 00-0000000.
4.02 The Borrower is empowered to perform all acts and things undertaken
and done pursuant to this Agreement and has taken all corporate or other action
necessary to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. The officers of Borrower executing the Loan
Documents to which it is a party have been duly elected or appointed and have
been fully authorized to execute such Loan Documents at the time executed. The
Loan Documents to which it is a party, when executed and delivered, will be the
legal, valid and binding obligations of the Borrower, enforceable against it in
accordance with their respective terms.
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4.03 The Financial Statements furnished by or on behalf of the Borrower to
the Bank are complete and accurate, fairly present the financial condition of
the Borrower and its Subsidiaries, or affiliates at the respective dates thereof
and the results of operations for the respective periods covered thereby, and
(subject to normal year-end adjustments with respect to interim Financial
Statements) were prepared in accordance with GAAP. The Borrower does not have
any material liabilities or obligations (contingent or otherwise), liability for
taxes, or unusual forward or long-term commitments, except as disclosed in the
Financial Statements.
4.04 Since the date of Borrower's most recent Financial Statements
furnished to the Bank, there has been no material adverse change in the assets,
liabilities or condition, financial or otherwise, of Borrower or its
Subsidiaries, other than changes arising from transactions in the Ordinary
Course of Business.
4.05 Other than as set forth in the Financial Statements or as disclosed
in Schedule 4.05 attached hereto, there are no actions, suits or proceedings
pending, or, to the best of the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its Subsidiaries at law or in equity or before
or by any Governmental Authority or any foreign equivalent thereof, which is
reasonably likely to result in a material adverse judgment against Borrower or
liability to Borrower or any of its Subsidiaries, or which are, in the
aggregate, material in light of the financial condition and assets of the
Borrower or any of its Subsidiaries, as determined by the Bank in its sole
discretion. There are no actions, suits, investigations or proceedings pending,
or to the best of the knowledge of the Borrower, threatened against the Borrower
or any of its Subsidiaries or its properties regarding Environmental Laws, the
manufacture, storage or treatment of Hazardous Substances or products liability.
4.06 The Borrower is not in violation of, and the execution and delivery
of the Loan Documents to which it is a party and the performance by the Borrower
of its obligations under the Loan Documents to which it is a party, do not and
will not result in the Borrower being in violation of or in conflict with, or
constitute a default under any of, the Borrower's Amended and Restated
Certificate of Incorporation or Restated By-Laws, any term or provision of any
material note, mortgage, indenture, contract, agreement, instrument, judgment or
Law applicable to the Borrower, and the execution and delivery of the Loan
Documents and the performance by Borrower of its obligations under the Loan
Documents do not and will not result in the creation or imposition of any
mortgage, lien, charge or encumbrance of any nature whatsoever (other than those
in favor of Bank) upon any of the assets of the Borrower or any of its
Subsidiaries pursuant to any such term or provision.
Except as disclosed on Schedule 4.05, (the "Disclosed Claims"), neither
the Borrower nor any of its Subsidiaries is in default, after the expiration of
any applicable grace or cure periods, in any respect in the performance or
fulfillment of any of its obligations, covenants or conditions contained in any
material agreement or instrument to which it is a party or by which any of its
properties may be bound, and the Borrower does not know of any dispute regarding
any such agreement or instrument.
Notwithstanding the foregoing, by the execution of this Agreement and the
consummation of the transactions set forth herein, the Bank does not waive any
Event of Default hereunder that may exist or hereafter arise out of the matters
described in the Disclosed Claims. Further, the Bank fully reserves its right,
at any time, to declare an Event of Default and exercise its remedies under this
Agreement or any of the Loan Documents arising out of or in connection with the
Disclosed Claims. Borrower shall keep the Bank fully apprised of significant
negotiations and communications with the regard to the Disclosed
13
Claims, and promptly provide the Bank with copies of all correspondence and
documents regarding the same.
4.07 Neither the Borrower nor any of its Subsidiaries have outstanding any
Debt or other obligation for borrowed money, or for the deferred purchase price
of property or services nor are the Borrower or any Subsidiary of Borrower
obligated as guarantor, co-signer or otherwise on any Debt or other obligation
of any kind of any Person other than Borrower or its Subsidiaries, except (i)
Debt to the extent shown on or reflected in the Financial Statements in
accordance with GAAP, (ii) trade debt incurred in the Ordinary Course of
Business of Borrower or any Subsidiary of Borrower. No Person is in default
under any of said Debt, subject to the provisions set forth in Section 4.06.
4.08 All tax returns and reports of the Borrower and its Subsidiaries
required by law to be filed have been duly filed, and all taxes, assessments,
fees and other governmental charges (other than those presently payable without
penalty or interest) upon each or upon any of its properties or assets, which
are due and payable, have been paid, except to the extent being contested in
accordance with Section 6.03. The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes are considered adequate by
the Borrower, and the Borrower does not know of any assessment of a material
nature against it or any of its Subsidiaries.
4.09 Except to the extent that failure to comply would not materially or
practically interfere with the conduct of the business of the Borrower or its
Subsidiaries, or affect in any way the Borrower's obligations (or Bank's rights)
under the Loan Documents, the Borrower and its Subsidiaries have complied with
all applicable laws with respect to: (i) the conduct of their business and (ii)
the use, maintenance, and operation of the real and personal properties owned or
leased by them in the conduct of their business.
4.10 No authorization, consent, license or approval of, or filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution, delivery or performance of the Loan Documents by
the Borrower.
4.11 With respect to each Employee Benefit Plan:
(A) each Employee Benefit Plan that is intended to qualify under
Section 401(a) of the Code and the assets of which are exempt from
taxation under Section 501 of the Code ("QUALIFIED PLAN") has received a
favorable determination letter as to such qualification and there has been
no development or circumstance since the date of such letter that creates
a material risk of the loss of such plan's qualified status;
(B) each Qualified Plan that is subject to the requirements of Title
IV of ERISA has met the minimum funding standards of Section 412 of the
Code and is not subject to any event or condition (including a reportable
event under Section 4043 of ERISA) that would be grounds for the
termination of such plan by the Pension Benefit Guaranty Corporation or
would otherwise subject the Borrower to any liability with respect to such
plan (including liability for Pension Benefit Guaranty Corporation
premiums for periods prior to the Closing);
(C) no Employee Benefit Plan has engaged in a transaction prohibited
by or under Section 406 of ERISA, or which would subject the Borrower or
any of its Subsidiaries to any tax on prohibited transactions under
Section 4975 of the Code;
14
(D) each Employee Benefit Plan is in full compliance in all material
respects (as determined by the Bank in its sole discretion) with the
reporting and disclosure requirements of ERISA and all other applicable
laws;
(E) no Qualified Plan is a multi-employer plan within the meaning of
Section 3(37) of ERISA; and
(F) there are no obligations for future post-retirement health,
medical or death benefits under any Employee Benefit Plan except for death
benefits under a Qualified Plan.
4.12 The Borrower is solvent, no transaction under or contemplated by this
Agreement renders or will render the Borrower insolvent, the Borrower retains
sufficient capital for the business and transactions in which it engages or
intends to engage, no obligation incurred hereby is beyond the ability of the
Borrower to pay as such obligation matures, the Borrower is not contemplating
either the filing of a petition under any state or federal bankruptcy or
insolvency laws or the liquidating of all or a major portion of any of its
property, and Borrower has no knowledge of any person contemplating the filing
of any such petition against it.
4.13 There exists no actual or threatened termination, cancellation or
limitation of, or any modification or change in, the proposed business
relationship of Borrower or any of its Subsidiaries with any customer or group
of customers whose purchases individually or in the aggregate are material to
the current business of Borrower or any of its Subsidiaries, or in the proposed
business relationship of Borrower or any of its Subsidiaries with any material
supplier, and Borrower reasonably anticipates that all such customers and
suppliers will continue a business relationship with Borrower and its
Subsidiaries, as the case may be, on a basis no less favorable to the Borrower
than that heretofore conducted; and there exists no other condition or state of
facts or circumstances which would materially adversely affect the current
operation of the business of Borrower after the consummation of the transactions
contemplated by this Agreement on a basis no less favorable to the Borrower than
that in which it has heretofore been conducted by Borrower.
4.14 Except as disclosed on Schedule 4.05, no strike, work stoppage or
other labor dispute relating to the Borrower or any of its Subsidiaries is
pending or, to the best knowledge of the Borrower or any of its Subsidiaries, is
threatened and no application for certification of a collective bargaining agent
is pending or, to the best knowledge of the Borrower, is threatened. Except as
disclosed on Schedule 4.05, there are no unfair labor practice charges or
grievances or similar matters pending or in process or, to the best knowledge of
the Borrower, threatened by or on behalf of any employee of the Borrower or any
of its Subsidiaries, nor any complaints received by the Borrower, or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened or on file,
with any federal, state or local governmental agencies alleging employment
discrimination or other violations of laws pertaining to such employees, with
respect to which an adverse decision is reasonable likely which would have a
material adverse effect on the condition (financial or otherwise), properties,
assets, operations, results of operations, business or rights of the Borrower
and its Subsidiaries, taken as a whole.
4.15 The Borrower's execution and delivery of this Agreement or any other
Document does not directly or indirectly violate or result in a violation of
Section 7 of the Securities and Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation, regulations
U, T and X of the Board of Governors of the Federal Reserve System, and neither
the
15
Borrower nor any of its Subsidiaries owns any "margin stock," within the meaning
of said regulations, or is engaged in the business of extending credit to others
for such purpose, and no part of the proceeds of any borrowing hereunder will be
used to purchase or carry any "margin stock" or to extend credit to others for
the purpose of purchasing or carrying any "margin stock."
4.16 No representation or warranty by the Borrower contained herein or in
any certificate or other document furnished by or on behalf of the Borrower or
its Subsidiaries in connection with the transactions hereunder contains any
untrue statement of material fact or omits to state a material fact necessary to
make such representation or warranty not misleading in any material respect, as
determined by the Bank in its sole discretion, in light of the circumstances
under which it was made.
4.17 Except as indicated in the Financial Statements and, except for
purchase money financing or leasing arrangements used to acquire or lease office
equipment, furniture, furnishings, and similar items, the Borrower has not
encumbered, pledged, mortgaged, granted a security interest in, assigned, sold,
leased or otherwise disposed of a transfer, in whole or in part, any Real
Estate, Accounts, Inventory, Equipment, General Intangibles or other assets or
properties now owned or leased by Borrower or in which Borrower has an interest.
4.18 Schedule 4.18 attached hereto and made a part hereof sets forth the
full and complete ownership of Borrower and the ownership of each Person that is
a Stockholder of Borrower as of the date of this Agreement.
4.19 All of the representations and warranties set forth in this Article
IV shall survive and continue to be true, complete and correct in all material
respects (except to the extent that such representation or warranty is stated to
relate to an earlier date) until all Obligations of the Borrower hereunder are
paid and satisfied in full and this Agreement shall have been terminated.
ARTICLE V. NEGATIVE COVENANTS
The Borrower covenants that until all Obligations of Borrower hereunder
are paid and satisfied in full, and the Bank's obligation to make advances
hereunder has terminated, the Borrower will not, directly or indirectly, without
the prior consent in writing of the Bank:
5.01 dispose by sale, assignment, lease, sale leaseback or otherwise any
material portion, as determined by the Bank in its sole discretion, of its
properties or assets (other than obsolete or worn out property or equipment not
used or useful in its business), whether now owned or hereafter acquired and
including, without limitation, any notes, accounts receivable, equipment or
machinery;
5.02 transfer, directly or indirectly, any of its assets or pay out,
directly or indirectly, money or property or provide services or do any other
act, or fail to do any act, which would have the effect of materially and
adversely affecting its ability to perform its obligations hereunder;
5.03 own, hold, purchase from or acquire stock, bonds, debentures or other
securities of, or make any capital contribution to any new Subsidiary or
dissolve or liquidate any existing Subsidiary; provided, however, Borrower may
create and contribute capital to new Subsidiaries upon the conditions that (i)
Borrower owns 100% of all of the Stock of each such Subsidiary (except with
respect to such projects involving joint ventures with other parties, provided
the Borrower owns a majority of the Stock of such joint venture (except for
Brookdale Senior Housing, LLC, a Delaware limited liability company,
16
in which two Subsidiaries of Borrower collectively own a 25% stated interest,
and further provided the Borrower notifies the Bank of such joint venture
arrangement and the Bank approves the same, which approval shall not be
unreasonably withheld or delayed), and (ii) such Subsidiary is formed for the
sole purpose of owning, operating, managing or developing real estate by such
Subsidiary and does not violate any other provision of this Agreement;
5.04 make any material change in its ownership, financial structure,
management (except on 15 days prior notice to the Bank), or control; change its
name (except on 15 days prior notice to the Bank); enter into any merger,
consolidation, dissolution, liquidation, reorganization or recapitalization, or
reclassification of its Stock;
5.05 engage in business activities or operations substantially different
from and unrelated to its business activities on the date of this Agreement;
5.06 directly or indirectly apply any part of the proceeds of the
Revolving Loan for any purpose other than as set forth herein;
5.07 directly or indirectly apply any part of the proceeds of the
Revolving Loan to the purchasing or carrying of any "margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
or any regulations, interpretations or rulings thereunder;
5.08 create, incur, remain obligated on or assume any Debt other than (a)
the Revolving Loan, (b) Debt disclosed in the Financial Statements provided to
the Bank contemporaneous with the execution of this Agreement, (c) Debt incurred
in the Borrower's Ordinary Course of Business, provided such debt is not
borrowed from or owed to a bank, financial, lending or similar institution
(except for purchase money financing or leasing arrangements used to acquire or
lease office equipment, furniture, furnishings, and similar items), or (d)
Contingent Liabilities existing as of September 30, 2004, and which are not
prohibited by the other provisions of this Agreement.
5.09 encumber, pledge, mortgage or grant a security interest in, in whole
or in part, any Real Estate, Accounts, Inventory, Equipment, General
Intangibles, Goods, Software, Securities, Investment Paper, Instruments,
Documents, Letter of Credit Rights, Health Care Insurance Receivables, or other
assets or properties now or hereafter owned or leased by Borrower or in which
Borrower has an interest, or any Proceeds of the foregoing, (excluding from the
foregoing purchase money financing or leasing arrangements used to acquire or
lease office equipment, furniture, furnishings, and similar items); provided,
however, Borrower may pledge, on a non-recourse basis to Borrower, Borrower's
partnership, membership or ownership interest in a Subsidiary of Borrower in
connection with Debt incurred by such Subsidiaries to the extent not prohibited
by other provisions of this Agreement;
5.10 enter into, or be a party to, any transaction with any Affiliate,
except in the ordinary course of and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms which are fully disclosed in
writing to the Bank and are no less favorable to such Person than would be
obtained in a comparable arm's length transaction with a person not an
Affiliate;
5.11 change its fiscal year;
5.12 furnish the Bank any certificate or other document that contains any
untrue statement of material fact or that will omit to state a material fact
necessary to make it not misleading in any material
17
respect, as determined by the Bank in its sole discretion, in light of the
circumstances under which it was furnished.
5.13 directly or indirectly, purchase or redeem any shares of its stock or
declare or pay any dividends, whether in cash or otherwise or set aside any
funds for any such purpose or make any distribution to its shareholders, except
that repayment of the loan from the shareholders made in connection with the
purchase of the interest in GFB-AS Investors, LLC., in accordance with its terms
shall not be prohibited under this Section.
ARTICLE VI. AFFIRMATIVE COVENANTS
The Borrower covenants that until all Obligations of the Borrower are paid
and satisfied in full, and the Bank's obligation to make advances hereunder has
terminated, the Borrower will:
6.01 furnish and deliver to the Bank:
(A) as soon as practicable, and in any event within 120 days after
the end of each fiscal year: (i) a statement of cash flows of the Borrower
and its Subsidiaries for such year, (ii) an income statement of the
Borrower and its Subsidiaries for such year, and (iii) a balance sheet of
the Borrower and its Subsidiaries as of the end of such year; all in
reasonable detail, including all footnotes, and audited by Ernst & Young
LLP or other certified public accountants selected by the Borrower and
reasonably acceptable to the Bank and certified by such accountants to
have been prepared in accordance with GAAP, except for any inconsistencies
explained in such certificate;
(B) as soon as practicable, and in any event within 45 days after
the end of each quarter commencing with the quarter ending September 30,
2004, (i) a statement of cash flows of the Borrower and its Subsidiaries
for such quarter and the portion of the fiscal year then ended, (ii) an
income statement of the Borrower and its Subsidiaries for such quarter and
the portion of the fiscal year then ended, and (iii) a balance sheet of
the Borrower and its Subsidiaries as of the end of such quarter; all in
reasonable detail and certified by an Authorized Borrower Representative
as complete and accurate in all material respects, fairly presenting the
financial condition of the Borrower and its Subsidiaries and prepared in
accordance with GAAP;
(C) concurrent with year end and quarterly fiscal statements
required to be delivered hereunder, a certificate of an Authorized
Borrower Representative (a) calculating Borrower's compliance (or lack
thereof) with the financial covenants in Section 6.13 hereof, in
reasonable detail, and (b) stating that no Event of Default has occurred
and is continuing or if an Event of Default has occurred and is continuing
setting forth a description of such event and the steps being taken to
remedy such event;
(D) with reasonable promptness (i) such other information materially
concerning the business, properties, conditions or operations, financial
or otherwise, of the Borrower, and/or its Subsidiaries, or compliance by
the Borrower with any of the covenants in the Loan Documents, and (b)
copies of all documents, instruments or other agreements pertaining or
relating to any Debt of the Borrower as the Bank may from time to time
reasonably request;
6.02 furnish and deliver to Bank:
18
(A) immediately after the occurrence thereof, notice of any Event of
Default or of any fact, condition or event that with the giving of notice
or passage of time or both, could become an Event of Default, or of the
failure by the Borrower to observe any of its respective undertakings
hereunder;
(B) immediately after the occurrence thereof, notice of any default
under any Debt, or under any indenture, mortgage or other agreement
relating thereto for which the Borrower is liable;
(C) immediately after knowledge thereof, notice of any litigation or
proceeding in which the Borrower is a party if an adverse decision therein
is reasonably likely which would require the Borrower to pay more than
$1,000,000 or deliver assets the value of which exceeds such sum (whether
or not the claim is considered to be covered by insurance);
(D) immediately after receipt of notice thereof, notice of the
institution of any other suit or proceeding involving the Borrower that
would reasonably likely materially and adversely affect the Borrower's
business, properties or conditions or operations, financial or otherwise,
as determined by the Bank in its sole discretion;
(E) immediately after the occurrence thereof, notice of any other
matter which has resulted in, or would reasonably likely result in, a
materially adverse change in the business, properties, or the conditions
or operations, financial or otherwise, of the Borrower, as determined by
the Bank in its sole discretion; and
(F) immediately upon their becoming available, Borrower shall
deliver or cause to be delivered to the Bank a copy of any written reports
submitted to Borrower, or any Subsidiary of Borrower, by independent
accountants in connection with any annual, interim or special audit of the
financial statements of Borrower, or any Subsidiary of Borrower;
6.03 promptly pay and discharge when due all taxes, assessments and other
governmental charges imposed upon it, or upon its income, profits or property,
and all claims for labor, material or supplies which, if unpaid, might by law
become a lien or charge upon its property; provided, however, that it shall not
be required to pay any tax, assessment, charge or claim if so permitted by law,
so long as the validity thereof shall be contested in good faith by appropriate
proceedings and adequate reserves therefor in accordance with GAAP shall be
maintained on its books;
6.04 maintain its inventory, equipment, real estate and other properties
in good condition and repair (normal wear and tear excepted), pay and discharge
or cause to be paid and discharged when due, the costs of repairs to or
maintenance of the same, and pay or cause to be paid all rental or mortgage
payments due on the same except if it is in good faith contesting by appropriate
proceedings such amounts due and is maintaining adequate reserves for such
liability in accordance with GAAP;
6.05 maintain and comply with leases covering real property, if any, used
by it in accordance with the respective terms thereof so as to prevent any
default thereunder which may result in the exercise or enforcement of any
landlord's or other lien against it or its property; provided, however, that it
may contest any matters in connection with such leases in good faith and by
appropriate proceedings
19
if it makes such payments as are required by law and maintains adequate reserves
on its books in accordance with GAAP in connection therewith;
6.06 maintain its corporate existence, maintain all rights, privileges,
franchises, permits and approvals necessary or desirable for the continuation of
its business, and comply with the requirements of all material agreements to
which it is a party or by which any of its assets is bound, and all applicable
Laws, including Environmental Laws, and orders of any Governmental Authority,
noncompliance with which would materially adversely affect its business,
properties, condition, financial or otherwise, or ability to repay its
Obligations;
6.07 keep adequate records and books of the accounts and operations of
Borrower, in which complete entries will be made in accordance with its past
practices and consistent with sound business practice, reflecting all of its
financial transactions, and collect its accounts only in the Ordinary Course of
Business;
6.08 permit any of the Bank's representatives to examine and inspect all
properties and operations of Borrower, and all books of account, records,
reports and other papers and to make copies and extracts therefrom, and to
discuss the Borrower's affairs, finances and accounts with its officers and
employees or its independent public accountants (and by this provision the
Borrower authorizes said accountants to discuss the finances and affairs of the
Borrower), all at such reasonable times and as often as may be reasonably
requested and upon three (3) Business Days notice by the Bank, the costs and
fees for which Borrower shall pay up to a maximum of $5,000.00 provided no Event
of Default has occurred;
6.09 at its sole cost and expense, keep and maintain all of its property
and assets insured for the full insurable value thereof against loss or damage
by fire, theft, explosions, sprinklers and all other hazards and risks (i)
covered by extended coverage and/or (ii) ordinarily insured against by other
owners or users of properties in similar businesses. All such policies of
insurance shall be in form, with insurers and in such amounts as may be
reasonably satisfactory to the Bank;
6.10 pay when due and payable all of its Debt except if (with respect to
Debt other than the Obligations hereunder) it is in good faith contesting by
appropriate proceedings such amounts due and has maintained adequate reserves
for such liability in accordance with GAAP;
6.11 at the Bank's request, execute and/or deliver to the Bank, at any
time or times hereafter, all Supplemental Documentation that the Bank may
request, in form and substance acceptable to the Bank, and pay the costs of any
recording or filing of the same;
6.12 maintain its principal banking relationship and accounts with the
Bank;
6.13 maintain a minimum Debt Service Coverage Ratio of not less than the
following required levels, tested and determined by the Bank as of each period
ending below, based upon the financial and reporting requirements to be complied
with by Borrower pursuant to this Article VI:
20
DATE REQUIRED LEVEL
-------- --------------
12/31/04 1.00:1.00
3/31/05 1.00:1.00
6/30/05 1.00:1.00
ARTICLE VII. EVENTS OF DEFAULT
7.01 The occurrence of any of the following events or acts shall
constitute an Event of Default ("Event of Default"):
(A) The Borrower or any Subsidiary or Affiliate of Borrower defaults
in the payment of any of its Obligations or any part thereof when the same
shall become due and payable, either by their terms or as otherwise herein
provided.
(B) Any Financial Statement, representation or warranty made by the
Borrower herein or delivered by the Borrower pursuant hereto or otherwise
made in writing by the Borrower in connection with this Agreement proves
to have been false in any material respect as of the date on which it was
made or deemed made, or the Borrower defaults in the performance of any of
the covenants, conditions or agreements contained in this Agreement (other
than events referred to in other provisions of this Section 7.01).
(C) Except as provided in Section 7.01(H), the Borrower fails to pay
or perform under the terms of any Debt when due, or suffers to exist any
other event of default giving rise to any obligation under any agreement
binding the Borrower and such failure or event of default continues beyond
any applicable grace period, the effect of which is to cause the Debt or
such obligation to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(D) The Borrower or any of its Subsidiaries files a petition under
any section or chapter of the United States Bankruptcy Code or any similar
federal or state law or regulation, the Borrower or any of its
Subsidiaries admits in writing its inability to pay debts as they mature,
the Borrower or any of its Subsidiaries makes an assignment for the
benefit of one or more of its creditors, the Borrower or any of its
Subsidiaries makes an application for the appointment of a receiver,
trustee or custodian for any of its properties or assets, or the Borrower
or any of its Subsidiaries files any case or proceeding for its
reorganization, dissolution or liquidation or for relief from creditors;
provided that any of the foregoing with respect to a Subsidiary will
constitute an Event of Default only if it materially and adversely affects
the ability of Borrower to perform its Obligations hereunder.
(E) The Borrower or any of its Subsidiaries is enjoined, restrained
or in any way prevented by court order from conducting all or any material
part of its business affairs, a petition under any section or chapter of
the United States Bankruptcy Code or any similar federal or state law or
regulation is filed against the Borrower or any of its Subsidiaries, any
case or proceeding is filed against the Borrower or any of its
Subsidiaries for its reorganization, dissolution or liquidation or for
creditor relief, or an application is made by any Person other than the
Borrower or any of its Subsidiaries for the appointment of a receiver,
trustee, or
21
custodian for any of its properties or assets, and such injunction,
restraint, petition or application is not dismissed or stayed within
ninety (90) days after the entry or filing thereof; provided that any of
the foregoing with respect to a Subsidiary will constitute an Event of
Default only if it materially and adversely affects the ability of
Borrower to perform its Obligations hereunder.
(F) The Borrower or any of its Subsidiaries conceals or removes or
permits to be concealed or removed any part of its property with intent to
hinder, delay or defraud its creditors or any of them, or makes or suffers
to be made a transfer of any of its property that may be fraudulent under
any federal or state bankruptcy, fraudulent conveyance or similar law.
(G) The Borrower or any of its Subsidiaries permits any of its
properties or assets to be attached, seized, subjected to a writ or
distress warrant, or levied upon, or to come within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors;
provided that any of the foregoing with respect to a Subsidiary of
Borrower will constitute an Event of Default only if it materially and
adversely affects the ability of Borrower to perform its Obligations
hereunder.
(H) The Borrower or any of its Subsidiaries suffers a final judgment
for payment of money in excess of $1,000,000 which shall not be stayed on
appeal and does not discharge the same within a period of thirty (30)
days; provided that any of the foregoing with respect to a Subsidiary of
Borrower will constitute an Event of Default only if it materially and
adversely affects the ability of Borrower to perform its Obligations
hereunder, as determined by the Bank in its sole discretion.
(I) A judgment creditor of the Borrower or any of its Subsidiaries
obtains possession of any of its properties or assets with an aggregate
value in excess of $1,000,000 by any means, including without limitation,
levy, distraint, replevin or self-help; provided that any of the foregoing
with respect to a Subsidiary of Borrower will constitute an Event of
Default only if it materially and adversely affects the ability of
Borrower to perform its Obligations hereunder, as determined by the Bank
in its sole discretion.
(J) Any authorization, consent, approval, license, exemption,
registration, qualification, designation, declaration, report filing or
other action or undertaking now or hereafter made by or with any
Governmental Authority in connection with the business or operations of
Borrower or any of its Subsidiaries, or with this Agreement or any other
Document or any such action or undertaking now or hereafter necessary to
make its business and operations or this Agreement or any other Document
legal, valid, enforceable and admissible in evidence is not obtained or
shall have ceased to be in full force and effect or shall have been
revoked, modified or amended or shall have been held to be illegal or
invalid and, as a result thereof, the ability of the Borrower to perform
its Obligations hereunder is materially and adversely affected, as
determined by the Bank in its sole discretion.
(K) Any permit material to the business, operations or financial
condition of the Borrower or any of its Subsidiaries shall be terminated,
suspended or revoked and, as a result thereof, the ability of the Borrower
to perform its Obligations hereunder is materially and adversely affected,
as determined by the Bank in its sole discretion.
22
(L) There shall occur any uninsured damage to, or loss, theft, or
destruction of, any of the properties or assets of the Borrower in excess
of $1,000,000 and, as a result thereof, the ability of the Borrower to
perform its Obligations hereunder is materially and adversely affected, as
determined by the Bank in its sole discretion.
(M) A notice of lien or assessment is filed or recorded with respect
to all or any of the Borrower's or any Subsidiary of the Borrower's assets
by the United States, or any department, agency or instrumentality
thereof, or by any state, county, municipal or other governmental agency,
or if any taxes or debts owing at any times hereafter to any one of these
becomes a lien or encumbrance upon any such Person's assets and the same
is not released within thirty (30) days after the same becomes a lien or
encumbrance and, as a result, the ability of the Borrower to perform its
obligations hereunder is materially and adversely affected, as determined
by the Bank in its sole discretion; provided that such Person shall have
the right to contest by appropriate proceedings any such lien, levy or
assessment if such Person provides the Bank with a bond or indemnity
satisfactory to the Bank assuring the payment of such lien, levy or
assessment.
(N) Any of the following events if such event could have a material
adverse effect on the Borrower as reasonably determined by the Bank: (i)
the existence of a Reportable Event, (ii) the withdrawal of the Borrower
or any of its Subsidiaries, or any ERISA Affiliate from an Employee
Benefit Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, (iii) the occurrence of an
obligation to provide affected parties with a written notice of intent to
terminate an Employee Benefit Plan in a distress termination under Section
4041 of ERISA, (iv) the institution by PBGC of proceedings to terminate
any Employee Benefit Plan, (v) any event or condition which would require
the appointment of a trustee to administer an Employee Benefit Plan, (vi)
the withdrawal of the Borrower or any of its Subsidiaries, or any ERISA
Affiliate from a Multi-employer Plan, and (vii) any event that would give
rise to a Lien under Section 302(f) of ERISA.
(O) The occurrence of a default or an Event of Default under any of
the other Loan Documents which is not cured within the time, if any,
specified therefor in such other Loan Document.
7.02 Upon the occurrence of any Event of Default, and at any and all times
while any Event of Default shall be continuing, the Bank shall have all rights
and remedies provided by this Agreement or any other Loan Document and by
applicable law and, without limiting the generality of the foregoing, may, at
its option, declare all Obligations immediately due, including the right to
declare the Revolving Loan Commitment terminated, by giving written notice
thereof to the Borrower, and upon such declaration, the amounts outstanding
under the Note and all outstanding Loan Advances together with all accrued but
unpaid interest and any and all other amounts owed by the Borrower to the Bank
hereunder and under the Note, and all Obligations, shall thereupon be and become
forthwith, due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. The Bank shall
have the right to terminate the Purchasing Card Program and declare immediately
due and payable all credit extended thereunder or under the Card and Card
Agreements issued thereunder. The Bank shall further have the right, without
notice to the Borrower, to set off against and to appropriate and apply to such
due and payable amounts any debt owing to, and any other funds, accounts,
deposits or amounts held in any manner for the account of the Borrower by
Lender.
23
ARTICLE VIII. MISCELLANEOUS
8.01 No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder or under any other Loan 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.
8.02 This Agreement and the other Loan Documents constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and there are no promises expressed or implied unless contained herein
and therein. No amendment, modification, termination or waiver of any provision
of the Loan Documents nor consent to any departure by the Borrower therefrom
shall in any event be effective unless the same shall be in writing and signed
by the Bank, and then such waiver or consent shall be effective only for the
specific purpose for which given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
8.03 The Borrower will pay any documentary, stamp or similar taxes payable
in respect of the Loan Documents. The Borrower will, on demand, reimburse the
Bank for all expenses, including the reasonable fees and expenses of legal
counsel (including, without limitation, legal assistants) for the Bank, incurred
by the Bank in connection with any amendment or modification of the Loan
Documents, the administration of the Revolving Loan and the enforcement of the
Loan Documents and the collection or attempted collection of the Obligations.
8.04 (A) For the purposes of any action or proceeding involving the Loan
Documents or any other agreement or document referred to therein, the Borrower
hereby expressly submits to the jurisdiction of all federal and state courts
located in the State of Illinois and consents that any order, process, notice of
motion or other application to or by any of said courts or a judge thereof may
be served within or without such court's jurisdiction by registered mail or by
personal service, provided a reasonable time for appearance is allowed. To the
extent permitted by applicable law, the Borrower hereby irrevocably waives any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Document brought in any federal or state court sitting in Xxxx County, State of
Illinois, and, to the extent permitted by law, hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
(B) THE BORROWER AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR
RELATING TO THIS AGREEMENT, THE NOTE, ANY OTHER OF THE DOCUMENTS AND
AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT
A JURY.
8.05 Any notices or consents required or permitted by this Agreement shall
be in writing and shall be delivered in person or sent by certified mail,
postage prepaid, return receipt requested, or delivered by, facsimile, telegram
or telex, or delivered by a nationally recognized overnight express delivery
service, addressed as follows, unless such address is changed by written notice
hereunder:
24
If to the Borrower: Brookdale Living Communities, Inc.
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: R. Xxxxxxx Xxxxx
Executive Vice President
and Chief Financial Officer
FAX: (000) 000-0000
with a copy to: Brookdale Living Communities, Inc.
000 X. Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Senior Vice President, Secretary
and General Counsel
FAX: (000) 000-0000
If to the Bank: LaSalle Bank National Association
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Vice President
with a copy to: Xxxxxxx, Xxxxxxx & Xxxxxx, LLC
0000 Xxxx Xxxxxxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Any such notice or communication shall be deemed to have been given either at
the time of personal delivery, or in the case of overnight express delivery, as
of the Business Day delivery was first attempted, or in the case of facsimile,
telegram or telex, upon receipt or in the case of certified mail, two (2)
Business Days after delivery to the United States Postal Service.
8.06 This Agreement may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
8.07 This Agreement shall become effective when it shall have been
executed and delivered by the Borrower and the Bank, and thereafter shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Bank.
8.08 This Agreement has been, and any other Loan Documents will be,
delivered and accepted in and shall be deemed to be, contracts made under and
governed by the laws of the State of Illinois, and for all purposes shall be
construed in accordance with the laws of said State.
8.09 Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without
25
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction; wherever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable Law.
8.10 All covenants, agreements, representations and warranties made by the
Borrower herein and any and all certificates and instruments delivered by the
Borrower in connection herewith shall, notwithstanding any investigation by the
Bank, be deemed material and relied on by the Bank and shall survive the
execution and delivery to the Bank of this Agreement, the Note and any extension
or renewal thereof.
8.11 From time to time, the Borrower will execute and deliver to Bank such
additional documents and will provide such additional information as the Bank
may reasonably require to carry out the terms of this Agreement and be informed
of the Borrower's status and affairs.
8.12 All Exhibits and Schedules attached to this Agreement shall be deemed
incorporated herein by this reference.
8.13 Whenever under the terms of this Agreement, the time for performance
of a covenant or condition falls upon a day other than a Business Day, such time
for performance shall be extended to the next Business Day. Unless otherwise
stated, all references herein to "days" shall mean calendar days.
8.14 The Borrower hereby consents to the Bank's participation, sale,
assignment or transfer, at any time or times hereafter of this Agreement or the
Loan Documents, or any portion hereof or thereof, without affecting the
liability of the Borrower hereunder; provided, however, the Bank shall at all
times act as sole agent on behalf of itself and any participant that acquires
any interest in this Agreement or the Loan Documents and shall at all times
service the Revolving Loan on behalf of itself and any participant.
[signature page follows]
26
IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ R. Xxxxxxx Xxxxx
---------------------------------
Print Name: R. Xxxxxxx Xxxxx
Title: Executive Vice President and Chief
Financial Officer
BANK:
LaSALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
------------------------------------------
Print Name: Xxxxx Xxxxxx
----------------------------------
Title: VP
---------------------------------------
27
EXHIBIT A
NOTE
See attached.
SCHEDULE 2.02
OUTSTANDING OLD BROOKDALE GENERAL LETTER OF CREDIT
AUTHORIZED
EXISTING EXPIRATION EXPIRATION
ENTITY NAME BENEFICIARIES AMOUNT DATE ISSUED DATE ** DATE *** LETTER OF CREDIT #
------------------------ ------------------- -------------- ------------ ------------------- ------------ ------------------
Brookdale Living Illinois Department $ 1,370,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531961
Communities of of Public Health
Illinois - GE, Inc.
Brookdale Living Illinois Department $ 530,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531957
Communities of of Public Health
Illinois - HV, Inc.
Brookdale Living Illinois Department $ 285,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531958
Communities of Illinois of Public Health
- Xxxxxxx Estates LLC
Brookdale Living Illinois Department $ 950,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531960
Communities of Illinois of Public Health
- II, Inc.
Brookdale Living Illinois Department $ 280,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531956
Communities of Illinois of Public Health
- HLAL, LLC
Brookdale Living Illinois Department $ 2,745,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531953
Communities of Illinois, of Public Health
- 2960, LLC*
River Oaks Partners Illinois Department $ 480,000.00 May 17, 2001 February 28, 2005 May 31, 2005 S531951
of Public Health
* Successor to Brookdale Living Communities of Illinois, Inc. as operator of
The Hallmark, Chicago facility.
** Reflects current expiration date taking into account renewals and
extensions of original expiration date.
*** See Section 2.03 of Loan Agreement.
SCHEDULE 4.05
LITIGATION
[See attached]
SCHEDULE 4.05: LITIGATION
AND OTHER RELATED MATTERS
1. Xxxx Xxxxxx and Xxxxxxxxx Xxxxxx v. Brookdale Living Community, HRH
Construction Corp. and Century-Maxim Construction Corp., Case No. 25973-99,
filed on July 21, 1999, in the Supreme Court in the State of New York, County of
Kings. Plaintiff is an employee of Rebar, Inc. ("Rebar"), who was allegedly
injured on or about July 13, 1999, while working on the construction of the
facility in Battery Park City, New York ("Hallmark -BPC"). Rebar was a
sub-contractor of HRH Construction Corp., the general contractor retained by
Brookdale Living Communities of New York-BPC, Inc., the developer of the
Hallmark-BPC. Plaintiff Xxxx Xxxxxx seeks damages in the amount of
$5,000,000.00, and the plaintiff Xxxxxxxxx Xxxxxx seeks damages in the amount of
$1,000,000.00. The named defendant, Brookdale Living Community, is neither
Brookdale Living Communities, Inc. ("BLCI" or the "Company") nor a subsidiary of
BLCI. The case was tendered to the insurance carrier for Rebar, who accepted the
tender and is handling the defense of this case on behalf of certain defendants,
including the Company.
2. Brookdale Living Communities of Illinois - HV, Inc. x. Xxxx Illinois
Corporation, Case Xx. 00 X 000000, filed on ------------ in the Circuit Count of
Xxxx County, Illinois, Country Department, Law Division. Subrogation claim
brought by Company's insurance carrier against the contractor that performed the
renovation work at the Kenwood of Lake View facility located in Chicago,
Illinois ("Kenwood-Chicago"). Brookdale's original insurance claim involved a
pipe burst on December 22, 1999, at the Kenwood-Chicago due to inadequate
insulation or poor construction. Prosecution of this action on behalf of the
insurance company is being handled by Xxxxxxx X. Xxxxxxx, of Xxxxxxx Xxxxxx, PC.
Three defendants settled for $53,000; one defendant remains.
3. Xxxx Xxxxxxx v. SPT Brook Properties Trust, Brookdale Living
Communities, Inc., BLC of Illinois - II and BLC of Illinois - 2960, Case Xx. 00
X 0000, filed on June 24, 2003 in the Circuit Court of Xxxx County. Plaintiff is
a resident of the Hallmark, Chicago facility located in Chicago, Illinois (the
"Hallmark-Chicago), who broke her hip when she fell after walking into sliding
glass doors in the lobby as those doors were closing on December 17, 2002.
Defense of this action on behalf of the Subsidiary is being handled by Xxxxx
Xxxxxxx of Xxxxxxxxxx, Xxxxx & Xxxxxxx, attorneys retained by the Company's
insurance carrier. Dismissed without prejudice 12/22/03; plaintiff to amend
complaint. Settlement negotiations ongoing.
4. Xxxxxxx Xxxx v. Brookdale Living Communities, Inc., Case No. 114515-03,
filed on August 13, 2003, in the Supreme Court of New York County, New York.
Plaintiff is a resident of the Hallmark-BPC allegedly suffered an injury to her
knee when a staff member pushed her dining room chair into the dining table on
January 31, 2003. Defense of this action on behalf of the Subsidiary is being
handled by Xxxx Xxxxx of the Law Offices of Xxxxxxx Xxxxx, attorneys retained by
the Company's insurance carrier.
5. Xxxxxx Xxxxxxxx v. Brookdale Living Communities of Florida, Inc., The
Terrace at West Palm Beach and Xxxxx Good Samaritan, Inc., Case No.
502003CA012899ZZONAH, filed on
31
December 9, 2003, in the Circuit Court of Palm Beach Florida. Plaintiff is a
resident of the Classic at West Palm Beach facility in West Palm Beach, Florida
("Classic-West Palm Beach"), who went to the hospital for personal medical
problems on April 26, 2003. To return to the facility, when the facility did not
arrange the return transportation that he alleges was promised, he took a cab
and fell and fractured his hip upon exiting the cab. Plaintiff died following
the filing of the lawsuit. Defense of this action on behalf of the Subsidiary is
being handled by Xxxxxx X. Xxxxxxxxxx, Xxxxxxxx Xxxxxxx Xxxxxxxxxx Zei Xxxxxxx &
Xxxxxx, attorneys retained by the Company's insurance carrier.
6. Cal PIRG and Congress of California Seniors, Inc. v. Alterra Healthcare
Corp, et al., Case no. BC310271, filed in the Superior Court for Los Angeles
County, California, on February 6, 2004. Plaintiffs are senior advocacy groups
who challenge the community fees charged by California senior living providers.
Defense on behalf of the Company and its California subsidiaries (Brookdale
Living Communities of California, Inc., Brookdale Living Communities of
California-San Marcos, Inc., and Brookdale Living Communities of California-RC,
Inc.) is being handled by Xxxx Xxxxxx of Xxxxxx Xxxxxxxx as part of a joint
defense with other industry defendants. Discovery is underway.
7. Medical Staffing Network, Inc. v. Brookdale Living Communities, Inc.,
Xxxx xx. 00 0000 XX 000000 XXXX MB, filed in the circuit court for Palm Beach
County, Florida, on February 13, 2004. Plaintiff is suing for payment for
services performed at the Windsong Care Center in 2003, after the facility had
been sold by Brookdale. Notice has been given to the purchaser of the facility
(Gem Care), including a demand for defense and indemnification as required by
the Purchase and Sale Contract.
8. Estate of Xxxxx Xxxxxxxxxxx v. Brookdale Living Community of Illinois
DNC, LLC d/b/a Xxxxxxxx Xxxx Xxxxxx, Xxxx Xx. 0000X000000, filed on May 17, 2004
in the Circuit Court for DuPage County. Claimants are the family of a
now-deceased resident at the Westbury Care Center in Lisle, Illinois
("Westbury"), and allege that employees of Westbury failed to exercise proper
care and treatment of Xx. Xxxxxxxxxxx prior to his death on May 15, 2002, in
particular in connection with the treatment of a Class IV bedsore. Defense of
this action on behalf of the Subsidiary is being handled by Xxx XxXxx, retained
by the Company's insurance carrier.
9. Xxxxxxxxxx Xxxxx, Independent Administrator of the Estate of Xxxxxx X.
Xxxxx, Case No. 2004L000833, filed on August 5, 2004, in the Circuit Court for
DuPage County. Plaintiff is the administrator of the estate of a now-deceased
resident of the Westbury, and alleges that a particular medical procedure
relating to a bowel obstruction was negligently performed by Westbury on August
11, 2002. Defense of this action on behalf of the Subsidiary is being handled by
Xxxxxxxxxx, Xxxxx & Xxxxxxx, retained by the Company's insurance carrier.
10. Xxxxx Xxxxxxx v. Brookdale Living Communities of California, Inc.,
case no. 104CV025207, filed on August 17, 2004 in Superior Court of Santa Xxxxx
County, California. Plaintiff is the former Director of Dining Services who
alleges that he should have been paid overtime during his employment.
32
11. Estate of Xxxxxxxxx XxXx v. BLC of Indiana-OL, LP and Xxxxxx'x Health
Systems, Inc., cased no.49D060408CT1632, filed on August 31, 2004, in the
Superior Court of Xxxxxx County, Indiana. Plaintiff is the administrator of the
estate of a now-deceased resident of the Berkshire of Castleton, located in
Indianapolis, Indiana (the "Berkshire"), and alleges that the resident suffered
a fall on April 5, 2003, resulting in injuries to her arm and hip. The resident
died on November 11, 2003. The complaint (incorrectly) identifies the Berkshire
as a nursing facility, certified under Medicaid and/or Medicare programs. The
complaint has been forwarded to the Company's insurance carrier for review.
Xxxxx Xxxxx, with the law firm of Locke, Reynolds, LLP, Indianapolis, Indiana,
has been assigned by the Company's insurance carrier to defend this case.
12. Employment Claims. Certain claims made by former employees of certain
Subsidiaries are pending. The Company does not believe that any of these claims
will result in a liability to the Company or any Subsidiary within the
applicable limits of materiality.
13. Labor. The employees of The Devonshire of Mt. Lebanon, located in
Pittsburgh, Pennsylvania (the "Mt. Lebanon Facility") petitioned to be
represented by Local 636 of the International Brotherhood of Teamsters. An
election was held on October 3, 2003. The outcome of the election was 23 to 20
in favor of the union. A Subsidiary of the Company is currently negotiating the
first contract and it is expected that bargaining will continue.
14. Other Insured Claims. Certain other claims have been made against the
Company and/or one or more of the Subsidiaries, including the claims described
below. The defenses of these claims are being handled by attorneys retained by
the Company's insurance carrier, and the Company expects any and all damages
awarded to the claimants, or paid to the claimants in settlement, will be fully
covered by insurance, subject to applicable deductibles.
(a) Xxxxx Xxxx. Claimant was a visitor to the Classic-West Palm
Beach, who was assaulted and robbed on April 29, 2002, outside
of the Classic-West Palm Beach. The Company's insurance carrier
is currently reviewing this case.
(b) Xxxxxxx Xxxxxxxxxx. Claimant was a resident at the Island on
Lake Xxxxxx facility, located in Lago Vista, Texas ("Lake
Xxxxxx") who allegedly died from salmonella poisoning, sometime
in late November 2003. The health department did an inspection
and could not trace the alleged salmonella back to Lake Xxxxxx.
(c) Xxxxxxxx Xxxxxx. Claimant is a resident of the Heritage of
Southfield, located in Southfield, MI ("Heritage-Southfield"),
who slipped and fell in February 2004, bruising his shoulder in
the parking lot. Heritage-Southfield arranged for a caregiver
for a limited period of time and the family is demanding
continuing payments. The Company's insurance adjuster is
currently reviewing this case.
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(d) Xxxxxxxx Xxxxx. Claimant is a resident at the Classic-West Palm
Beach, who alleges that she tripped over the bumper of a car in
the parking lot and fractured her ankle on March 4, 2004, due to
a light that was out. The Company's insurance carrier is
currently reviewing this case.
15. In February 2001, a subsidiary of the Company acquired a 45%
partnership interest (and acted as the limited partner) in GFB-AS Investor LLC
("GFB"), the sole owner of the general partners in various partnerships owning
and investing Grand Court properties across the country; effective as of May 29,
2003, that Subsidiary acquired the remaining 55% interest in GFB. In addition,
several management subsidiaries of the Company have acted as management
consultant to the owning partnership of the various Grand Court properties
during various points in time since February 2001. The following are the Grand
Court lawsuits and claims which are being monitored by the insurance carrier:
(a) Lawsuits:
(i) Xxxxxx Xxxxxx. Lawsuit filed on October 23, 2003, in the
Circuit Court of Miami-Dade County, Florida on behalf of the
family of a resident who jumped off a balcony and died on
April 26, 2002 at the Grand Court - North Miami, Florida
facility ("GC-North Miami"). The insurance company is
assigning counsel in this matter.
(ii) Xxx Xxxxx. Lawsuit filed on August 28, 2003, in the District
Court of Xxxxxx County, Texas, on behalf of the estate of a
former resident of XX - Xxxxx who fell and broke her leg on
the sidewalk on September 21, 2002. The insurance company is
assigning counsel in this matter. Trial is set for 1/18/05.
(iii) Xxx Xxxxxx. Lawsuit filed on September 2, 2003, for wrongful
death on behalf of a resident of the Grand Court - Westland,
Michigan facility ("GC-Westland"), who eloped from the
facility on April 4, 2003 and was found lying in the parking
lot. She subsequently died of hypothermia. The insurance
company is assigning counsel in this matter.
(iv) Estate of Xxxxxxx Xxxxxxxx v. Glades Associates. Grand Court
Facilities, Inc XXIII, and Xxxxxxxx Xxxxxxxx. Case No. 03
10080 CA 22 filed in the Circuit Court for Miami-Dade County
on December 12, 2003. Plaintiff was a former resident of GC -
South Miami who fell and cut his head, receiving stitches on
[date unknown] prior to moving to a nursing home. The
insurance company is assigning counsel in this matter.
(v) Xxxxx Xxxxxxxxx v. Twin Lakes, L.P., T Lakes LC, Waterford
Shores Associates II L.P., GFB-AS Investors, LLC, Brookdale
Living Communities-GC LLC and other individual limited
partners. Case No.____ filed in the
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Xxxxxxx Xxxxx for Xxx county Florida filed on December 31,
2003. Lawsuit filed by a limited partner investor challenging
the adequacy of the consideration to be received in connection
with the proposed sale of the Grand Court Fort Xxxxx facility
located in Fort Xxxxx, Florida ("GC-Fort Xxxxx"). It is likely
that there is no insurance coverage for this case.
(vi) Homestead Health Care, Inc. vs. Brookdale Living Communities
GC, LLC, Brookdale Living Communities of Michigan, Inc.,
Xxxxxx Xxxxxx, Xxxxxx XxXxxxxx, Care Continuum, Inc.,
Signature Home Care and Xxxxxxx Reo, Case no 04-0055773-CK
filed in the Circuit Court for Oakland County, Michigan on
January 29, 2004. Lawsuit filed by an outside provider of
assisted living services at the Grand Court Novi facility
located in Novi, Michigan (GC-Novi) alleging tortious
interference with contract and injury to their reputation as a
result of GC-Novi bringing in a different service provider.
The insurance company is currently reviewing this case.
(vii) Xxxxxxx Xxxxxx vs. Xxxxxxx Xxxx, Xx., Xxxx Xxxxxxx, Brookdale
Living Communities-GC, LLC d/b/a The Grand Court, The Grand
Court, Ventas Realty, LP, et al, Xxxx Xx. X000000, filed in
the district court of Xxxxx County on July 1, 2004. Plaintiff
is a resident of Grand Court - Las Vegas, located in Las
Vegas, Nevada ("GC-Las Vegas"), who fell from her scooter and
broke her arm when the facility's bus driver swerved to avoid
a collision with another driver on October 30, 2003. The
Company's insurance carrier is currently reviewing this case.
(b) Claims:
(i) Rose Gold. Claimant is a resident of Grand Court - Phoenix
facility located in Phoenix, Arizona ("GC-Phoenix"), who was
injured on October 1, 2003, when another resident driving a
motorized cart hit her and caused her to fall. The Company's
insurance carrier is currently reviewing this case.
(ii) Xxxxxxxx Xxxxxx. Claimant is a resident of GC-Fort Xxxxx, who
lost her balance and fell when she reached for the elevator
button, fracturing her femur. The Company's insurance carrier
is currently reviewing this case.
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Schedule 4.18: Brookdale Living Communities, Inc - Ownership Structure
(FLOW CHART)
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