SECOND AMENDMENT TO CREDIT AGREEMENT
EXECUTION VERSION
SECOND
AMENDMENT TO CREDIT AGREEMENT
SECOND
AMENDMENT, dated as of May 12, 2008 (this “Amendment”), to the
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 15, 2006 (as
amended by the First Amendment, dated as of October 10, 2007, and as the
same may be further amended, supplemented, extended or restated, or otherwise
modified from time to time, the “Credit Agreement”),
among BROOKDALE SENIOR LIVING INC., a Delaware corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time
parties to the Credit Agreement (the “Lenders”), XXXXXX
BROTHERS INC. and CITIGROUP GLOBAL MARKETS INC., as joint lead arrangers and
joint bookrunners (in such capacity, the “Joint Lead
Arrangers”), XXXXXXX SACHS CREDIT PARTNERS L.P., LASALLE BANK NATIONAL
ASSOCIATION and BANC OF AMERICA SECURITIES LLC, as co-arrangers (in such
capacity, the “Co-Arrangers”),
LASALLE BANK NATIONAL ASSOCIATION and BANK OF AMERICA, N.A., as co-syndication
agents (in such capacity, the “Co-Syndication
Agents”), XXXXXXX XXXXX CREDIT PARTNERS L.P. and CITICORP NORTH AMERICA,
INC., as co-documentation agents (in such capacity, the “Co-Documentation
Agents”) and XXXXXX COMMERCIAL PAPER INC., as administrative agent (in
such capacity, the “Administrative
Agent”).
W I T N E
S S E T H:
WHEREAS,
the Borrower has requested that the Lenders amend the Credit Agreement to
(i) permit the purchase of up to $150,000,000 of Capital Stock of the
Borrower and (ii) make certain other amendments as set forth herein;
and
WHEREAS,
the Lenders have agreed to amend the Credit Agreement solely upon the terms and
conditions set forth herein;
NOW,
THEREFORE, in consideration of the premises and the agreements hereinafter set
forth, the parties hereto hereby agree as follows:
1. Defined
Terms. Unless otherwise noted herein, terms defined in the
Credit Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
2. Amendment to
Section 1.1 of the Credit Agreement (Defined Terms). (a) Section 1.1
of the Credit Agreement is hereby amended by deleting the definitions of
“Applicable Margin” and “Revolving Loan Commitment Fee Rate” and substituting in
lieu thereof the following new definitions in the appropriate alphabetical
order:
‘“Applicable
Margin”: (i) for the LaSalle L/C Facility, a rate per
annum equal to 1.50%, (ii) for the Revolving Credit Facility, a rate per
annum equal to (x) 3.00%, with respect to Base Rate Loans (including Swing
Line Loans) and (y) 4.00%, with respect to Eurodollar Loans and
(iii) for the BoA L/C Facility, a rate per annum equal to
4.00%.
“Revolving Loan Commitment
Fee Rate”: 0.50% per annum.’
(b) Section 1.1
of the Credit Agreement is hereby further amended by inserting the following new
defined terms in the appropriate alphabetical order:
‘“Hedge Provider
Collateral”: with respect to any Hedge Agreement, any
collateral in the form of cash deposited and/or pledged by the Borrower or any
of its Subsidiaries for the benefit of the counterparty in an amount not to
exceed the maximum obligation of the Borrower or any of its Subsidiaries under
such Hedge Agreement at the time such deposit is required to be
made.
“Second
Amendment”: the Second Amendment to this Agreement, dated as
of May 12, 2008.
“Second Amendment Effective
Date”: the date on which each of the conditions in
Section 8 of the Second Amendment have been fulfilled, which is
May 12, 2008.’
3. Amendment to
Section 2.10 of the Credit Agreement (Mandatory Prepayments and Commitment
Reductions). (a) Section 2.10 of the Credit
Agreement is hereby amended by deleting Section 2.10(c) in its entirety and
substituting in lieu thereof the following:
“(c) Amounts
to be applied in connection with prepayments made pursuant to this Section 2.10
(other than Section 2.10(d)) shall be applied to the prepayment of the Revolving
Credit Loans and/or Swing Line Loans (without a corresponding reduction of the
Revolving Credit Commitments).”
(b) Section 2.10
of the Credit Agreement is hereby further amended by adding the following new
Section 2.10(d) in the appropriate alphabetical order:
“(d) On
the last day of each fiscal quarter ending after the Second Amendment Effective
Date, the aggregate amount of Revolving Credit Commitments shall be permanently
reduced (determined on a cumulative basis for the period beginning on the Second
Amendment Effective Date to such date of determination) by an amount equal to
the greater of:
(i) an
amount equal (if positive) to (A) 50% of the aggregate amount of Net Cash
Proceeds (net of any amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the applicable Property, and customary costs
and expenses incurred, in connection therewith) received by the Borrower and its
Subsidiaries from the incurrence of Indebtedness permitted by
Sections 7.2(f), (g) (excluding amounts borrowed to finance construction
and other customary development costs and expenses) and (i) during the period
beginning on the Second Amendment Effective Date and ending on such date of
determination minus (B) $50,000,000;
and
(ii) an
amount equal (if positive) to (A) the aggregate of common stock purchased
by the Borrower in accordance with Section 7.6(e) during the
2
period
beginning on the Second Amendment Effective Date and ending on such date of
determination minus
(B) $50,000,000.
Notwithstanding
the foregoing, the aggregate amount of Revolving Credit Commitments shall be
further permanently reduced, if applicable, on the last day of each fiscal
quarter set forth below to the amount set forth below opposite such fiscal
quarter:
Fiscal Quarter
|
Revolving
Credit Commitment
|
|
FQ4
2008
|
$245,000,000
|
|
FQ1
2009
|
$220,000,000
|
For the
avoidance of doubt, any reduction made pursuant to clauses (i) and (ii)
above shall be permanent without regard to the grid above. Any such
reduction of the Revolving Credit Commitments shall be accompanied by prepayment
of the Revolving Credit Loans and/or Swing Line Loans to the extent, if any,
that the Total Revolving Extensions of Credit exceed the amount of the Total
Revolving Credit Commitments as so reduced. For the avoidance of
doubt, any such reduction shall not reduce the amount of the BoA L/C Commitment
or the LaSalle L/C Commitment.”
4. Amendment to
Section 7.1 of the Credit Agreement (Financial Condition
Covenants). (a) Section 7.1(a) of the Credit
Agreement is hereby amended by deleting such Section in its entirety and
substituting in lieu thereof the following:
“(a) Maximum Revolving Credit
Loan Balance. Permit the aggregate principal amount of the
Revolving Credit Loans and Swing Line Loans outstanding on the last day of any
fiscal quarter of the Borrower to exceed an amount equal to (i) the amount
of the Revolving Credit Commitments in effect on such date after giving effect
to any reduction required pursuant to Section 2.10(d) minus (ii) the
BoA L/C Commitment in effect on such date.”
(b) Section 7.1(b)
of the Credit Agreement is hereby amended by deleting the grid set forth in such
Section and substituting in lieu thereof the following:
Fiscal
Quarter
|
Consolidated
Adjusted
Leverage
Ratio
|
|
FQ4
2006 through FQ2 2007
|
8.75
to 1.00
|
|
FQ3
2007 through FQ4 2007
|
8.25
to 1.00
|
|
FQ1
2008 through FQ3 2008
|
8.00
to 1.00
|
|
FQ4
2008
|
7.75
to 1.00
|
|
FQ1
2009 and each fiscal
quarter
thereafter
|
7.50
to 1.00
|
(c) Section 7.1(c)
of the Credit Agreement is hereby amended by deleting the grid set forth in such
Section and substituting in lieu thereof the following:
3
Fiscal
Quarter
|
Consolidated
Fixed
Charge
Coverage
Ratio
|
|
FQ4
2006 through FQ2 2007
|
1.20
to 1.00
|
|
FQ3
2007 through FQ4 2007
|
1.25
to 1.00
|
|
FQ1
2008 through FQ3 2008
|
1.30
to 1.00
|
|
FQ4
2008 and each fiscal quarter thereafter
|
1.35
to 1.00
|
5. Amendment to
Section 7.3 of the Credit Agreement (Limitation on
Liens). Section 7.3 of the Credit Agreement is hereby
amended by (i) deleting the word “and” at the end of Section 7.3(l),
(ii) deleting the period at the end of Section 7.3(m) and substituting
in lieu thereof the word “; and” and (iii) inserting the following new
paragraph (n) in the appropriate order:
“(n) Liens
on any Hedge Provider Collateral in favor of the counterparty under any Hedge
Agreement entered into by the Borrower or any of its Subsidiaries in compliance
with Section 7.15.”
6. Amendment to
Section 7.6 of the Credit Agreement (Limitation on Restricted
Payments). Section 7.6 of the Credit Agreement is hereby
amended by (i) deleting the word “and” at the end of Section 7.6(c),
(ii) deleting the period at the end of Section 7.6(d) and substituting
in lieu thereof the word “; and” and (iii) inserting the following new
paragraph (e) in the appropriate order:
“(e) the
Borrower may purchase the Borrower’s common stock for cash in an aggregate
amount not exceeding $150,000,000 during the term of this
Agreement.”
7. Extension of Termination
Dates. The Borrower hereby exercises each of its two options
to extend the Revolving Credit Termination Date and the LaSalle L/C Termination
Date, such that from and after the date hereof the Revolving Credit Termination
Date and the LaSalle L/C Termination Date shall be May 15,
2009. The Lenders and Administrative Agent agree that the Borrower
shall have no further obligation to deliver any Extension Request Notice or
satisfy any condition pursuant to Section 2.6 of the Credit Agreement or
otherwise to effect the extension of the Revolving Credit Termination Date and
the LaSalle L/C Termination Date as contemplated herein.
8. Conditions to
Effectiveness. This Amendment shall become effective upon the
date (the “Amendment
Effective Date”) on which the Administrative Agent shall have
received:
(a) This
Amendment, executed and delivered by a duly authorized officer of the Borrower
and the Administrative Agent.
4
(b) An
Acknowledgment and Consent, substantially in the form of Exhibit A hereto
(an “Acknowledgment and
Consent”), duly executed and delivered by each Grantor.
(c) A
Lender Consent Letter, substantially in the form of Exhibit B (a “Lender Consent Letter”), duly executed
and delivered by the Required Lenders.
(d) Irrevocable
written instruction from the Borrower permanently reducing the Revolving Credit
Commitments from $320,000,000 to $270,000,000 pursuant to Section 2.8 of
the Credit Agreement, such reduction to be effective on May 12,
2008.
(e) An
amendment fee for the account of each Lender that executes and delivers to the
Administrative Agent a Lender Consent Letter at or prior to 12:00 Noon, New York
City time, on May 12, 2008, in an amount equal to 0.50% of the Commitments
of such Lender on such date.
(f) The
extension fees required to be paid to the Administrative Agent for the ratable
benefit of the Lenders pursuant to Section 2.6 of the Credit Agreement in
an amount equal to $1,312,500.
(g) All
fees required to be paid, and all expenses for which invoices have been
presented supported by customary documentation (including reasonable fees,
disbursements and other charges of counsel to the Administrative Agent), on or
before the Amendment Effective Date.
9. Representations and
Warranties. The Borrower hereby represents and warrants to the
Administrative Agent and each Lender that as of the Amendment Effective Date
(before and after giving effect to this Amendment):
(a) Each
Loan Party has the requisite power and authority to make, deliver and perform
this Amendment and the Acknowledgment and Consent (collectively, the “Amendment Documents” to which it is a
party.
(b) Each
Loan Party has taken all necessary corporate or other action to authorize the
execution, delivery and performance of the Amendment Documents to which it is a
party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the Amendment Documents, or the execution, delivery,
performance, validity or enforceability of this Amendment or the other Amendment
Documents, except (i) consents, authorizations, filings and notices which
have been obtained or made and are in full force and effect and (ii) the
filings contemplated by Section 4.19 of the Credit
Agreement. Each Amendment Document has been duly executed and
delivered on behalf of each Loan Party that is a party thereto. Each
Amendment Document and the Credit Agreement, as amended hereby (the “Amended Credit Agreement”) constitutes
a legal, valid and binding obligation of each Loan Party that is a party
thereto, enforceable against each such Loan Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar
5
laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(c) The
execution, delivery and performance of the Amendment Documents will not violate
any Requirement of Law or any Contractual Obligation of the Borrower or any of
its Subsidiaries and will not result in, or require, the creation or imposition
of any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents).
(d) Each
of the representations and warranties made by any Loan Party herein or in or
pursuant to the Loan Documents is true and correct in all material respects on
and as of the Amendment Effective Date as if made on and as of such date (except
that any representation or warranty which by its terms is made as of an earlier
date shall be true and correct in all material respects as of such earlier
date).
(e) The
Borrower and the other Loan Parties have performed in all material respects all
agreements and satisfied all conditions which this Amendment and the other Loan
Documents provide shall be performed or satisfied by the Borrower or the other
Loan Parties on or before the Amendment Effective Date.
(f) After
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing, or will result from the consummation of the transactions
contemplated by this Amendment.
10. Payment of
Expenses. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.
11. Limited
Effect. Except as expressly provided hereby, all of the terms
and provisions of the Credit Agreement and the other Loan Documents are and
shall remain in full force and effect. The amendments contained
herein shall not be construed as a waiver or amendment of any other provision of
the Credit Agreement or the other Loan Documents or for any purpose except as
expressly set forth herein or a consent to any further or future action on the
part of the Borrower that would require the waiver or consent of the
Administrative Agent or the Lenders.
12. Governing
Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13. Counterparts. This
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same agreement, and any of the parties
hereto may execute this Amendment by signing any such counterpart. A
set of the copies of this Amendment and the Lender Consent Letters signed by all
the parties shall be
6
lodged
with the Administrative Agent. Delivery of an executed signature page
of this Agreement or of a Lender Consent Letter by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof.
14. Binding
Effect. The execution and delivery of the Lender Consent
Letter by any Lender shall be binding upon each of its successors and assigns
(including assignees of its Loans in whole or in part prior to effectiveness
hereof).
15. Headings,
etc. Section or other headings contained in this Amendment are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Amendment.
7
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
XXXXXX
COMMERCIAL PAPER INC., as
|
||||
Administrative Agent |
By:
|
/s/
Xxxxx Xxxxxx
|
|||
Name:
|
Xxxxx
Xxxxxx
|
|||
Title:
|
Authorized
Signatory
|
[Signature
Page to Second Amendment to the Credit Agreement]
EXHIBIT A
to
SECOND
AMENDMENT
ACKNOWLEDGMENT
AND CONSENT
Reference
is made to the SECOND AMENDMENT, dated as of May 12, 2008 (as the same may
be further amended, supplemented, extended or restated or otherwise modified
from time to time, the “Amendment”), to the
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 15, 2006 (as
amended by the First Amendment, dated as of October 10, 2007, and as the
same may be further amended, supplemented, extended or restated, or otherwise
modified from time to time, the “Credit Agreement”),
among BROOKDALE SENIOR LIVING INC., a Delaware corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time
parties to the Credit Agreement (the “Lenders”), XXXXXX
BROTHERS INC. and CITIGROUP GLOBAL MARKETS INC., as joint lead arrangers and
joint bookrunners (in such capacity, the “Joint Lead
Arrangers”), XXXXXXX XXXXX CREDIT PARTNERS L.P., LASALLE BANK NATIONAL
ASSOCIATION and BANC OF AMERICA SECURITIES LLC, as co-arrangers (in such
capacity, the “Co-Arrangers”),
LASALLE BANK NATIONAL ASSOCIATION and BANK OF AMERICA, N.A., as co-syndication
agents (in such capacity, the “Co-Syndication
Agents”), XXXXXXX SACHS CREDIT PARTNERS L.P. and CITICORP NORTH AMERICA,
INC., as co-documentation agents (in such capacity, the “Co-Documentation
Agents”) and XXXXXX COMMERCIAL PAPER INC., as administrative agent (in
such capacity, the “Administrative
Agent”). Unless otherwise defined herein, capitalized terms
used herein and defined in the Credit Agreement are used herein as therein
defined.
Each of
the undersigned parties to the Amended and Restated Guarantee and Pledge
Agreement, dated as of November 15, 2006 (the “Guarantee and Pledge
Agreement”) hereby (a) consents to the transactions contemplated by
the Amendment and (b) acknowledges and agrees that the guarantees and
grants of security interests made by such party contained in the Guarantee and
Pledge Agreement are, and shall remain, in full force and effect after giving
effect to the Amendment.
IN
WITNESS WHEREOF, the parties hereto have caused this Acknowledgement and Consent
to be duly executed and delivered by their respective proper and duly authorized
officers as of May 12, 2008.
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
BROOKDALE
LIVING COMMUNITIES, INC.
|
||||
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
AMERICAN
RETIREMENT CORPORATION
|
||||
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
FEBC-ALT
INVESTORS LLC
|
||||
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
FEBC-ALT
HOLDINGS INC.
|
||||
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
[Signature
Page to Acknowledgment and Consent]
ALTERRA
HEALTHCARE CORPORATION
|
||||
By:
|
/s/
T. Xxxxxx Xxxxx
|
|||
Name:
|
T.
Xxxxxx Xxxxx
|
|||
Title:
|
Executive
Vice President
|
[Signature
Page to Acknowledgment and Consent]
EXHIBIT B
to
SECOND AMENDMENT
LENDER
CONSENT LETTER
CREDIT
AGREEMENT
DATED AS
OF NOVEMBER 15, 2006
To:
|
Xxxxxx
Commercial Paper Inc.,
|
as
Administrative Agent
|
|
000
Xxxxxxx Xxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Attn: Xxxxx
Xxxxxx
|
Ladies
and Gentlemen:
Reference
is made to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
November 15, 2006 (as amended by the First Amendment, dated as of
October 10, 2007, and as the same may be further amended, supplemented,
extended or restated, or otherwise modified from time to time, the “Credit Agreement”),
among BROOKDALE SENIOR LIVING INC., a Delaware corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time
parties to the Credit Agreement (the “Lenders”), XXXXXX
BROTHERS INC. and CITIGROUP GLOBAL MARKETS INC., as advisors, joint lead
arrangers and joint bookrunners (in such capacity, the “Joint Lead
Arrangers”), XXXXXXX XXXXX CREDIT PARTNERS L.P., LASALLE BANK NATIONAL
ASSOCIATION and BANC OF AMERICA SECURITIES LLC, as co-arrangers (in such
capacity, the “Co-Arrangers”),
LASALLE BANK NATIONAL ASSOCIATION and BANK OF AMERICA, N.A., as co-syndication
agents (in such capacity, the “Co-Syndication
Agents”), XXXXXXX SACHS CREDIT PARTNERS L.P. and CITICORP NORTH AMERICA,
INC., as co-documentation agents (in such capacity, the “Co-Documentation
Agents”) and XXXXXX COMMERCIAL PAPER INC., as administrative agent (in
such capacity, the “Administrative
Agent”). Unless otherwise defined herein, capitalized terms
used herein and defined in the Credit Agreement are used herein as therein
defined.
The
Borrower has requested that the Required Lenders consent to amend the provisions
of the Credit Agreement solely on the terms described in the Second Amendment to
Credit Agreement, dated as of May 12, 2008, substantially in the form
delivered to the undersigned Lender on or prior to the date hereof (the “Amendment”).
Pursuant
to Section 10.1 of the Credit Agreement, the undersigned Lender hereby
consents to the execution by the Administrative Agent of the
Amendment.
Very
truly yours,
|
||||
(NAME
OF LENDER)
|
||||
By:
|
||||
Name:
|
||||
Title:
|
||||
Dated: May
___, 2008
|
[Signature
Page to Lender Consent Letter]
Accepted
and agreed:
|
||
XXXXXX
COMMERCIAL PAPER INC., as
|
||
Administrative
Agent
|
||
By:
|
||
Name:
|
||
Title:
Authorized
Signatory
|
[Signature
Page to Lender Consent Letter]