FIRST AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS
THIS FIRST AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS, dated as of July
, 1998 (this "Amendment"), is entered into by and between BROOKDALE LIVING
COMMUNITIES, INC., a Delaware corporation (the "Borrower"), and LaSALLE NATIONAL
BANK, a national banking association (the "Bank").
WITNESSETH
WHEREAS, Borrower has previously executed and delivered to the Bank a
certain Note dated April 27, 1998 in the original principal amount of up to
Fifteen Million Dollars ($15,000,000.00) evidencing a certain loan (the "Loan")
set forth more fully in and governed by a certain Loan Agreement of that same
date to which the Bank is also a party ("Loan Agreement");
WHEREAS, subject to the terms and conditions of this Amendment,
Borrower has requested the Bank (a) to increase the principal amount of the Loan
by $10,000,000, on an interim basis only, from $15,000,000 to $25,000,000, and
(b) to permit a portion of the Loan to be reserved for the issuance of standby
letters of credit by the Bank to and for the benefit municipalities and other
governmental units in connection with projects developed by Borrower from time
to time.
WHEREAS, Borrower and the Bank desire to modify the Loan Agreement and
the Documents to reflect the modified terms of the Loan as set forth in this
Amendment.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
Incorporation of Recitals. The above and foregoing recitals are
incorporated into and made a part of this Amendment. All capitalized terms used
herein, if not otherwise specifically defined, shall have the meanings and
definitions prescribed in the Loan Agreement and the Documents referred to
therein.
Interim Maturity Date. For purposes of this Amendment and the
Documents, the term "Interim Maturity Date" shall mean the earlier of (a) a date
certain which is ninety (90) days after the date of this Amendment, or (b) a
date certain which is the date on which Borrower closes on an offering of
Borrower's convertible preferred stock or convertible debt securities with a
minimum aggregate sales price (before underwriting commissions and discounts and
other expenses relating to such sale) of $50,000,000.00 which in all cases shall
be subordinate to the Loan (the "Offering").
Increased Loan Commitment. As of the date of this Amendment, the Loan
Agreement and the Documents are hereby amended to increase the principal amount
of the Loan and Maximum Revolving Loan Commitment from $15,000,000.00 to an
amount not to exceed $25,000,000.00 until the Interim Maturity Date on which
date, without further notice or demand (a) Borrower shall pay amounts necessary
to reduce the outstanding principal balance of the Loan, including any portion
of the Loan comprised of an LC Reserve (as hereafter defined) to (i)
$10,000,000.00 or less if the Offering has occurred, or (ii) $15,000,000.00 if
the Offering has not occurred, and (b) the Maximum Revolving Loan Commitment
shall be permanently reduced to an amount not to exceed (i) $10,000,000.00 if
the Offering has occurred, or (ii) $15,000,000.00 if the Offering has not
occurred.
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Letters of Credit. Provided Borrower is otherwise in compliance with
all terms and conditions of the Loan Agreement, the Documents and this
Amendment, the Bank agrees to issue from time to time from the date of this
Amendment to and including April 1, 1999, standby letters of credit (a "Letter
of Credit" and, collectively, the "Letters of Credit") for the account of
Borrower to and for the benefit of municipalities and other units of government
in order to guarantee Borrower's completion of public improvements required by
those entities in connection with Borrower's development projects, all subject
to the conditions of this Section 4 and which, when added to: (a) the aggregate
amount of all other Letters of Credit outstanding, issued or approved by the
Bank as of the proposed issuance date, and (b) the aggregate amount of Loan
Advances outstanding as of the proposed issuance date, will not exceed the
Maximum Revolving Loan Commitment in effect as of the proposed issuance date.
The Letters of Credit shall also be subject to the following conditions:
Application and Agreement. As a condition of the Bank's
obligation to issue a particular Letter of Credit, Borrower, through
the Authorized Borrower Representative, shall notify the Bank of the
particulars of the Letter of Credit not less than three (3) business
days in advance, and Borrower shall provide such borrowing resolutions
and information, and execute such applications, documents and
agreements as are required by the Bank, including without limitation,
the Bank's standard form of application and credit agreement. ("LC
Documents").
Reserve. The stated amount of each Letter of Credit issued by
the Bank shall reduce the amount of the Maximum Revolving Loan
Commitment then in effect in accordance with the terms of this
Agreement on a dollar for dollar basis ("LC Reserve").
Expiry. The Bank shall not issue any Letter of Credit with an
expiry date later than April 1, 1999.
Fee. Borrower shall pay the Bank a fee in the amount of one
percent (1%) per annum of the stated amount of each Letter of Credit
issued by the Bank at the request of Borrower, fully earned and payable
quarterly in advance. If the Letter of Credit expires during the
quarter, the fee shall be pro-rated based upon the number of days in
the quarter that the Letter of Credit is outstanding. As a condition to
the issuance of each Letter of Credit, Borrower shall pay the Bank the
quarterly portion of the Letter of Credit fee stated in the preceding
sentence.
Payment. Each drawing under the Letter of Credit (an "LC
Drawing") shall constitute a Loan advance under the Loan Agreement and
shall be payable in accordance with the terms and provisions of the
Loan Agreement with respect to other Loan Advances. Borrower's
obligation to pay all LC Drawings shall be absolute, irrevocable,
unconditional and without setoff under any and all circumstances
whatsoever, including, without limitation, any of the following,
whether or not with notice to, or the consent of, Borrower:
Any lack of validity or enforceability of a Letter of
Credit, the Loan Agreement, the LC Documents or any of the LC
Documents;
The existence of any claim, set-off, defense or other
right which Borrower may have at any time against the
beneficiary of a Letter of Credit, the Bank or any other
person or entity, whether in connection with the transactions
contemplated herein or therein or any unrelated transaction;
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Any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever;
Payment by the Bank under a Letter of Credit against
presentation of a draft or certificate which does not comply
with the terms of the Letter of Credit;
Any failure, omission, delay or lack on the part of
the Bank or any party to any of the LC Documents to enforce,
assert or exercise any right, power or remedy conferred upon
the Bank or any such party under the LC Documents, or any
other acts or omissions on the part of the Bank or any such
party;
The voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially
all the assets of Borrower, the receivership, insolvency,
bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or
readjustment or other similar proceedings affecting Borrower
or any of the assets of Borrower, or any allegation or contest
of the validity of this Amendment, the Loan Agreement, the
Letter of Credit or any of the LC Documents, in any such
proceeding; or
Any other event or action that would, in the absence
of this clause, result in the release or discharge by
operation of law of Borrower from the performance or
observance of any obligation, covenant or agreement contained
in this Amendment, the Loan Agreement, the Letter of Credit or
any of the LC Documents.
LC Documents Control. Each Letter of Credit shall be governed
by and subject to the LC Documents required to be executed by Borrower
for each such Letter of Credit. In the event of any conflict between
any of the terms of the LC Documents and any of the terms of this
Amendment, the terms of this Amendment shall control.
Maturity Date. The definition of Maturity Date in the Loan Agreement is
amended and restated to mean (a) the Interim Maturity Date as to any and all
amounts of the Loan in excess of (i) $10,000,000.00 or less if the Offering has
occurred, or (ii) $15,000,000.00 or less if the Offering has not occurred, on
which date Borrower shall pay all amounts necessary to reduce the outstanding
principal balance of the Loan, including the amount of the LC Reserve, to (A)
$10,000,000.00 or less if the Offering has occurred or (B) $15,000,000.00 or
less if the Offering has not occurred, and on which date the Maximum Revolving
Loan Commitment shall be permanently reduced to an amount not to exceed (C)
$10,000,000.00 or less if the Offering has occurred or (D) $15,000,000.00 or
less if the Offering has not occurred, and (b) April 26, 1999 as to the balance
of the Loan and all outstanding Loan Advances together with any accrued but
unpaid interest thereon and any other costs or amounts owed to the Bank under
the Loan Agreement as amended hereby.
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Interim Maturity Default Rate. If the outstanding principal balance of
the Loan, including the amount of the LC Reserve, is not reduced to (a)
$10,000,000.00 or less if the Offering has occurred or (b) $15,000,000.00 or
less if the Offering has not occurred by the Interim Maturity Date as required
under this Amendment, Borrower shall be considered in default under the Loan
Agreement and, in addition to all other rights and remedies available to the
Bank under the Loan Agreement, the Documents, at law or equity, any and all
amounts outstanding under the Loan Agreement shall, without notice, bear
interest payable on demand at the interest rate then in effect with respect
thereto plus four percent (4%) ("Preliminary Default Rate"), further provided
that if, within 30 days after the Interim Maturity Date as required above, the
outstanding principal balance of the Loan, including the amount of the LC
Reserve, is not reduced to (i) $10,000,000.00 or less if the Offering has
occurred, or (ii) $15,000,000.00 or less if the Offering has not occurred, any
and all amounts outstanding under the Loan Agreement shall, without notice, bear
interest payable on demand at the Preliminary Default Rate plus two percent (2%)
(Modified Default Rate"). The Preliminary Default Rate and the Modified Default
Rate are, during their pendency, in lieu of the default rate of interest set
forth in Section 2.03 of the Loan Agreement.
Execution Note. Contemporaneous with the execution of this Amendment,
Borrower has executed and delivered an Amended and Restated Note in the
principal sum of up to $25,000,000.00 evidencing the Loan as amended by and
subject to this Amendment, which Amended and Restated Note shall replace and
supersede the Note.
Payment of Fees. Contemporaneous with and as a condition of the
execution of this Agreement, Borrower shall pay the Bank a fee in the amount of
$50,000.00, which fee is deemed fully earned at the time Borrower and the Bank
execute this Amendment, as additional consideration for increasing the amount of
the Loan. Borrower shall also pay the legal fees of Bank counsel in connection
with the preparation of this Amendment and matters related thereto. In addition
to the $50,000.00 closing fee, Borrower shall continue to be obligated to pay
the Bank the Unused Commitment Fee in the amount of one-quarter of one percent
(1/4%) per annum of the average unused Maximum Revolving Loan Commitment,
excluding the LC Reserve, and as otherwise set forth in the Loan Agreement, as
amended by this Amendment.
Year 2000 Problem. Borrower and its Subsidiaries have reviewed the
areas within their business and operations which could be adversely affected by,
and have developed or are developing a program to address on a timely basis, the
"Year 2000 Problem" (that is, the risk that computer applications used by
Borrower and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), and have made related appropriate inquiry of material
suppliers and vendors. Based on such review and program, Borrower believes that
the "Year 2000 Problem" will not have a material adverse effect on Borrower.
From time to time, at the request of the Bank, Borrower and its Subsidiaries
shall provide to the Bank such updated information or documentation as is
requested regarding the status of their efforts to address the Year 2000
Problem.
Reaffirmation. To the extent any term(s) or condition(s) in any of the
Documents shall contradict or be in conflict with the amended terms of the Loan
as set forth herein, such terms and conditions are hereby deemed modified and
amended accordingly, upon the effective date hereof, to reflect the terms of the
Loan as so amended herein. All terms of the Documents, as amended hereby, shall
be and remain in full force and effect and shall constitute the legal, valid,
binding and enforceable obligations of Borrower to the Bank. As of the date of
this Amendment, Borrower herein restates, ratifies and reaffirms each and every
term and condition set forth in the Documents as amended herein. There are no
other changes to the Documents except for the changes specifically set forth
herein.
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Certification. To further induce the Bank to enter into this Amendment,
Borrower represents and warrants to the Bank as follows: (a) Borrower is
empowered to perform all acts and things undertaken and done pursuant to this
Amendment and the Amended and Restated Note and has taken all corporate or other
action necessary to authorize the execution, delivery and performance of the of
this Amendment and the Amended and Restated Note; (b) the officers of Borrower
executing this Amendment and the Amended and Restated Note have been duly
elected or appointed and have been fully authorized to execute the same at the
time executed; (c) this Amendment and the Amended and Restated Note, when
executed and delivered, will be the legal, valid and binding obligation of
Borrower, enforceable against it in accordance with its respective terms; and
(d) Borrower is delivering to the Bank contemporaneously herewith, a certificate
of Borrower's Secretary certifying as to the resolutions of the Executive
Committee of Borrower's Board of Directors approving this Amendment and the
Amended and Restated Note and the incumbency and signatures of the officers of
Borrower signing this Amendment and the Amended and Restated Note.
Consent to Offering. The Bank hereby consents to the Offering and
acknowledges that the Offering shall not constitute an Event of Default under
the Loan Agreement conditioned upon the Offering being subordinate to the Loan.
Absence Of Claim. To further induce the Bank to enter into this
Amendment, Borrower hereby acknowledges and agrees that, as of the date hereof,
there exists no right of offset, defense, counterclaim or objection in favor of
Borrower as against the Bank with respect to the Obligations to the Bank.
Illinois Law To Govern. This Amendment and each transaction
contemplated hereunder shall be deemed to be made under and shall be construed
and interpreted in accordance with the laws of the State of Illinois.
Binding Effect. The terms, provisions and conditions of this Amendment
shall be binding upon and inure to the benefit of each respective party and
their respective legal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By:
Print Name:
Title:
ATTEST:
By:
Print Name:
Title:
BANK:
LaSALLE NATIONAL BANK
By:
Print Name:
Title:
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