Exhibit 10.1
FORBEARANCE AND LOAN MODIFICATION AGREEMENT
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THIS FORBEARANCE AND LOAN MODIFICATION AGREEMENT (this "Agreement") is made
and entered into as of the 15/th/ day of December, 1998, by and among SUNDANCE
HOMES, INC., an Illinois corporation ("Sundance"), the subsidiaries of Sundance
listed on Exhibit A attached hereto (the "Borrowing Subsidiaries") (Sundance and
the Borrowing Subsidiaries are sometimes hereinafter referred to individually as
a "Borrower" and collectively as the "Borrowers"), and LASALLE NATIONAL BANK,
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO and BANKBOSTON, N.A.
(collectively, the "Lenders"), and LASALLE NATIONAL BANK, a national banking
association, acting in its capacity as agent for the Lenders (the "Agent").
RECITALS:
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A. The Lenders have made an $80,000,000 revolving credit facility (the
"Loan") available to the Borrowers in accordance with the terms, provisions and
conditions set forth in that certain Revolving Credit Loan Agreement dated as of
April 30, 1998, and thereafter amended from time to time (the "Loan Agreement")
by and among the Agent, the Borrowers and the Lenders. All capitalized terms
used herein and not otherwise defined shall have the meanings ascribed thereto
in the Loan Agreement.
B. The Borrowers have breached the financial covenants set forth in
Sections 10.1, 10.2, 10.4 and 10.5 of the Loan Agreement and, pursuant to
Section 11.1(c) of the Loan Agreement, such breaches constitute immediate
"Events of Default" under the Loan Agreement and the other Loan Documents.
Additionally, the Borrowers have breached the covenants set forth in Section
8.12 of the Loan Agreement and, as of the date hereof, such breach constitutes a
"Default" under the Loan Agreement. The aforementioned "Events of Default" are
collectively referred to herein as the "Existing Defaults".
C. Notwithstanding the occurrence of the Existing Defaults, the Borrowers
have requested that the Agent and the Lenders forbear from exercising their
respective rights and remedies against the Borrowers under the Loan Documents,
at law and in equity. The Agent and the Lenders are willing to forbear in the
exercise of such rights and remedies against the Borrowers and to waive the
Existing Defaults, subject to and conditioned upon the terms, provisions and
conditions set forth below; provided, however, that such forbearance shall
continue only for so long as the Borrowers shall continue to strictly comply
with all of such terms, provisions and conditions of this Agreement, as well as
those of the Loan Agreement and other Loan Documents as modified hereby.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Incorporation of Recitals. The Recitals set forth above are herein
incorporated by this reference as though fully repeated hereunder and are hereby
made a part of this Agreement.
2. Forbearance; Waiver of Existing Defaults. Notwithstanding the
occurrence of the Existing Defaults, the Agent and the Lenders agree to forbear
from exercising their respective rights and remedies against the Borrowers under
the Note and the other Loan Documents, at law and in equity, subject to and
conditioned upon the Borrowers' compliance with the terms, provisions and
conditions set forth in this Agreement; provided further that such forbearance
shall continue only for so long as the Borrowers shall continue to strictly
comply with all of such terms, provisions and conditions. Furthermore, Lender
hereby waives the Existing Defaults, provided that the execution and delivery of
this Agreement does not constitute a waiver by Lender of any Event of Default
other than the Existing Defaults, whether such Event of Default now exists or
hereafter occurs.
3. No Additional Waivers. Any discussions between the Agent, the Lenders
and/or the Borrowers regarding the Loan Documents that have previously occurred
or that hereafter occur shall not (i) cause a modification of the Loan
Documents, except as expressly set forth herein or otherwise agreed to in
writing, (ii) cure, waive, release or postpone any Defaults or Events of Default
now or hereafter existing under the Loan Documents, except as set forth in
Section 2 above, (iii) establish a custom, or (iv) waive, limit or condition the
rights and remedies of the Agent or the Lenders under the Loan Documents, except
as set forth in Section 2 above, all of which are hereby expressly reserved.
Except as expressly set forth in this Agreement, the Loan Agreement and the
other Loan Documents shall remain in full force and effect in accordance with
their respective terms.
4. Additional Property Acquisitions.
(a) No Additional Acquisitions or Contracts. The Borrowers hereby
represent and warrant that since December 1, 1998, no Borrower or Other
Subsidiary has acquired any real property nor has any Borrower or Other
Subsidiary executed any contingent or non-contingent contract, reservation,
option or other agreement pertaining to the acquisition of additional real
property. The Borrowers further covenant that, notwithstanding anything to
the contrary set forth in the Loan Agreement, no Borrower or Other
Subsidiary shall hereafter execute any contingent or non-contingent
contract, reservation, option or other agreement creating any right or
direct or indirect obligation pertaining to the acquisition of additional
real property (any such contract, reservation, option or other agreement
that is hereafter executed being referred to herein as a "Restricted
Agreement") unless (i) the aggregate amount of the Borrowers' funds and
Letters of Credit that are deposited or otherwise delivered under all
Restricted Agreements does not exceed $100,000, and such funds and Letters
of Credit are not at-
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risk (i.e., they are fully refundable upon the cancellation of the
Restricted Agreements), (ii) no Loan proceeds are directly or indirectly
paid or otherwise applied to the Borrowers' obligations under the
Restricted Agreements (including the aforementioned $100,000) without the
prior written consent of the Lenders, which consent may be granted or
denied in the sole and absolute discretion of the Lenders; provided,
however, that the Borrowers may obtain a Letter of Credit with respect to
any such obligation if the conditions precedent to the issuance of such
Letter of Credit set forth herein and in the Loan Agreement have been
satisfied, and (iii) no acquisitions contemplated by the Restricted
Agreements may be consummated without the prior written consent of the
Lenders, which consent may be granted or denied in the sole and absolute
discretion of the Lenders.
(b) Pending Acquisition Contracts. The Borrowers hereby represent and
warrant that all contingent and non-contingent contracts and agreements
pertaining to the acquisition of additional real property that were
executed by a Borrower or Other Subsidiary prior to December 1, 1998, which
acquisitions have not closed as of the date of this Agreement, are
described on Exhibit B-1 attached hereto (collectively, the "Pending
Acquisition Contracts"), together with the amount of funds that are at-risk
in connection with each of such acquisitions. Certified copies of all
Pending Acquisition Contracts shall be delivered to the Lenders at closing.
The acquisitions contemplated by the Pending Acquisition Contracts listed
on Exhibit B-2 attached hereto may be consummated in accordance with the
terms and conditions of the Loan Agreement and this Agreement, provided
that Rembrandt Homes, Inc. ("Rembrandt") may not be a party to more than
two such Pending Acquisition Contracts. The acquisitions contemplated by
the Pending Acquisition Contracts listed on Exhibit B-3 attached hereto may
not be consummated and the Borrowers hereby covenant to the Lenders that
such Pending Acquisition Contracts shall be terminated in writing and that
the Borrowers shall use their best efforts to cause all amounts or Letters
of Credit deposited in connection therewith shall be returned to the
Borrowers and applied to the repayment of the Loan on or before February
15, 1999.
5. Additional Development Limitations.
(a) Plaza 32.
(i) Notwithstanding anything contained herein or in the Loan
Agreement or the other Loan Documents to the contrary, the Borrowers
hereby acknowledge and agree that the project commonly known as Plaza
32 and located at 0000 Xxxxxxx Xxxxxx in Chicago, Illinois ("Plaza
32"), is not an Approved Project and that no further advances of Loan
proceeds (including Permitted Additional Advances) shall be directly
or indirectly made by the Lenders (or applied by the Borrowers) with
respect to costs incurred in connection with the construction,
development and sale of Plaza 32. Furthermore, the Borrowers
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covenant that no further work of any kind shall be performed with
respect to Plaza 32 and no costs incurred in connection with Plaza 32
shall be paid prior to the consummation of the construction financing
referred to in clause (ii) below.
(ii) The Lenders shall permit the Borrowers to obtain
construction and mezzanine financing for Plaza 32 from a third party
lender (and Sundance to guaranty the repayment of not more than
$5,500,000 of such financing), and shall subordinate the repayment of
the Loan proceeds previously disbursed in connection with Plaza 32 to
the repayment of such construction financing, if and only if the terms
and conditions of such construction financing and subordination are
finalized on or before March 31, 1999, in a manner satisfactory to the
Lenders in their sole and absolute discretion. Prior to the
consummation of such construction financing, (A) the Lenders must
approve in writing the corporate structure and financial statements of
the owner of Plaza 32, the plans and specifications and budget for
Plaza 32, and the Borrowers hereby covenant that they shall not agree
to or request any changes in such structure, plans and specifications
or budget without the prior written approval of the Lenders, and (B)
the Lenders must receive a written detailed summary in a form
satisfactory to the Lenders of the costs paid using the Borrowers'
equity investment in Plaza 32 and the Loan proceeds (which costs shall
not include costs previously referred to by the Borrowers as "false
start costs"). Additionally, the construction lender must agree to
provide copies to the Agent of all notices given to a Borrower, and
the Borrowers hereby acknowledge and agree that an Event of Default
under the construction financing shall constitute an immediate Event
of Default under the Loan Agreement. Finally, an amount equal to the
excess of (X) the sum of the Borrowers' equity in Plaza 32 plus the
amount of Loan proceeds previously disbursed in connection with Plaza
32 over (Y) the equity and subordinated debt (excluding "mezzanine"
debt) requirements of the construction lender, shall be repaid to the
Lenders concurrently with the closing of the construction financing.
(iii) If the Borrowers are unable to obtain a fully executed
binding commitment for construction and mezzanine financing for Plaza
32 in accordance with the terms set forth in the preceding clause,
then on or before March 31, 1999, the Borrowers shall repay to the
Lenders all Loan proceeds previously disbursed in connection with
Plaza 32. The failure to repay such amounts as aforesaid shall (A)
constitute an immediate Event of Default under the Loan Agreement and
the other Loan Documents, and (B) result in an additional loan fee in
the amount of $50,000 being immediately due and payable by the
Borrowers to the Lenders (the payment of which shall not be deemed to
be a cure or waiver of such Event of Default).
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(iv) The Borrowers represent and warrant that Marathon Center,
Inc. holds fee title to Plaza 32 and that Marathon Center, Inc. is a
wholly-owned subsidiary of Chicago Urban Properties, Inc.
(b) Art House Lofts (Sangamon Lofts). Notwithstanding anything
contained herein or in the Loan Agreement or the other Loan Documents to
the contrary, the Borrowers hereby acknowledge and agree that the project
commonly known as Phase II of Art House Lofts (also known as Sangamon
Lofts) and located in Chicago, Illinois ("Art House Phase II"), is not an
Approved Project and that no further advances of Loan proceeds (including
Permitted Additional Advances) shall be directly or indirectly made by the
Lenders (or applied by the Borrowers) with respect to costs incurred in
connection with the acquisition, construction, development and sale of Art
House Phase II. Loan proceeds, including Permitted Additional Advances, in
the aggregate amount of $100,000 have been disbursed prior to the date
hereof (and have not been repaid as of the date hereof) with respect to
costs incurred in connection with the acquisition, construction,
development and/or sale of Art House Phase II, and such amount must be
repaid by the Borrowers on or before the 90/th/ day following written
demand for such repayment is received from the Agent, which demand may be
given at any time after the date hereof. The failure to repay such amounts
as aforesaid shall (i) constitute an immediate Event of Default under the
Loan Agreement and the other Loan Documents, and (ii) result in an
additional loan fee in the amount of $50,000 being immediately due and
payable by the Borrowers to the Lenders (the payment of which shall not be
deemed to be a cure or waiver of such Event of Default).
(c) Kildeer. Rembrandt has acquired land that it intends to subdivide
into thirteen lots (the "Kildeer Lots") in the Village of Kildeer,
Illinois, three of which will be located on the west side of Xxxxxxx Road
(the "West Lots") and ten of which will be located on the east side of
Xxxxxxx Road. The acquisition was financed, in part, by proceeds of the
Loan. The Lenders hereby agree to issue a Letter of Credit not to exceed
$725,000 on behalf of Rembrandt for the benefit of the Village of Kildeer
solely for the purpose of inducing the Village to execute and permit the
recordation of a plat of subdivision for the Kildeer Lots, provided that
(i) the Lenders have approved the form of said plat of subdivision, (ii)
the Lenders have received satisfactory evidence from the Village of Kildeer
that there are no conditions precedent to the execution and recording of
the plat of subdivision other than the issuance of the aforementioned
Letter of Credit, and (iii) the plat of subdivision is recorded by
Rembrandt within sixty days after the issuance of such Letter of Credit.
The Borrowers acknowledge that $828,000 of Loan proceeds have previously
been advanced and applied to payment of the cost of acquiring the Kildeer
Lots. Other than the aforementioned Letter of Credit and amounts
previously advanced by the Lenders, no additional Loan proceeds shall be
advanced with respect to the Kildeer Lots under the Loan Agreement and this
Agreement, and no further site work of any kind shall be conducted by or on
behalf of Rembrandt with respect to the development of the Kildeer Lots,
unless and until the Agent has received and approved in
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writing fully executed bona fide non-contingent contracts for the sale of
not less than six of such lots, and in no event shall construction of a
home on a Kildeer Lot commence unless such lot has been sold as aforesaid
(except that (A) if the Agent receives evidence satisfactory to the Agent
of the saleability of a home constructed on a West Lot, then one Model may
be constructed on such lot, or (B) if six of the Kildeer Lots have been
sold as aforesaid, then one Model may be constructed on any Kildeer Lot).
(d) Capital Hill Lofts. The Borrowers hereby acknowledge and agree
that $2,373,000 of Loan proceeds have previously been disbursed and applied
to the payment of costs incurred in connection with the project commonly
known as Capital Hill Lofts and located at 000 Xxxx Xxxxxxx xx Xxxxxxx,
Xxxxxxxx ("Capital Hill"). Although Capital Hill was previously deemed an
Approved City Project, such status is currently being reevaluated by the
Lenders; however, pending the completion of such reevaluation, the Lenders
hereby agree to disburse $500,000 of additional Loan proceeds in the
aggregate with respect costs incurred in connection with Capital Hill. If
the Lenders determine that Capital Hill is no longer an Approved City
Project, then the Borrowers hereby covenant that all Loan proceeds
disbursed in connection with Capital Hill shall be repaid on or before the
120/th/ day following the date on which written demand for such repayment
is received from the Agent.
(e) Rembrandt. Rembrandt may not execute any contingent or non-
contingent contract, reservation, option or other agreement pertaining to
the acquisition of additional real property after the date hereof, unless
(i) such contract, reservation, option or other agreement is a Restricted
Agreement permitted under the terms of Section 4(a) above, or (ii) the lot
to be acquired pursuant to such contract, reservation, option or other
agreement or the home to be constructed on such lot has been pre-sold
pursuant to a fully executed bona fide non-contingent contract with an
unaffiliated third party, which contract has been delivered to and approved
in writing by the Agent. Furthermore, Rembrandt shall not commence the
construction of a home on any lot hereafter acquired pursuant to a Pending
Acquisition Contract (as defined in Section 4(b) above) or a Restricted
Agreement (as defined in Section 4(a) above), unless on or before the date
such construction commences the Agent shall have received and approved in
writing a fully executed bona fide non-contingent contract for the sale of
such home to an unaffiliated third party.
6. Xxxxxxxxx'x Notes. The Borrowers hereby reaffirm, represent and
warrant to the Lenders that (a) Xxxxxxxxx has made a $2,500,000 loan to Sundance
in connection with the construction and development of the property commonly
known as Erie Tower at 000 Xxxx Xxxx Xxxxxx in Chicago, Illinois ("Erie Tower"),
which loan is evidenced by a certain Subordinated Promissory Note effective as
of May 1, 1998, in the original principal sum of $2,500,000 made by Sundance and
payable to the order of Xxxxxxxxx, (b) Xxxxxxxxx has made an additional loan to
certain of the Borrowers, which loan is evidenced by a certain unsecured
subordinated promissory note in the stated principal amount of $3,930,660 in
favor of Xxxxxxxxx, and (c) the
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Xxxxxxxxx Descendants Trust U/A/D December 29, 1992 (the "Xxxxxxxxx Trust") has
made a loan to certain of the Borrowers, which loan is evidenced by a certain
unsecured subordinated promissory note in the stated principal amount of
$262,500 (collectively, the "Xxxxxxxxx Notes"). The Borrowers also hereby
reaffirm, represent and warrant to the Lenders that no outstanding loans other
than those evidenced by the Xxxxxxxxx Notes have been made by Xxxxxxxxx to any
of the Borrowers. Notwithstanding anything to the contrary set forth in that
certain Subordination Agreement dated as of April 30, 1998, by Xxxxxxxxx and the
Xxxxxxxxx Trust to and for the benefit of the Agent, including, without
limitations Sections 3 and 5 thereof, and regardless of whether all of the Loan
advances made by the Lenders with respect to Erie Tower have been repaid to the
Lenders, Sundance may not pay and Xxxxxxxxx may not receive all or any portion
of the outstanding principal balance of the indebtedness evidenced by the
Sanderman Notes, or any accrued and unpaid interest thereon, unless and until
the Loan has been repaid in full.
7. Salary and Distribution Restrictions. Notwithstanding anything to the
contrary contained in the Loan Agreement, including, without limitation, Section
9.15 thereof, (i) during the period commencing on the date hereof and ending on
the date on which the Loan is repaid in full, the aggregate compensation
(excluding bonuses) paid to Xxxxxxxxx by the Borrowers may not exceed $300,000,
(ii) bonuses in an amount not to exceed $200,000 in the aggregate may be paid to
Xxxxxxxxx by the Borrowers on the Maturity Date, if and only if the pre-tax,
pre-bonus consolidated net income of the Borrowers exceeds $7,400,000 for the
twelve month period ending September 30, 1999, and no Event of Default then
exists, and (iii) no Distributions shall be made by Sundance to either the
record or beneficial owners of the Capital Stock of Sundance.
8. Amendment of Interest Rates and Payments.
(a) Floating Rate. As of December 1, 1998, the "Floating Rate" set
forth in the Loan Agreement and the Note shall be the Prime Rate plus 3.0%;
provided, however, that interest shall be due and payable monthly prior to
the Maturity Date based upon the Interim Interest Rate (as hereinafter
defined), although interest shall at all times accrue at the Floating Rate.
On the Maturity Date, all accrued and unpaid interest shall be due and
payable in full. From and after December 1, 1998, the "Interim Interest
Rate" shall be the Prime Rate plus 2.0%.
(b) Termination of LIBOR Option. Notwithstanding anything to the
contrary contained in the Loan Agreement, including, without limitation,
Sections 2.5 and 2.6 thereof, from and after the date hereof Sundance and
the other Borrowers shall no longer have the option to convert portions of
the outstanding principal balance of the Loan into LIBOR Portions or to
maintain any portion of said principal balance as a LIBOR Portion. Each
LIBOR Portion outstanding as of the date hereof shall bear interest at the
Floating Rate from and after the last day of the Interest Period applicable
to such LIBOR Portion.
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9. Modification of Maturity Date. The maturity date of the Loan is
hereby changed from February 1, 2000, to January 3, 2000, and all references in
the Loan Agreement, the Note and the other Loan Documents to the "Maturity Date"
shall be deemed to mean January 3, 2000.
10. EBITDA. The definition of "EBITDA" set forth in the Loan Agreement is
hereby amended by adding the following clause prior to the words "all as
determined on a consolidated basis in accordance with GAAP": "minus all amounts
added in determining such Consolidated Net Income on account of income from
extraordinary gains and/or nonrecurring sales of property outside the ordinary
course of such Persons' businesses (including, without limitation, any bulk
sales of lots and dispositions of raw land)."
11. Frequency of Loan Requests. The last sentence of Section 2.4 of the
Loan Agreement is hereby deleted in its entirety and the following sentence is
inserted in lieu thereof: "The Borrowers may request Loan disbursements not more
frequently than three times in any calendar month, and only one of such requests
may pertain to disbursements for the payment of costs incurred in connection
with City Projects."
12. Limitations on Construction of Spec Townhomes.
(a) Generally. Notwithstanding anything to the contrary set forth in
Section 9.17 of the Loan Agreement, the Borrowers shall not construct any
additional townhome (i.e., attached) Spec Homes except in accordance with
the terms of this Agreement. Exhibit D attached hereto sets forth all
Models and Spec Homes of the Borrowers existing as of the date hereof.
(b) The Preserve. With respect to the project commonly known as The
Preserve at Orland Park (the "Preserve"), the Borrowers may commence
construction of a townhome building when more than 50% of the Units within
such building are Sold Units; provided, however, that at no time may the
aggregate number of Spec Homes that are townhomes within the Preserve
exceed twenty at any one time, provided further that at no time may more
than twelve of such twenty Spec Homes be developed beyond construction of
their foundations.
(c) Arrowhead. With respect to the project commonly known as
Arrowhead ("Arrowhead"), the Borrowers may commence construction of a
townhome building when more than 50% of the Units within such building are
Sold Units. The Borrowers represent and warrant that there are not more
than seventeen of the townhome Units within Arrowhead are Spec Homes as of
the date hereof. Notwithstanding the foregoing, construction of additional
Spec Homes within Arrowhead can in no event commence until the number of
existing Spec Homes is less than twelve, and at all times thereafter the
number of Spec Homes cannot exceed twelve at any one time.
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13. Reduction of Loan Amount.
(a) Maximum Aggregate Loan Amount. Notwithstanding anything to the
contrary set forth in the Loan Agreement, from and after the date hereof,
the Maximum Aggregate Loan Amount during the following periods shall be as
follows: (i) $74,000,000 from December 15, 1998, through and including
Xxxxx 00, 0000, (xx) $60,000,000 from April 1, 1999, through and including
June 30, 1999, (iii) $50,000,000 from July 1, 1999, through and including
September 30, 1999, (iv) $20,000,000 from October 1, 1999, through and
including the Maturity Date, and (vi) $0 at all times thereafter. The
Borrowers may at any time and from time to time permanently reduce the
Maximum Aggregate Loan Amount by irrevocable written notice of such
reduction to the Agent, and such reduction shall be effective as of the
date on which the Agent receives such notice.
(b) Maximum Principal Balance of Loan. Notwithstanding anything to
the contrary set forth in the Loan Agreement, the Borrowers hereby covenant
to the Lenders that the outstanding principal balance of the Loan on the
following dates shall not exceed 105% of the following amounts: (i)
$54,000,000 on Xxxxx 00, 0000, (xx) $41,000,000 on June 30, 1999, and (iii)
$12,000,000 on September 30, 1999. For purposes of determining compliance
with the terms of this covenant, the outstanding principal balance shall be
deemed to have been reduced by the amounts of any Unit sales proceeds being
held by the Title Company and not yet delivered to the Lenders as of the
date of such determination. A breach of the foregoing covenant shall
constitute an immediate Event of Default under the Loan Agreement.
14. Other Reductions and Modifications.
(a) Permitted Additional Advances. Nothing in this Agreement is
intended to modify or otherwise amend the Permitted Additional Advances
repayment requirements set forth in Section 2.1(e) of the Loan Agreement;
provided, however, that (i) the 120 day period referenced in clause (v) of
said Section is hereby reduced to 90 days, and (ii) notwithstanding
anything to the contrary set forth in said Section, no further Permitted
Additional Advances shall be made after the date of this Agreement.
(b) Letter of Credit Liability. Notwithstanding anything to the
contrary set forth in clause (i) of Section 3.1 of the Loan Agreement, from
and after the date hereof, the aggregate outstanding amount of the Letter
of Credit Liability (excluding the Letter of Credit Liability arising in
connection with any Letter of Credit issued to the Village of Kildeer
pursuant to Section 5(c) above) shall at no time exceed $3,500,000.
(c) Bonds. Notwithstanding anything to the contrary set forth in
Section 9.18 of the Loan Agreement, the aggregate amount of the face value
of all Bonds outstanding at any one time shall not, without the written
consent of the Lenders, exceed $10,000,000
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plus the face value of any Bonds which are hereafter issued in replacement
of any outstanding Letters of Credit.
(d) Unused Line Amount. In clause (i) of Section 2.14(b) of the Loan
Agreement, the definition of "Unused Line Amount" is hereby deleted and the
following is inserted in lieu thereof:
"The 'Unused Line Amount' during any period shall equal (i) the
applicable Maximum Aggregate Loan Amount minus (ii) the daily average
principal balance of the Loans outstanding during such period
(determined without regard to the actual amount of the Permitted
Suburban Project Advances, the Permitted City Project Advances, the
Permitted Unique Project Advances, and the Permitted Additional
Advances during such period)."
Additionally, notwithstanding anything to the contrary set forth in said
Section 2.14(b), the unused line fee shall be due and payable on December
31, 1998, and quarterly in arrears thereafter (beginning with the quarter
ending March 31, 1999).
15. No Modifications of Budgeted Costs; Field Audits and Appraisals.
Notwithstanding anything to the contrary set forth in the Loan Agreement, the
Budgeted Costs for each Project shall be based upon the budget for such Project
approved by the Lenders and set forth in Exhibit F attached hereto (the
"Approved Budgets"). A subsequent modification of a Project's budget shall not
result in the modification of the Approved Budget or the Budgeted Costs for such
Project unless the Lenders have expressly agreed to such modifications in
writing. The Lenders reserve the right to unilaterally modify the Approved
Budgets and the status of any project previously deemed to be an Approved
Project based upon the results of any field audits or appraisals hereafter
conducted solely at the Borrowers' expense by or on behalf of the Lenders to
verify the accuracy of the Borrowing Certificates and other matters pertaining
to the Loan. If material irregularities or additional Events of Default are
discovered as a result of such field audits, the Lenders shall have the right to
immediately deem this Agreement null and void and the Lenders shall no longer to
be required to forbear from exercising their respective rights and remedies
against the Borrowers under the Note and the other Loan Documents, at law and in
equity.
16. Expiration Dates of Letters of Credit. Notwithstanding anything to
the contrary set forth in the Loan Agreement, at no time may Letters of Credit
in the aggregate face amount of more than $200,000 (excluding any Letter of
Credit issued to the Village of Kildeer pursuant to the terms of Section 5(c)
above) have expiration dates that occur after the Maturity Date.
17. Projections; Modification of Financial Covenants. A true and correct
copy of the Borrowers' projections for the fiscal year ending September 30,
1999, is attached hereto as Exhibit E. From and after the date hereof, the
Borrowers shall be required to comply with the
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covenants set forth in Exhibit C attached hereto in lieu of and in substitution
for the covenants set forth in Sections 10.1 through 10.6 of the Loan Agreement,
and a breach of such covenants shall be deemed an immediate Event of Default.
18. Financial Information.
(a) Financial Statements. From and after the date hereof, the
financial statements referred to in clauses (i) and (ii) of Section 8.1(b)
of the Loan Agreement shall be prepared and delivered on a monthly basis
(rather than a quarterly basis) no later than the 20/th/ day of each month,
provided that variances from the Approved Budgets shall also be shown in
such financial statements.
(b) Accounts Payable Schedule. From and after the date hereof, the
aging accounts payable schedule referred to in Section 8.1(b)(iii) of the
Loan Agreement shall be prepared and delivered on a monthly basis (rather
than a quarterly basis) no later than the 20/th/ day of each month.
(c) Xxxxxxx Money. On or before the 20/th/ day of each month, the
Borrowers shall deliver to the Agent a schedule dated as of the last day of
the preceding month setting forth the xxxxxxx money paid to the Borrowers
(on a project by project basis) with respect to Unit sales that have not
closed as of such date, together with a statement of the aggregate amount
of xxxxxxx money then in the possession of the Borrowers.
(d) Borrowing Certificate. The Borrowers hereby acknowledge and
reaffirm that pursuant to the terms of Section 8.1(c) of the Loan
Agreement, all Borrowing Certificates furnished to the Agent and the
Lenders must be signed by the Chairman, President, Chief Financial Officer
or Controller of Sundance.
19. Sale of Inventoried Land.
(a) Sales and Marketing. The Borrowers hereby covenant to the Agent
and the Lenders that (i) the Borrowers and their affiliates shall
diligently and in good faith attempt to sell the parcels of land described
on Exhibit G attached hereto (the "Inventoried Land") using commercially
reasonable methods, and (ii) no later than the 20/th/ day of each month,
Sundance shall deliver to the Agent a written summary (in a form reasonably
acceptable to the Agent) of the status of such sales attempts. Upon the
written request of the Agent, the Inventoried Land shall be listed for sale
with an independent third party real estate broker reasonably satisfactory
to the Lenders.
(b) 2700 Halsted. If an Event of Default has occurred and is
continuing, the Borrowers shall, within three Business Days after written
demand from the Lenders, list the real property located at 2700 Halsted in
Chicago, Illinois (the "Halsted Property"), for sale with an independent
third party real estate broker reasonably satisfactory to the
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Lenders at a price not to exceed $3,000,000, and no later than the 20/th/
day of each month thereafter, the Borrowers shall deliver to the Agent a
written summary (in a form reasonably acceptable to the Agent) of the
status of the sales attempt.
(c) Amounts Payable to Lenders. The Borrowers covenant to the Agent
and the Lenders that concurrently with the sale of each parcel of
Inventoried Land and the Halsted Property, the Borrowers shall pay to the
Lenders an amount equal to the greater of (i) the sum of all advances of
Loan proceeds (including Permitted Additional Advances) made with respect
to costs incurred in connection with the acquisition, construction,
development and/or sale of such parcel which have not previously been
repaid, and (ii) 100% of the "Net Sales Proceeds" (as hereinafter defined)
received from such sale. The amount owing pursuant to the preceding
sentence shall be applied to the payment of the Borrowers' obligations to
Lender in the manner set forth in the Loan Agreement. As used in this
Section, "Net Sales Proceeds" means the gross sales proceeds payable by the
purchaser of a parcel, minus all customary and reasonable title insurance
charges, escrow fees, legal fees, real estate taxes and other prorations
approved by Lender, transfer taxes and market rate real estate brokers'
commissions, all to the extent payable as a result of the sale of such
parcel (provided that not more than $275,000 of deferred compensation owing
and paid at closing to Xxxxxxx Xxxxx may also be deducted when calculating
the Net Sales Proceeds with respect to the Inventoried Land located at 000
Xxxx Xxxx Xxxxxx).
20. Additional Approved City Project Information. The Borrowers hereby
represent and warrant to the Agent and the Lenders that (i) attached hereto as
Exhibit H are true, complete and correct copies of the sworn owner's statements
for each Approved City Project dated no earlier than December 1, 1998, and (ii)
attached hereto as Exhibit I are true, complete and correct copies of the sworn
contractor's statements for each Approved City Project dated no earlier that
December 1, 1998. The Borrowers represent that as of the date hereof the hard
costs of construction with respect to (a) the project commonly known as Phase I
of Art House Lofts (also known as Sangamon Lofts) ("Art House Phase I") have
increased by $300,000, and (b) the project commonly known as Erie Tower have
increased by $1,600,000. The Lenders shall have no obligation to make further
disbursements with respect to Art House Phase I or Erie Tower until the Lenders
either receive satisfactory evidence that such projects are in balance or waive
or modify the balancing requirements. In the interim, the Lenders will disburse
additional amounts with respect to Art House Phase I and Erie Tower solely at
their discretion, and any such disbursements shall in no manner obligate the
Lenders to make further disbursements.
21. Additional Approved City Project Requirements.
(a) No further disbursements shall be made with respect to an Approved
City Project unless and until the items on the checklist attached hereto as
Exhibit J with respect to such Approved City Project have been delivered to
the Agent in a form satisfactory to the Agent.
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(b) The Permitted City Project Advances applicable to an Approved City
Project shall only be disbursed for the purpose of paying (or reimbursing
others for the payment of) the Budgeted Costs of such Approved City Project
that have been incurred, and not for the payment of any costs attributable
to any other Project. Loan advances made with respect to a Project other
than an Approved City Project may not be used for the payment of costs
attributable to such Approved City Project.
(c) From and after the date hereof, no Permitted City Project Advances
applicable to an Approved City Project shall be made unless each of the
additional construction conditions set forth on Exhibit K attached hereto
are satisfied.
22. Interest Reserve. The Lenders may at any time and from time to time
establish a reasonable interest reserve from the undisbursed portion of the Loan
proceeds, and, if the Borrowers fail to pay any accrued interest on the Loan on
the date such payment is due, the Lenders are hereby authorized to disburse such
interest to themselves from the reserve; provided, however, that nothing herein
is intended to limit, reduce or otherwise affect Borrower's obligation to pay
interest when due. Any amounts disbursed by the Lenders from the interest
reserve shall become part of the outstanding principal balance of the Loan and
interest thereon shall accrue and be payable as provided in the Loan Documents
and this Agreement.
23. References. All references to the Loan Agreement or any other Loan
Document contained in any of the Loan Documents shall be deemed to refer to each
of such documents as further amended by this Agreement.
24. Additional Expenses. The Borrowers hereby jointly and severally agree
to pay all of the Lenders' reasonable attorneys' fees and costs incurred in
connection with the negotiation and documentation of the agreements contained in
this Agreement, all recording fees and charges, title insurance charges and
premiums, appraisal fees, travel expenses, inspecting architects and consultant
fees and all other expenses, charges, costs and fees referred to in,
necessitated by or otherwise relating to this Agreement (collectively, the
"Additional Loan Expenses").
25. Payment of Amounts Owing under this Agreement. If any amounts owing
to the Agent or the Lenders pursuant to the terms of this Agreement, including,
without limitation, the Additional Loan Expenses, are not paid within five days
after written demand therefor, the Agent is hereby authorized to make a
disbursement of the proceeds of the Loan in order to pay such amounts,
regardless of whether all conditions precedent to such Loan disbursement have
been satisfied at such time.
26. Defaults. Each Borrower represents and warrants to the Lenders and
the Agent that as of the date hereof no Event of Default or Default exists under
the Loan Agreement or the other Loan Documents other than the Existing Defaults.
Each Borrower further acknowledges and agrees that an Event of Default under the
Loan Agreement and the other Loan Documents
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shall be deemed to immediately exist upon the occurrence of a breach of any of
the representations, warranties or covenants set forth in this Agreement.
27. No Defenses. Each Borrower represents and warrants to the Lenders and
the Agent that there is not any condition, event or circumstance existing, or
any litigation, arbitration, governmental or administrative proceedings,
actions, examinations, claims or demands pending or threatened affecting the
Borrowers or their respective property, or which could prevent them from
complying with or performing their respective obligations under the Loan
Agreement and the other Loan Documents, and no basis for any such matter exists.
28. Authority to Execute Amendment; No Conflict. Each Borrower represents
and warrants to the Lenders and the Agent that they have full power and
authority to execute and deliver this Agreement and to perform their respective
obligations hereunder. Upon the execution and delivery hereof, this Agreement
will be valid, binding and enforceable upon each Borrower in accordance with its
terms. Execution and delivery of this Agreement does not and will not
contravene, conflict with, violate or constitute a default under any applicable
law, rule, regulation, judgment, decree or order or any agreement, indenture or
instrument to which any Borrower is a party or is bound.
29. Ratification of Liability. Each Borrower hereby ratifies and confirms
its respective liabilities and obligations under the Loan Agreement and the
other Loan Documents and the liens and security interests created thereby, and
acknowledges that it no defenses, claims or set-offs to the enforcement by the
Agent and/or the Lenders of its obligations and liabilities thereunder.
30. Termination of Forbearance Provisions. If (a) any amount owing by the
Borrowers to the Agent or the Lenders is not received on or prior to any date
when due, or (b) an Event of Default (other than an Existing Default) shall
occur, then the forbearance provisions of Section 2 of this Agreement shall be
immediately terminated, without further notice, and the Lenders shall have the
immediate right, without any further notice, to exercise any and all rights and
remedies available to the Lenders under the Note and the other Loan Documents,
at law and in equity.
31. Effect of Bankruptcy. Each Borrower hereby acknowledges and agrees
that, if a petition under any Section, Chapter or provision of the United States
Bankruptcy Code (the "Code") or similar law or statute is filed by or against
such Borrower, (i) it shall not contest, and it shall consent to, the relief
requested in any motion or application of the Lenders made in any court of
competent jurisdiction seeking modification or termination of any automatic stay
or other injunction against the Lenders resulting from such filing, and (ii) it
shall execute any order or other document necessary to effectuate such
modification or termination. If at any time a Borrower seeks relief under the
Code, including, without limitation, the filing of a petition under Chapter 7 or
11 thereof, such Borrower shall be deemed to have taken such action in bad
faith. Furthermore, if such action is taken against a Borrower by a third party,
such Borrower shall
-14-
take all action necessary to have (A) the petition filed by such third party
dismissed, including consenting to the immediate dismissal thereof, and (B) any
additional relief requested by such third party denied, unless instructed in
writing to the contrary by the Lenders. The Lenders are specifically relying
upon the representations, warranties, covenants and agreements contained in this
Section, and such representations, warranties, covenants and agreements
constitute a material inducement to accept the terms and conditions set forth in
this Agreement and, but for the receipt of the benefit of such representations,
warranties, covenants and agreements, the Lenders would not have agreed to such
terms and conditions.
32. Consent to Certain Actions. Each Borrower acknowledges and agrees
that upon termination of the forbearance provisions of Section 2 above, such
Borrower shall not contest or object to any actions which a Lender may take to
exercise its rights and remedies against such Borrower under the Note and the
other Loan Documents, including without limitation, the right to foreclose its
liens and security interests in the collateral described in the Mortgage
pursuant to the provisions of the Uniform Commercial Code and the provision of
the Illinois Mortgage Foreclosure Law (Chapter 735, Sections 5/15-1101 et seq.,
Illinois Compiled Statutes), and such Borrower shall not object or contest in
any way, and hereby consents to, all such actions. Each Lender is specifically
relying upon the covenants and agreements contained in this Section and such
covenants and agreements constitute a material inducement to enter into this
Agreement. The covenants and agreements made by the Borrowers herein shall
survive the termination of this Agreement.
33. Conditions Precedent to Effectiveness of this Agreement. The Agent
and the Lenders shall have no obligation to enter into this Agreement unless and
until (i) the Borrowers have executed and delivered this Agreement to the Agent,
and (ii) the Borrowers have delivered to the Agent the General Release attached
hereto as Exhibit L, which is incorporated by reference as though fully set
forth herein.
34. Time is of Essence. Time is strictly of the essence of the Agreement
and the full and complete performance of each and every term, provision and
condition hereof.
35. No Oral Modification; No Course of Dealing. No change in the terms of
this Agreement shall be valid unless in writing and signed by all parties
hereto. Nothing contained in this Agreement shall be construed as creating any
course of dealing or conduct between the parties.
36. Statute of Limitations. The running of any statute of limitations
shall be deemed tolled during the term of this Agreement.
37. Headings. The section headings and captions used herein are intended
solely for convenience of reference and shall not control or effect the
interpretation, meaning or construction of any provision of this Agreement.
-15-
38. Severability. In the event that any provision of this Agreement is
deemed to be invalid by reason of the operation of law, or by reason of the
interpretation placed thereon by any administrative agency or any court, (i) the
Borrowers and the Lenders shall negotiate an equitable adjustment in the
provisions of the same in order to effect, to the maximum extent permitted by
law, the purpose of this Agreement, and (ii) the validity and enforceability of
the remaining provisions, or portions or applications thereof, shall not be
affected thereby and shall remain in full force and effect.
39. Further Instruments. Upon request of the Agent or the Lenders, the
Borrowers shall execute, acknowledge and deliver all such additional instruments
and further assurances of title and shall do or cause to be done all such
further acts and things as may reasonably be necessary to fully effectuate the
intent of this Agreement
40. Strict Performance. Strict performance of the terms of this Agreement
is required, and substantial performance in good faith and without willful
failure shall not be deemed sufficient performance. Strict performance shall be
deemed the essence of this Agreement and shall be deemed contracted for by the
parties hereto.
41. Binding Effect. This Agreement shall be binding on each Borrower and
its successors and permitted assigns, and shall inure to the benefit of the
Agent and each Lender and their respective successors and assigns.
42. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
43. Counterparts. This Agreement may be executed in separate identical
counterparts, each of which when so executed shall be an original, but all of
such counterparts shall taken together constitute but one and the same
instrument.
44. JURY WAIVER. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER
LOAN DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND
THEREIN WOULD BE BASED UPON DIFFICULT AND COMPLEX ISSUES. ACCORDINGLY, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY KNOWINGLY
AND VOLUNTARILY (A) WAIVES THE RIGHT TO TRIAL BY JURY IN ANY CIVIL ACTION,
CLAIM, COUNTERCLAIM, CROSS-CLAIM, THIRD-PARTY CLAIM, DISPUTE, DEMAND, SUIT OR
PROCEEDING ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE
OR ANY OF THE OTHER LOAN DOCUMENTS, THE LOAN, OR ANY RENEWAL, EXTENSION OR
MODIFICATION THEREOF, OR ANY CONDUCT OF ANY PARTY RELATING THERETO, AND (B)
AGREES THAT ANY SUCH ACTION,
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CLAIM, SUIT OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.
45. Year 2000 Problem. Each Borrower has reviewed the areas within its
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 such Borrower may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date on or after December 31, 1999), and has made
related appropriate inquiry of material suppliers and vendors. Based on such
review and program, each Borrower believes that the "Year 2000 Problem" will not
have a material adverse effect on such Borrower or its operations or business.
From time to time, at the request of Lender, each Borrower shall provide to
Lender such updated information or documentation as is requested regarding the
status of its efforts to address the Year 2000 problem.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AGENT:
-----
LASALLE NATIONAL BANK, a national
banking association, as agent for the
Lenders
By: ______________________
Title: ______________________
LENDERS:
-------
LASALLE NATIONAL BANK, a national
banking association
By: ______________________
Title: ______________________
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO, a
national banking association
By: ______________________
Title: ______________________
BANKBOSTON, N.A., a national banking
association
By: ______________________
Title: ______________________
BORROWERS:
---------
SUNDANCE HOMES, INC., an Illinois
corporation
By: ______________________
Title: ______________________
[BORROWERS' SIGNATURES
CONTINUED ON NEXT PAGE]
The undersigned hereby consents and agrees
to the terms and conditions of Sections 6
and 7 above
_________________________________
XXXXXXX XXXXXXXXX
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1515 SOUTH MICHIGAN LOFTS, INC., an Illinois
corporation
By: __________________________
Title: __________________________
ERIE CENTER LOFTS, INC., an Illinois corporation
By: __________________________
Title: __________________________
GEORGIAN COURT DEVELOPMENT, INC., an
Illinois corporation
By: __________________________
Title: __________________________
HOMETOWN DEVELOPMENT, INC., an Illinois
corporation
By: __________________________
Title: __________________________
MARATHON CENTER, INC., an Illinois corporation
By: __________________________
Title: __________________________
XxXXXXX'X MILL DEVELOPMENT, INC., an
Illinois corporation
By: __________________________
Title: __________________________
SANGAMON LOFTS, INC., an Illinois corporation
By: __________________________
Title: __________________________
SRLB DEVELOPMENT, INC., an Illinois corporation
By: __________________________
Title: __________________________
XXXXXX DEVELOPMENT, INC., an
Illinois corporation
By:
__________________________
Title:
__________________________
LOCKPORT DEVELOPMENT, INC., an Illinois
corporation
By: __________________________
Title: __________________________
CHICAGO URBAN PROPERTIES, INC., an Illinois
corporation
By: __________________________
Title: __________________________
ERIE CENTER TOWER, INC., an Illinois
corporation
By: __________________________
Title: __________________________
HEARTLAND XXXXXXX DEVELOPMENT,
INC., an Illinois corporation
By: __________________________
Title: __________________________
LAKE-WELLS MANAGEMENT, INC., an Illinois
corporation
By: __________________________
Title: __________________________
MATTESON DEVELOPMENT, INC., an Illinois
corporation
By: __________________________
Title: __________________________
REMBRANDT HOMES, INC., an Illinois corporation
By: __________________________
Title: __________________________
SAR DEVELOPMENT, INC., an Illinois corporation
By: __________________________
Title: __________________________
SUNDANCE SUBURBAN PROPERTIES, INC., an
Illinois corporation
By: __________________________
Title: __________________________
WALNUT POINTE DEVELOPMENT, INC., an
Illinois corporation
By: __________________________
Title: __________________________
CAPITAL HILL LOFTS, INC., an Illinois corporation
By: __________________________
Title: __________________________
-18-
LIST OF EXHIBITS:
Exhibit A - List of Borrowing Subsidiaries
Exhibit B-1 - List of All Pending Acquisition Contracts
Exhibit B-2 - List of Pending Acquisition Contracts to be Consummated
Exhibit B-3 - List of Pending Acquisition Contracts to be Terminated
Exhibit C - Financial Covenants
Exhibit D - List of Models and Spec Homes
Exhibit E - Projections
Exhibit F - Approved Budgets for Each Project
Exhibit G - Inventoried Land to be Sold
Exhibit H - Copies of Sworn Owner's Statements
Exhibit I - Copies of Sworn Contractor's Statements
Exhibit J - Approved City Project Checklist
Exhibit K - Additional Construction Loan Requirements
Exhibit L - General Release
