SEVENTH AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS
THIS SEVENTH AMENDMENT TO LOAN AGREEMENT AND DOCUMENTS, dated as of
January 25, 1999 (this "Amendment"), is entered into by and between BROOKDALE
LIVING COMMUNITIES, INC., a Delaware corporation (the "Borrower"), and LaSALLE
NATIONAL BANK, a national banking association (the "Bank").
WITNESSETH
WHEREAS, Borrower has previously executed and delivered to the Bank a
certain Note dated April 27, 1998 in the original principal amount of up to
Fifteen Million Dollars ($15,000,000.00) (the "Original Note") evidencing a
certain loan (the "Loan") set forth more fully in and governed by a certain Loan
Agreement of that same date to which the Bank is also a party (the "Original
Loan Agreement");
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Amended and Restated Note dated
July 16, 1998 increasing the principal amount of the Loan by $10,000,000.00, on
an interim basis only, from $15,000,000.00 to $25,000,000.00 (the "Amended and
Restated Note") and a certain First Amendment to Loan Agreement and Documents of
that same date to which the Bank is also a party (the "First Amendment") that
(a) increased the principal amount of the Loan on an interim basis as aforesaid
and (b) permitted a portion of the Loan to be reserved for the issuance of
standby Letters of Credit by the Bank to and for the benefit of municipalities
and other governmental units in connection with projects developed by Borrower
from time to time as set forth more fully therein;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Second Amendment to Loan
Agreement and Documents dated October 14, 1998 to which the Bank is also a party
(the "Second Amendment") wherein (a) the Bank consented to the Borrower's
proposed issuance of a convertible subordinated and unsecured note to OZ Master
Fund, Ltd. in the principal amount of Ten Million Dollars ($10,000,000.00), (b)
the Bank permitted the Borrower to guarantee financing from other financial
institutions to certain Subsidiaries of Borrower in connection with certain
development projects located in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇), ▇▇▇▇
Ellyn, Illinois and Raleigh, North Carolina, which projects were to be
originally financed by Nomura Asset Capital Corporation, (c) the Event of
Default set forth in Section 7.01(O) of the Loan Agreement was modified and
restructured, and (d) the Interim Maturity Date was extended to November 3,
1998;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Third Amendment to Loan
Agreement and Documents dated October 20, 1998 to which the Bank is also a party
(the "Third Amendment") wherein (a) the Maximum Revolving Loan Commitment was
frozen at $24,953,750.00, (b) the Interim Maturity Date was extended to November
3, 1998, (c) it was agreed that, on the Interim Maturity Date (x) the
outstanding principal balance of the Loan was to be reduced to $10,000,000.00,
and (y) the principal amount of the Loan and Maximum Revolving Loan Commitment
were to be decreased from $25,000,000.00 to an amount not to exceed
$10,000,000.00, (d) the Interim Interest Rate and the Revised Default Rate were
adjusted, and (e) certain additional changes to the Maximum Revolving Loan
Commitment were mandated based upon the Stock Price of the Company from time to
time, all of the foregoing as set forth more fully in and subject to the terms
and conditions of the Third Amendment;
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WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Fourth Amendment to Loan
Agreement and Documents dated November 3, 1998 to which the Bank is also a party
(the "Fourth Amendment") wherein (a) the Interim Maturity Date was extended to a
date certain which was the first to occur of (x) the earlier of November 30,
1998, or (y) the date on which Borrower closed on the Offering (as defined in
the Fourth Amendment), and (b) it was agreed that, on the Interim Maturity Date
(x) the outstanding principal balance of the Loan was to be reduced to zero
($0.00) provided that the Offering had closed, (y) the outstanding principal
balance of the Loan was to be reduced to $10,000,000.00 regardless of whether
the Offering had closed, and (z) the principal amount of the Loan and Maximum
Revolving Loan Commitment were to be decreased from $25,000,000.00 to an amount
not to exceed $10,000,000.00 regardless of whether the Offering had closed, all
of the foregoing as set forth more fully in and subject to the terms and
conditions of the Fourth Amendment;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Third Amended and Restated Note
dated December 21, 1998 (the "Third Amended and Restated Note") and a certain
Fifth Amendment to Loan Agreement and Documents of that same date to which the
Bank is also a party (the "Fifth Amendment") wherein the principal amount of the
Loan and the Maximum Revolving Loan Commitment was increased from $10,000,000.00
to $15,000,000.00, as set forth more fully in and subject to the terms and
conditions of the Fifth Amendment;
WHEREAS, the Loan was subsequently modified and amended by Borrower's
execution and delivery to the Bank of a certain Fourth Amended and Restated Note
dated January 15, 1999 (the "Fourth Amended and Restated Note") and a certain
Sixth Amendment to Loan Agreement and Documents of that same date to which the
Bank is also a party (the "Sixth Amendment") wherein the principal amount of the
Loan and the Maximum Revolving Loan Commitment was increased from $15,000,000.00
to $25,000,000.00, as set forth more fully in and subject to the terms and
conditions of the Sixth Amendment (the Original Loan Agreement, as amended by
the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment, the Sixth Amendment and this Amendment is herein
referred to as the "Loan Agreement");
WHEREAS, subject to the terms and conditions of this Amendment,
Borrower has requested the Bank to consent to the Borrower's proposed execution
of that certain Loan Agreement between Borrower and FBR Asset Investment
Corporation ("FBR") dated January 25, 1999 (the "FBR Loan Agreement") and that
certain Promissory Note dated January 25, 1999 in favor of FBR pursuant to which
Borrower will become indebted to the FBR in the original principal amount of
$5,000,000.00 (the "FBR Promissory Note") [the FBR Loan Agreement and the FBR
Promissory Note are referred to collectively as the "FBR Loan Documents" and the
loan made pursuant thereto is referred to as the "FBR Loan"];
WHEREAS, Borrower would otherwise be prohibited from entering into the
FBR Loan under the existing Loan Agreement and Documents but for the consent of
the Bank; and
WHEREAS, the Bank is willing to consent to the FBR Loan, subject to and
conditioned upon the terms and conditions 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:
1. Incorporation of Recitals. The above and foregoing recitals are
incorporated into and made a part of this Amendment. All capitalized terms used
herein, if not otherwise specifically defined, shall have the meanings and
definitions prescribed in the Loan Agreement and the Documents referred to
therein.
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2. Consent to FBR Loan. The Bank consents to the Borrower's execution
of the FBR Loan Documents in form and content as set forth as Exhibit A and
Exhibit B to the Subordination Agreement (as defined herein), and acknowledges
that the FBR Loan shall not constitute a breach of a negative covenant or an
Event of Default under the Loan Agreement upon the condition that (a) the FBR
Loan shall be and remain at all times subordinate to the Loan in accordance with
the terms of the Subordination Agreement and no violation or breach of the
Subordination Agreement occurs, (b) FBR shall execute and Borrower shall in
writing acknowledge the Subordination Agreement between the Bank and FBR dated
January 25, 1999 (the "Subordination Agreement") in the form attached hereto as
Exhibit A, and (c) the Borrower herein acknowledges the Subordination Agreement
and herein agrees (i) that it will make no payment to FBR which is prohibited by
the terms of the Subordination Agreement and (ii) that it will on request by the
Bank execute and deliver all documents which may be deemed necessary or
desirable by the Bank to evidence and protect the Bank's rights under the
Subordination Agreement.
3. Permanent Reduction. Effective as of January 15, 1999 and pursuant
to the Sixth Amendment, the principal amount of the Loan and Maximum Revolving
Loan Commitment has been increased from $15,000,000.00 to an amount not to
exceed $25,000,000.00 until the Interim Maturity Date on which date, without
further notice or demand (a) Borrower shall pay amounts necessary to reduce the
outstanding principal balance of the Loan to $15,000,000.00 or less, and (b) the
Maximum Revolving Loan Commitment shall be permanently reduced to an amount not
to exceed $15,000,000.00 (the "Mandatory Permanent Reduction"). In addition to
(but not to the exclusion of) the circumstances comprising the Interim Maturity
Date which results in the Mandatory Permanent Reduction, the Maximum Revolving
Loan Commitment shall also be automatically and permanently reduced to an amount
not to exceed $15,000,000.00 on a date and time certain which date and time
certain shall occur contemporaneous with Borrower's repayment of the outstanding
principal balance of the Loan to an amount that is $15,000,000.00 or less at any
time and for any reason whatsoever (the "Voluntary Permanent Reduction").
Notwithstanding the foregoing, in the event the Interim Maturity Date is the
same date as the Maturity Date, the outstanding principal balance of the Loan
together with any accrued but unpaid interest thereon and any other costs or
amounts owed to the Bank hereunder shall be due and paid in full on such date.
As of the date of this Amendment, the provisions of this paragraph are intended
to supersede and replace the provision of Paragraph 5 of the Sixth Amendment.
4. Bank Fees. Contemporaneous with and as a condition to the
execution of the Sixth Amendment, Borrower paid the Bank a fee in the amount of
$100,000.00 (the "Fee"), which Fee was and is deemed fully earned by the Bank at
the time Borrower and the Bank executed the Sixth Amendment, as additional
consideration for increasing the amount of the Loan and Maximum Revolving Loan
Commitment to $25,000,000.00. If the outstanding principal balance of the Loan
and the Maximum Revolving Loan Commitment are reduced to $15,000,000.00 or less
on or prior to April 1, 1999, regardless of whether such reduction is a
Mandatory Permanent Reduction or a Voluntary Permanent Reduction, and if the
Borrower is not otherwise in default under the Loan Agreement or the Documents,
fifty percent (50%) of the Fee shall be refunded to Borrower. Borrower shall
also pay the reasonable legal fees of Bank counsel in connection with the
preparation of this Amendment and all prior amendments and matters related
thereto. In addition to the Fee, Borrower shall continue to be obligated to pay
the Bank the Unused Commitment Fee in the amount of one-quarter of one percent
(1/4%) per annum of the average unused Maximum Revolving Loan Commitment,
excluding the LC Reserve, and as otherwise set forth in the Loan Agreement, as
amended by this Amendment. As of the date of this Amendment, the provisions of
this paragraph are intended to supersede and replace the provision of Paragraph
12 of the Sixth Amendment.
5. Information. Borrower shall provide Bank, upon request, with
copies of all documentation and information concerning the FBR Loan.
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6. Reaffirmation. To the extent any term(s) or condition(s) in the
Loan Agreement or any of the Documents shall contradict or be in conflict with
the amended terms of the Loan as set forth herein, such terms and conditions are
hereby deemed modified and amended accordingly, upon the effective date hereof,
to reflect the terms of the Loan as so amended herein. All terms of the Loan
Agreement and the Documents, as amended hereby, shall be and remain in full
force and effect and shall constitute the legal, valid, binding and enforceable
obligations of Borrower to the Bank. As of the date of this Amendment, Borrower
herein restates, ratifies and reaffirms each and every term and condition set
forth in the Loan Agreement and the Documents as amended herein. There are no
other changes to the Documents, including without limitation the Loan Agreement,
except for the changes specifically set forth herein. Notwithstanding the
foregoing, Borrower acknowledges and agrees that in addition to amending certain
terms and conditions of the Loan, this Amendment restates certain terms and
conditions previously set forth in the Loan Agreement. Any terms or conditions
set forth in the Loan Agreement that are not specifically amended or modified by
this Amendment, even if not specifically restated herein, shall remain binding
on the parties hereto.
7. No Waiver. No failure or delay on the part of the Bank in
exercising any right, power or remedy hereunder or under any other Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder or under any other
Document. The remedies herein provided and under any other Document are
cumulative and not exclusive of any remedies provided by law.
8. Certification. To further induce the Bank to enter into this
Amendment, Borrower represents and warrants to the Bank as follows: (a) Borrower
is empowered to perform all acts and things undertaken and done pursuant to this
Amendment and has taken all corporate or other action necessary to authorize the
execution, delivery and performance of the of this Amendment; (b) the officers
of Borrower executing this Amendment have been duly elected or appointed and
have been fully authorized to execute the same at the time executed; (c) this
Amendment, when executed and delivered, will be the legal, valid and binding
obligation of Borrower, enforceable against it in accordance with its respective
terms; and (d) Borrower is delivering to the Bank contemporaneously herewith, a
certificate of Borrower's Secretary certifying as to the resolutions of the
Executive Committee of Borrower's Board of Directors approving this Amendment
and the incumbency and signatures of the officers of Borrower signing this
Amendment.
9. 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.
10. 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.
11. Binding Effect. The terms, provisions and conditions of this
Amendment shall be binding upon and inure to the benefit of each respective
party and their respective legal representatives, successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Executive Vice President
ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Secretary
BANK:
LaSALLE NATIONAL BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Commercial Banking Officer
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EXHIBIT A
SUBORDINATION AGREEMENT
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