Exhibit 10.1


 


EXECUTION COPY


 


SECOND AMENDMENT TO THE CREDIT AGREEMENT


 


SECOND AMENDMENT, dated
as of April 5, 2006 (this “Second Amendment”), to the Credit
Agreement, dated as of April 6, 2005 (as amended by that certain First
Amendment, dated as of October 14, 2005 and as previously amended,
supplemented or otherwise modified, the “Existing Credit Agreement”, and
as amended hereby and as further amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Credit Agreement”), by
and among ARC Housing LLC (“Housing LLC”), ARC HousingTX LP (“HousingTX
LP”, together with Housing LLC, collectively, the “Borrowers”, each,
a “Borrower”) and Merrill Lynch Mortgage Capital Inc. (the “Lender”).


 


RECITALS


 


The Borrowers and the
Lender are parties to the Existing Credit Agreement. Capitalized terms used but
not otherwise defined herein shall have the meanings given to them in the
Existing Credit Agreement.


 


The Borrowers and the
Lender have agreed, subject to the terms and conditions of this Second
Amendment, that the Existing Credit Agreement be amended pursuant to the terms hereof.


 


Accordingly, the
Borrowers and the Lender hereby agree, in consideration of the mutual premises
and mutual obligations set forth herein, that the Existing Credit Agreement is
hereby amended as follows:


 


SECTION 1.  Amendments.


 


1.1                                 Section 1.01
of the Existing Credit Agreement is hereby amended by deleting subsection (e) of
the definition of “Accelerated Amortization Event” in its entirety and
inserting in lieu thereof the following:


 


“(e)                            The
amount received from the aggregate net proceeds of the disposition of ARC
Communities shall be less than $85,000,000 during the period from the First
Amendment Effective Date to the first anniversary of the First Amendment
Effective Date (the “Compliance Date”); provided, that the Borrowers may
extend the Compliance Date to December 31, 2006 by requesting an extension
and paying the Lender an extension fee of $250,000, in each case, on or prior
to the first anniversary of the First Amendment Effective Date;”


 


1.2                                 Section 1.01
of the Existing Credit Agreement is hereby amended by deleting subsection (a) of
the definition of “Applicable Margin Increase Event” in its entirety and
inserting in lieu thereof the following:


 


“(a)                            Reserved.”


 


1

















 


1.3                                 Section 1.01
of the Existing Credit Agreement is hereby amended by deleting subsection (d) of
the definition of “Applicable Margin Increase Event” in its entirety and
inserting in lieu thereof the following:


 


“(d)                           commencing
as of the First Amendment Effective Date, the average age of all Units owned by
ARC LP and its Affiliates, in the aggregate, as of the last day of each Fiscal
Quarter, is less than or equal to 4.50 years.”


 


SECTION 2.
 Conditions
Precedent. This Amendment shall become effective on the date (the “Amendment
Effective Date”) on which the following conditions precedent shall have
been satisfied:


 


2.1                                 Delivered
Documents. On the Amendment Effective Date, the Lender shall have received
the following documents, each of which shall be satisfactory to the Lender in
form and substance:


 


(a)                                  Amendment.
This Amendment, duly executed and delivered by a duly authorized officer of
each Borrower and by the Lender; and


 


(b)                                 Other
Documents. Such other documents as the Lender or counsel to the Lender may
reasonably request.


 


2.2                                 No
Material Adverse Change. There shall have been no material adverse change
in the financial condition of Housing LLC or HousingTX LP prior to the
Amendment Effective Date.


 


2.4                                 Expenses.
The Borrowers shall pay to Lender on the Amendment Effective Date the fees and
expenses of counsel and other professional advisors to the Lender.


 


2.5                                 No
Default. On the Amendment Effective Date, (i) the Borrowers shall be
in compliance with all the terms and provisions set forth in the Existing
Credit Agreement on its part to be observed or performed and (ii) both
before and after giving effect to the amendment, no Default shall have occurred
and be continuing on such date.


 


2.6                                 Representations
and Warranties. On the Amendment Effective Date, the representations and
warranties in the Loan Documents shall be true and correct as of such date,
unless such representations and warranties relate to an earlier date, both
before and after giving effect to the Amendment.


 


SECTION 3.
 Limited Effect.
Except as expressly amended and modified by this Second Amendment, the Existing
Credit Agreement shall continue to be, and shall remain, in full force and
effect in accordance with its terms; provided, however, that
reference therein and herein to the “Loan Documents” shall be deemed to
include, in any event, this Second Amendment. Each reference to the Existing
Credit Agreement in any of the Loan Documents shall be deemed to be a reference
to the Existing Credit Agreement as amended hereby. The execution of this Second Amendment by the Lender or Custodian shall
not operate as a waiver of any of their rights, powers or privileges under the Existing
Credit Agreement or under any of the other
Loan Documents except as expressly set forth herein.


 

















 


SECTION 4.
 Counterparts. This
Amendment may be executed by each of the parties hereto on any number of
separate counterparts, each of which shall be an original and all of which
taken together shall constitute one and the same instrument. Delivery of an
executed signature page of this Second Amendment in Portable Document
Format (PDF) or by facsimile transmission shall be effective as delivery of an
executed original counterpart of this Second Amendment.


 


SECTION 5.
 GOVERNING LAW. THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AMENDMENT INCORPORATES BY
REFERENCE, AND THE BORROWERS AND LENDER HEREBY AGREE TO BE SUBJECT TO, THE PROVISIONS
SET FORTH IN SECTION 11.11 OF THE EXISTING CREDIT AGREEMENT.


 


[SIGNATURE
PAGE FOLLOWS]


 

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Second Amendment to be duly executed and
delivered as of the day and year first above written.


 


 


	
   

  	
  BORROWERS

  
	
   

  	
   

  
	
   

  	
  ARC
  HOUSING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ Karen Kinslinger

  	
   

  
	
   

  	
   

  	
  Name: Karen Kinslinger

  
	
   

  	
   

  	
  Title:   Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARC
  HOUSINGTX LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/Karen Kinslinger

  	
   

  
	
   

  	
   

  	
  Name: Karen Kinslinger

  
	
   

  	
   

  	
  Title:   Vice President & Treasurer

  
					



 


 


SECOND AMENDMENT


 

















 


	
   

  	
  LENDER

  
	
   

  	
   

  
	
   

  	
  MERRILL LYNCH MORTGAGE

  CAPITAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Joshua A. Green

  	
   

  
	
   

  	
   

  	
  Name: Joshua A. Green

  
	
   

  	
   

  	
  Title: Vice President