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Exhibit 10.32  


EXECUTION COPY  


 
 

$125,000,000    
    
    CREDIT AGREEMENT    
    
    Dated as of February 18, 2004    
    
    among    
    
    AFFORDABLE RESIDENTIAL COMMUNITIES LP,    


    as Borrower,    
    
    AFFORDABLE RESIDENTIAL COMMUNITIES INC.,    
    
    as Parent Guarantor,    
    
    THE
SUBSIDIARY GUARANTORS NAMED HEREIN,    
    
    as Subsidiary Guarantors,    
    
    THE INITIAL LENDERS, INITIAL ISSUING BANK AND
  SWING LINE BANK NAMED HEREIN,    
    

as Initial Lenders, Initial Issuing Bank and Swing Line Bank    
    
    CITICORP NORTH AMERICA, INC.,    
    
    as Administrative Agent and as Collateral
Agent,    
    
    MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,    
    
    as Syndication Agent,    
    
    BANK ONE, NA,    
    

as Documentation Agent,    
    
    and    
    
    CITIGROUP GLOBAL MARKETS INC.    
    
    and    
    
    MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
   
    
    as Joint Lead Arrangers and Joint Book Running Managers    










  



 
 

TABLE OF CONTENTS    
    



	Section
 
	 	 
	 	Page

	ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS
	

SECTION 1.01.	
 	

Certain Defined Terms	
 	

1
	SECTION 1.02.	 	Computation of Time Periods; Other Definitional Provisions	 	23
	SECTION 1.03.	 	Accounting Terms	 	23
	

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT
	

SECTION 2.01.	
 	

The Advances and the Letters of Credit	
 	

24
	SECTION 2.02.	 	Making the Advances	 	25
	SECTION 2.03.	 	Issuance of and Drawings and Reimbursement Under Letters of Credit	 	27
	SECTION 2.04.	 	Repayment of Advances	 	28
	SECTION 2.05.	 	Termination or Reduction of the Commitments	 	29
	SECTION 2.06.	 	Prepayments	 	29
	SECTION 2.07.	 	Interest	 	30
	SECTION 2.08.	 	Fees	 	31
	SECTION 2.09.	 	Conversion of Advances	 	32
	SECTION 2.10.	 	Increased Costs, Etc.	 	32
	SECTION 2.11.	 	Payments and Computations	 	33
	SECTION 2.12.	 	Taxes	 	35
	SECTION 2.13.	 	Sharing of Payments, Etc.	 	37
	SECTION 2.14.	 	Use of Proceeds	 	38
	SECTION 2.15.	 	Evidence of Debt	 	38
	

ARTICLE III

CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT
	

SECTION 3.01.	
 	

Conditions Precedent to Initial Extension of Credit	
 	

39
	SECTION 3.02.	 	Conditions Precedent to Each Borrowing, Issuance and Renewal	 	43
	SECTION 3.03.	 	Determinations Under Section 3.01	 	43
	

ARTICLE IV

REPRESENTATIONS AND WARRANTIES
	

SECTION 4.01.	
 	

Representations and Warranties of the Loan Parties	
 	

44
	

ARTICLE V

COVENANTS OF THE LOAN PARTIES
	

SECTION 5.01.	
 	

Affirmative Covenants	
 	

48
	SECTION 5.02.	 	Negative Covenants	 	54
	SECTION 5.03.	 	Reporting Requirements	 	60
	SECTION 5.04.	 	Financial Covenants	 	62
	

ARTICLE VI

EVENTS OF DEFAULT
	

SECTION 6.01.	
 	

Events of Default	
 	

63
	SECTION 6.02.	 	Actions in Respect of the Letters of Credit upon Default	 	65
	 	 	 	 	 





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ARTICLE VII

GUARANTY
	

SECTION 7.01.	
 	

Guaranty; Limitation of Liability	
 	

66
	SECTION 7.02.	 	Guaranty Absolute	 	66
	SECTION 7.03.	 	Waivers and Acknowledgments	 	67
	SECTION 7.04.	 	Subrogation	 	68
	SECTION 7.05.	 	Guaranty Supplements	 	68
	SECTION 7.06.	 	Indemnification by Guarantors	 	68
	SECTION 7.07.	 	Subordination	 	69
	SECTION 7.08.	 	Continuing Guaranty	 	70
	

ARTICLE VIII

THE AGENTS
	

SECTION 8.01.	
 	

Authorization and Action; Appointment of Supplemental Collateral Agents	
 	

70
	SECTION 8.02.	 	Agents' Reliance, Etc.	 	71
	SECTION 8.03.	 	CNAI and Affiliates	 	71
	SECTION 8.04.	 	Lender Party Credit Decision	 	72
	SECTION 8.05.	 	Indemnification by Lender Parties	 	72
	SECTION 8.06.	 	Successor Agents	 	73
	

ARTICLE IX

MISCELLANEOUS
	

SECTION 9.01.	
 	

Amendments, Etc.	
 	

73
	SECTION 9.02.	 	Notices, Etc.	 	74
	SECTION 9.03.	 	No Waiver; Remedies	 	75
	SECTION 9.04.	 	Costs and Expenses	 	75
	SECTION 9.05.	 	Right of Set-off	 	77
	SECTION 9.06.	 	Binding Effect	 	77
	SECTION 9.07.	 	Assignments and Participations	 	77
	SECTION 9.08.	 	Execution in Counterparts	 	80
	SECTION 9.09.	 	No Liability of the Issuing Banks	 	80
	SECTION 9.10.	 	Confidentiality	 	80
	SECTION 9.11.	 	Release of Collateral	 	81
	SECTION 9.12.	 	Patriot Act Notification	 	81
	SECTION 9.13.	 	Jurisdiction, Etc.	 	81
	SECTION 9.14.	 	Governing Law	 	81
	SECTION 9.15.	 	WAIVER OF JURY TRIAL	 	81




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	SCHEDULES
	

Schedule I	
 	

—	
 	

Commitments and Applicable Lending Offices
	Schedule II	 	—	 	Manufactured Home Communities Constituting Borrowing Base Assets
	Schedule 4.01(b)	 	—	 	Subsidiaries
	Schedule 4.01(d)	 	—	 	Authorizations, Approvals, Actions, Notices and Filings
	Schedule 4.01(f)	 	—	 	Disclosed Litigation
	Schedule 4.01(n)	 	—	 	Existing Debt
	Schedule 4.01(o)	 	—	 	Surviving Debt
	Schedule 4.01(p)	 	—	 	Existing Liens
	Schedule 4.01(q)	 	—	 	Owned Real Property
	Schedule 4.01(r)	 	—	 	Leased Real Property
	Schedule 4.01(s)	 	—	 	Environmental Concerns
	Schedule 4.01(x)	 	—	 	Existing Loans to Directors and Executive Officers
	Schedule 4.01(y)	 	—	 	Excluded Subsidiaries and Excluded Subsidiary Agreements
	Schedule 4.01(z)	 	—	 	Plans and Welfare Plans
	

EXHIBITS
	

Exhibit A	
 	

—	
 	

Form of Note
	Exhibit B	 	—	 	Form of Notice of Borrowing
	Exhibit C	 	—	 	Form of Guaranty Supplement
	Exhibit D	 	—	 	Form of Assignment and Acceptance
	Exhibit E-1	 	—	 	Form of Opinion of Counsel to the Loan Parties
	Exhibit E-2	 	—	 	Form of Opinion of Maryland Counsel to the Loan Parties
	Exhibit E-3	 	 	 	Form of Opinion of Colorado Counsel for the Loan Parties
	Exhibit E-4	 	 	 	Form of Opinion of Wyoming Counsel for the Loan Parties
	Exhibit E-5	 	 	 	Form of Opinion of Delaware Counsel for the Loan Parties
	Exhibit E-6	 	—	 	Form of Opinion of Local Counsel to the Loan Parties
	Exhibit F-1	 	—	 	Form of Primary Security Agreement
	Exhibit F-2	 	—	 	Form of ARC Housing Security Agreement
	Exhibit G	 	—	 	Form of Mortgage
	Exhibit H	 	—	 	Form of Borrowing Base Certificate
	Exhibit I	 	—	 	Form of Collateral Sub-Agency Agreement




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CREDIT AGREEMENT    
    


        CREDIT AGREEMENT dated as of February 18, 2004 (this "Agreement") among AFFORDABLE RESIDENTIAL COMMUNITIES
LP, a Delaware limited partnership (the "Borrower"), AFFORDABLE RESIDENTIAL COMMUNITIES INC., a Maryland corporation (the
"Parent Guarantor"), the entities listed on the signature pages hereof as the guarantors (together with any Additional Guarantors (as hereinafter
defined) acceding hereto pursuant to Section 7.05, the "Subsidiary Guarantors" and, together with the Parent Guarantor, the
"Guarantors") the banks, financial institutions and other institutional lenders listed on the signature pages hereof as the initial lenders (the
"Initial Lenders"), CITICORP NORTH AMERICA, INC. ("CNAI"), as the initial issuer of Letters of
Credit (as hereinafter defined) (the "Initial Issuing Bank"), the Swing Line Bank (as hereinafter defined), CNAI, as administrative agent (together with
any successor administrative agent appointed pursuant to Article VIII, the "Administrative Agent") for the Lender Parties (as hereinafter
defined), CNAI, as collateral agent (together with any successor collateral agent appointed pursuant to Article VIII, the "Collateral Agent", and
together with the Administrative Agent, the "Agents") for the Secured Parties (as hereinafter defined), MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED, as syndication agent, BANK ONE, NA, as documentation agent, and CITIGROUP GLOBAL MARKETS INC. ("CGMI") and MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED, as joint lead arrangers and joint book running managers (the "Arrangers"). 


 
 

ARTICLE I
  DEFINITIONS AND ACCOUNTING TERMS    
    



        SECTION
1.01.    Certain Defined Terms.    As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): 



        "Additional Guarantor" has the meaning specified in Section 7.05. 


        "Adjusted EBITDA" means (a) EBITDA for the fiscal quarter of the Parent Guarantor most recently ended for which financial
statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, less (b) an amount
equal to 25% of the Capital Expenditure Reserve for all Manufactured Home Communities; provided, however, that for purposes of this definition, in the
case of any acquisition or disposition of any direct or indirect interest in any Asset
(including through the acquisition of Equity Interests) by the Parent Guarantor or any of its Subsidiaries during any fiscal quarter, Adjusted EBITDA will be adjusted (1) in the case of an
acquisition, by adding thereto an amount equal to the product of (y) the actual EBITDA generated by the Asset so acquired during such fiscal quarter, multiplied
by (z) a fraction (A) the numerator of which is the total number of days in such fiscal quarter less the actual
number of days in such fiscal quarter that such Asset was owned by the Parent Guarantor or such Subsidiary and (B) the denominator of which is the actual number of days in such fiscal quarter
that such Asset was owned by the Parent Guarantor or such Subsidiary and (2) in the case of a disposition, by subtracting therefrom an amount equal to the actual EBITDA generated by the Asset
so disposed of during such fiscal quarter. 


        "Adjusted Net Operating Income" means, for any Borrowing Base Asset, the Net Operating Income attributable to such Borrowing Base Asset  less the sum of
(a) the amount, if any, by which (i) 5% of all rental and other income from the operation of such Borrowing Base Asset for
the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or
(c), as the case may be, exceeds (ii) all management fees payable in respect of such Borrowing Base Asset during such fiscal period and (b) if such Asset is a Manufactured Home
Community, the total Capital Expenditure Reserve for such Borrowing Base Asset. 


        "Administrative Agent" has the meaning specified in the recital of parties to this Agreement. 






 




        "Administrative Agent's Account" means the account of the Administrative Agent maintained by the Administrative Agent with Citibank, N.A.,
at its office at 2 Penns Way, Suite 200, New Castle, Delaware 19720, ABA No. 021000089, Account No. 36852248, Account Name: Agency/Medium Term Finance, Reference: ARC, Attention: Global
Loans/Agency, or such other account as the Administrative Agent shall specify in writing to the Lender Parties. 


        "Advance" means a Revolving Credit Advance, a Swing Line Advance or a Letter of Credit Advance. 



        "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of
a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Interests of such Person or to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting Interests, by contract or otherwise. 


        "Agents" has the meaning specified in the recital of parties to this Agreement. 



        "Agreement" has the meaning specified in the recital of parties to this Agreement. 


        "Agreement Value" means, for each Hedge Agreement, on any date of determination, an amount determined by the Administrative Agent equal
to: (a) in the case of a Hedge Agreement documented pursuant to the Master Agreement (Multicurrency-Cross Border) published by the International Swap and Derivatives Association, Inc.
(the "Master Agreement"), the amount, if any, that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedge
Agreement, as if (i) such Hedge Agreement was being terminated early on such date of determination, (ii) such Loan Party or Subsidiary was the sole "Affected Party", and (iii) the
Administrative Agent was the sole party determining such payment amount (with the Administrative Agent making such determination pursuant to the provisions of the form of Master Agreement); or
(b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement
to the Loan Party or Subsidiary of a Loan Party party to such Hedge Agreement determined by the Administrative Agent based on the settlement price of such Hedge Agreement on such date of
determination, or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party
or Subsidiary of a Loan Party party to such Hedge Agreement determined by the Administrative Agent as the amount, if any, by which (i) the present value of the future cash flows to be paid by
such Loan Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement; capitalized terms used
and not otherwise defined in this definition shall have the respective meanings set forth in the above described Master Agreement. 


        "Annualized EBITDA" means the product of (a) Adjusted EBITDA for the most recently ended fiscal quarter of the Parent Guarantor for
which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, multiplied
by (b) four. 


        "Applicable Borrowing Base Capitalization Rate" means, with respect to any Manufactured Home Community that constitutes a Borrowing Base
Asset, 8.5%; provided, however, that if the yield to maturity of the then current ten-year
U.S. Treasury obligation (calculated by the Administrative Agent as an average of the five preceding closing date values prior to the end of a fiscal quarter) shall at any time exceed 5.5%, then the
Applicable Borrowing Base Capitalization Rate shall increase by 50% of such excess (rounded downward, as necessary, to the nearest 1/4 of 1%), to a maximum of 9.5%. (By way of example
only, an increase in the 5-day average 10-year 



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treasury
to 6.5% will increase the Applicable Borrowing Base Capitalization Rate by 50 basis points to 9.0%.) 


        "Applicable Lending Office" means, with respect to each Lender Party, such Lender Party's Domestic Lending Office in the case of a Base
Rate Advance and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate Advance. 


        "Applicable Margin" means, at any date of determination, a percentage per annum determined by reference to the Leverage Ratio as set forth
below: 



	Pricing

Level
 
	 	Leverage Ratio
	 	Applicable Margin

for Base Rate

Advances
	 	Applicable Margin

for Eurodollar Rate

Advances
	 
	I	 	3 70%	 	2.500	%	3.500	%
	II	 	< 70% 3 but 60%	 	2.125	%	3.125	%
	III	 	< 60% but 3 50%	 	1.750	%	2.750	%
	IV	 	< 50%	 	1.375	%	2.375	%






The
Applicable Margin for each Base Rate Advance shall be determined by reference to the Leverage Ratio in effect from time to time and the Applicable Margin for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing shall be determined by reference to the Leverage Ratio in effect on the first day of such Interest Period; provided,
however, that (a) no change in the Applicable Margin resulting from the Leverage Ratio shall be effective until three Business Days after the date on which the
Administrative Agent receives (x) the financial statements required to be delivered pursuant to Section 5.03(b) or (c), as the case may be, and (y) a certificate of the Chief
Financial Officer of the Borrower demonstrating the Leverage Ratio, and (b) the Applicable Margin shall be at Pricing Level I for so long as the Borrower has not submitted to the Administrative
Agent as and when required under Section 5.03(b) or (c), as applicable, the information described in clause (a) of this proviso. 


        "Applicable Multiple" means, for purposes of calculating Borrowing Base Asset Value for any Borrowing Base Asset that is a Manufactured
Home Rental Unit, a multiple determined with reference to the age of such Manufactured Home Rental Unit as set forth below (determined in accordance with the model year indicated on the certificate of
title thereof, to the extent provided therein): 



	Age of Manufactured

Home Rental Unit
	 	Applicable Multiple

	Less than or equal to 6 years:	 	3.5
	Greater than 6 years, but less than or equal to 10 years:	 	3.0
	Greater than 10 years:	 	0






        "Appraisal" means an appraisal complying with the requirements of the Federal Financial Institutions Reform, Recovery and Enforcement Act
of 1989, prepared for the account of the Collateral Agent (for the benefit of the Lenders) by a MAI appraiser selected by the Collateral Agent in consultation with the Borrower, and otherwise in
scope, form and substance satisfactory to the Collateral Agent. 


        "Appraised Value" means, for any Borrowing Base Asset that is a Manufactured Home Community, the "as is" market value of such Manufactured
Home Community (excluding any manufactured homes situated thereon), determined by the Administrative Agent based on an Appraisal of such Manufactured Home Community, after discretionary adjustments of
the value shown in such Appraisal following a review by the Administrative Agent's appraisal review department. 


        "ARC Housing Security Agreement" has the meaning specified in Section 3.01(a)(ii). 



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        "Arrangers" has the meaning specified in the recital of parties to this Agreement. 


        "Assets" means Manufactured Home Communities, Manufactured Home Rental Units, Development Properties, Consumer Finance Receivables and
Joint Venture Assets. 


        "Asset Value" means, at any date of determination, (a) in the case of any Asset comprised of a Manufactured Home Community or
Manufactured Home Rental Unit, the Annualized EBITDA of such Asset divided by 8.5%; provided,  however, that
in the case of any such Asset in which the Parent Guarantor or any of its Subsidiaries shall have acquired any direct or indirect interest
(including through the acquisition of Equity Interests) during the fiscal quarter of the Parent Guarantor then most recently ended for which financial statements are required to be delivered pursuant
to Section 5.03(b) or (c), as the case may be, the "Asset Value" of such Asset at such date of determination shall be the lesser of
(i) the Annualized EBITDA of such Asset divided by 8.5% and (ii) the purchase price of such Asset, (b) in the case of any
Development Property, the book value of such Development Property as determined in accordance with GAAP, (c) in the case of any Consumer Finance Receivable, the book value of such Consumer
Finance Receivable net of any related loan loss reserve, each as determined in accordance with GAAP, and (d) in the case of any Joint Venture Asset, the JV Pro Rata Share of the book value of
such Joint Venture Asset as determined in accordance with GAAP. 


        "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender Party and an Eligible Assignee, and accepted by
the Administrative Agent, in accordance with Section 9.07 and in substantially the form of Exhibit D hereto. 


        "Available Amount" of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to drawing). 


        "Bankruptcy Law" means any applicable law governing a proceeding of the type referred to in Section 6.01(f) or Title 11, U.S. Code,
or any similar foreign, federal or state law for the relief of debtors. 


        "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to
the higher of (a) the rate of interest announced publicly by Citibank, N.A. in New York, New York, from time to time, as Citibank, N.A.'s base rate and (b) 1/2 of 1% per
annum above the Federal Funds Rate. 


        "Base Rate Advance" means an Advance that bears interest as provided in Section 2.07(a)(i). 


        "Borrower" has the meaning specified in the recital of parties to this Agreement. 


        "Borrower's Account" means the account of the Borrower maintained by the Borrower with Compass Bank at its office at 999
18th Street, Suite 2800, Denver, Colorado 80202, ABA No. 107005319, Account No. 2500884595, or such other account as the Borrower shall specify in writing to the
Administrative Agent. 


        "Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type made by the Lenders or a Swing Line
Borrowing. 


        "Borrowing Base Assets" means only such Assets comprised of Manufactured Home Communities and Manufactured Home Rental Units
(a) for which the applicable conditions (as may be determined by the Collateral Agent in its sole discretion) in Section 3.01 and, if applicable, 5.01(s), 5.01(t) and 5.01(j) have been
satisfied and as the Required Lenders, in their sole discretion, shall from time to time elect to consider Borrowing Base Assets for purposes of this Agreement, and (b) (i) in the case of
Manufactured Home Communities, that (A) are wholly-owned in fee, and (B) are listed on Schedule II hereto (as supplemented from time to time pursuant to
Section 5.01(j)(iv)) and (ii) in the case of Manufactured Home Rental Units, (A) at 



4





 




any
time prior to the forty-fifth (45th) day following the occurrence of a Collateral Trigger Event, that are listed as "Rental Units that Reflect the Collateral Agent's UCC Lien" on the
Summary Status Report (as defined in the Collateral Sub-Agency Agreement) most recently delivered to the Collateral Agent pursuant to Section 4.1.2(c) of the Collateral
Sub-Agency Agreement and (B) at any time on or after the forty-fifth (45th) day following the occurrence of a Collateral Trigger Event, that are listed as "Rental
Units that Reflect the Collateral Agent's Certificate of Title Lien" on the Summary Status Report (as defined in the Collateral Sub-Agency Agreement) most recently delivered to the
Collateral Agent pursuant to Section 4.1.3(c) of the Collateral Sub-Agency Agreement. 


        "Borrowing Base Asset Value" means, at any date of determination, (a) for any Borrowing Base Asset that is a Manufactured Home
Community, the lesser of (i) 60% of the Appraised Value of such Borrowing Base Asset and (ii) 75% of the Adjusted Net Operating Income of such Borrowing Base Asset  divided by the Applicable
Borrowing Base Capitalization Rate and (b) for any Borrowing Base Asset that is a Manufactured Home Rental Unit, the
lesser of (i) 45% of the capitalized purchase price of such Borrowing Base Asset determined in accordance with GAAP, (ii) 70% of the depreciated book value of such Borrowing Base Asset
determined in accordance with GAAP and (iii) Adjusted Net Operating Income in respect of such Borrowing Base Asset multiplied by the Applicable
Multiple. 


        "Borrowing Base Certificate" means a certificate in substantially the form of Exhibit H hereto, duly certified by the Chief
Financial Officer of the Parent Guarantor. 


        "Borrowing Base Debt Service Coverage Ratio" means, at any date of determination, the ratio of (a) the aggregate Adjusted Net
Operating Income for all Borrowing Base Assets to (b) the greater of (i) the actual interest expense of the Borrower under this Agreement for the consecutive four fiscal quarters of the
Parent Guarantor most recently ended for which financial statements are required to be delivered pursuant to Section 5.03(b) or (c), as the case may be and (ii) the interest that would
have been required to be paid by the Borrower under this Agreement for such fiscal period had the applicable interest rate been equal to (A) the Applicable Margin for Eurodollar Rate Advances  plus
(B) the greater of (1) 3.0% and (2) the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) as published
on Reuters Page ISDAFIX1 (or any successor page) as the International Swaps and Derivatives Association mid-market par 3-year swap rate, in each case, in effect at such date of
determination. 


        "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market. 


        "Capital Expenditure Reserve" means, with respect to any Manufactured Home Community on any date of determination, the product of
(A) $100 times (B) the total number of Pads within such Manufactured Home Community. 


        "Capitalized Leases" means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases. 



        "Cash Equivalents" means any of the following, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens
other than Liens created under the Collateral Documents and having a maturity of not greater than 90 days from the date of issuance thereof: (a) readily marketable direct obligations of
the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States,
(b) certificates of deposit of or time deposits with any commercial bank that is a Lender Party or a member of the Federal Reserve System, issues (or the parent of which issues) commercial
paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of 



5





 




at
least $1,000,000,000 or (c) commercial paper in an aggregate amount of not more than $50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any
State of the United States and rated at least "Prime-1" (or the then equivalent grade) by Moody's or "A-1" (or the then equivalent grade) by S&P. 



        "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time. 


        "CERCLIS" means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency. 


        "Certificate of Title Registrations" means the filings and registrations referred to in Section 4.1.3 of the Collateral
Sub-Agency Agreement with respect to Manufactured Home Rental Units, the ownership of which is evidenced by a certificate of title. 



        "CGMI" has the meaning specified in the recital of parties to this Agreement. 


        "Change of Control" means the occurrence of any of the following: (a) any Person (other than a Private Equity Investor) or two or
more Persons (other than Private Equity Investors) acting in concert shall have acquired and shall continue to have following the date hereof beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Interests of the Parent Guarantor (or other
securities convertible into such Voting Interests) representing 35% or more of the combined voting power of all Voting Interests of the Parent Guarantor; or (b) during any period of up to 24
consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Parent Guarantor shall cease for any reason
to constitute a majority of the board of directors of the Parent Guarantor unless Persons replacing such individuals were nominated by the board of directors of the Parent Guarantor or, in the case of
each such individual, the Person replacing such individual was nominated by the same institution that nominated the Person being replaced; or (c) any Person or two or more Persons acting in
concert shall have acquired and shall continue to have following the date hereof, by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in
its or their acquisition of the power to direct, directly or indirectly, the management or policies of the Parent Guarantor; or (d) the Parent Guarantor ceases to be the general partner of the
Borrower; or (e) the Parent Guarantor ceases to be the legal and beneficial owner of all of the general partnership interests in the Borrower; or (f) the Parent Guarantor shall create,
incur, assume or suffer to exist any Lien on the Equity Interests in the Borrower owned by it. 


        "Closing Date" means February 18, 2004 or such other date as may be agreed upon by the Borrower and the Administrative Agent. 



        "CNAI" has the meaning specified in the recital of parties to this Agreement. 


        "Collateral" means all "Collateral" and all "Mortgaged Property" referred to in the Collateral Documents and all other property that is or
is intended to be subject to any Lien in favor of the Collateral Agent for the benefit of the Secured Parties and will include, without limitation, all Borrowing Base Assets, whether or not any
filings or recordings have been made against or in respect of such Borrowing Base Assets prior to or after the occurrence of a Collateral Trigger Event. 



        "Collateral Agent" has the meaning specified in the recital of parties to this Agreement. 


        "Collateral Documents" means the Security Agreements, the Mortgages, the Collateral Sub-Agency Agreement and any other
agreement that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties. 



6





 




        "Collateral Sub-Agency Agreement" has the meaning specified in Section 3.01(a)(iv). 


        "Collateral Trigger Event" has the meaning specified in Section 5.01(j)(i). 


        "Commitment" means a Revolving Credit Commitment, a Swing Line Commitment or a Letter of Credit Commitment. 


        "Communications" has the meaning specified in Section 9.02(b). 



        "Company Debt Service Ratio" means, at any date of determination, the ratio of (a) Annualized EBITDA to (b) the sum of
(i) interest (including capitalized interest) payable on, and amortization of debt discount in respect of, all Debt for Borrowed Money plus
(ii) principal amounts of all Debt for Borrowed Money payable, in each case, of or by the Parent Guarantor and its Subsidiaries (without duplication) for the consecutive four fiscal quarters of
the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be;  provided, however, that:



        (A)  for
purposes of computing the Company Debt Service Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending March 31,
2004, the amounts described in clauses (b)(i) and (b)(ii) above (as used in this definition only, the "Denominator Items") shall be deemed
to equal (1) the sum of such items for the fiscal quarter of the Parent Guarantor ending December 31, 2003, multiplied by (2) four, 


        (B)  for
purposes of calculating the Company Debt Service Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
June 30, 2004, the Denominator Items shall be deemed to equal (1) the sum of such items for the fiscal quarter of the Parent Guarantor ending March 31, 2004,  multiplied by (2) four,



        (C)  for
purposes of calculating the Company Debt Service Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
September 30, 2004, the Denominator Items shall be deemed to equal (1) the sum of such items for the two consecutive fiscal quarters of the Parent Guarantor ending June 30, 2004,  multiplied by (2) two, and 



        (D)  for
purposes of calculating the Company Debt Service Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
December 31, 2004, the Denominator Items shall be deemed to equal (1) the sum of such items for the three consecutive fiscal quarters of the Parent Guarantor ending September 30,
2004, multiplied by (2) 1.333; 




provided, further, that the calculations described in clause (A) above which pertain to the fiscal quarter of the Parent Guarantor ending
December 31, 2003 shall be made on a pro forma basis after giving effect to the IPO and the Recapitalization. 



        "Confidential Information" means information that any Loan Party furnishes to any Agent or any Lender Party in writing designated as
confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to such Agent or such Lender Party from a source other than
the Loan Parties. 


        "Consent Request Date" has the meaning specified in Section 9.01(b). 


        "Consolidated" refers to the consolidation of accounts in accordance with GAAP. 



        "Consumer Finance Credit Facilities" means the credit agreements, dated on or about the date hereof, among Enspire Finance LLC and Merrill
Lynch Mortgage Capital, Inc., on the one hand, and ARC Dealership, Inc. and Merrill Lynch Mortgage Capital, Inc., on the other, consisting of (a) a loan funding facility to
fund the Borrower's retail home sales initiative and (b) a floorplan facility to fund the Borrower's retail home sales initiative, in each case, as amended from time to time to the extent
expressly permitted hereunder. 



7







  



        "Consumer Finance Receivable" means purchase money Debt owed to the Borrower or any of its Subsidiaries in respect of the sale of a
Manufactured Home Rental Unit to a resident or prospective resident of a Manufactured Home Community. 


        "Contingent Obligation" means, with respect to any Person, any Obligation or arrangement of such Person to guarantee or intended to
guarantee any Debt, leases, dividends or other payment Obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or
deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the Obligation of a primary obligor, (b) the Obligation to
make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement or (c) any Obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for
the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount
of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to perform thereunder), as determined by such Person in good faith. 


        "Conversion", "Convert" and "Converted"
each refer to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.07(d), 2.09 or 2.10. 


        "Current Assets" of any Person means all assets of such Person that would, in accordance with GAAP, be classified as current assets of a
company conducting a business the same as or similar to that of such Person, after deducting adequate reserves in each case in which a reserve is proper in accordance with GAAP. 


        "Current Liabilities" of any Person means (a) all Debt of such Person that by its terms is payable on demand or matures within one
year after the date of its creation (excluding any Debt renewable or extendible, at the option of such Person, to a date more than one year from such date or arising under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year from such date) and (b) all other items (including taxes accrued as estimated) that in accordance with GAAP would be classified as current liabilities of such
Person. 


        "Customary Carve-Out Agreement" has the meaning specified in the definition of Non-Recourse Debt. 


        "Debt" of any Person means, without duplication for purposes of calculating financial ratios, (a) all Debt for Borrowed Money of
such Person, (b) all Obligations of such Person for the deferred purchase price of property or services other than trade payables incurred in the ordinary course of business and not overdue by
more than 60 days, (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations of such 



8





 




Person
under acceptance, letter of credit or similar facilities, (g) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity
Interests in such Person or any other Person (other than Preferred Interests that are issued by any Loan Party or Subsidiary thereof and classified as either equity or minority interests pursuant to
GAAP) or any warrants, rights or options to acquire such Equity Interests, (h) all Obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof,
(i) all Contingent Obligations of such Person and (j) all indebtedness and other payment Obligations referred to in clauses (a) through (i) above of another Person secured
by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the payment of such indebtedness or other payment Obligations; provided,  however,
that in the case of the Parent Guarantor and its Subsidiaries "Debt" shall also include, without duplication, the JV Pro Rata Share of Debt for
each Joint Venture. 


        "Debt for Borrowed Money" of any Person means all items that, in accordance with GAAP, would be classified as indebtedness on a
Consolidated balance sheet of such Person, provided, that in the case of the Parent Guarantor and its Subsidiaries "Debt for Borrowed Money" shall also
include, without duplication, the JV Pro Rata Share of Debt for Borrowed Money for each Joint Venture. 


        "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given
or time elapse or both. 


        "Default Termination Notice" has the meaning specified in Section 2.01(b). 


        "Development Properties" means real estate assets acquired by the Borrower or any of its Subsidiaries for development into Manufactured
Home Communities that, in accordance with GAAP, would be classified as development properties on a Consolidated balance sheet of the Parent Guarantor and its Subsidiaries. 


        "Disclosed Litigation" has the meaning specified in Section 3.01(f). 



        "Domestic Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Domestic Lending
Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party, as the case may be, or such other office of such Lender Party as
such Lender Party may from time to time specify to the Borrower and the Administrative Agent. 


        "EBITDA" means, for any period, (a) the sum of (i) net income (or net loss) (excluding gains (or losses) from extraordinary
and unusual items), (ii) interest expense, (iii) income tax expense, (iv) depreciation expense and (v) amortization expense, in each case of the Parent Guarantor and its
Subsidiaries determined on a Consolidated basis and in accordance with GAAP for such period, plus (b) with respect to each Joint Venture, the JV
Pro Rata Share of the sum of (i) net income (or net loss) (excluding gains (or losses) from extraordinary and unusual items), (ii) interest expense, (iii) income tax expense,
(iv) depreciation expense and (v) amortization expense of such Joint Venture, in each case determined on a Consolidated basis and in accordance with GAAP for such period. 


        "Effective Date" means the first date on which the conditions set forth in Article III shall be satisfied. 



        "Eligible Assignee" means (a) with respect to the Revolving Credit Facility, (i) a Lender; (ii) an Affiliate or Fund
Affiliate of a Lender; (iii) a commercial bank organized under the laws of the United States, or any State thereof, respectively, and having total assets in excess of $500,000,000;
(iv) a savings and loan association or savings bank organized under the laws of the United States 



9





 




or
any State thereof, and having total assets in excess of $500,000,000; (v) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded
special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess
of $500,000,000, so long as such bank is acting through a branch or agency located in the United States; (vi) the central bank of any country that is a member of the OECD; (vii) a
finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business and having total assets in excess of $500,000,000; and (viii) any other Person approved by the Administrative Agent and, unless a Default
has occurred and is continuing at the time any assignment is effected pursuant to Section 9.07, the Borrower, each such approval not to be unreasonably withheld or delayed, and (b) with
respect to the Letter of Credit Facility, a Person that is an Eligible Assignee under subclause (iii) or (v) of this definition and is approved by the Administrative Agent and, unless a
Default has occurred and is continuing at the time any assignment is effected pursuant to Section 9.07, approved by the Borrower, such approval not to be unreasonably withheld or delayed;  provided, however,
 that neither any Loan Party nor any Affiliate of a Loan Party shall qualify as an Eligible Assignee under this definition. 


        "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising
from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response,
remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive
relief. 


        "Environmental Law" means any Federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment,
injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation,
those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. 


        "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental
Law. 


        "Equity Interests" means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person,
warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible
into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of
such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination. 



        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. 


        "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the controlled group of any Loan Party, or under
common control with any Loan Party, within the meaning of Section 414 of the Internal Revenue Code. 



10





 




        "ERISA Event" means (a)(i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect
to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC or (ii) the requirements of Section 4043(b) of ERISA apply with
respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to
a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of any Loan Party or any ERISA Affiliate in the circumstances described in
Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined
in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of
an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant
to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee
to administer, such Plan. 


        "Eurocurrency Liabilities" has the meaning specified in Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time. 


        "Eurodollar Lending Office" means, with respect to any Lender Party, the office of such Lender Party specified as its "Eurodollar Lending
Office" opposite its name on Schedule I hereto or in the Assignment and Acceptance pursuant to which it became a Lender Party (or, if no such office is specified, its Domestic Lending Office),
or such other office of such Lender Party as such Lender Party may from time to time specify to the Borrower and the Administrative Agent. 


        "Eurodollar Rate" means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same Borrowing, an interest rate
per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in U.S. dollars at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period for a period equal to such
Interest Period or, if for any reason such rate is not available, the average (rounded upward, if necessary, to the nearest 1/100 of 1%, if such average is not such a multiple) of the rate per annum
at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time)
two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing to be outstanding
during such Interest Period (or, if such Reference Bank shall not have such a Eurodollar Rate Advance, U.S.$1,000,000) and for a period equal to such Interest Period by (b) a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. 


        "Eurodollar Rate Advance" means an Advance that bears interest as provided in Section 2.07(a)(ii). 



        "Eurodollar Rate Reserve Percentage" means, for any Interest Period for all Eurodollar Rate Advances comprising part of the same
Borrowing, the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the
Federal Reserve System in New 



11





 




York
City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period. 


        "Events of Default" has the meaning specified in Section 6.01. 


        "Existing Debt" means Debt of each Loan Party and its Subsidiaries outstanding immediately before giving effect to the Recapitalization. 



        "Excluded Subsidiary" at any time means any direct or indirect Subsidiary of the Borrower that is unable to guaranty the Obligations of
the Loan Parties under the Loan Documents at such time because it is party to one or more Excluded Subsidiary Agreements that prohibit such Excluded Subsidiary from entering into the Guaranty set
forth in Article VII or a Guaranty Supplement. 


        "Excluded Subsidiary Agreement" for each Excluded Subsidiary means any agreement set forth opposite the name of such Excluded Subsidiary
on Schedule 4.01(y) hereto (as such Schedule may be supplemented from time to time pursuant to Sections 5.01(j)(ii) and 5.01(j)(iii)) and any agreement pursuant to which such Excluded
Subsidiary incurs Refinancing Debt with regard to the Debt, if any, incurred pursuant to such Excluded Subsidiary Agreement. 


        "Facility" means the Revolving Credit Facility, the Swing Line Facility or the Letter of Credit Facility. 


        "Facility Exposure" means, at any date of determination, the sum of the aggregate principal amount of all outstanding Advances and the
Available Amount under all outstanding Letters of Credit. 


        "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day
for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 



        "Fee Letter" means the fee letter dated December 22, 2003 among the Borrower, CNAI and CGMI, as the same may be amended from time
to time. 


        "Fiscal Year" means a fiscal year of the Parent Guarantor and its Consolidated Subsidiaries ending on December 31 in any calendar
year. 


        "Fixed Charge Coverage Ratio" means, at any date of determination, the ratio of (a) Annualized EBITDA to (b) the sum of
(i) interest (including capitalized interest) payable on, and amortization of debt discount in respect of, all Debt for Borrowed Money plus
(ii) principal amounts of all Debt for Borrowed Money payable plus (iii) all dividends payable on any Preferred Interests  plus (iv) rentals
payable under leases of real or personal, or mixed, property, in each case, of or by the Parent Guarantor and its Subsidiaries
for the consecutive four fiscal quarters of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to
Section 5.03(b) or (c), as the case may be; provided, however, that: 



        (A)  for
purposes of computing the Fixed Charge Coverage Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
March 31, 2004, the amounts described in clauses (b)(i), (ii), (iii) and (iv) above (as used in this definition only, the "Denominator
Items") shall be deemed to equal (1) the sum of such items 




12





 


for
the fiscal quarter of the Parent Guarantor ending December 31, 2003, multiplied by (2) four, 



        (B)  for
purposes of calculating the Fixed Charge Coverage Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
June 30, 2004, the Denominator Items shall be deemed to equal (1) the sum of such items for the fiscal quarter of the Parent Guarantor ending March 31, 2004,  multiplied by (2) four,



        (C)  for
purposes of calculating the Fixed Charge Coverage Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
September 30, 2004, the Denominator Items shall be deemed to equal (1) the sum of such items for the two consecutive fiscal quarters of the Parent Guarantor ending June 30, 2004,  multiplied by (2) two, and 


        (D)  for
purposes of calculating the Fixed Charge Coverage Ratio at any date of determination occurring during the fiscal quarter of the Parent Guarantor ending
December 31, 2004, the Denominator Items shall be deemed to equal (1) the sum of such items for the three consecutive fiscal quarters of the Parent Guarantor ending September 30,
2004, multiplied by (2) 1.333; 




provided, further, that the calculations described in clause (A) above which pertain to the fiscal quarter of the Parent Guarantor ending
December 31, 2003 shall be made on a pro forma basis after giving effect to the IPO and the Recapitalization. 


        "Fund Affiliate" means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans
and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. 



        "Funds From Operations" means net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and
extraordinary and unusual items, plus depreciation and amortization, and after adjustments for unconsolidated Joint Ventures,  provided that the
determination of Funds From Operations shall be made on a pro forma basis after giving
effect to the IPO and the Recapitalization. Adjustments for unconsolidated Joint Ventures will be calculated to reflect funds from operations on the same basis. 



        "GAAP" has the meaning specified in Section 1.03. 


        "Good Faith Contest" means the contest of an item as to which: (a) such item is contested in good faith, by appropriate
proceedings, (b) reserves that are adequate are established with respect to such contested item in accordance with GAAP and (c) the failure to pay or comply with such contested item
during the period of such contest is not reasonably likely to result in a Material Adverse Effect. 


        "Guaranteed Obligations" has the meaning specified in Section 7.01. 


        "Guarantors" means the Parent Guarantor and the Subsidiary Guarantors. 


        "Guaranty" means the Guaranty by the Guarantors pursuant to Article VII, together with any and all Guaranty Supplements required to
be delivered pursuant to Section 5.01(j). 


        "Guaranty Supplement" means a supplement entered into by an Additional Guarantor in substantially the form of Exhibit C hereto. 



        "Hazardous Materials" means (a) petroleum or petroleum products, by-products or breakdown products, radioactive
materials, asbestos-containing materials, polychlorinated biphenyls, radon gas and mold and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law. 



13





 




        "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts and other hedging agreements. 


        "Hedge Bank" means any Lender Party or an Affiliate of a Lender Party in its capacity as a party to a Secured Hedge Agreement. 


        "Indemnified Costs" has the meaning specified in Section 8.05(a). 


        "Indemnified Party" has the meaning specified in Section 7.06(a). 


        "Information Memorandum" means the information memorandum dated November, 2003 used by the Arrangers in connection with the syndication of
the Commitments. 


        "Initial Extension of Credit" means the earlier to occur of the initial Borrowing and the initial issuance of a Letter of Credit
hereunder. 


        "Initial Issuing Bank" has the meaning specified in the recital of parties to this Agreement. 


        "Initial Lenders" has the meaning specified in the recital of parties to this Agreement. 


        "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in
Section 4001(a)(18) of ERISA. 


        "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance, and ending on the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower
pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, as the Borrower may, upon notice received by the Administrative Agent not later than
12:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: 



        (a)   the
Borrower may not select any Interest Period with respect to any Eurodollar Rate Advance that ends after the Termination Date; 


        (b)   Interest
Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration; 


        (c)   whenever
the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on
the next succeeding Business Day; provided, however, that if such extension would cause the last day of such Interest Period to occur
in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and 


        (d)   whenever
the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar
month. 




        "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. 


        "Investment" in any Person means any loan or advance to such Person, any purchase or other acquisition of any Equity Interests or Debt or
the assets comprising a division or business unit or a substantial part or all of the business of such Person, any capital contribution to such Person or 



14





 




any
other direct or indirect investment in such Person, including, without limitation, any acquisition by way of a merger or consolidation and any arrangement pursuant to which the investor incurs
Debt of the types referred to in clause (i) or (j) of the definition of "Debt" in respect of such Person. 


        "IPO" means the initial public offering of common stock in the Parent Guarantor and its registration as a public company with the
Securities and Exchange Commission. 


        "Issuing Bank" means the Initial Issuing Bank and any other Lender approved as an Issuing Bank by the Administrative Agent and the
Borrower and any Eligible Assignee to which a Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07 so long as each such Lender or each such Eligible Assignee
expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the
Administrative Agent of its Applicable Lending Office and the amount of its Letter of Credit Commitment (which information shall be recorded by the Administrative Agent in the Register) for so long as
such Initial Issuing Bank, Lender or Eligible Assignee, as the case may be, shall have a Letter of Credit Commitment. 


        "Joint Venture" means any joint venture (a) in which the Parent Guarantor or any of its Subsidiaries holds any Equity Interest,
(b) that is not a Subsidiary of the Parent Guarantor or any of its Subsidiaries and (c) the accounts of which would not appear on the Consolidated financial statements of the Parent
Guarantor. 


        "Joint Venture Assets" means, with respect to any Joint Venture at any time, the assets owned by such Joint Venture at such time. 


        "JV Pro Rata Share" means, with respect to any Joint Venture at any time, the fraction, expressed as a percentage, obtained by dividing
(a) the total book value of all Equity Interests in such Joint Venture held by the Parent Guarantor and any of its Subsidiaries by (b) the total book value of all outstanding Equity
Interests in such Joint Venture at such time. 


        "L/C Cash Collateral Account" means the account of the Borrower maintained with the Administrative Agent, in the name of the
Administrative Agent and under the sole control and dominion of the Administrative Agent and subject to the terms of this Agreement. 


        "L/C Related Documents" has the meaning specified in Section 2.04(c)(ii)(A). 


        "Lender Party" means any Lender, the Swing Line Bank or any Issuing Bank. 


        "Lenders" means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 9.07 for so long as
such Initial Lender or Person, as the case may be, shall be a party to this Agreement. 


        "Letter of Credit Advance" means an advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c). 



        "Letter of Credit Agreement" has the meaning specified in Section 2.03(a). 


        "Letter of Credit Commitment" means, with respect to any Issuing Bank at any time, the amount set forth opposite such Issuing Bank's name
on Schedule I hereto under the caption "Letter of Credit Commitment" or, if such Issuing Bank has entered into one or more Assignment and Acceptances, set forth for such Issuing Bank in the
Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Issuing Bank's "Letter of Credit Commitment", as such amount may be reduced at or prior to such time pursuant
to Section 2.05. 


        "Letter of Credit Facility" means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks'
Letter of Credit Commitments at such time, and (b) $5,000,000, as such amount may be reduced at or prior to such time pursuant to Section 2.05. 



15











  



        "Letters of Credit" has the meaning specified in Section 2.01(b). 


        "Leverage Ratio" means, at any date of determination, the ratio, expressed as a percentage, of (a) Consolidated Debt of the Parent
Guarantor and its Subsidiaries to (b) Total Asset Value, in each case as at the end of the most recently ended fiscal quarter of the Parent Guarantor for which financial statements are required
to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be. 


        "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. 


        "Limited Subsidiary" has the meaning specified in Section 5.01(j)(iii). 



        "Loan Documents" means (a) this Agreement, (b) the Notes, (c) the Fee Letter, (d) each Letter of Credit
Agreement, (e) each Guaranty Supplement, (f) the Collateral Documents and (g) each Secured Hedge Agreement, in each case, as amended. 


        "Loan Parties" means the Borrower and the Guarantors. 


        "Loan Value" means, with respect to any Borrowing Base Asset, an amount determined by the Administrative Agent equal to the Borrowing Base
Asset Value of such Borrowing Base Asset; provided, however, that to the extent the aggregate Loan Value
of such Borrowing Base Assets that are Manufactured Home Rental Units exceeds 35% of the sum of the aggregate Loan Values of all Borrowing Base Assets, such excess will not be counted for purposes of
determining the aggregate amount (or the sum) of the Loan Values. 


        "Manufactured Home Community" means all right, title and interest of the Borrower and each of its Subsidiaries in and to any land and any
improvements thereon comprising a community designed and improved with homesites for the placement of manufactured homes, together with all equipment, furniture, materials, supplies and personal
property in which such Person has an interest now or hereafter located on or used in connection with such manufactured home community, and all
appurtenances, additions, improvements, renewals, substitutions and replacements thereof now or hereafter acquired by such Person. 


        "Manufactured Home Rental Unit" means a manufactured home that is owned by ARC Housing LLC and is situated in a Manufactured Home
Community. 


        "Marketable Securities" means any of the following, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all
Liens and having a maturity of not greater than 360 days from the date of acquisition thereof: (a) readily marketable direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time
deposits with any commercial bank that is a Lender or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c), is
organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000 or (c) commercial paper in an aggregate amount of no more than
$50,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least "Prime-1" (or the then equivalent
grade) by Moody's or "A-1" (or the then equivalent grade) by S&P. 


        "Margin Stock" has the meaning specified in Regulation U. 



16





 




        "Material Adverse Change" means any material adverse change in the business, condition (financial or otherwise), results of operations or
prospects of the Borrower and the Guarantors, taken as a whole. 


        "Material Adverse Effect" means a material adverse effect on (a) the business, condition (financial or otherwise), operations or
prospects of the Borrower and the Guarantors, taken as a whole, (b) the rights and remedies of any Agent or any Lender Party under any Loan Document, (c) the ability of any Loan Party to
perform its Obligations under any Loan Document to which it is or is to be a party or (d) the value of the Collateral. 



        "Material Contract" means, with respect to any Loan Party, each contract to which such Loan Party is a party involving aggregate
consideration payable to or by such Loan Party in an amount of $5,000,000 or more per annum or otherwise material to the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower and the Guarantors, taken as a whole. 


        "Material Debt" has the meaning specified in Section 6.01(e). 


        "Moody's" means Moody's Investors Services, Inc. and any successor thereto. 


        "Mortgage Policies" has the meaning specified in Section 5.01(s). 


        "Mortgages" has the meaning specified in Section 3.01(a)(iii). 


        "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA
Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. 


        "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained
for employees of any Loan Party or any ERISA Affiliate and at least one Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan
Party or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. 



        "Net Operating Income" means, with respect to any Asset, the total rental revenue and other income from the operation of such Asset for
the fiscal quarter of the Parent Guarantor most recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case
may be, multiplied by four, minus (a) in the case of any Manufactured Home Rental Unit,
(i) all expenses and other proper charges incurred by the applicable Loan Party in connection with the operation and maintenance of such Manufactured Home Rental Unit during such fiscal period,
including, without limitation, management fees, repairs, real estate and chattel taxes and bad debt expenses, but before payment or provision for debt service charges, income taxes and depreciation,
amortization and other non-cash expenses, multiplied by (ii) four and (b) in the case of any Manufactured Home Community, all
expenses and other proper charges incurred in connection with the operation and maintenance of such Manufactured Home Community during the consecutive four fiscal quarters of the Parent Guarantor most
recently ended for which financial statements are required to be delivered to the Lender Parties pursuant to Section 5.03(b) or (c), as the case may be, including, without limitation,
management fees, repairs, real estate and chattel taxes and bad debt expenses, but before payment or provision for debt service charges, income taxes and depreciation, amortization and other
non-cash expenses, all as determined in accordance with GAAP, provided that there shall be no rent leveling adjustments made when computing
Net Operating Income. 


        "Non-Consenting Lender" has the meaning specified in Section 9.01(b). 



17





 




        "Non-Recourse Debt" means Debt for Borrowed Money with respect to which recourse for payment is limited to (a) any
building(s) or parcel(s) of real property or any related assets encumbered by a Lien securing such Debt for Borrowed Money and/or (b) the general credit of any Property-Level Subsidiary and/or
the Equity Interests therein and/or the general credit of the immediate parent entity of such Property-Level Subsidiary provided that such parent entity's assets consist solely of Equity Interests in
one or more Property-Level Subsidiaries, it being understood that the instruments governing such Debt may include customary carve-outs to such limited recourse (any such customary
carve-outs or agreements limited to such customary carve-outs, being a "Customary Carve-Out Agreement") such as, for
example, personal recourse to the Parent Guarantor or any Subsidiary of the Parent Guarantor for fraud, willful misrepresentation, misapplication or misappropriation of cash, waste, environmental
claims, damage to properties, non-payment of taxes or other liens despite the existence of sufficient cash flow, interference with the enforcement of loan documents upon maturity or
acceleration, violation of loan document prohibitions against voluntary or involuntary bankruptcy filings, transfer of properties or ownership interests therein and liabilities and other circumstances
customarily excluded by lenders from exculpation provisions and/or included in separate indemnification agreements in non-recourse financings of real estate. 


        "Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A hereto,
evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances, Swing Line Advances and Letter of Credit Advances made by such Lender. 


        "Notice" has the meaning specified in Section 9.02(c). 


        "Notice of Borrowing" has the meaning specified in Section 2.02(a). 


        "Notice of Issuance" has the meaning specified in Section 2.03(a). 


        "Notice of Renewal" has the meaning specified in Section 2.01(b). 


        "Notice of Swing Line Borrowing" has the meaning specified in Section 2.02(b). 


        "Notice of Termination" has the meaning specified in Section 2.01(b). 


        "NPL" means the National Priorities List under CERCLA. 



        "Obligation" means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in
Section 6.01(f). Without limiting the generality of the foregoing, the Obligations of any Loan Party under the Loan Documents include (a) the obligation to pay principal, interest,
Letter of Credit commissions, charges, expenses, fees, attorneys' fees and disbursements, indemnities and other amounts payable by such Loan Party under any Loan Document and (b) the obligation
of such Loan Party to reimburse any amount in respect of any of the foregoing that any Lender Party, in its sole discretion, may elect to pay or advance on behalf of such Loan Party. 


        "OECD" means the Organization for Economic Cooperation and Development. 


        "Other Taxes" has the meaning specified in Section 2.12(b). 



        "Pad" means an individual homesite for the placement of a manufactured home within a Manufactured Home Community. 



18





 




        "Parent Guarantor" has the meaning specified in the recital of parties to this Agreement. 


        "Patriot Act" has the meaning specified in Section 9.12. 


        "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). 


        "Permitted Liens" means: (a) Liens for taxes, assessments and governmental charges or levies not yet due and payable;
(b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business securing obligations
that (i) are not overdue for a period of more than 30 days and (ii) individually or together with all other Permitted Liens outstanding on any date of determination do not
materially adversely affect the use of the property to which they relate unless, in the case of (i) or (ii) above, such liens are the subject of a Good Faith Contest; (c) pledges
or deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; (d) easements, zoning restrictions, rights of way and
other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use or value of such property for its present
purposes; (e) Tenancy Leases; and (f) with respect to real property encumbered by Non-Recourse Debt and not comprising Collateral as defined herein, easements, zoning
restrictions, rights of way and other encumbrances affecting such real property that are permitted to exist under the terms of the agreements governing such Non-Recourse Debt. 



        "Person" means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. 


        "Plan" means a Single Employer Plan or a Multiple Employer Plan. 


        "Platform" has the meaning specified in Section 9.02(b). 


        "Post Petition Interest" has the meaning specified in Section 7.07(c). 


        "Preferred Interests" means, with respect to any Person, Equity Interests issued by such Person that are entitled to a preference or
priority over any other Equity Interests issued by such Person upon any distribution of such Person's property and assets, whether by dividend or upon liquidation. 



        "Private Equity Investors" means Thomas H. Lee Equity Fund IV, L.P. and Affiliates thereof that hold at the relevant time of measurement
investments in the Parent Guarantor and are advised or managed by the same investment advisor as (or whose general partner or managing member is the entity that is the general partner of) Thomas H.
Lee Equity Fund IV, L.P. or by an Affiliate of such investment advisor. 


        "Property-Level Subsidiary" means any Subsidiary of the Borrower or any Joint Venture that holds a direct fee or leasehold interest in any
single building (or group of related buildings, including, without limitation, buildings pooled for purposes of a Non-Recourse Debt financing) or parcel (or group of related parcels,
including, without limitation, parcels pooled for purposes of a Non-Recourse Debt financing) of real property and related assets and not in any other building or parcel of real property. 


        "Proposed Borrowing Base Community" has the meaning specified in Section 5.01(j)(iv). 


        "Proposed Borrowing Base Unit" has the meaning specified in Section 5.01(j)(v). 


        "Pro Rata Share" of any amount means, with respect to any Lender at any time, the product of such amount  times a fraction the numerator of which is the amount of
such Lender's Revolving Credit Commitment at such time (or, if the Commitments shall have been
terminated pursuant to 



19





 




Section 2.05
or 6.01, such Lender's Revolving Credit Commitment as in effect immediately prior to such termination) and the denominator of which is the Revolving Credit Facility at such time
(or, if the Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the Revolving Credit Facility as in effect immediately prior to such termination). 


        "Recapitalization" means the acquisition by the Company of a portfolio of manufactured home communities and related community assets from
Hometown America, L.L.C. in exchange for consideration of cash and assumption of debt and other obligations and the offering of 4,000,000 shares of the Company's Series A preferred stock, in
each case, all as more fully described in the Company's Form S-11 Registration Statement filed with the Securities and Exchange Commission in connection with the IPO and otherwise
on terms reasonably acceptable to the Administrative Agent. 


        "Redeemable" means, with respect to any Equity Interest, any Debt or any other right or Obligation, any such Equity Interest, Debt, right
or Obligation that (a) the issuer has undertaken to redeem at a fixed or determinable date or dates, whether by operation of a sinking fund or otherwise, or upon the occurrence of a condition
not solely within the control of the issuer or (b) is redeemable at the option of the holder. 


        "Reference Banks" means Citibank, N.A., Bank One, National Association and Wachovia Bank, National Association. 


        "Refinancing Debt" means, with respect to any Debt, any Debt extending the maturity of, or refunding or refinancing, in whole or in part,
such Debt, provided that (a) the terms of any Refinancing Debt, and of any agreement entered into and of any instrument issued in connection
therewith, do not provide for any Lien on any Borrowing Base Assets and are otherwise permitted by the Loan Documents, and (b) the material terms, taken as a whole, of any such Refinancing Debt
are no less favorable in any material respect to the Loan Parties or the Lender Parties than the terms governing the Debt being extended, refunded or refinanced (it being understood that the mere
extension of the maturity of any
Surviving Debt that is Non-Recourse Debt shall be deemed to qualify as Refinancing Debt hereunder). 


        "Register" has the meaning specified in Section 9.07(d). 



        "Regulation U" means Regulation U of the Board of Governors of the Federal Reserve System, as in effect from time to time. 


        "REIT" means a Person that is qualified to be treated for tax purposes as a real estate investment trust under Sections
856-860 of the Internal Revenue Code. 


        "Replacement Lender" has the meaning specified in Section 9.01(b). 



        "Required Lenders" means, at any time, Lenders owed or holding greater than 662/3% of the sum of (a) the aggregate
principal amount of the Advances outstanding at such time, (b) the aggregate Available Amount of all Letters of Credit outstanding at such time and (c) the aggregate Unused Revolving
Credit Commitments at such time. For purposes of this definition, the aggregate principal amount of Swing Line Advances owing to the Swing Line Bank and of Letter of Credit Advances owing to any
Issuing Bank and the Available Amount of each Letter of Credit shall be considered to be owed to the Revolving Lenders ratably in accordance with their respective Revolving Credit Commitments. 



        "Responsible Officer" means any officer of, or any officer of any general partner or managing member of, any Loan Party or any of its
Subsidiaries. 


        "Revolving Credit Advance" has the meaning specified in Section 2.01(a). 



20





 




        "Revolving Credit Commitment" means, (a) with respect to any Lender at any time, the amount set forth opposite such Lender's name
on Schedule I hereto under the caption "Revolving Credit Commitment" or (b) if such Lender has entered into one or more Assignment and Acceptances, set forth for such Lender in the
Register maintained by the Administrative Agent pursuant to Section 9.07(d) as such Lender's "Revolving Credit Commitment", as such amount may be reduced at or prior to such time pursuant to
Section 2.05. 


        "Revolving Credit Facility" means, at any time, the aggregate amount of the Lenders' Revolving Credit Commitments at such time. 



        "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc. and any successor
thereto. 


        "Sarbanes-Oxley" means the Sarbanes-Oxley Act of 2002, as amended. 


        "Secured Hedge Agreement" means any Hedge Agreement required or permitted under Article V that is entered into by and between any
Loan Party and any Hedge Bank and that is secured by the Collateral Documents. 



        "Secured Obligations" means, collectively, the "Secured Obligations" as defined in the Primary Security Agreement and the "Secured
Obligations" as defined in the ARC Housing Security Agreement. 


        "Secured Parties" means the Agents, the Lender Parties and the Hedge Banks. 


        "Securities Act" means the Securities Act of 1933, as amended to the date hereof and from time to time hereafter, and any successor
statute. 


        "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended to the date hereof and from time to time hereafter, and
any successor statute. 


        "Security Agreements" have the meaning specified in Section 3.01(a)(ii). 


        "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and no Person other than the Loan Parties and the ERISA Affiliates or (b) was so maintained and in respect of which any Loan Party or any
ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. 


        "Solvent" means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such
Person, on a going-concern basis, is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person, on a going-concern basis, is not less than the amount
that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time (including, without limitation, after taking into account appropriate discount factors for the present value of future contingent
liabilities), represents the amount that can reasonably be expected to become an actual or matured liability. 



        "Standby Letter of Credit" means any Letter of Credit issued under the Letter of Credit Facility, other than a Trade Letter of Credit. 


        "Subordinated Obligations" has the meaning specified in Section 7.07(a). 



21





 




        "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in
which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at
the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of
such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate, in each case, is at the time directly or indirectly owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. 


        "Subsidiary Guarantor" has the meaning specified in the recital of parties to this Agreement. 


        "Supplemental Collateral Agent" has the meaning specified in Section 8.01(b). 



        "Surviving Debt" means Debt of each Loan Party and its Subsidiaries outstanding immediately before and after giving effect to the
Recapitalization. 


        "Swing Line Advance" means an advance made by (a) the Swing Line Bank pursuant to Section 2.01(c) or (b) any Lender
pursuant to Section 2.02(b). 


        "Swing Line Bank" means CNAI, in its capacity as the Lender of Swing Line Advances, and its successors and permitted assigns in such
capacity. 


        "Swing Line Borrowing" means a borrowing consisting of a Swing Line Advance made by the Swing Line Bank pursuant to Section 2.01(c)
or the Lenders pursuant to Section 2.02(b). 


        "Swing Line Commitment" means, with respect to the Swing Line Bank, the amount of the Swing Line Facility set forth in
Section 2.01(b), as such amount may be reduced at or prior to such time pursuant to Section 2.05. 


        "Swing Line Facility" has the meaning specified in Section 2.01(c). 


        "Taxes" has the meaning specified in Section 2.12(a). 


        "Tenancy Leases" means operating leases, subleases, licenses, occupancy agreements and
rights-of-use entered into by the Borrower or any of its Subsidiaries in its capacity as a lessor or a similar capacity in the ordinary course of business that do not
materially and adversely affect the use of the Manufactured Home Community or other real property encumbered thereby for its intended purpose. 



        "Termination Date" means the earlier of (a) the third anniversary of the Closing Date and (b) the date of termination in
whole of the Revolving Credit Commitments, the Letter of Credit Commitments and the Swing Line Commitment pursuant to Section 2.05 or 6.01. 


        "Total Asset Value" means, on any date of determination, the sum of the Asset Values for all Assets at such date  plus cash on hand and cash reserves of the
Borrower and its Subsidiaries and Cash Equivalents. 



        "Trade Letter of Credit" means any Letter of Credit that is issued under the Letter of Credit Facility for the benefit of a supplier of
inventory to the Borrower or any of its Subsidiaries to effect payment for such Inventory. 


        "Transfer" has the meaning specified in Section 5.02(e). 


        "Type" refers to the distinction between Advances bearing interest at the Base Rate and Advances bearing interest at the Eurodollar Rate. 



        "Unit Collateral Agent" has the meaning specified in the Collateral Sub-Agency Agreement. 



22





 




        "Unused Fee" has the meaning specified in Section 2.08(a). 


        "Unused Revolving Credit Commitment" means, with respect to any Lender at any time, (a) such Lender's Revolving Credit Commitment
at such time minus (b) the sum of (i) the aggregate principal amount of all Revolving Credit Advances, Swing Line Advances and Letter of
Credit Advances made by such Lender (in its capacity as a Lender) and outstanding at such time plus (ii) such Lender's Pro Rata Share of
(A) the aggregate Available Amount of all Letters of Credit outstanding at such time, (B) the aggregate principal amount of all Letter of Credit Advances made by the Issuing Banks
pursuant to Section 2.03(c) and outstanding at such time and (C) the aggregate principal amount of all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(c)
and outstanding at such time. 


        "Voting Interests" means shares of capital stock issued by a corporation, or equivalent Equity Interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency. 


        "Welfare Plan" means a welfare plan, as defined in Section 3(1) of ERISA, that is maintained for employees of any Loan Party or in
respect of which any Loan Party could have liability. 




        SECTION
1.02.    Computation of Time Periods; Other Definitional Provisions.    In this Agreement and the other Loan
Documents in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding". References in the Loan Documents to any agreement
or contract "as amended" shall mean and be a reference to such agreement or contract as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with its terms. 



        SECTION
1.03.    Accounting Terms.    All accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(g)
("GAAP"). 


23






   ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT  


        SECTION
2.01.    The Advances and the Letters of Credit.    (a) The Revolving Credit
Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make advances (each a "Revolving Credit
Advance") to the Borrower from time to time on any Business Day during the period from the date hereof until the Termination Date in an amount for each such Advance not to
exceed such Lender's Unused Revolving Credit Commitment at such time. Each Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall
consist of Revolving Credit Advances made simultaneously by the Lenders ratably according to their Revolving Credit Commitments. Within the limits of each Lender's Unused Revolving Credit Commitment
in effect from time to time and prior to the Termination Date, the Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.06(a) and reborrow under this
Section 2.01(a). 


        (b)    Letters of Credit.    Each Issuing Bank severally agrees, on the terms and conditions hereinafter set forth, to
issue (or cause its Affiliate that is a commercial bank to issue on its behalf) letters of credit (the "Letters of Credit"), for the account of the
Borrower from time to time on any Business Day during the period from the date hereof until 60 days before the Termination Date in an aggregate Available Amount (i) for all Letters of
Credit not to exceed at any time the Letter of Credit Facility at such time, (ii) for all Letters of Credit issued by such Issuing Bank not to exceed such Issuing Bank's Letter of Credit
Commitment at such time, and (iii) for each such Letter of Credit not to exceed the Unused Revolving Credit Commitments of the Lenders at such time. No Letter of Credit shall have an expiration
date (including all rights of the Borrower or the beneficiary to require renewal) later than the earlier of 60 days before the Termination Date and (A) in the case of a Standby Letter of
Credit one year after the date of issuance thereof, but may by its terms be renewable annually upon notice (a "Notice of Renewal") given to the Issuing
Bank that issued such Standby Letter of Credit and the Administrative Agent on or prior to any date for notice of renewal set forth in such Letter of Credit but in any event at least three Business
Days prior to the date of the proposed renewal of such Standby Letter of Credit and upon fulfillment of the applicable conditions set forth in Article III unless such Issuing Bank has notified
the Borrower (with a copy to the Administrative Agent) on or prior to the date for notice of termination set forth in such Letter of Credit but in any event at least 30 Business Days prior to the date
of automatic renewal of its election not to renew such Standby Letter of Credit (a "Notice of Termination") and (B) in the case of a Trade Letter
of Credit, 60 days after the date of issuance thereof; provided, however, that the terms of each
Standby Letter of Credit that is automatically renewable annually shall (x) require the Issuing Bank that issued such Standby Letter of Credit to give the beneficiary named in such Standby
Letter of Credit notice of any Notice of Termination, (y) permit such beneficiary, upon receipt of such notice, to draw under such Standby Letter of Credit prior to the date such Standby Letter
of Credit otherwise would have been automatically renewed and (z) not permit the expiration date (after giving effect to any renewal) of such Standby Letter of Credit in any event to be
extended to a date later than 60 days before the Termination Date. If either a Notice of Renewal is not given by the Borrower or a Notice of Termination is given by the relevant Issuing Bank
pursuant to the immediately preceding sentence, such Standby Letter of Credit shall expire on the date on which it otherwise would have been automatically renewed; provided,
however, that even in the absence of receipt of a Notice of Renewal the relevant Issuing Bank may in its discretion, unless instructed to the contrary by the Administrative
Agent or the Borrower, deem that a Notice of Renewal had been timely delivered and in such case, a Notice of Renewal shall be deemed to have been so delivered for all purposes under this Agreement.
Each Standby Letter of Credit shall contain a provision authorizing the Issuing Bank that issued such Letter of Credit to deliver to the beneficiary of such Letter of Credit, upon the occurrence and
during the continuance of an Event of Default, a notice (a "Default Termination Notice") terminating such Letter of Credit and giving such beneficiary
15 days to draw such Letter of Credit. Within the limits of the 


24





 



Letter
of Credit Facility, and subject to the limits referred to above, the Borrower may request the issuance of Letters of Credit under this Section 2.01(b), repay any Letter of Credit
Advances resulting from drawings thereunder pursuant to Section 2.03(c) and request the issuance of additional Letters of Credit under this Section 2.01(b). 


        (c)    The Swing Line Advances.    The Borrower may request the Swing Line Bank to make, and the Swing Line Bank
agrees to make, on the terms and conditions hereinafter set forth, Swing Line Advances to the Borrower from time to time on any Business Day during the period from the date hereof until the
Termination Date (i) in an aggregate amount not to exceed at any time outstanding $1,000,000 (the "Swing Line Facility") and (ii) in an
amount for each such Swing Line Borrowing not to exceed the
aggregate of the Unused Revolving Credit Commitments of the Lenders at such time. No Swing Line Advance shall be used for the purpose of funding the payment of principal of any other Swing Line
Advance. Each Swing Line Borrowing shall be in an amount of $250,000 or an integral multiple of $250,000 in excess thereof and shall be made as a Base Rate Advance. Within the limits of the Swing Line
Facility and within the limits referred to in clause (ii) above, the Borrower may borrow under this Section 2.01(c), repay pursuant to Section 2.04(b) or prepay pursuant to
Section 2.06(a) and reborrow under this Section 2.01(c). 



        SECTION
2.02.    Making the Advances.    (a) Except as otherwise provided in Section 2.03, each
Borrowing shall be made on notice, given not later than 12:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances, or not later than 1:00 P.M. (New York City time) on the first Business Day prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof by telex or telecopier. Each such notice of a Borrowing (a
"Notice of Borrowing") shall be by telephone, confirmed immediately in writing, or telex or telecopier or e-mail, in each case in
substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate
amount of such Borrowing and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each Lender shall, before 12:00 P.M.
(New York City time) on the date of such Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances and 1:00 P.M. (New York City time) on the date of such Borrowing in the case
of a Borrowing consisting of Base Rate Advances, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent's Account, in same day funds,
such Lender's ratable portion of such Borrowing in accordance with the respective Commitments of such Lender and the other Lenders. After the Administrative Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower's Account;  provided, however,
that the Administrative Agent shall first make a portion of such funds equal to the aggregate principal amount of any Swing Line
Advances and Letter of Credit Advances made by the Swing Line Bank or any Issuing Bank, as the case may be, and by any other Lender and outstanding on the date of such Borrowing, plus interest accrued
and unpaid thereon to and as of such date, available to the Swing Line Bank or such Issuing Bank, as the case may be, and such other Lenders for repayment of such Swing Line Advances and Letter of
Credit Advances. 


        (b)   Each
Swing Line Borrowing shall be made on notice, given not later than 12:00 P.M. (New York City time) on the date of the proposed Swing Line Borrowing, by the
Borrower to the Swing Line Bank and the Administrative Agent. Each such notice of a Swing Line Borrowing (a "Notice of Swing Line Borrowing") shall be
by telephone, confirmed immediately in writing or by telecopier or e-mail, in each case specifying therein the requested (i) date of such Borrowing, (ii) amount of such
Borrowing and (iii) maturity of such Borrowing (which maturity shall be no later than the earlier of (A) the seventh day after the requested date of such Borrowing and (B) the
Termination Date). The Swing Line Bank shall, before 1:00 P.M. (New York City time) on the date of such Swing Line Borrowing, 


25





 



make
the amount thereof available to the Administrative Agent at the Administrative Agent's Account, in same day funds. After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower by crediting the Borrower's Account. Upon written demand by the Swing
Line Bank, with a copy of such demand to the Administrative Agent, each other Lender shall purchase from the Swing Line Bank, and the Swing Line Bank shall sell and assign to each such other Lender,
such other Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of such demand, by making available for the account of its Applicable Lending Office to the Administrative
Agent for the account of the Swing Line Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding principal amount of such Swing Line
Advance to be purchased by such Lender. The Borrower hereby agrees to each such sale and assignment. Each Lender agrees to purchase its Pro Rata Share of an outstanding Swing Line Advance on
(i) the Business Day on which demand therefor is made by the Swing Line Bank, provided that notice of such demand is given not later than
12:00 P.M. (New York City time) on such Business Day or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such
assignment by the Swing Line Bank to any other Lender of a portion of a Swing Line Advance, the Swing Line Bank represents and warrants to such other Lender that the Swing Line Bank is the legal and
beneficial owner of such interest being assigned by it, but makes no other representation or warranty and assumes no responsibility with respect to such Swing Line Advance, the Loan Documents or any
Loan Party. If and to the extent that any Lender shall not have so made the amount of such Swing Line Advance available to the Administrative Agent, such Lender agrees to pay to the Administrative
Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Swing Line Bank until the date such amount is paid to the Administrative Agent, at the
Federal Funds Rate. If such Lender shall pay to the Administrative Agent such amount for the account of the Swing Line Bank on any Business Day, such amount so paid in respect of principal shall
constitute a Swing Line Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Swing Line Advance made by the Swing Line Bank
shall be reduced by such amount on such Business Day. 


        (c)   Anything
in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for the initial Borrowing
hereunder or for any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant
to Section 2.07(d)(ii), 2.09 or 2.10 and (ii) there may not be more than 10 separate Borrowings outstanding at any time. 



        (d)   Each
Notice of Borrowing and Notice of Swing Line Borrowing shall be irrevocable and binding on the Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such
Advance, as a result of such failure, is not made on such date. 


        (e)   Unless
the Administrative Agent shall have received notice from a Lender prior to (x) the date of any Borrowing consisting of Eurodollar Rate Advances or
(y) 12:00 Noon (New York City time) on the date of any Borrowing consisting of Base Rate Advances that such Lender will not make available to the Administrative Agent such Lender's ratable
portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with subsection
(a) of this Section 2.02 and the Administrative Agent may, in reliance upon such assumption, make available to 


26





 



the
Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower
severally agree to repay or pay to the Administrative Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid or paid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at such time under Section 2.07 to
Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such Borrowing for all purposes. 


        (f)    The
failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make
its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing. 


        SECTION
2.03.    Issuance of and Drawings and Reimbursement Under Letters of
Credit.    (a) Request for Issuance. Each Letter of Credit shall be issued upon notice, given not later than
12:00 P.M. (New York City time) on the fifth Business Day prior to the date of the proposed issuance of such Letter of Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent and each Lender prompt notice thereof by telex, telecopier or e-mail or by means of the Platform. Each such notice of issuance of a Letter of Credit (a
"Notice of Issuance") shall be by telephone, confirmed immediately in writing, telex, telecopier or e-mail, in each case specifying therein
the requested (i) date of such issuance (which shall be a Business Day), (ii) Available Amount of such Letter of Credit, (iii) expiration date of such Letter of Credit,
(iv) name and address of the beneficiary of such Letter of Credit and (v) form of such Letter of Credit, and shall be accompanied by such application and agreement for letter of credit
as such Issuing Bank may specify to the Borrower
for use in connection with such requested Letter of Credit (a "Letter of Credit Agreement"). If (y) the requested form of such Letter of Credit
is acceptable to such Issuing Bank in its sole discretion and (z) it has not received notice of objection to such issuance from the Required Lenders, such Issuing Bank will, upon fulfillment of
the applicable conditions set forth in Article III, make such Letter of Credit available to the Borrower at its office referred to in Section 9.02 or as otherwise agreed with the
Borrower in connection with such issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement
shall govern. 


        (b)    Letter of Credit Reports.    Each Issuing Bank shall furnish (i) to each Lender on the first Business
Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued by such Issuing Bank during the preceding month and drawings during such month under all
Letters of Credit issued by such Issuing Bank and (ii) to the Administrative Agent and each Lender on the first Business Day of each calendar quarter a written report setting forth the average
daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit issued by such Issuing Bank. 


        (c)    Drawing and Reimbursement.    The payment by any Issuing Bank of a draft drawn under any Letter of Credit shall
constitute for all purposes of this Agreement the making by such Issuing Bank of a Letter of Credit Advance, which shall be a Base Rate Advance, in the amount of such draft. Upon written demand by any
Issuing Bank with an outstanding Letter of Credit Advance, with a copy of such demand to the Administrative Agent, each Lender shall purchase from such Issuing Bank, and such Issuing Bank shall sell
and assign to each such Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit Advance as of the date of such purchase, by making available for the account of its Applicable Lending
Office to the Administrative Agent for the account of such Issuing Bank, by deposit to the Administrative Agent's Account, in same day funds, an amount equal to the portion of the outstanding
principal amount of such Letter of Credit Advance to be purchased by such Lender. Promptly after receipt thereof, the Administrative Agent shall transfer such funds to such 


27





 



Issuing
Bank. The Borrower hereby agrees to each such sale and assignment. Each Lender agrees to purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i) the Business Day
on which demand therefor is made by the Issuing Bank which made such Advance, provided that notice of such demand is given not later than
11:00 A.M. (New York City time) on such Business Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. Upon any such
assignment by an Issuing Bank to any Lender of a portion of a Letter of Credit Advance, such Issuing Bank represents and warrants to such other Lender that such Issuing Bank is the legal and
beneficial owner of such interest being assigned by it, free and clear of any liens, but makes no other representation or warranty and assumes no responsibility with respect to such Letter of Credit
Advance, the Loan Documents or any Loan Party. If and to the extent that any Lender shall not have so made the amount of such Letter of Credit Advance available to the Administrative Agent, such
Lender agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by such Issuing Bank until the date such amount is
paid to the Administrative Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable. If such Lender shall pay to the Administrative Agent such amount for the
account of such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute a Letter of Credit Advance made by such Lender on such Business Day for purposes of this
Agreement, and the outstanding principal amount of the Letter of Credit Advance made by such Issuing Bank shall be reduced by such amount on such Business Day. 



        (d)    Failure to Make Letter of Credit Advances.    The failure of any Lender to make the Letter of Credit Advance to
be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Letter of Credit Advance on such date, but no Lender shall be
responsible for the failure of any other Lender to make the Letter of Credit Advance to be made by such other Lender on such date. 


        SECTION
2.04.    Repayment of Advances.    (a) Revolving Credit
Advances. The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders on the Termination Date the aggregate outstanding principal amount of the
Revolving Credit Advances then outstanding. 


        (b)    Swing Line Advances.    The Borrower shall repay to the Administrative Agent for the account of (i) the
Swing Line Bank and (ii) each other Lender that has made a Swing Line Advance by purchase from the
Swing Line Bank pursuant to Section 2.02(b), the outstanding principal amount of each Swing Line Advance made by each of them on the earlier of the maturity date specified in the applicable
Notice of Swing Line Borrowing (which maturity shall be no later than the seventh day after the requested date of such Swing Line Borrowing) and the Termination Date. 


        (c)    Letter of Credit Advances.    (i) The Borrower shall repay to the Administrative Agent for the account
of each Issuing Bank and each other Lender that has made a Letter of Credit Advance on the same day on which such Advance was made the outstanding principal amount of each Letter of Credit Advance
made by each of them. 


        (ii)   The
Obligations of the Borrower under this Agreement, any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit (and the
obligations of each Lender to reimburse the Issuing Bank with respect thereto) shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances: 



        (A)  any
lack of validity or enforceability of any Loan Document, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto
(all of the foregoing being, collectively, the "L/C Related Documents"); 



28





 

        (B)  any
change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of the Borrower in respect of any L/C Related Document or
any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; 


        (C)  the
existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of
Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with the transactions contemplated by the L/C
Related Documents or any unrelated transaction; 


        (D)  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; 


        (E)  payment
by any Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of
Credit; 


        (F)  any
exchange, release or non-perfection of any Collateral or other collateral, or any release or amendment or waiver of or consent to departure from the
Guaranties or any other guarantee, for all or any of the Obligations of the Borrower in respect of the L/C Related Documents; or 


        (G)  any
other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor; 




provided that, notwithstanding the foregoing, an Issuing Bank shall not be relieved of any liability it may otherwise have as a result of its gross
negligence or willful misconduct. 


        SECTION
2.05.    Termination or Reduction of the
Commitments.    (a) Optional. The Borrower may, upon at least three Business Days' notice to the Administrative
Agent, terminate in whole or reduce in part the unused portions of the Swing Line Facility, the Letter of Credit Facility and the Unused Revolving Credit Commitments; provided,
however, that each partial reduction of a Facility (i) shall be in an aggregate amount of $10,000,000 (or in the case of the Swing Line Facility, $250,000) or an
integral multiple of $1,000,000 (or in the case of the Swing Line Facility, $250,000) in excess thereof and (ii) shall be made ratably among the Lenders in accordance with their Commitments
with respect to such Facility. 


        (b)    Mandatory.    (i) The Letter of Credit Facility shall be permanently reduced from time to time on the
date of each reduction in the Revolving Credit Facility by the amount, if any, by which the amount of the Letter of Credit Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility. 


        (ii)   The
Swing Line Facility shall be permanently reduced from time to time on the date of each reduction in the Revolving Credit Facility by the amount, if any, by which
the amount of the Swing Line Facility exceeds the Revolving Credit Facility after giving effect to such reduction of the Revolving Credit Facility. 


        SECTION
2.06.    Prepayments.    (a) Optional. The Borrower
may, upon same day notice in the case of Base Rate Advances and two Business Days' notice in the case of Eurodollar Rate Advances, in each case to the Administrative Agent stating the proposed date
and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding aggregate principal amount of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the aggregate principal amount prepaid; provided,
however, that (i) each partial prepayment shall be in an aggregate principal amount of 


29





 



$5,000,000
or an integral multiple of $1,000,000 in excess thereof or, if less, the amount of the Advances outstanding and (ii) if any prepayment of a Eurodollar Rate Advance is made on a date
other than the last day of an Interest Period for such Advance, the Borrower shall also pay any amounts owing pursuant to Section 9.04(c). 


        (b)    Mandatory.    (i) The Borrower shall, on each Business Day, prepay an aggregate principal amount of the
Revolving Credit Advances comprising part of the same Borrowings, the Swing Line Advances and the Letter of Credit Advances and deposit an amount in the L/C Cash Collateral Account in an amount equal
to the amount by which (A) the sum of the aggregate principal amount of (1) the Revolving Credit Advances then outstanding, (2) the Swing Line Advances then outstanding and
(3) the Letter of Credit Advances then outstanding plus the aggregate Available Amount of all Letters of Credit then outstanding exceeds
(B) the lesser of the Revolving Credit Facility and the sum of the Loan Values of the Borrowing Base Assets on such Business Day. 


         (ii)  The
Borrower shall, on each Business Day, pay to the Administrative Agent for deposit in the L/C Cash Collateral Account an amount sufficient to cause the aggregate
amount on deposit in the L/C Cash Collateral Account to equal the amount by which the aggregate Available Amount of all Letters of Credit then outstanding exceeds the Letter of Credit Facility on such
Business Day. 


        (iii)  Prepayments
of the Revolving Credit Facility made pursuant to clause (i) above shall be first applied to prepay
Letter of Credit Advances then outstanding until such Advances are paid in full, second applied to prepay Swing Line Advances then outstanding until
such Advances are paid in full, third applied to prepay Revolving Credit Advances then outstanding comprising part of the same Borrowings until such
Advances are paid in full and fourth deposited in the L/C Cash Collateral Account to cash collateralize 100% of the Available Amount of the Letters of
Credit then outstanding. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the relevant Issuing Bank
or Lenders, as applicable. 


        (iv)  All
prepayments under this subsection (b) shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid. 


        SECTION
2.07.    Interest.    (a) Scheduled Interest. The
Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates
per annum: 




          (i)  Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to
the sum of (A) the Base Rate in effect from time to time plus (B) the Applicable Margin in effect from time to time, payable in arrears
quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full. 



         (ii)  Eurodollar Rate Advances. During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at
all times during each Interest Period for such Advance to the sum of (A) the Eurodollar Rate for such Interest Period for such Advance plus
(B) the Applicable Margin in effect on the first day of such Interest Period, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than
three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid
in full. 





        (b)    Default Interest.    Upon the occurrence and during the continuance of a Default of the type described in
Section 6.01(a) or (f) or, at the election of the Administrative Agent or the Required Lenders, upon the occurrence and during the continuance of an Event of Default, the Borrower shall
pay interest on (i) the unpaid principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above and on
demand, at a rate per annum 


30





 

equal
at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent
permitted by law, the amount of any interest, fee or other amount payable under the Loan Documents that is not paid when due, from the date such amount shall be due until such amount shall be paid in
full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid, in the case
of interest, on the Type of Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii) above and, in all other cases, on Base Rate Advances pursuant to
clause (a)(i) above. 


        (c)    Notice of Interest Period and Interest Rate.    Promptly after receipt of a Notice of Borrowing pursuant to
Section 2.02(a), a notice of Conversion pursuant to Section 2.09 or a notice of selection of an Interest Period pursuant to the terms of the definition of "Interest Period", the
Administrative Agent shall give notice to the Borrower and each Lender of the applicable Interest Period and the applicable interest rate determined by the Administrative Agent for purposes of
clause (a)(i) or (a)(ii) above, and the applicable rate, if any, furnished by each Reference Bank for the purpose of determining the applicable interest rate under
clause (a)(ii) above. 


        (d)    Interest Rate Determination.    (i) Each Reference Bank agrees to furnish to the Administrative Agent
timely information for the purpose of determining each Eurodollar Rate. If any one or more of the Reference Banks shall not furnish such timely information to the Administrative Agent for the purpose
of determining any such interest rate, the Administrative Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks. 



         (ii)  If
Telerate Page 3750 is unavailable and fewer than two Reference Banks are able to furnish timely information to the Administrative Agent for determining the
Eurodollar Rate for any Eurodollar Rate Advances, 



        (A)  the
Administrative Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances, 


        (B)  each
such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base
Rate Advance, will continue as a Base Rate Advance), and 


        (C)  the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist. 




        SECTION
2.08.    Fees.    (a) Unused Fee. The Borrower shall
pay to the Administrative Agent for the account of the Lenders an unused commitment fee (the "Unused Fee"), from the date hereof in the case of each
Initial Lender and from the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date, payable in
arrears on the date of the initial Borrowing hereunder, and thereafter quarterly on the last day of each March, June, September and December, commencing March 31, 2004, and on the Termination
Date. The Unused Fee payable for the account of each Lender shall be calculated for each period for which the Unused Fee is payable on the average daily Unused Revolving Credit Commitment of such
Lender during such period at the rate of 1/2 of 1% per annum. 


        (b)    Letter of Credit Fees, Etc.    (i) The Borrower shall pay to the Administrative Agent for the account
of each Lender a commission, payable in arrears, (a) quarterly on the last day of each March, June, September and December, commencing March 31, 2004, and (b) on the earliest to
occur of the full drawing, expiration, termination or cancellation of any Letter of Credit, and (c) on the Termination Date, on such Lender's Pro Rata Share of the average daily aggregate
Available Amount during such quarter of all Letters of Credit outstanding from time to time at the rate per annum equal to the Applicable Margin for Eurodollar Rate Advances in effect from time to
time. 


31





 



         (ii)  The
Borrower shall pay to each Issuing Bank, for its own account, (A) a fronting fee for each Letter of Credit issued by such Issuing Bank in an amount equal to
0.125% of the Available Amount of such Letter of Credit on the date of issuance of such Letter of Credit, payable on such date and (B) such other commissions, issuance fees, transfer fees and
other fees and charges in connection with the issuance or administration of each Letter of Credit as the Borrower and such Issuing Bank shall agree. 


        (c)    Agents' Fees.    The Borrower shall pay to each Agent for its own account such fees as may from time to time be
agreed between the Borrower and such Agent. 


        SECTION
2.09.    Conversion of Advances.    (a) Optional. The
Borrower may on any Business Day, upon notice given to the Administrative Agent not later than 12:00 P.M. (New York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.07 and 2.10, Convert all or any portion of the Advances of one Type comprising the same Borrowing into Advances of the other Type;  provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances, any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(c), no
Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(c) and each Conversion of Advances comprising part of the same Borrowing under any Facility
shall be made ratably among the Lenders in accordance with their Commitments under such Facility. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for such Advances.
Each notice of Conversion shall be irrevocable and binding on the Borrower. 



        (b)    Mandatory.    (i) On the date on which the aggregate unpaid principal amount of Eurodollar Rate
Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically Convert into Base Rate Advances. 


         (ii)  If
the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition
of "Interest Period" in Section 1.01, the Administrative Agent will forthwith so notify the Borrower and the Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Base Rate Advance. 


        (iii)  Upon
the occurrence and during the continuance of any Event of Default, (y) each Eurodollar Rate Advance will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (z) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. 



        SECTION
2.10.    Increased Costs, Etc.    (a) If, due to either (i) the introduction of or any change
in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force
of law), there shall be any increase in the cost to any Lender Party of agreeing to make or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or
maintaining or participating in Letters of Credit or of agreeing to make or of making or maintaining Letter of Credit Advances (excluding, for purposes of this Section 2.10, any such increased
costs resulting from (y) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (z) changes in the basis of taxation of overall net income or overall gross income by the
United States or by the foreign jurisdiction or state under the laws of which such Lender Party is organized or has its Applicable Lending Office or any political subdivision thereof), then the
Borrower shall from time to time, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender Party
additional amounts sufficient to compensate such Lender Party for 


32





 



such
increased cost; provided, however, that a Lender Party claiming additional amounts under this Section 2.10(a) agrees to use reasonable
efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such a designation would avoid the need for, or
reduce the amount of, such increased cost that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. A certificate as
to the amount of such increased cost, submitted to the Borrower by such Lender Party, shall be conclusive and binding for all purposes, absent manifest error. 



        (b)   If
any Lender Party determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or
not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such Lender Party's commitment to lend or to issue or participate in Letters of Credit hereunder and other commitments of such
type or the issuance or maintenance of or participation in the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender Party or such corporation (with a copy of such
demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender Party, from time to time as specified by such Lender Party, additional amounts
sufficient to compensate such Lender Party in the light of such circumstances, to the extent that such Lender Party reasonably determines such increase in capital to be allocable to the existence of
such Lender Party's commitment to lend or to issue or participate in Letters of Credit hereunder or to the issuance or maintenance of or participation in any Letters of Credit. A certificate as to
such amounts submitted to the Borrower by such Lender Party shall be conclusive and binding for all purposes, absent manifest error. 


        (c)   If,
with respect to any Eurodollar Rate Advances, the Required Lenders notify the Administrative Agent that the Eurodollar Rate for any Interest Period for such Advances
will not adequately reflect the cost to such Lenders of making, funding or maintaining their Eurodollar Rate Advances for such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon (i) each such Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lenders
have determined that the circumstances causing such suspension no longer exist. 


        (d)   Notwithstanding
any other provision of this Agreement, if the introduction of or any change in or in the interpretation of any law or regulation shall make it unlawful,
or any central bank or other governmental authority shall assert that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder, then, on notice thereof and demand therefor by such Lender to the Borrower through the Administrative Agent,
(i) each Eurodollar Rate Advance will automatically, upon such demand, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall notify the Borrower that such Lender has determined that the circumstances causing such suspension no longer exist;  provided, however,
 that, before making any such demand, such Lender agrees to use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Eurodollar Lending Office if the making of such a designation would allow such Lender or its Eurodollar Lending Office to continue to perform its
obligations to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. 


        SECTION
2.11.    Payments and Computations.    (a) The Borrower shall make each payment hereunder and under
the Notes, irrespective of any right of counterclaim or set-off (except as otherwise provided in Section 2.13), not later than 12:00 P.M. (New York City time) on the day when
due in U.S. 


33





 



dollars
to the Administrative Agent at the Administrative Agent's Account in same day funds, with payments being received by the Administrative Agent after such time being deemed to have been received
on the next succeeding Business Day. The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable hereunder and under the Notes to more than one Lender Party, to such Lender Parties for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective Obligations then payable to such Lender Parties and (ii) if such payment by the Borrower is in respect of any
Obligation then payable hereunder to one Lender Party, to such Lender Party for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement.
Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(d), from and after the effective date of such
Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender Party assignee thereunder, and the
parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. 



        (b)   The
Borrower hereby authorizes each Lender Party and each of its Affiliates, if and to the extent payment owed to such Lender Party is not made when due hereunder or, in
the case of a Lender, under the Note held by such Lender, to charge from time to time, to the fullest extent permitted by law, against any or all of the Borrower's accounts with such Lender Party any
amount so due. 


        (c)   All
computations of interest based on the Base Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and
all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of fees and Letter of Credit commissions shall be made by the Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each
determination by the Administrative Agent of an interest rate, fee or commission hereunder shall be conclusive and binding for all purposes, absent manifest error. 


        (d)   Whenever
any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commitment fee, as the case may be; provided,
however, that if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall
be made on the next preceding Business Day. 


        (e)   Unless
the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender Party hereunder that the
Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each such Lender Party on such due date an amount equal to the amount then due such Lender Party. If and to the extent the Borrower
shall not have so made such payment in full to the Administrative Agent, each such Lender Party shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender Party
together with interest thereon, for each day from the date such amount is distributed to such Lender Party until the date such Lender Party repays such amount to the Administrative Agent, at the
Federal Funds Rate. 


34







  





        (f)    Whenever any payment received by the Administrative Agent under this Agreement or any of the other Loan Documents is insufficient to pay in full all amounts due and
payable to the Agents and the Lender Parties under or in respect of this Agreement and the other Loan Documents on any date, such payment shall be distributed by the Administrative Agent and applied
by the Agents and the Lender Parties in the following order of priority: 



          (i)  first, to the payment of all of the fees, indemnification payments, costs and expenses that are due and payable to the
Agents (solely in their respective capacities as Agents) under or in respect of this Agreement and the other Loan Documents on such date, ratably based upon the respective aggregate amounts of all
such fees, indemnification payments, costs and expenses owing to the Agents on such date; 



         (ii)  second, to the payment of all of the fees, indemnification payments, costs and expenses that are due and payable to the
Issuing Banks (solely in their respective capacities as such) under or in respect of this Agreement and the other Loan Documents on such date, ratably based upon the respective aggregate amounts of
all such fees, indemnification payments, costs and expenses owing to the Issuing Banks on such date; 


        (iii)  third, to the payment of all of the indemnification payments, costs and expenses that are due and payable to the
Lenders under Section 9.04, Section 24 of the Primary Security Agreement, Section 20 of the ARC Housing Security Agreement and any similar section of any of the other Loan
Documents on such date, ratably based upon the respective aggregate amounts of all such indemnification payments, costs and expenses owing to the Lenders on such date; 


        (iv)  fourth, to the payment of all of the amounts that are due and payable to the Administrative Agent and the Lender Parties
under Sections 2.10 and 2.12 on such date, ratably based upon the respective aggregate amounts thereof owing to the Administrative Agent and the Lender Parties on such date; 


         (v)  fifth, to the payment of all of the fees that are due and payable to the Lenders under Section 2.08(a) on such
date, ratably based upon the respective aggregate Commitments of the Lenders under the Facilities on such date; 


        (vi)  sixth, to the payment of all of the accrued and unpaid interest on the Obligations of the Borrower under or in respect
of the Loan Documents that is due and payable to the Administrative Agent and the Lender Parties under Section 2.07(b) on such date, ratably based upon the respective aggregate amounts of all
such interest owing to the Administrative Agent and the Lender Parties on such date; 


       (vii)  seventh, to the payment of all of the accrued and unpaid interest on the Advances that is due and payable to the
Administrative Agent and the Lender Parties under Section 2.07(a) on such date, ratably based upon the respective aggregate amounts of all such interest owing to the Administrative Agent and
the Lender Parties on such date; 


      (viii)  eighth, to the payment of the principal amount of all of the outstanding Advances and any reimbursement obligations
that are due and payable to the Administrative Agent and the Lender Parties on such date, ratably based upon the respective aggregate amounts of all such principal and reimbursement obligations owing
to the Administrative Agent and the Lender Parties on such date, and to deposit into the L/C Cash Collateral Account any contingent reimbursement obligations in respect of outstanding Letters of
Credit to the extent required by Section 6.02; and 


        (ix)  ninth, to the payment of all other Obligations of the Loan Parties owing under or in respect of the Loan Documents that
are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative
Agent and the other Secured Parties on such date. 




        SECTION
2.12.    Taxes.    (a) Any and all payments by the Borrower hereunder or under the Notes shall be
made, in accordance with Section 2.11, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender Party and the Administrative Agent, taxes 


35





 

that
are imposed on its overall net income by the United States and taxes that are imposed on its overall net income (and franchise or other similar taxes imposed in lieu thereof) by the state or
foreign jurisdiction under the laws of which such Lender Party or the Administrative Agent, as the case may be, is organized or any political subdivision thereof and, in the case of each Lender Party,
taxes that are imposed on its overall net income (and franchise or other similar taxes imposed in lieu thereof) by the state or foreign jurisdiction of such Lender Party's Applicable Lending Office or
any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or
under any Note to any Lender Party or the Administrative Agent, (i) the sum payable by the Borrower shall be increased as may be necessary so that after the Borrower and the Administrative
Agent have made all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender Party or the Administrative Agent, as the case may be,
receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make all such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in accordance with applicable law. 


        (b)   In
addition, the Borrower shall pay any present or future stamp, documentary, excise, property, intangible, mortgage recording or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Agreement, or any other Loan Document
(hereinafter referred to as "Other Taxes"). 



        (c)   The
Borrower shall indemnify each Lender Party and the Administrative Agent for and hold them harmless against the full amount of Taxes and Other Taxes, and for the full
amount of taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.12, imposed on or paid by such Lender Party or the Administrative Agent (as the case may be) and
any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such
Lender Party or the Administrative Agent (as the case may be) makes written demand therefor. 


        (d)   Within
30 days after the date of any payment of Taxes, the Borrower shall furnish to the Administrative Agent, at its address referred to in Section 9.02,
the original or a certified copy of a receipt evidencing such payment or, if such receipts are not obtainable, other evidence of such payments by the Borrower reasonably satisfactory to the
Administrative Agent. In the case of any payment hereunder or under the Notes by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower
by a payor that is not a United States person, if the Borrower determines that no Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause such payor to furnish, to the
Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes. For purposes of subsections (d) and
(e) of this Section 2.12, the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue Code. 


        (e)   Each
Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of this Agreement in
the case of each Initial Lender Party, and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time
thereafter as requested in writing by the Borrower (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Administrative Agent and the Borrower with two
original Internal Revenue Service forms W8-ECI or W8-BEN, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender
Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the forms provided by a Lender Party at the time such Lender
Party first becomes a party to this Agreement indicate a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and
until such Lender Party provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods
governed by such forms; provided, however,


36





 



that
if, at the effective date of the Assignment and Acceptance pursuant to which a Lender Party becomes a party to this Agreement, the Lender Party assignor was entitled to payments under subsection
(a) of this Section 2.12 in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such
date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on
the date hereof by Internal Revenue Service form W8-ECI or W8-BEN, that the applicable Lender Party reasonably considers to be confidential, such Lender Party shall give notice
thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. Upon the request of the Borrower, any Lender that is a United States person and is
not an exempt recipient for U.S. backup withholding purposes shall deliver to the Borrower two copies of Internal Revenue Service form W-9 (or any successor form). 


        (f)    For
any period with respect to which a Lender Party has failed to provide the Borrower with the appropriate form described in subsection (e) above
(other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) of this Section 2.12 with
respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender Party become subject to Taxes because
of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes. 



        (g)   Any
Lender Party claiming any additional amounts payable pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with its internal policy and
legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional
amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be otherwise disadvantageous to such Lender Party. 


        (h)   If
any Lender Party or the Administrative Agent receives a refund of Taxes or Other Taxes paid by the Borrower or for which the Borrower has indemnified any Lender Party
or the Administrative Agent, as the case may be, pursuant to this Section 2.12, then such Lender Party or the Administrative Agent, as applicable, shall pay such amount, net of any expenses
incurred by such Lender Party or the Administrative Agent, to the Borrower within 30 days of the receipt of such Taxes or Other Taxes. Notwithstanding the foregoing, (i) the Borrower
shall not be entitled to review the tax records or financial information of any Lender Party or the Administrative Agent and (ii) neither the Administrative Agent nor any Lender Party shall
have any obligation to pursue (and no Loan Party shall have any right to assert) any refund of Taxes or Other Taxes that may be paid by the Borrower. 



        SECTION
2.13.    Sharing of Payments, Etc.    If any Lender Party shall obtain at any time any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or otherwise, other than as a result of an assignment pursuant to Section 9.07) (a) on account of
Obligations due and payable to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due
and payable to such Lender Party at such time to (ii) the aggregate amount of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time) of payments on
account of the Obligations due and payable to all Lender Parties hereunder and under the Notes at such time obtained by all the Lender Parties at such time or (b) on account of Obligations
owing (but not due and payable) to such Lender Party hereunder and under the Notes at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations
owing to such Lender Party at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time) of
payments on account of the Obligations owing (but not due and payable) to all Lender Parties hereunder and under the Notes at such time obtained by all of the Lender Parties at such time, such Lender
Party shall forthwith purchase from the other Lender Parties such interests or participating interests in the Obligations due and payable or owing to them, as 


37





 



the
case may be, as shall be necessary to cause such purchasing Lender Party to share the excess payment ratably with each of them; provided, however,
that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender Party, such purchase from each other Lender Party shall be rescinded and such other Lender Party
shall repay to the purchasing Lender Party the purchase price to the extent of such Lender Party's ratable share (according to the proportion of (i) the purchase price paid to such Lender Party
to (ii) the aggregate purchase price paid to all Lender Parties) of such recovery together with an amount equal to such Lender Party's ratable share (according to the proportion of
(i) the amount of such other Lender Party's required repayment to (ii) the total amount so recovered from the purchasing Lender Party) of any interest or other amount paid or payable by
the purchasing Lender Party in respect of the total amount so recovered. The Borrower agrees that any Lender Party so purchasing an interest or participating interest from another Lender Party
pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest or
participating interest, as the case may be, as fully as if such Lender Party were the direct creditor of the Borrower in the amount of such interest or participating interest, as the case may be. 



        SECTION
2.14.    Use of Proceeds.    The proceeds of the Advances and issuances of Letters of Credit shall be
available (and the Borrower agrees that it shall use such proceeds and Letters of Credit) solely for the acquisition and development of Manufactured Home Communities and Manufactured Home Rental
Units, to refinance Debt, to make capital expenditures and the general corporate purposes of the Borrower and its Subsidiaries. 


        SECTION
2.15.    Evidence of Debt.    (a) Each Lender Party shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to such Lender Party resulting from each Advance owing to such Lender Party from time to time, including the amounts of
principal and interest payable and paid to such Lender Party from time to time hereunder. The Borrower agrees that upon notice by any Lender Party to the Borrower (with a copy of such notice to the
Administrative Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender Party to evidence (whether for purposes of pledge,
enforcement or otherwise) the Advances owing to, or to be made by, such Lender Party, the Borrower shall promptly execute and deliver to such Lender Party, with a copy to the Administrative Agent, a
Note, in substantially the form of Exhibit A hereto, payable to the order of such Lender Party in a principal amount equal to the Revolving Credit Commitment of such Lender Party. All
references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder. 


        (b)   The
Register maintained by the Administrative Agent pursuant to Section 9.07(d) shall include a control account, and a subsidiary account for each Lender Party,
in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest
Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become
due and payable from the Borrower to each Lender Party hereunder, and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender Party's share
thereof. 


        (c)   Entries
made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Lender Party in its account or accounts
pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and
payable from the Borrower to, in the case of the Register, each Lender Party and, in the case of such account or accounts, such Lender Party, under this Agreement, absent manifest error;  provided, however, that the failure of the Administrative Agent or such Lender Party to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement. 


38





 


 
 

ARTICLE III
  CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT    
    



        SECTION
3.01.    Conditions Precedent to Initial Extension of Credit.    The obligation of each Lender to make an
Advance or of any Issuing Bank to issue a Letter of Credit on the occasion of the Initial
Extension of Credit hereunder is subject to the satisfaction of the following conditions precedent before or concurrently with the Initial Extension of Credit: 



        (a)   The
Administrative Agent shall have received on or before the day of the Initial Extension of Credit the following, each dated such day (unless otherwise specified), in
form and substance satisfactory to the Administrative Agent (unless otherwise specified) and (except for the Notes) in sufficient copies for each Lender Party: 



          (i)  A
Note payable to the order of each Lender that has requested a Note prior to the Effective Date. 


         (ii)  Security
agreements in substantially the form of (x) Exhibit F-1 hereto (the "Primary Security
Agreement"), duly executed by each Loan Party that owns Borrowing Base Assets, and (y) Exhibit F-2 hereto (the "ARC Housing
Security Agreement"), duly executed by ARC Housing LLC (the Primary Security Agreement and the ARC Housing Security Agreement, together with each other security agreement and
security agreement supplement delivered pursuant to Section 5.01(j), in each case as amended, being the "Security Agreements"), together with: 



        (A)  acknowledgment
copies of proper financing statements, duly filed on or before the day of the Initial Extension of Credit under the Uniform Commercial Code of all
jurisdictions that the Collateral Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Collateral Documents, covering
the Collateral described therein, 


        (B)  completed
requests for information, dated on or before the date of the Initial Extension of Credit, listing all effective financing statements filed in the jurisdictions
referred to in clause (A) above and in such other jurisdictions specified by the Administrative Agent that name any Loan Party as debtor, together with copies of such other financing
statements, 


        (C)  evidence
of the completion of all other recordings and filings of or with respect to the Security Agreements that the Collateral Agent may deem necessary or desirable in
order to perfect and protect the Liens created thereby, 


        (D)  evidence
of the insurance required by the terms of the Security Agreements, 


        (E)  duly
executed account control agreements in respect of the concentration accounts referred to in Section 5.01(r) in form and substance satisfactory to the
Collateral Agent, and 


        (F)  evidence
that all other action that the Collateral Agent may deem necessary in order to perfect and protect the first priority liens and security interests created under
the Security Agreements has been
taken (including, without limitation, receipt of duly executed payoff letters, UCC termination statements and landlords' and bailees' waiver and consent agreements). 




        (iii)  Deeds
of trust, trust deeds and mortgages, in substantially the form of Exhibit G hereto (with such changes as may be required to account for local law matters
and otherwise reasonably satisfactory in form and substance to the Collateral Agent) and covering all Manufactured Home Communities that could constitute Borrowing Base Assets (together with each
other deed of trust, trust deed and mortgage delivered pursuant to Section 5.01(j), in 




39





 


each
case as amended, the "Mortgages"), duly executed by the appropriate Loan Party, together with: 



        (A)  evidence
that counterparts of the Mortgages have been duly executed, acknowledged and delivered on or before the day of the Initial Extension of Credit and are in form
suitable for filing or recording in all filing or recording offices that the Collateral Agent may deem necessary or desirable in order to create a valid first and subsisting Lien on the property
described therein in favor of the Collateral Agent for the benefit of the Secured Parties and that all required affidavits, tax forms and filings pertaining to any applicable documentary stamp,
intangible and mortgage recordation taxes have been executed and delivered by all appropriate parties and are in form suitable for filing with all applicable governmental authorities, 


        (B)  with
respect to all Manufactured Home Communities that could constitute Borrowing Base Assets, engineering, soils, environmental and other similar reports as to the
properties described in the Mortgages, in form and substance and from professional firms reasonably acceptable to the Collateral Agent, 


        (C)  evidence
of the insurance required by the terms of the Mortgages, 


        (D)  an
Appraisal of each Manufactured Home Community that could constitute a Borrowing Base Asset, and 


        (E)  such
other consents, agreements and confirmations of lessors and third parties as the Administrative Agent may reasonably deem necessary and evidence that all other
action that the Collateral Agent may deem necessary in order to create valid first and subsisting Liens on the property described in the Mortgages has been taken. 




        (iv)  A
collateral sub-agency and services agreement in substantially the form of Exhibit I hereto, duly executed by the Borrower, ARC Housing LLC, the
Collateral Agent and the Unit Collateral Agent (as the same may be amended, supplemented or otherwise modified from time to time, the "Collateral Sub-Agency
Agreement"), together with evidence of delivery by ARC
Housing LLC to the Unit Collateral Agent of such original powers of attorney as the Collateral Agent or the Unit Collateral Agent may deem necessary or desirable to authorize the Unit Collateral Agent
to execute and file all documents necessary under the applicable provisions of the Uniform Commercial Code and any applicable certificate of title statutes in effect in any applicable jurisdiction to
create and perfect first priority security interests in all Manufactured Home Rental Units that could constitute Borrowing Base Assets. 



         (v)  Certified
copies of the resolutions of the Board of Directors, general partner or managing member, as applicable, of each Loan Party and of each general partner or
managing member (if any) of each Loan Party approving the transactions contemplated by the Loan Documents and each Loan Document to which it is or is to be a party, and of all documents evidencing
other necessary corporate action and governmental and other third party approvals and consents, if any, with respect to the transactions under the Loan Documents and each Loan Document to which it is
or is to be a party. 


        (vi)  A
copy of a certificate of the Secretary of State (or equivalent authority) of the jurisdiction of incorporation, organization or formation of each Loan Party and of
each general partner or managing member (if any) of each Loan Party, dated reasonably near the Closing Date, certifying, if and to the extent such certification is generally available for entities of
the type of such Loan Party, (A) as to a true and correct copy of the charter, certificate of limited partnership, limited liability company agreement or other organizational document of such
Loan Party, general partner or managing member, as the case may be, and each amendment thereto on file in such Secretary's office and (B) that (1) such amendments are the only amendments
to the charter, certificate of limited partnership, limited liability company agreement or other organizational document, as applicable, of such Loan Party, general partner or managing member, as the
case may be, on file in such Secretary's office and (2) such Loan Party, general partner or managing member, as the case may be, has paid 




40





 





all
franchise taxes to the date of such certificate and (C) such Loan Party, general partner or managing member, as the case may be, is duly incorporated, organized or formed and in good
standing or presently subsisting under the laws of the jurisdiction of its incorporation, organization or formation. 


       (vii)  A
copy of a certificate of the Secretary of State (or equivalent authority) of each jurisdiction in which any Loan Party or any general partner or managing member of a
Loan Party owns or leases property or in which the conduct of its business requires it to qualify or be licensed as a foreign corporation except where the failure to so qualify or be licensed would
not be reasonably likely to have a Material Adverse Effect, dated reasonably near (but prior to) the Closing Date, stating, with respect to each such Loan Party, general partner or managing member,
that such Loan Party, general partner or managing member, as the case may be, is duly qualified and in good standing as a foreign corporation, limited partnership or limited liability company in such
State and has filed all annual reports required to be filed to the date of such certificate. 


      (viii)  A
certificate of each Loan Party and of each general partner or managing member (if any) of each Loan Party, signed on behalf of such Loan Party, general partner or
managing member, as applicable, by its President or a Vice President and its Secretary or any Assistant Secretary (or those of its general partner or managing member, if applicable), dated the Closing
Date (the statements made in which certificate shall be true on and as of the date of the Initial Extension of Credit), certifying as to (A) the
absence of any amendments to the constitutive documents of such Loan Party, general partner or managing member, as applicable, since the date of the certificate referred to in
Section 3.01(a)(vi), (B) a true and correct copy of the bylaws, operating agreement, partnership agreement or other governing document of such Loan Party, general partner or managing
member, as applicable, as in effect on the date on which the resolutions referred to in Section 3.01(a)(v) were adopted and on the date of the Initial Extension of Credit, (C) the
due incorporation, organization or formation and good standing or valid existence of such Loan Party, general partner or managing member, as applicable, as a corporation, limited liability company or
partnership organized under the laws of the jurisdiction of its incorporation, organization or formation and the absence of any proceeding for the dissolution or liquidation of such Loan Party,
general partner or managing member, as applicable, (D) the truth of the representations and warranties contained in the Loan Documents as though made on and as of the date of the Initial
Extension of Credit and (E) the absence of any event occurring and continuing, or resulting from the Initial Extension of Credit, that constitutes a Default. 



        (ix)  A
certificate of the Secretary or an Assistant Secretary of each Loan Party (or Responsible Officer of the general partner or managing member of any Loan Party) and of
each general partner or managing member (if any) of each Loan Party certifying the names and true signatures of the officers of such Loan Party, or of the general partner or managing member of such
Loan Party, authorized to sign each Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder. 


         (x)  Such
financial, business and other information regarding each Loan Party and its Subsidiaries as the Lender Parties shall have requested, including, without limitation,
information as to possible contingent liabilities, tax matters, environmental matters, obligations under Plans, Multiemployer Plans and Welfare Plans, collective bargaining agreements and other
arrangements with employees, audited annual financial statements for the year ending December 31, 2002, interim financial statements dated the end of the most recent fiscal quarter for which
financial statements are available (or, in the event the Lender Parties' due diligence review reveals material changes since such financial statements, as of a later date within 45 days of the
day of the Initial Extension of Credit). 


        (xi)  Evidence
of insurance naming the Administrative Agent as loss payee and additional insured with such responsible and reputable insurance companies or associations, and
in such amounts and covering such risks, as is satisfactory to the Lender Parties. 




41





 





       (xii)  An
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Loan Parties, in substantially the form of Exhibit E-1 hereto and as
to such other matters as any Lender Party through the Administrative Agent may reasonably request. 



      (xiii)  An
opinion of Venable LLP, Maryland counsel for the Loan Parties, in substantially the form of Exhibit E-2 hereto and as to such other matters as
any Lender Party through the Administrative Agent may reasonably request. 


      (xiv)  An
opinion of Brownstein Hyatt & Farber, P.C., Colorado counsel for the Loan Parties, in substantially the form of Exhibit E-3 hereto and as
to such other matters as any Lender Party through the Administrative Agent may reasonably request. 


       (xv)  An
opinion of Holland & Hart LLP, Wyoming counsel for the Loan Parties, in substantially the form of Exhibit E-4 hereto and as to such other
matters as any Lender Party through the Administrative Agent may reasonably request. 


      (xvi)  An
opinion of Richards, Layton & Finger, P.A., Delaware counsel for the Loan Parties, in substantially the form of Exhibit E-5 hereto and as
to such other matters as any Lender Party through the Administrative Agent may reasonably request. 


     (xvii)  An
opinion of Shearman & Sterling LLP, counsel for the Administrative Agent, in form and substance satisfactory to the Administrative Agent. 



    (xviii)  A
Notice of Borrowing or Notice of Issuance, as applicable, and a Borrowing Base Certificate relating to the Initial Extension of Credit. 




        (b)   The
Lender Parties shall be satisfied with the corporate and legal structure and capitalization of each Loan Party and its Subsidiaries, including the terms and
conditions of the charter and bylaws, operating agreement, partnership agreement or other governing document of each of them. 


        (c)   The
Lender Parties shall be satisfied that all Existing Debt, other than Surviving Debt, has been prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished and that all Surviving Debt shall be on terms and conditions satisfactory to the Lender Parties. 


        (d)   (i) The
Recapitalization and the IPO shall have been, substantially concurrently herewith, consummated, (ii) the Parent Guarantor shall have received net
cash proceeds from the IPO in an amount not less than $350,000,000, and (iii) the common shares of the Parent Guarantor shall have been listed on the New York Stock Exchange. 



        (e)   Before
and after giving effect to the transactions contemplated by the Loan Documents, there shall have occurred no Material Adverse Change since December 31,
2002. 


        (f)    There
shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or threatened before any court,
governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 4.01(f) hereto (the
"Disclosed Litigation") or (ii) purports to affect the legality, validity or
enforceability of any Loan Document or the consummation of the transactions contemplated thereby, and there shall have been no adverse change in the status, or financial effect on any Loan Party or
any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 4.01(f) hereto. 


        (g)   All
governmental and third party consents and approvals necessary in connection with the transactions contemplated by the Loan Documents shall have been obtained
(without the imposition of any conditions that are not acceptable to the Lender Parties) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the
Lender Parties that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated by the Loan Documents. 


        (h)   The
Borrower shall have entered into the Hedge Agreements required under Section 5.01(n). 



42





 




        (i)    The
Borrower shall have delivered each of the items required under Section 5.01(s). 



        (j)    The
Borrower shall have paid all accrued fees of the Administrative Agent and the Lender Parties and all reasonable, out-of-pocket expenses of
the Administrative Agent (including the reasonable fees and expenses of counsel to the Administrative Agent). 




        SECTION
3.02.    Conditions Precedent to Each Borrowing, Issuance and Renewal.    The obligation of each Lender to
make an Advance (other than a Letter of Credit Advance made by an Issuing Bank or a Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a Lender pursuant to
Section 2.02(b)) on the occasion of each Borrowing (including the initial Borrowing), the obligation of each Issuing Bank to issue a Letter of Credit (including the initial issuance) or renew a
Letter of Credit and the right of the Borrower to request a Swing Line Borrowing shall be subject to the further conditions precedent that on the date of such Borrowing, issuance or renewal
(a) the following statements shall be true and the Administrative Agent shall have received for the account of such Lender, the Swing Line Bank or such Issuing Bank (x) a Borrowing Base
Certificate dated the date of such Borrowing, issuance or renewal and (y) a certificate signed by a duly authorized officer of the Borrower, dated the date of such Borrowing, issuance or
renewal, stating that: 




          (i)  the
representations and warranties contained in each Loan Document are true and correct on and as of such date, before and after giving effect to (A) such
Borrowing, issuance or renewal and (B) in the case of any Borrowing or issuance or renewal, the application of the proceeds therefrom, as though made on and as of such date; 


         (ii)  no
Default has occurred and is continuing, or would result from (A) such Borrowing, issuance or renewal or (B) in the case of any Borrowing or issuance or
renewal, from the application of the proceeds therefrom; and 


        (iii)  for
each Revolving Credit Advance or Swing Line Advance made by the Swing Line Bank or issuance or renewal of any Letter of Credit, (A) the sum of the Loan
Values of the Borrowing Base Assets equals or exceeds the aggregate principal amount of the Revolving Credit Advances plus Swing Line Advances  plus Letter
of Credit Advances to be outstanding plus the aggregate Available Amount of all Letters of
Credit to be outstanding after giving effect to such Advance or issuance or renewal, respectively, and (B) before and after giving effect to such Advance, issuance or renewal, the Parent
Guarantor shall be in compliance with the covenants contained in Section 5.04, together with supporting information in form satisfactory to the Administrative Agent showing the computations
used in determining compliance with such covenants; 





and
(b) the Administrative Agent shall have received such other approvals, opinions or documents as any Lender Party through the Administrative Agent may reasonably request. 


        SECTION
3.03.    Determinations Under Section 3.01.    For purposes of determining compliance with the
conditions specified in Section 3.01, each Lender Party shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to
be consented to or approved by or acceptable or satisfactory to the Lender Parties unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents
shall have received notice from such Lender Party prior to the Initial Extension of Credit specifying its objection thereto and, if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender Party's ratable portion of such Borrowing. 


43






  



 
 

ARTICLE IV
  REPRESENTATIONS AND WARRANTIES    
    


        SECTION
4.01.    Representations and Warranties of the Loan Parties.    Each Loan Party represents and warrants as
follows: 



        (a)   Each
Loan Party and each of its Subsidiaries and each general partner or managing member, if any, of each Loan Party (i) is a corporation, limited liability
company or partnership duly incorporated, organized or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (ii) is
duly qualified and in good standing as a foreign corporation, limited liability company or partnership in each other jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed except where the failure to so qualify or be licensed would not be reasonably likely to have a Material Adverse Effect and (iii) has all
requisite corporate, limited liability company or partnership power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own or lease and operate
its properties and to carry on its business as now conducted and as proposed to be conducted. Since December 31, 1998, which is the date from which the Parent Guarantor first qualified as a
REIT under the Internal Revenue Code, the Parent Guarantor has at all times maintained its qualification as a REIT under the Internal Revenue Code. All of the outstanding Equity Interests in the
Parent Guarantor have been validly issued, are fully paid and non-assessable, all of the general partner Equity Interests in the Borrower are owned by the Parent Guarantor, and all such
general partner Equity Interests are owned by the Parent Guarantor free and clear of all Liens. 


        (b)   Set
forth on Schedule 4.01(b) hereto is a complete and accurate list of all Subsidiaries of each Loan Party, showing as of the date hereof (as to each such
Subsidiary) the jurisdiction of its incorporation, organization or formation, the number of shares (or the equivalent thereof) of each class of its Equity Interests authorized, and the number
outstanding, on the date hereof and the percentage of each such class of its Equity Interests owned (directly or indirectly) by such Loan Party and the number of shares (or the equivalent thereof)
covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding Equity Interests in each Loan Party's Subsidiaries has been
validly issued, are fully paid and non-assessable and are owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens. 


        (c)   The
execution and delivery by each Loan Party and of each general partner or managing member (if any) of each Loan Party of each Loan Document to which it is or is to be
a party, and the performance of its obligations thereunder, and the consummation of the IPO, the Recapitalization and the transactions contemplated by the Loan Documents, are within the corporate,
limited liability company or partnership powers of such Loan Party, general partner or managing member, have been duly authorized by all necessary corporate, limited liability company or partnership
action, and do not (i) contravene the charter or bylaws, operating agreement, partnership agreement or other governing document of such Loan Party, general partner or managing member,
(ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of, or constitute a default or require any payment to be made under, any material contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting any Loan Party, any of its Subsidiaries or any of their properties, or any general partner or managing member of any Loan
Party or (iv) except for the Liens created under the Loan Documents, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of any Loan Party
or any of its Subsidiaries. No Loan Party or any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach
of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which would be reasonably likely to have a Material Adverse Effect. 



44





 




        (d)   No
authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for
(i) the due execution, delivery, recordation, filing or performance by any Loan Party or any general partner or managing member of any Loan Party of any Loan Document to which it is or is to be
a party or for the consummation of the IPO, the Recapitalization or the transactions contemplated by the Loan Documents, (ii) the grant by any Loan Party (or the general partner or managing
member of such Loan Party) of the Liens granted by it pursuant to the Collateral Documents, (iii) other than filing such Mortgages and Certificate of Title Registrations not required to be
filed hereunder or under the other Loan Documents, the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof) or, (iv) the
exercise by the Administrative Agent, the Collateral Agent or any Lender Party of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents,
except for the authorizations, approvals, actions, notices and filings listed on Schedule 4.01(d) hereto, all of which have been duly obtained, taken, given or made and are in full force and
effect. 


        (e)   This
Agreement has been, and each other Loan Document when delivered hereunder will have been, duly executed and delivered by each Loan Party and general partner or
managing member (if any) of each Loan Party party thereto. This Agreement is, and each other Loan Document when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party
and general partner or managing member (if any) of each Loan Party party thereto, enforceable against such Loan Party, general partner or managing member, as the case may be, in accordance with its
terms. 


        (f)    There
is no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries or any general partner or managing member (if any)
of any Loan Party, including any Environmental Action, pending or threatened before any court, governmental agency or arbitrator that
(i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of any Loan
Document or the consummation of the IPO, the Recapitalization or the transactions contemplated by the Loan Documents, and there has been no adverse change in the status, or financial effect on any
Loan Party or any of its Subsidiaries or any general partner or managing member (if any) of any Loan Party, of the Disclosed Litigation from that described on Schedule 4.01(f) hereto. 



        (g)   The
Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as at December 31, 2002 and the related Consolidated statements of income and
Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the fiscal year then ended, accompanied by an unqualified opinion of PricewaterhouseCoopers LLP, independent
public accountants, and the Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as at September 30, 2003, and the related Consolidated statements of income and Consolidated
statement of cash flows of the Parent Guarantor and its Subsidiaries for the nine months then ended, duly certified by the Chief Financial Officer of the Parent Guarantor, copies of which have been
furnished to each Lender Party, fairly present, subject, in the case of said balance sheet as at September 30, 2003, and said statements of income and cash flows for the nine months then ended,
to year-end audit adjustments, the Consolidated financial condition of the Parent Guarantor and its Subsidiaries as at such dates and the Consolidated results of operations of the Parent
Guarantor and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles applied on a consistent basis, and since December 31, 2002,
there has been no Material Adverse Change. 


        (h)   The
Consolidated forecasted balance sheets, statements of income and statements of cash flows of the Parent Guarantor and its Subsidiaries delivered to the Lender
Parties pursuant to Section 3.01(a)(x) or 5.03 were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing
at the time of delivery of such forecasts, and represented, at the time of delivery, the Parent Guarantor's best estimate of its future financial performance. 



45





 




        (i)    Neither
the Information Memorandum nor any other information, exhibit or report furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender
Party in connection with the negotiation and syndication of the Loan Documents or pursuant to the terms of the Loan Documents contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements made therein not misleading. 


        (j)    No
Loan Party is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Advance or drawings under any
Letter of Credit will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock. 



        (k)   Neither
any Loan Party nor any of its Subsidiaries nor any general partner or managing member of any Loan Party, as applicable, is an "investment company", or an
"affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended. Without limiting the generality of the foregoing, each Loan Party
and each of its Subsidiaries and each general partner or managing member of any Loan Party, as applicable: (i) is primarily engaged, directly or through a wholly-owned subsidiary or
subsidiaries, in a business or businesses other than that of (A) investing, reinvesting, owning, holding or trading in securities or (B) issuing face-amount certificates of
the installment type; (ii) is not engaged in, does not propose to engage in and does not hold itself out as being engaged in the business of (A) investing, reinvesting, owning, holding
or trading in securities or (B) issuing face-amount certificates of the installment type; (iii) does not own or propose to acquire investment securities (as defined in the
Investment Company Act of 1940, as amended) having a value exceeding forty percent (40%) of the value of such company's total assets (exclusive of government securities and cash items) on an
unconsolidated basis; (iv) has not in the past been engaged in the business of issuing face-amount certificates of the installment type; and (v) does not have any outstanding
face-amount certificates of the installment type. Neither any Loan Party nor any of its Subsidiaries nor any general partner or managing member of any Loan Party or Subsidiary of a Loan
Party that is a partnership or a limited liability company, as applicable, is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. Neither the making of any Advances, nor the issuance of any
Letters of Credit, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated by the Loan Documents, will violate any
provision of any such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder. 


        (l)    Neither
any Loan Party nor any of its Subsidiaries is a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any
charter, corporate, partnership, membership or other governing restriction that would be reasonably likely to have a Material Adverse Effect. 


        (m)  Other
than filing such Mortgages and Certificate of Title Registrations not required to be filed hereunder or under the other Loan Documents, as applicable, all filings
and other actions necessary to perfect and protect the security interest in the Collateral created under the Collateral Documents have been duly made or taken and are in full force and effect, and the
Collateral Documents create in favor of the Administrative Agent for the benefit of the Secured Parties a valid and, together with such filings and other actions, perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly
taken. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for the liens and security interests created or permitted under the Loan Documents. 


        (n)   Set
forth on Schedule 4.01(n) hereto is a complete and accurate list of all Existing Debt (other than Surviving Debt), showing as of the date hereof the obligor
and the principal amount outstanding thereunder. 



46





 




        (o)   Set
forth on Schedule 4.01(o) hereto is a complete and accurate list of all Surviving Debt, showing as of the date hereof the obligor and the principal amount
outstanding thereunder, the maturity date thereof and the amortization schedule therefor. 


        (p)   Set
forth on Schedule 4.01(p) hereto is a complete and accurate list of all Liens on the property or assets of any Loan Party or any of its Subsidiaries, showing
as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto. 


        (q)   Set
forth on Schedule 4.01(q) hereto is a complete and accurate list of all Manufactured Home Communities owned by any Loan Party or any of its Subsidiaries,
showing as of the date hereof the street address, county or other relevant jurisdiction, state, record owner and book value thereof. Each Loan Party or such Subsidiary has good, marketable and
insurable fee simple title to such Manufactured Home Communities, free and clear of all Liens, other than Liens created or permitted by the Loan Documents. 



        (r)   Set
forth on Schedule 4.01(r) hereto is a complete and accurate list of all leases of real property under which any Loan Party or any of its Subsidiaries is the
lessee, showing as of the date hereof the street address, county or other relevant jurisdiction, state, lessor, lessee, expiration date and annual rental cost thereof. Each such lease is the legal,
valid and binding obligation of the lessor thereof, enforceable in accordance with its terms. 


        (s)   (i) Except
as otherwise set forth on Part I of Schedule 4.01(s) hereto, the operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental
Permits has been resolved without material ongoing obligations or costs, and to the knowledge of each Loan Party or any of its Subsidiaries, no circumstances exist that could be reasonably likely to
(A) form the basis of an Environmental Action against any Loan Party or any of its Subsidiaries or any of their properties that could have a Material Adverse Effect or (B) cause any such
property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law. 


         (ii)  Except
as otherwise set forth on Part II of Schedule 4.01(s) hereto, none of the properties currently or to the knowledge of each Loan Party and any of
its Subsidiaries, formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or to the knowledge of each Loan Party and any of its Subsidiaries, proposed for listing on the NPL
or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property; any and all asbestos or asbestos-containing material on any property currently owned or operated by
any Loan Party or any of its Subsidiaries is in good condition and is arranged in accordance with Environmental Laws; and Hazardous Materials have not been released, discharged or disposed of on any
property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries in a manner that could reasonably be expected to result in a material liability. 


        (iii)  Except
as otherwise set forth on Part III of Schedule 4.01(s) hereto, neither any Loan Party nor any of its Subsidiaries is undertaking, and has not
completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site,
location or operation, either voluntarily or pursuant to the order of any governmental or regulatory authority or the requirements of any Environmental Law; and all Hazardous Materials generated,
used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries. 



        (t)    Each
Loan Party and each Subsidiary is in compliance with the requirements of all Laws (including, without limitation, the Securities Act and the Securities Exchange
Act, and the applicable rules and regulations thereunder, state securities law and "Blue Sky" laws) applicable to 



47





 




it
and its business, where the failure to so comply could reasonably be expected to have a Material Adverse Effect. 



        (u)   Neither
the business nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that could be reasonably likely to have a Material Adverse
Effect. 


        (v)   Each
Loan Party has, independently and without reliance upon the Administrative Agent or any other Lender Party and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement (and in the case of the Guarantors, to give the guaranty under this Agreement) and each other Loan Document
to which it is or is to be a party, and each Loan Party has established adequate means of obtaining from each other Loan Party on a continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the business, condition (financial or otherwise), operations, performance, properties and prospects of such other Loan Party. 


        (w)  Each
Loan Party is individually and together with its Subsidiaries, Solvent. 


        (x)   Except
as set forth on Schedule 4.01(x), no Loan Party has made any extension of credit to any of its directors or executive officers in contravention of any
applicable restrictions set forth in Section 402(a) of Sarbanes-Oxley. 



        (y)   Set
forth on Schedule 4.01(y) hereto is a complete and accurate list of all Excluded Subsidiaries and their respective Excluded Subsidiary Agreements existing on
the date hereof. 


        (z)   (i) Set
forth on Schedule 4.01(z) hereto is a complete and accurate list of all Plans and Welfare Plans. 


         (ii)  No
ERISA Event has occurred or is reasonably expected to occur with respect to any Plan that has resulted in or is reasonably expected to result in a material liability
of any Loan Party or any ERISA Affiliate. 


        (iii)  Schedule B
(Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan, copies of which have been filed with the Internal
Revenue Service and furnished to the Lender Parties, is complete and accurate and fairly presents the funding status of such Plan, and since the date of such Schedule B there has been no
material adverse change in such funding status. 


        (iv)  Neither
any Loan Party nor any ERISA Affiliate has contributed to or been required to contribute to any Multiemployer Plan within the past six years prior to the date
hereof. 


         (v)  Neither
any Loan Party nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA. 



 
 

ARTICLE V
  COVENANTS OF THE LOAN PARTIES    
    



        SECTION
5.01.    Affirmative Covenants.    So long as any Advance or any other Obligation of any Loan Party under any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, each Loan Party will: 



        (a)    Compliance with Laws, Etc.    Comply, and cause each of its Subsidiaries to comply, in all material respects,
with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and the Racketeer Influenced and Corrupt Organizations Chapter of the
Organized Crime Control Act of 1970; provided, however, that the failure to comply with the provisions of this Section 5.01(a) shall not
constitute a default 



48





 

hereunder
so long as such non-compliance is the subject of a Good Faith Contest or would not reasonably be expected to have a Material Adverse Effect. 


        (b)    Payment of Taxes, Etc.    Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before
the same shall become delinquent, (i) all material taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid,
might by law become a Lien upon its property; provided, however, that neither the Loan Parties nor any of their Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable against its other creditors. 


        (c)    Compliance with Environmental Laws.    Comply, and cause each of its Subsidiaries and all lessees and other
Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew and cause each of its Subsidiaries
to obtain and renew all Environmental Permits necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to conduct, any investigation, study, sampling and testing,
and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all
Environmental Laws; provided, however, that neither the Loan Parties nor any of their Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to
such circumstances. 


        (d)    Maintenance of Insurance.    Maintain, and cause each of its Subsidiaries to maintain, insurance (including,
with respect to the Borrowing Base Assets, the insurance required by the terms of the Mortgages) with responsible and reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Loan Party or such Subsidiaries operate. 



        (e)    Preservation of Partnership or Corporate Existence, Etc.    Preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its existence (corporate or otherwise), rights (charter and statutory), permits, licenses, approvals and franchises except, in the case of Subsidiaries of the
Borrower only, if in the reasonable business judgment of such Subsidiary it is in its best economic interest not to preserve and maintain such rights or franchises and such failure to preserve and
maintain such rights or franchises is not reasonably likely to result in a Material Adverse Effect (it being understood that the foregoing shall not prohibit, or be violated as a result of, any
transactions by or involving any Loan Party or Subsidiary thereof otherwise permitted under Section 5.02(d) or (e) below). 


        (f)    Visitation Rights.    At any reasonable time and from time to time, permit any of the Agents or Lender Parties,
or any Agent or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, any Loan Party and any of its Subsidiaries,
and to discuss the affairs, finances and accounts of any Loan Party and any of its Subsidiaries with any of their general partners, managing members, officers or directors and with their independent
certified public accountants. 


        (g)    Keeping of Books.    Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in
which full and correct entries shall be made of all financial transactions and the assets and business of such Loan Party and each such Subsidiary in accordance with GAAP. 


        (h)    Maintenance of Properties, Etc.    Maintain and preserve, and cause each of its Subsidiaries to maintain and
preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted and will from time to time make or cause to
be made all appropriate repairs, renewals and replacement thereof except where failure to do so would not have a Material Adverse Effect. 



49





 




        (i)    Transactions with Affiliates and Excluded Subsidiaries.    Conduct, and cause each of its Subsidiaries to
conduct, all transactions otherwise permitted under the Loan Documents with any of their Affiliates (other than any Loan Party) or with any Excluded Subsidiary on terms that are fair and reasonable
and no less favorable to such Loan Party or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate. 


        (j)    Covenant to Guarantee Obligations and Give Security.    (i) Upon the earlier to occur of (y) the
Company Debt Service Ratio being less than or equal to 1.25:1.00 and (z) the occurrence of an Event of Default (either such event, a "Collateral Trigger
Event"), then each applicable Loan Party shall, in each case at its expense: 




        (A)  as
promptly as practicable take, and cause each of its Subsidiaries to take, and hereby acknowledges that the Collateral Agent or the Unit Collateral Agent, as the case
may be, may immediately take, whatever action, whether pursuant to the Collateral Sub-Agency Agreement or otherwise (including, without limitation, the recording of instruments, the filing
of Uniform Commercial Code financing statements and Certificate of Title Registrations, the giving of notices, the delivery of opinions of counsel in form and substance satisfactory to the Collateral
Agent and other actions) as may be necessary or advisable in the opinion of the Collateral Agent to vest, and confirm the vesting, in the Collateral Agent (or in any representative of the Collateral
Agent designated by it) valid and subsisting first priority Liens on the Assets purported to be subject to the Mortgages, pledges, assignments, security agreements and security agreement supplements
delivered pursuant to Section 3.01 or pursuant to this Section 5.01(j), enforceable against all third parties in accordance with their terms, 


        (B)  within
10 days after the request of the Collateral Agent (acting in its sole discretion or at the direction of the Required Lenders acting in their sole
discretion) made at any time following the occurrence of such Collateral Trigger Event, furnish to the Collateral Agent account control agreements duly executed by each bank or other financial
institution at which the Borrower or any of its Subsidiaries maintains an account in substantially the form of Exhibit A to the ARC Housing Security Agreement or Exhibit B to the Primary
Security Agreement, as the case may be, or otherwise in form and substance satisfactory to the Collateral Agent and its counsel, and 


        (C)  upon
the request of the Collateral Agent (acting in its sole discretion or at the direction of the Required Lenders acting in their sole discretion), promptly implement
(i) a lockbox account into which tenants or subtenants, as applicable, of all Manufactured Home Rental Units and (ii) such other lockbox accounts into which tenants of all Manufactured
Home Communities that constitute Borrowing Base Assets, in each case, will be required to make payments directly to Citibank, N.A. or one or more banks acceptable to the Collateral Agent that have
accepted the assignment of such accounts to the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Agreements. 




         (ii)  Within
10 days after any Excluded Subsidiary Agreement terminates or otherwise becomes ineffective as to the Excluded Subsidiary party to such agreement, cause
such Excluded Subsidiary to duly execute and deliver to the Administrative Agent a Guaranty Supplement in substantially the form of Exhibit C hereto, or such other guaranty supplement in form
and substance satisfactory to the Administrative Agent, guaranteeing the Obligations of the other Loan Parties under the Loan Documents, unless such Excluded Subsidiary shall incur
Non-Recourse Debt permitted under Section 5.02(b)(ii)(G) within 90 days after the termination of such Excluded Subsidiary Agreement, and in such case the agreement in respect
of such Non-Recourse Debt shall be deemed to be an Excluded Subsidiary Agreement and the Borrower shall, or cause such Excluded Subsidiary to, promptly deliver to the Administrative Agent
(x) a copy of such agreement in respect of such Non-Recourse Debt and (y) an amended Schedule 4.01(y) that sets forth such agreement in respect of such
Non-Recourse Debt opposite the name of such Excluded Subsidiary. 




50





 


        (iii)  Within
10 days after the formation or acquisition of any new direct or indirect Subsidiary by any Loan Party, cause each such Subsidiary (other than a
Subsidiary (x) that is prohibited by the terms of any loan agreement or indenture or other material agreement to which it is a party from providing guarantees of the Obligations of the Loan
Parties under the Loan Documents or (y) that is being formed for the purpose of incurring Non-Recourse Debt permitted under Section 5.02(b)(ii)(G) in respect of Assets that
are not Borrowing Base Assets (any Subsidiary described in clauses (x) or (y) of this parenthetical, a "Limited Subsidiary")), and cause
each direct and indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a Guaranty Supplement in substantially the form of
Exhibit C hereto, or such other guaranty supplement in form and substance satisfactory to the Administrative Agent, guaranteeing the other Loan Parties' Obligations under the Loan Documents,  provided that upon the formation or acquisition of any Limited Subsidiary, each such Limited Subsidiary shall be deemed to be an Excluded Subsidiary and
each such loan agreement or indenture or other material agreement that restricts such Limited Subsidiary from providing guarantees of the Obligations of the Loan Parties under the Loan Documents shall
be deemed to be an Excluded Subsidiary Agreement, and the
Borrower shall, or cause such Limited Subsidiary to, promptly deliver to the Administrative Agent (1) copies of such agreements or indentures in respect of such Non-Recourse Debt
and (2) an amended Schedule 4.01(y) that sets forth such agreements or indentures in respect of such Non-Recourse Debt opposite the name of such Limited Subsidiary. 


        (iv)  Upon
the request by the Borrower that any additional Manufactured Home Community (a "Proposed Borrowing Base Community")
be included as a Borrowing Base Asset, if such Proposed Borrowing Base Community, in the judgment of the Collateral Agent, shall not already be subject to a perfected first priority Lien in favor of
the Collateral Agent for the benefit of the Secured Parties, in each case at the Borrower's expense: 



        (A)  within
10 days after such request, furnish to the Collateral Agent (1) a description, in detail satisfactory to the Collateral Agent, of the Proposed
Borrowing Base Community, (2) each of the items set forth in Sections 3.01(a)(ii), (iii) and (xii) and Section 5.01(s), mutatis
mutandis, in each case in respect of such Proposed Borrowing Base Community and (3) a revised Schedule II hereto reflecting the addition of such Proposed
Borrowing Base Community, provided that for purposes of the definition of Borrowing Base Assets, such revised Schedule II shall become effective
only upon satisfaction of each of the conditions set forth in this Section 5.01(j)(iv), and 


        (B)  as
promptly as possible, furnish to the Collateral Agent such other approvals, opinions or documents as any Lender Party through the Administration Agent may reasonably
request. 




         (v)  Upon
the request by the Borrower that any additional Manufactured Home Rental Unit (a "Proposed Borrowing Base Unit") be
included as a Borrowing Base Asset, if such Proposed Borrowing Base Unit, in the judgment of the Collateral Agent, shall not already be subject to a perfected first priority Lien in favor of the
Collateral Agent for the benefit of the Secured Parties, in each case at the Borrower's expense: 



        (A)  within
10 days after such request, furnish to the Collateral Agent (1) a description, in detail satisfactory to the Collateral Agent, of the Proposed
Borrowing Base Unit (including a revised Schedule III to the ARC Housing Security Agreement reflecting the addition of such Proposed Borrowing Base Unit), (2) to the extent not
theretofore provided, each of the items of the type set forth in Section 3.01(a)(iv) in respect of such Proposed Borrowing Base Unit and (3) evidence reasonably satisfactory to
the Collateral Agent that the certificate of title of such Proposed Borrowing Base Unit has been delivered to the Unit Collateral Agent in accordance with the terms of the Collateral
Sub-Agency Agreement and that such certificate of title is free and clear of any Lien (or notation of a Lien) thereon (other than a Lien or notation of a Lien in favor of the 





51





 



Collateral
Agent for the benefit of the Secured Parties) and, if after the occurrence of a Collateral Trigger Event, such other items as may be necessary or advisable in the opinion of the Unit
Collateral Agent or the Collateral Agent to vest in the Unit Collateral Agent or the Collateral Agent (or any representative of either of them designated by either of them), as the case may be, valid
and subsisting first priority Liens on such Proposed Borrowing Base Unit, 


        (B)  within
10 days after such request (to the extent not theretofore provided), duly execute and deliver, or cause the applicable Subsidiary to duly execute and
deliver, to the Collateral Agent such pledges, assignments, security agreements and security agreement supplements, as specified by and in form and substance satisfactory to the Collateral Agent,
securing payment of all the Obligations of the applicable Loan Party under the Loan Documents and sufficient in the judgment of the Unit Collateral Agent or the Collateral Agent to create for the
benefit of the Unit Collateral Agent or the Collateral Agent (or in any representative of either of them designated by either of them), as the case may be, valid and subsisting Liens on such Proposed
Borrowing Base Unit, and 


        (C)  as
promptly as possible, take, and cause such Subsidiary to take, such other actions as may be contemplated by or required under the Collateral Sub-Agency
Agreement and the ARC Housing Security Agreement. 




        (vi)  At
any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as any Agent may deem
necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, Mortgages, pledges, assignments, security agreements and security agreement
supplements. 




        (k)    Further Assurances.    (i) Promptly upon request by any Agent, or any Lender Party through the
Administrative Agent, correct, and cause each of its Subsidiaries promptly to correct, any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment,
filing or recordation thereof. 



         (ii)  Promptly
upon request by any Agent, or any Lender Party through the Administrative Agent, do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, mortgages, deeds of trust, trust deeds, assignments, financing
statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as any Agent, or any Lender Party through the
Administrative Agent, may reasonably require from time to time in order to (A) carry out more effectively the purposes of the Loan Documents, (B) to the fullest extent permitted by
applicable law, subject any Loan Party's or any of its Subsidiaries' properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents,
(C) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (D) assure, convey, grant,
assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document
or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party, and cause each of its Subsidiaries to do so. 



        (iii)  Promptly
upon the request of the Administrative Agent, deliver to the Collateral Agent a recent Appraisal of each Borrowing Base Asset, including, without limitation,
each Manufactured Home Community, provided that the Loan Parties shall be required to comply with only one such request by the Administrative Agent per
calendar year. 




        (l)    Performance of Material Contracts.    Perform and observe all the terms and provisions of each Material
Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all 



52





 

such
action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Material Contract such
demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do
so. 


        (m)    Compliance with Terms of Leaseholds.    Make all payments and otherwise perform all obligations in respect of
all leases of real property to which the Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to
cure any such default, and cause each of its Subsidiaries to do so. 



        (n)    Interest Rate Hedging.    Enter into prior to the Closing Date, and maintain at all times thereafter, interest
rate Hedge Agreements (i) with Persons acceptable to the Administrative Agent, (ii) providing either an interest-rate swap for a fixed rate of interest acceptable to the
Administrative Agent or and interest-rate cap at an interest rate acceptable to the Administrative Agent, (iii) covering a notional amount equal to the amount, if any, by which
(A) 75% of Consolidated Debt for Borrowed Money of the Parent Guarantor exceeds (B) all Debt for Borrowed Money of the Parent Guarantor
and its Subsidiaries then accruing interest at a fixed rate acceptable to the Administrative Agent and (iv) otherwise on terms and conditions acceptable to the Administrative Agent. 


        (o)    Maintenance of REIT Status.    In the case of the Parent Guarantor, at all times, conduct its affairs and the
affairs of its Subsidiaries in a manner so as to continue to qualify as a REIT and elect to be treated as a REIT. 


        (p)    NYSE Listing.    In the case of the Parent Guarantor, at all times (i) cause its common shares to be
duly listed on the New York Stock Exchange and (ii) timely file all reports required to be filed by it in connection therewith. 


        (q)    Sarbanes-Oxley.    Comply at all times with all applicable provisions of Section 402(a) of
Sarbanes-Oxley. 


        (r)    Cash Concentration Accounts.    Maintain, and cause each of its Subsidiaries (including, without limitation,
ARC Housing LLC) to maintain, main cash concentration accounts with Citibank, N.A. (or such other bank or financial institution that has executed and delivered an account control agreement
with respect to each such concentration account to the Collateral Agent in form and substance satisfactory to the Collateral Agent) into which all income and revenue received in respect of
Manufactured Home Rental Units shall be deposited. 


        (s)    Title Insurance, Surveys and Legal Opinions.    Deliver to the Collateral Agent within 45 days after the
Closing Date (provided that such time period may be extended by up to an additional 30 days in the Administrative Agent's sole discretion): 



          (i)  signed
copies of favorable opinions, addressed to the Administrative Agent and the other Secured Parties, of local counsel for the Loan Parties in substantially the
form of Exhibit E-6 hereto and as to such other matters as any Lender Party through the Collateral Agent may reasonably request, 




53











  




         (ii)  fully
paid American Land Title Association Lender's Extended Coverage title insurance policies (the "Mortgage Policies")
in form and substance, with endorsements (including zoning endorsements where available) and in amounts reasonably acceptable to the Collateral Agent, issued, coinsured and reinsured by title insurers
reasonably acceptable to the Collateral Agent, evidencing the recordation of the Mortgages and insuring the Mortgages to be valid first and subsisting Liens on the property described therein, free and
clear of all defects (including, but not limited to, mechanics' and materialmen's Liens) and encumbrances, excepting only Permitted Liens, and providing for such other affirmative insurance (including
endorsements for future advances under the Loan Documents and for mechanics' and materialmen's Liens) and such coinsurance and direct access reinsurance as the Collateral Agent may reasonably deem
necessary or desirable, and with respect to any such property located in a State in which a zoning endorsement is not available, a zoning compliance letter from the applicable municipality in a form
reasonably acceptable to the Collateral Agent, and 


        (iii)  American
Land Title Association/American Congress on Surveying and Mapping form surveys for which all necessary fees have been paid, dated not earlier than
45 days before the date of their delivery to the Collateral Agent, certified to the Collateral Agent and the issuer of the Mortgage Policies in a manner reasonably satisfactory to the
Collateral Agent by a land surveyor duly registered and licensed in the States in which the property described in such surveys is located and acceptable to the Collateral Agent, showing all buildings
and other improvements, any off-site improvements, the location of any easements, rights of way, building set-back lines and other dimensional regulations and the absence of
encroachments, either by such improvements or on to such property, and other defects, other than encroachments and other defects reasonably acceptable to the Collateral Agent. 




        (t)    Manufactured Home Rental Unit Certificates of Title.    Deliver to the Collateral Agent as promptly as
practicable and in any event within 90 days after the Closing Date (provided that such time period may be extended by up to an additional 90 days in the Administrative Agent's sole
discretion) evidence that not less than 85% of the certificates of title pertaining to those Manufactured Home Rental Units that could constitute Borrowing Base Assets have been delivered to the Unit
Collateral Agent to be held in accordance with the terms of the Collateral Sub-Agency Agreement and that no such certificate of title is subject to any Lien or contains any notation of a
Lien thereon (other than a Lien or notation of a Lien in favor of the Collateral Agent for the benefit of the Secured Parties). 




        SECTION
5.02.    Negative Covenants.    So long as any Advance or any other Obligation of any Loan Party under any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, no Loan Party will, at any time: 



        (a)    Liens, Etc.    Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur,
assume or suffer to exist, any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or
suffer to exist, or permit any of its Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial Code of any jurisdiction, a financing statement that names such Loan Party or any of
its Subsidiaries as debtor, or sign or suffer to exist, or permit any of its Subsidiaries to sign or suffer to exist, any security agreement authorizing any secured party thereunder to file such
financing statement, or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income, except, in the case of the Loan Parties (other than the Parent Guarantor)
and their respective Subsidiaries: 



          (i)  Liens
created under the Loan Documents; 


         (ii)  Permitted
Liens; 


        (iii)  Liens
described on Schedule 4.01(p) hereto; 


        (iv)  purchase
money Liens upon or in equipment acquired or held by such Loan Party or any of its Subsidiaries in the ordinary course of business to secure the purchase price
of such equipment or to secure Debt incurred solely for the purpose of financing the acquisition of 




54





 





any
such equipment to be subject to such Liens, or Liens existing on any such equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not
secure the purchase price), or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided, however, that no
such Lien shall extend to or cover any property other than the equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to
the Lien being extended, renewed or replaced; and provided further that the aggregate principal amount of the Debt secured by Liens permitted by this
clause (iv) shall not exceed the amount permitted under Section 5.02(b)(ii)(B) at any time outstanding; 


         (v)  Liens
arising in connection with Capitalized Leases permitted under Section 5.02(b)(ii)(C), provided that no such
Lien shall extend to or cover any Collateral or assets other than the assets subject to such Capitalized Leases; 



        (vi)  Liens
on property of a Person existing at the time such Person is merged into or consolidated with any Loan Party or any Subsidiary of any Loan Party or becomes a
Subsidiary of any Loan Party, provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend
to any assets other than those of the Person so merged into or consolidated with such Loan Party or such Subsidiary or acquired by such Loan Party or such Subsidiary; 


       (vii)  other
Liens securing Non-Recourse Debt permitted under Section 5.02(b)(ii)(G), provided that no such
Lien shall extend to or cover any Collateral; and 


      (viii)  the
replacement, extension or renewal of any Lien permitted by clause (iii) above upon or in the same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby. 




        (b)    Debt.    Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume
or suffer to exist, any Debt, except: 



          (i)  in
the case of any Loan Party or any Subsidiary of a Loan Party, Debt owed to any other Loan Party or any wholly-owned Subsidiary of any Loan Party (other than an
Excluded Subsidiary), provided that, in each case, such Debt (y) shall be on terms acceptable to the Administrative Agent and (z) shall be
evidenced by promissory notes in form and substance satisfactory to the Administrative Agent, which promissory notes shall (unless payable to the Borrower) by their terms be subordinated to the
Obligations of the Loan Parties under the Loan Documents; 


         (ii)  in
the case of each Loan Party (other than the Parent Guarantor) and its Subsidiaries, 



        (A)  Debt
under the Loan Documents, 


        (B)  Debt
secured by Liens permitted by Section 5.02(a)(iv) not to exceed in the aggregate $5,000,000 at any time outstanding, 


        (C)  (1)
Capitalized Leases not to exceed in the aggregate $5,000,000 at any time outstanding, and (2) in the case of Capitalized Leases to which any Subsidiary of a
Loan Party is a party, Debt of such Loan Party of the type described in clause (i) of the definition of "Debt" guaranteeing the Obligations of
such Subsidiary under such Capitalized Leases, 


        (D)  the
Surviving Debt described on Schedule 4.01(o) hereto and any Refinancing Debt, extending, refunding or refinancing such Surviving Debt, 


        (E)  Debt
in respect of Hedge Agreements entered into by the Borrower and designed to hedge against fluctuations in interest rates or foreign exchange rates incurred in the
ordinary course of business and consistent with prudent business practice, 





55





 






        (F)  unsecured
Debt incurred in the ordinary course of business for borrowed money, maturing within one year from the date created, and aggregating, on a Consolidated basis,
not more than $5,000,000 at any one time outstanding, and 


        (G)  Non-Recourse
Debt (including, without limitation, the JV Pro Rata Share of Non-Recourse Debt of any Joint Venture) the incurrence of which would
not result in a Default under Section 5.04 or any other provision of this Agreement; 




        (iii)  in
the case of the Parent Guarantor, Debt under the Loan Documents and under Customary Carve-Out Agreements; 


        (iv)  in
the case of Enspire Finance LLC, ARC Dealership, Inc. and the Borrower, Debt under the Consumer Finance Credit Facilities not to exceed $250,000,000 in the
aggregate at any time outstanding; and 


         (v)  endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. 




        (c)    Change in Nature of Business.    Make, or permit any of its Subsidiaries to make, any material change in the
nature of its business as carried on at the date hereof; or engage in, or permit any of its Subsidiaries to engage in, any business other than ownership, development and management of commercial real
estate properties in the United States consistent in quality with the Manufactured Home Communities, and other business activities incidental thereto. 



        (d)    Mergers, Etc.    Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so;  provided,
however, that (i) any Subsidiary of a Loan Party may merge or consolidate with or into,
or dispose of assets to, any other Subsidiary of such Loan Party (provided that if one or more Subsidiaries is also a Loan Party, any such Loan Party shall be the surviving entity) or any other Loan
Party (provided that such Loan Party or, in the case of any Loan Party other than the Borrower, another Loan Party shall be the surviving entity), and (ii) any Loan Party may merge with any
other Person so long as such Loan Party or another Loan Party is the surviving entity, provided, in each case, that no Default shall have occurred and
be continuing at the time of such proposed transaction or would result therefrom. Notwithstanding any other provision of this Agreement, (y) any Subsidiary of a Loan Party (other than the
Borrower) may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and the assets or proceeds from the
liquidation or dissolution of such Subsidiary are transferred to the Borrower or another Loan Party, provided that (A) no Collateral Trigger
Event shall have occurred and no Default or Event of Default shall have occurred and be continuing at the time of such proposed transaction and (B) no Collateral Trigger Event, Default or Event
of Default would result therefrom, and (z) any Loan Party or Subsidiary of a Loan Party shall be permitted to effect any Transfer of Assets through the sale of Equity Interests in the
Subsidiary of such Loan Party that owns such Assets so long as Section 5.02(e) would otherwise permit the Transfer of all Assets owned by such Subsidiary at the time of such sale of Equity
Interests. 


        (e)    Sales, Etc. of Assets.    (i) In the case of the Parent Guarantor, sell, lease, transfer or otherwise
dispose of, or grant any option or other right to purchase, lease or otherwise acquire any assets and (ii) in the case of the Loan Parties (other than the Parent Guarantor), sell, lease (other
than enter into Tenancy Leases), transfer or otherwise dispose of, or grant any option or other right to purchase, lease (other than any option or other right to enter into Tenancy Leases) or
otherwise acquire, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, or grant any option or other right to purchase, lease or otherwise acquire (each action described
in clause (ii) of this subsection (e) being a "Transfer"), any Asset or Assets (or any Equity Interests in connection therewith) other
than: 




        (A)  (1)
the Transfer of any Asset or Assets that are not Borrowing Base Assets from any Loan Party to another Loan Party or from a Subsidiary of a Loan Party to another 





56





 



Subsidiary
of such Loan Party or any other Loan Party or (2) the Transfer of any Asset or Assets (other than Transfers of Manufactured Home Rental Units permitted pursuant to clause (B)
below) of which the aggregate Asset Value, when added to the Asset Values of all other Assets (other than Manufactured Home Rental Units the Transfer of which was permitted pursuant to
clause (B) below) that had been the subject of any previous Transfer (as determined at the time of each such Transfer), is less than 20% of Total Asset Value at such time, and 


        (B)  the
Transfer of any Manufactured Home Rental Unit in the ordinary course of business and in accordance with Section 9(e) of the ARC Housing Security Agreement, 





provided that (1) no Transfer of any Borrowing Base Asset that is a Manufactured Home Community shall be permitted without the prior written
consent of the Required Lenders acting in their sole discretion, (2) in the case of any Transfer described in clause (A) above, the Loan Parties are in compliance with the covenants
contained in Section 5.04 (both before and after giving effect to such Transfer), as evidenced by a certificate of the Chief Financial Officer (or such person performing similar functions) of
the Borrower delivered to the Administrative Agent prior to such Transfer demonstrating such compliance and that the Transfer does not otherwise cause or result in a Default, Event of Default or
Collateral Trigger Event and (3) following the occurrence of any Collateral Trigger Event, no Transfer of any Borrowing Base Asset that is a Manufactured Home Rental Unit shall be permitted
without the prior written consent of the Required Lenders acting in their sole discretion unless such Transfer is made pursuant to the terms of a contract for the sale thereof entered into prior to
the occurrence of such Collateral Trigger Event in the ordinary course of business of the Borrower and its Subsidiaries on market terms with a Person that is not an Affiliate of a Loan Party or any
Subsidiary of a Loan Party. 


        (f)    Investments in Other Persons.    Make or hold, or permit any of its Subsidiaries to make or hold, any
Investment in any Person other than: 



          (i)  Investments
by the Loan Parties and their Subsidiaries in their Subsidiaries outstanding on the date hereof and additional Investments in wholly-owned Subsidiaries and,
in the case of the Loan Parties (other than the Parent Guarantor) and their respective Subsidiaries, Investments in Assets (including by asset or Equity Interest acquisitions), in each case subject,
where applicable, to the limitations set forth in Section 5.02(f)(iv); 


         (ii)  Investments
in Cash Equivalents; 


        (iii)  Investments
consisting of intercompany Debt permitted under Section 5.02(b)(i); 


        (iv)  Investments
consisting of the following items so long as (y) the aggregate amount outstanding, without duplication, of all Investments described in this
subsection does not exceed, at any time, 15% of Total Asset Value at such time, and (z) the aggregate amount of each of the following items of Investments does not exceed the specified
percentage of Total Asset Value set forth below: 



        (A)  loans,
advances and extensions of credit to any Person (other than an officer or director of the Parent Guarantor and its Subsidiaries) using proceeds of Debt permitted
under Section 5.02(b)(iv), 


        (B)  loans,
advances and extensions of credit to any Person (other than an officer or director of the Parent Guarantor and its Subsidiaries) so long as the aggregate amount
of such Investments does not at any time exceed 2.5% of Total Asset Value at such time, in each case after giving effect to such Investments, 


        (C)  unimproved
real estate, so long as the aggregate amount of such Investment, calculated on the basis of cost, does not at any time exceed 1.5% of Total Asset Value at
such time, 


        (D)  Development
Property that is being constructed or developed as a Manufactured Home Community, but is not yet completed (including such assets that such Person has 





57





 






contracted
to purchase for development with or without options to terminate the purchase agreement), so long as the aggregate amount of such Investment, calculated on the basis of the greater of
actual cost or budgeted cost, does not at any time exceed 2.5% of Total Asset Value at such time, 


        (E)  Investments
outstanding on the date hereof in Subsidiaries that are Excluded Subsidiaries or Subsidiaries that are not wholly-owned Subsidiaries of any Loan Party and
additional Investments after the date hereof in Subsidiaries that are Excluded Subsidiaries or Subsidiaries that are not wholly-owned
Subsidiaries of any Loan Party so long as the aggregate amount of such additional Investments outstanding does not at any time exceed 10% of Total Asset Value at such time, and 



        (F)  Investments
in Joint Ventures of any Loan Party so long as the aggregate amount of such Investments outstanding does not at any time exceed (i) 5% of Total Asset
Value at any time during which the Leverage Ratio exceeds 60%, or (ii) 10% of Total Asset Value at any time during which the Leverage Ratio does not exceed 60%; and 




         (v)  Investments
by the Borrower in Hedge Agreements permitted under Section 5.02(b)(ii)(E). 




        (g)    Restricted Payments.    In the case of the Parent Guarantor only, declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its Equity Interests now or hereafter outstanding, return any capital to its stockholders, partners or members (or the equivalent Persons
thereof) as such, make any distribution of assets, Equity Interests, obligations or securities to its stockholders, partners or members (or the equivalent Persons thereof) as such;  provided,
however, that the Parent Guarantor may declare and pay dividends or make other distributions
of common stock or cash only (i) so long as no Default or Event of Default shall have occurred and be continuing, (y) in an aggregate amount not to exceed (1) during any four
consecutive fiscal quarters of the Parent Guarantor occurring from and after April 1, 2003, 90% of Funds From Operations for such four fiscal quarter period,  plus (2) $30,000,000 in the
aggregate during the four fiscal quarters of the Parent Guarantor ending March 31, 2005 so long as the
dividend per share of common stock of the Parent Guarantor does not change during such four fiscal quarter period, or (z) as may otherwise be required to avoid the imposition of income or
excise taxes on the Parent Guarantor, and (ii) so long as no Default or Event of Default of the type described in Sections 6.01(a) or (e) shall have occurred and be continuing, as may be
required to comply with Section 5.01(o). 


        (h)    Amendments of Constitutive Documents.    Amend, or permit any of its Subsidiaries to amend, in each case in any
material respect, its limited partnership agreement, certificate of incorporation or bylaws or other constitutive documents, provided that any amendment
to any such constitutive document that would be adverse to any of the Secured Parties shall be deemed "material" for purposes of this Section. 


        (i)    Accounting Changes.    Make or permit, or permit any of its Subsidiaries to make or permit, any change in
(i) accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles, or (ii) Fiscal Year. 


        (j)    Speculative Transactions.    Engage, or permit any of its Subsidiaries to engage, in any transaction involving
commodity options or futures contracts or any similar speculative transactions. 



58







  




        (k)    Payment Restrictions Affecting Subsidiaries.    Directly or indirectly, enter into or suffer to exist, or
permit any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Subsidiaries to declare or pay dividends or other distributions in
respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Borrower or any Subsidiary of the Borrower (whether
through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) the Loan Documents, (ii) any agreement or instrument
evidencing Surviving Debt, (iii) any agreement in effect at the time such Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation
of such Person becoming a Subsidiary of the Borrower, and (iv) any Excluded Subsidiary Agreement. 



        (l)    Amendment, Etc. of Material Contracts.    Cancel or terminate any Material Contract or consent to or accept any
cancellation or termination thereof, amend or otherwise modify any Material Contract or give any consent, waiver or approval thereunder, waive any default under or breach of any Material Contract,
agree in any manner to any other amendment, modification or change of any term or condition of any Material Contract or take any other action in connection with any Material Contract that would impair
the value of the interest or rights of any Loan Party thereunder or that would impair the interest or rights of the Administrative Agent or any Lender Party, or permit any of its Subsidiaries to do
any of the foregoing, in each case in a manner that could reasonably be expected to have a Material Adverse Effect, in each case taking into account the effect of any agreements that supplement or
serve to substitute for, in whole or in part, such Material Contract. 


        (m)    Negative Pledge.    Enter into or suffer to exist, or permit any of its Subsidiaries to enter into or suffer to
exist, any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its property or assets (including, without limitation, any Borrowing Base Assets), except
(i) pursuant to the Loan Documents, (ii) pursuant to any Excluded Subsidiary Agreement entered into in connection with any Non-Recourse Debt permitted under
Section 5.02(b)(ii)(G), or (iii) in connection with (A) any Surviving Debt and any Refinancing Debt extending, refunding or refinancing such Surviving Debt, (B) any
purchase money Debt permitted by Section 5.02(b)(ii)(B) solely to the extent that the agreement or instrument governing such Debt prohibits a Lien on the property acquired with the proceeds of
such Debt, (C) any Capitalized Lease permitted by Section 5.02(b)(ii)(C) solely to the extent that such Capitalized Lease prohibits a Lien on the property subject thereto, or
(D) any Debt outstanding on the date any Subsidiary of the Borrower becomes such a Subsidiary (so long as such agreement was not entered into solely in contemplation of such Subsidiary becoming
a Subsidiary of the Borrower). 


        (n)    Parent Guarantor as Holding Company.    In the case of the Parent Guarantor, not enter into or conduct any
business, or engage in any activity (including, without limitation, any action or transaction that is required or restricted with respect to the Borrower and its Subsidiaries under Sections 5.01 and
5.02 without regard to any of the enumerated exceptions to such covenants), other than (i) the holding of the Equity Interests of the Borrower; (ii) the performance of its duties as
general partner of the Borrower; (iii) the performance of its Obligations (subject to the limitations set forth in the Loan Documents) under each Loan Document to which it is a party;
(iv) the making of equity Investments in
the Borrower and its Subsidiaries; provided each such Investment (A) shall be on terms acceptable to the Administrative Agent and
(B) shall be evidenced by stock certificates, promissory notes or instruments in form and substance satisfactory to the Administrative Agent; (v) the maintenance of any deposit accounts
permitted or required pursuant to the Security Agreements; (vi) engaging in any activity necessary to continue to qualify as a REIT and (vii) activities incidental to each of the
foregoing. 


        (o)    Excluded Subsidiaries.    Enter into or suffer to exist, or permit any Excluded Subsidiary to enter into or
suffer to exist, any agreement prohibiting or conditioning (i) the guaranty by such Excluded Subsidiary of the Obligations of the Loan Parties under the Loan Documents or (ii) the
creation or assumption of any Lien upon any of such Excluded Subsidiary's property or assets, except (x) as would be permitted under Section 5.02(m), (y) pursuant to an Excluded
Subsidiary Agreement in effect on the later of the Effective Date and the date on which such Excluded 



59





 




Subsidiary
becomes a Subsidiary of such Loan Party or (z) in connection with the incurrence by such Excluded Subsidiary of Non-Recourse Debt permitted under
Section 5.02(b)(ii)(G). 


        (p)    Multiemployer Plans.    Neither any Loan Party nor any ERISA Affiliate will contribute to or be required to
contribute to any Multiemployer Plan. 




        SECTION
5.03.    Reporting Requirements.    So long as any Advance or any other Obligation of any Loan Party under any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have any Commitment hereunder, the Borrower will furnish to the Administrative Agent for
transmission to the Lender Parties in accordance with Section 9.02(b): 



        (a)    Default Notice.    As soon as possible and in any event within two days after the occurrence of each Default or
any event, development or occurrence reasonably likely to have a Material Adverse Effect continuing on the date of such statement, a statement of the Chief Financial Officer (or person performing
similar functions) of the Parent Guarantor setting forth details of such Default or such event, development or occurrence and the action that the Parent Guarantor has taken and proposes to take with
respect thereto. 


        (b)    Annual Financials.    As soon as available and in any event within 90 days after the end of each Fiscal
Year, a copy of the annual audit report for such year for the Parent Guarantor and its Subsidiaries, including therein Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of
the end of such Fiscal Year and Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for such Fiscal Year, in each case accompanied
by an opinion acceptable to the Required Lenders of PricewaterhouseCoopers LLP or other independent public accountants of recognized standing acceptable to the Required Lenders, together with
(i) a certificate of such accounting firm to the Lender Parties stating that in the course of the regular audit of the business of the Parent Guarantor and its Subsidiaries, which audit was
conducted by such accounting firm in accordance with generally accepted auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing, or if, in the
opinion of such accounting firm, a Default has occurred and is continuing, a statement as to the nature thereof, (ii) a
schedule in form satisfactory to the Administrative Agent of the computations used by such accountants in determining, as of the end of such Fiscal Year, compliance with the covenants contained in
Section 5.04, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Parent Guarantor shall
also provide, if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP and (iii) a certificate of
the Chief Financial Officer (or person performing similar functions) of the Parent Guarantor stating that no Default has occurred and is continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto. 


        (c)    Quarterly Financials.    As soon as available and in any event within 45 days after the end of each of
the first three quarters of each Fiscal Year, Consolidated balance sheets of the Parent Guarantor and its Subsidiaries as of the end of such quarter and Consolidated statements of income and a
Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous fiscal quarter and ending with the end of such fiscal quarter and
Consolidated statements of income and a Consolidated statement of cash flows of the Parent Guarantor and its Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending
with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding date or period of the preceding Fiscal Year, all in reasonable detail and
duly certified (subject to normal year-end audit adjustments) by the Chief Financial Officer (or person performing similar functions) of the Parent Guarantor as having been prepared in
accordance with GAAP, together with (i) a certificate of said officer stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Parent Guarantor has taken and proposes to take with respect thereto and (ii) a schedule in form satisfactory to the Administrative Agent of the
computations used by the Parent Guarantor in determining compliance with the covenants contained in Section 5.04, provided that in the event of
any change in GAAP used in the preparation of such financial statements, the Parent Guarantor shall also 



60





 




provide,
if necessary for the determination of compliance with Section 5.04, a statement of reconciliation conforming such financial statements to GAAP. 



        (d)    Borrowing Base Certificate.    As soon as available and in any event within 45 days after the end of
each fiscal quarter of the Parent Guarantor, a Borrowing Base Certificate, as at the end of such fiscal quarter, certified by the Chief Financial Officer (or person performing similar functions) of
the Parent Guarantor. 


        (e)    Borrowing Base Financials.    As soon as available and in any event within 15 days after the end of each
month, financial information in respect of all Borrowing Base Assets, in form and detail satisfactory to the Administrative Agent. 



        (f)    Annual Budgets.    As soon as available and in any event no later than 45 days after the end of each
Fiscal Year, forecasts prepared by management of the Parent Guarantor, in form satisfactory to the Administrative Agent, of balance sheets, income statements and cash flow statements on a monthly
basis for the then current Fiscal Year and on an annual basis for each Fiscal Year thereafter until the Termination Date. 


        (g)    Material Litigation.    Promptly after the commencement thereof, notice of all actions, suits, investigations,
litigation and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting any Loan Party or any of its Subsidiaries
of the type described in Section 4.01(f), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party or any of its
Subsidiaries of the Disclosed Litigation from that described on Schedule 4.01(f) hereto. 


        (h)    Securities Reports.    Promptly after the sending or filing thereof, copies of all proxy statements, financial
statements and reports that any Loan Party or any of its Subsidiaries sends to its stockholders, and copies of all regular, periodic and special reports, and all registration statements, that any Loan
Party or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or with any national securities exchange. 


        (i)    Real Property.    As soon as available and in any event within 30 days after the end of each Fiscal
Year, a report supplementing Schedules 4.01(q) and 4.01(r) hereto, including an identification of all owned and leased real property disposed of by any Loan Party or any of its Subsidiaries during
such Fiscal Year, a list and description (including the street address, county or other relevant jurisdiction, state, record owner, book value thereof and, in the case of leases of property, lessor,
lessee, expiration date and annual rental cost thereof) of all real property acquired or leased by any Loan Party or any of its Subsidiaries during such Fiscal Year and a description of such other
changes in the information included in such Schedules as may be necessary for such Schedules to be accurate and complete. 


        (j)    Environmental Conditions.    Give notice in writing to the Administrative Agent (i) promptly upon
obtaining knowledge of any material violation of any Environmental Law affecting any Asset or the operations thereof or the operations of any of its Subsidiaries, (ii) promptly upon obtaining
knowledge of any known release, discharge or disposal of any Hazardous Materials at, from, or into any Asset which it reports in writing or is reportable by it in writing to any governmental authority
and which is material in amount or nature or which could materially adversely affect the value of such Asset, (iii) promptly upon its receipt of any notice of material violation of any
Environmental Laws or of any material release, discharge or disposal of Hazardous Materials in violation of any Environmental Laws or any matter that may result in an Environmental Action, including a
notice or claim of liability or potential responsibility from any third party (including without limitation any federal, state or local governmental officials) and including notice of any formal
inquiry, proceeding, demand, investigation or other action with regard to (A) such Loan Party's or any other Person's operation of any Asset, (B) contamination on, from or into any
Asset, or (C) investigation or remediation of off-site locations at which such Loan Party or any of its predecessors are alleged to have directly or indirectly disposed of Hazardous
Materials, or (iv) upon such Loan Party's obtaining knowledge that any expense or loss has been incurred by such governmental authority in connection with the assessment, containment, 



61





 




removal
or remediation of any Hazardous Materials with respect to which such Loan Party or any Joint Venture may be liable or for which a Lien may be imposed on any Asset,  provided that any of the events
described in clauses (i) through (iv) above would have a Material Adverse Effect or could reasonably be
expected to result in an Environmental Action with respect to any Borrowing Base Asset. 



        (k)    Borrowing Base Asset Value.    Promptly after discovery of any setoff, claim, withholdings or other defenses to
which any Borrowing Base Assets are subject, which (i) would have a material adverse effect on the value of such Borrowing Base Asset, (ii) would have a Material Adverse Effect or
(iii) with respect to such Borrowing Base Asset, would constitute a Lien which is not a Permitted Lien, provide the Administrative Agent with notice thereof. 


        (l)    Other Information.    Promptly, such other information respecting the business, condition (financial or
otherwise), operations, performance, properties or prospects of any Loan Party or any of its Subsidiaries as the Administrative Agent, or any Lender Party through the Administrative Agent, may from
time to time reasonably request. 




        SECTION
5.04.    Financial Covenants.    So long as any Advance or any other Obligation of any Loan Party under any
Loan Document shall remain unpaid, any Letter of Credit shall be outstanding or any Lender Party shall have, at any time after the Initial Extension of Credit, any Commitment hereunder, the Parent
Guarantor will: 



        (a)    Parent Guarantor Financial Covenants.    



        (i)    Maximum Total Leverage Ratio:    Maintain (A) at the end of each fiscal quarter of the Parent Guarantor
ending during any of the periods set forth below and (B) on the date of each Advance occurring during any of the periods indicated below (both before and after giving effect to such Advance), a
Leverage Ratio of less than the correlative ratio indicated: 




	Period
 
	 	Leverage Ratio
	 
	12/31/03 through 12/30/04	 	75.0	%
	12/31/04 through 12/30/05	 	70.0	%
	12/31/05 through 6/29/06	 	65.0	%
	6/30/06 and thereafter	 	60.0	%







        (ii)    Minimum Tangible Net Worth:    Maintain at all times an excess of Total Asset Value  plus unrestricted cash and Cash
Equivalents on hand over Consolidated total liabilities, in each case, of the Parent Guarantor and its Subsidiaries, of
not less than the sum of $190,000,000 plus an amount equal to 75% of the proceeds of all issuances or sales of Equity Interests of the Parent Guarantor
or any of its Subsidiaries consummated following the Closing Date. 



        (iii)    Minimum Company Debt Service Ratio:    Maintain (A) at the end of each fiscal quarter of the Parent
Guarantor ending during any of the periods indicated below and (B) on the date of each Advance occurring during any of the periods indicated below (both before and after giving effect to such
Advance), a Company Debt Service Ratio greater than the correlative ratio indicated: 




	Period
 
	 	Company Debt Service Ratio

	12/31/03 through 12/30/04	 	1.50:1.00
	12/31/04 through 6/29/06	 	1.75:1.00
	6/30/06 and thereafter	 	2.00:1.00







        (iv)    Minimum Fixed Charge Coverage Ratio.    Maintain (A) at the end of each fiscal quarter of the Parent
Guarantor ending during any of the periods indicated below and (B) on the date of each Advance occurring during any of the periods indicated below (both before 




62






 


and
after giving effect to such Advance), a Fixed Charge Coverage Ratio greater than the correlative ratio indicated: 




	Period
 
	 	Fixed Charge Coverage Ratio

	12/31/03 through 12/30/04	 	1.25:1.00
	12/31/04 through 6/29/06	 	1.50:1.00
	6/30/06 and thereafter	 	1.75:1.00







        (v)    Manufactured Home Rental Unit Net Operating Income.    Not permit at any time the aggregate Net Operating
Income in respect of all Manufactured Home Rental Units at such time to exceed 20% of the aggregate Net Operating Income in respect of all Assets at such time. 





        All
calculations described above in this Section 5.04(a) which pertain to the fiscal quarter of the Parent Guarantor ending December 31, 2003 shall be made on a  pro forma basis after giving effect
to the IPO and the Recapitalization. 



        (b)    Borrowing Base Financial Covenants.    



        (i)    Maximum Facility Exposure to Borrowing Base Asset Value:    Not permit at any time (A) the Facility
Exposure at such time to exceed the sum of the Loan Values of all Borrowing Base Assets at such time or (B) the sum of the Loan Values of all Borrowing Base Assets that are Manufactured Home
Communities to be less than 65% of the Facility Exposure at such time. 


        (ii)    Minimum Borrowing Base Debt Service Coverage Ratio:    Maintain (A) at the end of each fiscal quarter
of the Parent Guarantor and (B) as of the time of each Advance occurring during any of the periods indicated below (both before and after giving effect to such Advance) a Borrowing Base Debt
Service Coverage Ratio of not less than 2.0:1.0. 


        (iii)    Minimum Occupancy of Manufactured Home Communities:    Not permit at any time the percentage of tenants or
subtenants (in each case exclusive of any Affiliates of the Loan Parties) paying rent and in occupancy of the Pads in all Manufactured Home Communities constituting Borrowing Base Assets, in the
aggregate, to be less than 50%. 




 
 

ARTICLE VI
  EVENTS OF DEFAULT    
    



        SECTION
6.01.    Events of Default.    If any of the following events ("Events of
Default") shall occur and be continuing: 



        (a)   (i) the
Borrower shall fail to pay any principal of any Advance when the same shall become due and payable or (ii) the Borrower shall fail to pay any
interest on any Advance, or any Loan Party shall fail to make any other payment under any Loan Document, in each case under this clause (ii) within three Business Days after the same becomes
due and payable; or 


        (b)   any
representation or warranty made by any Loan Party (or any of its officers or the officers of its general partner or managing member, as applicable) under or in
connection with any Loan Document shall prove to have been incorrect in any material respect when made; or 


        (c)   the
Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 2.14, 5.01(d), (e), (f), (i), (j), (n), (o), (p) or (q),
5.02, 5.03 or 5.04; or 


        (d)   any
Loan Party shall fail to perform or observe any other term, covenant or agreement contained in any Loan Document on its part to be performed or observed if such
failure shall remain unremedied for 30 days after the earlier of the date on which (i) a Responsible Officer becomes aware of such failure or (ii) written notice thereof shall
have been given to the Borrower by the Administrative Agent or any Lender Party; or 


        (e)   (i) any
Loan Party or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt of
such Loan Party or such Subsidiary (as the case may be) that is outstanding in a principal amount (or, in the case of any 



63





 




Hedge
Agreement, an Agreement Value) of at least $10,000,000 either individually or in the aggregate (such Debt, whether the obligation of one or more of the Loan Parties or their respective
Subsidiaries, and whether the subject of one or more separate debt instruments or agreements, exclusive of Debt outstanding hereunder is referred to herein as "Material
Debt") but excluding Debt outstanding hereunder), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise),
and following the expiration of the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or in such Hedge Agreement; or (ii) any other event shall
occur or condition shall exist under any agreement or instrument relating to any such Material Debt, if (A) the effect of such event or condition is to permit the acceleration of the maturity
of such Material Debt or otherwise permit the holders thereof to cause such Material Debt to mature, and (B) such event or condition shall remain unremedied or otherwise uncured for a period of
30 days; or (iii) the maturity of any such Material Debt shall be accelerated or any such Material Debt shall be declared to be due and payable or required to be prepaid or redeemed
(other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Material Debt shall be required to be made, in
each case prior to the stated maturity thereof; or 


        (f)    any
Loan Party or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Loan Party or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property
and, in the case of any such proceeding instituted against it (but not instituted by it) that is being diligently contested by it in good faith, either such proceeding shall remain undismissed or
unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver,
trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or any Loan Party or any of its Subsidiaries shall take any corporate action to authorize any
of the actions set forth above in this subsection (f); or 


        (g)   any
judgments or orders, either individually or in the aggregate, for the payment of money in excess of $10,000,000 shall be rendered against any Loan Party or any of
its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided,  however, that
any such judgment or order shall not give rise to an Event of Default under this Section 6.01(g) if and so long as (A) the
amount of such judgment or order which remains unsatisfied is covered by a valid and binding policy of insurance between the respective Loan Party and the insurer covering full payment of such
unsatisfied amount and (B) such insurer, which shall be rated at least "A" by A.M. Best Company, has been notified, and has not disputed the claim made for payment, of the amount of such
judgment or order; or 


        (h)   any
non-monetary judgment or order shall be rendered against any Loan Party or any of its Subsidiaries that could have a Material Adverse Effect, and there
shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or 


        (i)    any
provision of any Loan Document after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms thereof)
cease to be valid and binding on or enforceable against any Loan Party party to it, or any such Loan Party shall so state in writing; or 


        (j)    any
Collateral Document or financing statement after delivery thereof pursuant to Section 3.01 or 5.01(j) shall for any reason (other than pursuant to the terms
thereof) cease to 



64





 




create
a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby; or 


        (k)   a
Change of Control shall occur; or 


        (l)    any
ERISA Event shall have occurred with respect to a Plan and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan
and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of the Loan Parties and the ERISA Affiliates related to such
ERISA Event) exceeds $10,000,000; 




then,
and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Commitments of each
Lender Party and the obligation of each Lender Party to make Advances (other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section 2.03(c) and Swing Line Advances by
a Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request,
or may with the consent, of the Required Lenders, (A) by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower, (B) by notice to each party required under the terms of any agreement in support of which a Letter of Credit is
issued, request that all Obligations under such agreement be declared to be due and payable and (C) by notice to each Issuing Bank, direct such Issuing Bank to deliver a Default Termination
Notice to the beneficiary of each Letter of Credit issued by it, and each Issuing Bank shall deliver such Default Termination Notices; provided,
however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under any Bankruptcy Law, (y) the Commitments of each Lender
Party and the obligation of each Lender Party to make Advances (other than Letter of Credit Advances by an Issuing Bank or a Lender pursuant to Section 2.03(c) and Swing Line Advances by a
Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit shall automatically be terminated and (z) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. 



        SECTION
6.02.    Actions in Respect of the Letters of Credit upon Default.    If any Event of Default shall have
occurred and be continuing, the Administrative Agent may, or shall at the request of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or
otherwise, make demand upon the Borrower to, and forthwith upon such demand the Borrower will, pay to the Administrative Agent on behalf of the Lender Parties in same day funds at the Administrative
Agent's office designated in such demand, for deposit in the L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding. If at any time
the Administrative Agent or the Issuing Bank determines that any funds held in the L/C Cash Collateral Account are subject to any right or claim of any Person other than the Administrative Agent and
the Lender Parties with respect to the Obligations of the Loan Parties under the Loan Documents, or that the total amount of such funds is less than the aggregate Available Amount of all Letters of
Credit, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the L/C Cash Collateral Account, an
amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Collateral Account that the Administrative Agent,
as the case may be, determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit in the L/C Cash Collateral Account, such funds
shall be applied to reimburse the relevant Issuing Bank or Lenders, as applicable, to the extent permitted by applicable law. 


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ARTICLE VII
  GUARANTY    
    



        SECTION
7.01.    Guaranty; Limitation of Liability.    (a) Each Guarantor hereby absolutely, unconditionally
and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of the
Borrower and each other Loan Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or
renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action,
costs, expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including, without
limitation, fees and expenses of counsel) incurred by the Administrative Agent or any other Secured Party in enforcing any rights under this Agreement or any other Loan Document. Without limiting the
generality of the foregoing, each Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to any Secured Party
under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other
Loan Party. This Guaranty is a guaranty of payment and not merely of collection. 



        (b)   Each
Guarantor, the Administrative Agent and each other Lender Party and, by its acceptance of the benefits of this Guaranty, each other Secured Party, hereby confirms
that it is the intention of all such Persons that this Guaranty and the Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty and the Obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Guarantors, the Administrative Agent, the other Lenders Parties and, by their acceptance of the benefits of this Guaranty, the other Secured
Parties hereby irrevocably agree that the Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Obligations of such Guarantor under
this Guaranty not constituting a fraudulent transfer or conveyance. 


        (c)   Each
Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Guaranty or any
other guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the
Secured Parties under or in respect of the Loan Documents. 



        SECTION
7.02.    Guaranty Absolute.    Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly
in accordance with the terms of this Agreement and the other Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent or any other Secured Party with respect thereto. The Obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed
Obligations or any other Obligations of any other Loan Party under or in respect of this Agreement or the other the Loan Documents, and a separate action or actions may be brought and prosecuted
against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in
any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now have or hereafter acquire in any way relating to, any or all of the following: 



        (a)   any
lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; 



        (b)   any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party
under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed 



66





 




Obligations
resulting from the extension of additional credit to the Borrower, any other Loan Party or any of their Subsidiaries or otherwise; 



        (c)   any
taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other
guaranty, for all or any of the Guaranteed Obligations; 


        (d)   any
manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral
for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries; 



        (e)   any
change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries; 


        (f)    any
failure of the Administrative Agent or any other Secured Party to disclose to any Loan Party any information relating to the business, condition (financial or
otherwise), operations, performance, properties or prospects of any other Loan Party now or hereafter known to the Administrative Agent or such other Secured Party (each Guarantor waiving any duty on
the part of the Administrative Agent and each other Secured Party to disclose such information); 



        (g)   the
failure of any other Person to execute or deliver this Agreement, any other Loan Document, any Guaranty Supplement (as hereinafter defined) or any other guaranty or
agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or 


        (h)   any
other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Administrative Agent or
any other Secured Party that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety. 




This
Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any
Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made. 


        SECTION
7.03.    Waivers and Acknowledgments.    (a) Each Guarantor hereby unconditionally and irrevocably
waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any
of the Guaranteed Obligations and this Guaranty and any requirement that the Administrative Agent or any other Secured Party protect, secure, perfect or insure any Lien or any property subject thereto
or exhaust any right or take any action against any Loan Party or any other Person or any collateral. 


        (b)   Each
Guarantor hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to
all Guaranteed Obligations, whether existing now or in the future. 


        (c)   Each
Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the
Administrative Agent or any other Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or
indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Loan Parties, any other guarantor or any other Person or any collateral and
(ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder. 


        (d)   Each
Guarantor acknowledges that the Administrative Agent may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor
under this Guaranty, foreclose under any mortgage by nonjudicial sale, and each Guarantor hereby waives any defense to the recovery by the Administrative Agent and the other Secured Parties against
such Guarantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law. 


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        (e)   Each
Guarantor hereby unconditionally and irrevocably waives any duty on the part of the Administrative Agent or any other Secured Party to disclose to such Guarantor
any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower, any other Loan Party or any of their
Subsidiaries now or hereafter known by the Administrative Agent or such other Secured Party. 


        (f)    Each
Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by this Agreement and the other
Loan Documents and that the waivers set forth in Section 7.02 and this Section 7.03 are knowingly made in contemplation of such benefits. 


        SECTION
7.04.    Subrogation.    Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any
rights that it may now have or hereafter acquire against the Borrower, any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such
Guarantor's Obligations under or in respect of this Guaranty, this Agreement or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration,
contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower, any other Loan Party or any other insider guarantor or any collateral,
whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Loan
Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right,
unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all Letters of Credit shall have expired or been
terminated and the Commitments shall have expired or been terminated. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the latest of
(a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (b) the Termination Date and (c) the latest date of expiration or
termination of all Letters of Credit, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Guarantor and
shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents. If (i) any Guarantor shall make payment to any Secured Party
of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, (iii) the
Termination Date shall have occurred and (iv) all Letters of Credit shall have expired or been terminated, the Administrative Agent and the other Secured Parties will, at such Guarantor's
request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such
Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty. 



        SECTION
7.05.    Guaranty Supplements.    Upon the execution and delivery by any Person of a Guaranty Supplement,
(i) such Person shall be referred to as an "Additional Guarantor" and shall become and be a Guarantor hereunder, and each reference in this
Agreement to a "Guarantor" or a "Loan Party" shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a "Guarantor" shall also mean and be a
reference to such Additional Guarantor, and (ii) each reference herein to "this Agreement", "this Guaranty", "hereunder", "hereof" or words of like import referring to this Agreement and this
Guaranty, and each reference in any other Loan Document to the "Loan Agreement", "Guaranty", "thereunder", "thereof" or words of like import referring to this Agreement and this Guaranty, shall mean
and be a reference to this Agreement and this Guaranty as supplemented by such Guaranty Supplement. 


        SECTION
7.06.    Indemnification by Guarantors.    (a) Without limitation on any other Obligations of any
Guarantor or remedies of the Administrative Agent or the Secured Parties under this Agreement, this Guaranty or the other Loan Documents, each Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless the Administrative Agent, each Secured Party and each of their Affiliates and their respective officers, directors, employees, agents and 


68





 



advisors
(each, an "Indemnified Party") from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a result of any failure
of any Guaranteed Obligations to be the legal, valid and binding obligations of any Loan Party enforceable against such Loan Party in accordance with their terms. 


        (b)   Each
Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort or otherwise) to any of
the Guarantors or any of their respective Affiliates or any of their respective officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert any claim against
any Indemnified Party on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the
proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated by the Loan Documents. 



        SECTION
7.07.    Subordination.    (a) Each Guarantor hereby subordinates any and all debts, liabilities and
other Obligations owed to such Guarantor by each other Loan Party (the "Subordinated Obligations") to the Guaranteed Obligations to the extent and in
the manner hereinafter set forth in this Section 7.07. 


        (b)    Prohibited Payments, Etc.    Except during the continuance of a Default (including the commencement and
continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor may receive regularly scheduled payments from any other Loan Party on account of the
Subordinated Obligations. After the occurrence and during the continuance of any Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other
Loan Party), however, unless the Administrative Agent otherwise agrees, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations. 


69







  





        (c)    Prior Payment of Guaranteed Obligations.    In any proceeding under any Bankruptcy Law relating to any other
Loan Party, each Guarantor agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the
commencement of a proceeding under any Bankruptcy Law, whether or not constituting an allowed claim in such proceeding ("Post Petition Interest"))
before such Guarantor receives payment of any Subordinated Obligations. 


        (d)    Turn-Over.    After the occurrence and during the continuance of any Default (including the
commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor shall, if the Administrative Agent so requests, collect, enforce and receive
payments on account of the Subordinated Obligations as trustee for the Secured Parties and deliver such payments to the Administrative Agent on account of the Guaranteed Obligations (including all
Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of such Guarantor under the other
provisions of this Guaranty. 


        (e)    Administrative Agent Authorization.    After the occurrence and during the continuance of any Default
(including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), the Administrative Agent is authorized and empowered (but without any
obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts
received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Administrative Agent for application to the Guaranteed Obligations (including any and all
Post Petition Interest). 


        SECTION
7.08.    Continuing Guaranty.    This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (ii) the Termination Date and
(iii) the latest date of expiration or termination of all Letters of Credit, (b) be binding upon the Guarantors, their successors and assigns and (c) inure to the benefit of and
be enforceable by the Administrative Agent and the other Secured Parties and their successors, transferees and assigns. 


 
 

ARTICLE VIII
  THE AGENTS    
    



        SECTION
8.01.    Authorization and Action; Appointment of Supplemental Collateral Agents.    (a) Each Lender
Party (in its capacities as a Lender, the Swing Line Bank (if applicable) and as an Issuing Bank (if applicable) and on behalf of itself and its Affiliates as potential Hedge Banks) hereby appoints
and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to such Agent by the
terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by the Loan Documents (including, without
limitation, enforcement or collection of the Notes), no Agent shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lender Parties and all holders of Notes;  provided, however,
that no Agent shall be required to take any action that exposes such Agent to personal liability or that is contrary to this
Agreement or applicable law. Each Agent agrees to give to each Lender Party prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. Notwithstanding anything
to the contrary in any Loan Document, no Person identified as a syndication agent, documentation agent, senior manager, joint lead arranger or joint book running manager, in such Person's capacity as
such, shall have any obligations or duties to any Loan Party, the Administrative Agent or any other Secured Party under any of such Loan Documents. 


        (b)   Anything
contained herein or in the Collateral Documents to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent deems it
to be necessary, 


70





 



appoint
one or more trustees, co-trustees, collateral co-agents or collateral subagents (each, a "Supplemental Collateral
Agent") with respect to all or any part of the Collateral. In the event that the Collateral Agent so appoints any Supplemental Collateral Agent with respect to any Collateral,
(i) such Supplemental Collateral Agent shall automatically be vested, in addition to the Collateral Agent, with all rights, powers, privileges, interests and remedies of the Collateral Agent
under the Collateral Documents with respect to such Collateral; (ii) such Supplemental Collateral Agent shall be deemed to be an "Agent" for purposes of this Agreement and the other Loan
Documents, and the provisions of Section 24 of the Primary Security Agreement, Section 20 of the ARC Housing Security Agreement, this Article and Section 9.04 hereof that refer to
the Agents (or either of them) shall inure to the benefit of such Supplemental Collateral Agent, and all references therein and in the other Loan Documents to the Collateral Agent shall be deemed to
be references to the Collateral Agent and/or such Supplemental Collateral Agent, as the context may require; and (iii) the term "Collateral Agent," when used herein or in any applicable
Collateral Document in relation to the Liens on or security interests in such Collateral granted in favor of the Collateral Agent, and any rights, powers, privileges, interests and remedies of the
Collateral Agent with respect to such Collateral, shall be deemed to include such Supplemental Collateral Agent; provided, however, that no such
Supplemental Collateral Agent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent. Should
any instrument in writing from the Borrower or any other Loan Party be required by any Supplemental Collateral Agent so appointed by the Collateral Agent to more fully or certainly vest in and
confirming to such Supplemental Collateral Agent such rights, powers, privileges and duties, the Borrower shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such
instruments promptly upon request by the Collateral Agent. If any Supplemental Collateral Agent, or successor thereto, shall die, become incapable of acting, resign or be removed, all the rights,
powers, privileges and duties of such Supplemental Collateral Agent, to the extent permitted by law, shall automatically vest in and be exercised by the Collateral Agent until the appointment of a new
Supplemental Collateral Agent. Without limiting the generality of the foregoing, the Unit Collateral Agent shall constitute a Supplemental Collateral Agent hereunder. 



        SECTION
8.02.    Agents' Reliance, Etc.    Neither any Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, each Agent: (a) in the case of the Administrative Agent, may treat the payee of any Note as the holder thereof until the Administrative Agent
receives and accepts an Assignment and Acceptance entered into by the Lender that is the payee of such Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any other Agent,
such Agent has received notice from the Administrative Agent that it has received and accepted such Assignment and Acceptance, as provided in Section 9.07; (b) may consult with legal
counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it
in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender Party and shall not be responsible to any Lender Party for any
statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance, observance or satisfaction of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or the existence at any time of any Default under the Loan
Documents or to inspect the property (including the books and records) of any Loan Party; (e) shall not be responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; and
(f) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or
telex) believed by it to be genuine and signed or sent by the proper party or parties. 



        SECTION
8.03.    CNAI and Affiliates.    With respect to its Commitments, the Advances made by it and the Notes issued
to it, CNAI shall have the same rights and powers under the Loan Documents as 


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any
other Lender Party and may exercise the same as though it were not the Administrative Agent or the Collateral Agent; and the term "Lender Party" or "Lender Parties" shall, unless otherwise
expressly indicated, include CNAI in its individual capacity. CNAI and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements
from and generally engage in any kind of business with, any Loan Party, any Subsidiary of any Loan Party and any Person that may do business with or own securities of any Loan Party or any such
Subsidiary, all as if CNAI were not the Administrative Agent or the Collateral Agent and without any duty to account therefor to the Lender Parties. 


        SECTION
8.04.    Lender Party Credit Decision.    Each Lender Party acknowledges that it has, independently and
without reliance upon any Agent or any other Lender Party and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender Party also acknowledges that it will, independently and without reliance upon any Agent or any other
Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 


        SECTION
8.05.    Indemnification by Lender Parties.    (a) Each Lender Party severally agrees to indemnify
each Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party's ratable share (determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Agent in any way relating
to or arising out of the Loan Documents or any action taken or omitted by such Agent under the Loan Documents (collectively, the "Indemnified Costs");  provided, however,
 that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from any Agent's gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent
jurisdiction. Without limitation of the foregoing, each Lender Party agrees to reimburse each Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation,
fees and expenses of counsel) payable by the Borrower under Section 9.04, to the extent that such Agent is not promptly reimbursed for such costs and expenses by the Borrower. In the case of
any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.05 applies whether any such investigation, litigation or proceeding is brought by any Lender
Party or any other Person. 


        (b)   Each
Lender Party severally agrees to indemnify each Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and against such Lender Party's ratable
share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever
that may be imposed on, incurred by, or asserted against such Issuing Bank in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Issuing Bank under the
Loan Documents; provided, however, that no Lender Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank's gross negligence or willful misconduct as found in a final, non-appealable judgment by a
court of competent jurisdiction. Without limitation of the foregoing, each Lender Party agrees to reimburse such Issuing Bank promptly upon demand for its ratable share of any costs and expenses
(including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 9.04, to the extent that such Issuing Bank is not promptly reimbursed for such costs and
expenses by the Borrower. 


        (c)   For
purposes of this Section 8.05, the Lender Parties' respective ratable shares of any amount shall be determined, at any time, according to their respective
Revolving Credit Commitments at such time. The failure of any Lender Party to reimburse any Agent or any Issuing Bank, as the case may be, promptly upon demand for its ratable share of any amount
required to be paid by the Lender Parties to such Agent or such Issuing Bank, as the case may be, as provided herein shall not relieve any other Lender Party of its obligation hereunder to reimburse
such Agent or such Issuing Bank, as the case may be, for its ratable share of such amount, but no Lender Party shall be responsible for the failure of any other Lender Party to reimburse such Agent or
such Issuing Bank, as the case may be, for such 


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other
Lender Party's ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender Party hereunder, the agreement and obligations of each Lender Party contained
in this Section 8.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents. 



        SECTION
8.06.    Successor Agents.    Any Agent may resign at any time by giving 30 days' prior written notice
thereof to the Lender Parties and the Borrower and may be removed at any time with or without cause by the Required Lenders; provided, however, that any
removal of the Administrative Agent will not be effective until it has been replaced as Collateral Agent and it (or its Affiliate) has been replaced as an Issuing Bank and released from all
obligations in respect thereof. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent, which appointment shall, provided that no Default has
occurred and is continuing, be subject to the consent of the Borrower, such consent not to be unreasonably withheld or delayed. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lender Parties, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States or of any State thereof and having a
combined capital and surplus of at least $250,000,000 and which appointment shall, provided that no Default has occurred and is continuing, be subject to the consent of the Borrower, such consent not
to be unreasonably withheld or delayed. Upon the acceptance of any appointment as an Agent hereunder by a successor Agent, and, in the case of a successor Collateral Agent, upon the execution and
filing or recording of such financing statements, or amendments thereto, and such amendments or supplements to the Mortgages, and such other instruments or notices, as may be necessary or desirable,
or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Agent
shall succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations
under the Loan Documents. If within 45 days after written notice is given of the retiring Agent's resignation or removal under this Section 8.06 no successor Agent shall have been
appointed and shall have accepted such appointment, then on such 45th day (i) the retiring Agent's resignation or removal shall become effective, (ii) the retiring Agent shall thereupon
be discharged from its duties and obligations under the Loan Documents and (iii) the Required Lenders shall thereafter perform all duties of the retiring Agent under the Loan Documents until
such time, if any, as the Required Lenders appoint a successor Agent as provided above. After any retiring Agent's resignation or removal hereunder as an Agent shall have become effective, the
provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was an Agent under this Agreement. 


 
 

ARTICLE IX
  MISCELLANEOUS    
    



        SECTION
9.01.    Amendments, Etc.    (a) No amendment or waiver of any provision of this Agreement or the Notes or any
other Loan Document, nor consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given;  provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders, do any of the following at any time:
(i) waive any of the conditions specified in Section 3.01 or, in the case of the Initial Extension of Credit, Section 3.02, (ii) change the number of Lenders or the
percentage of (x) the Commitments, (y) the aggregate unpaid principal amount of the Advances or (z) the aggregate Available Amount of outstanding Letters of Credit that, in each
case, shall be required for the Lenders or any of them to take any action hereunder, (iii) release the Borrower with respect to the Obligations or reduce or limit the obligations of any
Guarantor under Article VII or release such Guarantor or otherwise limit such Guarantor's liability with respect to the Guaranteed Obligations, (iv) release any individual Manufactured
Home Community comprising a Borrowing Base Asset or all or substantially all of the Collateral, in each case in any transaction or series of related 


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transactions,
or permit the creation, incurrence, assumption or existence of any Lien on any individual Borrowing Base Asset or all or substantially all of the Collateral, in each case in any
transaction or series of related transactions, to secure any Obligations other than Obligations owing to the Secured Parties under the Loan Documents, (v) amend this Section 9.01,
(vi) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (vii) reduce the principal of, or interest on, the Notes or any fees or other amounts
payable hereunder, (viii) postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder or amend Section 2.06,
(ix) limit the liability of any Loan Party under any of the Loan Documents, or (x) amend, waive or permit any departure from the provisions of Section 5.04 or the defined terms
used in or related to such Section; provided further that no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Bank or
each Issuing Bank, as the case may be, in addition to the Lenders required above to take such action, affect the rights or obligations of the Swing Line Bank or of the Issuing Banks, as the case may
be, under this Agreement; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent or
the Collateral Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent or the Collateral Agent under this Agreement or the other
Loan Documents. 


        (b)   In
the event that any Lender (a "Non-Consenting Lender") shall refuse to consent to a waiver or amendment to,
or a departure from, the provisions of this Agreement of the type described in clause (x) of Section 9.01(a) that has been consented to by the Required Lenders, then the Borrower shall
have the right, upon written demand to such Non-Consenting Lender and the Administrative Agent given within 30 days after the first date on which such consent was solicited in
writing from the Lenders by the Administrative Agent (a "Consent Request Date"), to cause such Non-Consenting Lender to assign its rights
and obligations under this Agreement (including, without limitation, its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it) to an Eligible Assignee designated by the
Borrower and approved by the Administrative Agent (such approval not to be unreasonably withheld) (a "Replacement Lender"),  provided that
(i) as of such Consent Request Date, no Event of Default shall have occurred and be continuing, and (ii) as of the date of
the Borrower's written demand to replace such Non-Consenting Lender, no Default or Event of Default shall have occurred and be continuing other than a Default or Event of Default that
resulted solely from the subject matter of the waiver or amendment for which such consent was being solicited from the Lenders by the Administrative Agent. The Replacement Lender shall purchase such
interests of the Non-Consenting Lender and shall assume the rights and obligations of the Non-Consenting Lender under this Agreement upon execution by the Replacement Lender of
an Assignment and Acceptance delivered pursuant to Section 9.07. Any Lender that becomes a Non-Consenting Lender agrees that, upon receipt of notice from the Borrower given in
accordance with this Section 9.01(b) and Section 9.07, it shall execute and deliver an Assignment and Acceptance with a Replacement Lender as contemplated by this Section. 



        SECTION
9.02.    Notices, Etc.    (a) All notices and other communications provided for hereunder shall be
either (x) in writing (including telecopier or telegraphic communication) and mailed, telecopied, telegraphed or delivered, (y) as and to the extent set forth in Section 9.02(b)
and in the proviso to this Section 9.02(a), in an electronic medium and delivered as set forth in Section 9.02(b) or (z) as and to the extent expressly permitted in this
Agreement, transmitted by e-mail, provided that such e-mail shall in all cases include an attachment (in PDF format or similar
format) containing a legible signature of the person providing such notice, if to the Borrower, at its address at 600 Grant Street, Suite 900, Denver, Colorado 80203, Attention: John G. Sprengle or,
if applicable, at johns@arc-hs.com (and in the case of transmission by e-mail, with a copy by e-mail to Scott L. Gesell, at scottg@arc-hs.com and a copy
by U.S. mail to the attention of John G. Sprengle and Scott L. Gesell at 600 Grant Street, Suite 900, Denver, Colorado 80203); if to any Initial Lender, at its Domestic Lending Office or, if
applicable, at the e-mail address specified opposite its name on Schedule I hereto (and in the case of a transmission by e-mail, with a copy by U.S. mail to its Domestic
Lending Office); if to any other Lender Party, at its Domestic Lending Office or, if applicable, at the e-mail address specified in the Assignment and Acceptance pursuant to which it
became a Lender Party (and in the case of a transmission by e-mail, with a copy by U.S. mail to its Domestic Lending Office); if to the Initial 


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Issuing
Bank, at its address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department, or, if applicable, at dawnmarie.conover@citigroup.com (and in the case of a
transmission by e-mail, with a copy by U.S. mail to Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department); and if to the Administrative Agent or the
Collateral Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department, or, if applicable, at dawnmarie.conover@citigroup.com (and in the case of a
transmission by e-mail, with a copy by U.S. mail to Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department) or, as to the Borrower or any Agent, at such
other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice
to the Borrower and the Administrative Agent. All such notices and communications shall, when mailed, telecopied, telegraphed or e-mailed, be effective when deposited in the mails,
telecopied, delivered to the telegraph company or confirmed by e-mail, respectively, except that notices and communications to the Administrative Agent pursuant to Article II, III
or VIII shall not be effective until received by the Administrative Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes
or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of an original executed counterpart thereof. 


        (b)   So
long as CNAI is the Administrative Agent, materials required to be delivered pursuant to Section 5.03(a), (b), (c) and (g) shall be delivered to
the Administrative Agent in an electronic medium in a format acceptable to the Administrative Agent and the Lender Parties by e-mail at oploanswebadmin@citigroup.com. The Borrower agrees
that the Administrative Agent may make such materials, as well as any other written information, documents, instruments and other material relating to the Borrower, any Loan Party, any of their
Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby (collectively, the
"Communications") available to the Lender Parties by posting such notices on Intralinks or a substantially similar electronic transmission system (the
"Platform"). The Borrower acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that
there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided "as is" and "as available" and (iii) neither the Administrative Agent nor any
of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the
Platform. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of
third party rights or freedom from viruses or other code defects, is made by the Administrative Agent or any of its Affiliates in connection with the Platform. 


        (c)   Each
Lender Party agrees that notice to it (as provided in the next sentence) (a "Notice") specifying that any
Communications have been posted to the Platform shall constitute effective delivery of such information, documents or other materials to such Lender Party for purposes of this Agreement,  provided that
if requested by any Lender Party, the Administrative Agent shall deliver a copy of the Communications to such Lender Party by
e-mail or telecopier. Each Lender Party agrees (i) to notify the Administrative Agent in writing of such Lender Party's e-mail address to which a Notice may be sent by
electronic transmission (including by electronic communication) on or before the date such Lender Party becomes a party to this Agreement (and from time to time thereafter to ensure that the
Administrative Agent has on record an effective e-mail address for such Lender Party) and (ii) that any Notice may be sent to such e-mail address. 


        SECTION
9.03.    No Waiver; Remedies.    No failure on the part of any Lender Party or the Administrative Agent to
exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 


        SECTION
9.04.    Costs and Expenses.    (a) Each Loan Party agrees jointly and severally to pay on demand
(i) all reasonable out-of-pocket costs and expenses of each Agent in connection with the preparation, execution, delivery, administration, modification and amendment of
the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, 


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computer,
duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses, (B) the reasonable fees and expenses of counsel for such Agent with respect
thereto (including, without limitation, with respect to reviewing and advising on matters required to be completed by the Loan Parties on a post-closing basis), with respect to advising
such Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or
with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or
otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors' rights generally and any proceeding ancillary thereto and (C) the reasonable
fees and expenses of counsel for such Agent with respect to the preparation, execution, delivery and review of any documents and instruments at any time delivered pursuant to Section 5.01(j))
and (ii) all reasonable out-of-pocket costs and expenses of each Agent and each Lender Party in connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of the Loan Documents, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors' rights generally (including,
without limitation, the reasonable fees and expenses of counsel for such Agent and each Lender Party with respect thereto). 



        (b)   Each
Loan Party agrees to indemnify, defend and save and hold harmless each Indemnified Party from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith)
(i) the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the transactions contemplated thereby or (ii) the
actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors or an Indemnified Party, whether or not
any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated by the Loan Documents are consummated. Each Loan Party also agrees not to assert any claim against
any Agent, any Lender Party or any of their Affiliates, or any of their respective officers, directors, employees, agents and advisors, on any theory of liability, for special, indirect, consequential
or punitive damages arising out of or otherwise relating to the Facilities, the actual or proposed use of the proceeds of the Advances or the Letters of Credit, the Loan Documents or any of the
transactions contemplated by the Loan Documents. 


        (c)   If
any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender Party other than on the last day
of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant to
Section 6.01 or for any other reason, or if the Borrower fails to make any payment or prepayment of an Advance for which a notice of prepayment has been given or that is otherwise required to
be made, whether pursuant to Section 2.04, 2.06 or 6.01 or otherwise, the Borrower shall, upon demand by such Lender Party (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party any amounts required to compensate such Lender Party for any additional losses, costs or expenses that it may reasonably incur as a result of
such payment or Conversion or such failure to pay or prepay, as the case may be, including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender Party to fund or maintain such Advance. 


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        (d)   If
any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of
counsel and indemnities, such amount may be paid on behalf of such Loan Party by any Agent or any Lender Party, in its sole discretion. 


        (e)   Without
prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrower and
the other Loan Parties contained in Sections 2.10 and 2.12, Section 7.06 and this Section 9.04 shall survive the payment in full of principal, interest and all other amounts payable
hereunder and under any of the other Loan Documents. 


        SECTION
9.05.    Right of Set-off.    Upon (a) the occurrence and during the continuance of any
Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Notes due and payable
pursuant to the provisions of Section 6.01, each Agent and each Lender Party and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by
such Agent, such Lender Party or such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the Obligations of the Borrower or such Loan Party
now or hereafter existing under the Loan Documents, irrespective of whether such Agent or such Lender Party shall have made any demand under this Agreement or such Note or Notes and although such
obligations may be unmatured. Each Agent and each Lender Party agrees promptly to notify the Borrower or such Loan Party after any such set-off and application;  provided, however, that the failure to
give such notice shall not affect the validity of such set-off and application. The rights of each
Agent and each Lender Party and their respective Affiliates under this Section 9.05 are in addition to other rights and remedies (including, without limitation, other rights of
set-off) that such Agent, such Lender Party and their respective Affiliates may have. 


        SECTION
9.06.    Binding Effect.    This Agreement shall become effective when it shall have been executed by the
Borrower, each Guarantor named on the signature pages hereto and each Agent and the Administrative Agent shall have been notified by each Initial Lender and each Initial Issuing Bank that such Initial
Lender or such Initial Issuing Bank, as the case may be, has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Guarantors named on the signature pages
hereto and each Agent and each Lender Party and their respective successors and assigns, except that neither the Borrower nor any other Loan Party shall have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lender Parties. 


        SECTION
9.07.    Assignments and Participations.    (a) Each Lender may and, if demanded by the Borrower in
accordance with Section 9.01(b) upon at least five Business Days' notice to such Lender and the Administrative Agent, will assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment or Commitments, the Advances owing to it and the Note or Notes held by it);  provided, however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in
respect of one or more of the Facilities, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender, an Affiliate of any Lender or a Fund
Affiliate of any Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the aggregate amount of the Commitments being assigned to such Eligible Assignee pursuant to
such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 under each Facility or an integral multiple of
$1,000,000 in excess thereof (or such lesser amount as shall be approved by the Administrative Agent and, so long as no Default shall have occurred and be continuing at the time of effectiveness of
such assignment, the Borrower), (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower pursuant to
Section 9.01(b) shall be arranged by the Borrower after consultation with the Administrative Agent, shall be made to an Eligible Assignee approved by the Administrative Agent (such approval not
to be unreasonably withheld) and shall be an assignment of all rights and obligations of the assigning Lender 


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under
this Agreement, (v) no such assignments shall be permitted without the consent of the Administrative Agent until the Administrative Agent shall have notified the Lender Parties that
syndication of the Commitments hereunder has been completed and (vi) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance, together with any Note or Notes subject to such assignment and, except if such assignment is being made by a Lender to an Affiliate or Fund Affiliate of
such Lender, a processing and recordation fee of $3,500; provided, however, that for each such assignment made as a result of a demand by the Borrower
pursuant to Section 9.01(b), the Borrower shall pay to the Administrative Agent the applicable processing and recordation fee. 


        (b)   Upon
such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Acceptance, (i) the assignee
thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender or Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.10, 2.12, 7.06, 8.05 and 9.04 to the extent any claim thereunder relates to an event arising
prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the remaining portion of an assigning Lender's or
Issuing Bank's rights and obligations under this Agreement, such Lender or Issuing Bank shall cease to be a party hereto). 


        (c)   By
executing and delivering an Assignment and Acceptance, each Lender Party assignor thereunder and each assignee thereunder confirm to and agree with each other and the
other parties thereto and hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; (ii) such assigning Lender Party makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party
or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms
that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such
assigning Lender Party or any other Lender Party and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the Administrative Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required
to be performed by it as a Lender or Issuing Bank, as the case may be. 


        (d)   The
Administrative Agent shall maintain at its address referred to in Section 9.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lender Parties and the Commitment under each Facility of, and principal amount of the Advances owing under each Facility to, each Lender
Party from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lender Parties may treat each Person whose name is recorded in the Register as a Lender Party hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or the Administrative Agent or any Lender Party at any reasonable time and from time to time upon reasonable prior notice. 


78





 



        (e)   Upon
its receipt of an Assignment and Acceptance executed by an assigning Lender Party and an assignee, together with any Note or Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit D hereto, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower and each other Agent. In the case of any assignment by a Lender, within
five Business Days after its receipt of such notice, the Borrower, at its own expense, shall, if requested by the applicable Lender, execute and deliver to the Administrative Agent in exchange for the
surrendered Note or Notes a new Note to the order of such Eligible Assignee in an amount equal to the Commitment assumed by it under each Facility pursuant to such Assignment and Acceptance and, if
any assigning Lender has retained a Commitment hereunder under such Facility, a new Note to the order of such assigning Lender in an amount equal to the Commitment retained by it hereunder. Such new
Note or Notes, if any, shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit A hereto. 


        (f)    Each
Issuing Bank may assign to one or more Eligible Assignees all or a portion of its rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) except in the case of an assignment to a Person that immediately prior to such assignment was
an Issuing Bank or an assignment of all of an Issuing Bank's rights and obligations under this Agreement, the amount of the Letter of Credit Commitment of the assigning Issuing Bank being assigned
pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $10,000,000 and shall be in an integral
multiple of $1,000,000 in excess thereof, (ii) each such assignment shall be to an Eligible Assignee and (iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with a processing and recordation fee of $3,500,  provided that such fee shall not be
payable if the assigning Issuing Bank is making such assignment simultaneously with the assignment in its capacity
as a Lender of all or a portion of its Revolving Credit Commitment to the same Eligible Assignee. 



        (g)   Each
Lender Party may sell participations to one or more Persons (other than any Loan Party or any of its Affiliates) in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Note or Notes (if any) held by it);  provided, however, that
(i) such Lender Party's obligations under this Agreement (including, without limitation, its Commitments) shall remain
unchanged, (ii) such Lender Party shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender Party shall remain the holder of
any such Note for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the other Lender Parties shall continue to deal solely and directly with such Lender Party in
connection with such Lender Party's rights and obligations under this Agreement, (v) no participant under any such participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan Party therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on,
the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation or postpone any date fixed for any payment of principal of, or interest on, the Notes
or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the Collateral and (vi) if, at the time of such
sale, such Lender Party was entitled to payments under Section 2.12(a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term
Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect
to such participant on such date, provided that such participant complies with the requirements of Section 2.12(e). 


        (h)   Any
Lender Party may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the
assignee or participant or proposed assignee or participant any information relating to the Borrower furnished to such Lender 


79





 



Party
by or on behalf of the Borrower; provided, however, that, prior to any such disclosure, the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any Confidential Information received by it from such Lender Party. 


        (i)    Notwithstanding
any other provision set forth in this Agreement, any Lender Party may at any time create a security interest in all or any portion of its rights under
this Agreement (including, without limitation, the Advances owing to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System. 


        SECTION
9.08.    Execution in Counterparts.    This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement. 



        SECTION
9.09.    No Liability of the Issuing Banks.    The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither any Issuing Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against
presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or
(d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against such Issuing Bank, and such Issuing
Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by (i) such Issuing Bank's
willful misconduct or gross negligence as determined in a final, non-appealable judgment by a court of competent jurisdiction in determining whether documents presented under any Letter of
Credit comply with the terms of the Letter of Credit or (ii) such Issuing Bank's willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and
certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. 


        SECTION
9.10.    Confidentiality.    Neither the Administrative Agent nor any Lender Party shall disclose any
Confidential Information to any Person without the consent of the Borrower, other than (a) to such Administrative Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents
and advisors and to actual or prospective Eligible Assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process,
(c) as requested or required by any state, Federal or foreign authority or examiner regulating such Lender Party and (d) to any rating agency when required by it, provided that, prior to
any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Confidential Information relating to the Loan Parties received by it from such Lender Party. 


80







   
        SECTION 9.11.    Release of Collateral.    Upon the sale, lease, transfer or other disposition of any item of
Collateral of any Loan Party (including, without limitation, as a result of the sale, in accordance with the terms of the Loan Documents, of the Loan Party that owns such Collateral) in accordance
with the terms of the Loan Documents, the Collateral Agent will, at the Borrower's expense, execute and deliver to such Loan Party such documents as such Loan Party may reasonably request to evidence
the release of such item of Collateral from the assignment and security interest granted under the Collateral Document in accordance with the terms of the Loan Documents. 


        SECTION
9.12.    Patriot Act Notification.    Each Lender and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)) (the
"Patriot Act"), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address
of such Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Loan Party in accordance with the Patriot Act. The Parent Guarantor
and the Borrower shall, and shall cause each of their Subsidiaries to, provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the
Administrative Agent or any Lenders in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act. 


        SECTION
9.13.    Jurisdiction, Etc.    (a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court
or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of any jurisdiction. 


        (b)   Each
of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Loan Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such
court. 


        SECTION
9.14.    Governing Law.    This Agreement and the Notes shall be governed by, and construed in accordance
with, the laws of the State of New York. 


        SECTION 9.15.    WAIVER OF JURY
TRIAL.    EACH OF THE BORROWER, EACH OTHER LOAN PARTY, THE ADMINISTRATIVE AGENT AND THE LENDER PARTIES IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES OR THE
ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.


[Balance of page intentionally left blank]


81






        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. 













BORROWER:













	 	 	AFFORDABLE RESIDENTIAL COMMUNITIES LP
	

 	
 	

By:	
 	

AFFORDABLE RESIDENTIAL COMMUNITIES INC., its general partner
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

 	
 	

 	
 	

 















GUARANTORS:













	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

AFFORDABLE RESIDENTIAL COMMUNITIES INC.
	



 	

 	



 	

 	



By	

 	



/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC BROKERAGE, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC DEALERSHIP, INC.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ARC HOUSING GP LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARCHC LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC HOUSING LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	 	 	 	 	 	 	 









	

 	
 	

ARC HOUSINGTX LP

By: ARC HOUSING GP LLC, its general partner
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC III, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC INSURANCE SERVICES, INC.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC INSURANCE SERVICES, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC MANAGEMENT SERVICES, INC.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ARC PROPERTY MANAGEMENT, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Executive Vice President and Secretary
	

 	
 	

ARC REAL ESTATE HOLDINGS, LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ARC REAL ESTATE SERVICES, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Secretary
	 	 	 	 	 	 	 









	

 	
 	

ARC REAL ESTATE, LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ARC TRS, INC.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ARCHOMESMART, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ARCMEZ3, L.L.C.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ARCMS, INC.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ENSPIRE FINANCE LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT D. JACKSON      
 Name: Scott D. Jackson

Title: Chief Executive Officer
	

 	
 	

ENSPIRE HOLDINGS LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

ENSPIRE INSURANCE LLC
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	 	 	 	 	 	 	 









	

 	
 	

WINDSTAR AVIATION CORP.
	

 	
 	

 	
 	

By	
 	

/s/  SCOTT L. GESELL      
 Name: Scott L. Gesell

Title: Vice President and Secretary
	

 	
 	

 	
 	

 	
 	

 


















ADMINISTRATIVE AGENT, COLLATERAL AGENT, INITIAL ISSUING BANK, SWING LINE BANK AND INITIAL LENDER:













	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

CITICORP NORTH AMERICA, INC.
	



 	

 	



 	

 	



By	

 	



/s/  DAVID BOUTON      
 Name: David Bouton

Title: Vice President
	

 	
 	

 	
 	

 	
 	

 


















INITIAL LENDERS:













	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

MERRILL LYNCH CAPITAL CORPORATION
	



 	

 	



 	

 	



By	

 	



/s/  STEPHANIE VALLILLO      
 Name: Stephanie Vallillo

Title: Vice President
	

 	
 	

 	
 	

 	
 	

 









	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

BANK ONE, NA
	



 	

 	



 	

 	



By	

 	



/s/  ANGELA L. KLEIMAN      
 Name: Angela L. Kleiman

Title: Director
	

 	
 	

 	
 	

 	
 	

 









	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH
	



 	

 	



 	

 	



By	

 	



/s/  KARL M. STUDER      
 Name: Karl M. Studer

Title: Director
	



 	

 	



 	

 	



By	

 	



/s/  CASSANDRA DROOGAN      
 Name: Cassandra Droogan

Title: Associate
	

 	
 	

 	
 	

 	
 	

 









	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

MORGAN STANLEY MORTGAGE CAPITAL INC.
	



 	

 	



 	

 	



By	

 	



/s/  STEVEN STERN      
 Name: Steven Stern

Title: Vice President
	

 	
 	

 	
 	

 	
 	

 









	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

UBS LOAN FINANCE LLC
	



 	

 	



 	

 	



By	

 	



/s/  JUAN ZUNIGA      
 Name: Juan Zuniga

Title: Associate Director
	



 	

 	



 	

 	



By	

 	



/s/  JOSELIN FERNANDES      
 Name: Joselin Fernandes

Title: Associate Director
	

 	
 	

 	
 	

 	
 	

 









	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

WACHOVIA BANK, NATIONAL ASSOCIATION
	



 	

 	



 	

 	



By	

 	



/s/  DAVID HOAGLAND      
 Name: David Hoagland

Title: Vice President
	

 	
 	

 	
 	

 	
 	

 









	

 	
 	

 	
 	

 	
 	

 
	

 	
 	

KEYBANK NATIONAL ASSOCIATION
	



 	

 	



 	

 	



By	

 	



/s/  CHERYL F. VAN KLOMPENBERG      
 Name: Cheryl F. Van Klompenberg

Title: Assistant Vice President
	

 	
 	

 	
 	

 	
 	

 









 
 

SCHEDULE I    
    
    COMMITMENTS AND APPLICABLE LENDING OFFICES    
    



	Name of Initial

Lender/ Initial

Issuing Bank
 
	 	Revolving Credit

Commitment
	 	Letter of Credit

Commitment
	 	Swing Line

Commitment
	 	Domestic Lending Office
	 	Eurodollar Lending Office

	

Citicorp North America, Inc.	
 	
$	

29,761,904	
 	
$	

5,000,000	
 	
$	

1,000,000	
 	

2 Penns Way, Suite 200

New Castle, DE 19720

Attn: Dawnmarie Conover

Tel: 302-894-6047

Fax: 302-994-0849

E-mail: Dawnmarie. conover@citigroup.com	
 	

2 Penns Way, Suite 200

New Castle, DE 9720

Attn: Dawnmarie Conover

Tel: 302-894-6047

Fax: 302-994-0849

E-mail: Dawnmarie. conover@citigroup.com
	

Merrill Lynch Capital Corporation	
 	
$	

29,761,904	
 	
 	

—	
 	
 	

—	
 	

4 World Financial

Centers, 16th Floor

New York, NY 10080

Attn: Eve Lam

Tel: 212-449-6187

Fax: 212-738-1719

E-mail: Eve_Lam @ml.com	
 	

4 World Financial

Centers, 16th Floor

New York, NY 10080

Attn: Eve Lam

Tel: 212-449-6187

Fax: 212-738-1719

E-mail: Eve_Lam @ml.com
	

Bank One, NA	
 	
$	

15,000,000	
 	
 	

—	
 	
 	

—	
 	

One Bank One Plaza,

Suite IL1-0315

Chicago, IL 60670

Attn: Jose Rodriguez

Tel: 312-325-7071

Fax: 312-325-7101

E-mail: jose_l_rodriguez

@bankone.com	
 	

One Bank One Plaza,

Suite IL1-0315

Chicago, IL 60670

Attn: Jose Rodriguez

Tel: 312-325-7071

Fax: 312-325-7101

E-mail: jose_l_rodriguez

@bankone.com
	

Credit Suisse First Boston, acting through its Cayman Islands Branch	
 	
$	

10,119,048	
 	
 	

—	
 	
 	

—	
 	

One Madison Avenue

New York, NY10010

Attn: Ed Markowski

Tel: 212-538-3380

Fax: 212-538-6851

E-mail: edwards.markowski

@csfb.com	
 	

One Madison Avenue

New York, NY10010

Attn: Ed Markowski

Tel: 212-538-3380

Fax: 212-538-6851

E-mail: edwards.markowski

@csfb.com
	

Morgan Stanley Mortgage Capital Inc.	
 	
$	

10,119,048	
 	
 	

—	
 	
 	

—	
 	

1633 Broadway, 25th Floor

New York, NY 10019

Attn: Kevin Hyland

Tel: 212-537-1799

Fax: 212-507-4950

E-mail: kevin.hyland

@morganstanley.com	
 	

1633 Broadway, 25th Floor

New York, NY 10019

Attn: Kevin Hyland

Tel: 212-537-1799

Fax: 212-507-4950

E-mail: kevin.hyland

@morganstanley.com
	

UBS Loan Finance LLC	
 	
$	

10,119,048	
 	
 	

—	
 	
 	

—	
 	

677 Washington Blvd., 6th Floor

Stamford, CT 06901

Attn: Deborah Porter

Tel: 203-719-6391

Fax: 203-719-4176

E-mail: deborah.porter@ubs.com	
 	

677 Washington Blvd., 6th Floor

Stamford, CT 06901

Attn: Deborah Porter

Tel: 203-719-6391

Fax: 203-719-4176

E-mail: deborah.porter@ubs.com
	 	 	 	 	 	 	 	 	 	 	 	 	 	 








	

Wachovia Bank, National Association	
 	
$	

10,119,048	
 	
 	

—	
 	
 	

—	
 	

201 S. College St., CP9, NC1183

Charlotte, NC 28288

Attn: Shharon Gibson

Tel: 704-715-760

Fax: 704-715-0094

E-mail: sharon.gibson1

@wachovia.com	
 	

201 S. College St., CP9, NC1183

Charlotte, NC 28288

Attn: Sharon Gibson

Tel: 704-715-7608

Fax: 704-715-0094

E-mail: sharon.gibson1

@wachovia.com
	

KeyBank National Association	
 	
$	

10,000,000	
 	
 	

—	
 	
 	

—	
 	

127 Public Square, 8th Fl.

Cleveland, OH 44114

Attn: Audrey Pishnery

Tel: 216-689-5756

Fax: 216-689-4721

E-mail: audrey_pishnery

@keybank.com	
 	

127 Public Square, 8th Fl.

Cleveland, OH 44114

Attn: Audrey Pishnery

Tel: 216-689-5756

Fax: 216-689-4721

E-mail: audrey_pishnery

@keybank.com
	 	
Total	
 	
$	

125,000,000	
 	
$	

5,000,000	
 	
$	

1,000,000	
 	

 	
 	

 











QuickLinks


$125,000,000 CREDIT AGREEMENT Dated as of February 18, 2004 among AFFORDABLE RESIDENTIAL COMMUNITIES LP, as Borrower, AFFORDABLE RESIDENTIAL COMMUNITIES INC., as Parent Guarantor, THE SUBSIDIARY GUARANTORS NAMED
HEREIN, as Subsidiary Guarantors, THE INITIAL LENDERS, INITIAL ISSUING BANK AND SWING LINE BANK NAMED HEREIN, as Initial Lenders, Initial Issuing Bank and Swing Line Bank CITICORP NORTH AMERICA, INC., as Administrative Agent and as Collateral Agent,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Syndication Agent, BANK ONE, NA, as Documentation Agent, and CITIGROUP GLOBAL MARKETS INC. and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, as Joint Lead Arrangers and Joint Book
Running Managers



TABLE OF CONTENTS


CREDIT AGREEMENT

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS


ARTICLE III CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT


ARTICLE IV REPRESENTATIONS AND WARRANTIES

ARTICLE V COVENANTS OF THE LOAN PARTIES



ARTICLE VI EVENTS OF DEFAULT

ARTICLE VII GUARANTY


ARTICLE VIII THE AGENTS

ARTICLE IX MISCELLANEOUS


SCHEDULE I COMMITMENTS AND APPLICABLE LENDING OFFICES