Exhibit 10.2


 


EXECUTION
VERSION


 


FIRST AMENDMENT TO THE ARC LP GUARANTEE


 


FIRST AMENDMENT, dated as of October 14, 2005
(this “Amendment”), to the ARC LP Guarantee, dated as of April 6,
2005 (as previously amended, supplemented or otherwise modified, the “Existing
ARC LP Guarantee”, and as amended hereby and as further amended, restated,
supplemented or otherwise modified and in effect from time to time, the “ARC
LP Guarantee”), by Affordable Residential Communities LP (the “Guarantor”)
in favor of Merrill Lynch Mortgage Capital Inc. (the “Lender”).


 


RECITALS


 


The Guarantor and the Lender are parties to the
Existing ARC LP Guarantee.  Capitalized
terms used but not otherwise defined herein shall have the meanings given to
them in the Existing ARC LP Guarantee.


 


The Guarantor and the Lender have agreed, subject to
the terms and conditions of this Amendment, that the Existing ARC LP Guarantee
be amended to revise the provisions of a
covenant relating to minimum tangible net worth.


 


Accordingly, the Guarantor and the Lender hereby
agree, in consideration of the mutual premises and mutual obligations set forth
herein, that the Existing ARC LP Guarantee is hereby amended as follows:


 


SECTION 1.         Amendment.


 


1.1           Section 11
of the Existing ARC LP Guarantee is hereby amended by deleting Section 11(c) and
inserting in lieu thereof the following:


 


(c)           Minimum
Tangible Net Worth.  As of the last
day of each Fiscal Quarter, the REIT shall maintain a Tangible Net Worth of not
less than (i) $425,000,000, on and after September 30, 2005 through
and including December 31, 2006; (ii) $385,000,000, on and after January 1,
2007 through and including December 31, 2007; and (iii) $355,000,000,
on and after January 1, 2008 through and including September 30,
2008.


 


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


 


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


 


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


 


1





















 


(b)           First
Amendment to the Credit Agreement. The First Amendment to the Credit
Agreement, dated as of October 14, 2005, duly executed and delivered by a
duly authorized officer of ARC HousingTX LP and ARC Housing LLC and by the
Lender;


 


(c)           Legal
Opinions. Opinion, dated as of the Guarantee Amendment Effective Date and
addressed to the Lender, from Skadden, Arps, Slate, Meagher & Flom
LLP, special New York counsel to the Guarantor;


 


(d)           Resolutions,
etc.  from the Guarantor, (i) a
copy of a current good standing certificate of the Secretary of State (or
comparable official) of the jurisdiction of organization of the Guarantor and (ii) a
certificate duly executed and delivered by the Guarantor’s Secretary or Assistant
Secretary as to (A) resolutions of the Guarantor’s board of directors (or
analogous governing body as Person or Persons) then in full force and effect
authorizing the execution, delivery and performance of this Amendment and any
related documents or agreements and the transactions contemplated hereby and
thereby, (B) the incumbency and signatures of those of the Guarantor’s
officers authorized to act with respect to this Amendment, and (C) the
full force and validity of each Organic Document of the Guarantor and copies
thereof (or a certificate of the Guarantor’s Secretary or Assistant Secretary
that there have been no changes to the versions of such Organic Documents
provided to the Lender in connection with the effectiveness of the Existing ARC
LP Guarantee), upon which certificates the Lender may conclusively rely until
it shall have received a further certificate of the Secretary or Assistant
Secretary of the Guarantor canceling or amending such prior certificate; and


 


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


 


2.2           No
Material Adverse Change. There shall have been no material adverse change
in the financial condition of the Guarantor prior to the Guarantee Amendment
Effective Date.


 


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


 


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


 


SECTION 3.         Limited
Effect.  Except as expressly amended
and modified by this Amendment, the Existing ARC LP Guarantee shall continue to
be, and shall remain, in full force and effect in accordance with its terms; provided,
however, that reference therein and herein to the “Loan Documents” shall
be deemed to include, in any event, this Amendment.  Each reference to the Existing ARC LP
Guarantee in any of the Loan Documents shall be deemed to 


 


2





















 


be a reference to the Existing ARC LP Guarantee as amended hereby.  The
execution of this Amendment by the Lender shall not operate as a waiver of any
of their rights, powers or privileges under the Existing ARC LP
Guarantee or under any of the other Loan
Documents except as expressly set forth herein.


 


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


 


SECTION 5.         GOVERNING
LAW.  THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK. THIS AMENDMENT INCORPORATES BY REFERENCE, AND THE GUARANTOR
AND LENDER HEREBY AGREE TO BE SUBJECT TO, THE PROVISIONS SET FORTH IN SECTION 19
OF THE EXISTING ARC LP GUARANTEE.


 


[SIGNATURE PAGE FOLLOWS]


 


3





















 


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


 


 


	
   

  	
  GUARANTOR

  
	
   

  	
   

  
	
   

  	
  AFFORDABLE RESIDENTIAL

  COMMUNITIES LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/Scott L.
  Gesell

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Scott L. Gesell

  
	
   

  	
   

  	
  Title: 

  	
  Vice President

  
					



 


 


FIRST AMENDMENT ARC LP GUARANTEE


 





















 


	
   

  	
  ACKNOWLEDGED AND
  AGREED:

  
	
   

  	
   

  
	
   

  	
  MERRILL LYNCH MORTGAGE

  CAPITAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/Joshua
  A. Green

  	
   

  
	
   

  	
   

  	
   Name:  Joshua A. Green

  
	
   

  	
   

  	
   Title:  Vice President

  



 


 


FIRST AMENDMENT ARC LP GUARANTEE