Document:

creditagreement

 

EXHIBIT 4.12   

 

 

EXECUTION COPY

 

AMENDED AND RESTATED CREDIT AGREEMENT 

DATED AS OF OCTOBER 18, 2010

 

AMONG

 

ASSOCIATED ESTATES REALTY CORPORATION,

AS BORROWER

 

AND

 

PNC BANK, NATIONAL ASSOCIATION

AS ADMINISTRATIVE AGENT

 

AND

 

PNC CAPITAL MARKETS, LLC, AS CO-LEAD ARRANGER

AND BOOK MANAGER

 

AND

 

WELLS FARGO BANK, N.A., AS SYNDICATION AGENT 

 

AND

 

WELLS FARGO SECURITIES, LLC, AS CO-LEAD ARRANGER

 

AND

 

U. S. BANK NATIONAL ASSOCIATION, AS DOCUMENTATION AGENT

 

AND

 

THE SEVERAL LENDERS

FROM TIME TO TIME PARTIES HERETO,

AS LENDERS

 

 

 

 

 

 

TABLE OF CONTENTS

 

Page

ARTICLE I
DEFINITIONS. 1

1.1      Definitions. 1

1.2      Construction. 23

1.3      Accounting Principles. 23

ARTICLE II
THE CREDIT. 24

2.1      Generally. 24

2.2      Revolving Credit Advances. 24

2.3      Interest Rate Options. 24

2.4      Commitment Fee. 25

2.5      Other Fees. 25

2.6      Usury. 25

2.7      Voluntary Commitment Reductions. 26

2.8      Minimum Amount of Each Advance. 26

2.9      Final Principal Payment; Optional Prepayments. 26

2.10    Revolving Credit Loan Requests; Swing Loan Requests. 26

2.11    Conversion and Continuation of Outstanding Advances. 27

2.12    Changes in Interest Rate, Etc. 27

2.13    Rates Applicable After Event of Default 27

2.14    Method of Payment 28

2.15    Notes; Telephonic Notices. 28

2.16    Interest Payment Dates; Interest and Fee Basis. 28

2.17    Notification of Advances, Interest Rates and Prepayments. 28

2.18    Increasing Lenders and New Lenders. 29

2.19    Presumptions by Administrative Agent 30

2.20    Replacement of a Lender 30

2.21    Swing Advances. 31

2.22    Letter of Credit Subfacility. 32

2.23    Extension of Facility Termination Date. 37

ARTICLE III
UNENCUMBERED POOL PROPERTIES. 38

3.1      Eligibility of Projects. 38

3.2      Conditions Precedent to a Project Becoming a Qualifying
Unencumbered Project 39

3.3      Release of Subsidiary Guarantors and Qualifying Unencumbered
Projects. 39

ARTICLE IV
INCREASED COSTS. 40

4.1      Increased Costs Generally. 40

4.2      Taxes. 41

4.3      Indemnity. 43

4.4      Settlement Date Procedures. 44

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4.5      LIBOR Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available. 44

4.6      Administrative Agent’s and Lender’s Rights. 45

ARTICLE V
CONDITIONS PRECEDENT. 45

5.1      Initial Advance. 45

5.2      Each Advance. 47

ARTICLE VI
REPRESENTATIONS AND WARRANTIES. 47

6.1      Existence. 47

6.2      Authorization and Validity. 47

6.3      No Conflict; Government Consent 47

6.4      Financial Statements; Material Adverse Effect 48

6.5      Taxes. 48

6.6      Litigation and Guarantee Obligations. 48

6.7      Subsidiaries. 48

6.8      ERISA.. 48

6.9      Accuracy of Information. 49

6.10    Regulation U.. 49

6.11    Material Agreements. 49

6.12    Compliance With Laws. 49

6.13    Ownership of Projects. 49

6.14    Investment Company Act 49

6.15    Solvency. 49

6.16    Insurance. 50

6.17    REIT and Listing Status. 50

6.18    Title to Property. 50

6.19    Environmental Matters. 50

6.20    Office of Foreign Asset Control 51

6.21    Subsidiary Guaranty. 51

6.22    Intellectual Property. 52

ARTICLE VII
COVENANTS. 52

7.1      Financial Reporting. 52

7.2      Use of Proceeds. 53

7.3      Notice of Default 54

7.4      Conduct of Business. 54

7.5      Taxes. 54

7.6      Insurance. 54

7.7      Compliance with Laws. 54

7.8      Maintenance of Properties and Equipment 54

7.9      Inspection. 54

7.10    Maintenance of Status. 55

7.11    Dividends. 55

7.12    No Change in Control 55

7.13    Non-Real Estate Investments. 55

7.14    Merger; Sale of Assets. 55

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7.15    Acquisitions and Investments. 55

7.16    Liens. 56

7.17    Affiliates. 56

7.18    Recourse Secured Indebtedness. 57

7.19    Minimum Consolidated Tangible Net Worth. 57

7.20    Indebtedness and Cash Flow Covenants. 57

7.21    Environmental Matters. 57

7.22    Permitted Investments. 58

7.23    Additional Unsecured Indebtedness. 59

7.24    Limits on Ownership Encumbrances. 59

ARTICLE VIII
events of DEFAULT. 59

ARTICLE IX
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES. 61

9.1      Acceleration. 61

9.2      Amendments. 62

9.3      Preservation of Rights. 63

9.4      Insolvency of Borrower 63

ARTICLE X
GENERAL PROVISIONS. 63

10.1    Survival of Representations. 63

10.2    Governmental Regulation. 63

10.3    No Plan Assets. 63

10.4    Headings. 63

10.5    Entire Agreement 63

10.6    Several Obligations; Benefits of this Agreement 63

10.7    Expenses; Indemnification. 64

10.8    Electronic Document Deliveries. 64

10.9    Accounting. 65

10.10  Severability of Provisions. 65

10.11  Nonliability of Lenders. 65

10.12  CHOICE OF LAW... 65

10.13  SUBMISSION TO JURISDICTION.. 65

10.14  WAIVER OF VENUE. 65

10.15  SERVICE OF PROCESS. 66

10.16  WAIVER OF JURY TRIAL. 66

ARTICLE XI
THE ADMINISTRATIVE AGENT. 66

11.1    Appointment and Authority. 66

11.2    Rights as a Lender 66

11.3    Exculpatory Provisions. 66

11.4    Reliance by Administrative Agent 67

11.5    Delegation of Duties. 68

11.6    Resignation of Administrative Agent 68

11.7    Non-Reliance on Administrative Agent and Other Lenders. 69

11.8    No Other Duties, etc. 69

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11.9    No Reliance on Administrative Agent’s Customer Identification
Program.. 69

11.10  Requests for Approval 69

11.11  Defaulting Lenders. 69

ARTICLE XII
SETOFF; RATABLE PAYMENTS. 70

12.1    Setoff. 70

12.2    Ratable Payments. 70

ARTICLE XIII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. 71

13.1    Successors and Assigns Generally. 71

13.2    Assignments by Lenders. 72

13.3    Register 73

13.4    Participations. 73

13.5    Limitations upon Participant Rights Successors and Assigns
Generally. 74

13.6    Certain Pledges; Successors and Assigns Generally. 74

13.7    Confidentiality. 74

ARTICLE XIV
NOTICES. 75

14.1    Giving Notice. 75

14.2    Change of Address. 75

ARTICLE XV
PATRIOT ACT. 75

ARTICLE XVI
COUNTERPARTS. 76

 

 

EXHIBITS

 

EXHIBIT A - FORM OF NOTE

EXHIBIT B - COMPLIANCE CERTIFICATE

EXHIBIT C - FORM OF ASSIGNMENT AND ASSUMPTION

EXHIBIT D - SUBSIDIARY GUARANTY

EXHIBIT E - FORM OF OPINION
OF BORROWER’S COUNSEL

EXHIBIT F - LOAN REQUEST

SCHEDULE 1.1 -  ORIGINAL FACILITY LETTERS OF CREDIT

SCHEDULE 3.1 -    INITIAL QUALIFYING UNENCUMBERED PROJECTS AND 

                                SUBSIDIARY GUARANTORS

SCHEDULE 6.6 -
LITIGATION

SCHEDULE 6.7 - SUBSIDIARIES
OF BORROWER

SCHEDULE 6.13 -  EXCEPTIONS,
IF ANY, TO OWNERSHIP FREE OF UNPERMITTED 

                                LIENS

SCHEDULE 6.19 -
ENVIRONMENTAL MATTERS

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AMENDED AND RESTATED CREDIT
AGREEMENT

This Amended and Restated Credit
Agreement, dated as of October 18, 2010, is among Associated Estates Realty
Corporation (the “Borrower”), PNC Bank, National Association, and the
several banks, financial institutions and other entities from time to time
parties to this Credit Agreement (collectively, the “Lenders”), PNC
Bank, National Association, not individually, but as “Agent” or “Administrative
Agent” and Wells Fargo Bank, N.A., as “Syndication Agent.”

RECITALS

WHEREAS, the Borrower is primarily engaged in the business
of purchasing, owning, operating, developing and managing apartment
communities.

WHEREAS,  the Borrower and certain of the Lenders are
parties to that certain Credit Agreement dated as of April 14, 2007, as amended
by a First Amendment thereto dated as of March 20, 2008 (as amended, the “Original
Agreement”).

WHEREAS, the Borrower has requested that the Lenders agree
to amend and restate the Original Agreement to, among other things, increase
the maximum aggregate amount of loans available thereunder, provide for an
extension of the maturity date thereof and modify certain of the pricing and
financial covenants thereunder.

WHEREAS, the Lenders are willing to so amend and restate
the Original Agreement in consideration of the Borrower’s agreement to the
terms and conditions of this Amendment.

NOW, THEREFORE, in consideration
of the mutual covenants and agreements herein contained, the parties hereto
agree as follows:

ARTICLE
I

DEFINITIONS

1.1             
Definitions

.  As used in this Agreement:

“Acquisition” means any
transaction, or any series of related transactions, consummated on or after the
date of this Agreement, by which the Borrower or any of its Subsidiaries
(i) acquires any going business or all or substantially all of the assets
of any firm, corporation or division thereof, whether through purchase of
assets, merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding partnership
interests of a partnership.

“Adjusted Funds From Operations”
shall mean Funds From Operations, as adjusted for impairments and other
non-cash charges and without any reduction  for Defeasance Costs.

“Administrative Agent” means PNC
Bank, National Association in its capacity as agent for the Lenders pursuant to
Article XI, and not in its individual capacity as a Lender, and any
successor Administrative Agent appointed pursuant to Article XI.

 

 

 

 

 

 

“Advance” means a borrowing
hereunder consisting of the aggregate amount of the several Loans made by one
or more of the Lenders to the Borrower of the same Type and, in the case of
LIBOR Rate Advances, for the same Interest Period, including Swing Advances.

“Affiliate” as to any Person shall mean any other Person
(i) which directly or indirectly controls, is controlled by, or is under common
control with such Person, or (ii) which beneficially owns or holds 5% or more
of any class of the voting or other equity interests of such Person, or (iii)
5% or more of any class of voting interests or other equity interests of which
is beneficially owned or held, directly or indirectly, by such Person.  

“Affordable Housing Projects”
means any Project for which rents are subsidized and certain aspects of the
operations are regulated by the U.S. Department of Housing and Urban
Development.

“Aggregate Commitment” means, as
of any date, the aggregate of the then-current Commitments of all the Lenders,
which is, as of the Agreement Execution Date, $250,000,000.

“Agreement” means this Credit
Agreement, as it may be amended or modified and in effect from time to time.

“Agreement Execution Date” means
the date this Agreement has been fully executed and delivered by all parties
hereto.

“Anti-Terrorism Laws” shall mean any Laws relating to
terrorism or money laundering, including Executive Order No. 13224, the USA
Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the
Laws administered by the United States Treasury Department’s Office of Foreign
Asset Control (as any of the foregoing Laws may from time to time be amended,
renewed, extended, or replaced).

“Applicable Commitment Fee Rate” shall mean, with respect
to the Commitment Fee payable in arrears for any quarter, 0.35% per annum.  

“Applicable Margin” means an annual percentage to be used
in calculating the interest rate applicable to the various Types of Advances
which shall vary from time to time with the Leverage Ratio as follows:

 

	
   

   

  Leverage Ratio

  	
   

  LIBOR Applicable Margin

  	
  Base Rate Applicable Margin

  
	
   

  	
   

  	
   

  
	
  Less than 45%

  	
  2.30%

  	
  1.30%

  
	
  Greater than or equal to
  45%, but less than 50%

  	
  2.65%

  	
  1.65%

  
	
  Greater than or equal to
  50% but less than or equal to 55%

  	
  2.95%

  	
  1.95%

  
	
  Greater than 55% but less
  than or equal to 60%

  	
  3.25%

  	
  2.25%

  
	
  Greater than 60% 

  	
  3.25% + Default Rate

  	
  2.25% + Default Rate

  

 

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As of the Agreement Execution
Date, based on the Leverage Ratio shown on the Compliance Certificate delivered
to the Administrative Agent by Borrower pursuant to Section 5.1(k), the
LIBOR Applicable Margin is 2.30% and the Base Rate Applicable Margin is 1.30%.
The percentages set forth above shall be changed from time to time in
accordance with the Leverage Ratio of the last day of the most recent preceding
fiscal quarter for which financial results have been reported, which percentage
shall be effective on the first day of the calendar month following the date on
which Administrative Agent receives a Compliance Certificate as required by Section
7.1(c) from the Borrower as of the end of such fiscal quarter in the
form attached hereto as Exhibit B, beginning with the Compliance
Certificate for the fiscal quarter ending September 30, 2010.  If any such
Compliance Certificate shall later be determined to be incorrect and as a
result a higher Applicable Margin should have been in effect for any period,
Borrower shall pay to the Administrative Agent for the benefit of the Lenders
all additional interest which would have accrued if the original Compliance
Certificate had been correct, as shown on an invoice to be prepared by the
Administrative Agent and delivered to Borrower, on the next Payment Date
following delivery of such invoice.

“Article” means an article of
this Agreement unless another document is specifically referenced.

“Authorized Officer” means any
of the President and Chief Executive Officer, Vice President and General
Counsel, and  Vice President and Chief Financial Officer, of Borrower, acting
singly,  or such other individuals, designated by written notice to the
Administrative Agent from the Borrower, authorized to execute notices, reports
and other documents on behalf of the Loan Parties required hereunder.  The
Borrower may amend such list of individuals from time to time by giving written
notice of such amendment to the Administrative Agent.

“Base Rate” shall mean, for any day, a fluctuating per
annum rate of interest equal to the highest of (a) the Federal Funds Open Rate,
plus fifty basis points (0.5%), and (b) the Prime Rate, and (c) the
Daily LIBOR Rate, plus 100 basis points (1.0%).  Any change in the Base
Rate (or any component thereof) shall take effect at the opening of business on
the day such change occurs.

“Base Rate Advance” means an Advance that bears interest
at the Base Rate Option.

“Base Rate Applicable Margin”
means as of any date, with respect to the percentage spread to be added
to the Base Rate under the Base Rate Option, the percentage in effect on such
date under the definition of the “Applicable Margin”.

“Base Rate Loan” means a Loan
which bears interest at the Base Rate Option.

“Base Rate Option” shall mean
the option of the Borrower to have Advances bear interest at the rate and under
the terms set forth in Section 2.3.

“Borrower” means Associated
Estates Realty Corporation, a corporation organized under the laws of the State
of Ohio, and its successors and assigns.

“Borrowing Date” means a date on
which an Advance is made hereunder.

“Borrowing Tranche” shall mean specified portions of
Advances outstanding as follows:  (i) any Advances to which a LIBOR Rate Option
applies which become subject to the same Interest Rate Option under the same
Loan Request by the Borrower and which have the same Interest Period shall
constitute one Borrowing Tranche, and (ii) all Advances to which a Base Rate
Option applies shall constitute one Borrowing Tranche.

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“Business Day” means (i) with respect to any borrowing,
payment or rate selection of LIBOR Rate Advances, a day (other than a Saturday
or Sunday) on which banks generally are open in Cleveland, Ohio and New York,
New York for the conduct of substantially all of their commercial lending
activities and on which dealings in United States dollars are carried on in the
London interbank market and (ii) for all other purposes, a day (other than a
Saturday or Sunday) on which banks generally are open in Cleveland, Ohio and
New York, New York for the conduct of substantially all of their commercial
lending activities.

“Capital Stock” means any and
all shares, interests, participations or other equivalents (however designated)
of capital stock of a corporation, any and all equivalent ownership interests
in a Person which is not a corporation and any and all warrants or options to
purchase any of the foregoing.

“Capitalization Rate” means
seven and one half percent (7.50%).

“Capitalized Lease” of a Person
means any lease of Property imposing obligations on such Person, as lessee
thereunder, which are required in accordance with GAAP to be capitalized on a
balance sheet of such Person.

“Capitalized Lease Obligations”
of a Person means the amount of the obligations of such Person under
Capitalized Leases which would be shown as a liability on a balance sheet of
such Person prepared in accordance with GAAP.

“Cash
Equivalents”  means, as of any date:

(i)         securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one year from such
date;

(ii)        mutual funds organized under the United States
Investment Company Act rated AAm or AAm-G by S&P and P-1 by Moody’s;

(iii)       certificates of deposit or other
interest-bearing obligations of a bank or trust company which is a member in
good standing of the Federal Reserve System having a short term unsecured debt
rating of not less than A-1 by S&P and not less than P-1 by Moody’s (or in
each case, if no bank or trust company is so rated, the highest comparable
rating then given to any bank or trust company, but in such case only for funds
invested overnight or over a weekend) provided that such investments shall
mature or be redeemable upon the option of the holders thereof on or prior to a
date one month from the date of their purchase;

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(iv)       certificates of deposit or other
interest-bearing obligations of a bank or trust company which is a member in
good standing of the Federal Reserve System having a short term unsecured debt
rating of not less than A-1+ by S&P, and not less than P-1 by Moody’s and
which has a long term unsecured debt rating of not less than A1 by Moody’s (or
in each case, if no bank or trust company is so rated, the highest comparable
rating then given to any bank or trust company, but in such case only for funds
invested overnight or over a weekend) provided that such investments shall
mature or be redeemable upon the option of the holders thereof on or prior to a
date three months from the date of their purchase;

(v)        bonds or other obligations having a short term
unsecured debt rating of not less than A-1+ by S&P and P-1+ by Moody’s and
having a long term debt rating of not less than A1 by Moody’s issued by or by
authority of any state of the United States, any territory or possession of the
United States, including the Commonwealth of Puerto Rico and agencies thereof,
or any political subdivision of any of the foregoing;

(vi)       repurchase agreements issued by an entity rated
not less than A-1+ by S&P, and not less than P-1 by Moody’s which are
secured by U.S. Government securities of the type described in clause (i)
of this definition maturing on or prior to a date one month from the date the
repurchase agreement is entered into;

(vii)      short term promissory notes rated not less than
A-1+ by S&P, and  not less than P-1 by Moody’s maturing or to be redeemable
upon the option of the holders thereof on or prior to a date one month from the
date of their purchase; and

(viii)     commercial paper (having original maturities of
not more than 365 days) rated at least A-1+ by S&P and P-1 by Moody’s and
issued by a foreign or domestic issuer who, at the time of the investment, has
outstanding long-term unsecured debt obligations rated at least A1 by Moody’s.

“Change in Control” means
the occurrence of any of the following:  (i) the Board of Directors or
shareholders of Borrower approve a consolidation or merger in which Borrower is
not the surviving corporation, the sale of all or substantially all of the
assets of Borrower, or the liquidation or dissolution of Borrower; (ii) any
Person or group of Persons which are Affiliates of each other (other than
Borrower or another member of the Consolidated Group or a Single Employer Plan
(including any trustee of such a Single Employer Plan acting in its capacity as
trustee)) purchases any Capital Stock of Borrower (or securities convertible
into Capital Stock) pursuant to a tender or exchange offer without the prior
consent of the Board of Directors of Borrower, or becomes the beneficial
owner of Capital Stock of Borrower (or securities convertible into Capital
Stock), in either case, representing 51%  or more of the voting
power of Borrower’s outstanding Capital Stock. 

“Change in Law” shall mean the occurrence, after the date
of this Agreement, of any of the following: (a) the adoption or taking effect
of any Law, (b) any change in any Law or in the administration, interpretation
or application thereof by any Governmental Authority or (c) the making or
issuance of any request, guideline or directive (whether or not having the
force of Law) by any Governmental Authority.

“Code” means the Internal
Revenue Code of 1986, as amended, reformed or otherwise modified from time to
time.

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“Commitment” means, for each Lender, the obligation of
such Lender to make Loans not exceeding the amount set forth opposite its
signature below or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to Section 13.3.2, as
such amount may be modified from time to time pursuant to the terms hereof.

“Commitment Fee” is defined in Section 2.4.

“Compliance Certificate” is defined in Section 7.1(c).

“Consolidated Adjusted EBITDA” shall
mean, as of the date of calculation, (a) an annualized amount determined by
taking the Consolidated Net Income for the twelve (12) most recent months for
which financial results have been reported, as adjusted by adding or deducting
for, as applicable, Defeasance Costs, gains or losses from sales of assets,
impairment and other non-cash charges, other extraordinary items, interest
expense, income taxes, depreciation expense and amortization expense, plus (b)
the Consolidated Group percentage of the net income (or loss) for such period
of the Investment Affiliates as determined in accordance with GAAP and as
adjusted in the same manner as Consolidated Net Income under clause (a) of this
sentence.

“Consolidated Debt Service”
means, for any period, without duplication, (a) Consolidated Interest Expense
for such period plus (b) the aggregate amount of scheduled
principal payments attributable to Consolidated Outstanding Indebtedness
(excluding optional prepayments and balloon principal payments at maturity in
respect of any such Indebtedness) required to be made during such period by any
member of the Consolidated Group plus (c) a percentage of all such
scheduled principal payments required to be made during such period by any
Investment Affiliate on Indebtedness taken into account in calculating Consolidated
Interest Expense, equal to the greater of (x) the percentage of the
principal amount of such Indebtedness for which any member of the Consolidated
Group is liable and (y) the Consolidated Group Pro Rata Share of such
Investment Affiliate.

“Consolidated Fixed Charges” shall mean, for any period
without duplication, the sum of (i) Consolidated Debt Service for such period,
plus (ii) all Preferred Dividends payable by Borrower or any other member of
the Consolidated Group with respect to such period.  

“Consolidated Group” shall mean
the Borrower and all Subsidiaries which are consolidated with them for
financial reporting purposes under GAAP.

“Consolidated Group Pro Rata
Share” shall mean, with respect to any Investment Affiliate, the percentage of
the total equity ownership interests held by the Consolidated Group, in the
aggregate, in such Investment Affiliate determined by calculating the
percentage of the issued and outstanding stock, partnership interests or
membership interests in such Investment Affiliate held by the Consolidated
Group in the aggregate.

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“Consolidated Interest Expense”
means, for any period without duplication, the sum of (a) the amount of
interest expense, determined in accordance with GAAP, of the Consolidated Group
for such period attributable to Consolidated Outstanding Indebtedness during
such period, excluding any interest expense on the Consolidated Group’s Secured
Indebtedness attributable to Defeasance Costs or non-cash charges which have
been added back to Consolidated Adjusted EBITDA pursuant to the definition
thereof, plus (b) the applicable Consolidated Group Pro Rata Share of any
such interest expense, determined in accordance with GAAP, of each Investment
Affiliate, for such period, on Indebtedness of such Investment Affiliate,
whether recourse or non-recourse, similarly excluding any interest expense
attributable to Defeasance Costs or non-cash charges of such Investment
Affiliate which has been added back to net income of such Investment Affiliate
in calculating Consolidated Adjusted EBITDA.

“Consolidated Net Income” means,
for any period, consolidated net income (or loss) of the Consolidated Group for
such period determined on a consolidated basis in accordance with GAAP.

“Consolidated Outstanding
Indebtedness” means, as of any date of determination, without duplication, the
sum of (a) all Indebtedness of the Consolidated Group outstanding at such
date, determined on a consolidated basis in accordance with GAAP (whether
recourse or non-recourse) plus (b) the applicable Consolidated
Group Pro Rata Share of any Indebtedness of each Investment Affiliate other
than Indebtedness of such Investment Affiliate to a member of the Consolidated
Group.

“Consolidated Tangible Net Worth” shall mean Net Worth
(Common and Preferred Stock, plus Paid-In-Capital and Retained Earnings) plus
Accumulated Depreciation as defined in accordance with GAAP. 

“Consolidated Unsecured
Indebtedness” means, as of any date of determination, that portion of
Consolidated Outstanding Indebtedness that is not Secured Indebtedness or
Subordinated Debt.

“Conversion/Continuation Notice”
is defined in Section 2.11.

“Convertible Debt Accounting Guidance” means any rule,
regulation, pronouncement or other guidance under GAAP in the United States,
which specifically relates to the accounting for convertible debt instruments
that may be settled in cash upon conversion, and requires that the accounting
treatment of such instruments be modified to (i) bifurcate the instrument into
an indebtedness and an equity component, (ii) value each component of the
instrument separately, and (iii) recognize interest expense on the indebtedness
component at a rate similar to a liability instrument that does not have an
equity component (which effectively represents a non-cash adjustment to
interest expense in excess of the stated interest rate on the instrument).

“Daily LIBOR Rate shall mean, for any day, the rate per
annum determined by the Administrative Agent by dividing (x) the Published Rate
by (y) a number equal to 1.00 minus the LIBOR Reserve Percentage on such day.

“Default Rate” means the
interest rate which may apply during the continuance of an Event of Default
pursuant to Section 2.13 which shall mean that (i) each
LIBOR Rate Advance shall bear interest for the remainder of the applicable
Interest Period at the LIBOR Rate Option otherwise applicable to such Interest
Period plus 4% per annum and (ii) each Base Rate Advance shall bear interest at
a rate per annum equal to the Base Rate Option otherwise applicable to the Base
Rate Advance plus 4% per annum.

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“Defaulting Lender” shall mean any Lender that (a) has
failed to fund any portion of the Advances, participations with respect to
Facility Letters of Credit, or participations in Swing Loans required to be
funded by it hereunder within one Business Day of the date required to be
funded by it hereunder unless such failure has been cured and all interest
accruing as a result of such failure has been fully paid in accordance with the
terms hereof, (b) has otherwise failed to pay over to the Administrative Agent
or any other Lender any other amount required to be paid by it hereunder within
one Business Day of the date when due, unless the subject of a good faith
dispute or unless such failure has been cured and all interest accruing as a
result of such failure has been fully paid in accordance with the terms hereof,
(c) has failed at any time to comply with the provisions of Section 12.2
with respect to purchasing participations from the other Lenders, whereby such
Lender’s share of any payment received, whether by setoff or otherwise, is in
excess of its Ratable Share of such payments due and payable to all of the
Lenders, or (d) has since the date of this Agreement been deemed insolvent by a
Governmental Authority or become the subject of a bankruptcy, receivership,
conservatorship or insolvency proceeding, or has a parent company that since
the date of this Agreement been deemed insolvent by a Governmental Authority or
become the subject of a bankruptcy, receivership, conservatorship or insolvency
proceeding.

“Defeasance Costs” means expenses
incurred in the defeasance or prepayment of secured indebtedness including, but
not limited to:  prepaid interest, yield maintenance or other prepayment
premiums, legal, accounting and consulting fees directly attributable to the
defeasance of debt; the write‐off of deferred financing fees; servicer
processing fees; custodial account fees; rating agency fees; and the computed
defeasance premium. 

“Eligible Unencumbered Project” means a Project which
satisfies all of the following requirements:  (a) such Project is located in
the continental United States; (b) such Project is an institutional grade
multifamily property as determined by the Agent in its sole discretion; (c)
such Project is owned in fee simple or leased under a Ground Lease containing
provisions allowing leasehold mortgage financing of such lease on terms
reasonably acceptable to Administrative Agent (provided that the aggregate
amount added to Unencumbered Real Property Value on account of Projects subject
to such Ground Leases shall not exceed twenty percent (20%)) entirely by
Borrower or a Wholly Owned Subsidiary which is also a Subsidiary Guarantor; (d)
with respect to any Project other than the initial Qualifying Unencumbered
Projects shown on Schedule 3.1, such Project is a “market rate” Project
which is not subject to any restrictions requiring apartment units to be leased
at below-market rates, or if such rent restrictions do exist, they do not (i)
apply to more than twenty percent (20%) of the total residential units in such
Project or (ii) cause more than ten percent (10%) of the total residential
units in all of the then-current Eligible Unencumbered Projects to be subject
to such rent restrictions; (e) neither such Project nor any interest of the
Borrower or any Subsidiary therein, is subject to any Lien (other than
Permitted Liens (but not Liens of the type described in clause (e) of the
definition of Permitted Liens)) or a Negative Pledge; (f) if such Property is
owned or leased by a Subsidiary Guarantor (i) none of Borrower’s direct or
indirect ownership interest in such Subsidiary Guarantor is subject to any Lien
(other than Permitted Liens (but not Liens of the type described in clause (e)
of the definition of Permitted Liens)) or to a Negative Pledge; and (ii)
Borrower directly, or indirectly through a Subsidiary, has the right to take
the following actions without the need to obtain the consent of any Person: 
(x) to sell, transfer or otherwise dispose of such Project and (y) to create a
Lien on such Project as security for Indebtedness of the Borrower or such
Subsidiary Guarantor, as applicable; (g) such Project has been completed and is
free of all structural defects or major architectural deficiencies, title defects,
environmental conditions or other adverse matters except for defects,
deficiencies, conditions or other matters individually or collectively which
are not material to the profitable operation of such Project ;  and (h) as of
the date such Project first becomes an Eligible Unencumbered Project, at least
75% of the residential units within such Project are subject to third party
occupancy leases.

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“Environmental Laws” includes,
but is not limited to, the following statutes, as amended, any successor
thereto, and any regulations promulgated pursuant thereto, and any state or
local statutes, ordinances, rules, regulations and the like addressing similar
issues:  the Comprehensive Environmental Response, Compensation and Liability
Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous
Substances Transportation Act; the Resource Conservation and Recovery Act
(including but not limited to Subtitle I relating to underground storage
tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.

“Equity Issuance” means any issuance by a Person of any
Capital Stock in such Person and shall in any event include the issuance of any
Capital Stock upon the conversion or exchange of any security constituting
Indebtedness that is convertible or exchangeable, or is being converted or
exchanged, for Capital Stock.

“ERISA” means the Employee
Retirement Income Security Act of 1974, as the same may be amended or
supplemented from time to time, and any successor statute of similar import,
and the rules and regulation thereunder, as from time to time in effect.

“ERISA Affiliate” shall mean, at any time, any trade or
business (whether or not incorporated) under common control with the Borrower and
are treated as a single employer under Section 414 of the Code.

“ERISA Event shall mean (a) a reportable event (under
Section 4043 of ERISA and regulations thereunder) with respect to a Pension
Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or
any ERISA Affiliate.

“ERISA Group” shall mean, at any time, the Borrower and
all members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control and all other entities
which, together with the Borrower, are treated as a single employer under
Section 414 of the Internal Revenue Code.

“Event of Default” shall mean any of the events described
in Article VIII and referred to therein as an “Event of Default.”

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“Excluded Taxes” shall mean, with respect to the
Administrative Agent, any Lender, the Issuing Lender or any other recipient of
any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it (in lieu of net income taxes),
by the jurisdiction (or any political subdivision thereof) under the Laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Borrower is
located and (c) in the case of a Foreign Lender, any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with Section 4.2, except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax pursuant
to Section 4.2.

“Executive Order No. 13224” shall mean the Executive Order
No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.

“Facility Letter of Credit” means any of the Original
Facility Letters of Credit or any Letter of Credit issued after the Agreement
Execution Date pursuant to Section 2.22 of this Agreement.

“Facility Letter of Credit Fee” is defined in Section
2.22(h)(i)(a).

“Facility Letter of Credit Obligations” means, as of any
date, all liabilities, whether actual or contingent, of the Borrower with
respect to Facility Letters of Credit, including the sum of (a) the
Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then outstanding Facility Letters of Credit.

“Facility Letter of Credit Sublimit” means $20,000,000.

““Facility Termination
Date” shall mean October 17, 2013, which shall be the day immediately prior to
the third (3rd ) anniversary of the Agreement Execution Date, or if such day is
not a Business Day the last Business Day immediately preceding such day, as
such date may be extended pursuant to Section 2.23 hereof.

“Federal Funds Effective Rate” for any day shall mean the
rate per annum (based on a year of 360 days and actual days elapsed and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being the weighted average of the rates
on overnight federal funds transactions arranged by federal funds brokers on
the previous trading day, as computed and announced by such Federal Reserve
Bank (or any successor) in substantially the same manner as such Federal
Reserve Bank computes and announces the weighted average it refers to as the
“Federal Funds Effective Rate” as of the date of this Agreement; provided, if
such Federal Reserve Bank (or its successor) does not announce such rate on any
day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.

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“Federal Funds Open Rate” for any day shall mean the rate
per annum (based on a year of 360 days and actual days elapsed) which is the
daily federal funds open rate as quoted by ICAP North America, Inc. (or any
successor) as set forth on the Bloomberg Screen BTMM for that day opposite the
caption “OPEN” (or on such other substitute Bloomberg Screen that displays such
rate), or as set forth on such other recognized electronic source used for the
purpose of displaying such rate as selected by the Administrative Agent (for
purposes of this definition, an “Alternate Source”) (or if such rate for
such day does not appear on the Bloomberg Screen BTMM (or any substitute
screen) or on any Alternate Source, or if there shall at any time, for any
reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or
any Alternate Source, a comparable replacement rate determined by the
Administrative Agent at such time (which determination shall be conclusive
absent manifest error); provided however, that if such day is not a Business
Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day.  If and when the Federal Funds Open Rate
changes, the rate of interest with respect to any Advance to which the Federal
Funds Open Rate applies will change automatically without notice to the
Borrower, effective on the date of any such change.

“Fee Letter” is defined in Section
2.5.

“Financial Contract” of a Person
means (i) any exchange - traded or over-the-counter futures, forward, swap or
option contract or other financial instrument with similar characteristics, or
(ii) any Interest Rate Hedge.

“Financial Undertaking” of a
Person means (i) any transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
consolidated balance sheet of such Person, or (ii) any agreements, devices
or arrangements designed to protect at least one of the parties thereto from
the fluctuations of interest rates, exchange rates or forward rates applicable
to such party’s assets, liabilities or exchange transactions, including, but
not limited to, interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options.

“First Mortgage Receivable”
means any Indebtedness owing to a member of the Consolidated Group which is
secured by a first-priority mortgage or deed of trust on any real property
(which property may be owned by a member of the Consolidated Group, an
Investment Affiliate or an unrelated third party) having a value in excess of
the amount of such Indebtedness and which has been designated by the Borrower
as a “First Mortgage Receivable” in its most recent compliance certificate.

“Foreign Lender” shall mean any Lender that is organized
under the Laws of a jurisdiction other than that in which the Borrower is
resident for tax purposes.  For purposes of this definition, the United States
of America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

“Funds From Operations” shall
have the meaning determined from time to time by the National Association of
Real Estate Investment Trusts to be the meaning most commonly used by its
members and for avoidance of doubt shall mean “basic” Funds From Operations, as
such term is customarily used by members of such association.

“GAAP” means generally accepted
accounting principles in the United States of America, as are in effect from time to time, applied in a
manner consistent with that used in preparing the financial statements
hereunder and in all circumstances subject to the
provisions of Section 1.3.

“Governmental Authority” means
any nation or government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

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“Guarantee Obligation” means, as
to any Person (the “guaranteeing person”), any obligation (determined
without duplication) of (a) the guaranteeing person or (b) another
Person to induce the creation of which the guaranteeing person has issued a
reimbursement, counter-indemnity or similar obligation, in either case guaranteeing
or in effect guaranteeing any Indebtedness, leases, or dividends (the “primary
obligations”) of any other third Person (the “primary obligor”) in
any manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing 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 (1) for
the purchase or payment of any such primary obligation or (2) 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, 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 owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business, or any indemnification obligations arising in the
ordinary course of business, including without limitation guaranties of non-recourse
“carve-out” exceptions in secured loans and environmental indemnity agreements
in favor of secured lenders.  The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the maximum stated amount of the
primary obligation relating to such Guarantee Obligation (or, if less, the
maximum stated liability set forth in the instrument embodying such Guarantee
Obligation), provided, that in the absence of any such stated amount or
stated liability, the amount of such Guarantee Obligation shall be such
guaranteeing person’s maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.

“Indebtedness” of any Person at
any date means without duplication, (a) all indebtedness of such Person
for borrowed money including without limitation any repurchase obligation or
liability of such Person with respect to securities, accounts or notes
receivable sold by such Person, (b) all obligations of such Person for the
deferred purchase price of property or services (other than current accounts
payable and trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), to the extent such obligations
constitute indebtedness for the purposes of GAAP, (c) any other
indebtedness of such Person which is evidenced by a note, bond, debenture or
similar instrument, including any so-called “trust deferred debt” (d) all
Capitalized Lease Obligations, (e) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (f) all
Guarantee Obligations of such Person (excluding in any calculation of
consolidated Indebtedness of the Consolidated Group, Guarantee Obligations of
one member of the Consolidated Group in respect of primary obligations of any
other member of the Consolidated Group), (g) all reimbursement obligations of
such Person for letters of credit and, to the extent such obligations
constitute “contingent liabilities” which are required to be accrued under
GAAP, other contingent liabilities, (h) any Net Mark-to-Market Exposure
and (i) all liabilities secured by any lien (other than liens for taxes not yet
due and payable) on any property owned by such Person even though such Person
has not assumed or otherwise become liable for the payment thereof.

“Indemnified Taxes” shall mean Taxes other than Excluded
Taxes.

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“Interest Period” shall
mean the period of time selected by the Borrower in connection with (and to
apply to) any election permitted hereunder by the Borrower to have Advances 
bear interest under the LIBOR Rate Option.  Subject to the last sentence of
this definition, such period shall be one, two, three or six Months. Such
Interest Period shall commence on the effective date of such LIBOR Rate Option,
which shall be (i) the Borrowing Date if the Borrower is requesting new Loans,
or (ii) the date of renewal of or conversion to the LIBOR Rate Option if the
Borrower is renewing or converting to the LIBOR Rate Option applicable to
outstanding Loans.  Notwithstanding the second sentence hereof: (A) any
Interest Period which would otherwise end on a date which is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day, and (B) the Borrower shall not select,
convert to or renew an Interest Period for any portion of the Loans that would
end after the Facility Termination Date.

“Interest Rate Hedge” shall mean an interest rate
exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor
or similar agreements entered into by the Loan Parties or their Subsidiaries in
order to provide protection to, or minimize the impact upon, the Borrower, the
Guarantor and/or their Subsidiaries of increasing floating rates of interest
applicable to Indebtedness.

“Interest Rate Option” shall mean any LIBOR Rate Option or
Base Rate Option.

“Investment” of a Person means
any loan, advance (other than commission, travel and similar advances to
officers and employees made in the ordinary course of business), extension of
credit (other than accounts receivable arising in the ordinary course of
business on terms customary in the trade), deposit account or contribution of
capital by such Person to any other Person or any investment in, or purchase or
other acquisition of, the stock, partnership interests, notes, debentures or
other securities of any other Person made by such Person.

“Investment Affiliate” means any
Person in which the Consolidated Group, directly or indirectly, has any
ownership interest, whose financial results are not consolidated under GAAP
with the financial results of the Consolidated Group.  For the purposes
of this Agreement, The Residences at Carronade, LLC, an Ohio limited liability
company, shall not be deemed to be an “Investment Affiliate” of the Borrower.

“Issuance Date” is defined in Section 2.22.

“Issuance Notice” is defined in Section 2.22.

“Issuing Lender” means, with respect to each Facility
Letter of Credit, the Lender which issues such Facility Letter of Credit.  PNC
Bank, National Association shall be the sole Issuing Lender.

“Law” shall mean any law (including common law),
constitution, statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree, bond, judgment, authorization or
approval, lien or award by a Governmental Authority.

“Lender Provided Interest Rate Hedge” shall mean an
Interest Rate Hedge which is provided by any Lender or its Affiliate and with
respect to which the Administrative Agent confirms: (i) is documented in a
standard International Swap Dealer Association Agreement, and (ii) provides for
the method of calculating the reimbursable amount of the provider’s credit
exposure in a reasonable and customary manner.

“Lenders” means the lending
institutions listed on the signature pages of this Agreement, their respective
successors and assigns, any other lending institutions that subsequently become
parties to this Agreement.

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“Letter of Credit” of a Person means a letter of credit or
similar instrument which is issued upon the application of such Person or upon
which such Person is an account party or for which such Person is in any way
liable.

“Letter of Credit Collateral Account” is defined in Section
2.22.

“Letter of Credit Obligation” shall mean, as of any date
of determination, the aggregate amount available to be drawn under all
outstanding Facility Letters of Credit on such date (if any Letter of Credit
shall increase in amount automatically in the future, such aggregate amount
available to be drawn shall currently give effect to any such future increase)
plus the aggregate Reimbursement Obligations on such date.

“Letter of Credit Request” is defined in Section 2.22.

“Leverage Ratio” shall mean, as of the end of any date of
determination, the ratio of (A) Consolidated Outstanding Indebtedness on
such date to (B) Total Asset Value on such date. 

“LIBOR Applicable Margin” means
as of any date, with respect to the percentage spread to be added to the LIBOR
Rate under the LIBOR Rate Option, the percentage in effect on such date under
the definition of “Applicable Margin”.

“LIBOR Rate” shall mean, with respect to the Loans
comprising any Borrowing Tranche to which the LIBOR Rate Option applies for any
Interest Period, the interest rate per annum determined by the Administrative
Agent by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg
Page BBAM1 (or on such other substitute Bloomberg page that displays rates at
which US dollar deposits are offered by leading banks in the London interbank
deposit market), or the rate which is quoted by another source selected by the
Administrative Agent which has been approved by the British Bankers’
Association as an authorized information vendor for the purpose of displaying
rates at which US dollar deposits are offered by leading banks in the London
interbank deposit market (for purposes of this definition, an “Alternate
Source”), at approximately 11:00 a.m., London time, two (2) Business Days
prior to the commencement of such Interest Period as the London interbank
offered rate for U.S. Dollars for an amount comparable to such Borrowing
Tranche and having a borrowing date and a maturity comparable to such Interest
Period (or if there shall at any time, for any reason, no longer exist a
Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a
comparable replacement rate determined by the Administrative Agent at such time
(which determination shall be conclusive absent manifest error)), by (ii) a
number equal to 1.00 minus the LIBOR Reserve Percentage.  LIBOR may also be
expressed by the following formula:

                                        London interbank offered rates quoted by Bloomberg

            LIBOR Rate  =     or appropriate
successor as shown on Bloomberg Page BBAM1

                                        1.00 -  LIBOR Reserve Percentage

 

The LIBOR Rate shall be adjusted with respect to any Loan
to which the LIBOR Rate Option applies that is outstanding on the effective
date of any change in the LIBOR Reserve Percentage as of such effective date. 
The Administrative Agent shall give prompt notice to the Borrower of the LIBOR
Rate as determined or adjusted in accordance herewith, which determination
shall be conclusive absent manifest error.

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“LIBOR Rate Advance” means an
Advance which bears interest at the LIBOR Rate Option.

“LIBOR Rate Loan” means a Loan
which bears interest at the LIBOR Rate Option.

“LIBOR Rate Option” shall mean the option of the Borrower
to have Advances bear interest at the rate and under the terms set forth in Section
2.3.

“LIBOR Reserve Percentage” shall mean as of any day the
maximum percentage in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

“Lien” means any lien (statutory
or other), mortgage, pledge, negative pledge, hypothecation, assignment,
deposit arrangement, encumbrance or priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
Capitalized Lease or other title retention agreement).

“Loan” means, with respect to a
Lender, such Lender’s Ratable Share of any Advance.

“Loan Documents” means this
Agreement, the Notes, the Subsidiary Guaranty, and any other document from time
to time evidencing or securing indebtedness incurred by the Borrower under this
Agreement, as any of the foregoing may be amended or modified from time to
time.

“Loan Parties” means the
Borrower and the Subsidiary Guarantors.

“Loan Request” shall have the meaning specified in Section
2.10.

“Material Adverse Effect” means,
in the Administrative Agent’s reasonable discretion, any event that is
reasonably anticipated to have a material adverse effect on (i) the business,
property or condition (financial or otherwise) of the Consolidated Group (taken
as a whole), (ii) the ability of the Borrower to perform its obligations under
the Loan Documents, or (iii) the validity or enforceability of any of the Loan
Documents.

“Materials of Environmental
Concern” means any gasoline or petroleum (including crude oil or any fraction
thereof) or petroleum products or any hazardous or toxic substances, materials
or wastes, defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation, but excluding substances of kinds and amounts
ordinarily used or stored in similar properties for the purposes of cleaning or
other maintenance or operations or as inventory of tenants and otherwise in
compliance with all Environmental Laws.

“Maximum Legal Rate” means the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Notes and as provided for herein or in the Notes
or other Loan Documents, under the laws of such state or states whose laws are
held by any court of competent jurisdiction to govern the interest rate
provisions hereof.

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“Month” with respect to an Interest Period under the LIBOR
Rate Option, shall mean the interval between the days in consecutive calendar
months numerically corresponding to the first day of such Interest Period.  If
any LIBOR Rate Interest Period begins on a day of a calendar month for which
there is no numerically corresponding day in the month in which such Interest
Period is to end, the final month of such Interest Period shall be deemed to
end on the last Business Day of such final month.

“Moody’s” means Moody’s
Investors Service, Inc. and its successors.

“Multiemployer Plan shall mean any employee benefit plan
which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of
ERISA and to which the Borrower or any member of the ERISA Group is then making
or accruing an obligation to make contributions or, within the preceding five
Plan years, has made or had an obligation to make such contributions.

“Net Mark-to-Market Exposure” of
a Person means, as of any date of determination, the excess (if any) of all
unrealized losses over all unrealized profits of such Person arising from
Interest Rate Hedges or any other Financial Contract.  “Unrealized losses”
means the fair market value of the cost to such Person of replacing such
Interest Rate Hedge or other Financial Contract as of the date of determination
(assuming the Interest Rate Hedge or other Financial Contract were to be
terminated as of that date), and “unrealized profits” means the fair market
value of the gain to such Person of replacing such Interest Rate Hedge or other
Financial Contract as of the date of determination (assuming such Interest Rate
Hedge or other Financial Contract were to be terminated as of that date).

“Net Operating Income” means,
with respect to any Project for any period, “property rental and other income”
(as determined by GAAP) attributable to such Project accruing for such period minus
the amount of all expenses (as determined in accordance with GAAP) incurred in
connection with and directly attributable to the ownership and operation of
such Project for such period, including, without limitation, Management Fees
and amounts accrued for the payment of real estate taxes and insurance
premiums, but excluding any general and administrative expenses related to the
operation of the Borrower or the other members of the Consolidated Group, any
interest expense or other debt service charges and any non-cash charges such as
depreciation or amortization of financing costs.  As used herein “Management
Fees”, means, with respect to each Project for any period, an amount equal
to two and one-half percent (2.5%) per annum on the aggregate rent due and
payable under leases at such Project.

“Net Proceeds” means with
respect to any Equity Issuance by a Person, the aggregate amount of all cash
and the fair market value of all other Property (other than securities of such
Person being converted or exchanged in connection with such Equity Issuance)
received by such Person in respect of such Equity Issuance net of investment
banking fees, legal fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred by such
Person in connection with such Equity Issuance.

“Non-Consenting Lender” shall have the meaning specified
in Section 9.2.

“Non-Recourse Indebtedness” means, with respect to any
Person, Secured Indebtedness for which the liability of such Person (except
with respect to fraud, Environmental Laws liability, bankruptcy and other
customary non-recourse “carve-out” exceptions) either is contractually limited
to collateral securing such Indebtedness or is so limited by operation of law.

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“Note” means a promissory note,
in substantially the form of Exhibit A hereto, duly executed by Borrower
and payable to the order of a Lender in the amount of its Commitment, including
any amendment, modification, renewal or replacement of such promissory note.

“Notice of Assignment” is
defined in Section 13.3.2.

“Obligation” shall mean any obligation or liability of any
of the Loan Parties, howsoever created, arising or evidenced, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to
become due, under or in connection with (i) this Agreement, the Notes, the
Facility Letters of Credit, the Administrative Agent’s Letter or any other Loan
Document whether to the Administrative Agent, any of the Lenders or their
Affiliates or other persons provided for under such Loan Documents and (ii) any
Lender Provided Interest Rate Hedge.

“Original Agreement” is defined
in the Recitals to this Agreement.

“Original Facility Letters of
Credit” means those Letters of Credit issued under the Original Agreement which
are outstanding on the Agreement Execution Date, as identified on Schedule
1.1 attached hereto.

“Other Taxes” shall mean
all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

“Participants” is defined in Section
13.4.

“Payment Date” means, (i) with
respect to the payment of interest accrued on any LIBOR Rate Advance or Swing
Advance ninety (90) or less days in term, the maturity date of any such
Advance, or with respect to an Advance having a term beyond ninety (90) days,
then any such interest payments shall be due every ninety (90) days thereafter,
or (ii) with respect to the payment of interest accrued on any Base Rate
Advance and the payment of the Commitment Fee, the first Business Day of each
April, July, October and January.

“PBGC” means the Pension Benefit
Guaranty Corporation established pursuant to Subtitle A of Title IV to ERISA,
or any successor thereto.

“Pension Plan” shall mean any “employee pension benefit
plan” (as such term is defined in Section 3(2) of ERISA), other than a
Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or
maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA
Affiliate contributes or has an obligation to contribute, or in the case of a
multiple employer or other plan described in Section 4064(a) of ERISA, has made
contributions at any times during the immediately preceding five plan years.

“Permitted Acquisitions” are
defined in Section 7.15.

“Permitted Liens” are defined in
Section 7.16.

“Person” means any natural
person, corporation, firm, joint venture, partnership, association, enterprise,
trust or other entity or organization, or any government or political
subdivision or any agency, department or instrumentality thereof.

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“Plan” shall mean at any
time an employee pension benefit plan (including a Multiple Employer Plan, but
not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject
to the minimum funding standards under Section 412 of the Code and either (i)
is maintained by any member of the ERISA Group for employees of any member of
the ERISA Group or (ii) has at any time within the preceding five years been
maintained by any entity which was at such time a member of the ERISA Group for
employees of any entity which was at such time a member of the ERISA Group.

“PNC” shall mean PNC Bank, National Association, its
successors and assigns.

“Potential Default” shall mean any event or condition
which with notice or passage of time, or both, would constitute an Event of
Default.

“Preferred Dividends” means,
with respect to any entity, dividends or other distributions which are payable
to holders of any ownership interests in such entity which entitle the holders
of such ownership interests to be paid on a preferred basis prior to dividends
or other distributions to the holders of other types of ownership interests in
such entity, provided that “Preferred Dividends” shall not mean any preferred
equity in any joint venture relationship between the Borrower or any subsidiary
of the Borrower and any Person other than a shareholder in the Borrower.

“Prime Rate” shall mean the interest rate per annum
announced from time to time by the Administrative Agent at its Principal Office
as its then prime rate, which rate may not be the lowest or most favorable rate
then being charged commercial borrowers or others by the Administrative Agent. 
Any change in the Prime Rate shall take effect at the opening of business on
the day such change is announced.

“Principal Office shall mean the main banking office of
the Administrative Agent in Pittsburgh, Pennsylvania.

“Project” means any real estate
asset owned by the Borrower or any of its Subsidiaries or any Investment
Affiliate, and operated or intended to be operated as a multifamily residential
property.

“Property” of a Person means any
and all property, whether real, personal, tangible, intangible, or mixed, of
such Person, or other assets owned, leased or operated by such Person.

“Published Rate” shall mean the rate of interest published
each Business Day in The Wall Street Journal “Money Rates” listing under
the caption “London Interbank Offered Rates” for a one month period (or, if no
such rate is published therein for any reason, then the Published Rate shall be
the rate at which U.S. dollar deposits are offered by leading banks in the
London interbank deposit market for a one month period as published in another
publication selected by the Administrative Agent).

“Qualifying Unencumbered
Project” means the Projects shown on Schedule 3.1 and any Project which
has satisfied the requirements set forth in Section 3.1 below.

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“Ratable Share” shall mean the proportion that a Lender’s
Commitment (excluding the Swing Loan Commitment) bears to the Commitments
(excluding the Swing Loan Commitment) of all of the Lenders.  If the
Commitments have terminated or expired, the Ratable Shares shall be determined
based upon the Commitments (excluding the Swing Loan Commitment) most recently
in effect, giving effect to any assignments.

“Real Property Under Development” is defined as any
Project which either is under construction or completed and has not yet
achieved a leasing level of 85% or more.

“Recourse Indebtedness” means
any Indebtedness of Borrower or any other member of the Consolidated Group with
respect to which the liability of the obligor is not limited to the obligor’s
interest in specified assets securing such Indebtedness, subject to customary
limited exceptions for certain acts or types of liability, and provided further
that Non-Recourse Indebtedness shall not be considered Recourse Indebtedness
even if a breach of such customary limited exceptions to recourse liability
would result in such Non-Recourse Indebtedness becoming recourse to the obligor
thereunder.

“Regulation U” means Regulation
U of the Board of Governors of the Federal Reserve System as from time to time
in effect and any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of
the Federal Reserve System.

“Reimbursement Obligations”
means at any time, the aggregate of the Obligations of the Borrower to the
Lenders, the Issuing Lender and the Administrative Agent in respect of all
unreimbursed payments or disbursements made by the Lenders, the Issuing Lender
and the Administrative Agent under or in respect of the Facility Letters of
Credit.

“Release” is defined in Section
3.3. 

“Reportable Event” means a
reportable event as defined in Section 4043 of ERISA and the regulations issued
under such section, with respect to a Plan, excluding, however, such events as
to which the PBGC by regulation waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event,
provided, however, that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

“Required Lenders” shall mean

(A)       If there are only two (2) Lenders, all Lenders
(other than any Defaulting Lender), and

(B)       If there exist three (3) or more Lenders,
Lenders (other than any Defaulting Lender) having more than 66-2⁄3% of the
aggregate amount of the Commitments of the Lenders (excluding any Defaulting
Lender) or, after the termination of the Commitments, the outstanding Loans and
Ratable Share of Letter of Credit Obligations of the Lenders (excluding any
Defaulting Lender).

“Reserve Requirement” means,
with respect to a Rate Loan and LIBOR Interest Period, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Federal Reserve Board or other governmental authority or agency having
jurisdiction with respect thereto for determining the maximum reserves
(including, without limitation, basic, supplemental, marginal and emergency
reserves) for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D) maintained by a member bank of the Federal
Reserve System.

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“Revolving Credit Advances”
shall mean all Advances made to Borrower hereunder other than Swing Loans.

“Revolving Credit Loan” means,
with respect to a Lender, such Lender’s Ratable Share of any Revolving Credit
Advance.

“Revolving Facility Usage” shall mean at any time the sum
of the outstanding Revolving Credit Loans, the outstanding Swing Loans, and the
Letter of Credit Obligations.

“Section” means a numbered
section of this Agreement, unless another document is specifically referenced.

“Secured Indebtedness” means any
Indebtedness which is secured by a Lien on a Project, any ownership interests
in any Person or any other assets which had, in the aggregate, a value in
excess of the amount of such Indebtedness at the time such Indebtedness was
incurred.

“Single Employer Plan” means a
Plan maintained by the Borrower or any member of the ERISA Group for employees
of the Borrower or any member of the ERISA Group.

“S&P” means Standard &
Poor’s Ratings Group and its successors.

“Subordinated Debt” means (i)
any Indebtedness of Borrower or any other member of the Consolidated Group that
is subordinated by its express terms to the repayment of the Obligations under
this Facility; and (ii) any Indebtedness of Borrower or any Subsidiary of
Borrower due to any Affiliate of Borrower that is expressly subordinate in
priority and payment to the Obligations under this Facility.

“Subsidiary” of a Person means
(i) any corporation more than 50% of the outstanding securities having ordinary
voting power of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture or similar business organization more than 50% of
the ownership interests having ordinary voting power of which shall at the time
be so owned or controlled.  Unless otherwise expressly provided, all references
herein to a “Subsidiary” shall mean a Subsidiary of Borrower.

“Subsidiary Guarantor” means, as
of any date, each Wholly-Owned Subsidiary of Borrower which is then a party to
the Subsidiary Guaranty pursuant to Section 6.21.  

“Subsidiary Guaranty” means the
guaranty to be executed and delivered by those Subsidiaries of the Borrower
listed on Schedule 6.21, substantially in the form of Exhibit D, as the
same may be amended, supplemented or otherwise modified from time to time
pursuant to Section 6.21, including any joinders executed by additional
Subsidiary Guarantors. 

“Substantial Portion” means,
with respect to the Property of the Borrower and its Subsidiaries, Property
which represents more than 10% of then-current Total Asset Value.

“Swing Advances” means, as of any date, collectively, all
Swing Loans then outstanding under this Facility.

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“Swing Loans” shall mean collectively and Swing Loan
shall mean separately all Swing Loans or any Swing Loan made by PNC to the
Borrower pursuant to Section 2.21 hereof.

“Swing Loan Commitment” means the obligation of the Swing
Lender to make Swing Loans not exceeding $20,000,000, which is included in, and
is not in addition to, the Swing Lender’s total Commitment hereunder.

“Swing Lender” shall mean PNC Bank, National Association,
in its capacity as a Lender.

“Taxes” means any and all
present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and any and all liabilities with respect to the foregoing, but
excluding Excluded Taxes and Other Taxes.

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“Total Asset Value” means, as of
any date, (i) the Net Operating Income for the most recent four (4)
consecutive fiscal quarters of the Borrower for which financial results have
been reported attributable to Projects then owned or leased by Borrower or any
other member of the Consolidated Group (excluding 100% of the Net Operating
Income attributable to any such Projects which have not been owned or leased by
any combination of Borrower, other members of the Consolidated Group or
Investment Affiliates and included in Borrower’s financial statements for at
least six (6) fiscal quarters as of the end of the most recent fiscal quarter
for which financial results have been reported, other than Net Operating Income
from Overlimit General Projects (as defined below) then owned or leased by
Borrower or any other member of the Consolidated Group which Net Operating
Income will be included in this clause (i)) divided by the Capitalization Rate,
plus (ii) 100% of cost for any such Projects first acquired or leased during
such six (6) fiscal quarter period (including the amount of any assumed
Indebtedness secured thereby) which are not Overlimit General Projects, plus (iii) the Consolidated Group Pro Rata Share of Net
Operating Income for the most recent four (4) consecutive fiscal
quarters of the Borrower for which financial results have been reported attributable to Projects then owned or leased by an
Investment Affiliate (excluding Net Operating Income attributable to any such
Projects which have not been owned or leased by any combination of
Borrower, other members of the Consolidated Group or Investment Affiliates for six (6) fiscal
quarters as of the end of such most recent fiscal quarter for which financial
results have been reported, other than Net Operating Income from Overlimit
General Projects then owned or leased by an Investment Affiliate which Net
Operating Income will be included in this clause (iii)) divided by the
Capitalization Rate, plus (iv) the Consolidated Group Pro Rata Share of 100%
of cost for any such Projects first acquired or leased by an Investment
Affiliate during such six (6) fiscal quarter period (including the amount of
any assumed Indebtedness secured thereby) which are not Overlimit General
Projects; plus (v) cash and Cash Equivalents owned by
Borrower or any other member of the Consolidated Group as of the end of the
most recent fiscal quarter for which financial results have been reported, plus
(vi) the Consolidated Group Pro Rata Share of all cash and Cash Equivalents
owned by Investment Affiliates as of the end of the most recent fiscal quarter
financial results have been reported plus (vii) Real Property Under Development
and Undeveloped Land of the Consolidated Group, valued at cost, plus (viii) the
Consolidated Group Pro Rata Share of any Real Property Under Development and
Undeveloped Land of Investment Affiliates, valued at cost, plus (ix) First
Mortgage Receivables owned by the Consolidated Group, valued in accordance with
GAAP, plus (x) the Consolidated Group Pro Rata Share of First Mortgage
Receivables owned by any Investment Affiliates, valued in accordance with
GAAP.  As used herein, the term “Overlimit General Projects” shall mean,
if at any time the aggregate amount contributed to Total Asset Value under
clauses (ii) and (iv) of this definition on account of acquired Projects owned
or leased for more than four (4) quarters but less than seven (7) quarters
would exceed twenty percent (20%) of Total Asset Value, a sufficient number of
such Project(s) which would otherwise be valued at cost under such clauses (ii)
or (iv), which the Company shall designate to instead be valued in accordance
with clauses (i) or (iii), so that the aggregate value of the remaining
Projects owned or leased for more than four (4) quarters but less than seven
(7) quarters which are included at cost under clauses (ii) and (iv) of this
definition do not exceed twenty percent (20%) of Total Asset Value. For the avoidance of doubt, such references to
“less than seven (7) quarters” shall mean that the applicable Project shall be
included at cost in up to but not more than six (6) quarterly financial
statements of Borrower. 

 “Type” means, with respect to
any Advance, its nature as a Base Rate Advance, a LIBOR Rate Advance or a Swing
Advance.

“Undeveloped Land” means, as of
any date, any undeveloped land owned from time to time by the Borrower or any
other member of the Consolidated Group.

“Unencumbered Real Property Value” shall mean, as
of any date, (i) Unencumbered Real Property Adjusted NOI divided by the
Capitalization Rate applicable thereto, plus (ii) the cost of all Qualifying
Unencumbered Projects then owned by Borrower or a Subsidiary Guarantor which
have not been owned by any combination of Borrower, other members of the
Consolidated Group or Investment Affiliates and included in Borrower’s
financial statements for six (6) consecutive fiscal quarters as of the end of
the most recent fiscal quarter of Borrower for which financial results have
been reported other than Overlimit Unencumbered Projects, with the cost of each
such Qualifying Unencumbered Project being the amount capitalized as “real
estate” on Borrower’s balance sheet plus any portion of the acquisition cost
required to be allocated as an intangible asset by GAAP.  As used herein, the
term “Overlimit Unencumbered Projects” shall mean, if at any time the aggregate
amount contributed to Unencumbered Real Property Value under clause (i) of this
definition for acquired Qualifying Unencumbered Projects owned or leased for
more than four (4) quarters but less than seven (7) quarters would exceed
twenty percent (20%) of Unencumbered Real Property Value, a sufficient number
of such Project(s) which would otherwise be valued at cost under such clause
(ii), which the Company shall designate to instead be valued in accordance with
clause (i), so that the aggregate value of the remaining Qualifying
Unencumbered Projects owned or leased for more than four (4) quarters but less
than seven (7) quarters which are included at cost under clause (ii) of this
definition does not exceed twenty percent (20%) of Unencumbered Real Property
Value. For the avoidance of doubt, such references to “less than seven (7)
quarters” shall mean that the applicable Project shall be included at cost in
up to but not more than six (6) quarterly financial statements of Borrower.

“Unencumbered Real Property Adjusted NOI” shall mean, as
of any date,  the Net Operating Income for the most recent four (4) consecutive
fiscal quarters of Borrower for which financial results have been reported
attributable to Qualifying Unencumbered Projects then owned or leased by
Borrower or a Subsidiary Guarantor (excluding Net Operating Income attributable
to any such Qualifying Unencumbered Projects which have not been owned or
leased by any combination of Borrower, other members of the Consolidated Group
or Investment Affiliates and included in Borrower’s financial statements for
six (6) fiscal quarters as of the end of the most recent fiscal quarter of
Borrower for which financial results have been reported other than Net
Operating Income from Overlimit Unencumbered Projects then owned or leased by
Borrower or a Subsidiary Guarantor which shall be included in this definition),
less (i) management fees equal to 2.5% of the aggregate gross revenues
attributable to such Qualifying Unencumbered Projects for such period, and less
(ii) a capital expenditure reserve equal to $150 per unit for such Qualifying
Unencumbered Projects.

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“Unfunded Liabilities” means the
amount (if any) by which the present value of all vested nonforfeitable
benefits under all Single Employer Plans exceeds the fair market value of all
such Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plans.

“USA Patriot Act” shall mean the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107‐56, as the same has been, or
shall hereafter be, renewed, extended, amended or replaced.

“Wholly-Owned Subsidiary” of a
Person means (i) any Subsidiary all of the outstanding voting securities of
which shall at the time be owned or controlled, directly or indirectly, by such
Person or one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, association, joint venture or similar business organization 100%
of the ownership interests having ordinary voting power of which shall at the
time be so owned or controlled.

The
foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.

1.2             
Construction

.  Unless the context of this Agreement otherwise
clearly requires, the following rules of construction shall apply to this
Agreement and each of the other Loan Documents: (i) references to the plural
include the singular, the plural, the part and the whole and the words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,”
“hereto” and similar terms in this Agreement or any other Loan Document refer
to this Agreement or such other Loan Document as a whole; (iii) article, section,
subsection, clause, schedule and exhibit references are to this Agreement or
other Loan Document, as the case may be, unless otherwise specified; (iv)
reference to any Person includes such Person’s successors and assigns; (v)
reference to any agreement, including this Agreement and any other Loan
Document together with the schedules and exhibits hereto or thereto, document
or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated; (vi) relative to
the determination of any period of time, “from” means “from and including,”
“to” means “to but excluding,” and “through” means “through and including”;
(vii) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights,
(viii) section headings herein and in each other Loan Document are included for
convenience and shall not affect the interpretation of this Agreement or such
Loan Document, and (ix) unless otherwise specified, all references herein to
times of day shall be references to Eastern Time.

1.3             
Accounting Principles

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.  Except as otherwise provided in this Agreement,
all computations and determinations as to accounting or financial matters and
all financial statements to be delivered pursuant to this Agreement shall be
made and prepared in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such terms by GAAP; provided, however, that all
accounting terms used in Article VII (and all defined terms used in the
definition of any accounting term used in Article VII shall have the
meaning given to such terms (and defined terms) under GAAP as in effect on the
date hereof applied on a basis consistent with those used in preparing
statements referred to in Section 6.4.  In the event of any change after
the date hereof in GAAP, and if such change would affect the computation of any
of the financial covenants set forth in Article VII, then the parties
hereto agree to endeavor, in good faith, to agree upon an amendment to this
Agreement that would adjust such financial covenants in a manner that would
preserve the original intent thereof, but would allow compliance therewith to
be determined in accordance with the Borrower’s financial statements at that
time, provided that, until so amended such financial covenants shall continue
to be computed in accordance with GAAP prior to such change therein.

            Notwithstanding any provision contained
herein to the contrary, solely for purposes of calculating any financial
covenant required hereunder, such calculation shall ignore the application of
the Convertible Debt Accounting Guidance, if and to the extent otherwise
applicable to Borrower’s financial statements.  If at any time any
material change in GAAP would materially affect the computation of any
financial ratio or requirement set forth in any of the Loan Documents, and
either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change in GAAP (subject to the approval of the
Required Lenders (which shall not be unreasonably withheld)); provide that,
until so amended, (i) such ratio or requirement shall continue to be computed
in accordance with GAAP prior to such change therein and (ii) the Borrower
shall provide to the Administrative Agent and the Lenders an explanation of the
impact of such change in reasonable detail satisfactory to the Administrative
Agent.

ARTICLE
II

THE
CREDIT

2.1             
Generally

.  Subject to
the terms and conditions of this Agreement, Lenders severally agree to make
Advances through the Administrative Agent to Borrower from time to time prior
to the Facility Termination Date, provided that the making of any
such Advance will not cause the then‐current Revolving Facility Usage to
exceed the then-current Aggregate Commitment.  Each Lender shall fund its
Ratable Share of each such Revolving Credit Advance and no Lender will be
required to fund any amounts which, when aggregated with such Lender’s Ratable
Share of all other Advances then outstanding, would exceed such Lender’s
then-current Commitment.  This facility (“Facility”) is a revolving
credit facility and, subject to the provisions of this Agreement, Borrower may
request Advances hereunder, repay such Advances and reborrow Advances at any
time prior to the Facility Termination Date.

2.2             
Revolving Credit Advances

.  Each Revolving
Credit Advance hereunder shall consist of Loans made from the several Lenders
ratably in proportion to the ratio their respective Commitments bear to the
Aggregate Commitment.  The Revolving Credit Advances may be Base Rate Advances,
LIBOR Rate Advances or a combination thereof, selected by Borrower in
accordance with Sections 2.10 and 2.11.

2.3             
Interest Rate Options

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.  The Borrower shall pay interest in respect of the
outstanding unpaid principal amount of the Loans as selected by it from the
Base Rate Option or LIBOR Rate Option set forth below applicable to the
Advances, it being understood that, subject to the provisions of this
Agreement, the Borrower may select different Interest Rate Options and
different Interest Periods to apply simultaneously to the Loans comprising
different Borrowing Tranches and may convert to or renew one or more Interest
Rate Options with respect to all or any portion of the Loans comprising any
Borrowing Tranche; provided that there shall not be at any one time outstanding
more than six (6) Borrowing Tranches in the aggregate among all of the Loans
and provided further that if an Event of Default or Potential Default exists
and is continuing, the Borrower may not request, convert to, or renew the LIBOR
Rate Option for any Advances and the Required Lenders may demand that all
existing Borrowing Tranches bearing interest under the LIBOR Rate Option shall
be converted immediately to the Base Rate Option, subject to the obligation of
the Borrower to pay any indemnity under Article IV in connection with
such conversion.  The Borrower shall have the right to select from the
following Interest Rate Options applicable to the Advances:

(a)               
Base Rate Option:  A fluctuating rate per annum (computed
on the basis of a year of 360 days and actual days elapsed) equal to the Base
Rate plus the Base Rate Applicable Margin, such interest rate to change
automatically from time to time effective as of the effective date of each
change in the Base Rate; or

(b)              
LIBOR Rate Option:  A rate per annum (computed on the
basis of a year of 360 days and actual days elapsed) equal to the LIBOR Rate
plus the LIBOR Applicable Margin.

Subject to Section 2.13, only the Base Rate
Option shall apply to the Swing Loans.

2.4             
Commitment Fee

.  Accruing
from the date hereof until the Facility Termination Date, the Borrower agrees
to pay to the Administrative Agent for the account of each Lender according to
its Ratable Share, a nonrefundable commitment fee (the “Commitment Fee”)
equal to the Applicable Commitment Fee Rate (computed on the basis of a year of
360 days and actual days elapsed) multiplied by the average daily difference
between the amount of (i) the Commitments (for purposes of this computation,
PNC’s Swing Loans shall be deemed to be borrowed amounts under its Commitment)
and (ii) the Revolving Facility Usage; provided, however, that any Commitment
Fee accrued with respect to the Commitment of a Defaulting Lender during the period
prior to the time such Lender became a Defaulting Lender and unpaid at such
time shall not be payable by the Borrower so long as such Lender shall be a
Defaulting Lender except to the extent that such Commitment Fee shall otherwise
have been due and payable by the Borrower prior to such time; and provided
further that no Commitment Fee shall accrue with respect to the Commitment of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.  Subject
to the proviso in the directly preceding sentence, all Commitment Fees shall be
payable in arrears on each Payment Date.

2.5             
Other Fees

.  The Borrower agrees to pay all fees payable to the
Administrative Agent pursuant to the Borrower’s letter agreements with (i) the
Administrative Agent dated as of September 9, 2010, and (ii) the Syndication
Agent dated as of September 23, 2010 (collectively, the “Fee Letter”).

2.6             
Usury

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.  This Agreement and each Note are subject to the
express condition that at no time shall Borrower be obligated or required to
pay interest on the principal balance of the Loan at a rate which could subject
any Lender to either civil or criminal liability as a result of being in excess
of the Maximum Legal Rate.  If by the terms of this Agreement or the Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the interest rate or the Default Rate, as the case may be, shall be deemed to
be immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder.  All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest
on account of the Loan does not exceed the Maximum Legal Rate of interest from
time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.

2.7             
Voluntary Commitment Reductions

.  Borrower may, at any time upon five (5) days prior
written notice to the Administrative Agent, elect to reduce or terminate the
Aggregate Commitment under this Facility provided that (i) each such reduction
shall be in the minimum amount of $5,000,000, (ii) all such reductions shall
reduce each Lender’s Commitment and the Swing Loans Commitment on a pro rata
basis, (iii) any amount by which the Revolving Facility Usage exceeds the
reduced Aggregate Commitment shall be paid on the effective date of, and as a
condition to such reduction, (iv) Borrower shall pay all costs associated with
any related prepayments of LIBOR Rate Advances or due under any other
provisions contained in this Agreement and (v) Borrower shall not reduce the
Aggregate Commitment below $100,000,000 unless Borrower elects to terminate the
Aggregate Commitment in its entirety.

2.8             
Minimum Amount of Each Advance

.  Each LIBOR Rate Advance shall be in an amount not
less than $1,000,000 or a whole multiple of $100,000 in excess thereof.  Each
Base Rate Advance and each Swing Advance shall be in the minimum amount of
$250,000; provided, however, that, subject to Section 2.1, any Base Rate
Advance or Swing Advance may be in the amount of the unused Aggregate
Commitment.

2.9             
Final Principal Payment; Optional Prepayments

.  Any outstanding Advances and all other unpaid Obligations
shall be paid in full by Borrower on the Facility Termination Date.  The
Borrower may, without premium or penalty, upon at least one (1) Business Day’s
notice to the Administrative Agent given not later than 1:00 p.m. on such
Business Day, in the case of all Advances other than Swing Advances (in which
case such notice shall be given not later than 1:00 p.m. on such date of
prepayment), prepay the Advances, which notice shall specify the date and
amount of prepayment and whether the prepayment is of LIBOR Rate Advances, Base
Rate Advances, or a combination thereof, and if a combination thereof, the
amount allocable to each; provided, however, that (i) any partial prepayment
under this Subsection shall be in an amount not less than $1,000,000 or a whole
multiple of $100,000 in excess thereof and; (ii) any LIBOR Rate Advance prepaid
on any day other than the last day of the applicable LIBOR Interest Period must
be accompanied by any amounts payable pursuant to Section 4.4.  Upon
receipt of any such notice the Administrative Agent shall promptly notify each
Lender thereof.  If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
any amounts payable pursuant to Section 4.4.

2.10         
Revolving Credit Loan Requests; Swing Loan Requests

.

(a)               
Revolving Credit Loan Requests

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.  Except as otherwise provided herein, the Borrower
may from time to time prior to the Facility Termination Date request the
Lenders to make Loans, or renew or convert the Interest Rate Option applicable
to existing Loans, by delivering to the Administrative Agent, not later than
noon, Eastern time, (i) three (3) Business Days prior to the proposed Borrowing
Date with respect to the making of Loans to which the LIBOR Rate Option applies
or the conversion to or the renewal of the LIBOR Rate Option for any Loans; and
(ii) the same Business Day of the proposed Borrowing Date with respect to the
making of a Loan to which the Base Rate Option applies or the last day of the
preceding Interest Period with respect to the conversion to the Base Rate
Option for any Loan, of a duly completed request therefor substantially in the
form of Exhibit F-1 or a request by telephone immediately confirmed in
writing by letter, facsimile or telex in such form (each, a “Loan Request”),
it being understood that the Administrative Agent may rely on the authority of
any individual making such a telephonic request without the necessity of
receipt of such written confirmation.  Each Loan Request shall be irrevocable
and shall specify the aggregate amount of the proposed Loans comprising each
Borrowing Tranche, and, if applicable, the Interest Period.

Except as otherwise provided herein, the
Borrower may from time to time prior to the Facility Termination Date request
PNC to make Swing Loans by delivery to PNC not later than 2:00 p.m., Eastern
time, on the proposed Borrowing Date of a duly completed request therefor
substantially in the form of Exhibit F-2 hereto or a request by
telephone immediately confirmed in writing by letter, facsimile or telex (each,
a “Swing Loan Request”), it being understood that the Administrative
Agent may rely on the authority of any individual making such a telephonic
request without the necessity of receipt of such written confirmation.  Each
Swing Loan Request shall be irrevocable and shall specify the proposed
Borrowing Date and the principal amount of such Swing Loan.

The Administrative Agent shall, promptly after
receipt by it of a Loan Request pursuant to this Section 2.10, notify
the Lenders of its receipt of such Loan Request specifying the information
provided by the Borrower and the apportionment among the Lenders of the
requested Loans as determined by the Administrative Agent.  Each Lender shall
remit the principal amount of each Loan to the Administrative Agent such that
the Administrative Agent is able to, and the Administrative Agent shall, to the
extent the Lenders have made funds available to it for such purpose and subject
to Section 5.2 fund such Loans to the Borrower in U.S. Dollars and
immediately available funds at the Principal Office prior to 2:00 p.m., on the
applicable Borrowing Date; provided that if any Lender fails to remit such
funds to the Administrative Agent in a timely manner, the Administrative Agent
may elect in its sole discretion to fund with its own funds the Loans of such
Lender on such Borrowing Date, and such Lender shall be subject to the
repayment obligation in Section 2.19.

2.11         
Conversion and Continuation of Outstanding Advances

.  Base Rate Advances shall continue as Base Rate
Advances unless and until such Base Rate Advances are converted into LIBOR Rate
Advances.  Each LIBOR Rate Advance shall continue as a LIBOR Rate Advance until
the end of the then applicable Interest Period therefor, at which time such
LIBOR Rate Advance shall be automatically converted into a Base Rate Advance
unless the Borrower shall have given the Administrative Agent a Loan Request
requesting that, at the end of such Interest Period, such LIBOR Rate Advance
either continue as a LIBOR Rate Advance for the same or another Interest Period
or be converted to an Advance of another Type.

2.12         
Changes in Interest Rate, Etc.

  Each Base Rate Advance shall bear interest on the
outstanding principal amount thereof, for each day from and including the date
such Advance is made or is converted from a LIBOR Rate Advance into a Base Rate
Advance to but excluding the date it becomes due or is converted into a LIBOR
Rate Advance, at a rate per annum equal to the Base Rate for such day.  Changes
in the rate of interest on that portion of any Advance maintained as a Base
Rate Advance will take effect simultaneously with each change in the Base
Rate.  Each LIBOR Rate Advance shall bear interest from and including the first
day of the Interest Period applicable thereto to (but not including) the last
day of such Interest Period at the interest rate determined as applicable to
such LIBOR Rate Advance.

2.13         
Rates Applicable After Event of Default

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.  During the continuance of an Event of Default the
Administrative Agent may, at the direction of the Required Lenders, by notice
to the Borrower, declare that (i) no Advance may be made as, converted into, or
continued beyond the expiration of any then-current Interest Period as, a LIBOR
Rate Advance, and (ii) the Default Rate shall apply (which notice may be
revoked at the option of the Required Lenders notwithstanding any provision of Section
9.2 requiring unanimous consent of the Lenders to changes in interest
rates), provided, however, that the Default Rate shall become applicable
automatically if an Event of Default occurs under Section 8.1, 8.2,
or 8.3, unless waived by the Required Lenders.

2.14         
Method of Payment

.  All payments of the Obligations hereunder shall be
made, without setoff, deduction, or counterclaim, in immediately available
funds to the Administrative Agent at the Principal Office of Administrative
Agent by noon, Eastern time, on the date when due and shall be applied ratably
by the Administrative Agent among the Lenders.  As
provided elsewhere herein, all Lenders’ interests in the Revolving Credit
Advances and the Loan Documents shall be ratable undivided interests and none
of such Lenders’ interests shall have priority over the others.  Each payment
delivered to the Administrative Agent for the account of any Lender or amount
to be applied or paid by the Administrative Agent to any Lender shall be paid
promptly (on the same day as received by the Administrative Agent if received
prior to noon, Eastern time, on such day and otherwise on the next Business
Day) by the Administrative Agent to such Lender in the same type of funds that
the Administrative Agent received at its address specified pursuant to Article
XIV or at any other office specified in a notice received by the
Administrative Agent from such Lender.  Payments received by the Administrative
Agent but not timely funded to the Lenders shall bear interest payable by the
Administrative Agent at the Federal Funds Effective Rate from the date due
until the date paid.  The Administrative Agent is hereby authorized to charge
the account of the Borrower maintained with PNC Bank, National Association for
each payment of principal, interest and fees as it becomes due hereunder.

2.15         
Notes; Telephonic Notices

.  Each Lender is hereby authorized to record the
principal amount of each of its Loans and each repayment on the schedule
attached to its Note, provided, however, that the failure to so record shall
not affect the Borrower’s obligations under such Note.  The Borrower hereby
authorizes the Lenders and the Administrative Agent to extend, convert or
continue Advances, effect selections of Types of Advances and to transfer funds
based on written notices made by any Authorized Officer and Borrower agrees to
deliver promptly to the Administrative Agent such written notice.  The
Administrative Agent will at the request of the Borrower, from time to time,
but not more often than monthly, provide notice of the amount of the
outstanding Aggregate Commitment, the Type of Advance, and the applicable
interest rate, if for a LIBOR Rate Advance.  Upon a Lender’s furnishing to
Borrower an affidavit to such effect, if a Note is mutilated, destroyed, lost
or stolen, Borrower shall deliver to such Lender, in substitution therefore, a
new note containing the same terms and conditions as such Note being replaced.

2.16         
Interest Payment Dates; Interest and Fee Basis

.  Interest accrued on each Advance shall be payable
on each Payment Date, commencing with the first such date to occur after the
date hereof, at maturity, whether by acceleration or otherwise, and upon any
termination of the Aggregate Commitment in its entirety.  Interest on LIBOR
Rate Advances, Facility Letter of Credit Fees and Commitment Fees shall be
calculated for actual days elapsed on the basis of a 360-day year.  Interest on
Base Rate Advances and Swing Advances shall be calculated for actual days
elapsed on the basis of a 360 day year. Interest shall be payable for the day
an Advance is made but not for the day of any payment on the amount paid if
payment is received prior to noon, Eastern time. If any payment of principal of
or interest on an Advance shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment.

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2.17         
Notification of Advances, Interest Rates and Prepayments

.  The Administrative Agent will notify each Lender
of the contents of each Loan Request, Conversion/Continuation Notice, and
repayment notice received by it hereunder not later than the close of business
on the Business Day such notice is received by the Administrative Agent.  The
Administrative Agent will notify each Lender of the interest rate applicable to
each LIBOR Rate Advance promptly upon determination of such interest rate and
will give each Lender prompt notice of each change in the Base Rate.

2.18         
Increasing Lenders and New Lenders

. The Borrower may, at any time
prior to the second anniversary of the Agreement Execution Date, request that
(1) the current Lenders increase their Commitments (any current Lender which
elects to increase its Commitment shall be referred to as an "Increasing
Lender") or (2) one or more new lenders (each a "New Lender")
join this Agreement and provide a Commitment hereunder, subject to the
following terms and conditions: 

2.18.1   
No Obligation to Increase.  No current Lender shall be
obligated to increase its Commitment and any increase in the Commitment by any
current Lender shall be in the sole discretion of such current Lender. 

2.18.2   
Defaults.  There shall exist no Events of Default or
Potential Default on the effective date of such increase after giving effect to
such increase. 

2.18.3   
Aggregate Commitment.  After giving effect to such
increase, the total Aggregate Commitment shall not exceed $300,000,000. 

2.18.4   
Resolutions; Opinion.  The Loan Parties shall deliver to
the Administrative Agent on or before the effective date of such increase the
following documents in a form reasonably acceptable to the Administrative
Agent: (1) certifications of their corporate secretaries with attached
resolutions certifying that the increase in the Aggregate Commitment has been
approved by such Loan Parties, and (2) an opinion of counsel addressed to the
Administrative Agent and the Lenders addressing the authorization and execution
of the Loan Documents by, and enforceability of the Loan Documents against, the
Loan Parties. 

2.18.5   
Notes.  The Borrower shall execute and deliver (1) to each
Increasing Lender a replacement revolving credit Note reflecting the new amount
of such Increasing Lender's Commitment after giving effect to the increase (and
the prior Note issued to such Increasing Lender shall be deemed to be
terminated) and (2) to each New Lender a Note reflecting the amount of such New
Lender's Commitment. 

2.18.6   
Approval of New Lenders.  Any New Lender shall be subject
to the approval of the Borrower, which approval shall not be unreasonably
withheld or delayed, and the Administrative Agent.

2.18.7   
Increasing Lenders.  Each Increasing Lender shall confirm
its agreement to increase its Commitment pursuant to an acknowledgement in a
form acceptable to the Administrative Agent, signed by it and the Borrower and
delivered to the Administrative Agent at least five (5) days before the effective
date of such increase. 

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2.18.8   
New Lenders--Joinder.  Each New Lender shall execute an
amendment to this Agreement in substantially the form of Exhibit G
attached hereto pursuant to which such New Lender shall join and become a party
to this Agreement and the other Loan Documents with a Commitment in the amount
set forth in such amendment. 

Notwithstanding anything in
this Section 2.18 to the contrary, in the event Borrower requests that Lenders
increase their Commitments, current Lenders shall be presented with and shall
have the right to increase their Commitments before any solicitation is made of
a new, prospective lender to provide a new commitment hereunder.

(ii)        Treatment
of Outstanding Loans and Letters of Credit.  

(a)        Repayment of Outstanding Loans;
Borrowing of New Loans.  On the effective date of such increase, the
Borrower shall repay all Loans then outstanding, subject to the Borrower's
indemnity obligations under Section 4.3; provided that it may borrow new
Loans with a Borrowing Date on such date. Each of the Lenders shall participate
in any new Loans made on or after such date in accordance with their respective
Ratable Shares after giving effect to the increase in the Aggregate Commitment
contemplated by this Section 2.18.

(b)        Outstanding Letters of Credit. Repayment of Outstanding
Loans; Borrowing of New Loans.  On the effective date of such increase,
each Increasing Lender and each New Lender (i) will be deemed to have purchased
a participation in each then outstanding Facility Letter of Credit equal to its
Ratable Share of such Facility Letter of Credit and the participation of each
other Lender in such Facility Letter of Credit shall be adjusted accordingly
and (ii) will acquire, (and will pay to the Administrative Agent, for the
account of each Lender, in immediately available funds, an amount equal to) its
Ratable Share of all outstanding Participation Advances.

2.19         
Presumptions by Administrative Agent

.  Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the Issuing Lender hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the Issuing Lender, as the case may
be, the amount due.  In such event, if the Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Lender, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or the Issuing Lender, with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

2.20         
Replacement of a Lender

.  In the event any Lender (i) gives notice under Section
4.5, (ii) requests compensation under Section 4.1, or requires the
Borrower to pay any additional amount to any Lender or any Governmental Body
for the account of any Lender pursuant to Section 4.2, (iii) is a
Defaulting Lender, (iv) becomes subject to the control of an Governmental
Authority (other than normal and customary supervision), or (v) is a
Non-Consenting Lender referred to in Section 9.2, then in any such
event the Borrower may, at its sole expense, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and
consents required by, Article XIII, all of its interests, rights and
obligations under this Agreement and the related Loan Documents to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment), provided that:

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(i)                
the Borrower shall have paid to the Administrative Agent the
assignment fee specified in Section 13.2;

(ii)              
such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and Participation Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any amounts under Section 4.3) from
the assignee (to the extent of such outstanding principal and accrued interest
and fees) or the Borrower (in the case of all other amounts);

(iii)            
in the case of any such assignment resulting from a claim for
compensation under Section 4.1] or payments required to be made pursuant
to Section 4.2, such assignment will result in a reduction in such
compensation or payments thereafter; and

(iv)            
such assignment does not conflict with applicable Law.

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such
assignment and delegation cease to apply.

2.21         
Swing Advances.

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 In addition to the other options available to the
Borrower hereunder, the Swing Loans Commitment shall be available for Swing
Advances subject to the following terms and conditions.  Swing Advances shall
be made available for same day borrowings provided that a Swing Loan Request is
given in accordance with Section 2.10 hereof during the period
commencing on the Agreement Effective Date and ending on a date ten (10) days
prior to the then-current Facility Termination Date.  Each Swing Advance shall
bear interest at a variable rate for each day such Swing Advance is outstanding
equal to the Base Rate Option for such day.  In no event shall the Swing Lender
be required to fund a Swing Advance if it would increase the total aggregate
outstanding Loans by Swing Lender hereunder plus its Ratable Share of
Reimbursement Obligations to an amount in excess of the Swing Lender’s
Commitment.  No Swing Advance may be made to repay a Swing Advance, but
Borrower may repay Swing Advances from subsequent pro rata Advances hereunder. 
On the fifteenth day and on the last Business Day of each calendar month, if
any Swing Advances have not previously been paid, each Lender irrevocably
agrees to purchase its Ratable Share of any Swing Advance made by the Swing
Lender regardless of whether the conditions for disbursement are satisfied at
the time of such purchase, including the existence of an Event of Default
hereunder provided that Swing Lender did not have actual knowledge of such
Event of Default at the time the Swing Advance was made and provided further
that no Lender shall be required to have total outstanding Loans plus its
Ratable Share of Letter of Credit Obligations exceed its Commitment.  Such
purchase shall take place by the time PNC so requests (which request may be
telephonic or written notice by letter, facsimile or telex), which shall not be
earlier than 3:00 p.m. on the Business Day next after the date the Lenders
receive such request from PNC.  From and after the date it is so purchased,
each such Swing Advance shall, to the extent purchased, (i) be treated as
a Loan made by the purchasing Lenders and not by the selling Lender for all
purposes under this Agreement and the payment of the purchase price by a Lender
shall be deemed to be the making of a Loan by such Lender and shall constitute
outstanding principal under such Lender’s Note, and (ii) shall no longer
be considered a Swing Advance except that all interest accruing on or
attributable to such Swing Advance for the period prior to the date of such
purchase shall be paid when due by the Borrower to the Administrative Agent for
the benefit of the Swing Lender and all such amounts accruing on or
attributable to such Loans for the period from and after the date of such
purchase shall be paid when due by the Borrower to the Administrative Agent for
the benefit of the purchasing Lenders.  If prior to purchasing its Ratable
Share of a Swing Advance one of the events described in Section 8.7
shall have occurred and such event prevents the consummation of the purchase
contemplated by preceding provisions, each Lender will purchase an undivided
participating interest in the outstanding Swing Advance in an amount equal to
its Ratable Share of such Swing Advance.  From and after the date of each
Lender’s purchase of its participating interest in a Swing Advance, if the
Swing Lender receives any payment on account thereof, the Swing Lender will
distribute to such Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Lender’s participating interest was outstanding and funded);
provided, however, that in the event that such payment was received by the
Swing Lender and is required to be returned to the Borrower, each Lender will
return to the Swing Lender any portion thereof previously distributed by the
Swing Lender to it.  If any Lender fails to so purchase its Ratable Share of
any Swing Advance, such Lender shall be deemed to be a Defaulting Lender
hereunder.

2.22         
Letter of Credit Subfacility.  

 

(a)               
Obligation to Issue.  Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of
the Borrower herein set forth, the Issuing Lender hereby agrees to issue for
the account of the Borrower, one or more Facility Letters of Credit in
accordance with this Section 2.22, from time to time during the period
commencing on the Agreement Effective Date and ending on a date sixty (60) days
prior to the then-current Facility Termination Date.

(b)              
Types and Amounts. The Issuing Lender shall not have any
obligation to:

(i)                
issue any Facility Letter of Credit if the aggregate maximum
amount then available for drawing under Letters of Credit issued by such Issuing
Lender, after giving effect to the Facility Letter of Credit requested
hereunder, shall exceed any limit imposed by law or regulation upon such
Issuing Lender;

(ii)              
issue any Facility Letter of Credit if, after giving effect
thereto, (1) the then applicable Revolving Facility Usage would exceed the then
current Aggregate Commitment, or (2) the Facility Letter of Credit
Obligations would exceed the Facility Letter of Credit Sublimit; or

(iii)            
issue any Facility Letter of Credit having an expiration date, or
containing automatic extension provision to extend such date, to a date beyond
the second anniversary of the then-current Facility Termination Date (provided
that Borrower agrees to cash collateralize any Facility Letter of Credit that
remains outstanding on a date forty-five (45) days prior to the actual Facility
Termination Date as provided in Subsection (i) of this Section 2.22  and
in Section 9.1 below).

(c)               
Conditions. In addition to being subject to the
satisfaction of the conditions contained in Article V hereof, the
obligation of the Issuing Lender to issue any Facility Letter of Credit is
subject to the satisfaction in full of the following conditions:

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(i)                
the Borrower shall have delivered to the Issuing Lender at such
times and in such manner as the Issuing Lender may reasonably prescribe such
documents and materials as may be reasonably required pursuant to the terms of
the proposed Facility Letter of Credit (it being understood that if any
inconsistency exists between such documents and the Loan Documents, the terms
of the Loan Documents shall control) and the proposed Facility Letter of Credit
shall be reasonably satisfactory to the Issuing Lender as to form and content;

(ii)              
as of the date of issuance, no order, judgment or decree of any
court, arbitrator or governmental authority shall purport by its terms to
enjoin or restrain the Issuing Lender from issuing the requested Facility
Letter of Credit and no law, rule or regulation applicable to the Issuing
Lender and no request or directive (whether or not having the force of law)
from any governmental authority with jurisdiction over the Issuing Lender shall
prohibit or request that the Issuing Lender refrain from the issuance of
Letters of Credit generally or the issuance of the requested Facility Letter or
Credit in particular; and

(iii)            
there shall not exist any Event of Default.

(d)              
Procedure for Issuance of Facility Letters of Credit. 
Borrower shall give the Issuing Lender and the
Administrative Agent at least five (5) Business Days’ prior written notice, or
such shorter period as may be agreed to by the Issuing Lender, of any requested
issuance of a Facility Letter of Credit under this Agreement (a “Letter of
Credit Request”) and shall (i) immediately provide the Issuing Lender and the
Administrative Agent with a telecopy of the written notice required hereunder
which has been signed by an Authorized Officer or a telex containing all
information required to be contained in such written notice and (ii) promptly
provide the Issuing Lender and the Administrative Agent (in no event later than
the requested date of issuance) with the written notice required hereunder
containing the original signature of an authorized officer; such notice shall
be irrevocable, except as provided below in this Section 2.22(d), and
shall specify:

(i)                
the stated amount of the Facility
Letter of Credit requested (which stated amount shall not be less than
$50,000);

(ii)              
the effective date (which day shall be a Business Day) of
issuance of such requested Facility Letter of Credit (the “Issuance Date”);

(iii)            
the date on which such requested Facility Letter of Credit is to
expire (which day shall be a Business Day);

(iv)            
the purpose for which such Facility Letter of Credit is to be
issued;

(v)              
the Person for whose benefit the requested Facility Letter of
Credit is to be issued; and

(vi)            
any special language required to be included in the Facility
Letter of Credit.

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Such notice, to be effective, must be received by such
Issuing Lender and the Administrative Agent not later than noon, Eastern time,
on the last Business Day on which notice can be given under this Section
2.22(d).

Subject to the terms and conditions of this Section
2.22 and provided that the applicable conditions set forth in Article V
hereof have been satisfied, the Issuing Lender shall, on the Issuance Date,
issue a Facility Letter of Credit on behalf of the Borrower in accordance with
the Letter of Credit Request and the Issuing Lender’s usual and customary
business practices unless the Issuing Lender has actually received (i) written
notice from the Borrower specifically revoking the Letter of Credit Request
with respect to such Facility Letter of Credit given not later than Business
Day immediately preceding the Issuance Date, or (ii) written or telephonic
notice from the Administrative Agent stating that the issuance of such Facility
Letter of Credit would violate Section 2.22(b).

The Issuing Lender shall give the Administrative Agent
(who shall promptly notify Lenders) and the Borrower written or telex notice,
or telephonic notice confirmed promptly thereafter in writing, of the issuance
of a Facility Letter of Credit (the “Issuance Notice”).

The Issuing Lender shall not extend or amend any Facility
Letter of Credit unless the requirements of this Section 2.22(d) are met
as though a new Facility Letter of Credit was being requested and issued.

(e)               
Reimbursement Obligations; Duties of Issuing Lender.

(i)                
The Issuing Lender shall promptly notify the Borrower and the
Administrative Agent (who shall promptly notify Lenders) of any draw under a
Facility Letter of Credit.  Any such draw shall not be deemed to be a default
hereunder but shall constitute an Advance of the Facility in the amount of the
Reimbursement Obligation with respect to such Facility Letter of Credit and
shall bear interest from the date of the relevant drawing(s) under the
pertinent Facility Letter of Credit at the Base Rate; provided that if an Event
of Default or a Potential Default regarding the non-payment of any monetary
obligations to the Administrative Agent or the Lenders exists at the time of
any such drawing(s), then the Borrower shall reimburse the Issuing Lender for
drawings under a Facility Letter of Credit issued by the Issuing Lender no
later than the next succeeding Business Day after the payment by the Issuing
Lender and until repaid such Reimbursement Obligation shall bear interest at
the Default Rate.

(ii)              
Any action taken or omitted to be taken by the Issuing Lender
under or in connection with any Facility Letter of Credit, if taken or omitted
in the absence of willful misconduct or gross negligence, shall not put the
Issuing Lender under any resulting liability to any Lender or, provided that
such Issuing Lender has complied with the procedures specified in Section
2.22(d), relieve that Lender of its obligations hereunder to the Issuing
Lender. In determining whether to pay under any Facility Letter of Credit, the
Issuing Lender shall have no obligation relative to the Lenders other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered in compliance, and that they appear to comply on
their face, with the requirements of such Letter of Credit.

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(f)               
Participation.

(i)                
Immediately upon the Agreement Execution Date with respect to the
Original Facility Letters of Credit, by their execution hereof, and immediately
upon each issuance by the Issuing Lender of any other Facility Letter of Credit
in accordance with the procedures set forth in Section 2.22(d),
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from the Issuing Lender, without recourse, representation or
warranty, an undivided interest and participation equal to such Lender’s
Ratable Share in such Facility Letter of Credit (including, without limitation,
all obligations of the Borrower with respect thereto) and all related rights
hereunder and under the Guaranty and other Loan Documents.  Each Lender’s
obligation to make further Loans to Borrower (other than any payments such
Lender is required to make under subparagraph (ii) below) or to purchase an
interest from the Issuing Lender in any subsequent Facility Letters of Credit
issued by the Issuing Lender on behalf of Borrower shall be reduced by such
Lender’s Ratable Share of the undrawn portion of each Facility Letter of Credit
outstanding.

(ii)              
In the event that the Issuing Lender makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such amount to
the Issuing Lender pursuant to Section 2.22(g) hereof, the Issuing
Lender shall promptly notify the Administrative Agent, which shall promptly
notify each Lender of such failure, and each Lender shall promptly and
unconditionally pay to the Administrative Agent for the account of the Issuing
Lender the amount of such Lender’s Ratable Share of the unreimbursed amount of
such payment, and the Administrative Agent shall promptly pay such amount to
the Issuing Lender.  Lender’s payments of its Ratable Share of such
Reimbursement Obligation as aforesaid shall be deemed to be a Loan by such
Lender and shall constitute outstanding principal under such Lender’s Note. 
The failure of any Lender to make available to the Administrative Agent for the
account of the Issuing Lender its Ratable Share of the unreimbursed amount of
any such payment shall not relieve any other Lender of its obligation hereunder
to make available to the Administrative Agent for the account of such Issuing
Lender its Ratable Share of the unreimbursed amount of any payment on the date
such payment is to be made, but no Lender shall be responsible for the failure
of any other Lender to make available to the Administrative Agent its Ratable
Share of the unreimbursed amount of any payment on the date such payment is to
be made.  Any Lender which fails to make any payment required pursuant to this Section 2.22(f)(ii)
shall be deemed to be a Defaulting Lender hereunder.

(iii)            
Whenever the Issuing Lender receives a payment on account of a
Reimbursement Obligation, including any interest thereon, the Issuing Lender
shall promptly pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Lender which has funded its participating interest
therein, in immediately available funds, an amount equal to such Lender’s
Ratable Share thereof.

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(iv)            
Upon the request of the Administrative Agent or any Lender, the
Issuing Lender shall furnish to such Administrative Agent or Lender copies of
any Facility Letter of Credit to which the Issuing Lender is party and such
other documentation as may reasonably be requested by the Administrative Agent
or Lender.

(v)              
The obligations of a Lender to make payments to the
Administrative Agent for the account of the Issuing Lender with respect to a
Facility Letter of Credit shall be absolute, unconditional and irrevocable, not
subject to any counterclaim, set‐off, qualification or exception whatsoever
other than a failure of any such Issuing Lender to comply with the terms of
this Agreement relating to the issuance of such Facility Letter of Credit, and
such payments shall be made in accordance with the terms and conditions of this
Agreement under all circumstances.

(g)              
Payment of Reimbursement Obligations.  The Borrower agrees
to pay to the Administrative Agent for the account of the Issuing Lender the
amount of all Advances for Reimbursement Obligations, interest and other
amounts payable to the Issuing Lender under or in connection with any Facility
Letter of Credit when due, irrespective of any claim, set‐off, defense or
other right which the Borrower may have at any time against any Issuing Lender
or any other Person, under all circumstances, including without limitation any
of the following circumstances:

(i)                
any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;

(ii)              
the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary named in a Facility
Letter of Credit or any transferee of any Facility Letter of Credit (or any
Person for whom any such transferee may be acting), the Administrative Agent,
the Issuing Lender, any Lender, or any other Person, whether in connection with
this Agreement, any Facility Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transactions
between the Borrower and the beneficiary named in any Facility Letter of
Credit);

(iii)            
any draft, certificate or any other document presented under the
Facility Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect of any statement therein being untrue or inaccurate
in any respect;

(iv)            
the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents; or

(v)              
the occurrence of any Event of Default.

In the event any payment by the Borrower received by the
Issuing Lender or the Administrative Agent with respect to a Facility Letter of
Credit and distributed by the Administrative Agent to the Lenders on account of
their participations is thereafter set aside, avoided or recovered from the
Administrative Agent or Issuing Lender in connection with any receivership, liquidation,
reorganization or bankruptcy proceeding, each Lender which received such
distribution shall, upon demand by the Administrative Agent, contribute such
Lender’s Ratable Share of the amount set aside, avoided or recovered together
with interest at the rate required to be paid by the Issuing Lender or the
Administrative Agent upon the amount required to be repaid by the Issuing
Lender or the Administrative Agent.

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(h)              
Compensation for Facility Letters of Credit.

(i)                
(a)        The Borrower shall pay to the Administrative Agent,
for the ratable account of the Lenders (including the Issuing Lender), based
upon the Lenders’ respective Ratable Shares, a per annum fee (the “Facility
Letter of Credit Fee”) as a percentage of the face amount of each Facility
Letter of Credit outstanding equal to the LIBOR Applicable Margin in effect
from time to time while such Facility Letter of Credit is outstanding.  The
Facility Letter of Credit Fee relating to any Facility Letter of Credit shall
accrue on a daily basis and shall be due and payable in arrears on the first
Business Day of each calendar quarter following the issuance of such Facility
Letter of Credit and, to the extent any such fees are then due and unpaid, on
the Facility Termination Date or any other earlier date that the Obligations
are due and payable in full.  The Administrative Agent shall promptly remit
such Facility Letter of Credit Fees, when paid, to the other Lenders in
accordance with their Ratable Shares thereof.  The Borrower shall not have any
liability to any Lender for the failure of the Administrative Agent to promptly
deliver funds to any such Lender and shall be deemed to have made all such
payments on the date the respective payment is made by the Borrower to the
Administrative Agent, provided such payment is received by the time specified
in Section 2.14 hereof.

(ii)              
(b)        The Issuing Lender also shall have the right to
receive solely for its own account an issuance fee equal to one‐eighth of
one percent (0.125%) of the face amount of each Facility Letter of Credit,
payable by the Borrower on the Issuance Date for each such Facility Letter of
Credit and on the date of any increase therein or extension thereof.  The
Issuing Lender shall also be entitled to receive its reasonable out‐of‐pocket
costs and the Issuing Lender’s standard charges of issuing, amending and
servicing Facility Letters of Credit and processing draws thereunder.

(i)                
Letter of Credit Collateral Account.  The Borrower hereby
agrees that it will immediately upon the earlier of (i) a date forty-five days
prior to the Facility Termination Date or (ii) the occurrence of an Event of
Default, establish a special collateral account (the “Letter of Credit
Collateral Account”) at the Administrative Agent’s office at the address
specified pursuant to Article XIV, in the name of the Borrower but
under the sole dominion and control of the Administrative Agent, for the
benefit of the Lenders, and in which the Borrower shall have no interest other
than as set forth in Section 9.1.  The Letter of Credit Collateral
Account shall hold the deposits the Borrower is required to make either (i) on
the forty-fifth (45th) day prior to the Facility Termination Date
under Section 2.22(a) with respect to any Facility Letter of Credit which
remains outstanding on such date or (ii) immediately after an Event of Default
on account of any outstanding Facility Letters of Credit as described in Section 9.1. 
In addition to the foregoing, the Borrower hereby grants to the Administrative
Agent, for the benefit of the Lenders, a security interest in and to the Letter
of Credit Collateral Account and any funds that may hereafter be on deposit in
such account, including income earned thereon.  The Lenders acknowledge and
agree that the Borrower has no obligation to fund the Letter of Credit Collateral
Account unless and until so required under Section 9.1 hereof.

2.23         
Extension of Facility Termination Date

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.  The Borrower may, by notice (an “Extension
Request”) to the Administrative Agent not later than sixty (60) days and
not earlier than ninety (90) days prior to the Facility Termination Date, elect
that the Facility Termination Date be extended for an additional one (1) year
period (the “Extension Period”). The Administrative Agent shall promptly
notify the Lenders of receipt of an Extension Request from the Borrower.  Upon receipt by the Administrative Agent of an Extension
Request, accompanied by an extension fee equal to 0.25% of the then current
Aggregate Commitment (the “Extension Fee”), and provided that (i) the
Borrower executes and delivers to the Administrative Agent such documents as
the Administrative Agent may reasonably request to confirm that such Extension
Request has been properly authorized on behalf of the Borrower and (ii) that no
Event of Default or Potential Default has occurred and is continuing either on
the date of receipt of such Extension Request or on
the original Facility Termination Date, the Facility Termination Date shall
be automatically extended to a date one (1) year thereafter without any need
for consent or approval of the Lenders.  The Extension Fee shall be remitted to
the Lenders on a pro rata basis in accordance with their respective Ratable
Shares as of the effective date of such extension.  If the Borrower fails to
make a timely Extension Request or fails to remit the Extension Fee or if an
Event of Default or Potential Default then has occurred and is then continuing,
the Commitments will terminate on the then-current Facility Termination Date
and on such date the Borrower will repay all Advances and collateralize all
Facility Letters of Credit as provided in Section 2.22 hereof.

ARTICLE
III 

UNENCUMBERED
POOL PROPERTIES

            3.1       Eligibility of Projects

.

(a)               
As of the Agreement Execution Date, the Administrative Agent has
approved for inclusion as Qualifying Unencumbered Projects those Projects
identified on Schedule 3.1, and such Projects shall become the initial
Qualifying Unencumbered Projects.

(b)              
If, after the Agreement Execution Date, Borrower desires to
include any additional Projects as Qualifying Unencumbered Projects Borrower
shall so notify the Administrative Agent in writing and obtain the approval of
the Administrative Agent. The Administrative Agent’s approval shall be
conclusive and no approval from the Lenders shall be required so long as such
additional Projects meet the criteria set forth in the definition of “Eligible
Unencumbered Project”. If  such additional Project does not meet such criteria
it shall only be included in Qualifying Unencumbered Projects if the Required
Lenders shall have also approved the inclusion of such Project. No Property
will be approved by the Administrative Agent unless it is an Eligible
Unencumbered Project and unless and until the Borrower delivers to the
Administrative Agent the following, in form and substance satisfactory to the
Administrative Agent: 

(i)                
a description of such Project, such description to include the
age, location, size and occupancy rate of such Project;

(ii)              
a certificate of  Borrower certifying that insurance of the type
required hereunder is in effect with respect to such Project and that, to the
best of Borrower’s knowledge, there are no material environmental concerns with
respect to such Project; and

(iii)            
such other information, including operating statements and site
plans, that the Administrative Agent may reasonably request in order to
evaluate such Project.

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(c)               
If, after receipt and review of the foregoing, unless
Administrative Agent has reasonably determined that the additional Project does
not satisfy the requirements to be an Eligible Unencumbered Project, the
Administrative Agent will notify the Borrower and each Lender within five (5)
Business Days after receipt of all of the above items that it is prepared to
proceed with the acceptance of such Project as an Unencumbered Project.  If the
Administrative Agent has determined that the additional Project does not
satisfy the requirements to be an Eligible Unencumbered Project and therefore
that addition of such Property as a Qualifying Unencumbered Project requires
Required Lender approval, the Administrative Agent shall so notify the Borrower
and the Lenders and shall forward to the Lenders all documents and information
submitted by Borrower with respect to such additional Project. In such event
each Lender shall notify the Administrative Agent whether it approves of the
designation of such Project as a Qualifying Unencumbered Project,
notwithstanding such non-compliance, within ten (10) Business Days of receipt
of such notice and all such documents and information.  If a Lender shall fail
to so notify the Administrative Agent, then such Lender shall be deemed to have
approved of such Project.  Upon approval of such Project by the Administrative
Agent, or, if required, by Required Lenders, and upon execution and delivery of
all of the documents required to be provided under Section 3.2, such
Project shall become a Qualifying Unencumbered Project .

3.2             
Conditions Precedent to a Project Becoming a Qualifying
Unencumbered Project

.  No Property shall become a
Qualifying Unencumbered Project until the Administrative Agent, or, if required,
the Required Lenders, shall have approved of such Project as provided in Section
3.1, and Borrower shall have caused to be executed and delivered to the
Administrative Agent the following instruments, documents and agreements in
respect of such Property, each to be in form and substance reasonably
satisfactory to the Administrative Agent:

(a)               
if such Project is owned by a Subsidiary that is not already a
Subsidiary Guarantor, a joinder agreement with respect to the Subsidiary
Guaranty in the form attached thereto as Exhibit A executed by such Subsidiary
and all of the items that would have been required to be delivered to the
Administrative Agent under Sections 5.1(b) through (f) had such
Subsidiary been a Loan Party on the Effective Date;

(b)              
a Compliance Certificate calculated after giving effect to the
inclusion of such Project as a Qualifying Unencumbered Project; and

(c)               
such other due diligence materials, instruments, documents,
certificates, and opinions as the Administrative Agent may reasonably request. 

3.3             
Release of Subsidiary Guarantors and Qualifying Unencumbered Projects

.  From time to time Borrower may request, upon not
less than two (2) Business Days prior written notice to the Administrative
Agent, that the Subsidiary owning a Qualifying Unencumbered Project be released
from the Guaranty, or that any Qualifying Unencumbered Project be released from
such status in whole or in part, which release (the “Release”) shall be
effected by the Administrative Agent if all of the following conditions are
satisfied as of the date of such Release:

(a)               
Borrower shall have delivered a Compliance Certificate showing
pro forma compliance with the covenants set forth in Section 10.1 after
giving effect to such Release;
and

-
39 -

 

 

 

 

 

(b)              
If after giving effect to such Release (and taking into account
any concurrent addition of a new Qualifying Unencumbered Project pursuant to Section
3.1), the resulting reduction in the Unencumbered Real Property Value and
Unencumbered Real Property Adjusted NOI would cause a breach of either Section
7.20(c) or Section 7.20(d), Borrower shall have repaid such
Advances, if any, as may be required to reduce the outstanding Advances to the
maximum amount of Advances that can be outstanding without creating such a
breach of Section 7.20(c) or Section 7.20(d).  In addition, if
after giving effect to such Release (and taking into account any concurrent
addition of a new Qualifying Unencumbered Project pursuant to Section 3.1), 
any resulting reduction in the percentage of units in the Qualifying
Unencumbered Projects which are physically occupied would cause a breach of Section
7.20(e), Borrower shall take the actions required under such Section
7.20(e) within the time required thereunder.

In connection with a Release, Borrower shall deliver to
the Administrative Agent a certificate from Borrower’s chief executive officer
or chief financial officer regarding the matters referred to in the immediately
preceding clauses (a) and (b).  Notwithstanding the foregoing, the
Administrative Agent shall not be obligated to release any such Subsidiary from
the Subsidiary Guaranty if (i) such Subsidiary owns any other Qualifying
Unencumbered Projects that are not being so released from such status or (ii)
an Event of Default or Potential Default has occurred and is then continuing.

ARTICLE
IV

INCREASED COSTS

4.1             
Increased Costs Generally

.  

(a)               
If any Change in Law shall:

(i)                
impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in the LIBOR Rate) or the
Issuing Lender;

(ii)              
subject any Lender or the Issuing Lender to any tax of any kind
whatsoever with respect to this Agreement, any Facility Letter of Credit, any
participation in a Facility Letter of Credit or any Loan under the LIBOR Rate
Option made by it, or change the basis of taxation of payments to such Lender
or the Issuing Lender in respect thereof (except for Indemnified Taxes or Other
Taxes covered by Section 4.2 and the imposition of, or any change in the
rate of, any Excluded Tax payable by such Lender or the Issuing Lender); or

(iii)            
impose on any Lender, the Issuing Lender or the London interbank
market any other condition, cost or expense affecting this Agreement or any
Loan under the LIBOR Rate Option made by such Lender or any Letter of Credit or
participation therein;

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and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Loan under the
LIBOR Rate Option (or of maintaining its obligation to make any such Loan), or
to increase the cost to such Lender or the Issuing Lender of participating in,
issuing or maintaining any Facility Letter of Credit (or of maintaining its
obligation to participate in or to issue any Facility Letter of Credit), or to
reduce the amount of any sum received or receivable by such Lender or the
Issuing Lender hereunder (whether of principal, interest or any other amount)
then, upon request of such Lender or the Issuing Lender, the Borrower will pay
to such Lender or the Issuing Lender, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Lender, as the
case may be, for such additional costs incurred or reduction suffered.

(b)              
If any Lender or the Issuing Lender determines that any Change in
Law affecting such Lender or the Issuing Lender or any lending office of such
Lender or such Lender’s or the Issuing Lender’s holding company, if any,
regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender’s or the Issuing Lender’s capital or on the
capital of such Lender’s or the Issuing Lender’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Facility Letters of Credit held by, such Lender, or
the Facility Letters of Credit issued by the Issuing Lender, to a level below
that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s
holding company could have achieved but for such Change in Law (taking into
consideration such Lender’s or the Issuing Lender’s policies and the policies
of such Lender’s or the Issuing Lender’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or the Issuing Lender, as the case may be, such additional amount or amounts as
will compensate such Lender or the Issuing Lender or such Lender’s or the
Issuing Lender’s holding company for any such reduction suffered.

(c)               
A certificate of a Lender or the Issuing Lender setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Lender or
its holding company, as the case may be, as specified in this Section 4.1
and delivered to the Borrower shall be conclusive absent manifest error.  The
Borrower shall pay such Lender or the Issuing Lender, as the case may be, the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.

(d)              
Failure or delay on the part of any Lender or the Issuing Lender
to demand compensation pursuant to this Section shall not constitute a waiver
of such Lender’s or the Issuing Lender’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender or the
Issuing Lender pursuant to this Section for any increased costs incurred or
reductions suffered more than nine (9) months prior to the date that such
Lender or the Issuing Lender, as the case may be, notifies the Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s or the Issuing Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine (9) month period referred to above
shall be extended to include the period of retroactive effect thereof).

4.2             
Taxes

.

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(a)               
Any and all payments by or on account of any obligation of the
Borrower hereunder or under any other Loan Document shall be made free and
clear of and without reduction or withholding for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required by applicable Law
to deduct any Indemnified Taxes (including any Other Taxes) from such payments,
then (i) the sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent, Lender or Issuing Lender,
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 such deductions
and (iii) the Borrower shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable Law.  Without limiting
the provisions above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable Law.

(b)              
The Borrower shall indemnify the Administrative Agent, each
Lender and the Issuing Lender, within ten (10) days after demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by the Administrative Agent, such Lender or the
Issuing Lender, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing
Lender (with a copy to the Administrative Agent), or by the Administrative
Agent on its own behalf or on behalf of a Lender or the Issuing Lender, shall
be conclusive absent manifest error.  As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

(c)               
Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the Law of the jurisdiction in which the
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable Law or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable Law as will permit such payments to be
made without withholding or at a reduced rate of withholding.  Notwithstanding
the submission of such documentation claiming a reduced rate of or exemption
from U.S. withholding tax, the Administrative Agent shall be entitled to
withhold United States federal income taxes at the full 30% withholding rate if
in its reasonable judgment it is required to do so under the due diligence
requirements imposed upon a withholding agent under § 1.1441-7(b) of the United
States Income Tax Regulations.  Further, the Administrative Agent is
indemnified under § 1.1461-1(e) of the United States Income Tax Regulations
against any claims and demands of any Lender or assignee or participant of a
Lender for the amount of any tax it deducts and withholds in accordance with
regulations under § 1441 of the Internal Revenue Code.  In addition, any
Lender, if requested by the Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable Law or reasonably requested
by the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.

(d)              
Without limiting the generality of the foregoing, in the event
that the Borrower is resident for tax purposes in the United States of America,
any Foreign Lender shall deliver to the Borrower and the Administrative Agent
(in such number of copies as shall be requested by the recipient) on or prior
to the date on which such Foreign Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the request of the Borrower or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

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(i)                
two (2) duly completed valid originals of IRS Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States of America is a party,

(ii)              
two (2) duly completed valid originals of IRS Form W-8ECI,

(iii)            
in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C)
a “controlled foreign corporation” described in section 881(c)(3)(C) of the
Code and (y) two duly completed valid originals of IRS Form W-8BEN,

(iv)            
any other form prescribed by applicable Law as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable Law to permit the Borrower to determine the
withholding or deduction required to be made.

(v)              
To the extent that any Lender is not a Foreign Lender, such
Lender shall submit to the Administrative Agent two (2) originals of an IRS
Form W-9 or any other form prescribed by applicable Law demonstrating that such
Lender is not a Foreign Lender.

4.3             
Indemnity

.  In addition to the compensation or payments
required by Section 4.1 or Section 4.2, the Borrower shall
indemnify each Lender against all liabilities, losses or expenses (including
loss of anticipated profits, any foreign exchange losses and any loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain such Loan, from fees payable to terminate the deposits from which such
funds were obtained or from the performance of any foreign exchange contract)
which such Lender sustains or incurs as a consequence of any:

(a)               
payment, prepayment, conversion or renewal of any Loan to which a
LIBOR Rate Option applies on a day other than the last day of the corresponding
Interest Period (whether or not such payment or prepayment is mandatory,
voluntary or automatic and whether or not such payment or prepayment is then
due),

(b)              
attempt by the Borrower to revoke (expressly, by later inconsistent
notices or otherwise) in whole or part any Loan Requests under Section 2.10
or Section 2.11 or notice relating to prepayments under Section 2.9,
or

(c)               
default by the Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Loan Document,
including any failure of the Borrower to pay when due (by acceleration or
otherwise) any principal, interest, Commitment Fee or any other amount due
hereunder.

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If any Lender sustains or incurs any such loss
or expense, it shall from time to time notify the Borrower of the amount
determined in good faith by such Lender (which determination may include such
assumptions, allocations of costs and expenses and averaging or attribution
methods as such Lender shall deem reasonable) to be necessary to indemnify such
Lender for such loss or expense.  Such notice shall set forth in reasonable
detail the basis for such determination.  Such amount shall be due and payable
by the Borrower to such Lender ten (10) Business Days after such notice is
given.

4.4             
Settlement Date Procedures

. In order to minimize the transfer of funds between the
Lenders and the Administrative Agent, the Borrower may borrow, repay and
reborrow Swing Loans and PNC may make Swing Loans as provided in Section 2.21
hereof during the period between Settlement Dates.  The Administrative Agent
shall notify each Lender of its Ratable Share of the total of the Revolving
Credit Advances and the Swing Loans (each a “Required Share”).  On such
Settlement Date, each Lender shall pay to the Administrative Agent the amount
equal to the difference between its Required Share and its Revolving Credit
Loans, and the Administrative Agent shall pay to each Lender its Ratable Share
of all payments made by the Borrower to the Administrative Agent with respect
to the Revolving Credit Advances.  The Administrative Agent shall also effect
settlement in accordance with the foregoing sentence on the proposed Borrowing
Dates for Revolving Credit Advances and may at its option effect settlement on
any other Business Day.  These settlement procedures are established solely as
a matter of administrative convenience, and nothing contained in this Section
4.4 shall relieve the Lenders of their obligations to fund Revolving Credit
Loans on dates other than a Settlement Date pursuant to Section 2.21. 
The Administrative Agent may at any time at its option for any reason
whatsoever require each Lender to pay immediately to the Administrative Agent
such Lender’s Ratable Share of the outstanding Revolving Credit Advances and
each Lender may at any time require the Administrative Agent to pay immediately
to such Lender its Ratable Share of all payments made by the Borrower to the
Administrative Agent with respect to the Revolving Credit Advances.

4.5             
LIBOR Rate Unascertainable; Illegality; Increased Costs;
Deposits Not Available

.

(a)               
If on any date on which a LIBOR Rate would otherwise be
determined, the Administrative Agent shall have determined that:

(i)                
adequate and reasonable means do not exist for ascertaining such
LIBOR Rate, or

(ii)              
a contingency has occurred which materially and adversely affects
the London interbank eurodollar market relating to the LIBOR Rate, the
Administrative Agent shall have the rights specified in Section 4.6.

(b)              
In addition, if at any time any Lender shall have determined
that:

(i)                
the making, maintenance or funding of any Loan to which a LIBOR
Rate Option applies has been made impracticable or unlawful by compliance by
such Lender in good faith with any Law or any interpretation or application thereof
by any Governmental Authority or with any request or directive of any such
Governmental Authority (whether or not having the force of Law), or

(ii)              
such LIBOR Rate Option will not adequately and fairly reflect the
cost to such Lender of the establishment or maintenance of any such Loan, or

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(iii)            
after making all reasonable efforts, deposits of the relevant
amount in Dollars for the relevant Interest Period for a Loan, or to banks
generally, to which a LIBOR Rate Option applies, respectively, are not
available to such Lender with respect to such Loan, or to banks generally, in
the interbank eurodollar market,

then the Administrative Agent shall have the rights
specified in Section 4.6.

4.6             
Administrative Agent’s and Lender’s Rights

.  In the case of any event specified in Section
4.5(a) above, the Administrative Agent shall promptly so notify the Lenders
and the Borrower thereof, and in the case of an event specified in Section
4.5(b) above, such Lender shall promptly so notify the Administrative Agent
and endorse a certificate to such notice as to the specific circumstances of
such notice, and the Administrative Agent shall promptly send copies of such
notice and certificate to the other Lenders and the Borrower.  Upon such date
as shall be specified in such notice (which shall not be earlier than the date
such notice is given), the obligation of (A) the Lenders, in the case of such
notice given by the Administrative Agent, or (B) such Lender, in the case of
such notice given by such Lender, to allow the Borrower to select, convert to
or renew a LIBOR Rate Option shall be suspended until the Administrative Agent
shall have later notified the Borrower, or such Lender shall have later
notified the Administrative Agent, of the Administrative Agent’s or such
Lender’s, as the case may be, determination that the circumstances giving rise
to such previous determination no longer exist.  If at any time the
Administrative Agent makes a determination under Section 4.5(a) and the
Borrower has previously notified the Administrative Agent of its selection of,
conversion to or renewal of a LIBOR Rate Option and such Interest Rate Option
has not yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Base Rate Option otherwise available
with respect to such Loans.  If any Lender notifies the Administrative Agent of
a determination under Section 4.5(b), the Borrower shall, subject to the
Borrower’s indemnification Obligations under Section 4.3, as to any Loan
of the Lender to which a LIBOR Rate Option applies, on the date specified in
such notice either convert such Loan to the Base Rate Option otherwise
available with respect to such Loan or prepay such Loan in accordance with Section
2.9.  Absent due notice from the Borrower of conversion or prepayment, such
Loan shall automatically be converted to the Base Rate Option otherwise
available with respect to such Loan upon such specified date.

ARTICLE
V

CONDITIONS
PRECEDENT

5.1             
Initial Advance.

  The Lenders shall not be required to make the initial
Advance hereunder or accept their respective participation interests in the
Original Facility Letters of Credit unless (i) the Borrower shall, prior to or
concurrently with such initial Advance, have paid all fees due and payable to
the Lenders and the Administrative Agent hereunder, and (ii) the Borrower shall
have furnished to the Administrative Agent, with sufficient copies for the
Lenders, the following:

(a)               
The duly executed originals of the Loan Documents, including the
Notes, payable to the order of each of the Lenders, and this Agreement; 

(b)              
Certificates of good standing for each Loan Party from its state
of organization, certified by the appropriate governmental officer and dated
not more than thirty (30) days prior to the Agreement Execution Date;

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(c)               
Copies of the formation documents (including code of regulations,
if appropriate) of each Loan Party, certified by an officer of the Borrower,
together with all amendments thereto;

(d)              
Incumbency certificates, executed by officers of the Borrower,
which shall identify by name and title and bear the signature of the Persons
authorized to sign the Loan Documents and to make borrowings hereunder on
behalf of such parties, upon which certificate the Administrative Agent and the
Lenders shall be entitled to rely until informed of any change in writing by
the Borrower;

(e)               
Copies, certified by a Secretary or an Assistant Secretary, of
the Borrower’s resolutions (and resolutions of the other Loan Parties, if any
are reasonably deemed necessary by counsel for the Administrative Agent)
authorizing the Advances provided for herein, with respect to the Borrower, and
the execution, delivery and performance of the Loan Documents to be executed
and delivered by the Loan Parties;

(f)               
A written opinion of the Borrower’s counsel, addressed to the
Lenders in substantially the form of Exhibit E hereto or such other form
as the Administrative Agent may reasonably approve;

(g)              
A closing certificate, signed by an Authorized Officer of the
Borrower, stating that on the initial Borrowing Date no Event of Default or
Potential Default has occurred and is continuing, there has been no Material
Adverse Effect nor any current or pending litigation that may result in a
Material Adverse Effect other than as previously disclosed in writing to the
Administrative Agent, and that all representations and warranties of the
Borrower are true and correct in all material respects as of the initial
Borrowing Date provided that such certificate is in fact true and correct;

(h)              
The most recent financial statements of the Borrower;

(i)                
UCC financing statement, judgment, and tax lien searches with
respect to the Borrower from the state of its organization and the state in
which its principal place of business is located;

(j)                
Written money transfer instructions, addressed to the Administrative
Agent and signed by an Authorized Officer, together with such other related
money transfer authorizations as the Administrative Agent may have reasonably
requested;

(k)              
A pro forma Compliance Certificate in the form of Exhibit B,
utilizing the modified covenants established herein and executed by the Vice
President and General Counsel, the Borrower’s chief financial officer or chief
executive officer;

(l)                
Completion of Administrative Agent’s due diligence review of
Borrower and Administrative Agent’s determination that (i) no Event of Default
exists under the Original Agreement and (ii) no material adverse change in
Borrower’s financial condition has occurred;

(m)            
Evidence that all reasonable costs related to the initial
Advance, including reasonable legal fees, have been or will be paid and that
all upfront fees due to each of the Lenders under the terms of their respective
commitment letters have been paid or will be paid out of the proceeds of the
initial Advance hereunder; and

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(n)              
Completion of any other documentation the Administrative Agent or
its counsel may have reasonably requested, the form and substance of which
documents shall be reasonably acceptable to the parties and their respective
counsel.

5.2             
Each Advance.  

The Lenders shall not be required to make any Advance
unless on the applicable Borrowing Date:

(i)                
There exists no Event of Default or Potential Default;

(ii)              
The representations and warranties contained in Article VI
are true and correct in all material respects as of such Borrowing Date with
respect to the Loan Parties in existence on such Borrowing Date, except to the
extent any such representation or warranty is stated to relate solely to an
earlier date, in which case such representation or warranty shall be true and
correct in all material respects on and as of such earlier date; and

(iii)            
All legal matters incident to the making of such Advance shall be
satisfactory to the Lenders and their counsel.

Each Loan Request with respect
to each Advance shall constitute a representation and warranty by the Borrower
that the conditions contained in Sections 5.2(i) and (ii)
have been satisfied.  Any Lender may require a duly completed Compliance
Certificate in substantially the same form of the Certificate attached as Exhibit 
B.

ARTICLE
VI

REPRESENTATIONS
AND WARRANTIES

The
Borrower represents and warrants to the Lenders that:

6.1             
Existence

.  Borrower is a corporation duly organized and
validly existing under the laws of the State of Ohio, with its principal place
of business in Richmond Heights, Ohio and is duly qualified as a foreign
corporation, properly licensed (if required), in good standing and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except where the failure to be so qualified, licensed
and in good standing and to have the requisite authority would not have a
Material Adverse Effect.  Each of Borrower’s Subsidiaries is duly incorporated
or otherwise organized, validly existing and in good standing under the laws of
its jurisdiction of organization and has all requisite authority to conduct its
business in each jurisdiction in which its business is conducted, except where
the failure to be so qualified, licensed and in good standing and to have the
requisite authority would not have a Material Adverse Effect.

6.2             
Authorization and Validity

.  Each Loan Party has the corporate, limited
partnership, or limited liability company power and authority and legal right
to execute and deliver the Loan Documents and to perform its obligations
thereunder.  The execution and delivery by the Borrower of the Loan Documents
and the performance of its obligations thereunder have been duly authorized by
proper proceedings, and the Loan Documents constitute legal, valid and binding
obligations of each Loan Party enforceable against each Loan Party in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally.

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6.3             
No Conflict; Government Consent

.  Neither the execution and delivery by the Loan
Parties of the Loan Documents, nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof will violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
the Borrower, any of Borrower’s Subsidiaries, or either of their articles of
incorporation, operating agreements, partnership agreement, or by-laws, or the
provisions of any indenture, instrument or agreement to which the Borrower or
any of Borrower’s Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, except
where such violation, conflict or default would not have a Material Adverse
Effect, or result in the creation or imposition of any Lien in, of or on the
Property of the Borrower or a Subsidiary pursuant to the terms of any such
indenture, instrument or agreement.  No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, any of the Loan Documents other than the filing of
a copy of this Agreement.

6.4             
Financial Statements; Material Adverse Effect

.  All consolidated financial statements of the Loan
Parties heretofore or hereafter delivered to the Lenders were prepared in accordance
with GAAP in effect on the date of such statements and fairly present in all
material respects the consolidated financial condition and operations of the
Consolidated Group at such date and the consolidated results of their
operations for the period then ended, subject, in the case of interim financial
statements, to normal and customary year-end adjustments.  From the date of the
most recent financial statements delivered to the Lenders through the Agreement
Execution Date, there was no change in the business, properties, or condition
(financial or otherwise) of the Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.

6.5             
Taxes

.  The Loan Parties have filed all United States
federal tax returns and all other tax returns which are required to be filed
and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided, and except any non‐compliance which does not
have a Material Adverse Effect.  No tax liens have been filed with respect to
such taxes, except for ad valorem real estate tax contests in the ordinary
course of Borrower’s business not having a Material Adverse Effect.  The
charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of any taxes or other governmental charges are
adequate.

6.6             
Litigation and Guarantee Obligations

.  Except as set forth on Schedule 6.6 hereto
or as set forth in written notice to the Administrative Agent from time to
time, there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their executive officers,
threatened against or affecting the Loan Parties which could reasonably be
expected to have a Material Adverse Effect.  

6.7             
Subsidiaries

.  Schedule 6.7 hereto contains, an accurate
list of all Subsidiaries of the Borrower, setting forth their respective
jurisdictions of incorporation or formation and the percentage of their
respective capital stock or partnership or membership interest owned by the
Borrower or other Subsidiaries.  All of the issued and outstanding shares of
capital stock of such Subsidiaries that are corporations have been duly
authorized and issued and are fully paid and non-assessable.

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6.8             
ERISA

.  The Unfunded Liabilities of all Single Employer
Plans do not in the aggregate exceed $1,000,000.  Neither the Borrower nor any
other member of the ERISA Group has incurred, or is reasonably expected to
incur, any withdrawal liability to Multiemployer Plans in excess of $250,000 in
the aggregate.  Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither the Borrower nor any other members of the ERISA
Group has withdrawn from any Plan or initiated steps to do so, and no steps
have been taken to reorganize or terminate any Plan.

            None of the assets of the Borrower or any
Subsidiary constitute “plan assets” within the meaning of ERISA, the Code and
the respective regulations promulgated thereunder.  The execution, delivery and
performance of this Agreement and the other Loan Documents, and the borrowing
and repayment of amounts hereunder, do not and will not constitute “prohibited
transactions” under ERISA or the Code.

6.9             
Accuracy of Information

.  To the best of Borrower’s knowledge, no
information, exhibit or report furnished by the Loan Parties to the
Administrative Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents contained any material misstatement of fact
or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading.

6.10         
Regulation U

.  The Borrower has not used the proceeds of any
Advance to buy or carry any margin stock (as defined in Regulation U) in
violation of the terms of this Agreement.

6.11         
Material Agreements

.  Neither the Borrower nor any Subsidiary is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any agreement to which it
is a party, which default could have a Material Adverse Effect or (ii) any
agreement or instrument evidencing or governing Indebtedness, which default
would constitute an Event of Default hereunder.

6.12         
Compliance With Laws

.  Except as set forth in Schedule 6.6,
Borrower is in compliance in all material aspects with all applicable statutes,
rules, regulations, orders and restrictions of any domestic or foreign
government or any instrumentality or agency thereof, having jurisdiction over
the conduct of their respective businesses or the ownership of their respective
Property, except for any non-compliance which would not have a Material Adverse
Effect.  The Loan Parties have not received any uncured written notice to the
effect that its operations are not in material compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations or the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment,
which non-compliance or remedial action could have a Material Adverse Effect.

6.13         
Ownership of Projects

.  Except as set forth on Schedule 6.13
hereto, on the date of this Agreement, the Borrower or its Subsidiaries will,
respectively, have good and marketable title, free of all Liens other than
Permitted Liens, respectively, to all of the Projects reflected in the
financial statements as owned by it.

6.14         
Investment Company Act

.  Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.

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6.15         
Solvency

.

(a)               
Immediately after the Agreement Execution Date and immediately
following the making of each Loan and after giving effect to the application of
the proceeds of such Loans, (a) the fair value of the assets of the
Borrower and its Subsidiaries on a consolidated basis, at a fair valuation,
will exceed the debts and liabilities, subordinated, contingent or otherwise,
of the Borrower and its Subsidiaries on a consolidated basis; (b) the present
fair saleable value of the Property of the Borrower and its Subsidiaries on a
consolidated basis will be greater than the amount that will be required to pay
the probable liability of the Borrower and its Subsidiaries on a consolidated
basis on their debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured; (c)
the Borrower and its Subsidiaries on a consolidated basis will be able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.

(b)              
The Borrower does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries will,
incur debts beyond its ability to pay such debts as they mature, taking into
account the timing of and amounts of cash to be received by it or any such
Subsidiary and the timing of the amounts of cash to be payable on or in respect
of its Indebtedness or the Indebtedness of any such Subsidiary.

6.16         
Insurance

  The Loan Parties carry insurance on their Projects
with financially sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar Projects in
localities where the Borrower and its Subsidiaries operate. 

6.17         
REIT and Listing Status

.  Borrower is qualified as a real estate investment
trust under Section 856 of the Code and currently is in compliance in all
material respects with all provisions of the Code applicable to the
qualification of the Borrower as a real estate investment trust.
Borrower’s Capital Stock is and shall be at all times prior to the Facility
Termination Date listed on at least one of the New York Stock Exchange, NASDAQ
or the American Stock Exchange.

6.18         
Title to Property

.  The execution, delivery or performance of the Loan
Documents required to be delivered by the Borrower hereunder will not result in
the creation of any Lien on the Projects of the Consolidated Group.  No consent
to the transactions contemplated hereunder is required from any ground lessor
or mortgagee or beneficiary under a deed of trust or any other party except as
has been delivered to the Lenders.

6.19         
Environmental Matters

.  Each of the following representations and
warranties is true and correct on and as of the Agreement Execution Date except
as disclosed on Schedule 6.19 attached hereto and to the extent that the
facts and circumstances giving rise to any such failure to be so true and
correct, in the aggregate, would not reasonably be expected to have a Material
Adverse Effect:

(a)               
To the best knowledge of the Borrower, all Projects owned by the
Borrower and/or its Subsidiaries are in compliance in all material respects
with all applicable Environmental Laws.

- 50 -

 

 

 

 

 

(b)              
Neither the Borrower nor any of its Subsidiaries has received any
uncured, written notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws from any Governmental Authority with regard to any of
the Projects, nor does the Borrower have knowledge or reason to believe that
any such written notice is being threatened.

(c)               
To the best knowledge of the Borrower, Materials of Environmental
Concern are not transported or disposed of from the Projects of the Borrower
and its Subsidiaries in violation of, or in a manner or to a location which
could reasonably give rise to liability of the Borrower or any Subsidiary
under, Environmental Laws, nor are any Materials of Environmental Concern being
generated, treated, stored or disposed of at, on or under any of the Projects
of the Borrower and its Subsidiaries in violation of, or in a manner that could
give rise to liability of the Borrower or any Subsidiary under, any applicable
Environmental Laws.

(d)              
No judicial proceedings or governmental or administrative action
is pending, or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any of its Subsidiaries is or, to
the Borrower’s knowledge, will be named as a party with respect to the Projects
of the Borrower and its Subsidiaries, nor are there any consent decrees or
other decrees, consent orders, administrative order or other orders, or other
administrative of judicial requirements outstanding under any Environmental Law
with respect to the Projects of the Borrower and its Subsidiaries.

(e)               
To the best knowledge of the Borrower,
there has been no release or threat of release of Materials of Environmental
Concern at or from the Projects of the Borrower and its Subsidiaries, or
arising from or related to the operations of the Borrower and its Subsidiaries
in connection with the Projects in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws.

6.20         
Office
of Foreign Asset Control

.  Borrower and any Subsidiary Guarantor are not (and
will not be) a person with whom any Lender is restricted from doing business
under regulations of the Office of Foreign Asset Control (“OFAC”) of the
Department of the Treasury of the United States of America (including, those
Persons named on OFAC’s Specially Designated and Blocked Persons list) or under
any statute, executive order (including, the September 24, 2001 Executive Order
Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action and is
not and shall not knowingly engage in any dealings or transactions or otherwise
be associated with such persons.  In addition, Borrower hereby agrees to
provide to any Lender with any additional information that any Lender deems
necessary from time to time in order to ensure compliance with all applicable
Laws concerning money laundering and similar activities.

6.21         
Subsidiary Guaranty

- 51 -

 

 

 

 

 

.           Borrower shall cause each Subsidiary
Guarantor listed on Schedule 3.1, as amended from time to time, to
execute and deliver to the Administrative Agent the Subsidiary Guaranty. 
Borrower shall cause each Subsidiary which hereafter owns a Qualifying
Unencumbered Project to execute and deliver to the Administrative Agent a
joinder in the Subsidiary Guaranty in the form of Exhibit A attached to
the form of Subsidiary Guaranty.  Borrower covenants and agrees that each
Subsidiary which it shall cause to execute the Subsidiary Guaranty shall be
fully authorized to do so by its supporting organizational and authority
documents and shall be in good standing in its state of organization and shall
have obtained any necessary foreign qualifications required to conduct its
business.  

6.22         
Intellectual Property

.  To the best knowledge of Borrower, Borrower and
each Subsidiary of Borrower owns or has the right to use, under valid license
agreements or otherwise, all material patents, licenses, franchises,
trademarks, trademark rights, trade names, trade name rights, trade secrets and
copyrights (collectively, “Intellectual Property”) necessary to the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict as of the Agreement Date with any patent, license,
franchise, trademark, trade secret, trade name, copyright, or other proprietary
right of any other Person.  To the best knowledge of Borrower, Borrower and
each other Subsidiary have taken all such steps as they deem reasonably
necessary to protect their respective rights under and with respect to such
Intellectual Property.

ARTICLE
VII

COVENANTS

During
the term of this Agreement the following shall apply, unless the Required
Lenders shall otherwise consent in writing:

7.1             
Financial Reporting

.  Borrower will maintain a system of accounting
established and administered in accordance with GAAP, and will furnish to the
Administrative Agent and the Lenders:

(a)               
As soon as available, but in any event not later than 45 days
after the close of each fiscal quarter, other than the fourth quarter, an
unaudited consolidated balance sheet as of the close of each such fiscal
quarter and the related unaudited consolidated statements of income, retained earnings,
and cash flows for each such quarter and for such quarter and the preceding
quarters of the current fiscal year, on an aggregate basis, setting forth in
each case in comparative form the figures for the corresponding period during
the previous fiscal year, all certified by the Borrower’s chief financial
officer or chief accounting officer as being true and correct in all material
respects to such officer’s knowledge;

(b)              
As soon as available, but in any event not later than 90 days
after the close of each fiscal year, audited financial statements, including a
consolidated balance sheet as at the end of such year and the related
consolidated statements of income and retained earnings and of cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, without a “going concern” or like qualification or exception,
prepared by independent certified public accountants of nationally recognized
standing reasonably acceptable to the Administrative Agent and Lenders (PriceWaterhouse
Coopers and the other big four firms are pre-approved), plus annual cash flow
projections of the Borrower and annual budgets and forecasts for the
Consolidated Group;

(c)               
Together with the quarterly and annual financial statements
required hereunder, a compliance certificate, in substantially the form of Exhibit
B attached hereto (a “Compliance Certificate”) signed by the
Borrower’s chief financial officer or chief executive officer showing the
calculations and computations necessary to determine compliance with this
Agreement and stating that, to such officer’s knowledge, no Event of Default or
Potential Default exists, or if, to such officer’s knowledge, any Event of
Default or Potential Default exists, stating the nature and status thereof;

- 52 -

 

 

 

 

 

(d)              
As soon as available, but in any event not later than 30 days
after the close of each fiscal year, a schedule of all filings to be made by
the Borrower with the Securities and Exchange Commission for the upcoming
fiscal year, including without limitation all 10-Ks and 10-Qs;

(e)               
As soon as possible and in any event within 10 days after a
responsible officer of the Borrower knows that any Reportable Event has
occurred with respect to any Plan, a statement, signed by the chief financial
officer of the Borrower, describing said Reportable Event and the action which
the Borrower proposes to take with respect thereto;

(f)               
As soon as possible and in any event within 10 days after receipt
by an executive officer of the Borrower, a copy of (i) any notice or claim from
any Governmental Authority to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the release by
the Borrower, any of its Subsidiaries, or any other Person of any Material of
Environmental Concern into the environment, (ii) any notice of litigation or
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries, which
would have a Material Adverse Effect, (iii) any notice of any Lien on any
Qualifying Unencumbered Project (other than Permitted Liens) or any Lien on any
other Project (other than Permitted Liens) that would reasonably be expected to
have a Material Adverse Effect, (iv) any notice of default on Recourse
Indebtedness and or on any Non-Recourse Indebtedness that exceeds $25,000,000,
(v) any notice of default on interest rate hedge agreements, and (vi) any other
default under any obligations of any Loan Party would reasonably be expected to
have a Material Adverse Effect;

(g)              
Prior to the incurrence of any Defeasance Costs in connection
with the defeasance or prepayment of Indebtedness in excess of $5,000,000, a
written notice (to be delivered to the Administrative Agent only) identifying
such Indebtedness and the expected date of defeasance or prepayment and
containing an estimate of the types and amounts of Defeasance Costs reasonably
anticipated to be incurred in connection with such defeasance or prepayment;

(h)              
Promptly upon the furnishing thereof to the shareholders of the Borrower,
copies of all financial statements, reports and proxy statements so furnished;
and

(i)                
Except for non-public material information and information that
is privileged pursuant to the attorney-client and/or work product privileges,
such other information (including, without limitation, financial and
non-financial information and a listing of capital expenditures, a rent roll,
and such other information on any Project) as the Administrative Agent or any
Lender may from time to time reasonably request.

7.2             
Use of Proceeds

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.  The Borrower shall use the proceeds of the
Advances for its general corporate purposes, including but not limited to debt
financing and refinancing (including defeasance or prepayment of Indebtedness),
property acquisitions, new construction, renovations, expansions, tenant
improvement costs, working capital for Borrower and its Subsidiaries, stock
repurchases, dividend payments and equity investments primarily associated with
income-producing, institutional–grade multifamily properties. The Borrower will
not, nor will it permit any Subsidiary to, use any of the proceeds of the
Advances (i) to purchase or carry any “margin stock” (as defined in Regulation
U) if such usage could constitute a violation of Regulation U by any Lender,
(ii) to fund any purchase of, or offer for, a controlling portion of the
Capital Stock of any Person, unless the board of directors or other manager of
such Person has consented to such offer, or (iii) to make any Acquisition other
than a Permitted Acquisition.

7.3             
Notice of Default

.  The Borrower will give, and will cause each of its
Subsidiaries to give, prompt notice in writing to the Administrative Agent and
the Lenders of the occurrence of any Event of Default or Potential Default.

7.4             
Conduct of Business

.  The Borrower will do, and will cause each of its
Subsidiaries (other than those whose businesses have been discontinued) to do
all things necessary to remain duly incorporated or duly qualified, validly
existing and in good standing as a real estate investment trust, corporation,
limited liability company general partnership or limited partnership, as the
case may be, in its jurisdiction of incorporation/formation (except with
respect to permitted mergers and Permitted Acquisitions) and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted and to carry on and conduct their businesses in
substantially the same manner as they are presently conducted where the failure
to do so could reasonably be expected to have a Material Adverse Effect and,
specifically, Borrower shall carry on all of its business operations and
investments through the Borrower and its Wholly-Owned Subsidiaries, except as
provided in Section 7.15 and subject to the limitations set forth in Section
7.22(d). The activities of  the Borrower and its Subsidiaries shall be
limited primarily to (i) the acquisition, development, ownership, management,
operation and leasing of income-producing, institutional-grade, multifamily
residential properties, and (ii) construction, development and other related
activities conducted by Borrower’s Wholly-Owned Subsidiary, Merit Enterprises,
Inc.

7.5             
Taxes

.  The Borrower will pay, and will cause each of its
Subsidiaries to pay, when due all taxes, assessments and governmental charges
and levies upon them of their income, profits or Properties, except those which
are being contested in good faith by appropriate proceedings and with respect
to which adequate reserves have been set aside, if and to the extent deemed
reasonably necessary by Borrower.

7.6             
Insurance

.  The Borrower will, and will cause each of its
Subsidiaries to, maintain insurance which is consistent with the representation
contained in Section 6.16 on all their Properties and the Borrower
will furnish to any Lender upon reasonable request full information as to the
insurance carried.

7.7             
Compliance with Laws

.  The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which they may be subject, the
violation of which could reasonably be expected to have a Material Adverse
Effect, if and to the extent deemed reasonably necessary by Borrower.

7.8             
Maintenance of Properties and Equipment

.  The Borrower will, and will cause each of its
Subsidiaries to, do all things necessary to maintain, preserve, protect and
keep their respective Properties and equipment in good repair, working order
and condition, ordinary wear and tear excepted.

7.9             
Inspection

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.  The Borrower will, and will cause each of its
Subsidiaries to, permit the Lenders upon reasonable notice and during normal
business hours and subject to rights of tenants, by their respective
representatives and agents, to inspect any of the Projects, corporate books and
financial records of the Borrower and each of its Subsidiaries, to examine and
make copies of the books of accounts and other financial records of the
Borrower and each of its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and each of its Subsidiaries with executive officers
thereof, and to be advised as to the same by, except for non-public material
information and information that is privileged pursuant to the attorney-client
and/or work product privileges, their respective officers at such reasonable
times and intervals as the Lenders may designate.

7.10         
Maintenance of Status

.  The Borrower shall at all times  maintain its
status as a real estate investment trust in compliance with all applicable
provisions of the Code relating to such status.

7.11         
Dividends

.  The Borrower and its Subsidiaries shall be
permitted to declare and pay dividends on their Capital Stock from time to
time, provided, however, that in no event shall the Borrower
declare or pay dividends on its Capital Stock (other than Preferred Dividends)
or make distributions with respect thereto (other than Preferred Dividends), if
such dividends and distributions paid with respect to the most recent four (4)
consecutive full fiscal quarters for which financial results are available, in
the aggregate for such period, would exceed 95% of Adjusted Funds From
Operations of the Borrower for such period.  Notwithstanding the foregoing, the
Borrower shall be permitted at all times to distribute whatever amount of
dividends is necessary to maintain its tax status as a real estate investment
trust.

7.12         
No Change in Control

.  The Borrower will not consent to a Change in
Control.

7.13         
Non-Real Estate Investments

.  Borrower shall not make any acquisition of
non-real estate related assets or service companies without the Administrative
Agent’s approval.  Purchases of computers, automobiles, furniture, office
equipment and similar fixed assets used in the normal course of business are
permitted.

7.14         
Merger; Sale of Assets

.  The Borrower shall not, nor will it permit any of
its Subsidiaries to, without prior written approval of the Administrative Agent
and without providing a pro forma Compliance Certificate showing the effects of
such transaction, enter into any merger (other than mergers in which such entity
is the survivor and mergers of Subsidiaries as part of transactions that are
Permitted Acquisitions, provided that following such merger the target entity
becomes a Wholly-Owned Subsidiary of Borrower), consolidation, reorganization
or liquidation, except for such transactions that occur between Wholly-Owned
Subsidiaries. Neither Borrower nor any other member of the Consolidated Group,
without the prior written approval of the Administrative Agent, will either (i)
acquire in a single transaction real estate assets which have a value in excess
of 20% of the then-current Total Asset Value or (ii) dispose of in a single
transaction real estate assets which comprise 10% or more of the then-current
Total Asset Value.  

7.15         
Acquisitions and Investments

.  The Borrower will not, nor will it permit any
Subsidiary to, make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or become a partner in any partnership or joint venture,
or to make any Acquisition of any Person, except:

(a)               
Cash and Cash Equivalents;

(b)              
Investments in Projects, Real Property Under Development,
Undeveloped Land and First Mortgage Receivables, subject to the limits
established in Section 7.22;

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(c)               
Investments in existing Subsidiaries, Investments in Subsidiaries
formed for the purpose of developing or acquiring Projects, and Investments in
joint ventures and partnerships engaged solely in the business of purchasing,
developing, owning, operating, leasing and managing Projects;

(d)              
transactions permitted pursuant to Section 7.23; 

(e)               
Acquisitions of Persons whose primary operations consist of the
ownership, development, operation and management of multifamily residential
properties; and

(f)               
Interest Rate Hedges related to hedging interest rates with
respect to the Consolidated Outstanding Indebtedness or the Indebtedness of
Investment Affiliates.

provided that, after giving
effect to such Acquisitions and Investments, Borrower continues to comply with
all its covenants herein.  Acquisitions permitted pursuant to this Section
7.15 shall be deemed to be “Permitted Acquisitions”.

7.16         
Liens

.  The Borrower will not, nor will it permit any of
its Subsidiaries to, create, incur, or suffer to exist any Lien in, of or on
the Property of the Borrower or any of its Subsidiaries, except:

(a)               
Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by
appropriate proceedings and for which adequate reserves shall have been set
aside on its books, if and to the extent deemed reasonably necessary by
Borrower;

(b)              
Liens imposed by law, such as carriers’, warehousemen’s and
mechanics’ liens and other similar liens arising in the ordinary course of
business which secure payment of obligations which are being or will timely be
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books, if and to the extent deemed
reasonably necessary by Borrower;

(c)               
Liens arising out of pledges or deposits under workers’
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation;

(d)              
Easements, restrictions and such other encumbrances or charges
against real property as are of a nature generally existing with respect to
properties of a similar character and which do not materially and adversely
interfere with the use thereof in the business of the Borrower or its
Subsidiaries;

(e)               
Liens on Projects to secure any Indebtedness to the extent such
Liens will not result in an Event of Default in any of Borrower’s covenants
herein.

Liens permitted pursuant to
this Section 7.16 shall be deemed to be “Permitted Liens”.

7.17         
Affiliates

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.  The Borrower will not, nor will it permit any of
its Subsidiaries to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate which is not a member of the Consolidated Group
except in the ordinary course of business and pursuant to the reasonable
requirements of the Borrower’s or such Subsidiary’s business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arms-length
transaction.

7.18         
Recourse Secured Indebtedness

.  Borrower will not allow, or permit any member of
the Consolidated Group to allow, the aggregate outstanding principal amount of
Secured Indebtedness of the Consolidated Group which is also Recourse
Indebtedness to exceed ten percent (10%) of the then-current Total Asset Value
at any time.  The amount of the Consolidated Group’s Secured Indebtedness which
is Non-Recourse Indebtedness shall be limited only by Section 7.20(a)
and Section 7.20(b).

7.19         
Minimum Consolidated Tangible Net Worth

.  Borrower shall not permit Consolidated Tangible
Net Worth to be less than $500,000,000 plus eighty-five percent (85%) of
the Net Proceeds of any Equity Issuance received after the Agreement Execution
Date.

7.20         
Indebtedness and Cash Flow Covenants

.  The Borrower shall not permit:

(a)               
The ratio of Consolidated Outstanding Indebtedness to Total Asset
Value to be greater than 0.60:1 as of the end of any fiscal quarter;

(b)              
The ratio of Consolidated Adjusted EBITDA to Consolidated Fixed
Charges to be less than 1.50:1 as of the end of any fiscal quarter ending on
December 31, 2010 or at any time thereafter; 

(c)               
The ratio of Consolidated Unsecured Indebtedness to Unencumbered
Real Property Value to be greater than 0.60:1 as of the end of any fiscal
quarter; 

(d)              
The ratio of Unencumbered Real Property Adjusted NOI to
Consolidated Interest Expense on Consolidated Unsecured Indebtedness as of the
end of any fiscal quarter to be less than 2.00:1; and

(e)               
The percentage of the total residential units in the Qualifying
Unencumbered Projects that are physically occupied by tenants under third party
occupancy leases to be less than 85% as of any date, provided however that, if
and to the extent that the total percentage of residential units in the
Qualifying Unencumbered Projects that are physically occupied by tenants under
third party occupancy leases falls below the 85% threshold at any time,
Borrower shall, within thirty (30) days from such date, either (i) add an
Eligible Unencumbered Project (in accordance with Section 3.1 of the
Credit Agreement), (ii)  replace a Qualifying Unencumbered Project, or (iii)
remove a Qualifying Unencumbered Project (in accordance with Section 3.3
of the Credit Agreement) in order to comply with such 85% minimum threshold.

7.21         
Environmental Matters

.  Borrower and its Subsidiaries shall:

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(a)               
Comply with, and use all reasonable efforts to ensure compliance
by all tenants and subtenants, if any, with, all applicable Environmental Laws
and obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, except to the extent that failure to do so could not be reasonably expected
to have a Material Adverse Effect; provided that in no event shall the Borrower
or its Subsidiaries be required to modify the terms of leases, or renewals
thereof, with existing tenants (i) at Projects owned by the Borrower or its
Subsidiaries as of the date hereof, or (ii) at Projects hereafter acquired by
the Borrower or its Subsidiaries as of the date of such acquisition, to add
provisions to such effect.

7.22         
Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws, except to the extent that (i) the same are being contested in good faith
by appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect, or (ii) the
Borrower has determined in good faith that contesting the same is not in the
best interests of the Borrower and its Subsidiaries and the failure to contest
the same could not be reasonably expected to have a Material Adverse Effect.

(a)               
Defend, indemnify and hold harmless Administrative Agent and each
Lender, and their respective officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of, noncompliance with
or liability under any Environmental Laws applicable to the operations of the
Borrower, its Subsidiaries or the Projects, or any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, attorney’s and consultant’s fees, investigation and laboratory
fees, response costs, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor.  This indemnity shall
continue in full force and effect regardless of the termination of this
Agreement.  

(b)              
Defend each such indemnified party by
counsel selected by Borrower, subject to the reasonable approval of the
indemnified party, promptly after notice of any claims made against an
indemnified party hereunder.

7.23         
Permitted Investments

.

(a)               
The Borrower’s Investment in Real Property Under Development
(with each asset valued in accordance with GAAP at cost, as incurred through
the reporting date for construction in progress in the most recent quarter of
the Consolidated Group for which financial results have been reported) shall
not at any time exceed ten percent (10%) of Total Asset Value.

(b)              
The Borrower’s Investment in Undeveloped Land shall not at any
time exceed five percent (5%) of Total Asset Value.

(c)               
The Borrower’s Investment in First Mortgage Receivables (with
each asset valued at the lower of its acquisition cost and its fair market
value) shall not at any time exceed five percent (5%) of Total Asset Value.

(d)              
The Borrower’s aggregate investment shall not exceed $25,000,000,
in the aggregate, in other directly owned assets that are not either
income-producing, institutional-grade multifamily properties or one of the
Investments described in the above items (a)-(c).

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(e)               
The Borrower’s aggregate Investment in Investment Affiliates
(valued at the greater of the cash investment in that entity by the Borrower or
the portion of Total Asset Value attributable to such entity or its assets as
the case may be) shall not at any time exceed ten percent (10%) of Total
Asset Value.

(f)               
The aggregate Investment of the Borrower in the above items
(a)-(d), in the aggregate and after eliminating any duplication of Investments
included in more than one of such items, shall not at any time exceed twenty
percent (20%) of Total Asset Value.

7.24         
Additional Unsecured Indebtedness

.  Neither Borrower nor any other member of the
Consolidated Group shall incur any Indebtedness of a revolving nature other
than this Facility.  Neither Borrower nor any other member of the Consolidated
Group shall incur any other non-revolving unsecured Indebtedness other than
Indebtedness which does not cause any violation of the provisions of Section 7.20(c)
or Section 7.20(d).  Future trust preferred issuances will be permitted
only to the extent they are expressly subordinate to this Facility. 

7.25         
Limits on Ownership Encumbrances

. The Borrower will not allow, or permit any member
of the Consolidated Group to allow, its direct or indirect ownership interests
in any other member of the Consolidated Group or any Investment Affiliate to be
encumbered to secure any Indebtedness, other than “mezzanine” Indebtedness of a
member of the Consolidated Group provided that such “mezzanine” Indebtedness is
either (A) Non-Recourse Indebtedness incurred for the purpose of financing the
construction and development of  a new Project  not to exceed $10,000,000, when
aggregated with all other construction and development “mezzanine” Indebtedness
then outstanding or committed, so long as such Indebtedness is not
cross-collateralized or cross-defaulted with other Indebtedness of any member
of the Consolidated Group or (B) created in connection with Indebtedness of a
direct or indirect Wholly-Owned Subsidiary of such member secured by a mortgage
or deed of trust on such Wholly-Owned Subsidiary’s real Property and initially
held by the lender under such secured Indebtedness or an Affiliate thereof. 

ARTICLE VIII

events
of DEFAULT

 

The
occurrence of any one or more of the following events shall constitute an Event
of Default:

8.1       Nonpayment
of any principal payment due hereunder or under any Note when due.

8.2       Nonpayment of interest
upon any Note or of any fee or other payment Obligations under any of the Loan
Documents within five (5) Business Days after written notice from
Administrative Agent that the same has become due.

8.3       The breach of any of
the terms or provisions of Sections 7.2, 7.10, 7.11, 7.12,
7.18, 7.19, 7.20, 7.22, 7.23, and 7.24. 

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8.4       Any representation or warranty made or deemed
made by or on behalf of the Borrower or any of its Subsidiaries to the Lenders
or the Administrative Agent under or in connection with this Agreement, or any
material certificate or information delivered in connection with this Agreement
or any other Loan Document shall be materially false on the date as of which
made, unless such matter is corrected within thirty (30) days after written
notice of such material falsity.

8.5       The breach by the Borrower (other than a
breach which constitutes an Event of Default under Section 8.1, 8.2,
8.3 or 8.4) of any of the terms or provisions of this Agreement
which is not remedied within thirty (30) days after written notice to Borrower
from the Administrative Agent or any Lender.

8.6       The default by the Borrower or any other
member of the Consolidated Group or any Investment Affiliate in the payment of
any amount due under, or the performance of any term, provision or condition
contained in, any agreement with respect to (A) any Recourse Indebtedness of
the Borrower or any other member of the Consolidated Group, or (B) any
Non-Recourse Indebtedness of the Borrower or any other member of the
Consolidated Group or any Investment Affiliate having an outstanding principal
balance in excess of $25,000,000 in the aggregate (collectively, “Material
Indebtedness”) or any other event shall occur or condition exist, which causes
or permits any such Material Indebtedness to be due and payable or required to
be prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof. 

8.7       Borrower or any member of the Borrower shall
voluntarily (i) have an order for relief entered with respect to it under the
Federal bankruptcy laws as now or hereafter in effect, (ii) make an assignment
for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce
in, the appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any Substantial Portion of its Property, (iv)
institute any proceeding seeking an order for relief under the Federal bankruptcy
laws as now or hereafter in effect or seeking to adjudicate it as a bankrupt or
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors or
fail to file an answer or other pleading denying the material allegations of
any such proceeding filed against it, (v) take any corporate action to
authorize or effect any of the foregoing actions set forth in this Section
8.7, (vi) fail to contest in good faith any appointment or proceeding
described in Section 8.8 or (vii) admit in writing its
inability to pay its debts generally as they become due.

8.8       A receiver, trustee, examiner, liquidator or
similar official shall be appointed for any member of the Consolidated Group or
for any Substantial Portion of the Property of any member of the Consolidated
Group (other than a receiver in connection with the foreclosure of any Secured
Indebtedness having an outstanding principal balance of $25,000,000 or less) or
a proceeding described in Section 8.7(iv) shall be instituted against
any member of the Consolidated Group and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of ninety (90) consecutive days.

8.9       Any member of the Consolidated Group shall
fail within sixty (60) days to pay, bond or otherwise discharge any judgments
or orders for the payment of money in an amount which, when added to all other
judgments or orders outstanding against Borrower, would exceed $10,000,000 in
the aggregate in excess of any insurance proceeds available to pay such
judgments or orders, which have not been stayed on appeal or otherwise
appropriately contested in good faith.

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8.10     Failure to remediate within the time period
permitted by law or governmental order, after all administrative hearings and
appeals have been concluded (or within a reasonable time in light of the nature
of the problem if no specific time period is so established), material
environmental problems at Properties owned by the Borrower or any of its
Subsidiaries or Investment Affiliates if the reasonably estimated costs of
remediation are in excess of $10,000,000 in the aggregate.

8.11     The occurrence of any “Event of Default” as
defined in any Loan Document or the breach of any of the terms, covenants, or
provisions of any Loan Document, which default or breach continues beyond any
period of grace therein provided.

8.12     The
Borrower, without obtaining consent of the Required Lenders, shall enter into
any merger, consolidation, reorganization or liquidation or transfer or
otherwise dispose of all or substantially all of their Properties, unless (a)
in the case of a merger or consolidation the Borrower is the surviving entity
in such merger or consolidation and (b) after giving effect to the merger, the
Borrower remains in compliance with the terms of the Credit Agreement, provided
that any such action shall not constitute an Event of Default unless the Borrower
shall fail to reverse such action within sixty (60) days after written notice
from the Administrative Agent that such action constitutes an Event of Default
hereunder.

ARTICLE
IX

ACCELERATION,
WAIVERS, AMENDMENTS AND REMEDIES

9.1             
Acceleration

.  If any Event of Default described in Section
8.7 or 8.8 occurs with respect to the Borrower, the obligations of
the Lenders to make Loans and hereunder shall automatically terminate and the
Obligations shall immediately become due and payable without any election or
action on the part of the Administrative Agent or any Lender.  If any other
Event of Default occurs, so long as an Event of Default exists Lenders shall
have no obligation to make any Loans and the Required Lenders, at any time
prior to the date that such Event of Default has been fully cured, may
permanently terminate the obligations of the Lenders to make Loans hereunder
and declare the Obligations to be due and payable, or both, whereupon if the
Required Lenders elected to accelerate (i) the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives and (ii) if any
automatic or optional acceleration has occurred, the Administrative Agent, as
directed by the Required Lenders (or if no such direction is given within 30
days after a request for direction, as the Administrative Agent deems in the
best interests of the Lenders, in its sole discretion), shall use its good
faith efforts to collect, including without limitation, by filing and
diligently pursuing judicial action, all amounts owed by the Borrower and any
Subsidiary Guarantor under the Loan Documents.

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Upon the forty-fifth (45th) day prior to the
Facility Termination Date so long as any Facility Letter of Credit has not been
fully drawn and has not been cancelled or expired by its terms, the Borrower
shall deposit in the Letter of Credit Collateral Account cash in an amount
equal to the aggregate undrawn face amount of all outstanding Facility Letters of
Credit and all fees and other amounts due or which may become due with respect
thereto. In addition to the foregoing, following the occurrence of an Event of
Default and so long as any Facility Letter of Credit has not been fully drawn
and has not been cancelled or expired by its terms, upon demand by the
Administrative Agent the Borrower shall deposit in the Letter of Credit
Collateral Account cash in an amount equal to the aggregate undrawn face amount
of all outstanding Facility Letters of Credit and all fees and other amounts
due or which may become due with respect thereto.  The Borrower shall have no
control over funds in the Letter of Credit Collateral Account and shall not be
entitled to receive any interest thereon.  Such funds shall be promptly applied
by the Administrative Agent to reimburse the Issuing Lender for drafts drawn
from time to time under the Facility Letters of Credit and associated issuance
costs and fees.  Such funds, if any, remaining in the Letter of Credit
Collateral Account following the payment of all Obligations in full shall,
unless the Administrative Agent is otherwise directed by a court of competent
jurisdiction, be promptly paid over to the Borrower.

If, within 10 days after
acceleration of the maturity of the Obligations or termination of the
obligations of the Lenders to make Loans hereunder as a result of any Event of
Default (other than any Event of Default as described in Section 8.7 or 8.8
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, all of the Lenders
(in their sole discretion) shall so direct, the Administrative Agent shall, by
notice to the Borrower, rescind and annul such acceleration and/or termination.

9.2             
Amendments

.  Subject to the provisions of this Article IX
the Required Lenders (or the Administrative Agent with the consent in writing
of the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to
the Loan Documents or changing in any manner the rights of the Lenders or the
Borrower hereunder or waiving any Event of Default hereunder; provided,
however, that no such supplemental agreement or waiver shall, without the
consent of all Lenders:

(a)               
Extend the Facility Termination Date (except as provided in Section
2.22), or forgive all or any portion of the principal amount of any Loan or
accrued interest thereon or the Commitment Fee, reduce the Applicable Margins
(or modify any definition herein which would have the effect of reducing the
Applicable Margins) or the interest rate or underlying interest rate options or
extend the time of payment of any such principal, interest or facility fees.

(b)              
Modify Section 7.20(c) or Section 7.20(d) or
diminish any of the requirements for a Project to qualify as a Qualifying
Unencumbered Project (or modify any other definitions herein which would have
the effect of diminishing such requirements).

(c)               
Change the definition of Required Lenders.

(d)              
Increase the Aggregate Commitment, except as provided for in Section
2.18.

(e)               
Permit the Borrower to assign its rights under this Agreement.

(f)               
Amend Sections 9.1, 9.2, or 12.2.

(g)              
Waive a monetary Event of Default.

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No amendment of any
provision of this Agreement relating to the Administrative Agent shall be
effective without the written consent of the Administrative Agent.  If
in connection with any proposed waiver, amendment or modification referred to
in Sections 9.2(a) through 9.2(f) above, the consent of the
Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained (each a “Non-Consenting
Lender”), then the Borrower shall have the right to replace any such
Non-Consenting Lender with one or more replacement Lenders pursuant to Section
2.20. Notwithstanding anything to the contrary in this Section 9.2,
no such supplemental agreement or waiver shall modify Section 7.12 or
the definition of Change in Control or delete or modify the reference to Section
7.12 which is contained in Section 8.3 without the consent of
Lenders in the aggregate having at least 75% of the Aggregate Commitment, or if
the Aggregate Commitment has been terminated, Lenders in the aggregate holding
at least 75% of the aggregate unpaid principal amount of the outstanding
Advances.

9.3             
Preservation of Rights

.  No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Event of Default or an
acquiescence therein, and the making of a Loan notwithstanding the existence of
an Event of Default or the inability of the Borrower to satisfy the conditions
precedent to such Loan shall not constitute any waiver or acquiescence.  Any
single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 9.2, and then only to the extent in
such writing specifically set forth.  All remedies contained in the Loan
Documents or by law afforded shall be cumulative and all shall be available to
the Administrative Agent and the Lenders until the Obligations have been paid
in full.

9.4             
Insolvency of Borrower

.  In the event of the insolvency of the Borrower,
the Lenders shall have no obligation to make further disbursements of the
Facility, and the outstanding principal balance of the Facility, including
accrued and unpaid interest thereon, shall be immediately due and payable.

ARTICLE
X

GENERAL
PROVISIONS

10.1         
Survival of Representations

.  All representations and warranties of the Borrower
contained in this Agreement shall survive delivery of the Notes and the making
of the Loans herein contemplated.

10.2         
Governmental Regulation

.  Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

10.3         
No Plan Assets

.  None of the funds to be advanced by the Lenders
under this Agreement will constitute “plan assets” within the meaning of ERISA,
the Code and the respective regulations promulgated thereunder.  

 

10.4         
Headings

.  Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.

10.5         
Entire Agreement

.  The Loan Documents embody the entire agreement and
understanding among the Borrower, the Administrative Agent and the Lenders and
supersede all prior commitments, agreements and understandings among the
Borrower, the Administrative Agent and the Lenders relating to the subject
matter thereof.

10.6         
Several Obligations; Benefits of this Agreement

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.  The respective obligations of the Lenders
hereunder are several and not joint and no Lender shall be the partner or agent
of any other (except to the extent to which the Administrative Agent is authorized
to act as such).  The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder.  This Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns.

10.7         
Expenses; Indemnification

.  The Borrower shall reimburse the Administrative
Agent for any reasonable costs and actual documented (reasonable evidence shall
be provided for any expense over $500) out-of-pocket expenses (including,
without limitation, all reasonable fees for consultants and fees and reasonable
expenses for attorneys for the Administrative Agent, which attorneys may not be
employees of the Administrative Agent) paid or incurred by the Administrative
Agent in connection with the amendment, modification, and enforcement of the
Loan Documents.  The Borrower also agrees to reimburse the Administrative Agent
and the Lenders for any reasonable costs, external charges and out-of-pocket
expenses (including, without limitation, all fees and reasonable expenses for
attorneys for the Administrative Agent and the Lenders, which attorneys may not
be employees of the Administrative Agent or the Lenders) paid or incurred by
the Administrative Agent or any Lender in connection with the collection and
enforcement of the Loan Documents (including, without limitation, any
workout).  The Borrower further agrees to indemnify the Administrative Agent,
each Lender and their Affiliates, and their directors and officers against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all reasonable fees and reasonable expenses for
attorneys of the indemnified parties, all reasonable expenses of litigation or
preparation therefor whether or not the Administrative Agent, or any Lender is
a party thereto) which any of them may pay or incur arising out of or relating
to this Agreement, the other Loan Documents, the Projects, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Loan hereunder, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor.  The obligations of the Borrower
under this Section shall survive the termination of this Agreement.  Defense of any such indemnified party shall be provided by
counsel selected by Borrower, subject to the reasonable approval of the indemnified
party, promptly after notice to Borrower of the indemnified claims.

10.8         
Electronic Document Deliveries

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.  Documents required to be delivered pursuant to the
Loan Documents shall be delivered by electronic communication and delivery,
including, the Internet, e-mail or intranet websites  to which the
Administrative Agent and each Lender have access (including a commercial,
third-party website such as www.Edgar.com <http://www.Edgar.com> or a
website sponsored or hosted by the Administrative Agent or the Borrower)
provided that (A) the foregoing shall not apply to notices to any Lender (or
the Issuing Lender) pursuant to Article II and (B) the Lender has not
notified the Administrative Agent or Borrower that it cannot or does not want
to receive electronic communications.   The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic delivery pursuant to procedures
approved by it for all or particular notices or communications.  Documents or
notices delivered electronically shall be deemed to have been delivered
twenty-four (24) hours after the date and time on which the Administrative
Agent or Borrower posts such documents or the documents become available on a
commercial website and the Administrative Agent or Borrower notifies each
Lender of said posting and provides a link thereto provided if such notice or
other communication is not sent or posted during the normal business hours of
the recipient, said posting date and time shall be deemed to have commenced as
of  9:00 a.m. on the opening of business on the next business day for the
recipient.  Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificate to the Administrative Agent and shall deliver paper copies of any
documents to the Administrative Agent or to any Lender that requests such paper
copies until a written request to cease delivering paper copies is given by the
Administrative Agent or such Lender.  Except for the Compliance Certificate
Provision,  the Administrative Agent shall have no obligation to request the
delivery of or to maintain paper copies of the documents delivered
electronically, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery.  Each Lender
shall be solely responsible for requesting delivery to it of paper copies and
maintaining its paper or electronic documents. 

 

10.9         
Accounting

.  Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.

10.10     
Severability of Provisions

.  Any provision in any Loan Document that is held to
be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the
remaining provisions in that jurisdiction or the operation, enforceability, or
validity of that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.

10.11     
Nonliability of Lenders

.  The relationship between the Borrower, on the one
hand, and the Lenders and the Administrative Agent, on the other, shall be
solely that of borrower and lender.  Neither the Administrative Agent nor any
Lender shall have any fiduciary responsibilities to the Borrower.  Neither the
Administrative Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower’s business or operations.

10.12     
CHOICE OF LAW

.  THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF OHIO, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

10.13     
SUBMISSION TO JURISDICTION

.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR OHIO STATE COURT SITTING IN
CLEVELAND AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH OHIO STATE COURT OR,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE, AFTER EXPIRATION OF ANY APPEAL PERIODS
APPLICABLE THERETO, AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR
IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE
AGENT, ANY LENDER OR THE ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE
BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

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10.14      WAIVER
OF VENUE

.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN SECTION 10.13.  EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE.

10.15     
SERVICE OF PROCESS

.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE
OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 14.1.  NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

10.16        WAIVER
OF JURY TRIAL

.  THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

ARTICLE
XI

THE
ADMINISTRATIVE AGENT

11.1         
Appointment and Authority

.  Each of the Lenders and the Issuing Lender hereby
irrevocably appoints PNC to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto.  The
provisions of this Section 11 are solely for the benefit of the
Administrative Agent, the Lenders and the Issuing Lender, and neither the
Borrower nor any other Loan Party shall have rights as a third party
beneficiary of any of such provisions.

11.2         
Rights as a Lender

.  The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the
Person serving as the Administrative Agent hereunder in its individual
capacity.  Such Person and its Affiliates may accept deposits from, lend money
to, act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.

11.3         
Exculpatory Provisions

.  The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents.  Without limiting the generality of the foregoing, the
Administrative Agent:

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(a)               
shall not be subject to any fiduciary or other implied duties,
regardless of whether a Potential Default or Event of Default has occurred and
is continuing;

(b)              
shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents); provided that
the Administrative Agent shall not be required to take any action that, in its
opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable Law; and

(c)               
shall not, except as expressly set forth herein and in the other
Loan Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable
for any action taken or not taken by it (i) with the consent or at the
request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in
good faith shall be necessary, under the circumstances as provided in Sections
9.1 and 9.2) or (ii) in the absence of its own gross negligence or
willful misconduct.  The Administrative Agent shall be deemed not to have
knowledge of any Potential Default or Event of Default unless and until notice
describing such Potential Default or Event of Default is given to the
Administrative Agent by the Borrower, a Lender or the Issuing Lender.

The Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any Potential Default or Event of Default, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Section 5  or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

11.4         
Reliance by Administrative Agent

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.  The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  The Administrative Agent also
may rely upon any statement made to it orally or by telephone and believed by
it to have been made by the proper Person, and shall not incur any liability
for relying thereon.  In determining compliance with any condition hereunder to
the making of a Loan, or the issuance of a Facility Letter of Credit, that by
its terms must be fulfilled to the satisfaction of a Lender or the Issuing
Lender, the Administrative Agent may presume that such condition is satisfactory
to such Lender or the Issuing Lender unless the Administrative Agent shall have
received notice to the contrary from such Lender or the Issuing Lender prior to
the making of such Loan or the issuance of such Facility Letter of Credit.  The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

11.5         
Delegation of Duties

.  The Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties.  The exculpatory provisions of this Article
XI shall apply to any such sub agent and to the Related Parties of the
Administrative Agent and any such sub agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

11.6         
Resignation of Administrative Agent

.  The Administrative Agent may at any time give
notice of its resignation to the Lenders, the Issuing Lender and the Borrower. 
Upon receipt of any such notice of resignation, the Required Lenders shall have
the right, with approval from the Borrower (so long as no Event of Default has
occurred and is continuing), to appoint a successor, such approval not to be
unreasonably withheld or delayed.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Administrative Agent gives notice of
its resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the Issuing Lender, appoint a successor Administrative Agent;
provided that if the Administrative Agent shall notify the Borrower and the
Lenders that no qualifying Person has accepted such appointment, then such
resignation shall nonetheless become effective in accordance with such notice
and (i) the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder and under the other Loan Documents (except that in
the case of any collateral security held by the Administrative Agent on behalf
of the Lenders or the Issuing Lender under any of the Loan Documents, the
retiring Administrative Agent shall continue to hold such collateral security
until such time as a successor Administrative Agent is appointed) and (ii) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the Issuing Lender directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section 11.6. 
Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents (if not already discharged therefrom as provided above in this
Section).  The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the
provisions of this Article XI and Section 10.7 shall continue in
effect for the benefit of such retiring Administrative Agent, its sub agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while the retiring Administrative Agent was acting
as Administrative Agent.

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If PNC resigns as Administrative Agent under
this Section 11.6, PNC shall also resign as an Issuing Lender.  Upon the
appointment of a successor Administrative Agent hereunder, such successor shall
(i) succeed to all of the rights, powers, privileges and duties of PNC as the
retiring Issuing Lender and Administrative Agent and PNC shall be discharged
from all of its respective duties and obligations as Issuing Lender and
Administrative Agent under the Loan Documents, and (ii) issue letters of credit
in substitution for the Facility Letters of Credit issued by PNC, if any,
outstanding at the time of such succession or make other arrangement
satisfactory to PNC to effectively assume the obligations of PNC with respect to
such Facility Letters of Credit.

The Administrative Agent may be removed as
administrative agent by the Required Lenders upon 30 days' prior written notice
if the Administrative Agent (i) shall have committed gross negligence or
willful misconduct in the course of performing its duties hereunder or (ii) has
become or is insolvent or has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee or custodian appointed
for it, or has taken any action in furtherance
of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.

11.7         
Non-Reliance on Administrative Agent and Other Lenders

.  Each Lender and the Issuing Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Lender and the Issuing Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.

11.8         
No Other Duties, etc.

  Anything herein to the contrary notwithstanding,
neither the Syndication Agent nor the Documentation Agent listed on the cover
page hereof shall have any powers, duties or responsibilities under this
Agreement or any of the other Loan Documents, except in its capacity as a
Lender hereunder.

11.9         
No Reliance on Administrative Agent’s Customer Identification
Program

.  Each Lender acknowledges and agrees that neither such
Lender, nor any of its Affiliates, participants or assignees, may rely on the
Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the USA Patriot Act or the regulations thereunder,
including the regulations contained in 31 CFR 103.121 (as hereafter amended or
replaced, the “CIP Regulations”), or any other Anti-Terrorism Law,
including any programs involving any of the following items relating to or in
connection with any of the Loan Parties, their Affiliates or their agents, the
Loan Documents or the transactions hereunder or contemplated hereby: (i) any
identity verification procedures, (ii) any recordkeeping, (iii) comparisons
with government lists, (iv) customer notices or (v) other procedures required
under the CIP Regulations or such other Laws.

11.10     
Requests for Approval

.  If the Administrative Agent requests in writing
the consent or approval of a Lender, such Lender shall respond and either
approve or disapprove definitively in writing to the Administrative Agent
within ten (10) Business Days (or sooner if such notice specifies a shorter
period for responses based on Administrative Agent’s good faith determination
that circumstances exist warranting its request for an earlier response) after
such written request from the Administrative Agent.  If the Lender does not so
respond, that Lender shall be deemed to have approved the request.

11.11     
Defaulting Lenders

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.  At such time as a Lender becomes a Defaulting
Lender, such Defaulting Lender’s right to vote on matters which are subject to
the consent or approval of the Required Lenders, each affected Lender or all
Lenders shall be immediately suspended until such time as the Lender is no
longer a Defaulting Lender, except that the amount of the Commitment of the
Defaulting Lender may not be changed without its consent.  If a Defaulting
Lender has failed to fund its pro rata share of any Advance and until such time
as such Defaulting Lender subsequently funds its pro rata share of such
Advance, all Obligations owing to such Defaulting Lender hereunder shall be subordinated
in right of payment, as provided in the following sentence, to the prior
payment in full of all principal of, interest on and fees relating to the Loans
funded by the other Lenders in connection with any such Advance in which the
Defaulting Lender has not funded its pro rata share (such principal, interest
and fees being referred to as “Senior Loans” for the purposes of this
section).  All amounts paid by Borrower or the Subsidiary Guarantors and
otherwise due to be applied to the Obligations owing to such Defaulting Lender
pursuant to the terms hereof shall be distributed by the Administrative Agent
to the other Lenders in accordance with their respective pro rata shares
(recalculated for the purposes hereof to exclude the Defaulting Lender) until
all Senior Loans have been paid in full provided, however, in no event will any
such distribution to the other Lenders give rise to any liability of the
Borrower to the Defaulting Lender.  After the Senior Loans have been paid in
full equitable adjustments will be made in connection with future payments by
the Borrower to the extent a portion of the Senior Loans had been repaid with
amounts that otherwise would have been distributed to a Defaulting Lender but
for the operation of this Section 11.11.  This provision governs
only the relationship among the Administrative Agent, each Defaulting Lender
and the other Lenders; nothing hereunder shall limit the obligation of the
Borrower to repay all Loans in accordance with the terms of this Agreement. 
The provisions of this section shall apply and be effective regardless of
whether an Event of Default occurs and is continuing, and notwithstanding (i)
any other provision of this Agreement to the contrary, (ii) any instruction of
the Borrower as to its desired application of payments or (iii) the suspension
of such Defaulting Lender’s right to vote on matters which are subject to the
consent or approval of the Required Lenders or all Lenders.

ARTICLE
XII

SETOFF;
RATABLE PAYMENTS

12.1         
Setoff

.  In addition to, and without limitation of, any
rights of the Lenders under applicable law, if the Borrower becomes insolvent,
or any Event of Default occurs and is continuing, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by any Lender or any of its Affiliates to or for the credit or account of
the Borrower may be offset and applied toward the payment of the Obligations
owing to such Lender at any time prior to the date that such Event of Default
has been fully cured, whether or not the Obligations, or any part hereof, shall
then be due, provided that no Lender shall take such an offset if such action
could reasonably be deemed to constitute an election of remedies under this
Agreement that would in any way limit or impair any of the other rights and
remedies of the Administrative Agent and other Lenders hereunder with respect
to such Event of Default. Notwithstanding anything herein to the contrary, the
consent of the Required Lenders shall be required prior to the exercise of
setoff rights by any Lender.

12.2         
Ratable Payments

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.  If any Lender shall, by exercising any right of
setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by
realization upon security, or by any other non-pro rata source, obtain payment
in respect of any principal of or interest on any of its Loans or other
obligations hereunder resulting in such Lender’s receiving payment of a
proportion of the aggregate amount of its Loans and accrued interest thereon or
other such obligations greater than the pro-rata share of the amount such
Lender is entitled thereto, then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and such other obligations of
the other Lenders, or make such other adjustments as shall be equitable, so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and other amounts owing them, provided that:

(a)               
if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
together with interest or other amounts, if any, required by Law (including
court order) to be paid by the Lender or the holder making such purchase; and

(b)              
the provisions of this Section 12.2 shall not be construed
to apply to (x) any payment made by the Loan Parties pursuant to and in
accordance with the express terms of the Loan Documents or (y) any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in Advances to any assignee
or participant, other than to the Borrower or any Subsidiary thereof (as to
which the provisions of this Section 12.2 shall apply).

Each Loan Party consents to the foregoing and agrees,
to the extent it may effectively do so under applicable Law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against each Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of each Loan
Party in the amount of such participation.

Any Lender that fails at any time to comply with the
provisions of this Section 12.2 shall be deemed a Defaulting Lender
until such time as it performs its obligations hereunder and is not otherwise a
Defaulting Lender for any other reason.  A Defaulting Lender shall be deemed to
have assigned any and all payments due to it from the Borrower, whether on
account of or relating to outstanding Loans, Facility Letters of Credit,
interest, fees or otherwise, to the remaining non-defaulting Lenders for
application to, and reduction of, their respective Ratable Share of all
outstanding Loans and other unpaid Obligations of any of the Loan Parties.  The
Defaulting Lender hereby authorizes the Administrative Agent to distribute such
payments to the non-defaulting Lenders in proportion to their respective
Ratable Share of all outstanding Loans and other unpaid Obligations of any of
the Loan Parties to which such Lenders are entitled.  A Defaulting Lender shall
be deemed to have satisfied the provisions of this Section 12.2 when and
if, as a result of application of the assigned payments to all outstanding
Loans and other unpaid Obligations of any of the Loan Parties to the
non-defaulting Lenders, the Lenders’ respective Ratable Share of all
outstanding Loans and unpaid Obligations have returned to those in effect
immediately prior to such violation of this Section 12.2.

ARTICLE
XIII

BENEFIT
OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

13.1         
Successors and Assigns Generally

- 71 -

 

 

 

 

 

.  The provisions of this Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with
the provisions of Section 13.2, (ii) by way of participation in
accordance with the provisions of Section 13.4, or (iii) by way of
pledge or assignment of a security interest subject to the restrictions of Section
13.6 (and any other attempted assignment or transfer by any party hereto
shall be null and void).  Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in Section 13.4 and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.  

            PNC Bank, National Association, agrees to
hold no less than ten percent (10%) of the Aggregate Commitment for so long as
it shall serve as the Administrative Agent hereunder.  If an Event of Default
should occur pursuant to the terms of this Agreement, Administrative Agent
shall be allowed to transfer all of its rights and obligations hereunder.

13.2         
Assignments by Lenders

.  Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided that any such assignment shall be subject to the following
conditions:

(a)               
Minimum Amounts.

(i)                
in the case of an assignment of the entire remaining amount of
the assigning Lender’s Commitment and the Loans at the time owing to it or in
the case of an assignment to a Lender or an Affiliate of a Lender, no minimum
amount need be assigned; and

(ii)              
in any case not described in clause (a)(i) of this Section
13.2, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the applicable Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption Agreement with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption Agreement, as of the Trade Date) shall not be less
than $5,000,000, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed).

(b)              
Proportionate Amounts.  Each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Loan or the
Commitment assigned.

(c)               
Required Consents.  No consent shall be required for any
assignment except for the consent of the Administrative Agent (which shall not
be unreasonably withheld or delayed) and:

(i)                
the consent of the Borrower (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has
occurred and is continuing at the time of such assignment or (y) such
assignment is to a Lender, an Affiliate of a Lender; and

- 72 -

 

 

 

 

 

(ii)              
the consent of the Issuing Lender (such consent not to be
unreasonably withheld or delayed) shall be required for any assignment that
increases the obligation of the assignee to participate in exposure under one
or more Letters of Credit (whether or not then outstanding).

(d)              
Assignment and Assumption Agreement.  The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption Agreement, together with a processing and recordation fee of
$3,500, and the assignee, if it is not a Lender, shall deliver to the
Administrative Agent an administrative questionnaire provided by the
Administrative Agent.

(e)               
No Assignment to Borrower.  No such assignment shall be
made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

(f)               
No Assignment to Natural Persons.  No such assignment
shall be made to a natural person.

Subject to acceptance and recording thereof by the
Administrative Agent pursuant to Section 13.3, from and after the
effective date specified in each Assignment and Assumption Agreement, the
assignee thereunder shall be a party to this Agreement and, to the extent of
the interest assigned by such Assignment and Assumption Agreement, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption Agreement, be released from its obligations under
this Agreement (and, in the case of an Assignment and Assumption Agreement
covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto) but shall continue to
be entitled to the benefits of Sections 4.5, 4.1 and 10.7
with respect to facts and circumstances occurring prior to the effective date
of such assignment.  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 13.2
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 13.4.
PNC agrees that if, at any time that PNC shall have made an assignment or
assignments which result in PNC having no Commitment or outstanding Advances
hereunder, an Event of Default shall have occurred, PNC shall promptly resign
as Administrative Agent and a replacement Administrative Agent shall be selected
as provided in Section 11.6 above, 

13.3         
Register

.  The Administrative Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain a record of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the
Loans owing to, each Lender pursuant to the terms hereof from time to time. 
Such register shall be conclusive, and the Borrower, the Administrative Agent
and the Lenders may treat each Person whose name is in such register pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  Such register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

13.4         
Participations

- 73 -

 

 

 

 

 

.  Any Lender may at any time, without the consent
of, or notice to, the Borrower or the Administrative Agent, sell participations
to any Person (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or
a portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the Lenders, Issuing Lender shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement.

Any agreement or instrument pursuant to which a
Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver with
respect to Sections 9.2(a) or 9.2(d).   Subject to the other
provisions of this Article XIII, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 4.5 and 4.1
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 13.2, provided however that if such
Participant makes a claim under such Sections 4.5 or 4.1, such Participant
shall be subject to replacement at the direction of the Borrower under Section
2.20 as if such Participant were a Lender.  To the extent permitted by Law,
each Participant also shall be entitled to the benefits of Section 12.1
as though it were a Lender; provided such Participant agrees to be subject to Section
12.2 as though it were a Lender. 

13.5         
Limitations upon Participant Rights Successors and Assigns
Generally

.  A Participant shall not be entitled to receive any
greater payment under Sections 4.1, 4.2 or 10.7 than the
applicable Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent.  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 4.2 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 4.2 as though it were a
Lender.

13.6         
Certain Pledges; Successors and Assigns Generally

.  Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

13.7         
Confidentiality

.

(a)               
General

- 74 -

 

 

 

 

 

.  Each of the Administrative Agent, the Lenders and
the Issuing Lender agrees to maintain the confidentiality of the Information,
except that Information may be disclosed (i) to its Affiliates and to its and
its Affiliates’ respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (ii) to
the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (iii) to the extent required
by applicable Laws or regulations or by any subpoena or similar legal process,
(iv) to any other party hereto, (v) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this Section, to (A) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (B) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrower and its obligations, (vii) with the consent of the Borrower or
(viii) to the extent such Information (Y) becomes publicly available other than
as a result of a breach of this Section or (Z) becomes available to the
Administrative Agent, any Lender, the Issuing Lender or any of their respective
Affiliates on a nonconfidential basis from a source other than the Borrower or
the other Loan Parties.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

(b)              
Sharing Information With Affiliates of the Lenders

.  Each Loan Party acknowledges that from time to
time financial advisory, investment banking and other services may be offered
or provided to the Borrower or one or more of its Affiliates (in connection
with this Agreement or otherwise) by any Lender or by one or more Subsidiaries
or Affiliates of such Lender and each of the Loan Parties hereby authorizes
each Lender to share any information delivered to such Lender by such Loan
Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or
Affiliate subject to the provisions of this Section 13.7.

ARTICLE
XIV

NOTICES

14.1         
Giving Notice

.  All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below its signature hereto or at such other address (or
to counsel for such party) as may be designated by such party in a notice to
the other parties.  Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
telex or facsimile, shall be deemed given when transmitted (answerback
confirmed in the case of telexes).

14.2         
Change of Address

.  The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

ARTICLE
XV

PATRIOT
ACT

Each Lender that is subject to the USA Patriot Act and the
Administrative Agent (for itself and not on behalf of any Lender) hereby
notifies Loan Parties that pursuant to the requirements of the USA Patriot Act,
it is required to obtain, verify and record information that identifies the
Loan Parties, which information includes the name and address of Loan Parties
and other information that will allow such Lender or Administrative Agent, as
applicable, to identify the Loan Parties in accordance with the USA Patriot
Act.

- 75 -

 

 

 

 

 

ARTICLE
XVI

COUNTERPARTS

This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement and the
other Loan Documents, and any separate letter agreements with respect to fees
payable to the Administrative Agent, constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the
subject matter hereof including any prior confidentiality agreements and
commitments.  Except as provided in Article V, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof that,
when taken together, bear the signatures of each of the other parties hereto. 
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy or e-mail shall be effective as delivery of a manually executed
counterpart of this Agreement.

- 76 -

 

 

 

 

 

IN
WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent have
executed this Agreement as of the date first above written.

ASSOCIATED ESTATES REALTY CORPORATION, an
Ohio corporation

 

 

By:       /s/ Lou Fatica                                                   

Name:    Lou Fatica                                                      

Title:      VP
& CFO                                                     

 

1 AEC Parkway

Richmond Heights, OH  44143

Attention:  Chief Financial Officer &
Legal Department

Phone:  216-261-3902

Facsimile:  216-797-8779

 

With a copy to:

 

Greenberg Traurig, LLP

77 West Wacker Drive

Chicago, IL  60601

Attention:  Michael T. Fishman

Phone:  312- 476-5075

Fax:  312-456-8435

 

S-1

 

 

 

 

 

COMMITMENT:                                             PNC
BANK, NATIONAL ASSOCIATION, 

$50,000,000                                                    Individually
and as Administrative Agent

 

 

By:       /s/ John E. Wilgus, II                                        

Name:       John E. Wilgus, II                                       

Title:        
Senior Vice President                                  

 

PNC
Real Estate

1900
East Ninth Street - 22nd Floor

Mail
Stop:  B7-YB13-22-1

Cleveland,
OH  44114

Phone:  216-222-6032

Facsimile:  216-222-6070                    

Attention:   John
E. Wilgus, II

                  Senior
Vice President

                  Real
Estate Banking

                                    

S-2

 

 

 

 

 

COMMITMENT:                                             WELLS
FARGO BANK, N.A., individually and as

$50,000,000                                                    Syndication
Agent

 

 

By:       /s/ Antoinette G. Perry                                     

Name:       Antoinette G. Perry                                     

Title:        
Vice President                                             

                                    200 Public Square

                                    Suite 3200

                                    Cleveland, OH 
44114

                                    Attention:  Toni
G. Perry

                                    Phone: 
216-344-6946

                                    Facsimile: 
216-344-6971

S-3

 

 

 

 

 

COMMITMENT:                                             U.S.
BANK NATIONAL ASSOCIATION, 

$30,000,000                                                    individually
and as Documentation Agent

                                                                        

 

By:  /s/ Donald J. Pafford                                            

Name: Donald J. Pafford

Title:    Senior
Vice President

                                    U.S. Bank National
Association

                                    209 South LaSalle
Street, Suite 210

                                    Chicago, IL 60604

                                    Attention:  Curt
M. Steiner, Senior Vice President

                                    Phone:
(312)325-8756

                                    Facsimile:
(312)325-8853

S-4

 

 

 

 

 

COMMITMENT:                                             RAYMOND
JAMES BANK, FSB

$25,000,000

 

 

By:  /s/ James M. Armstrong                                        

Name: James Armstrong

Title:    Vice
President                                                  

                                    710 Carillon
Parkway

                                    St. Petersburg,
FL  33716

                                    Attention:  James
Armstrong

                                    Phone: 
727-567-7919

                                    Facsimile: 
866-205-1396

S-5

 

 

 

 

 

COMMITMENT:                                             THE
HUNTINGTON NATIONAL BANK

$25,000,000

 

 

By:       /s/ Michael Kauffman                                      

Name:    Michael Kauffman                                        

Title:      
Senior Vice President                                    

                                    

                                    917 Euclid Avenue,
CM17

                                    Cleveland, OH 
44115

                                    Attention: 
Jennifer Hearns

                                    Phone: 
216-515-6923

                                    Facsimile: 
216-515-0179

 

                                    with
notice to:

 

917
Euclid Avenue, CM17

                                    Cleveland, OH 
44115

                                    Attention: 
Timothy Smith

                                    Phone: 
216-515-0368

                                    Facsimile: 
216-515-0179

S-6

 

 

 

 

 

COMMITMENT:                                             CITIBANK,
N.A.

$25,000,000                                                    

 

By:       /s/ John C. Rowland                                         

Name:    John C. Rowland                                           

Title:     
Citibank, N.A.                                               

 

Citibank,
N.A.

388
Greenwich Street, 23rd Floor

New
York, NY  10013

Attention: 
John C. Rowland

Phone:  212-816-4947

Email:  john.c.rowland@citi.com 

 

 

S-7

 

 

 

 

 

COMMITMENT:                                             COMPASS
BANK, an Alabama banking corporation

$25,000,000                                                    

 

By:       /s/ S. Kent Gorman                                          

Name:  S. Kent Gorman

Title:  Senior
Vice President

BBVA Compass

15
South 20th Street, Suite 1504

Birmingham,
AL  35233

Attention: 
S. Kent Gorman

Phone:  205-297-3328

Facsimile:  205-297-3901

 

S-8

 

 

 

 

 

COMMITMENT:                                             RBS
CITIZENS BANK N.A. d/b/a CHARTER ONE

$20,000,000                                                    

 

By:  /s/ Michelle L. Lyles                                             

Name:  Michelle L. Lyles

Title:  Assistant
Vice President

RBS Citizens Bank N.A. d/b/a Charter One

1215
Superior Avenue, OH S675

Cleveland,
OH  44114

Attention:
 Samuel A. Bluso

Phone:  216-277-0388

Facsimile:  216-277-4600

 

 

 

S-9

 

 

 

 

 

EXHIBIT A

 

FORM OF NOTE

 

 

____________, 2010

 

 

Associated Estates Realty
Corporation, a corporation organized under the laws of the State of Ohio (the
“Borrower”), promises to pay to the order of _________________________ (the
“Lender”) the aggregate unpaid principal amount of all Loans made by the Lender
to the Borrower pursuant to Article II of the Credit Agreement (as the same may
be amended or modified, the “Agreement”) hereinafter referred to, in
immediately available funds at the main office of PNC Bank, National
Association in Cleveland, Ohio, as Administrative Agent, together with interest
on the unpaid principal amount hereof at the rates and on the dates set forth
in the Agreement.  The Borrower shall pay remaining unpaid principal of and
accrued and unpaid interest on the Loans in full on the Facility Termination
Date or such earlier date as may be required under the Agreement.

The Lender shall, and is hereby
authorized to, record on the schedule attached hereto, or to otherwise record
in accordance with its usual practice, the date and amount of each Loan and the
date and amount of each principal payment hereunder.

This Note is one of the Notes
issued pursuant to, and is entitled to the benefits of the Credit Agreement,
dated as of ____________, 2010 among the Borrower, PNC Bank, National
Association, individually and as Administrative Agent, and the other Lenders
named therein, to which Agreement, as it may be amended from time to time,
reference is hereby made for a statement of the terms and conditions governing
this Note, including the terms and conditions under which this Note may be
prepaid or its maturity date accelerated.  Capitalized terms used herein and
not otherwise defined herein are used with the meanings attributed to them in
the Agreement.

If there is an Event of Default
under the Agreement or any other Loan Document and Administrative Agent
exercises the remedies provided under the Agreement and/or any of the Loan
Documents for the Lenders, then in addition to all amounts recoverable by the
Administrative Agent and the Lenders under such documents, the Administrative
Agent and the Lenders shall be entitled to receive reasonable attorneys fees
and expenses incurred by the Administrative Agent and the Lenders in connection
with the exercise of such remedies.

Borrower and all endorsers
severally waive presentment, protest and demand, notice of protest, demand and
of dishonor and nonpayment of this Note, and any and all lack of diligence or
delays in collection or enforcement of this Note, and expressly agree that this
Note, or any payment hereunder, may be extended from time to time, and
expressly consent to the release of any party liable for the obligation secured
by this Note, the release of any of the security for this Note, the acceptance
of any other security therefor, or any other indulgence or forbearance
whatsoever, all without notice to any party and without affecting the liability
of the Borrower and any endorsers hereof.

This Note shall be governed and
construed under the internal laws of the State of Ohio.

A-1

 

 

 

 

 

BORROWER AND LENDER, BY ITS
ACCEPTANCE HEREOF, EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT UNDER THIS NOTE OR ANY OTHER LOAN
DOCUMENT OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS
THE SUBJECT OF THIS NOTE AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

 

ASSOCIATED ESTATES
REALTY CORPORATION,

a n Ohio corporation

 

 

By:                                                                               

Name:                                                                          

Title:                                                                                                                                                                                                                                                                                                                      A-2

 

 

 

 

 

 

SCHEDULE OF LOANS AND PAYMENTS OF
PRINCIPAL

TO

NOTE OF ASSOCIATED ESTATES REALTY
CORPORATION

DATED ___________, 2010

 

 

                                                                                               Maturity

                           Principal                   Maturity                     Principal

                           Amount
of                of Interest                   Amount                       Unpaid

Date                    Loan                         Period                         Paid                             Balance

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

 

______________________________________________________________________________ 

A-3

 

 

 

 

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

 

PNC
Bank, National Association, as Administrative Agent

Investment
Real Estate

1900
East Ninth Street - 22nd Floor

Mail
Stop:  B7-YB13-22-1

Cleveland,
OH  44114

 

 

	
  Re:

  	
  Amended and Restated Credit
  Agreement dated as of October __, 2010 (as amended, modified, supplemented,
  restated, or renewed, from time to time, the “Agreement”) between ASSOCIATED ESTATES REALTY
  CORPORATION (the “Borrower”), and PNC BANK, NATIONAL ASSOCIATION, as
  Administrative Agent for itself and the other lenders parties thereto from
  time to time (“Lenders”).

  

 

Reference is made to the Agreement.  Capitalized terms
used in this Certificate (including schedules and other attachments hereto,
this “Certificate”) without definition have the meanings specified in the
Agreement.

Pursuant to applicable provisions of the Agreement, Borrower
hereby certifies to the Lenders that the information furnished in the attached
schedules, including, without limitation, each of the calculations listed below
are true, correct and complete in all material respects as of the last day of
the fiscal periods subject to the financial statements and associated covenants
being delivered to the Lenders pursuant to the Agreement together with this
Certificate (such statements the “Financial Statements” and the periods covered
thereby the “reporting period”) and for such reporting periods.

The Borrower hereby further certifies to the Lenders that:

1.         Compliance with Financial Covenants. 
Schedule A attached hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.  

2.         Review of Condition.  The Borrower has
reviewed the terms of the Agreement, including, but not limited to, the
representations and warranties of the Borrower set forth in the Agreement and
the covenants of the Borrower set forth in the Agreement, and has made, or
caused to be made under his or her supervision, a review in reasonable detail
of the transactions and condition of the Borrower through the reporting periods.

3.         Representations and Warranties.  To the
Borrower’s actual knowledge, the representations and warranties of the Borrower
contained in the Loan Documents, including those contained in the Agreement,
are true and accurate in all material respects as of the date hereof and were
true and accurate in all material respects at all times during the reporting
period except as expressly noted on Schedule B hereto.

B-1

 

 

 

 

 

4.         Covenants.  To the Borrower’s actual
knowledge, during the reporting period, the Borrower observed and performed all
of the respective covenants and other agreements under the Agreement and the
Loan Documents, and satisfied each of the conditions contained therein to be
observed, performed or satisfied by the Borrower, except as expressly noted on
Schedule B hereto.

5.         No Default.  To the Borrower’s actual
knowledge, no Event of Default exists as of the date hereof or existed at any
time during the reporting period, except as expressly noted on Schedule B
hereto.

IN WITNESS WHEREOF, this Certificate is executed by the
undersigned this ___ day of October, 2010.

ASSOCIATED
ESTATES REALTY CORPORATION,

an Ohio
corporation

 

 

By:                                                                                     

Name:                                                                                

Title:                                                                                  

B-2

 

 

 

 

 

SCHEDULE A

 

FINANCIAL DATA AND COMPUTATIONS

 

B-3

 

 

 

 

 

EXHIBIT C

 

FORM OF

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (the “Assignment and
Assumption”) is dated as of the Effective Date set forth below and is
entered into by and between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee] (the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below  (as amended, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee.  The
Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby
irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by the Administrative Agent as contemplated
below (i) all of the Assignor’s rights and obligations in its capacity as a
Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the respective facilities identified below (including
without limitation any letters of credit, guarantees, and swing loans included
in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as, the “Assigned Interest”). 
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.

1.         Assignor:                     ______________________________

 

2.         Assignee:                     ______________________________

                                                [and
is an Affiliate of [identify Lender][1]]

 

3.         Borrower(s):                ______________________________

 

4.         Administrative Agent:  ______________________,
as the administrative agent under the Credit Agreement

 

                                                                           C-1

 

 

 

 

 

5.         Credit Agreement:        The
Amended and Restated Credit Agreement dated as of October _, 2010 among
Associated Estates Realty Corporation, the Lenders parties thereto, PNC Bank,
National Association, as Administrative Agent, and the other agents parties
thereto

 

6.          Assigned Interest:       ______________________

 

	
  Facility Assigned[2]

  	
  Aggregate Amount of Commitment/Loans
  for all Lenders*

  	
  Amount of Commitment/Loans Assigned*

  	
  Percentage Assigned of Commitment/Loans[3]

  
	
   

  	
  $

  	
  $

  	
              %

  
	
   

  	
  $

  	
  $

  	
              %

  
	
   

  	
  $

  	
  $

  	
              %

  

 

[7.        Trade
Date:                  ______________][4]

 

                                                                                                    C-2

 

 

 

 

 

Effective Date:   _____________ ___, 20___ [TO BE
INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF
RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption
are hereby agreed to:

                                                                        ASSIGNOR

                                                                        [NAME
OF ASSIGNOR]

 

                                                                        By:______________________________

                                                                          
Title:

 

                                                                        ASSIGNEE

                                                                        [NAME
OF ASSIGNEE]

 

                                                                        By:______________________________

                                                                          
Title:

[Consented to and][5]
Accepted:

 

PNC Bank, National
Association, 

as Administrative Agent

 

By_________________________________

  Title:

 

[Consented to:][6]

 

Associated Estates Realty
Corporation

 

By________________________________

 
Title:                                                                                       C-2

 

 

 

 

 

ANNEX 1

 

[__________________][7]

 

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

 

                        1.  Representations
and Warranties.  

 

                        1.1  
Assignor.  The Assignor (a) represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Credit Document[8],
(ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Documents or any collateral thereunder,
(iii) the financial condition of the Borrower, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of any Credit Document or
(iv) the performance or observance by the Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Credit Document.

 

                        1.2. 
Assignee.  The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement), (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section ___ thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender[9],
attached to the Assignment and Assumption is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently
and without reliance on the Administrative Agent, the Assignor or any other
Lender, 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 the Credit Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender.

 

                                                                            C-3

 

 

 

 

 

                        2.   Payments.   
From and after the Effective Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have
accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.[10]

 

                        3.  General
Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns.  This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of
this Assignment and Assumption by telecopy
shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption.  This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of New York.

 

                                                                            C-4

 

 

 

 

 

EXHIBIT D

 

SUBSIDIARY GUARANTY

This Guaranty is made as of
October __, 2010 by the parties identified in the signature pages thereto, and
any joinder to this Guaranty hereafter delivered (collectively, the “Subsidiary
Guarantors”), to and for the benefit of PNC Bank, National Association,
individually (“National City”) and as administrative agent (“Administrative
Agent”) for itself and the lenders under the Credit Agreement (as defined
below) and their respective successors and assigns (collectively, the “Lenders”).

RECITALS

A.        Associated Estates
Realty Corporation, a corporation organized under the laws of the State of Ohio
(“Borrower”), and Subsidiary Guarantors have requested that the Lenders
make a revolving credit facility available to Borrower in an aggregate
principal amount of $250,000,000, subject to increase up to $300,000,000 (the “Facility”).

B.         The Lenders have
agreed to make available the Facility to Borrower pursuant to the terms and
conditions set forth in an Amended and Restated Credit Agreement of even date
herewith among Borrower, National City, individually, and as Administrative
Agent, and the Lenders named therein (as amended, modified or restated from
time to time, the “Credit Agreement”).  All capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Credit Agreement.

C.         Borrower has executed
and delivered or will execute and deliver to the Lenders promissory notes in
the principal amount of each Lender’s Commitment and promissory notes in the
principal amount, if any, of each Lender’s Loan as evidence of Borrower’s
indebtedness to each such Lender with respect to the Facility (the promissory
notes described above, together with any amendments or allonges thereto, or
restatements, replacements or renewals thereof, and/or new promissory notes to
new Lenders under the Credit Agreement, are collectively referred to herein as
the “Notes”).

D.        Subsidiary Guarantors
are subsidiaries of Borrower.  Subsidiary Guarantors acknowledge that the
extension of credit by the Administrative Agent and the Lenders to Borrower
pursuant to the Credit Agreement will benefit Subsidiary Guarantors by making
funds available to Subsidiary Guarantors through Borrower and by enhancing the
financial strength of the consolidated group of which Subsidiary Guarantors and
Borrower are members.  The execution and delivery of this Guaranty by
Subsidiary Guarantors are conditions precedent to the performance by the
Lenders of their obligations under the Credit Agreement.

AGREEMENTS

NOW, THEREFORE, Subsidiary
Guarantors, in consideration of the matters described in the foregoing
Recitals, which Recitals are incorporated herein and made a part hereof, and
for other good and valuable consideration, hereby agree as follows:

1.         Subsidiary Guarantors absolutely,
unconditionally, and irrevocably guaranty to each of the Lenders:

                                                                           2D-1

 

 

 

 

 

(a)        the full and prompt payment of the principal of and interest on
the Notes when due, whether at stated maturity, upon acceleration or otherwise,
and at all times thereafter, and the prompt payment of all sums which may now
be or may hereafter become due and owing under the Notes, the Credit Agreement,
and the other Loan Documents;

(b)        the payment of all Enforcement Costs (as hereinafter defined in Paragraph 7
hereof); and

(c)        the full, complete, and punctual observance, performance, and
satisfaction of all of the obligations, duties, covenants, and agreements of
Borrower under the Credit Agreement and the Loan Documents.

All amounts due, debts,
liabilities, and payment obligations described in subparagraphs (a) and (b) of
this Paragraph 1 are referred to herein as the “Facility
Indebtedness.”  All obligations described in subparagraph (c) of this Paragraph 1
are referred to herein as the “Obligations.”  Subsidiary Guarantors and
Lenders agree that Subsidiary Guarantors’ obligations hereunder shall not
exceed the greater of:  (i) the aggregate amount of all monies received,
directly or indirectly, by Subsidiary Guarantors from Borrower after the date
hereof (whether by loan, capital infusion or other means), or (ii) the
maximum amount of the Facility Indebtedness not subject to avoidance under
Title 11 of the United States Code, as same may be amended from time to time,
or any applicable state law (the “Bankruptcy Code”).  To that end, to
the extent such obligations would otherwise be subject to avoidance under the
Bankruptcy Code if Subsidiary Guarantors are not deemed to have received
valuable consideration, fair value or reasonably equivalent value for its
obligations hereunder, each Subsidiary Guarantor’s obligations hereunder shall
be reduced to that amount which, after giving effect thereto, would not render
such Subsidiary Guarantor insolvent, or leave such Subsidiary Guarantor with an
unreasonably small capital to conduct its business, or cause such Subsidiary Guarantor
to have incurred debts (or intended to have incurred debts) beyond its ability
to pay such debts as they mature, as such terms are determined, and at the time
such obligations are deemed to have been incurred, under the Bankruptcy Code. 
In the event a Subsidiary Guarantor shall make any payment or payments under
this Guaranty each other Subsidiary Guarantor of the Facility Indebtedness
shall contribute to such Subsidiary Guarantor an amount equal to such
non-paying Subsidiary Guarantor’s pro rata share (based on their respective
maximum liabilities hereunder) of such payment or payments made by such
Subsidiary Guarantor, provided that such contribution right shall be
subordinate and junior in right of payment in full of all the Facility
Indebtedness to Lenders.

2.         In the event of any default by Borrower in
making payment of the Facility Indebtedness, or in performance of the
Obligations, as aforesaid, in each case beyond the expiration of any applicable
grace period, Subsidiary Guarantors agree, on demand by the Administrative
Agent or the holder of a Note, to pay all the Facility Indebtedness and to
perform all the Obligations as are then or thereafter become due and owing or
are to be performed under the terms of the Notes, the Credit Agreement, and the
other Loan Documents.

                                                                           2D-2

 

 

 

 

 

3.         Subsidiary Guarantors do hereby waive
(i) notice of acceptance of this Guaranty by the Administrative Agent and
the Lenders and any and all notices and demands of every kind which may be
required to be given by any statute, rule or law, (ii) any defense, right
of set-off or other claim which Subsidiary Guarantors may have against Borrower
or which Subsidiary Guarantors or Borrower may have against the Administrative
Agent or the Lenders or the holder of a Note, (iii) presentment for
payment, demand for payment (other than as provided for in Paragraph 2
above), notice of nonpayment (other than as provided for in Paragraph 2
above) or dishonor, protest and notice of protest, diligence in collection and
any and all formalities which otherwise might be legally required to charge
Subsidiary Guarantors with liability, (iv) any failure by the
Administrative Agent and the Lenders to inform Subsidiary Guarantors of any
facts the Administrative Agent and the Lenders may now or hereafter know about
Borrower, the Facility, or the transactions contemplated by the Credit
Agreement, it being understood and agreed that the Administrative Agent and the
Lenders have no duty so to inform and that Subsidiary Guarantors are fully
responsible for being and remaining informed by Borrower of all circumstances
bearing on the existence or creation, or the risk of nonpayment of the Facility
Indebtedness or the risk of nonperformance of the Obligations, and (v) any
and all right to cause a marshalling of assets of Borrower or any other action
by any court or governmental body with respect thereto, or to cause the
Administrative Agent and the Lenders to proceed against any other security
given to a Lender in connection with the Facility Indebtedness or the Obligations. 
Credit may be granted or continued from time to time by the Lenders to Borrower
without notice to or authorization from Subsidiary Guarantors, regardless of
the financial or other condition of Borrower at the time of any such grant or
continuation.  The Administrative Agent and the Lenders shall have no
obligation to disclose or discuss with Subsidiary Guarantors the Lenders’
assessment of the financial condition of Borrower.  Subsidiary Guarantors
acknowledge that no representations of any kind whatsoever have been made by
the Administrative Agent and the Lenders to Subsidiary Guarantors.  No
modification or waiver of any of the provisions of this Guaranty shall be
binding upon the Administrative Agent and the Lenders except as expressly set
forth in a writing duly signed and delivered on behalf of the Administrative
Agent and the Lenders.  Subsidiary Guarantors further agree that any
exculpatory language contained in the Credit Agreement, the Notes, and the
other Loan Documents shall in no event apply to this Guaranty, and will not
prevent the Administrative Agent and the Lenders from proceeding against
Subsidiary Guarantors to enforce this Guaranty.

                                                                           2D-3

 

 

 

 

 

4.         Subsidiary Guarantors further agree that
Subsidiary Guarantors’ liability as guarantor shall in no way be impaired by
any renewals or extensions which may be made from time to time, with or without
the knowledge or consent of Subsidiary Guarantors of the time for payment of
interest or principal under a Note or by any forbearance or delay in collecting
interest or principal under a Note, or by any waiver by the Administrative
Agent and the Lenders under the Credit Agreement, or any other Loan Documents,
or by the Administrative Agent or the Lenders’ failure or election not to
pursue any other remedies they may have against Borrower, or by any change or
modification in a Note, the Credit Agreement, or any other Loan Documents, or
by the acceptance by the Administrative Agent or the Lenders of any security or
any increase, substitution or change therein, or by the release by the
Administrative Agent and the Lenders of any security or any withdrawal thereof
or decrease therein, or by the application of payments received from any source
to the payment of any obligation other than the Facility Indebtedness, even
though a Lender might lawfully have elected to apply such payments to any part
or all of the Facility Indebtedness, it being the intent hereof that Subsidiary
Guarantors shall remain liable as principal for payment of the Facility
Indebtedness and performance of the Obligations until all indebtedness has been
paid in full and the other terms, covenants and conditions of the Credit
Agreement, and other Loan Documents and this Guaranty have been performed,
notwithstanding any act or thing which might otherwise operate as a legal or
equitable discharge of a surety.  Subsidiary Guarantors further understand and
agree that the Administrative Agent and the Lenders may at any time enter into
agreements with Borrower to amend and modify a Note, the Credit Agreement or
any of the other Loan Documents, or any other documents related thereto, and
may waive or release any provision or provisions of a Note, the Credit
Agreement, or any other Loan Document and, with reference to such instruments,
may make and enter into any such agreement or agreements as the Administrative
Agent, the Lenders and Borrower may deem proper and desirable, without in any
manner impairing this Guaranty or any of the Administrative Agent and the
Lenders’ rights hereunder or any of Subsidiary Guarantors’ obligations
hereunder.

5.         This is an absolute, unconditional, complete,
present and continuing guaranty of payment and performance and not of
collection.  Subsidiary Guarantors agree that its obligations hereunder shall
be joint and several with any and all other guarantees given in connection with
the Facility from time to time.  Subsidiary Guarantors agree that this Guaranty
may be enforced by the Administrative Agent and the Lenders without the
necessity at any time of resorting to or exhausting any security or collateral,
if any, given in connection herewith or with a Note, the Credit Agreement, or
any of the other Loan Documents or by or resorting to any other guaranties, and
Subsidiary Guarantors hereby waive the right to require the Administrative
Agent and the Lenders to join Borrower in any action brought hereunder or to
commence any action against or obtain any judgment against Borrower or to
pursue any other remedy or enforce any other right.  Subsidiary Guarantors
further agree that nothing contained herein or otherwise shall prevent the
Administrative Agent and the Lenders from pursuing concurrently or successively
all rights and remedies available to them at law and/or in equity or under a
Note, the Credit Agreement or any other Loan Documents, and the exercise of any
of their rights or the completion of any of their remedies shall not constitute
a discharge of any of Subsidiary Guarantors’ obligations hereunder, it being
the purpose and intent of Subsidiary Guarantors that the obligations of such
Subsidiary Guarantors hereunder shall be primary, absolute, independent and
unconditional under any and all circumstances whatsoever.  Neither Subsidiary
Guarantors’ obligations under this Guaranty nor any remedy for the enforcement
thereof shall be impaired, modified, changed or released in any manner
whatsoever by any impairment, modification, change, release or limitation of
the liability of Borrower under a Note, the Credit Agreement or any other Loan
Document or by reason of Borrower’s bankruptcy or by reason of any creditor or
bankruptcy proceeding instituted by or against Borrower.  This Guaranty shall
continue to be effective and be deemed to have continued in existence or be
reinstated (as the case may be) if at any time payment of all or any part of
any sum payable pursuant to a Note, the Credit Agreement or any other Loan
Document is rescinded or otherwise required to be returned by the payee upon
the insolvency, bankruptcy, or reorganization of the payor, all as though
such payment to such Lender had not been made, regardless of whether such
Lender contested the order requiring the return of such payment.  The
obligations of Subsidiary Guarantors pursuant to the preceding sentence shall
survive any termination, cancellation, or release of this Guaranty.

6.         This Guaranty shall be assignable by a Lender
to any assignee of all or a portion of such Lender’s rights under the Loan
Documents.

                                                                           2D-4

 

 

 

 

 

7.         If:  (i) this Guaranty, a Note, or any of
the Loan Documents are placed in the hands of an attorney for collection or is
collected through any legal proceeding; (ii) an attorney is retained to
represent the Administrative Agent or any Lender in any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors’ rights
and involving a claim under this Guaranty, a Note, the Credit Agreement, or any
Loan Document; (iii) an attorney is retained to enforce any of the other
Loan Documents or to provide advice or other representation with respect to the
Loan Documents in connection with an enforcement action or potential
enforcement action; or (iv) an attorney is retained to represent the
Administrative Agent or any Lender in any other legal proceedings whatsoever in
connection with this Guaranty, a Note, the Credit Agreement, any of the Loan
Documents, or any property subject thereto (other than any action or proceeding
brought by any Lender or participant against the Administrative Agent alleging
a breach by the Administrative Agent of its duties under the Loan Documents),
then Subsidiary Guarantors shall pay to the Administrative Agent or such Lender
upon demand all reasonable attorney’s fees, costs and expenses, including,
without limitation, court costs, filing fees and all other costs and expenses
incurred in connection therewith (all of which are referred to herein as
“Enforcement Costs”), in addition to all other amounts due hereunder.

8.         The parties hereto intend that each provision
in this Guaranty comports with all applicable local, state and federal laws and
judicial decisions.  However, if any provision or provisions, or if any portion
of any provision or provisions, in this Guaranty is found by a court of law to
be in violation of any applicable local, state or federal ordinance, statute,
law, administrative or judicial decision, or public policy, and if such court
should declare such portion, provision or provisions of this Guaranty to be
illegal, invalid, unlawful, void or unenforceable as written, then it is the
intent of all parties hereto that such portion, provision or provisions shall
be given force to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Guaranty shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained therein, and that the rights, obligations and
interest of the Administrative Agent and the Lender or the holder of a Note
under the remainder of this Guaranty shall continue in full force and effect.

9.         Any indebtedness of Borrower to Subsidiary
Guarantors now or hereafter existing is hereby subordinated to the Facility
Indebtedness.  Subsidiary Guarantors will not seek, accept, or retain for
Subsidiary Guarantors’ own account, any payment from Borrower on account of
such subordinated debt at any time when an Event of Default or Potential
Default exists under the Credit Agreement or the Loan Documents, and any such
payments to Subsidiary Guarantors made while any Event of Default or Potential
Default then exists under the Credit Agreement or the Loan Documents on account
of such subordinated debt shall be collected and received by Subsidiary
Guarantors in trust for the Lenders and shall be paid over to the
Administrative Agent on behalf of the Lenders on account of the Facility
Indebtedness without impairing or releasing the obligations of Subsidiary
Guarantors hereunder.  Subsidiary Guarantors also agree not to incur any
“Indebtedness” (as defined in the Agreement) not permitted to be incurred by
the owner of a “Qualifying Unencumbered Project” (as defined in the Agreement).

10.       Subsidiary Guarantors hereby subordinate to the
Facility Indebtedness any and all claims and rights, including, without
limitation, subrogation rights, contribution rights, reimbursement rights and
set-off rights, which Subsidiary Guarantors may have against Borrower arising
from a payment made by Subsidiary Guarantors under this Guaranty and agree
that, until the entire Facility Indebtedness is paid in full, not to assert or
take advantage of any subrogation rights of Subsidiary Guarantors or the
Lenders or any right of Subsidiary Guarantors or the Lenders to proceed against
(i) Borrower for reimbursement, or (ii) any other guarantor or any
collateral security or guaranty or right of offset held by the Lenders for the
payment of the Facility Indebtedness and performance of the Obligations, nor
shall Subsidiary Guarantors seek or be entitled to seek any contribution or
reimbursement from Borrower or any other guarantor in respect of payments made
by Subsidiary Guarantors hereunder.  It is expressly understood that the
agreements of Subsidiary Guarantors set forth above constitute additional and
cumulative benefits given to the Lenders for their security and as an
inducement for their extension of credit to Borrower.

11.       Any amounts received by a Lender from any source
on account of any indebtedness may be applied by such Lender toward the payment
of such indebtedness, and in such order of application, as a Lender may from
time to time elect.

                                                                           2D-5

 

 

 

 

 

12.       Subsidiary Guarantors hereby submit to personal
jurisdiction in the State of Ohio for the enforcement of this Guaranty and
waive any and all personal rights to object to such jurisdiction for the
purposes of litigation to enforce this Guaranty.  Subsidiary Guarantors hereby
consent to the jurisdiction of either the Ohio state courts or the United
States District Courts in the state of Ohio, in any action, suit, or proceeding
which the Administrative Agent or a Lender may at any time wish to file in
connection with this Guaranty or any related matter.  Subsidiary Guarantors
hereby agree that an action, suit, or proceeding to enforce this Guaranty may
be brought in any state or federal court in the State of Ohio and hereby waives
any objection which Subsidiary Guarantors may have to the laying of the venue
of any such action, suit, or proceeding in any such court; provided, however,
that the provisions of this Paragraph shall not be deemed to preclude the
Administrative Agent or a Lender from filing any such action, suit, or
proceeding in any other appropriate forum.

13.       All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below or at such other address as may be designated by
such party in a notice to the other parties.  Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by facsimile, shall be deemed given when
transmitted.  Notice may be given as follows:

To Subsidiary
Guarantors:

c/o Associated Estates Realty
Corporation

1 AEC Parkway

Richmond Heights, OH  44143

Attention:  Lou Fatica, Vice
President & CFO

Telephone:  (216) 797-8779

Facsimile:  (216) 261-3902

 

With a copy to:

Associated Estates Realty
Corporation

1 AEC Parkway

Richmond Heights, OH  44143

Attention:  Martin Fishman,
Vice President and General Counsel

Telephone:  (216) 797-8780

Facsimile:  (216) 797-8719

 

To PNC Bank,
National Association as Administrative Agent and as a Lender:

PNC Bank,
National Association

PNC Real Estate

1900 East Ninth Street - 22nd
Floor

Mail Stop:  B7-YB13-22-1

Cleveland, OH  44114

Phone: 
216-222-6032

Facsimile: 
216-222-6070                    

Attention:         John E.
Wilgus, II, Senior Vice President

                        

 

 

                                                                           2D-6

 

 

 

 

 

With a copy
to:  

PNC Bank,
National Association

Agency
Services

500 First
Avenue, 4th Floor

Pittsburgh,
PA  15219

Attention: 
Sharon Turner

Phone: 
(412) 762-4532

Facsimile: 
(412) 705-2006

 

With a copy to:

SNR Denton US LLP

233 South Wacker Drive, Suite
7800

Chicago, IL  60606

Attention:  Patrick G. Moran,
Esq.

Telephone:  (312) 876-8132

Facsimile:  (312) 876-7934

 

If to any other Lender, to its address set forth in the
Credit Agreement.

14.       This Guaranty shall be binding upon the heirs,
executors, legal and personal representatives, successors and assigns of
Subsidiary Guarantors and shall inure to the benefit of the Administrative
Agent and the Lenders’ successors and assigns.  

15.       This Guaranty shall be construed and enforced
under the internal laws of the State of Ohio.

16.       SUBSIDIARY GUARANTORS, THE ADMINISTRATIVE
AGENT AND THE LENDERS, BY THEIR ACCEPTANCE HEREOF, EACH HEREBY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT
UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING
FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS GUARANTY AND AGREE
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.

17.       From time to time, additional parties may
execute a joinder substantially in the form of Exhibit A hereto, and thereby
become a party to this Guaranty.  From and after delivery of such joinder, the
Subsidiary delivering such joinder shall be a Subsidiary Guarantor, and be
bound by all of the terms and provisions of this Guaranty.

[Signature page
intentionally left blank.]

                                                                           2D-7

 

 

 

 

 

IN WITNESS WHEREOF, Subsidiary Guarantors have delivered
this Guaranty in the State of Ohio as of the date first written above.

	
   

  	
  Sandler at Alta Lago, LLC,

  a Virginia limited liability company

   

  By:      Associated Estates Realty Corporation, 

            its sole member

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

  

   

  
	
   

  	
  BUCKHEAD AERC, LLC,

  a Delaware limited liability company

   

  By:      Associated Estates Realty Corporation, 

            its sole member

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

  

   

  
	
   

  	
  AERC ASHBOROUGH, LLC,

  a Delaware limited liability company

   

  By:      Associated Estates Realty Corporation, 

            its sole member

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

  

   

  

                                                                           2D-8

 

 

 

 

 

 

	

   

  	
  AERC
  SAN RAPHAEL, LLC,

  a Delaware limited liability company

   

  By:      Associated
  Estates Realty Corporation, 

            its sole member

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

  

   

  
	
   

  	
  ASPEN LAKES - AERC, INC.,

  a Michigan corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	
   

  	
  AERC bedford commons, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	
   

  	
  AERC LAKE FOREST, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

  

  

                                                                           2D-9

 

 

 

 

 

 

	
   

  	
  AERC MORGAN PLACE, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

   

  
	
   

  	
  AERC ARROWHEAD STATION, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	

   

  	
  AERC bennell, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	
   

  	
  AERC remington PLACE, INC.,

  a Delaware corporation

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

   

   

  

                                                                          2D-10

 

 

 

 

 

 

	
   

  	
  AERC williamsburg, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	
   

  	
  AERC westchester, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	
   

  	
  AERC sterling park, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  
	
   

  	
  AERC kensington grove, INC.,

  a Delaware corporation

   

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

  

  
	
   

  	
  AERC western reserve, INC.,

  a Delaware corporation

   

  By:      ________________________     Name:  Martin
  A. Fishman

  Title:    Vice President

  

  

   

  

                                                                          2D-11

 

 

 

 

 

 

	
   

  	
  AERC Spring Brook, LLC,

  a Delaware limited liability company

   

  By:      AERC Brook, Inc.,
  its Manager

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

  

   

  
	
   

  	
  AERC Landings at Preserve, LLC,

  a Delaware limited liability company

   

  By:      AERC Landings,
  Inc., Manager

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

  

   

  
	
   

  	
  AERC Country Place, LLC,

  a Delaware limited liability company

   

  By:      AERC Country I,
  Inc., its Manager

   

   

              By:      ________________________

              Name:  Martin A. Fishman

             Title:    Vice
  President

  

  

   

  
	
   

  	
  AERC Georgetown Park, LLC,

  a Delaware limited liability company

   

  By:      AERC Georgetown,
  Inc., its Manager

   

   

              By:      ________________________

              Name:  Martin A. Fishman

             Title:    Vice
  President

  

  

   

  

                                                                          2D-12

 

 

 

 

 

 

	
   

  	
  AERC Oaks Hampton, LLC,

  a Delaware limited liability company

   

  By:      AERC Oaks, Inc.,
  its Manager

   

   

              By:      ________________________

              Name:  Martin A. Fishman

             Title:    Vice
  President

  

  

   

  
	
   

  	
  AERC DPF Georgia Ventures, LLC,

  a Delaware limited liability company

              

  By:      AERC of Georgia,
  Inc., 

            its Sole Member

   

   

              By:      ________________________

              Name:  Martin A. Fishman

              Title:    Vice
  President

  

 

                                                                          2D-13

 

 

 

 

 

EXHIBIT A TO
SUBSIDIARY GUARANTY

FORM OF JOINDER TO
GUARANTY

THIS JOINDER is executed as of
_________, 201_ by the undersigned, each of which hereby agrees as follows:

1.         All capitalized terms
used herein and not defined in this Joinder shall have the meanings provided in
that certain Subsidiary Guaranty (the “Guaranty”) dated as of October __, 2010
executed for the benefit of PNC Bank, National Association, as agent for itself
and certain other lenders, with respect to a loan from the Lenders to
Associated Estates Realty Corporation (“Borrower”).

2.         As required by the
Credit Agreement described in the Guaranty, each of the undersigned is
executing this Joinder to become a party to the Guaranty.

3.         Each and every term,
condition, representation, warranty, and other provision of the Guaranty, by
this reference, is incorporated herein as if set forth herein in full and the
undersigned agrees to fully and timely perform each and every obligation of a
Subsidiary Guarantor under such Guaranty.

[SUBSIDIARY GUARANTOR]

FEIN NO. ______________________

 

 

By:                                                                               

Name:                                                                          

Its:                                                                               

 

 

                                                                          2D-14

 

 

 

 

 

EXHIBIT
E

FORM OF OPINION OF BORROWER’S COUNSEL

October ___, 2010

 

PNC Bank, National
Association, as Agent 

PNC Real Estate

1900 East Ninth Street - 22nd
Floor

Mail Stop:  B7-YB13-22-1

Cleveland, OH  44114

 

 

Re:       $250,000,000
Credit Facility to Associated Estates Realty Corporation (the “Borrower”)

Ladies
and Gentlemen:

We have acted as counsel for the Borrower and certain of
its subsidiaries (the “Subsidiary Guarantors”, together with the Borrower are
collectively the “Loan Parties”) in connection with a $250,000,000 unsecured
revolving credit facility, (the “Loan”), which Loan is being made pursuant to
that certain Amended and Restated Credit Agreement dated as of October ___,
2010 (the “Credit Agreement”) among the Borrower, PNC Bank, National
Association and the several lenders from time to time parties thereto
(collectively, the “Lenders”), and PNC Bank, National Association, as Administrative
Agent (the “Agent”).

In connection with the Loan we have been furnished with
originals or copies certified to our satisfaction of the Articles of
Incorporation and Bylaws of the Borrower and of the  Subsidiary
Guarantors, and all such corporate and other records of the Borrower and the
Subsidiary Guarantors with such declarations and agreements, and certificates
of officers and representatives of the Borrower and with such other documents,
and we have made such other examinations and investigations as we have deemed
necessary as a basis for the opinions expressed below.

We have examined the originals of the following documents,
each of which is addressed to the Lender or to which the Lender is a party (all
of which are sometimes collectively referred to as the “Loan Documents”):

1.         The Credit Agreement; 

2.         The Subsidiary Guaranty made by the
Subsidiary Guarantors, dated as of the date of this Opinion; and

3.         Those
certain amended and restated and new promissory notes payable to the Lenders,
each dated as of the date of this Opinion, in the aggregate amount of
$250,000,000. 

Based upon the foregoing, we are of the opinion that:

                                                                            2E-1

 

 

 

 

 

1.         Borrower
is a corporation duly formed, validly existing and in good standing under the
laws of the State of Ohio.  The Subsidiary Guarantors are duly formed, validly
existing and in good standing under the laws of the State set forth next to
such specific Subsidiary Guarantor’s name on Exhibit A, attached to this
Opinion.  

2.         The
execution, delivery, and performance by each of the Loan Parties of the Loan
Documents to which it is a party has been duly authorized by all necessary
action of such Loan Party and does not (i) require any consent or approval of
any partner or shareholder of such entity or any other person or entity
excepting such consents or approvals as have actually been obtained; (ii)
violate any provision of any law, rule, or regulation of the United States or
the State of Ohio, or any provision of the partnership or corporate law
presently in effect having applicability to the Borrower or its Subsidiary
Guarantors; (iii) violate any provision of the partnership agreements,
operating agreements, articles of incorporation, or bylaws of the Loan Parties;
(iv) violate any presently existing statutory or administrative provision or
judicial decision applicable to the Loan Parties; or (v) result in a breach of,
or constitute a default under, any agreement or instrument affecting the Loan
Parties.

3.         Each
Loan Document to which it is a party (a) has been properly authorized, executed
and delivered by each Loan Party, (b) constitutes the legal, valid, and
binding obligations of such Loan Party, and (c) is enforceable in
accordance with its terms.

4.         To
our knowledge, no presently existing authorization, exemption, consent,
approval, license, or registration with any court or governmental department,
commission, bureau, agency, or instrumentality will be necessary for the valid,
binding, and enforceable execution, delivery and performance by the Loan
Parties of the Loan Documents.

5.         To
our knowledge, there are no actions, suits, or proceedings pending or
threatened against the Loan Parties before any court or governmental entity or
instrumentality which could reasonably be expected to have a Material Adverse
Effect (as defined in the Credit Agreement).

6.         The
Loan Documents are governed by the laws of the State of Ohio, and the Loan,
including the interest rate reserved in the applicable Note and all fees and
charges paid or to be paid by or on behalf of Loan Parties in connection with
such Loan pursuant to the applicable Loan Documents, is not in violation of the
usury laws of the State of Ohio.

The opinions expressed herein are expressly made subject
to and qualified by the following:

(a)  We have assumed that the Loan Documents are duly
authorized and validly executed and delivered by the Agent, the Lenders and all
other parties other than the Loan Parties.

(b)  This opinion is based upon existing laws, ordinances
and regulations in effect as of the date hereof.

(c)  This opinion is limited to the laws of the State of
Ohio and applicable federal law and no opinion is expressed as to the laws of
any other jurisdiction.

                                                                            2E-2

 

 

 

 

 

(d)  We have assumed the authenticity of all documents
submitted to us as originals (other than the Loan Documents) and the conformity
to original documents of all documents (other than the Loan Documents)
submitted to us as certified or photostatic copies.

(e)  The opinions expressed herein are qualified to the
extent that: (i) the enforceability of any rights or remedies in any agreement
or instruments may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally; and
(ii) the availability of specific performance, injunctive relief or any other
equitable remedy is subject to the discretion of a court of competent
jurisdiction.

(f)  The opinions set forth herein are subject to the
effect of limitations contained in Title 11 of the United States Code, 11
U.S.C. §§ 101 et seq. (the “Federal Bankruptcy Code”) and all other applicable
receivership, conservatorship, bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or similar laws affecting the rights of
creditors generally. Without limitation of the foregoing qualification, no opinion
is offered with respect any of the following matters: (a) turnover, automatic
stay, avoiding power fraudulent transfer, preference, discharge, conversion of
a non-recourse obligation into a recourse claims, limitations on ipso facto and
anti-assignment clauses; (b) judicially developed doctrines relating to the
Federal Bankruptcy Code or similar state laws, such as substantive
consolidation.

(g)  No opinion is expressed herein
as to any securities or “blue sky” laws, environmental laws, labor laws, Federal
Reserve Board margin regulations, tax laws, pension and employee benefit laws
and regulations, compliance with fiduciary duty requirements, antitrust and
unfair competition laws and regulations, land use and subdivision laws and
regulations, patent, copyright and trademark laws and regulations, racketeering
laws and regulations, health and safety laws and regulations, laws, regulations
and policies concerning, national and local emergency, terrorism and criminal
and civil forfeiture laws.

(h)  The opinions expressed herein are limited by (a)
equitable principles, including the availability of equitable remedies
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and (b) with respect to any indemnity, waiver and similar
provisions contained in the Loan Documents, public policy considerations.

(i)  No opinion is expressed herein as to the payment of
late fees, prepayment premiums, default interest or other charges payable upon
or after the occurrence of a default.  In addition, we express no opinion as to
the effect of the law of any jurisdiction other than the State of Ohio wherein
any Person may be located or wherein any enforcement of the Loan Documents may
be sought which limits the rates of interest legally chargeable or
collectible.  

(j)  No opinion is expressed herein as to any accounting
treatment.

(k)  We express no opinion as to
whether any person has qualified or is required to qualify to do business as a
foreign corporation or other entity, or to otherwise qualify to transact
business, in any State.

                                                                            2E-3

 

 

 

 

 

(l)  We call to your attention that certain remedies and
provisions of the Loan Documents (including, without limitation, provisions
concerning self-help; summary remedies; and waiver of trial by jury or other
rights) may be unenforceable in some or all circumstances under applicable law
or judicial decisions.  However, such laws and judicial decisions do not, in
our opinion, subject to the other qualifications in this opinion, render the
Loan Documents invalid as a whole or leave the parties to the Loan Documents
without the ultimate practical realization of the essential legal benefits
intended to be afforded thereby.

(m)  We note that the enforceability of the Loan Documents
may be limited if Lenders or Agent fails to act in good faith or in a
commercially reasonable manner in seeking to exercise its rights and remedies
thereunder.  Without limiting the generality of the foregoing, we note that a
court might hold that a technical or nonmaterial default under the Loan
Documents by a Loan Party does not give rise to a right of Lenders or Agent to
exercise some or all remedies including, without limitation, acceleration.  We
express no opinion as to the effect on the opinions expressed herein of (a) the
compliance or non-compliance of any party to the Loan
Documents with any state, Federal or other laws or regulations applicable to it
or (b) any law relating to the legal or regulatory status of Agent or any
Lender.

            (n)  Whenever we have
stated that we have assumed any matter, it is intended to indicate that we have
assumed such matter without making any factual, legal or other inquiry or
investigation and without expressing any opinion or conclusion of any kind
concerning such matter.  Whenever our opinion herein with respect to the
existence or absence of facts or circumstances is qualified by the phrase “to
our knowledge”, that phrase signifies that, in the course of our representation
of the Loan Parties, no facts have come to the attention of Michael
T. Fishman or Eric Greenfield the attorneys within our firm who have been
directly involved in representing the Loan Parties in connection with the Loan,
that would give them actual knowledge or actual notice that any such opinions
or other matters are not accurate.  We have undertaken no independent
investigation or verification of such matters.

(o)  The opinions expressed herein are based on the facts
(as we know, believe or have assumed them to be) and law as in effect on the
date of this opinion.  We do not undertake to supplement or update this opinion
if, hereafter, there is a change in law or facts or new facts come to our
attention.

(p)  We
express no opinion as to any choice of law, forum selection, venue, service of
process, consent to jurisdiction (both as to personal jurisdiction and subject
matter jurisdiction) or waiver of jury trial provisions in any of the Loan
Documents.  In addition, the opinions set forth herein are given as if the law
of the State of Ohio governs each Loan Document, without regard to whether such
Loan Document so provides. 

(q)  Certain of the members of our firm are members of the
Bar of the State of Ohio.  The opinions expressed herein are limited
exclusively to the internal laws of the State of Ohio without regard to
principles of conflicts of laws.  Although certain members of our firm are
admitted to the practice of law in certain other states, we have not made any
review of the laws of any other state or consulted with members of this firm
who are admitted in such other jurisdictions for the purpose of the foregoing
opinions.  Accordingly, except as set forth in this paragraph, we express no
opinion as to any matters governed by the laws of any other state or any
Federal laws of the United States of America or any other nation or sovereign
entity.

                                                                            2E-4

 

 

 

 

 

This opinion may be relied upon only by the addressee
hereof, the Lenders, their respective attorneys, auditors, advisors and
participants, and their respective successors and assigns, and not by any other
party.

Very truly yours,

 

 

 

Greenberg
Traurig, LLP

 

 

                                                                            2E-5

 

 

 

 

 

Exhibit A

AERC Subsidiary Guarantors

 

 

 

 

                                                                            2E-6

 

 

 

 

 

EXHIBIT F

 

LOAN REQUEST

 

___________, 201_

 

 

PNC Real Estate

1900 East Ninth Street - 22nd
Floor

Mail Stop:  B7-YB13-22-1

Cleveland, OH  44114

Phone:  216-222-6032

Facsimile:  216-222-6070                    

Attention:   John E. Wilgus,
II

                  Senior Vice
President

                  Real Estate
Banking

 

Loan Request

 

Associated Estates Realty
Corporation (“Borrower”) hereby requests an Advance pursuant to Section 2.10
of the Amended and Restated Credit Agreement, dated as of October __, 2010 (as
amended or modified from time to time, the “Credit Agreement”), among Borrower,
the Lenders referenced therein, and you, as an administrative agent for the
Lenders.

 

An Advance is requested to be
made in the amount of $__________, to be made on _____________.  Such Advance
shall be a [LIBOR] [Base] Rate Advance.  [The applicable Interest Period shall
be _____________.]  

 

The proceeds of the requested
loan shall be directed to the following account:

 

Wiring
Instructions:

(Bank
Name)

(ABA
No.)

(Beneficiary)

(Account
No. to Credit)

(Notification
Requirement)

 

                                                                            F-1

 

 

 

 

 

In support of this request,
Borrower hereby represents and warrants to the Administrative Agent and the
Lenders that acceptance of the proceeds of such Advance by the Borrower shall
be deemed to further represent and warrant that all requirements of Section
5.2 of the Credit Agreement in connection with such Advance have been
satisfied at the time such proceeds are disbursed.

 

Date:_________________________________

 

Associated Estates Realty Corporation, 

an Ohio corporation,

 

 

By:                                                                   

Name:                                                              

Its:                                                                   

                                                                            F-2

 

 

 

 

 

EXHIBIT G

 

AMENDMENT TO CREDIT AGREEMENT

This Amendment to the Credit Agreement described below
(the “Amendment”) is made as of ________________, 201_, by and among Associated Estates Realty Corporation, PNC Bank
National Association, individually and as “Administrative Agent”, and
one or more New Lenders or Increasing Lenders shown on the signature pages
hereof.

R
E C I T A L S

A.        Borrower,
Administrative Agent and certain other Lenders have entered into an Amended and
Restated Revolving Credit Agreement dated as of October __, 2010 (as amended,
the “Credit Agreement”).  All capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the Credit Agreement.

B.         Pursuant to the
terms of the Credit Agreement, the Lenders initially agreed to provide Borrower
with a revolving credit facility in an aggregate principal amount of up to
$250,000,000.  The Borrower, the Administrative Agent and the Lenders now
desire to amend the Credit Agreement in order to, among other things
(i) increase the Aggregate Commitment to $____,000,000; (ii) increase the
Commitments of the Increasing Lenders as shown below and (iii) admit [name
of new banks] as “New Lenders” under the Credit Agreement. 

NOW, THEREFORE, in consideration of the foregoing Recitals
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

AGREEMENTS

1.         The foregoing Recitals to this Amendment hereby
are incorporated into and made part of this Amendment.

2.         From and after _______________, _____ (the
“Effective Date”) (i) [name of new banks] shall be
considered as “New Lenders” under the Credit Agreement and the Loan Documents,
and (ii) [name of existing lenders] are “Increasing Lenders”
and shall each be deemed to have increased its Commitment to the amount shown
next to their respective signatures on the signature pages of this Amendment,
each having a Commitment in the amount shown next to their respective
signatures on the signature pages of this Amendment.  The Borrower shall, on or
before the Effective Date, execute and deliver to each of such New Lenders and
Increasing Lenders a new or amended and restated Note in the amount of such
Commitment .

3.         From and after the Effective Date, the
Aggregate Commitment shall equal             
 Million Dollars ($_____,000,000).

4.         For purposes of Section 14.1 of the Credit
Agreement (Giving Notice), the address(es) and facsimile number(s) for the New
Lenders shall be as specified below their respective signature(s) on the
signature pages of this Amendment.

                                                                           G-1

 

 

 

 

 

5.         The Borrower hereby represents and warrants
that, as of the Effective Date, there is no Event of Default or Potential Default,
the representations and warranties contained in Article VI of the
Agreement are true and correct as of such date, except to the extent any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty shall be true and correct as of such
earlier date and the Borrower has no offsets or claims against any of the
Lenders.

6.         As expressly modified as provided herein, the
Credit Agreement shall continue in full force and effect.

7.         This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Amendment by signing any such
counterpart.

                                                                           G-2

 

 

 

 

 

            IN WITNESS WHEREOF, the parties
have executed and delivered this Amendment as of the date first written above.

	
  ASSOCIATED ESTATES REALTY CORPORATION

   

   

  By:                                                                   

  Print Name:                                                      

  Title:                                                                

   

   

   

  	
  PNC BANK, NATIONAL ASSOCIATION, Individually and as Administrative
  Agent

   

   

  By:                                                                                           

  Print Name:                                                                              

  Title:                                                                                        

   

   

  

 

Amount
of Commitment:  $ ____________                [NAME OF NEW LENDER]

 

By:_________________________________ 

Print
Name:__________________________ 

Title:________________________________ 

 

[Address
of New Lender]

 

Attention:____________________________ 

Telephone:___________________________ 

Facsimile:____________________________ 

 

Amount
of Commitment:  $ ____________                [NAME OF INCREASING LENDER]

 

By:_________________________________ 

Print
Name:__________________________ 

Title:________________________________ 

 

 

                                                                           G-3

 

[1] Select as
applicable.

[2] Fill in the
appropriate terminology for the types of facilities under the Credit Agreement
that are being assigned under this Assignment (e.g. “Revolving Credit
Commitment,” “Term Loan Commitment,” etc.)

* Amount to be
adjusted by the counterparties to take into account any payments or prepayments
made between the Trade Date and the Effective Date.

[3] Set forth, to at
least 10 decimals, as a percentage of the Commitment/Loans of all Lenders
thereunder.

[4] To be completed
if the Assignor and the Assignee intend that the minimum assignment amount is
to be determined as of the Trade Date.

[5] To be added only
if the consent of the Administrative Agent is required by the terms of the
Credit Agreement.

[6] To be added only
if the consent of the Borrower and/or other parties (e.g. Swing Lender, L/C
Issuer) is required by the terms of the Credit Agreement.

[7] Describe Credit
Agreement at option of Administrative Agent.

[8] The term “Credit
Document” should be conformed to that used in the Credit Agreement.

[9] The concept of 
“Foreign Lender” should be conformed to the section in the Credit Agreement
governing withholding taxes and gross-up.

[10] The
Administrative Agent should consider whether this method conforms to its
systems.  In some circumstances, the following alternative language may be
appropriate:  “From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignee whether such
amounts have accrued prior to, on or after the Effective Date. 
The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.”exhibit10_1.htm

  

NINTH AMENDMENT TO LOAN AGREEMENT

This Ninth Amendment to Loan Agreement is made and entered into effective the 2nd day of November, 2010, by and between U.S. Bank National Association, a national banking association, with an address of 141 North Main Avenue, Post Office Box 5308, Sioux Falls, South Dakota 57117-5308 (“Lender”) and Daktronics, Inc., a South Dakota corporation, with an address of 331 - 32nd Avenue, Brookings, South Dakota 57006 (“Borrower”).

RECITALS:

A.           Lender and Borrower entered into a Loan Agreement dated October 14, 1998, and Borrower executed and delivered to Lender a Revolving Note dated October 14, 1998, in the original principal sum of $15,000,000.00.

B.           The Loan Agreement and Revolving Note were amended by an Amendment to Loan Agreement and a Modification of Promissory Note, each dated November 30, 1999, an Amendment to Loan Agreement and a Modification of Promissory Note, each dated December 8, 2000, a Third Amendment to Loan Agreement and Revolving Note dated June 20, 2002, a Fourth Amendment to Loan Agreement and Revolving Note dated December 2, 2003, a Fifth Amendment to Loan Agreement and Revolving Note dated October 1, 2005, a Sixth Amendment to Loan Agreement and a Renewal Revolving Note, each dated January 23, 2007, a Seventh Amendment to Loan Agreement and an Amendment to Renewal Revolving Note, each dated April 28, 2008, and an Eighth Amendment to Loan Agreement and a Renewal Revolving Note, each dated November 4, 2009.

C.           Pursuant to the Eighth Amendment to Loan Agreement and the Renewal Revolving Note dated November 4, 2009, the loan amount was changed to $35,000,000.00 (the "Revolving Loan").

D.           Lender and Borrower mutually wish to renew and amend the Revolving Note (pursuant to a Renewal Revolving Note dated even date herewith), and to amend the Loan Agreement as provided herein.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Borrower and Lender covenant and agree as follows:

 

  

  

  

1.           The following definitions in Section 1.1 of the Loan Agreement are amended and restated as follows:

“Revolving Loan Maturity Date”:  November 15, 2011.

“Revolving Note”:  The Renewal Revolving Note dated November 2, 2010, along with any amendments, renewals, or extensions thereof.

2.            Section 2.1 of the Loan Agreement is amended and restated as follows:

Section 2.1                      Revolving Loan.  Upon the terms and subject to the conditions hereof, Lender agrees to make available a revolving loan (the "Revolving Loan") to Borrower in the principal amount of Thirty-five Million and No/100 Dollars ($35,000,000.00).  Borrower may obtain advances, prepay and obtain new advances under the Revolving Loan.

Borrower may request and Lender, in its sole discretion, may issue as part of the Revolving Loan, letters of credit in a total amount not to exceed $15,000,000.00.  Letters of credit not exceeding a total amount of $3,000,000.00 may have an expiration date of no later than November 15, 2012 and letters of credit not exceeding $100,000.00 may have an expiration date of no later than April 15, 2014.  Otherwise, all letters of credit will expire on or before November 15, 2011.  The amount available to be borrowed under the Revolving Loan will be correspondingly reduced by the face amount of all letters of credit issued.  Notwithstanding any agreement to the contrary, Lender will have no obligation to issue any letter of credit, or to amend, extend, renew or replace any letter of credit, unless it is in form and substance acceptable to Lender.

3.           Schedule VI to the Loan Agreement (“Schedule VI”) is amended and restated as attached to this Ninth Amendment.

4.           Except as modified herein, all the terms and conditions of the Loan Agreement, including previous amendments thereto, will remain in full force and effect.

5.           Borrower acknowledges that the Loan Agreement and related Loan Documents are and will remain the legal and binding obligation of Borrower, free of any claim, defense, or offset.

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BORROWER:

	  	  	  
	  	
DAKTRONICS, INC.

	  	  	  
	  	  	  
	  	
By

	  /s/ James B. Morgan
	  	  	
James B. Morgan, Its Chief Executive Officer

	  	  	  
	  	  	  
	  	
By

	  /s/ William R. Retterath
	  	  	
William R. Retterath, Its Chief Financial Officer

	  	  	  
	  	  	  
	  	
LENDER:

	  	  	  
	  	
U.S. BANK NATIONAL ASSOCIATION

	  	  	  
	  	  	  
	  	  	  /s/ Carl Wynja
	  	  	
Carl Wynja, Its Senior Vice President

 

 

 

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SCHEDULE VI

ADDITIONAL COVENANTS

Until the Revolving Note and all of the other Obligations are paid and performed in full, unless the Lender shall otherwise consent in writing:

Dividends.  With the exception of a special cash dividend of $0.50 per share of common stock approved by the Borrower’s board of directors to be paid at the end of the second quarter of fiscal 2011, the Borrower will not pay in excess of current year's net profit after tax any dividends or otherwise make any distributions on, or redemptions of, any of its outstanding stock.

Minimum Adjusted Fixed Charge Coverage Ratio.  The Borrower will not permit its Minimum Adjusted Fixed Charge Ratio, as of the last day of any fiscal year for the four consecutive fiscal quarters ending on that date to be less than 2 to 1.

For purposes hereof, the following definitions have the following meanings:

“EBITDA”:  For any period of determination, the net income of the Borrower before deductions for income taxes, interest expense, depreciation and amortization, all as determined in accordance with GAAP.

“Adjusted Fixed Charge Coverage Ratio”:  For any period of determination with respect to the Borrower, the ratio of

	
  

	
(a)

	
EBITDA minus the sum of (i) any dividends or other distributions (with the exception of the special cash dividend of $0.50 per share of common stock to be paid at the end of the second quarter of fiscal 2011), (ii) a reserve for maintenance capital expenditures in the amount of $6,000,000.00, and (iii) tax expenses, to

	
  

	
(b)

	
all required principal and interest payments with respect to Indebtedness (including but not limited to all payments with respect to capitalized lease obligations of the Borrower),

in each case determined for said period in accordance with GAAP.

"Indebtedness":  All interest-bearing obligations, including those represented by bonds, debentures, or other debt securities, except principal reductions on the Revolving Loan.

IBD/EBITDA Ratio.  The Borrower will not permit the ratio of its IBD to EBITDA, as of the last day of any fiscal quarter to be greater than 1 to 1.  For purposes hereof, the following definitions have the following meanings:

 

 

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“IBD”:  All interest bearing obligations, including those represented by bonds, debentures, or other debt securities, excluding any long-term contractual obligations related to marketing transactions whose source of payment is underlying advertising agreements.

“EBITDA”:  For any period of determination, the net income of the Borrower before deductions for income taxes, interest expense, depreciation and amortization, all as determined in accordance with GAAP.  This computation will use the last four quarters.

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