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Exhibit 4.8(b)
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FIFTH AMENDMENT TO CREDIT AGREEMENT
BY AND AMONG
ASSOCIATED ESTATES REALTY CORPORATION,
BORROWER,
NATIONAL CITY BANK,
AS AGENT
AND
THE BANKS IDENTIFIED ON SCHEDULE 1
DATED: AS OF NOVEMBER 27, 1996
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FIFTH AMENDMENT TO
CREDIT AGREEMENT
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THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of November 27, 1996, by and among ASSOCIATED ESTATES REALTY CORPORATION, an
Ohio corporation ("Borrower"), the banks and lending institutions identified on
SCHEDULE 1, attached hereto and made a part hereof by this reference (the
"Banks"), and NATIONAL CITY BANK, a national banking association, in its
capacity as agent for the Banks under the Credit Agreement defined in the
recitals below (in such capacity, the "Agent").
R E C I T A L S
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A. Pursuant to that certain Credit Agreement, dated as of March 30,
1994, by and among Borrower, the Banks identified on Schedule 1.1 thereto and
the Agent, such Banks agreed to advance certain Loans to Borrower, on the terms
and subject to the conditions set forth therein, and Borrower agreed to repay
such Loans, with interest thereon, as provided therein.
B. The aforementioned credit agreement has been amended (1) by a First
Amendment to Credit Agreement, dated as of May 17, 1994; (2) by a Second
Amendment to Credit Agreement dated as of February 24, 1995, pursuant to which
the aforementioned credit agreement was amended and restated in its entirety;
(3) by a Third Amendment to Credit Agreement, dated as of September 26, 1995,
pursuant to which such credit agreement was again amended and restated pursuant
to a Second Amended and Restated Credit Agreement dated as of September 26,
1995; and (4) by a Fourth Amendment to Credit Agreement, dated as of March 26,
1996 (as
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amended, and amended and restated as aforesaid, such credit agreement is
referred to as the "Credit Agreement").
C. NBD Bank ("NBD") has assigned all of its rights and obligations as a
"Bank" under the Credit Agreement and the other Loan Documents to The First
National Bank of Chicago ("First Chicago"), and First Chicago has accepted such
assignment and assumed and agreed prospectively to perform the duties and
obligations of a Bank under the Credit Agreement with respect to the interests
so assigned, all in accordance with the terms of a Assignment and Assumption
Agreement effective as of November 6, 1996; and
D. Borrower, the Banks and the Agent have agreed further to amend the
Credit Agreement in order to reflect the parties' mutual understandings
regarding certain mutually acceptable changes in the covenants of Borrower
thereunder, upon and subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, for Ten Dollars ($10.00) and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. DEFINED TERMS. Capitalized terms which are used in this
Amendment without being defined herein shall have the meanings ascribed to them
in the Amended Credit Agreement (as hereinafter defined).
2. AMENDMENT OF THE CREDIT AGREEMENT. The parties agree that
the Credit Agreement shall be further amended, effective as of the Effective
Date (as hereinafter defined), as follows:
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(a) Section 1.2 of the Credit Agreement shall be
amended by deleting the definition of "Capitalized
Income Value" appearing on pages 3 and 4 thereof, and
by substituting the following therefor:
"'CAPITALIZED INCOME VALUE'" means, as of
any date, an amount equal to Borrower's
EBITDA, including Service EBITDA in an
amount not to exceed $1,500,000 on an
annualized basis, divided by nine and
three-quarters percent (9.75%) (the
"Capitalization Factor"). For the purposes
of this provision, Borrower's EBITDA shall
be subject to adjustment to reflect any
acquisitions made by Borrower during the
applicable fiscal period on a PRO FORMA
basis acceptable to the Agent, assuming the
lesser of 90% or actual occupancy."
(b) Section 1.2 of the Credit Agreement shall be
further amended by deleting the definition of "Market
Value" appearing on pages 12 and 13 thereof, and by
substituting the following therefor:
"'MARKET VALUE' means, as of any date, an
amount equal to the sum of (i) Borrower's
Capitalized Income Value, plus (ii) fifty
percent (50%) of the book value of
Borrower's Assets Under Development and Raw
Land, PLUS (iii) one hundred percent (100%)
of the value of cash equivalents owned and
held by Borrower (all as of the date of
determination of Market Value)."
(c) Section 5.19 of the Credit Agreement shall be
amended by deleting all of subsections (d), (e), (f)
and (g) of Section 5.19 from the Credit Agreement,
and by substituting the following therefor:
"(d) LEVERAGE RATIO. Borrower shall at all
times maintain a ratio of Liabilities to
EBITDA, on an annualized basis (determined
by multiplying the quarterly EBITDA by a
factor of four, and subject to the
adjustment described in the following
sentence), of not more than five and
three-quarters (5.75) to one (1). For the
purposes of this provision, Borrower's
EBITDA shall be adjusted to reflect any
acquisitions made by Borrower during the
quarter on a PRO FORMA basis acceptable to
the Agent, assuming the lesser of 90% or
actual occupancy.
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(e) DEBT SERVICE COVERAGE RATIO. Borrower
shall at all times maintain a ratio of
EBITDA to all required payments of debt
service as described in this Section
5.19(e), on an annualized basis (determined
by multiplying the quarterly EBITDA by a
factor of four, and subject to the
adjustments described in the following
sentence), of not less than two (2.00) to
one (1). For the purposes of this provision:
(i) Borrower's EBITDA shall be subject to
adjustment to reflect any acquisitions made
by Borrower during the applicable fiscal
period on a PRO FORMA basis acceptable to
the Agent, assuming the lesser of 90% or
actual occupancy, to exclude Service EBITDA
in excess of $1,500,000 with respect to any
annual period and to reflect, in a manner
acceptable to Agent, the proper treatment of
such items of expense as payment of real
property AD VALOREM taxes (which, while paid
in a specific quarter, pertain to a
semi-annual or annual period), as well as
extraordinary items of income or expense, to
the extent that the foregoing are not
accrued or annualized in accordance with
GAAP on Borrower's financial statements; and
(ii) "debt service" shall include actual
payments of principal and/or interest on
Indebtedness for Borrower Money, together
with projected principal payments on all of
Borrower's non-amortizing Indebtedness for
Borrowed Money (excluding any construction
loans); such projected principal payments
shall be calculated on the basis of the rate
of interest then applicable to such
Indebtedness and a twenty-five (25) year
mortgage amortization schedule for such
Indebtedness.
(f) UNENCUMBERED DEBT SERVICE COVERAGE
RATIO. Borrower shall at all times maintain
a ratio of Unencumbered EBITDA to all
required payments of debt service as
described in this Section 5.19(f) on
Indebtedness for Borrowed Money which is
Unencumbered Debt, on an annualized basis
(determined by multiplying the quarterly
Unencumbered EBITDA by a factor of four, and
subject to the adjustments described in the
following sentence) of not less than two
(2.0) to one (1). For the purposes of this
provision: (i) Unencumbered EBITDA shall be
subject to adjustment to reflect any
acquisition of an Unencumbered Real Estate
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Asset (other than Raw Land or Assets Under
Development) made by Borrower during the
applicable period, on a PRO FORMA basis
acceptable to Agent, assuming the lesser of
90% or actual occupancy, and to reflect, in
a manner acceptable to the Agent, the proper
treatment of such items of expense as
payment of real property AD VALOREM taxes
(which, while paid in a specific quarter,
pertain to an annual or semi-annual period);
and (ii) "debt service" shall include actual
payments of principal and/or interest on
Indebtedness for Borrowed Money, together
with projected principal payments on all of
Borrower's non-amortizing Indebtedness for
Borrowed Money (excluding any construction
loans) which is Unencumbered Debt; such
projected principal payments shall be
calculated on the basis of the rate of
interest then applicable to such
indebtedness and a twenty-five (25) year
mortgage amortization schedule for such
indebtness.
(g) UNENCUMBERED REAL ESTATE ASSETS TO
UNENCUMBERED DEBT RATIO. The ratio of the
aggregate value of Borrower's Unencumbered
Real Estate Assets to the aggregate
outstanding principal balance of Borrower's
Unencumbered Debt shall at all times equal
or exceed two (2.0) to one (1). The
aggregate value of Borrower's Unencumbered
Real Estate Assets for the purposes of this
Section 5.19(g) shall be determined (x) by
including therein fifty percent (50%) of the
book value of the Assets Under Development
and of the Raw Land comprised within
Borrower's Unencumbered Real Estate Assets,
and (y) with respect to Unencumbered Real
Estate Assets other than Assets Under
Development or Raw Land, determined by
reference to the Capitalization Factor.
As amended as provided herein, the Credit Agreement is
referred to as the "Amended Credit Agreement".
3. CONDITIONS PRECEDENT TO THIS AMENDMENT. On or prior to the
Effective Date, each of the following conditions precedent shall have been
satisfied:
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(a) PROOF OF CORPORATE AUTHORITY. The Agent shall
have received from Borrower copies, certified by a
duly authorized officer of Borrower to be true and
complete on and as such date, of records of all
corporate action taken by Borrower to authorize (i)
Borrower's execution and delivery of this Amendment
and the Substitute Note (hereafter defined); and (ii)
the performance by Borrower of its other obligations
and agreements hereunder, under the Amended Credit
Agreement and under the Substitute Note;
(b) INCUMBENCY CERTIFICATE. The Agent shall have
received from Borrower an incumbency certificate
substantially similar to that which is attached as
EXHIBIT A and made a part hereof by this reference,
dated as of the Effective Date, signed by a duly
authorized officer and giving the name and bearing a
specimen signature of each individual who shall be
authorized to execute this Amendment for and on
behalf of Borrower;
(c) OFFICERS' CERTIFICATE. The Agent shall have
received from Borrower a certificate substantially
similar to that which is attached hereto as EXHIBIT B
and made a part hereof by this reference, dated as of
the Effective Date, signed by a duly authorized
officer of Borrower and certifying, on terms
acceptable to the Agent, that each of the
representations and warranties of Borrower in the
Credit Agreement was true and correct when made and,
giving effect to the information set forth or
referred to in the Officers' Certificate, each of the
warranties and representations of Borrower in the
Amended Credit Agreement remains true and correct in
all material respects on and as of the Effective
Date.
(d) LEGALITY OF TRANSACTIONS. No change in applicable
law shall have occurred as a consequence of which it
shall have become and continue to be unlawful (i) for
the Agent or any Bank to perform any of its
agreements or obligations hereunder or under Amended
Credit Agreement or any other Loan Document (giving
effect to the transactions described herein) on or as
of the Effective Date; or (ii) for Borrower to
perform any of its agreements or obligations
hereunder or under the Amended Credit Agreement or
any Loan Document.
(e) PERFORMANCE, ETC. Borrower shall have duly and
properly performed, complied with
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and observed, in all material respects, each of its
covenants, agreements and obligations contained in
each of the Loan Documents to which Borrower is a
party or by which Borrower is bound. No event shall
have occurred on or prior to the Effective Date, and
no condition shall then exist, which (giving effect
to the amendments to the Credit Agreement effected
hereby) constitutes or would (with the delivery of
notice or the passing of time, or both) constitute a
Default or an Event of Default under the Credit
Agreement or under any Loan Document.
(f) COMPLIANCE WITH LAWS. Each of the borrowings made
and each Letter of Credit issued under or pursuant to
the Credit Agreement prior to the Effective Date is,
and each borrowing to be made and each Letter of
Credit to be issued under the Amended Credit
Agreement will be, in compliance with the
requirements of all applicable laws, regulations,
rules and orders, including without limitation all
Environmental Laws and all applicable requirements
imposed by the SEC or by the Board of Governors of
the Federal Reserve System under Regulations U, G and
X.
(g) LEGAL OPINION. The Agent and each Bank shall have
received a written legal opinion, addressed to the
Agent and each Bank and dated as of the Effective
Date, from legal counsel for Borrower, substantially
in the form attached hereto as EXHIBIT C, and
otherwise acceptable to the Agent and each Bank.
(h) PAYMENT OF CERTAIN EXPENSES. Borrower shall have
reimbursed the Agent for all reasonable out-of-pocket
costs and expenses, including without limitation all
fees and disbursements of legal counsel to the Agent,
which shall have been incurred by the Agent in
connection with the negotiation and preparation of
this Amendment.
(i) CHANGES: NONE ADVERSE. From the date of the most
recent financial statements of Borrower delivered in
accordance with the requirements of the Credit
Agreement, through and including the Effective Date,
no changes shall have occurred in the assets,
liabilities, financial condition, business,
operations or prospects of Borrower or Borrower's
Consolidated Subsidiaries which, individually or in
the aggregate, are material and
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adverse to Borrower and its Consolidated
Subsidiaries.
(j) COMPLIANCE CERTIFICATE. The Agent shall have
received a Compliance Certificate substantially
similar to that which is attached as EXHIBIT D and
made a part hereof by this reference, executed by a
duly authorized officer of Borrower, dated on and as
of the Effective Date and showing (with
substantiating data reasonably acceptable to the
Agent), the required calculations under which shall
demonstrate Borrower's compliance as of the Effective
Date with the covenants set forth in the Credit
Agreement (giving effect to the amendment thereof
effected hereby).
(k) OTHER APPROVALS. The Agent shall have received
such other approvals, opinions, certificates,
instruments and documents with respect to the
transactions described herein as it may request.
(l) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by or on behalf
of Borrower in the Amended Credit Agreement shall be
true, correct and complete in all material respects
as of the Effective Date.
(m) SUBSTITUTE NOTE. Borrower shall have executed and
delivered to the Agent a substitute promissory note
(the "Substitute Note") in favor of First Chicago,
substantially similar to that which is attached
hereto as EXHIBIT E and made a part hereof by this
reference.
4. REGARDING BORROWER'S DEBT RATINGS. Borrower represents that
as of the Effective Date, Borrower's Debt Ratings are as follows:
Xxxxx'x: Baaa3 ; and
S&P: BBB- _.
5. RATIFICATION. Except as specifically modified and amended
as contemplated by this Agreement, the Credit Agreement is unchanged, and
remains in full force and effect. Borrower, the Banks and the Agent each hereby
ratifies and affirms the Credit Agreement and every term and condition thereof,
as the same are amended as provided hereby.
6. BINDING EFFECT. This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
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7. EFFECTIVE DATE. The amendments contemplated by this
Amendment shall be effective as of the date first set forth above (the
"Effective Date"). Promptly after the Effective Date, First Chicago shall return
to Borrower the original Substitute Promissory Note dated as of September 25,
1995, and previously executed and delivered by Borrower in favor of NBD,
legended to reflect the replacement of such note by the Substitute Note as
hereinabove described.
8. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, and signature pages from any counterpart may be appended to any
other counterpart. All such counterparts shall constitute a single, unified
instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered by or on behalf of each of the parties as of the date first set forth
above.
BORROWER:
ASSOCIATED ESTATES REALTY
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
President
AGENT:
NATIONAL CITY BANK
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Vice President
THE BANKS:
NATIONAL CITY BANK
By: /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Vice President
BANK ONE, CLEVELAND, N.A.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President
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MANUFACTURERS AND TRADERS TRUST
COMPANY
By: /s/ Xxxxx X Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Banking Officer
COMERICA BANK
By: /s/ Xxxx X. Xxxxx III
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Name: Xxxx X. Xxxxx III
Title: Vice President
XXXXXX TRUST & SAVINGS BANK
By: /s/ Xxxxxxx X. Bins
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Name: Xxxxxxx X. Bins
Title: Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ Xxxxxxx X. Glbert
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Name: Xxxxxxx X. Glbert
Title: Vice President
HUNTINGTON BANK-CLEVELAND, N.A.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Vice President
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