SECOND AMENDMENT
TO
CREDIT AGREEMENT
AND
OTHER LOAN DOCUMENTS
AMONG
HOMESTEAD VILLAGE INCORPORATED,
THE LENDERS NAMED HEREIN,
AND
COMMERZBANK AG,
NEW YORK BRANCH, AS AGENT FOR THE LENDERS
DATED AS OF APRIL 24, 0000
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XXXXXX XXXXXXXXX TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS
SECOND AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS
(this "Amendment"), dated as of April 24, 1998, among HOMESTEAD VILLAGE
INCORPORATED, a Maryland corporation (the "Borrower"), COMMERZBANK AG, LOS
ANGELES BRANCH, and the other lenders listed on Exhibit A attached to the
Agreement (as hereinafter defined), as amended from time to time (each a
"Lender" and collectively, the "Lenders") and COMMERZBANK AG, NEW YORK BRANCH,
as agent for the Lenders (the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower entered into a revolving credit facility
in an amount up to $50,000,000.00 with the Lenders pursuant to a Credit
Agreement dated as of May 6, 1997, among the Borrower, as borrower, the Lenders,
as lenders and the Agent, as amended by the First Amendment to the Credit
Agreement and Other Loan Documents on August 25, 1997 (the "Agreement"); all
capitalized terms used herein and not defined herein shall have the meanings
ascribed respectively thereto in the Agreement;
WHEREAS, pursuant to Borrower's request, Lenders have agreed
to modify the Agreement and the other Loan Documents, as more particularly
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Agreement and the other Loan
Documents are hereby modified as follows:
1. Amendment to Credit Agreement. The Agreement is
hereby amended as follows:
(a) The term "Alternate Rate" as defined in Section 1.1 of the
Agreement shall mean, as of any Applicable Margin Adjustment Date, a
per annum rate equal to th e greater of (a) the Prime Lending Rate plus
the Prime Rate Applicable Margin, and (b) the Federal Funds Rate plus
the Federal Funds Applicable Margin;
(b) The term "Applicable Margin" as defined in Section 1.1 of
the Agreement and as referred to in Section 2.6(a) shall be
changed to "LIBOR Applicable Margin" an d shall mean, as of any
Applicable Margin Adjustment Date (i) if the Leverage Percentage as of
such Applicable Margin Adjustment Date is less than fifteen percent
(15%), one hundred fifty (150) basis points, (ii) if the Leverage
Percentage as of such Applicable Margin Adjustment Date is equal to or
greater than fifteen percent (15%) but less than twenty-five percent
(25%), two hundred (200) basis points, and (iii) if the Leverage
Percentage as of such Applicable Margin Adjustment Date is equal to or
greater than twenty-five percent (25%) and up to a maximum of
thirty-eight percent (38%), two hundred fifty (250) basis points.
(c) The term "Applicable Margin Adjustment Date" shall be
added to Section 1.1 of the Agreement and shall mean the date on which
any Applicable Margin Adjustment Event occurs.
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(d) The term "Applicable Margin Adjustment Event" shall be
added to Section 1.1 of the Agreement and shall mean (i) the making of
any Advance, and (ii) the receipt and collection by Agent, on behalf of
the Lenders, of any portion of the unpaid principal balance of the
Loan.
(e) The term "Debt Service" as defined in Section 1.1 shall
now include Construction Interest.
(f) The term "Federal Funds Applicable Margin" shall be added
to Section 1.1 of the Agreement and shall mean as of any Applicable
Margin Adjustment Date (i) if the Leverage Percentage as of such
Applicable Margin Adjustment Date is less than fifteen percent (15%),
one hundred (100) basis points, (ii) if the Leverage Percentage as of
such Applicable Margin Adjustment Date is equal to or greater than
fifteen percent (15%) but less than twenty-five percent (25%), one
hundred fifty (150) basis points, and (iii) if the Leverage Percentage
as of such Applicable Margin Adjustment Date is equal to or greater
than twenty-five percent (25%) and up to a maximum of thirty-eight
percent (38%), two hundred (200) basis points.
(g) The term "Leverage Percentage" shall be added to Section
1.1 and shall mean, as of any Applicable Margin Adjustment Date and
after giving effect to any Applicable Margin Adjustment Event giving
rise thereto, the quotient of the outstanding principal amount of the
Loan, divided by Eligible Costs, expressed as a percentage. In no event
shall such Leverage Percentage be permitted to exceed 38%.
(h) The term "Maturity Date" as defined in Section 1.1 of the
Agreement shall mean April 23, 1999.
(i) The term "Mortgaged Properties" as defined in Section 1.1
shall be amended by inserting after the word "which" the words "is
located in a Suburban Area and which".
(j) The term "Prime Rate Applicable Margin" shall be added to
Section 1.1 of the Agreement and shall mean as of any Applicable Margin
Adjustment Date (i) if the Leverage Percentage as of such Applicable
Margin Adjustment Date is less than fifteen percent (15%), fifty (50)
basis points, (ii) if the Leverage Percentage as of such Applicable
Margin Adjustment Date is equal to or greater than fifteen percent
(15%) but less than twenty-five percent (25%), one hundred (100) basis
points, and (iii) if the Leverage Percentage as of such Applicable
Margin Adjustment Date is equal to or greater than twenty-five percent
(25%) and up to a maximum of thirty-eight percent (38%), one hundred
fifty (150) basis points.
(k) The term "Suburban Area" shall be added to Section 1.1 of
the Agreement and shall mean such area outside a major metropolitan
city.
(l) The term "Commitment" as defined in Section 2.1(b) of the
Agreement shall mean $150,000,000;
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(m) The following shall be added as last sentence to Section
2.6(a):
"The LIBOR Applicable Margin, Federal Funds
Application Margin and Prime Rate Application Margin
shall be recalculated, and the interest on each
Advance shall be correspondingly increased or
decreased, on and as of each Applicable Margin
Adjustment Date. In the event that the date on which
the interest on any Advance is converted to, or
otherwise commences to accrue at, the Alternate Rate
is a date that is not an Applicable Margin Adjustment
Date, then the Alternate Rate shall be calculated on
the basis of the Leverage Percentage as of the most
recent Applicable Margin Adjustment Date."
(n) Add Section 2.9(c) which shall state as follows:
"The Borrower shall apply upon receipt (i) all net
proceeds from its equity offerings to repay on a pari
passu basis the Loan and the Indebtedness referred to
in Section 5.3(a)(vii) of the Agreement, and (ii) all
other amounts and fees due to the Agent and the
Lenders under this Agreement and the other Loan
Documents."
(o) The first sentence of Section 2.10 of the Agreement is
hereby deleted in its entirety and replaced with the following:
"Section 2.10 Fees. The Borrower shall pay to the
Agent for the account of the Lenders a commitment fee
(the "Commitment Fee") equal to 0.375 per annum of
the Average Undrawn Balance of the Commitment."
(p) Add new section 5.3(a)(vii) which shall state as follows:
"Indebtedness under that certain Credit Agreement
dated as of April 24, 1998, between Borrower, Agent
and one or more lenders with regard to a revolving
credit facility of up to an aggregate principal
amount of $50,000,000.00."
(q) The covenant for "Total Debt" as set forth in Section
5.3(b) of the Agreement is hereby deleted in its entirety and replaced
with the following:
"(b) Total Debt. Permit there to be aggregate
Indebtedness of the Borrower of more than an amount
equal to fifty-five percent (55%) of Gross Asset
Value, or permit there to be aggregate Indebtedness
of the Borrower which is secured by a Lien of more
than an amount equal to fifty percent (50%) of Gross
Asset Value."
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(r) The covenant for "Debt Service Ratios" as set forth in
Section 5.3(c) of the Agreement is hereby deleted in its entirety and
replaced with the following:
"(c) Debt Service Ratios. Maintain a ratio of EBITDA
to Debt Service on a quarterly basis (i) for the
first calender quarter of 1998 of less than 1.1:1.0,
(ii) for the second calender quarter of 1998 of less
than 1.25:1.0, and (iii) of less than 1.75:1.0 after
the second calender quarter of 1998."
(s) The covenant for "Stockholders Equity" as set forth in
Section 5.3(c) of the Agreement is hereby deleted in its entirety and
replaced with the following:
"(f) Stockholders Equity. Permit Stockholders'
Equity to be less than $325,000,000.00."
(t) Add new Section 6.1(i) which shall state as follows:
"(i) New Credit Agreement. An Event of Default
(as defined in that certain Credit Agreement referred
to in Section 5.3(a)(vii)) shall occur.
(u) Exhibit A attached to the Agreement is deleted in its
entirety and replaced with Exhibit A attached hereto.
(v) Exhibit B attached hereto is added to the Agreement as
Exhibit O.
2. Amendment to All Loan Documents. Simultaneously herewith
the Borrower has executed and delivered to Agent a (i) Second Amended and
Restated Promissory Note which effectuates certain of the amendments contained
herein, and (ii) a Letter of Comfort from Security Capital Group Incorporated in
the form of Exhibit O to the Agreement confirming its commitment to fund all the
capital needs of the Borrower other than debt during the term of the Agreement
up to an amount of $150,000,000 (the "Letter of Comfort"). All references in the
Loan Documents to the "Promissory Note" shall be deemed to refer to the Second
Amended and Restated Promissory Note. All references in the Loan Documents to
the "Credit Agreement" shall be deemed to refer to the Agreement as modified
pursuant to the terms hereof. All references in any one of the Loan Documents to
any of the other Loan Documents shall be deemed to refer to such other Loan
Documents as modified pursuant to the terms hereof. In the event of any
inconsistency or conflict between the terms and provisions of any of the Loan
Documents and the terms and provisions of this Second Amendment, the terms and
provisions of this Second Amendment shall control and be binding, it being the
agreement and intent of the Borrower, Lenders and Agent that the terms and
provisions contained or referred to in the Loan Documents shall hereby be and be
deemed to be amended and modified to the extent, but only to the extent,
necessary to give effect to the terms and provisions of this Second Amendment.
3. Borrower's Representations. Borrower hereby certifies that
the following statements are true on the date hereof:
(a) No Default or Event of Default has occurred and is
continuing;
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(b) Other than the representation in the second sentence of
Section 4.5(a) of the Credit Agreement which shall apply as of the
Closing Date, all representations and warranties contained in the
Agreement, before and after giving effect to this Amendment are true
and correct in all material respects with the same effect as though
such representations and warranties are being made as of the date
hereof and the Borrower, before and after giving effect to this
Amendment is in compliance in all material respects with all covenants
and agreements contained in the Agreement and the other Loan Documents;
(c) There has been no Material Adverse Change;
(d) All statements and certifications contained in the most
recent certificate delivered to Agent pursuant to Section 5.2(e) of the
Agreement, before and after giving effect to this Amendment are true
and correct in all material respects with the same effect as though
such statements and certifications are being made as of the date
hereof;
(e) Except as expressly modified hereby, the Agreement and
other Loan Documents remain unmodified and in full force and effect and
are hereby ratified and confirmed in all respects;
(f) The Borrower has no offsets, counterclaims or defenses to
the enforcement of, or otherwise with respect to, the Agreement and/or
other Loan Documents as hereby modified; and
(g) This Second Amendment is hereby incorporated into and made
a part of the Loan Documents. This Second Amendment and the Letter of
Comfort shall constitute Loan Documents for all purposes.
4. Execution in Counterparts. This Amendment may be executed
in separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument.
5. Governing Law. This Amendment shall be governed by and
construed in accordance with the internal laws of the State of New York.
6. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.
[Signatures are on the Following Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed by their respective officers and officer of the General
Partner, as the case may be, hereunto duly authorized as of the date first above
written.
HOMESTEAD VILLAGE INCORPORATED
By:___________________________
Name:
Title:
COMMERZBANK AG, New York Branch,
as Agent
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
COMMERZBANK AG, Los Angeles Branch,
as a lender
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
XXXXX FARGO BANK NATIONAL ASSOCIATION
as a lender
By:________________________________
Name:
Title:
