_________________________________________________________________
THIRD AMENDMENT TO CREDIT AGREEMENT
BY AND AMONG
ASSOCIATED ESTATES REALTY CORPORATION,
Borrower,
NATIONAL CITY BANK,
as Managing Agent
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
as Documentation Agent
AND
THE BANKS IDENTIFIED ON SCHEDULE 1
Dated: as of December 18, 1998
_________________________________________________________________
THIRD AMENDMENT TO
CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment")
is made as of December 18, 1998, by and among ASSOCIATED ESTATES
REALTY CORPORATION, an Ohio corporation ("Borrower"), and
NATIONAL CITY BANK, as Managing Agent under the Credit Agreement
defined in the following recitals (in such capacity, the
"Managing Agent"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Documentation Agent under the Credit Agreement
(in such capacity, the "Documentation Agent") and each of the
Banks identified on Schedule 1 attached hereto (the "Banks").
R E C I T A L S
A. Pursuant to that certain credit agreement, dated as of
June 30, 1998, by and among Borrower, the Managing Agent and Bank
of America National Trust and Savings Association, as
Documentation Agent, and the Banks identified on Schedule 1
thereto, such Banks agreed to advance certain Loans and to issue
certain Letters of Credit to Borrower, on the terms and subject
to the conditions set forth therein, and Borrower agreed to repay
the same, 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
August 6, 1998; (2) by a Second Amendment to Credit Agreement,
dated as of August 31, 1998. As so amended, such credit
agreement is referred to as the "Credit Agreement".
C. Certain Events of Defaults occurred as of September 30,
1998, in respect of Borrower's compliance with certain covenants
set forth in the Credit Agreement (the "Existing Defaults") which
the Required Banks have not waived and which, immediately prior
to the execution and delivery of this Amendment, remain uncured.
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D. The Managing Agent, at the direction and with the
express approval of the Required Banks in accordance with the
applicable provisions of the Credit Agreement, has further agreed
with Borrower to amend the Credit Agreement in order to reflect
the parties' understandings regarding certain changes to the
financial covenants set forth in the Credit Agreement, the Banks'
approval of certain changes to Borrower's accounting practices
relevant to particular kinds of capital expenditures and in order
to make other mutually acceptable changes to the Credit
Agreement, 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
(defined below).
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), so
that from and after the Effective Date the Credit Agreement shall
be completely amended and restated as set forth in Annex 1 to
this Amendment. As so amended and restated, the Credit Agreement
is referred to herein as the "Amended Credit Agreement". The
parties acknowledge that certain exhibits and schedules which are
referred to in the Amended Credit Agreement have been omitted
therefrom. Each exhibit and schedule so omitted remains
identical to the corresponding version thereof which was appended
2
to the Credit Agreement; all such exhibits and schedules shall be
deemed to be incorporated in the Amended Credit Agreement by this
reference.
3. Conditions Precedent to this Amendment. On or
prior to the effective date of this Amendment (the "Effective
Date"), each of the following conditions precedent shall have
been satisfied:
(a) Proof of Corporate Authority. The Managing
Agent shall have received from Borrower copies,
certified by a duly authorized officer of Borrower
to be true and complete on and as of the Effective
Date, of records of all corporate action taken by
Borrower to authorize (i) the execution and
delivery of this Amendment; (ii) the making by
Borrower of the borrowings contemplated by the
Amended Credit Agreement, as amended hereby; and
(iii) the performance of its other obligations and
agreements hereunder and under the Amended Credit
Agreement;
(b) Incumbency Certificate. The Managing Agent
shall have received from Borrower an incumbency
certificate, dated as of the Effective Date,
signed by a duly authorized officer of Borrower
and giving the name and bearing a specimen
signature of each individual who shall be
authorized to sign, in the name and on behalf of
Borrower, this Amendment and the Amended Credit
Agreement.
(c) Officers' Certificate. The Managing Agent
shall have received from Borrower a certificate
dated as of the Effective Date, signed by a duly
authorized officer of Borrower and certifying on
terms acceptable to the Managing Agent that each
of the representations and warranties of Borrower
in the Amended Credit Agreement is 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 Managing Agent
or any Bank to perform any of its agreements or
obligations under the Amended Credit Agreement or
any other Loan Document on or as of the Effective
Date; or (ii) for Borrower to perform any of its
agreements or obligations under the Amended Credit
Agreement or any Loan Document.
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(e) Performance, Etc. Except for the Existing
Defaults, Borrower shall have duly and properly
performed, complied with 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 exist as of the Effective Date,
which 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 Amended
Credit Agreement.
(f) Compliance with Laws. Each of the borrowings
made and each Letter of Credit issued under the
Credit Agreement is, and each borrowing to be made
and each Letter of Credit to be issued under the
Amended Credit Agreement shall be, in compliance
with the requirements of all applicable laws,
regulations, rules and orders, including without
limitation the Environmental Laws and the
requirements imposed by the SEC or by the Board of
Governors of the Federal Reserve System under
Regulations U, G and X.
(g) Payment of Waiver Fee and Certain Expenses.
Borrower shall have (i) paid to the Managing
Agent, for the benefit of the Banks as hereinafter
provided, a Waiver Fee (the "Waiver Fee") in the
amount of Three Hundred Seventy-Five Thousand
Dollars ($375,000); and (ii) reimbursed the
Managing Agent for all reasonable out-of-pocket
costs and expenses, including, without limitation,
all fees and disbursements of legal counsel to the
Managing Agent which shall have been incurred by
the Managing Agent in connection with the
negotiation and preparation of this Amendment and
the documents and instruments described or
referred to herein.
(h) Changes: None Adverse. From the date of the
most recent balance sheets referred to in
Section 4.5 of the Amended Credit Agreement or
delivered in accordance with the requirements of
the Amended Credit Agreement, in either case
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 adverse to
Borrower and its Consolidated Subsidiaries.
(i) Compliance Certificate. The Managing Agent
shall have received a Compliance Certificate, the
required calculations under which shall
demonstrate Borrower's compliance with the
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covenants set forth in the Amended Credit
Agreement.
(j) Other Approvals. The Managing Agent shall
have received such other approvals, opinions,
certificates, instruments and documents with
respect to the transactions described herein as it
may request.
(k) Representations and Warranties. Each of the
representations and warranties made by or on
behalf of Borrower in the Amended Credit Agreement
or in any other Loan Document shall be true,
correct and complete in all material respects as
of the Effective Date.
4. Acknowledgement of Certain Matters.
(a) The Managing Agent acknowledges its receipt
of the Waiver Fee in the amount referred to in Section 3(g),
above, and further acknowledges that the Facility Fee has been
paid for the period ending as of June 30, 1999.
(b) Borrower, the Managing Agent and each Bank
acknowledges that this Amendment, and the implementation of the
terms of the Amended Credit Agreement resulting from this
Amendment, have been made in contemplation of Borrower's revising
its accounting policies to reflect, in accordance with GAAP, the
accounting treatment of certain suite renovation expenditures in
a manner consistent with the application of the Capital
Expenditure Allocation set forth in the Amended Credit Agreement.
The Managing Agent and each Bank approves such revision to
Borrower's accounting practices, and agrees that the
implementation of such revision shall not constitute inconsistent
application of GAAP for purposes of the Amended Credit Agreement.
(c) The Managing Agent and each Bank agrees that
Borrower may, for the purposes of determining Interest Expense
for Borrower's fiscal quarter and fiscal year ended December 31,
1998, effect a proforma adjustment to the interest payable during
5
such fiscal quarter to reflect the difference between the
interest actually paid in respect of the Obligations during such
fiscal quarter and attributable to the unavailability of LIBOR
Rate Loans under the Credit Agreement by reason of the Existing
Defaults and the interest which would have been paid in respect
of the Obligations during such fiscal quarter if LIBOR Rate Loans
at a LIBOR Margin of One Hundred Forty (140) basis points had
been available to Borrower during the period commencing upon the
occurrence of the Existing Defaults and concluding on the
Effective Date.
5. Ratification. Except as specifically modified and
amended by this Amendment, the Credit Agreement and each other
Loan Document is unchanged and remains in full force and effect.
Borrower hereby ratifies and affirms the Credit Agreement and
every term and condition thereof, as the same are amended and
restated as provided herein, and represents and warrants to the
Managing Agent and each Bank that (a) as of the date hereof and
except for the Existing Defaults, there is no Default or Event of
Default; (b) all of Borrower's representations and warranties
under the Amended Credit Agreement are true and correct in all
material respects as of the Effective Date; and (c) Borrower has
no offsets or claims against the Managing Agent or any Bank
under, in respect of or in any way related to the Amended Credit
Agreement or any Loan Document.
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.
7. Effective Date. The amendments contemplated by
this Amendment shall be effective, as of the date first set forth
6
above (the "Effective Date"), upon (i) the execution of this
instrument by Borrower, the Managing Agent, the Documentation
Agent and the Banks; and (ii) the satisfaction of each of the
conditions precedent set forth in Section 3 of this Amendment.
8. Regarding Borrower's Debt Ratings. Borrower
warrants and represents that as of the Effective Date, Borrower's
Debt Ratings are as follows:
Moody's: BBB-; and
S&P: Baa3
9. Regarding the Existing Defaults. The Managing
Agent and the Banks agree that provided that all of the
conditions precedent set forth in Section 3, above, shall have
been fulfilled on or before the Effective Date, all of the
Existing Defaults, and all rights and remedies available to the
Banks or the Managing Agent in consequence of the Existing
Defaults, shall be waived.
10. 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.
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BORROWER:
ASSOCIATED ESTATES REALTY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Print Name: Xxxxxxx X. Xxxxxxxx
Title: President
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxx, President
8
MANAGING AGENT:
NATIONAL CITY BANK
By: /s/ Xxxx X. Xxxxx
------------------
Xxxx X. Xxxxx
Vice President
National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xx. 0000
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxx, Vice President
Investment Real Estate Div.
THE DOCUMENTATION AGENT:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Xxxxxxx X. Xxxx, Xx.
--------------------------------
Print Name: Xxxxxxx X. Xxxx, Xx.
Title: Vice President
000 Xxxxx XxXxxxx Xxxxxx, 00-X
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Xx.,
Vice-President
9
THE BANKS:
NATIONAL CITY BANK
By: /s/ Xxxx X. Xxxxx
--------------------
Xxxx X. Xxxxx
Vice President
National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xx. 0000
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxx, Vice President
Investment Real Estate Div.
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Xxxxxxx X. Xxxx, Xx.
--------------------------------
Print Name: Xxxxxxx X. Xxxx, Xx.
Title: Vice President
000 Xxxxx XxXxxxx Xxxxxx, 00-X
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxx, Xx.,
Vice-President
BANK ONE, N.A.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Print Name: Xxxxxxx X. Xxxxx
Title: Vice President
00 Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx Xxxxx, Vice-President
10
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ Xxxxx Xxxxx
--------------------------------
Print Name: Xxxxx Xxxxx
Title: Assistant Vice President
Xxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx,
Assistant Vice President
XXXXXX TRUST & SAVINGS BANK
By: /s/ Xxxxxxx X. Bins
----------------------------
Print Name: Xxxxxxx X. Bins
Title: Vice President
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Bins,
Vice President
HUNTINGTON BANK - CLEVELAND, N.A.
By: /s/ Xxxxxx X. Xxxx
---------------------------
Print Name: Xxxxxx X. Xxxx
Title: Vice President
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxx,
Vice President
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CITIZENS BANK OF RHODE ISLAND
By: /s/ Xxxx X. Xxxxxx
---------------------------
Print Name: Xxxx X. Xxxxxx
Title: Vice President
Xxx Xxxxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxxx
Vice President
FIRSTMERIT BANK, N.A.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Print Name: Xxxxx X. Xxxxxxx
Title: Vice President
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx,
Vice President
SOUTHTRUST BANK, N.A.
By: /s/ Xxx Xxxxxxxx
--------------------------
Print Name: Xxx Xxxxxxxx
Title: Asst. Vice President
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Print Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxx Xxxxxxx, Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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SCHEDULE 1
to
Third Amendment to
Credit Agreement
Participation
Bank Percentage Credit Commitment
----------------------- ------------- -----------------
National City Bank 14% $ 35,000,000
Bank of America National 14% $ 35,000,000
Trust and Savings
Association
Manufacturers and Traders 8% $ 20,000,000
Trust Company
Xxxxxx Trust & Savings Bank 10% $ 25,000,000
Bank One, N.A. 12% $ 30,000,000
Huntington Bank - 10% $ 25,000,000
Cleveland, N.A.
Citizens Bank of 8% $ 20,000,000
Rhode Island
FirstMerit Bank, N.A. 4% $ 10,000,000
SouthTrust Bank, N.A. 10% $ 25,000,000
Commerzbank 10% $ 25,000,000
Aktiengesellschaft
100% $250,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
December 18, 1998, by and among ASSOCIATED ESTATES REALTY
CORPORATION, an Ohio corporation (hereinafter, "Borrower"), the
banks and lending institutions set forth on Schedule 1 hereto
(the "Banks"), and NATIONAL CITY BANK, a national banking
association ("NCB"), in its capacity as agent for the Banks (in
such capacity, the "Managing Agent"), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, in its capacity as Documentation Agent (in such
capacity, the "Documentation Agent").
RECITALS
A. Pursuant to a Credit Agreement, dated as of
June 30, 1998, by and among Borrower, the Managing Agent, the
Documentation Agent and those Banks which were identified on
Schedule A thereto (the "Original Credit Agreement"), such Banks
agreed to make Loans and to issue Letters of Credit to Borrower
upon the terms and subject to the conditions set forth therein.
B. The Original Credit Agreement has been amended by (1)
that certain First Amendment to Credit Agreement dated as of
August 7, 1998, and (2) that certain Second Amendment to Credit
Agreement, dated as of August 31, 1998. As so amended, the
Original Credit Agreement is referred to as the "Amended Credit
Agreement".
C. Borrower, the Managing Agent, the Documentation Agent
and the Banks have agreed to amend and restate the Amended Credit
Agreement in its entirety as hereinafter set forth.
ARTICLE 1.
INTERPRETATION
Section 1.1 General. For the purposes of this
Agreement, the following general rules of interpretation shall
apply to the extent that they are not clearly inconsistent with
the context or the subject-matter of specific provisions hereof:
(a) The expression "this Agreement" shall mean this
Credit Agreement (including all of the Schedules and Exhibits
annexed hereto) as originally executed, or, if supplemented,
amended or restated from time to time, as so supplemented,
amended or restated;
(b) Singular nouns shall include the plural and vice
versa, and all references to dollars shall mean United States
Dollars;
(c) Accounting terms not otherwise defined herein
shall have the meanings assigned to them in accordance with
Generally Accepted Accounting Principles (as hereinafter
defined); and
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(d) All Schedules and Exhibits to this instrument
shall be deemed to be incorporated herein by reference.
Section 1.2 Definitions. In addition to terms defined
elsewhere in this Agreement, the terms set forth below shall have
the following meanings for the purpose of this Agreement:
"Absolute Interest Period" means, with respect to a
Competitive Bid Loan made at an Absolute Rate, a period not more
than one hundred eighty (180) days after the Draw Date for such
Competitive Bid Loan, as requested by Borrower and offered by a
Bank, but in no event extending beyond the Termination Date. If
an Absolute Interest Period would end on a day which is not a
Business Day, such Absolute Interest Period shall end on the next
succeeding Business Day.
"Absolute Rate" means a fixed rate of interest (rounded
to the nearest 1/100 of 1%) for an Absolute Interest Period with
respect to a Competitive Bid Loan offered by a Bank and accepted
by the Borrower at such rate.
"Absolute Rate Loan" means a Competitive Bid Loan made
at the Absolute Rate.
"Accountants" means Price, Waterhouse & Co., or such
other nationally recognized firm of certified public accountants
as may from time to time be selected by Borrower and acceptable
to the Managing Agent, with the consent of the Required Banks.
"Adjusted Prime Rate" means, at any time, the sum of
the Prime Rate plus the Prime Rate Margin in effect at such time.
"Adjusted Unencumbered Debt Service" means, for any
fiscal period of Borrower and its Wholly-Owned Subsidiaries, an
amount equal to the Debt Service for such period in respect of
all Unencumbered Debt of Borrower and its Wholly-Owned
Subsidiaries, assuming that (a) the rate of interest payable in
respect of all such Unencumbered Debt were the greater of (i)
seven percent (7.0%) per annum, or (ii) two percent (2.0%) per
annum in excess of the prevailing rate, as of the applicable date
of determination, for ten (10) year U.S. Treasury obligations;
and (b) all such Unencumbered Debt were payable in equal monthly
installments of principal and interest over a twenty-five (25)
year mortgage amortization schedule.
"Affiliate" means, in relation to any Person (an
"Affiliated Person"), any Person (other than a Subsidiary) which
(directly or indirectly) controls or is controlled by or is under
common control with such Affiliated Person. For the purposes of
this definition, the term "control" shall mean the possession
(directly or indirectly) of the power to direct or to cause the
direction of the management or the policies of a Person, whether
through the ownership of shares of any class in the capital or
any other voting securities of such Person, by contract or
otherwise.
"Agency Fee" means an annual fee, payable to the
Managing Agent in consideration for its serving as the Managing
15
Agent in respect of the Loan Documents, as and when set forth in
a letter agreement between Borrower and the Managing Agent dated
of even date herewith.
"Aggregate Consolidated Indebtedness" means, at any
time, the sum of (i) the outstanding principal balance at such
time of Consolidated Indebtedness, plus (ii) the amount at such
time of the Consolidated Group Percentage Interest of all
Investment Entity Indebtedness.
"Aggregate Market Value" means, at any time, the sum of
(i) Market Value at such time, plus (ii) the amount at such time
of the Consolidated Group Percentage Interest of Investment
Entity Market Value.
"Apartment Suites" means all multi-family residential
rental units owned by Borrower, its Consolidated Subsidiaries or
any Investment Entity, without regard to whether such units are
subject to any governmental financial support, operating
assistance or regulation. The number of Apartment Suites shall,
for any purpose relevant to this Agreement, mean the aggregate
number of Apartment Suites owned by Borrower, its Consolidated
Subsidiaries or any Investment Entity on the final day of the
fiscal period most recently expired as of the date of such
determination; as to any Investment Entity, the number of
Apartment Suites for the purposes of the determination of the
amount of the Capital Expenditure Allocation shall be equal to
the Consolidated Group Percentage Interest in all of the
Apartment Suites owned by such Investment Entity.
"Applicable Margin" means, as at any date, a percentage
per annum for Prime Rate Loans and Ratable LIBOR Rate Loans,
determined by reference to Borrower's Debt Rating as set forth
below:
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Debt Rating Ratable LIBOR Prime
-------------------- -------------- ------------
Rate Margin Rate Margin
(expressed in (expressed in
Level S&P Xxxxx'x basis points) basis points)
----- --------- --------- ------------- -------------
1 A- to A+ A3 to A1 100 -0-
2 BBB+ Baa1 110 -0-
3 BBB Baa2 125 -0-
4 BBB- Baa3 140 -0-
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