Exhibit 99.3
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AMENDED AND RESTATED CREDIT AGREEMENT
among
CAPRI CAPITAL LIMITED PARTNERSHIP,
CAPRI ACQUISITION, INC.,
and
CM INVESTOR LLC
Dated as of July 16, 2004
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AMENDED AND RESTATED CREDIT AGREEMENT
(This Table of Contents is not a part of
this Amended and Restated Credit Agreement
and is only for
convenience of reference)
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. THE LOANS......................................................1
Section 1.1 Term Loan......................................1
Section 1.2 Note...........................................1
Section 1.3 Interest.......................................2
Section 1.4 Use of Proceeds................................2
Section 1.5 Intentionally omitted..........................2
Section 1.6 Intentionally omitted..........................3
SECTION 2. INTENTIONALLY OMITTED..........................................3
SECTION 3. FEES, PREPAYMENTS AND APPLICATIONS.............................3
Section 3.1 Intentionally omitted..........................3
Section 3.2 Intentionally omitted..........................3
Section 3.3 Voluntary Prepayments..........................3
Section 3.4 Place and Application of Payments..............3
SECTION 4. COLLATERAL; GUARANTY...........................................4
Section 4.1 Collateral.....................................4
Section 4.2 Guaranty.......................................4
Section 4.3 Further Assurances.............................4
SECTION 5. DEFINITIONS; INTERPRETATION....................................4
Section 5.1 Definitions....................................4
Section 5.2 Interpretation.................................8
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BORROWERS....................8
Section 6.1 Organization...................................8
Section 6.2 Qualification..................................8
Section 6.3 Subsidiaries...................................8
Section 6.4 Authorization and Validity.....................9
Section 6.5 Compliance with Laws and Contracts.............9
Section 6.6 Margin Stock...................................9
Section 6.7 Financial Reports..............................9
Section 6.8 Good Title....................................10
Section 6.9 Litigation....................................10
Section 6.10 Approvals.....................................10
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Section 6.11 Compliance with Laws, Environmental Laws......10
Section 6.12 Credit Documents..............................10
Section 6.13 Other Agreements..............................11
Section 6.14 ERISA; No Prohibited Transactions.............11
Section 6.15 Affiliate Transactions........................11
SECTION 7. COVENANTS OF THE BORROWERS....................................11
Section 7.1 Preservation of Existence, Etc................11
Section 7.2 Maintenance of Properties.....................11
Section 7.3 Taxes and Assessments.........................12
Section 7.4 Financial Reports.............................12
Section 7.5 Inspection and Field Audit....................13
Section 7.6 Liens.........................................13
Section 7.7 Compliance with Laws..........................14
Section 7.8 Notice of Event of Default....................14
Section 7.9 Further Assurances............................15
Section 7.10 Burdensome Contracts With Affiliates..........15
Section 7.11 Credit Enhancement Agreement Covenants........15
Section 7.12 Insurance.....................................15
Section 7.13 Liquidity.....................................15
SECTION 8. EVENTS OF DEFAULT.............................................15
Section 8.1 Events of Default.............................15
Section 8.2 Non-Bankruptcy Defaults.......................17
Section 8.3 Bankruptcy Default............................17
Section 8.4 Non-Exclusive.................................17
Section 8.5 Expenses......................................17
Section 8.6 Intentionally omitted.........................18
Section 8.7 Intentionally omitted.........................18
SECTION 9. INTENTIONALLY OMITTED.........................................18
SECTION 10. GENERAL.......................................................18
Section 10.1 No Waiver of Rights...........................18
Section 10.2 Non-Business Day..............................18
Section 10.3 Documentary Taxes.............................18
Section 10.4 Survival of Representations...................18
Section 10.5 Survival of Indemnities.......................18
Section 10.6 Notices.......................................19
Section 10.7 Counterparts..................................20
Section 10.8 Successors and Assigns........................20
Section 10.9 Intentionally omitted.........................20
Section 10.10 Amendments....................................20
Section 10.11 Legal Fees and Indemnification................20
Section 10.12 Advertising...................................21
Section 10.13 Intentionally omitted.........................21
Section 10.14 Governing Law.................................21
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Section 10.15 Headings......................................21
Section 10.16 Entire Agreement..............................21
Section 10.17 Payments Free of Withholding..................21
Section 10.18 Assignment Agreements.........................22
Section 10.19 Intentionally omitted.........................23
Section 10.20 Joint and Several Liability of Borrowers......23
Section 10.21 Waiver of Jury Trial..........................24
Section 10.22 Consent to Jurisdiction.......................24
Section 10.23 Usury.........................................24
Section 10.24 Severability..................................25
SIGNATURE .............................................................S-1
EXHIBIT A - TERM NOTE........................................................A-1
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AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 16, 2004 (this
"Agreement"), among CAPRI CAPITAL LIMITED PARTNERSHIP, a Delaware limited
partnership ("Capri"), CAPRI ACQUISITION, INC., an Illinois corporation ("CAI";
CAI and Capri are collectively referred to as the "Borrowers" and each as a
"Borrower") and CHARTERMAC LENDER LLC, a Delaware limited liability company (the
"Lender").
WHEREAS, The Borrowers, Comerica Bank and Bank One, NA
(successor-in-interest to American National Bank and Trust Company of Chicago)
(the "Term Loan Lenders") entered into that certain Credit Agreement, dated as
of November 19, 1999 (as amended by the First Amendment dated April 28, 2003 and
the Second Amendment, dated January 29, 2004, the "Credit Agreement"), whereby
the Borrowers have borrowed a term loan in the principal amount of $55,000,000
(the "Original Term Loan");
WHEREAS, the parties wish to amend and restate the Credit Agreement to
consolidate the Original Term Loan and additional advances of $29,000,000 and to
modify the terms and conditions of the Credit Agreement as set forth herein;
WHEREAS, simultaneously herewith the Lender has acquired the Original
Term Loan from the Term Loan Lenders and has made an additional loan to the
Borrowers in the principal amount of $17,000,000, to be used for the purposes
set forth in Section 1.4(i), (iii) and (iv) herein; and, subject to the terms
and conditions of this Agreement and the Transaction Agreement (as defined
herein), the Lender has agreed to make a further advance to the Borrowers in the
principal amount of $12,000,000, to be used for the purposes set forth in
Section 1.4(ii) herein; and
WHEREAS, the Lender and the Borrowers wish to enter into an Amended and
Restated Credit Agreement on the terms and conditions set forth therein.
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. THE LOANS
Section 1.1 Term Loan. The Lender has acquired by assignment the
Original Term Loan and simultaneously herewith has advanced an additional
$17,000,000, (the "Initial Advance"), and has agreed, subject to the terms and
conditions set forth herein and in the Transaction Agreement, to make a further
advance (the "CCA Purchase Advance") on the CCA Purchase Closing Date, which
will result in a loan in the aggregate principal amount of $84,000,000 (the
"Loan").
Section 1.2 Note. The Lender's Loan is evidenced by a promissory note of
the Borrowers in the form attached hereto as Exhibit A (the "Note", including
any Note issued pursuant to Section 10.18 hereof) payable to the order of the
Lender in the principal amount of $84,000,000. Advances on the Note shall be
indicated on Schedule A to the Note. Without regard to the principal amount of
the Note stated on its face, the actual principal amount at any
time outstanding and owing by the Borrowers on account of the Note shall be the
principal amount of the Loan made thereon less all payments of principal
actually received by the Lender with respect to the Loan.
Section 1.3 Interest.
(a) Interest Rate. The Loan shall bear interest at the rate of
eleven and one-half percent (11.5%) per annum compounded annually (the
"Interest Rate").
(b) Intentionally omitted.
(c) Intentionally omitted.
(d) Computation and Payment of Interest. All interest on the
Loans shall be calculated on the basis of a 360 day year for the actual
number of days elapsed and be based upon the balance of principal
outstanding and unpaid from time to time. The Loan shall bear interest
payable monthly, in arrears, on the last Business Day of each month
(commencing July, 2004) and on the Maturity Date, at the Interest Rate
and shall bear interest after the occurrence of an Event of Default or
maturity (whether by acceleration or otherwise) at the Default Rate
until paid in full.
(e) Intentionally omitted.
(f) Intentionally omitted.
(g) Intentionally omitted.
Section 1.4 Use of Proceeds. The proceeds of the Loan shall be used (i)
in the amount of $14,500,000 to pay in full the Credit Enhancement Termination
Fee; (ii) in the amount of $12,000,000, to be loaned by the Borrowers to CRC for
payment of the CCA Purchase Price, (iii) in the amount of $450,000 to repay in
full the outstanding indebtedness under the RFC Term Loan, (iv) in the amount of
$1,000,000 for distributions or payments of bonuses to the Capri Principals, as
determined by the Borrowers in their sole discretion, and (v) the balance of the
proceeds of the Loan, to pay expenses and other liabilities as determined by the
Borrowers in their sole discretion, provided, however, that none of such
proceeds shall be paid to the Capri Principals.
Section 1.5 Extension of Termination Date. The Borrowers shall
have the right, exercisable twice, to extend the then current Maturity Date by
an additional 90 days. The Borrowers may exercise such right only by (i)
executing and delivering to the Lender at least 10 days but not more than 60
days prior to the then current Maturity Date, a written request for such
extension (an "Extension Request") and (ii) paying to the Lender a fee in the
amount equal to 0.5% of the then outstanding principal balance of the Loan
("Extension Fee"), and upon such delivery of an Extension Request and payment of
Extension Fee to the Lender, the Maturity Date shall be extended for 90 days.
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Section 1.6 Intentionally omitted.
Section 1.7 Intentionally omitted.
SECTION 2. INTENTIONALLY OMITTED.
SECTION 3. FEES, PREPAYMENTS AND APPLICATIONS.
Section 3.1 Intentionally omitted.
Section 3.2 Intentionally omitted
Section 3.3 Voluntary Prepayments. The Borrowers shall have the
privilege of prepaying the Loan in whole or in part (but, if in part, then (i)
in an amount not less than $100,000 and (ii) if such a prepayment prepays the
Loan in full, including accrued interest thereon to the date of prepayment. The
Borrowers acknowledge and agree that the Loans have been funded in a single
advance and are not revolving loans. Any amounts prepaid hereunder may not be
reborrowed.
Section 3.4 Place and Application of Payments. (a) All payments of
principal, interest, fees and all other amounts payable hereunder shall be made
to the Lender at Lender's office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, (or
such other location as the Lender may from time to time designate to the
Borrowers) no later than 2:00 p.m. (New York time) on the date any such payment
is due and payable. Any payments received after such time shall he deemed to
have been received by the Lender on the next Business Day. All such payments
shall be made in lawful money of the United States of America, in immediately
available funds at the place of payment, without setoff or counterclaim and
without reduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholdings, restrictions
or conditions of any nature imposed by any government or any political
subdivision or taxing authority thereof.
(b) Intentionally omitted.
(c) Anything contained herein to the contrary notwithstanding,
all payments and collections received in respect of the indebtedness
evidenced by the Note including without limitation any amount received
pursuant to the Collateral, by the Lender after the occurrence of an
Event of Default shall be applied as follows:
(i) first, to the payment of any outstanding reasonable costs
and expenses incurred by the Lender in protecting, preserving or
enforcing rights under this Agreement or the other Credit Documents
and in any event including all costs and expenses of a character
which the Borrowers have agreed to pay under Section 10.11 hereof;
(ii) second, to the payment of any outstanding interest or other
fees or amounts due under the Note or this Agreement other than for
principal; and
(iii) third, to the payment of the principal of the Notes.
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SECTION 4. COLLATERAL; GUARANTY.
Section 4.1 Collateral. The payment and performance of the Obligations
shall be secured pursuant to the Security Agreements by security interests in
the Collateral.
Section 4.2 Guaranty.
The Lender shall be entitled to the benefit of the Guaranty of
the Obligations pursuant to those certain Guarantees executed by Xxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxx III, Xxxxx X. Fargo, the General Partner and CRC, which
Guarantees are secured by the Collateral described in the respective Security
Agreements executed by such Guarantors.
Section 4.3 Further Assurances. The Borrowers covenant and agree that
they shall comply and shall cause each Subsidiary to comply, with all terms and
conditions of each of the Collateral Documents and that they shall, at any time
and from time to time as requested by the Lender, execute and deliver such
further instruments and do such acts and things as the Lender may deem necessary
or desirable to provide for or protect or perfect the Lien of the Lender in the
Collateral.
SECTION 5. DEFINITIONS; INTERPRETATION.
Section 5.1 Definitions. The following terms when used herein shall have
the following meanings:
"Affiliate" of a Person means (a) any Person which, directly or
indirectly, controls is controlled by or is under common control with such
Person and (b) any member of a controlled group of corporations or a group of
trades or businesses under common control with such Person and (c) any director
or executive officer, partner or member of such Person. Control (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as used herein, means the possession, directly or indirectly, of the
power in any form to direct or cause the direction of the management and
policies of the person in question.
"Associates" means Capri Capital Associates, LLC, a Delaware limited
liability company, formerly known as Capri Mortgage Associates, LLC.
"Borrower" and "Borrowers" are defined in the introductory paragraph
hereof.
"Business Day" means any day other than a Saturday or Sunday on which
banks are not authorized or required to close in Xxx Xxxx, Xxx Xxxx xxx Xxxxxxx,
Xxxxxxxx.
"CAG" means Capital Associates Group, Inc., an Illinois corporation.
"Capri Companies" means CAI, CCLP, CRC, Capri Holdings, Associates and
Capri Finance and their subsidiaries, and "Capri Company" means CAI, CCLP, CRC,
Capri Holdings, Associates, Capri Finance or their Subsidiaries, as the context
may require.
"Capri Finance" means Capri Capital Finance, LLC, a Delaware limited
liability company.
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"Capri Parties" means the Capri Companies and the Capri Principals, or
any of them, as the context may require.
"Capri Principals" means Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx III and Xxxxx
X. Fargo.
"CCA" means Capri Capital Advisors LLC, a Delaware limited liability
company.
"CCA Minority Interest" means the 49% membership interest in CCA owned
by CAG prior to the Closing Date.
"CCA Purchase Advance" is defined in Section 1.1 hereof.
"CCA Purchase Agreement" means the purchase agreement to be entered into
by and between CRC, as purchaser, and CAG, as seller, pursuant to which CAG
agrees to sell to CRC on the Closing Date the CCA Minority Interest, in form and
substance satisfactory to Lender.
"CCA Purchase Price" means the purchase price for the CCA Minority
Interest payable pursuant to the CCA Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Collateral" has the meaning ascribed thereto in the Transaction
Agreement.
"Collateral Documents" means the Security Agreements and all other
mortgages, deeds of trust, security agreements, assignments, financing
statements and other documents as shall from time to time secure the
Obligations.
"Credit Documents" means this Agreement, the Note, the Security
Agreements, the other Collateral Documents, the Transaction Agreement, the
Option Agreement and any other document or instrument executed in connection
herewith or therewith.
"Credit Enhancement Clawback Right" means the right granted by certain
of the Capri Parties to the Credit Enhancers providing for payment to the Credit
Enhancers of a portion of the proceeds if certain subsequent transactions
involving the acquisition of Capri are entered into (but excluding such
acquisitions by the party providing financing for the repayment of the Existing
Term Loan and the payment of the Credit Enhancement Termination Fee).
"Credit Enhancement Termination Fee" means the fee in the amount of
$14,500,000 payable to the Credit Enhancers by the Borrowers in full
satisfaction of all obligations of the Borrowers and their affiliates to the
Credit Enhancers pursuant to the Credit Enhancement Documents, except for the
Credit Enhancement Clawback Right.
"Credit Enhancers" means GRS and PFRS.
"CRC" means Capri Realty Capital, LLC, a Delaware limited liability
company.
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"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Default Rate" means for any day a rate of interest equal to the
Interest Rate plus 2% per annum.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" means any event or condition described in Section 8.1
hereof.
"Extension Fee" has the meaning ascribed thereto in Section 1.5.
"Extension Request" has the meaning ascribed thereto in Section 1.5.
"Finance" means Capri Capital Finance, LLC, formerly known as Capri
Mortgage Capital, LLC.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time, applied by Borrowers on a basis
consistent with the most recent financial statements furnished to the Lender
pursuant to Section 7.4 hereof.
"General Partner" means CPC Realty Advisors, Inc.
"GRS" means the Board of Trustees of the General Retirement System of
the City of Detroit.
"Holdings" means Capri Holdings, LLC, an Illinois limited liability
company.
"Interest Rate" means for any day a rate of interest equal to 11.5% per
annum.
"Initial Advance" is defined in Section 1.1 hereof.
"Lender" is defined in the introductory paragraph hereof.
"Lien" means any mortgage, deed of trust, lien, security interest,
pledge, charge or encumbrance of any kind in respect of any Property, including
the interests of a vendor or lessor under any conditional sale, capital lease or
other title retention arrangement.
"Loan" is defined in Section 1.1 hereof.
"Maturity Date" means the earlier of (i) January 15, 2005 or (ii) the
date of acceleration of the maturity of the Note pursuant to Section 8.2 or 8.3
hereof.
"Net liquid Assets" means, as of any date, the aggregate amount of cash,
marketable securities, certificates of deposit with maturities of less than one
year and other cash equivalents of Capri (and any Subsidiaries whose assets are
consolidated with Capri under GAAP), determined in accordance with GAAP, minus
(X) the outstanding aggregate liabilities of Capri (and any such consolidated
Subsidiaries) which are secured by any of the foregoing, including
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arbitrage lines of credit and minus (Y) the aggregate amount of any liquidity
deposits which Capri (or any of such consolidated Subsidiaries) is required to
maintain with Xxxxxx Xxx.
"Note" is defined in Section 1.2 hereof.
"Obligations" means all obligations of the Borrowers (i) to pay
principal and interest on the Loan, all fees and charges payable hereunder, (ii)
all other payment obligations of the Borrowers arising under or in relation to
any Credit Document, in each case whether existing or hereafter arising, due or
to become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired or (iii) under the Transaction Agreement and the
other Transaction Documents (as defined therein).
"Person" means an individual, partnership, limited partnership, limited
liability company, corporation, association, trust, unincorporated organization
or any other entity or organization, including a government or agency or
political subdivision thereof.
"PFRS" means the Board of Trustees of the Policemen and Firemen
Retirement System of Detroit.
"Pledged Stock" means the original certificates evidencing all of the
pledged stock, which stock is pledged to the Lender pursuant to the Security
Agreements, together with the undated stock powers duly executed in blank in
connection therewith.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"RFC Term Loan" means that certain Term Loan and Security Agreement
dated August 15, 2000, by and among Capri Finance and CCA, as borrowers, and
Residential Funding Corporation, as lender.
"Security Agreements" has the meaning ascribed thereto in the
Transaction Agreement.
"Subsidiary" of a Person means any sole proprietorship, general or
limited partnership, joint venture, limited liability company, corporation or
other entity of which such Person owns, whether existing or hereafter acquired,
directly or indirectly through one or more intermediaries, more than fifty
percent (50%) of the outstanding securities or ownership interests of any class
or classes ordinarily entitled, in the absence of contingencies, to elect a
majority of the corporate directors or managers (or persons performing similar
functions). "Subsidiaries" shall have the plural meaning of the preceding.
"Transaction Agreement" means that certain Transaction Agreement dated
the date hereof by and among the Borrowers and the Lender.
Section 5.2 Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. All
references to time of day herein are references to New York, New York time
unless otherwise specifically provided. Capitalized terms not otherwise defined
herein shall have the meaning, set forth in the other Credit Documents.
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SECTION 6. REPRESENTATIONS AND WARRANTIES OF BORROWERS.
The Borrowers jointly and severally represent and warrant to the Lender
as follows:
Section 6.1 Organization. Capri is a valid and subsisting limited
partnership duly organized and existing under the laws of the State of Delaware,
and its partnership agreement constitutes the only instrument under which Capri
is organized, is in full force and effect and has not been amended or modified
in any respect except for such amendments and modifications thereto as have been
heretofore furnished to the Lender. CAI is duly organized, validly existing and
in good standing as a corporation under the laws of the State of Illinois. Each
of the Borrowers has provided true, complete and correct copies of its
organizational documents which has heretofore been delivered to the Lender.
Section 6.2 Qualification. Each Borrower has full right and authority to
enter into this Agreement and the other Credit Documents and to make the
borrowings herein provided for, to issue the Note in evidence thereof, to grant
the Liens described in the Collateral Documents and to perform each and all of
the matters and things herein and therein provided for.
Section 6.3 Subsidiaries. Each Subsidiary of the Borrowers is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized, as the case may be, has
full and adequate power to own its Property, to grant the Liens described in the
Collateral Documents and conduct its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying. Schedule 6.3 hereto
identifies each Subsidiary, the jurisdiction of its incorporation or
organization, as the case may be, the percentage of issued and outstanding
shares of each class of its capital stock or other equity interests owned by
each of the Borrowers and their Subsidiaries and, if such percentage is not 100%
(excluding directors' qualifying shares as required by law), a description of
each class of its authorized capital stock and other equity interests and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock and other equity interests of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable and all such
shares and other equity interests indicated on Schedule 6.3 as owned by a
Borrower or a Subsidiary are owned, beneficially and of record, by such Borrower
or such Subsidiary free and clear of all Liens other than those Liens of the
Term Loan Lenders under the Original Loan Agreement which are being assigned to
Lender and the Liens under the Credit Enhancement Agreement which are being
terminated and released simultaneously herewith. There are no outstanding
commitments or other obligations of any Subsidiary to issue, and no options,
warrants or other rights of any Person to acquire, any shares of any class of
capital stock or other equity interests of any Subsidiary.
Section 6.4 Authorization and Validity. All approvals, authorizations or
consents required by law for the execution and delivery by each Borrower of each
of the Credit Documents have been obtained, the execution and delivery by each
Borrower of each of the Credit Documents have been duly authorized by proper
proceedings and each of the Credit Documents constitute valid and binding
obligations of each Borrower, enforceable in accordance with their respective
terms except as such enforceability may be limited by applicable
8
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application relating to or affecting creditors' rights and general
principles of equity.
Section 6.5 Compliance with Laws and Contracts. Neither the execution
and delivery by each Borrower of, nor the compliance of each Borrower with, the
Credit Documents, nor the consummation of the transactions contemplated in the
Credit Documents, will violate (a) any law, rule, regulation order, writ,
judgment, injunction, decree or award binding on any Borrower, (b) the
organizational documents of any Borrower, or (c) the provisions of any
indenture, instrument or agreement to which any Borrower is a party or is
subject, or by which it, or its property, is bound, or conflict with or
constitute a default thereunder, or result in the creation or imposition of any
lien pursuant to the terms of any such indenture, instrument or agreement, other
than as expressly permitted under this Agreement.
Section 6.6 Margin Stock. Neither Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of the Loan hereunder will be used to
purchase or carry any such margin stock or extend credit to others for the
purpose of purchasing or carrying any such margin stock.
Section 6.7 Financial Reports. The consolidated statement of financial
condition of Capri and its Subsidiaries as at December 31, 2003 and the related
consolidated balance sheet, income statement and statement of changes in
financial condition of Capri and its Subsidiaries for the year then ended and
accompanying notes thereto, and the unaudited interim consolidated balance
sheet, income statement and statement of changes of financial condition of Capri
and its Subsidiaries as of May 31, 2004 for the 5 months then ended, heretofore
furnished to the Lender, fairly present the financial condition of Capri and its
Subsidiaries as at said dates in accordance with GAAP. As of the date hereof,
neither of the Borrowers nor any Subsidiary have contingent liabilities which
are material to it other than as indicated on said financial statements. Since
December 31, 2003, there have been no material adverse changes other than as set
forth in Schedule 6.7 in the condition (financial or otherwise) of Capri or any
Subsidiary nor any changes to Capri or any Subsidiary except those occurring in
the ordinary course of business.
Section 6.8 Good Title. The Borrowers and their Subsidiaries each have
good and defensible title to their assets as reflected on the most recent
balance sheet of the Borrowers and its Subsidiaries furnished to the Lender.
Section 6.9 Litigation. There is no litigation or governmental
proceeding pending, nor to the knowledge of any Borrower or any Subsidiary
threatened, against any Borrower or any Subsidiary which (i) if adversely
determined would result in any material adverse change in the financial
condition or liabilities of Borrowers or any Subsidiary, (ii) in any manner
draws into question the validity or enforceability of this Agreement, the Note
or any other Credit Documents or any security interest created hereby or thereby
or (iii) in any way contests the existence, organization or powers of any of
Borrowers or any Subsidiary.
Section 6.10 Approvals. No authorization, consent, license, exemption or
filing or registration with any court or governmental department, agency or
instrumentality, including for this purpose, Xxxxxx Xxx and Xxxxxxx Mac, or any
approval or consent of any Person, is or will
9
be necessary to the valid execution, delivery or performance by the Borrowers of
this Agreement, the Note or the other Credit Documents.
Section 6.11 Compliance with Laws, Environmental Laws. To the best of
the Borrowers' knowledge, each Borrower is in compliance with the requirements
of all federal state and local laws, rules and regulations, including for this
purpose Xxxxxx Mae and Xxxxxxx Mac, applicable to or pertaining to its business
operations (including, without limitation, the Occupational Safety and Health
Act of 1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), non-compliance with which could have
a material adverse effect on its financial condition, business or operations. No
Borrower has received notice to the effect that its operations are not in
compliance with any of the requirements of applicable federal, state or local
environmental, health and safety statutes and regulations or are the subject of
any governmental 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 on its financial condition, business or operations.
Section 6.12 Credit Documents. Representations and warranties contained
in the Credit Documents and contained in Schedule 7.11 with respect to the
Borrowers and their Affiliates, and each of them, are true and correct in all
material respects
Section 6.13 Other Agreements. Neither of the Borrowers is in default
under the terms of any covenant, indenture or agreement of or affecting such
Borrower or any of its Properties, which default would have a material adverse
effect on the financial condition, Properties, business, operations or
liabilities of such Borrower.
Section 6.14 ERISA; No Prohibited Transactions. The consummation of the
transactions provided for in this Agreement and compliance by Borrowers with the
provisions hereof and the Notes issued hereunder will not involve any prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975 of the
Code. The exercise by the Lender of its rights hereunder will not constitute a
prohibited transaction (as defined above) with respect to either Borrower. The
foregoing representation is made on the assumption that no portion of the funds
used by the Lender to fund the Loans are subject to the "prohibited transaction"
rules of ERISA.
Section 6.15 Affiliate Transactions. Neither of the Borrowers nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
on terms and conditions which are less favorable to such Borrower or such
Subsidiary than would be usual and customary in similar contracts or agreements
between Persons not affiliated with each other.
SECTION 7. COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree with the Lender that they will do the
following so long as any amounts remain outstanding under the Note or any other
obligations remain unfulfilled under this Agreement, unless the Lender shall
otherwise consent in writing.
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Section 7.1 Preservation of Existence, Etc. Each Borrower shall (i)
preserve and maintain its existence as a limited partnership, or corporation, as
the case may be, and shall take no action to alter, change or terminate its
existence or status, (ii) comply in all material respects with its
organizational documents, and (iii) comply in all material respects with the
provisions of any indenture, instrument or agreement to which such Borrower is a
party or is subject, or by which it, or its Properties, is bound, the violation
of which would have a material and adverse effect on such Borrower's ability to
perform its obligations under this Agreement or any other Credit Document.
Section 7.2 Maintenance of Properties. Each Borrower shall maintain,
preserve, and keep its property, plant and equipment in good repair, working
order and condition (ordinary wear and tear excepted) and each Borrower will
from time to time make or cause to be made all needful and proper repairs,
renewals, replacements, additions and betterments thereto so that at all times
the efficiency thereof shall be fully preserved and maintained.
Section 7.3 Taxes and Assessments. Each Borrower will duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge all taxes,
rates, assessments, fees and governmental charges upon or against it or its
property, before the same become delinquent and before penalties accrue thereon,
unless and to the extent that the same are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and adequate reserves are provided therefor.
Section 7.4 Financial Reports. Each Borrower will, and will cause each
Subsidiary to, maintain a standard system of accounting and each Borrower will
furnish to the Lender and their duly authorized representatives such information
respecting the business and financial condition of such Borrower and its
Subsidiaries as the Lender may reasonably request; and without any request, will
furnish to the Lender:
(a) as soon as available, and in any event within 45 days after
the close of each calendar quarter of such Borrower, a quarterly
financial statement for such calendar quarter and for the year to date
prepared on a GAAP basis in the form then used by such Borrower
certified by its General Partner or chief financial officer, as
applicable, as being materially true and correct;
(b) as soon as available, and in any event within 90 days after
the close of each fiscal year a copy of such Borrower's consolidated
balance sheet and income statement for such fiscal year. Each such
annual report shall be prepared in accordance with GAAP, be audited by
an independent certified public accountant reasonably satisfactory to
the Lender, and be in a form reasonably satisfactory to the Lender;
(c) promptly after knowledge thereof shall have come to the
attention of any responsible officer of such Borrower (or General
Partner, as applicable), written notice of any threatened or pending
litigation or governmental proceeding against such Borrower which, if
adversely determined, would materially adversely effect the financial
condition, business or operations of such Borrower or of the occurrence
of any Default or Event of Default;
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(d) promptly upon any transfer of any interest in such Borrower
written notice of such transfer;
(e) (i) within 45 days after the end of each calendar quarter a
report showing the unpaid principal balance of loans closed and loans
fully paid during the quarter, and (ii) on a quarterly basis (1) a
report showing mortgage servicing rights held at the beginning of the
quarter, those acquired and those disposed of during the quarter,
amortization for the quarter and the ending balance; (2) a collateral
report listing the unpaid principal balance of loans, and other property
and assets of such Borrower, including, in the case of Capri, a
statement of the Net Liquid Assets of Capri; (3) a report showing all
outstanding loan balances being serviced by such Borrower and its
Affiliates, classified by investor; and (4) a statement signed by the
chief financial officer of such Borrower or General Partner, as
applicable, that no default exists under any agreement between such
Borrower or any of its Affiliates, on the one hand, and the Xxxxxx Mae
or HUD, on the other hand, regarding mortgage origination, mortgage
warehousing and mortgage servicing activities for these respective
entities.
(f) Along with the statements provided in (b) above, each
Borrower shall provide:
(i) a certificate signed by a chief financial officer of
such Borrower or General Partner, as applicable, certifying that
(A) the signing officer has conducted or supervised a review of
such Borrower's and each Subsidiaries' mortgage origination,
mortgage warehousing and mortgage servicing activities for the
preceding year and such Borrower's and each Subsidiaries'
obligations under this Agreement and (B) to the best of such
officer's knowledge, no Default or Event of Default has occurred
under such agreements or, the officer shall enumerate the
defaults that have occurred and indicating the corrective action
taken or to be taken; and
(ii) a letter or letters from one or more firms or
independent, nationally recognized certified public accountants
stating that such firm has (A) performed applicable tests with
respect to the servicing rights portfolio in accordance with the
compliance testing procedures as set forth in the then-current
version of the guidelines or requirements of any government
sponsored entity and (B) examined such operations in accordance
with the requirements of the then-current Uniform Single Audit
Program for Mortgage Bankers (or its replacement), and stating
the conclusions resulting from such audits (to the extent that
it is applicable).
Section 7.5 Inspection and Field Audit. Each Borrower will permit the
Lender and its duly authorized representatives and agents to visit and inspect
any of the Properties, corporate books and financial records of such Borrower,
to examine and make copies of the books of accounts and other financial records
of such Borrower, and to discuss the affairs, finances and accounts of such
Borrower with, and to be advised as to the same by, such Borrower's officers,
independent public accountants, and actuaries (and by this provision such
Borrower authorizes such accountants and actuaries to discuss with the Lender
the finances and affairs of such Borrower) at such reasonable times and
reasonable intervals as the Lender may designate.
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Section 7.6 Liens. No Borrower will, nor will any Borrower permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any kind
of Property owned by such Borrower or any Subsidiary; provided, however, that
this Section 7.6 shall not apply to, nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar charges,
good faith cash deposits in connection with tenders, contracts or leases to
which any Borrower or any Subsidiary is a party or other cash deposits required
to be made in the ordinary course of business, provided in each case that the
obligation is not for borrowed money and that the obligation secured is not
overdue or, if overdue, is being contested in good faith by appropriate
proceedings which prevent enforcement of the matter under contest and adequate
reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers',
or other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith by
appropriate proceedings which prevent enforcement of the matter under contest;
(c) the pledge of assets for the purpose of securing an appeal,
stay or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of Borrowers and their Subsidiaries secured by a
pledge of assets permitted under this subsection, including interest and
penalties thereof, if any, shall not be in excess of $100,000 at any one time
outstanding;
(d) Liens on property of the Borrowers or any of their
Subsidiaries representing or incurred to finance, refinance or refund the
purchase price of Property, provided that no such Lien shall extend to or cover
other Property of any Borrower or Subsidiary other than the respective Property
so acquired, and the principal amount of indebtedness secured by any such Lien
shall at no time exceed the original purchase price of such Property;
(e) Intentionally omitted.
(f) Liens securing mortgage warehouse lines of credit obtained in
the ordinary course of business.
(g) Liens securing arbitrage lines of credit in the ordinary
course of business.
Section 7.7 Compliance with Laws. Each Borrower will comply with all
requirements of all federal, state and local laws, rules, regulations,
ordinances and orders applicable to or pertaining to business operations of such
Borrower, non-compliance with which could have a material adverse effect on the
financial condition, business or operations of such Borrower or could result in
a Lien upon any of its Property; provided, however, that such Borrower may
contest the validity or application thereof and appeal or otherwise seek relief
therefrom, and exercise any and all of the rights and remedies which it may have
with regard thereto.
Section 7.8 Notice of Event of Default. Each Borrower shall immediately
give notice to the Lender of the occurrence of any Default or Event of Default.
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Section 7.9 Further Assurances. Each Borrower shall promptly execute and
deliver, at any time and from time to time, at the expense of such Borrower, all
further instruments and documents, and take all further action, that may be
necessary or reasonably desirable as determined by the Lender, in order to
perfect and protect any interest granted or purported to be granted hereby or by
any Credit Document.
Section 7.10 Burdensome Contracts With Affiliates. Each Borrower shall
not, nor shall it permit any Subsidiary to, enter into any contract, agreement
or business arrangement with any of its Affiliates on terms and conditions which
are less favorable to such Borrower or such Subsidiary than would be usual and
customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.
Section 7.11 Credit Enhancement Agreement Covenants. Each Borrower
agrees that it will, and that it will cause Holdings to, comply with, abide by,
and be restricted by all the agreements, covenants, obligations and undertakings
of such Borrower contained in Schedule 7.11 attached hereto.
Section 7.12 Insurance. Each Borrower shall insure and keep insured, and
shall cause each of its Subsidiaries to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated against loss or damage
from such hazards and risks, and in such amounts, as are insured by Persons
similarly situated; and each Borrower shall insure, and shall cause each of its
Subsidiaries to insure, such other hazards and risks (including professional
liability, employers' and public liability risks) with good and responsible
insurance companies as and to the extent usually insured by Persons similarly
situated and conducting similar businesses.
Section 7.13 Liquidity. Capri shall not, at any time, permit its Net
Liquid Assets to be less than $4,000,000.00.
SECTION 8. EVENTS OF DEFAULT.
Section 8.1 Events of Default. Any one or more of the following shall
constitute an Event of Default hereunder:
(a) default in the payment when due of all or any part of any
Obligation payable by the Borrowers (or either of them) hereunder or
under any other Credit Document (whether at the stated maturity thereof
or at any other time provided for in this Agreement) after which the
Lender shall provide prompt written notice to the Borrowers; or
(b) default in the observance or performance of the covenants set
forth in Section 7.1(i) hereof or the occurrence of an "Event of
Default" listed in Section 3 of Schedule 7.11; or
(c) default in the observance or performance of any other
provision hereof which is not remedied within 30 days after written
notice thereof to the Borrowers by the Lender; provided, however, that
if such breach cannot be corrected within such period, it shall not
constitute an Event of Default if the breach is correctable and if
corrective
14
action is instituted by or on behalf of the Borrowers within such period
and diligently pursued until the breach is corrected but, in any event,
such breach must be corrected within 60 days after the earlier of the
notice from the Lender or the date any Borrower first had knowledge of
such breach; or
(d) any representation or warranty made by or on behalf of the
Borrowers, or either of them, herein or in any statement or certificate
furnished by it pursuant hereto, or in connection with the Loan made
hereunder, proves untrue in any material respect as of the date of the
issuance or making thereof; or
(e) any material provision of this Agreement, or any other Credit
Document shall cease to be valid and binding, or any Borrower shall
contest any such provision, or any Borrower, or any agent or trustee on
behalf of any Borrower shall deny that it has any or further liability
under this Agreement (other than as a result of payment in full), or any
other Credit Document; or
(f) any Borrower shall (i) have entered involuntarily against it
an order for relief under the Bankruptcy Code of 1978, as amended, and
any such proceeding continues undismissed for a period of 60 days, (ii)
not pay, or admit in writing its inability to pay, its debts generally
as they become due or suspend payment of its obligations, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent
to, or acquiesce in, the appointment or a receiver, custodian, trustee,
conservator, liquidator or similar official for it or any substantial
part of its property, (v) institute any proceeding seeking to have
entered against it an order for relief under the Bankruptcy Code of
1978, as amended, to adjudicate it insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, marshaling of
assets, 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, (vi) fail to
contest in good faith any appointment or proceeding described in Section
8.1(g) hereof, or (vii) take any action in furtherance of any of the
foregoing purposes; or
(g) a custodian, receiver, trustee, conservator, liquidator or
similar official shall be appointed for any Borrower or any substantial
part of the Property of any Borrower, or a proceeding described in
Section 8.1(f)(v) shall be instituted against any Borrower and such
appointment continues undischarged or any such proceeding continues
undismissed or unstayed for a period of 60 days; or
(h) default shall occur in the payment when due of indebtedness
for borrowed money issued, assumed, or guaranteed by any Borrower or
under any indenture, agreement or other instrument under which the same
may be issued in an aggregate principal amount for all such indebtedness
for borrowed money in excess of $100,000, and such default shall
continue for a period of time sufficient to permit the acceleration of
the maturity of any such indebtedness for borrowed money or any such
indebtedness for borrowed money shall not be paid when due (whether by
lapse of time, acceleration or otherwise); or
15
(i) any judgment or judgments, writ or writs or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of $100,000 and not fully covered by
insurance (subject to such deductibles as reasonably established by the
Borrowers) shall be entered or filed against any Borrower or against any
of their Property and remains unvacated, unbonded or unstayed for a
period of 60 days; or
(j) Intentionally omitted.
(k) any transfer of any ownership interest in any Borrower
without the prior written consent of the Lender.
Section 8.2 Non-Bankruptcy Defaults. When any Event of Default other
than those described in Sections 8.1(f) or (g) has occurred and is continuing,
the Lender may by notice to the Borrowers declare the principal of and the
accrued interest on the Note to be forthwith due and payable and thereupon the
Note, including both principal and interest, shall be and become immediately due
and payable together with all other amounts payable under this Agreement without
further demand, presentment, protest or notice of any kind.
Section 8.3 Bankruptcy Default. When any Event of Default described in
subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing,
then the Notes and the aggregate principal amount of the Loan shall immediately
become due and payable together with all other amounts payable under this
Agreement or under any Credit Document without presentment, demand, protest or
notice of any kind including, without limitation, the obligation to pay any
amounts owing under Section 2.5 hereof based on a prepayment of the entire
principal amount of the Loan on the date of such acceleration.
Section 8.4 Non-Exclusive. The rights provided for herein are cumulative
and are not exclusive of any other rights, powers, privileges or remedies
provided in the other Credit Documents or by law.
Section 8.5 Expenses. The Borrowers agree to pay to the Lender all
reasonable costs and expenses incurred or paid by the Lender, or any such
holder, including reasonable attorneys' fees and court costs, in connection with
any Default or Event of Default hereunder or in connection with the enforcement
of any of the terms hereof or of the Note.
Section 8.6 Intentionally omitted.
Section 8.7 Intentionally omitted.
SECTION 9. INTENTIONALLY OMITTED.
SECTION 10. GENERAL.
Section 10.1 No Waiver of Rights. No delay or failure on the part of the
Lender or on the part of the holder of the Note in the exercise of any power or
right shall operate as a waiver thereof, nor as an acquiescence in any default,
nor shall any single or partial exercise thereof preclude any other or further
exercise of any other power or right, and the rights and remedies
16
hereunder of the Lender and of the holder of the Note are cumulative to, and not
exclusive of, any rights or remedies which any of them would otherwise have.
Section 10.2 Non-Business Day. If any payment of principal or interest
on the Loan or of any fee hereunder, shall fall due on a day which is not a
Business Day, interest at the rate the Loan bears for the period prior to
maturity or at the rate such fee accrues shall continue to accrue from the
stated due date thereof to and including the next succeeding Business Day, on
which the same shall be payable.
Section 10.3 Documentary Taxes. The Borrowers agree that they will pay
any documentary, stamp or similar taxes payable in respect to this Agreement or
the Note, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made and whether or not any
credit is then in use or available hereunder.
Section 10.4 Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and of the Note, and shall continue
in full force and effect with respect to the date as of which they were made as
long as any credit is in use or available hereunder. Section 10.5 Survival of
Indemnities. All indemnities shall survive the termination of this Agreement and
the payment of the Loan and the Note; provided that the Lender shall not make a
claim for such compensation later than five years after the repayment in full of
the Loan.
Section 10.6 Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including cable, telecopy or telex) and shall be
given to the relevant party at its address, telecopier number or telex number
set forth below, in the case of the Borrowers and the Lender, or such other
address or telecopier number as such party may hereafter specify by notice to
the other party, given by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder to the Borrowers shall
be addressed to:
Capri Capital Limited Partnership
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx III
Telecopy: (000) 000-0000
with a copy to: Xxxxxxxxxxxx Xxxx & Xxxxxxxxx LLP
800 Sears Tower
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
And if to Lender, to: c/o CharterMac
17
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to: Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and, in case of any
notice of default by
the Lender to Capri
or other Capri Parties,
with a copy to: Xxxxxx Mae
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxx Xxxx
Telecopy No.: (000) 000-0000
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 10.6 and a confirmation of such telecopy has been
received by the sender, (ii) if given by mail, five (5) days after such
communication is deposited in the mail, certified or registered with return
receipt requested, addressed as aforesaid or (iii) if given by any other means,
when delivered at the addresses specified in this Section; provided that any
notice given pursuant to Section 1 hereof shall be effective only upon receipt.
Section 10.7 Counterparts. This Agreement may be executed in any number
of counterparts, and by the different parties on different counterparts, each of
which when executed shall he deemed an original but all such counterparts taken
together shall constitute one and the same instrument.
Section 10.8 Successors and Assigns. This Agreement shall be binding
upon the Borrowers and their respective successors and assigns, and shall inure
to the benefit of the Lender and, to the benefit of their respective successors
and assigns (subject to Section 10.18), including any subsequent holders of the
Note. The Borrowers may not assign any of their respective rights or obligations
hereunder without the written consent of the Lender.
Section 10.9 Intentionally omitted.
Section 10.10 Amendments. Any provision of this Agreement or the other
Credit Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrowers and Lender.
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Section 10.11 Legal Fees and Indemnification.
(a) Borrowers agree to pay, or reimburse the Lender for payment
of, on demand (i) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing, recording or
amendment of this Agreement and the other Credit Documents and the consummation
of the transactions contemplated hereby, and any and all liabilities with
respect to or resulting from any delay in paying or omitting to pay such taxes
or fees, and (ii) in connection with any Default or Event of Default, all
reasonable costs and expenses of the Lender (including reasonable fees and
expenses of in-house and outside counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with the amendment,
waiver or enforcement of this Agreement, or the Credit Documents or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement.
(b) Borrowers agree to indemnify and save the Lender harmless
from all loss, cost, damage, liability or expenses, including reasonable
in-house and outside attorneys' fees and disbursements, incurred by the Lender
by reason of an Event of Default (including in connection with any "workout" or
restructuring regarding the Obligations hereunder, and including in any
bankruptcy or insolvency proceeding or appellate proceeding), or enforcing the
obligations of any Borrower under this Agreement or any of the other Credit
Documents or in the prosecution or defense of any action or proceeding
concerning any matter growing out of or in connection with this Agreement or any
of the other Credit Documents, excluding, however, any loss, cost, damage,
liability or expenses arising solely as a result of the gross negligence or
willful misconduct of the party seeking to be indemnified.
(c) The obligations of the Borrowers under this Section 10.11
shall survive the termination of this Agreement.
Section 10.12 Advertising. Neither the Borrowers nor the Lender shall
advertise the transactions contemplated by this Agreement or the other Credit
Documents without the prior written consent of the other party. Borrowers may
disclose to the Credit Enhancers, to the Term Loan Lenders, to CAG and to
CALPERS the existence of this Agreement and the general structure of the
transactions described herein, but not the identity of the Lender. Borrowers and
Lender shall consult with each other on the desirability, timing and substance
of any press release or public announcement, publicity statement, or other
public disclosure relating to this Agreement or the other Credit Documents. The
parties hereto each agree not to make any such public disclosures without the
prior written consent of the other parties as to the content and timing of such
disclosure; provided, however, that either party may make such disclosures as
required to comply with applicable law, regulations or stock exchange
requirements. The parties acknowledge that they have executed that certain
Confidentiality Agreement, dated May 28, 2004 (the "Confidentiality Agreement"),
and that they shall continue to be obligated by the terms and provisions of such
Confidentiality Agreement notwithstanding the execution of this Agreement.
Section 10.13 Intentionally omitted.
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Section 10.14 Governing Law. This Agreement and the Note, and the rights
and duties of the parties hereto, shall be construed and determined in
accordance with the laws of the State of New York, without regard to conflicts
of law doctrine.
Section 10.15 Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 10.16 Entire Agreement. This Agreement and the other Credit
Documents constitutes the entire understanding of the parties hereto with
respect to the subject matter hereof and any prior or contemporaneous
agreements, whether written or oral, with respect thereto are superseded hereby.
Section 10.17 Payments Free of Withholding.
Except as otherwise required by law, each payment by any Borrower under
this Agreement or the other Credit Documents shall be made without withholding
for or on account of any present or future taxes (other than overall net income
taxes on the recipient) imposed by or within the jurisdiction in which any
Borrower is domiciled, any jurisdiction from which any Borrower makes any
payment, or (in each case) any political subdivision or taxing authority thereof
or therein. If any such withholding is so required, the Borrowers shall make the
withholding, pay the amount withheld to the appropriate governmental authority
before penalties attach thereto or interest accrues thereon and forthwith pay
such additional amount as may be necessary to ensure that the net amount
actually received by the Lender free and clear of such taxes (including such
taxes on such additional amount) is equal to the amount which that the Lender
would have received had such withholding not been made. If the Lender pays any
amount in respect of any such taxes, penalties or interest, the Borrowers shall
reimburse the Lender for that payment on demand in the currency in which such
payment was made. If any Borrower pays any such taxes, penalties or interest, it
shall deliver official tax receipts evidencing that payment or certified copies
thereof to the Lender on whose account such withholding, was made on or before
the thirtieth day after payment.
Section 10.18 Assignment Agreements.
(a) The Lender shall have the right at any time to sell, assign,
transfer or negotiate all or any part of its rights and obligations under the
Credit Documents (including, without limitation, the indebtedness evidenced by
the Note held by the assigning Lender, its obligation to make the Loan to one or
more commercial banks or other financial institutions or investors, provided
that, unless otherwise agreed to by the Lender, such assignment shall be of a
fixed percentage (and not by its terms of varying percentage) of the Lender's
rights and obligations under the Credit Documents; provided, however, that in
order to make any such assignment (i) so long as no Event of Default then
exists, the Borrowers' consent shall be required for any such assignment by the
Lender, and (ii) (A) unless the assigning Lender is assigning all of its
outstanding Loan, the assigning Lender shall retain at least $5,000,000 in
outstanding Loan, (B) the assignee Lender shall have outstanding Loans of at
least $5,000,000, (C) each such assignment shall be evidenced by a written
agreement (substantially in the form attached hereto as Exhibit C or in such
other form acceptable to the Lender) executed by Lender, such assignee Lender
and, if required as provided above, the Borrowers, which agreement shall
20
specify in each instance the portion of the Obligations which are to be assigned
to the assignee Lender and the portion of the Loan of the assigning Lender to be
assumed by the assignee Lender, and (D) the assigning Lender shall pay to the
Lender a processing fee of $3,500 and any out-of-pocket attorneys' fees and
expenses incurred by the Lender in connection with any such assignment agreement
unless such assignment is made pursuant to Section 8.7 hereof. Any assignee
satisfying the foregoing requirements shall become a Lender for all purposes
hereunder to the extent of the rights and obligations under the Credit Documents
it assumes and the assigning Lender shall be released from its obligations, and
will have released its rights, under the Credit Documents to the extent of such
assignment. The address for notices to such assignee Lender shall be as
specified in the assignment agreement executed by it. The Borrowers authorize
the Lender to disclose to any purchaser or prospective purchaser of an interest
in the Loan owed to it under this Section any financial or other information
pertaining to the Borrowers or any Affiliate or Subsidiary. Promptly upon the
effectiveness of any such assignment agreement, the Borrowers shall execute and
deliver replacement Notes to the assigning Lender and the assignee Lender after
giving effect to the reduction occasioned by such assignment (all such Notes
shall collectively constitute the "Note" for all purposes of this Agreement and
the other Credit Documents), and the assigning Lender shall surrender to the
Borrowers its old Note upon delivery of such replacement Notes. Notwithstanding
the foregoing, nothing herein contained shall prevent (i) the Lender from
assigning its rights in and to the Loan and the Credit Documents as collateral
security to any party providing financing to the Lender and (ii) after an Event
of Default, from any such secured party making further transfers or assignments
of the Loan or any rights under the Credit Documents.
(b) The Lender may at any time pledge or grant a security
interest in all or any portion of its rights under this Agreement to secure its
obligations, including any such pledge or grant to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or grant of a security interest;
provided that no such pledge or grant of a security interest shall release the
Lender from any of its obligations hereunder or substitute any such pledgee or
secured party for the Lender as a party hereto; provided further, however, that
the right of any such pledgee or grantee (other than any Federal Reserve Bank)
to further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.
Section 10.19 Intentionally omitted.
Section 10.20 Joint and Several Liability of Borrowers. Each Borrower
hereby acknowledges and agrees that it is jointly and severally liable for all
of the Obligations regardless of, and each Borrower hereby waives any defense
based upon:
(a) any lack of validity, legality or enforceability of this
Agreement or any other Credit Documents as to the other Borrower;
(b) the failure or delay of the Lender to enforce any right or
remedy against the other Borrower;
21
(c) any reduction, limitation, impairment of termination of any
Obligations with respect to the other Borrower for any reason, including
recision in bankruptcy or any claim of waiver, release, surrender,
alteration or compromise;
(d) any addition, exchange, release, surrender or nonperfection
of any collateral of the other Borrower; and
(e) any other circumstance with respect to the other Borrower
which might otherwise constitute a defense (other than the defense of
payment in full of the Obligations) available to, or a legal or
equitable discharge of, such other Borrower.
Each Borrower agrees that its joint and several liability hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Obligations is rescinded or must
be restored by the Lender or any holder of any of the Notes, upon the
insolvency, bankruptcy or reorganization of the other Borrower, as though such
payment had not been made. The Borrowers represent and warrant that (i) the
Borrowers are Affiliates under common management; (ii) the business operations
of the Borrowers are interrelated; and (iii) the proceeds of the Loan will
directly or indirectly benefit both Borrowers, regardless of which Borrower
requests or receives part or all of such proceeds. The Borrowers agree that the
Lender shall not have any duty or responsibility to provide any Borrower with
any credit or other information concerning the other Borrower's affairs,
financial condition or business.
Section 10.21 Waiver of Jury Trial. EACH BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT THAT SUCH BORROWER MAY HAVE TO A
TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS
CREDIT AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY OTHER STATEMENTS
OR ACTIONS OF THE AGENT OR ANY LENDER. EACH BORROWER ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO THIS AGREEMENT AND
EACH OTHER CREDIT DOCUMENT, AND THAT THIS WAIVER SHALL BE EFFECTIVE AS TO EACH
OF THE OTHER CREDIT DOCUMENTS AS IF FULLY INCORPORATED THEREIN.
Section 10.22 Consent to Jurisdiction. EACH BORROWER ACKNOWLEDGES THAT
THE LENDER'S PRINCIPAL OFFICE IS LOCATED IN NEW YORK, NEW YORK AND THAT THE
AGENT MAY BE IRREPARABLY HARMED IF IT IS REQUIRED TO INSTITUTE OR DEFEND ANY
ACTION IN ANY JURISDICTION OTHER THAN THE SOUTHERN DISTRICT OF NEW YORK OR NEW
YORK COUNTY, NEW YORK. THEREFORE, EACH BORROWER IRREVOCABLY AGREES THAT ANY
SUIT, ACTION OR OTHER LEGAL PROCEEDING BY SUCH BORROWER RELATING TO THIS
AGREEMENT OR THE CREDIT DOCUMENTS SHALL BE BROUGHT ONLY IN THE CIRCUIT COURT OF
NEW YORK COUNTY OR IN THE SOUTHERN DISTRICT OF NEW YORK. EACH BORROWER CONSENTS
TO THE JURISDICTION OF EACH SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDINGS
BY AGENT OR ANY LENDER AND WAIVES ANY OBJECTION WHICH SUCH BORROWER MAY HAVE TO
THE LAYING OF VENUE IN ANY SUCH SUIT, ACTION OR PROCEEDING IN EITHER
22
SUCH COURT. EACH BORROWER AGREES TO JOIN THE AGENT IN ANY PETITION FOR REMOVAL
TO EITHER SUCH COURT.
Section 10.23 Usury. Each Borrower hereby represents and warrants that
the loans hereunder are business loans made for business purposes. All
agreements in the Note or any of the other Credit Documents are expressly
limited so that in no contingency or event whatsoever, whether by reason of
advancement or acceleration of maturity, or otherwise, shall the amount paid or
agreed to be paid under the Note or any of the other Credit Documents for the
use, forbearance or detention of money exceed the highest lawful rate permitted
under applicable usury laws. If, from any circumstance whatsoever, fulfillment
of any provision of the Note or of any of the Credit Documents, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law which a court of competent jurisdiction deems
applicable to the indebtedness evidenced hereby, then, the obligation to be
fulfilled shall be reduced to the limit of such validity and if, from any
circumstance whatsoever, the Lender or any holder of a Note shall ever receive
as interest an amount which would exceed the highest lawful rate, the receipt of
such excess shall be credited against the principal amount of the indebtedness
evidenced by the applicable Note to which the same may lawfully be credited, and
any portion of such excess not capable of being so credited shall be rebated to
Borrowers.
Section 10.24 Severability. Invalidation of any one or more clauses in
any provision, or any entire provision, of any of the Credit Documents by
judgment, order or decree of state or federal court shall in no way affect any
other clause or provision in any of the Credit Documents, all of which shall
remain in full force and effect.
[SIGNATURES FOLLOW]
23
IN WITNESS WHEREOF, the Lender and the Borrowers have caused this
Agreement to be duly executed on the date first above written.
BORROWERS:
CAPRI CAPITAL LIMITED PARTNERSHIP, a
Delaware limited partnership
By: CPC Realty Advisors, Inc., an Illinois
corporation, its General Partner
By: /s/ Xxxxxxx X. Xxxxx, III
---------------------------
Name: Xxxxxxx X. Xxxxx, III
Its: Co-Chairman
CAPRI ACQUISITION, INC., an Illinois
corporation
By:/s/ Xxxxxxx X. Xxxxx, III
-------------------------
Name: Xxxxxxx X. Xxxxx, III
Its: Co-Chairman
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
S-1
LENDER:
Loan: $84,000,000 CM INVESTOR LLC
ADDRESS AND LENDING OFFICE: By: Charter Mac Corporation, its
Sole Member
Attention: Xx. Xxxxxx X. Xxxxxx
c/o CharterMac
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 By:/s/ Xxxxxx X. Xxxxxx
---------------------
Telecopy. (000) 000-0000 Name: Xxxxxx X. Xxxxxx
Telephone. (000) 000-0000 Its: Chief Executive Officer
S-2
EXHIBIT A
AMENDED AND RESTATED TERM NOTE
New York, New York
$84,000,000 ___________, 2004
FOR VALUE RECEIVED, the undersigned, CAPRI CAPITAL LIMITED PARTNERSHIP
and CAPRI ACQUISITION, INC. (collectively, the "Borrowers" and individually each
a "Borrower") promise, jointly and severally, to pay to the order of CHARTERMAC
LENDER LLC (the "Lender") at the offices of the Lender located at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, the principal sum of (i) Eighty-Four Million dollars
($84,000,000) or (ii) such lesser amount as may at the maturity hereof, whether
by acceleration or otherwise, be the aggregate unpaid principal amount of all
Loans owing from either Borrower to the Lender, together with interest thereon
at the rate, and payable in the manner and on the dates, specified in the
hereinafter defined Credit Agreement.
This Note evidences Loan made and to be made to the Borrowers by the
Lender under that certain Amended and Restated Credit Agreement dated as of July
16, 2004, among the Borrowers and Lender (said Amended and Restated Credit
Agreement, as the same may from time to time be modified or amended, being
referred to herein as the "Credit Agreement"), and the Borrowers promise,
jointly and severally, to pay interest at the office described above on such
Loan evidenced hereby at the rates and at the times and in the manner specified
therefor in the Credit Agreement. The Borrowers shall be the sole entities to
draw upon the Loan and the obligations hereunder may not be assigned without the
written consent of the Lender. All capitalized terms used herein without
definition shall have the same meanings herein as such terms are defined in the
Credit Agreement.
The Loan made under the Credit Agreement against this Note, any
repayment of principal hereon and the unpaid principal balance hereof shall be
endorsed by the holder hereof on a schedule to this Note or recorded on the
books and records of the holder hereof (provided that such entries shall be
endorsed on a schedule hereof prior to any negotiation hereof). The Borrowers
agree that in any action or proceeding instituted to collect or enforce
collection of this Note, the entries endorsed on a schedule to this Note or
recorded on the books and records of the holder hereof shall be prima facie
evidence of the unpaid principal balance of this Note.
This Note is issued by the Borrowers under the terms and provisions of
the Credit Agreement and this Note and the holder hereof are entitled to all of
the benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary prepayments
may be made hereon, and certain prepayments are required to be made hereon, all
in the events, on the terms and with the effects provided in the Credit
Agreement.
This Note shall be construed in accordance with, and governed by, the
internal laws of the State of New York without regard to principles of conflicts
of laws. This Note is subject to an acceleration provision in the Credit
Agreement. The Borrowers jointly and severally promise
A-1
to pay all costs and expenses (including attorneys' fees) suffered or incurred
by the holder hereof in collecting this Note or enforcing any rights in any
collateral therefor. The Borrowers hereby waive presentment for payment and
demand.
CAPRI CAPITAL LIMITED PARTNERSHIP, a Delaware limited
partnership
By: CPC Realty Advisors, Inc., an Illinois corporation
Its Managing General Partner
By:
-------------------------------------------------
Name:
-----------------------------------------------
Its:
------------------------------------------------
CAPRI ACQUISITION, INC., an Illinois corporation
By:
-------------------------------------------------------
Name:
-----------------------------------------------------
Its:
------------------------------------------------------
A-2
Schedule A
Date of Advance Outstanding Principal
or Repayment Amount of Advance Amount of Repayment Amount
------------------------- ----------------------- ----------------------- ----------------------
$ $ $
------------------------- ----------------------- ----------------------- ----------------------
$ $ $
------------------------- ----------------------- ----------------------- ----------------------
$ $ $
------------------------- ----------------------- ----------------------- ----------------------
$ $ $
------------------------- ----------------------- ----------------------- ----------------------
$ $ $
------------------------- ----------------------- ----------------------- ----------------------
$ $ $
------------------------- ----------------------- ----------------------- ----------------------
A-1
SCHEDULE 6.3
SUBSIDIARIES
JURISDICTION OF
NAME ORGANIZATION PERCENTAGE OWNERSHIP OWNER
------------------------- ----------------------- ----------------------- ----------------------
Capri Holdings, LLC Illinois 100% Capri Capital Limited
Partnership
Capri Capital Delaware 100% Capri Holdings, LLC
Associates, LLC
Capri Capital Finance, Delaware 100% Capri Holdings, LLC
LLC
Capri Capital Illinois 100% Capri Capital Limited
Management, LLC Partnership
Capri Capital Advisors Delaware 51% Capri Capital Limited
LLC Partnership
SCHEDULE 7.11
-------------
Defined Terms
--------------------------------------------------------------------------------
The following terms when used in this Schedule 7.11 shall have the following
meanings:
"Agreement" means that certain Amended and Restated Credit Agreement,
dated as of July 16, 2004, by and among CLLP, CAI and CM Investor LLC, of which
this Schedule 7.11 is a part.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss. 101, et seq.), as amended from time to time, and any successor statute.
"Benefit Plan" means a defined benefit plan as defined in Section 3(5)
of ERISA (other than a Multiemployer Plan) in respect of which any Company or
any Affiliate thereof is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Book Value" means, at any date, the amount which would be set forth
opposite the caption "total shareholders' equity", "total partners' equity",
"total members' equity" (or any like caption) on the consolidated balance sheet
of the Companies at such date, determined in conformity with GAAP.
"Companies" means CAI, Capri, CHI and their Subsidiaries and "Company"
means CAI, Capri, CHI or their Subsidiaries, as the context may require.
"CPC Realty" means CPC Realty Advisors, Inc., an Illinois corporation,
the managing general partner of Capri.
"Debt" means all liabilities, obligations and indebtedness of the
Companies, on a consolidated basis, to any Person of any kind or nature, now or
hereafter owing, arising, due from or payable by the Companies, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, and including, without in any way
limiting the generality of the foregoing: (1) the Companies' liabilities and
obligations, on a consolidated basis, to trade creditors; (ii) all of the
Companies' obligations, on a consolidated basis, for borrowed money; (iii) all
obligations and liabilities of any Person secured by any Lien on the Companies'
property, on a consolidated basis, even though the Companies shall not have
assumed or become liable for the payment thereof; provided, however, that all
such obligations and liabilities which are limited in recourse to such property
shall be included in Debt only to the extent of the value of such property as
shown on the Financial Statements; (iv) all obligations and liabilities under
Guaranties of the Companies; and (v) deferred taxes. Debt shall exclude the
outstanding balances under any secured warehouse line of credit utilized by
Capri or any Subsidiary and the outstanding balances under any secured tax and
interest investment arbitrage line of credit to the extent of the fair value of
the assets pledged as collateral for such secured arbitrage lines of credit or
the related outstanding balances, whichever is less.
"Distribution" means, in respect of any corporation, general or limited
partnership or limited liability company, joint venture, or any other entity:
(a) the payment or making of any
3
dividend or other distribution of property in respect of capital stock of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) of the same class; (b) the payment or making of any
dividend, profit, retained earning or other distribution of property in respect
of an ownership interest of such general or limited partnership, limited
liability company, joint venture or any other entity; (c) the redemption or
other acquisition of any capital stock (or any options or warrants for such
stock) of such corporation or ownership interest of any general or limited
partnership, limited liability company, joint venture of such general or limited
partnership, limited liability company, joint venture or any other entity or any
other entity; (d) payments or distributions in respect of capital stock or
ownership interest that are not pro-rata within a class or series; or (e) any
distribution of profits or surplus to any Person with an ownership interest of
such general or limited partnership, limited liability company, joint venture or
any other entity.
"Earnings" means net income before interest, income taxes, depreciation,
amortization and extraordinary items, determined in conformity with GAAP.
"Employment Agreements" means the Executive Management and
Noncompetition Agreements dated June 16, 1998 and executed by Capri and Xxxxx X
Xxxxxx, Xxxxx X. Fargo and Xxxxxxx X. Xxxxx III, respectively, as amended by the
Xxxxxx Amendment, Fargo Amendment and Primo Amendment, as such terms are defined
in the Transaction Agreement.
"FHA" means the Federal Housing Administration or its successors.
"FHLMC" means the Federal Home Loan Mortgage Corporation or its
successors.
"Financial Statements" means any balance sheet as of a specified date
and related statements of income, cash flows and changes in stockholders equity,
partnership interests, membership interests or any ownership interest for the
period then ended, prepared in accordance with GAAP consistently applied,
subject in the case of unaudited financial statements to normal year-end audit
adjustments.
"Fiscal Year" means the Companies' fiscal year for financial accounting
purposes each of which ends on December 31. The 2004 Fiscal Year of the
Companies will end on December 31, 2004.
"FNMA" means the Federal National Mortgage Association or its
successors.
"GAAP" means at any particular time generally accepted accounting
principles as in effect at such time, consistently applied.
"GNMA" means the Government National Mortgage Association or its
successors.
"Indemnitees" has the meaning set forth in Section 4.1 of this Schedule
7.11.
"IRS" means the Internal Revenue Service or any successor agency.
"Licenses" has the meaning set forth in Section 1.14 of this Schedule
7.11.
4
"Material Adverse Change" with respect to any Company means a
substantial adverse change in its property, business, operations or condition
(financial or otherwise).
"Mortgage Companies" means any mortgage company, mortgage banking
company or related subsidiary.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Companies or any Affiliate contribute, is
required to contribute, or has contributed within the immediately preceding six
(6) years.
"Origination Loan" means a mortgage loan properly secured by a perfected
first lien on real estate with a constructed commercial or multi-family dwelling
and that otherwise conforms to the requirements for sale to FNMA or its
successors, FHLMC or its successors or HUD or GNMA or its successors.
"Permitted Liens" means:
(a) Liens for taxes not yet payable or statutory Liens for taxes
in any amount not to exceed $100,000, provided that the payment of such
taxes which are due and payable is being contested in good faith and by
proper proceedings diligently pursued, and that reserves or other
appropriate provision, if any, as shall be required by GAAP shall have
been made therefor;
(b) Liens in favor of the Lender;
(c) Liens upon Equipment granted in connection with the
acquisition of such equipment by any Company after the date hereof
provided that (i) the Debt incurred to finance each such acquisition is
permitted by Section 2.6, and (ii) each such Lien attaches only to the
equipment acquired with the Debt secured thereby;
(d) Deposits under workmen's compensation, unemployment
insurance, social security and other similar laws, or to secure the
performance of bids, tenders or contracts (other than for the repayment
of borrowed money) or to secure indemnity, performance or other similar
bonds for the performance of bids, tenders or contracts (other than for
the repayment of borrowed money) or to secure statutory obligations or
surety or appeal bonds, or to secure indemnity, performance or other
similar bonds in the ordinary course of business;
(e) Liens which arise by operation of law in the ordinary course
of business under Article 2 of the Uniform Commercial Code in favor of
unpaid sellers of goods or prepaying buyers of goods, or liens on items
of any accompanying documents or proceeds arising by operation of law in
the ordinary course of business under Article 4 of the Uniform
Commercial Code in favor of a collecting bank including pre-existing
mortgage warehouse facilities and pre-existing purchase money security
interests;
(f) Liens arising by statute securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, for sums not yet due or being contested in good faith;
5
(g) Reservations, exceptions, encroachments, easements,
rights-of-way, covenants running with the land, and other similar title
exceptions or encumbrances affecting any real estate owned or leased by
the Companies; provided that they do not in the aggregate materially
detract from the value of real estate or materially interfere with their
use in the ordinary conduct of a Company's business; and
(h) Liens permitted pursuant to Section 7.6 of the Agreement.
"Plan" means any employee pension benefit plan as defined in Section
3(2) of ERISA in respect of which any Company or any Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Public Authority" means the government of any country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or any department, agency, public corporation or other instrumentality
of any of the foregoing, or any government-sponsored enterprise, such as FHLMC,
FNMA or GNMA, if any.
"Reportable Event" has the meaning ascribed to that term in Section 4043
of ERISA or the regulations promulgated thereunder.
"Routine Expenses" means the costs (including but not limited to
professional fees and expenses) incurred by the Lender to monitor the Companies'
compliance with the Agreement, or the status of the Servicing Rights Portfolio,
or acquisition of Mortgage Companies or mortgage servicing portfolio, in the
absence of an Event of Default.
"Semi-Annual Budget Plans" has the meaning set forth in Section 2.28(f)
of this Schedule 7.11.
"Servicing Loan" means an Origination Loan that is owned by a Person
other than a Company or one of its direct or indirect Affiliates.
"Servicing Rights Portfolio" means all mortgage servicing rights of the
Companies or their Affiliates in existence from time to time. The Servicing
Rights Portfolio existing as of June 30, 2004 is set forth in the attached
Schedule A.
"Termination Event" means: (a) a Reportable Event with respect to a
Benefit Plan or a Multiemployer Plan; or (b) the withdrawal of any Company or
any Affiliate thereof from a Benefit Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; or (c)
providing to affected parties a notice of intent to terminate a Benefit Plan or
the treatment of a Benefit Plan amendment as a termination under Section 4041 of
ERISA which would subject any Company to any material liability; or (d) any
other event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan; or (e) the partial or complete withdrawal of any Company or any
Affiliate thereof from a Multiemployer Plan which gives rise to any withdrawal
liability pursuant to Title IV of ERISA; or (f) the partial or complete
withdrawal from or termination of a Welfare Plan by any Company or any Affiliate
which gives rise to any material liability.
6
"Transaction Agreement" means that certain Transaction Agreement dated
the date hereof by and among the Borrowers and the Lender.
"VA" means the Veterans Administration or its successors.
"Welfare Plan" means any employee welfare benefit plan as defined in
Section 3(1) of ERISA which the Companies or any Affiliate sponsors or to which
the Companies or any Affiliate has an obligation to contribute, and as to which
the contributing employer may, under the terms of the plan or any related
agreement, have any continuing obligation to the plan or its participants and
beneficiaries after termination of the contributing employer's sponsorship of or
obligation to contribute to the plan.
SECTION 1.
GENERAL WARRANTIES AND REPRESENTATIONS OF THE COMPANIES
-------------------------------------------------------
Capri, CHI and CAI, jointly and severally, warrant and represent to the
Lender as follows:
Section 1.1 Organization and Qualification. Each Company is duly
organized and validly existing in good standing under the laws of either the
States of Delaware or Illinois and has all requisite power and authority to
conduct its respective business and to own its respective properties. Each
Company is duly qualified and in good standing to conduct business in each of
the jurisdictions set forth in Schedule 1.1 hereto, and there are no
jurisdictions in which any Company is not qualified where the failure to be so
qualified could have a material adverse affect on the business, properties or
affairs of such Company. Each Company has all corporate power to own its
properties and conduct its business in the manner presently conducted and as
contemplated by this Agreement.
Section 1.2 Subsidiaries and Affiliates. Schedule 1.2 is a correct and
complete list of the name and relationship to each Company of each and all of
its Subsidiaries and other Affiliates.
Section 1.3 Financial Statements and Projections. Capri has delivered to
the Lender the audited consolidated balance sheet and related statements of
income, retained earnings, cash flows and changes in partnership equity for
Capri as of December 31, 2003, and for the Fiscal Year then ended, accompanied
by the report thereon of the Companies' independent certified public
accountants, which accountants are acceptable to the Lender. Capri has also
delivered to the Lender its unaudited consolidated balance sheet as of May 31,
2004 (the "Balance Sheet") and related statement of income for the five (5)
months then ended. All such Financial Statements have been prepared in
accordance with GAAP. The Balance Sheet and the statement of income for the five
(5) months ended May 31, 2004, have been prepared in accordance with GAAP except
that they are not accompanied by the statements of cash flow and changes in
shareholders equity and do not include footnote disclosures required by GAAP.
The Financial Statements, the Balance Sheet and the statement of income for the
five (5) months ended May 31, 2004, present accurately and fairly the Companies'
financial position as of the dates thereof and their results of operations for
the periods then ended, subject in the case of unaudited
7
financial statements to normal year-end audit adjustments. The Balance Sheet
does not fail to reflect any liability or obligation of the Companies and their
Affiliates other than (a) those incurred in the ordinary course of business
subsequent to the Balance Sheet date, which in the aggregate do not materially
adversely affect the financial condition of such entities individually or on a
consolidated basis or (b) those not required to be reflected thereon under GAAP.
There is no agreement, commitment or understanding of any Company to incur any
debt, make any guaranty or incur a contingent liability subsequent to the date
of the Balance Sheet other than in the ordinary course of business.
Section 1.4 Capitalization. CAI's ownership interest consists of three
shareholders: Xxxxx X. Xxxxxx (45%); Xxxxxxx X. Xxxxx III (45%) and Xxxxx X.
Fargo (10%). CPC Realty's ownership interest consists of three shareholders:
Xxxxx X. Xxxxxx (45%); Xxxxxxx X. Xxxxx III (45%) and Xxxxx X. Fargo (10%).
Capri's ownership interest consists of three partners: CRC (89%); CAI, a limited
partner (10%); and CPC Realty, the managing general partner (1%). CHI has one
(1) member: Capri. CAI's authorized capital stock consists of 1,000 shares of
common stock of which 100 shares have been issued. CPC Realty's authorized
capital stock consists of 1,000 shares of common stock of which 200 shares have
been issued. There are no options, warrants or rights to acquire any equity
interests of any Company or its Affiliate, except as set forth in Schedule 1.4.
Section 1.5 Distributions. Since January 1, 2004, no Distribution has
been declared, paid, or made by any Company or its Affiliates except
distributions in accordance with Sections 2.18(h) and 2.21 of this Schedule
7.11.
Section 1.6 Title to Property. Each Company and each of its Affiliates
has good and merchantable title to all of its property (including, without
limitation, the assets reflected on the Balance Sheet delivered to the Lender,
except as disposed of in the ordinary course of business since the date
thereof), free of all Liens except Permitted Liens.
Section 1.7 Real Property; Leases and Subleases. Schedule 1.7 sets forth
a correct and complete list of all real property owned by each Company, all
leases and subleases of real or personal property by each Company as lessee or
sublessee, and all leases and subleases of real or personal property by each
Company as lessor or sublessor. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no
default in any material respect exists by any party to any such lease or
sublease.
Section 1.8 Litigation. Except as set forth in Schedule 1.8, there is no
pending or (to the best of the Companies' knowledge) threatened action, suit,
proceeding, or counterclaim or any reasonable basis therefor by any Person
whether or not purportedly on behalf of any of the Companies, or investigation
by any Public Authority, to which any of the Companies or their Affiliates is or
may be named a party or to which their property may be subject and in which an
unfavorable outcome, ruling or finding may result in a Material Adverse Change
with respect to any Company and none of the Companies has knowledge of any
unasserted claim which may materially and adversely affect the Lender's rights
under this Agreement or any agreement contemplated herein or the ability of any
Company to perform its obligations hereunder or result in a Material Adverse
Change with respect to any Company.
8
Section 1.9 Restrictive Agreements. No Company is a party to any
contract or agreement, or subject to any charter or other corporate restriction
or order, ruling or decree of a Public Authority which impairs its ability to
conduct business as presently conducted or as planned to be conducted, which
affects its ability to execute and deliver this Agreement or which materially
and adversely affects or, insofar as it can reasonably foresee, could in any
respect materially and adversely affect the Lender's rights under this
Agreement, or which could otherwise result in a Material Adverse Change with
respect to any Company.
Section 1.10 Labor Disputes. With respect to each Company, (a) there is
no collective bargaining agreement or other labor contract covering its
employees, (b) to the best of its knowledge, no union or other labor
organization is seeking to organize, or to be recognized as a collective
bargaining unit of its employees, or for any similar purpose, and (c) there is
no pending or (to the best of its knowledge) threatened strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against or
affecting it, or any of its employees.
Section 1.11 No Default. No Company nor any Affiliate thereof is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which it is a party or by which it is bound, which
default would materially and adversely affect the Lender's rights under this
Agreement or result in a Material Adverse Change with respect to any Company.
Section 1.12 ERISA.
(a) No Company maintains or contributes to any Plan other than
those listed in Schedule 1.12.
(b) No Multiemployer Plan has been terminated or partially
terminated or is insolvent or in reorganization, nor have any
proceedings been instituted to terminate or reorganize any Multiemployer
Plan.
(c) No Company nor any Affiliate has taken or failed to take any
action which could constitute or result in a Termination Event.
(d) No Company nor any Affiliate has incurred any liability to
the PBGC other than for required insurance premiums which have been paid
when due.
(e) No Benefit Plan has an "accumulated funding deficiency"
(whether or not waived) as defined in Section 302 of ERISA or in Section
412 of the Code.
(f) Each Plan is in substantial compliance with ERISA, and no
Company nor any Affiliate has received any notice asserting that a Plan
is not in compliance with ERISA.
(g) Each Plan which is intended to be a qualified Plan has been
determined by the IRS to be qualified under Section 401(a) of the Code
as currently in effect and each trust related to such Plan has been
determined to be exempt from federal income tax under Section 501(a) of
the Code.
9
(h) Except as provided in Schedule 1.12, no Company nor any
Affiliate maintains or contributes to any employer Welfare Plan within
the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by
Section 601 of ERISA.
(i) No Company nor any Affiliate, nor any other
"party-in-interest" or "disqualified Person" has engaged in a
"prohibited transaction," as such terms are defined in Section 4975 of
the Code and Section 406 of ERISA, in connection with any Plan which
would subject a party-in-interest or disqualified Person (after giving
effect to any exemption) to the tax on prohibited transactions imposed
by Section 4975 of the Code or any other liability.
(j) No Company nor any Affiliate has failed to comply with the
health care continuation coverage requirement of Sections 601-608 of
ERISA in respect of their employees and former employees and their
dependents and beneficiaries which alone or in the aggregate would
subject any Company to any material liability.
(k) No Company nor any Affiliate has (i) failed to make a
required contribution or payment to a Multiemployer Plan; (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from
a Multiemployer Plan; or (iii) incurred a decline in contribution base
units with respect to a Multiemployer Plan which, if continued at
current levels, would cause a partial withdrawal under Section 4205 of
ERISA.
(l) Schedule 1.12 lists each Welfare Plan, Benefit Plan, and
Multiemployer Plan (and the amount of potential liability attributable
to the Companies or any Affiliate) which each Company or any Affiliate
sponsors or to which any Company or any Affiliate has an obligation to
contribute, with respect to which any Company or any Affiliate would
incur a material liability if it were to withdraw from such plan,
terminate such plan, or terminate its obligation to contribute to such
plan. For purposes of this subparagraph 1.12(l), materiality is defined
as a potential liability in excess of $25,000.
Section 1.13 Taxes. Except as set forth in Schedule 1.13, each Company
has filed, within the time prescribed by law, all tax returns and other reports
which it was required by law to file with the Internal Revenue Service, State of
Illinois and other Public Authorities on or prior to the date hereof and has
paid or made adequate provision for, on the Financial Statements as of June 30,
2004, all tax assessments, fees, and other governmental charges, and penalties
and interest, if any , against it or its property, income, or franchise, that
are due and payable or claimed to be due and payable. No Company knows of any
other tax returns or reports required to be filed or of any unpaid assessment
for any fiscal period.
Section 1.14 Licensing. Except as set forth in Schedule 1.14, each
Company and its Affiliates has obtained all necessary and appropriate approvals,
rights, licenses, registrations, permits, franchises, authorizations, and other
similar authority (collectively "Licenses") of FNMA, FHLMC, FHA, GNMA, VA and
other applicable agencies and Public Authority to conduct its business as
presently conducted and as planned to be conducted, including its mortgage
origination and mortgage servicing activities. Each of the Licenses listed in
Schedule
10
1.14 hereto constitute all of the authorizations required by any Public
Authority or government-sponsored enterprise for the conduct of business as
presently conducted and as planned to be conducted by the Companies and their
Affiliates and all such Licenses have been validly issued and are in full force
and effect. To the best of the knowledge and belief of the Companies and their
Affiliates, after due investigation:
(a) no event has occurred which permits, or after notice or
lapse of time, or both, would permit, revocation or termination of any
such Licenses, or which materially adversely affects, or in the future
may (so far as any of the Companies and their Affiliates can now
reasonably foresee) materially and adversely affect, the rights
thereunder;
(b) no proceedings are pending or threatened by or before any
Public Authority or any court of competent jurisdiction issuing any of
the Licenses pursuant to which any of the Companies and their Affiliates
has or is given the right to operate or conduct its business or any part
thereof, which could materially and adversely affect any Licenses;
(c) the Companies and their Affiliates have no reason to believe
that any of said Licenses will not be renewed by the issuing authority
in the ordinary course at or prior to the respective termination dates
thereof;
(d) none of the Companies or their Affiliates is in default in
any material respect under any of such Licenses or other similar
authority; and
(e) the Companies and their Affiliates possess all patents,
patent rights, trademarks, trademark rights, trade names, trade name
rights and copyrights necessary to conduct business as now being
conducted and as planned to be conducted without infringement upon any
valid rights of others and the lack of which could materially and
adversely affect the operations or condition, financial or otherwise, of
the Companies and their Affiliates, and the Companies and their
Affiliates have not received any notice of infringement upon or conflict
with the asserted rights of others.
Section 1.15 Disclosure Neither this Agreement (including the exhibits
hereto) nor any document or statement furnished to the Lender or their
representatives by or on behalf of the Companies hereunder contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein or therein not misleading. No fact
exists, relating to any of the Companies, or any of their Affiliates, their
businesses or their operations, which materially adversely affects or which any
such entity can foresee will materially adversely affect the business or
properties of any such entity or the ability of such entity to perform hereunder
exists which has not been disclosed to the Lender or their representatives.
SECTION 2.
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Unless the Lender shall otherwise provide prior written consent, CAI,
Capri and CHI, jointly and severally, covenant that, until the Loan is repaid in
full:
11
Section 2.1 Taxes and Other Obligations. Each Company and each of its
Affiliates shall (a) file when due all tax returns and other reports which such
Company or Affiliate is required to file, (b) pay, or provide for the payment,
when due, of all taxes, fees, assessments and other governmental charges against
such Company or its Affiliates, or upon their property, income and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items, and provide to the Lender, upon
request, satisfactory evidence of their timely compliance with the foregoing,
and (c) pay when due all claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, and all other indebtedness owed
by them and perform and discharge in a timely manner all other obligations
undertaken by them; provided, however, that such Company or Affiliate need not
pay any tax, fee, assessment, governmental charge, or Debt, or discharge any
other obligation, that any of them is contesting in good faith by appropriate
proceedings diligently pursued, and for which adequate reserves are maintained
in accordance with GAAP, so long as no Lien, other than a Permitted Lien,
results from such non-payment.
Section 2.2 Existence and Good Standing. Each Company and each of its
Affiliates shall maintain their corporate, limited partnership, or limited
liability company existence, as applicable, and their qualification and good
standing in all states necessary to conduct their business and own their
property, and shall obtain and maintain all licenses, permits, franchises and
governmental authorizations necessary to conduct their business and own their
property. Additionally, CAI shall maintain its S-Corporation status at all times
during the term of this Agreement. Without limiting the foregoing, at all times
during the term of this Agreement and/or any Credit Enhancement issued
hereunder, each Company and each of its Affiliates shall obtain and maintain all
Licenses and all approvals and authorizations of FMNA, FHLMC, FHA, GNMA, VA and
other applicable Public Authorities or government-sponsored enterprises
necessary and appropriate to the conduct of their mortgage origination, mortgage
warehousing and mortgage servicing activities, ownership of their properties and
conduct of their business, and will not take any act which could result in the
loss or forfeiture thereof. The Companies shall provide the Lender with a
schedule listing all such approvals, authorizations, licenses and qualifications
and, upon request by the Lender, shall update such schedule as appropriate. Each
Company and its Affiliates shall continue at all times to comply with all laws,
ordinances, regulations and requirements of any Public Authority relating to
their business, property and affairs.
Section 2.3 Compliance With Laws and Agreements. Each Company and each
of its Affiliates shall comply in all material respects with the terms and
provisions of each Requirement of Law applicable to them and each contract,
mortgage, lien, lease, indenture, order, instrument, agreement, or document to
which they are a party or by which they are bound. Without limiting the
foregoing, in addition to all other laws with which each Company and each of its
Affiliates must comply, each Company's and its Affiliates' mortgage origination,
mortgage warehousing, mortgage refinancing and mortgage servicing activities
(and all documentation in connection therewith) shall comply with all applicable
state and federal consumer credit, servicing, and usury laws, rules and
regulations. Each Company and each of its Affiliates, at all times during the
term of the Agreement and/or any Credit Enhancement issued hereunder, shall
maintain and observe written policies and procedures reasonably acceptable to
the Lender to comply and monitor compliance with all such laws, rules and
regulations. Each Company shall provide the Lender with periodic reports (in
form and substance reasonably acceptable to the
12
Lender) regarding such compliance and procedures. In addition, upon prior notice
to the Companies, the Lender may retain at the Companies' expense (but subject
to the limitations on Routine Expenses) consultants and legal counsel to review
any Company's and/or its Affiliates' compliance with such laws, rules and
regulations and to advise the Lender regarding such review.
Section 2.4 Maintenance of Property. Each Company and each of its
Affiliates shall maintain all of their property necessary and useful in their
business in good operating condition and repair, ordinary wear and tear
excepted.
Section 2.5 ERISA Compliance.
(a) For each Plan adopted by a Company or its Affiliate, and
intended to be qualified under Section 401(a) of the Code, such Company
or its Affiliate shall (i) use its best efforts to seek and receive a
determination letter from the IRS that such Plan is so qualified, and
(ii) from and after the adoption of any such Plan, use its best efforts
to cause such Plan to continue to be qualified under Section 401(a) of
the Code and to be administered in all material respects in accordance
with the requirements of ERISA and Section 401 (a) of the Code, and
(iii) not take or fail to take any action which would cause such Plan
not to be qualified under Section 401(a) of the Code or not to be
administered in all material respects in accordance with the
requirements of ERISA and Section 401(a) of the Code.
(b) No Company nor any Affiliate shall:
(a) Engage in any prohibited transaction for which an
exemption is not available or has not been previously obtained
from the Department of Labor in connection with which it could
be subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or tax imposed by Section 4975 of the
Code;
(b) Permit to exist any accumulated funding deficiency
(whether or not waived) as defined in Section 301 of ERISA and
Section 412 of the Code;
(c) Fail to timely pay to any Plan required
contributions or installments due with respect to any waived
funding deficiency;
(d) Fail to make any contribution or payment to any
Multiemployer Plan which it may be required to make under any
agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(e) Allow a Termination Event to occur;
(f) Fail to pay any required installment under Section
412(m) of the Code or any other payment required under Section
412 of the Code on or before the due date for such installment
or other payment; or
13
(g) Amend any Benefit Plan resulting in an increase in
current liability for the plan year such that it is required to
provide security to such Plan under Section 401(a)(29) of the
Code.
Section 2.6 Liens.
(a) No Company or its Affiliate shall create, incur, assume, or
permit to exist any Lien on any property now owned or hereafter acquired
by any of them, except Permitted Liens.
(b) Without limiting the generality of the foregoing subsection
(a), no Company or its Affiliate shall create, incur, assume, or permit
to exist any Lien on any of the Collateral except in favor of the
Lender.
(c) The Companies and their Affiliates shall preserve all
security interests granted or assigned to the Lender in connection with
this Agreement and the Transaction Agreement.
Section 2.7 Subsidiaries. Capri, CHI and CAI shall disclose all
transactions between any of them and their Subsidiaries or Affiliates to the
Lender. No Company shall sell or transfer or permit the sale or transfer of any
interest in any Subsidiary or Affiliate without the prior written consent of the
Lender. CHI shall remain a wholly-owned Subsidiary of Capri. No equity
securities or rights to acquire equity securities of CHI shall be granted to any
Person. The member ownership interest of CHI or any other Subsidiary shall not
be pledged or encumbered nor shall any interest therein be sold, pledged,
encumbered or otherwise disposed of or alienated.
Section 2.8 Debt; Interest Coverage Ratio; Current Ratio; Return on
Equity.
(a) The Companies' consolidated Debt, less amounts outstanding
under the Loan and plus any amounts outstanding under any warehouse
facility for sixty (60) days or longer plus any amounts outstanding
under any arbitrage facility in excess of the fair value of the assets
pledged as collateral for such arbitrage facilities, shall not exceed
1.25 times the amounts outstanding under the Loan at the end of any
fiscal year.
(b) As of March 31, 2004, and at the end of each calendar
quarter thereafter, Capri shall not permit the ratio of EBITDA for the
four (4) calendar quarters then ended to interest expense for the same
four (4) calendar quarters to be less than 1.50 to 1.0. "EBITDA" means,
with reference to any period, Net Income for such period plus all
amounts deducted in arriving at such Net Income amount in respect of (i)
Interest Expense for such period, (ii) federal, state and local income
taxes for such period, (iii) depreciation for such period, and (iv)
amortization for such period. "Interest Expense" means, with reference
to any period, the sum of all interest charges (including interest
charges on secured warehouse lines of credit and secured arbitrage lines
of credit to the extent such interest charges are not offset by interest
income realized from assets pledged as collateral for such secured lines
of credit, imputed interest charges with respect to capitalized lease
obligations and all amortization of debt discount and expense) and
credit enhancement fees including, without limitation, those payable to
the Lender, of the Companies and their Affiliates for such period
determined in accordance with GAAP.
14
"Net Income" means, with reference to any period, the net income (or net
loss) of the Companies and their Affiliates for such period as computed
on a consolidated basis in accordance with GAAP, and, without limiting
the foregoing, after deduction from gross income of all expenses and
reserves, including reserves for all taxes on or measured by income, but
excluding any extraordinary income as determined in accordance with GAAP
and also excluding any taxes on such extraordinary income.
(c) Capri shall not, at any time, permit the Current Ratio to be less than
1.03 to 1.0. "Current Ratio" means, at any time the same is to be
determined, the ratio of current assets of the Companies and their
Affiliates (including inventories of mortgages held for sale but not
including capitalized servicing rights) to current liabilities of the
Companies and their Affiliates, all as determined on a consolidated
basis in accordance with GAAP. Temporary increases in amounts
outstanding under warehouse lines of credit secured by mortgage loans
and the assets pledged as collateral for such warehouse facilities are
to be excluded from this computation unless the mortgage loans have been
pledged as collateral for longer than sixty (60) days.
(d) For the year ended December 31, 2003, and for each year thereafter, the
Companies' consolidated Net Income shall not be less than fifteen (15)
percent of the Companies' Book Value plus fifty (50) percent of the
excess of the fair value of the Companies' mortgage servicing rights, as
determined by a qualified independent appraiser acceptable to the
Lender, over the amounts reflected in the Companies' balance sheet for
such mortgage servicing rights as of the beginning of such year.
Section 2.9 Minimum Book Value. The Companies' consolidated Book Value
plus fifty (50) percent of the excess of the fair value of the Companies'
mortgage servicing rights, as determined by a qualified independent appraiser
acceptable to the Lender, over the amounts reflected in the Companies' balance
sheet for such mortgage servicing rights, shall be no less than $9,000,000 on
December 31, 2003 and thereafter.
Section 2.10 Employment Agreements. Neither Capri nor CAI shall amend,
modify, revise or terminate the Employment Agreements.
Section 2.11 No Amendment of Organizational Documents. No Company or its
Affiliate will amend or modify its Articles of Organization, Certificate of
Limited Partnership, Operating Agreement, Limited Partnership Agreement,
Articles of Incorporation, By-Laws, Joint Venture Agreement or any similar
document (collectively, the "Organizational Documents") in any manner without
the prior written approval of the Lender, which approval will not come later
than thirty (30) days after receipt of notice by the Lender of an intention to
amend the Organizational Documents. Copies of any proposed amendments shall be
delivered to the Lender contemporaneous with the notice delivered to the Lender
referred to herein.
Section 2.12 Delivery of Financial Statements and Collateral Reports.
Until repayment in full of the Loan, Capri shall deliver to the Lender copies of
its annual audited consolidated Financial Statements for each fiscal year,
certified by an appropriately qualified certified public accounting (CPA) firm,
acceptable to the Lender, and its quarterly unaudited consolidated Financial
Statements for each of its first three fiscal quarters of each Fiscal Year,
certified by its
15
chief financial officer. Such Financial Statements shall fairly present, in all
material respects, the financial condition, results of operations and cash flows
of the consolidated Companies in accordance with generally accepted accounting
principles. Annual audited financial statements shall be delivered promptly upon
becoming available but not later than 90 days after the end of each Fiscal Year,
and quarterly unaudited financial statements shall be delivered promptly upon
becoming available but not later than 45 days after the end of the fiscal
quarter to which they relate. All Financial Statements shall include comparisons
to the comparable period of the prior Fiscal Year. Additionally, Capri, on
behalf of the Companies, shall deliver to the Lender (a) within 30 days after
the end of each calendar month, a report showing the unpaid principal balance of
loans closed and loans fully paid during the month, and (b) on a quarterly basis
(i) a report showing mortgage servicing rights held at the beginning of the
quarter, those acquired and those disposed of during the quarter, amortization
for the quarter and the ending balance and (ii) a collateral report listing the
unpaid principal balance of loans, and listing the property and assets pledged
as collateral for the Loan and the Credit Enhancement.
Section 2.13 Annual Compliance Certificates. Along with the Companies'
annual audited consolidated Financial Statements, the Companies and Affiliates,
through Capri, shall also provide the Lender with:
(a) a certificate, signed by a chief financial officer of Capri,
certifying that (i) the signing officer has conducted or supervised a
review of each Company's Affiliates' mortgage origination, mortgage
warehousing and mortgage servicing activities for the preceding year and
each Company's and Affiliates' obligations under this Agreement and the
other documentation for each Loan and Credit Enhancement and (ii) to the
best of such officer's knowledge, no default has occurred under such
agreements or, the officer shall enumerate the defaults that have
occurred and indicate the corrective action taken or to be taken; and
(b) a letter or letters from one or more firms of independent,
nationally recognized certified public accountants stating that such
firm has (i) performed applicable tests with respect to the Servicing
Rights Portfolio in accordance with the compliance testing procedures as
set forth in the then-current version of the guidelines or requirements
of any government sponsored entity and (ii) examined such operations in
accordance with the requirements of the then-current Uniform Single
Audit Program for Mortgage Bankers (or its replacement), and stating the
conclusions resulting from such audits (to the extent that the
conclusions are applicable).
Section 2.14 Correspondence and Notices.
(a) Promptly after receipt thereof, each Company shall deliver
to the Lender copies of all correspondence received by it or any of its
Affiliates and from any Public Authority or government-sponsored
enterprise, which correspondence is material to the renewal, continuing
validity, revocation or termination of any License, consent or
authorization necessary for the conduct of its business or that of any
of its Affiliates in the manner presently conducted or proposed to be
conducted or which relates to the Loan or Credit Enhancement.
16
(b) Each Company and Affiliate will promptly deliver to the
Lender any notice or claim of default received under the Loan, any other
loan and any other material agreement.
(c) Each Company and Affiliate shall promptly notify the Lender
of any event or occurrence which constitutes, or with notice or lapse of
time or both would constitute, an Event of Default hereunder.
Section 2.15 Acquisition and Dispositions of Servicing Rights. Prior to
acquiring mortgage servicing rights for inclusion in the Servicing Rights
Portfolio or disposing of mortgage servicing rights, the Companies and their
Affiliates through Capri, shall retain the services of one of the nationally
recognized servicing rights valuation consultants listed in Schedule 2.15 hereto
or a firm of similar qualifications, for the purposes of valuing the servicing
rights proposed to be acquired or disposed of. The results of the consultant's
valuation study shall be promptly delivered by Capri, on behalf of the Companies
and their Affiliates, to the Lender. The Lender retain the right to retain their
own valuation consultants to advise them with respect to the value of mortgage
servicing rights proposed to be acquired for inclusion in, or sold from, the
Servicing Rights Portfolio and, notwithstanding any valuations, to approve or
disapprove any such acquisition or sales. Any costs incurred by the Lender for
such valuation shall be paid by Capri. No such acquisition or disposition shall
be made without the prior written consent of the consultant designated by the
Lender. The acquisition of mortgage servicing rights shall be limited to
commercial or multi-family loans.
Section 2.16 Acquisition and Dispositions of Mortgage Companies. Each
Company agrees that any hereafter acquired Subsidiary shall be wholly-owned by
said Company. Prior to acquiring any mortgage company, mortgage banking company
or related subsidiary (individually or collectively referred to as "Mortgage
Company" or "Mortgage Companies") or disposing of same, Capri, on behalf of the
Companies, shall retain the services of one of the nationally recognized
valuation consultants listed in Schedule 2.16 hereto or a firm of similar
qualifications acceptable to the Lender, for the purposes of valuing the
Mortgage Company proposed to be acquired or disposed of. Any xxxxxxx deposits
made by any Company for the acquisition of a mortgage company in excess of Two
Hundred Fifty Thousand Dollars ($250,000) shall be accompanied by a written
provision that said deposit is fully refundable subject to the approval of the
Lender. The results of the consultant's valuation study shall be promptly
delivered by Capri to the Lender. The Lender reserve the right to retain their
own valuation consultants to advise them with respect to the value of the
Mortgage Company proposed to be acquired or sold, and, notwithstanding any
valuations, to approve or disapprove any such acquisition or sale. The
acquisition of any Mortgage Company shall be limited to a mortgage banking
company engaged in the business of Mortgage Banking only. No such acquisition or
disposition shall be made without the prior written consent of the Lender or the
consultant designated by the Lender.
Section 2.17 Transactions With Affiliates. No Company shall enter into
any material transaction with any of its Affiliates except on terms no less
favorable to the Company than could be obtained in an arm's-length transaction
with an unaffiliated Person. Capri, CHI and CAI shall disclose all transactions
between and any of their Affiliates to the Lender.
17
Section 2.18 Additional Negative Covenants. No Company nor its
Affiliates will cause or permit any of the following actions to occur:
(a) The creation of any new classes of securities of any
Company; the increase of the number of partners of Capri; the increase
in the number of members of CHI; the increase in the number of
shareholders of CAI.
(b) Restricting the sale of interests in mortgage and land
contract pass-through trusts or partnerships by any Company or any
Affiliate provided that such interests do not constitute an equity
security of any Company or its Subsidiaries.
(c) The merger of any Company with any other entity (other than
with an entity wholly-owned directly or indirectly, by Capri pursuant to
the provision of Section 2.16 hereof).
(d) The sale by any Company of all or substantially all of its
assets to any other entity.
(e) The purchase by any Company of all or substantially all of
the assets of any other entity.
(f) The creation of, or investment in, additional Subsidiaries
of any Company which are not directly or indirectly wholly-owned as
provided in Section 2.16 hereof.
(g) The increase of the total cash compensation paid to each of
the officers, directors, partners, executive officers or managers of any
Company to amounts in excess of amounts paid to persons in similar
positions with comparable firms as determined by a nationally recognized
industry survey or a report from a recognized compensation consultant.
For purposes of this Section, the term "executive officers or managers"
shall include the five officers who have the highest degree of
management and policy-making authority for Capri, CHI, and CAI.
(h) Except as provided in Section 1.4 of the Agreement, the
payment of any dividend or making of any other distribution of cash or
property with respect to outstanding shares of capital stock,
partnership interest or membership interests except upstream
distributions through CHI to Capri, contributions of working capital
from Capri through CHI to subsidiaries as set forth in Section 2.21
hereof. Nothing contained in this Section 2.18(h) shall restrict
distributions or payments to the shareholders of CAI relative to Section
2.21 distributions received by CAI.
(i) The name change of any Company.
(j) The transfer of any assets of any Company to a Person
without immediately receiving valuable consideration for said transfer
outside of the ordinary course of business.
Section 2.19 Additional Information. From time to time, Capri acting for
each Company shall provide the Lender with such documents and certificates as
the Lender may
18
reasonably request (in form and substance acceptable to the Lender) to evidence
compliance with the criteria for Origination Loans, Servicing Loans and
Servicing Rights.
Section 2.20 Inspection. Capri, acting for the Companies, shall provide
the Lender reasonable access to their properties, assets, books and records (and
those of their Affiliates) for the purpose of making reasonable inspections,
copies and abstracts thereof, during business hours and upon reasonable notice.
Capri acting for the Companies shall also permit the Lender to discuss the
affairs, finances and accounts of the Companies with each of their respective
shareholders, partners, members, directors, officers, employees and independent
auditors without restriction, and does hereby authorize, grant permission to and
agree to instruct such persons to respond fully and without restriction to the
Lender's reasonable inquiries and release such information and documentation as
the Lender may reasonably request. The information so obtained may be disclosed
by the Lender to their advisors and representatives, but shall not be used for
purposes not properly related to this Agreement and shall not otherwise be
disclosed by the Lender, their advisors or representatives except as required by
law or to enforce the Lender's rights under this Agreement.
Section 2.21 Payments to Partners of Capri. Distributions of net income
shall be made quarterly to the partners of Capri for the purpose of payment of
required federal and state income tax estimated payments by the partners of
Capri to the extent that such estimated payments are attributable to the taxable
income of Capri. The amount of such quarterly distributions shall be estimated
based on the taxable income of Capri for the applicable quarterly period and
will be paid to the partners no later than forty-five (45) days following the
end of each applicable quarter. Additional distributions of net income may be
made to the partners of Capri with the consent of the Lender, but total
distributions to the partners of Capri in any fiscal year, including quarterly
distributions for the purpose of payment of federal and state income tax
estimated payments, shall not exceed fifty percent (50%) of the Companies'
consolidated net income for such fiscal year. Notwithstanding the foregoing,
there shall be no limitation other than the consent of the Lender on
distributions of net income once the partners of Capri have retained $7,500,000
of net income in Capri, so long as such amounts are not required in the ongoing
and viable operation of the Companies, so long as the Book Value of the
Companies is at least S7,500,000 following any distribution and so long as no
other provisions of this Agreement or any other agreement are violated by any
such distribution. The partners of Capri may also elect at any time to reinvest
such distributions back into Capri as partners' capital.
Section 2.22 Limitation on Salary, Cash and Liability Payments of
Partners. Capri shall pay the following limited partners, Xxxxx X. Xxxxxx, Xxxxx
X. Fargo and Xxxxxxx X. Xxxxx III, an annual salary limited to amounts provided
in the Employment Agreements.
Section 2.23 Limitation on Capital Expenditures. Each Company and its
Affiliates shall limit cash payments incurred for capital expenditures of all
types and for all purposes to amounts provided in the approved Semi-Annual
Budget Plans (as defined in Section 2.28 below) without the prior written
consent of the Lender, except for amounts paid to the Lender by the Borrowers
under the Transaction Agreement.
Section 2.24 Limitation on Loans to Partners and Owners. No Company
shall make any loan of any type to any partner, member, shareholder or joint
venturer or other person with
19
an ownership interest, other than the loan to CRC contemplated by clause (a)(iv)
of Section 2.26 of this Schedule 7.11. However, any advances to any partner of
Capri shall be limited to an aggregate amount outstanding of Twenty-Five
Thousand Dollars ($25,000). The term "advances" shall be limited to travel,
entertainment and food expenses incurred in the ordinary course of business.
Section 2.25 Cash Operating Expenditures. Cash Operating Expenditures
will not exceed, in the aggregate, the amounts set forth in the approved
Semi-Annual Budget Plans (as defined in Section 2.28 below).
Section 2.26 Debt Limitation. During the term of this Agreement, each
Company and its Affiliates shall not (a) incur any Debt, except for (i)
pre-existing mortgage warehouse facilities, (ii) short-term indebtedness
incurred in the ordinary course, such as leases of, and purchase money security
interests in, furniture, equipment and trade fixtures, (iii) accounts payable to
suppliers and service providers, and (iv) a loan by Capri to CRC of $12 million
dollars, utilizing proceeds of the CCA Purchase Advance, to purchase the 49%
membership interest in CCA from CAG, or (b) serve as a guarantor for any Person,
except pursuant to the Guaranties as defined in the Transaction Agreement.
Section 2.27 Intentionally Omitted.
Section 2.28 Reporting Requirements. The Companies and their Affiliates,
through Capri, shall provide the Lender with the following reports as well as
access to books, records to any data thereof, and auditors
(a) Monthly production reports in a form and substance
acceptable to the Lender.
(b) Monthly certificates, signed by a partner or the chief
financial officer of Capri, certifying that the Companies and their
Affiliates are in compliance with all covenants of this Agreement in a
form and substance acceptable to the Lender.
(c) Monthly financial statements signed by the chief financial
officer of each Company.
(d) Annual personal financial statements of each partner of
Capri other than Xxxxx X. Fargo, compiled by the same qualified CPA firm
described in Section 2.12 hereof.
(e) Annual business recap, business plan and organizational
chart in a form and substance acceptable to the Lender.
(f) The Companies and their Affiliates, through Capri, shall
provide the Lender with semi-annual budget plans for the six-month
periods ending June 30 and December 31 of each fiscal year (the
"Semi-Annual Budget Plans"). Each such budget plan will he provided to
the Lender no later that thirty (30) days prior to the first day of the
applicable six-month period. Such budget plans will include separate
budget plans for Capri, CAI and each of their Subsidiaries and
Affiliates, presented in form and substance
20
acceptable to the Lender and will include, among other things, revenue
earned and realized, expenditures incurred and paid, capital
expenditures, acquisitions and dispositions of mortgage companies or
mortgage servicing rights portfolios, other cash receipts and
expenditures, Base Fees and Annual Supplemental Fees, and payments to or
on behalf of partners or shareholders. The Lender shall have thirty (30)
days following receipt of each Semi-Annual Budget Plan to approve or
reject the applicable Semi-Annual Budget Plan by written notice to
Capri, provided that if the Lender fails to reject the applicable
Semi-Annual Budget Plan within said thirty (30) day period, such
Semi-Annual Budget Plan shall be deemed approved. To the extent the
Lender rejects a proposed Semi-Annual Budget Plan by written notice to
Capri, said Semi-Annual Budget Plan shall not be implemented by Capri,
CAI or their Subsidiaries and Affiliates and Capri will submit a revised
Semi-Annual Budget Plan for the Lender's approval or rejection within
fifteen (15) days following receipt of the Lender's notice of rejection.
Any such revised Semi-Annual Budget Plan shall then be subject to the
provisions of this paragraph. Capri may periodically revise any
Semi-Annual Budget Plan, subject to the prior submission to and written
approval of the Lender's Consultant (as defined below).
Section 2.29 Limitations on CAI. CAI may not (i) receive any
disbursements from any other Company, except in connection with acquisitions
authorized by the Lender or as provided in Section 2.21 of this Agreement; (ii)
increase its number of shareholders, or (iii) transfer, sell or dispose of its
interests in any Company.
Section 2.30 Intentionally Omitted.
Section 2.31 Intentionally Omitted.
Section 2.32 Further Assurances. Each Company and its Affiliates shall
execute and deliver, or cause to be executed and delivered, to the Lender such
documents and agreements, and shall take or cause to be taken such actions, as
the Lender may, from time to time, reasonably request to carry out the terms and
conditions of this Agreement.
SECTION 3.
EVENTS OF DEFAULT
-----------------
Section 3.1 Occurrence of Event of Default. An Event of Default shall
exist upon the occurrence of any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any administrative or
governmental body):
(a) Default by any Company in the performance, or breach, of the
covenants set forth in Section 2 of this Schedule 7.11 or of any other
covenant or agreement hereunder or in any other agreement between any
Company and the Lender and (i) in the case of a default in the payment
of any fee or other amounts required to be paid to the Lender hereunder,
failure to pay such fee or amount by the fifth day after the due date
thereof; and (ii) in the case of a default pursuant to Sections 2.1, 2.2
(other than a default
21
arising from a termination, forfeiture or loss of a License which is not
cured within fifteen (15) days of receipt of notice or constructive
notice by the Company), 2.3 (except to the extent that such default
results in a Material Adverse Change), 2.4, 2.5, 2.6(a) (but not 2.6 (b)
or (c)), 2.11, 2.12, 2.13, 2.14, 2.17, 2.19, 2.20, 2.22, 2.23, 2.24,
2.25, 2.26, 2.27 and 2.28 of this Schedule 7.11, continuance of such
default or breach for a period of 30 days; or
(b) Any Event of Default under any indenture or related
documents which is not cured within the period specified therein for
curing defaults; or
(c) Any misstatement of a material fact contained in any
agreement between the Lender and any Company, or in any certificate
delivered to the Lender in connection therewith, or such agreement or
certificate omits to state a material fact necessary to make the
statements contained therein not misleading; or
(d) Any Company or its Affiliates becomes insolvent, is unable
to pay its debts as they become due in the ordinary course, makes an
assignment for the benefit of creditors, files a voluntary petition
under the United States Bankruptcy Code or any other insolvency or
moratorium statute, or there is filed against any Company or Affiliate
an involuntary petition under any such statute which is not dismissed
after 60 days after filing; or
(e) Any Material Adverse Change occurs with respect to any
Company; or
(f) Any material default in the performance by any Company of
mortgage servicing functions with respect to any servicing rights or
otherwise; provided, however, that if such default is attributable to
the default in performance by any subservicer, an Event of Default shall
not exist hereunder unless the Companies fail, within ten days after the
Companies learn or should have learned of such default, to have such
default cured, by the retention of an alternate subservicer or
otherwise; or
(g) Any of the following occur:
(a) The acceleration of any indebtedness of any Company
individually or in the aggregate totaling $100,000 or more,
prior to its maturity;
(b) The occurrence of any material default by any
Company under any other material agreement to which it is a
party or by which it is bound;
(c) The entry against any Company of any judgment in an
amount in excess of $100,000 which is unbonded, unstayed or
unsatisfied following forty-five (45) days from the date of
judgment; or
(d) The incurrence by any Company of any liability
individually or in the aggregate totaling $100,000 or more under
any statute regulating the discharge of emissions into the
environment or the storage, handling or disposal of toxic or
hazardous substances, or under any provision of ERISA.
22
SECTION 4.
INDEMNIFICATION
---------------
Section 4.1 Indemnity. Capri, CHI and CAI jointly and severally agree to
indemnify and hold the Lender and their respective officers, trustees, members
and agents (collectively, the "Indemnitees") harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
incurred by the Indemnitees, whether direct, indirect or consequential, as a
result of or arising from or relating to any proceeding by any Person, whether
threatened or initiated, asserting any claim for legal or equitable remedy
against any Person in any way arising from or in connection with the
negotiation, preparation, execution, delivery, enforcement, performance and
administration of this Agreement or any other document executed in connection
herewith or contemplated hereby, including but not limited to Credit Facilities
and Credit Enhancements and all documents related thereto and performance
thereunder, provided that no Company shall have any obligation hereunder with
respect to liabilities arising (a) from or in connection with any financial
information concerning the Lender provided by the Lender to any Person, or (b)
from the gross negligence or willful misconduct of any Indemnitee seeking such
indemnification as determined by a court of competent jurisdiction in a final
judgment against the Lender (as to which all appeals or the time of appeal has
expired). To the extent that the indemnity set forth in this Section may be
unenforceable because it is violative of any law or public policy, each Company
shall pay the maximum portion which it is permitted to pay under applicable law.
Any Indemnitee will promptly notify the Companies of the commencement of any
legal proceeding which may give rise to any indemnified liability under the
foregoing indemnity and shall permit the Companies (or any of them) to assume
and direct the defense of such Indemnitee in any such proceeding; no Company
will have any obligation to pay or reimburse the fees or expenses of any counsel
or experts, separately retained by the Indemnitee in connection with the defense
of such proceeding, which are incurred or arise after such assumption, except if
the Lender determine that any Company has a position adverse or potentially
adverse to the Lender or the Indemnitee. If at least one of the Companies fails
to assume promptly the defense of the action, the Lender or the Indemnitee may
do so, at the Companies' sole cost and expense. No Indemnitee shall settle or
compromise any claim against such Indemnitee for which indemnification hereunder
is sought without the written approval of the Companies, and no Company shall
settle or compromise any claim against any Indemnitee or itself without the
complete release of the Lender and all Indemnitees and the prior written consent
of the Lender. The foregoing indemnity shall survive the termination of this
Agreement.
23
SCHEDULE A
SERVICING RIGHTS PORTFOLIO
------------------------- ---------------- ------------------ ---------------- ------------------
CCF Unpaid CCA Unpaid
Investor Name/Type No. of Loans Principal 6/30/04 No. of Loans Principal 6/30/04
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Xxx Prior Approval 3 6,931,305
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Mae DUS Cash 73 682,613,862
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Xxx DUS MBS 274 2,774,975,162
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Xxx Xxxx 97 1,137,134,016
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Xxx Forwards 6 54,860,000
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Mae Senior Housing 8 64,424,686
------------------------- ---------------- ------------------ ---------------- ------------------
Xxxxxx Xxx Aggregation 2 17,146,511
------------------------- ---------------- ------------------ ---------------- ------------------
FHLMC 75 394,020,956
------------------------- ---------------- ------------------ ---------------- ------------------
RFC Forwards 3 8,713,000
------------------------- ---------------- ------------------ ---------------- ------------------
Sub Servicing BANK ONE 21 2,182,526
------------------------- ---------------- ------------------ ---------------- ------------------
Private Label BANK ONE 46 60,886,552
------------------------- ---------------- ------------------ ---------------- ------------------
HUD Fully Insured 22 124,191,431
------------------------- ---------------- ------------------ ---------------- ------------------
HUD Co-insurance 2 9,350,583
------------------------- ---------------- ------------------ ---------------- ------------------
Totals 608 $5,203,889,109 24 $133,542,014
------------------------- ---------------- ------------------ ---------------- ------------------
Grand Totals 632 $5,337,430,515
------------------------- ---------------- ------------------ ---------------- ------------------
SCHEDULE 1.1
ORGANIZATION AND QUALIFICATION
1) Capri Capital Limited Partnership, a Delaware limited partnership,
qualified in the following jurisdictions:
o California
o Illinois
o Washington
2) Capri Acquisition, Inc., an Illinois corporation, no qualifications.
3) CPC Realty Advisors, Inc., an Illinois corporation, no qualifications.
4) Capri Holdings, LLC, an Illinois limited liability company, no
qualifications.
5) Capri Capital Management, LLC, an Illinois limited liability company,
qualified in the following jurisdictions:
o California
6) Capri Capital Finance, LLC, a Delaware limited liability company,
qualified in the following jurisdictions:
o Alabama
o California
o Florida
o Illinois
o Kentucky
o Maryland
o Massachusetts
o New Jersey
o Ohio
o Pennsylvania
o Virginia
7) Capri Capital Associates, LLC, a Delaware limited liability company,
qualified in the following jurisdictions:
o California
o Illinois
o Massachusetts
o Virginia
8) Capri Realty Capital, LLC, a Delaware limited liability company, no
qualifications.
(9) Capri Capital Advisors, LLC, a Delaware limited liability company,
qualified in the following jurisdictions:
o Illinois
o Texas
(10) Capri Franklin Park, LLC, a Delaware limited liability company,
qualified in the following jurisdictions:
o Michigan
26
SCHEDULE 1.2
SUBSIDIARIES AND AFFILIATES
-------- ------------------------------------------ ---------------------------------------------
-------- ------------------------------------------ ---------------------------------------------
1. Subsidiaries
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Advisors LLC Capri Capital Limited Partnership is a 51%
Member of Capri Capital Advisors LLC
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Management, LLC Wholly-owned Subsidiary of Capri Capital
Limited Partnership
-------- ------------------------------------------ ---------------------------------------------
Capri Holdings, LLC Wholly-owned Subsidiary of Capri Capital
Limited Partnership
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Finance, LLC Wholly-owned Subsidiary of Capri Holdings,
LLC
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Associates, LLC Wholly-owned Subsidiary of Capri Holdings,
LLC
-------- ------------------------------------------ ---------------------------------------------
Capri Franklin Park, LLC Wholly-owned Subsidiary of Capri Holdings,
LLC
-------- ------------------------------------------ ---------------------------------------------
2. Affiliates
-------- ------------------------------------------ ---------------------------------------------
A. Other Entities
Capri Realty Capital, LLC A recently formed entity which will be
the future 89% Limited Partner of Capri
Capital Limited Partnership
Capri Acquisition, Inc. 10% Limited Partner of Capri Capital
Limited Partnership
CPC Realty Advisors, Inc. 1% General Partner of Capri Capital
Limited Partnership
Capri Urban Capital I, LLC Capri Capital Limited Partnership is a
2.5% Member of Capri Urban Capital I,
Capital Associates Institutional LLC
Fund, L.P. Capri Capital Advisors LLC is a .5%
General Partner of Capital Associates
Public Pension Fund II Institutional Fund, L.P.
Capri Capital Advisors LLC is a .5%
Capital Associates Apartment Fund, L.P. General Partner of Public Pension Fund
II
Capri Capital Advisors LLC is a .5%
Capri Capital Advisors Apartment Fund General Partner of Capital Associates
III, L.P. Apartment Fund, L.P.
Capri Capital Advisors LLC is a .5%
Capri Select Income, LLC General Partner of Capri Capital
Advisors Apartment Fund III, L.P.
Capri Capital Advisors LLC is a 2.61%
Member of Capri Select Income, LLC
-------- ------------------------------------------ ---------------------------------------------
B. Shareholders of 10% or more of CPC Realty Advisors, Inc. and Capri Acquisition,
Inc. Common Stock:
-------- ----------------------------------------------------------------------------------------
Xxxxx X. Xxxxxx 45.0%
Xxxxxxx X. Xxxxx III 45.0%
Xxxxx X. Fargo 10.0%
-------
100.00%
-------- ------------------------------------------ ---------------------------------------------
-------- ----------------------------------------------------------------------------------------
C. Directors and Managers and Executive Officers of Subsidiaries:
Capri Capital Limited Partnership managing general partner is as
follows:
-------- ------------------------------------------ ---------------------------------------------
Officer Title
------- -----
CPC Realty Advisors, Inc. Managing General Partner
-------- ------------------------------------------ ---------------------------------------------
Xxxxx X. Xxxxxx Co-Chairman, President
Xxxxxxx X. Xxxxx III Co-Chairman, Secretary
Xxxxx X. Fargo Vice Chairman, Treasurer, Assistant
Secretary
-------- ------------------------------------------ ---------------------------------------------
Xxxxx X. Xxxxxx Director
Xxxxxxx X. Xxxxx III Director
Xxxxx X. Fargo Director
-------- ----------------------------------------------------------------------------------------
Capri Capital Management, LLC's sole member is Capri Capital Limited Partnership
whose managing general partner is CPC Realty Advisors, Inc. whose officers manage
Capri Capital Management, LLC (See CPC Realty Advisors, Inc. officers above)
Capri Holdings, LLC sole member is Capri Capital Limited Partnership whose managing
general partner is CPC Realty Advisors, Inc. whose officers manage Capri Holdings, LLC
(See CPC Realty Advisors, Inc. officers above)
Capri Capital Finance, LLC Officers are as follows:
-------- ----------------------------------------------------------------------------------------
Xxxxx X. Xxxxxx Co-Chairman
Xxxxxxx X. Xxxxx III Co-Chairman
Xxxxx X. Fargo Vice-Chairman, Chief Financial Officer,
Assistant Treasurer and Assistant
Xxxxxx X. Xxxxx, Xx. Secretary
Xxxxxx X. Xxxxx Vice Chairman and Chief Executive Officer
Xxxx Xxxxxx President, Chief Lending Officer
Executive Vice President, Chief Financial
Xxxx Xxxxxx and Administrative Officer
Xxxxxx Xxxxxx Executive Vice President
Xxxx Xxxxxx Executive Vice President and Corporate
Xxxx Xxx Xxxxx Controller
Senior Vice President
Senior Vice President
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Finance, LLC Managers are as follows:
-------- ------------------------------------------ ---------------------------------------------
Xxxxx X. Xxxxxx Manager
Xxxxxxx X. Xxxxx III Manager
Xxxxx X. Fargo Manager
Xxxxxx X. Xxxxx, Xx. Manager
-------- ------------------------------------------ ---------------------------------------------
-------- ----------------------------------------------------------------------------------------
Capri Capital Associates, LLC Officers are as follows:
-------- ----------------------------------------------------------------------------------------
Xxxxx X. Xxxxxx Co-Chairman
Xxxxxxx X. Xxxxx III Co-Chairman
Xxxxx X. Fargo Vice-Chairman, Chief Financial Officer,
Assistant Treasurer and Assistant
Xxxxxx X. Xxxxx, Xx. Secretary
Xxxxxx X. Xxxxx Vice Chairman and Chief Executive Officer
Xxxx Xxxxxx President, Chief Lending Officer
Executive Vice President, Chief Financial
Xxxx Xxxxxx and Administrative Officer
Xxxxxx Xxxxxx Executive Vice President
Xxxx Xxxxxx Executive Vice President and Corporate
Xxxx Xxx Xxxxx Controller
Senior Vice President
Senior Vice President
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Associates, LLC Managers are as follows:
-------- ------------------------------------------ ---------------------------------------------
Xxxxx X. Xxxxxx Manager
Xxxxxxx X. Xxxxx III Manager
Xxxxxx X. Xxxxx, Xx. Manager
Xxxxx X. Fargo Manager
-------- ------------------------------------------ ---------------------------------------------
Capri Franklin Park, LLC Officers are as follows:
-------- ----------------------------------------------------------------------------------------
Xxxxxxx X. Xxxxx III Co-Chairman and Treasurer
Xxxxx X. Xxxxxx Co-Chairman and Secretary
Xxxxx X. Fargo Vice Chairman, Chief Financial Officer,
Assistant Treasurer and Assistant
Xxxxxx X. Xxxxx Secretary
Xxxx Xxxxxx President
Executive Vice President and Chief
Xxxx Xxxxxx Administrative Officer
Senior Vice President
-------- ----------------------------------------------------------------------------------------
Capri Capital Advisors LLC Officers are as follows:
-------- ----------------------------------------------------------------------------------------
Xxxxx X. XxXxx Co-Chairman
Xxxxxx X. Xxxxxxxxx Co-Chairman
Xxxxxxx X. Xxxxx III Chief Executive Officer
Xxxxx X. Xxxxxx Chief Investment Officer
Xxxxx X. Fargo Chief Operating Officer
-------- ------------------------------------------ ---------------------------------------------
Capri Capital Advisors LLC Managers are as follows:
-------- ----------------------------------------------------------------------------------------
Xxxxx X. XxXxx Manager
Xxxxxx X. Xxxxxxxxx Manager
Xxxxxxx X. Xxxxx III Manager
Xxxxx X. Xxxxxx Manager
Xxxxx X. Fargo Manager
-------- ------------------------------------------ ---------------------------------------------
SCHEDULE 1.4
OPTIONS, WARRANTS, OR RIGHTS TO ACQUIRE EQUITY INTERESTS
NONE
SCHEDULE 1.7
REAL PROPERTY; LEASES AND SUBLEASES
I. Real Property Owned
The Lexington of Southfield aka Franklin Park Towers consisting of six
7- and 8-story brick faced mid-rise apartment buildings containing 1,135
units in Southfield, Michigan.
II. Real Property Leased
----------------------------------- ------------------------- ---------------- ------------------
Lessor Description Terms Monthly Payments
----------------------------------- ------------------------- ---------------- ------------------
Park Place Investors III, LLC - Arlington Office Lease 09/30/08 49,078.81
Xxxxxx Management Corp.
----------------------------------- ------------------------- ---------------- ------------------
Sublease to Franchise Information Arlington Office 02/28/07 5,118.33
Services Inc.
----------------------------------- ------------------------- ---------------- ------------------
SRI Michigan Avenue Venture, LLC Chicago Office Lease 12/31/09 29,562.00
----------------------------------- ------------------------- ---------------- ------------------
Property California SCJW1 Corp. Walnut Creek Office 08/31/04 9,776.99
Lease
----------------------------------- ------------------------- ---------------- ------------------
Equity Office Properties Trust Irvine Office Lease 10/31/06 21,283.70
----------------------------------- ------------------------- ---------------- ------------------
Harmonie Studios Limited Detroit Office Lease 07/31/04 2,835.00
Partnership
----------------------------------- ------------------------- ---------------- ------------------
Xxxxxxx Company Corp. Apartment - 03/31/05 1,314.00
Arlington
----------------------------------- ------------------------- ---------------- ------------------
Xxxxx Xxxxx Corp. Apartment - Irvine Monthly 2,842.00
----------------------------------- ------------------------- ---------------- ------------------
Xxxxxxx X. Xxxxx III Corp. Apartment - Monthly 423.37
Chicago
----------------------------------- ------------------------- ---------------- ------------------
Sandz Real Estate Co., Inc. Capri Capital Advisors 02/28/05 15,476.24
LLC Chicago Office Lease
----------------------------------- ------------------------- ---------------- ------------------
III. Office Equipment Leases
----------------- ------------------------ --------------------- ---------- --------- -----------
Lease Monthly
Location Lessor Description Inception Terms Payments
----------------- ------------------------ --------------------- ---------- --------- -----------
Chicago Fleet Capital Leasing Konica Model 8031 10/05/03 36 757.23
Months
----------------- ------------------------ --------------------- ---------- --------- -----------
Chicago GE Capital Toshiba 310 7/19/04 60 1,280.00
Ricoh 2045 Months
----------------- ------------------------ --------------------- ---------- --------- -----------
Xxxxxx XXX Xxxxxxx Xxxxx XX0000 11/05/01 36 635.73
Months
----------------- ------------------------ --------------------- ---------- --------- -----------
Irvine Filter Fresh Keurig (Coffee Monthly 120.00
Maker)
----------------- ------------------------ --------------------- ---------- --------- -----------
Irvine Pitney Xxxxx Credit Postage Meter Quarterly 186.41
Corp.
----------------- ------------------------ --------------------- ---------- --------- -----------
Walnut Creek Xerox 5855CAF Copier 12 531.63
Months
----------------- ------------------------ --------------------- ---------- --------- -----------
Walnut Creek Pitney Xxxxx Credit Postage Meter Quarterly 186.41
Corp.
----------------- ------------------------ --------------------- ---------- --------- -----------
Arlington Citicorp Vendor Finance Canon IR-8500N 10/15/03 36 2,413.95
Canon IR-6000N Months
Canon IR-5000N
Canon IR-3300N
----------------- ------------------------ --------------------- ---------- --------- -----------
IV. Automobile Leases
NONE
1. Capri Capital Advisors LLC ("Advisors") and Capri Capital Limited Partnership
("CCLP") have been advised by the United States Department of Labor ("DOL") that
DOL is conducting an investigation of the Detroit Carpenters Union Pension Trust
Fund ("Carpenters Fund"). In connection therewith, DOL has issued to Advisors
and CCLP a subpoena requiring them to deliver to DOL, or allow DOL to examine,
their records relating to an engagement of a few years ago under which
Carpenters Fund engaged CCLP to provide it with certain asset management or
advisory services relating to a hotel property in Florida in which Carpenters
Fund had invested or was about to invest. In connection with that DOL
investigation, DOL has also submitted to Advisors and CCLP, and asked them to
sign, a form of tolling agreement tolling the statute of limitations with
respect to possible claims relating to that Carpenters Fund investment. Advisors
and CCLP are negotiating with DOL the text of that tolling agreement. Carpenters
Fund has also asked Advisors and CCLP to execute a similar tolling agreement
with Carpenters Fund, and Advisors and CCLP are considering that request.
2. Carpenters Fund was sued several years ago by certain persons (collectively,
the "Founders") who had made certain investments or otherwise expended certain
funds in connection with a real estate development project in Michigan ("Forest
Dunes") to which Carpenters Fund had lent money and which Carpenters Fund
ultimately took over from the developers (who were Carpenters Fund's borrowers).
For a period of time, CCLP acted as asset manager or advisor to Carpenters Fund
in connection with that asset. The Founders and Carpenters Fund have apparently
entered into a settlement of the Founders claims against Carpenters Fund, and
Carpenters Fund has now, very recently, joined CCLP as a third party defendant
in the lawsuit and is seeking from CCLP payment of or reimbursement for some or
all of the amounts that Carpenters Fund has agreed to pay to or for the benefit
of the Founders under that settlement agreement. CCLP has tendered the matter to
its insurance carrier and is being defended in the matter by attorneys selected
by the carrier.
SCHEDULE 1.12
-------------
BENEFIT PLANS
-------------
ELIGIBILITY
o Eligible first of the month coinciding with date of hire.
CONTRIBUTIONS
o 100% maximum of eligible compensation can be deducted (subject to
statutory maximum) from the employee's paycheck on a pretax basis.
Employer contributions are discretionary.
ROLLOVERS
o Rollovers from another tax-qualified plan may be accepted.
INVESTMENT OPTIONS
o Capri employees have currently thirty (30) investment options through
Great West Life Insurance.
VESTING
o Employee is 100% vested in pretax contributions, as well as any amounts
that are rolled over to the Plan.
o Employee is eligible for any matching contributions after one year of
service. Employee is 100% vested in matching contributions as made and
in profit sharing contributions after three years of service.
LOANS
o Employee may borrow against their Plan account balance. No more than two
loans can be outstanding at a time. A loan can be repaid by payroll
deduction over a five-year period. Loans for a principal residence may
be paid back over as many as 20 years, but not beyond your normal
retirement age.
WITHDRAWALS
o Employee can withdraw from their fund based on extreme financial
hardship and certain conditions. There may be adverse tax consequences,
including a 10% tax penalty. Taking a financial hardship withdrawal will
suspend the employee from contributing to his/her plan for six (6)
months.
DISTRIBUTIONS
o Employee may receive distribution of their account due to separation
from service based on retirement, death or termination of employment.
Employee may receive an in-service
distribution upon the attainment of age 59 and 1/2 provided the
participant is 100% vested. Also, a distribution can be directly rolled
over from the Plan to an XXX or another employer's tax-qualified plan
that accepts rollovers.
SCHEDULE 1.13
TAXES
NONE
SCHEDULE 1.14
LICENSING
Capri Capital Limited Partnership has the following approvals and licenses:
SEC Registered Advisor
Capri Capital Management, LLC has the following approvals and licenses:
SEC Registered Advisor
Capri Select Income, LLC has the following approvals and licenses:
NONE
Capri Holdings, LLC has the following approvals and licenses:
NONE
Capri Capital Finance, LLC has the following approvals and licenses:
Xxxxxx Mae Seller Servicer
FHLMC Seller Servicer
California Finance Lender's License
Capri Capital Associates, LLC has the following approvals and licenses:
HUD Seller Servicer
Xxxxxx Xxx Issuer of mortgage backed
securities
California Finance Lender's License
Capri Acquisition, Inc. has the following approvals and licenses:
NONE
CPC Realty Advisors, Inc. has the following approval and licenses:
NONE
Capri Urban Capital I, LLC has the following approvals and licenses:
California Finance Lender's License
Capri Franklin Park, LLC has the following approvals and licenses:
NONE
Capri Capital Advisors LLC has the following approvals and licenses:
SEC Registered Advisor
