LOAN AGREEMENT
Exhibit
10.5
THIS
AGREEMENT (“Agreement”) is made effective as of the ___ day of , 2005,
by and among XXXXX X. XXXXXX (“Xxxxxx”), , an Ohio
(“Company”), and the undersigned investor (“Investor”).
WHEREAS, the parties hereto understand and acknowledge that: (a) Investor and other persons
and entities have previously made one or more loans (“Investor Notes”) to the Company and/or other
related entities in which Julian has an interest (“Variable Interest Entities”); (b) the Company
and the other Variable Interest Entities are currently without sufficient assets or income to pay
the principal and interest owed to Investor under the Investor Notes; (c) Julian has made certain
interest and/or principal payments due under the Investor Notes out of his personal resources for
several months, and his personal resources are essentially depleted; (d) the Company plans to
acquire certain Class C Preferred Units of Performance Home Buyers, LLC, an Ohio limited liability
company (“PHB LLC”), in amounts equal to the Investor Notes issued by the Company in exchange for a
promissory note issued to PHB LLC by the Company; and (e) Julian will personally guarantee the
promissory note issued to PHB LLC.
NOW THEREFORE, inconsideration of the mutual promises, agreements, covenants, representations
and warranties set forth herein, the parties do hereby agree as follows:
1. Amendment of Investor Notes. The Investor Notes will be and hereby are, without
further act or deed, amended so as to: (a) extend the maturity date of the Investor Notes to May
15, 2010; (b) add all accrued but unpaid interest due under the Investor Notes through the date
hereof into the principal amount of such Investor Notes; (c) adjust the interest rate on such
Investor Notes to five percent (5%) per annum simple interest; (d) release any and all mortgages,
security interests and other collateral issued with respect to the Investor Notes; (e) adjust the
payment schedule so that accrued interest only is payable quarterly on the 15th day of
February, May, August and November, commencing August 15, 2005; and (f) adjust the payment schedule
so that principal is payable at any time on or before the maturity date of the Investor Notes at
the option of the Company, without prepayment penalty. The Investor agrees that the terms of the
amended Investor Notes are as set forth in the Note Holder Disclosure Statement of even date
herewith. The Investor agrees that any and all prior acts of default under the Investor Notes are
considered cured, and that the Investor shall not bring any legal action with respect to the
Investor Notes so long as the parties hereto are not in default of their respective obligations
under the Investor Notes and this Agreement. Except as otherwise provided herein, the terms set
forth in the Investor Notes shall remain in full force and effect.
2. Issuance of Class C Units. The Company will acquire Class C Preferred Units
(“Class C Units”) of PHB LLC. By their terms, the Class C Units pay distributions quarterly at a
annual rate of five percent (5%). The Class C Units will have priority as to payment over the
Common Units of PHB LLC, but will be subordinate to other Preferred Units currently existing or to
be issued in the future and any debts or other liabilities of PHB LLC. The Class C Units will be
redeemable at any time and from time to time without penalty by PHB LLC, but will not have a
definite redemption date. The amount of Class C Units to be acquired by the Company will be equal
to the aggregate amount of unpaid principal (including accrued but unpaid interest due through the
date hereof) under the Investor Notes issued by the Company.
3. Payment for Class C Units. The Company will acquire the Class C Units from PHB LLC
in exchange for a promissory note issued to PHB LLC by the Company (“PHB Note”). The Company Note
shall bear interest at the annual rate of five percent (5%). Interest only under the Company Note
shall be payable quarterly. The principal due under the Company Note may be payable at any time
and from time to time without penalty, but shall be paid in full on or before May 30, 2010 unless
such maturity date is extended with the consent of PHB LLC. Julian will personally guarantee full
and timely payment of the Company Note. Full and timely payment of the Company Note will also be
secured by a pledge of the Class C Units by the Company to PHB LLC.
4. Representations of Julian and Company. Julian and the Company jointly and
severally represent and warrant to the Investor as follows:
(a) Issuance of Class C Units: PHB LLC has agreed to issue Class C Units to the
Company under the terms described herein.
(b) Contributions from Julian to Company and VIEs. Within three (3) business days
after Julian receives distribution of cash from PHB LLC with respect to his common membership units
of PHB LLC, so long as there is any unpaid interest or principal outstanding under any of the
Investor Notes, Julian will make a cash distribution (“Cash Contribution”) to the Company and/or
the other Variable Interest Entities.
(c) Percentage of Contribution to Company and VIEs. In the event the amount of the
Cash Contribution to be made to the Company and the other Variable Interest Entities is not
sufficient at the time it is received to pay all of the accrued interest and principal due to all
of the holders of Investor Notes issued by the Company and all of the other Variable Interest
Entities, then the percentage of such Cash Contribution which will be contributed to the Company
shall be equal to the total balance of Investor Notes issued by the Company as compared to the
total balance of the Investor Notes issued by the Company and all of the other Variable Investor
Entities.
(d) Priority of Contribution Payments. The Company will use any Cash Contribution
received from Julian as follows: (i) first, to make payments of interest due on the Company Note;
(iii) second, to make payments to pay-off the principal on the
Company Note; (iii) third, to make payments of interest due on its Investor Notes; and (iv)
fourth, to make payments to pay-off the principal on its Investor Notes.
(e) Priority of Class C Unit Distributions. The Company will use any Class C Unit
distributions received from PHB LLC (“Class C Unit Distributions”) as follows: (i) first, to make
payments of interest due on the Company Note; (iii) second, to make payments to pay-off the
principal on the Company Note; (iii) third, to make payments of interest due on its Investor Notes;
and (iv) fourth, to make payments to pay-off the principal on its Investor Notes.
(f) Cash Redemptions from PHB LLC. Within three (3) business days after the Company
receives any cash redemption payment (“Cash Redemption Payment”) from PHB LLC with respect to the
Class C Units, as permitted by the terms of the Class C Units, so long as there is any unpaid
interest or principal outstanding under the Company Note or its Investor Notes, the Company will
use such Cash Redemption Payment to pay-off the interest and principal due under the Company Note
and/or its Investor Notes.
(g) Payments to Investors. In the event the amount of any Cash Contribution, Class C
Unit Distributions, or Cash Redemption Payment received by the Company is not sufficient at the
time it is received to pay all of the accrued interest and principal due to all of the holders of
Investor Notes issued by the Company, then such amount shall be paid to the holders of the Investor
Notes issued by the Company as follows: (i) first to pay any accrued interest due and owing under
such Investor Notes to each holder of such Investor Notes on a pro rata basis (based on the
relative amount of accrued interest due and owing to such holder as compared to the amount of
accrued interest due and owing to all holders); and (ii) only after all accrued interest due and
owing under such Investor Notes has been paid to all holders of such Investor Notes, then to pay
principal due under such Investor Notes to each holder of such Investor Notes on a pro rata basis
(based on the relative unpaid principal balance of such Investor Notes held by such holder as
compared to the unpaid principal balance of such Investor Notes held by all holders).
5. Representations of Investor. The Investor represents and warrants to the Company
and Julian that:
(a) Investor has received and reviewed the Disclosure Statement and Addendum to Disclosure
Statement of even date herewith and the attached financial statements of the Company and of PHB
LLC. Investor agrees to return to Company or PHB LLC, as the case may be, all copies of theses
documents in the event Investor does not execute this Agreement.
(b) The Investor has been afforded the opportunity to ask questions of Julian and the Company
concerning the transactions contemplated by this Agreement and has received and reviewed the
information requested.
(c) Investor has consulted with or has had the opportunity to consult with his or her
attorney, accountant and/or personal financial, business and tax advisor concerning the
transactions contemplated by this Agreement, or has such knowledge and experience in financial and
business matters that the Investor is capable of evaluating such transactions alone.
(d) Investor acknowledges and agrees that it currently does not have any claims against PHB
LLC and hereby waives any and all future claims, demands, damages, liabilities, actions, causes of
actions, or suits for money damages or equitable relief, known and unknown, including those based
on any third party beneficiary theory claims, which Investor may now have or may ever have against
PHB LLC arising out of, or in any way related to the Investor Notes.
6. Other Documents. The parties hereto agree to prepare, execute, record and/or file
such other instruments, agreements and other documents as are necessary or desirable to consummate
the transactions contemplated by this Agreement.
7. Confidentiality. The parties hereto shall not discuss, disclose, publish or
otherwise reveal with or to any party other than their attorney, accountant or other personal
financial, business and tax advisor any aspect of the Investor Notes, this Agreement, the
Disclosure Statement, the Addendum to the Disclosure Statement, the transactions contemplated by
this Agreement or other dealings between the parties hereto related to this Agreement or the
Investor Notes.
8. Counterparts. This Agreement may be signed in multiple counterparts, each of which
when taken together shall constitute one and the same agreement. It is anticipated that all
holders of Investor Notes will execute a copy of this Agreement or a substantially similar
agreement. Unless the Company waives such requirement in its sole discretion, which may be
accomplished without notice to the holders of Investor Notes, all of the transactions contemplated
by this Agreement are contingent upon all or substantially all of the holders of Investor Notes
executing this Agreement or a substantially similar agreement on or before June 29, 2005.
9. Governing Law. This Agreement shall be governed by and construed in accordance
with Ohio law. All parties hereto agree to venue and jurisdiction of any dispute hereunder in
Xxxxxxxxxx County, Ohio.
10. Binding Effect. All of the terms, covenants and conditions herein contained shall
inure to the benefit of and be binding upon the parties hereto, their successors and assigns;
provided, however, that any transfer of any interest herein in violation of any of the provisions
hereof shall confer no rights upon the transferees.
11. Notices. Except where expressly provided otherwise in this Agreement, whenever it
is provided in this Agreement that notice, demand, request or other communication shall be given to
or served upon any of the parties hereto by another, any such notice, demand, request or
communication shall be in writing and personally
delivered or sent by certified or registered mail, return receipt requested, addressed to such
party at the last known address of the party as shown on the Company’s records or to such other
place or attention as any party shall specify by notice. Such demand, notice, request or
communication shall be effective for the purpose hereof only when and if so personally delivered or
mailed, as the case may be.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date
first set forth above.
| COMPANY: | JULIAN: | |||||||||||
| Xxxxx X. Xxxxxx, Individually | ||||||||||||
By: |
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| Xxxxx X. Xxxxxx | ||||||||||||
| Its: | ||||||||||||
| INVESTOR: | ||||||||||||
| Print Name of Investor | ||||||||||||
| Print Name and Title of Signer (if Investor is not an Individual) | ||||||||||||
| Signature | ||||||||||||
NOTEHOLDER DISCLOSURE STATEMENT
This Statement is made a part of, and attached to, a Loan Agreement which sets forth a summary of
the re-negotiated terms of a loan between (Noteholder) and
(Borrower).
Original Principal Amount: |
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Original Loan Date: |
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Original Interest Rate: |
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Original Maturity Date: |
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Remaining Unpaid Principal: |
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Remaining Unpaid Interest: |
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New Principal Amount:
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(Unpaid Principal plus Unpaid Interest) |
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New Interest Rate: |
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New Maturity Date: |
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New Payment Terms: Interest-only to be paid Quarterly, principal balance due at maturity unless
repaid earlier. No pre-payment penalty. First interest payment is due on:
This Statement fairly represents the balances due to the Noteholder, and the re-negotiated terms
and repayment obligation of the Borrower.
| Noteholder (or agent for): | Date: | |||||||||||||
| Borrower: | Date: | |||||||||||||
| By: | ||||||||||||||
