CONFIDENTIAL
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HOMETOWN AMERICA, L.L.C.
LOAN TO
CP LIMITED PARTNERSHIP
CHATEAU COMMUNITIES, INC.
TERM SHEET
June 26, 2003
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THIS TERM SHEET IS INTENDED AS A PROPOSAL BY HOMETOWN AMERICA, L.L.C., A
DELAWARE LIMITED LIABILITY COMPANY ("HOMETOWN") TO MAKE A LOAN (THE "LOAN") TO
CP LIMITED PARTNERSHIP, A MARYLAND LIMITED PARTNERSHIP, AND CERTAIN OF ITS
SUBSIDIARIES (COLLECTIVELY, "BORROWER"), CHATEAU COMMUNITIES, INC., A MARYLAND
CORPORATION, AND ROC COMMUNITIES, INC., A MARYLAND CORPORATION (COLLECTIVELY,
THE "GUARANTORS") AND NOT A COMMITMENT TO LEND. NO PARTY WILL HAVE ANY
COMMITMENT OR OBLIGATION HEREUNDER UNLESS AND UNTIL BORROWER, THE GUARANTORS AND
LENDER (AS DEFINED HEREIN) COUNTERSIGN THIS TERM SHEET ON BEHALF OF IT AND ITS
RESPECTIVE SUBSIDIARIES AND AFFILIATES. THIS TERM SHEET DOES NOT PURPORT TO
SUMMARIZE ALL OF THE TERMS AND PROVISIONS TO BE MUTUALLY AGREED UPON AND
CONTAINED IN DEFINITIVE DOCUMENTATION FOR THIS TRANSACTION AS DESCRIBED BELOW.
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BORROWER: CP Limited Partnership and the subsidiaries that are the
owners of the Projects, jointly and severally.
GUARANTORS: Chateau Communities, Inc. and ROC Communities, Inc.
LENDER: Hometown, or any of its affiliates in Hometown's
discretion.
LOAN DOCUMENTS: Xxxxxxxx's obligations in respect of the Loan will be
evidenced and secured by a loan agreement (the "LOAN
AGREEMENT"), a guaranty agreement (the "GUARANTY
AGREEMENT"), promissory notes, security instruments, and
other related documentation (collectively, together with
this Term Sheet, the "LOAN DOCUMENTS") in customary form and
mutually satisfactory to Borrower and Lender.
AMOUNT: $85 million.
COMMITMENT FEE: None.
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PURPOSE: The Loan will be made for the purposes of repaying in full
(the "REPAYMENT") the Series A Notes and the Series B Notes
issued pursuant to an unsecured credit facility (the "PAC
LIFE LOAN") obtained by CP Limited Partnership and the
Guarantors from Pacific Life Insurance Company ("PAC LIFE").
On the First Funding Date (as defined below), Lender will
fund such portion of the Loan as is necessary to repay the
Series B Notes in full, including any required "make whole"
or prepayment premium and associated fees and expenses (the
"SERIES B REPAYMENT AMOUNT"). On the Second Funding Date (as
defined below), the balance of the Loan will be funded in
order to enable Borrower to repay the Series A Notes in
full, including any required "make whole" or prepayment
premium and associated fees and expenses (the "SERIES A
REPAYMENT AMOUNT"). Interest shall not accrue on the Series
A Repayment Amount until disbursement on the Second Funding
Date. Borrower acknowledges that the Series A Repayment
Amount will not be sufficient to repay the Series A Notes in
full, and, therefore, Borrower and the Guarantors will use
their own capital resources (together with the Series A
Repayment Amount) to repay the Series A Notes in full.
SECURITY The Loan will be secured by two (2) manufactured home
communities located in Michigan and four (4) manufactured
home communities located in Florida (collectively, the
"PROJECTS").
FUNDING DATE: The Loan will be funded in two installments. The Series B
Payment Amount will be funded on a date (the "FIRST FUNDING
DATE") that will enable Borrower and Guarantor to repay the
Series B Notes so as to avoid any default under the Pac Life
Loan Agreement (defined below), and the Series A Payment
Amount will be funded on a date (the "SECOND FUNDING DATE")
that will enable Borrower and Guarantor to repay the Series
A Notes so as to avoid any default under the Pac Life Loan
Agreement.
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CONDITIONS
PRECEDENT TO
FUNDING/CLOSING: Execution and delivery of the Loan Documents.
Representation by Borrower and the Guarantors that the Loan
Documents will not and this Term Sheet does not violate or
give rise to any obligation by Borrower, the Guarantors or
any of their respective subsidiaries or affiliates, to make
any payments under any existing contracts, agreements,
understandings or arrangements with or involving Borrower,
the Guarantors or any of their respective subsidiaries or
affiliates, including, but not limited to, any tax
protection, tax sharing, or similar agreements or
arrangements.
Other conditions similar to those in the Second Amendment
and Waiver to the Amended and Restated Note Purchase
Agreement between CP Limited Partnership, the Guarantors and
Pac Life, dated as of December 31, 2002 (the "PAC LIFE LOAN
AGREEMENT") as well as other conditions precedent customary
in a secured loan.
MATURITY: March 31, 2004
AMORTIZATION: None.
INTEREST RATE: Variable rate equal to one-month LIBOR + 250 basis points
("BPS").
DEFAULT RATE: Upon the occurrence and during the continuation of an Event
of Default under the Loan Documents, the Loan will accrue
interest at a default rate equal to (a) Interest Rate + 200
bps for 60 days, (b) Interest Rate + 400 bps for the
following 60 days, (c) Interest Rate + 600 bps for the
following 60 days, and (d) Interest Rate + 800 bps
thereafter.
ANNUAL FEE: None.
COLLATERAL: The Loan will be secured with first liens on the Projects,
assignments of leases and rents, and other customary
security covering the Projects.
RECOURSE: The Loan will be fully non-recourse to Borrower, except that
the Loan will be recourse to Borrower and Guarantors for
standard recourse exceptions which include environmental
matters, intentional misrepresentation, misappropriation of
funds (including proceeds paid under any insurance policies
or condemnation proceedings, rents and security deposits),
waste, willful destruction of property, fraud, unauthorized
transfer, voluntary bankruptcy, collusive involuntary
bankruptcy and customary items.
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REPRESENTATIONS The Loan will include representations and warranties to be
AND WARRANTIES: made as of the Funding Date that will be similar to the
representations and warranties made in the Pac Life Loan, as
well as representations and warranties customary in a
secured loan.
EXPENSES: The out-of-pocket expenses of Lender associated with
negotiating, structuring, documenting, and enforcing the
Loan Documents will be paid by Xxxxxxxx. All such expenses
of the Lender incurred as of the Funding Date will be paid
by Borrower on the Funding Date.
DEFAULTS: The Loan Documents will contain events of default that are
customary in a secured loan.
GENERAL The Loan Documents will contain covenants that are customary
COVENANTS: in a secured loan.
FINANCIAL
COVENANTS: None.
PREPAYMENT: The Loan may be prepaid in whole or in part at any time on
not less than three (3) days' prior written notice. Any
prepayment of Loan principal must be accompanied by interest
accrued through the date of prepayment on the principal
amount prepaid.
APPRAISAL: Prior to the Funding Date Lender will have received an
appraisal for the Projects, on an "as-is, where-is, with all
faults" basis from an appraiser acceptable to Lender (the
"APPRAISAL"), confirming that the amount of the Required
Payment will not exceed 80% of the appraised value of the
Projects.
ENVIRONMENTAL/ Environmental reports and structural engineering reports
ENGINEERING: satisfactory to Lender, in form and from firms acceptable to
Lender will be required.
BROKER/
CORRESPONDENT: None.
Nothing herein express or implied shall give or be construed to give to any
person or entity, other than the parties hereto, any legal or equitable or other
rights or benefits.
[Remainder of page intentionally left blank. Signature Page Follows.]
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BORROWER: LENDER:
CP LIMITED PARTNERSHIP, HOMETOWN AMERICA, L.L.C.,
a Maryland limited partnership a Delaware limited liability
company
By: /s/ Xxxxxx X. Xxxxxxx By: Hometown Residential Manager, L.L.C.,
----------------------------- a Delaware limited liability company,
Name: Xxxxxx Xxxxxxx its sole manager]
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Title: Executive Vice President
-------------------------- By: /s/ Xxxxxxx X. Xxxxx, Xx.
--------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
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GUARANTORS: Title: Manager
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CHATEAU COMMUNITIES, INC.,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Executive Vice President
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ROC COMMUNITIES, INC.,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Executive Vice President
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