EXHIBIT 10.37
SUBORDINATED TERM LOAN AGREEMENT
THIS SUBORDINATED TERM LOAN AGREEMENT (as amended from time to time,
the "Agreement") is made and entered into as of this 4th day of December, 2002
by and between ORIGEN FINANCIAL, L.L.C., a Delaware limited liability company
("Borrower"), whose address is 000 Xxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000, and SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP, a Michigan
limited partnership ("Lender"), whose address is 00000 Xxxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000.
RECITALS:
A. Borrower has requested from Lender, and Lender has agreed to make
the loan described below (the "Loan") to Borrower, in accordance with the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. LOAN. The Loan provided hereunder shall have the following terms:
Type of Loan: Term Loan
Interest Rate: 700 basis points over LIBOR, but not less than eleven
percent (11%) per annum, or in excess of fifteen percent (15%) per
annum
Note Amount: $10,000,000
Maturity: December 31, 2003; provided that the due date shall be
automatically extended to December 31, 2004 if the Master Repurchase
Agreement between Borrower and Credit Suisse First Boston Mortgage
Capital LLC dated December 18, 2001, as amended from time to time (the
"CSFB Agreement"), is renewed on terms acceptable to Lender upon the
expiration of the CSFB Agreement in May 2003.
The Loan and any amendments, extensions, renewals, or refinancing thereof are
subject to this Agreement.
2. TERM PROMISSORY NOTE. Upon the execution of this Agreement, Borrower
shall execute and deliver the Term Promissory Note of even date herewith
attached to this Agreement as EXHIBIT A (the "Note") to evidence the
indebtedness under the Loan.
3. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender, all of which representations and warranties shall be
continuing until the Loan is fully paid and Borrower's obligations under this
Agreement and the Related Documents are fully performed, as follows:
A. Borrower's Existence and Authority. Borrower is a Delaware
limited liability company, and the person executing this Agreement on
behalf of Borrower has full power and complete authority to execute
this Agreement and all Related Documents on behalf of Borrower, and
this Agreement and the Related Documents are valid, binding and
enforceable against Borrower.
B. Financial Information. All financial information provided
to Lender has been prepared and will continue to be prepared in
accordance with generally accepted accounting principles ("GAAP"),
consistently applied, and fully and fairly presents the financial
condition of Borrower as of the date or for the operating period
thereof. There
has been no material adverse change in Borrower's business, property,
or financial condition since the date of Borrower's latest Financial
Statements provided to Lender.
C. No Litigation/No Misrepresentations. There are no civil or
criminal proceedings pending before any court, government agency,
arbitration panel, or administrative tribunal or, to Borrower's
knowledge, threatened against Borrower, which may result in any
material adverse change in the business, property, or financial
condition of Borrower. All representations and warranties in this
Agreement and the Related Documents are true and correct and no
material fact has been omitted.
4. AFFIRMATIVE COVENANTS. As of the date of this Agreement and
continuing until all of Borrower's obligations under this Agreement and the
Related Documents are fully performed and the Loan is fully repaid to Lender,
Borrower shall at all times comply with the following covenants:
A. Notice of Adverse Events. Borrower shall promptly notify
Lender in writing of any litigation, indictment, governmental
proceeding, default, or any other occurrence which may have a material
adverse effect on Borrower's business, property or financial condition.
B. Maintain Business Existence and Operations. Borrower shall
do all things necessary to keep in full force and effect its corporate
existence and continue its business as presently conducted.
C. General Compliance with Law. Borrower shall at all times
operate its business in strict compliance with all applicable Federal,
State, and local laws, ordinances and regulations, and refrain from
engaging in any civil or criminal activity proscribed by Federal, State
or local law.
D. Delivery of Financial Statements. Within forty-five (45)
days after the end of each fiscal quarter, Borrower shall deliver to
Lender copies of its unaudited financial statements prepared in
accordance with GAAP, consistently applied. Within ninety (90) days
after the end of each fiscal year, Borrower shall deliver to Lender
copies of its audited financial statements prepared in accordance with
GAAP, consistently applied.
5. EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default under this Agreement:
A. Failure to Pay Amounts Due. Any amount of principal or
interest under the Note is not paid when due.
B. Misrepresentations; False Financial Information. Any
statement, warranty or representation of Borrower in connection with or
contained in this Agreement, the Related Documents, or any Financial
Statements now or hereafter furnished to Lender by or on behalf of
Borrower, is false or misleading.
C. Noncompliance with Loan Agreements. Borrower breaches any
covenant, term, condition or agreement stated in this Agreement, the
Related Documents or any agreement relating to Senior Debt (as defined
below).
D. Cessation/Termination of Existence. Borrower shall cease
doing business or Borrower's existence is terminated by sale,
dissolution, merger or otherwise.
E. Bankruptcy or Receivership. Any conveyance is made of
substantially all of Borrower's assets, any assignment is made for the
benefit of creditors, any receiver is
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appointed, or any insolvency, liquidation or reorganization proceeding
under the Bankruptcy Code or otherwise shall be filed by or against
Borrower.
F. Attachments; Tax Liens. Any attachment, execution, levy,
forfeiture, tax lien or similar writ or process is issued against any
property of Borrower.
G. Material Adverse Change. Any material adverse change occurs
or is imminent the effect of which would be to substantially diminish
Borrower's financial condition, business, or the ability to perform its
agreements with Lender.
H. Other Lender Default. Any other indebtedness of Borrower to
Lender or any other creditor (including, without limitation, Financial
Institutions (as defined below) becomes due and remains unpaid after
acceleration of the maturity or after the stated maturity.
I. Other Indebtedness. Borrower incurs any Indebtedness (other
than Senior Debt) in excess of $100,000 in the aggregate after the date
of this Agreement.
J. Change of Control Event. Absent Lender's prior written
consent, any Change of Control Event with respect to Borrower occurs
after Borrower's first draws on the Loan.
6. REMEDIES ON DEFAULT.
A. Acceleration Set-Off. Upon the occurrence of any Event of
Default, Lender may, at Lender's option, declare the Loan to be
immediately due and payable. The foregoing shall not in any way impair
Lender's right to demand repayment under the terms of the Note.
B. Remedies; No Waiver. The remedies provided in this
Agreement are cumulative and not exclusive, and Lender may exercise any
remedies available to it at law, in equity, and as are provided in this
Agreement, the Related Documents and any other written agreement
between Borrower and Lender. No delay or failure of Lender in
exercising any right, remedy, power, or privilege under this Agreement
or the Related Documents shall affect that right, remedy, power or
privilege, nor shall any single or partial exercise preclude the
exercise of any other right, remedy, power or privilege. No delay or
failure of Lender to demand strict adherence to the terms of this
Agreement or the Related Documents shall be deemed to constitute a
course of conduct inconsistent with Lender's right at any time, before
or after any Event of Default, to prospectively demand strict adherence
to the terms of this Agreement and the Related Documents.
7. SUBORDINATION.
A. The indebtedness evidenced by the Note and any renewals or
extensions thereof (such indebtedness being herein called the
"Subordinated Indebtedness") shall at all times be wholly subordinate
and junior in right to payment in full of all Senior Debt (as defined
below). The provisions of this section on subordination shall
constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Debt, and
such provisions are made for the benefit of the holders of Senior Debt,
and such holders are hereby made obligees hereunder the same as if
their names were written herein as such, and they and/or each of them
may proceed to enforce such provisions. Unless and until an event of
default under any of the Senior Debt (other than an event of default
which exists solely by reason of a default under this Agreement) shall
have occurred and be continuing ("Superior Default"), Borrower shall
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pay the principal and interest on all Subordinated Indebtedness
according to the terms hereof.
For purposes of this Agreement, "Senior Debt" means the
principal of, and interest on and other amounts due on or in connection
with any Indebtedness of Borrower (other than the Note) to any
Financial Institution (as defined below), whether outstanding on the
date of this Agreement, or thereafter created, incurred or assumed by
Borrower (including all deferrals, renewals, extensions or refundings
of, or amendments, modifications or supplements to, Indebtedness of the
kind described in this clause). Notwithstanding anything herein to the
contrary, Senior Debt shall not include: (a) Indebtedness of or amounts
owed by Borrower for compensation to employees, or for goods or
materials purchased in the ordinary course of business or for services,
or (b) Indebtedness of Borrower to any of its subsidiaries or
affiliates. In no event shall any Financial Institution be deemed to be
an affiliate of Borrower. Indebtedness of Borrower to any of its
subsidiaries or affiliates shall be pari passu in all respects with the
Subordinated Indebtedness.
For purposes of this Agreement, "Financial Institution" means
any bank as defined in section 3(a)(2) of the Securities Act of 1933,
as amended (the "Securities Act"), savings and loan association or
other institution as defined in section 3(a)(5)(A) of the Securities
Act, insurance company as defined in section 2(13) of the Securities
Act, or investment banking firm. For purposes of this Agreement, Credit
Suisse First Boston Mortgage Capital, LLC ("CSFBMC") shall be
considered a Financial Institution.
For purposes of this Agreement, "Indebtedness" means, with
respect to any person, (a) any liability, contingent or otherwise, of
such person (i) for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such person or only to a
portion thereof), (ii) evidenced by a note, debenture or similar
instrument or representing the balance deferred and unpaid of the
purchase price of any property purchased, (iii) for the payment of
money relating to a lease that is required to be capitalized under
GAAP; or (iv) to repurchase securities or other property, including
without limitation, Borrower's obligations to repurchase securities
under the CSFB Agreement; (b) any obligation secured by a lien to which
the property or assets of such person are subject, whether or not the
obligations secured thereby shall have been assumed by or shall
otherwise be such person's legal liability; and (c) any and all
deferrals, renewals, extensions and refundings of, or amendments,
modifications or supplements to, any liability of the kind described in
any of the preceding clauses (a) or (b).
B. The terms hereof, the subordination effected hereby and the
rights of the holders of the Senior Debt shall not be affected by (a)
any amendment of or addition or supplement to any Senior Debt or any
instrument or agreement relating thereto, (b) any exercise or
non-exercise of any right, power or remedy under or in respect of any
Senior Debt or any instrument or agreement relating thereto, or (c) any
waiver, consent, release, indulgence, extension, renewal, modification,
delay or other action, inaction or omission, in respect of any Senior
Debt or any instrument or agreement relating thereto or any security
therefor or guaranty thereof, whether or not any holder of any
Subordinated Indebtedness shall have had notice or knowledge of any of
the foregoing.
C. Upon the happening of (a) a Superior Default which is a
default in respect of payment of principal, premium, if any, or
interest on Senior Debt or (b) a Superior Default (other than a
Superior Default in respect of payment of principal, premium, if any,
or interest on Senior Debt) and receipt by Lender of written notice
thereof from any holder of Senior Debt, then until all Senior Debt
shall have been paid in full, Borrower shall not, directly or
indirectly, make or agree to make, and neither Lender nor any
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assignee or successor holder of any Subordinated Indebtedness shall
demand, accept or receive (a) any payment (in cash, property or
securities, by set-off or otherwise), direct or indirect, of or on
account of any principal or interest in respect of any Subordinated
Indebtedness, and no such payment shall be accepted by any holder of
any Subordinated Indebtedness, or (b) any payment for the purpose of
any redemption, purchase or other acquisition, direct or indirect, of
any Subordinated Indebtedness, and no such payment shall be due.
In the case of any Superior Default (other than a Superior
Default with respect to payment of principal, premium, if any, or
interest on Senior Debt), the foregoing restrictions shall cease to
apply to any payment received with respect to the Subordinated
Indebtedness after the expiration of 180 days after the holder of
Senior Debt shall have sent notice of the Superior Default to the
holder of the Note, unless prior to the expiration of such 180-day
period one or more holders of the Senior Debt shall have commenced and
be diligently prosecuting an action, suit or other legal or equitable
proceeding or otherwise take action or exercise any other remedy
against Borrower or its property based upon the Superior Default, or
unless a Superior Default which is a payment default shall have
occurred and be continuing; provided, further, that during such 180-day
period following the Superior Default (other than a Superior Default
with respect to payment of principal, premium, if any, or interest on
Senior Debt) the holders of the Subordinated Indebtedness shall refrain
from prosecuting any such action, suit or other legal or equitable
proceeding against Borrower or its property based upon an Event of
Default hereunder.
In the event that a Superior Default (other than a Superior
Default with respect to payment of principal, premium or interest on
Senior Debt) is cured or is waived by the appropriate holders of the
Senior Debt (whether by amendment to the applicable loan agreement,
forbearance agreement or otherwise) prior to the expiration of the
aforesaid 180-day period applicable to such Superior Default, then any
Event of Default occurring under this Agreement solely by reason of the
occurrence of such Superior Default shall be deemed not to have
occurred. Any judicial proceedings initiated by a holder of
Subordinated Indebtedness at a time when such holder has no knowledge
that such proceedings are prohibited by this paragraph shall not be
deemed a violation of any provisions of this Agreement and, upon
receipt of notice from the holder of the Senior Debt that such
proceedings are so prohibited, such holder of the Subordinated
Indebtedness shall terminate such proceedings, without prejudice.
D. Upon any distribution (whether of cash, securities or other
property) to creditors of Borrower in a liquidation or dissolution of
Borrower, or in a bankruptcy, reorganization, insolvency, receivership,
assignment for the benefit of creditors, marshalling of assets or
similar proceeding relating to Borrower or its property:
(1) holders of Senior Debt shall be entitled to
receive payment in full in cash of such Senior Debt (including interest
accruing after the commencement of any such proceeding or interest that
would have accrued but for the commencement of such proceeding to the
date of payment on, and other amounts included in, Senior Debt) before
the holder of the Note shall be entitled to receive any payment of
principal of, premium (if any) or interest on the Note or any other
distributions with respect to the Note;
(2) until the Senior Debt is paid in full in cash as
provided in clause (1) of this paragraph, any distribution to which the
holder of the Note would be entitled but for this section on
subordination shall be made to the holders of Senior Debt as their
interests may appear.
In the event that any payment or distribution of assets of
Borrower prohibited by
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the provisions of this section on subordination of any kind or
character, whether in cash, property or securities, shall be received
by the holder of the Note before all Senior Debt is paid in full, or
provision made for such payment in accordance with the terms of the
Senior Debt, such payment or distribution shall be held in trust for
the benefit of, and shall be paid over or delivered to, the holders of
such Senior Debt or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any
instruments evidencing any of such Senior Debt may have been issued, as
their respective interests may appear, for application to the payment
of all Senior Debt remaining unpaid to the extent necessary to pay such
Senior Debt in full in accordance with its terms, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Debt.
E. In the event that the Note is declared due and payable
before its stated maturity because of the occurrence of an Event of
Default hereunder, the holders of the Senior Debt shall be entitled to
receive payment in full of all amounts due with respect to all Senior
Debt before the holder of the Note is entitled to receive any payment
on account of the principal of, premium (if any) or interest on, or any
repurchase, redemption or other retirement (including, without
limitation, any defeasance) of, the Note.
F. The holders of Subordinated Indebtedness shall not be
subrogated to the rights of the holders of Senior Debt to receive
payments or distributions of assets of Borrower applicable to the
Senior Debt.
G. No payments or distributions to the holders of Senior Debt
by or on behalf of Borrower by virtue of this Agreement which otherwise
would have been made to the holder of the Note, shall, as between
Borrower and the holder of the Note, be deemed to be payment by
Borrower to or on account of the Senior Debt, it being understood that
the provisions of this paragraph are intended solely for the purpose of
defining the relative rights of the holders of Subordinated
Indebtedness on the one hand and the holders of Senior Debt, on the
other hand. Nothing contained herein is intended to or shall impair, as
between Borrower and Lender, the obligation of Borrower, which is
absolute and unconditional, to pay to Lender, the principal of and
interest on the Subordinated Indebtedness as and when the same shall
become due and payable in accordance with its terms, or is intended to
or shall affect (except to the extent specifically provided in the
above paragraph) the relative rights of the holders hereof and
creditors of Borrower other than the holders of the Senior Debt, nor
shall anything herein or therein prevent any holder of the Note from
exercising all remedies otherwise permitted by applicable law upon
default hereunder subject to the rights, if any, hereunder of the
holders of Senior Debt in respect of cash, property or securities of
Borrower received upon the exercise of any such remedy.
8. COLLATERAL SECURITY.
To secure the payment of all amounts due to Lender by Borrower in
connection with the Loan and pursuant to terms of this Agreement and the Sixth
Amended Note, Borrower has granted Lender a security interest in those assets
described under the following documents: (i) the Security Agreement dated
February 1, 2002 between Origen LLC and Lender, as amended from time to time,
(ii) Amended and Restated Security Agreement dated February 1, 2002 between
Origen Financial, Inc. and Lender, as amended from time to time, (iii) the
Amended and Restated Stock Pledge Agreement dated February 1, 2002 between
Origen Financial, Inc. and Lender, as amended from time to time, (iv) the
Limited Liability Company Interest Security and Pledge Agreement dated February
1, 2002 between Origen LLC and Lender, as amended from time to time, and (v) the
Amended and Restated Limited Liability Company Interest Security and Pledge
Agreement dated February 1, 2002 between Origen Financial, Inc. and Lender, as
amended from time to time.
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9. MISCELLANEOUS.
A. Compliance with Lender Agreements. Borrower acknowledges
that it has read and understands this Agreement, the Related Documents,
and all other written agreements between Borrower and Lender, and
Borrower agrees to fully comply with all of the agreements.
B. Further Action. Borrower agrees, from time to time, upon
Lender's request to make, execute, acknowledge, and deliver to Lender,
such further and additional instruments, documents, and agreements, and
to take such further action as may be required to carry out the intent
and purpose of this Agreement and prompt repayment of the Loan.
C. Governing Law/Partial Illegality. This Agreement and the
Related Documents shall be interpreted and the rights of the parties
determined under the laws of the State of Michigan. Should any part,
term, or provision of this Agreement be adjudged illegal or in conflict
with any law of the United States of America or State of Michigan, the
validity of the remaining portion or provisions of the Agreement shall
not be affected.
D. Writings Constitute Entire Agreement; Modifications Only in
Writing. This Agreement together with all other written agreements
between Borrower and Lender, including, without limitation, the Related
Documents, constitute the entire agreement of the parties and there are
no other agreements, express or implied. None of the parties shall be
bound by anything not expressed in writing, and neither this Agreement
nor the Related Documents can be modified except (i) by a writing
executed by Borrower and by Lender, and (ii) with the prior consent of
CSFBMC.
E. Successors, Assigns and Benefit. This Agreement shall inure
to the benefit of and shall be binding upon all of the parties to this
Agreement and their respective successors and assigns; provided
however, that Borrower may not assign or transfer its rights or
obligations under this Agreement without Lender's prior written
consent. The parties hereto agree that holders of Senior Debt,
including, without limitation, CSFBMC, are third party beneficiaries of
this Agreement and this Agreement shall inure to the benefit of and be
enforceable by such holders of Senior Debt.
F. Headings. All section and paragraph headings in this
Agreement are included for reference only and do not constitute a part
of this Agreement.
G. Term of Agreement. This Agreement shall continue in full
force and effect until all of Borrower's obligations to Lender are
fully satisfied and the Loan is fully repaid.
H. Counterparts; Reproductions. This Agreement may be executed
in counterparts, each of which shall be deemed to be an original and
all of which together shall constitute one instrument. Facsimile copies
of signatures to this Agreement shall be deemed to be originals, and
the parties may rely upon such facsimile copies to the same extent as
the originals.
10. DEFINITIONS. The following words shall have the following meanings
in this Agreement:
A. "Change of Control Event" shall mean, with respect to
Borrower, (a) an event or series of events by which any person, entity
or group (as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the
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"Exchange Act")) of persons or other entities acting in concert as a
partnership or other group (a "Group of Persons") (other than persons
who are, or Groups of Persons entirely made up of, (i) management
personnel of Borrower or (ii) any affiliates of any such management
personnel) shall, as a result of a tender or exchange offer or offers,
an open market purchase or purchases, a privately negotiated purchase
or purchases or otherwise, become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act, except that a person or
entity shall be deemed to have "beneficial ownership" of all securities
that such person or entity has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly
or indirectly, of 20% or more of the combined voting power of the then
outstanding voting stock of Borrower; or (b) Borrower consolidates
with, or merges with or into, another person or entity, or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person or entity, or any person
or entity consolidates with, or merges with or into Borrower, in any
such event pursuant to a transaction in which the outstanding voting
stock of Borrower is converted into or exchanged for cash, securities
or other property.
B. "Event of Default" shall mean any of the events described
in Section 5 of this Agreement or in the Related Documents.
C. "Financial Statements" shall mean all balance sheets,
income statements, and other financial information which have been, are
now, or in the future are furnished to Lender.
D. "Note" shall mean that certain line of credit promissory
note from Borrower to Lender, in the form attached hereto as EXHIBIT A,
as amended from time to time.
E. "Related Documents" shall mean any and all documents,
promissory notes, and agreements executed in connection with this
Agreement. This term shall include documents existing before, at the
time of execution of, and documents executed concurrent with or after
the date of, this Agreement.
[signatures on following page]
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IN WITNESS WHEREOF, the parties have executed this Subordinated Term
Loan Agreement as of the date first written above.
BORROWER:
ORIGEN FINANCIAL, L.L.C., a Delaware
limited liability company
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Its: Chief Executive Officer
-----------------------------------
LENDER:
SUN COMMUNITIES OPERATING LIMITED
PARTNERSHIP, a Michigan limited
partnership
By: Sun Communities, Inc., a Maryland
corporation
Its: General Partner
By:
-----------------------------
Its:
----------------------------
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IN WITNESS WHEREOF, the parties have executed this Subordinated Term
Loan Agreement as of the date first written above.
BORROWER:
ORIGEN FINANCIAL, L.L.C., a Delaware
limited liability company
By:
--------------------------------------
Its:
-----------------------------------
LENDER:
SUN COMMUNITIES OPERATING LIMITED
PARTNERSHIP, a Michigan limited
partnership
By: Sun Communities, Inc., a Maryland
corporation
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------
Its: Chief Executive Officer
----------------------------
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