ITEM 99.3
[__________________] INVESTMENT LOAN
Third Amended and Restated Investment Loan Agreement
THIS THIRD AMENDED AND RESTATED INVESTMENT LOAN AGREEMENT, dated as of
August 2, 2001, is entered into between [ ], in his individual capacity, (the
"Borrower"), and CWS COMMUNITIES LP, a Delaware limited partnership (the
"Lender").
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
W I T N E S S E T H
WHEREAS, the Borrower and [ ] (the "Trust"), jointly and severally (the
Borrower and the Trust collectively, referred to as, the "Original Borrowers"),
and Lender have entered into that certain Loan Agreement, dated March 4, 1998,
as amended by that certain First Amended and Restated Loan Agreement dated as of
March 16, 1999, between Original Borrowers and Lender, and that certain Second
Amended and Restated Loan Agreement dated as of June 24, 1999, between Original
Borrowers and Lender (collectively, the "Original Loan Agreement");
WHEREAS, pursuant to the Original Loan Agreement, Lender loaned $7,500,000
to the Original Borrowers as evidenced by, among other things, (i) that certain
Promissory Note dated March 16, 1999 (the "Mar. 99 $1.5m Note"), made by
Original Borrowers in favor of Lender in the original principal amount of
$1,500,000; (ii) that certain Promissory Note dated June 14, 1999 (the "Jun. 99
$1.5m Note"), made by Original Borrowers in favor of Lender in the original
principal amount of $1,500,000; (iii) that certain Promissory Note dated
December 15, 1999 (the "Dec. 99 $1.5m Note"), made by Original Borrowers in
favor of Lender in the original principal amount of $1,500,000; and (iv) that
certain Promissory Note dated September 26, 2000 (the "Sept. 00 $3m Note"), made
by Original Borrowers in favor of Lender in the original principal amount of
$3,000,000;
WHEREAS, Lender is a party to that certain Agreement and Plan of Merger
dated as of June 6, 2001 (the "Merger Agreement"), among Chateau Communities,
Inc., a Maryland corporation ("CPJ"), CP Limited Partnership, a Maryland limited
partnership ("Chateau OP"), certain merger subsidiaries named therein, CWS
Communities Trust, a Maryland real estate investment trust ("CWS"), Lender, and
Security Capital Manufactured Housing Incorporated, a Delaware corporation.
Pursuant to the terms of the Merger Agreement, Lender will be acquired through
merger by and become a wholly owned subsidiary of Chateau OP;
WHEREAS, in connection with the Merger Agreement, Original Borrowers are
party to that certain CP Limited Partnership Election and Subscription Agreement
for Units of Limited Partner Interests dated as of June 6, 2000 (the
"Subscription Agreement"), among Original Borrowers, CPJ and Chateau OP,
whereby, among other things, Original Borrowers consented to certain
modifications to the Original Loan Agreement;
WHEREAS, the parties desire to amend and restate the provisions of the
Original Loan Agreement to, among other things, (i) provide for the release of
the Trust as a borrower under the Agreement in exchange for the reaffirmation by
the Trust of its obligations under the Pledge Agreement and the Option
Agreement; and (ii) modify certain of the terms in accordance with the
Subscription Agreement; and
WHEREAS, except as expressly provided herein, it is the intention of
Original Borrowers and Lender that this Agreement and the execution and delivery
of any substituted promissory notes not effect
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a novation of the obligations of Original Borrowers to the Lender under the
Original Loan Agreement but merely a restatement and, where applicable, a
substitution of the terms governing and evidencing such obligations hereafter.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the Original Loan Agreement is amended and restated
to read in its entirety, and the parties agree, as follows:
1. Definitions.
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated for purposes of
this Agreement (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Agreement" means this Third Amended and Restated Investment Loan
Agreement, including all exhibits and schedules hereto, as the same may be
amended, modified or supplemented from time to time.
"Agreement of Limited Partnership" means that certain Amended and
Restated Agreement of Limited Partnership of Chateau OP, as the same may be
amended, modified or supplemented from time to time.
"Borrower" - see Preamble.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday on which banks are authorized or required to be closed in Chicago,
Illinois.
"Chateau OP" - see Preamble.
"Closing" has the meaning given to such term in the Option Agreement.
"Code" means the Internal Revenue Code of 1986 and any successor
statute of similar import, together with the regulations thereunder, in each
case as in effect from time to time. References to sections of the Code shall be
construed to also refer to any successor sections.
"Collateral" has the meaning given to such term in the Pledge
Agreement.
"Contribution Agreement" means that certain Contribution Agreement
relating to the formation and capitalization of CWS dated March 6, 1998, among
Security Capital U.S. Realty, a Luxembourg corporation, Security Capital
Holdings SA, a Luxembourg corporation, [_________], a [_________] corporation,
Lender and certain other entities and individuals.
"Covered Securities" means any securities included within the
Collateral and any Other Qualifying Securities.
"CPJ" - see Preamble.
"CPJ Shares" - means the common stock, $0.01 par value, of CPJ.
"Current Fair Market Value" shall mean as of a date,:
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(i) with respect to a Unit, the product of (a) the Fair Market Value
of one (1) CPJ Share as of such date and (b) the number (or
fraction) of CPJ Shares into which such Unit is then exchangeable
or redeemable under the Agreement of Limited Partnership;
(ii) with respect to a CPJ Share, the Fair Market Value of one (1) CPJ
Share;
(iii) with respect to cash, the value of such cash; and
(iv) with respect to other assets with readily available market
values, such market values as determined in good faith by the
Board of Directors of CPJ.
"CWS" - see Preamble.
"Dec. 99 $1.5m Note" - see Preamble.
"Default" means any event or condition which, with the lapse of time or
giving of notice to the Borrower or both, would constitute an Event of Default.
"Deferred Option Securities Collateral" means Options Securities
Collateral that is a result of a prepayment of the Loan under Section 4.3(a).
"Event of Default" means any of the events described in Section 6.1.
"Excess Portion Payment" has the meaning given to such term in the
Pledge Agreement.
"Exercise Period" has the meaning given to such term in the Option
Agreement.
"Exercise Price" has the meaning given to such term in the Option
Agreement.
"Fair Market Value" means on any day as to one (1) CPJ Share, the
closing sales price of such security as listed on the NYSE averaged over a
period of 21 business days consisting of the day as of which "Fair Market Value"
is being determined and the 20 consecutive business days prior to such day (the
term "business day" as used in this sentence means any day on which the NYSE is
open for trading). If the day of determination of Fair Market Value is other
than a business day, Fair Market Value shall be determined as of the business
day immediately preceding such day as if it were the day of determination of
Fair Market Value. If at any time such security is not listed on the NYSE then,
if there has been a sale of such security for an aggregate amount exceeding $1
million to Persons who are not Affiliates of CPJ within ninety (90) days prior
to such time, the price per security in the most recent such sale shall be
deemed to be the Fair Market Value hereunder. In all other cases, the "Fair
Market Value" shall be the fair value thereof as determined in accordance with
the following procedure:
(a) Each of the Lender and the Borrower shall select a
nationally-recognized firm that is experienced in valuing similar
securities within ten (10) days after the applicable Payment Date or other
date hereunder. If either Lender or the Borrower shall fail to designate
such firm within said ten (10) day period, then such firm shall be
appointed by the office of the American Arbitration Association or its
successor located closest to Chicago, Illinois.
(b) Within twenty (20) days after their selection, each of the
two firms selected under paragraph (a) above shall submit a report of its
valuation as of the applicable payment or other date of the CPJ Shares to
the Borrower and Lender. Each firm's valuation shall
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value the CPJ Shares based upon its opinion of the likely purchase price
thereof in an arm's length transaction involving a willing buyer and a
willing seller, with neither under undue compulsion to buy or sell,
assuming for such purpose that the CPJ Shares were being sold by CPJ in an
original issuance. Each firm's valuation shall also be based upon the
assumption that the CPJ Shares being valued are freely transferable without
registration under the Securities Act of 1933, as amended. Such valuation
shall not apply any "minority discount."
(c) If the higher of the two valuations described in paragraph
(b) above is no more than ten percent (10%) higher than the lower
valuation, then, for purposes of this Agreement, the Fair Market Value as
of the applicable payment or other date of the CPJ Shares shall be deemed
to be the average of the two valuations.
(d) If the higher of the two valuations described in paragraph
(b) above is more than ten percent (10%) higher than the lower valuation,
then the two valuation firms selected under paragraph (a) above shall
select a third nationally-recognized firm that is experienced in valuing
similar securities within five (5) days after the delivery of the valuation
reports described in paragraph (b) above. If the two valuation firms shall
fail to select a third valuation firm within such time period, then the
third valuation firm shall be appointed by the office of the American
Arbitration Association located closest to Chicago, Illinois. Such third
valuation firm shall deliver its report on the value of the CPJ Shares
within twenty (20) days after its selection. For purposes of this
Agreement, the Fair Market Value of the CPJ Shares as of the applicable
Payment Date or other date shall be deemed to be the average of the two
valuations (of the three valuations prepared) that are closest to each
other.
The costs of determining Fair Market Value shall be shared equally by
Borrower and Lender.
"First Renewal Term" has the meaning given in Section 2.3.
"Initial Fair Market Value" initially shall be twenty-seven and 17/100
dollars ($27.17) per Unit or CPJ Share. The Initial Fair Market Value of such
Unit or CPJ Share shall be adjusted appropriately by the Board of Directors of
CPJ to take into account any of the following to the extent occurring after the
date hereof: any stock/unit split, stock/unit dividend or other similar
adjustment to the capital structure of Chateau OP or CPJ. If CPJ or Chateau OP
shall be a party to any transaction (including without limitation a merger,
consolidation, statutory share exchange, self tender offer for all or
substantially all of the Covered Securities, sale of all or substantially all of
the assets of CPJ or Chateau OP or recapitalization of the Covered Securities)
(each of the foregoing being referred to herein as a "Transaction"), in each
case as a result of which all or substantially all of such Covered Securities
are converted into the right to receive stock, securities or other property
(including cash or any combination thereof) of another Person (collectively,
"Successor Property") then, for purposes of the Agreement, the aggregate Initial
Fair Market Value of such Successor Property shall be the aggregate Initial Fair
Market Value of the relevant Covered Securities immediately prior to such
conversion, which if the context permits, shall be expressed on an appropriate
per unit or per share basis. The preceding sentence shall similarly apply to
successive Transactions.
"Jun. 99 $1.5m Note" - see Preamble.
"Lender" - see Preamble.
"Loan" means the indebtedness evidenced by the Notes.
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"Loan Documents" means this Agreement, the Notes, the Pledge Agreement,
the Option Agreement, that certain letter dated the date hereof addressed to and
acknowledged and agreed to by Original Borrowers from CPJ, Chateau OP and
Lender, any security agreement with respect to Collateral securing the Loan and
any other documents or instruments required to be entered into under any of the
foregoing. The Loan Documents do not include the Contribution Agreement or any
"Related Documents" (as defined therein) other than the Loan Documents
identified above.
"Loan Reduction Collateral" shall mean, with respect to any application
of Split Collateral under Section 4.1(b), that portion of Split Collateral that,
when applied as a payment under the Loan in accordance with Section 4.1(b), will
result in the Loan-to-Value Ratio immediately after the application of Split
Collateral (taking into account, if applicable, the payment by Optionee of the
Exercise Price to the Lender) under Section 4.1(b) (giving effect to the Return
Split Collateral, if any, to be received by Borrower in connection with the
application of such Split Collateral under Sections 4.1(b)) to equal the
Loan-to-Value Ratio immediately prior to such application of Split Collateral;
provided, however, that with respect to any Split Collateral, the Loan Reduction
Collateral will always comprise all of the Split Collateral remaining after the
Optionee's share if (i) the Loan-to-Value Ratio before the application of such
Split Collateral was greater than 1.0; or (ii) after applying all of the Split
Collateral as a payment under the Loan, the Loan-to-Value Ratio is greater than
the ratio that existed immediately prior to such application. Loan Reduction
Collateral will not include any Option Securities to the extent that the Option
is exercised with respect thereto.
"Loan-to-Value Ratio" shall mean at a particular time a fraction, the
numerator of which is the outstanding principal, interest and other amounts due
under the Loan at such time, and the denominator of which is the Current Fair
Market Value of the Collateral at such time.
"Mar. 99 $1.5m Note" - see Preamble.
"Merger Agreement" - see Preamble.
"NYSE" means the New York Stock Exchange or a national securities
exchange (including the NASDAQ Stock Market) on which the CPJ Shares are listed.
"Note 1 - Investment Loan" means the Amended and Restated Promissory
Note 1 - Investment Loan executed pursuant to this Agreement, substantially in
the form set forth as Exhibit A-1 attached hereto, as the same amends and
restates the Mar. 99 $1.5m Note and as such promissory note may be amended,
modified or supplemented from time to time.
"Note 2 - Investment Loan" means the Amended and Restated Promissory
Note 2 - Investment Loan executed pursuant to this Agreement, substantially in
the form set forth as Exhibit A-2 attached hereto, as the same amends and
restates the Jun. 99 $1.5m Note and as such promissory note may be amended,
modified or supplemented from time to time.
"Note 3 - Investment Loan" means the Amended and Restated Promissory
Note 3 - Investment Loan executed pursuant to this Agreement, substantially in
the form set forth as Exhibit A-3 attached hereto, as the same amends and
restates the Dec. 99 $1.5m Note and as such promissory note may be amended,
modified or supplemented from time to time.
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"Note 4 - Investment Loan" means the Amended and Restated Promissory
Note 4 - Investment Loan executed pursuant to this Agreement, substantially in
the form set forth as Exhibit A-4 attached hereto, as the same amends and
restates the Sep. 00 $3m Note and as such promissory note may be amended,
modified or supplemented from time to time.
"Notes" means collectively, Note 1 - Investment Loan, Note 2 -
Investment Loan, Note 3 - Investment Loan and Note 4 - Investment Loan, and the
term "Note" shall mean Note 1 - Investment Loan, Note 2 - Investment Loan, Note
3 - Investment Loan or Note 4 - Investment Loan.
"Original Borrowers" - see Preamble.
"Original Loan Agreement" - see Preamble.
"Option" has the meaning given to such term in the Option Agreement.
"Option Agreement" means that certain Option Agreement dated as of
March 16, 1999, among Original Borrowers and Optionee, as amended and restated
by the Amended and Restated Option Agreement executed by Original Borrowers and
Optionee substantially in the form of Exhibit C attached hereto with appropriate
insertions, as such option agreement may be amended, modified or supplemented
from time to time.
"Option Securities" has the meaning given to such term in the Option
Agreement.
"Option Securities Collateral" has the meaning given to such term in
the Option Agreement.
"Optionee" has the meaning given to such term in the Option Agreement.
"Optionor" has the meaning given to such term in the Option Agreement.
"Other Loan" has the meaning set forth in Section 4.3.
"Other Loan Agreement" has the meaning set forth in Section 4.3.
"Other Qualifying Securities" means any Units or CPJ Shares that are
not included in the Collateral.
"Payment Date" shall mean the date of any payment under Sections 4.1 or
4.2 hereof. For purposes of clarity, in the case of Split Collateral, Payment
Date shall mean the date such Collateral is requested to be split as
contemplated in Section 4.1(a).
"Person" means an individual, partnership, corporation, limited
liability company, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Pledge Agreement" means that certain Investment Pledge Agreement dated
as of March 16, 1999, made by Original Borrowers in favor of Lender, as amended
by First Amendment to Investment Pledge Agreement dated as of June 14, 1999,
between Original Borrowers and Lender, Second Amendment to Investment Pledge
Agreement dated as of December 15, 1999, between Original Borrowers and Lender,
and Third Amendment to Investment Pledge Agreement dated as of September 26,
2000, as amended and restated by the Amended and Restated Investment Pledge
Agreement executed by the Original Borrowers and Lender substantially in the
form of Exhibit B attached hereto with appropriate insertions, as such pledge
agreement may be amended, modified or supplemented from time to time.
"Prentice Hall" has the meaning set forth in Section 7.10.
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"Renewal Term(s)" has the meaning given in Section 2.3.
"Return Split Collateral" shall mean, with respect to a particular
application of Split Collateral under Section 4.1(b), that portion of such Split
Collateral remaining after receipt by the Optionee of the Option Securities
Collateral included within such Split Collateral, if applicable, and the
application by the Lender of the Loan Reduction Collateral to amounts
outstanding under the Loan.
"Second Renewal Term" has the meaning given in Section 2.3.
"Section 4.3 Collateral" has the meaning given in Section 4.3.
"Sept. 00 $3m Note" - see Preamble.
"Split Collateral" shall have the meaning given to it in Section
4.1(a).
"Successor Property " - contained in the definition of Initial Fair
Market Value.
"Subscription Agreement " - see Preamble.
"Transaction" - contained in the definition of Initial Fair Market
Value.
"Treasury Yield" has the meaning given in Section 3.2.
"Trust" - see Preamble.
"Units" means common units of limited partner interest in Chateau OP.
2. Release of the Trust and Certain Loan Terms.
2.1 Release of the Trust and Execution of Pledge Agreement. Lender
hereby releases the Trust from its obligation to repay the Loan to Lender. In
exchange for such release by Lender, the Trust hereby agrees to execute and
deliver the Pledge Agreement and the Option Agreement.
2.2 The Notes; Maturity. Contemporaneously herewith, (i) Lender has
returned to Original Borrowers the original Mar. 99 $1.5m Note, Jun. 99 $1.5m
Note, Dec. 99 $1.5m Note and Sept. 00 $3m Note each marked "cancelled"; and (ii)
Borrower has executed Note 1 - Investment Loan, Note 2 - Investment Loan, Note 3
- Investment Loan and Note 4 - Investment Loan, which, subject to Section 2.3,
shall be due and payable in full on March 16, 2009, June 14, 2009, December 15,
2009 and September 26, 2010, respectively.
2.3 Renewal Terms. Borrower may, at its option, extend the maturity
date of each or all of Note 1- Investment Loan, Note 2 -Investment Loan, Note 3
- Investment Loan and Note 4 - Investment Loan for one ten (10) year term
("First Renewal Term") and one five (5) year term ("Second Renewal Term";
collectively, with the First Renewal Term, the "Renewal Terms", and each a
"Renewal Term"), respectively, provided that,:
(i) Lender shall have received written notice of Borrower's
intention to extend the then current maturity date of the applicable
Note no later than three (3) months prior to the then current maturity
date of the applicable Note;
(ii) no Event of Default exists on the date of the notice given
by Borrower in paragraph (i) above and on the commencement date of the
Renewal Term; and
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(iii) Borrower shall have properly exercised its option to extend
the then current maturity date of the applicable note made by Borrower
pursuant to the Other Loan such that the applicable Note remains
co-terminus with such note.
The foregoing notwithstanding, in the event of the death of Borrower, the then
current term (other than the Second Renewal Term) shall be extended or
shortened, as applicable, so that it ends four (4) years after such death.
2.4 No Advances. Lender shall not be required to advance any additional
funds to Borrower hereunder.
3. Interest.
3.1 Initial Term Interest.
(i) The unpaid principal amount of the indebtedness evidenced by
the Notes shall bear interest in accordance with the following
schedule:
NOTE 1 - INVESTMENT LOAN
------------------------
Period Interest Rate
------ -------------
The date hereof - March 15, 2002 6.50%
March 16, 2002 - March 15, 2003 6.75%
March 16, 2003 - March 15, 2004 7.00%
March 16, 2004 - March 15, 2005 7.25%
March 16, 2005 - March 16, 2009 7.50%
Renewal Term(s) As set forth in
Section 3.2
NOTE 2 - INVESTMENT LOAN
------------------------
Period Interest Rate
------ -------------
The date hereof - June 13, 2002 6.50%
June 14, 2002 - June 13, 2003 6.75%
June 14, 2003 - June 13, 2004 7.00%
June 14, 2004 - June 13, 2005 7.25%
June 14, 2005 - June 14, 2009 7.50%
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Renewal Term(s) As set forth in
Section 3.2
NOTE 3 - INVESTMENT LOAN
------------------------
Period Interest Rate
------ -------------
The date hereof - December 14, 2001 6.25%
December 15, 2001 - December 14, 2002 6.50%
December 15, 2002 - December 14, 2003 6.75%
December 15, 2003 - December 14, 2004 7.00%
December 15, 2005 - December 14, 2006 7.25%
December 15, 2006 - December 15, 2009 7.50%
Renewal Term(s) As set forth in
Section 3.2
NOTE 4 - INVESTMENT LOAN
------------------------
Period Interest Rate
------ -------------
The date hereof - September 25, 2001 6.25%
September 26, 2001 - September 25, 2002 6.50%
September 26, 2002 - September 25, 2003 6.75%
September 26, 2003 - September 25, 2004 7.00%
September 26, 2004 - September 25, 2005 7.25%
September 26, 2005 - September 26, 2010 7.50%
Renewal Term(s) As set forth in
Section 3.2
(ii) Accrued interest for each calendar quarter shall be payable
quarterly on the last day of such calendar quarter and on the maturity
date of the Notes. After the maturity date of the applicable Note,
accrued interest shall be payable on demand.
3.2 Renewal Terms. The annual interest rate charged on the unpaid
principal balance and overdue and unpaid interest during each Renewal Term shall
be the Treasury Yield plus one hundred fifty (150) basis points, not to exceed a
maximum annual rate of nine percent (9%). "Treasury Yield" means the yield of
U.S. Treasury Issues as quoted on the date immediately preceding the
commencement
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of the applicable Renewal Term (or if not quoted on such date then the most
recent date on which such rate is quoted) in The Wall Street Journal as maturing
on the closest date to the tenth (10th) anniversary after the commencement date
of the applicable Renewal Term. Should more than one U.S. Treasury Issue be
quoted as maturing on the closest date to the tenth (10th) anniversary of the
commencement date of the applicable Renewal Term, then the yield of the issue
selling closest to par will be used in the calculation. If The Wall Street
Journal is not then in publication, then another national publication acceptable
to Lender (and reasonably acceptable to Borrower) will be utilized. Borrower may
elect in the renewal notice given to Lender pursuant to Section 2.3, that the
Treasury Yield be reset at the beginning of each anniversary of the commencement
date of the applicable Renewal Term in the manner provided above, with the
applicable maturity of the U.S. Treasury Issues being the date closest to the
tenth (10th) anniversary of such anniversary date of the commencement date.
3.3 Method of Calculating Interest. Interest on the unpaid principal
amount of the Loan shall accrue from and including the date of the initial
advance of the Loan, but not including, the date the Loan is paid. Interest
shall be calculated on the basis of a year consisting of 365 days and shall be
paid for actual days elapsed in any partial-year period.
4. Payments, Prepayments and Setoff; Release of Collateral.
4.1 Payment.
(a) All payments hereunder (including payments with respect to
the Notes) shall be made without setoff or counterclaim and shall be made
to the Lender in immediately available funds prior to 12:30 p.m., Chicago
time, on the date due at c/o Falcon Farms, 0000 000xx Xxxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxxxx 00000, Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X.
Xxxxx, or at such other place as may be designated by the Lender to the
Borrower in writing. Any payments received after such time shall be deemed
received on the next Business Day. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a date other than
a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall be included in the calculation of
interest. Payment may be made (1) in cash; (2) by transferring to Lender
Other Qualifying Securities; or (3) with respect to principal payments only
(and not interest payments and other amounts due hereunder), by requesting
that the Collateral other than then existing Deferred Option Securities
Collateral, or a portion thereof (any such Collateral being used for such
purpose being hereinafter referred to as the "Split Collateral"), be split
among payment under the Loan and, if applicable, transfer to the Optionee
and the Borrower, all as provided in Section 4.1(b) below. If payment is
made by transfer of Other Qualifying Securities then Lender will credit,
first against the accrued interest and then outstanding principal balance
of the Loan, the Current Fair Market Value of such Other Qualifying
Securities on the date Borrower first tenders such Other Qualifying
Securities to Lender as payment under the Loan.
(b) (i) In the event that the Borrower makes the request with
respect to Split Collateral as provided in Section 4.1(a) above, Lender and
Borrower agree that Lender will retain the Loan Reduction Collateral as
payment under the Loan and credit against the outstanding principal balance
of the Loan, the Current Fair Market Value of the Loan Reduction Collateral
as of the applicable Payment Date; provided, that the final amount of the
Loan Reduction Collateral shall not be determined and the Lender shall not
make the credit described in this sentence until such time as described
below in this Section 4.1(b), it being understood that the Lender will hold
the portion of such Split Collateral that constitutes Option Securities
Collateral in trust for the Optionee (through the later of the end of the
Exercise Period and the applicable
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Closing under the Option Agreement) and deal with such Option Securities
Collateral as further provided in this Section 4.1(b).
(ii) Borrower and Lender agree that any Split Collateral
shall contain (1) securities and property that is not a security (such as
cash) in the same relative proportions as such securities and property are
included in the Collateral, and (2) securities and property included within
the Option Securities Collateral in the same proportion with respect to
each security or other property included in such Split Collateral as such
securities are contained in the Collateral. Subject to the foregoing, the
Borrower shall be permitted to select the portions of the Collateral that
shall constitute Split Collateral. In the event that, in connection with
the payment at maturity of the Loan or with a prepayment (in whole or part)
of the Loan, the Optionee is not going to acquire Option Securities
Collateral under the Option Agreement, then Lender will then make the
credit described in Section 4.1(b)(i). In the event that the Optionee
exercises the Option with respect to Option Securities pertaining to all or
a portion of the Split Collateral and, in connection therewith will be
acquiring Option Securities Collateral, then on the date of the applicable
Closing under the Option Agreement, Optionee shall pay to Lender an amount
equal to the Exercise Price of such Option Securities Collateral and,
immediately thereafter, Lender shall make the credit described in Section
4.1(b)(i) with respect to the remaining Split Collateral. All amounts paid
by Optionee under the preceding sentence shall be applied to reduce the
principal outstanding under the Loan. In exchange for receiving the amount
of the Exercise Price from Optionee, Lender shall transfer the applicable
Option Securities Collateral to the Optionee.
(iii) After such time that the Lender has made the credit
set forth in Section 4.1(b)(i) with respect to the applicable Split
Collateral and the Optionee has either (1) acquired Option Securities
Collateral included in the applicable Split Collateral or (2) failed to
exercise the right to acquire Option Securities Collateral as permitted by
the Option Agreement for the Option Securities Collateral included in the
applicable Split Collateral, then the Lender shall cause the applicable
Return Split Collateral to be delivered to Borrower.
(iv) In no event will the Lender sell or otherwise dispose
of Option Securities Collateral prior to the end of the Exercise Period
corresponding to such Option Securities Collateral. Optionee hereby agrees
to give a notice of an election to purchase Option Securities Collateral
under the Option Agreement to Lender hereunder at the same time that it
gives notice thereof to Optionor under the Option Agreement, Lender hereby
agreeing to provide to Optionee notice of any change in the address or
facsimile number for such notice to Optionee as contemplated in Section 7.3
of this Agreement. The right of the Optionee to receive Option Securities
Collateral as provided in this Section 4.1 shall not be affected by any
failure by Borrower to make any payment or perform any obligation or
agreement under any Loan Document. The Optionee shall not be liable for any
of Borrower's obligations under any Loan Document, other than to pay an
amount equal to the Exercise Price to the Lender under the conditions
described above.
(v) All transfers of the Loan Reduction Collateral and
Option Securities Collateral shall be by instrument that effectively
transfers to Lender or the Optionee, as applicable, the CPJ Shares or the
Units, free and clear in all cases of all liens, security interests and
claims other than the Pledge Agreement.
(vi) Examples 1 and 2 in Exhibit F attached hereto
illustrate hypothetical examples of the application of Split Collateral
under this Section 4.1. Such examples are for purposes of illustration only
and do not purport to describe every circumstance in which this Section 4.1
might be applied.
11
4.2 Prepayment. The Borrower may prepay, in the manner described in
Section 4.1, all or any portion of the principal amount of the Loan together
with any unpaid interest thereon, at his option at any time, without penalty;
provided, however, that Borrower shall not be entitled to make a prepayment with
respect to the Loan unless it simultaneously therewith makes a prepayment of the
loan (the "Other Loan") made under the that certain Third Amended and Restated
Non-Investment Loan Agreement dated as of the date hereof (the "Other Loan
Agreement"), between Lender and Borrower in an amount equal to one-third of the
amount of the prepayment to be made under the Loan.
4.3 Return of Collateral in Connection with Cash Payments. In the
event that Borrower makes a prepayment of a portion of the Loan in cash other
than as contemplated by Section 5(c) of the Pledge Agreement, then Lender will:
(a) if such prepayment is made on or before December 31, 2002,
return a portion of the Collateral to Borrower that has an Initial Fair
Market Value equal to the principal amount of the Loan which has been so
prepaid less the Options Securities Collateral attributable to the same.
All returns of Collateral under this Section 4.3(a) shall include (1)
securities and property that is not a security (such as cash) in the same
relative proportions as such securities and property are included in the
Collateral, and (2) securities and property included within Option
Securities Collateral in the same proportion with respect to each security
or other property included in such returned Collateral as such securities
and property included within Option Securities Collateral are contained in
the Collateral. The Option Securities that may be included within any
Collateral otherwise required to be returned under this Section 4.3(a): (i)
shall be designated Deferred Option Securities Collateral; (ii) shall not
be returned to Borrower until after the end of the Exercise Period
applicable to the Deferred Option Securities Collateral; and (iii) shall be
applied in accordance with Section 4.3(b)(i)-(iii) below.
(b) With respect to the Deferred Option Securities Collateral:
(i) if Optionee has notified Borrower during the Exercise
Period for such Collateral (or failed to notify Borrower prior to the
expiration of the Exercise Period for such Collateral) that Optionee is not
going to acquire the Deferred Option Securities Collateral under the Option
Agreement, then, as of such date, such Collateral shall no longer be
designated or constitute Deferred Option Securities Collateral or Option
Securities Collateral and be shall be returned to Borrower;
(ii) if Optionee has notified Borrower during the Exercise
Period for such Collateral that Optionee is exercising its Option with
respect to the Deferred Option Securities Collateral, then on the date of
the applicable Closing under the Option Agreement, Optionee shall pay to
Borrower an amount equal to the Exercise Price of such Option Securities
Collateral.
(iii) All transfers of the Option Securities Collateral
shall be by instrument that effectively transfers to Optionee the CPJ
Shares or the Units, free and clear in all cases of all liens, security
interests and claims other than the Pledge Agreement.
(iv) Notwithstanding anything to the contrary contained
herein, if the Notes are prepaid in full in cash on or before December 31,
2002, then (1) all Deferred Option Securities Collateral shall be returned
to Borrower; (2) Optionee shall have no right to exercise the Option with
respect to the Deferred Option Securities Collateral or such cash
prepayment; and (3) there shall be no Exercise Period with respect to the
Deferred Option Securities Collateral and such cash prepayment.
12
(c) if such prepayment is made after December 31, 2002, return a
portion of the Collateral to Borrower that has an Initial Fair Market Value
equal to the principal amount of the Loan which has been so prepaid. All
returns of Collateral under this Section 4.3(c) shall include (1)
securities and property that is not a security (such as cash) in the same
relative proportions as such securities and property are included in the
Collateral, and (2) securities and property included within Option
Securities Collateral in the same proportion with respect to each security
or other property included in such returned Collateral as such securities
and property included within Option Securities Collateral are contained in
the Collateral. Notwithstanding the foregoing, the Lender shall not return
Option Securities Collateral included within any Collateral otherwise
required to be returned under this Section 4.3(c) until after the end of
the Exercise Period applicable to such Option Securities Collateral. In the
event that the Optionee exercises the Option with respect to such Option
Securities Collateral (if permitted to do so under the Option Agreement),
Lender shall hold such Option Securities Collateral in trust and dispose of
them in a manner consistent with the terms of the Option Agreement. The
Collateral that is returned to Borrower under this Section 4.3(c) and, if
applicable, delivered to Optionee as contemplated under the Option
Agreement, is referred to as the "Section 4.3 Collateral." Example 3 in
Exhibit F attached hereto illustrates a hypothetical example of the
application of Section 4.3 Collateral under this Section 4.3(c). Such
example is for purposes of illustration only and does not purport to
describe every circumstance in which this Section 4.3(c) might be applied.
Subject to the limitations contained herein, the Borrower may determine the
composition of the Collateral to be returned under this Section 4.3.
4.4 Return of Collateral After Maturity and Other Events. The Lender
will return any remaining Collateral to the Borrower after the occurrence of all
of the following: (i) maturity of the Loan, (ii) the payment of all amounts due
hereunder (including the application of all Collateral to payment of such
amounts as permitted by the Loan Documents), (iii) the Closing of the
acquisition of any Option Securities by the Optionee with respect to which the
Optionee has submitted an Notice of Exercise, and (iv) the termination of any
future ability, whether matured or contingent, of the Optionee to send any
further Notice of Exercise to acquire Option Securities. The Lender shall not be
required to return any Collateral to the Borrower prior to satisfaction of all
requirements of the immediately preceding sentence, except to the extent
required by Sections 4.1(b) or 4.3 hereof.
4.5 Applications of Payments. Notwithstanding anything to the contrary
contained in this Agreement, all payments of principal and interest under the
Loan and the Other Loan shall be applied in a 75/25 ratio to outstanding amounts
of principal and interest under the Loan and the Other Loan, respectively,
regardless of how Borrower directs that such payments be applied. If Borrower
desires to make any payment under the Loan with Loan Reduction Collateral, he
may do so only if he makes a prepayment under the Other Loan with collateral (as
the term "Collateral" is defined under the Other Loan Agreement) with a Current
Fair Market Value equal to one-third (1/3) of the Current Fair Market Value of
the applicable Loan Reduction Collateral and otherwise consisting of the same
proportionate quantities of securities and other property as the applicable
Split Collateral.
4.6 Substitute Collateral. The Borrower shall, with the consent of the
Lender and Optionee, be permitted to substitute for portions of the Collateral
("Replaced Collateral") securities ("Substitute Collateral") consisting of CPJ
Shares or Units that have a Current Fair Market Value as of the date of
substitution equal to that of the Replaced Collateral. In connection with any
such substitution, the Borrower shall deliver such Substitute Collateral to the
Lender shall make such representations and warranties, shall execute such
documents and make such deliveries to evidence such Substitute Collateral, and
shall provide such evidence of unencumbered title to the Substitute Collateral
and the perfection of
13
the Lender's security interest therein, as the Lender shall request. In the case
of such a substitution, (1) Option Securities Collateral shall constitute the
same portion of such Substitute Collateral as Option Securities Collateral
constituted of the Replaced Collateral; and (2) Deferred Option Securities
Collateral shall constitute the same portion of such Substitute Collateral as
Deferred Option Securities Collateral constituted of the Replaced Collateral. If
the Borrower has complied with the terms of this paragraph, then the Lender's
and the Optionee's consent to such substitution shall not be unreasonably
withheld. From and after the date of any such substitution, the Substitute
Collateral shall constitute Collateral for all purposes of the Loan Documents
and the Replaced Collateral will be promptly returned to Borrower.
5. Warranties. The Borrower warrants that on the date hereof:
5.1 Authorization. The execution, delivery and performance by the
Borrower of this Agreement, the Notes and the other Loan Documents and the
borrowing hereunder (i) are within the right, power, authority and capacity of
the Borrower and (ii) do not and will not require any consent or approval of any
governmental agency or authority or any other Person.
5.2 No Conflicts. The execution, delivery and performance by the
Borrower of this Agreement, the Notes and the other Loan Documents do not
conflict with any agreement binding upon the Borrower or the Collateral or any
court or administrative order or decree applicable to the Borrower.
5.3 Validity and Binding Effect. This Agreement is, and the Notes and
the other Loan Documents when duly executed and delivered will be, legal, valid
and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies.
5.4 No Default. No Event of Default or Default has occurred and is
continuing.
5.5 Regulation G. The Borrower is not engaged in the business of
purchasing or selling "margin stock," as defined in Regulation G of the Federal
Reserve Board, or extending credit to others for the purpose of purchasing or
carrying margin stock, and no part of the proceeds of the Loan will be used to
purchase or carry any margin stock or for any other purpose, in each case in a
manner which would violate any of the margin regulations of the Federal Reserve
Board.
5.6 Solvency. Prior to and after giving effect to the Agreement, (i)
the Borrower's assets will exceed his liabilities and (ii) the Borrower will be
solvent, will be able to pay his debts as they mature, will own cash and
property with fair saleable value greater than the amount required to pay his
debts and on-going obligations.
5.7 Purpose. The proceeds of the Loan has be used by the Borrower
solely for investment purposes. The Borrower agrees that the indebtedness
evidenced by the Notes constitutes a business loan which comes within the
purview of Section 205/4(1)(c) of Chapter 815 of the Illinois Compiled Statutes
(formerly Section 6401(1)(c) of Ch. 17 of the Illinois Revised Statutes), and is
not usurious.
6. Events of Default and Remedies.
6.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
14
(a) Non-Payment on the Notes. Default in the payment when due of
any principal of or interest on the Notes and the continuance of such
default for more than ten (10) days after the Lender has provided Borrower
notice of the failure to make such payment when due.
(b) Agreements. Default in the performance of any of the Original
Borrower's agreements set forth in any of the Loan Documents (and not
constituting an Event of Default under any of the other subsections of this
Section 6.1) and continuance of such default for sixty (60) days after
notice thereof to the respective Original Borrower from the Lender.
(c) Warranty. Any warranty made by the Original Borrowers in any
of the Loan Documents is untrue in any material respect when made or deemed
made, in each case, for sixty (60) days after notice thereof to the
Borrower from the Lender.
(d) Invalidity of Note. Any Note shall cease to be in full force
and effect with respect to the Borrower or the Borrower shall fail (subject
to any applicable grace period) to comply with or to perform any applicable
provision of any Loan Document to be performed by Borrower, or the Borrower
shall contest in any manner the validity, binding nature or enforceability
of any Loan Document, and continuance of such default for sixty (60) days
after notice thereof to the Borrower from the Lender.
(e) Bankruptcy of Borrower. The bankruptcy of the Borrower (for
purposes of this Loan Agreement, the bankruptcy of the Borrower shall be
deemed to have occurred upon the expiration of sixty (60) days following
the happening of any of the following: (i) the filing of an application by
the Borrower for, or a consent to, the appointment of a trustee of his
assets; (ii) the filing by the Borrower of a voluntary petition in
bankruptcy or the filing by the Borrower of a pleading in any court of
record admitting in writing his inability to pay his debts as they come
due; (iii) the making by the Borrower of a general assignment for the
benefit of creditors; (iv) the filing by the Borrower of an answer
admitting the material allegations of, or his consenting to, or defaulting
in answering, a bankruptcy petition filed against him in any bankruptcy
proceeding; or (v) the entry of an order, judgment or decree by any court
of competent jurisdiction adjudicating the Borrower a bankrupt or
appointing a trustee of his assets).
6.2 Remedies. Subject to Section 7.2, if any Event of Default
described in Section 6.1 shall have occurred and be continuing, in addition to
any other remedies available under applicable law, the Lender may take any and
all actions permitted by the Loan Documents and the Lender, upon notice to the
Borrower, may declare the Notes to be due and payable, whereupon the Notes shall
become immediately due and payable.
7. General.
7.1 Waiver and Amendments. No failure or delay on the part of the
Lender or the holder of the Notes in the exercise of any power or right, and no
course of dealing between the Borrower and the Lender or the holder of the
Notes, shall operate as a waiver of such power or right, nor shall any single or
partial exercise of any power or right preclude other or further exercise
thereof or the exercise of any other power or right. The remedies provided for
herein are cumulative and not exclusive of any remedies which may be available
to the Lender or the holder of the Notes at law or in equity. No notice to or
demand on the Borrower not required hereunder or under the Notes shall in any
event entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the right of the Lender or the
holder of the Notes to any other or further action in any circumstances without
notice or demand. No amendment, modification or waiver of, or consent with
respect to, any
15
provision of this Agreement or the Notes shall in any event be effective unless
the same shall be in writing and signed and delivered by the Lender. Any waiver
of any provision of this Agreement or the Notes, and any consent to any
departure by the Borrower from the terms of any provision of this Agreement or
the Notes, shall be effective only in the specific instance and for the specific
purpose for which given.
7.2 Non-Recourse. Nothing herein contained shall be deemed to cause
the Borrower personally to be liable to pay any principal outstanding on the
Notes, and the Lender shall not seek any personal or deficiency judgment with
respect to any amount of the Notes, and the sole remedy of the Lender with
respect to the payment of the Notes shall be against the Collateral securing the
Notes and the income from, and other proceeds of, such Collateral; provided,
however, that the foregoing shall not in any way affect the personal liability
of the Borrower for: (a) payment of any interest on the Notes; (b) payment of
any principal on the Notes solely to the extent and only to the extent of fifty
percent (50%) of the amount, if any, by which the outstanding principal balance
of the Loan at maturity (however such maturity occurs) exceeds the Current Fair
Market Value, determined as of such maturity date, of the Collateral then
subject to the Pledge Agreement; or (c) recover any expenses and other amounts
due and owing to the Lender under Section 7.4, but only to the extent such
expenses result from any successful action taken by Lender to enforce its rights
under (a) or (b) above or this clause (c) or clause (d) below, or (d) Borrower's
share of the costs incurred in determining the Fair Market Value of any
securities, as provided in the definition of Fair Market Value.
7.3 Notices. Except as otherwise expressly provided herein, any notice
hereunder to the Borrower or the Lender shall be in writing (including
telegraphic or facsimile communication) and shall be given to the Borrower or
the Lender at his or its address or facsimile number set forth on the signature
pages hereof or at such other address or facsimile number as the Borrower or the
Lender may, by written notice, designate as his or its address or facsimile
number for purposes of notice hereunder. Copies of notices to Borrower shall be
sent to O'Melveny & Xxxxx LLP, 000 Xxxxx Xxxx, Xxxxx Xxxx, Xxxxxxxxxx
00000-0000, Attn: Xxxxxxx X. Xxxxxx, Esq. Copies of notices to Lender shall be
sent to: Xxxxxxxx Chance Xxxxxx & Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxx X. Xxxxxxxxx, Esq. All such notices shall be deemed to be
given when transmitted by facsimile, personally delivered or, in the case of a
mailed notice, when sent by registered or certified mail, postage prepaid, in
each case addressed as specified in this Section 7.3.
7.4 Expenses. Subject to Section 7.2, the Borrower agrees to pay the
Lender upon demand for all expenses, including reasonable fees of attorneys for
the Lender and other legal expenses and costs of collection, incurred by the
Lender in connection with the successful enforcement of the Borrower's
obligations hereunder or under the Notes or under any Loan Document.
7.5 Severability. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited,
invalidated or unenforceable in any jurisdiction then such provision shall, as
to such jurisdiction, be ineffective to the extent of such prohibition,
invalidity or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
7.6 Law. THIS AGREEMENT AND THE NOTES SHALL BE CONTRACTS MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. BY EXECUTING THIS
AGREEMENT, BORROWER ACKNOWLEDGES THAT HE UNDERSTANDS THE EFFECT OF THE
APPLICATION OF ILLINOIS LAW TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
BORROWER ACKNOWLEDGES THAT, AFTER BEING ADVISED BY HIS COUNSEL, HE HAS FREELY
CONSENTED TO THE APPLICATION OF ILLINOIS LAW.
16
7.7 Successors. This Agreement shall be binding upon the Borrower, and
the Lender and their respective heirs, representatives, successors and assigns,
and shall inure to the benefit of the Borrower and the Lender and the successors
and assigns of the Lender. Except as required by applicable law, the Borrower
shall not assign his rights or duties hereunder without the prior written
consent of the Lender; provided, that upon Borrower's death, Borrower's estate
shall succeed to Borrower's rights, obligations and agreements hereunder
(Borrower hereby agreeing to cause the same Persons to succeed in the same
proportions to this Agreement and the other Loan Documents and the Other Loan
Agreement and Loan Documents (as defined in the Other Loan Agreement) and
provided further, that Borrower may assign his rights, obligations and
agreements hereunder to members of his family and to trusts formed and
maintained at all times after assignment for the benefit of members of his
family (it being understood and agreed in such case that Borrower shall remain
liable for all obligations under Section 7.2 hereunder and that Borrower shall
assign all rights under the Other Loan and the Loan Documents (as defined in the
Other Loan Agreement) to the same assignee). The Borrower shall provide the
Lender with prior written notice of any such assignment.
7.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been received by
the Lender, this Agreement shall become effective as of the date hereof.
7.9 No Presumption Against Drafter; Interpretation. All of the parties
hereto have jointly participated in the negotiation and drafting of this
Agreement. In the event of an ambiguity or if a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by all of the parties hereto and no presumptions or burdens of proof shall arise
favoring any party by virtue of the authorship of any of the provisions of this
Agreement. The use of the masculine, feminine or neuter gender herein shall not
limit any provision of the Loan Documents. Without limiting the foregoing, the
word "his" shall be deemed to refer also, where possible, to "her" and "its" and
the word "he" shall be deemed to refer also, wherever possible, to "she" and
"it", including in all such cases in connection with references to the Borrower.
7.10 Entire Understanding. Notwithstanding anything to the contrary or
contained in the Subscription Agreement, this Agreement sets forth the entire
agreement and understanding of the parties hereto in respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof and is not intended to
confer upon any other person any rights or remedies hereunder. There have been
no representations or statements, oral or written, that have been relied on by
any party hereto, except those expressly set forth in this Agreement.
7.11 Agent for Service of Process. In connection with any action by
Lender for enforcement of any provision of this Agreement or any provision of
any other Loan Document, Borrower has appointed The Prentice Hall Corporation
System, Inc. ("Prentice Hall") or any successor firm thereto, located in
Chicago, Illinois, as his agent for service of process by executing the
instrument attached hereto as Exhibit E. The foregoing appointment shall be
deemed to be coupled with an interest and shall be irrevocable. If Prentice Hall
ceases to exist and has no successors, then Borrower will execute similar
substitute documents with a substitute agent as reasonably requested by Lender.
7.12 Arbitration, Forum Selection and Consent to Jurisdiction. EACH OF
THE BORROWER AND LENDER AGREES THAT ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT BETWEEN SUCH PARTIES, SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF
17
ILLINOIS LOCATED IN XXXX COUNTY, ILLINOIS, OR IN THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. NOTWITHSTANDING THE FOREGOING, ANY
CONTORVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES ARISING OUT OF OR RELATING TO
THE LOAN DOCUMENTS SHALL AT THE REQUEST OF ANY PARTY BE DETERMINED BY
ARBITRATION. THE ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH THE
COMMERCIAL RULES OF THE AMERICAN ARBITRATION ASSOCIATION AND SHALL BE CONDUCTED
IN SPRINGFIELD, ILLINOIS. THE ARBITRATOR(S) SHALL BE RETIRED FEDERAL DISTRICT
COURT JUDGES. THE ARBITRATOR(S) SHALL GIVE EFFECT TO STATUTES OF LIMITATION IN
DETERMINING ANY CLAIM. ANY CONTROVERSY CONCERNING WHETHER AN ISSUE IS ARBITRABLE
SHALL BE DETERMINED BY THE ARBITRATOR(S). ANY PARTY TO THIS AGREEMENT MAY BRING
AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF
ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING
JURISDICTION OVER SUCH ACTION. JUDGMENT UPON THE ARBITRATION AWARD SHALL BE
ENTERED EXCLUSIVELY IN ANY COURT OF THE STATE OF ILLINOIS LOCATED IN XXXX
COUNTY, ILLINOIS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS. THE AWARD SHALL BE CONCLUSIVE AND BINDING, SUBJECT TO
CHALLENGE ONLY ON ONE OR MORE OF THE FOLLOWING GROUNDS: (I) THE AWARD WAS
PROCURED BY CORRUPTION, FRAUD OR OTHER UNDUE MEANS; (II) THERE WAS CORRUPTION IN
ANY OF THE ARBITRATORS; (III) THE RIGHTS OF THE APPEALING PARTY WERE
SUBSTANTIALLY PREJUDICED BY MISCONDUCT OF A NEUTRAL ARBITRATOR; (IV) THE
ARBITRATORS EXCEEDED THEIR POWERS AND THE AWARD CANNOT BE CORRECTED WITHOUT
AFFECTING THE MERITS OF THE DECISION UPON THE CONTROVERSY SUBMITTED; (V) THE
RIGHTS OF THE APPEALING PARTY WERE SUBSTANTIALLY PREJUDICED BY THE REFUSAL OF
THE ARBITRATORS TO POSTPONE ANY HEARING UPON SUFFICIENT CAUSE BEING SHOWN
THEREFOR OR BY THE REFUSAL OF THE ARBITRATORS TO HEAR EVIDENCE MATERIAL TO THE
CONTROVERSY OR BY OTHER CONDUCT OF ANY ARBITRATOR CONTRARY TO THE ARBITRATION
RULES; (VI) ANY OTHER GROUNDS WHICH PERMIT APPEAL UNDER THE ARBITRATION RULES;
OR (VII) BASED UPON THE ARBITRATOR'S INCORRECT APPLICATION OF ILLINOIS STATUTORY
OR COMMON LAW. THE VALIDITY AND ENFORCEABILITY OF AN ARBITRATION DECISION IS TO
BE DETERMINED EXCLUSIVELY BY THE ILLINOIS COURTS PURSUANT TO THE PROVISIONS
HEREOF. NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO LIMIT THE RIGHT OF LENDER
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SET-OFF, OR (B)
TO FORECLOSE AGAINST ANY COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL
OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF OR THE
APPOINTMENT OF A RECEIVER. LENDER MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE
UPON SUCH COLLATERAL, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE,
DURING OR AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO
THIS AGREEMENT. NOTWITHSTANDING THE FOREGOING, THE LENDER SHALL NOT BE ENTITLED
TO EXERCISE SELF-HELP REMEDIES OR FORECLOSE UPON THE COLLATERAL UNTIL IT HAS
FIRST ATTEMPTED TO APPLY THE COLLATERAL TO PAYMENTS UNDER THE LOAN AS PERMITTED
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND WAS NOT ABLE PROMPTLY TO
SO APPLY THE COLLATERAL AT SUCH TIME OR TIMES AS PERMITTED UNDER THE LOAN
DOCUMENTS, REGARDLESS OF THE REASON THEREFOR (FOR PURPOSES OF CLARITY, IF ANY
ARBITRATOR OR JUDGE RENDERS OR FAILS TO RENDER ANY PRELIMINARY OR OTHER DECISION
OR BORROWER OR ANY OTHER PERSON TAKES ANY ACTION THE EFFECT OF WHICH IS TO
PREVENT OR DELAY EXERCISE OF ANY RIGHT OF LENDER TO THE COLLATERAL, THEN LENDER
SHALL THEREUPON BE ENTITLED TO EXERCISE SELF-HELP REMEDIES OR FORECLOSE UPON THE
COLLATERAL). NEITHER THE EXERCISE OF SELF-
18
HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR
PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES. EACH OF THE BORROWER
AND LENDER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS IN CONNECTION WITH ANY LITIGATION HEREUNDER,
INCLUDING THE ENTERING OF ANY JUDGMENT UPON AN ARBITRATION AWARD. EACH OF THE
BORROWER AND LENDER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
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IN WITNESS WHEREOF, this Third Amended and Restated Investment Loan
Agreement has been duly executed and delivered as of the day and year first
written above.
BORROWER:
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[ ]
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Address: [ ]
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[ ]
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[ ]
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THE TRUST:
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[ ]
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By: _______________________________
[ ], Trustee
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Address: [ ]
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[ ]
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[ ]
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[ ]
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LENDER:
CWS COMMUNITIES LP,
a Delaware limited partnership
By: Second Merger Sub, LLC,
its general partner
By: _____________________
Name:
Title:
Address: c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
With a copy to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
WS Option Corp. joins in the execution of this Agreement
solely for the purpose of binding itself to the obligations
of the Optionee set forth in Section 4 of this Agreement.
WS OPTION CORP.,
a Delaware corporation
By: _____________________
Name:
Title:
Address: c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
With a copy to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
21
EXHIBIT A-1
FORM OF NOTE 1 - INVESTMENT LOAN
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.
THIS NOTE AMENDS AND RESTATES THAT CERTAIN PROMISSORY NOTE DATED MARCH 16, 1999,
MADE BY [____________] AND [_________] IN FAVOR OF CWS
COMMUNITIES LP IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,500,000
PAYMENT OF THIS NOTE IS NON-RECOURSE TO THE BORROWER EXCEPT AS
PROVIDED IN THE LOAN AGREEMENT REFERRED TO HEREIN.
AMENDED AND RESTATED PROMISSORY NOTE 1 - INVESTMENT LOAN
$1,500,000
Due: March 16, 2009
Chicago, Illinois: August 2, 2001
FOR VALUE RECEIVED, the undersigned, [ ], in his individual capacity (the
"Borrower"), promises to pay to the order of CWS Communities LP, a Delaware
limited partnership, (the "Lender"), the principal sum of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000), payable in full on March 16, 2009, unless
extended as specified in the Loan Agreement (as defined herein).
The Borrower further promises to pay interest on the unpaid principal
amount of this Amended and Restated Promissory Note 1 - Investment Loan (this
"Note") from the date hereof until the Note is paid in full, payable at the
rates and at the times as contemplated in the Loan Agreement. In addition, on or
before October 1, 2001, Borrower promises to pay any accrued and unpaid interest
under the Mar. 99 $1.5m Note, the Jun. 99 $1.5m Note, the Dec. 99 $1.5m Note and
the Sept. 00 $3m Note.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the Lender's office at c/o Falcon Farms, 0000 000xx Xxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxxx 00000, Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx, or at
such other place as may be designated by the Lender to the Borrower in writing.
This Note is one of the notes referred to in, and is subject to all the
terms and conditions of, and evidences indebtedness incurred under, the Third
Amended and Restated Investment Loan Agreement, dated as of the date hereof
(and, if amended, modified or supplemented, all amendments, modifications and
supplements thereto) (the "Loan Agreement"), between the Borrower and the
Lender, to which Loan Agreement reference is made for a statement of the terms
and provisions thereof including Section 7.2 thereof, and those under which such
indebtedness may be declared to be immediately due and payable. Without limiting
the foregoing, there shall be no payment and subsequent reborrowing under this
Note.
This Note is secured by the personal property described in the Pledge
Agreement, to which reference is made for a description of the collateral
provided thereby and the rights of the Lender and the Original Borrowers in
respect of such collateral.
A-1-1
The Pledge Agreement is subject to the exercise of the option under the
Option Agreement.
Without limiting the applicability of any particular provision of the Loan
Agreement to this Note, it is understood that this Note, together with that
certain Amended and Restated Promissory Note 2 - Investment Loan, Amended and
Restated Promissory Note 3 - Investment Loan and Amended and Restated Promissory
Note 4 - Investment Loan issued under the Loan Agreement, are subject to the
provisions of Section 7.2 of the Loan Agreement.
All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
* * * * *
A-1-2
This Note is made under and governed by the internal laws of the State
of Illinois.
BORROWER:
-------------------------------
[ ]
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Address: [ ]
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[ ]
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[ ]
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X-0-0
XXXXXXX X-0
FORM OF NOTE 2 - INVESTMENT LOAN
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.
THIS NOTE AMENDS AND RESTATES THAT CERTAIN PROMISSORY NOTE DATED JUNE 14, 1999,
MADE BY [________] AND [_________________________] IN FAVOR OF CWS
COMMUNITIES LP IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,500,000
PAYMENT OF THIS NOTE IS NON-RECOURSE TO THE BORROWER EXCEPT AS PROVIDED
IN THE LOAN AGREEMENT REFERRED TO HEREIN.
AMENDED AND RESTATED PROMISSORY NOTE 2 - INVESTMENT LOAN
$1,500,000
Due: June 14, 2009
Chicago, Illinois: August 2, 2001
FOR VALUE RECEIVED, the undersigned, [ ], in his individual capacity (the
"Borrower"), promises to pay to the order of CWS Communities LP, a Delaware
limited partnership, (the "Lender"), the principal sum of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000), payable in full on June 14, 2009, unless
extended as specified in the Loan Agreement (as defined herein).
The Borrower further promises to pay interest on the unpaid principal
amount of this Amended and Restated Promissory Note 2 - Investment Loan (this
"Note") from the date hereof until the Note is paid in full, payable at the
rates and at the times as contemplated in the Loan Agreement. In addition, on or
before October 1, 2001, Borrower promises to pay any accrued and unpaid interest
under the Mar. 99 $1.5m Note, the Jun. 99 $1.5m Note, the Dec. 99 $1.5m Note and
the Sept. 00 $3m Note.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the Lender's office at c/o Falcon Farms, 0000 000xx Xxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxxx 00000, Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx, or at
such other place as may be designated by the Lender to the Borrower in writing.
This Note is one of the notes referred to in, and is subject to all the
terms and conditions of, and evidences indebtedness incurred under, the Third
Amended and Restated Investment Loan Agreement, dated as of the date hereof
(and, if amended, modified or supplemented, all amendments, modifications and
supplements thereto) (the "Loan Agreement"), between the Borrower and the
Lender, to which Loan Agreement reference is made for a statement of the terms
and provisions thereof including Section 7.2 thereof, and those under which such
indebtedness may be declared to be immediately due and payable. Without limiting
the foregoing, there shall be no payment and subsequent reborrowing under this
Note.
A-2-1
This Note is secured by the personal property described in the Pledge
Agreement, to which reference is made for a description of the collateral
provided thereby and the rights of the Lender and the Original Borrowers in
respect of such collateral.
The Pledge Agreement is subject to the exercise of the option under the
Option Agreement.
Without limiting the applicability of any particular provision of the Loan
Agreement to this Note, it is understood that this Note, together with that
certain Amended and Restated Promissory Note 1 - Investment Loan, Amended and
Restated Promissory Note 3 - Investment Loan and Amended and Restated Promissory
Note 4 - Investment Loan issued under the Loan Agreement, are subject to the
provisions of Section 7.2 of the Loan Agreement.
All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
* * * * *
A-2-2
This Note is made under and governed by the internal laws of the State
of Illinois.
BORROWER:
----------------------
[ ]
---------
Address: [ ]
------------
[ ]
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[ ]
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X-0-0
XXXXXXX X-0
FORM OF NOTE 3 - INVESTMENT LOAN
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH LAWS OR THE AVAILABILITY OF AN
EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.
THIS NOTE AMENDS AND RESTATES THAT CERTAIN PROMISSORY NOTE DATED
DECEMBER 15, 1999, MADE BY [___________] AND [____________________] IN FAVOR
OF CWS COMMUNITIES LP IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,500,000
PAYMENT OF THIS NOTE IS NON-RECOURSE TO THE BORROWER EXCEPT
AS PROVIDED IN THE LOAN AGREEMENT REFERRED TO HEREIN.
AMENDED AND RESTATED PROMISSORY NOTE 3 - INVESTMENT LOAN
$1,500,000
Due: December 15, 0000
Xxxxxxx, Xxxxxxxx: August 2, 2001
FOR VALUE RECEIVED, the undersigned, [ ], in his individual capacity (the
"Borrower"), promises to pay to the order of CWS Communities LP, a Delaware
limited partnership, (the "Lender"), the principal sum of ONE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($1,500,000), payable in full on December 15, 2009,
unless extended as specified in the Loan Agreement (as defined herein).
The Borrower further promises to pay interest on the unpaid principal
amount of this Amended and Restated Promissory Note 3 - Investment Loan (this
"Note") from the date hereof until the Note is paid in full, payable at the
rates and at the times as contemplated in the Loan Agreement. In addition, on or
before October 1, 2001, Borrower promises to pay any accrued and unpaid interest
under the Mar. 99 $1.5m Note, the Jun. 99 $1.5m Note, the Dec. 99 $1.5m Note and
the Sept. 00 $3m Note.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the Lender's office at c/o Falcon Farms, 0000 000xx Xxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxxx 00000, Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx, or at
such other place as may be designated by the Lender to the Borrower in writing.
This Note is one of the notes referred to in, and is subject to all the
terms and conditions of, and evidences indebtedness incurred under, the Third
Amended and Restated Investment Loan Agreement, dated as of the date hereof
(and, if amended, modified or supplemented, all amendments, modifications and
supplements thereto) (the "Loan Agreement"), between the Borrower and the
Lender, to which Loan Agreement reference is made for a statement of the terms
and provisions thereof including Section 7.2 thereof, and those under which such
indebtedness may be declared to be immediately due and payable. Without limiting
the foregoing, there shall be no payment and subsequent reborrowing under this
Note.
This Note is secured by the personal property described in the Pledge
Agreement, to which reference is made for a description of the collateral
provided thereby and the rights of the Lender and the Original Borrowers in
respect of such collateral.
A-3-1
The Pledge Agreement is subject to the exercise of the option under the
Option Agreement.
Without limiting the applicability of any particular provision of the Loan
Agreement to this Note, it is understood that this Note, together with that
certain Amended and Restated Promissory Note 1 - Investment Loan, Amended and
Restated Promissory Note 2 - Investment Loan and Amended and Restated Promissory
Note 4 - Investment Loan issued under the Loan Agreement, are subject to the
provisions of Section 7.2 of the Loan Agreement.
All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
* * * * *
A-3-2
This Note is made under and governed by the internal laws of the State
of Illinois.
BORROWER:
-----------------------------------
V
Address: [ ]
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[ ]
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[ ]
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X-0-0
XXXXXXX X-0
FORM OF NOTE 4 - INVESTMENT LOAN
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE. THIS NOTE MAY NOT BE
TRANSFERRED WITHOUT REGISTRATION UNDER SUCH LAWS OR THE AVAILABILITY OF
AN EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.
THIS NOTE AMENDS AND RESTATES THAT CERTAIN PROMISSORY NOTE DATED
SEPTEMBER 26, 2000, MADE BY [______________] AND [________________] IN
FAVOR OF CWS COMMUNITIES LP IN THE ORIGINAL PRINCIPAL AMOUNT OF $3,000,000
PAYMENT OF THIS NOTE IS NON-RECOURSE TO THE BORROWER EXCEPT
AS PROVIDED IN THE LOAN AGREEMENT REFERRED TO HEREIN.
AMENDED AND RESTATED PROMISSORY NOTE 4 - INVESTMENT LOAN
$3,000,000
Due: September 26,2010
Chicago, Illinois: August 2, 2001
FOR VALUE RECEIVED, the undersigned, [___________], in his individual
capacity (the "Borrower"), promises to pay to the order of CWS Communities LP, a
Delaware limited partnership, (the "Lender"), the principal sum of THREE MILLION
DOLLARS ($3,000,000), payable in full on September 26, 2010, unless extended as
specified in the Loan Agreement (as defined herein).
The Borrower further promises to pay interest on the unpaid principal
amount of this Amended and Restated Promissory Note 4 - Investment Loan (this
"Note") from the date hereof until the Note is paid in full, payable at the
rates and at the times as contemplated in the Loan Agreement. In addition, on or
before October 1, 2001, Borrower promises to pay any accrued and unpaid interest
under the Mar. 99 $1.5m Note, the Jun. 99 $1.5m Note, the Dec. 99 $1.5m Note and
the Sept. 00 $3m Note.
All payments of principal and interest under this Note shall be made in
lawful money of the United States of America in immediately available funds at
the Lender's office at c/o Falcon Farms, 0000 000xx Xxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxxx 00000, Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx, or at
such other place as may be designated by the Lender to the Borrower in writing.
This Note is one of the notes referred to in, and is subject to all the
terms and conditions of, and evidences indebtedness incurred under, the Third
Amended and Restated Investment Loan Agreement, dated as of the date hereof
(and, if amended, modified or supplemented, all amendments, modifications and
supplements thereto) (the "Loan Agreement"), between the Borrower and the
Lender, to which Loan Agreement reference is made for a statement of the terms
and provisions thereof including Section 7.2 thereof, and those under which such
indebtedness may be declared to be immediately due and payable. Without limiting
the foregoing, there shall be no payment and subsequent reborrowing under this
Note.
This Note is secured by the personal property described in the Pledge
Agreement, to which reference is made for a description of the collateral
provided thereby and the rights of the Lender and the Original Borrowers in
respect of such collateral.
A-4-1
The Pledge Agreement is subject to the exercise of the option under the
Option Agreement.
Without limiting the applicability of any particular provision of the Loan
Agreement to this Note, it is understood that this Note, together with that
certain Amended and Restated Promissory Note 1 - Investment Loan, Amended and
Restated Promissory Note 2 - Investment Loan and Amended and Restated Promissory
Note 3 - Investment Loan issued under the Loan Agreement, are subject to the
provisions of Section 7.2 of the Loan Agreement.
All parties hereto, whether as makers, endorsers or otherwise, severally
waive presentment, demand, protest and notice of dishonor in connection with
this Note.
Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Loan Agreement.
* * * * *
A-4-2
This Note is made under and governed by the internal laws of the State
of Illinois.
BORROWER:
-------------------------------------
[ ]
-------
Address: [ ]
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[ ]
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[ ]
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A-4-3
EXHIBIT B
FORM OF AMENDED AND RESTATED INVESTMENT PLEDGE AGREEMENT
THIS AMENDED AND RESTATED INVESTMENT PLEDGE AGREEMENT (this "Agreement"),
dated as of August 2, 2001 is between [ ] and [ ] (the "Trust"), jointly and
severally (Borrower and the Trust hereinafter collectively referred to as, the
"Pledgor") and CWS Communities LP, a Delaware registered limited partnership
(the "Lender").
W I T N E S S E T H:
WHEREAS, the Pledgor and Lender have entered into that certain Loan
Agreement, dated March 4, 1998, as amended by that certain First Amended and
Restated Loan Agreement dated as of March 16, 1999, between Pledgor and Lender,
and that certain Second Amended and Restated Loan Agreement dated as of June 24,
1999, between Pledgor and Lender (collectively, the "Original Loan Agreement");
WHEREAS, pursuant to the Original Loan Agreement, Lender loaned $7,500,000
to the Pledgor as evidenced by, among other things, (i) that certain Promissory
Note dated March 16, 1999, made by Pledgor in favor of Lender in the original
principal amount of $1,500,000; (ii) that certain Promissory Note dated June 14,
1999, made by Pledgor in favor of Lender in the original principal amount of
$1,500,000; (iii) that certain Promissory Note dated December 15, 1999, made by
Pledgor in favor of Lender in the original principal amount of $1,500,000; and
(iv) that certain Promissory Note dated September 26, 2000, made by Pledgor in
favor of Lender in the original principal amount of $3,000,000;
WHEREAS, as security for the Loan, among other things, Pledgor executed
that certain Investment Pledge Agreement dated as of March 16, 1999, made by
Pledgor in favor of Lender, as amended by First Amendment to Investment Pledge
Agreement dated as of June 14, 1999, between Pledgor and Lender, Second
Amendment to Investment Pledge Agreement dated as of December 15, 1999, between
Pledgor and Lender, and Third Amendment to Investment Pledge Agreement dated as
of September 26, 2000 (collectively, the "Original Pledge Agreement");
WHEREAS, Lender is a party to that certain Agreement and Plan of Merger
dated as of June 6, 2001 (the "Merger Agreement"), among CPJ, Chateau OP,
certain merger subsidiaries named therein, CWS, Lender, and Security Capital
Manufactured Housing Incorporated, a Delaware corporation. Pursuant to the terms
of the Merger Agreement, Lender will be acquired through merger by and become a
wholly owned subsidiary of Chateau OP;
WHEREAS, in connection with the Merger Agreement, Pledgor is a party to
that certain CP Limited Partnership Election and Subscription Agreement for
Units of Limited Partner Interests dated as of June 6, 2000 (the "Subscription
Agreement"), among Pledgor, CPJ and Chateau OP, whereby, among other things,
Pledgor consented to certain modifications to the Original Loan Agreement and
the Original Pledge Agreement;
WHEREAS, the parties desire to amend and restate the provisions of the
Original Pledge Agreement to, among other things, (i) provide for the
reaffirmation by Pledgor of its obligations thereunder; and (ii) modify certain
of the terms in accordance with the Subscription Agreement. In exchange for the
same, contemporaneously herewith, Lender has released the Trust as a borrower
under the Loan Agreement;
B-1
NOW, THEREFORE, for and in consideration of any loan, advance or other
financial accommodation heretofore or hereafter made to the Pledgor under or in
connection with the Loan Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. When used herein, the following terms have the following
meanings (such meanings to be applicable to both the singular and plural forms
of such terms):
"Borrower" - see Preamble.
"Chateau OP" has the meaning assigned to such term in the Loan
Agreement.
"Collateral" - see Section 2.
"CPJ" has the meaning assigned to such term in the Loan Agreement.
"CPJ Shares" has the meaning assigned to such term in the Loan
Agreement.
"CWS" has the meaning assigned to such term in the Loan Agreement.
"Default" has the meaning assigned to such term in the Loan Agreement.
"Event of Default" means an Event of Default under Section 7 of the
Loan Agreement.
"Excess Portion" has the meaning set forth in Section 5(c).
"Excess Portion Payment" has the meaning set forth in Section 5(c).
"Issuer" means the issuer of the partnership interests representing
all of the Collateral.
"Liabilities" means all obligations (monetary or otherwise) of the
Pledgor and each other Person (other than the Lender) obligated under, or
otherwise a party to, any Loan Document, howsoever created, arising or
evidenced, whether direct or indirect, primary or secondary, joint or
several, absolute or contingent, now or hereafter existing, or due or to
become due, which arise under or in connection with the Loan Agreement, the
Notes, this Agreement, any other Loan Document or any document or
instrument executed in connection therewith.
"Lender" - see Preamble.
"Loan" has the meaning assigned to such term in the Loan Agreement.
"Loan Document" has the meaning assigned to such term in the Loan
Agreement.
"Merger Agreement" - see Preamble.
"Notes" has the meaning assigned to such term in the Loan Agreement.
"Option" has the meaning provided in the Option Agreement.
"Option Agreement" means the Option Agreement executed in the form
attached as Exhibit C to the Loan Agreement.
B-2
"Option Securities Collateral" has the meaning provided in the Option
Agreement.
"Optionee" has the meaning provided in the Option Agreement.
"Original Loan Agreement" - see Preamble.
"Original Pledge Agreement" - see Preamble.
"Person" has the meaning assigned to such term in the Loan Agreement.
"Pledgor" - see Preamble.
"Subscription Agreement" - see Preamble.
"Trust" has the meaning assigned to such term in the Loan Agreement.
"Units" has the meaning assigned to such term in the Loan Agreement.
"Withheld Distributions" has the meaning set forth in Section 5 B.
2. Pledge. As security for the payment and performance of the Notes and the
obligations of Pledgor, as Optionor under the Option Agreement, the Pledgor
hereby pledges to the Lender, and grants to the Lender a continuing security
interest in, all of the following, whether now or hereafter existing or
acquired:
A. All of the CPJ Shares and the Units described in Schedule A hereto,
all of the certificates and/or instruments representing or evidencing such
CPJ Shares or Units, and all cash, securities (including and CPJ Shares or
Units), interest, distributions, dividends, rights and other property at
any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such CPJ Shares
or Units;
B. All other Units or CPJ Shares hereafter delivered to the Lender in
substitution for or in addition to any of the foregoing, all certificates
and instruments representing or evidencing such CPJ Shares or Units, and
all cash, securities, interest, distributions, dividends, rights and other
property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for such CPJ Shares or
Units; and
C. All products and proceeds of all of the foregoing.
All of the foregoing are herein collectively called the "Collateral."
The Pledgor agrees to deliver to the Lender, promptly upon receipt and in
due form for transfer (i.e., endorsed in blank or accompanied by stock or bond
powers or other similar endorsement executed in blank), any Collateral which may
at any time or from time to time be in or come into the possession or control of
the Pledgor; and prior to the delivery thereof to the Lender, such Collateral
shall be held by the Pledgor separate and apart from his other property and in
express trust for the Lender.
3. Warranties; Further Assurances. The Pledgor warrants to the Lender that:
(a) For each entry on Schedule A hereto, each Person listed as a
"Pledgor" on such schedule is (or at the time of any future delivery, pledge,
assignment or transfer thereof will be) the lawful, legal and equitable owner of
all of the Collateral listed opposite to such Person's name on
B-3
Schedule A free and clear of all liens, security interests and encumbrances of
every description whatsoever other than the security interest created hereunder
and the rights of Optionee under the Option Agreement, with full right, power,
authority and capacity to pledge the Collateral to the Lender hereunder;
(b) the pledge and delivery of the Collateral pursuant to this
Agreement will create a valid, perfected, first priority security interest in
the Collateral in favor of the Lender;
(c) all documentary, stamp or other taxes or fees owing in connection
with the transfer and/or pledge of the Collateral hereto have been paid in full
and will hereafter be paid by the Pledgor as such become due and payable;
(d) the execution, delivery and performance by the Pledgor of this
Agreement and the Option Agreement are within the right, power, authority and
capacity of the Pledgor and do not and will not require any consent or approval
of any governmental agency or authority or any other Person;
(e) the execution, delivery and performance by the Pledgor of this
Agreement and the Option Agreement do not conflict with any agreement binding
upon the Pledgor or the Collateral or any court or administrative order or
decree applicable to the Pledgor;
(f) this Agreement and the Option Agreement are, when duly executed
and delivered legal, valid and binding obligations of the Pledgor, enforceable
against the Pledgor in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws of
general application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies;
(g) no Event of Default or Default has occurred and is continuing; and
(h) prior to and after giving effect to the Pledge Agreement and the
Option Agreement, (i) each Pledgor's assets will exceed its liabilities and (ii)
each Pledgor will be solvent, will be able to pay its debts as they mature, and
will own cash and property with fair saleable value greater than the amount
required to pay its debts and on-going obligations.
So long as any of the Liabilities shall be outstanding, the Pledgor (i)
shall not, without the express prior written consent of the Lender, sell,
assign, exchange, pledge or otherwise transfer, encumber, or grant any option,
warrant or other right to purchase the securities which are pledged hereunder,
or otherwise diminish or impair any of his rights in, to or under any of the
Collateral; (ii) shall execute such Uniform Commercial Code financing statements
and other documents (and pay the costs of filing and recording or re-filing and
re-recording the same in all public offices reasonably deemed necessary or
appropriate by the Lender) and do such other acts and things, all as the Lender
may from time to time reasonably request, to establish and maintain a valid,
perfected, first priority security interest in the Collateral (free of all other
liens, claims and rights of third parties whatsoever except those arising under
the Option Agreement) to secure the performance and payment of the Liabilities;
and (iii) will execute and deliver to the Lender such stock powers and similar
documents relating to the Collateral, satisfactory in form and substance to the
Lender, as the Lender may reasonably request; provided, however, that upon
approval of documents reasonably satisfactory to the Lender to protect in full
its interest in the Collateral, including receipt of a pledge agreement signed
by the transferee as to the Collateral in form and substance satisfactory to the
Lender, the Pledgor may transfer any or all of the Collateral, subject to the
pledge of this Agreement and the Option Agreement, to Borrower's parents, lineal
descendants (including those through adoption) or spouse of Borrower or to a
trust for the benefit of Borrower, any of his parents, lineal descendants
(including those through adoption) or his spouse.
B-4
4. Holding in Name of Lender. The Lender may from time to time after the
occurrence and during the continuance of an Event of Default, upon notice to the
Pledgor, take all or any of the following actions: (a) transfer all or any part
of the Collateral into the name of the Lender or any nominee or sub-agent for
the Lender, as long as it discloses that such Collateral is subject to the lien
and security interest hereunder, (b) appoint one or more sub-agents or nominees
for the purpose of retaining physical possession of the Collateral, (c) notify
the parties obligated on any of the Collateral to make payment to the Lender of
any amounts due or to become due thereunder, (d) endorse any checks, drafts or
other writings in the name of the Pledgor to allow collection of the Collateral,
(e) enforce collection of any of the Collateral by suit or otherwise, and (f)
take control of any proceeds of the Collateral (provided, that Lender shall not
be permitted to take control of any dividends paid with respect to the
Collateral prior to the occurrence of such Event of Default).
5. Voting Rights, Dividends, etc.
(a) Notwithstanding certain provisions of Section 2 or Section 4 hereof,
so long as the Lender has not properly given the notice referred to in paragraph
(b) below:
A. The Pledgor shall be entitled to exercise any and all voting or
consensual rights and powers and stock purchase or subscription rights (but
any such exercise by the Pledgor of stock purchase or subscription rights
may be made only from funds of the Pledgor not comprising part of the
Collateral) relating or pertaining to the Collateral or any part thereof
for any purpose.
B. The Pledgor shall be entitled to receive and retain any and all
lawful distributions or dividends payable in respect of the Collateral
resulting from property operations (as opposed to sales, financings or
other capital events) which are paid by any Issuer, but (i) all
distributions resulting from sales, financings and other capital events
("Withheld Distributions") shall be handled as described in Section 5(c)
below, and (ii) all dividends and distributions in respect of the
Collateral or any part thereof made in partnership interests or shares of
stock of the Issuer, whether resulting from a subdivision, combination or
reclassification of Collateral or any part thereof or received in exchange
for Collateral or any part thereof or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Issuer may
be a party or otherwise or as a result of any exercise of any stock
purchase or subscription right to the extent consideration is not paid in
connection with such exercise, shall be and become part of the Collateral
hereunder and, if received by the Pledgor, shall be forthwith delivered to
the Lender in due form for transfer (i.e., endorsed in blank or accompanied
by stock or bond powers executed in blank or other similar endorsement) to
be held for the purposes of this Agreement.
C. The Lender shall execute and deliver, or cause to be executed and
delivered, to the Pledgor, all such proxies, powers of attorney, dividend
orders and other instruments as the Pledgor may request for the purpose of
enabling the Pledgor to exercise the rights and powers which it is entitled
to exercise pursuant to clause (A) above and to receive the distributions
or dividends which it is authorized to retain pursuant to clause (B) above.
(b) Upon notice from the Lender during the existence of an Event of
Default, and so long as the same shall be continuing, all rights and powers
which the Pledgor is entitled to exercise pursuant to Section 5(a)(A) hereof,
and all rights of the Pledgor to receive and retain distributions or dividends
pursuant to Section 5(a)(B) hereof, shall forthwith cease, and all such rights
and powers shall thereupon become vested in the Lender which shall have, during
the continuance of such Event of Default, the sole and exclusive authority to
exercise such rights and powers and to receive such dividends. Any and all money
and other property paid over to or received by the Lender pursuant to this
paragraph (b) shall be retained by the Lender as additional Collateral hereunder
and applied in accordance
B-5
with the provisions hereof, except that, to the extent such amounts are cash or
cash equivalents, they shall be promptly applied to any amounts owing under the
Notes.
(c) Withheld Distributions shall be handled as described in this Section
5(c). An amount equal to the Option Securities Percentage (as defined in the
Option Agreement relating to the Option) of the Excess Portion shall be applied
by Lender as a prepayment of the Loan and shall reduce the principal balance of
the Notes pro-rata (each such payment, an "Excess Portion Payment"), with the
remainder of the Excess Portion being paid to the Pledgor. The Withheld
Distributions that are not disposed under the preceding sentence shall, if
Pledgor tenders substitute Collateral that is reasonably acceptable to Lender,
be paid to Pledgor; provided, that if such substitute Collateral is not
reasonably acceptable to Lender, then such Withheld Distributions shall be
applied as prepayments under the Loan. For purposes of determining whether
proposed substitute Collateral is acceptable to Lender for purposes of this
Section 5(c), CPJ Shares or Units shall be deemed to be an acceptable form of
Collateral.
The "Excess Portion" means, with respect to any distributions and
dividends, the portion thereof, if any, resulting from proceeds from asset
dispositions or non-recourse financings in excess of the original cost of the
underlying asset and capitalized improvements thereto (determined under
generally accepted accounting principles, without reduction for depreciation).
The Excess Portion for each Withheld Distribution shall be determined by CPJ and
approved in good faith by its Board of Directors. Upon such approval, Pledgor
shall accept such determination and the same shall be deemed final, unless there
is manifest error or the approval by the Board of Directors of CPJ was not done
in good faith.
6. Event of Default; Remedies. Whenever an Event of Default shall exist,
upon notice to the Pledgor, the Lender may exercise from time to time any rights
and remedies available to it under the Uniform Commercial Code as in effect in
Illinois or otherwise available to it. Notwithstanding the foregoing, the Lender
shall not be entitled to exercise self-help remedies or foreclose upon the
Collateral until it has first attempted to apply the Collateral to payments
under the Loan as permitted under this Agreement and the other Loan Documents
and was not able promptly to so apply the Collateral at such time or times as
permitted under the Loan Documents, regardless of the reason therefor (for
purposes of clarity, if any arbitrator or judge renders or fails to render any
preliminary or other decision or Pledgor or any other Person takes any action
the effect of which is to prevent or delay exercise of any right of Lender to
the Collateral, then Lender shall thereupon be entitled to exercise self-help
remedies or foreclose upon the Collateral). Any proceeds of any of the
Collateral may be applied by the Lender to the payment of expenses in connection
with the Collateral, including, without limitation, reasonable attorneys' fees
and legal expenses, and any balance of such proceeds may be applied by the
Lender toward the payment of such of the Liabilities, and in such order of
application, as the Lender may from time to time elect (and, after payment in
full of all Liabilities, any excess shall be delivered to the Pledgor or as a
court of competent jurisdiction shall direct).
The Lender is hereby authorized to comply with any limitation or
restriction in connection with any sale of Collateral as it may be advised by
counsel is necessary in order to (a) avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers and/or further restrict such
prospective bidders or purchasers to persons or entities who will represent and
agree that they are purchasing for their own account for investment and not with
a view to the distribution or resale of such Collateral) or (b) obtain any
required approval of the sale or of the purchase by any governmental regulatory
authority or official, and the Pledgor agrees that such compliance shall not
result in such sale being considered or deemed not to have been made in a
commercially reasonable manner and that the Lender shall not be liable or
accountable to the Pledgor for any discount allowed by reason of the fact that
such Collateral is sold in compliance with any such limitation or restriction.
B-6
Notwithstanding anything in this Pledge Agreement to the contrary, the
Lender's exercise of the remedies permitted by this Pledge Agreement shall in no
event result in recourse to the Borrower for any amounts in excess of those
permitted by Section 7.2 of the Loan Agreement.
7. Option. This Agreement and the security interests and pledge granted
hereunder are equal in priority (neither subordinate nor superior) to the
Option, it being understood that the rights of the Lender and the Optionee with
respect to the Option Securities Collateral (as defined in the Option Agreement)
shall be governed as set forth in Sections 4.1 and 4.2 of the Loan Agreement.
8. General.
The Lender and Pledgor shall provide notices to the other in the manner
prescribed by the Loan Agreement.
The Trust shall:
(i) preserve, or cause to be preserved, and keep in full force
and effect their entity status, rights and privileges under
the laws of the state of their formation;
(ii) not (nor shall any general partner, managing member or
trustee therein) wind up, liquidate, dissolve, reorganize,
merge, or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of all or
substantially all of their assets, or acquire all or
substantially all of the assets of the business of any
Person; and
(iii)shall conduct business only in each of their own names and
shall not change their name, identity, or organizational
structure, or the location of their chief executive office
or principal place of business;
unless, in each case, The Trust (a) shall have obtained the prior
written consent of Lender to such change or transaction listed in
(ii), which consent shall not be unreasonably withheld, and (b)
shall have taken all actions as necessary to file or amend any
financing statement or continuation statement to assure
perfection and continuation of perfection of security interests
under the Loan Documents.
Borrower shall:
(i) not change his name or identity, unless he (a) shall have
obtained the prior written consent of Lender to such change,
which consent shall not be unreasonably withheld, and (b)
shall have taken all actions as necessary to file or amend
any financing statement or continuation statement to assure
perfection and continuation of perfection of security
interests under the Loan Documents.
(ii) not change the location of his residence, unless he (a)
shall have provided Lender with thirty (30) days prior
written notice of such change, and (b) shall have taken all
actions as necessary to file or amend any financing
statement or continuation statement to assure perfection and
continuation of perfection of security interests under the
Loan Documents.
B-7
The Pledgor agrees to pay all expenses (including, without limitation,
reasonable attorney's fees and legal expenses) paid or incurred by the Lender in
successfully enforcing this Agreement against the Pledgor.
No delay on the part of the Lender in exercising any right, power or remedy
shall operate as a waiver thereof, and no single or partial exercise of any such
right, power or remedy shall preclude any other or further exercise thereof, or
the exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement shall be
effective unless the same shall be in writing and signed and delivered by the
Lender, and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
This Agreement shall remain in full force and effect until the Notes have
been paid in full. If at any time all or any part of any payment theretofore
applied by the Lender to the Notes is or must be rescinded or returned by the
Lender for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Pledgor), such liability shall, for the
purposes of this Agreement, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence, notwithstanding
such application by the Lender, and this Agreement shall continue to be
effective or be reinstated, as the case may be, as to such liability, all as
though such application by the Lender had not been made.
All obligations of the Pledgor and all rights, powers and remedies of the
Lender expressed herein are in addition to all other rights, powers and remedies
possessed by them, including, without limitation, those provided by applicable
law or in any other written instrument or agreement relating to any of the
Liabilities or any security therefor.
This Agreement shall be construed in accordance with and governed by the
internal laws of the State of Illinois.
Wherever possible each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
The use of the masculine, feminine or neuter gender herein shall not limit
any provision of the Loan Documents. Without limiting the foregoing, the word
"his" shall be deemed to refer also, where possible, to "her" and "its" and the
word "he" shall be deemed to refer also, wherever possible, to "she" and "it",
including in all such cases in connection with references to the Borrower.
Section captions used in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
This Agreement shall be binding upon the Pledgor and the Lender and their
respective heirs, representatives, successors and assigns, and shall inure to
the benefit of the Pledgor and the Lender and the successors and assigns of the
Lender. Except as required by applicable law, the Pledgor shall not assign its
rights or duties hereunder without the prior written consent of Lender.
This Agreement may be executed in any number of the deemed an original but
all such counterparts shall together constitute but one and the same Agreement.
B-8
At the option of the Lender, this Agreement, or a carbon, photographic or
other reproduction of this Agreement or of any Uniform Commercial Code financing
statement covering the Collateral or any portion thereof, shall be sufficient as
a Uniform Commercial Code financing statement and may be filed as such.
Notwithstanding anything to the contrary or contained in the Subscription
Agreement, this Agreement sets forth the entire agreement and understanding of
the parties hereto in respect to the transactions contemplated hereby and
supersedes all prior agreements, arrangements and understandings relating to the
subject matter hereof and is not intended to confer upon any other person any
rights or remedies hereunder. There have been no representations or statements,
oral or written, that have been relied on by any party hereto, except those
expressly set forth in this Agreement.
If the Pledgor is comprised of more than one Person, such Persons shall be
jointly and severally liable for all obligations of Pledgor hereunder; provided,
however, that the heirs of [__________] shall not be jointly and severally
liable hereunder to the extent they succeed to the rights and obligations
hereunder upon the death of [__________].
EACH PLEDGOR AND LENDER AGREES THAT SECTION 7.12 OF THE LOAN AGREEMENT
SHALL APPLY TO THIS AGREEMENT.
B-9
IN WITNESS WHEREOF, this Amended and Restated Investment Pledge Agreement
has been duly executed and delivered as of the day and year first written above.
PLEDGOR:
------------------------
[ ]
----------
Address: [ ]
----------------
[ ]
----------------
[ ]
----------------
[ ]
----------------
By:
-----------------------------------
[ ], Trustee
-------------------
Address: [ ]
-------------------
[ ]
-------------------
[ ]
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[ ]
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B-10
LENDER:
CWS COMMUNITIES LP,
a Delaware limited partnership
By: Second Merger Sub, LLC,
its general partner
By: _____________________
Name:
Title:
Address: c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
With a copy to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
B-11
SCHEDULE A
TO PLEDGE AGREEMENT
UNITS
-----------------------------
Pledgor No.
-----------------------------
-----------------------------
The Trust 276,000
-----------------------------
-----------------------------
-----------------------------
Total 276,000
-----------------------------
CPJ SHARES
-------------------------------------------------------------
Pledgor Certificate No. No. and Class
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
B-12
EXHIBIT C
FORM OF AMENDED AND RESTATED OPTION AGREEMENT
THIS AMENDED AND RESTATED OPTION AGREEMENT, dated as of August 2, 2001,
among [__________], in his individual capacity (the "Borrower"), [__________]
(the "Trust"), jointly and severally (Borrower and the Trust collectively
hereinafter referred to as, the "Optionor"), and WS OPTION CORP. ("Optionee"), a
Delaware corporation and successor by assignment to CWS.
WHEREAS, the Optionor and the Partnership have entered into that certain
Loan Agreement, dated March 4, 1998, as amended by that certain First Amended
and Restated Loan Agreement dated as of March 16, 1999, between Optionor and the
Partnership, and that certain Second Amended and Restated Loan Agreement dated
as of June 24, 1999, between Optionor and the Partnership (collectively, the
"Original Loan Agreement");
WHEREAS, pursuant to the Original Loan Agreement, the Partnership loaned
$7,500,000 to the Optionor as evidenced by, among other things, (i) that certain
Promissory Note dated March 16, 1999, made by Optionor in favor of Lender in the
original principal amount of $1,500,000; (ii) that certain Promissory Note dated
June 14, 1999, made by Optionor in favor of the Partnership in the original
principal amount of $1,500,000; (iii) that certain Promissory Note dated
December 15, 1999, made by Optionor in favor of the Partnership in the original
principal amount of $1,500,000; and (iv) that certain Promissory Note dated
September 26, 2000, made by Optionor in favor of the Partnership in the original
principal amount of $3,000,000;
WHEREAS, as security for the Loan, among other things, Optionor executed
that certain Option Agreement dated as of March 16, 1999, made by Optionor in
favor of Optionee (the "Original Option Agreement");
WHEREAS, the Partnership is a party to that certain Agreement and Plan of
Merger dated as of June 6, 2001 (the "Merger Agreement"), among CPJ, Chateau OP,
certain merger subsidiaries named therein, CWS, the Partnership, and Security
Capital Manufactured Housing Incorporated, a Delaware corporation. Pursuant to
the terms of the Merger Agreement, the Partnership will be acquired through
merger by and become a wholly owned subsidiary of Chateau OP;
WHEREAS, in connection with the Merger Agreement, Optionor is a party to
that certain CP Limited Partnership Election and Subscription Agreement for
Units of Limited Partner Interests dated as of June 6, 2000 (the "Subscription
Agreement"), among Optionor, CPJ and Chateau OP, whereby, among other things,
Optionor consented to certain modifications to the Original Option Agreement and
the Original Loan Agreement;
WHEREAS, the parties desire to amend and restate the provisions of the
Original Option Agreement to, among other things, (i) provide for the
reaffirmation by Optionor of its obligations thereunder; and (ii) modify certain
of the terms in accordance with the Subscription Agreement. In exchange for the
same, contemporaneously herewith, the Partnership has released the Trust as a
borrower under the Loan Agreement;
In consideration of the mutual covenants, agreements and warranties herein
contained, it is agreed that Optionee shall have the right to receive from the
Optionor the Option Securities (as defined herein) upon the terms and conditions
hereinafter set forth.
C-1
1. Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated for purposes of
this Agreement (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Adjusted Initial Fair Market Value" shall mean, as of any date of
determination with respect to any security, the Initial Fair Market Value
of such security reduced by the fair market value of any distributions
(such as distributions resulting from property sales or financings or
capital events) on or prior to such date of determination made with respect
to that security that did not arise from Funds from Operations (as such
term is defined by NAREIT) (provided that if Funds from Operations is no
longer defined by NAREIT, the reduction in this definition shall be based
upon the definition of such similar term that is commonly used by publicly
traded real estate companies to define operating cash flow).
"Agreement" shall mean this Amended and Restated Option Agreement,
including all Exhibits and Schedules hereto, as the same may be amended or
otherwise modified from time to time in accordance with its terms.
"Agreement of Limited Partnership" shall have the meaning set forth in
the Loan Agreement.
"Business Day" shall have the meaning set forth in the Loan Agreement.
"Chateau OP" shall have the meaning set forth in the Loan Agreement.
"Class A Shares" shall have the meaning set forth in the Contribution
Agreement.
"Class B Shares" shall have the meaning set forth in the Contribution
Agreement.
"Closing" shall have the meaning set forth in Section 4.
"Code" means the Internal Revenue Code of 1986 and any successor
statute of similar import, together with the regulations thereunder, in
each case as in effect from time to time. References to sections of the
Code shall be construed to also refer to any successor sections.
"Contribution Agreement" shall have the meaning set forth in the Loan
Agreement.
"CPJ" shall have the meaning set forth in the Loan Agreement.
"CPJ Shares" shall have the meaning set forth in the Loan Agreement.
"CWS" shall have the meaning set forth in the Loan Agreement.
"Current Fair Market Value" shall have the meaning set forth in the
Loan Agreement.
"Deferred Option Securities Collateral" shall have the meaning set
forth in the Loan Agreement.
"Equivalent Value" means, with respect to any Option Securities which
the Optionee is permitted to elect to acquire during any Exercise Period,
the excess, if any, of the Current Fair Market Value at the date of
maturity or the Payment Date, as applicable, of such Option Securities over
the Exercise Price of such Option Securities.
C-2
"Excess Portion Payments" shall have the meaning set forth in the
Pledge Agreement.
"Exercise Period" shall mean:
(a) with respect to payment in full of the Notes:
(i) if such payment is made in cash and on or prior to December
31, 2002, there shall be no Exercise Period with respect to such
payment; or
(ii) if such payment is made after December 31, 2002 or not in
cash, the period beginning on the maturity date of the Notes and
ending 90 days after the maturity of the Notes (howsoever such
maturity occurs); or, if earlier, the period beginning on the Payment
Date and ending 30 days after the Payment Date with respect to the
payment in full of the Note;
(b) with respect to any partial prepayment of the Notes:
(i) for Option Securities Collateral not designated Deferred
Option Securities Collateral, the period beginning on the Payment Date
with respect to such prepayment and ending 30 days after the Payment
Date with respect to the Option Securities equivalent to the Option
Securities Collateral included within the Split Collateral, or the
Section 4.3 Collateral, as applicable. Notwithstanding the foregoing,
if Optionee provides notice of an affirmative election to acquire
Option Securities hereunder or notice of an election not to acquire
such Option Securities, the Exercise Period with respect to those
Option Securities shall be deemed to have terminated on the date such
notice is delivered; and
(ii) for Deferred Option Securities Collateral, (1) the period
beginning on January 1, 2003 and ending April 1, 2003; and (2) for any
period prior to January 1, 2003, the period for which an Event of
Default shall have occurred and remains uncured. Notwithstanding the
foregoing, if Optionee provides notice of an affirmative election to
acquire Option Securities hereunder or notice of an election not to
acquire such Option Securities, the Exercise Period with respect to
those Option Securities shall be deemed to have terminated on the date
such notice is delivered.
"Exercise Price" shall mean the Initial Fair Market Value of the Option
Securities or, in the event Optionee is acquiring Option Securities
Collateral, the Initial Fair Market Value of the securities included within
such Option Securities Collateral, in each case, reduced by an amount equal
to any Excess Portion Payments that relate to such Option Securities and/or
Option Securities Collateral. Such reduction shall be made immediately
prior to the payment by CPJ or Chateau OP of the Withheld Distributions
that correspond with such Excess Portion Payment.
"Fiscal Quarter" means any calendar quarter of a Fiscal Year.
"Fiscal Year" means any period of 12 consecutive calendar months ending
on the 31st day of December. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 1992") refer to the
Fiscal Year ending on the 31st day of December occurring during such
calendar year.
"Initial Fair Market Value" shall have the meaning set forth in the
Loan Agreement.
C-3
"Lien" means any mortgage, pledge, hypothecation, judgment lien or
similar legal process, title retention lien, or other lien or security
interest, including, without limitation, the interest of a vendor under any
conditional sale or other title retention agreement.
"Loan" shall have the meaning set forth in the Loan Agreement.
"Loan Agreement" shall mean the Third Amended and Restated Investment
Loan Agreement, dated as of the date hereof, between Borrower and the
Partnership as the same may be amended or otherwise modified from time to
time.
"Loan Documents" shall have the meaning set forth in the Loan
Agreement.
"Merger Agreement" shall have the meaning set forth in the Loan
Agreement.
"NAREIT" means the National Association of Real Estate Investment
Trusts.
"Note" or "Notes" shall have the meaning set forth in the Loan
Agreement.
"Notice of Exercise" shall mean a Notice of Exercise in the form
attached hereto as Exhibit A.
"Option" shall mean the right to receive the Option Securities (or, if
applicable, Option Securities Collateral) pursuant to Section 2.
"Option Securities" shall mean, at any time, a number of Units equal to
the total number of CPJ Shares (adjusted appropriately based on the number
(or fraction) of CPJ Shares into which a Unit is then exchangeable or
redeemable under the Agreement of Limited Partnership), Units and any other
securities or property included within the Option Securities Collateral. If
the Optionor delivers any Substitute Collateral (as defined in the Loan
Agreement) to the Partnership, then Option Securities shall constitute the
same portion of such Substitute Collateral as Option Securities constituted
of the Replaced Collateral (as defined in the Loan Agreement). For purposes
of this definition and Section 2 of this Agreement, a number of Units shall
be deemed to be equivalent to such securities and property included within
the Option Securities Collateral if the excess of the Current Fair Market
Value of such Units over their Exercise Price equals the excess of the
Current Fair Market Value of such securities and property included within
the Option Securities Collateral over such securities' and property's
Initial Fair Market Value.
"Option Securities Collateral" shall mean the number of Units, CPJ
Shares and any other securities or other property included within the
Collateral resulting from multiplying each of the number of such Units, CPJ
Shares and such other securities or other property included within the
Collateral by the Option Securities Percentage.
"Option Securities Percentage" shall mean, as of the date that the
Option is exercised:
(A) a ratio, expressed as a percentage no greater than 100%:
(i) the numerator of which is the weighted average annual yield
(measured with respect to the Adjusted Initial Fair Market Value
of the Collateral (for the period commencing and continuing from
and after the date hereof) or the Pre-Merger Adjusted Initial Fair
Market Value of the Pre-Merger Collateral (for the period
commencing on March 4, 1998 to, and including, the date
immediately prior to
C-4
the date hereof) as applicable during the time period being
measured) of dividends and distributions declared with respect to
the Collateral and the Pre-Merger Collateral, as applicable, for
the period beginning on March 4, 1998 and ending on the last day
of the Fiscal Quarter immediately preceding the closing date with
respect to the Collateral and Pre-Merger Collateral including any
distributions or dividends that reduced the Adjusted Initial Fair
Market Value or Pre-Merger Adjusted Initial Fair Market Value
under the definition thereof);
(ii) the denominator of which is six percent (6%);
(B) multiplied by sixty-six and two-thirds percent (66 2/3%).
For purposes of this definition of Option Securities Percentage, the
weighting of the average annual yields shall be done on the basis of
the relative sizes of the Adjusted Initial Fair Market Values or
Pre-Merger Adjusted Initial Fair Market Values, as applicable, to which
such yields relate and the length of the time periods for which those
Adjusted Fair Market Values or Pre-Merger Adjusted Initial Fair Market
Values, as applicable, were outstanding. For example, if the dividends
declared with respect to the Collateral for the first eighteen months
are $10.50 and the Adjusted Initial Fair Market Value for such period
is $100, and the dividend declared for the subsequent six months is
$1.25 and the Adjusted Initial Fair Market Value for such period is
$50, then the weighted average annual yield for the entire two-year
period would be 6.71 % ((7% x A) plus (5% x B))/(A + B), where A =
18/24 x 100 and B = 6/24 x 50).
"Optionee" shall have the meaning set forth in the preamble hereto.
"Optionor" shall have the meaning set forth in the preamble hereto.
"Original Loan Agreement" shall have the meaning set forth in the
preamble hereto.
"Original Option Agreement" shall have the meaning set forth in the
preamble hereto.
"Original Pledge Agreement" shall have the meaning set forth in the
Pledge Agreement.
"Partnership" means CWS Communities LP, a Delaware limited partnership.
"Payment Date" shall have the meaning set forth in the Loan Agreement.
"Person" shall have the meaning set forth in the Loan Agreement.
"Pre-Merger Adjusted Initial Fair Market Value" means as of any date of
determination a value equal to ten dollars ($10.00) per Pre-Merger Unit and
Pre-Merger Share, reduced by the fair market value of any distributions
(such as distributions resulting from property sales or financings or
capital events) on or prior to such date of determination made with respect
to the Pre-Merger Securities that did not arise from Funds from Operations
(as such term is defined by NAREIT) (provided that if Funds from Operations
is no longer defined by NAREIT, the reduction in this definition shall be
based upon the definition of such similar term that is commonly used by
publicly traded real estate companies to define operating cash flow).
C-5
"Pre-Merger Collateral" means the following Pre-Merger Securities that
were pledged to the Partnership by the Optionor under the Original Pledge
Agreement:
==============================================================================
Period Pledgor Type Number of
Pre-Merger
Securities
----------------------------------- ------------------------------------------
3/16/1999 to, and including, the Trust Pre-Merger Units 150,000
date immediately prior to the
date hereof
----------------------------------- ------------------------------------------
6/14/1999 to, and including, the Trust Pre-Merger Units 150,000
date immediately prior to the
date hereof
----------------------------------- ------------------------------------------
12/15/1999 to, and including, the Trust Pre-Merger Units 150,000
date immediately prior to the
date hereof
----------------------------------- ------------------------------------------
9/26/2000 to, and including, the Trust Pre-Merger Shares 300,000
date immediately prior to the
date hereof
==============================================================================
"Pre-Merger Securities" means collectively, Pre-Merger Units and
Pre-Merger Shares.
"Pre-Merger Shares" means Class A Shares or Class B Shares prior to the
effectiveness of the Merger Agreement.
"Pre-Merger Units" means units of limited partner interest in the
Partnership prior to the effectiveness of the Merger Agreement.
"Pledge Agreement" shall have the meaning set forth in the Loan
Agreement.
"Prentice Hall" shall have the meaning set forth in the Loan Agreement.
"Replaced Collateral" shall have the meaning set forth in the Loan
Agreement.
"Section 4.3 Collateral" shall have the meaning set forth in the Loan
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, all as the same shall be in
effect from time to time.
"Split Collateral" shall have the meaning set forth in the Loan
Agreement.
C-6
"Subscription Agreement" shall have the meaning set forth in the
preamble hereto
"Substitute Collateral" shall have the meaning set forth in the Loan
Agreement.
"Taxes" with respect to any Person means taxes, assessments or other
governmental charges or levies, including, without limitation, all related
interest and penalties imposed upon such Person, its income or any of its
properties, franchises, assets or activities.
"Units" shall have the meaning set forth in the Loan Agreement.
"Withheld Distributions" shall have the meaning set forth in the Pledge
Agreement.
2. Right to Exercise. (a) Subject to and upon compliance with the
conditions of this Agreement, Optionee shall have the right, at its option, at
any time during any Exercise Period to exercise the Option and obtain Option
Securities from the Optionor. From and after January 1, 2003, the Option is
exercisable with respect to (i) Option Securities equivalent to all the
Collateral covered by the Pledge Agreement that pertains to each Note in
connection with any maturity of such Note under the Loan or full or final
payment of such Note under the Loan; (ii) Option Securities Collateral relating
to Split Collateral; (iii) Option Securities Collateral relating to Section 4.3
Collateral; and (iv) the Deferred Option Securities Collateral. Notwithstanding
anything to the contrary contained herein, (1) the Optionee shall be permitted
to exercise the Option with respect to all or a portion of the Option Securities
equivalent to any particular portion of the Collateral with respect to which the
Option is exercisable under the preceding sentence; and (2) if the Notes are
prepaid in full in cash on or before December 31, 2002, (x) Optionee shall have
no right to exercise the Option with respect to such payment; (y) there shall be
no Exercise Period with respect to such payment; and (z) this Agreement shall
terminate and be of no further force and effect upon the later of the expiration
of any Exercise Period with respect to any Split Collateral and the date of the
cash prepayment referred to in this Section 2(a)(2).
(b) Notwithstanding the foregoing, the Optionor may, at its option, no
later than the first day of an Exercise Period, provide the Optionee with a
notice that it desires that the Optionee not exercise the Option with respect to
the Option Securities applicable to such Exercise Period and that the Optionor
desires instead to pay the applicable Equivalent Value to the Optionee. If the
Optionor provides such a notice, the Optionee shall not exercise the Option with
respect to such Option Securities (and the Option shall not thereafter be
exercisable with respect to the Option Securities applicable to such Exercise
Period) if, and only if, the following conditions have been met: (a) the
Optionor has placed cash in an amount equal to the Equivalent Value with an
escrow agent on terms reasonably satisfactory to the Optionor and the Optionee,
to be held to be paid to the Optionee promptly in the event Optionee receives
the opinion described in clause (b), and (b) the Optionee has received prior to
the tenth (10th) day before the last day of the applicable Exercise Period an
opinion of its outside accounting firm or law firm acceptable to it that the
receipt by the Optionee of the cash described in the immediately preceding
clause (a) will not, under the relevant law at such time, result in any adverse
tax consequences (as compared to the tax consequences that would result from the
exercise of the Option), taking into account the types of income expected to be
received by the Optionee during the relevant tax periods and other relevant
factors. The Optionee agrees to work in good faith with the relevant accounting
firm or law firm to receive the opinion described in clause (b) of the preceding
sentence. If the Optionee does not receive such opinion, then the Option will
continue to be exercisable with respect to the applicable Option Securities
during the applicable Exercise Period. For purposes of this Agreement, there
shall be deemed to be adverse tax consequences only if (x) income received by
the Optionee as a result of receiving the payment of Equivalent Value as
contemplated by this subparagraph (b) would cause the Optionee to fail to
qualify as a real estate investment trust for federal income tax purposes, or
(y) Federal income tax rules require a
C-7
dividend to be paid as a result of receiving the payment of Equivalent Value as
contemplated in this subparagraph (b) and such dividend would not be required to
be paid if the Option were exercised.
3. Notice of Exercise. To exercise the Option, Optionee shall deliver to
the Optionor in accordance with Section 12(d) below a Notice of Exercise duly
executed by Optionee. Unless otherwise requested by Optionee, the Option shall
be deemed to have been exercised and Optionee shall be deemed to have become the
holder of record of the Option Securities for all purposes, as of the close of
business on the date the Notice of Exercise, is received by the Optionor.
4. Closing. Except as otherwise contemplated by Section 4 of the Loan
Agreement, each closing ("Closing") of a purchase of Option Securities shall
occur within five (5) days after delivery of the Notice of Exercise and be held
at Optionee's offices located at c/o Falcon Farms, 0000 000xx Xxxxxx Xxxxx, Xxxx
Xxxxx, Xxxxxxxx 00000, or such other office as designated in the Notice of
Exercise. At the Closing, the following deliveries shall be made simultaneously:
(a) Optionor shall deliver to Optionee stock powers duly endorsed in
blank, of the CPJ Shares constituting the Option Securities, and an instrument
that effectively transfers to Optionee the Units and any other securities
constituting the Option Securities;
(b) Optionee shall deliver to Optionor a cash payment equal to the
Exercise Price. For purposes of Section 4.2(b)(ii) of the Loan Agreement, the
Optionee shall be deemed to have delivered the Exercise Price with respect to
any Option Securities at such time as the Lender has made the appropriate credit
therefor under such section.
5. Pledge Agreement. To the extent that the Optionee has the right to
acquire Option Securities Collateral under Section 2 hereof, the Option is equal
in priority (neither subordinate nor superior) to the security interests in the
Option Securities Collateral created pursuant to the Pledge Agreement, it being
understood that the rights of the Optionee and the Lender under the Loan
Agreement with respect to the Option Securities Collateral shall be governed as
set forth in Section 4 of the Loan Agreement.
6. Representations and Warranties of Optionor. The Optionor represents and
warrants to Optionee that as of the date hereof:
(a) Authorization. The execution, delivery and performance by the
Optionor of this Agreement and the other Loan Documents and the granting of the
Option hereunder (i) are within the right, power, authority and capacity of the
Optionor, and (ii) do not and will not require any consent or approval of any
governmental agency or authority or any other Person.
(b) No Conflicts. The execution, delivery and performance by the
Optionor of this Agreement and the Loan Documents do not conflict with (i) any
provision of law, (ii) any agreement binding upon the Optionor, the CPJ Shares
or the Units held by Optionor, or (iii) any court or administrative order or
decree applicable to the Optionor, and do not require, or result in, the
creation or imposition of any Lien on any asset of the Optionor.
(c) Validity and Binding Effect. This Agreement is, and the Loan
Documents when duly executed and delivered will be, legal, valid and binding
obligations of the Optionor, enforceable against the Optionor in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity limiting the
availability of equitable remedies.
C-8
(d) Solvency. Prior to and after giving effect to the Option
hereunder, (i) the Optionor's assets will exceed his liabilities and (ii) the
Optionor will be solvent, will be able to pay his debts as they mature, will own
cash and property with fair saleable value greater than the amount required to
pay its debts and will have capital sufficient to carry on his business as then
constituted.
7. Reservation of Option Securities Collateral. The Optionor will at all
times reserve and keep available, solely for delivery upon the exercise of the
Option (subject to the terms hereof), the Option Securities Collateral. The
Partnership and/or Chateau OP are authorized to act as the Optionor's agent in
holding the Option Securities Collateral for Optionor pursuant to this
Agreement. The Option Securities Collateral shall, when delivered upon such
exercise, (a) not subject Optionee to any liability (other than liabilities of
Chateau OP in accordance with the Agreement of Limited Partnership) other than
the payment of the Exercise Price, and (b) be free from all taxes, liens and
charges with respect to the issue thereof other than any transfer taxes in
respect of any transfer occurring contemporaneously with such delivery. No
partner of Chateau OP or any other Person has or shall have any preemptive
rights to subscribe for the Option Securities Collateral or any portion thereof.
8. Direction to Optionee to Hold Option Securities Collateral. Optionor
hereby irrevocably authorizes and directs the Partnership to so reserve, keep
available and deliver the Option Securities Collateral to the Optionee in
accordance with this Agreement and the Pledge Agreement.
9. Admission of Optionee into the Chateau OP. Upon exercise of the Option
in accordance with the terms hereof, Chateau OP agrees to admit Optionee as a
limited partner of Chateau OP with respect to the Units included in the Option
Securities Collateral (to the extent that the Optionee acquires such Units as
permitted hereunder) and further agrees to take any and all action necessary to
cause such admission.
10. No Impairment. Except as otherwise expressly agreed in writing by
Optionee, none of the Optionor or Chateau OP shall by any action, including,
without limitation, amending, modifying or restating the Agreement of Limited
Partnership or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of this Agreement, but will
at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate to protect the
rights of Optionee against impairment. Without limiting the generality of the
foregoing, the Optionor and Chateau OP will (i) take all such action as may be
necessary or appropriate in order that the Optionor may validly and legally
deliver the Option Securities Collateral as described herein upon the exercise
of the Option, and (ii) obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Optionor and Chateau OP to perform their respective obligations
under this Agreement.
11. Acknowledgment of Validity. Upon the request of Optionee, the Optionor
and Chateau OP will at any time and from time to time through the end of the
Exercise Period acknowledge in writing, in form satisfactory to Optionee, the
continued validity of the Option and the Optionor's and Chateau OP's respective
obligations hereunder.
12. Miscellaneous
(a) Expenses.
(i) The Optionor agrees to pay Optionee upon demand all expenses,
including reasonable fees of attorneys for Optionee and other legal
expenses incurred by Optionee in connection with the successful
enforcement of the Optionor's obligations
C-9
hereunder or under any other Loan Document. The Optionor's foregoing
obligations shall survive any termination of this Agreement.
(ii) The Optionor shall pay all taxes, assessments, charges and
fees, if any, imposed by the United States or any state or political
subdivision thereof, required to be paid in connection with the
transfer and assignment of the Option Securities and/or Option
Securities Collateral, as applicable.
(b) Successors. This Agreement shall be binding upon the Optionor,
Optionee and Chateau OP and their respective successors and assigns, and shall
inure to the benefit of the Optionor, Optionee and Chateau OP and the successors
and assigns of Optionee. Neither the Optionor nor Chateau OP shall assign its
rights or duties hereunder without the consent of each other party.
(c) Amendment. This Agreement may be amended, modified or supplemented
but only in writing signed by all of the parties hereto.
(d) Notices. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in person, (ii) on the date of
acknowledgment of receipt if sent by telex, facsimile or other wire transmission
or (iii) three days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
If to the Optionor, addressed as follows:
c/o [ ]
----------
[ ]
----------
[ ]
----------
[ ]
----------
With a copy to:
O'Melveny & Xxxxx LLP
000 Xxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000)000-0000
If to Chateau OP, addressed as follows:
c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
With copies to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
C-10
Xx. Xxxx X. Xxxxx, Xx.
and:
[ ]
----------
[ ]
----------
[ ]
----------
[ ]
----------
[ ]
----------
If to Optionee, addressed as follows:
c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
With copies to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and
Xx. Xxxx X. Xxxxx, Xx.
and:
[ ]
----------
[ ]
----------
[ ]
----------
[ ]
----------
[ ]
----------
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
(e) Waivers. The failure of a party hereto at any time or times to
require performance of any provision hereof shall in no manner affect its right
at a later time to enforce the same. No waiver by a party of any condition or of
any breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.
(f) Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Severability. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this
C-11
Agreement shall be prohibited, invalidated or unenforceable in any jurisdiction
then such provision shall, as to such jurisdiction, be ineffective to the extent
of such prohibition, invalidity or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(h) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS. All
obligations of the Optionor, Chateau OP and Optionee expressed herein or in any
other Loan Document shall be in addition to and not in limitation of those
provided by applicable law.
(i) Other Instruments. Upon the reasonable request of Optionee, the
Optionor will execute and deliver to Optionee such other documents, releases,
assignments and other instruments as may be required to effectuate completely
the transfer and assignment to Optionee of, and to vest fully in Optionee title
to, the Option Securities and/or Option Securities Collateral, as applicable.
(j) Entire Understanding. Notwithstanding anything to the contrary or
contained in the Subscription Agreement, this Agreement sets forth the entire
agreement and understanding of the parties hereto in respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings relating to the subject matter hereof and is not intended to
confer upon any other person any rights or remedies hereunder. There have been
no representations or statements, oral or written, that have been relied on by
any party hereto, except those expressly set forth in this Agreement.
(k) No Presumption Against Drafter; Interpretation. All of the parties
hereto have jointly participated in the negotiation and drafting of this
Agreement. In the event of an ambiguity or if a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by all of the parties hereto and no presumptions or burdens of proof shall arise
favoring any party by virtue of the authorship of any of the provisions of this
Agreement. The use of the masculine, feminine or neuter gender herein shall not
limit any provision of the Loan Documents. Without limiting the foregoing, the
word "his" shall be deemed to refer also, where possible, to "her" and "its" and
the word "he" shall be deemed to refer also, wherever possible, to "she" and
"it."
(l) Accredited Investor. Optionee represents and warrants to the
Optionor as follows:
(i) Optionee is an "accredited investor" within the meaning of
Rule 501 promulgated under the Securities Act of 1933, as amended;
(ii) Optionee has such experience in business and financial
matters so as to be able to evaluate independently the merits and
risks of entering into this Agreement, and Optionee is able to bear
the economic risk of entering into this Agreement including the
inability of selling or otherwise transferring or disposing of all or
any portion of the Option (or, upon exercise of the Option, the Option
Securities);
(iii) Optionee has been afforded an opportunity to ask questions
and receive answers in response concerning the business and financial
affairs of the Optionor and Chateau OP and the opportunity to obtain
any additional information that Optionee desired with respect to the
Optionor and Chateau OP; and
C-12
(iv) the Option (or, upon exercise of the Option, the Option
Securities) will be held for Optionee's own account and not with a
view to any resale or distribution thereof in any manner that would
violate the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
13. Agent for Service of Process. In connection with any action by Optionee
for enforcement of any provision of this Agreement, Optionor has appointed
Prentice Hall, as its agent for service of process by executing an instrument in
the form attached as Exhibit E to the Loan Agreement. The foregoing appointment
shall be deemed to be coupled with an interest and shall be irrevocable. If
Prentice Hall ceases to exist and has no successors, then Optionor will execute
similar substitute documents with a substitute agent as reasonably requested by
Optionee.
14. Forum Selection and Consent to Jurisdiction. EACH OF THE OPTIONOR,
CHATEAU OP AND THE OPTIONEE AGREES THAT ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT BETWEEN SUCH PARTIES, SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS
LOCATED IN XXXX COUNTY, ILLINOIS, OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS. NOTWITHSTANDING THE FOREGOING, ANY CONTROVERSY OR
CLAIM BETWEEN OR AMONG THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT
SHALL AT THE REQUEST OF ANY PARTY BE DETERMINED BY ARBITRATION. THE ARBITRATION
SHALL BE CONDUCTED IN ACCORDANCE WITH THE COMMERCIAL RULES OF THE AMERICAN
ARBITRATION ASSOCIATION AND SHALL BE CONDUCTED IN CHICAGO, ILLINOIS. THE
ARBITRATOR(S) SHALL BE RETIRED FEDERAL DISTRICT COURT JUDGES. THE ARBITRATOR(S)
SHALL GIVE EFFECT TO STATUTES OF LIMITATION IN DETERMINING ANY CLAIM. ANY
CONTROVERSY CONCERNING WHETHER AN ISSUE IS ARBITRABLE SHALL BE DETERMINED BY THE
ARBITRATOR(S). ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION. JUDGMENT UPON THE ARBITRATION AWARD SHALL BE ENTERED EXCLUSIVELY IN ANY
COURT OF THE STATE OF ILLINOIS LOCATED IN XXXX COUNTY, ILLINOIS, OR IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. THE AWARD
SHALL BE CONCLUSIVE AND BINDING, SUBJECT TO CHALLENGE ONLY ON ONE OR MORE OF THE
FOLLOWING GROUNDS: (I) THE AWARD WAS PROCURED BY CORRUPTION, FRAUD OR OTHER
UNDUE MEANS; (II) THERE WAS CORRUPTION IN ANY OF THE ARBITRATORS; (III) THE
RIGHTS OF THE APPEALING PARTY WERE SUBSTANTIALLY PREJUDICED BY MISCONDUCT OF A
NEUTRAL ARBITRATOR; (IV) THE ARBITRATORS EXCEEDED THEIR POWERS AND THE AWARD
CANNOT BE CORRECTED WITHOUT AFFECTING THE MERITS OF THE DECISION UPON THE
CONTROVERSY SUBMITTED; (V) THE RIGHTS OF THE APPEALING PARTY WERE SUBSTANTIALLY
PREJUDICED BY THE REFUSAL OF THE ARBITRATORS TO POSTPONE ANY HEARING UPON
SUFFICIENT CAUSE BEING SHOWN THEREFOR OR BY THE REFUSAL OF THE ARBITRATORS TO
HEAR EVIDENCE MATERIAL TO THE CONTROVERSY OR BY OTHER CONDUCT OF ANY ARBITRATOR
CONTRARY TO THE ARBITRATION RULES; (VI) ANY OTHER GROUNDS WHICH PERMIT APPEAL
UNDER THE ARBITRATION RULES; OR (VII) BASED UPON THE ARBITRATOR'S INCORRECT
APPLICATION OF ILLINOIS STATUTORY OR COMMON LAW. THE VALIDITY AND ENFORCEABILITY
OF AN ARBITRATION DECISION IS TO BE DETERMINED EXCLUSIVELY BY THE ILLINOIS
COURTS PURSUANT TO THE PROVISIONS HEREOF. THE INSTITUTION AND MAINTENANCE OF AN
ACTION FOR JUDICIAL RELIEF OR PURSUIT OF A PROVISIONAL OR ANCILLARY REMEDY SHALL
NOT CONSTITUTE A WAIVER OF THE
C-13
RIGHT OF ANY PARTY, INCLUDING THE PLAINTIFF, TO SUBMIT THE CONTROVERSY OR CLAIM
TO ARBITRATION IF ANY OTHER PARTY CONTESTS SUCH ACTION FOR JUDICIAL RELIEF. EACH
OF THE OPTIONOR, PARTNERSHIP AND OPTIONEE HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS IN CONNECTION
WITH ANY LITIGATION HEREUNDER, INCLUDING THE ENTERING OF ANY JUDGMENT UPON AN
ARBITRATION AWARD. EACH OF THE OPTIONOR, PARTNERSHIP AND OPTIONEE HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
15. Joint and Several Liability. If the Optionor is comprised of more than
one Person, such Persons shall be jointly and severally liable for all
obligations of Optionor hereunder; provided, however, that the heirs of [ ]
shall not be jointly and severally liable hereunder to the extent they succeed
to the rights and obligations hereunder upon the death of [ ].
C-14
IN WITNESS WHEREOF, this Amended and Restated Option Agreement has been
duly executed and delivered as of the day and year first written above.
Optionor:
------------------------
[ ]
-----------
[ ]
----------------
By:
-----------------------------------
[ ], Trustee
-----------
C-15
Optionee:
WS OPTION CORP.
By:
-------------
Name:
Title:
Partnership:
CWS COMMUNITIES LP,
By: Second Merger Sub, LLC, its general partner
By:
--------------
Name:
Title:
Chateau OP:
(As to Sections 7, 8, 9, 10, 11, 12, 13 and 14)
CP LIMITED PARTNERSHIP
By: Chateau Comminutes, Inc.,
its general partner
By:
--------------
Name:
Title:
By: ROC Communities, Inc.,
its general partner
By:
--------------
Name:
Title:
C-16
EXHIBIT A
TO OPTION AGREEMENT
Form of Notice of Exercise
The undersigned hereby irrevocably exercises the Option to receive the
Option Securities referred to in the Amended and Restated Option Agreement
described below, dated as of August 2, 2001 among [ ] and [ ], and the
undersigned, at the price and on the terms and conditions specified in the
Amended and Restated Option Agreement, to be issued in the name of the
undersigned.
Dated:
----------,------
WS OPTION CORP.
By:
-------------------
Name:
Title:
Description of Option Securities:
C-17
EXHIBIT E
FORM OF RENEWABLE APPOINTMENT OF AGENT AGREEMENT
RENEWABLE APPOINTMENT OF AGENT AGREEMENT
This Renewable Appointment of Agent Agreement ("Appointment") shall be effective
as of the Effective Date (which is defined along with other capitalized terms of
this Appointment in Appendix A which is attached hereto and made a part hereof
by this reference).
For one dollar and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. The Appointing Party hereby appoints Corporation Services Company
("CSC") as its agent for receipt of legal process in connection with any legal
action or proceeding under the Agreement (s) Covered Herein in the court of the
state in which the Corporation Service Company Address is located and in the
Federal Courts of the United States whose jurisdiction covers such location. It
is agreed that the Requestor may serve notice and service of process at CSC's
address designated in Appendix A, Section 1. By its signature below and upon
receipt of the Initial Annual Fee, CSC accepts such appointment.
2. CSC shall follow commercially reasonable procedures in receiving and
forwarding legal process to the Appointing Party. In the event legal process is
returned to CSC as undeliverable, CSC will return the legal process to the
sender. The Appointing Party and Requestors shall immediately inform CSC in
writing of a change in their address.
3. CSC SHALL NOT BE RESPONSIBLE FOR THE FAILURE OF THE APPOINTING PARTY TO
ACCEPT DELIVERY OF LEGAL PROCESS NOR FOR THE FAILURE OF THE APPOINTING PARTY OR
ANY REQUESTOR TO PROVIDE WRITTEN NOTICE OF A CHANGE OF ADDRESS. THE APPOINTING
PARTY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS CSC FROM AND AGAINST ANY AND
ALL CLAIMS, DAMAGES, LIABILITIES AND CAUSES OF ACTION (INCLUDING REASONABLE
ATTORNEYS' FEES AND COSTS) IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST CSC,
DIRECTLY OR INDIRECTLY, RELATING TO OR ARISING OUT OF THIS APPOINTMENT;
PROVIDED, HOWEVER, THAT THIS INDEMNIFICATION SHALL NOT EXTEND TO WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE OF CSC. THIS PARAGRAPH WILL SURVIVE THE
TERMINATION OF THIS APPOINTMENT.
4. The Billing Party shall pay CSC the Initial Annual Fee promptly upon the
execution of this Agreement. On each anniversary date of the Effective Date or
at the Appointing Party's renewal billing date, the Billing Party shall pay CSC
the Annual Fee in full to renew the Appointment for the upcoming twelve month
period (or through the Termination Date if such should come sooner). This
Agreement shall automatically terminate if the Initial Annual Fee or any Annual
Fee is not received within 30 days of CSC's issuance of an invoice but shall
otherwise be irrevocable. Except for failure to make timely payment of the
Annual Fees, each of Appointing Party and CSC agrees that it shall not terminate
this Agreement without the prior written consent of the Requestor. No fees paid
under this Agreement are refundable, in whole or in part, for any reason.
E-1
5. This Appointment may be signed in counterparts each of which shall
constitute an original and all of which together shall constitute an original.
This Appointment shall be governed by and construed in accordance with the laws
of the State of Delaware without reference to its principles of conflict of
laws. Any action or other legal proceeding against CSC arising under or
pertaining to this Agreement may be brought only in the courts of the State of
Delaware.
---------------------
[ ]
-----------
[ ]
-----------
By:
----------------------
[ ], Trustee
Corporation Service Company
------------------------
Name:
Title:
E-2
Renewable Appointment of Agent Agreement
Appendix A
Page 1
1. "The Xxxxxxxx-Xxxx Corporation System, Inc." (as may change from time to time
by written notice to the Appointing Party and Requestors):
00 Xxxxx XxXxxxx
Xxxxxxx, XX 00000
2. Agreement(s) Covered Herein:
All documents are dated as of August 2, 2001
a) Third Amended and Restated Investment Loan Agreement between [_________]
and CWS Communities LP (the "Loan Agreement");
b) Amended and Restated Investment Pledge Agreement among [______]
[__________________], and CWS Communities LP;
c) Amended and Restated Option Agreement among [__________], [_____________],
and WS Option Corp; and
d) All other Loan Documents (as such term is defined in the Loan Agreement).
3. Appointing Parties:
1. [_______________]
[_______________]
[_______________]
2. [__________________________]
[_______________]
[_______________]
[_______________]
4. Billing Party:
CWS Communities LP
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx
E-3
5. Requestors:
1. CWS Communities LP
c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx
With a copy to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx
2. WS Option Corp.
c/o Falcon Farms
0000 000xx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx
With a copy to:
c/o Chateau Communities, Inc.
0000 X. Xxxxxxxx Xxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. XxXxxxxx and Xx. Xxxx X. Xxxxx
E-4
EXHIBIT F
SECTION 4.1 AND 4.3 EXAMPLES
Example 1
Assume the following facts:
1. Amount loaned on 1st day of Year 1 = $100,000.
2. Initial Fair Market Value of Collateral = $100,000.
3. On 1st day of calendar year 2003, Current Fair Market Value of Collateral =
$150,000.
4. On 1st day of calendar year 2003, Borrower designates Split Collateral
under Section 4.1(a) having an Initial Fair Market Value of $20,000 and a
Current Fair Market Value of $30,000.
5. Option Securities Percentage = 50%.
6. Optionee exercises Option with respect to Option Securities equivalent to
the Option Securities Collateral included within Split Collateral, but
Optionor does not deliver any Option Securities (resulting in Optionee
exercising its rights under Section 2(c) of the Option Agreement).
Under the above facts, the loan would be repaid in part from two sources:
1. Exercise Price from Optionee $10,000
2 Current Fair Market Value of
Loan Reduction Collateral $10,000
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Total Loan prepayments $20,000
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The Borrower would receive Return Split Collateral with a current Fair
Market Value of $5,000.
Immediately, after the application of all Split Collateral, the loan
balance would be $80,000, the Current Fair Market Value of the Collateral would
be $120,000, and the Loan-to-Value Ratio would be 2/3, the same as it was
immediately prior to the application of the Split Collateral.
Example 2
Assume the following facts:
1. Amount loaned on first day of year 1 = $100,000.
2. Initial Fair Market Value of Collateral = $100,000.
3. On first day of calendar year 2003, Current Fair Market Value of Collateral
= $80,000.
4. On first day of calendar year 2003, Borrower designates Split Collateral
under Section 4.2(a) having an Initial Fair Market Value of $20,000 and a
Current Fair Market Value of $16,000.
5. Option Securities Percentage = 50%.
6. Optionee does not elect to exercise Option with respect to the Split
Collateral.
Under these facts, all of the Split Collateral would be Loan Reduction
Collateral; the Loan-to-Value Ratio prior to the application of Split Collateral
is 1.25/1 and the Loan-to-Value Ratio after the application of Split Collateral
is 1.3125/1.
Example 3
Assume the following facts:
F-1
1. Amount loaned on first day of year 1 = $100,000.
2. Initial Fair Market Value of Collateral = $100,000.
3. On first day of calendar year 2003, the Current Fair Market Value of the
Collateral is $150,000.
4. On first day of calendar year 2003, Borrower prepays $20,000 of the amount
outstanding under the Loan with cash.
5. Option Securities Percentage = 50%.
5. Optionee elects to exercise the Option with respect to the Option
Securities equivalent to the Option Securities Collateral included within
the Section 4.3 Collateral, but Optionor does not deliver any Option
Securities (resulting in Optionee exercising its rights under Section 2(c)
of the Option Agreement).
Under these facts, the Borrower would receive Section 4.3 Collateral with
an Initial Fair Market Value of $10,000 and a Current Fair Market Value of
$15,000, and the Borrower would receive cash from the Optionee of $10,000
representing the payment of the Exercise Price of the Option Securities included
within the Section 4.3 Collateral. Optionee would receive Option Securities with
an Initial Fair Market Value of $10,000 and a Current Fair Market Value of
$15,000 in exchange for the payment of the Exercise Price.
F-2
