Exhibit 10.1

 

RESTRUCTURING AGREEMENT,

 

dated as of August 31, 2006,

 

among

 

Capri Realty Holdings, LLC,

 

Capri Realty Capital, LLC,

 

Capri Capital Advisors, LLC,

 

CPC Realty Advisors, Inc.,

 

Quintin E. Primo III,

 

Daryl J. Carter,

 

Brian C. Fargo

 

and

 

CM Investor LLC

 

 

 

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RESTRUCTURING AGREEMENT

THIS RESTRUCTURING AGREEMENT (this “Agreement”) is made as of as of August 31,
2006, by and among (i) Capri Realty Holdings, LLC, a Delaware limited liability
company (“CRH”), Capri Realty Capital, LLC, a Delaware limited liability company
(“CRC”), Capri Capital Advisors, LLC, a Delaware limited liability company
(“CCA”), and CPC Realty Advisors, Inc., an Illinois corporation (“CPC” and,
together with CRH, CRC and CCA the “Capri Entities” and each a “Capri Entity”),
(ii) Quintin E. Primo III (“Primo”), Brian C. Fargo (“Fargo”), Daryl J. Carter
(“Carter” and, together with Primo and Fargo, the “Capri Principals” and each a
“Capri Principal”; the Capri Principals and the Capri Entities collectively, the
“Capri Parties” and each a “Capri Party”) and (iii) CM Investor LLC, a Delaware
limited liability company (“CMI”).

WHEREAS, pursuant to that certain Investment Agreement dated as of January 3,
2005 (the “Investment Agreement”) made by and among the Capri Parties (other
than CCA and CPC) and CMI, the Capri Parties and CMI made agreements set forth
therein providing for, inter alia, (a) the making of a loan to CRH evidenced by
that certain promissory note dated January 3, 2005 in the original principal
amount of $20,000,000 (the “CRH Note”), (b) the acquisition by CMI of Capri
Capital Limited Partnership, a Delaware limited partnership (“CCLP”), and the
mortgage banking business thereof, (c) certain agreements set forth therein
regarding CCA, including the grant to CMI of an option to acquire a 49%
membership interest in CCA (the “CMI 49% Option”), (d) other put and call
options in respect of the membership interests in CCA, and (e) certain other
agreements relating to CCA as set forth in the Investment Agreement;

WHEREAS, CRC owns a 51% membership interest in CCA and CRH owns the remaining
49% membership interest in CCA, which is subject to the CMI 49% Option;

WHEREAS, CRC owns a 99.9% membership interest in CRH, and CPC owns the remaining
0.1% membership interest in CRH;

WHEREAS, Primo, Carter and Fargo own 45%, 45% and 10%, respectively, of (a) the
membership interests in CRC, and (b) the issued and outstanding capital stock of
CPC; and

WHEREAS, the parties hereto desire to engage in a transaction pursuant to which,
among other things, (a) CCA will pay in full the CRH Note, (b) CCA will pay to
CMI a fee and assign and transfer to CMI (or its designee) the CUC Assets (as
defined below) in exchange for the termination of the Investment Agreement
(including, without limitation, the CMI 49% Option and the Investment Agreement
Documents (as defined below) but excluding the Excluded Provisions (as defined
below)), (c) Carter and Fargo shall transfer and assign all of their shares in
CPC to Primo, (d) Primo shall purchase all of Carter’s membership interests in
CSI II (as defined below), and (e) CRC and/or CCA will redeem and/or purchase
all of the interests of Carter and Fargo in CRC, all on the terms and subject to
the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

 

 

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I  

 

CERTAIN DEFINITIONS

 

A

Certain Definitions.

As used in this Agreement, the following terms shall have the meanings set forth
or referred to below:

“Advisory Clients” means all Persons with whom CCA or any of its Subsidiaries
from time to time have any agreement, arrangement or understanding with respect
to the provision of investment advisory services, whether arranged as a
commingled fund, separate account or otherwise.

“Affiliate” with respect to a Person, means any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person or the parents, spouse, siblings and lineal descendants of such Person,
and their respective spouses so long as they remain spouses, and any trust for
the benefit of such Person or any of the foregoing and any beneficiaries of such
Person. The term “control” as used herein (including the terms “controlled by,”
and “under common control with”) means the possession, direct or indirect, of
the power (i) to vote more than fifty percent (50%) of the outstanding voting
securities of such Person, or (ii) to otherwise direct management policies of
such Person by contract or otherwise.

“Agreement” shall have the meaning set forth in the Preamble.

“Assignment of CUC Assets” means the assignment by CCA to CUCA of the CUC Assets
and the assumption by CUCA of (and release of CCA and its Affiliates from)
co-investment obligations in respect of CUC, in the form of Exhibit A.

“Business Day” means any day excluding Saturday, Sunday and any day which in
Chicago, Illinois is a legal holiday or a day on which banking institutions are
authorized or required by law or other government actions to close.

“CAF I” means Capital Associates Institutional Fund, L.P., a Delaware limited
partnership.

“CAF I Agreement” shall have the meaning set forth in Section 4.1(c).

“CAF II” means Capital Associates Apartment Fund, L.P., a Delaware limited
partnership.

“CAF II Agreement” shall have the meaning set forth in Section 4.1(c).

“CAF III” means Capri/Capital Advisors Apartment Fund III, L.P., a Delaware
limited partnership.

“CAF III Amendment” shall have the meaning set forth in Section 3.2(a).

 

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“CAF III Interest” shall have the meaning set forth in Section 2.4(h).

“CalPERS” means the California Public Employees’ Retirement System.

“Capri Entity” or “Capri Entities” shall have the meaning set forth in the
Preamble.

“Capri Fund(s)” means all limited liability companies, limited partnerships and
other legal entities formed or managed by CCA and its Subsidiaries (or any of
them) pursuant to Investment Advisory Contracts, including all commingled funds
of CCA and its Subsidiaries. The term “Capri Fund(s)” does not include any
employees’ incentive pool, plan, group or entity through which any of the Capri
Principals or members of management of CCA and its Subsidiaries co-invest in
Capri Funds or Separate Accounts, all of which are listed on Schedule 1.1 – A to
the Investment Agreement.

“Capri Party” or “Capri Parties” shall have the meaning set forth in the
Preamble.

“Capri Principal” or “Capri Principals” shall have the meaning set forth in the
Preamble.

“Carter” shall have the meaning set forth in the Preamble.

“Carter CAF Amount” shall have the meaning set forth in Section 4.1(c).

“Carter CAF III Assignment” shall have the meaning set forth in Section 3.2(a).

“Carter CAF Right” shall have the meaning set forth in Section 4.1(c).

“Carter Cash” shall have the meaning set forth in Section 2.6(a).

“Carter CPC Stock” shall have the meaning set forth in Section 2.1.

“Carter CPC Stock Payment” shall have the meaning set forth in Section 2.1.

“Carter CSI II Assignment” shall have the meaning set forth in Section 3.6(a).

“Carter Guaranty” means the Guaranty to be executed by Primo in favor of the
Carter Trust guaranteeing CCA’s obligations pursuant to the Carter Note, in the
form of Exhibit B.

“Carter LACERA Amount” shall have the meaning set forth in Section 4.1(b).

“Carter LACERA Right” shall have the meaning set forth in Section 4.1(b).

“Carter Note” shall have the meaning set forth in Section 2.4(b).

“Carter Promotes Guaranty” means the Promotes Guaranty to be executed by Primo
in favor of the Carter Trust guaranteeing CCA’s obligations pursuant to Section
4.1, in the form of Exhibit Z.

“Carter Resignation” shall have the meaning set forth in Section 3.6(c).

 

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“Carter Security Agreement” means the Security Agreement to be entered into by
and between CCA, as debtor, and the Carter Trust, as secured party, pursuant to
which CCA will grant to the Carter Trust a security interest in all of CCA’s
assets as security for the Carter Note, in the form of Exhibit C.

“Carter SMUs” means 278,203 of the SMUs.

“Carter TRS Payment” shall have the meaning set forth in Section 4.1(f).

“Carter Trust” means Daryl J. Carter, as Co-Trustee of the Daryl and Renee
Carter Trust u/d/t dated May 29, 2001.

“CCA” shall have the meaning set forth in the Preamble.

“CCA/CRC Assignment” shall have the meaning set forth in Section 3.3(a).

“CCA/CRH Assignment” shall have the meaning set forth in Section 3.4.

“CCA Financee” shall have the meaning set forth in Section 4.9(a).

“CCA Indemnified Persons” shall have the meaning set forth in Section 4.8.

“CCA Measurement Period Revenues” shall have the meaning set forth in
Section 4.1(f).

“CCLP” shall have the meaning set forth in the Recitals.

“CharterMac” means Charter Municipal Mortgage Acceptance Company, a Delaware
statutory trust.

“Closing” shall have the meaning set forth in Section 3.1.

“Closing Date” shall have the meaning set forth in Section 3.1.

“CMCC” shall have the meaning set forth in Section 4.9(a).

“CMI” shall have the meaning set forth in the Preamble.

“CMI Cash” shall have the meaning set forth in Section 2.9.

“CMI 49% Option” shall have the meaning set forth in the Recitals.

“Code ” shall mean the Internal Revenue Code of 1986, as amended.

“CPC” shall have the meaning set forth in the Preamble.

“CRC” shall have the meaning set forth in the Preamble.

“CRC/Carter Assignment” shall have the meaning set forth in Section 3.6(e).

 

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“CRC/Fargo Assignment” shall have the meaning set forth in Section 3.7(e).

“CRH” shall have the meaning set forth in the Preamble.

“CRH/CRC Assignment” shall have the meaning set forth in Section 3.3(b).

“CRH Note” shall have the meaning set forth in the Recitals.

“CSI II” shall mean Capri Select Income II Key Employee Incentive Plan, LLC, an
Illinois limited liability company.

“CSI II Membership Interest” shall have the meaning set forth in Section 2.3.

“CSI II Payment” shall have the meaning set forth in Section 2.3.

“CUC” means Capri Urban Capital I, LLC, a California limited liability company.

“CUCA” means CharterMac Urban Capital Advisor, LLC, a Delaware limited liability
company.

“CUC Assets” means all of CCA’s rights and interest in CUC, including without
limitation the CUC Business, all membership interests held by CCA, by the direct
or indirect members of CCA and by the Capri Parties and their respective
Affiliates in CUC, CCA’s management rights in CUC, all rights of CCA, direct or
indirect members of CCA and the Capri Parties and their respective Affiliates to
receive Promotes relating to CUC, and any other distributions or fees from CUC,
and all rights of CCA, direct or indirect members of CCA and the Capri Parties
or their respective Affiliates under any agreements with CalPERS and CUC, in
each case other than the CUC Interest.

“CUC Assets Disclosure Letter” means the Disclosure Letter delivered to CMI and
Carter concurrently with the execution of this Agreement, executed by CCA and
setting forth exceptions to the representations and warranties set forth in
Article IV of the Investment Agreement, to the extent relating to CUC Assets or
the CUC Interests.

“CUC Business” means the partnership and investment advisory relationship of CCA
with CalPERS maintained through CUC.

“CUC/Carter Assignment” shall have the meaning set forth in Section 3.2(a).

“CUC Interest” shall have the meaning set forth in Section 2.4(e).

“Damages” shall have the meaning set forth in Section 10.2.

“Excluded Provisions” means the provisions of the Investment Agreement set forth
on the attached Schedule I.

“Fargo” shall have the meaning set forth in the Preamble.

“Fargo CAF Amount” shall have the meaning set forth in Section 4.1(e).

 

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“Fargo CAF III Assignment” shall have the meaning set forth in Section 3.2(b).

“Fargo CAF Right” shall have the meaning set forth in Section 4.1(e).

“Fargo Cash” shall have the meaning set forth in Section 2.8(a).

“Fargo CPC Stock” shall have the meaning set forth in Section 2.1.

“Fargo CPC Stock Payment” shall have the meaning set forth in Section 2.1.

“Fargo LACERA Amount” shall have the meaning set forth in Section 4.1(d).

“Fargo LACERA Right” shall have the meaning set forth in Section 4.1(d).

“Fargo Note” shall have the meaning set forth in Section 2.4(c).

“Fargo Security Agreement” means the Security Agreement to be entered into by
and between CCA, as debtor, and Fargo, as secured party, pursuant to which CCA
will grant to Fargo a security interest in all of CCA’s assets as security for
the Fargo Note, in the form of Exhibit U.

“Fargo SMUs” means 26,495 of the SMUs.

“Fund” shall have the meaning set forth in Section 4.9(a).

“GAAP” shall mean generally accepted United States accounting principles,
applied consistently with the past practices of CCA.

“Investment Advisory Contracts” means all of the investment advisory agreements
to which CCA or any of its Subsidiaries from time to time are party and any
other arrangements or understandings relating to CCA’s or any of its
Subsidiaries’ rendering of investment advisory services or advice to any Person,
including without limitation, limited liability company operating agreements,
limited partnership agreements and agreements relating to commingled funds or
separate accounts held for clients.

“Investment Agreement” shall have the meaning set forth in the Recitals.

“Investment Agreement Documents” means the Investment Agreement and all of the
other instruments, agreements and documents executed and delivered in connection
therewith (including those referred to in Article III of the Investment
Agreement and specifically including the Notes, the Guaranties and the Security
Agreements (as each of those terms is defined in the Investment Agreement)).

“Investor” means Investment Holdings IDS, LLC, a Delaware limited liability
company.

“Joint Consent” shall have the meaning set forth in Section 3.5(c).

“LACERA” means the Los Angeles County Employees Retirement Association.

 

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“LACERA Agreement” means that certain Master Real Estate Investment Advisor
Agreement, dated as of December 16, 2002, between LACERA and CCA.

“LACERA Properties” shall have the meaning set forth in Section 4.1(b).

“LaSalle” means LaSalle Bank National Association, a national banking
association.

“Lien” means any mortgage, deed of trust, lien, security interest, pledge,
charge or encumbrance of any kind in respect of any Property, including the
interests of a vendor or lessor under any conditional sale, capital lease or
other title retention arrangement.

“Material Adverse Effect” means, in respect of any Person, any fact, event,
change, circumstance or effect that is, or is reasonably likely to be,
materially adverse to the assets, liabilities, business or prospects of such
Person.

“Measurement Date” shall have the meaning set forth in Section 4.1(f).

“Measurement Period” shall have the meaning set forth in Section 4.1(f).

“Mutual Release” means the Mutual Release to be entered into by and among CMI
and the Capri Parties, in the form of Exhibit E.

“Organizational Documents” means (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the limited liability company
agreement or operating agreement and any certificate of formation or articles of
formation of a limited liability company; (c) the partnership agreement and any
statement of partnership of a general partnership; (d) the limited partnership
agreement and the certificate of limited partnership of a limited partnership;
(e) any charter or similar document adopted or filed in connection with the
creation, formation, or organization of a Person; and (f) any amendment to any
of the foregoing.

“Payroll Services Agreement” means that certain Payroll Services Agreement dated
as of February 1, 2005 by and between CharterMac Capital LLC, a Delaware limited
liability company (formerly known as Related Capital Company, LLC), and CCA.

“Person” means an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an association, an unincorporated
organization or other entity and a government or any department, agency or
instrumentality thereof.

“Primo” shall have the meaning set forth in the Preamble.

“Primo CAF III Assignment” means the Assignment of CAF III Right in the form
attached hereto as Exhibit Y.

“Primo Distributions” shall have the meaning set forth in Section 4.1(f).

“Primo Note” shall have the meaning set forth in Section 2.4(d).

“Proposal Deadline” shall have the meaning set forth in Section 4.9(b).

 

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“Pro Rata Share” means 45% with respect to Primo, 45% with respect to Carter and
10% with respect to Fargo.

“Promotes” means all rights of the Capri Parties (or any of them) and members of
management of the Capri Entities to receive from or in respect of Capri Funds or
Separate Accounts (i) distributions in excess of pro rata distributions on
capital contributions where Capri Parties and the Capri Principals (or any of
them) and members of management of the Capri Parties and CCA and its
Subsidiaries are required or authorized to co-invest in Capri Funds or Separate
Accounts and (ii) contingent compensation consisting of payment of a share of
capital proceeds or net income or cash flow payable after a stated target is
reached where there is no co-investment obligation.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Proposed Financing” shall have the meaning set forth in Section 4.9(a).

“Regulatory Body” means any domestic or foreign national, state or municipal or
other local government or multinational body (including, but not limited to, the
European Economic Community), any subdivision, agency, commission or authority
thereof, or any quasi-governmental, self-regulatory or private body exercising
any regulatory or taxing authority thereunder including but not limited to the
Securities and Exchange Commission.

“Request For Proposal” shall have the meaning set forth in Section 4.9(a).

“Separate Account(s)” means all investments made by CCA and its Subsidiaries (or
any of them) on behalf of individual Advisory Clients pursuant to Investment
Advisory Contracts.

“SMUs” means the 304,698 Special Membership Units in CMI currently owned by CRC.

“Subordination Agreement” means the Subordination Agreement to be entered into
by and among Primo, Carter, Fargo, CCA and CCA’s lenders, in the form of Exhibit
D.

“Subsidiary” of a Person means any general or limited partnership, joint
venture, limited liability company, corporation or other entity of which such
Person owns, whether existing or hereafter acquired, directly or indirectly
through one or more intermediaries, more than fifty percent (50%) of the
outstanding securities or ownership interests of any class or classes ordinarily
entitled, in the absence of contingencies, to elect a majority of the corporate
directors or managers (or persons performing similar functions). “Subsidiaries”
shall have the plural meaning of the preceding. Notwithstanding the foregoing,
Capri Funds and Separate Accounts shall not be deemed to be Subsidiaries of CCA
or its Subsidiaries.

“Termination of Investment Agreement” shall have the meaning set forth in
Section 2.9.

“Transaction Documents” means this Agreement and all other instruments,
agreements and documents executed and delivered in connection therewith
(including those referred to in Article III).

 

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“Transactions” shall have the meaning set forth in the Article II.

“Transfer” means to, directly or indirectly, offer to sell, sell, contract to
sell, assign, pledge, grant any option to purchase, make any short sale,
exchange, encumber or otherwise dispose of.

“Trilogy Agreements” shall mean that certain Acquisition Agreement, dated as of
February 28, 2006, by and between CCA and CMI, and all other instruments,
agreements and documents executed and delivered in connection therewith.

“TRS” shall mean the Teachers’ Retirement System of the State of Illinois.

“TRS Agreement” shall mean that certain Investment Management Agreement, dated
as of March 28, 2003, by and between CCA and TRS.

“TRS Promote Amount” shall have the meaning set forth in Section 4.1(f).

“TRS Statement” shall have the meaning set forth in Section 4.1(f).

II      

TRANSACTION STRUCTURE

The parties agree that, at the Closing, the following transactions
(collectively, the “Transactions”) shall occur in the following order:

A                 CPC Stock Purchase. Primo shall purchase all of the capital
stock of CPC owned by Carter (the “Carter CPC Stock”) for $7,350.00 (the “Carter
CPC Stock Payment”) in cash and all of the capital stock of CPC owned by Fargo
(the “Fargo CPC Stock”) for $1,633.33 (the “Fargo CPC Stock Payment”) in cash.

B                 Payment of CRH Note. CCA shall pay in full to CMI all amounts
owing to CMI pursuant to the CRH Note as of the Closing Date, by wire transfer
of immediately available funds to the account designated in Schedule II.

C                 Purchase of Carter CSI II Interest. Primo shall purchase all
of Carter’s membership interests in CSI II (the “CSI II Membership Interest”)
for an amount, in cash, equal to $387,360 (the “CSI II Payment”).

D                 Partial Redemption of CRC and CRH. CCA shall redeem 60% of
CRC’s and CRH’s membership interests in CCA in exchange for the following:

Cash in an amount equal to $9.7 million;

A promissory note, in the form attached hereto as Exhibit G (the “Carter Note”)
from CCA payable to the Carter Trust in the amount of $5,000,000;

A promissory note, in the form attached hereto as Exhibit S (the “Fargo Note”)
from CCA payable to Fargo in the amount of $1,600,000;

 

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A promissory note, in the form attached hereto as Exhibit T (the “Primo Note”)
from CCA payable to Primo in the amount of $1,900,000 (which shall not be
distributed to CRC and/or CRH until immediately after the redemption of Carter
and Fargo described in Sections 2.6 and 2.8, respectively);

All of CCA’s rights (the “CUC Interest”) to receive capital, preferred returns
and promotes in CUC with respect to any investments made by CCA (other than with
funds provided by CMI for such investments pursuant to Section 6.7 of the
Investment Agreement) in CUC prior to the Closing Date;

The Carter LACERA Right;

The Carter CAF Right;

The portions of CCA’s right, title and interest in CAF III (the “CAF III
Interest”), as described more fully in the Carter CAF III Assignment, the Fargo
CAF III Assignment and the Primo CAF III Assignment;

The Fargo LACERA Right; and

The Fargo CAF Right.

.              Subject to Section 2.5 below, the foregoing items shall be
distributed to CRC and CRH in proportion to their ownership interests in CCA
(taking into account the sale by Carter and Fargo of their stock in CPC to
Primo). For the convenience of the parties, CRH and CRC hereby direct that title
to the items described be vested in the name of CRC, the Carter Trust, Primo and
Fargo, as applicable.

E                 Redemption of CRC. CRH shall redeem 60% of CRC's membership
interests in CRH in exchange for CRH's proportionate share of the items
distributed to CRH pursuant to Section 2.4 above.

F                 Redemption and Acquisition of Carter Interests. CRC and/or CCA
shall redeem and/or purchase all of Carter’s membership interests in CRC in
exchange for the following:

Cash (the “Carter Cash”) in an amount equal to $6,946,454.00;

The Carter Note;

The Carter SMUs;

The CUC Interest;

The Carter LACERA Right;

The Carter CAF Right; and

The portion of the CAF III Interest described in the Carter CAF III Assignment.

 

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Carter hereby directs title to each of the foregoing items to be vested in the
name of the Carter Trust. Notwithstanding the foregoing, such items shall be
deemed to have been paid or distributed to Carter and, in turn, assigned by
Carter to the Carter Trust.

G                 Carter Resignation. Carter will resign as an officer and
manager of all of the Capri Entities and from all committees (including any
investment committees) thereof immediately prior to the Closing.

H                 Redemption of Fargo. CRC shall redeem all of Fargo’s
membership interests in CRC in exchange for the following:

Cash (the “Fargo Cash”) in an amount equal to $1,740,034.67;

The Fargo Note;

The Fargo SMUs;

The Fargo LACERA Right;

The Fargo CAF Right; and

The portion of the CAF III Interest described in the Fargo CAF III Assignment.

I                 Payment of Termination Fee. In exchange for CMI agreeing to
terminate the Investment Agreement (other than the Excluded Provisions) and the
Investment Agreement Documents pursuant to the Termination of Investment
Agreement in the form of Exhibit F (the “Termination of Investment Agreement”),
CCA shall (a) pay to CMI $6,000,000 in cash (the “CMI Cash”), and (b) transfer
to CMI the CUC Assets.

III    

CLOSING

A                 Closing. The closing of the Transactions (the “Closing”) shall
take place at 10:00 A.M., Chicago time, on August 31, 2006 (the “Closing Date”),
at the offices of Sonnenschein Nath & Rosenthal LLP, Chicago, Illinois or at
such other time or place as the parties hereto shall agree in writing. The
Closing shall be deemed effective at the close of business on the date of the
Closing.

B              CCA’s Deliveries. At the Closing, simultaneous with the
deliveries of the other parties hereunder, CCA shall deliver all of the
following documents, certificates and instruments:

To Carter:

i            the Carter Cash (increased by the Carter CPC Payment and the Carter
CSI-II Payment, which Primo hereby directs CCA to pay at Primo’s direction), by
wire transfer of immediately available funds to the account designated in
Schedule III;

 

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ii

the Carter Note, duly executed by CCA;

 

iii

the Carter Security Agreement, duly executed by CCA;

iv             the Subordination Agreement, duly executed by CCA and CCA’s
lenders;

v              an assignment of membership interest, in the form attached hereto
as Exhibit H (the “CUC/Carter Assignment”), assigning to Carter all of CCA's
right, title and interest in the CUC Interest, duly executed by CCA;

vi             an assignment of a portion of CCA’s interest in CAF III, in the
form attached hereto as Exhibit V (the “Carter CAF III Assignment”), duly
executed by CCA;

vii            an amendment to the limited partnership interest of CAF III
admitting the Carter Trust, Fargo and Primo as limited partners as contemplated
by the Carter CAF III Assignment, the Fargo CAF III assignment and the Primo CAF
III Assignment, in the form attached hereto as Exhibit W (the “CAF III
Amendment”), duly executed by CCA;

viii           the Termination of Investment Agreement, duly executed by CRC and
CRH; and

ix             a legal opinion of counsel to CCA and Primo in a form reasonably
acceptable to Carter (it being agreed that the form accepted by CCA’s lenders
shall be deemed to be acceptable to Carter) opining as to the enforceability of
the Carter Note, the Carter Security Agreement, the Subordination Agreement and
the Primo Guaranty;

To Fargo:

x            the Fargo Cash (increased by the Fargo CPC Payment, which Primo
hereby directs CCA to pay at Primo’s direction), by wire transfer of immediately
available funds to the account designated in Schedule IV;

 

xi

the Fargo Note, duly executed by CCA;

 

xii

the Fargo Security Agreement, duly executed by CCA;

xiii           an assignment of a portion of CCA’s interest in CAF III, in the
form attached hereto as Exhibit X (the “Fargo CAF III Assignment”), duly
executed by CCA;

 

xiv

the CAF III Amendment, duly executed by CCA; and

xv            the Subordination Agreement, duly executed by CCA and CCA’s
lenders;

 

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To CMI:

xvi         the CMI Cash, by wire transfer of immediately available funds to the
account designated in Schedule II;

 

xvii

the Assignment of CUC Assets;

xviii         the certificates representing the SMUs duly endorsed for transfer
to the Carter Trust and Fargo; and

xix           the Termination of Investment Agreement, duly executed by CRC and
CRH;

To CRC, the Primo Note; and

To the Capri Parties (other than CCA) and CMI, the Mutual Release, duly executed
by CCA and each of the other Capri Entities.

C                 Deliveries by CRC. At the Closing, simultaneous with the
deliveries of the other parties hereunder, CRC shall deliver all of the
following documents, certificates and instruments:

To CCA, an assignment of membership interest, in the form attached hereto as
Exhibit J (the “CCA/CRC Assignment”), assigning to CCA 60% of CRC's right, title
and interest in CCA, duly executed by CRC; and

To CRH, an assignment of membership interest, in the form attached hereto as
Exhibit K (the “CRH/CRC Assignment”), assigning to CRH 60% of CRC's right, title
and interest in CRH, duly executed by CRC.

D                 Deliveries by CRH. At the Closing, simultaneous with the
deliveries of the other parties hereunder, CRH shall deliver to CCA an
assignment of membership interest, in the form attached hereto as Exhibit L (the
“CCA/CRH Assignment”), assigning to CCA 60% of CRH's right, title and interest
in CCA, duly executed by CRH.

E              Primo’s Deliveries. At the Closing, simultaneous with the
deliveries of the other parties hereunder, Primo shall deliver all of the
following documents, certificates and instruments:

To Carter:

i            the CAF III Amendment, duly executed by Primo;

 

ii

the Carter Guaranty, duly executed by Primo;

 

iii

the Carter Promotes Guaranty, duly executed by Primo;

 

iv

the Subordination Agreement, duly executed by Primo; and

 

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v            the Termination of Investment Agreement, duly executed by Primo;

To Fargo:

 

vi

the CAF III Amendment, duly executed by Primo;

 

vii

the Subordination Agreement, duly executed by Primo; and

viii          the Termination of Investment Agreement, duly executed by Primo;

To the Capri Parties (other than Primo), the joint unanimous consent of the
directors of CPC, the managers of CCA, the managers of CRH and the managers of
CRC approving the execution and delivery of this Agreement and the Transaction
Documents by the Capri Entities and their performance of the transactions
contemplated hereby, in the form attached hereto as Exhibit M (the “Joint
Consent”), duly executed by Primo;

To the Capri Parties (other than Primo) and CMI, the Mutual Release, duly
executed by Primo; and

To CMI, the Termination of Investment Agreement, duly executed by Primo.

F              Carter’s Deliveries. At the Closing, simultaneous with the
deliveries of the other parties hereunder, Carter shall deliver all of the
following documents, certificates and instruments:

To Primo:

i              a certificate or certificates representing the Carter CPC Stock,
duly endorsed for transfer or accompanied by duly executed stock powers;

ii              an assignment of membership interest, in the form attached
hereto as Exhibit N (the “Carter CSI II Assignment”), assigning to Primo all of
Carter's right, title and interest in the CSI II Membership Interest, duly
executed by Carter;

 

iii

the CAF III Amendment, duly executed by the Carter Trust;

 

iv

the Subordination Agreement, duly executed by Carter; and

v              the Termination of Investment Agreement, duly executed by Carter;

To Fargo:

 

vi

the CAF III Amendment, duly executed by the Carter Trust;

 

vii

the Subordination Agreement, duly executed by Carter; and

 

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viii           the Termination of Investment Agreement, duly executed by Carter;

To the Capri Entities:

 

ix

the Joint Consent, duly executed by Carter;

x              a resignation, in the form attached hereto as Exhibit O (the
“Carter Resignation”), duly executed by Carter;

To CCA:

xi             the CAF III Amendment, duly executed by the Carter Trust; and

xii            the Subordination Agreement, duly executed by the Carter Trust;

To CRC, an assignment of membership interest, in the form attached hereto as
Exhibit P (the “CRC/Carter Assignment”), assigning to CRC all of Carter's right,
title and interest in his membership interests in CRC, duly executed by Carter;

To the Capri Parties (other than Carter) and CMI, the Mutual Release, duly
executed by Carter; and

To CMI, the Termination of Investment Agreement, duly executed by Carter.

G              Fargo’s Deliveries. At the Closing, simultaneous with the
deliveries of the other parties hereunder, Fargo shall deliver all of the
following documents, certificates and instruments:

To Primo:

i              a certificate or certificates representing the Fargo CPC Stock,
duly endorsed for transfer or accompanied by duly executed stock powers with all
requisite state and federal transfer stamps affixed thereto;

 

ii

the CAF III Amendment, duly executed by Fargo;

 

iii

the Subordination Agreement, duly executed by Fargo; and

iv             the Termination of Investment Agreement, duly executed by Fargo;

To Carter:

v              the CAF III Amendment, duly executed by Fargo;

 

vi

the Subordination Agreement, duly executed by Fargo; and

 

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vii            the Termination of Investment Agreement, duly executed by Fargo;

To the Capri Entities, the Joint Consent, duly executed by Fargo;

To CCA:

 

viii

the CAF III Amendment, duly executed by Fargo; and

 

ix

the Subordination Agreement, duly executed by Fargo;

To CRC, an assignment of membership interest, in the form attached hereto as
Exhibit Q (the “CRC/Fargo Assignment”), assigning to CRC all of Fargo's right,
title and interest in his membership interests in CRC, duly executed by Fargo;

To the Capri Parties (other than Fargo) and CMI, the Mutual Release, duly
executed by Fargo; and

To CMI, the Termination of Investment Agreement, duly executed by Fargo.

H              CMI’s Deliveries. At the Closing, simultaneous with the
deliveries of the other parties hereunder, CMI shall deliver all of the
following documents, certificates and instruments:

To CCA, A payoff letter, in the form attached hereto as Exhibit R, setting
forth, as of the Closing Date, the amount of principal and interest necessary to
pay in full the CRH Note, duly executed by CMI;

To each of the Capri Parties,

i              the Termination of Investment Agreement, duly executed by CMI;
and

 

ii

the Mutual Release, duly executed by CMI;

To Carter, a certificate representing the Carter SMUs standing in the name of
the Carter Trust; and

To Fargo, a certificate representing the Fargo SMUs standing in the name of
Fargo.

IV    

COVENANTS AND OTHER AGREEMENTS

 

A

Promotes.

Effective at the Closing, that certain Amended and Restated Buy-Sell Agreement,
dated as of July 25, 2005, by and among CRC, CRH, CPC, Carter, Fargo and Primo
is hereby terminated and no party thereto shall have any further rights or
obligations pursuant thereto. In addition, after the Closing, Carter shall have
no obligation to make

 

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any capital contributions with respect to any Capri Funds or Separate Accounts
(or any other funds or accounts in which CCA or any Affiliate thereof owns a
direct or indirect ownership interest); it being agreed that, at the Closing,
CUC shall cease to be a Capri Fund or Separate Account. Except as provided below
in this Section 4.1, after the Closing, neither CMI nor Carter shall be entitled
to receive any returns of capital, returns on capital or Promotes payable to, or
received by, CCA or any other Capri Entity with respect to any Capri Funds or
Separate Accounts; it being agreed that, at the Closing, CUC shall cease to be a
Capri Fund or Separate Account.

If, at any time (and from time to time) after the Closing, CCA receives any
incentive fees pursuant to the paragraph entitled “Incentive Fee” on Exhibit C
of the LACERA Agreement and which relate to Baldwin Hills Crenshaw Plaza or The
Royal Equestrian properties (collectively, the “LACERA Properties”), then CCA
shall deliver to the Carter Trust, no later than ten (10) days after any such
incentive fees are received by CCA, an amount (the “Carter LACERA Amount”) equal
to forty-five percent (45%) of such incentive fees so received after the
deduction described below. The right of the Carter Trust to receive the Carter
LACERA Amount from CCA pursuant to this Section 4.1(b) is hereinafter referred
to as the “Carter LACERA Right.” CCA shall have the right to deduct from each
payment owing to the Carter Trust pursuant to this Section 4.1(b) an amount
equal to Carter's Pro Rata Share of any bonuses paid by CCA to its employees
(other than Primo and/or Fargo) associated with the LACERA Properties (provided
in no event shall such deduction exceed 10% of the payment that the Carter Trust
would otherwise receive pursuant to this Section 4.1(b) if no amount was
deducted for the payment of any such bonus). Except as expressly set forth above
in this Section 4.1(b), CCA shall not offset, deduct from or otherwise reduce
any amounts owing to the Carter Trust under this Section 4.1(b). CCA hereby
grants to the Carter Trust a continuing security interest in the Carter LACERA
Right to secure CCA’s obligations pursuant to this Section 4.1(b). CCA hereby
agrees that it shall not assign, transfer, modify or amend the Carter LACERA
Right or otherwise pledge of encumber the Carter LACERA Right without the prior
written consent of the Carter Trust, which may be withheld in its sole
discretion. Upon request of the Carter Trust, CCA shall execute such financing
statements and other documents and do such other acts and things, all as the
Carter Trust may from time to time request, to establish and maintain a valid
security interest in the Carter LACERA Right (free of all other liens and claims
whatsoever) to secure CCA’s obligations pursuant to this Section 4.1(b).

If, at any time (and from time to time) after the Closing, CCA receives any
amount paid pursuant to (i) Articles V and X of that certain Agreement of
Limited Partnership, dated as of November 1, 1993, of Capital Associates
Institutional Fund L.P., a Delaware limited partnership (the “CAF I Agreement”),
or (ii) Articles V and X of that certain Amended and Restated Agreement of
Limited Partnership, dated as of June 15, 1997, of Capital Associates Apartment
Fund L.P., a Delaware limited partnership (the “CAF II Agreement”), then CCA
shall deliver to the Carter Trust, no later than ten (10) days after any such
amounts are received by CCA, an amount (the “Carter CAF Amount”) equal to (A)
forty-five percent (45%) of all such amounts received (other than any amounts
received pursuant to Section 5.1(b) of the CAF I Agreement or Section 5.1(b) of
the CAF II Agreement), and (B) forty-five percent (45%) of fifty-one percent

 

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(51%) of all such amounts received pursuant to Section 5.1(b) of the CAF I
Agreement or Section 5.1(b) of the CAF II Agreement, in each case after the
deduction described below. The right of the Carter Trust to receive the Carter
CAF Amount from CCA pursuant to this Section 4.1(c) is hereinafter referred to
as the “Carter CAF Right.” CCA shall have the right to deduct from each payment
owing to the Carter Trust pursuant to clause (B) of this Section 4.1(c) an
amount equal to Carter's Pro Rata Share of any bonuses paid by CCA to its
employees (other than Primo and/or Fargo) associated with CAF I or CAF II
(provided in no event shall such deduction exceed 10% of the payment that the
Carter Trust would otherwise receive pursuant to clause (B) of this Section
4.1(c) if no amount was deducted for the payment of any such bonus). Except as
expressly set forth above in this Section 4.1(c), CCA shall not offset, deduct
from or otherwise reduce any amounts owing to the Carter Trust under this
Section 4.1(c). CCA hereby grants to the Carter Trust a continuing security
interest in the Carter CAF Right to secure CCA’s obligations pursuant to this
Section 4.1(c). CCA hereby agrees that it shall not assign, transfer, modify or
amend the Carter CAF Right or otherwise pledge of encumber the Carter CAF Right
without the prior written consent of the Carter Trust, which may be withheld in
its sole discretion. Upon request of the Carter Trust, CCA shall execute such
financing statements and other documents and do such other acts and things, all
as the Carter Trust may from time to time request, to establish and maintain a
valid security interest in the Carter CAF Right (free of all other liens and
claims whatsoever) to secure CCA’s obligations pursuant to this Section 4.1(c).

If, at any time (and from time to time) after the Closing, CCA receives any
incentive fees pursuant to paragraph entitled “Incentive Fee” on Exhibit C of
the LACERA Agreement and which relate to the LACERA Properties, then CCA shall
deliver to Fargo, no later than ten (10) days after any such incentive fees are
received by CCA, an amount (the “Fargo LACERA Amount”) equal to ten percent
(10%) of such fees or other amounts so received after the deduction described
below. The right of Fargo to receive the Fargo LACERA Amount from CCA pursuant
to this Section 4.1(d) is hereinafter referred to as the “Fargo LACERA Right.”
CCA shall have the right to deduct from each payment owing to Fargo pursuant to
this Section 4.1(d) an amount equal to Fargo's Pro Rata Share of any bonuses
paid by CCA to its employees (other than Primo and/or Fargo) associated with the
LACERA Properties (provided in no event shall such deduction exceed 10% of the
payment that Fargo would otherwise receive pursuant to this Section 4.1(d) if no
amount was deducted for the payment of any such bonus). Except as expressly set
forth above in this Section 4.1(d), CCA shall not offset, deduct from or
otherwise reduce any amounts owing to Fargo under this Section 4.1(d). CCA
hereby agrees that it shall not assign, transfer, modify or amend the Fargo
LACERA Right or otherwise pledge of encumber the Fargo LACERA Right without the
prior written consent of Fargo, which may be withheld in his sole discretion.

If, at any time (and from time to time) after the Closing, CCA receives any
amount paid pursuant to (i) Articles V and X of the CAF I Agreement, or (ii)
Articles V and X of the CAF II Agreement, then CCA shall deliver to Fargo, no
later than ten (10) days after any such amounts are received by CCA, an amount
(the “Fargo CAF Amount”) equal to (A) ten percent (10%) of all such amounts
received (other than any amounts received pursuant to Section 5.1(b) of the CAF
I Agreement or Section 5.1(b) of

 

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the CAF II Agreement), and (B) ten percent (10%) of fifty-one percent (51%) of
all such amounts received pursuant to Section 5.1(b) of the CAF I Agreement or
Section 5.1(b) of the CAF II Agreement, in each case after the deduction
described below. The right of Fargo to receive the Fargo CAF Amount from CCA
pursuant to this Section 4.1(e) is hereinafter referred to as the “Fargo CAF
Right.” CCA shall have the right to deduct from each payment owing to Fargo
pursuant to clause (B) of this Section 4.1(e) an amount equal to Fargo’s Pro
Rata Share of any bonuses paid by CCA to its employees (other than Primo and/or
Fargo) associated with CAF I, CAF II or CAF III (provided in no event shall such
deduction exceed 10% of the payment that Fargo would otherwise receive pursuant
to clause (B) of this Section 4.1(e) if no amount was deducted for the payment
of any such bonus). Except as expressly set forth above in this Section 4.1(e),
CCA shall not offset, deduct from or otherwise reduce any amounts owing to Fargo
under this Section 4.1(e). CCA hereby agrees that it shall not assign, transfer,
modify or amend the Fargo CAF Right or otherwise pledge of encumber the Fargo
CAF Right without the prior written consent of Fargo, which may be withheld in
his sole discretion.

Within thirty (30) days after the date (the “Measurement Date”) that CCA
receives all Incentive Fees (as set out in Section (c) of Exhibit C to the TRS
Agreement) from the sale of the last asset currently owned by, or for the
benefit of, TRS which was acquired pursuant to the TRS Agreement on or prior to
the Closing Date, Primo shall deliver to Carter a statement in the form
described below (the “TRS Statement”). The TRS Statement shall detail (i) the
amount (the “TRS Promote Amount”) of all Incentive Fees (as set out in Section
(c) of Exhibit C to the TRS Agreement) paid to CCA during the period (the
“Measurement Period”) commencing on the Closing Date and ending on the
Measurement Date, (ii) the amount (the “CCA Measurement Period Revenues”) of all
of the gross revenues (including, without limitation, all Incentive Fees (as set
out in Section (c) of Exhibit C to the TRS Agreement)), determined in accordance
with GAAP, of CCA during the Measurement Period, (iii) the amount (the “Primo
Distributions”) which would have been distributed to Primo by CCA in his
capacity as a Class A Member of CCA (other than Tax Distributions at the rate of
40% of all income allocated to Primo in such capacity) during the Measurement
Period if CCA’s lenders did not prohibit such distributions or require the
funding of any debt service reserve fund, and (iv) the amount (the “Carter TRS
Payment”) calculated by multiplying fifty percent (50%) of the Primo
Distributions by a fraction, the numerator of which is the TRS Promote Amount
and the denominator of which is the CCA Measurement Period Revenues. Primo shall
pay to the Carter Trust an amount equal to the Carter TRS Payment by paying to
the Carter Trust twenty-five percent (25%) of all amounts which are actually
distributed to Primo by CCA in his capacity as a Class A Member of CCA after the
Measurement Date until the full Carter TRS Payment has been paid to the Carter
Trust, provided that upon a sale by CCA of all or substantially all of its
assets or a sale by Primo of all of his membership interests in CCA, all unpaid
amounts of the Carter TRS Payment shall immediately become due and payable.

B                 Capri Name. CMI agrees that, from and after the Closing Date,
neither CMI nor its Affiliates shall use the “Capri” name, and CMI shall cause
CUC to change its name to a name that does not include “Capri”.

 

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C                 Non-Disparagement. Each of the Capri Parties and CMI agree on
such party's own behalf that such party will not make statements or
representations, or otherwise communicate, directly or indirectly, in writing,
orally, or otherwise, or take any action which may, directly or indirectly,
disparage or impugn the business reputation of, or otherwise make derogatory or
detrimental statements concerning or relating to the business reputation of, any
other party to this Agreement and/or any Affiliate thereof. Notwithstanding the
foregoing, nothing in this Agreement shall preclude any of such Persons from
making truthful statements or disclosures that are required by applicable law,
regulation or legal process.

D                 Certain Carter Rights. The Capri Entities will continue to
maintain, for at least five (5) years after the Closing Date, any commercial
general liability insurance and/or D&O liability insurance which they currently
maintain which covers Carter for any acts or omissions prior to the date of the
Closing. Carter will have access and use of the Capri investment track record
from 1992 through the Closing Date. Additionally, Carter may use the Capri name
only in the context of presenting his investment track record to third parties.

E                 Payroll Services Agreement. The parties agree that the Payroll
Services Agreement shall remain in full force and effect through December 31,
2006, at which time it shall automatically terminate without any further action
of the parties thereto and neither party shall have any further obligation
thereunder other than with respect to the obligations thereunder, which
expressly survive the termination of the Payroll Services Agreement.

F                 Tax Returns. As far in advance as possible before (but not
less than fifteen (15) days prior to) the filing by or on behalf of any of the
Capri Entities of any federal, state or local tax returns that includes
reporting of any of the Transactions, CCA shall cause true, correct and complete
copies of such tax returns to be delivered to Carter for his review, comment and
approval, such approval not to be unreasonably withheld, conditioned or delayed.

G                 Right to Inspect Books and Records. Following the Closing,
Carter shall have the right, during normal business hours and upon reasonable
prior written notice to CCA, to review, inspect and copy, at the expense of
Carter, any and all books, records and other materials of the Capri Entities and
their Subsidiaries that relate to the period on and prior to the Closing Date,
but only to the extent needed by Carter to defend any audit, claim,
investigation or litigation or to enforce or otherwise exercise the provisions
of this Agreement or as otherwise reasonably needed by Carter.

H                 Indemnification Pursuant to Operating Agreement. From the date
hereof until the fifth anniversary of the date hereof, CCA shall continue, in
accordance with the terms of its operating agreement as in effect on the date
hereof, to indemnify all past and present members, managers and officers of CCA
(collectively, the “CCA Indemnified Persons”) and shall indemnify all of the CCA
Indemnified Persons in all cases to the maximum extent permitted by Delaware
law.

I                 Certain Financings.

If during a period of two years from the date hereof, CCA or any investment
adviser that is an affiliate of CCA or Primo (collectively referred to as “CCA
Financee”)

 

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seeks any mortgage loan or mezzanine loan financing (a “Proposed Financing”) in
connection with any Capri Fund or Separate Account managed or advised by any CCA
Financee (a “Fund”) other than a Proposed Financing to be made by a Fund, then
CCA shall:

i              provide written notice (a “Request For Proposal”) to CharterMac
Mortgage Capital Corp. (“CMCC”), such notice to be sent in accordance with
Section 11.7 but directed to Bill Hyman and Patti Saylor, in each case at
CharterMac Mortgage Capital, 625 Madison Ave, NY 10022, with respect to the
Proposed Financing;

ii              provide to CMCC a description of the material terms of such
Proposed Financing; and

iii             provide to CMCC a copy of the materials (inclusive of any
additional materials requested by any prospective financing source which are
sent to such prospective financing sources prior to the Proposal Deadline) sent
to others who are being requested to make proposals with respect to the Proposed
Financing, it being understood that nothing contained in this Section 4.9 shall
prohibit a CCA Financee from seeking proposals to provide any Proposed Financing
from such financing sources as each CCA financee determines in its sole
discretion.

If CMCC makes a proposal with respect to the Proposed Financing on or prior to
the Proposal Deadline (as defined below), CCA shall, or shall cause the
applicable CCA Financee to, accept such proposal unless the CCA Financee
determines, in its fiduciary capacity, that the terms of such proposal are less
favorable (taking into account both the financial terms of the proposal and the
non-financial terms of the proposal, such as the covenants) to the Fund than an
alternative proposal submitted to the applicable CCA Financee by another party.
The “Proposal Deadline” shall be five (5) Business Days (or such longer or
shorter period as is stated in the Request for Proposal sent to all prospective
financing sources or otherwise offered to any other prospective financing source
for the delivery of its initial proposal in response to the Request for
Proposal, in any such case due to the timing of the particular transaction)
after the delivery of a Request for Proposal.

If (i) a CCA Financee accepts a proposal from CMCC pursuant to clause (b) above,
(ii) such CCA Financee has negotiated with CMCC in good faith with respect to
definitive documentation with respect to the accepted proposal, and (iii) such
CCA Financee and CMCC are unable to agree on the terms of such definitive
documentation, then the applicable CCA Financee may seek the Proposed Financing
from a party other than CMCC.

If the CCA Financee determines that an alternative proposal is more favorable to
a Fund than a proposal which was timely submitted by CMCC, then the CCA Financee
shall provide to CMCC written notice setting for the reasons for such
determination, but

 

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shall have no obligation to consider, review or accept any counter-offer,
rebuttal or change in terms by CMCC with respect to the Proposed Financing.

CMCC agrees that the determination of the CCA Financee as to whether, in
accordance with clause (b) above, the CCMC proposal is less favorable than an
alternative proposal, shall, in the absence of bad faith, be binding and
conclusive.

J                 CUC Interest. CMI hereby agrees that it shall, or shall cause
CUCA to, pay to the Carter Trust any amounts actually received by CMI or CUCA
(or any designee or successor-in-interest thereto) with respect to the CUC
Interest. CMI further agrees to pay, or to cause CUCA to pay, such amount within
ten (10) days after its receipt thereof. CMI shall not, and shall cause CUCA not
to, offset, deduct from or otherwise reduce any amounts owing to the Carter
Trust under this Section 4.10, provided that CMI or CUCA may offset, deduct from
or otherwise reduce any such amounts owing to the Carter Trust for or on account
of (i) any tax withheld and to be paid to any taxing authority to the extent
required by any applicable law, or (ii) any payment, indemnification, clawback
or other form of contribution that is required to be made by CMI or CUCA to any
person and that is attributable to the CUC Interest.

K                 LaSalle Financing Statements. Primo and CCA, jointly and
severally, agree to cause the UCC-1 Financing Statements perfecting the liens
being granted to LaSalle Bank National Association on the Closing Date to be
filed with the appropriate governmental entities on the Closing Date and to
deliver evidence of such filings to the Carter Trust promptly after their
receipt thereof.

V  

REPRESENTATIONS AND WARRANTIES OF THE CAPRI ENTITIES

The Capri Entities, jointly and severally, represent and warrant to the other
parties hereto as follows:

A                 Existence and Power. Each of CCA, CRC and CRH is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware. CPC is a corporation organized, validly
existing and in good standing under the laws of the State of Illinois. Each of
CCA, CRC and CRH has all limited liability company powers, and CPC has all
corporate powers, in each case required to carry on its business as now
conducted and to perform its obligations under this Agreement and the other
Transaction Documents to which it is a party.

B                 Authorization. The execution, delivery and performance by each
of the Capri Entities of this Agreement and the Transaction Documents to which
it is a party, and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized, and no additional action is
required for the approval of this Agreement and the Transaction Documents to
which it is a party. This Agreement and the Transaction Documents to which each
of the Capri Entities is a party, have been duly executed and delivered and
constitute valid and binding agreements of each such Capri Entity, enforceable
against each such Capri Entity in accordance with their terms, except as may be
limited by bankruptcy, reorganization, insolvency, moratorium and similar laws
of general application relating to

 

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affecting the enforcement of rights of creditors and except that enforceability
of their obligations thereunder are subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

C                 Non-Contravention. Except as set forth on Schedule 5.3, the
execution, delivery and performance by each of the Capri Entities of this
Agreement and the Transaction Documents to which it is a party, and the
consummation by each of the Capri Entities of the transactions contemplated
hereby do not and will not: (a) contravene or conflict with the Organizational
Documents of such Capri Entity; (b) contravene or conflict with or constitute a
material violation of any material provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to such Capri Entity,
which contravention, conflict or violation would have a Material Adverse Effect
on such Capri Entity, or contravene or conflict with, or constitute a breach of,
or require any consent under, any material agreement to which any Capri Entity
is a Party; or (c) require any action by or respect of, or filing with any
governmental body, agency, official or authority, which, individually or in the
aggregate, would have a Material Adverse Effect on such Capri Entity.

D                 CUC Assets and Interest. CCA owns the CUC Assets and the CUC
Interest, and has full right to transfer the CUC Assets and the CUC Interest to
CMI and the Carter Trust, in each case free and clear of any Liens. Except as
set forth in the CUC Assets Disclosure Letter, each of the representations and
warranties set forth in Article IV of the Investment Agreement, to the extent
relating to CUC Assets or the CUC Interest, are true and correct as of the date
hereof, and each of the covenants set forth in Article VI of the Investment
Agreement, to the extent relating to the CUC Assets or the CUC Interest, has
been complied with.

E                 As-Is Acquisition. Except as otherwise provided in this
Agreement, CRC is acquiring Carter's and Fargo's membership interests in CRC on
an "AS-IS/WHERE-IS" and "WITH ALL FAULTS" basis without any representation or
warranty of Carter or Fargo (or any other party), express, implied or statutory,
as to the nature or condition of such interests or their fitness for CRC's
intended use of the same. CRC is familiar with all of the Capri Entities and is
relying solely upon, and has conducted, its own independent inspection,
investigation and analysis of Carter's and Fargo's membership interests in CRC
and the Capri Entities as it deems necessary or appropriate.

F                 Certain Interests. CRC owns a 51% membership interest in CCA
and CRH owns the remaining 49% membership interest in CCA, in each case free and
clear of any Liens (other than the CMI 49% option and Liens in favor of CMI).
CRC owns a 99.9% membership interest in CRH, and CPC owns the remaining 0.1%
membership interest in CRH. Each of the Capri Entities has the full right to
undertake the transfers of its membership interests provided for under this
Agreement.

VI    

REPRESENTATIONS AND WARRANTIES OF CMI

CMI represents and warrants to the other parties hereto as follows:

 

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A                 Existence and Power. CMI is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. CMI has all limited liability company powers required to carry on its
business as now conducted and to perform its obligations under this Agreement
and the other Transaction Documents to which it is a party.

B                 Authorization. The execution, delivery and performance by CMI
of this Agreement and the Transaction Documents to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized, and no additional action is required for the approval of this
Agreement and the Transaction Documents to which it is a party. This Agreement
and the Transaction Documents to which CMI is a party, have been duly executed
and delivered and constitute valid and binding agreements of CMI, enforceable
against CMI in accordance with their terms, except as may be limited by
bankruptcy, reorganization, insolvency, moratorium and similar laws of general
application relating to or affecting the enforcement of rights of creditors and
except that enforceability of their obligations thereunder are subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

C                 Non-Contravention. The execution, delivery and performance by
CMI of this Agreement and the Transaction Documents to which it is a party, and
the consummation by it of the transactions contemplated hereby do not and will
not: (a) contravene or conflict with the Certificate of Formation or limited
liability company agreement of CMI; (b) contravene or conflict with or
constitute a material violation of any material provision of any law,
regulation, judgment, injunction, order or decree binding upon or applicable to
CMI, which contravention, conflict or violation would have a Material Adverse
Effect on CMI, or contravene or conflict with, or constitute a breach of, or
require any consent under, any material agreement to which CMI is a party; or
(c) require any action by or respect of, or filing with any governmental body,
agency, official or authority, which, individually or in the aggregate, would
have a Material Adverse Effect on CMI.

D                 Termination of Investment Agreement. The rights and benefits
of CMI under the Investment Agreement and the Investment Agreement Documents are
free and clear of any Liens, and CMI has full right to terminate the Investment
Agreement and the Investment Agreement Documents.

VII  

REPRESENTATIONS AND WARRANTIES OF PRIMO

Primo represents and warrants to the other parties hereto as follows:

A                 Authorization. No additional action is required for the
execution, delivery and performance by Primo of this Agreement and the
Transaction Documents to which he is a party. This Agreement and the Transaction
Documents to which Primo is a party, have been duly executed and delivered and
constitute valid and binding agreements of Primo, enforceable against Primo in
accordance with their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of their obligations

 

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thereunder are subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).

B                 Non-Contravention. The execution, delivery and performance by
Primo of this Agreement and the Transaction Documents to which he is a party,
and the consummation by him of the transactions contemplated hereby do not and
will not: (a) contravene or conflict with or constitute a material violation of
any material provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to Primo, which contravention, conflict or
violation would have a Material Adverse Effect on Primo, or contravene or
conflict with, or constitute a breach of, or require any consent under, any
material agreement to which Primo is a party; or (b) require any action by or
respect of, or filing with any governmental body, agency, official or authority,
which, individually or in the aggregate, would have a Material Adverse Effect on
Primo.

C                 As-Is Acquisition. Except as otherwise provided in this
Agreement, Primo is purchasing the Carter CPC Stock and the Fargo CPC Stock on
an "AS-IS/WHERE-IS" and "WITH ALL FAULTS" basis without any representation or
warranty of Carter or Fargo (or any other party), express, implied or statutory,
as to the nature or condition of such stock or its fitness for Primo's intended
use of the same. Primo is familiar with all of the Capri Entities and is relying
solely upon, and has conducted, his own independent inspection, investigation
and analysis of the Carter CPC Stock and the Fargo CPC Stock and the Capri
Entities as he deems necessary or appropriate.

D                 Sources and Uses. Schedule 7.4 contains a true and complete
schedule of the sources and uses for the Transactions including amounts, if any,
committed to be funded after the Closing.

VIII 

REPRESENTATIONS AND WARRANTIES OF CARTER

Carter represents and warrants to the other parties hereto as follows:

A                 Authorization. No additional action is required for the
execution, delivery and performance by Carter of this Agreement and the
Transaction Documents to which he is a party. This Agreement and the Transaction
Documents to which Carter is a party, have been duly executed and delivered and
constitute valid and binding agreements of Carter, enforceable against Carter in
accordance with their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of their obligations thereunder are subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

B                 Non-Contravention. The execution, delivery and performance by
Carter of this Agreement and the Transaction Documents to which he is a party,
and the consummation by him of the transactions contemplated hereby do not and
will not: (a) contravene or conflict with or constitute a material violation of
any material provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to Carter, which contravention, conflict or

 

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violation would have a Material Adverse Effect on Carter, or contravene or
conflict with, or constitute a breach of, or require any consent under, any
material agreement to which Carter is a party; or (b) require any action by or
respect of, or filing with any governmental body, agency, official or authority,
which, individually or in the aggregate, would have a Material Adverse Effect on
Carter.

C                 Certain Interests. Carter owns the Carter CPC Stock, and,
subject to obtaining the consent of Primo and Fargo, has full right to transfer
the Carter CPC Stock to Primo, free and clear of any Liens. Carter owns the CSI
II Membership Interest, and, subject to obtaining the consent of Primo and
Fargo, has full right to transfer the CSI II Membership Interest to Primo, free
and clear of any Liens. Carter owns a 45% membership interest in CRC and,
subject to obtaining the consent of Primo and Fargo, has full right to transfer
such membership interest to CRC, free and clear of any Liens other than Liens in
favor of CMI which will be released at the Closing.

IX    

REPRESENTATIONS AND WARRANTIES OF FARGO

Fargo represents and warrants to the other parties hereto as follows:

A                 Authorization. No additional action is required for the
execution, delivery and performance by Fargo of this Agreement and the
Transaction Documents to which he is a party. This Agreement and the Transaction
Documents to which Fargo is a party, have been duly executed and delivered and
constitute valid and binding agreements of Fargo, enforceable against Fargo in
accordance with their terms, except as may be limited by bankruptcy,
reorganization, insolvency, moratorium and similar laws of general application
relating to or affecting the enforcement of rights of creditors and except that
enforceability of their obligations thereunder are subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

B                 Non-Contravention. The execution, delivery and performance by
Fargo of this Agreement and the Transaction Documents to which he is a party,
and the consummation by him of the transactions contemplated hereby do not and
will not: (a) contravene or conflict with or constitute a material violation of
any material provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to Fargo, which contravention, conflict or
violation would have a Material Adverse Effect on Fargo, or contravene or
conflict with, or constitute a breach of, or require any consent under, any
material agreement to which Fargo is a party; or (b) require any action by or
respect of, or filing with any governmental body, agency, official or authority,
which, individually or in the aggregate, would have a Material Adverse Effect on
Fargo.

C                 Certain Interests. Fargo owns the Fargo CPC Stock, and,
subject to obtaining the consent of Primo and Carter, has full right to transfer
the Fargo CPC Stock to Primo, free and clear of any Liens. Fargo owns a 10%
membership interest in CRC and, subject to obtaining the consent of Primo and
Carter, has full right to transfer such membership interest to CRC, free and
clear of any Liens other than Liens in favor of CMI which will be released at
the Closing.

 

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X  

INDEMNIFICATION

 

A

Survival of Representations and Warranties.

All representations, warranties and agreements made by any of the Capri Parties
in this Agreement or any of the other Transaction Documents or in any
certificate delivered by any of the Capri Parties pursuant hereto or thereto,
other than representations and warranties of the Capri Entities set forth in
Sections 5.4, 5.5, 5.6, 7.3, 8.3 and 9.3, shall survive the Closing until June
30, 2007.

All representations and warranties made by the Capri Entities in Section 5.4
(other than the second sentence thereof), 5.5 and 5.6 shall survive the Closing
indefinitely, notwithstanding any investigation conducted with respect thereto.

All representations and warranties made by the Capri Entities in the second
sentence of Section 5.4 shall survive the Closing until the eighteen (18) month
anniversary of the Closing.

All representations, warranties and agreements made by CMI in this Agreement or
any of the other Transaction Documents or in any certificate delivered by CMI
pursuant hereto or thereto other than representations and warranties set forth
in Section 6.4 shall survive the Closing until June 30, 2007.

All representations and warranties made by CMI in Section 6.4 shall survive the
Closing indefinitely, notwithstanding any investigation conducted with respect
thereto.

All representations and warranties made by Carter, Primo and Fargo in Sections
7.3, 8.3 and 9.3 shall survive the Closing indefinitely, notwithstanding any
investigation conducted with respect thereto.

B                 Indemnification by the Capri Principals. Each of the Capri
Principals, severally (in proportion to their Pro Rata Shares), shall indemnify
CMI against, and hold CMI harmless from, and shall reimburse CMI for, any loss,
liability, claim, damage, expense (including, but not limited to, costs of
investigation and defense and reasonable attorneys’ fees) or diminution of value
(collectively, “Damages”) arising from or in connection with (a) any inaccuracy
in any of the representations and warranties of any of the Capri Entities or
Capri Principals in this Agreement or any of the other Transaction Documents or
in any certificate delivered by any of the Capri Entities or Capri Principals
pursuant hereto or thereto, or any actions, omissions or states of fact
inconsistent with any such representation or warranty, provided, that no Capri
Principal shall be liable pursuant to this Section 10.2 in respect of any such
inaccuracy or inconsistency in the representations and warranties made, or any
certificate delivered, solely by any other Capri Principal, and each Capri
Principal shall be liable for the full Damages in respect of any such inaccuracy
or inconsistency in the representations and warranties made by such Capri
Principal, (b) any failure by any of the Capri Parties to perform or comply with
any covenant or other agreement in this Agreement or any of the other
Transaction Documents on its part to be performed, provided, that no Capri
Principal shall be liable pursuant to this Section

 

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10.2 in respect of any such failure to perform or comply with any such covenant
or other agreement to be performed or complied with solely by any other Capri
Principal, and each Capri Principal shall be liable for the full Damages in
respect of any such failure to perform or comply with any such covenant or other
agreement to be performed or complied with by such Capri Principal, (c) any
third party claims (including actions by Regulatory Bodies) arising out of acts
or omissions of CCA and/or its Subsidiaries prior to the Closing Date relating
to CUC, other than any claims for accounts payable arising in the ordinary
course of business by CUC and any liabilities reflected on the books and records
of CUC and disclosed with specificity in the CUC Assets Disclosure Letter, or
(d) any distributions made prior to the Closing Date in connection with the CUC
Business that are required to be repaid by CMI, or any obligation to pay any
shortfall resulting from distributions in connection with the CUC Business made
prior to the Closing.

C                 Indemnification by CMI. CMI shall indemnify the Capri Parties
against, and hold the Capri Parties harmless from, and shall reimburse the Capri
Parties for, any Damages arising from or in connection with (a) any inaccuracy
in any of the representations and warranties of CMI in this Agreement or any of
the other Transaction Documents or in any certificate delivered by CMI pursuant
hereto or thereto, or any actions, omissions or states of fact inconsistent with
any such representation or warranty, (b) any failure by CMI to perform or comply
with any covenant or other agreement in this Agreement or any of the other
Transaction Documents on its part to be performed, or (c) any third party claims
(including actions by Regulatory Bodies) relating to liabilities of CCA related
to the CUC Business assumed by CUCA pursuant to the Assignment of CUC Assets.

D                 Threshold Amount – Capri Principals. The Capri Principals
shall have no liability (for indemnification or otherwise) with respect to the
matters described in Section 10.2(a) above until the total amount of all Damages
with respect thereto exceeds $250,000 and then only for the amount by which such
Damages exceed $250,000. The Capri Principals’ aggregate liability (for
indemnification or otherwise) with respect to such matters will not exceed
$3,000,000. Each Capri Principals’ aggregate liability (for indemnification or
otherwise) with respect to such matters will not exceed such Capri Principal’s
Pro Rata Share of $3,000,000. Notwithstanding the foregoing, this Section shall
not apply to any liability which results from (a) any fraud on the part of the
Capri Parties or their respective Affiliates (it being agreed that each Capri
Principal shall be liable for all Damages with respect to any fraud committed by
such Capri Principal), (b) any liabilities of CCA related to the CUC Business
which accrued prior to the Closing and that are not assumed by CUCA pursuant to
the Assignment of CUC Assets, or (c) any of the matters described in Section
10.2(b), (c) or (d).

E                 Threshold Amount – CMI. CMI shall have no liability (for
indemnification or otherwise) with respect to the matters described in Section
10.3(a) above until the total amount of all Damages with respect thereto exceeds
$250,000 and then only for the amount by which such Damages exceed $250,000.
CMI’s liability (for indemnification or otherwise) with respect to such matters
will not exceed $3,000,000. However, this Section shall not apply to any
liability resulting from (a) any fraud on the part of CMI or its Affiliates (it
being agreed that CMI shall be liable for all Damages with respect thereto), (b)
any liabilities of CCA related to the CUC Business assumed by CUCA pursuant to
the Assignment of CUC Assets, or (c) any of the matters described in Section
10.3(b) or (c).

 

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F                 Procedure for Indemnification. Promptly after receipt by an
indemnified party under Section 10.2 or 10.3 of notice of the commencement of
any action for which indemnification is available, such indemnified party shall,
if a claim in respect thereof is to be made against an indemnifying party under
any such Section, give notice to the indemnifying party of the commencement
thereof, but the failure so to notify the indemnifying party shall not relieve
it of any liability that it may have to any indemnified party except to the
extent the indemnifying party demonstrates that the defense of such action is
prejudiced thereby. In case any such action shall be brought against an
indemnified party and it shall give notice to the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such section for any fees of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation and costs and expenses of legal counsel, if the indemnified party
and the indemnifying party are both parties to the action and the indemnified
party has been advised by counsel that there may be one or more defenses
available to it and not available to the indemnifying party. If an indemnifying
party assumes the defense of such an action, (a) no compromise or settlement
thereof may be effected by the indemnifying party without the indemnified
party’s consent (which shall not be unreasonably withheld, conditioned or
delayed) unless (i) there is no finding or admission of any violation of law or
any violation of the rights of any Person and no effect on any other claims that
may be made against the indemnified party and (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party and (b) the
indemnified party shall have no liability with respect to any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld, conditioned or delayed). If notice is given to an indemnifying party
of the commencement of any action and it does not, within ten days after the
indemnified party’s notice is given, give notice to the indemnified party of its
election to assume the defense thereof, the indemnifying party shall be bound by
any determination made in such action or any compromise or settlement thereof
effected by the indemnified party. Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that an action may adversely affect it or its affiliates other than
as a result of monetary damages, such indemnified party may, by notice to the
indemnifying party, assume the exclusive right to defend, compromise or settle
such action, with counsel reasonably acceptable to the indemnifying party but
the indemnifying party shall not be bound by any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld,
conditioned or delayed).

XI    

MISCELLANEOUS

 

A

Amendment; Waiver.

This Agreement may not be amended except by an instrument in writing executed by
each of the Capri Parties and CMI.

 

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Any failure of any party to comply with any provision hereof may be waived by
the party entitled to the benefit thereof only by a written instrument signed by
the party granting such waiver, but such waiver or failure to insist upon strict
compliance with such provision shall not operate as a waiver of or estoppel with
respect to any subsequent or other failure.

B                 Expenses. CCA shall pay, or reimburse each party hereto for,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby.

C                 Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations herein shall be assigned, except by operation of law by any party
hereto without the prior written consent of the other parties, which consent may
be withheld by any party in its sole discretion. The foregoing provisions shall
not restrict or otherwise limit the right of the Carter Trust to Transfer the
Carter Note, the Carter Security Agreement and/or the Carter Guaranty, in each
case after providing CCA with no less than ten (10) Business Days’ prior written
notice of any such Transfer. Nothing in this Agreement, express or implied, is
intended to confer upon any third person or entity any rights or remedies of any
nature whatsoever under this Agreement.

D                 Further Assurances. Each of the Capri Parties, on the one
hand, and CMI, on the other hand, agrees that, from and after the date hereof,
upon the reasonable request of the other and without further consideration, such
party will, and will cause its Subsidiaries and Affiliates to, execute and
deliver to the other such documents and further assurances and will take such
other actions as the other may reasonably request in order to carry out the
purpose and intention of this Agreement.

E                 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto (including without limitation the Transaction
Documents) or delivered pursuant hereto which form a part hereof contain the
entire understanding of the parties with respect to the subject matter hereof
and all earlier drafts of this Agreement or any Schedule or Exhibit hereto and
all negotiations, conversations, correspondence or other communications relating
to the transactions and agreements contemplated by this Agreement are hereby
merged with and into this Agreement in such a way as to prevent any party to
this Agreement from referring to such drafts, negotiations, conversations,
correspondence or other communications in any subsequent dispute between any of
the parties hereto. This Agreement and the Schedules and Exhibits attached
hereto (including without limitation the Transaction Documents) supersedes all
prior agreements and understandings between the parties with respect to the
subject matter hereof.

F                 Headings; References. The Article and Section headings
contained in this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement. Unless the context
otherwise requires, references in this Agreement to Sections, Articles,
Schedules and Exhibits are references to Sections and Articles of, and Schedules
and Exhibits to, this Agreement.

 

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G                 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and delivered by hand or sent by registered
or certified mail (postage prepaid, return receipt requested) or by nationally
recognized overnight air courier service and shall be deemed to have been duly
given or made as of the date delivered if delivered personally, or if mailed, on
the third Business Day after mailing (on the first Business Day after mailing in
the case of a nationally recognized overnight air courier service) to the
parties at the following addresses:

If to any Capri Entity or Primo, to:

Capri Capital Advisors, LLC

875 North Michigan Avenue

Suite 3430

Chicago, Illinois 60611

Attention: Quintin E. Primo III

with a copy to:

Sonnenschein Nath & Rosenthal LLP

7800 Sears Tower

Chicago, Illinois 60606

Attention: Eric R. Decator, Esq.

If to CMI, to:

CM Investor LLC

c/o Charter Mac Corporation

625 Madison Avenue

New York, New York 10022

Attention: Alan P. Hirmes

with a copy to:

Proskauer Rose LLP

1585 Broadway

New York, New York 10036

Attention: Steven Fishman, Esq.

If to Carter, to:

Daryl J. Carter

4 Flagstone

Coto de Caza, California 92679

with a copy to:

Allen Matkins Leck Gamble Mallory & Natsis LLP

1900 Main Street, Fifth Floor

 

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Irvine California 92614-7321

Attention: Paul D. O’Connor, Esq.

If to Fargo, to:

Brian C. Fargo

875 North Michigan Avenue

Suite 3430

Chicago, Illinois 60611

Any party may by notice given in accordance with this Section 11.7 to the other
parties designate another address or Person for receipt of notices hereunder.

H                 Consent to Jurisdiction. EACH OF THE CAPRI PARTIES AND CMI
ACKNOWLEDGES THAT CCA’S PRINCIPAL OFFICE IS LOCATED IN CHICAGO, ILLINOIS AND
THAT CMI’S PRINCIPAL OFFICE IS LOCATED IN NEW YORK, NEW YORK AND THAT CCA AND/OR
CMI MAY BE IRREPARABLY HARMED IF EITHER IS REQUIRED TO INSTITUTE OR DEFEND ANY
ACTION IN ANY JURISDICTION OTHER THAN THE NORTHERN DISTRICT OF ILLINOIS, COOK
COUNTY, ILLINOIS, THE SOUTHERN DISTRICT OF NEW YORK OR NEW YORK COUNTY, NEW
YORK. THEREFORE, EACH OF THE CAPRI PARTIES AND CMI IRREVOCABLY AGREES THAT ANY
SUIT, ACTION OR OTHER LEGAL PROCEEDING BY THE CAPRI PARTIES OR CMI RELATING TO
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS SHALL BE BROUGHT ONLY IN THE
CIRCUIT COURT OF COOK COUNTY, IN THE NORTHERN DISTRICT OF ILLINOIS, IN THE
CIRCUIT COURT OF NEW YORK COUNTY OR IN THE SOUTHERN DISTRICT OF NEW YORK. EACH
OF THE CAPRI PARTIES AND CMI CONSENTS TO THE JURISDICTION OF EACH SUCH COURT IN
ANY SUCH SUIT, ACTION OR PROCEEDINGS BY CMI AND WAIVES ANY OBJECTION WHICH IT
MAY HAVE TO THE LAYING OF VENUE IN ANY SUCH SUIT, ACTION OR PROCEEDING IN EITHER
SUCH COURT. EACH OF THE CAPRI PARTIES AND CMI AGREES TO JOIN CMI IN ANY PETITION
FOR REMOVAL TO ANY SUCH COURT.

I                 Governing Law. This Agreement and the other Transaction
Documents, and the rights and duties of the parties hereto, shall be construed
and determined in accordance with the laws of the State of Illinois, without
regard to conflicts of law doctrine.

J                 Counterparts; Facsimile. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which when taken together shall constitute one and the same agreement.
Original signatures hereto and to other Transaction Documents may be delivered
by facsimile which shall be deemed originals.

K                 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.

 

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L                 Specific Performance. Each of the parties acknowledges that
the subject matter of this Agreement is unique and that no adequate remedy at
law would be available for breach of the obligations of any party or its
Affiliates pursuant to this Agreement. Accordingly, each party shall be entitled
to an appropriate decree of specific performance or other equitable remedies to
enforce the obligations, with respect to any other party of this Agreement
(without any bond or other security being required) and each such other party
waives the defense in any action or proceeding brought to enforce the
obligations of this Agreement that there exists an adequate remedy at law.

M                 Other Remedies. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law, or in
equity on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.

N                 Construction of Agreement. The parties have participated
jointly in the drafting of this Agreement, and each party was represented by
counsel in the negotiation of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.

O                 No Third Party Beneficiary. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.

P                 Publicity. Except as required by law, and for disclosures to
parties from whom consents are sought pursuant to this Agreement (but only to
the extent reasonably required in connection with seeking such consent), no
party to this Agreement shall make any public disclosure of the execution of
this Agreement or of the terms hereof or actions or transactions contemplated
hereby without the prior written consent of the other parties to such disclosure
and the form thereof, which consent shall not be unreasonably withheld. The
Capri Parties consent to (a) the filing by CharterMac with the SEC of a Form 8-K
or other filings by CharterMac with the SEC, and (b) the issuance of a press
release (so long as CCA is provided with a copy thereof at least two Business
Days in advance of its issuance and the opportunity to comment thereon), in each
case disclosing the execution of this Agreement and the transactions
contemplated hereby, and CMI consents to the disclosure by the Capri Parties of
information contained in any such press release, Form 8-K or other filings after
the issuance thereof or filing thereof with the SEC.

Q                 Attorneys' Fees. If any proceeding is brought by any party
hereto against any other party hereto, to enforce, or for the breach of, any of
the provisions of this Agreement or any other Transaction Document, then the
prevailing party shall be entitled in such proceeding to recover reasonable
attorneys' and expert witness fees, together with the costs of such proceeding
therein incurred.

[SIGNATURES FOLLOW]

 

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                IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above written.

CAPRI PARTIES:

 

CAPRI REALTY HOLDINGS, LLC, a Delaware limited liability company

 

 

By:

/s/ Quintin E. Primo III

 

Name:

Quintin E. Primo III

 

Title:

Chairman

CAPRI REALTY CAPITAL, LLC, a Delaware limited liability company

 

 

By:

/s/ Quintin E. Primo III

 

Name:

Quintin E. Primo III

 

Title:

Chairman

CAPRI CAPITAL ADVISORS, LLC, a Delaware limited liability company

 

 

By:

/s/ Quintin E. Primo III

 

Name:

Quintin E. Primo III

 

Title:

Chairman

CPC REALTY ADVISORS, INC., an Illinois corporation

 

 

By:

/s/ Quintin E. Primo III

 

Name:

Quintin E. Primo III

 

Title:

Chairman

 

/s/ Quintin E. Primo III

 

QUINTIN E. PRIMO III

 

 

/s/ Brian C. Fargo

BRIAN C. FARGO

 

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/s/ Daryl J. Carter

DARYL J. CARTER

CMI:

CM INVESTOR LLC, a Delaware limited liability company

 

 

By:

CharterMac Corporation

 

 

By:

/s/ Alan Hirmes

Name:Alan Hirmes

Title: Chief Operating Officer

 

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Schedule I

The Excluded Provisions

 

The Excluded Provisions consist of the following:

 

1.           All of the representations and warranties contained in Article IV
which, pursuant to Section 8.1 of the Investment Agreement, survive beyond
August __, 2006.

2.           Section 7.1(i)(iv)(F) of the Investment Agreement, except that such
Section shall be amended to read, in its entirety, as provided below, it being
agreed that the Capri Parties shall have no liability or obligation of any kind
pursuant to Section 7.1(i)(iv)(F) as originally set forth in the Investment
Agreement and that the Capri Entities shall have no liability or obligation of
any kind pursuant to Section 7.1(i)(iv)(F) as set forth below:

(I)           From and after the Closing Date, the Capri Principals severally
(in proportion to their Pro Rata Shares) and not jointly and severally, shall
pay to the Investor the amount of any unpaid claims for DUS Losses pursuant to
Claim Notices (as defined below) delivered by the Investor prior to the second
anniversary of the CCLP Acquisition Date as to which either no objection
pursuant to an Objection Notice (as defined below) or a Joinder Notice (as
defined below) has been made by such Capri Principal or as to which such
objection has been resolved in favor of the Investor; provided that the Capri
Principles shall not be obligated to pay to the Investor, pursuant to this
clause (I), any amounts to the extent that such amounts, together with all other
amounts paid or payable to, or retained by, the Investor on or after the first
anniversary of the CCLP Acquisition Date, exceed $1,500,000. For purposes
hereof, (x) “Claim Notice” shall mean any notice by the Investor to the Capri
Principals of any claims of the Investor against the Capri Principals arising
under, in relation to or in connection with this Section 7.1(i)(iv)(F), which
notice shall identify such claims in reasonable detail, and (y) “Objection
Notice” shall mean any notice by one or more of the Capri Principals to the
Investor (and to each other Capri Principal) within twenty (20) Business Days
after delivery of a Claim Notice that one or more of the Capri Principals object
to the claims set forth in such Claim Notice, which notice shall specify the
reasons for such objection or objections in reasonable detail. Upon receipt of
an Objection Notice, each Capri Principal who was not a party to such Objection
Notice shall have the right, within twenty (20) Business Days after delivery of
such Objection Notice, to join in such Objection Notice by delivering a notice
of such joinder (a “Joinder Notice”) to the Investor and each other Capri
Principal.

(II)         From and after the second anniversary of the CCLP Acquisition Date,
in respect of Watch-List Loans as of such second

 

 

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anniversary, the Capri Principals severally (in proportion to their Pro Rata
Shares) and not jointly and severally, shall pay to the Investor:

(1)        the amount of any DUS Losses occurring prior to the fourth
anniversary of the CCLP Acquisition Date, and

(2)        the amount of any DUS Losses occurring after the fourth anniversary
of the CCLP Acquisition Date, in respect of such Watch-List Loans which, as of
such fourth anniversary, are then experiencing an uncured loan default or
delinquency, have a debt service coverage ratio of less than 1.0 to 1.0, are
subject to a DUS Loss claim made by Fannie Mae, or in respect of which an event
has occurred making the occurrence of a DUS Loss reasonably likely, provided,
that from and after each anniversary of such fourth anniversary, the Capri
Principals shall have no obligation to pay Investor for DUS Losses in respect of
any of such Watch-List Loans which are not continuing to experience one of the
circumstances referred to above in this clause (2) as of such anniversary,

 

in each case pursuant to this clause (II) up to the lesser of (x) the aggregate
amount of DUS Losses estimated (on the same basis used to estimate the CCLP
Projected DUS Losses) as of such second anniversary to be incurred in respect of
such Watch-List Loans and (y) $1,500,000 less the amounts paid or payable to the
Investor pursuant to clause (I) above.

(III)        In respect of each DUS Loss referred to in clause (I) or (II) above
(if any), the Investor shall notify the Capri Principals of the occurrence of
such DUS Loss, identifying the applicable Watch-List Loan and the amount of such
DUS Loss payable.

(IV)       Notwithstanding the foregoing, the Capri Principals shall have no
liability to the Investor pursuant to this Section 7.1(i)(iv)(F) for the first
$206,663.02 of DUS Losses (the “DUS Credit”) incurred by the Investor on or
after August 1, 2006; provided that the DUS Credit may be increased to up to
$239,450.00 upon agreement among the Investor and the Capri Principals that the
DUS Credit should be greater than $206,663.02.

3.           Section 7.3, but only with respect to the CharterMac Restricted
Equity Securities held by Carter or the Carter Trust, it being agreed that the
provisions of Section 7.3 shall not apply to any CharterMac Restricted Equity
Securities held by Fargo (including the Fargo SMU’s).

 

 

 

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4.           Articles VIII and IX of the Investment Agreement, except that (a)
the Capri Entities shall have no liability or obligation of any kind pursuant to
such Article VIII or IX, and (b) all liabilities and obligations of the Capri
Principals pursuant to such Articles VIII and IX shall be the obligations of the
Capri Principals severally (in proportion to their Pro Rata Shares) and not
jointly and severally.

5.           All of the definitions contained or referred to in Article I to the
extent used in any of the Excluded Provisions referred to in paragraphs 1
through 4 above.

 

 

 

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[Other Schedules and Exhibits Omitted]

 

 

 

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