EX-99 3 termsheet.txt EXHIBIT 4 CONFIDENTIAL -------------------------------------------------------------------------------- HOMETOWN AMERICA, L.L.C. LOAN TO CP LIMITED PARTNERSHIP CHATEAU COMMUNITIES, INC. TERM SHEET June 26, 2003 -------------------------------------------------------------------------------- THIS TERM SHEET IS INTENDED AS A PROPOSAL BY HOMETOWN AMERICA, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY ("HOMETOWN") TO MAKE A LOAN (THE "LOAN") TO CP LIMITED PARTNERSHIP, A MARYLAND LIMITED PARTNERSHIP, AND CERTAIN OF ITS SUBSIDIARIES (COLLECTIVELY, "BORROWER"), CHATEAU COMMUNITIES, INC., A MARYLAND CORPORATION, AND ROC COMMUNITIES, INC., A MARYLAND CORPORATION (COLLECTIVELY, THE "GUARANTORS") AND NOT A COMMITMENT TO LEND. NO PARTY WILL HAVE ANY COMMITMENT OR OBLIGATION HEREUNDER UNLESS AND UNTIL BORROWER, THE GUARANTORS AND LENDER (AS DEFINED HEREIN) COUNTERSIGN THIS TERM SHEET ON BEHALF OF IT AND ITS RESPECTIVE SUBSIDIARIES AND AFFILIATES. THIS TERM SHEET DOES NOT PURPORT TO SUMMARIZE ALL OF THE TERMS AND PROVISIONS TO BE MUTUALLY AGREED UPON AND CONTAINED IN DEFINITIVE DOCUMENTATION FOR THIS TRANSACTION AS DESCRIBED BELOW. -------------------------------------------------------------------------------- BORROWER: CP Limited Partnership and the subsidiaries that are the owners of the Projects, jointly and severally. GUARANTORS: Chateau Communities, Inc. and ROC Communities, Inc. LENDER: Hometown, or any of its affiliates in Hometown's discretion. LOAN DOCUMENTS: Borrower's obligations in respect of the Loan will be evidenced and secured by a loan agreement (the "LOAN AGREEMENT"), a guaranty agreement (the "GUARANTY AGREEMENT"), promissory notes, security instruments, and other related documentation (collectively, together with this Term Sheet, the "LOAN DOCUMENTS") in customary form and mutually satisfactory to Borrower and Lender. AMOUNT: $85 million. COMMITMENT FEE: None. ------------------------------------------------------------------------------- HOMETOWN AMERICA, L.L.C. JUNE 2003 Page 1 CONFIDENTIAL ------------------------------------------------------------------------------- PURPOSE: The Loan will be made for the purposes of repaying in full (the "REPAYMENT") the Series A Notes and the Series B Notes issued pursuant to an unsecured credit facility (the "PAC LIFE LOAN") obtained by CP Limited Partnership and the Guarantors from Pacific Life Insurance Company ("PAC LIFE"). On the First Funding Date (as defined below), Lender will fund such portion of the Loan as is necessary to repay the Series B Notes in full, including any required "make whole" or prepayment premium and associated fees and expenses (the "SERIES B REPAYMENT AMOUNT"). On the Second Funding Date (as defined below), the balance of the Loan will be funded in order to enable Borrower to repay the Series A Notes in full, including any required "make whole" or prepayment premium and associated fees and expenses (the "SERIES A REPAYMENT AMOUNT"). Interest shall not accrue on the Series A Repayment Amount until disbursement on the Second Funding Date. Borrower acknowledges that the Series A Repayment Amount will not be sufficient to repay the Series A Notes in full, and, therefore, Borrower and the Guarantors will use their own capital resources (together with the Series A Repayment Amount) to repay the Series A Notes in full. SECURITY The Loan will be secured by two (2) manufactured home communities located in Michigan and four (4) manufactured home communities located in Florida (collectively, the "PROJECTS"). FUNDING DATE: The Loan will be funded in two installments. The Series B Payment Amount will be funded on a date (the "FIRST FUNDING DATE") that will enable Borrower and Guarantor to repay the Series B Notes so as to avoid any default under the Pac Life Loan Agreement (defined below), and the Series A Payment Amount will be funded on a date (the "SECOND FUNDING DATE") that will enable Borrower and Guarantor to repay the Series A Notes so as to avoid any default under the Pac Life Loan Agreement. ------------------------------------------------------------------------------- HOMETOWN AMERICA, L.L.C. JUNE 2003 Page 2 CONFIDENTIAL ------------------------------------------------------------------------------- CONDITIONS PRECEDENT TO FUNDING/CLOSING: Execution and delivery of the Loan Documents. Representation by Borrower and the Guarantors that the Loan Documents will not and this Term Sheet does not violate or give rise to any obligation by Borrower, the Guarantors or any of their respective subsidiaries or affiliates, to make any payments under any existing contracts, agreements, understandings or arrangements with or involving Borrower, the Guarantors or any of their respective subsidiaries or affiliates, including, but not limited to, any tax protection, tax sharing, or similar agreements or arrangements. Other conditions similar to those in the Second Amendment and Waiver to the Amended and Restated Note Purchase Agreement between CP Limited Partnership, the Guarantors and Pac Life, dated as of December 31, 2002 (the "PAC LIFE LOAN AGREEMENT") as well as other conditions precedent customary in a secured loan. MATURITY: March 31, 2004 AMORTIZATION: None. INTEREST RATE: Variable rate equal to one-month LIBOR + 250 basis points ("BPS"). DEFAULT RATE: Upon the occurrence and during the continuation of an Event of Default under the Loan Documents, the Loan will accrue interest at a default rate equal to (a) Interest Rate + 200 bps for 60 days, (b) Interest Rate + 400 bps for the following 60 days, (c) Interest Rate + 600 bps for the following 60 days, and (d) Interest Rate + 800 bps thereafter. ANNUAL FEE: None. COLLATERAL: The Loan will be secured with first liens on the Projects, assignments of leases and rents, and other customary security covering the Projects. RECOURSE: The Loan will be fully non-recourse to Borrower, except that the Loan will be recourse to Borrower and Guarantors for standard recourse exceptions which include environmental matters, intentional misrepresentation, misappropriation of funds (including proceeds paid under any insurance policies or condemnation proceedings, rents and security deposits), waste, willful destruction of property, fraud, unauthorized transfer, voluntary bankruptcy, collusive involuntary bankruptcy and customary items. ------------------------------------------------------------------------------- HOMETOWN AMERICA, L.L.C. JUNE 2003 Page 3 CONFIDENTIAL ------------------------------------------------------------------------------- REPRESENTATIONS The Loan will include representations and warranties to be AND WARRANTIES: made as of the Funding Date that will be similar to the representations and warranties made in the Pac Life Loan, as well as representations and warranties customary in a secured loan. EXPENSES: The out-of-pocket expenses of Lender associated with negotiating, structuring, documenting, and enforcing the Loan Documents will be paid by Borrower. All such expenses of the Lender incurred as of the Funding Date will be paid by Borrower on the Funding Date. DEFAULTS: The Loan Documents will contain events of default that are customary in a secured loan. GENERAL The Loan Documents will contain covenants that are customary COVENANTS: in a secured loan. FINANCIAL COVENANTS: None. PREPAYMENT: The Loan may be prepaid in whole or in part at any time on not less than three (3) days' prior written notice. Any prepayment of Loan principal must be accompanied by interest accrued through the date of prepayment on the principal amount prepaid. APPRAISAL: Prior to the Funding Date Lender will have received an appraisal for the Projects, on an "as-is, where-is, with all faults" basis from an appraiser acceptable to Lender (the "APPRAISAL"), confirming that the amount of the Required Payment will not exceed 80% of the appraised value of the Projects. ENVIRONMENTAL/ Environmental reports and structural engineering reports ENGINEERING: satisfactory to Lender, in form and from firms acceptable to Lender will be required. BROKER/ CORRESPONDENT: None. Nothing herein express or implied shall give or be construed to give to any person or entity, other than the parties hereto, any legal or equitable or other rights or benefits. [Remainder of page intentionally left blank. Signature Page Follows.] ------------------------------------------------------------------------------- HOMETOWN AMERICA, L.L.C. JUNE 2003 Page 4 CONFIDENTIAL ------------------------------------------------------------------------------- BORROWER: LENDER: CP LIMITED PARTNERSHIP, HOMETOWN AMERICA, L.L.C., a Maryland limited partnership a Delaware limited liability company By: /s/ Tamara D. Fischer By: Hometown Residential Manager, L.L.C., ----------------------------- a Delaware limited liability company, Name: Tamara Fischer its sole manager] -------------------------- Title: Executive Vice President -------------------------- By: /s/ Richard G. Cline, Jr. -------------------------------- Name: Richard G. Cline, Jr. ----------------------------- GUARANTORS: Title: Manager ----------------------------- CHATEAU COMMUNITIES, INC., a Maryland corporation By: /s/ Tamara D. Fischer ----------------------------- Name: Tamara D. Fischer -------------------------- Title: Executive Vice President -------------------------- ROC COMMUNITIES, INC., a Maryland corporation By: /s/ Tamara D. Fischer ----------------------------- Name: Tamara D. Fischer -------------------------- Title: Executive Vice President -------------------------- ------------------------------------------------------------------------------- HOMETOWN AMERICA, L.L.C. JUNE 2003 Page 5