Exhibit 99.12
EXECUTION COPY
November 17, 2003
CharterMac Capital Company, LLC
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Lock-Up Agreement
Ladies and Gentlemen:
Reference is hereby made to (i) that certain Contribution Agreement,
dated as of December 17, 2002 (the "Contribution Agreement"), by and among
CharterMac Capital Company, LLC, a Delaware limited liability company ("CCC"),
and the contributors named therein, pursuant to which the undersigned will
receive special common units of CCC (the "Special Common Units") which are
exchangeable for common shares of beneficial interest (the "Common Shares") of
CharterMac, a Delaware statutory trust ("CharterMac"), in accordance with that
certain Exchange Rights Agreement, dated as of the date hereof, among CCC,
CharterMac Corporation, the undersigned and certain other parties thereto (the
"Exchange Rights Agreement") and (ii) that certain Special Preferred Voting
Shares Purchase Agreement, dated as of November 17, 2003, by and among
CharterMac and APH Associates L.P., DLK Associates L.P, Marc Associates, L.P.,
Related General II, L.P. and SJB Associates L.P., pursuant to which the
undersigned will receive special preferred voting shares of beneficial interest
of CharterMac (the "Special Preferred Shares" and together with the Special
Common Units and the Common Shares, the "Securities").
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Contribution Agreement.
In consideration of the agreement by CCC to consummate the transactions
contemplated by the Contribution Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned, intending to be legally bound, hereby agrees as follows:
1. General. Until November 17, 2004, except as set forth in this Lock-Up
Agreement, the undersigned shall not, 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 ("Transfer") any of the Securities without the prior written consent
of CCC, which shall be granted or withheld in the sole discretion of CCC.
From November 17, 2004 until November 17, 2005,
except as set forth in this Lock-Up Agreement, the undersigned may not
Transfer more than 20% of the Securities without the prior written
consent of CCC, which shall be granted or withheld in the sole discretion
of CCC. From November 17, 2005 until November 17, 2006, except as set
forth in this Lock-Up Agreement, the undersigned may not Transfer more
than 60% of the Securities without the prior written consent of CCC,
which shall be granted or withheld in the sole discretion of CCC. From
and after November 17, 2006 there shall be no restrictions on Transfer
pursuant to this Section 1.
2. Exchange Restrictions. Without the prior written consent of CCC, which
shall not be unreasonably withheld, the undersigned shall not exchange
any Special Common Units into cash or Common Shares pursuant to the
Exchange Rights Agreement (the "Exchange of Special Common Units") until
November 17, 2004; provided, however, that the foregoing restriction with
respect to the Exchange of Special Common Units shall terminate upon the
death of the undersigned and shall not apply to the exchange of Special
Common Units following the foreclosure or other exercise of remedies by a
pledgee which is an Institutional Lender (as defined below) in accordance
with Section 3; provided, further, however, that the consent of CCC shall
be deemed reasonably withheld if CCC could reasonably anticipate adverse
tax consequences to CCC or CharterMac resulting from granting such
consent. Notwithstanding the provisions of Section 1 hereof, to the
extent the restrictions on the Exchange of Special Common Units have not
previously been removed, all such restrictions shall expire after the
first anniversary of the date hereof.
3. Permitted Transfers. (a) Notwithstanding the provisions of Sections 1 and
2 hereof, the undersigned may from time to time pledge Securities which
are subject to the restrictions on Transfer and/or exchange contained in
Sections 1 and 2 in connection with a recourse loan or loans of which the
aggregate principal amount, as of the date of any such pledge or any
additional advance secured by such pledge, shall not exceed 40% of the
Value (as defined below) as of such date of the Securities then subject
to pledge. In connection with any permitted pledge, the pledgee shall
agree to be bound in writing by the restrictions set forth herein;
provided, however, that a pledgee which is an Institutional Lender shall
otherwise be entitled and authorized, in connection with any foreclosure
in respect of such pledge, to transfer the Securities into its name and
sell any Securities to any Person other than an Investor Member (as
defined in the Exchange Rights Agreement) or an Affiliate of an Investor
Member free of the restrictions of this Lock-Up Agreement. For purposes
hereof, "Institutional Lender" means either a financial institution
(including, without limitation, a commercial bank, mortgage bank,
investment bank, life insurer or pension fund) in the business of making
loans and having assets exceeding $25 billion, or any public or
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private company in the business of making loans to real estate companies
and having assets exceeding $1 billion or a subsidiary of such financial
institution or such public or private company. For purposes hereof,
"Value" means, with respect to a referenced date, the average of the
closing market price of the Common Shares for the immediately preceding
thirty (30) consecutive trading days. The market price for each such
trading day shall be: (i) if the Common Shares are listed or admitted to
trading on the New York Stock Exchange (the "NYSE"), the American Stock
Exchange ("AMEX"), any national securities exchange or the Nasdaq Stock
Market ("Nasdaq"), the closing price on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices
on such day; (ii) if the Common Shares are not listed or admitted to
trading on the NYSE, the AMEX, any national securities exchange or the
Nasdaq, the last reported sale price on such day or, if no sale takes
place on such day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source designated by
CharterMac; or (iii) if the Common Shares are not listed or admitted to
trading on the NYSE, the AMEX, any national securities exchange or the
Nasdaq and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low asked
prices on such day, as reported by a reliable quotation source designated
by CharterMac, or if there shall be no bid and asked prices on such day,
the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than thirty (30) days prior to the date in
question) for which prices have been so reported; provided, that if there
are no bid and asked prices reported during the thirty (30) days prior to
the date in question, the Value of the Securities shall be determined by
the Independent Trustees (as defined in the Second Amended and Restated
Trust Agreement of CharterMac) acting in good faith on the basis of such
quotations and other information as they consider, in their reasonable
judgment, appropriate.
(b) The provisions of Sections 1 and 4 shall not apply to a
Transfer to a Permitted Transferee, provided that the Permitted
Transferee shall furnish to CCC a written agreement to be bound by and
comply with the provisions of this Lock-Up Agreement applicable to the
transferor.
As used herein, "Permitted Transferee" shall mean (i) Xxxxxx X. Xxxxx
(the "Principal"); (ii) any spouse, parent, lineal descendent,
parent-in-law, nephew, niece, brother, sister, brother-in-law,
sister-in-law, stepchild, son-in-law and daughter-in-law of the Principal
or their respective spouses; (iii) any corporation, limited partnership
or limited liability company in which all of the shares, partnership
interests or membership interests are owned by the Principal and/or the
individuals listed in (ii) above; (iv) in case of the death of any of the
foregoing individuals, a transfer by will or by the laws of the intestate
succession to executors, administrators, testamentary trustees, legatees
or beneficiaries; or (v) trusts, the only beneficiaries of which are
listed in (i), (ii), (iii); (iv) and/or are charitable organizations.
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(c) Notwithstanding anything to the contrary in this Lock-Up
Agreement, the restrictions on Transfers and Exchange of Special Common
Units contained in Sections 1 and 2 of this Lock-Up Agreement shall
terminate and be of no further force and effect upon the occurrence of
either of the following events: (i) termination of the Principal's
employment by CCC without Cause (as defined in the Principal's employment
agreement dated as of the date hereof (the "Employment Agreement")), (ii)
termination of the Principal's employment by the Principal for Good
Reason (as defined in the Principal's Employment Agreement) or (iii) the
Principal's death or Disability (as defined in the Principal's Employment
Agreement).
(d) Notwithstanding anything to the contrary contained in this
Lock-Up Agreement, the restrictions on Transfers and Exchange of Special
Common Units contained in this Lock-Up Agreement shall not apply to:
(i) any Transfer of Securities effected pursuant to a
tender offer or exchange offer made by any Person or Persons
(other than Contributor and its Affiliates) recommended by the
Board of Trustees of CharterMac and any Exchange of Special Common
Units to permit Contributor to participate in such tender; or
(ii) any Transfer of Securities effected pursuant to a
merger or consolidation in which CharterMac is a constituent
company, or pursuant to an exercise of dissenter's rights
applicable to any statutory merger or consolidation in which
CharterMac is a constituent company, or any Exchange of Special
Common Units to permit Contributor to participate in such a
transaction; or
(iii) any Transfer of Securities or Exchange of Special
Common Units following a Change in Control of CharterMac. As used
in this Section 3(d)(iii), a "Change in Control" shall be deemed
to have occurred if: (A) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act), which
is not an Affiliate of CharterMac or CCC is or becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of CharterMac
representing 50.1% or more of the combined voting power of
CharterMac's then outstanding securities or becomes the managing
member of CCC; (B) any consolidation or merger of CharterMac or
CCC with or into any other corporation or other entity or person
(other than an Affiliate of CharterMac or CCC) in which the
shareholders of CharterMac prior to such consolidation or merger
own or owns less than 50.1% of CharterMac's voting power
immediately after such consolidation or merger, or in which the
managing member of CCC or another Affiliate of CharterMac ceases
to be the controlling person of the surviving entity or person
(excluding any consolidation or merger effected exclusively to
change the domicile of
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CharterMac or CCC); (C) a sale of all or substantially all of the assets
of CharterMac or CCC; or (D) a liquidation or dissolution of CharterMac
or CCC; provided, that no change in control shall be deemed to occur with
respect to any of the above-referenced events involving CCC if after such
event Principal continues to be an employee of a company that is an
Affiliate of CharterMac and continues to have duties and functions and
compensation consistent with those referenced in his Employment Agreement
with RCC.
4. Additional Transfer Restrictions. Without the prior written consent of
CCC, which shall be granted or withheld in the sole discretion of CCC,
the undersigned shall not Transfer any Securities to any Person who
holds, or would hold as a result of such Transfer, more than 10% of the
Common Shares (or any combination of Securities that, on a fully
exchanged basis, would constitute more than 10% of the Common Shares),
determined on a fully diluted basis.
5. Stop Transfer Instructions. The undersigned agrees and consents to the
entry of stop transfer instructions with CCC and CharterMac's transfer
agent and registrar against the Transfer of the Securities except in
compliance with the restrictions set forth in this Lock-Up Agreement.
6. Remedies for Breach. The undersigned acknowledges that any Transfer of
any Securities in violation of this Lock-Up Agreement shall be null and
void. The undersigned acknowledges that it is impossible to measure the
damages that will accrue to CCC or CharterMac by reason of a failure of
the undersigned to comply with the provisions of this Lock-Up Agreement.
Therefore, if CharterMac and/or CCC shall institute any action or
proceeding to enforce the provisions hereof, the undersigned agrees that
CharterMac and/or CCC shall be entitled to injunctive relief, without the
need to prove actual damages and the undersigned waives, and shall not
allege as a claim or defense to such action or proceeding that CharterMac
and/or CCC has an adequate remedy at law. CharterMac is an intended
third-party beneficiary of this Lock-Up Agreement and shall have the
right, independently or together with CCC, to enforce any of the
provisions hereof.
7. Miscellaneous. The undersigned understands that CCC is relying upon this
Lock-Up Agreement in consummating the transactions contemplated in the
Contribution Agreement. The undersigned further understands that this
Lock-Up Agreement is irrevocable and shall be binding upon the
undersigned's heirs, legal representatives, successors, and assigns. In
connection with any Transfer pursuant to this Lock-Up Agreement, the
transferee shall enter into such agreements and documentation as required
pursuant to the Amended and Restated Operating Agreement of CCC (as
amended from time to time).
8. Governing Law. This Lock-Up Agreement shall be governed by the laws of
the State of New York without regard to the conflict of laws principles
thereof.
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9. Acknowledgement Agreement. CCC agrees to enter into an agreement with any
permitted pledgee of Securities acknowledging the pledge and the rights
of the pledgee on terms reasonably requested by the pledgee.
Very truly yours,
DLK Associates L.P.
By: DLK Associates, Inc., its general partner
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
The undersigned, being the holder(s) (collectively if more than one, the
"Holder") of all of the equity interests (the "Equity Interests") in the above
party to the foregoing Lock-Up Agreement (the "Direct Owner"), agree for the
benefit of CCC and CharterMac that the Holder will not Transfer or permit any
Transfer of the Equity Interests in the Direct Owner in a manner that, by
indirect Transfer, would circumvent the purpose and intent of the restrictions
on Transfer of Securities set forth in the Lock-Up Agreement.
/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
Acknowledged and agreed to by:
CharterMac Capital Company, LLC
By: CharterMac Corporation,
its Managing Member
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chief Operating Officer
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