UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. _________)*
RESORTQUEST INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
761183 10 2
- --------------------------------------------------------------------------------
(CUSIP Number)
Thomas J. Plotz, Esq.
Shaw Pittman Potts and Trowbridge
2300 N Street, NW
Washington, D.C. 20037
(202) 663-8000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 26, 1998
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 28 Pages
<PAGE>
SCHEDULE 13D
CUSIP No. 761183 10 2 Page 2 of 28 Pages
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Joshua M. Freeman
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO, AF
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D)
OR 2(E)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 941,707
BENEFICIALLY
OWNED BY -----------------------------------------------------
EACH
REPORTING 8 SHARED VOTING POWER
PERSON
WITH -0-
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,016,457
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
932,152
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS)
[X]*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
- --------------------------------------------------------------------------------
* Excludes 9,555 shares that represent the 2% of CMF Coastal that Mr. Freeman
does not own and the 74,750 shares owned by CMF RQI Holdings over which Mr.
Freeman does not have voting control. Mr. Freeman disclaims beneficial ownership
of such securities.
<PAGE>
SCHEDULE 13D
CUSIP No. 761183 10 2 Page 3 of 28 Pages
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CMF Coastal Resorts L.L.C.
52-2036729
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
OO
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D)
OR 2(E)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 477,750
BENEFICIALLY
OWNED BY -----------------------------------------------------
EACH
REPORTING 8 SHARED VOTING POWER
PERSON
WITH -0-
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
477,750
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
477,750
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (SEE INSTRUCTIONS)
[X]*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO (limited liability company)
- --------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
CUSIP No. 761183 10 2 Page 4 of 28 Pages
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
CMF RQI Holdings L.L.C.
52-2098807
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D)
OR 2(E)
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES -0-
BENEFICIALLY
OWNED BY -----------------------------------------------------
EACH
REPORTING 8 SHARED VOTING POWER
PERSON
WITH -0-
-----------------------------------------------------
9 SOLE DISPOSITIVE POWER
193,383
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
193,383
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE
INSTRUCTIONS)
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.2%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO (limited liability company)
- --------------------------------------------------------------------------------
<PAGE>
Item 1. SECURITY AND ISSUER
The class of equity securities to which this statement relates consists
of the common stock, par value $.01 per share (the "Common Stock"), of
ResortQuest International, Inc., a Delaware corporation (the "Company"). The
address of the Company's principal executive offices is 1355-B Lynnfield Road,
Suite 245, Memphis, Tennessee 38119.
Item 2. IDENTITY AND BACKGROUND
(a) The names of the filing persons are:
Joshua M. Freeman ("Mr. Freeman")
CMF Coastal Resorts L.L.C. ("CMF Coastal"), a limited
liability company organized under the laws of the State of
Delaware. Mr. Freeman owns 98% of the membership interest and
is Managing Member of CMF Coastal.
CMF RQI Holdings L.L.C. ("CMF RQI Holdings"), a limited
liability company organized under the laws of the State of
Delaware. Mr. Freeman owns 61.346% of the membership interest
and is Managing Member of CMF RQI Holdings.
(b) The business address for Mr. Freeman, CMF Coastal and CMF RQI
Holdings is 11325 Seven Locks Road, Potomac, Maryland 20854.
(c) Mr. Freeman's principal occupation is real estate development
and management. Mr. Freeman conducts his business through the
following entities: Carl M. Freeman Associates, Inc., Sea
Colony Development Corporation, Inc., JMF Land Company, Inc.,
Freeman Group Limited Partnership, Americana Investments,
Inc., Carl M. Freeman Management Company, Inc., CMF Paymaster,
Inc., CMF Coastal Resorts L.L.C., Coastal Resorts Development
L.L.C., Coastal Resorts Utilities L.L.C., CMF Bayside L.L.C.,
Coastal Resorts Gas Company, L.L.C., Coastal Resorts Water
Company, L.L.C., Coastal Resorts Maintenance L.L.C., Slainte
Associates L.L.C., Cabin John Associates, L.P., CMF
Springfield, Limited Partnership, CMF Land Company, Inc.,
First Americana Aspen Limited Partnership, Second Americana
Aspen Limited Partnership, Cove Resort Limited Partnership,
Sea Colony Water Company, L.L.C., CMF Fitness, Inc., CMF Water
Management Co., Inc., CMF Virginia Land L.P., CMF Land
Company, Inc., CMF Loudoun L.P., CMF Loudoun Land Company,
Inc., CMF/Bull Run Associates, L.P., CMF/Bull Run Company,
Inc., CMF/Greenfields Associates, L.P., CMF/Greenfields
Company, Inc., CMF/McNair Associates, L.P., CMF/McNair
Company, Inc., CMF/Ni River Associates, L.P., CMF/Ni River
Company, Inc., CMF/Ashburn Associates, L.P., CMF Ashburn Land
Company, Inc. All of such entities are in the principal
business of real estate development and management and are
located at 11325 Seven Locks Road, Potomac, Maryland 20854.
CMF Coastal's principal business is real estate development
and management.
CMF RQI Holdings' principal business is holding for investment
shares of Common Stock of the Company.
Page 5 of 28 Pages
<PAGE>
(d) During the last five years, none of Mr. Freeman, CMF Coastal
or CMF RQI Holdings has been convicted in a criminal
proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of Mr. Freeman, CMF Coastal
or CMF RQI Holdings has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction as
a result of which he or it was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
such laws.
(f) Mr. Freeman is a United States citizen.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Freeman received 335,324 shares of Common Stock pursuant
to the Agreement and Plan of Organization dated March 11, 1998
by and among the Company, Coastal Realty Acquisition L.L.C.,
Coastal Management Acquisition Corp., Coastal Resorts Realty
L.L.C., Coastal Resorts Management, Inc., Mr. Freeman, T.
Michael Nally and CMF Coastal (the "Agreement"). CMF Coastal
received 477,750 shares of Common Stock pursuant to the
Agreement. On May 26, 1998, CMF RQI Holdings used its working
capital in the amount of $2,127,213 to acquire 193,383 shares
of Common Stock in the initial public offering of the Common
Stock of the Company. Mr. Freeman owns a 61.346% membership
interest in and is Managing Member of CMF RQI Holdings. Mr.
Freeman purchased his membership interest in CMF RQI Holdings
for a cash capital contribution of $1,304,963, all of which
was borrowed from Carl M. Freeman Associates, Inc. ("CMFA").
The borrowing was made pursuant to a Loan Agreement, dated as
of May 26, 1998, between Mr. Freeman and CMFA and is evidenced
by a Promissory Note, in the principal amount of $1,304,963,
which is due and payable on May 25, 2008 and bears interest at
the rate of 6.00% per annum. The Promissory Note is secured
pursuant to a Security Agreement, dated as of May 26, 1998,
between Mr. Freeman and CMFA under which Mr. Freeman has
pledged to CMFA his entire membership interest in CMF RQI
Holdings, any dividends or distributions thereunder, and any
proceeds from the foregoing.
Item 4. PURPOSE OF TRANSACTION
As of the date hereof, Mr. Freeman, CMF Coastal and CMF RQI
Holdings are each holding their Common Stock solely for
investment and none of the parties has any present plans or
proposals with respect to any material change in the Company's
business or corporate structure or, generally, any other
action referred to in instructions (a) through (j) of Item 4
of the form of Schedule 13D. Depending on market conditions
and other factors, Mr. Freeman, CMF Coastal and CMF RQI
Holdings may continue purchases of Common Stock or may sell or
otherwise dispose of all or portions of their Common Stock,
following the expiration of any relevant lockup restrictions,
if such sales and purchases would be desirable investments for
the portfolios of their respective accounts. Pursuant to
Section 10.4 of the Agreement, Mr. Freeman has been elected a
director of the Company and a member of the Executive
Committee of the Company's Board of Directors, to serve
subject to and in accordance with the Company's Certificate of
Incorporation and Bylaws.
Page 6 of 28 Pages
<PAGE>
Item 5. INTEREST IN SECURITIES OF THE ISSUER
a-b) As of the date hereof, Mr. Freeman may be deemed to
beneficially own, pursuant to the rules and regulations of the
Securities and Exchange Commission, 1,016,457 shares (6.4%) of
Common Stock. However, Mr. Freeman disclaims beneficial
ownership of 9,555 shares of Common Stock held by CMF Coastal
and 74,750 shares of Common Stock held by CMF RQI Holdings,
leaving him with acknowledged beneficial ownership of 932,152
shares (5.9%) of Common Stock. Shares beneficially owned by
Mr. Freeman (pursuant to the rules and regulations of the
Securities and Exchange Commission) include: (i) 335,324
shares acquired by Mr. Freeman directly pursuant to the
Agreement, for all of which Mr. Freeman has sole voting power
and sole dispositive power; (ii) 10,000 shares which are the
subject of stock options Mr. Freeman received as a
non-employee director of the Company, for all of which Mr.
Freeman would have sole voting power and sole dispositive
power upon exercise; (iii) 477,750 shares acquired by CMF
Coastal pursuant to the Agreement, for all of which Mr.
Freeman has sole voting power and sole dispositive power;
provided, however, that Mr. Freeman disclaims beneficial
ownership of 9,555 shares held by CMF Coastal which are
attributable to the 2% membership interest of CMF Coastal not
owned by him; and (iv) 193,383 shares purchased by CMF RQI
Holdings in the Company's initial public offering, for 118,633
shares of which Mr. Freeman has sole voting power and for
74,750 shares of which Mr. Freeman has no voting power, and
for all of which Mr. Freeman has sole dispositive power;
provided, however, that Mr. Freeman disclaims beneficial
ownership of 74,750 shares held by CMF RQI over which Mr.
Freeman has no voting power which are attributable to the
membership interest of CMF RQI Holdings not owned by him.
As of the date hereof, the number of shares beneficially owned
by CMF Coastal is 477,750, comprising 3.0% of the outstanding
shares of Common Stock. CMF Coastal has sole voting power and
sole dispositive power of 477,750 shares of Common Stock.
As of the date hereof, the number of shares beneficially owned
by CMF RQI Holdings is 193,383, comprising 1.2% of the
outstanding shares of Common Stock. CMF RQI Holdings has sole
voting power over no shares of Common Stock and sole
dispositive power of 193,383 shares of Common Stock.
(c) The transactions described above are the only transactions in
the Common Stock effected by the parties within the past 60
days.
(d) Not applicable.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Pursuant to the Agreement, Mr. Freeman and CMF Coastal may not
dispose of their shares of Common Stock acquired through the
Agreement until May 26, 1999. Additionally, in connection with
the initial public offering, Mr. Freeman and CMF RQI Holdings
each entered into a lockup letter for a one-year period with
Smith Barney Inc.
Page 7 of 28 Pages
<PAGE>
Item 7. MATERIAL TO BE FILED AS EXHIBITS
(1) Joint Acquisition Statement Pursuant to Rule 13d-1(f).
(2) Agreement and Plan of Organization dated March 11, 1998 by and
among ResortQuest International, Inc. (formerly Vacation
Properties, Inc.), Coastal Realty Acquisition L.L.C., Coastal
Management Acquisition Corp., Coastal Resorts Realty L.L.C.,
Coastal Resorts Management, Inc., Joshua M. Freeman, T.
Michael Nally and CMF Coastal Resorts L.L.C. (Incorporated by
reference to Exhibit 2.3 to the Company's Registration
Statement on Form S-1 (Registration No. 333-47867) filed on
March 12, 1998).
(3) Lockup Letter by Joshua M. Freeman to Smith Barney Inc.
(4) Lockup Letter by CMF RQI Holdings L.L.C. to Smith Barney Inc.
(5) Loan Agreement, dated May 26, 1998, between Carl M. Freeman
Associates, Inc. and Joshua M. Freeman.
(6) Promissory Note, dated May 26, 1998, from Joshua M. Freeman to
Carl M. Freeman Associates, Inc.
(7) Security Agreement, dated May 26, 1998, between Carl M.
Freeman Associates, Inc. and Joshua M. Freeman.
Page 8 of 28_ Pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I hereby certify that the information set forth in this statement is
true, complete and correct.
Dated: June 5, 1998
/s/ Joshua M. Freeman
----------------------------------------
Joshua M. Freeman
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I hereby certify that the information set forth in this statement is
true, complete and correct.
Dated: June 5, 1998
CMF COASTAL RESORTS L.L.C.
By: /s/ Joshua M. Freeman
------------------------------------------
Name: Joshua M. Freeman
Title: President and Managing Member
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I hereby certify that the information set forth in this statement is
true, complete and correct.
Dated: June 5, 1998
CMF RQI HOLDINGS L.L.C.
By: /s/ Joshua M. Freeman
----------------------------------------
Name: Joshua M. Freeman
Title: President and Managing Member
Page 9 of 28 Pages
EXHIBIT 1
JOINT ACQUISITION STATEMENT PURSUANT TO RULE 13D-1(F)
The undersigned hereby agree that this document shall be filed on
behalf of each of them.
/s/ Joshua M. Freeman
---------------------------------
Joshua M. Freeman
CMF COASTAL RESORTS L.L.C.
By: /s/ Joshua M. Freeman
------------------------------
Joshua M. Freeman
President and Managing Member
CMF RQI HOLDINGS L.L.C.
By: /s/ Joshua M. Freeman
------------------------------
Joshua M. Freeman
President and Managing Member
Dated: June 5, 1998
Page 10 of 28 Pages
EXHIBIT 3
RESORTQUEST INTERNATIONAL, INC.
LOCK-UP LETTER
May 20, 1998
SMITH BARNEY INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
FURMAN SELZ, LLC.
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, NY 10013
Dear Sirs and Mesdames:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
ResortQuest International, Inc., a Delaware corporation (the "Company",) and
that the Underwriters propose to reoffer the Shares to the public.
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that without the prior written consent of Smith Barney
Inc. the undersigned will not (and, except as may be disclosed in the
Prospectus, will not announce or disclose any intention to) sell, offer to sell,
solicit an offer to buy, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of, any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of one year after the date of the final Prospectus relating to the offering of
the Shares to the public by the Underwriters. Prior to the expiration of such
period, the undersigned will not announce or disclose any intention to do any
thing after the expiration of such period which the undersigned is prohibited,
as provided in the preceding sentence, form doing during such period.
Notwithstanding the foregoing, the provisions of this letter shall apply only to
Common Stock owned as of the date of the final Prospectus or acquired in the
offering as Directed Shares (as that term is defined in the final Prospectus).
The undersigned agrees that the provisions of this agreement shall be
binding also upon the successors, assigns, heirs and personal representatives of
the undersigned.
It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the
<PAGE>
Shares, you will release us from our obligations under this letter agreement.
Very truly yours,
/s/ Joshua M. Freeman
--------------------------
Name: Joshua M. Freeman
-----------------------
EXHIBIT 4
RESORTQUEST INTERNATIONAL, INC.
LOCK-UP LETTER
May 20, 1998
SMITH BARNEY INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
FURMAN SELZ, LLC.
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, NY 10013
Dear Sirs and Mesdames:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Common Stock, par value $0.01 per share (the "Common Stock"), of
ResortQuest International, Inc., a Delaware corporation (the "Company",) and
that the Underwriters propose to reoffer the Shares to the public.
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that without the prior written consent of Smith Barney
Inc. the undersigned will not (and, except as may be disclosed in the
Prospectus, will not announce or disclose any intention to) sell, offer to sell,
solicit an offer to buy, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of, any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for Common Stock, for a period
of one year after the date of the final Prospectus relating to the offering of
the Shares to the public by the Underwriters. Prior to the expiration of such
period, the undersigned will not announce or disclose any intention to do any
thing after the expiration of such period which the undersigned is prohibited,
as provided in the preceding sentence, form doing during such period.
Notwithstanding the foregoing, the provisions of this letter shall apply only to
Common Stock owned as of the date of the final Prospectus or acquired in the
offering as Directed Shares (as that term is defined in the final Prospectus).
The undersigned agrees that the provisions of this agreement shall be
binding also upon the successors, assigns, heirs and personal representatives of
the undersigned.
It is understood that, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the
<PAGE>
Shares, you will release us from our obligations under this letter agreement.
Very truly yours,
/s/ Joshua M. Freeman
------------------------------
Name: CMF RQI HOLDINGS L.L.C.
--------------------------
By: Joshua M. Freeman,
Managing Member
EXHIBIT 5
LOAN AGREEMENT
<TABLE>
<CAPTION>
<S> <C> <C>
Lender: Carl M. Freeman Associates, Inc. Borrower: Joshua M. Freeman
- ------ 11325 Seven Locks Road -------- 11325 Seven Locks Road
Potomac, Maryland 20854 Potomac, Maryland 20854
</TABLE>
THIS LOAN AGREEMENT between Joshua M. Freeman ("BORROWER") and Carl M.
Freeman Associates, Inc. ("LENDER") is made on the following terms and
conditions. Borrower has applied to Lender for a commercial loan (the "LOAN")
for the purposes set forth herein. Lender has agreed, subject to the terms and
conditions of this Loan Agreement, to make such Loan to Borrower.
1. Term. This Agreement shall be effective as of May 26, 1998, and shall
continue thereafter until all indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
2. Definitions. The following words shall have the following meanings when
used in this Agreement. Terms not otherwise defined in this agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code as in
effect in the State of Maryland or the State of Delaware or the Commonwealth of
Virginia. All references to dollar amounts shall mean amounts in lawful money of
the United States of America.
(a) Agreement. "AGREEMENT" means this Loan Agreement, as this Loan
Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Loan Agreement from time to time.
(b) CMF RQI. "CMF RQI" means CMF RQI Holdings L.L.C., a Delaware
limited liability company, and its successors and assigns.
(c) Expiration Date. "EXPIRATION DATE" means the date upon which
Borrower shall repay to Lender all amounts of principal and interest outstanding
on the Note. Unless otherwise agreed by Lender and Borrower in writing, the
Expiration Date shall be May 25, 2008.
(d) Indebtedness. "INDEBTEDNESS" means all principal, interest and
other fees, costs, charges and other amounts, whether now existing or hereafter
arising, and all other present and future liabilities and obligations of
Borrower to Lender, whether direct or indirect, matured or unmatured, and
whether absolute or contingent, joint, several, or joint and several, under this
Agreement, the Note, the Security Agreement, or any other document evidencing,
securing or otherwise relating to the transactions contemplated by this
Agreement.
(e) Note. "NOTE" means that certain Promissory Note of even date
herewith made by Borrower payable to the order of Lender in the maximum
principal amount of One
<PAGE>
Million Three Hundred Four Thousand Nine Hundred Sixty-Three Dollars
($1,304,963.00), together with any amendment, modification, substitute,
replacement or refinancing thereof.
(f) Related Documents. "RELATED DOCUMENTS" means all promissory notes,
credit agreements, loan agreements, security agreements and all other
instruments, agreements and documents, whether now or hereafter existing,
evidencing, securing or otherwise executed in connection with the Indebtedness.
(g) Security Agreement. "SECURITY AGREEMENT" means the Security
Agreement of even date herewith between Lender and Borrower and any other
agreements creating a lien or encumbrance on, or security interest in, any
assets of Borrower or any other person for purposes of securing all or any
portion of the Indebtedness.
3. Collateral. To secure payment of the Indebtedness and performance of all
other obligations and duties owed by Borrower to Lender, borrower shall grant to
Lender security interests in certain of Borrower's rights, interests and
holdings of such property as shall be set forth in the definition of
"Collateral" in the Security Agreement.
4. Representations and Warranties. Borrower Represents and warrants to
Lender, as of the date of this Agreement, as of the date of each disbursement of
Loan proceeds and at all times any indebtedness exists:
(a) Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower do not conflict with, result in
a violation of, or constitute a default under (a) any agreement or other
instrument binding upon Borrower or (b) any law, governmental regulation, court
decree, or order applicable to Borrower.
(b) Binding Effect. This Agreement, the Note, all Security Agreements
directly or indirectly securing repayment of the Indebtedness and all of the
Related Documents are binding upon Borrower as well as upon Borrower's estate,
successors, personal representatives, heirs and assigns, and are legally
enforceable in accordance with their respective terms.
(c) Commercial Purposes. Borrower intends to use, and shall use, the
Loan proceeds solely for the purpose of funding Borrower's capital contributions
to CMF RQI as provided in the Operating Agreement of CMF RQI.
(d) Survival of Representations and Warranties. Borrower understands
and agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in entering into with Borrower this
Agreement, the Note, the Security Agreement, and the Related Documents. Borrower
further agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect unless such time
as Borrower's Indebtedness shall be paid in full, or until this Agreement shall
be terminated in the manner provided above, whichever is the last to occur.
5. Covenants. Borrower covenants and agrees with Lender that, While this
Agreement is in effect, Borrower will:
-2-
<PAGE>
(a) Loan Proceeds. Use all Loan proceeds solely for the purposes set
forth above, unless specifically consented to the contrary by Lender in writing.
(b) Performance. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of any
event which constitutes an Event of Default under this Agreement or under any of
the Related Documents.
(c) Additional Assurances. Make, execute and deliver to Lender such
promissory notes, security agreements, financing statements, instruments,
documents and other agreements as Lender or its attorneys may reasonably request
to evidence and secure the Loan and to perfect all security interests provided
for hereunder or under the Security Agreement.
6. Events of Default. Each of the following shall constitute an Event of
Default under this Agreement:
(a) Default on Indebtedness. Failure of Borrower to make any payment
when due on the Indebtedness.
(b) Other Defaults. Failure of Borrower to comply with or to perform
when due any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents, or failure of Borrower to comply
with or to perform any other term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.
(c) False Statements. Any warranty, representation or statement made
or furnished to Lender by or on behalf of Borrower under this Agreement or the
Related Documents is false or misleading in any material respect at the time
made or furnished, or becomes false or misleading at any time thereafter.
(d) Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create and maintain a valid and perfected first priority
security interest in the Collateral) at any time and for any reason or if any of
the Collateral shall be attached or distrained at any time pursuant to any court
order or other legal process.
(e) Insolvency. The insolvency of Borrower, or a trustee or receiver
is appointed for Borrower for all or any portion of the property of Borrower, or
Borrower makes a general assignment for the benefit of Borrower's creditors, or
Borrower files for bankruptcy, or an involuntary bankruptcy petition is filed
against Borrower, or any proceeding under any bankruptcy or insolvency law or
any law relating to the relief of debtors or readjustments of indebtedness that
shall be commenced by or against Borrower.
(f) Right to Cure. If any default, other than a default relating to
any failure to make timely and full payment of any Indebtedness, is curable, and
if Borrower has not been given a notice of a similar default within the
preceding twelve (12) months, such default may be cured (and no Event of Default
will have occurred) if Borrower after receiving written notice from Lender
demanding cure of such default: (a) cures the default within ten (10) days; or
(b) if the
-3-
<PAGE>
cure reasonably requires more than ten (10) days, immediately initiates steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter diligently and continuously pursues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical, but in no event later than sixty (60) days after the end
of such ten (10) day period.
7. Effect of an Event of Default. If any Event of Default Shall occur,
except where otherwise provided in this Agreement or the Related Documents, at
Lender's option, all Indebtedness will become immediately due and payable, all
without notice of any kind to Borrower, except that in the case of an Event of
Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents or available at
law, in equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently; election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower shall not affect Lender's right
to declare a default and to exercise its rights and remedies.
8. Event of Prepayment. Each of the following shall constitute an Event of
Prepayment under this Agreement:
(a) Any sale for cash of all or any portion of Borrower's membership
interest in CMF RQI;
(b) Any distribution of cash by CMF RQI to Borrower in respect of
Borrower's membership interest in CMF RQI;
(c) Following the dissolution of CMF RQI and the distribution to
Borrower by CMF RQI of Borrower's proportionate share of CMF RQI's assets, any
sale for cash by Borrower of such assets; and
(d) Following the dissolution of CMF RQI and the distribution to
Borrower by CMF RQI of Borrower's proportionate share of CMF RQI's assets, the
receipt by Borrower of any cash distribution in respect of such assets.
9. Effect of Event of Prepayment. If Any Event of Prepayment shall occur,
except where otherwise provided in this Agreement or the Related Documents,
Borrower shall be required to make a mandatory prepayment on the Note as set
forth in the Note.
10. Miscellaneous Provisions.
(a) Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment.
-4-
<PAGE>
(b) Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Maryland (i.e., the laws
other than those relating to conflict of laws rules).
(c) Consent to Jurisdiction. Borrower irrevocably submits to the
jurisdiction of any state or federal court sitting in the State of Maryland over
any suit, action, or proceeding arising out of or relating to this Agreement.
Borrower irrevocably waives, to the fullest extent permitted by law, any
objection that Borrower may now or hereafter have to the laying of venue of any
such suit, action, or proceeding brought in any such court and any claim that
any such suit, action, or proceeding brought in any such court has been brought
in an inconvenient forum. Final judgment in any such suit, action, or proceeding
brought in any such court shall be conclusive and binding upon Borrower and may
be enforced in any court in which Borrower is subject to jurisdiction by a suit
upon such judgment provided that service of process is effected upon Borrower as
provided in this Agreement or as otherwise permitted by applicable law.
(d) Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement.
(e) Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
out-of-pocket expenses incurred in connection with this Agreement or in
connection with the Loan made pursuant to this Agreement. Subject to any limits
under applicable law, if Lender hires an attorney to help enforce this Agreement
or to collect any Indebtedness, Borrower agrees to pay Lender's attorneys' fees,
and all of Lender's other collection expenses, whether or not there is a lawsuit
and including legal expenses for bankruptcy proceedings.
(f) Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed to be sufficiently given when
personally delivered or three business days after being sent by certified United
States mail, postage prepaid, return receipt requested, addressed to the
applicable party at the address of such party set forth above or to such other
address furnished by notice given in accordance with this subsection (f).
(g) Severability. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity, however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
(h) Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind his estate, personal representative, heirs,
successors and assigns and shall inure to the benefit of Lender, its successors
and assigns. Borrower shall not, however, have the right to assign its rights
under this Agreement or any interest therein, without the prior written consent
of Lender, which may be granted or withheld by Lender in its sole discretion.
-5-
<PAGE>
(i) Survival. All warranties, representations, and covenants and
agreements of Borrower in this Agreement shall survive the making of the Loan
contemplated hereby.
(j) Time is of the Essence. Time is of the essence in the performance
of this Agreement.
(k) Waiver. Indulgence by Lender with respect to any of the terms and
conditions of this Agreement or the failure of Lender to exercise any of its
rights under this Agreement shall not constitute a waiver thereof, and Borrower
shall remain liable for the strict performance of such terms and conditions
unless this Agreement shall be terminated. No provision of this Agreement may be
waived or modified orally, but all such waivers or modifications shall be in
writing. Whenever the consent of Lender is required under this Agreement, the
granting of such consent by Lender in one instance shall not constitute Lender's
continuing consent in subsequent instances, and in all cases such consent may be
granted or withheld in the sole discretion of Lender.
THIS LOAN AGREEMENT IS SIGNED AND DELIVERED EFFECTIVE IN ALL RESPECTS AS OF
MAY 26, 1998.
BORROWER:
----------
/s/ Joshua M. Freeman
----------------------
Joshua M. Freeman
LENDER:
----------
CARL M. FREEMAN ASSOCIATES, INC.
By: /s/ T. Michael Nally
----------------------
T. Michael Nally
Vice President
-6-
EXHIBIT 6
PROMISSORY NOTE
---------------
$1,304,963 MAY 26, 1998
POTOMAC, MARYLAND
FOR VALUE RECEIVED, the undersigned maker hereof, JOSHUA M. FREEMAN
(the "MAKER"), promises to pay to the order of CARL M. FREEMAN ASSOCIATES, INC.,
a Maryland corporation (hereinafter referred to as the "HOLDER" which term shall
mean the holder at any particular time of this Promissory Note), the principal
sum of ONE MILLION THREE HUNDRED FOUR THOUSAND NINE HUNDRED SIXTY-THREE DOLLARS
AND NO CENTS ($1,304,963.00), together with interest, as herein provided, on
said principal sum or so much thereof as may from time to time remain unpaid,
which principal and interest shall be paid as follows:
(a) Beginning on May 25, 1999, interest only payments shall be due
annually on each May 25 for accrued but unpaid interest at the rate of six
percent (6.00%) per annum (but in no event higher than the maximum legal rate of
interest, if any, chargeable with respect to this transaction). If any payment
of principal or interest is not made when due, such unpaid principal amount and,
to the extent not prohibited by applicable law, any such unpaid interest, shall
bear interest at the rate of ten percent (10%) per annum (or at the maximum rate
not prohibited by law, whichever is less) (the "DEFAULT RATE") from the date
payment is due (whether by acceleration or otherwise) to the date payment is
received by the Holder. If any provision hereof shall result in the interest
charged exceeding any applicable legal interest limit, any excessive interest
shall not be charged and any such amount if already paid shall be, at the option
of the Holder, (i) applied to reduce the principal amount due under this Note or
(ii) refunded to the Maker.
(b) (i) In any event, the entire principal, accrued interest as
aforesaid, and any other sums owed pursuant to this Promissory Note shall be due
and payable on May 25, 2008.
(ii) In addition, the Maker shall be required to make mandatory
prepayments on this Promissory Note as set forth in the following sentence.
Simultaneously with any Event of Prepayment, as defined in the Loan Agreement by
and between the Maker and the Holder of even date herewith as the same may be
modified, amended or restated from time to time (the "LOAN AGREEMENT"), the
Maker shall make a mandatory principal prepayment on this Promissory Note in an
amount equal to the amount of any net cash proceeds received as a direct or
indirect result of such Event of Prepayment.
(c) This Promissory Note is issued pursuant to the Loan Agreement.
<PAGE>
(d) Payment of principal and interest shall be made at Cabin John
Center, 11325 Seven Locks Road, Potomac, Maryland 20854 or at such other place
as the Holder may from time to time designate and shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender.
THIS PROMISSORY NOTE MAY BE PREPAID IN WHOLE OR IN PART AT ANY TIME.
This Promissory Note is secured by all membership interests of the
Maker in CMF RQI Holdings L.L.C., a Delaware limited liability company, granted
pursuant to that certain Security Agreement by and between the Maker and the
Holder of even date herewith as the same may be modified, amended or restated
from time to time (the "SECURITY AGREEMENT") and all proceeds therefrom.
It is expressly agreed that the entire principal sum of this Promissory
Note, together with all accrued interest thereon, shall immediately become due
and payable (without demand for payment, notice of non-payment, presentment,
notice of dishonor, protest, notice of protest, or any other notice, all of
which are hereby expressly waived by the Maker and any other party who may
become liable hereunder):
(i) upon the default in the payment of any installment of interest or
principal due under this Promissory Note, which default continues
for a period of ten (10) days; or
(ii) upon an Event of Default under and as defined in the Security
Agreement.
Except as provided in the Security Agreement, all payments on this
Promissory Note, when received, shall be applied first to the payment of due and
unpaid interest to and including the day prior to the receipt of such payment,
then to accrued interest not yet due and payable, and then to payment on account
of the principal hereof.
The Holder will record on its own internal records the amount and date
of each payment hereunder, and such records will be conclusive and binding in
the absence of manifest error.
The Maker agrees to pay all costs of collection when incurred,
including, without limitation, attorneys' fees and expenses and court costs.
Such costs shall be added to the balance of principal and interest then due and
shall be deemed secured by the Security Agreement.
Failure of the Holder hereof to assert any right herein shall not be
deemed a waiver thereof.
2
<PAGE>
In the event that this Promissory Note is transferred, assigned or
pledged, the Maker hereby waives, as against such transferee, assignee or
pledgee, any defenses, setoffs and counterclaims of every kind and description
that the Maker may have against the original holder of this Promissory Note.
This Promissory Note may not be changed or terminated orally, nor may
any of its provisions be waived, except by an agreement in writing signed by the
party against whom enforcement of such change, waiver or termination is sought.
This Promissory Note and the legality, validity and performance of the
terms hereof, shall be governed by and enforced, determined and construed in
accordance with the internal laws of the State of Maryland (i.e., the laws other
than those relating to conflict of laws rules) applicable to contracts,
transactions and obligations entered into, and to be performed in Maryland.
This Promissory Note shall be binding upon the Maker and the Maker's
estate, legal representatives, heirs, successors and assigns.
IN WITNESS WHEREOF, the Maker has caused this Promissory Note to be
duly executed as of the day and year first above written.
MAKER:
-------
/s/ Joshua M. Freeman
---------------------
Joshua M. Freeman
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") is made by and between CARL
M. FREEMAN ASSOCIATES, INC., a Maryland corporation ("SECURED PARTY"), and
JOSHUA M. FREEMAN ("DEBTOR"), effective as of May 26, 1998.
RECITALS:
I. Debtor has purchased, using financing provided by Secured Party, a
membership interest in CMF RQI Holdings L.L.C., a Delaware limited liability
company ("CMF RQI").
II. In connection with such financing for the purchase of Debtor's
membership interest in CMF RQI, Debtor has executed that certain Promissory Note
of even date herewith payable to the order of Secured Party (the "CMF RQI
NOTE").
III. In further consideration of the agreement by Secured Party to
provide purchase money financing in connection with Debtor's purchase of a
membership interest in CMF RQI, Debtor has agreed that the CMF RQI Note shall be
secured by a security interest in all of Debtor's interest in CMF RQI.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
A. As security for the Obligations (as hereinafter defined), Debtor
does hereby assign, grant, and set over to Secured Party, and agrees that
Secured Party shall have a security interest in (i) all of Debtor's right, title
and interest in and to CMF RQI and (ii) all of Debtor's rights and interests in
and under the operating agreement or other governing documents of CMF RQI, such
security interest to include, without limitation, any dividends or distributions
payable thereunder, and proceeds of any of the above (collectively, the
"COLLATERAL"). For purposes hereof, the "OBLIGATIONS" shall be deemed to consist
of all debts, liabilities and obligations evidenced or arising under (i) the CMF
RQI Note, including any extensions, renewals, refinancings or changes in form
thereof, and (ii) this Agreement, as may now or hereafter be amended.
Accordingly, Debtor acknowledges and agrees that all of the Collateral shall
remain subject to the lien and other terms hereof until all of the Obligations
shall have been paid in full.
B. Debtor and Secured Party agree that any and all dividends or
distributions from CMF RQI to which Debtor is entitled shall be paid directly to
the Secured Party and, to the extent any such dividends or distributions consist
of cash, applied by the Secured Party to the Obligations, in such order as may
be provided in the CMF RQI Note.
<PAGE>
C. At any time and from time to time, upon request of Secured Party,
Debtor will give, execute, file and/or record any notice, financing statement,
continuation statement, instrument, document or agreement that Secured Party may
consider necessary or desirable to create, preserve, continue, perfect or
validate any security interest granted hereunder or which Secured Party may
consider necessary or desirable to exercise or enforce its rights hereunder with
respect to such security interest. Without limiting the generality of the
foregoing, Secured Party is authorized to (i) file with respect to the
Collateral one or more financing statements, continuation statements or other
documents without the signature of Debtor and to name therein Debtor as debtor
and Secured Party as secured party, and (ii) correct or complete, or cause to be
corrected or completed, any financing statements, continuation statements or
other such documents as have been filed naming Debtor as debtor and Secured
Party as secured party.
D. Debtor represents that it owns all of the Collateral free and clear
of all liens and encumbrances. Debtor agrees that he will not encumber or grant
a security interest in or file a financing statement covering the Collateral, or
permit any of the foregoing, without the prior written consent of Secured Party,
and Debtor hereby represents that he has not heretofore done so.
E. Each of the following shall constitute an event of default ("EVENT
OF DEFAULT") hereunder: (a) if Debtor shall fail to make any payment of any of
the Obligations as and when due, (b) if Debtor has made any representation,
warranty or statement to Secured Party that is false or misleading in any
material respect at the time made, or becomes false or misleading at any time
thereafter in or with respect to, or has breached any provision of, this
Agreement , (c) if Debtor shall become insolvent, (d) if a receiver or a trustee
for all or any part of Debtor's property shall be appointed, (e) if any
assignment for the benefit of Debtor's creditors shall be made, (f) if a
petition in bankruptcy shall be filed by or against Debtor, (g) if any
proceeding under any bankruptcy or insolvency law or any law relating to the
relief of debtors or readjustments of indebtedness shall be commenced by or
against Debtor, or (h) if this Agreement ceases to be in full force and effect
(including the failure of this Agreement to create and maintain a valid and
perfected first priority security interest in the Collateral) at any time and
for any reason or if any of the Collateral shall be attached or distrained at
any time pursuant to any court order or other legal process.
If an Event of Default shall occur, then all Obligations shall become
immediately due and payable and Secured Party may avail itself of all rights and
remedies granted a secured party under the Uniform Commercial Code in force in
the State of Maryland or Delaware or the Commonwealth of Virginia, including,
without limiting the generality of the foregoing, the right to sell, assign and
deliver the Collateral, or any part thereof, at public or private sale in the
State of Maryland or elsewhere as Secured Party may determine in good faith and
at such prices as Secured Party may deem best. At any such sale Secured Party
shall have the right to purchase the Collateral, or any part thereof, to the
full extent permitted by law. At any such sale Secured Party may, in its
discretion, restrict the prospective bidders or purchasers to persons who will
represent and
2
<PAGE>
warrant that they are acquiring the Collateral for their own account, for
investment only and not with a view toward the resale or distribution thereof
and who will make such further representations and warranties as Secured Party
may, in its discretion, deem necessary or desirable to assure Secured Party that
such prospective bidders or purchasers are, with respect to the applicable
federal and state securities laws and rules, suitable bidders or purchasers of
such Collateral, which restrictions as to prospective bidders or purchasers the
parties agree are commercially reasonable. The parties agree that written notice
mailed to Debtor ten (10) business days prior to the date of public sale of the
Collateral or ten (10) business days prior to the date after which private sale
or any other disposition of the Collateral will be made shall constitute
reasonable notice (all other notices, demands, or advertisements of any kind
being hereby expressly waived), but notice given in any other reasonable manner
or at any other reasonable time shall be sufficient. Debtor shall be liable for
reasonable attorneys' fees and legal expenses incurred by Secured Party in
enforcing any of its rights or remedies under this Agreement , and, without
limiting the rights of Secured Party, the proceeds of disposition may be
applied, in Secured Party's discretion, to payment of such reasonable attorneys'
fees and legal expenses. EACH OF SECURED PARTY AND DEBTOR WAIVES THE RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INSTITUTED AGAINST DEBTOR IN RESPECT
OF THE CMF RQI NOTE, ANY OTHER OBLIGATIONS OR THE ENFORCEMENT OF ANY RIGHTS
GRANTED TO SECURED PARTY UNDER THIS SECURITY AGREEMENT.
Notwithstanding the foregoing, if an Event of Default, other than an
Event of Default relating to any failure to make timely and full payment of any
of the Obligations, is curable, and if Debtor has not been given a notice of a
similar default within the preceding twelve (12) months, such default may be
cured (and no Event of Default will have occurred) if Debtor after receiving
written notice from Secured Party demanding cure of such default: (a) cures the
default within ten (10) days; or (b) if the cure reasonably requires more than
ten (10) days, immediately initiates steps which Secured Party deems in Secured
Party's sole discretion to be sufficient to cure the default and thereafter
diligently and continuously pursues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical, but in
no event later than sixty (60) days after the end of such ten (10) day period.
F. Failure of Secured Party to exercise any right or remedy under this
Agreement , or delay by Secured Party in exercising same, will not operate as a
waiver thereof. No waiver by Secured Party will be effective unless and until it
is in written form and signed by Secured Party. Secured Party shall have no
obligation to resort to the Collateral or any other security which is or may
become available to it.
G. This Agreement, the CMF RQI Note, any amendments or replacements
hereof and thereof, and the legality, validity and performance of the terms
hereof and thereof, shall be governed by, enforced, determined and construed in
all respects in accordance with the internal laws of the State of Maryland
(i.e., the laws other than those relating to conflict of laws rules) applicable
to contracts, transactions and obligations entered into and to be performed in
the State of Maryland.
3
<PAGE>
Debtor hereby agrees that any suit, action or proceeding with respect
to this Agreement, the CMF RQI Note, any amendments or any replacement hereof
and thereof, and any transactions relating hereto or thereto may be brought in
the state courts of the State of Maryland, and Debtor hereby irrevocably
consents and submits to the jurisdiction of such courts for the purpose of any
such suit, action or proceeding. Debtor agrees that service of process on Debtor
in any such suit, action or proceeding may be made by certified United States
mail, postage prepaid, return receipt requested, to Debtor c/o Carl M. Freeman
Associates, Inc., 11325 Seven Locks Road, Potomac, Maryland 20854, or to such
other address furnished by notice given in accordance with Paragraph H of this
Agreement. Debtor hereby waives, and agrees not to assert against the Secured
Party (or any assignee thereof), by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, (a) any claim that he is not personally
subject to the jurisdiction of the above-named courts or that his property is
exempt or immune from setoff, execution or attachment, either prior to judgment
or in aid of execution and (b) to the extent permitted by applicable law, any
claim that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper or that this
Agreement, the CMF RQI Note or any amendments or any replacements thereof may
not be enforced in or by such courts.
This Agreement and the rights, powers and duties set forth herein shall
be binding upon Debtor, his estate, successors, personal representatives, heirs
and assigns and shall inure to the benefit of Secured Party, its successors and
assigns (including, without limitation, any assignee of the CMF RQI Note or any
part thereof). In the event that any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof which may prove invalid or unenforceable under any applicable
law shall not affect the validity or enforceability of any other provision
hereof.
H. Notices required or permitted to be given under this Agreement shall
be in writing and shall be deemed to be sufficiently given when personally
delivered or three business days after being sent by certified United States
mail, postage prepaid, return receipt requested, addressed to the applicable
party at the address of such party set forth below or to such other address
furnished by notice given in accordance with this Paragraph H.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
DEBTOR:
-------
/s/ Joshua M. Freeman
---------------------
Joshua M. Freeman
Address: c/o Carl M. Freeman Associates, Inc.
11325 Seven Locks Road
Potomac, Maryland 20854
SECURED PARTY:
--------------
CARL M. FREEMAN ASSOCIATES, INC.,
a Maryland corporation
By: /s/ T. Michael Nally
---------------------------
T. Michael Nally
Vice President
Address: Cabin John Center
11325 Seven Locks Road
Potomac, Maryland 20854
