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DALLAS COUNTY
8/1/2019 10:36 AM
FELICIA PITRE
DISTRICT CLERK
Alicia Mata
DC-1 9-1 0857
CAUSE NO.
§
C-68TH JUDICIAL DISTRICT
(“Blue”), Capital Park Management Company, LLC (“Capital Park MC”) and Capital Park Private
Equity Partners, LLC (“Capital Park PEP”) (with Blue and Capital Park MC, “B0rr0wers”)
“Borrowers”) and to
t0
As set forth below, Petitioner anticipates suit for breach 0f contract 0n a loan
with the loan agreement, amendments t0 the loan agreement, and forbearance agreements.
IN INTEREST
PARTIES 1N
1. Petitioner Portfolio Secure Lone LLC is a Delaware limited liability company with
a place ofbusiness at 101 Huntington Avenue, Suite 500, Boston, Massachusetts. Arthur Maxwell
business in Dallas County. Petitioner expects that Capital Park MC will have interests adverse t0
to
it in the anticipated suit. Capital Park MC may be served by serving its manager, Eric Blue, at
of Capital Park MC’s phone number, but Mr. Blue can be reached
unaware 0f at (972) 677-9400,
3. Capital Park PEP is a Delaware limited liability company with a principal place of
business in Dallas County. Petitioner expects that Capital Park PEP will have interests adverse to
it in the anticipated suit. Capital Park PEP may be served by serving its manager, Capital Park
Management Company, LLC through its manager, Eric Blue, at 3140 Harvard Avenue, Suite 402,
Dallas, Texas or wherever he may be found. Petitioner is unaware of Capital Park PEP’s phone
number, but Mr. Blue can be reached at (972) 677-9400, (972) 525-8546 or (214) 205-6215.
4. Eric C. Blue is an individual who resides in Dallas County. Petitioner expects that
Mr. Blue will have interests adverse to it in the anticipated suit. Mr. Blue may be served at 3140
Harvard Avenue, Suite 402, Dallas, Texas, or wherever he may be found. Mr. Blue can be reached
5. Venue is proper in Dallas County, Texas because it is where Mr. Blue resides and
where Capital Park MC and Capital Park PEP each have a principal place of business. See TEX.
R. CIV. P. 202.2(b)(1); 202.2(b)(2); TEX. CIV. PRAC. & REM. CODE §§ 15.002(2), (3).
FACTUAL BACKGROUND
6. Borrowers and PSL are parties to a Loan and Security Agreement dated February
7. Pursuant to the Agreement, PSL extended to the Borrowers a loan in the original
principal amount of $2,000,000, which loan was evidenced by a Secured Promissory Note dated
8. The $2,000,000 loan was intended to be a short-term bridge loan in connection with
a merger transaction (the “Anticipated Merger”) to which Capital Park MC was a party that would
close no later than 30-40 days from the request for the bridge loan. Borrowers expressly stated
the use 0f the loan proceeds t0 (a) payment 0f PSL’s legal fees and expenses in connection with
the loan; (b) a deposit by Capital Park MC in connection with the Anticipated Merger; and (c) t0
the extent there were any remaining proceeds, for working capital for Capital Park MC and Capital
Park PEP. Agreement § 1.3.
9. As an inducement for PSL t0 enter into the transaction, the Borrowers agreed t0
issue t0 PSL a 3% equity interest in the surviving Anticipated Merger entity, which was
contemplated t0 be under the control 0f one 0r more 0f the Borrowers. Agreement § 1.6. The
Agreement made clear that the obligations under Section 1.6 fell within the scope 0f the
Obligations, as that term is defined in the Agreement, but that the Borrowers “are not entitled t0
any credit for punctually performing their obligations under this Section 1.6 against any amount
due under the Note 0r under Section 1.1.2 0f this Agreement, 0r otherwise.” Agreement § 1.6.
10. The Agreement included a loan fee, due upon maturity 0f the Note 0r its earlier
prepayment in full, in the amount 0f $1,000,000, subject t0 certain adjustments for interest
11. The maturity date 0f the Note, prior t0 its amendment, was the m 0f (a) April
12. The Agreement grants PSL a security interest in “all assets” 0f Capital Park MC
and Capital Park PEP, “whether now existing 0r hereafter acquired and all rights t0 proceeds
13. At the time the parties entered into the Agreement, Blue had an outstanding federal
tax lien against him in the approximate amount 0f $46,000. At the closing, PSL’s counsel, with
the consent 0f PSL and the Borrowers, held back $100,000 0f the $2,000,000 pending resolution
federal tax lien issue would be resolved fairly quickly. Blue insisted on seeking to resolve the tax
lien issue himself, refusing PSL’s offer to address and resolve the tax lien issue.
14. As of March 28, 2019, Blue had not resolved the federal tax lien issue, which
resulted in a default under the Agreement. The Borrowers then stated that they needed an
additional thirty days to repay the Note and requested that the maturity date be extended.
Borrowers expressly stated that the Note would be repaid by the new maturity date. As an
accommodation to the Borrowers, PSL and the Borrowers entered into an amendment of the
Agreement and Note, effective as of March 28, 2019, on or about April 4, 2019 (“Amendment”).
A copy of the Amendment is attached hereto as Exhibit C. The Amendment, among other things,
substituted May 1, 2019, for April 2, 2019, in the Note’s definition of the maturity date. As
consideration for PSL’s agreement to extend the maturity date of the Note, the Borrowers made to
PSL a non-refundable payment of $100,000. Amendment § 3. This payment was made by way
of PSL’s counsel disbursing to PSL the $100,000 of loan proceeds that had been retained by PSL’s
15. The Amendment also amended and restated the first paragraph of Section 1.1.2 of
the Agreement to the extent it related to the loan fee contemplated in the Agreement to provide:
16. Under the Note, the pre-default rate of interest was set at 12% per annum.
Following an Event of Default, the Note set the interest rate at 16% per annum. The Note also
calls for the Borrowers to pay PSL’s reasonable attorneys’ fees and costs incurred in connection
17. The Agreement stated the parties’ “express intention that the Borrower[s] shall not
be required to pay interest on this Note at a rate in excess of the maximum lawful rate, it being
understood and acknowledged by Borrowers that [PSL] has made a usury notice filing with the
office of the Massachusetts Attorney General.” Agreement § 1.1.2 (second paragraph). The
Agreement further made clear that the Borrowers understood and agreed that “in determining
whether or not any interest payable under the Note exceeds the highest rate allowed by law, any
including, without limitation, prepayment fees and delinquency charges, shall, to the maximum
extend allowed by law, be an expense, fee or premium rather than interest. The term ‘applicable
law,’ as used in this Note shall mean the laws of The Commonwealth of Massachusetts or the laws
of the United States, whichever allows the greater rate of interest, as such laws now exist or may
be changed or amended or come into effect in the future.” Agreement § 1.1.2 (second paragraph).
18. As contemplated by the Agreement, on or about February 1, 2019, PSL filed with
the Massachusetts Attorney General’s Office, pursuant to Mass. Gen. Laws ch. 271, § 49(d), a
notice that it intended “to engage in a transaction or transactions which, but for the provisions of
said subsection (d), might be proscribed under the provisions of subsection (a) of said Chapter 271,
Section 49.” A copy of PSL’s letter to the Attorney General’s Office dated February 1, 2019, is
attached as Exhibit D, and a copy of Mass. Gen. Laws ch. 271, § 49 is attached as Exhibit E.
19. Under Section 5.1 of the Agreement, an Event of Default arises when, among other
Borrowers shall fail to make any payment of principal, interest or any other charge,
cost or expense pursuant to the Note or any of the remaining Financing Documents
as and when due and payable or within any applicable period of grace.
Agreement § 5.1.1.
Id. § 5.1.2.
Id. § 5.1.3.
20. During the period the Agreement remained in effect, the Borrowers agreed not to
“incur, assume, guarantee or permit to exist any indebtedness for borrowed money or for the
purchase of property or assets, other than trade credit extended to one or more Borrowers on
21. The Agreement provides that “[u]pon the occurrence of any one or more Events of
Default, then, the outstanding principal of the Note, with all accrued and unpaid interest thereon
respectively, together with expenses provided for therein and all of the Obligations, shall, at the
option of [PSL], become and be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by Each Borrower
and [PSL] may pursue any and all remedies available to it under the Financing Documents and/or
under any law, against any or all the Borrowers.” Id. § 5.2.
22. The Agreement includes a choice of law provision, identifying the laws of the
therewith, that Blue and PSL would enter into a Pledge Agreement (“Pledge Agreement”) and that
Capital Park MC and Capital Park PEP would enter into with PSL a Collateral Assignment of
Contracts by Capital Park MC and Capital Park PEP to Lender (“Collateral Assignment”). Id. §
1.2.
24. Under the Collateral Assignment, Capital Park MC and Capital Park PEP granted
a security interest in, and assigned to, PSL “all of any and each Borrower’s right, title and interest
in and to” certain Management Services Agreements to which either Capital Park MC or Capital
Park PEP is a party. Under the Pledge Agreement, Blue granted PSL an exclusive lien on and
security interest in, among other things, Blue’s equity membership interests in Capital Park MC
25. At all times, Borrowers understood that timely performance of their repayment
obligations under the Agreement and Note was important to PSL. Specifically, Blue was informed
that timely repayment of the loan prior to June 30, 2019, was important to Maxwell because of a
tax savings opportunity which he had to exercise prior to June 30. In a text message dated April
30, 2019, Blue represented to PSL that “I told Wendell I am going to take you out on the cash
portion independent of [the Anticipated Merger] and then we just square the equity component
when it closes.”
26. When the Note matured on May 1, 2019, Borrowers failed to repay the loan. At
that time, an Event of Default occurred. Borrowers have failed to make any payment on the Note
27. Over the next several weeks following May 1, 2019, PSL, through Maxwell, and
the Borrowers, through Blue, communicated regarding a possible further extension of the maturity
payment had to be made before June 30, 2019. At the same time, Blue was concluding another
transaction with the Procter & Gamble Company (the “Joy Transaction”) through one or more
entities in which Blue has an interest and/or over which he exercises control, separate from the
Anticipated Merger for which the $2 million loan was intended to be used. Meanwhile, the
progress of the negotiations regarding the Anticipated Merger appeared to slow and/or come to a
standstill. Over several weeks, Blue made a number of representations to PSL regarding when the
Anticipated Merger was expected to close and/or issues purportedly delaying the closing of the
Anticipated Merger. On May 30, 2019, Blue informed PSL that the Anticipated Merger had a hard
target to close during the week of June 17, 2019. PSL asked Blue to confirm that “hard” meant
the Anticipated Merger must close. Blue confirmed “hard” meant “it must.” As a result of these
representations, PSL refrained from exercising its rights under the Agreement and the Note at that
time.
28. On or about May 15, 2019, Blue forwarded to PSL a term sheet from a third-party
lender pursuant to which the third-party lender (“CSM”) would lend Capital Park MC funds
29. In particular, the term sheet presented by the third-party lender included, among
c. While no interest accrued on the loan, a premium would be applied at the time of
pay off. Assuming the loan was paid off on or before the maturity date, the
premium ranged from 40 to 55% of the funded amount of the loan depending on
d. If the loan was not paid in full by the maturity date, provisions relating to the
e. The grant of warrants with a nominal exercise price which would be exercisable
into an equity ownership equivalent to 20% of Capital Park MC’s equity interest in
30. Blue and PSL then began to discuss as an alternative to this third-party lender
option a further extension of the Agreement, with the understanding that the Borrowers were to
repay the loan on or before June 30, 2019, to allow Maxwell to take advantage of a tax planning
31. PSL was willing to engage with the Borrowers regarding a further extension of the
loan given Blue’s representations that the Anticipated Merger would close before June 24, 2019,
which closing would provide Borrowers with the funds to repay the PSL loan.
32. On or about May 30, 2019, PSL proposed the following terms for a further
extension: (1) June 24, 2019, would be the new maturity date; (2) an extension fee in the amount
of $150,000 for May and $4,500 per day for the period June 1 through June 24; and (3) a payment
of $3,000,000 at the closing of the Anticipated Merger, which Borrowers represented would occur
on or before June 24, 2019. To address the remaining balance owed by the Borrowers – namely,
the approximately $250,000 in extension fees listed above and an additional $211,000 owed by
the Borrowers to another party – PSL further proposed that the Borrowers pay as a premium six
monthly installments of $150,000. This element of PSL’s proposal was analogous to, yet less
costly than, the premium proposed to be charged by the third-party lender as set forth in the May
15 term sheet. Similarly, PSL reduced the sought-after equity interest in the contemplated
33. By a text message on May 31, 2019, Blue, on behalf of the Borrowers, replied,
“terms Agreed to. Should I have the amendment letter prepared?” PSL responded by test message,
34. This exchange of text messages evidences the parties’ mutual intent to be bound.
35. On June 12, 2019, PSL received a preliminary draft of a second amendment to the
Agreement from the Borrowers. The draft omitted, among other things, a maturity date and the
equity consideration. The draft, however, did incorporate the concept of the monthly payments of
36. By text message of June 20, 2019, PSL asked Blue for an update regarding the
timing of the closing of the Anticipated Merger from the proceeds of which PSL was to be repaid.
Blue had no new information to share. In response, PSL wrote, “I would think you’d know if
we’re closing tomorrow. Timing is critical for me if it’s not tomorrow will Monday be the day?”
37. On June 21, PSL reiterated its concern that the merger would not close before the
end of the following week, i.e., June 28, 2019. Blue replied, “I’ll get it done or worse case just get
38. On June 22, Maxwell again communicated the magnitude of the exposure that he
would face if the Borrowers did not make the $3 million payment as agreed on or about June 24,
writing, “I can’t go past Wed or Thursday on this or it will cost me over a million dollars.”
39. Over the next few days PSL continued to check in with Blue regarding the status
of the closing of the Anticipated Merger. On June 26, PSL wrote, “[w]e have entered the high risk
zone.” Blue wrote in response, “I’ve been viewing this as that for the last month. The reality is if
i [sic] cost you a million even by an hour I have to eat that period.” Blue acknowledged that if the
10
loss.
40. On June 27, Blue again acknowledged the Borrower’s obligation to make Maxwell
whole for the up to $1 million tax exposure he expected to face if Borrowers’ failed to repay at
least $3 million by the end of June. Blue represented that the Borrowers were seeking an
alternative funding source to repay PSL, writing, “I’m Waiting on an inbound wire payment to
cover you. If you’re drop dead is today and you’re a million dollars exposed I’ll have to cover it
but it will need to be back ended a bit because all I have coming in is right at $3mm.” Later that
day, Maxwell responded, “in all fairness if I get this money tomorrow There won’t be a 1 mil
obligation. You’ll only be required to satisfy the latest iteration of our understanding [i.e., the
agreement reached as of May 31, 2019] plus $22,500 [an additional extension fee for the period
41. By June 28, 2019, it was clear that the Borrowers would not be able to pay PSL $3
million as promised. At 4:01 p.m. that day, Blue told PSL, “I think I’ll have to gross You up for
Your tax exposure.” Blue was thus confirming his prior obligation to compensate Maxwell for the
potential tax loss. Maxwell subsequently informed Blue that the potential tax exposure likely
42. Even after the Borrowers missed the end of June payoff deadline, the parties
continued to communicate. On July 9, 2019, Blue represented to PSL that the plan was “to advance
you the $3m this Friday [July 12] and carry the balance for a period . . . if that were 6 months it
would create breathing room for me.” PSL responded, “I’m happy to work with you to achieve
our mutual needs on this. I really need to get that 3 million on Friday. We can figure out 6 month
plan but everything hinges on your ability [to] get that 3 in my account by Friday.”
11
44. The Borrowers did not pay by wire or any other means any funds to PSL on July
45. Blue has not returned multiple phone calls and appears to have blocked Maxwell’s
number from Blue’s cell phone. Maxwell was able to get through to Blue’s cell phone line one
time and recognized Blue’s voice answering the phone; Blue falsely told Maxwell that he had the
46. PSL anticipates filing claims for breach of contract relating to Borrower’s violation
47. PSL also seeks to investigate additional potential claims for breach of contract
relating to the full extent of Borrowers’ breach of the Agreement as amended and fraudulent
inducement relating to Borrowers’ representations regarding the same. PSL additionally seeks to
investigate its right to injunctive relief and garnishment to protect its secured interests under the
48. PSL further seeks to investigate potential claims of fraud against Blue relating to
49. Pursuant to Rule 202.1(a) and (b), Petitioner seeks the testimony of the following
person and corporate representatives for use in an anticipated suit and to investigate potential
Eric C. Blue
12
representatives of Capital Park MC and Capital Park PEP on at least the following topics:
b. the federal tax lien that had not yet been resolved as of March 28, 2019
giving rise to a default under the Agreement;
c. Borrowers’ request for additional time and the negotiation of the March 28,
2019 Amendment to the Agreement;
i. representations that Borrowers would pay the amount owed on the Note;
j. the reasons for non-payment of the Note as of the original and amended
maturity dates;
m. the use of the loan proceeds and the current amount of loan proceeds still in
Borrowers’ possession, custody, or control;
o. Mr. Blue’s equity interests in Capital Park MC and Capital Park PEP.
51. Petitioners also request that the Court order Mr. Blue, Capital Park MC and Capital
13
b. documents relating to the use or application of the proceeds of the loan from
PSL to Borrowers;
c. communications between CSM and any Borrower regarding the term sheet
provided to PSL on May 15, 2019;
the loan documents, communications with PSL, and participation in related merger negotiations
to evaluate the extent to which the Loan and Security Agreement has been violated in support of
anticipated and potential breach of contract claims, and to evaluate Petitioner’s potential claims
agreements and for injunctive relief. Pre-suit discovery is also necessary to determine whether
PSL is entitled to immediate equitable relief. Pre-suit depositions are additionally necessary
because there is no other way for Petitioner to obtain the facts required to demonstrate their claims.
Mr. Blue resides in Dallas County, and would suffer no undue harm by being deposed. The likely
benefit of allowing Petitioner to take the requested depositions to investigate the anticipated claims
SERVICE
53. Pursuant to Rule 202.3, Petitioner is serving a copy of the Verified Petition and
Notice of Oral Hearing on Eric Blue, Capital Park MC, and Capital Park PEP.
14
54. Petitioner respectfully requests that this Court set a date for hearing on this Petition,
and, after the hearing, issue an Order (1) authorizing Petitioner to take the oral and videotaped
deposition of Eric Blue, Capital Park MC, and Capital Park PEP and (2) compelling Mr. Blue,
Capital Park MC, and Capital Park PEP to produce the materials listed above.
15
David Genender
State Bar N0. 00790757
Jordan Kazlow
StateBar N0. 24101994
2001 Ross Avenue, Suite 900
Dallas, Texas 78701-2980
Tel.: (214) 953-6500
Fax: (214) 953-6503
david.genender@bakerbotts.com
j0rdan.kazlow@bakerbotts.com
Danny David
State Bar N0. 24028267
9 1 0 Louisiana Street
Houston, Texas 77002
Tel.: (713) 229-12334
Fax: (7 1 3) 229-1522
danny.david@bakerbotts.com
16
Before me, the undersigned authority, on this day personally appeared Arthur
Maxwell, who, after being duly sworn by me, upon oath did state that he has reviewed the
foregoing petition and that the facts stated therein arc within his personal knowledge and are true
and correct.
Anhm Maxwell
-
~ '-
Arthur Maxwell, proved to me on the basis ofsatisfactory evidence t0 be the person who appeared
before me.
WKg
Signature L .6?
Elma
Name
Printed
(’-
éoudaj
Notary Public in and for the State ofMassachusetts
ELENA C. GOUDEY
Notary Public
Massachusetts
Commisslan Expires Jul 17. 2020 -
In order t0 induce the Lender t0 make a certain loan t0 and otherwise extend credit to
Borrowers, all as particularly described in this Agreement, and in consideration 0f the mutual
covenants, agreements, representations and warranties herein contained and the faithful
performance of said covenants and agreements, the Lender and, individually, jointly and
severally, Borrowers covenant, agree, represent and warrant as follows:
SECTION 1
TERMS AND CONDITIONS OF LOAN
1.1 Loan and Note. The Lender agrees Borrowers a loan in the original
t0 extend to
principal sum 0f $2,000,000 (the “L0an”), to be evidenced in part by the Secured Promissory
Note in the original principal amount 0f $2,000,000 t0 be executed and delivered by the
Borrowers t0 Lender simultaneously with this Agreement (the “Note”, as such may be modified
and/or amended from time to time).
As used herein, the term “Obligations” shall mean the Loan and any and all other
liabilities and obligations of any Borrower 0r allBorrowers to the Lender of every kind and
description, direct or indirect, absolute or contingent, primary or secondary, due 0r to become
due, now existing or hereafter arising, arising in any manner from this Agreement or the other
Financing Documents (as defined below), including but not limited t0 the Note. Borrowers,
individually, jointly and severally, agrees to pay and, as to amounts outstanding under the Loan,
repay to the Lender all Obligations, Whether pursuant t0 the Note 0r the remaining Financing
Documents.
The Loan is being made upon the terms contained in this Agreement, the Note
and the remaining Financing Documents, the terms 0f Which are incorporated herein. The Loan
proceeds shall be applied in accordance with the Disbursement Authorization, being one 0f the
Financing Documents executed by Borrowers and delivered t0 Lender.
this Section 1.1.2 shall be inclusive of any accrued and unpaid interest due 0n the Note
such that the sum of interest actually paid 011 the Note, whether prior t0 0r at maturity,
plus any Loan fee, shall total $1,000,000. The Loan fee shall be paid in immediately
available U.S. dollars and paid according to Wiring instructions provided by Lender t0
Borrowers. Notwithstanding any conflicting or inconsistent provision in the Note,
Borrowers shall give Lender not less than three business days’ written notice 0f
Borrowers intent t0 prepay the Note in whole or in part.
required t0 pay interest 0n this Note at a rate in excess of the maximum lawful rate, it
being understood and acknowledged by Borrowers that Lender has made a usury notice
filing with the office of the Massachusetts Attorney General, and that in the event that
any provision 0f the Note 0r this Agreement is interpreted such that it is determined that
there is such excess amount, such excess shall be credited t0 the principal balance 0f the
Note (0r, if the Note has been fully paid, refunded by Lender t0 Borrowers), and the
provisions of Section 1.1.2 of this Agreement or the provisions of the Note shall be
reformed and the amounts thereafter collectible under the Note 0r this Section 1.1.2
reduced, Without the necessity 0f the execution of any further documents, so as to comply
with the then applicable law, but s0 as t0 permit the recovery by Lender of the fullest
amount otherwise called for under this Section 1.1.2 and the Note. Any such crediting 0r
refund shall not cure or waive any default by the Borrower under the Note 0r the other
Financing Documents. If at any time following any reduction in the interest rate payable
by the Borrowers there remains unpaid any principal amount under the Note and the
maximum interest rate allowed by applicable law is increased or eliminated, then the
interest rate payable under the Note and amounts due under this Section 1.1.2 shall be
readjusted, to the extent not prohibited by applicable law, so that the dollar amount of
interest payable under the Note and under the first paragraph of this Section 1.1.2, after
giving effect to this paragraph shall be equal to the dollar amount 0f interest which would
have been paid by the Borrower Without giving effect to the reduction in interest resulting
from compliance With applicable laws. The Borrower agrees that in determining Whether
0r not any interest payable under the Note exceeds the highest rate allowed by law, any
non-principal payment (except payments specifically stated in the Note t0 be “interest”),
including, Without limitation, prepayment fees and delinquency charges, shall, to the
maximum extent allowed by law, be an expense, fee or premium rather than interest. The
term “applicable law,” as used in this Note shall mean the laws 0f The Commonwealth of
Massachusetts 01‘ the laws 0f the United States, Whichever laws allow the greater rate 0f
interest, as such laws now exist 0r may be changed 0r amended 0r come into effect in the
future.
1.3 Use of Proceeds. The proceeds of the Loan will be used for the following
purposes:
(i) forpayment 0f legal fees and expenses 0f the Lender to consummate this Loan;
(ii) as a depositby Capital Park pursuant to that certain Agreement and Plan of
Merger dated November 16, 2018 (the “Original Merger Agreement”), among
Capital Park, Saints Merger Sub, Inc., a Delaware corporation and wholly-owned
subsidiary 0f Capital Park (“Merger Sub”), JHT Holdings, Inc., a Delaware
corporation (the “Target”), and Larry Beard, solely in his capacity as a
representative 0f Target’s shareholders, pursuant t0which Merger Sub will be
merged with and into Target with Target surviving (and upon the closing, the
“Buyer”), as amended by that Amendment t0 Agreement and Plan 0f Merger,
dated as of January 15, 2019 (together With the Original Merger Agreement, the
“Merger Agreement” and the transactions described therein are referred t0 as the
“Merger Transaction”); and
(iii) if any proceeds remain, the balance for working capital for the Entity Borrowers,
defined below.
The Borrowers each authorize the Lender to authenticate any financing statement,
continuation statement or any other document, certificate or record t0 evidence or perfect
Lender's lien on and security interest in the Collateral. For so long as any Borrower has any
outstanding Obligations t0 Lender, n0 Borrower shall file any termination statement 0f any
financing statement filed by Lender.
1.5 Conditions Precedent of Loan Disbursement. The Lender shall not be obligated
t0 make any disbursement 0f the proceeds 0f the Loan 0r take any other action under the
Financing Documents 0r this Agreement unless all 0f the following conditions precedent shall
have been satisfied at the time 0f any such action:
(a) there exists no condition event, act or omission Which constitutes a breach, default, or
Event of Default hereunder 0r in any 0f the Initial Financing Documents or this Agreement, or
Which would constitute a breach, default, 0r Event 0f Default thereunder after notice 0r lapse 0f
time, or both; and
(b) The representations 0f Borrowers contained in any and all of the Financing
Documents 0r this Agreement remain true and accurate in all material respects; and
(c)Borrower has delivered to Lender the Note, the UCCS, the Pledge Agreement, the
Collateral Assignment and all other Financing Documents, each properly executed, and other
documents, instruments, papers, insurance policies, and forms of evidence or other materials
requested by the Lender under the terms of any of Financing Documents or this Agreement; and
(d) The Lender has filed with the appropriate secretary of state offices the UCCs
perfecting t0 Lender’s satisfaction Lender’s first priority lien 0n the Collateral respectively
described therein; and
(e) The Lender have a received a separate good standing certificate issued by the
shall
office 0f the Delaware Secretary 0f State certifying as t0 the legal existence and good standing 0f
each of Capital Park and Capital Park PEP; and
(g) Such other manager certificates, resolutions and certifications and instruments as
Lender 0r Lender’s counsel shall require t0 confirm the representations and warranties 0f the
Borrowers under this Agreement and\0r the remaining Financing Documents.
Whether 0r not the entire face amount of the Note shall have been advanced t0 0r
for the benefit 0f any Borrowers, the Lender shall, at all times, be entitled t0 make additional
expenditures, (a) to discharge encumbrances at any time levied 0r placed upon the Collateral, pay
premiums on insurance 0n the Collateral, and/or pay expenses for maintenance and preservation
of the Collateral; (b) to pay all of the Lender’s reasonable attorneys’ fees and all other costs and
expenses incurred by the Lender in connection With the protection 0r enforcement 0f the
Lender’s rights pursuant t0 this Agreement; and (c) t0 pay the Lender’s usual and customary
charges for services rendered by it t0 any of the Borrowers; and each such additional advance
shall be a part 0f the Obligations and shall at all times be subj ect to the terms and conditions 0f
this Agreement.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF BORROWERS
The Borrowers, individually, jointly and severally, each represent, warrant and covenant
t0 the Lender that:
(a) Capital Park and Capital Park PEP are each a duly organizedand validly existing
limited liability company in Delaware, in good standing in Delaware, and in good standing and
(b) Capital Park and Capital Park PE each have adequate power and authority and has
full legal right to enter into each of the Financing Documents to which it is or is to become a
party, to perform, observe and comply with all of its agreements and obligations under each of
such documents, and to make all of the borrowings contemplated by this Agreement.
(c) The execution and delivery by each Borrower of each of the Financing Documents to
which it (or he) is or is to become a party, the performance by each Borrower of all of its (or his)
agreements and obligations under each of such documents, and the making by each Borrower of
all of the borrowings contemplated by this Agreement, have been duly authorized by all
necessary action on the part of each Entity Borrower and do not and will not (i) contravene any
provision of any Entity Borrower’s charter documents (whether certificate of organization,
certificate of formation limited liability agreement, operating agreement, or otherwise)
(collectively, “Charter Documents”), (ii) conflict with, or result in a breach of any material
term, condition or provision of, or constitute a default under or, except as contemplated herein,
result in the creation or any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property of any of the Borrowers under any instrument to which
any of the Borrowers is or may become a party or by which any of the Borrowers or any of the
properties of any Borrower is or may become bound or affected, or (iii) require any approval,
consent order, authorization or license by, or giving notice to, or taking any other action with
respect to, any governmental or regulatory authority or agency under any provision of any
applicable law.
(d) ECB is the sole Manager of Capital Park and Capital Park is the sole Manager of
Capital Park PEP. ECB is the sole member and equity holder of Capital Park and holds 1% of
the Class A Interests and 80% of the Class B Interests of Capital Park PEP. The name of each
other member of Capital Park PEP holding any ownership interest in Capital Park PEP, and the
percentage of ownership held by each is set forth on Schedule I and Schedule II of the Amended
and Restated Operating Agreement of Capital Park PEP dated as of July 18, 2016.
(e) Each Borrower has duly executed and delivered each of the Financing Documents to
which it is a party and each of such documents is in full force and effect. The agreements and
obligations of the Borrowers contained in each of the Financing Documents to which it is a party
constitute legal, valid and binding obligations of such Borrower enforceable against it or he in
accordance with their respective terms, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights and except to the extent that the availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(f) The Loan and the Loan proceeds are for business purposes.
6
(h) There are n0 actions, suits 0r proceedings pending, or to the knowledge 0f any
Borrower threatened against or affecting any Borrower or its or his properties 0r assets, in any
court 0r before 0r by any federal, state, municipal or other governmental body other than those
matters shown 0n the litigation search results which Lender’s counsel provided t0 Borrowers,
and each Borrower is not in default With respect to any order 0r other process 0f any court 0r
federal, state, municipal or other governmental body.
SECTION 3
NEGATIVE COVENANTS OF BORROWER
Without the prior written consent 0f the Lender, s0 long as this Agreement is in effect,
Borrowers, individually, jointly and severally, covenant that it and he Will not:
3.2 Other Indebtedness; incur, create, issue, assume, guarantee or permit to exist any
indebtedness for borrowed money or for the purchase of property or assets, other than trade
credit extended to one or more Borrowers 0n customary terms in the ordinary course of business.
3.3 Liens, Security Interests, Etc.; pledge, mortgage 0r otherwise encumber 0r subject
to, or permit to exist upon 0r be subj ect to, any encumbrance, security interest, 0r charge 0n,
lien,
the property 0r assets of any kind or character at any time owned by either Entity Borrower or on
the Collateral owned by ECB, except (a) liens in connection With workers' compensation 0r
unemployment insurance, taxes, other statutory obligations 0r similar charges all arising in the
ordinary course 0f business and not overdue, or, if overdue, being contested in good faith With
adequate reserves established for payment thereof; (b) liens of carriers, warehousemen,
mechanics and materialmen, incurred in the ordinary course 0f business and not overdue, or, if
overdue, being contested in good faith with adequate reserves established for payment thereof;
(c) purchase money security interests incurred in connection with the acquisition of equipment 0r
other fixed assets provided that such security interests are limited t0 the property so acquired;
and (d) liens created by any of the Security Instruments.
4.1 Performance of Obligations; duly and punctually (a) make or cause to be made all
payments due the Lender pursuant to this Agreement, the Note and the remaining Financing
Documents; (b) perform 0r cause to be performed all other obligations to the Lender provided in
this Agreement and in the remaining Financing Documents; (c) perform or cause to be performed
all obligations of Borrower pursuant to the terms of: (i) any other indebtedness of Borrower for
money borrowed; and (ii) all leases under Which it is lessee 0r lessor; (e) maintain the accuracy
0f all 0f the Borrowers’ representations, warranties and perform and observe all 0f the
Borrowers’ covenants set forth in any and all 0f the Financing Documents which representations,
warranties and covenants are hereby incorporated herein; (f) pay, upon the Lender’s demand
therefor, all reasonable and necessary expenses incidental t0 the making and administration 0f
the Loan including, Without limit, pre-closing and closing expenses (Lender’s good faith
determination that an expense is a reasonable and necessary expense incidental t0 the making
and/or administration 0f the Loan shall constitute a conclusive determination 0f Lender’s
obligation to pay such expense);
4.2 Financial Information; provide t0 the Lender, upon reasonable request following
an Event of Default, financial information concerning either 0r each Entity Borrower; and
maintain its books and records in an accurate, up-to-date and standardized fashion.
4.3 Maintenance 0f Existence; Operation of Business; Etc.; (a) keep in full force and
effect, to the extent required, its legal existence, rights and franchises; (b) continue to conduct
and operate its business substantially as now conducted actively and in good faith and in
compliance With all applicable laws t0 the extent the Violation of Which would materially or
adversely affect any Borrower’s financial condition 0r operations; (c) preserve, maintain and
protect its rights and keep its properties and assets in good repair, reasonable wear and tear and
damage by insured casualty only, excepted; (d) pay all taxes, assessments, governmental charges
and levies other than those contested in good faith for Which reasonable reserves are maintained
and (e) comply With all applicable and material laws and regulations Wherever its business is
conducted.
4.4 Insurance on Properties; keep 0r cause t0 be kept insured all its insurable
properties (specifically including leased properties and assets in Which Entity Borrower has an
insurable interest) against such risks as are usually insured against by entities engaged in the
same 0r similar business and maintain such other insurance as may be required by law or as may
be reasonably requested by the Lender.
4.6 Notice 0f Certain Events; immediately, upon any Borrower’s becoming aware of
the existence of any Event of Default or 0f any condition 0r event Which would, upon notice 0r
lapse 0f time or both constitute an Event of Default, or of the commencement of any suits or
proceedings Which, if adversely determined as t0 any Borrower, would have a material adverse
effect0n the financial condition, business or properties 0f any Borrower, or of any other event 0r
condition which could have a material adverse effect 0n the financial condition, business or
properties 0f any Borrower, give written notice t0 Lender specifying the nature and duration
thereof and the action proposed to be taken With respect thereto. The giving 0f such notice by a
Borrower shall not affect Lender's rights hereunder with respect thereto.
SECTION 5
DEFAULT AND REMEDIES
5.1 Default. The occurrence 0f any one of the events hereinafter described shall be an
“Event 0f Default”:
5. 1 .4 any Borrower shall default under any other of the Obligations, or any
of any Borrower for the payment 0f borrowed money or the deferred purchase price of
liability
property shall not have been paid prior to the expiration 0f the time permitted for the payment
by reason of any Borrower default, be
thereof, 0r prior t0 the stated maturity thereof shaft,
declared t0 be due and payable in its entirety, whether by acceleration or otherwise, 0r shall be
required to be prepaid by reason of such default, (other than any liability contested by such
Borrower in good faith); or
(f) admits in writing its 0r his general inability t0 pay its 0r his debts as
they become due; 0r
(g) changes
name, merges, consolidates, reorganizes, recapitalizes,
its
respective membership interests 0r other ownership interests, 0r purchases 0r retires for any
consideration, any warrant, right, 0r option pertaining thereto 0r other security convertible into
any of the foregoing; 01‘
5.1.7 the entry of an order for relief 0r similar order with respect to any Borrower
in any proceeding pursuant to the Bankruptcy Code or any other federal bankruptcy law; the
filing of any complaint, application, or petition by or against any Borrower initiating any matter
in which any Borrower is or may be granted any relief from the debts of any Borrower pursuant
to the Bankruptcy Code or any other insolvency statute or procedure; or
5.2 Remedies. Upon the occurrence of any one or more Events 0f Default, then, the
outstanding principal 0f the Note, With all accrued and unpaid interest thereon respectively,
together with expenses provided for therein and all of the Obligations shall, at the option of the
Lender, become and be immediately due and payable Without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by each Borrower, and the
10
5.3 Possession 0f Collateral. Upon the occurrence of an Event of Default, the Lender
shall be entitled to immediate possession 0f the Collateral and may enter upon Borrower’s
premises t0 take possession thereof and/or may require any Borrower t0 assemble the Collateral
and make it available to the Lender at a place t0 be designated by the Lender Which is reasonably
convenient to both parties.
5.4 Lender Rights and Remedies. The Lender shall have the rights and remedies of a
secured party under the UCC and other applicable laws, in addition to any rights and remedies
described herein, the choice and the manner of exercise of any right or remedy being in the
Lender’s sole discretion, and the Lender may, at all times, proceed directly against any Borrower
0r all 0f them or any person 0r entity now 0r hereafter liable for any 0f the Obligations, and the
Lender shall not be required to take any action to preserve, collect 0r protect the rights 0f either
the Lender 0r any Borrower in the Collateral.
5.5 Remedies Not Exclusive. The enumeration of rights and remedies in this
Agreement is not intended t0 be exclusive, and shall be in addition t0 such others as the Lender
may have under the Uniform Commercial Code and other applicable law. The Lender shall, in
its discretion, determine its choice of rights and remedies and the order in Which they shall be
exercised and Which collateral, if any, is t0 be proceeded against and in which order. The
exercise of any right or remedy shall not preclude the exercise of others, all of Which shall be
cumulative. N0 act, failure or delay by the Lender shall constitute a waiver 0f any of its rights
and remedies. N0 single 0r partial waiver by the Lender 0f any provision 0f this Agreement, 0r
breach 0r default there under, or 0f any right or remedy Which the Lender may have shall operate
as a waiver 0f any other provision, breach, default, right 0r remedy 0r of the same one on a future
occasmn.
SECTION 6
ADDITIONAL PROVISIONS
6.1 Amendment. The Lender’s rights and Borrowers obligations under this
Agreement may be modified only by an agreement in writing.
6.2 Indemnification. The Borrowers, individually, jointly and severally, hereby agree
to indemnify, defend and hold harmless Lender, its affiliates and all managers, members,
officers, directors, employees, and agents thereof from all liabilities, claims, damages, losses,
costs, expenses, demands, suits and actions (collectively, “Damages”)
arising out of or related
t0: (i) any Borrower breach of this Agreement 0r the remaining Financing Documents; or (ii)
any Borrower’s failure t0 comply with relevant laws and regulations; or (iii) arising from the
business operations of any of the Borrowers.
11
6.5 N0 Third Parties Beneficiary. This Agreement is entered into for the sole
protection and benefit of Lender (and its affiliates) and the Borrowers, its and his heirs and
permitted assigns, and no other person 0r persons shall have any right 0f action under this
Agreement, except the successors and assigns 0f the parties hereto.
6.6 Non—liabilitv 0f Lender. The relationship 0f Borrowers and the Lender under the
Financing Documents is, and shall at all times remain, solely that 0f borrower and lender, and the
Lender neither undertakes nor assumes any responsibility 0r duty t0 any Borrower 0r t0 any third
party with respect t0 the Collateral or with respect to use 0f the Loan proceeds.
6.7 Attorneys’ Fees. If any legal action or proceeding isbrought by any Borrower 0r
the Lender t0 enforce 0r construe a provision of the Financing Documents, the unsuccessful
party in such action or proceeding, Whether or not such action or proceeding is settled or
prosecuted t0 final judgment, shall pay 0f the attorneys’ fees and costs incurred by the
all
prevailing party. If any Borrower shall become subject t0 any case or proceeding under the
United States Bankruptcy Code, as amended from time to time, Borrowers, individually, jointly
and severally, shall pay to Lender on demand, all attorneys’ fees: costs and expenses which the
Lender may incur to obtain relief from any provision 0f the said Code which delays 0r otherwise
impairs Lender’s exercise of any right 0r remedy upon any 0f the Financing Documents 0r t0
obtain adequate protection for any 0f the Lender’s rights 0r collateral. Borrowers, individually,
jointly and severally, shall, upon request 0f the Lender, reimburse the Lender for the Lender’s
attorneys’ fees and expenses incurred in the preparation and recording of the Financing
Documents and the closing of the Loan.
6.8 Notices. A11 notices 0r demands under this Agreement and the Security
Instruments shall be in writing and shall be deemed t0 have been given when actually received,
or when mailed by registered 0r certified mail, return receipt requested, first-class postage
prepaid, and addressed in each case as follows:
12
Attn:
Email:
The address of a party to which any such notices shall be sent may be changed by
that party by notice t0 the other party.
6.9 Countegparts. This Agreement may be executed in two 0r more counterparts and
each executed copy shall constitute but one and the same instrument.
6.11 Governing Law. This Agreement shall be deemed t0 be a contract made under
the laws of the Commonwealth of Massachusetts wherein it is executed and delivered and for all
purposes shall be construed in accordance With the laws of said Commonwealth of
Massachusetts.
6.12 Headings; Exhibits and Schedules. The headings of the sections of this
Agreement have been inserted for convenience modify, define, limit or expand the
and shall not
express provisions of this Agreement. A11 Exhibits and Schedules t0 this Agreement are a part
hereof and incorporated herein.
6.13 Entire Agreement. This Agreement constitutes the entire Agreement between the
parties, supersedes all prior agreements and understandings whether written or oral, and may be
modified only by an agreement in writing, executed by the party to be charged. A copy 0f the
13
6.14 Jurv Trial Waiver. Each Borrower and the Lender mutually hereby
knowingly, voluntarily and intentionally waive the right t0 a trial by jury in respect 0f any
litigation based 0n this Agreement, arising out of, under 0r in connection with any 0f the
other Financing Documents contemplated t0 be executed in connection herewith, 0r any
course of conduct, course of dealings, statements (whether verbal or written) or actions 0f
any party. This waiver constitutes a material inducement for Borrowers and Lender t0
enter into the transactions contemplated hereby.
6.15 Power 0f Attorney. Each Borrower hereby appoints the Lender as its attorney-in-
fact coupled with an interest, and grants the Lender full power t0 do all things and acts
necessary t0 implement and execute any powers or rights granted t0 the Lender under this
Agreement including, without limitation the execution of UCC-l financing statements,
continuation statements and amendments, and each Borrower releases the Lender, its officers,
employees agents and attorneys, from any liability arising from any act 0r acts hereunder 0r in
furtherance hereof.
14
vdtten. /
ers:
Borrowers:
Borrow
'itnesss as t0
illfl ’itnes Borrow
all Borro
to all ers (sign
wers above)
(sign above ) ERIC C. E
L
*int Name 0n
|| Tint line:
on below line:
MANAGEMENT
(J
:
CAPITAL
CAPIT PARK MANAGEMENT
AL PARK
COMPANY,
COMP ANY, LLC
FovaA C(GM
By:
Eric C. ;r
!:
AL PARK
CAPITAL
CAPIT PRIVATE
PARK PRIVA EQUITY
TE EQUIT Y
NERS,, LLC
PARTNERS
PART
Manager:
its Manag
By its
By er:
Manageme
Capitall Park Manag
Capita nt Compa
ement ny, LLC
Company,
ii
By:.
.!
Name:
Name: Eric C.
C.Bl ue
Blue
Title:
Tifle: Manager
Manag er
Lende r:
Lender:
PORTFOLI
PORT FOLIO LONE LLC
O SECURE LONE
By:.
By:
Name:
Name: Wendell
Wende McCain
ll McCai n
Title:
Title: Manager
Manag er
15
4852-50
; 4852-5
1
029-26 .v3
I4N3
29-2614
VERIFIED
:: PETITION FOR RULE 202 DEPOSITION Page 33
IN WITNESS WHEREOF, each Borrower and the Lender have caused this this Loan and
and
Security Agreement to
Security to be executed as the day and year first
as an instrument under seal as of the first above
written.
written.
Borrowers:
as to
Witness as to all
all Borrowers (sign
(sign above) ERIC C. BLUE
By:
Eric C. Blue, Manager
By:
Name: Eric C. Blue
Title:
Title: Manager
Lender:
PORTFOL
PORTFOLIO
B
By:
y.
-
Name:
Title:
Title:
£¥
O SECURE LONE LLC
Wendell McCain
Manager
x2 A
15
4852-5029-2614.V3
4852-5029-2614.v3
Notwithstanding the foregoing paragraph and all other provisions of this Note, in
no event shall the interest payable hereon, whether before or after maturity, exceed the
maximum interest Which, under applicable law, may be contracted for, charged, 0r
If this Note is placed in the hands of an attorney for collection after default, or if
all or any part of the indebtedness represented hereby is proved, established or collected
in any court or in any bankruptcy, receivership, debtor relief, probate or other court
proceedings, the Borrowers, and all endorsers, sureties and guarantors of this Note,
individually, jointly and severally, agree to pay reasonNOYR Naa\_[Rf`i SRR` N[Q P\YYRPaV\[
costs to the holder hereof in addition to the principal and interest payable hereunder.
The Borrowers and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and nonpayment
of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this
Note, declaration or notice of acceleration of the maturity of this Note, diligence in
collecting, the bringing of any suit against any party and any notice of or defense on
account of any extensions, renewals, partial payments or changes in any manner of or in
this Note or in any of its terms, provisions and covenants, or any releases or substitutions
of any security, or any delay, indulgence or other act of any trustee or any holder hereof,
whether before or after maturity.
”a ‘
WEL
Wimflah E
Name:
Title:
EriW
Manager
Print Name: FOnalJ Ckflv}
COMPANY LLC
“a
L3 L, ”4‘17:
By: ‘9
Name:
Title:
EricW
Mahager
ERIC
Wis L
Cinduany
c.
Background. Borrowers are in default under the Original Financing Documents and
have requested accommodation from Lender as to such default. Lender is willing t0 forebear
from exercising its rights under the Original Financing Documents, subj ect to Borrowers and
Lender agreeing to and executing and delivering this Amendment.
In consideration 0f the mutual promises and covenants set forth herein, the Lender and,
individually, jointly and severally, Borrowers covenant, agree, represent and warrant as follows:
1. Definitions. Capitalized terms used in this Amendment but not defined in this
Amendment shall have the respective meaning assigned in the Original Loan Agreement or
Original Note, as the case may be.
2. Amendment to Original Loan Agreement. The first paragraph of Section 1.1.2 of the
Original Loan Agreement is hereby amended by restating it in its entirety t0 read:
this Section 1.1.2 shall, only ifz‘he Note is paid infull when due thereunder, be inclusive
of any accrued and unpaid interest due on the Note such that, only ifthe Note is paid in
full when due thereunder, the sum of interest actually paid 0n the Note, Whether prior t0
4. Ratification and Acknowledgement. (a) Borrowers hereby acknowledge and agree that,
in accordance with the terms and conditions 0f the Original Financing Documents, the Borrowers
are unconditionally liable t0 the Lender for the following amounts which constitute a portion 0f
the Obligations, as of the dates indicated below:
Principal: $2,000,000.00
Interest: 12% 0n above Principal from February 1, 2019
(b) Each Borrower hereby ratifies, confirms, and reaffirms each of the terms and conditions
0f the Original Financing Documents, and further acknowledges and agrees that except as
specifically provided under this Amendment, all terms and conditions of the Original Financing
Documents are and shall remain in full force and effect and are incorporated herein by reference.
Without limitation t0 the foregoing, each Borrower hereby ratifies, confirms and reaffirms, and
hereby covenants and agrees that the security interests and liens granted pursuant to the Original
Financing Documents and otherwise, each secure and shall continue t0 secure the payment and
performance of all Obligations.
(or 0f any other Event 0f Default, Whether now existing 0r hereafter arising under any 0f the
Financing Documents), 0r (ii) preclude (a) the exercise of rights and remedies by the Lender.
6. Waiver 0f Claims. Each Borrower hereby acknowledge and agree that none of them have
any offsets, defenses, claims, 0r counterclaims against the Lender (including, Without limitation,
any predecessor in interest thereto) 0r any 0f its/their respective affiliates, 0r its/their respective
officers, directors, attorneys, successors, 0r assigns with respect to the Original Financing
Documents, the Obligations, or otherwise, and that if any Borrower now has, 0r ever did have,
any such offsets, defenses, claims, or counterclaims against the Lender (including, without
limitation, any predecessor in interest thereto) or any 0f its/their respective affiliates, or its/their
7. Countegparts. This Amendment may be executed in two or more counterparts and each
executed copy shall constitute but one and the same instrument.
Borrowers:
Caffilv
Witness as to a orrowers (sign above) ERIC C. BLUE
Name:
Title:
mm
Eric C. Blue
Manager
Lender:
413:3
By'
“h ~~
«:5
.
4812-6003-3424.v1
February 1, 2019
The undersigned shall keep fecords of such transaction and/or transactions, at its
principal place of business in Massachusetts, which shall be made available to you for
inspection at your request.
WW
Boston,
SK/pkm
4829-1648-9350.vl
M.G.L.A. 271 § 49
Currentness
(a) Whoever in exchange for either a loan ofmoney or other property knowingly contracts for, charges, takes or receives, directly
or indirectly, interest and expenses the aggregate of which exceeds an amount greater than twenty per centum per annum upon
the sum loaned or the equivalent rate for a longer or shorter period, shall be guilty of criminal usury and shall be punished
by imprisonment in the state prison for not more than ten years or by a fine of not more than ten thousand dollars, or by both
such fine and imprisonment. For the purposes of this section the amount to be paid upon any loan for interest or expenses
shall include all sums paid or to be paid by or on behalf of the borrower for interest, brokerage, recording fees, commissions,
services, extension of loan, forbearance to enforce payment, and all other sums charged against or paid or to be paid by the
borrower for making or securing directly or indirectly the loan, and shall include all such sums when paid by or on behalf of
or charged against the borrower for or on account of making or securing the loan, directly or indirectly, to or by any person,
other than the lender, if such payment or charge was known to the lender at the time of making the loan, or might have been
ascertained by reasonable inquiry.
(b) Whoever, with knowledge of the contents thereof, possesses any writing, paper, instrument or article used to record a
transaction proscribed under the provisions ofparagraph (a) shall be punished by imprisonment in a jail or house of correction for
not more than two and one halfyears, or by a fine of not more than five thousand dollars, or by both such fine and imprisonment.
(c) Any loan at a rate of interest proscribed under the provisions of paragraph (a) may be declared void by the supreme judicial
or superior court in equity upon petition by the person to whom the loan was made.
(d) The provisions of paragraph (a) to (c), inclusive, shall not apply to any person who notifies the attorney general of his
intent to engage in a transaction or transactions which, but for the provisions of this paragraph, would be proscribed under the
provisions 0f paragraph (a) providing any such person maintains records 0f any such transaction. Such notification shall be
valid for a two year period and shall contain the person's name and accurate address. No lender shall publicly advertise the fact
of such notification nor use the fact 0f such notification to solicit business, except that such notification may be revealed to an
individual upon his inquiry. Illegal use of such notification shall be punished by a fine of one thousand dollars. Such records
shall contain the name and address of the borrower, the amount borrowed, the interest and expenses to be paid by the borrower,
the date the loan is made and the date or dates on which any payment is due. Any such records shall be made available to the
attorney general for the purposes of inspection upon his request. Such records and their contents shall be confidential but may
be used by the attorney general, or any district attorney with the approval of the attorney general, for the purposes of conducting
any criminal proceeding to which such records or their contents are relevant.
(e) The provisions of this section shall not apply to any loan the rate of interest for which is regulated under any other provision
of general or special law or regulations promulgated thereunder or to any lender subject to control, regulation or examination
by any state or federal regulatory agency.
Credits
Added by St. 1970, c. 826. Amended by St. 1971, c. 368.
End of Document © 2019 Thomson Reuters. No claim to original U.S. Government Works.