Exhibit 10.3 to
Form 8-K
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
between
HOMEFED CORPORATION
a Delaware corporation,
as Borrower,
and
LEUCADIA FINANCIAL CORPORATION,
a Utah corporation,
as Lender
Dated as of October 9, 2002
EXECUTION COPY
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
This SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as
of October 9, 2002, is entered into by and between HOMEFED CORPORATION, a
Delaware corporation, as Borrower, and LEUCADIA FINANCIAL CORPORATION, a Utah
corporation, as Lender.
RECITALS
A. On October 22, 1992, Borrower filed in the United States
Court for the Southern District of California (the "Bankruptcy Court"), a
voluntary petition for relief under chapter 11 of Title 11 of the United States
Bankruptcy Code which was later consolidated with an involuntary bankruptcy case
initiated by certain holders of debentures on June 25, 1992, and was assigned
Case No. 92-07591-All (the "Bankruptcy Case").
B. Borrower filed a Fourth Amended Plan of Reorganization
(the "Plan") in the Bankruptcy Case, which was approved by its creditors and
confirmed by the Bankruptcy Court by Order of Confirmation dated December 19,
1994 (which Order of Confirmation was modified as of June 14, 1995).
C. The original Loan Agreement, entered on the Effective
Date (the "Original Loan Agreement"), was required under the Plan. The borrowing
made under the Original Loan Agreement was evidenced by a promissory note
executed on the Effective Date by Borrower ("Original Note"), and was secured by
the Stock Pledge, the Guaranties, the Security Agreements, the Deeds of Trusts,
and related financing statements, all of which documents are more fully
described below in the definition of "Original Plan Documents."
D. As an inducement to the Borrower to enter into a
Development Management Agreement with Provence Hills Development Company, LLC, a
Delaware limited liability company, pursuant to the first amended and restated
Loan Agreement dated as of August 14, 1998 (the "First Amended and Restated Loan
Agreement") Lender agreed to restructure certain of Borrower's obligations under
the Original Loan Agreement and the Original Note, among other things, (a) to
extinguish the convertibility provisions thereof; (b) to increase the principal
amount outstanding by the amount of accrued but unpaid interest to date; (c) to
reduce the interest rate to 6% per year, compounded annually; and (d) to extend
the term of the Original Note to December 31, 2004.
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E. The Borrower now wishes to further restructure certain
terms of the Amended and Restated Loan Agreement, and Lender has agreed, among
other things to (a) extend the term of the Original Note to December 31, 2007
and (b) to convert the existing interest rate of 6% per annum to an escalating
rate. The terms of such further restructuring are reflected in the second
amended and restated promissory note executed by Borrower as of the date hereof
(the "Note") and this Loan Agreement.
NOW, THEREFORE, in consideration of the above recitals and
the mutual covenants and agreements herein contained, the parties hereto
covenant and agree, that upon satisfaction of the conditions precedent set forth
in SECTION 9.18 hereof, the First Amended and Restated Loan Agreement is hereby
amended and restated as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Loan Agreement, the
following terms shall have the meanings set forth respectively after each:
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise), provided
that, in any event, (i) any Person that owns, directly or indirectly, 50% or
more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation (other than securities having
such power only by reason of the happening of a contingency) will be deemed to
control such corporation, (ii) any Person who is a general partner or an
Affiliate of a general partner of a partnership will be deemed to control such
partnership, and (iii) any Person who owns or controls 50% or more of either the
voting power as to any matters on which owners are permitted to vote or of the
value of the ownership interests of any other Person (including a corporation or
partnership), will be deemed to control such other Person.
"Applicable Rate" shall mean (i) from the Restatement
Effective Date to the Existing Maturity Date, 6% per annum, (ii) from the
Existing Maturity Date to December 31, 2005, 9% per annum, (iii) from December
31, 2005 to December 31, 2006, 10% per annum, and (iv) thereafter, 11% per
annum.
"Borrower" means HomeFed Corporation, a Delaware
corporation.
"Business Day" means a day other than Saturday, Sunday or
other day on which commercial banks are authorized or required by law to close
under the laws of the States of California and/or Utah.
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"Cash" means, when used in connection with any Person, all
monetary and non-monetary items belonging to such Person that are treated as
cash in accordance with generally accepted accounting principles, consistently
applied.
"Cash Equivalent" means (i) securities with maturities of
one year or less from the date of the acquisition issued or fully guaranteed or
insured by the United States government or any agency thereof, (ii) commercial
paper of an issuer rated at least "A-1" by Standard & Poor's Corporation or
"P-1" by ▇▇▇▇▇'▇ Investors Service, Inc., or carrying an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.
"Certificate of a Responsible Official" means a certificate
signed by a Responsible Official of the Person providing the certificate.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $.01 per
share, of Borrower.
"Contingent Obligation" means, as applied to any Person,
any direct or indirect liability, contingent or otherwise, of such person with
respect to any Indebtedness or contractual obligation of another person, if the
purpose or intent of such Person in incurring the Contingent Obligation is to
provide assurance to the obligee of such Indebtedness or contractual obligation
that such Indebtedness or contractual obligation will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder of
such Indebtedness or contractual obligation will be protected (in whole or in
part) against loss in respect thereof. Contingent Obligations of a Person
include, without limitation, (a) the direct or indirect guarantee, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of an
obligation of another Person, and (b) any liability of such Person for an
Obligation of another Person through any agreement (contingent or otherwise) (i)
to purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of a loan, advance, stock purchase, capital contribution or
otherwise), (ii) to maintain the solvency or any balance sheet item, level of
income or financial condition of another Person, (iii) to make take-or-pay or
similar payments, if required, regardless of non-performance by any other party
or parties to an agreement, (iv) to purchase, sell or lease (as lessor or
lessee) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such obligation or to assure the holder
of such obligation against loss, or (v) to supply funds to or in any other
manner invest in such other Person (including, without limitation, to pay for
property or services irrespective of whether such property is received or such
services are rendered), if in the case of any agreement described in subclause
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(i), (ii), (iii), (iv), or (v) of this sentence the primary purpose or intent
thereof is as described in the preceding sentence. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported.
"Default" means any Event of Default and/or any event that,
with the giving of notice or passage of time or both, would be an Event of
Default.
"dollars" or "$" means United States dollars.
"Effective Date" means July 3, 1995.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Existing Maturity Date" means December 31, 2004.
"Event of Default" shall have the meaning ascribed to it in
Section 8.1.
"Financial Statements" means the consolidated balance sheet
of Borrower and its Subsidiaries as of June 30, 2002 and consolidated statements
of income, stockholders' equity and cash flows of Borrower and its Subsidiaries
for the six-month period then ended, each as included in the Borrower's Form
10-Q filed with the Securities and Exchange Commission on August 14, 2002.
"First Amended and Restated Loan Agreement" shall have the
meaning given to such term in Recital D hereof.
"GAAP" means United States generally accepted accounting
principles as established from time to time.
"Government Securities" means readily marketable direct
obligations of the United States of America or obligations fully guaranteed by
the United States of America.
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body, or (c) any
court, administrative tribunal or public utility.
"Hazardous Materials" means flammable explosives,
radioactive materials, petroleum, asbestos, polychlorinated biphenyls and
hazardous substances, materials or wastes which are defined as hazardous or
toxic substances, materials or waste under any applicable Law.
"Indebtedness" means, with respect to any Person (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments, (iii) all
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indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or Lender under such
agreement in the event of default are limited to repossession or sale of such
property), (iv) all Contingent Obligations of such Person, (v) all obligations
of such Person to purchase, redeem or otherwise acquire for value any stock or
stock equivalents of such Person, valued, in the case of redeemable preferred
stock, at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends, and (vi) all Indebtedness referred to in
clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any lien upon or on property, and (vii) all liabilities of such
Person that would be shown on a balance sheet of such Person prepared in
conformity with GAAP.
"Interest Payment Date" means the last day of each
September, December, March and June to occur while the Note is outstanding.
"Investment" means, when used in connection with any
Person, any investment by or of that Person, whether by means of purchase or
other acquisition of stock or other securities or by means of loan, advance,
capital contribution, guaranty or other debt or equity participation or interest
in any other Person, or otherwise, and includes, without limitation, any
partnership and joint venture interests of such Person.
"Laws" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations, ordinances,
codes and administrative or judicial precedents.
"Lender" means Leucadia Financial Corporation, a Utah
corporation, and any holder of the Note or any interest therein or any one or
more or all of their successors in interest, as the context requires or permits.
"Lender's Office" means Lender's address as set forth on
the signature pages of this Loan Agreement, or such other address as Lender
hereafter may designate by written notice to Borrower.
"Lien" means any pledge, hypothecation, security interest,
encumbrance, lien or charge of any kind, whether voluntarily incurred or arising
by operation of Law or otherwise, affecting any Property, including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and/or the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable Law of any jurisdiction.
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"Loan" means the principal amount outstanding under the
Original Loan Agreement as of the date hereof.
"Loan Agreement" means this Amended and Restated Loan
Agreement, either as originally executed or as it may from time to time be
supplemented, modified, amended, restated or extended.
"Material Adverse Effect" means a material adverse effect
on the business, operations or condition (financial or otherwise) of Borrower
and its Subsidiaries taken as a whole.
"Maturity Date" means December 31, 2007.
"Note" shall have the meaning set forth in Recital E and
shall be substantially in the form and substance of Exhibit A, with all blanks
properly completed, either as originally executed or as the same may from time
to time be supplemented, modified, amended, renewed, extended or refinanced.
"Obligations" means all present and/or future obligations
of every kind or nature of Borrower and its Subsidiaries at any time and/or from
time to time owed to Lender under any one or more of the Plan Documents, whether
due or to become due, matured or unmatured, liquidated or unliquidated, or
contingent or noncontingent, including obligations of performance as well as
obligations of payment, and including, without limitation, any and all expenses
(including without limitation, counsel fees and expenses) incurred by Lender in
enforcing its rights under this Loan Agreement as well as interest that accrues
after the commencement of any bankruptcy or insolvency proceeding by or against
Borrower or any Subsidiary or Affiliate of Borrower.
"Original Note" shall have the meaning given to such term
in Recital C hereof.
"Person" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock company,
trust, unincorporated organization, bank, business association, firm, joint
venture, Governmental Agency, or otherwise.
"Plan Documents" means all of the following documents, in
each case either as originally executed or as the same may from time to time be
supplemented, modified, amended, restated or extended:
(a) this Loan Agreement;
(b) the Note;
(c) the Security Agreement and Stock Pledge ("Stock
Pledge"), dated July 3, 1995, between Borrower and Lender;
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(d) the Payment Guaranty, dated July 3, 1995, executed by
HomeFed Communities, Inc., a California corporation ("HomeFed Communities");
(e) the Security Agreement, dated July 3, 1995, between
HomeFed Communities and Lender;
(f) the Payment Guaranty, dated July 3, 1995, executed by
HomeFed Resources Corporation, a California corporation ("HomeFed Resources");
(g) the Security Agreement, dated July 3, 1995, between
HomeFed Resources and Lender;
(h) the Deed of Trust, dated July 3, 1995, executed by
Paradise Valley Communities No. 1, a California general partnership ("Paradise
Valley");
(i) the Payment Guaranty, dated July 3, 1995, executed by
Paradise Valley in favor of Lender;
(j) the Security Agreement, dated July 3, 1995, between
Paradise Valley and Lender;
(k) the Payment Guaranty, dated July 3, 1995, executed by
Northfork in favor of Lender (collectively with the Payment Guaranties of
HomeFed Communities, HomeFed Resources and Paradise Valley, the "Payment
Guaranties"); and
(1) the Security Agreement, dated July 3, 1995, between
Northfork and Lender (collectively with the Security Agreements of HomeFed
Communities, HomeFed Resources and Paradise Valley, the "Security Agreements").
"Principal" means the outstanding principal amount of the
Loan, which shall equal $26,462,381.64.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Responsible Official" means:
(a) When used with reference to any Person other than an
individual, any corporate officer of such Person, general partner of such
Person, corporate officer of a corporate general partner of such Person, or
corporate officer of a corporate general partner of a partnership that is a
general partner of such Person, or any other responsible official thereof duly
acting on behalf thereof; and
(b) When used with reference to a Person who is an
individual, such Person.
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"Restatement Effective Date" shall have the meaning
ascribed thereto in Section 9.18.
"Restatement Fee" shall mean $250,000.
"Right of Others" means, as to any Property in which a
Person has an interest, any legal or equitable claim, right, title or other
interest (other than a Lien) in or with respect to that Property held by any
other Person, and any option or right held by any other Person to acquire any
such claim, right, title or other interests including any option or right to
acquire a Lien.
"Securities Act" means the Securities Act of 1933, as
amended.
"Subsidiary" means HomeFed Communities, HomeFed Resources,
Northfork, Paradise Valley and, after the date hereof, any other corporation,
association, partnership business trust or other business entity of which
Borrower shall at any time own directly or indirectly through one or more
Subsidiaries at least a majority (by number of votes) of the outstanding voting
stock of such entity.
"to the best knowledge of" means, when modifying a
representation, warranty or other statement of any Person, that the fact or
situation described therein is known by the Person (or, in the case of a Person
other than a natural Person, known by a Responsible Official of that Person)
making the representation, warranty or other statement, or with the exercise of
reasonable due diligence under the circumstances (in accordance with the
standard of what a reasonable Person in similar circumstances would have done)
should have been known by the Person (or, in the case of a Person other than a
natural Person, should have been known by a Responsible Official of that
Person).
1.2 Use of Defined Terms. Any defined term used in the plural shall
refer to all members of the relevant class, and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined
in this Loan Agreement shall be construed in conformity with, and all financial
data required to be submitted by this Loan Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect on the date
hereof, except as otherwise specifically prescribed herein.
1.4 Exhibits. Any and all exhibits to this Loan Agreement, either as
originally existing or as the same may from time to time be supplemented,
modified or amended, are incorporated herein by this reference.
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ARTICLE 2
NONREVOLVING LOAN
2.1 The Loan. The Loan shall be evidenced by the Note of even date
herewith, which shall be executed and delivered by Borrower.
2.2 Non-revolving. To the extent the Loan from time to time shall be
repaid by Borrower as permitted by Section 3.5, the Loan may not be reborrowed.
2.3 Use of Proceeds. The Borrower has used the proceeds of the Loan
to finance the Plan. No part of the proceeds of the Loan was used for the
purpose of "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
governors of the Federal Reserve System as now and from time to time in effect
("Regulation U").
ARTICLE 3
PAYMENTS; FEES
3.1 Payment Terms. Interest on the outstanding Principal shall be
payable quarterly in arrears on each Interest Payment Date, through the Maturity
Date calculated at the Applicable Rate, and on the Maturity Date, all unpaid
Principal shall be due and payable.
3.2 Non-Business Days. If any payment to be made by Borrower or any
other party under any Plan Document shall come due on a day other than a
Business Day, payment shall be made on the next succeeding Business Day and the
extension of time shall be reflected in computing interest.
3.3 Manner and Treatment of Payments.
(a) Each payment hereunder or on the Note or under any other Plan
Document shall be made to Lender, at Lender's Office or at such other place as
Lender may designate, for the account of Lender, in immediately available funds
not later than 12 noon Utah time on the day of payment (which must be a Business
Day). All payments shall be made in lawful money of the United States of
America.
(b) Each payment of any amount payable by Borrower under this
Loan Agreement and/or any other Plan Document shall be made free and clear of,
and without reduction by reason of, any taxes, assessments or other charges
imposed by any Governmental Agency, central bank or comparable authority.
3.4 Payment of Overdue Principal and Interest. The Borrower shall
pay interest on overdue Principal at the rate borne by the Note; it shall pay
interest on the overdue installments of interest at the same rate to the extent
lawful, such interest being due and payable on demand of Lender.
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3.5 Prepayments. The Note shall be prepayable in whole, or in part,
without penalty or charge, upon 30 days prior written notice to Lender.
3.6 Limitation on Interest. All agreements between Borrower and
Lender are hereby expressly limited so that in no contingency or event
whatsoever shall the amount paid or agreed to be paid to Lender for the use,
forbearance or retention of the indebtedness evidenced hereby exceed the maximum
amount which Lender is permitted to receive under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereto, at the time
performance of such provision shall be due, shall involve exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such validity, and if from any circumstance Lender should ever receive as
interest an amount which would exceed such maximum amount, such amount which
would be excessive interest shall be applied to the reduction of the Principal
balance evidenced hereby and not to the payment of interest. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof,
provided, however, that in the event there is a change in the law which results
in a higher permissible rate of interest, then the Note shall be governed by
such new law as of its effective date. This provision shall control every
provision of all agreements between Borrower and Lender.
3.7 Failure to Charge Not Subsequent Waiver. Any decision by Lender
not to require payment of any interest, fee, cost or other amount payable under
any Plan Document on any occasion shall in no way limit or be deemed a waiver of
Lender's right to require full payment of any interest, fee cost or other amount
payable under any Plan Document on any other or subsequent occasion.
3.8 Survivability. All of Borrower's obligations under this Article
3 shall survive until the Loan shall have been fully paid.
ARTICLE 4
COLLATERAL SECURITIES AND GUARANTIES
4.1 Security of Borrower. All of the Obligations are to be secured
by a perfected first priority security interest (except as set forth in Section
6.4 of this Agreement) in all of the assets of Borrower whether now owned or
hereafter acquired, including any capital stock held by Borrower, pursuant to
the terms of the Stock Pledge.
4.2 Guaranties and Security of the Subsidiaries. The Obligations
shall also be guaranteed pursuant to the terms of the Payment Guaranties. All of
the obligations of the Subsidiaries under their respective Payment Guaranties
shall be in turn secured by a perfected first priority security interest (except
as set forth in Section 6.4 of this Agreement, and as revealed by title
insurance policies issued to Lender as of July 3, 1995 covering real Property
that shall as of July 3, 1995 be encumbered by the Deeds of Trust) in all of the
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assets of such Subsidiary, whether now owned or hereafter acquired pursuant to
the terms of the Plan Documents to which such Subsidiary is a party.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to Lender, as of the date hereof, that:
5.1 Existence and Qualification; Power; Compliance With Laws.
Borrower is a corporation duly formed, validly existing and in good standing
under the Laws of Delaware. The chief executive offices of Borrower are in Salt
Lake City, Utah. Borrower is duly qualified or registered to transact business
and is in good standing in California and in each other jurisdiction in which
the conduct of its business or the ownership or leasing of its Property makes
such qualification or registration necessary where the failure to be so
qualified would have a Material Adverse Effect. Borrower has all requisite power
and authority to conduct its business, to own and lease its Property and to
execute, deliver and perform all of its Obligations under the Plan Documents.
All outstanding Common Stock of Borrower is duly authorized, validly issued,
fully paid and non-assessable and issued in compliance with all applicable state
and federal securities and other Laws. Borrower is in compliance with all Laws
and other legal requirements applicable to its business, has obtained all
authorizations, consents, approvals, orders, licenses and permits from, and has
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
necessary for the transaction of its business as now conducted, except where the
failure so to comply, file, register, qualify or obtain exemptions would not
have a Material Adverse Effect.
5.2 Authority; Compliance with Other Agreements and Instruments and
Government Regulations. The execution delivery and performance by Borrower of
the Loan Agreement has been duly authorized by all necessary action on the part
of Borrower, and do not and will not:
(a) Require any consent or approval not heretofore obtained of
any director, stockholder, security holder, partner or creditor of Borrower;
(b) Violate or conflict with any provision of Borrower's charter,
certificate or articles of incorporation or bylaws, or amendments thereto, as
applicable;
(c) Result in or require the creation or imposition of any Lien
or Right of Others upon or with respect to any Property now owned or leased or
hereafter acquired by Borrower;
(d) Violate any provision of any Law, order, writ, judgment,
injunction, decree, determination or award presently in effect and having
applicability to Borrower; or
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(e) Result in a breach of or constitute a default under, or cause
or permit the acceleration of any obligation owed under, any indenture or loan
or credit agreement or any other material agreement, lease or instrument to
which Borrower is a party or by which such Borrower or any of its Property is
bound or affected;
and neither Borrower, nor any Affiliate of Borrower is in default under any Law,
order, writ, judgment, injunction, decree, determination or award, or any
indenture, agreement, lease or instrument described in Section 5.2(e), in any
respect that is materially adverse to the interests of Lender or that would have
any Material Adverse Effect.
5.3 No Governmental Approvals Required. The Original Loan Agreement
was approved by the Bankruptcy Court in conjunction with the Plan, and no
additional authorization, consent, approval, order, license or permit from, or
filing, registration or qualification with, or exemption from any of the
foregoing from, any Governmental Agency is or will be required to authorize or
permit under applicable Law the execution, delivery and performance by Borrower
of and under any of the Plan Documents.
5.4 Subsidiaries. Borrower holds 400 shares of the outstanding
Common Stock of HomeFed Communities, which shares constitute all of the
outstanding shares of HomeFed Communities and are represented by a certificate
of HomeFed Communities. Borrower also holds 20 shares of the outstanding Common
Stock of HomeFed Resources, which shares constitute all of the outstanding
shares of HomeFed Resources and are represented by a certificate of HomeFed
Resources. HomeFed Resources and HomeFed Communities comprise all of the
partners of Northfork and Paradise Valley.
5.5 Title to and Location of Property. Borrower and the Subsidiaries
have good and valid title to all the Property reflected in the Financial
Statements, other than Property subsequently sold in the ordinary course of
business, free and clear of all Liens and Rights of Others other than Liens or
Rights of Others permitted pursuant to Section 6.4.
5.6 Investment Company Act of 1940. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940.
5.7 Litigation. Except as described in the Borrower Reports there
are no actions, suits or proceedings pending or, to the best knowledge of
Borrower, threatened against or affecting Borrower or any Property of Borrower
in any court of Law or before any Governmental Agency.
5.8 Binding Obligations. Each of the Plan Documents will continue to
constitute the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization arrangement, moratorium or
other similar Laws relating to or affecting creditors' rights generally or
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
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5.9 No Default. No event has occurred and is continuing that is an
Event of Default.
5.10 Disclosure. No written statement made by Borrower to Lender in
connection with this Loan Agreement or the Loan contains any untrue statement of
a material fact or omits a material fact necessary to make the statement made
not misleading. There is no fact which Borrower has not disclosed to Lender in
writing which materially and adversely affects nor, so far as Borrower can now
foresee, is reasonably likely to prove to affect materially and adversely the
business, operations, Property, prospects, profits or condition (financial or
otherwise) of Borrower, or the ability of Borrower to perform its obligations
under the Plan Documents.
5.11 Tax Liability. Borrower has filed all income tax returns which
are required to be filed, and has paid, or made provision for the payment of,
all taxes due for the transactions or periods covered by such returns, except
such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided.
5.12 Insurance Coverage. There is in full force and effect one or
more policies of insurance issued by insurers of nationally recognized
responsibility insuring Borrower and its Property and business against losses
and risks and in such amounts as are adequate for the business of Borrower and
as are customarily carried by Persons engaged in the same or similar business.
5.13 Access to Data. Lender has had an opportunity to discuss
Borrower's business, management, and financial affairs with its management and
to review Borrower's records and facilities, and Lender is relying for purposes
of this Agreement upon its own due diligence review of Borrower, not on any
representation or warranty of Borrower other than as expressly set forth in this
Agreement.
ARTICLE 6
COVENANTS OF BORROWER
From the date of this Agreement and for so long as any of the Loan
remains unpaid, or any other sums, of any kind, due and payable by Borrower,
under this Loan Agreement or due and payable by Borrower to Lender under any
other debt security, instrument, loan or other agreement, remain unpaid,
Borrower shall, and shall, if appropriate, cause each of its Subsidiaries to,
unless Lender otherwise consents in writing:
6.1 Payment of Principal and Interest. Duly and punctually pay the
Principal and interest on the Note in accordance with its terms and the terms of
this Loan Agreement.
6.2 Existence. Do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and the existence of
the Subsidiaries, rights (charter and statutory) and franchises; provided,
13
however, that it shall not be required to preserve any such right or franchise
if its Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of its business and that the loss thereof does
not have a Material Adverse Effect.
6.3 Maintenance of Property. Cause all Property used or useful in
the conduct of its business to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment, and prohibit waste
and cause to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in its judgment may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent discontinuing the operation or maintenance of any of such Property if
such discontinuance does not have a Material Adverse Effect and is, in its
judgment, desirable in the conduct of its business.
6.4 Payment of Taxes and Other Claims. Pay or discharge or cause to
be paid or discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income, profits or Property, and (2) any and all Liens and any and all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
Lien; provided, however, that it shall not be required (i) to terminate that
certain financing statement (California Federal Bank, secured party) filed with
the California Secretary of State at no. 910092913, (ii) to terminate those
certain financing statements (▇▇▇▇▇ HomeFed Communities La Quinta, debtor;
Community Bank, secured party) filed with the California Secretary of State at
nos. 90209536, 90209538, and 90261832, which financing statements are due to
expire in 1995, or (iii) to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge, Lien or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings and for
which adequate reserves are maintained.
6.5 Margin Stock. Refrain from "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms under
Regulation U.
6.6 No Plan Amendments, Etc. Refrain from amending any Plan
Documents without the prior written consent of Lender except as specifically
contemplated by this Agreement.
6.7 Preservation of Tax Attributes. Take all reasonable steps
necessary to preserve the existence and availability for federal income tax
purposes of Borrower's net operating losses.
6.8 [Reserved]
ARTICLE 7
INFORMATION AND REPORTING REQUIREMENTS
14
7.1 Financial and Business Information. From the date of this Loan
Agreement and for so long as the Loan remains unpaid or any other sums of any
kind due and payable by Borrower under this Loan Agreement or due and payable by
Borrower to Lender under any other debt security, instrument, loan or under any
other agreement, remain unpaid Borrower shall, unless Lender shall otherwise
consent in writing, deliver to Lender, at Borrower's sole expense:
(a) As soon as practicable, and in any event within twenty (20)
days after the end of each fiscal month of Borrower, (i) consolidated balance
sheets of Borrower and its Subsidiaries as at the end of such month, setting
forth in comparative form the corresponding figures as at the end of the
corresponding month of their preceding fiscal year and (ii) consolidated
statements of income, shareholders' equity, and cash flows of Borrower and its
Subsidiaries for such month and for the portion of their fiscal year ended with
such month, setting forth in comparative form the corresponding figures for the
corresponding periods of their preceding fiscal year, all in reasonable detail,
including footnotes. The preceding financial statements shall be certified by a
Responsible Official of Borrower as fairly presenting in all material respects
the financial condition, results of operations and changes in financial position
of Borrower and its Subsidiaries in accordance with generally accepted
accounting principles, consistently applied, as at such date and for such
periods, subject only to normal year-end audit adjustments.
(b) As soon as practicable, and in any event within thirty (30)
days after the end of each fiscal quarter of Borrower (including the last fiscal
quarter of each fiscal year, provided that with respect to such last quarter the
financial statements required hereby may be in preliminary form, prior to
year-end audit adjustments), (i) consolidated balance sheets of Borrower and its
Subsidiaries as at the end of such quarter, setting forth in comparative form
the corresponding figures as at the end of the corresponding quarter of their
preceding fiscal year and (ii) consolidated statements of income, shareholders'
equity, and cash flows of Borrower and its Subsidiaries for such quarter and for
the portion of their fiscal year ended with such quarter, setting forth in
comparative form the corresponding figures for the corresponding periods of
their preceding fiscal year, all in reasonable detail, including footnotes. The
preceding financial statements shall be certified by a Responsible Official of
Borrower as fairly presenting in all material respects the financial condition,
results of operations and changes in financial position of Borrower and its
Subsidiaries in accordance with generally accepted accounting principles,
consistently applied, as at such date and for such periods, subject only to
normal year-end audit adjustments.
(c) As soon as practicable, and in any event within ninety
(90) days after the close of each fiscal year of Borrower, (i) consolidated
balance sheets of Borrower and its Subsidiaries as at the end of such fiscal
year, setting forth in comparative form the corresponding figures as at the end
of their preceding fiscal year, and (ii) consolidated statements of income,
shareholders' equity, and cash flows of Borrower and its Subsidiaries for such
fiscal year, setting forth in comparative form the corresponding figures for
their previous fiscal year, all in reasonable detail. Such balance sheets and
15
statements shall be prepared in accordance with generally accepted accounting
principles, consistently applied, and such consolidated balance sheet and
consolidated statements shall be accompanied by a report and opinion of
independent public accountants selected by Borrower and reasonably satisfactory
to Lender which report and opinion shall be prepared in accordance with
generally accepted auditing principles as at such date.
(d) As soon as practicable, and in any event within thirty (30)
days after the end of each fiscal month of Borrower, a Certificate of a
Responsible Official of Borrower setting forth a schedule of Investments made by
Borrower and/or its Subsidiaries during such month, and during their fiscal year
to date, separately for Borrower and each of its Subsidiaries, and in reasonable
detail.
(e) As soon as practicable, and in any event within thirty (30)
days after filing, copies of any report or other document filed by Borrower or
any of its Subsidiaries with any Governmental Agency.
(f) Promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent to
the shareholders of Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which Borrower may file or be
required to file with any Governmental Agency or with any securities exchange.
(g) Promptly upon (and in no event later than five (5) Business
Days after) becoming aware of the existence of any condition or event which
constitutes a Default, a written notice specifying the nature and period of
existence thereof and what action Borrower or its Subsidiaries are taking or
propose to take with respect thereto.
(h) Promptly upon becoming aware that any Person asserts a claim
against Borrower or any of its Subsidiaries in excess of $25,000 and that such
Person has given notice or taken any other action with respect to a claimed
default or event of default, a written notice specifying the notice given or
action taken by such Person and the nature of the claimed default or event of
default and what action Borrower or its Subsidiaries are taking or propose to
take with respect thereto.
(i) Promptly upon any change in the name of Borrower or any
Subsidiary or a change in Borrower's organizational structure, a written notice
specifying such change.
(j) Promptly upon the occurrence of any uninsured or partially
insured loss (including the deductible amount) as a result of fire, theft,
liability or Property damage in excess of an aggregate of $25,000, a written
notice specifying the nature and amount of such loss.
(k) Such other data and information as from time to time may be
reasonably requested by Lender, including environmental audit reports prepared
by recognized California environmental consultants retained by Borrower with the
approval of Lender.
16
7.2 Compliance Certificates. So long as the loan remains unpaid or
any other Obligation remains unpaid or unperformed in whole or in part, Borrower
shall, upon the reasonable request of Lender, deliver to Lender, at Borrower's
sole expense, not later than 45 days after the end of each fiscal quarter of
Borrower, a Certificate of a Responsible Official of Borrower setting forth
computations or other appropriate information showing, in detail satisfactory to
Lender, whether any Default exists and, if so, the nature of the Default.
ARTICLE 8
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
8.1 Events of Default. The existence or occurrence of any one or
more of the following events, whatever the reason therefor, shall constitute an
Event of Default;
(a) Borrower fails to pay any installment of Principal or
interest of any indebtedness on the Note or any portion thereof, or to pay any
fee or any other amount due Lender under any Plan Document within five (5)
Business Days after such payment is due and payable; or
(b) Any failure to comply with Section 7.1(g); or
(c) Any failure to perform or observe any other term, covenant or
agreement contained in any Plan Document to be performed or observed by Borrower
or a Subsidiary which is not cured within ten (10) calendar days; or
(d) Borrower or any of its Subsidiaries (i) fails to pay the
principal, or any principal installment, of any present or future Indebtedness
or in connection with the purchase or lease of Property, or any guaranty of
present or future Indebtedness for borrowed money or issued in connection with
the Purchase or lease of Property, on its part to be paid, when due (or within
any stated grace period), whether at the stated maturity, upon acceleration, by
reason of required prepayment or otherwise, or (ii) fails to perform or observe
any other term, covenant or agreement on its part to be performed or observed in
connection with any present or future Indebtedness for borrowed money or in
connection with the purchase or lease of Property, or of any guaranty of present
or future Indebtedness for borrowed money or issued in connection with the
purchase or lease of Property, if as a result of such failure any holder or
holders thereof (or an agent or trustee on its or their behalf) has the right to
declare such Indebtedness due before the date on which it otherwise would become
due; or
(e) Any Plan Document, at any time and for any reason other
than the agreement of Lender or satisfaction in full of all the Obligations,
ceases to be in full force and effect or is declared by a court of competent
jurisdiction to be null and void, invalid or unenforceable in any respect which,
17
in the reasonable opinion of Lender, is materially adverse to the interests of
Lender; or any party thereto other than Lender denies that it has any or further
liability or obligation under any Plan Document, or purports to revoke,
terminate or rescind same; or
(f) Borrower or any of its Subsidiaries is the subject of
an order for relief in a bankruptcy case, or is unable or admits in writing its
inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator, or similar
officer for it or for all or any part of its Property; or any receiver, trustee,
custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of that Person and the appointment
continues undischarged or unstayed for thirty (30) calendar days; or institutes
or consents to any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, custodianship, conservatorship, liquidation,
rehabilitation or similar case or proceedings relating to it or to all or any
part of its Property under the Laws of any jurisdiction; or any similar case or
proceeding is instituted without the consent of that Person and continues
undismissed or unstayed for thirty (30) calendar days; or any judgment, writ,
warrant of attachment or execution or similar process is issued or levied
against all or any material part of the Property of any such Person and is not
released, vacated or fully bonded within thirty (30) calendar days after its
issue or levy; or
(g) Borrower or any Subsidiary thereof is dissolved or
liquidated or all or substantially all of the assets of Borrower or any
Subsidiary of Borrower are sold or otherwise transferred in violation of the
provisions of this Loan Agreement without the written consent of Lender;
provided, however, that Borrower shall be entitled to dissolve or liquidate any
of Borrower's Subsidiaries in the ordinary course of business if such act does
not have a Material Adverse Effect or (i) all of the proceeds of such
dissolution or liquidation go to Borrower, and (ii) such dissolution or
liquidation results in no breach of any obligations of Borrower or such
Subsidiary to any Person; or
(h) The revocation or nonrenewal of any permit or license,
authorization, consent, order or other approval from any Governmental Agency
necessary for the conduct of Borrower's business that has a Material Adverse
Effect; or
(i) Any judgment or order for the payment of money in
excess of $50,000 to the extent not fully covered by insurance shall be rendered
against Borrower or any of its Subsidiaries and either, (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order, or (ii) there shall be any period of ten (10) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
8.2 Remedies Upon Event of Default. Without limiting any other
rights or remedies of Lender provided for elsewhere in this Loan Agreement, the
Plan Documents, or by applicable Law, or in equity, or otherwise:
18
(a) Upon the occurrence of any Event of Default other than
an Event of Default described in Section 11.1(f) Lender may declare all or any
part of the unpaid Principal of the Note, all interest accrued and unpaid
thereon and all other amounts payable under the Plan Documents to be forthwith
due and payable, whereupon the same shall become and be forthwith due and
payable, without protest, presentment, notice of dishonor, demand or further
notice of any kind, all of which are expressly waived by Borrower.
(b) Upon the occurrence of any Event of Default described
in Section 8.1(f):
(1) all obligations of Lender and all rights of
Borrower under the Plan Documents shall terminate without
notice to or demand upon Borrower, which are expressly
waived by Borrower; provided, however, that Lender may waive
the Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to Lender, to extend the
Maturity Date; and
(2) the unpaid Principal of the Note, all interest
accrued and unpaid thereon and all other amounts payable
under the Plan Documents shall be forthwith due and payable,
without protest, presentment, notice of dishonor, demand or
further notice of any kind, all of which are expressly
waived by Borrower.
(c) Upon the occurrence of any Event of Default, Lender,
without notice to or demand upon Borrower, which are expressly waived by
Borrower, may proceed to protect, exercise and enforce its rights and remedies
under the Plan Documents against Borrower and such other rights and remedies as
are Provided by Law or equity.
(d) The order and manner in which Lender's rights and
remedies are to be exercised shall be determined by Lender in its sole
discretion, and all payments received by Lender shall be applied first to the
costs and expenses (including attorneys' fees and disbursements) of Lender, and
thereafter paid to Lender. Regardless of how Lender may treat payments for the
purpose of its own accounting, for the purpose of computing Borrower's
Obligations hereunder and under the Note, payments shall be applied, first, to
the costs and expenses of Lender, as set forth above, second, to the payment of
accrued and unpaid interest due under any Plan Document to and including the
date of such application (ratably, and without duplication, according to the
accrued and unpaid interest due under each of the Plan Documents), third, to the
payment of all unpaid Principal amounts due under any Plan Document (including,
for the purposes hereof, Principal due under the Note), and fourth, to the
payment of all other amounts (including fees) then owing to Lender under the
Plan Documents. No application of payments will cure any Event of Default, or
prevent acceleration, or continued acceleration, of amounts payable under the
19
Plan Documents, or prevent the exercise, or continued exercise, of rights or
remedies of Lender hereunder or thereunder or at Law or in equity.
(e) Upon the occurrence of any event that would be an Event
of Default under Section 11.1(f) with the passage of time, Lender may take such
action as Lender may deem necessary to protect the interests of Lender under the
Plan Documents.
ARTICLE 9
MISCELLANEOUS
9.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of Lender provided herein and in the Note and every
other Plan Document are cumulative and not exclusive of any right, power,
privilege or remedy provided by Law or equity. No failure or delay on the part
of Lender in exercising any right, power, privilege or remedy may be, or may be
deemed to be, a waiver thereof; nor may any single or partial exercise of any
right, power, privilege or remedy preclude any other or further exercise of the
same or any other right, power, privilege or remedy.
9.2 Amendments; Consents. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Loan Agreement or any
other Plan Document, no approval or consent thereunder, and no consent to any
departure therefrom by Borrower or any other party to the Plan Documents other
than Lender, may in any event be effective (except as otherwise provided in any
other Plan Document) unless in writing signed by the Parties hereto.
9.3 Nature of Lender's Obligations. Nothing contained in this
Loan Agreement or any other Plan Document and no action taken by Lender pursuant
hereto or thereto may, or may be deemed to, make Borrower and Lender a
partnership, an association, a joint venture or other entity, either between
themselves or with any Affiliate of Borrower. The relationship between Borrower
and Lender is, and shall at all times remain, solely that of a borrower and
Lender; Lender shall under no circumstance be construed to be a partner or joint
venturer of Borrower or its Affiliates; Lender shall under no circumstance be
deemed to be in a relationship of confidence or trust or a fiduciary
relationship with Borrower or its Affiliates, or to owe any fiduciary duty to
Borrower or its Affiliates; Lender undertakes or assumes no responsibility or
duty to Borrower or its Affiliates to select, review, inspect, supervise, pass
judgment upon or inform Borrower or its Affiliates of any matter in connection
with their Property, or the operations of Borrower or its Affiliates; Borrower
and its Affiliates shall rely entirely upon their own judgment with respect to
such matters; and any review, inspection, supervision, exercise of judgment or
supply of information undertaken or assumed by Lender in connection with such
matters is solely for the protection of Lender and neither Borrower nor any
other Person is entitled to rely thereon.
9.4 Survival of Representations and Warranties and Covenants. All
representations and warranties contained herein or in any other Plan Document,
20
or in any certificate or other writing delivered by or on behalf of Borrower,
will survive the making and repayment of the loan hereunder and the execution
and delivery of the Note and have been or will be relied upon by Lender,
notwithstanding any investigation made by Lender. All affirmative and negative
covenants contained herein will survive the payment of the Loan hereunder until
all indebtedness of Borrower to Lender under any other security debt instrument,
loan or other agreement is satisfied in full.
9.5 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including, without limitation, telegraphic,
telex, telecopy or cable communication) and mailed, telegraphed, telecopied, or
delivered by hand, if to the Borrower, at its address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇) (telephone number:
(▇▇▇) ▇▇▇-▇▇▇▇); and if to Lender, at its address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (telecopy number: (▇▇▇-▇▇▇-▇▇▇▇) (telephone number:
(▇▇▇-▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇; with a copy to Weil, Gotshal &
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (telecopy number
▇▇▇-▇▇▇-▇▇▇▇) (telephone number ▇▇▇-▇▇▇-▇▇▇▇), Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Esq.; or, at such other address as shall be designated by such party in a
written notice to the other party. All such notices and communications shall,
when mailed, telegraphed, telecopied or delivered, be effective when deposited
in the mails, delivered to the telegraph company, telecopied with confirmation
of receipt, or delivered by hand to the addressee.
9.6 Execution of Loan Agreements. This Loan Agreement may be
executed in any number of counterparts and any party hereto or thereto may
execute any counterpart, each of which when executed and delivered will be
deemed to be an original and all of which counterparts of this Loan Agreement,
as the case may be, when taken together will be deemed to be but one and the
same instrument. The execution of this Loan Agreement by any party hereto or
thereto will not become effective until counterparts hereof or thereof, as the
case may be, have been executed by all the parties hereto or thereto.
9.7 Binding Effect; Assignment. This Loan Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and thereto
and their respective successors and assigns, except that Borrower and/or its
Affiliates may not assign their rights hereunder or thereunder or any interest
herein or therein without the prior written consent of Lender. Lender may assign
its rights and obligations hereunder without the consent of Borrower.
9.8 Statements Required in Certificate. Each certificate with
respect to compliance with a condition or covenant provided for in the Note or
this Loan Agreement shall include:
(a) a statement that each Person making such certificate
has read such covenant or condition;
21
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such
certificate are based;
(c) a statement that, in the opinion of each such Person,
he or she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of
each such Person, such covenant or condition has been complied with.
9.9 Indemnity by Borrower. Borrower agrees to indemnify, save and
hold harmless Lender and each of its directors, officers, agents, attorneys and
employees (collectively the "Indemnitees") from and against: (a) any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than Lender) if the claim, demand, action or
cause of action directly or indirectly relates to a claim, demand, action or
cause of action that such Person has or asserts against Borrower, any Subsidiary
of Borrower or any of their respective officers, directors, agents, attorneys,
employees or shareholders; (b) any and all claims, demands, actions or causes of
action that are asserted against any Indemnitee if the claim, demand, action or
cause of action arises out of or relates to the relationship between Borrower
and Lender under any of the Plan Documents or the transactions contemplated
thereby; (c) any and all administrative or investigative proceedings by any
Governmental Agency arising out of or related to any claim, demand, action or
cause of action described in clauses (a) or (b) above; and (d) any and all
liabilities, losses, costs or expenses (including attorneys' fees and
disbursements and other professional services) that any Indemnitee suffers or
incurs as a result of the assertion of any of the foregoing; provided that no
Indemnitee shall be entitled to indemnification for any loss caused by its own
gross negligence or willful misconduct. Each Indemnitee is authorized to employ
counsel of its own choosing in enforcing its rights hereunder and in defending
against any claim, demand, action, cause of action or administrative or
investigative proceeding covered by this Section 9.9; provided that each
Indemnitee shall endeavor, in connection with any matter covered by this Section
9.9 which also involves other Indemnitees, to use reasonable efforts to avoid
unnecessary duplication of effort by counsel for all Indemnitees. Any obligation
or liability of Borrower to any Indemnitee under this Section 9.9 shall be and
hereby is covered and secured by the Plan Documents, and shall survive the
expiration or termination of this Loan Agreement and the repayment of the Loan
and the payment and performance of all other Obligations owed to Lender.
9.10 No Third Parties Benefited. This Loan Agreement is made for
the purpose of defining and setting forth certain obligations, rights and duties
of Borrower and Lender in connection with the Loan, and is made for the sole
protection of Borrower and Lender, and Lender's successors and assigns, and no
other Person shall have any rights of any nature hereunder or by reason hereof.
22
9.11 Further Assurances. Borrower and its Subsidiaries shall, at
their expense and without expense to Lender, do, execute and deliver such
further acts and documents as Lender from time to time reasonably requires for
the assuring and confirming unto Lender of the rights hereby created or intended
now or hereafter so to be, or for carrying out the intention or facilitating the
performance of the terms of any Plan Document, or for assuring the validity,
perfection, priority or enforceability of any Lien under any Plan Document.
9.12 Integration. This Loan Agreement, together with the other
Plan Documents, comprises the complete and integrated agreement of the parties
on the subject matter hereof and supersedes all prior agreements, written or
oral, on the subject matter hereof. In the event of any conflict between the
provisions of this Loan Agreement and those of any other Plan Document, the
provisions of this Loan Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of Lender in any other
Plan Document shall not be deemed a conflict with this Loan Agreement. Each Plan
Document was drafted with the joint participation of the respective parties
thereto and shall be construed neither against nor in favor of any party, but
rather in accordance with the fair meaning thereof.
9.13 Governing Law. This Loan Agreement and, except to the extent
otherwise provided therein each Plan Document, shall be governed by, and
construed and enforced in accordance with, the internal Laws of the State of
Utah (without regard to choice of law or conflict of law provisions).
9.14 Severability of Provisions. Any provision in any Plan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, unenforceability or validity of that provision as to any other
party or in any other jurisdiction, and to this end the provisions of all Plan
Documents are declared to be severable.
9.15 Headings. Article and Section headings in this Loan
Agreement and the other Plan Documents are included for convenience of reference
only and are not part of this Loan Agreement or the other Plan Documents for any
other purpose.
9.16 Submission to Jurisdiction; Service of Process.
(a) Any legal action or proceeding with respect to the Note
or this Loan Agreement or any document related thereto may be brought in the
courts of the State of Utah or of the United States of America for the District
of Utah, and, by execution and delivery of the Note and this Loan Agreement,
Borrower hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including, without limitation, any
objection to the laying of venue or based on the ground of forum non conveniens,
which any of them may now or hereafter have to the bringing of any such action
or proceeding in such respective jurisdictions.
23
(b) The Borrower irrevocably consents to the service of
process of any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
Borrower at its address provided herein.
(c) Nothing contained in this Section shall affect the
right of Lender or any holder of the Note to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against
Borrower in any other jurisdiction.
9.17 Certification. Except as otherwise specifically provided
herein, any requirement that any document or certificate be signed or executed
by any Person requires that such document or certificate be signed or executed
by a Responsible Official of such Person, and that the Responsible Official
signing or executing such document or certificate on behalf of such Person shall
be authorized to do so by all necessary corporate, partnership and/or other
action.
9.18 Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Restatement Effective Date") when (a) counterparts
hereof shall have been executed by each of the parties hereto, (b) each of the
parties to the Plan Documents shall have executed a consent to, and confirmation
of, the Plan Documents in the form attached hereto as Exhibit B and (c) the
Lender shall have received the Restatement Fee.
[Remainder of Page Intentionally Left Blank]
24
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.
BORROWER:
HomeFed Corporation,
a Delaware Corp.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (801-524-1761)
Telephone: (▇▇▇-▇▇▇-▇▇▇▇)
LENDER:
Leucadia Financial Corporation,
a Utah corporation
By: /s/ ▇▇▇▇▇▇ ▇. Orlando
----------------------------
Name: ▇▇▇▇▇▇ ▇. Orlando
Title: Vice President
Address:529 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (801-524-1751)
Telephone: (▇▇▇-▇▇▇-▇▇▇▇)
25
EXHIBIT "A"
To Loan Agreement
SECOND AMENDED AND RESTATED VARIABLE RATE SECURED NOTE
DUE DECEMBER 31, 2007
Salt Lake City, Utah
October 9, 2002
For value received, the undersigned HomeFed corporation, a
Delaware corporation ("Borrower"), unconditionally promises to pay to the order
of Leucadia Financial Corporation, a Utah corporation ("Lender"), at Lender's
principal place of business or at such other place as may be designated in
writing by Lender, in lawful money of the United States of America and in
immediately available funds, the principal sum of $26,462,381.64 plus interest.
This Note is made pursuant to that certain Second Amended
and Restated Loan Agreement of even date herewith between Borrower and Lender
("Loan Agreement"). Capitalized terms not otherwise defined herein shall have
the meanings set forth in the Loan Agreement. Interest on this Note shall be
payable in accordance with the terms of the Loan Agreement. This Note is due and
payable on December 31, 2007. There are no conversion rights under this Note.
This Note amends and restates and is being issued in
substitution for, but is not in payment or satisfaction of, the Note dated as of
August 14, 1998 (the "Original Note") in the aggregate principal amount of
TWENTY SIX MILLION FOUR HUNDRED SIXTY TWO THOUSAND THREE HUNDRED EIGHTY ONE AND
64/100 DOLLARS ($26,462,381.64), such Original Note having been issued in
connection with the First Amended and Restated Loan Agreement.
This Note is secured by, among other things, the following:
(i) that certain Security Agreement and Stock Pledge dated
July 3, 1995, executed by Borrower;
(ii) that certain Payment Guaranty dated July 3, 1995,
executed by HomeFed Communities, Inc., a California corporation ("HomeFed
Communities"), which Payment Guaranty is secured by a Security Agreement of even
date herewith, executed by HomeFed Communities;
(iii) that certain Payment Guaranty dated July 3, 1995,
executed by HomeFed Resources Corporation, a California corporation ("HomeFed
Resources"), which Payment Guaranty is secured by a Security Agreement of even
date herewith, executed by HomeFed Resources; and
A-1
(iv) that certain Payment Guaranty and Deed of Trust dated
July 3, 1995, each executed by Paradise Valley Communities No. I, a California
general partnership (and related financing statements).
If an Event of Default shall occur and be continuing, all
Principal and all interest accrued and other amounts due hereunder may be
declared due and payable in the manner and with the effect provided in the Loan
Agreement.
If any attorney is engaged by Lender to enforce or defend
any provision of this Note or the Loan Agreement, or as a consequence of any
Default, with or without the filing of any legal action or proceeding, then
Borrower shall pay to Lender immediately upon demand reasonable attorneys' fees
and costs incurred by Lender in connection therewith, together with interest
thereon from the date of such demand until paid at the rate of interest
applicable to the Principal as if such unpaid attorneys' fees and costs had been
added to Principal.
No previous waiver and no failure or delay by Lender in
acting with respect to the terms of this Note or the Loan Agreement shall
constitute a waiver of any breach, default, or failure of condition under this
Note or the Loan Agreement. A waiver of any term of this Note or the Loan
Agreement must be made in writing and shall be limited to the express written
terms of such waiver. In the event of any inconsistencies between the terms of
this Note and the terms of any other document related to the Loan, the terms of
the Loan Agreement and this Note shall prevail.
Except as may otherwise be provided in the Loan Agreement,
Borrower waives: presentment; demand; notice of dishonor; notice of default or
delinquency; notice of acceleration; notice of protest and nonpayment; notice of
costs, expenses or losses and interest thereon; notice of late charges; and
diligence in taking any action to collect any sums owing under this Note or in
proceeding against any of the rights or interests in or to properties, if any,
securing payment of this Note.
Time is of the essence with respect to every provision
hereof. This Note shall be construed and enforced in accordance with the
internal laws of the State or Utah, except to the extent that Federal laws
preempt the laws of the State of Utah.
Any legal action or proceeding with respect to this Note or
any document related hereto may be brought in the courts of the State of Utah or
of the United States of America for the District of Utah, and, by execution and
delivery of this Note, the Borrower hereby accepts for itself and in respect of
its Property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the ground of forum
non conveniens, which Borrower may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
A-2
The Borrower irrevocably consents to the service of process
of any of the aforesaid courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the
Borrower at its address provided in the Loan Agreement.
Nothing contained in this Note shall affect the right of
Lender to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
BORROWER:
HomeFed Corporation,
a Delaware Corp.
By:
-----------------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (801-524-1751)
Telephone: (▇▇▇-▇▇▇-▇▇▇▇)
▇-▇
▇▇▇▇▇▇▇ "▇"
To Loan Agreement
CONSENT
-------
Each of the parties to the Plan Documents, by signing
below, confirms in favor of the Lender that it (i) consents to the terms and
conditions of the Second Amended and Restated Loan Agreement, (ii) agrees that
all references in each of the Plan Documents to the Loan Agreement shall refer
to the Second Amended and Restated Loan Agreement and the Note executed in
connection therewith, and (iii) agrees it has no defense, offset, claim,
counterclaim or recoupment with respect to any of its obligations or liabilities
under its respective Guaranty, Security Document and/or its Deed of Trust and
that all terms of such Guaranty, Security Document or Deed of Trust shall
continue in full force and effect, subject to the terms thereof and shall
continue to secure the Loan as amended thereby.
This consent may be executed in any number of counterparts,
each of which, when executed and delivered, shall constitute an original, but
all executed counterparts together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page to this Consent by
telecopier shall be effective as delivery of a manually executed counterpart of
this Consent.
HOMEFED CORPORATION
By:
-----------------------------------------------------
Name:
Title:
HOMEFED COMMUNITIES, INC.
By:
-----------------------------------------------------
Name:
Title:
HOMEFED RESOURCES CORPORATION
By:
-----------------------------------------------------
Name:
Title:
▇-▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇. ▇
By:
-----------------------------------------------------
Name:
Title:
NORTHFORK COMMUNITIES
By:
-----------------------------------------------------
Name:
Title: