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 August 14, 1998
AMENDED AND RESTATED
LOAN AGREEMENT
This AMENDED AND RESTATED LOAN AGREEMENT, dated as of August
14, 1998, 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. Lender is the largest shareholder of Borrower, and Lender
worked with Borrower to create the Plan. It is in the best interest of
Lender to enter into this Loan Agreement, and to perform its other
obligations under and otherwise act in compliance with the Plan.
D. 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."
E. As an inducement to the Borrower to enter into a Development
Management Agreement with Provence Hills Development Company, LLC, a
Delaware limited liability company, Lender has agreed to restructure
certain of Borrower's obligations under the Original Loan Agreement and
the Original Note (the "Restructuring"), 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. The terms of the Restructuring are reflected in the
amended and restated promissory note executed by Borrower as of the date
hereof (the "Note") and this Loan Agreement, 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 Restructured Plan Documents.
NOW, THEREFORE, in consideration of the above recitals and the
mutual covenants and agreements herein contained, the parties hereto
covenant and agree 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.
"Borrower" means HomeFed Corporation, a Delaware
corporation.
2
"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.
"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
3
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
(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.
"Event of Default" shall have the meaning ascribed to it
in Section 8.1.
"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.
4
"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 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.
5
"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.
"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, 2004.
"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.
6
"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.
"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;
(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;
7
(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
(l) 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.
"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
8
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.
ARTICLE 2
NONREVOLVING LOAN
9
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
3.1 Payment Terms. Commencing on September 30, 1998, only
interest on the outstanding Principal shall be payable quarterly in
arrears on each Interest Payment Date, through the Maturity Date,
interest calculated at the rate of 6% per annum; 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.
10
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.
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
11
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 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
12
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
(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
13
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.
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
14
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
15
existence of the Subsidiaries, rights (charter and statutory) and
franchises; provided, 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.
16
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 Conversion Reinstatement. Upon the written request of the Lender,
the Company agrees that it shall submit for shareholder approval a
proposal to amend its Restated Certificate of Incorporation to eliminate
the restriction contained in Article 4A thereof and to reinstate Article
5 of the Original Loan Agreement and any related provisions of the
Original Loan Agreement necessary to provide the Lender or its permitted
assignees conversion privileges to convert the Note into not more than
54,000,000 shares of Common Stock at a conversion price of $0.45 per
share, as such number of shares and purchase price may be adjusted from
time to time in accordance with the terms of the Original Loan
Agreement.
ARTICLE 7
INFORMATION AND REPORTING REQUIREMENTS
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.
17
(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 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.
18
(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.
19
(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.
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
20
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, 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
21
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:
(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,
22
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 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
23
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
24
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, 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
25
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;
(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
26
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.
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
27
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.
(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
28
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.
[Remainder of Page Intentionally Left Blank]
29
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Chairman of the Board
-------------------------------
[Print Name and Title]
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (801-524-1761)
Telephone: (▇▇▇-▇▇▇-▇▇▇▇)
Lender:
Leucadia Financial Corporation,
a Utah corporation
By /s/ ▇▇▇▇▇▇ ▇. Orlando
------------------------------------
Vice President and Chief Financial
Officer
-------------------------------------
[Print Name and Title]
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopier: (801-524-1751)
Telephone: (▇▇▇-▇▇▇-▇▇▇▇)
30
EXHIBIT "A"
TO Loan Agreement
AMENDED AND RESTATED 6% SECURED NOTE
DUE DECEMBER 31, 2004
Salt Lake City, Utah
August 14, 1998
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 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 quarterly in arrears on each
Interest Payment Date. Interest on this Note shall be calculated at the
rate of 6% per annum. This Note is due and payable on December 31,
2004. There are no conversion rights under this Note.
This Note is being issued in replacement and substitution
for the Note dated as of July 3, 1995 in the aggregate principal amount
of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000), as such amount has
been increased pursuant to the Amended and Restated Loan Agreement dated
August 14, 1998.
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
(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.
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 corporation
By
------------------------------
------------------------------
[Print Name and Title]
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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 this
Amended and Restated Loan Agreement,
(ii) agrees that all references in each
of the Plan Documents to the Loan
Agreement shall refer to this 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.
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: