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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1997
COMMISSION FILE NUMBER 1-13223
LNR PROPERTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 65-0777234
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
760 NORTHWEST 107TH AVENUE, MIAMI, FLORIDA 33172
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)(ZIP CODE)
</TABLE>
(305) 485-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS: ON WHICH REGISTERED:
<S> <C>
COMMON STOCK, PAR VALUE 10\C PER SHARE NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of January 23, 1998, 25,143,859 shares of common stock and 10,984,547
shares of Class B common stock (which can be converted into common stock) were
outstanding. Of the total shares outstanding, 24,695,134 shares of common stock
and 1,086,617 shares of Class B common stock, having a combined aggregate
market value (assuming the Class B shares were converted) on that date of
$602,648,430 were held by non-affiliates of the registrant.
<TABLE>
<S> <C>
DOCUMENTS INCORPORATED BY PART OF FORM 10-K INTO WHICH
REFERENCE INTO THIS REPORT DOCUMENT IS INCOPORATED
LNR Property Corporation Part III
1998 Proxy Statement
</TABLE>
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<PAGE>
PART I
THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS THAT ARE SUBJECT TO RISK AND UNCERTAINTY. THERE CAN BE NO ASSURANCE
THAT THESE FUTURE RESULTS WILL BE ACHIEVED. READERS ARE CAUTIONED THAT A NUMBER
OF FACTORS, INCLUDING THOSE IDENTIFIED BELOW, COULD ADVERSELY AFFECT THE
COMPANY'S ABILITY TO OBTAIN THESE RESULTS: (A) ECONOMIC FACTORS WHICH AFFECT
THE REAL ESTATE INVESTMENT AND MANAGEMENT INDUSTRY, (B) CHANGES IN REGULATION
OF THE REAL ESTATE INDUSTRY AND (C) INCREASED COMPETITION IN THE REAL ESTATE,
COMMERCIAL LOANS AND OWNED REAL ESTATE AND COMMERCIAL MORTGAGE BACKED
SECURITIES MARKETS.
ITEM 1. BUSINESS
COMPANY OVERVIEW
LNR Property Corporation ("LNR" and, together with its subsidiaries, the
"Company") is a real estate investment and management company, which structures
and makes real estate related investments and, through its expertise in
developing and managing properties, seeks to enhance the value of those
investments. The Company has been engaged in the development, ownership and
management of commercial and multi-family residential properties since 1969.
LNR's Chairman, Chief Executive Officer and President have been with the Company
and have worked together for more than a decade. Over the five years ended
November 30, 1997, the Company's revenues and EBITDA increased at compound
annual growth rates of 27.7% and 30.4%, respectively. The Company's pro forma
revenues and EBITDA for the year ended November 30, 1997, giving effect to the
contributions of Lennar to the capital of LNR and the formation of Lennar Land
Partners as if they had occurred on December 1, 1996, and adjusting general and
administrative costs to eliminate spin-off related costs and add incremental
costs for a stand-alone public company, were $180.8 million and $122.8 million,
respectively.
LNR was formed by Lennar Corporation ("Lennar") in June 1997 to separate
Lennar's real estate investment and management business from its homebuilding
business. On October 31, 1997, Lennar distributed the stock of LNR to Lennar's
stockholders in a tax-free spin-off (the "Spin-off"). Activities conducted by
Lennar, as predecessor of the Company, of the type currently being conducted by
the Company are treated below as historical activities of the Company.
The Company's real estate investment activities primarily consist of
/bullet/ developing and managing commercial and multi-family residential
properties,
/bullet/ acquiring, managing and repositioning commercial and multi-family
residential real estate loans and properties,
/bullet/ acquiring, (often in partnership with financial institutions and real
estate funds) and managing portfolios of real estate assets,
/bullet/ investing in unrated and non-investment grade rated commercial
mortgage-backed securities ("CMBS") as to which the Company has the
right to be special servicer (i.e., to oversee workouts of
underperforming and nonperforming loans) and
/bullet/ making high yielding real estate related loans and equity investments.
The Company adjusts its investment focus from time to time to adapt to
various phases of the real estate cycle. The Company does not have specific
policies as to the type of real estate related assets it
1
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will acquire, the percentage of its assets it will invest in particular types
of real estate related assets or the percentage of the interests in particular
entities it will acquire. Instead, it reviews, at least monthly, the types of
real estate related investment opportunities which may at that time be
available, the market factors which may affect various types of real estate
related investments (including the likelihood of changes in interest rates or
availability of investment capital) and other factors which may affect the
attractiveness of particular investment opportunities.
At November 30, 1997, the Company's assets included the following:
<TABLE>
<CAPTION>
BOOK
TYPE OF ASSET VALUE DESCRIPTION/COMMENT
- - ------------------------------- -------------- -----------------------------------------------------------
(IN MILLIONS)
<S> <C> <C>
Commercial properties ......... $ 311.9 Multi-family apartment buildings, office and industrial
buildings, retail centers, hotels, and land.
Real estate loans ............. 86.8 Primarily mortgage loans. Also includes loans to
developers and builders, sometimes with profit
participations.
Partnerships .................. 159.4 Twelve partnerships with investment banks or real estate
funds which acquired portfolios of loans and properties,
as to which the Company is the managing general
partner. Also, a partnership with Lennar which acquires,
develops and sells land.
CMBS .......................... 304.7 Unrated or non-investment grade rated tranches of
CMBS pools acquired at significant discounts from face
value, as to which the Company has the right to be
special servicer and therefore can attempt to increase
collections of underlying loans.
Cash and other assets ......... 160.5 Cash at November 30, 1997 ($34.1 million unrestricted
--------- and $56.6 million restricted, of which $44.9 million was
collateral for a letter of credit) was unusually high
because of a Lennar capital contribution in connection
with the Spin-off. Other assets primarily include deferred
tax credits.
Total ....................... $ 1,023.3
=========
</TABLE>
At the time of the Spin-off, LNR entered into a Separation and
Distribution Agreement with Lennar under which, among other things, they agreed
that at least until 2002, they would not engage in the respective businesses in
which, when the Separation and Distribution Agreement was signed, the other of
them was engaged, or anticipated becoming engaged, except in limited areas in
which their then activities, or anticipated activities, overlapped.
REAL ESTATE INVESTMENTS AND RELATED ACTIVITIES
COMMERCIAL AND MULTI-FAMILY RESIDENTIAL RENTAL REAL ESTATE
In 1969 Lennar began engaging in the development, ownership and management
of commercial and residential multi-family rental real estate. Its initial
activities of this type included acquiring an apartment complex, and building
and operating small office buildings, local regional shopping centers and other
commercial and industrial facilities on properties being developed as part of
Lennar's homebuilding operations. Gradually, this was expanded to general
development, acquisition and active management of commercial and residential
multi-family rental real estate, as well as acquiring land for development and
sale or leasing for commercial uses. Among other things, these activities
helped offset the cyclical nature of Lennar's homebuilding business. The
Company has developed a staff of in-house
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real estate professionals to engage in those activities, including on-site
management, leasing and maintenance personnel, and accounting and management
personnel located at several offices. It also, in some instances, has used
outside management companies to perform day-to-day activities. In those
instances, employees of the Company have closely supervised the operation of
the commercial properties and the activities of the outside management
companies. At November 30, 1997, the Company's portfolio included 14 shopping
centers with 1.5 million square feet of rentable space, five office buildings
with 1.1 million square feet of rentable space, two industrial properties,
3,348 apartment units, a mobile home park and two hotels.
The shopping centers the Company owns and operates include six small
regional shopping centers (sometimes referred to as "strip centers") with
between 12,000 square feet and 36,400 square feet of store space, as well as
parking areas and public areas, and eight larger shopping centers, with 71,000
square feet to 599,000 square feet of store space. All the small regional
centers are located in Florida. Of the larger shopping centers, six are in
Florida and two are in Arizona.
The Company's five office buildings range from one to 36 stories and have
an aggregate of 1.1 million square feet of rentable office space. Two of the
office buildings are in Florida, two are in Georgia and one is in Louisiana.
The Company's industrial properties are located in Florida and California and
consist of 80,000 square feet and 382,000 square feet, respectively, of usable
floor space. The Company's ten apartment properties range in size from 96 to
712 units, eight of which are located in Florida, one is located in Virginia
and one is located in Colorado.
The two hotels owned by the Company have a total of 462 rooms. One is
managed by the Company and the other is managed by a national chain under a
management contract which can be terminated by either party on 10 days' notice.
In addition to the Company's operating properties, the Company owns
commercially zoned land, 1.6 million square feet of which is leased under
ground leases, and 865.6 acres of which is to be used for specific projects or
sold.
The Company maintains a program of liability, property loss and damage and
other insurance which covers all the Company's properties and which the Company
believes is adequate to protect it against all reasonably foreseeable material
insurable risks.
The net book value and operating results at November 30, 1997 and for the
year ended on that date with regard to various types of properties owned by the
Company, and related furniture, furnishings and equipment, were as follows:
<TABLE>
<CAPTION>
NET
OPERATING NOI AS A
NET BOOK OCCUPANCY INCOME % OF NET
VALUE RATE (NOI) BOOK VALUE
---------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C>
Stabilized operating properties
Commercial ...................................... $ 62,949 85% $11,031 18%
Multi-family .................................... 38,527 91% 7,712 20%
Hotel and other ................................. 16,195 75% 3,689 23%
Under development or repositioning
Commercial ...................................... 65,629 3,976
Multi-family .................................... 42,172 46
-------- -------
Total operating properties ....................... 225,472 26,454
Furniture, fixtures and equipment ................ 3,126 --
Land held for investment ......................... 83,297 --
-------- -------
Total operating properties and equipment ......... $311,895 $26,454
======== =======
</TABLE>
The Company's financing strategy with regard to its real estate portfolio
is normally to obtain financing secured by specific assets when the Company
acquires them. This type of financing usually is
3
<PAGE>
short- or intermediate-term. However, the Company sometimes seeks more
permanent financing in cases where the market for an asset makes long-term debt
an attractive option and the loan can be assumed or prepaid.
The Company has agreed to acquire Affordable Housing Group ("AHG"), a
group of entities which owns 41 multi-family and senior housing properties,
with approximately 6,000 residential rental apartments, many of which qualify
for low-income tax credits under Section 42 of the Internal Revenue Code. Of
the apartments, 49% are located in the Northwestern United States, 17% are
located in the Southwest, 15% are located in the East, 13% are located in the
Far West, and the remainder are located in the Southeast and Midwest.
Approximately 82% of the apartments were constructed by AHG or under its
supervision. AHG acquired the other apartments after they were completed. The
purchase price for AHG will be approximately $86 million and the Company will
assume obligations to make future investments in properties totaling $44
million, subject to certain adjustments. The Company expects that after the
acquisition, AHG, as part of the Company, will continue developing, acquiring
and operating residential apartments which qualify for low-income tax credits.
PORTFOLIOS OF COMMERCIAL MORTGAGE LOANS AND OWNED REAL ESTATE
In 1992, the Company began acquiring, directly and through partnerships,
portfolios of commercial mortgage loans and related pools of owned real estate
assets. Its first transaction of this type was a partnership with The Morgan
Stanley Real Estate Fund, which acquired from Resolution Trust Corporation a
portfolio of almost $1 billion face value of assets consisting of more than
1,000 mortgage loans and 65 properties. Since 1992, the Company has formed 11
additional partnerships with several different investment banking firms and real
estate funds to purchase and handle workout activities regarding portfolios of
distressed commercial loans and related real estate. The Company's partners in
these additional partnerships included affiliates of Banc One\Orix, Blackrock
Group, BT Alex. Brown Incorporated, Credit Suisse First Boston Corporation,
Deutsche Morgen Grenfell, Donaldson, Lufkin & Jenrette Securities Corporation,
First Chicago Capital Corporation, Lehman Brothers Inc., Morgan Stanley, Dean
Witter, Discover & Co. and Westbrook Partners. Involvement of these partners
both gave the Company access to investment opportunities it might not otherwise
have had and reduced the amount the Company had to invest to acquire interests
in large portfolios.
In each of these partnerships, a subsidiary formed by the Company acts as
the managing general partner and conducts the business of the partnership. The
partnership portfolio acquisitions in 1993 included a portfolio of real estate
assets with a face amount of more than $2 billion, in what the Company believes
is one of the largest real estate portfolio acquisitions ever to take place in
the United States. The Company earns management fees and asset disposition fees
from the partnerships and has carried interests in cash flow and sale proceeds
once the partners have recovered their capital and achieved specified returns.
The Company's investments ranged from 15% to 50% of the partnerships' capital
and totalled $165 million, out of a total of $684 million invested in the
partnerships. By November 30, 1997, the partnerships had distributed a total of
$1.1 billion to the partners, of which $331 million had been distributed to the
Company. Distributions to the Company included management and asset disposition
fees totaling approximately $50 million. As the U.S. real estate markets
strengthened in 1996 and 1997, substantially fewer large real estate portfolios
become available at what the Company viewed as attractive prices. The Company
has not participated in a partnership which acquired a portfolio of
under-performing real estate assets in the United States since August 1996
(although the Company recently became part of a partnership to acquire a
portfolio of underperforming and nonperforming commercial mortgage loans in
Japan). However, it has continued to acquire individual underperforming real
estate assets. Currently, the partnerships the Company formed are engaged
primarily in enhancing and disposing of assets in the portfolios they acquired,
as well as collecting sums paid with regard to portfolio assets. Since June
1992, the Company has also acquired directly three portfolios of real estate
assets with face amounts of between $21 million and $75 million.
The portfolio loans consist primarily, but not entirely, of fixed rate
first mortgage loans secured by office and industrial buildings, shopping
centers and multi-family residential properties. They are not covered by credit
insurance.
4
<PAGE>
The principal activity of the Company with respect to distressed
portfolios (whether owned by partnerships or directly owned by the Company) is
to manage the workout of nonperforming loans, including negotiating new or
modified financing terms and foreclosing on defaulted loans. The assets
generally are held only as long as is required to enhance their value and
prepare them for sale. Approximately 20% to 25% of each portfolio is turned
over each year. The Company believes its workout and property rehabilitation
skills are the principal reasons financial institutions have sought the Company
as a partner in acquiring portfolios of distressed assets and have given the
Company management control of the partnerships.
Debt financing for partnerships' acquisitions of real estate related asset
portfolios has usually been on a nonrecourse basis and with no guaranties by
the Company or any other of the partners. In some cases, the lender must be
repaid in full before a partnership can make cash distributions to the Company
and its partners. The Company's financing strategy with regard to real estate
related asset portfolios in which it invests directly is to seek short term
floating rate financing which matches the underlying loans. This type of
financing usually gives lenders recourse to the LNR subsidiaries which acquire
particular asset portfolios.
INVESTMENTS IN CMBS
As a further use of its loan and real estate workout capabilities, the
Company acquires unrated and non-investment grade rated subordinated CMBS and
provides "special servicing" for the mortgage pools to which they relate. Fitch
IBCA, Inc., which rates special servicers of CMBS on the basis of management
team, organizational structure, operating history, workout and asset
disposition experience and strategies, information systems, investor reporting
capabilities and financial resources, has given the Company Fitch's highest
rating. At November 30, 1997, the Company was entitled to be the special
servicer with regard to 36 securitized commercial mortgage pools and owned
unrated junior CMBS related to 33 of those pools. Special servicing is the
business of managing and working out the problem assets in a pool of commercial
mortgages or other assets. For example, when a mortgage in a securitized pool
goes into default, the special servicer negotiates with the borrower on behalf
of the pool to resolve the situation. The Company uses as special servicer
essentially the same workout skills it applies with regard to its distressed
assets portfolios. Because the holders of the unrated CMBS receive everything
that is collected after the more senior levels of CMBS have been paid in full,
the Company and other holders of unrated CMBS are the principal beneficiaries
of increased collections. Therefore, ownership of the unrated CMBS gives the
Company an opportunity to profit from its special servicing in addition to
receiving fees for being special servicer. The Company has not purchased
unrated CMBS unless it has had the right to be the special servicer of the
mortgage pools to which they relate.
The Company also, in some instances, purchases non-investment grade rated
subordinated CMBS relating to commercial mortgage pools as to which the Company
will act as special servicer. The Company expects to receive a yield on these
securities based on the stated interest and amortization of the Company's
purchase discount. However, if, as senior CMBS issued with regard to a pool
begin to be paid down, the performance of the pool exceeds initial
expectations, then the ratings of the subordinated CMBS are sometimes upgraded
by the rating agencies. This increases their market values and gives the
Company an opportunity to achieve gains on sale of the securities, as well as
receiving the stated interest while it holds them. Therefore, purchases of
non-investment grade rated subordinated securities, like purchases of unrated
junior securities, are a means for the Company to profit from its workout
skills.
Particularly in periods of falling interest rates, there often are
prepayments of mortgages underlying CMBS. Because the Company usually purchases
CMBS at significant discounts from their face amounts, prepayments tend to
increase the Company's yield as a percentage of its investment.
The Company is currently financing its purchases of CMBS through short
term repurchase obligations and under its short term revolving credit lines.
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<PAGE>
The following are the CMBS held by the Company at November 30, 1997:
<TABLE>
<CAPTION>
FACE INTEREST BOOK % OF FACE CASH BOOK
AMOUNT RATE VALUE AMOUNT YIELD(1) YIELD(2)
---------- ---------- --------- ----------- ---------- -----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
BB rated or above ...................... $ 88,828 7.93% $ 69,490 78.2% 10.15% 10.15%
B rated ................................ 149,684 8.49% 102,786 68.7% 12.43% 12.43%
Unrated ................................ 457,213 7.63% 95,165 21.5% 34.49% 11.85%
Unrealized gains on securities ......... -- -- 37,219 -- -- --
-------- ---- -------- ---- ----- -----
Total CMBS portfolio ................. $695,725 8.31% $304,660 43.8% 19.54% 11.22%
======== ==== ======== ==== ===== =====
</TABLE>
- - ----------------
(1) Cash yield is determined by annualizing the actual cash received during the
month of November 1997, and dividing the result by the book value at
November 1, 1997.
(2) Book yield is determined by annualizing the interest income for the month
of November 1997, and dividing the result by the book value at November 1,
1997.
COMMERCIAL REAL ESTATE LENDING
The Company holds mortgage loans made with regard to commercial properties
or properties being developed as residential communities, and loans made to the
developers and builders themselves. At November 30, 1997, the Company held
eight mortgage loans with a total outstanding principal balance of $74.4
million and four loans to developers and builders with a total outstanding
principal balance of $21.2 million. The states in which the properties securing
the Company's mortgage loans were located were as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
STATE OF LOANS
- - -------------------- -----------------
(IN THOUSANDS)
<S> <C>
Nevada ............. $52,760
California ......... 26,288
Florida ............ 8,341
New Jersey ......... 4,500
Texas .............. 3,704
-------
$95,593
=======
</TABLE>
The mortgage loans are primarily first mortgage loans secured by office
buildings, shopping centers, hotels or land acquired for development. The
mortgage loans on residential communities are usually subordinate to
construction loans, and provide the Company, in addition to interest income,
participation in profits after the developer or builder has achieved specified
financial targets. The types of loans held by the Company at November 30, 1997,
were as follows:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
TYPE OF LOAN OF LOANS
- - ------------------------------------- -----------------
(IN THOUSANDS)
<S> <C>
Mortgage loans
Convention center .................. $45,000
Office buildings ................... 17,401
Residential land ................... 7,064
Hotel .............................. 4,500
Shopping center .................... 3,704
Industrial park .................... 1,671
Recreation facility ................ 368
Warehouse .......................... 297
Developer and builder loans ......... 15,588
-------
$95,593
=======
</TABLE>
6
<PAGE>
The Company identifies opportunities to make commercial and residential
development loans through brokers and relationships with other real estate
companies and developers.
The Company evaluates possible loans with in-house personnel, who perform
site visits and do market, demographic and financial analyses with regard to
the collateral for the loans. The Company applies guidelines, which change from
time to time depending on the type of property and market conditions, relating
to loan-to-value ratio, debt coverage and other financial ratios. In most
instances the guidelines the Company has applied have been similar to those
applied in evaluating commercial mortgages for inclusion in mortgage
securitizations (although the Company has not to date securitized any of the
commercial loans it originated for its own account). Sometimes the Company has
made subordinated loans to which it applies other guidelines, but which bear
interest at rates which are higher than those on senior commercial mortgage
loans, and some of which provide the Company participation in profits from the
underlying properties.
The Company finances its commercial real estate lending activities with a
$50 million credit line, supplemented by the Company's general funds, which
include funds available under its revolving credit lines or repurchase
obligation lines.
LENNAR LAND PARTNERS
Before the Spin-off, Lennar and the Company transferred to Lennar Land
Partners (the "Land Partnership"), which is 50% owned by the Company and 50%
owned by Lennar, parcels of land or interests in land and other assets which
had a total book value on Lennar's books at October 31, 1997 of approximately
$372.4 million. This land was acquired by Lennar primarily to be used for
residential home development. It consists of approximately 31,000 potential
home sites in 35 communities, of which 19 communities with 19,300 potential
home sites are in Florida, two communities with 760 potential home sites are in
Arizona, five communities with 4,800 potential home sites are in Texas and nine
communities with 6,500 potential home sites are in California. Approximately 8%
of the land was developed and ready to be built upon, 49% of the land was in
various stages of development and 43% of the land was totally undeveloped. The
parcels of land or interests in land contributed by the Company had been
contributed to the Company by Lennar so the Company could contribute them to
the Land Partnership and receive a 50% interest in the Land Partnership.
When Lennar contributed that land to the Company and to the Land
Partnership, Lennar retained options to purchase up to approximately 22% of the
contributed land at prices it established. The remaining land is available for
sale to independent homebuilders or to Lennar at prices determined from time to
time, which, as is discussed below, must be approved by LNR.
The Land Partnership has an agreement with Lennar under which Lennar, for
a fee, administers all day-to-day activities of the Land Partnership, including
overseeing planning and development of properties and overseeing sales of land
to Lennar and other builders.
The Land Partnership is governed by an Executive Committee consisting of
representatives of Lennar and of the Company, with Lennar's representatives and
the Company's representatives each having in total one vote. This, in effect,
gives each of Lennar and the Company a veto with regard to matters presented to
the Executive Committee. LNR's by-laws require that all significant decisions
relating to the Land Partnership be approved by a Board of Directors committee
consisting entirely of directors who have no relationship with Lennar.
Lennar may, but will be under no obligation to, offer additional
properties to the Land Partnership. Lennar will be free to acquire properties
for itself without any consideration of whether those properties might have
been appropriate for the Land Partnership. The Company will, in effect, be able
to veto any proposals that the Land Partnership acquire properties proposed by
Lennar. Arrangements with regard to particular properties might include, (i)
options to Lennar to purchase all or portions of properties, (ii) rights of
first refusal for Lennar to acquire lots if other builders propose to acquire
them,
7
<PAGE>
or buy/sell arrangements under which, if Lennar wanted to purchase lots on
which it did not have an option, it would propose a purchase price and the
Company would have the option to approve the sale to Lennar at that price or
itself to purchase the lots for that price (probably in order to resell them to
someone who would be willing to pay a higher price).
The Company might seek to acquire commercial portions of properties owned
or acquired by the Land Partnership or options relating to them. If it did,
Lennar could, if it wanted to do so, veto acquisitions by the Company.
The Land Partnership has a $125 million revolving line of credit, and a
$100 million term loan, each of which matures in 2001. LNR and Lennar jointly
and severally guaranty the Land Partnership's obligations under these credit
facilities. Many of the Land Partnership assets are subject to nonrecourse
mortgage loans. The revolving line of credit is available to supplement
financing which is available with regard to specific properties. As of December
31, 1997, there was $4 million outstanding under the revolving line of credit,
and $100 million outstanding under the term loan.
COMPETITION
In virtually all aspects of its activities, the Company competes with a
variety of real estate development companies, real estate investment trusts
("REIT"), investment firms, investment funds and others. The principal area of
competition is for the purchase of real estate assets and securities at prices
which the Company can achieve its desired returns. As the real estate markets
have improved over the past two years, the Company has encountered increased
competition in several of the markets in which it competes, including the
purchase of certain types of real estate and CMBS as well as real estate
lending. The Company believes that its access to investment opportunities
through its relationships and presence in markets across the country, its
ability to quickly underwrite and evaluate those opportunities and its
expertise in real estate workout and management helps the Company to compete
effectively in the purchase of such assets. In addition, the Company's
experience in adding value to real estate and its top rating as a special
servicer to CMBS transactions often attracts other investors with attractive
investment opportunities but who do not have those skills.
Competitive conditions relating to shopping centers, office buildings,
industrial properties, residential apartment buildings and hotels owned or
operated by the Company vary depending on the locations of particular
properties. Most often these facilities compete for tenants or other users
based on their locations, the facilities provided and the pricing of the leases
or room rates. As general economic conditions have improved over the past year,
occupancies have generally increased in many of the Company's markets, which
has helped to reduce the amount of competition in existing properties and has
allowed for, in certain instances, new development.
Although properties owned by the Company may be significant competitors in
some of the areas in which they are located, the Company is not a significant
national competitor with regard to any of the properties it owns or any type of
real estate securities, except that, based on industry sources regarding
issuances of CMBS, the CMBS as to which the Company had the right to assume the
special servicing represented 17.6% and 12.8% of all the CMBS issued in 1996 and
1997, respectively.
REGULATION
Commercial properties owned by the Company or partnerships in which it
participates must comply with a variety of state and local regulations relating
to, among other things, zoning, treatment of waste, construction materials
which must be used and some aspects of building design.
In its loan workout activities, the Company is required to comply with a
number of Federal and state laws designed to protect debtors against
overbearing loan collection techniques. However, in most instances, laws of
this type apply to consumer level loans (including home mortgages), but do not
apply to commercial loans.
8
<PAGE>
The Company's hotels have to be licensed to conduct various aspects of
their businesses, including sales of alcoholic beverages.
EMPLOYEES
At November 30, 1997, the Company had 327 full time and 67 part time
employees, of whom 10 were senior management, 20 were corporate staff, 163 were
hotel personnel and 201 were engaged in asset acquisitions, loan workouts and
rehabilitation and disposition of properties.
None of the Company's employees are members of unions. The Company
believes its relationships with its employees are good.
ITEM 2. PROPERTIES
For information about properties owned by the Company for use in its
commercial activities, see Item 1.
The Company maintains its principal executive offices at 760 Northwest
107th Avenue, Miami, Florida, in a building which was built and is owned by the
Company. Those offices occupy approximately 11,240 square feet. Additional
Company offices are located in various office buildings owned by the Company
and in one leased facility.
ITEM 3. LEGAL PROCEEDINGS
The Company is not subject to any legal proceedings other than suits
relating to properties it owns which the Company views as an ordinary part of
its business and most of which are covered by insurance. LNR believes these
suits will not, in aggregate, have a material adverse effect upon the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1997.
9
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Company's common stock currently is listed on the New York Stock
Exchange under the symbol LNR. At January 23, 1998, there were 714 stockholders
of record of the Company's common stock. The foregoing number does not include
beneficial holders of the Company's common stock. The high and low sales prices
of the common stock for the quarter since November 3, 1997, the date the
Company commenced trading on the New York Stock Exchange, are set forth below:
<TABLE>
<CAPTION>
1997
---------------------
HIGH LOW
--------- ---------
<S> <C> <C>
Fourth Quarter ......... $25 3/4 $22 1/8
</TABLE>
The above quotations reflect interdealer prices, without retail markup,
mark down or commission, and may not necessarily represent actual transactions.
During the fourth quarter of 1997, the Company declared and paid cash dividends
of $.0125 per common share.
ITEM 6. SELECTED FINANCIAL DATA
The following table represents selected consolidated financial information
of the Company. The selected financial data set forth below should be read in
conjunction with the consolidated financial statements, the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
---------------------------------------------------------------
1997 1996 1995 1994 1993
--------------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS (2)
Revenues
Real estate .............................. $ 74,410 62,884 67,440 55,063 39,381
Partnerships and joint ventures ......... 39,272 67,345 39,263 31,974 13,611
CMBS and loans ........................... 51,067 33,207 23,202 12,766 8,694
Other .................................... 2,734 -- 2,910 2,016 1,387
========= ====== ====== ====== ======
Total revenues .......................... $ 167,483 163,436 132,815 101,819 63,073
EBITDA .................................... 105,132 103,896 86,770 63,499 36,401
Interest expense .......................... 26,584 20,513 14,692 5,688 3,378
--------- ------- ------- ------- ------
Net earnings .............................. 44,218 47,255 40,508 32,498 18,574
Per share amounts
Net earnings ............................. $ 1.21 -- -- -- --
Cash dividends ........................... 0.0125(1) -- -- -- --
Pro forma data
Revenues ................................. $ 180,775 -- -- -- --
Net earnings ............................. 56,297 -- -- -- --
Net earnings per share ................... 1.55 -- -- -- --
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
---------------- --------- --------- --------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION (2)
Total assets ........................... $ 1,023,337 752,968 652,400 547,722 310,355
Businesses
Real estate ........................... 311,895 294,443 274,343 282,636 217,177
Investments in partnerships ........... 159,359 110,180 141,541 106,637 39,409
CMBS and loans ........................ 391,509 328,283 217,224 144,393 40,314
Total debt ............................. 391,171 354,406 252,256 119,935 34,163
Parent Company investment .............. -- 367,048 370,903 396,403 266,965
Stockholders' equity ................... 569,088 -- -- -- --
Stockholders' equity per share ......... 15.75 -- -- -- --
Shares outstanding
Common stock .......................... 25,144 -- -- -- --
Class B common stock .................. 10,984 -- -- -- --
------------- ------- ------- ------- -------
Total ................................ 36,128 -- -- -- --
============= ======= ======= ======= =======
</TABLE>
- - ----------------
(1) 1997 dividends reflect the dividend declared and paid in the fourth
quarter.
(2) The Company was formed in June 1997 and spun-off from Lennar Corporation on
October 31, 1997. The above information has been prepared and presented to
reflect the Company as a separate consolidated group for the periods
presented. Previous historical results of operations and historical cost
bases of assets and liabilities have been extracted from Lennar
Corporation's financial statements. Pro forma data is shown after giving
effect to a retroactive contribution by the Company to Lennar Land
Partners; a one-time adjustment to remove Spin-off related costs and add
costs associated with creating a stand-alone public company; reductions to
interest expense due to the use of proceeds from funds advanced from
Lennar to repay debt and adjustment to taxes to represent the estimated
income tax effect of the pro forma adjustments to the Company's effective
tax rate of 39%.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS CONTAINS INFORMATION WHICH CONSTITUTES FORWARD LOOKING
STATEMENTS. FORWARD LOOKING STATEMENTS INHERENTLY INVOLVE RISKS AND
UNCERTAINTIES. THE FACTORS, AMONG OTHERS, THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE FORWARD LOOKING STATEMENTS IN THIS MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INCLUDE (I) CHANGES IN INTEREST RATES, (II) CHANGES IN DEMAND FOR COMMERCIAL
REAL ESTATE NATIONALLY, IN AREAS IN WHICH THE COMPANY OWNS PROPERTIES, OR IN
AREAS IN WHICH PROPERTIES SECURING MORTGAGES DIRECTLY OR INDIRECTLY OWNED BY
THE COMPANY ARE LOCATED, (III) NATIONAL OR REGIONAL BUSINESS CONDITIONS WHICH
AFFECT THE ABILITY OF MORTGAGE OBLIGORS TO PAY PRINCIPAL OR INTEREST WHEN IT IS
DUE, AND (IV) THE CYCLICAL NATURE OF THE COMMERCIAL REAL ESTATE BUSINESS.
OVERVIEW
LNR Property Corporation (the "Company") was formed by Lennar Corporation
("Lennar") in June 1997 to separate Lennar's real estate investment and
management business from its homebuilding business. Lennar contributed to the
Company all of the Lennar subsidiaries which were engaged in businesses
described in the following paragraph and assets of other Lennar subsidiaries
which were used primarily in connection with those businesses. On October 31,
1997, Lennar distributed the stock of the Company to Lennar's stockholders in a
tax-free spin-off. The Company and Lennar have entered into a Separation and
Distribution Agreement, and may enter into other agreements, providing for the
separation of the companies into independent groups and governing various
relationships between them.
11
<PAGE>
The Company is engaged primarily in (i) developing and managing commercial
and multifamily residential properties, (ii) acquiring, managing and
repositioning commercial and multi-family residential real estate loans and
properties, (iii) acquiring (often in partnership with financial institutions
or real estate funds) and managing portfolios of real estate assets, (iv)
investing in unrated and non-investment grade rated commercial mortgage-backed
securities ("CMBS") as to which the Company has the right to be special
servicer, and (v) making high yielding real estate related loans and equity
investments. For the following discussion, these businesses are grouped as
follows: (i) real estate operations, (ii) CMBS and loans and (iii) partnerships
and joint ventures.
The combined results of operations of the Company for the periods prior to
November 1, 1997, were extracted from the financial statements of Lennar using
the historical results of operations and historical cost basis of the assets
and liabilities of Lennar's real estate investment and management businesses.
Additionally, the results of operations include revenues and expenses that were
not historically recorded as part of those businesses, but were primarily
associated with them. Management believes the assumptions underlying the
Company's results of operations are reasonable. However, those results may not
reflect the results of operations the Company would have realized if it had
operated as a separate stand-alone group during the periods presented, rather
than as part of the larger Lennar enterprise.
The following is a summary of the Company's results of operations for the
years ended November 30, 1997, 1996 and 1995 after allocating among the core
business lines certain non-corporate general and administrative expenses. The
pro forma financial information has been prepared to reflect the effect, as
though they had occurred on December 1, 1996, of (i) the Company's 50% interest
in the earnings of Lennar Land Partners, (ii) the elimination of costs related
to the Spin-off and addition of incremental administrative costs associated with
operating as a stand-alone public company, (iii) reductions in interest expense
due to the use of proceeds from funds advanced by Lennar to repay debt and (iv)
the estimated income tax effect of the pro forma adjustments to the Company's
effective tax rate of 39.0%.
<TABLE>
<CAPTION>
PRO ACTUAL
FORMA -----------------------------------------
1997 1997 1996 1995
------------ ------------ ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenues
Real estate operations .................. $ 74,410 74,410 62,884 67,440
CMBS and loans .......................... 51,067 51,067 33,207 23,202
Partnerships and joint ventures ......... 52,564 39,272 67,345 39,263
Corporate and other ..................... 2,734 2,734 -- 2,910
--------- ------ ------ ------
Total revenues ........................... 180,775 167,483 163,436 132,815
--------- ------- ------- -------
Operating expenses
Real estate operations .................. 44,663 44,663 46,683 38,296
CMBS and loans .......................... 2,547 2,547 1,813 604
Partnerships and joint ventures ......... 3,104 3,104 6,113 5,339
Corporate and other ..................... 13,689 18,097 10,847 7,477
--------- ------- ------- -------
Total operating expenses ................. 64,003 68,411 65,456 51,716
--------- ------- ------- -------
Operating earnings
Real estate operations .................. 29,747 29,747 16,201 29,144
CMBS and loans .......................... 48,520 48,520 31,394 22,598
Partnerships and joint ventures ......... 49,460 36,168 61,232 33,924
Corporate and other ..................... (10,955) (15,363) (10,847) (4,567)
--------- ------- ------- -------
Total operating earnings ................. 116,772 99,072 97,980 81,099
Interest expense ......................... 24,484 26,584 20,513 14,692
Income tax expense ....................... 35,991 28,270 30,212 25,899
--------- ------- ------- -------
Net earnings ............................. $ 56,297 44,218 47,255 40,508
========= ======= ======= =======
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS
PRO FORMA YEAR ENDED NOVEMBER 30, 1997 COMPARED TO ACTUAL YEAR ENDED NOVEMBER
30, 1997
Pro forma net earnings for the year ended November 30, 1997 were $56.3
million, or $1.55 per share compared with actual net earnings of $44.2 million,
or $1.21 per share. The increase over actual resulted from pro forma
adjustments made to reflect the Spin-off and formation of Lennar Land Partners
as of the beginning of the year.
ACTUAL YEAR ENDED NOVEMBER 30, 1997 COMPARED TO YEAR ENDED NOVEMBER 30, 1996
Net earnings for the year ended November 30, 1997 were $44.2 million. This
represented a decrease of 6.4% from the prior year net earnings of $47.3
million. The decrease resulted primarily from (i) lower earnings from
partnerships and joint ventures as some of the more mature partnerships wind
down, (ii) the costs associated with the Spin-off offset by increases in (a)
interest income and servicing fees derived from the Company's growing CMBS
portfolio and (b) higher gains on sales of real estate properties and CMBS.
Operating earnings were generated from the Company's core main business
lines in the following proportions: 26% from real estate operations, 42% from
CMBS and loans and 32% from partnerships and joint ventures. This compares with
15%, 29% and 56%, respectively, for the prior year. The shift in these
percentages from 1996 to 1997 was the result of higher gains from the sale of
real estate assets, higher net income from a growing CMBS portfolio and lower
earnings from the more mature partnerships and joint ventures during 1997.
YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995
Net earnings for the year ended November 30, 1996 were $47.3 million. This
represented an increase of 16.7% over the prior year net earnings of $40.5
million. The increase resulted primarily from increased earnings from
partnerships and joint ventures due to higher sales of and gains on operating
properties and loans within the partnerships and higher interest income and
servicing fees resulting from purchases of CMBS, partially offset by lower
gains on sales of real estate properties.
Operating earnings were generated from the Company's three core business
lines in the following proportions: 15% from real estate operations, 29% from
CMBS and loans and 56% from partnerships and joint ventures. This compares with
34%, 26% and 40%, respectively, for the prior year. The shift in these
percentages from 1995 to 1996 was the result of lower gains on sales of real
estate, offset by (i) substantially higher earnings from partnerships and joint
ventures due to substantially higher sales of and gains on assets within the
partnerships, and (ii) higher interest income resulting from purchases of CMBS.
REAL ESTATE OPERATIONS
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Rental income ......................... $56,334 59,215 51,664
Gains on sales of real estate ......... 18,076 3,669 15,776
------- ------ ------
Total revenues ...................... 74,410 62,884 67,440
------- ------ ------
Cost of rental operations ............. 35,767 38,784 30,890
Other operating expenses .............. 2,836 1,983 1,735
Depreciation .......................... 6,060 5,916 5,671
------- ------ ------
Total operating expenses ............ 44,663 46,683 38,296
------- ------ ------
Operating earnings .................. $29,747 16,201 29,144
======= ====== ======
</TABLE>
NOTE: ACTUAL AND PRO FORMA RESULTS ARE IDENTICAL FOR 1997.
13
<PAGE>
Total revenues from real estate operations include the rental income from
operating properties plus gains on sales of those properties. Operating
expenses include the direct costs of operating those properties and the
overhead associated with managing them.
YEAR ENDED NOVEMBER 30, 1997 COMPARED TO YEAR ENDED NOVEMBER 30, 1996
Overall, operating earnings from real estate property increased to $29.7
million for the year ended November 30, 1997 from $16.2 million for 1996. The
increase was due primarily to greater gains on sales of real estate properties
in 1997 as the Company sold those properties it believed had reached their
optimal values. In addition, the stronger real estate economy in 1997
contributed to the higher sales prices for those assets sold. The increases
were also due to the shift in investments over the past few years from large
portfolios of assets in off-balance sheet partnerships and joint ventures to
individual asset acquisitions that are recorded directly on the Company's
balance sheet and statement of earnings.
Although sales of real estate property were approximately $82.4 million
during 1997, the balance of operating properties and equipment, net and land
held for investment increased by $17.5 million during the year primarily as a
result of approximately $101.3 million in acquisitions. A majority of those
acquisitions were for operating properties which are being developed or where
the Company believes it can improve net operating earnings and/or ultimate sales
value, although there can be no assurance that the Company will be successful.
As of November 30, 1997, approximately 48% of the Company's operating property
portfolio based on book value had not reached stabilized occupancy and the
anticipated improvements in operating earnings will not be recognized until
future periods.
Total rental income decreased to $56.3 million in 1997 from $59.2 million
in 1996. Rental income consisted of $27.0 million and $28.9 million from
commercial properties (office, retail and industrial), $19.5 million and $19.9
million from multi-family residential properties and $9.8 million and $10.4
million from hotels and other properties, in 1997 and 1996, respectively. The
decreases in rental income were attributable to the sales of real estate
properties described above. This was offset, to a lesser degree, by the
inclusion of rental income from newer properties added during 1996 and 1997.
Overall occupancy and rental rates were similar in the two years for stabilized
operating properties. Similarly, the cost of rental operations decreased to
$35.8 million in 1997 from $38.8 million in 1996, primarily due to the
aforementioned sale of real estate properties.
Other operating expenses increased to $2.8 million for 1997 from $2.0
million for 1996, primarily due to increased acquisition, development and
repositioning activities.
YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995
Overall, operating earnings from real estate properties decreased to $16.2
million for the year ended November 30, 1996 from $29.1 million for 1995. The
decrease was due primarily to lower gains on sales of real estate properties,
which decreased $12.1 million during 1996.
Total rental income increased to $59.2 million in 1996 from $51.7 million
in 1995. Rental income consisted of $28.9 million and $21.7 million from
commercial properties (office, retail and industrial), $19.9 million and $20.1
million from multi-family residential properties and $10.4 million and $9.9
million from hotels and other properties, in 1996 and 1995, respectively. The
increase in rental income from commercial properties (and total rental income)
was due primarily to the acquisition of a 36-story office building in downtown
Atlanta during the first quarter of 1996. Overall occupancy and rental rates
were similar in the two years for stabilized operating properties. The cost of
rental operations increased to $38.8 million in 1996 from $30.9 million in
1995, due primarily to the acquisition of the office building and an overall
increase in repairs and maintenance expense during 1996.
Gains on sales of real estate properties were $3.7 million in 1996
compared with $15.8 million in 1995. Gross sales of real estate properties were
$15.9 million in 1996 compared with $38.2 million in
14
<PAGE>
1995. The 1995 sales of real estate properties and gains on those sales were
substantially affected by a sale of a recreational facility in 1995 for $16.5
million. There were no sales of comparable size in 1996.
Other operating expenses did not change significantly in 1996 from 1995.
COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS) AND LOANS
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income - CMBS .......................... $29,919 20,713 12,631
Interest income - Loans ......................... 11,527 8,013 7,844
Gains on sales of investment securities ......... 5,359 1,735 513
Servicing fees .................................. 4,262 2,746 2,214
------- ------ ------
Total revenues ................................ 51,067 33,207 23,202
Operating expenses .............................. 2,547 1,813 604
------- ------ ------
Operating earnings ............................ $48,520 31,394 22,598
======= ====== ======
</TABLE>
NOTE: ACTUAL AND PRO FORMA RESULTS ARE IDENTICAL FOR 1997.
Revenues from CMBS and loans include interest income, gains on sales of
these assets and fees from acting as special servicer for CMBS transactions.
Related operating expenses include the direct costs of investing in and
originating CMBS and loans, and servicing the CMBS portfolio.
YEAR ENDED NOVEMBER 30, 1997 COMPARED TO YEAR ENDED NOVEMBER 30, 1996
Overall, operating earnings from CMBS and loans increased to $48.5 million
in 1997 from $31.4 million in 1996. Revenue was higher primarily due to the
growth of the Company's CMBS portfolio to $304.7 million at November 30, 1997
from $263.8 million at November 30, 1996, and to a lesser extent, the
origination and/or purchase of new loans. During 1997, the Company purchased
$146.7 million of CMBS in comparison with $121.9 million in 1996.
Special servicing fees earned from the CMBS portfolio increased during
1997 to $4.3 million from $2.7 million earned in 1996. These fees increased
because of an increased number of CMBS transactions (36 at November 30, 1997
versus 25 at November 30, 1996) for which the Company acts as special servicer.
In addition, results for 1997 include $5.4 million in gains from sales of
CMBS, primarily as a result of a Re-REMIC securitization transaction. The
Re-REMIC transaction was the securitization of the cash flows from pre-existing
CMBS bonds. In that transaction, the Company sold approximately $140 million of
non-investment grade rated CMBS bonds to a trust to which two other parties
sold approximately $320 million of similar bonds. Over 42% of the new
securities created by pooling this $460 million portfolio of non-investment
grade bonds were rated as investment grade. Most of the bonds in the new
securitization were sold to third parties and the Company also retained and/or
purchased approximately $63 million of face value of the non-investment grade
securities.
In recording CMBS interest income, the Company follows generally accepted
accounting principles and records interest received plus amortization of the
difference between the carrying value and the face amount of the securities to
achieve a level yield. To date, this has resulted in less recognition of
interest income than interest received. The excess interest received is applied
to reduce the Company's investment. In 1997 and 1996, this excess of cash
received over income recorded was $21.2 million and $10.1 million,
respectively. The Company's initial and ongoing estimates of its returns on
CMBS investments are based on a number of assumptions that are subject to
certain business and economic conditions, the most significant of which is the
timing and magnitude of credit losses on the underlying mortgages.
Actual loss experience to date, particularly for older transactions (3 to
4 years in age) is significantly lower than originally underwritten by the
Company. Therefore, changes to original
15
<PAGE>
estimated yields will result in improved earnings from these transactions in
future periods. The Company believes these improvements resulted from (i) its
ability to conservatively underwrite these transactions, (ii) its workout and
real estate expertise in these transactions and (iii) an improving real estate
economy. The Company, however, makes no representation at this time that such
positive experience on these older transactions will translate into yield
improvements on newer investments.
The increase in interest income from mortgage loans to $11.5 million in
1997 from $8.0 million in 1996 was due primarily to the higher investment in
mortgage loans, which increased to $86.8 million at November 30, 1997 from
$64.4 million at November 30, 1996, and gains realized on the early payoff of
certain loans which had been purchased at discounts.
Operating expenses increased to $2.5 million for 1997 from $1.8 million
for 1996 as a result of the additional investments made by the Company.
YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995
Overall, operating earnings from CMBS and loans increased to $31.4 million
in 1996 from $22.6 million in 1995. Revenue was higher primarily due to the
growth of the Company's CMBS portfolio to $263.8 million at November 30, 1996
from $163.3 million at November 30, 1995, and to a lesser extent the
origination and/or purchase of new loans. During 1996, the Company purchased
$121.9 million of CMBS in comparison with $81.6 million in 1995.
Special servicing fees earned from the CMBS portfolio increased during
1996 to $2.7 million from $2.2 million earned in 1995. These fees increased
because of an increased number of CMBS transactions (25 at November 30, 1996
versus 14 at November 30, 1995) for which the Company acts as special servicer.
In 1996 and 1995, respectively, the excess of cash received on CMBS over
income recorded was $10.1 million and $5.8 million, respectively.
Operating expenses increased to $1.8 million for 1996 from $0.6 million
for 1995 as a result of the additional investments made by the Company.
PARTNERSHIPS AND JOINT VENTURES
<TABLE>
<CAPTION>
PRO ACTUAL
FORMA -------------------------------
1997 1997 1996 1995
---------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Equity in earnings of partnerships
"Distressed portfolios" ......... $28,591 28,591 51,804 31,488
Lennar Land Partners ............ 13,570 278 -- --
Other ........................... 1,280 1,280 58 (285)
Management fees .................. 9,123 9,123 15,483 8,060
------- ------ ------ ------
Total revenues .................. 52,564 39,272 67,345 39,263
Operating expenses ............... 3,104 3,104 6,113 5,339
------- ------ ------ ------
Operating earnings .............. $49,460 36,168 61,232 33,924
======= ====== ====== ======
</TABLE>
The Company's interests in partnerships and joint ventures range from 15%
to 50%. The 50% or less partnerships are not consolidated in the Company's
consolidated financial statements and the results are reflected on the line
item "Equity in earnings of partnerships." Many of the Company's larger
partnership investments in distressed portfolios were made between 1992 and
1996. Because the purchase price of assets acquired by the partnerships is
allocated among the assets on the basis of their relative values at the time of
the purchase, there is generally little profit from dispositions of partnership
assets shortly after they are acquired. Therefore, the partnerships in which
the Company invests tend to
16
<PAGE>
generate greater profits as they mature, at least while real estate markets are
strong and until the partnerships become significantly liquidated.
As the U.S. real estate markets strengthened in 1996 and 1997,
substantially fewer large distressed real estate portfolios became available at
what the Company viewed as attractive prices; and therefore the Company has not
purchased any such portfolio subsequent to August, 1996. Approximately 20% to
25% of each portfolio is turned over each year, therefore it is expected that
operating earnings from the Company's U.S. distressed portfolio investments
will continue to decrease over the next three to four years.
The Company, however, has continued to acquire individual underperforming
real estate assets, both in partnership, for the larger assets, and directly.
In addition, subsequent to November 30, 1997, the Company entered into a
partnership to acquire a portfolio of nonperforming commercial mortgage loans
in Japan, where the Company has opened an office to oversee its loan workout
and real estate asset management operations. At this point, there can be no
assurance that these new investments will achieve the same level of results for
the Company as the U.S. distressed portfolio business did.
Prior to the Spin-off, Lennar and the Company transferred to a new
partnership, Lennar Land Partners, parcels of land or interests in land and
other assets which had a total book value on the partnership's books at
November 30, 1997 of $376.4 million. This new partnership, which is owned 50%
by the Company and 50% by Lennar, is expected to have a significant impact in
offsetting some, but probably not all, of the decreases in future operating
earnings from the Company's U.S. distressed portfolio business.
PRO FORMA OPERATING EARNINGS FROM PARTNERSHIPS AND JOINT VENTURES FOR THE
YEAR ENDED NOVEMBER 30, 1997 WERE $49.5 MILLION COMPARED TO $36.2 MILLION ON AN
ACTUAL BASIS. THIS DIFFERENCE WAS DUE TO THE INCLUSION OF THE COMPANY'S EQUITY
IN THE EARNINGS OF LENNAR LAND PARTNERS FROM DECEMBER 1, 1996 THROUGH OCTOBER
31, 1997.
YEAR ENDED NOVEMBER 30, 1997 COMPARED TO YEAR ENDED NOVEMBER 30, 1996
Operating earnings from partnerships and joint ventures decreased to $36.2
million in 1997 from $61.2 million in 1996. The decrease was primarily due to
reduced earnings and management fees related to the Company's larger distressed
portfolios. Equity in earnings from LW Real Estate Investments, L.P. and
subsidiaries ("LW Real Estate") decreased to $10.5 million in 1997 from $23.6
million in 1996 and equity in earnings from Lennar Florida Partners I, L.P. and
qualified affiliates ("Lennar Florida Partners") decreased to $8.7 million in
1997 from $20.0 million in 1996. Both of these partnerships were the largest
contributors of actual equity in earnings for both 1997 and 1996. As these
partnerships continue to liquidate their remaining portfolios of assets, their
future contributions to earnings should decrease in comparison with total
equity in earnings. The decreases in the earnings from these two partnerships
were partially offset by additional earnings from some of the Company's other
smaller partnerships and joint ventures.
Partnership distributions received by the Company in 1997 were $79.7
million in comparison with $95.4 million for 1996, a decrease of $15.7 million.
This decrease was primarily due to lower distributions from LW Real Estate of
$35.5 million, resulting from lower dispositions of partnership assets during
the current year. This decrease was partially offset by higher distributions
from several of the other partnerships, a portion of which was due to proceeds
from refinancing of unencumbered partnership assets. Future distributions from
these partnerships may not achieve their 1997 level due to the refinancings.
The 1997 distributions were $49.6 million higher than the Company's actual
equity in earnings of the partnerships of $30.1 million. This was because as
assets were liquidated, the partnerships received and could distribute a
significant portion of the liquidating proceeds whereas partnership earnings
are only based on net liquidation proceeds in excess of the book basis. The
Company's overall investments in and advances to partnerships increased
approximately 45% during 1997 to $159.4 million at the end of that year. This
was primarily due to (i) the addition of Lennar Land
17
<PAGE>
Partners, as part of the Spin-off, which increased investments in and advances
to partnerships by $92.3 million, and (ii) equity in earnings of the
partnerships of $30.1 million, offset by partnership distributions of $79.7
million. The largest distributions were made by LW Real Estate, Lennar Florida
Partners and Lennar U.S. Partners and were in excess of the Company's equity in
their earnings ($58.4 million of distributions compared with $23.1 million of
equity in earnings).
The Company did not receive any distributions from Lennar Land Partners
during 1997 and future distributions are limited until the repayment of the
partnership's debt, which is projected to occur in approximately 2 years.
Management fees decreased to $9.1 million in 1997 from $15.5 million in
1996. These fees typically are based on the amount of assets managed, the
performance of assets or partnerships, or both. Management fees decreased
during 1997 due to a reduction in partnership assets. Also contributing to the
decrease during 1997 was the receipt during 1996 of incentive fees from
partnerships managed by the Company (including an incentive fee of $9.6 million
received from one partnership which liquidated a significant portion of its
assets in 1996).
YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995
Operating earnings from partnerships and joint ventures increased to $61.2
million in 1996 from $33.9 million in 1995. This was because of increased
earnings of the partnerships resulting from increases in the collections from
distressed loans, foreclosed properties and other assets which had been
acquired by the partnerships, resulting to some extent from an improvement in
the real estate market, and to some extent from management of the assets.
In particular, the Company's equity in earnings of LW Real Estate
increased to $23.6 million in 1996 from $12.1 million in 1995 because of an
increase in the Company's percentage interest due to an additional investment
in the fourth quarter of 1995. Its equity in the earnings of Lennar Florida
Partners was essentially the same in 1996 as in 1995 ($20.0 million compared
with $19.5 million).
Partnership distributions received by the Company in 1996 were $95.4
million, of which distributions of $50.4 million were from LW Real Estate and
$26.6 million were from Lennar Florida Partners. Distributions from these two
partnerships were primarily from the net proceeds of asset sales. These
distributions were substantially greater than the Company's equity in earnings
of the partnerships of $51.9 million. This was because as assets were
liquidated, the partnerships received and could distribute a significant
portion of the liquidating proceeds whereas partnership earnings are only based
on net liquidation proceeds in excess of the book basis.
Management fees increased to $15.5 million in 1996 from $8.1 million in
1995. The 1996 increase was due primarily to incentive fees received from
partnerships managed by the Company (including an incentive fee of $9.6 million
received from one partnership which liquidated a significant portion of its
assets in 1996).
CORPORATE, OTHER AND INTEREST EXPENSES
YEAR ENDED NOVEMBER 30, 1997 COMPARED TO YEAR ENDED NOVEMBER 30, 1996
Actual corporate general and administrative expenses increased to $18.1
million in 1997 from $10.8 million in 1996 primarily due to Spin-off expenses
of approximately $6.2 million incurred during 1997. Lower corporate reserves
and bonus expenses in 1997 were largely offset by higher costs during the
latter half of the year associated with operating as a stand-alone company.
PRO FORMA CORPORATE GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED
NOVEMBER 30, 1997 WERE $13.7 MILLION COMPARED TO $18.1 MILLION ON AN ACTUAL
BASIS. THIS DIFFERENCE WAS DUE TO THE REMOVAL OF SPIN-OFF RELATED COSTS INCURRED
IN 1997, OFFSET BY INCREMENTAL COSTS FOR OPERATING AS A STAND-ALONE PUBLIC
COMPANY.
18
<PAGE>
Interest expense of $26.6 million and $20.5 million was incurred during
1997 and 1996, respectively. Interest amounts incurred and charged to expense
in 1997 were greater than those in 1996 due to higher debt levels. The higher
debt levels, in turn, reflected increased borrowings to finance the expansion
of the Company's core business lines.
PRO FORMA INTEREST EXPENSE FOR THE YEAR ENDED NOVEMBER 30, 1997 WAS $24.5
MILLION COMPARED TO $26.6 MILLION ON AN ACTUAL BASIS. THIS DIFFERENCE WAS DUE TO
THE USE OF PROCEEDS FROM FUNDS ADVANCED BY LENNAR TO REPAY DEBT ON OCTOBER 31,
1997, AS IF SUCH DEBT HAD BEEN REPAID ON DECEMBER 1, 1996.
YEAR ENDED NOVEMBER 30, 1996 COMPARED TO YEAR ENDED NOVEMBER 30, 1995
Corporate general and administrative expenses increased to $10.8 million
in 1996 from $7.5 million in 1995. This increase was attributable to a general
increase in the Company's operating costs, primarily relating to personnel
costs, including bonuses, and an increase in corporate level reserves.
During 1996 and 1995, interest expense of $20.5 million and $14.7 million,
respectively, were incurred by the Company. Interest amounts incurred and
charged to expense in 1996 were greater than those in 1995 due to higher debt
levels. The higher debt levels, in turn, reflected increased borrowings to
finance the expansion of the Company's core business lines.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Prior to the Spin-off on October 31, 1997, the Company obtained the funds
it used in its activities primarily from its cash flows, from borrowings and
from funds advanced by Lennar. While the Company was part of Lennar, borrowings
consisted of repurchase agreements and loans secured by particular assets of
the Company and borrowings under Lennar's and other revolving credit lines. As
part of the Spin-off, the Company has entered into its own debt agreements,
including its own revolving lines of credit.
The Company used $56.3 million of cash in operating activities in 1997
compared with $11.8 million in 1996. The increase during 1997 was primarily due
to the funding of restricted cash accounts of $10.0 million and increases in
other assets and deferred income taxes of $26.0 million and $9.4 million,
respectively. The increased restricted cash deposits relate primarily to an
increase in funds held in trust for asset purchases.
The fact that operating activities were a net user of cash also resulted
from the fact that the net earnings of the Company in those years included
non-cash equity in earnings of partnerships of $30.1 million in 1997 and $51.9
million in 1996. However, in those years, cash distributions by those
partnerships totaled $79.7 million and $95.4 million, respectively.
Distributions from partnerships are classified as cash provided by investing
activities, not as cash from operating activities. This is because as assets
are liquidated, the partnerships receive and can distribute a significant
portion of the liquidating proceeds whereas partnership earnings are only based
on net liquidation proceeds in excess of the book basis.
Cash flows provided by investing activities totaled $70.0 million in 1997
compared with $3.5 million in 1996. The increase is primarily attributable to
substantially higher proceeds from sales of real estate, which increased $66.5
million during 1997, higher proceeds from the sale of investment securities of
$102.1 million, including proceeds from the Re-REMIC transaction previously
discussed, and lower purchases of loans which decreased $15.6 million.
Offsetting these increases were lower partnership distributions, which
decreased $15.7 million, increased expenditures for operating property and
equipment and land held for investment of $78.3 million (primarily for
investments in development and redevelopment projects), and increased
expenditures for other investments of $21.9 million.
The Company also received cash from financing activities of $18.1 million
in 1997 compared with $6.4 million in 1996. The increase in 1997 was primarily
due to increased borrowings under mortgage
19
<PAGE>
notes and other debts payable, lower cash borrowings under repurchase
agreements for the purchase of CMBS (most CMBS acquisitions during 1997 were
financed at the same time as the purchase and did not affect cash flows) and
lower payments to Lennar.
Because many of the Company's interest bearing assets have fixed interest
rates while the Company's borrowings have been primarily at variable rates, the
Company's profits could be reduced by rising interest rates. Also, the value of
the Company's fixed rate assets will fall when interest rates rise. This could
require the Company to provide additional collateral for its borrowings or to
sell assets to repay borrowings. The Company closely monitors interest rate
risks and uses interest rate swaps and similar instruments to reduce the risks
of rising variable rates. As discussed below, the Company intends to increase
long term fixed rate borrowings, which would reduce its need to make variable
rate borrowings and therefore would reduce its exposure to rising variable
rates.
The Company anticipates issuing $200 million of long-term fixed rate
senior subordinated notes during the second quarter of 1998. Proceeds from
these notes are expected to be used to reduce short term floating rate
borrowings and for general corporate purposes. The notes are expected to bear
interest at a fixed rate and have a 10 year term.
The Company has various lines of credit and a revolving credit facility
available to fund its future expansion. Subsequent to November 30, 1997, the
Company entered into an unsecured revolving credit agreement which expires on
December 31, 2000, with the option of a one year extension. The total amount of
the facility is $200 million and as of February 25, 1998, the Company had a
total of $142 million committed under this facility. There are currently no
borrowings under this loan agreement. The facility is being syndicated and the
Company expects that availability will reach $200 million. This facility
contains covenants which could restrict the ability of the Company to borrow in
future periods, however, these restrictions are not expected to have any
adverse impact on the Company's activities. The Company has other secured lines
of credit totaling $430 million with availability of $147 million at November
30, 1997. These lines are available to purchase CMBS and mortgage notes.
The Company believes the combination of its liquid assets and cash flows
and its ability to obtain borrowings will provide all the funds the Company
requires to meet its short- and long-term needs based upon its currently
anticipated levels of growth.
SUBSEQUENT EVENTS
On February 26, 1998, the Company announced that it had agreed to acquire
AHG, a group of entities which owns 41 multi-family and senior housing
properties, with approximately 6,000 residential rental apartments, many of
which qualify for low-income tax credits under Section 42 of the Internal
Revenue Code. Of the apartments, 49% are located in the Northwestern United
States, 17% are located in the Southwest, 15% are located in the East, 13% are
located in the Far West, and the remainder are located in the Southeast and
Midwest. Approximately 82% of the apartments were constructed by AHG or under
its supervision. AHG acquired the other apartments after they were completed.
The purchase price for AHG will be approximately $86 million and the Company
will assume obligations to make future investments in properties totaling $44
million, subject to certain adjustments. The Company expects that after the
acquisition, AHG, as part of the Company, will continue developing, acquiring
and operating residential apartments which qualify for low-income tax credits.
YEAR 2000
The Company utilizes a number of software systems in conjunction with its
operations. The Company has and will continue to make certain investments in
its software systems and applications to ensure the Company is Year 2000
compliant. The financial impact of becoming Year 2000 compliant has not been
and is not expected to be material to the Company's financial position or
results of operations in a given year.
20
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 128, "Earnings per Share." This statement is effective for the
Company beginning with the first quarter of 1998 and earlier adoption is not
permitted. This statement requires that the current calculations of earnings
per share be replaced by basic and diluted earnings per share calculations.
Under the new guidance, basic and diluted earnings per share would be $1.22 for
1997.
Also in February 1997, the FASB issued SFAS No. 129, "Disclosure of
Information About Capital Structure." SFAS No. 129, which applies to all
entities that have issued securities, requires in summary form, the pertinent
rights and privileges of the various securities outstanding. Examples of
information that must be disclosed are dividend and liquidation preferences,
participation rights, call prices and dates, conversion or exercise prices or
rates and pertinent dates, sinking-fund requirements, unusual voting rights and
significant terms of contracts to issue additional shares. SFAS No. 129 is
effective for financial statements issued for periods ending after December 15,
1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. This statement requires that all items that are required
to be recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements. This statement is effective for
fiscal years beginning after December 15, 1997, and requires reclassification
of comparative purpose financial statements for all earlier periods presented.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information required by Item 8 is included elsewhere in this
Report (see Part IV, Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
21
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information about the Company's directors is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 30, 1998 (120 days
after the end of the Company's fiscal year). The following individuals were the
executive officers of LNR Property Corporation at the date of this report:
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR OF
NAME/POSITION AGE ELECTION
- - ------------------------------------------------ - ----
Stuart A. Miller
Chairman of the Board and Director ........... 40 1997
Steven J. Saiontz
Chief Executive Officer and Director ......... 39 1997
Jeffrey P. Krasnoff
President and Director ....................... 42 1997
Shelly Rubin
Financial Vice President ..................... 35
Michelle R. Simon
Secretary and Corporate Counsel .............. 34
Robert Cherry
Vice President ............................... 35
Steven I. Engel
Vice President ............................... 51
Mark A. Griffith
Vice President ............................... 41
David G. Levin
Vice President ............................... 42
Ronald E. Schrager
Vice President ............................... 36
David O. Team
Vice President ............................... 37
Margaret A. Jordan
Treasurer .................................... 46
John T. McMickle
Controller ................................... 40
</TABLE>
Stuart A. Miller is the Chairman of the Board of LNR. Mr. Miller became
the Chairman of the Board of LNR when it was formed in June 1997. Mr. Miller
has been the President and Chief Executive Officer of Lennar since April 1997.
For more than five years prior to April 1997, Mr. Miller was a vice president
of Lennar and held various executive positions with Lennar subsidiaries,
including being the president of its principal homebuilding subsidiary from
December 1991 to April 1997 and the president of its principal real estate
investment and management division (the predecessor to a substantial portion of
the Company's business) from April 1995 to April 1997.
Steven J. Saiontz is the Chief Executive Officer of LNR. Mr. Saiontz
became the Chief Executive Officer and a Director of LNR when it was formed in
June 1997. For more than five years prior to that, he was the president of
Lennar Financial Services, Inc., a wholly owned subsidiary of Lennar. Mr.
Saiontz is currently a Director of Lennar. He is the brother-in-law of Stuart
A. Miller and the son-in-law of Leonard Miller.
22
<PAGE>
Jeffrey P. Krasnoff is the President of LNR. Mr. Krasnoff became the
President of LNR when it was formed in June 1997 and became a Director in
December 1997. From 1987 until June 1997, he was a vice president of Lennar.
From 1990 until he became the President of LNR, Mr. Krasnoff was involved
almost entirely in Lennar's real estate investment and management division (the
predecessor to a substantial portion of the Company's business).
Shelly Rubin is the Financial Vice President of LNR. She became the
Financial Vice President of LNR when it was formed in June 1997. From May 1994
until June 1997, she was the principal financial officer of Lennar's real
estate investment and management division (the predecessor to a substantial
portion of the Company's business). From 1991 until May 1994, Ms. Rubin was
employed by Burger King Corporation as the controller for its real estate
division.
Michelle R. Simon is the Secretary and Corporate Counsel of LNR. She
became the Secretary and Corporate Counsel of LNR when it was formed in June
1997. From 1994 until June 1997, she was the counsel to Lennar's real estate
investment and management division (the predecessor to a substantial portion of
the Company's business). From 1992 to 1994, Ms. Simon was an associate and then
a vice president in the investment banking division, special execution group,
of Goldman, Sachs & Co.
Robert Cherry is a Vice President of LNR, responsible for sourcing and
evaluating new investment opportunities. From March 1995 until October 1997,
Mr. Cherry had similar responsibilities for LNR and Lennar's real estate
investment and management division (the predecessor to a substantial portion of
the Company's business). From March 1994 until February 1995, he was a vice
president of G. Soros Realty Advisors/Quantum North America Realty Fund. Prior
to that he was a senior analyst at Moody's Investor Service. Before joining
Moody's, Mr. Cherry was an associate at the law firm of Sullivan & Cromwell.
Steven I. Engel is a Vice President of LNR, directing the special
servicing of the CMBS portfolio. From 1992 until 1997, Mr. Engel had similar
responsibilities for LNR and Lennar's real estate investment and management
division (the predecessor to a substantial portion of the Company's business).
From 1987 to 1992, Mr. Engel owned and managed his own single family
construction company with projects in Broward, Collier and Lee counties in
Florida.
Mark A. Griffith is a Vice President of LNR, responsible for managing the
Eastern Regional Division. From February 1990 until October 1997, Mr. Griffith
had similar responsibilities for LNR and Lennar's real estate investment and
management division (the predecessor to a substantial portion of the Company's
business).
David G. Levin is a Vice President of LNR, responsible for managing Lennar
Capital Services, an LNR subsidiary. From February 1992 until early 1997, Mr.
Levin was responsible for managing the Miami Division of Lennar's real estate
investment and management division (the predecessor to a substantial portion of
the Company's business), which was at that time primarily focused on
partnerships with the Morgan Stanley Real Estate Fund. Prior to that he had
various positions with commercial real estate firms including managing director
of Bear Stearns Real Estate Group.
Ronald E. Schrager is a Vice President of LNR, responsible for managing
the Miami Division of LNR, which is primarily focused on CMBS/special
servicing. From September 1992 until early 1997, he held several positions in
Lennar's real estate investment and management division (the predecessor to a
substantial portion of the Company's business), managing various areas. Prior
to that he served as a vice president of Chemical Bank's Real Estate Finance
Group.
David O. Team is a Vice President of LNR, responsible for the Western
Regional Division. From 1994 to 1996, Mr. Team was the owner and president of
Windward Realty Group, a real estate development firm. From 1992 to 1993, he
was a senior vice president with American Real Estate Group.
Margaret A. Jordan is the Treasurer of LNR. Ms. Jordan joined LNR in
September 1997. From February 1993 to August 1997, Ms. Jordan worked as an
independent contractor and financial
23
<PAGE>
consultant to real estate businesses. From June 1987 to January 1993, Ms.
Jordan was employed by Atlantic Gulf Communities Corporation, serving as
assistant treasurer and then senior vice president and treasurer.
John T. McMickle is the Controller of LNR. Mr. McMickle joined LNR in July
1997. From 1994 to June 1997, Mr. McMickle was responsible for financial
reporting at Ryder System. Prior to that he was employed as a senior manager by
Price Waterhouse LLP.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by this item is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 30, 1998 (120 days
after the end of the Company's fiscal year).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this item is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 30, 1998 (120 days
after the end of the Company's fiscal year).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this item is incorporated by reference to
the Company's definitive proxy statement, which will be filed with the
Securities and Exchange Commission not later than March 30, 1998 (120 days
after the end of the Company's fiscal year).
Additional copies of Form 10-K will be furnished without charge to any
shareholder upon written request to Investor Relations, LNR Property
Corporation, 760 Northwest 107th Avenue, Miami, Florida 33172.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
PAGE
NUMBER
---------
<S> <C> <C> <C>
(A) 1. Consolidated Financial Statements
Report of Independent Auditors ........................................ F-1
Consolidated Balance Sheets as of November 30, 1997 and 1996 .......... F-2
Consolidated Statements of Earnings for the years ended
November 30, 1997, 1996 and 1995 .................................... F-3
Consolidated Statements of Parent Company investment
and Stockholders' Equity for the years ended
November 30, 1997, 1996 and 1995 .................................... F-4
Consolidated Statements of Cash Flows for the years ended
November 30, 1997, 1996 and 1995 .................................... F-5 - F-6
Notes to Consolidated Financial Statements ............................ F-7 - F-24
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PAGE
NUMBER
-------
<S> <C> <C>
2. Consolidated Financial Statement Schedules
Report of Independent Auditors ................................... F-25
Schedule II - Valuation and Qualifying Accounts .................. F-26
Schedule III - Real Estate and Accumulated Depreciation .......... F-27
Schedule IV - Mortgage Loans on Real Estate ...................... F-28
</TABLE>
(B) 1. Report on Form 8-K
A report on Form 8-K, dated November 17, 1997, was filed by the
registrant with respect to the change of control of the registrant as a
result of the spin-off on October 31, 1997.
A report on Form 8-K, dated November 25, 1997, was filed by the
registrant with respect to the change of control of registrant as a
result of the conversion the Company's common stock to Class B common
stock.
A report Form 8-K/A, dated January 15, 1998, was filed by the registrant
with respect to the pro forma consolidated condensed financial
information for the registrant, after giving effect to the spin-off.
(C) 1. Index to Exhibits
3.1 Certificate of Incorporation and amendment.*
3.2 By-laws.*
10.1 Separation and Distribution Agreement between the Company and Lennar
Corporation, dated June 10, 1997.*
10.2 LNR Property Corporation Employee Stock Ownership/401(k) Plan.
10.3 Shared Facilities Agreement between LNR Property Corporation and
Lennar Corporation.
10.4 Partnership Agreement by and between Lennar Land Partners Sub, Inc. and
LNR Land Partners Sub, Inc.
10.5 Revolving Credit Agreement dated as of December 5, 1997, among LNR
Property Corporation and certain subsidiaries and Bank of America
National Trust and Savings Association, as lender and agent.
10.6 Master Repurchase Agreement dated as of December 8, 1997, between LNR
Sands Holdings, Inc. and Goldman Sachs Mortgage Company.
10.7 Reverse Repurchase Agreement dated as of October 21 1997,between DLJ
Mortgage Capital, Inc. and LNR Property Corporation, Lennar Capital
Services, Inc., Nevada Securities Holdings, Inc., Lennar Securities
Holdings, Inc., Lennar MBS, Inc. and LFS Asset Corp.
10.8 Amended and Restated Credit Agreement dated as of October 31, 1997,
between Lennar Capital Services Inc. and Lennar MBS, Inc. as borrowers
and Nationsbank of Texas, N.A. as lender.
10.9 Credit Agreement among Lennar Land Partners as borrower, and the First
National Bank of Chicago, et al.
25
<PAGE>
10.10 Revolving Credit Agreement dated as of November 6, 1997, by and between
Lennar Capital Services, Inc. and The Bank of New York.
10.11 Reverse Repurchase Agreement dated as of June 7, 1996, between CS First
Boston (Hong Kong) Limited and Lennar Financial Services, Inc., Lennar
MBS, Inc., Lennar Securities Holdings, Inc., and LFS Asset Corp.
11.1 Statement Regarding Computation of Per Share Earnings.
21.1 List of subsidiaries.
27.1 Financial Data Schedule.
- - ----------------
*Previously filed.
26
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
LNR PROPERTY CORPORATION
BY: /s/ STEVEN J. SAIONTZ
------------------------------------
Steven J. Saiontz
Chief Executive Officer and Director
February 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
- - --------------------------------- -------------------------------------- ------------------
<S> <C> <C>
/s/ STUART A. MILLER Chairman of the Board and Director February 25, 1998
- - ---------------------------------
Stuart A. Miller
/s/ STEVEN J. SAIONTZ Chief Executive Officer and Director February 25, 1998
- - --------------------------------- (Principal Executive Officer)
Steven J. Saiontz
/s/ JEFFREY P. KRASNOFF President and Director February 25, 1998
- - ---------------------------------
Jeffrey P. Krasnoff
/s/ SHELLY RUBIN Financial Vice President February 25, 1998
- - --------------------------------- (Principal Financial Officer)
Shelly Rubin
/s/ JOHN T. McMICKLE Controller February 25, 1998
- - --------------------------------- (Principal Accounting Officer)
John T. McMickle
/s/ LEONARD MILLER Director February 25, 1998
- - ---------------------------------
Leonard Miller
/s/ SUE M. COBB Director February 25, 1998
- - ---------------------------------
Sue M. Cobb
/s/ CARLOS M. DE LA CRUZ Director February 25, 1998
- - ---------------------------------
Carlos M. de la Cruz
/s/ BRIAN L. BILZIN Director February 25, 1998
- - ---------------------------------
Brian L. Bilzin
</TABLE>
26
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of LNR Property Corporation:
We have audited the accompanying consolidated balance sheets of LNR
Property Corporation and subsidiaries (the "Company") as of November 30, 1997
and 1996 and the related consolidated statements of earnings, cash flows and
Parent Company investment and stockholders' equity for each of the three years
in the period ended November 30, 1997. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of LNR
Property Corporation and subsidiaries at November 30, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended November 30, 1997, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective
December 1, 1994, the Company changed its method of accounting for its
investments in debt securities to conform with Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. Effective December 1, 1996, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of.
DELOITTE & TOUCHE LLP
Miami, Florida
February 3, 1998
(February 18, 1998, as to Note 16)
F-1
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF NOVEMBER 30,
--------------------------
1997 1996
------------- ----------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Cash and cash equivalents ............................................. $ 34,059 2,295
Restricted cash ....................................................... 56,637 1,552
Investment securities ................................................. 304,660 263,842
Mortgage loans, net ................................................... 86,849 64,441
Operating properties and equipment, net ............................... 228,598 203,266
Land held for investment .............................................. 83,297 91,177
Investments in and advances to partnerships ........................... 159,359 110,180
Deferred income taxes ................................................. 23,974 10,067
Other assets .......................................................... 45,904 6,148
---------- -------
Total assets ....................................................... $1,023,337 752,968
========== =======
LIABILITIES, PARENT COMPANY INVESTMENT
AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable ..................................................... $ 4,244 2,698
Accrued expenses and other liabilities ............................... 36,708 27,931
Mortgage notes and other debts payable ............................... 391,171 354,406
---------- -------
Total liabilities .................................................. 432,123 385,035
---------- -------
Minority interests .................................................... 22,126 885
---------- -------
Commitments and contingent liabilities (Note 13)
Parent Company investment ............................................. -- 367,048
Stockholders' equity
Common stock, $.10 par value, 150,000 shares authorized, 25,144 shares
issued and outstanding ............................................. 2,515 --
Class B common stock, $.10 par value, 40,000 shares authorized,
10,984 shares issued and outstanding ............................... 1,098 --
Additional paid-in capital ........................................... 544,548 --
Retained earnings .................................................... 370 --
Unrealized gain on available-for-sale securities, net ................ 20,557 --
---------- -------
Total Parent Company investment and stockholders' equity ........... 569,088 367,048
---------- -------
Total liabilities, Parent Company investment and
stockholders' equity ............................................ $1,023,337 752,968
========== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30
------------------------------------
1997 1996 1995
------------ --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Revenues
Rental income .............................. $ 56,334 59,215 51,664
Equity in earnings of partnerships ......... 30,149 51,862 31,203
Interest income ............................ 41,446 28,726 20,475
Gains on sales of:
Real estate .............................. 18,076 3,669 15,776
Investment securities .................... 5,359 1,735 513
Management fees ............................ 13,385 18,229 10,274
Other, net ................................. 2,734 -- 2,910
--------- ------ ------
Total revenues .......................... 167,483 163,436 132,815
--------- ------- -------
Costs and expenses
Cost of rental operations .................. 35,767 38,126 30,890
General and administrative ................. 26,584 20,756 15,155
Depreciation ............................... 6,060 5,916 5,671
Other, net ................................. -- 658 --
--------- ------- -------
Total costs and expenses ................ 68,411 65,456 51,716
--------- ------- -------
Operating earnings .......................... 99,072 97,980 81,099
Interest expense ............................ 26,584 20,513 14,692
--------- ------- -------
Earnings before income taxes ................ 72,488 77,467 66,407
Income taxes ................................ 28,270 30,212 25,899
--------- ------- -------
Net earnings ................................ $ 44,218 47,255 40,508
========= ======= =======
Net earnings per share ...................... $ 1.21
=========
Weighted average common and common equivalent
shares outstanding ........................ 36,434
=========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARENT COMPANY INVESTMENT
AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30
------------------------------------------
1997 1996 1995
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Parent company investment
Beginning balance ....................................................... $ 367,048 370,903 396,403
Net earnings, December 1, 1996 through October 31, 1997 ................. 43,848 47,255 40,508
Advances (to) from Parent Company ....................................... 145,617 (53,240) (71,778)
Change in unrealized gain on available-for-sale securities, net ......... 10,874 2,130 5,770
Spin-off of LNR from Parent Company ..................................... (567,387) -- --
---------- ------- -------
Balance at November 30 ................................................ -- 367,048 370,903
---------- ------- -------
Common stock
Beginning balance ....................................................... -- -- --
Spin-off of LNR from Parent Company ..................................... 3,613 -- --
Conversion of common stock to Class B common stock ...................... (1,098) -- --
---------- ------- -------
Balance at November 30 ................................................ 2,515 -- --
---------- ------- -------
Class B common stock
Beginning balance ....................................................... -- -- --
Conversion of common stock to Class B common stock ...................... 1,098 -- --
---------- ------- -------
Balance at November 30 ................................................ 1,098 -- --
---------- ------- -------
Additional paid-in capital
Beginning balance ....................................................... -- -- --
Spin-off of LNR from Parent Company ..................................... 545,000 -- --
Cash dividends - common stock ........................................... (452) -- --
---------- ------- -------
Balance at November 30 ................................................ 544,548 -- --
---------- ------- -------
Retained earnings
Beginning balance ....................................................... -- -- --
Net earnings, November 1 through November 30, 1997 ...................... 370 -- --
---------- ------- -------
Balance at November 30 ................................................ 370 -- --
---------- ------- -------
Unrealized gain on available-for-sale securities, net
Beginning balance ....................................................... -- -- --
Spin-off of LNR from Parent Company ..................................... 18,774 -- --
Change in unrealized gain on available-for-sale securities, net,
November 1, through November 30, 1997 .................................. 1,783 -- --
---------- ------- -------
Balance at November 30 ................................................ 20,557 -- --
---------- ------- -------
Total Parent Company investment and stockholders' equity .............. $ 569,088 367,048 370,903
========== ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30
--------------------------------------------
1997 1996 1995
------------ -------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings ....................................................... $ 44,218 47,255 40,508
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation ...................................................... 6,060 5,916 5,671
Minority interest ................................................. 238 -- --
Amortization of discount on mortgage loans and loan costs ......... (91) (6) (881)
Gains on sales of real estate ..................................... (18,076) (3,669) (15,776)
Equity in earnings of partnerships ................................ (30,149) (51,862) (31,203)
Gain on sales of investment securities ............................ (5,359) (1,735) (513)
Decrease in deferred income taxes ................................. (21,999) (12,614) (14,742)
Changes in assets and liabilities:
Increase in restricted cash ...................................... (10,182) (155) (1,397)
Decrease (increase) in other assets .............................. (17,898) 8,129 (3,892)
Decrease (increase) in mortgage loans held for sale .............. (14,910) (9,776) 10,285
Increase in accounts payable and accrued liabilities ............. 11,886 6,694 8,910
--------- --------- -------
Net cash (used in) operating activities ......................... (56,262) (11,823) (3,030)
--------- --------- -------
Cash flows from investing activities:
Operating properties and equipment
Additions ......................................................... (79,830) (19,269) (9,511)
Sales ............................................................. 71,664 11,667 21,804
Land held for investment
Additions ......................................................... (21,435) (3,699) (5,911)
Sales ............................................................. 10,733 4,258 16,365
Investments in and advances to partnerships ........................ (5,342) (12,138) (70,442)
Distributions from partnerships .................................... 79,693 95,361 93,899
Purchases of other investments ..................................... (21,857) -- --
Purchase of mortgage loans held for investment ..................... (349) (15,927) (39,730)
Proceeds from mortgage loans held for investment ................... 1,116 9,616 5,374
Purchase of investment securities .................................. (96,386) (96,295) (57,450)
Proceeds from sales of investment securities and other ............. 110,714 19,773 11,019
Interest received on CMBS in excess of income recognized ........... 21,241 10,123 5,773
--------- --------- -------
Net cash provided by (used in) investing activities ............. 69,962 3,470 (28,810)
--------- --------- -------
Cash flows from financing activities:
Payment of dividends ............................................... (452) -- --
Net borrowings under repurchase agreements and revolving
credit lines ..................................................... 240 76,424 109,482
Mortgage notes and other debts payable
Proceeds from borrowings .......................................... 35,377 1,255 --
Principal payments ................................................ (17,101) (18,752) (1,323)
Payments (to) from Parent Company .................................. -- (52,478) (73,708)
--------- --------- -------
Net cash provided by financing activities ....................... 18,064 6,449 34,451
--------- --------- -------
Net increase (decrease) in cash and cash equivalents ............ 31,764 (1,904) 2,611
--------- --------- -------
Cash and cash equivalents at beginning of year ..................... 2,295 4,199 1,588
--------- --------- -------
Cash and cash equivalents at end of year ........................... $ 34,059 2,295 4,199
========= ========= =======
</TABLE>
(CONTINUED)
F-5
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30
---------------------------------
1997 1996 1995
---------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized ......................... $ 25,341 20,428 14,489
Cash paid for taxes ....................................................... $ 3,660 -- --
Supplemental disclosures of non-cash investing and financing activities:
Purchases of investment securities financed by sellers .................... $ 50,280 25,619 24,162
Purchase of an operating property financed by a mortgage note ............. $ -- 17,400 --
Contribution of loans held for investment to acquire an investment
in partnership .......................................................... $ -- -- 27,651
Purchase of a mortgage loan financed by revolving credit line ............ $ 33,092 -- --
Spin-off of LNR from Parent Company:
Increase in Parent Company investment due to transfer of certain
assets, liabilities and minority interests prior to Spin-off ........... $145,617 -- --
Increase in Parent Company investment due to change in unrealized
gain on available-for-sale securities, net ............................. $ 10,874 -- --
Supplemental disclosure of non-cash transfers:
Transfer of mortgage loans to land held for investment ................... $ -- 2,273 --
Transfer of operating properties to land held for investment ............. $ 1,826 -- --
Transfer of other assets to accounts payable and accrued expenses ........ $ 1,563 -- --
Transfer of Parent Company investment to common stock .................... $ 3,613 -- --
Transfer of Parent Company investment to additional
paid-in capital ........................................................ $545,000 -- --
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1997, 1996 AND 1995
1. SUMMARY OF ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
LNR Property Corporation ("LNR") and subsidiaries (collectively the
"Company"), a Delaware corporation, was formed in June 1997. The Company
operates a real estate investment and management business which engages
principally in (i) developing and managing commercial real estate, (ii)
acquiring, managing and repositioning commercial real estate loans and
properties, (iii) acquiring (often in partnership with financial institutions
and real estate funds) and managing portfolios of real estate assets, (iv)
investing in non-investment grade commercial mortgage backed securities
("CMBS") as to which the Company has the right to be the special servicer
(i.e., to oversee workouts of underperforming loans) and (v) originating high
yielding real estate related loans.
SPIN-OFF TRANSACTION
Prior to October 31, 1997, Lennar Corporation (the "Parent Company" or
"Lennar") transferred its real estate investment and management business to the
Company. On October 31, 1997, Lennar effected a spin-off of the Company to
Lennar's stockholders (the "Spin-off") by distributing to them one share of LNR
stock for each share of Lennar stock they held.
The assets and liabilities of Lennar and its subsidiaries were divided
between the Company and Lennar and its homebuilding subsidiaries so that Lennar
and its homebuilding subsidiaries would have a net worth of $200 million (with
specified adjustments) and the remaining net worth was transferred to the
Company.
In connection with the Spin-off, Lennar and the Company agreed that at
least until December 2002, Lennar and its homebuilding subsidiaries would not
engage in the businesses in which the Company currently is engaged and the
Company would not engage in the businesses in which Lennar and its homebuilding
subsidiaries currently are engaged (except in limited areas in which the
activities of the two groups overlap).
BASIS OF PRESENTATION AND CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. The assets, liabilities and
results of operations of entities (both corporations and partnerships) in which
the Company has a controlling interest have been consolidated. The ownership
interests of noncontrolling owners in such entities are reflected as minority
interests. The Company's investments in partnerships (and similar entities) in
which less than a controlling interest is held are accounted for by the equity
method (when significant influence can be exerted by the Company), or the cost
method. All significant intercompany transactions and balances have been
eliminated.
For periods prior to the Spin-off, the financial statements of the Company
are presented as if the Company had been a separate combined group. Expenses
which related both to the businesses operated by the Company and the businesses
retained by Lennar have been allocated on a basis which the Company believes is
reasonable. However, the expenses allocated to the Company are not necessarily
F-7
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
1. SUMMARY OF ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
the same as those the Company would have incurred if it had operated
independently, and in general, the results of operations, financial position
and cash flows reflected in the consolidated financial statements of the
Company are not necessarily the same as those which would have been realized if
the Company had been operated independently of Lennar during the periods to
which those financial statements relate.
The Company began accumulating retained earnings immediately following the
Spin-off on October 31, 1997.
NET EARNINGS PER SHARE
The Company was formed in June 1997 and had no outstanding stock prior to
formation; therefore, net earnings per share have not been calculated for the
fiscal years ended November 30, 1996 and 1995 in the attached consolidated
financial statements. Earnings per share for 1997 are computed as though the
shares issued in the Spin-off had been outstanding throughout the year.
Net earnings per share is computed by dividing net earnings by the
weighted average number of the total common shares and Class B common shares
and common stock equivalents outstanding during the period. The dilutive effect
of all outstanding stock options is considered common stock equivalents and is
calculated using the treasury stock method.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. Due to the
short maturity period of the cash equivalents, the carrying amount of these
instruments approximates their fair value.
INVESTMENT SECURITIES
Investment securities are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". This standard requires that debt
and equity securities that have determinable fair values are classified as
available-for-sale unless they are classified as held-to-maturity or trading.
Securities classified as held-to-maturity are carried at amortized cost because
they are purchased with the intent and ability to hold to maturity. At November
30, 1997 and 1996, no securities were held for trading purposes.
Securities classified as available-for-sale are recorded at fair value in
the consolidated balance sheet, with unrealized holding gains or losses, net of
tax effects, reported as a separate component of stockholders' equity. Realized
gains and losses, as well as unrealized losses that are other than temporary,
are recognized in earnings. The cost of securities sold is based on the
specific identification method.
MORTGAGE LOANS, NET
Mortgage loans held for sale are recorded at the lower of cost or market,
estimated on a discounted cash flow basis using market interest rates. Purchase
discounts recorded on these loans are presented as
F-8
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
1. SUMMARY OF ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
a reduction of the carrying amount of the loans and are not amortized. Mortgage
loans held for investment are carried net of unamortized discounts and are
amortized utilizing a methodology that results in a level yield.
The Company provides an allowance for credit losses related to loans based
upon the Company's historical loss experience and other factors.
OPERATING PROPERTIES AND EQUIPMENT, NET AND LAND HELD FOR INVESTMENT
Operating properties and equipment and land held for investment are
recorded at cost. Depreciation for operating properties and equipment is
calculated to amortize the cost of depreciable assets over their estimated
useful lives using the straight-line method. The range of estimated useful
lives for operating properties is 15 to 40 years and for equipment is 2 to 10
years.
In March 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." SFAS No. 121 requires companies to
evaluate long-lived assets for impairment based on the undiscounted future cash
flows of the asset. If a long-lived asset is identified as impaired, the value
of the asset must be reduced to its fair value. The Company's operating
properties and land holdings would be considered long-lived assets under this
pronouncement. The Company adopted this statement in the first quarter of its
fiscal year ended November 30, 1997 and it did not have any material effect on
the Company's financial position, results of operations or cash flows.
REVENUE RECOGNITION
Interest income is comprised of interest received plus amortization of the
discount between the carrying value of each mortgage loan held for investment
or investment security and its unpaid principal balance using a methodology
which results in a level yield.
Revenues from sales of real estate (including the sales of land held for
investment and operating properties) are recognized when a significant down
payment is received, the earnings process is complete and the collection of any
remaining receivables is reasonably assured. Management fees are recognized in
income when they are earned and realization is reasonably assured.
The Company applies the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
in accounting for sales of investment securities and other financial assets.
This statement requires that transfers of financial and servicing assets be
recognized as sales when control has been surrendered.
INCOME TAXES
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". Under SFAS 109,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured
by using enacted tax rates expected to apply to taxable income in the years in
which those differences are expected to reverse.
F-9
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
1. SUMMARY OF ORGANIZATION, BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES--(CONTINUED)
STOCK OPTION PLANS
At November 30, 1997, the Company had one stock option plan, which is
described in Note 11. The Company grants stock options to certain employees for
a fixed number of shares with an exercise price not less than the fair value of
the shares at the date of grant. The Company accounts for the stock option
grants in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees". The Company applies the disclosure
only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation".
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share." This
statement is effective for the Company beginning with the first quarter of 1998
and earlier adoption is not permitted. This statement requires that the current
calculations of earnings per share be replaced by basic and diluted earnings
per share calculations. Under the new guidance, basic and diluted earnings per
share would be $1.22 for 1997.
Also in February 1997, the FASB issued SFAS No. 129, "Disclosure of
Information About Capital Structure." SFAS No. 129, which applies to all
entities that have issued securities, requires in summary form, the pertinent
rights and privileges of the various securities outstanding. Examples of
information that must be disclosed are dividend and liquidation preferences,
participation rights, call prices and dates, conversion or exercise prices or
rates and pertinent dates, sinking-fund requirements, unusual voting rights and
significant terms of contracts to issue additional shares. SFAS No. 129 is
effective for financial statements issued for periods ending after December 15,
1997.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. This statement requires that all items that are required
to be recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements. This statement is effective for
fiscal years beginning after December 15, 1997, and requires reclassification
of comparative purpose financial statements for all earlier periods presented.
RECLASSIFICATIONS
Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the 1997 presentation.
F-10
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
2. RESTRICTED CASH
<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1997 1996
----------- --------
(IN THOUSANDS)
<S> <C> <C>
Short-term investment securities ................ $ 44,902 --
Funds held in trust for asset purchases ......... 10,007 --
Tenant security deposits ........................ 1,728 1,552
-------- -----
$ 56,637 1,552
======== =====
</TABLE>
The short-term investment securities are collateral for a $44.5 million
letter of credit, which provides credit enhancement to $277.3 million of
tax-exempt bonds. The bonds are secured by five high-rise, class A, apartment
buildings in Manhattan, New York. The Company receives interest on the
short-term investment as well as 600 basis points per year for providing the
credit enhancement.
3. INVESTMENT SECURITIES
Investment securities consist of investments in various issues of rated
and unrated portions of CMBS. The Company's investment in rated CMBS is
classified as available-for-sale and its investment in unrated CMBS is
classified as held-to-maturity. In general, principal payments on each class of
security are made in the order of the stated maturities of each class so that
no payment of principal will be made on any class until all classes having an
earlier maturity date have been paid in full. The Company's investment
securities have stated maturity dates in years 2001 through 2028 and carry
stated interest rates ranging from 6.50% to 11.42%. These securities are, in
effect, subordinate to other securities of classes with earlier maturities. The
annual principal repayments on a particular class are dependent upon
collections on the underlying mortgages, affected by prepayments and
extensions, and as a result, the actual maturity of any class of securities may
differ from its stated maturity.
These investments represent securities which are collateralized by pools
of mortgage loans on commercial real estate assets located across the country.
Concentrations of credit risk with respect to these securities are limited due
to the diversity of the underlying loans across geographical areas and
diversity among property types. In addition, the Company only invests in these
securities when it performs significant due diligence analysis on the real
estate supporting the underlying loans and when it has the right to select
itself as special servicer for the entire securitization. As special servicer,
the Company impacts the performance of the securitization by using its loan
workout and asset management expertise to resolve non-performing loans.
The Company's investment securities consisted of the following:
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------
1997 1996
------------ ----------
(IN THOUSANDS)
<S> <C> <C>
Available-for-sale ......... $ 188,434 193,869
Held-to-maturity ........... 116,226 69,973
--------- -------
$ 304,660 263,842
========= =======
</TABLE>
F-11
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
3. INVESTMENT SECURITIES--(CONTINUED)
At November 30, 1997 and 1996, the amortized cost and fair value of
investment securities consisted of the following:
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ---------------------- FAIR
COST GAINS LOSSES VALUE
----------- -------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1997
Available-for-sale ......... $ 154,734 33,918 (218) 188,434
Held-to-maturity ........... $ 116,226 37,291 -- 153,517
1996
Available-for-sale ......... $ 180,918 14,626 (1,675) 193,869
Held-to-maturity ........... $ 69,973 19,490 -- 89,463
</TABLE>
During 1997, proceeds from the sale of available-for-sale securities
amounted to $111.5 million and resulted in gross realized gains of $5.4
million, primarily as a result of a Re-REMIC securitization transaction. The
Re-REMIC transaction was the securitization of the cash flows from certain pre-
existing CMBS bonds. In that transaction, the Company sold approximately $140.0
million of rated non-investment grade CMBS bonds to a trust. During 1996,
proceeds from the sale of available-for-sale securities amounted to $18.1
million and resulted in gross realized gains of $1.7 million.
4. MORTGAGE LOANS, NET
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------
1997 1996
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Mortgage loans ................ $ 95,593 80,271
Allowance for losses .......... (2,038) (4,979)
Unamortized discounts ......... (6,706) (10,851)
-------- -------
$ 86,849 64,441
======== =======
</TABLE>
At November 30, 1997 and 1996, the balance of mortgage loans classified as
held for sale were $64.4 million and $41.6 million, respectively, and
classified as held for investment were $22.4 million and $22.8 million,
respectively.
F-12
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
5. OPERATING PROPERTIES AND EQUIPMENT, NET
<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------------
1997 1996
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Rental apartments ......................... $ 98,068 70,357
Office buildings .......................... 67,455 65,725
Retail centers ............................ 54,494 60,344
Hotels .................................... 18,735 18,713
Industrial buildings ...................... 2,862 4,373
Other ..................................... 15,762 14,498
--------- ------
Total land and buildings ..... .......... 257,376 234,010
Furniture, fixtures and equipment ......... 7,318 5,028
--------- -------
264,694 239,038
Accumulated depreciation .................. (36,096) (35,772)
--------- -------
$ 228,598 203,266
========= =======
</TABLE>
The Company leases as lessor its retail, office and other facilities under
non-cancelable operating leases with terms in excess of twelve months. The
future minimum rental revenues under these leases subsequent to November 30,
1997 are as follows (in thousands): 1998--$14,857; 1999--$13,599; 2000--
$11,958; 2001--$9,798; 2002--$9,786 and thereafter--$55,435.
6. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS
Summarized financial information on a combined 100% basis related to the
Company's significant partnerships accounted for by the equity method at
November 30, 1997 and 1996 follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------
1997 1996
----------- ---------
(IN THOUSANDS)
<S> <C> <C>
Assets
Cash ........................................... $ 36,792 53,109
Portfolio investments .......................... 872,090 839,441
Other assets ................................... 32,585 16,213
--------- -------
$ 941,467 908,763
========= =======
Liabilities and equity
Accounts payable and other liabilities ......... $ 61,105 57,557
Notes and mortgages payable .................... 385,115 425,716
Equity of:
The Company ................................... 164,065 119,133
Others ........................................ 331,182 306,357
--------- -------
$ 941,467 908,763
========= =======
</TABLE>
The equity of the Company in the partnerships' financial statements shown
above exceeds the Company's recorded investment in and advances to the
partnerships by $4.7 million and $9.0 million at November 30, 1997 and 1996,
respectively, primarily due to purchase discounts. Portfolio investments
F-13
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
6. INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS--(CONTINUED)
consist primarily of mortgage loans and business loans collateralized by real
property, as well as commercial properties and land held for development,
investment or sale.
<TABLE>
<CAPTION>
YEARS ENDED NOVEMBER 30,
-----------------------------------
1997 1996 1995
------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues ................................ $ 213,238 257,062 280,286
Costs and expenses ...................... 125,693 87,629 115,269
--------- ------- -------
Earnings of partnerships ................ $ 87,545 169,433 165,017
========= ======= =======
The Company's share of earnings ......... $ 30,149 51,862 31,203
========= ======= =======
</TABLE>
In connection with the Spin-off, Lennar transferred parcels of land to the
Company and the Company transferred these parcels to Lennar Land Partners in
exchange for a 50% partnership interest in Lennar Land Partners. The net book
value of the assets contributed to Lennar Land Partners was $92.3 million.
Lennar Land Partners was formed so that Lennar and the Company could share the
risks and profits of ownership of real property previously acquired by Lennar,
primarily for use in its homebuilding activities. Lennar manages the day-to-day
activities of Lennar Land Partners under a management agreement.
At November 30, 1997 and 1996, the Company's equity interests in all other
significant partnerships ranged from 15% to 50%. These partnerships are
involved in the acquisition and management of portfolios of real estate loans
and properties. The Company shares in the profits and losses of these
partnerships and, when appointed the manager of the partnerships, receives fees
for the management and disposition of the assets. The outstanding debt of
Lennar Land Partners and one second-tier partnership, amounting to $119.0
million at November 30, 1997, is guaranteed by the Company.
F-14
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
7. MORTGAGE NOTES AND OTHER DEBTS PAYABLE
<TABLE>
<CAPTION>
NOVEMBER 30,
----------------------
1997 1996
---------- ---------
(IN THOUSANDS)
<S> <C> <C>
Secured without recourse to LNR
Mortgage notes on operating properties and land with a fixed interest
rate of 7.4%, due December 2003 ........................................... $ 20,640 23,994
Mortgage notes on operating properties and land with a floating interest
rate (8.5% at November 30, 1997), due July 1999 ........................... 21,998 --
Other secured debt
Mortgage notes on operating properties and land with fixed interest
rates from 7.4% to 8.0%, due through 2004 ................................. 25,659 47,648
Mortgage notes on operating properties and land with floating interest
rates (4.2% to 9.5% at November 30, 1997), due through
December 2010 ............................................................. 21,972 --
Repurchase agreements with floating interest rates (6.7% to 7.2% at
November 30, 1997), secured by CMBS, due through October 1998 ............. 177,386 118,182
Revolving credit lines with floating interest rates (6.7% to 6.9% at
November 30, 1997), secured by CMBS and mortgage loans, due
through August 1998 ....................................................... 110,909 97,582
Unsecured revolving credit notes payable with floating interest rates ...... -- 67,000
Unsecured note payable to Lennar with a fixed interest rate of 10%, due
December 1997 ............................................................. 12,607 --
-------- -------
$391,171 354,406
======== =======
</TABLE>
Information concerning the Company's more significant debt instruments is
as follows:
REPURCHASE AGREEMENTS
The Company, through certain subsidiaries, has entered into two reverse
repurchase agreements through which it finances selected CMBS. The agreements
have an aggregate commitment of $310 million under which $177 million was
outstanding at November 30, 1997. Interest is variable, corresponds to the
rating assigned to the CMBS and is based on LIBOR plus specified percentages.
The agreements mature during 1998 and are expected to be refinanced or extended
on substantially the same terms as the existing agreements. LNR has guaranteed
the obligations of its subsidiaries under these agreements and the agreements
are collateralized by the CMBS.
REVOLVING CREDIT LINES
The Company, through certain subsidiaries, has three revolving credit
lines with an aggregate commitment of $125 million under which $111 million was
outstanding at November 30, 1997. Interest is variable and is based on LIBOR or
commercial paper rates plus specified percentages. The lines are collateralized
by CMBS and mortgage loans. The lines mature during 1998 and are expected to be
refinanced or extended on substantially the same terms as the existing lines.
The agreements also contain certain financial tests and restrictive covenants,
none of which are currently expected to restrict the Company's activities. LNR
has guaranteed the obligations of its subsidiaries under these agreements.
F-15
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
7. MORTGAGE NOTES AND OTHER DEBTS PAYABLE--(CONTINUED)
UNSECURED REVOLVING CREDIT NOTES PAYABLE
On December 5, 1997, the Company and certain of its subsidiaries, entered
into a $200 million revolving credit agreement (the "Revolving Credit
Agreement") which expires on December 31, 2000, with the option of a one year
extension. As of closing of the Revolving Credit Agreement, the Company had
commitments totaling $82 million. The remaining amount is currently being
syndicated. Interest is calculated at LIBOR plus a margin, which varies based
on the Company's leverage and debt ratings. Had there been outstanding amounts
under this facility at November 30, 1997, the interest rate would have been
7.0%. The agreements also contain certain financial tests and restrictive
covenants, none of which are currently expected to restrict the Company's
activities.
The aggregate principal maturities of mortgage notes and other debts
payable subsequent to November 30, 1997, are as follows (in thousands): 1998 -
$302,668; 1999 - $24,432; 2000 - $5,844; 2001 - $1,359; 2002 - $7,606 and
thereafter - $49,262. All of the notes secured by land contain collateral
release provisions.
8. MINORITY INTERESTS
Minority interests relate to the third party ownership interest in
partnerships in which the Company has a controlling interest. For financial
reporting purposes the partnerships' assets, liabilities and earnings are
consolidated with those of the Company, and the other partners' interests in
the partnerships are included in the Company's consolidated financial
statements as minority interest. The primary component of minority interests at
November 30, 1997, representing $18.9 million, relates to the Company's
interest in a partnership which provides credit enhancement to $44.5 million of
a $277.3 million issue of tax-exempt bonds collateralized by commercial real
estate. See Note 2.
9. INCOME TAXES
The Company was included in the consolidated federal income tax returns of
Lennar through the date of the Spin-off. Under the Agreement with Lennar, the
Company is required to reimburse Lennar for the income taxes resulting from the
Company's 1997 activity. Lennar is responsible for the preparation of all
income tax returns prior to the Spin-off and it will be determined at the time
of filing of the relevant returns whether the Company has under or over paid
its portion of the liability. The final cash settlement with Lennar for income
taxes will result in an adjustment of the Company's recorded deferred tax asset
and liability balances. The Company's provision for federal and state income
taxes in the accompanying consolidated statement of earnings for the period
prior to the Spin-off have been calculated based on the Company's income and
temporary differences as if it filed a separate return. For the post Spin-off
period, the provision for income taxes has been based on the stand-alone
operations of the Company.
F-16
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
9. INCOME TAXES--(CONTINUED)
The provisions for income taxes consisted of the following for the years
ended November 30, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current
Federal .............. $ 43,802 37,866 35,593
State ................ 6,467 4,960 5,048
--------- ------ ------
50,269 42,826 40,641
--------- ------ ------
Deferred
Federal .............. (18,432) (12,337) (15,303)
State ................ (3,567) (277) 561
--------- ------- -------
(21,999) (12,614) (14,742)
--------- ------- -------
Total expense ......... $ 28,270 30,212 25,899
========= ======= =======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of the assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The tax
effects of significant temporary differences of the Company's deferred tax
assets and liabilities at November 30, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
NOVEMBER 30,
---------------------
1997 1996
---------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets
Reserves and accruals .................................... $ 7,398 8,472
Investment securities income ............................. 19,091 13,043
Investment in partnerships ............................... 24,704 11,251
Acquisition adjustments .................................. 15,943 3,236
Other .................................................... 277 --
------- ------
Total deferred tax assets ............................... 67,413 36,002
------- ------
Deferred tax liabilities
Capitalized expenses ..................................... 2,662 2,603
Deferred gains ........................................... 10,042 4,306
Acquisition adjustments .................................. 16,736 12,786
Installment sales ........................................ -- 845
Unrealized gain on available-for-sale securities ......... 13,143 5,051
Other .................................................... 856 344
------- ------
Total deferred tax liabilities .......................... 43,439 25,935
------- ------
Net deferred tax asset .................................... $23,974 10,067
======= ======
</TABLE>
Based on management's assessment, it is more likely than not that the
deferred tax assets will be realized through future taxable income.
F-17
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
9. INCOME TAXES--(CONTINUED)
A reconciliation of the statutory rate to the effective tax rate for the
years ended November 30, 1997, 1996 and 1995 follows:
<TABLE>
<CAPTION>
% OF PRE-TAX INCOME
---------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Statutory rate ................................................ 35.0 35.0 35.0
State income taxes, net of federal income tax benefit ......... 4.0 4.0 4.0
---- ---- ----
Effective rate .............................................. 39.0 39.0 39.0
==== ==== ====
</TABLE>
10. FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair
values of financial instruments held by the Company at November 30, 1997 and
1996, using available market information and appropriate valuation
methodologies. Considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The use of different market assumptions
and/or estimation methodologies might have a material effect on the estimated
fair value amounts. The table excludes cash and cash equivalents, restricted
cash and accounts payable, which had fair values approximating their carrying
values.
<TABLE>
<CAPTION>
NOVEMBER 30,
-----------------------------------------------
1997 1996
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- --------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets
Mortgages loans .................................. $ 86,849 92,285 64,441 74,809
Investment securities available-for-sale ......... 188,434 188,434 193,869 193,869
Investment securities held-to-maturity ........... 116,226 153,517 69,973 89,463
Liabilities
Mortgage notes and other debts payable ........... $391,171 391,171 354,406 354,406
</TABLE>
The following methods and assumptions were used by the Company in
estimating fair values:
Mortgages loans: The fair values are based on discounting future cash
flows using the current interest rates at which similar loans would be made or
are estimated by the Company on the basis of financial or other information.
Investment securities available-for-sale and held-to-maturity: The fair
values are based on quoted market prices, if available. The fair values for
instruments which do not have quoted market prices are estimated by the Company
on the basis of the acquisition price paid or financial and other information.
Mortgages notes and other debts payable: The fair value of fixed rate
borrowings is based on discounting future cash flows using the Company's
incremental borrowing rate. Variable rate borrowings are tied to market indices
and thereby, approximate fair value.
F-18
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
11. CAPITAL STOCK
PREFERRED STOCK
The Company has 500,000 shares of authorized preferred stock, $10 par
value. At November 30, 1997, no shares of preferred stock were issued or
outstanding. The preferred stock may be issued in series with any rights,
powers and preferences which may be authorized by the Company's Board of
Directors.
COMMON STOCK
The Company has two classes of common stock. The common stockholders have
one vote for each share owned in matters requiring stockholder approval and
during the fourth quarter of 1997 received quarterly dividends of $.0125 per
share. Class B common stockholders have ten votes for each share of stock owned
and during the fourth quarter of 1997 received quarterly dividends of $.01125
per share. As of November 30, 1997, Mr. Leonard Miller, a member of the Board
of Directors, owned or controlled 9.9 million shares of Class B common stock,
which represented approximately 74% of the voting control of the Company.
STOCK OPTION PLAN
In connection with the Spin-off, the Company adopted the 1997 Stock Option
Plan (the "1997 Plan"). The 1997 Plan provides for the granting of options to
certain officers, employees and directors of the Company to purchase shares at
prices not less than market value on the date of the grant. Options granted
under the 1997 Plan will expire not more than 10 years after the date of grant,
except that options granted to a key employee who is a 10% stockholder will
expire not more than five years after the date of grant. The exercise price of
each stock option granted under the 1997 Plan will be 100% of the fair market
value of the common stock on the date the stock option is granted, except in
the case of a key employee who is a 10% stockholder, in which case the option
price may not be less than 110% of the fair market value of the common stock on
the date the stock option is granted, and except as to stock options granted to
replace Lennar stock options held by Lennar employees who became employees of
the Company as a result of the Spin-off.
The following table summarizes the status of the 1997 Plan (in thousands,
except for option prices):
<TABLE>
<CAPTION>
WEIGHTED OUTSTANDING OUTSTANDING EXERCISABLE
OPTION AVERAGE WEIGHTED WEIGHTED WEIGHTED
PRICE PER NUMBER OF REMAINING AVERAGE FAIR AVERAGE AVERAGE FAIR
SHARE OPTIONS LIFE VALUE EXERCISE PRICE VALUE
----------- ----------- ------------ -------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Options assumed at Spin-off ....... $3.98 -
$ 16.23 410 5.13 Years 18.70 7.64 19.05
Options granted ................... $ 24.82 1,069 9.72 Years 13.28 24.82 --
-----
Ending balance .................... 1,479
=====
Exercisable ....................... 61
=====
Options available for
future grant ..................... 521
=====
</TABLE>
F-19
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
11. CAPITAL STOCK--(CONTINUED)
The Company has elected to account for its employee stock options under
APB 25 and related Interpretations. No compensation expense is recorded under
APB 25 because the exercise price of the Company's employee common stock
options equaled the market price for the underlying common stock on the grant
date.
Under the terms of the Lennar 1991 Stock Option Plan (the "Lennar Option
Plan"), participants in the Lennar Option Plan who exercise their options after
the Spin-off (and who did not amend the terms of their options prior to the
Spin-off to provide otherwise) will receive upon exercise of Lennar stock
options both shares of Lennar common stock and LNR common stock. The Company
has agreed to deliver shares of its common stock to participants in the Lennar
Option Plan who exercise options and are entitled to LNR common stock. There
were Lennar stock options outstanding at the time of the Spin-off which could
entitle the holders to purchase up to 615,600 shares of LNR common stock. None
of these options had been exercised as of November 30, 1997. The Company will
not receive any portion of the exercise price of the Lennar stock options.
SFAS 123 requires "as adjusted" information regarding net income and net
income per share to be disclosed for new options granted after fiscal year
1996. The Company determined this information using the fair value method of
that statement. The fair value of these options was determined at the date of
grant using the Black-Scholes option-pricing model. The significant weighted
average assumptions used were as follows for the year ended November 30, 1997:
expected dividend yield, .20%; calculated volatility rate, .45%; risk-free
interest rate, 5.50%; and expected life of the option in years, 2-7 years.
The estimated fair value of the options is recognized in expense over the
options' vesting period for "as adjusted" disclosures. The net income per share
"as adjusted" for the effects of SFAS 123 is not indicative of the effects on
reported net income/loss for future years. For purposes of these calculations,
the Company has excluded shares subject to options which are held by
participants in the Lennar Option Plan who are not employees, and do not
otherwise receive compensation from, the Company. The Company's reported "as
adjusted" information for the year ended November 30, 1997 is as follows (in
thousands, except per share amounts):
<TABLE>
<S> <C>
Net earnings ............................................ $ 44,218
Net earnings "As adjusted" .............................. $ 43,042
Net earnings per share as reported -- primary ........... $ 1.21
Net earnings per share "As adjusted" -- primary ......... $ 1.18
</TABLE>
In management's opinion, existing stock option valuation models do not
provide a reliable single measure of the fair value of employee stock options
that have vesting provisions and are not transferable. In addition,
option-pricing models require the input of highly subjective assumptions,
including expected stock price volatility.
EMPLOYEE STOCK OWNERSHIP PLAN /401(K) PLAN
The Employee Stock Ownership Plan/401(k) Plan (the "Plan") provides shares
of stock to employees who have completed one year of continuous service with
the Company. All contributions for employees with five years or more of service
are fully vested. Under the 401(k) portion of the Plan,
F-20
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
11. CAPITAL STOCK--(CONTINUED)
employees may make contributions which are invested on their behalf, and the
Company may also make contributions for the benefit of employees. The Company
records as compensation expense an amount which approximates the vesting of the
contributions to the Employee Stock Ownership portion of the Plan, as well as
the Company's contribution to the 401(k) portion of the Plan. Amounts
contributed by the Company to the Plan during 1997, 1996 and 1995 were
immaterial.
RESTRICTIONS ON PAYMENTS OF DIVIDENDS
Other than as required to maintain the financial ratios and net worth
requirements under the revolving credit and term loan agreements, there are no
restrictions on the payment of dividends on common stock by the Company. The
cash dividends paid with regard to a share of Class B common stock in a
calendar year may not be more than 90% of the cash dividends paid with regard
to a share of common stock in that calendar year. One of the Company's major
subsidiaries is also restricted on the payment of dividends to its parent
company, LNR Property Corporation, under the revolving credit and loan
agreements.
12. RELATED PARTY TRANSACTIONS
During the period December 1, 1996 through October 31, 1997, and for the
years ended November 30, 1996 and 1995, Lennar provided various general and
administrative services to the Company including: data processing, treasury,
legal, human resources, payroll, accounting, risk management and others. Costs
for these services are designed to approximate the actual costs incurred by
Lennar to render these services. Management believes the methods used to
determine these costs are reasonable, however, such costs may not be
representative of those which would be incurred if the Company had operated as
an independent entity during the periods presented. Charges for these costs are
included in general and administrative expenses and amounted to $3.3 million,
$3.1 million and $2.6 million for the period December 1, 1996 through October
31, 1997 and for the years ended November 30, 1996 and 1995, respectively.
The Company provided a portion of Lennar's facilities on a rent-free basis
for the period December 1 through October 31, 1997 and for the years ended
November 30, 1996 and 1995. Subsequent to the Spin-off, the Company has
negotiated market-based lease agreements with Lennar and its subsidiaries that
result in additional rental income of over $1.4 million annually.
The Company has entered into agreements whereby Lennar provides data
processing and construction management services for a period of up to one year
from the Spin-off. Data processing services are charged at a monthly rate of
$16,000. Services under this agreement were provided after the Spin-off and
aggregated $16,000 for 1997. No charges were incurred under the construction
management services agreement in 1997 and charges for 1998 are not expected to
be material.
13. COMMITMENTS AND CONTINGENT LIABILITIES
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business. In the opinion of management, the
disposition of these matters will not have a material adverse effect on the
financial condition, results of operations or cash flows of the Company.
F-21
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
13. COMMITMENTS AND CONTINGENT LIABILITIES--(CONTINUED)
The Company is subject to the usual obligations associated with entering
into contracts for the purchase, development and sale of real estate as well as
the management of partnerships and special servicing of CMBS in the routine
conduct of its business.
The Company is committed, under various letters of credit or other
agreements, to provide certain guarantees. Outstanding letters of credit and
guarantees under these arrangements totaled approximately $56.2 million at
November 30, 1997.
The Company leases certain premises and equipment under various
noncancellable operating leases with terms expiring through 2003, exclusive of
renewal option periods. The annual aggregate minimum rental commitments under
these leases are summarized as follows (in thousands): 1998--$182; 1999--$163;
2000--$149; 2001--$158; 2002--$166 and thereafter $170.
14. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
---------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1997
Revenues ............................. $ 44,760 44,411 43,368 34,944
Operating earnings ................... $ 27,166 29,150 26,689 16,067
Earnings before income taxes ......... $ 20,357 22,758 19,168 10,205
Net earnings ......................... $ 12,418 13,882 11,693 6,225
1996
Revenues ............................. $ 38,814 41,773 41,336 41,513
Operating earnings ................... $ 22,801 27,081 23,739 24,359
Earnings before income taxes ......... $ 18,169 21,721 18,405 19,172
Net earnings ......................... $ 11,083 13,250 11,227 11,695
</TABLE>
F-22
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
15. SUPPLEMENTAL PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
As a result of the Spin-off and formation of Lennar Land Partners, the
Company believes that pro forma information provides the best information to
compare the results of operations and trends in earnings and costs. Results for
1997 have been adjusted to give pro forma effect to these transactions as if
such transactions had been completed as of the beginning of the period. The pro
forma information does not purport to be indicative of the results of
operations which would actually have been reported if the transactions had
occurred on the dates or for the periods indicated:
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
1997 ADJUSTMENTS 1997
------------ ----------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues
Rental income .............................. $ 56,334 56,334
Equity in earnings of partnerships ......... 30,149 13,292 (a) 43,441
Interest income ............................ 41,446 41,446
Gains on sales of:
Real estate ............................... 18,076 18,076
Investment securities ..................... 5,359 5,359
Management fees ........................... 13,385 13,385
Other, net ................................. 2,734 2,734
--------- ------ ------
Total revenues ......................... 167,483 13,292 180,775
--------- ------ -------
Costs and expenses
Cost of rental operations .................. 35,767 35,767
General and administrative ................. 26,584 (4,408)(b) 22,176
Depreciation ............................... 6,060 6,060
--------- ------ -------
Total costs and expenses ............... 68,411 (4,408) 64,003
--------- ------ -------
Operating earnings ......................... 99,072 17,700 116,772
Interest expense ........................... 26,584 (2,100)(c) 24,484
--------- ------ -------
Earnings before income taxes ............... 72,488 19,800 92,288
Income taxes ............................... 28,270 7,721 (d) 35,991
--------- ------ -------
Net earnings ............................... $ 44,218 12,079 56,297
========= ====== =======
Net earnings per share ..................... $ 1.21 1.55
========= ========
</TABLE>
Adjustments to the historical results to arrive at the pro forma results
are as follows:
(a) Represents entries to reflect the Company's 50% interest in the
earnings of Lennar Land Partners.
(b) Represents entries to reflect the elimination of costs related to the
Spin-off and addition of incremental administrative costs associated with
operating as a stand-alone public company.
(c) Represents entries to reflect reductions in interest expense due to
the use of proceeds from funds advanced by Lennar to repay debt.
(d) The adjustment to taxes represents the estimated income tax effect of
the pro forma adjustments to the Company's effective tax rate of 39.0%.
F-23
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997, 1996 AND 1995
16. SUBSEQUENT EVENTS
In February 1998, the Company agreed to purchase interests in 41 entities
that own approximately 6,000 residential rental apartments. The purchase price
is approximately $86 million plus the assumption of approximately $44 million of
future equity commitments, subject to certain adjustments. The Company will
manage the existing assets and is expected to both develop and acquire new
low-income tax credit properties. The transaction remains subject to the receipt
of third party consents.
F-24
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
LNR Property Corporation:
We have audited the consolidated financial statements of LNR Property
Corporation (the "Company") as of November 30, 1997 and 1996, and for each of
the three years in the period ended November 30, 1997, and have issued our
report thereon dated February 3, 1998 (February 18, 1998, as to Note 16); such
report is included elsewhere in this Form 10-K. Our audits also included the
financial statement schedules of LNR Property Corporation, listed in Item 14.
These financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedules, when considered in relation to
the basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
Deloitte & Touche LLP
Miami, Florida
February 3, 1998
F-25
<PAGE>
LNR PROPERTY CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED NOVEMBER 30, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
ADDITIONS
----------------------------------
CHARGED
CHARGED (CREDITED)
TO COSTS TO OTHER BEGINNING ENDING
DESCRIPTION BALANCE AND EXPENSES ACCOUNTS (DEDUCTIONS) BALANCE
- - ----------------------------------------- --------------- -------------- ------------------- --------------------- --------------
<S> <C> <C> <C> <C> <C>
Year ended November 30, 1997
Allowances deducted from assets to which
they apply:
Allowances for doubtful accounts and
notes receivable .................... $ 938,000 467,000 (702,000) -- 703,000
============ ======= ======== == =======
Deferred income and unamortized
discounts ........................... $ 10,851,000 -- 235,000 (4,380,000)(A) 6,706,000
============ ======= ======== ========== =========
Loan loss reserve ..................... $ 2,071,000 -- -- (33,000) 2,038,000
============ ======= ======== ========== =========
Valuation allowance ................... $ 2,908,000 -- -- (2,908,000)(A) --
============ ======= ======== ========== =========
Year ended November 30, 1996
Allowances deducted from assets to which
they apply:
Allowances for doubtful accounts and
notes receivable .................... $ 871,000 511,000 -- (444,000) 938,000
============ ======= ======== ========== =========
Deferred income and unamortized
discounts ........................... $ 13,112,000 -- (746,000)(B) (1,515,000)(A) 10,851,000
============ ======= ======== ========== ==========
Loan loss reserve ..................... $ -- 1,869,000 1,396,000 (1,194,000) 2,071,000
============ ========= ========= ========== ==========
Valuation allowance ................... $ 340,000 2,711,000 580,000 (723,000) 2,908,000
============ ========= ========= ========== ==========
Year ended November 30, 1995
Allowances deducted from assets to which
they apply:
Allowances for doubtful accounts and
notes receivable .................... $ 273,000 1,190,000 4,000 (596,000) 871,000
============ ========= ========= ========== ==========
Deferred income and unamortized
discounts ........................... $ 10,600,000 -- 4,186,000(B) (1,674,000)(A) 13,112,000
============ ========= ========= ========== ==========
Valuation allowance ................... $ 172,000 -- 168,000 -- 340,000
============ ========= ========= ========== ==========
</TABLE>
Notes:
(A) Includes transfers to Lennar Corporation of approximately $4.2 million and
amortization of discount and other.
(B) Includes discounts on mortgages purchased.
F-26
<PAGE>
LNR PROPERTY CORPORATION
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION (D)(E)
YEAR ENDED NOVEMBER 30, 1997
<TABLE>
<CAPTION>
COST
CAPITALIZED
INITIAL COST SUBSEQUENT TO
TO COMPANY ACQUISITION
--------------------------- -------------------------
BUILDING AND IMPROVE- CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS MENTS COSTS
- - ------------------- -------------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Rental
apartment
property - FL $20,640,000 1,872,000 9,063,000 4,624,000 359,000
Rental office
property - FL 12,709,000 1,779,000 -- 13,577,000 1,959,000
Hotel - FL ........ 1,000,000 3,478,000 8,867,000 367,000
Rental
apartment
property -
CO ............... 21,998,000 -- 5,375,000 24,055,000 441,000
Rental office
property -
GA ............... -- 1,263,000 11,700,000 -- --
Rental office
property -
GA ............... -- 5,238,000 20,020,000 1,570,000 --
Rental retail
Property -
AZ ............... -- 11,945,000 -- 1,023,000 --
Other
miscellaneous
properties
which are
individually
less than 5%
of total ......... 34,922,000 44,362,000 51,821,000 29,420,000 2,198,000
----------- ---------- ---------- ---------- ---------
$90,269,000 67,459,000 101,457,000 83,136,000 5,324,000
=========== ========== =========== ========== =========
<CAPTION>
GROSS AMOUNT
AT WHICH DATE OF
CARRIED AT ACCUMULATED COMPLETION OF DATE
CLOSE OF PERIOD DEPRECIATION(B) CONSTRUCTION ACQUIRED
----------------------------------------- -------------- --------------- ---------
DESCRIPTION LAND(A) BUILDINGS(A) TOTAL(C)
- - ------------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Rental
apartment
property - FL 2,046,000 13,872,000 15,918,000 9,946,000 1979 1977
Rental office
property - FL 4,319,000 12,996,000 17,315,000 3,250,000 Various 1980
Hotel - FL ........ 1,367,000 12,345,000 13,712,000 3,046,000 Various 1987
Rental
apartment
property - Under
CO ............... -- 29,871,000 29,871,000 446,000 Construction 1996
Rental office
property - Under
GA ............... 1,263,000 11,700,000 12,963,000 -- Construction 1997
Rental office
property - Under
GA ............... 5,239,000 21,589,000 26,828,000 984,000 Construction 1996
Rental retail
Property - Under
AZ ............... 11,945,000 1,023,000 12,968,000 -- Construction 1997
Other
miscellaneous
properties
which are
individually
less than 5%
of total ......... 49,632,000 78,169,000 127,801,000 14,232,000 Various Various
---------- ---------- ----------- ----------
75,811,000 181,565,000 257,376,000 31,904,000
========== =========== =========== ==========
</TABLE>
Notes:
(A) Includes related improvements and capitalized carrying costs.
(B) Depreciation is calculated using the straight-line method over the
estimated useful lives which vary from 15 to 40 years.
(C) The aggregate cost of the listed property for federal income tax purposes
was $220,000,000 at November 30, 1997.
(D) The listed real estate includes operating properties completed or under
construction.
(E) Reference is made to Notes 1, 5, and 7 of the consolidated financial
statements.
(F) The changes in the total cost of investment properties and accumulated
depreciation for the years ended November 30, 1997 are as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
Cost:
Balance at beginning of year ............................... $ 234,010 204,833 206,022
Additions, at cost ......................................... 76,921 34,410 6,808
Cost of real estate sold ................................... (55,381) (9,051) (8,304)
Transfers .................................................. 1,826 3,818 307
--------- ------- -------
Balance at end of year .................................... $ 257,376 234,010 204,833
========= ======= =======
Accumulated depreciation:
Balance at beginning of year ............................... $ 31,971 28,686 25,763
Depreciation and amortization charged against earnings ..... 5,195 5,170 4,992
Depreciation on real estate sold ........................... (5,262) (1,885) (2,069)
--------- ------- -------
Balance at end of year .................................... $ 31,904 31,971 28,686
========= ======= =======
</TABLE>
F-27
<PAGE>
LNR PROPERTY CORPORATION
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
FINAL PERIODIC
INTEREST MATURITY PAYMENT
DESCRIPTION RATE DATE TERMS
- - ----------------------------------------------------------- ------------ ----------- -----------------
<S> <C> <C> <C>
First mortgage notes secured real estate and other:
Office building - CA ...................................... 7.89% 2003 Varying payment
Convention center - NV .................................... Libor +300 2000 Interest Only
Hotel - NJ ................................................ 9.50% 1999 Varying payment
Retail center - TX ........................................ 10.00% 1998 Interest Only
Other ..................................................... 6%-10.5% 1998-2005 Various
Second mortgage notes secured by real estate:
Residential land - FL ..................................... Prime +2% 2001 Varying payment
Residential land - CA ..................................... 15% 1999 Varying payment
Residential land - NV ..................................... 15% 1999 Varying payment
Industrial land - CA ...................................... 25% 1999 Varying payment
Loan loss reserve .........................................
<CAPTION>
PRINCIPAL
AMOUNT
OF LOANS
SUBJECT TO
CARRYING DELINQUENT
FACE AMOUNT OF PRINCIPAL
PRIOR AMOUNT OF MORTGAGES OR
DESCRIPTION LIENS MORTGAGES (A)(B) INTEREST
- - ----------------------------------------------------------- ------------ --------------- --------------- -----------
<S> <C> <C> <C> <C>
First mortgage notes secured real estate and other:
Office building - CA ...................................... $ 16,788,000 12,227,000
Convention center - NV .................................... 45,000,000 45,000,000
Hotel - NJ ................................................ 4,500,000 4,194,000
Retail center - TX ........................................ 3,704,000 3,355,000
Other ..................................................... 5,613,000 4,295,000
------------ ----------
75,605,000 69,071,000
------------ ----------
Second mortgage notes secured by real estate:
Residential land - FL...................................... $ 314,436 4,400,000 4,400,000
Residential land - CA ..................................... 3,180,000 3,133,000
Residential land - NV ..................................... 7,760,000 7,690,000
Industrial land - CA ...................................... 4,648,000 4,593,000
------------ ----------
19,988,000 19,816,000
Loan loss reserve ......................................... (2,038,000)
------------ ----------
$ 95,593,000 86,849,000
============ ==========
</TABLE>
Notes:
(A) For Federal income tax purposes, the aggregate basis of the listed mortgages
was $86,849,000 at November 30, 1997.
(B) Carrying amounts are net of unamoritized discounts and valuation allowance.
(C) The changes in the carrying amounts of mortgages for the years ended
November 30, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- ----------------
<S> <C> <C> <C>
Balance at beginning of year ......... $ 64,441,000 53,551,000 55,893,000
Additions (deductions):
New mortgage loans, net ............. 67,319,000 77,369,000 42,572,000
Collections of principal ............ (20,085,000) (53,347,000) (44,495,000)
Transfers to Lennar Corporation ..... (24,918,000) (7,063,000) (1,779,000)
Amortization of discount ............ 92,000 488,000 344,000
Deferred income recognized .......... 0 0 1,066,000
Other ............................... 0 (6,557,000) (50,000)
------------- ----------- -----------
Balance at end of year ............... $ 86,849,000 64,441,000 53,551,000
============= =========== ===========
</TABLE>
F-28
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
10.2 LNR Property Corporation Employee Stock Ownership/401(k) Plan.
10.3 Shared Facilities Agreement between LNR Property Corporation and
Lennar Corporation.
10.4 Partnership Agreement by and between Lennar Land Partners Sub, Inc. and
LNR Land Partners Sub, Inc.
10.5 Revolving Credit Agreement dated as of December 5, 1997, among LNR
Property Corporation and certain subsidiaries and Bank of America
National Trust and Savings Association, as lender and agent.
10.6 Master Repurchase Agreement dated as of December 8, 1997, between LNR
Sands Holdings, Inc. and Goldman Sachs Mortgage Company.
10.7 Reverse Repurchase Agreement dated as of October 21, 1997 between DLJ
Mortgage Capital, Inc. and LNR Property Corporation, Lennar Capital
Services, Inc., Nevada Securities Holdings, Inc. Lennar Securities
Holdings, Inc., Lennar MBS, Inc. and LFS Asset Corp.
10.8 Amended and Restated Credit Agreement dated as of October 31, 1997,
between Lennar Capital Services Inc. and Lennar MBS, Inc. as borrowers
and Nationsbank of Texas, N.A. as lender.
10.9 Credit Agreement among Lennar Land Partners as borrower, and the First
National Bank of Chicago, et al.
10.10 Revolving Credit Agreement dated as of November 6, 1997, by and between
Lennar Capital Services, Inc. and The Bank of New York.
10.11 Reverse Repurchase Agreement dated as of June 7, 1996, between CS First
Boston (Hong Kong) Limited and Lennar Financial Services, Inc., Lennar
MBS, Inc., Lennar Securities Holdings, Inc., and LFS Asset Corp.
11.1 Statement Regarding Computation of Per Share Earnings.
21.1 List of subsidiaries.
27.1 Financial Data Schedule.
EXHIBIT 10.2
LNR PROPERTY CORPORATION EMPLOYEE STOCK OWNERSHIP/401(k) PLAN
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1.
DEFINITIONS .......................... 2
1.1 ACCOUNTS .................................................... 2
1.2 ACQUIRED COMPANY ............................................ 3
1.3 ACQUISITION LOAN ............................................ 3
1.4 ACTUAL CONTRIBUTION PERCENTAGE .............................. 3
1.5 ACTUAL DEFERRAL PERCENTAGE .................................. 3
1.6 ANNIVERSARY DATE ............................................ 4
1.7 BOARD ....................................................... 4
1.8 CODE ........................................................ 4
1.9 COMPANY ..................................................... 4
1.10 COMPANY STOCK ............................................... 4
1.11 COMPENSATION ................................................ 4
1.12 DEFERRED RETIREMENT DATE .................................... 4
1.13 DISABILITY .................................................. 5
1.14 EARLY RETIREMENT DATE ....................................... 5
1.15 ELIGIBLE EMPLOYEE ........................................... 5
1.16 EMPLOYEE .................................................... 5
1.17 EMPLOYER .................................................... 5
1.18 ENROLLMENT DATE ............................................. 6
1.19 ERISA ....................................................... 6
1.20 ESOP ........................................................ 6
1.21 FINANCED SHARES ............................................. 6
1.22 FINANCIAL HARDSHIP .......................................... 6
1.23 FULLY VESTED ................................................ 6
1.24 HIGHLY COMPENSATED EMPLOYEE ................................. 6
1.25 415 COMPENSATION ............................................ 7
1.26 HOUR OF SERVICE ............................................. 8
1.27 INDEPENDENT ADVISOR ......................................... 8
1.28 INVESTMENT MANAGER .......................................... 9
1.29 MATCHING CONTRIBUTION ....................................... 9
1.30 NONVESTED ................................................... 9
1.31 NON-HIGHLY COMPENSATED EMPLOYEE ............................. 9
1.32 NORMAL RETIREMENT AGE ....................................... 9
1.33 NORMAL RETIREMENT DATE ...................................... 9
1.34 ONE-YEAR BREAK-IN SERVICE ................................... 9
1.35 PARTICIPANT ................................................. 10
1.36 PLAN ........................................................ 10
i
<PAGE>
PAGE
----
1.37 PLAN YEAR ................................................... 10
1.38 PREDECESSOR PLAN ............................................ 11
1.39 SALARY DEFERRAL ARRANGEMENT ................................. 11
1.40 SALARY DEFERRAL CONTRIBUTION ................................ 11
1.41 TERMINATION OF EMPLOYMENT ................................... 11
1.42 TRUST ....................................................... 11
1.43 TRUSTEES .................................................... 11
1.44 VALUATION DATE .............................................. 12
1.45 YEAR-OF-SERVICE ............................................. 12
SECTION 2.
PARTICIPATION ......................... 12
2.1 COMMENCEMENT OF PARTICIPATION ............................... 12
2.2 OBLIGATION OF PARTICIPANT ................................... 12
2.3 TERMINATION OF PARTICIPATION ................................ 13
SECTION 3.
CONTRIBUTIONS ......................... 13
3.1 ESOP CONTRIBUTION ........................................... 13
3.2 SALARY DEFERRAL ............................................. 14
3.3 MATCHING AND VOLUNTARY CONTRIBUTIONS ........................ 16
3.4 ROLLOVER CONTRIBUTION ....................................... 19
3.5 ANNUAL LIMITATION ON CONTRIBUTIONS .......................... 19
SECTION 4.
VESTING ............................ 20
4.1 ESOP AND MATCHING ACCOUNTS .................................. 20
4.2 CAPITAL ACCUMULATION, SALARY DEFERRAL, VOLUNTARY
CONTRIBUTION AND ROLLOVER ACCOUNTS .......................... 21
SECTION 5.
FORFEITURES .......................... 21
5.1 FORFEITURES ................................................. 21
5.2 ALLOCATION .................................................. 21
5.3 RESTORATION OF BENEFITS ..................................... 22
SECTION 6.
ii
<PAGE>
PAGE
----
INVESTMENT IN FUNDS ...................... 22
6.1 INVESTMENT FUNDS ............................................ 22
6.2 ESOP AND CAPITAL ACCUMULATION ACCOUNTS ...................... 22
6.3 INVESTMENT PERFORMANCE ...................................... 25
6.4 INDEPENDENT APPRAISER ....................................... 26
SECTION 7.
DISTRIBUTIONS ......................... 26
7.1 DISTRIBUTIONS DURING EMPLOYMENT ............................. 26
7.2 DISTRIBUTIONS UPON SEPARATION FROM SERVICE .................. 26
7.3 DISTRIBUTEE'S RIGHT TO DEMAND COMPANY STOCK ................. 29
7.4 INCOMPETENCE OF DISTRIBUTEE ................................. 40
7.5 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN .............. 40
7.6 PUT OPTION .................................................. 40
7.7 RESTRICTIONS ................................................ 41
SECTION 8.
AMENDMENT AND TERMINATION .................. 41
8.1 AMENDMENT ................................................... 41
8.2 TERMINATION, PARTIAL TERMINATION, OR COMPLETE DISCONTINUANCE
OF CONTRIBUTIONS ............................................ 42
8.3 PERMISSIBLE REVERSIONS ...................................... 42
SECTION 9.
CLAIMS ............................ 43
SECTION 10.
TO HEAVY PROVISION ...................... 44
10.1 APPLICATION OF TOP-HEAVY PROVISIONS ......................... 44
10.2 KEY EMPLOYEES ............................................... 47
10.3 NON-KEY EMPLOYEE ............................................ 48
10.4 ADDITIONAL RULES ............................................ 48
10.5 VESTING REQUIREMENTS ........................................ 48
10.6 MINIMUM BENEFIT ............................................. 49
10.7 CEILING ON INCLUDIBLE COMPENSATION .......................... 49
SECTION 11.
iii
<PAGE>
PAGE
----
MISCELLANEOUS ........................ 49
11.1 LIMITATION OF RIGHTS; EMPLOYMENT RELATIONSHIP .............. 49
11.2 MERGER; TRANSFER OF ASSETS ................................. 49
11.3 PROHIBITION AGAINST ASSIGNMENT .............................. 50
11.4 APPLICABLE LAW; SEVERABILITY ................................ 51
11.5 RELIANCE UPON COPY OF PLAN .................................. 51
11.6 GENDER AND NUMBER; CAPTIONS OR HEADINGS .................... 51
SECTION 12.
ADMINISTRATIVE COMMITTEE .................. 51
12.1 APPOINTMENT OF COMMITTEE .................................... 51
12.2 COMMITTEE ORGANIZATION ...................................... 52
12.3 COMMITTEE MEETINGS .......................................... 52
12.4 COMMITTEE FUNCTIONS AND POWERS .............................. 52
12.5 COMMITTEE ACTIONS CONCLUSIVE ................................ 53
12.6 COMMITTEE APPOINTMENT OF AGENTS ............................. 53
12.7 RELIANCE ON OPINIONS, ETC. .................................. 53
12.8 RECORDS AND ACCOUNTS ........................................ 54
12.9 PAYMENT OF EXPENSE .......................................... 54
12.10 LIABILITY OF THE ADMINISTRATIVE COMMITTEE ................... 54
SECTION 13.
TRUST AGREEMENT ....................... 55
13.1 THE TRUST AGREEMENT ......................................... 55
13.2 NO DIVERSION OF CORPUS OR INCOME ............................ 55
iv
<PAGE>
PREAMBLE
The following are the provisions of the LNR PROPERTY CORPORATION
EMPLOYEE STOCK OWNERSHIP/401(k) PLAN (the "Plan") as it is hereinafter set
forth, and as it may hereinafter from time to time be amended by the LNR
PROPERTY CORPORATION, a corporation formed under the laws of Delaware (the
"Employer").
Employer was established in 1997, as a result of a reorganization of
Lennar Corporation. Pursuant to the reorganization, Employer was created and its
stock distributed to Lennar Corporation shareholders.
The Plan is based upon the LENNAR CORPORATION EMPLOYEE STOCK OWNERSHIP
PLAN (the "Predecessor Plan") which was originally adopted effective November 1,
1983 and subsequently amended and restated effective December 1, 1989 and again
on December 31, 1994. Assets and liabilities shall be transferred from the
Predecessor Plan to the Plan for all Participants in the Plan who have account
balances in the Predecessor Plan. Any Participant in this Plan on the Effective
Date, who was a participant in the Predecessor Plan as of the date immediately
preceding the Effective Date, shall be immediately eligible to participate in
the Plan and shall be credited with all Years of Service and all 1997 Hours of
Service earned at Lennar Corporation.
The Employer now desires to adopt the Plan in connection with the
reorganization of Lennar Corporation and the Employer. In order to accomplish
this result, the Employer does hereby adopt the LNR PROPERTY CORPORATION
EMPLOYEE STOCK OWNERSHIP/401(k) PLAN.
1
<PAGE>
SECTION 1.
DEFINITIONS
1.1 ACCOUNTS
(a) CAPITAL ACCUMULATION ACCOUNT
The account of a Participant which is credited with
contributions pursuant to Section 7.1 (a)(I).
(b) ESOP ACCOUNT
(I) GENERAL ACCOUNT
The account of a Participant which is
credited with ESOP Contributions pursuant to
Section 3.1.
(II) SUB-ACCOUNTS
The ESOP Account shall be divided into the
following two sub-accounts for accounting
purposes:
(A) COMPANY COMMON STOCK SUB-ACCOUNT
(i) This Sub-Account shall be
credited with the portion
of Participant's ESOP
Account which is invested
in Company Common Stock
through the company Common
Stock Fund pursuant to
Section 6.1 (a).
(B) OTHER INVESTMENTS SUB-ACCOUNT
(i) This Sub-Account shall be
credited with the portion
of the Participant's ESOP
Account which is invested
in anything other than
Company Common Stock
through the Company Common
Stock Fund pursuant to
Section 6.1 (a).
(c) LOAN SUSPENSE ACCOUNT
The account of the Plan which contains all assets
acquired by "Acquisition Loans."
2
<PAGE>
(d) MATCHING ACCOUNT
The account of a Participant which is credited with
matching contributions made pursuant to Section
3.3(a).
(e) ROLLOVER ACCOUNT
The account of a Participant which is credited with
rollover deposits made pursuant to Section 3.4.
(f) SALARY DEFERRAL ACCOUNT
The account of a Participant which is credited with
Salary Deferral Contributions made pursuant to
Section 3.2(a).
(g) VOLUNTARY CONTRIBUTION ACCOUNT
The account of a Participant which is credited with
Voluntary Contributions made pursuant to Section
3.3(b).
1.2 ACQUIRED COMPANY
A business the Company acquires through the purchase and/or
exchange of assets, equity or a combination of both.
1.3 ACQUISITION LOAN
A loan used by the Company to finance the acquisition of
Company Stock for the Trust pursuant to Section 6.1 (a)(I).
1.4 ACTUAL CONTRIBUTION PERCENTAGE
The ratio of:
(a) The sum of Matching Contributions and Voluntary
Contributions; to
(b) Compensation for the Plan Year, for each Eligible
Employee.
1.5 ACTUAL DEFERRAL PERCENTAGE
The ratio of:
(a) Salary Deferral Contributions; to
3
<PAGE>
(b) Compensation for the Plan Year for each Eligible
Employee.
1.6 ANNIVERSARY DATE
The last day of each Plan Year.
1.7 BOARD
The Board of Directors of the Company.
1.8 CODE
The Internal Revenue Code of 1986, as amended.
1.9 COMPANY
LNR Property Corporation, a Delaware corporation, or any
successor to it in ownership of all or substantially all of
its operating assets which adopts and continues the Plan by
operation of law or with the approval of the Board.
1.10 COMPANY STOCK
Shares of voting common stock issued by the Company which
either (A) are readily tradable on an established securities
market, or (B) have a combination of voting power and dividend
rights equal to or in excess of that class of common stock of
the Company having the greatest voting power and dividend
rights.
1.11 COMPENSATION
The total wages or salary paid within the Plan Year by the
Employer to a Participant as reported to the Internal Revenue
Service on Form W-2 plus any contributions elected pursuant to
Section 3.2. "Compensation" may not exceed $150,000 per year,
or such higher amount to which such amount shall be adjusted
annually in accordance with regulations prescribed by the
Secretary of the Treasury pursuant to Code Section 415(d) to
reflect increases in the cost-of-living.
1.12 DEFERRED RETIREMENT DATE
The actual retirement date of a Participant who has already
attained his Normal Retirement Age.
4
<PAGE>
1.13 DISABILITY
A mental or physical condition which is total and permanent
and prevents a Participant from performing the Participant's
usual duties as an Employee. The Administrative Committee,
based on medical evidence deemed by it to be competent, shall
be the sole judge of the Disability of a Participant, and its
determinations shall be final and conclusive.
1.14 EARLY RETIREMENT DATE
Any date on which the Participant retires prior to the date
such Participant attains age sixty-five (65) which is on or
after the later of:
(a) the day the Participant attains age sixty (60), or
(b) the day the Participant completes twenty-five (25)
Years-of-Service.
1.15 ELIGIBLE EMPLOVEE
An Employee who may participate in the Plan because he has
attained the age of 21.
1.16 Employee
Any individual, including any officer, employed by the Employer,
whether paid a regular weekly, bi-weekly, semimonthly, monthly,
or annual rate of salary, or paid on an hourly basis only for
performance as a managerial, administrative, technical,
professional or clerical employee, or paid in whole or in part
on a commission basis (but not including any other individual
employed on an hourly or piecework basis), and who is employed
in the United States, or if employed abroad, is a citizen of the
United States and is covered under an agreement entered into by
the Employer under Section 3121(1) of the Code. The term
Employee shall not include a member of the Board who is active
only in that capacity, or any individual covered by a collective
bargaining agreement between the Employer and a union (except as
may be provided in such collective bargaining agreement), or any
individual who is an independent contractor or a leased employee
under Section 414(n) of the Code.
1.17 EMPLOVER
The Company and all other entities which are part of a
controlled group, as defined at Code Sections 414(b) and 414(c),
of which the Company is part.
5
<PAGE>
1.18 ENROLLMENT DATE
Enrollment Date means January 1 or July I of each Plan Year.
1.19 ERISA
The Employee Retirement Income Security Act of 1974, as
amended.
1.20 ESOP
Employee Stock Ownership Plan as defined in Section 4975(e)(7)
of the Internal Revenue Code.
1.21 FINANCED SHARES
Shares of Company Stock acquired by the Trust with the
proceeds of an Acquisition Loan.
1.22 FINANCIAL HARDSHIP
An immediate and heavy financial need of a Participant as
described in Treasury Regulation 1.404(k)-l(d)(2).
1.23 FULLY VESTED
When a Participant's nonforfeitable percentage in all his
Accounts is 100% per Section 4.
1.24 HIGHLY COMPENSATED EMPLOYEE
Any Eligible Employee who:
(a) Performs service for the Employer during the Plan
Year and who, during the prior Plan Year received
Compensation from the Employer in excess of $80,000
(as adjusted pursuant to Code Section 415(d));
(b) Is a 5% owner at any time during the prior Plan Year
or Plan Year; or
(c) Separated from service (or was deemed to have
separated) prior to the Plan Year, performs no
service for the Employer during the Plan Year, and
was a Highly Compensated Employee for either the Plan
Year he terminated employment or any Plan Year ending
on or after his 55th Birthday.
6
<PAGE>
The determination of Highly Compensated Employees may be made
by the Committee on the basis of the "top-paid group" election
or the substantiation guidelines in accordance with such
regulations, notices or other guidance issued under Section
414(q) of the Code.
1.25 415 COMPENSATION
A Participant's wages, salaries, fees for professional service
and other amounts of personal services actually rendered in
the course of employment with an Employer maintaining the Plan
(including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips and bonuses
and in the case of a Participant who is an Employee within the
meaning of Code Section 401(c)(1) and the regulations
thereunder, the Participant's earned income (as described in
Code Section 401(c)(2) and the regulations thereunder) paid or
accrued during the "limitation year."It shall exclude:
(a) Contributions made by the Employer to a plan of
deferred compensation to the extent that, before the
application of the Code Section 415 limitations to
the Plan,the contributions are not includible in the
gross income of the Employee for the taxable year in
which contributed,
(b) Employer contributions made on behalf of an Employee
to a simplified employee pension plan described in
Code Section 408(k) to the extent such contributions
are deductible by the Employee under Code Section
219(a);
(c) Any distributions from a plan of deferred
compensation regardless of whether such amounts are
includible in the gross income of the Employee when
distributed except any amounts received by an
Employee pursuant to an unfunded nonqualified plan of
the Employee's Employer to the extent such amounts
are includible in the gross income of the Employee;
(d) Amounts realized from the exercise of a nonqualified
stock option or when restricted stock (or property)
held by an Employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture;
(e) Amounts realized from the sale, exchange or other
dispositions of stock required under a qualified
stock option;
(f) Other amounts which receive special tax benefits,
such as premiums for group term life insurance (but
only to the extent that the premiums are not
includible in the gross income of the Employee).
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However, notwithstanding the foregoing, for Plan Years
beginning after December 31, 1997, the term "415 Compensation"
shall include any elective deferral as defined in Section
402(g)(3) of the Code, and any amount which is contributed or
deferred by the Company at the election of the Participant and
is not includible in the gross income of the Participant by
reason of Section 125 of the Code.
1.26 HOUR OF SERVICE
"Hour of Service" means:
(a) Each hour for which an Employee is paid or entitled
to payment by the Company for the performance of
duties;
(b) Each hour for which an Employee is paid or entitled
to payment by the Company for reasons such as
vacation, sickness or disability, other than for the
performance of duties. These hours shall be credited
to the Employee for the computation period or periods
in which payment is actually made for amounts payable
to the Employee; and
(c) Each hour for which back pay (irrespective of
mitigation of damages) has been either awarded or
agreed to by the Company. These hours shall be
credited to the Employee for the computation period
or periods to which the award or agreement pertains,
rather than the computation period in which the
award, agreement or payment is made.
In applying this definition, any ambiguity shall be resolved
consistent with the rules set out at Department of Labor Reg.
Sections 2530.200b-2(b) and (c).
1.27 INDEPENDENT ADVISOR
Any person, firm or corporation which has been appointed by
the Administrative Committee pursuant to Section 12.4(k) to
provide advice with respect to investment of the funds in any
or in all of the Investment Funds described in Section 6.1.
An independent advisor must be one of the following:
(a) Registered as an investment advisor under the
Investment Advisors Act of 1940;
(b) A bank, defined under ERISA, or
(c) An insurance company qualified under the laws of more
than one state to manage, acquire or dispose of any
asset of a Plan.
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1.28 INVESTMENT MANAGER
Any person, firm or corporation which satisfies the
requirements of Section 3(38) of ERISA.
1.29 MATCHING CONTRIBUTION
The contribution described in Section 3.3(a).
1.30 NONVESTED
When a Participant is not Fully Vested.
1.31 NON-HIGHLY COMPENSATED EMPLOVEE
Any Eligible Employee who is not a Highly Compensated Employee
under Plan Section 1.25.
1.32 NORMAL RETIREMENT AGE
For all Participants who were participants in the Predecessor
Plan on November 30, 989, a Participant's 65th birthday. For
all other Participants, the later of (a) age sixty-five (65),
or (b) the fifth (5th) anniversary of the date on which a
Participant commenced participation.
1.33 NORMAL RETIREMENT DATE
The first day of the calendar month in which a Participant
attains Normal Retirement Age and retires.
1.34 ONE-YEAR BREAK-IN-SERVICE
The twelve month period following an Anniversary Date in which
the Participant does not complete more than five hundred (500)
Hours of Service. Notwithstanding the foregoing, solely for
the purpose of determining whether a Participant has incurred
a One-Year Break-In-Service, Hours of Service shall be
recognized for a "maternity leave of absence."
A "maternity leave of absence" shall mean an absence from work
for any period by reason of the Employee's pregnancy, birth of
the Employee's child, placement of a child with the Employee
in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period
immediately following such birth or placement. For this
purpose, Hours of Service shall be credited for the
computation period in which absence from work begins, only if
credit therefore is necessary to
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prevent the Employee from incurring a One-Year
Break-in-Service, or, in any other case, in the immediately
following computation period. The Hours of Service credited
for a maternity leave of absence shall be those that normally
would have been credited but for such absence, or, in any case
in which the Administrative Committee is unable to determine
such hours normally credited, eight (8) Hours of Service per
day. The total Hours of Service required to be credited for
any single maternity or leave of absence shall not exceed 501.
1.35 PARTICIPANT
Any Eligible Employee who has commenced participation in the
Plan in accordance with the provisions of Section 2 of the
Plan.
1.36 PLAN
LNR Property Corporation Employee Stock Ownership/401 (k)
Plan. The portion of the plan consisting of the Capital
Accumulation Accounts, the ESOP Accounts, and the Loan
Suspense Account is designated as an ESOP as defined in
Section 1.20 above, and is designed to be invested primarily
in Company Stock.
1.37 PLAN YEAR
Plan Year means a twelve (12) month period commencing each
January 1.
In 1997, the Plan will have a short plan year from the
Effective Date through December 31, 1997.
The short plan year
(a) is an additional computation period in computing
Employee's eligibility,
(b) is an additional computation period in computing
Year-of-Service,
(c) is an additional year of participation in computing
Normal Retirement Age.
For the month of December, 1997, the Company at its sole
discretion may, but shall not be obligated to, contribute to
each Participant's ESOP Account cash or stock equal to a
percentage of the Participant's Compensation earned during the
short plan year. The percentage of Compensation for the short
plan year ended December 31, 1997 will be the same for each
Participant. The Contribution made hereunder shall be made as
of the last day of December, 1997 and shall be made only for
those Participants who are Employees as of such date.
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1.38 PREDECESSOR PLAN
The Plan maintained by Lennar Corporation as of the effective
date of the Plan.
1.39 SALARY DEFERRAL AGREEMENT
A written agreement between a Participant and the Company
which provides that the Participant's Compensation will be
reduced by a whole percentage amount of such Compensation, not
less than 1% nor more than 15%, and the Company will
contribute an equivalent amount not less frequently than
monthly to the Participant's Salary Deferral Account. A
Participant may elect to increase or decrease the amount by
which his Compensation is to be reduced. If he has already
revoked a Salary Deferral Agreement, he may enter into a new
Salary Deferral Agreement as of any Enrollment Date. The
elections described above must be made on a written form
prescribed or approved by the Administrative Committee.
1.40 SALARY DEFERRAL CONTRIBUTION
The contribution described in Section 3.2(a).
1.41 TERMINATION OF EMPLOYMENT
(a) The discharge of an Employee by his Employer, whether
or not for cause and whether or not justified,
(b) A statement made by an Employee to the Employer that
he is quitting followed by the Employee's failure to
report to work, or
(c) The unexplained failure of an Employee to report to
work when expected to report.
1.42 TRUST
LNR Property Corporation Employee Stock Ownership/401(k) Plan
Trust, created by the Trust Agreement entered into pursuant to
Section 13 between the Company and the Trustees.
1.43 TRUSTEES
The persons and/or bank or trust company which are named as
Trustees in the Trust Agreement.
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1.44 Valuation Date
The date the Trustee values the assets held in the Funds
described in Section 6.1. Such dates shall be March 31, June
3O, September 30, and December 31 of each Plan Year or more
frequently if determined desirable by the Administrative
Committee.
1.45 YEAR-OF-SERVICE
A computation period during which an Employee has completed at
least 1000 Hours of Service. For vesting purposes, the
computation period shall be a Plan Year.
In determining Years-of-Service for any participant in the
Predecessor Plan, see the Preamble to the Plan. In determining
Years-of-Service in Section 1.14(b), 4.1 and accumulated hours
of service in Section l.l5(b), service performed for an
Acquired Company prior to its acquisition may, at the Board's
sole discretion, be counted as service performed for the
Company. In no case shall the Board exercise its discretion to
discriminate in favor highly compensated employees, as defined
in Code Section 414(q), of the Acquired Company.
SECTION 2.
PARTICIPATION
2.1 COMMENCEMENT OF PARTICIPATION
An Employee shall become a Participant in the Plan on the next
January 1 or July 1 after he first becomes an Eligible
Employee.
2.2 OBLIGATION OF PARTICIPANT
When an Employee becomes eligible to participate, and
thereafter from time to time, the Administrative Committee may
require the Employee to furnish such information and fill out,
sign and file such forms and documents as may be reasonably
required for the administration of the Plan, including
beneficiary designation forms, evidence of age and marital
status, Salary Deferral Agreements, etc. If a Participant does
not comply with any such reasonable requirements and if such
non-compliance makes it impossible or unreasonably burdensome
with respect to such Participant to administer the Plan,
neither the Administrative Committee, the Employer, the
Trustees, nor any other person, shall be obligated to
administer the Plan for such Participant until such
information is properly furnished, and no such person shall
incur liability to such Participant or his beneficiary to the
extent that any intended Plan benefit has not been obtained or
is not available because of the Participant's or beneficiary's
failure to furnish such information and fill out, sign and
file such documents.
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2.3 TERMINATION OF PARTICIPATION
(a) Participation in the Plan continues until a Participant's
Normal, Early or Deferred Retirement Date, death, Disability,
or a One-Year-Break-In-Service following Termination of
Employment.
(b) RE-EMPLOYMENT
(I) VESTED EMPLOYEE
If a re-employed Employee had a non-forfeitable right
to a portion of his accrued benefit at the time he
terminated employment, then such Employee shall
commence participation in the Plan immediately upon
reemployment.
(II) NONVESTED EMPLOYEE
If a re-employed Employee had only a forfeitable
right to his accrued benefit at the time he
terminated employment, then only if his number of
consecutive One-Year-Breaks-In-Service is less than
five (5) will he be allowed to commence participation
in the Plan immediately upon re-employment. Otherwise
he shall be treated as a new Employee for purposes of
eligibility to participate.
SECTION 3.
CONTRIBUTIONS
3.1 ESOP CONTRIBUTION
(a) CONTRIBUTION IF THERE ARE NO ACQUISITION LOANS
In a Plan Year in which there are no Acquisition Loans
outstanding, the Company at its sole discretion may, but shall
not be obligated to, contribute to each Participant's ESOP
Account cash or stock equal to a percentage of the
Participant's Compensation. The Company intends to advise the
Participants at the beginning of each Plan Year of the amount
of contribution it intends to make to the Plan for the year.
The intended contribution shall be contingent upon the Board's
determination at the end of the Plan Year that profits for the
year justify such contributions. The percentage of
Compensation for the Plan Year will be the same for each
Participant. Contributions made hereunder shall be made as of
the last day of each Plan Year and shall be made only for
Participants who are Employees as of such date.
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(b) CONTRIBUTION IF THERE ARE ACQUISITION LOANS
In a Plan Year in which there are Acquisition Loans
outstanding, Employer Contributions shall be made in cash in
such amounts and at such times as may be needed to provide the
Trustees with cash sufficient to pay any currently maturing
obligations under an Acquisition Loan. Upon receipt of
payment, a number of Financed Shares will be released from the
Loan Suspense Account for allocation to Participants' ESOP
Accounts in an amount equal to:
(I) The number of encumbered securities held immediately
before the release multiplied by,
(II) The principal and interest paid for the year, and
divided by,
(III) The sum of:
(A) (II) above plus
(B) the principal and interest to be paid in all
future years.
If the interest under the loan is variable, then the interest
to be paid in all future years will be computed using the
interest rate applicable as of the end of the Plan Year.
The Financed Shares released above shall be allocated among the
Participants' accounts based upon the proportion that each such
Participant's Compensation bears to the Compensation of all such
Participants for the Plan Year. Contributions made hereunder shall be
made as of the last day of each Plan Year and shall be made only for
Participants who are Employees as of such date.
3.2 SALARY DEFERRAL
(a) CONTRIBUTION:
The Company will contribute to a Participant's Salary Deferral
Account the amount by which his Compensation was reduced
pursuant to his Salary Deferral Agreement with the Company.
Such contribution shall be made no later than the fifteenth
business day of the month following the month in which such
amounts would otherwise have been payable to the Participant
in cash. Such contribution for any Participant shall be
limited under Code Section 402(g) for the Participant's
taxable year.
(b) LIMITATION:
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(I) Salary Deferral contributions for any Plan Year must
satisfy at least one of the following tests found in
Code Section 401(k)(3):
(A) The average of the Actual Deferral
Percentages for all Highly Compensated
Employees does not exceed the product of
1.25 and the average of the Actual Deferral
Percentages of all Non-Highly Compensated
Employees for the preceding Plan Year; or
(B) The excess of the average of the Actual
Deferral Percentages for Highly Compensated
Employees over the average of the Actual
Deferral Percentages for Non-Highly
Compensated Employees for the preceding Plan
Year is not more than 2 percentage points,
and the average of the Actual Deferral
Percentages for the Highly Compensated
Employees does not exceed twice the average
of the Actual Deferral Percentages for the
Non-Highly Compensated Employees for the
preceding Plan Year.
Notwithstanding the foregoing, the Committee may elect to
determine the permissible Actual Deferral Percentage for
Highly Compensated Employees for any plan year beginning on
or after January 1, 1997 on the basis of the Actual Deferral
Percentage of the group of Non-Highly Compensated Employees
for the current Plan Year rather than the preceding Plan
Year, in accordance with such regulations, notices or other
guidance issued under Section 401(k) of the Code.
For purposes of determining the Actual Deferral Percentage,
any plans which are treated as one plan for purposes of
section 410(b) shall be treated as one plan. If a Highly
Compensated Employee participates in two or more plans of an
Employer, all deferrals under those plans shall be aggregated
for purposes of determining the Actual Deferral Percentage of
such Highly Compensated Employee.
(c) DISTRIBUTION OF EXCESS SALARY DEFERRAL CONTRIBUTIONS:
(I) REDUCING THE EXCESS.
If the average of the Actual Deferral Percentage for
the Highly-Compensated Employees exceeds the Section
3.2(b) limits, then the Actual Deferral Percentage
of the Highly Compensated Employee with the highest
Actual Deferral Percentage is reduced to the extent
required to:
(A) Enable the arrangement to satisfy the
Section 3.2(b) limit; or
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(B) Cause such member's Actual Deferral
Percentage to equal the Percentage of the
member with the next highest Actual
Deferral Percentage.
This process must be repeated until one of the
Section 3.2(b) limits is satisfied.
(II) AMOUNT TO DISTRIBUTE
Once the process described above is completed, the
total dollar amount of excess deferrals shall be
determined. This amount shall be distributed in
accordance with a leveling procedure under which the
dollar amount of Salary Deferrals of the Highly
Compensated Employee with the highest dollar amount
of Salary Deferrals shall be reduced to the extent
required to distribute the total amount of excess
deferrals or, if it results in a lower reduction, to
the extent required to cause such Highly Compensated
Employee's dollar amount of Salary Deferrals to
equal the dollar amount of Salary Deferrals of the
Highly Compensated Employee with the next highest
dollar amount of Salary Deferrals. This distribution
procedure shall be repeated until all excess
deferrals have been distributed.
(III) DISTRIBUTION
The amount determined in 3.2(c)(I) and (II) above
shall be distributed to the Participant within two
and one-half months after the close of the Plan
Year, but in no case shall any distributions occur
more than twelve months after the close of the Plan
Year.
3.3 MATCHING AND VOLUNTARY CONTRIBUTIONS
(a) MATCHING CONTRIBUTIONS
The Company at its sole discretion may, but shall not be
obligated to, contribute to the Participants' Matching
Accounts. The Company may advise the Participants at the
beginning of each Plan Year, within a range of amounts, the
contribution it intends to make to the Plan for the year. The
actual amount of the contribution, if any, shall be
determined by the Board after the end of the Plan Year, based
on estimated Company profits for the fiscal year ending
within the Plan Year, which shall be made without regard to
the range of the intended contribution established at the
beginning of the Plan Year. Such contribution shall be
contingent upon the Participant having made a contribution
during the Plan Year to his Salary Deferral Account. The
amount of the Matching Contribution will be a percentage of
the Participant's Salary Deferral
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Contribution. The same percentage will be used for each
Participant who qualifies to receive a Matching
Contribution for that Plan Year.
(b) VOLUNTARY CONTRIBUTIONS
A Participant may, in addition to amounts elected
pursuant to Section 3.2(a), designate that a percentage
of his Compensation for the Plan Year be credited to his
Voluntary Contribution Account as non-deductible
contributions.
(c) ANNUAL LIMIT ON THE AGGREGATION OF MATCHING AND
VOLUNTARY CONTRIBUTIONS
Pursuant to Code Section 401 (m)(2), the average of the
Actual Contribution Percentages for the Highly
Compensated Employees shall not exceed the greater of
(I) or (II) as follows:
(I) The average of the Actual Contribution
Percentages for the Non-Highly Compensated
Employees for the preceding Plan Year
multiplied by one and one-quarter (1.25); or
(II) The average of the Actual Contribution
Percentages for the Non-Highly Compensated
Employees for the preceding Plan Year
multiplied by two (2); subject, however, to the
additional limitation that the average of the
Actual Contribution Percentages for the Highly
Compensated Employees may not exceed the
average of the Actual Contribution Percentages
for the Non-Highly Compensated Employees for
the preceding Plan Year by more than two (2)
percentage points.
The limitation of this Section 3.3(c) shall be applied
for each Plan Year. The limit in Section 3.3(c)(II)
shall be adjusted in accordance with Treasury Regulation
Section 1.401(m)-2 to avoid duplicate use of the limit
for any Highly Compensated Employee in violation of Code
Section 401(m)(9).
Notwithstanding the foregoing, the Committee may elect
to determine the permissible Actual Contribution
Percentage for Highly Compensated Employees for any
Plan Year beginning on or after January 1, 1997 on the
basis of the Actual Contribution Percentage of the group
of Non-Highly Compensated Employees for the current Plan
Year rather than the preceding Plan Year, in accordance
with such regulations, notices or other guidance issued
under Section 401(m) of the Code.
(d) REALLOCATING CONTRIBUTIONS OVER THE ANNUAL LIMIT:
(I) METHOD OF REALLOCATION
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Pursuant to Treasury Regulation Section 1.401
(m)-l(e)(2), if the average of the Actual
Contribution Percentages for the Highly
Compensated Employees exceeds the Section 3.3(c)
limit, then the Actual Contribution Percentage of
the Highly Compensated Employee with the highest
Actual Contribution Percentage is reduced to the
extent required to:
(A) Enable the arrangement to satisfy the
Section 3.3(c) limit; or
(B) Cause such Employee's Actual
Contribution Percentage to equal the
Percentage of the Highly Compensated
Employee with the next highest Actual
Contribution Percentage.
This process must be repeated until the Section
3.3(c) limit is satisfied.
II. AMOUNT TO REALLOCATE
Once the leveling procedure has been completed,
the total dollar amount of excess aggregate
contributions shall be determined. This amount
shall be distributed in accordance with a
leveling procedure under which the dollar amount
of an Employee's Matching and Voluntary
Contributions of the Highly Compensated Employee
with the highest dollar amount of Matching and
Voluntary Contributions shall be reduced to the
extent required to distribute the total amount of
excess aggregate contributions or, if it results
in a lower reduction, to the extent required to
cause such Highly Compensated Employee's dollar
amount of Matching and Voluntary Contributions to
equal the dollar amount of Matching and Voluntary
Contributions of the Highly Compensated Employee
with the next highest dollar amount of Matching
and Voluntary Contributions.
This distribution procedure shall be repeated
undl all excess aggregate contributions have been
distributed. In no case shall the amount of
excess aggregate contributions with respect to
any Highly Compensated Employee exceed the
Matching and Voluntary Contributions made on
behalf of such Employee in any Plan Year.
(e) REALLOCATION OF EXCESS OVER ANNUAL LIMIT
The Trustees shall reduce the Employee's Voluntary and
Matching Contributions for the Plan Year in the following
order until the amount to be reallocated, determined in
Section 3.3(d)(II) above, is satisfied.
(I) The Trustees shall refund the sum of the
contributions made by the Participant to his
Voluntary Contribution Account during the Plan
Year under Section 3.3(b) above and any earnings
thereon.
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(II) The Participant shall forfeit any Matching
Contributions made by the Company under Section
3.3(a) during the Plan Year and any earnings
thereon. Such forfeiture shall be reallocated
pursuant to Section 5.2 and such reallocation shall
take place by the end of the Plan Year immediately
following the Plan Year in which the excess Matching
Contributions were made.
3.4 ROLLOVER CONTRIBUTION
A Participant, or an Employee who the Administrative Committee
reasonably believes will become a Participant, may elect to deposit, or
have deposited on his behalf, the lump sum distribution received from:
(a) the trust of a qualified plan under Code Section 401(a); or
(b) an Individual Retirement Account described in Code Section
408(d)(3)(A)(ii), but only if the lump sum distribution
received represents the entire amount in the Individual
Retirement Account.
Such deposits shall be maintained in the Participant's Rollover
Account and shall be subject to the other provisions of this Plan.
3.5 ANNUAL LIMITATION ON CONTRIBUTIONS
(a) LIMIT
In no event shall the aggregate of a Participant's ESOP,
Salary Deferral, Matching, and Voluntary Contributions and
any Forfeitures allocated to him under Plan Section 5.2(b)
for any Plan Year exceed the lesser of:
(I) $30,000, as adjusted under Code Section 415(c)(1)(A),
or
(II) 25% of the Participant's 415 Compensation.
Furthermore, in any Plan Year in which not more than
one-third of the ESOP Contributions are allocated to the
accounts of Highly Compensated Employees, ESOP Contributions
which are applied by the Trustee (not later than the due
date, including extensions, for filing the Company's federal
income tax return for that fiscal year) to pay interest on an
Acquisition Loan, and Financed Shares which are allocated as
forfeitures, shall not be included as ESOP Contributions and
Forfeitures for purposes of the preceding sentence.
(b) REALLOCATING EXCESS CONTRIBUTIONS
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If the limitation in Section 3.5(a) is exceeded, the
excess contribution for the Plan Year shall be
reallocated from the following accounts, in the
following order until the limit is met.
(I) The sum of the contributions made by the
Participant to his Voluntary Contribution
Account during the Plan Year under Section
3.3(b) above and any earnings thereon shall be
distributed to the Participant within two and
one-half months after the close of the Plan
Year, but in no case shall any distributions
occur more than twelve months after the close
of the Plan Year.
(II) The amount contributed to the Participant's
Salary Deferral Account during the Plan Year
plus any earnings thereon shall be distributed
to the Participant within two and one-half
months after the close of the Plan Year, but
in no case shall any distributions occur more
than twelve months after the close of the Plan
Year.
SECTION 4.
VESTING
4.1 ESOP AND MATCHING ACCOUNTS
(a) VESTING SCHEDULE
A Participant's ESOP Account and Matching Account shall
vest in accordance with the following schedule.
THE NONFORFEITABLE
YEARS OF SERVICE PERCENTAGE IS
---------------- -------------
Less than 5 -0-
5 or more 100
Each non-vested Participant shall lose Years-of-Service
credited to him if his consecutive
One-Year-Breaks-in-Service following his Termination of
Employment equal or exceed five.
(b) EXCEPTIONS
A Participant's rights in his ESOP Account and Matching
Account will Fully Vest upon the earlier of:
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(I) Normal Retirement Age;
(II) Early Retirement Date;
(III) Death; and
(IV) Disability.
His rights will also Fully Vest if the Plan were to be
terminated or all Employer contributions were permanently discontinued.
4.2 CAPITAL ACCUMULATION, SALARY DEFERRAL, VOLUNTARY CONTRIBUTION
AND ROLLOVER ACCOUNTS
A Participant's Capital Accumulation, Salary Deferral,
Voluntary Contribution, and Rollover Accounts shall Fully Vest
immediately upon contribution and shall not be subject to
forfeiture for any reason.
SECTION 5.
FORFELTURES
5.1 FORFEITURES
Following his Termination of Employment, a Participant will
forfeit the nonvested portion of his Accounts upon the
occurrence of the earlier of (a) five One-Year-Breaks In-
Service, or (b) the distribution of his entire vested portion
of his Accounts.
Such distribution in (b) above shall be deemed to have
occurred if the vested portion of the terminated Participant's
Account is equal to zero. The Administrative Committee may in
its sole discretion request that the Trustees sell any
forfeited shares of Company Stock prior to the allocation of
forfeiture under 5.2 below.
5.2 ALLOCATION
(a) For any Plan Year, amounts forfeited in Section 5.1
above, including any earnings or losses incurred
subsequent to the date of Forfeiture, shall first be
applied to reduce the Company's contributions under
Sections 3.1 and 3.3(a). The Administrative Committee
shall determine by how much each Company contribution
noted above will be reduced.
(b) Any forfeitures remaining after the application of
Section 5.2(a) above shall be contributed to the ESOP
Accounts of those Participants who were Employees as
of the last day of the Plan Year. Such contribution
shall be made in the
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proportion that the Compensation of each such Participant
bears to the Compensation of all such persons for the Plan
Year.
5.3 RESTORATION OF BENEFITS
The Company shall restore a re-employed Employee's benefits
which were forfeited under Section 5.1 if the Employee
incurred less than five consecutive One-Year-Breaks In-Service
prior to re-employment.
SECTION 6.
INVESTMENT IN FUNDS
6.1 INVESTMENT FUNDS
(a) COMPANY COMMON STOCK FUND
The Company Common Stock Fund shall be invested by
the Trustees primarily in common stock of the
Company. Such investments will be made in such
manner, at such prices, in such amounts, and at such
times as the Trustees may in their sole discretion
determine. Without limiting the foregoing, the
Trustees may purchase common stock of the Company in
the open market, by the exercise of any stock rights
which may be acquired by the Trustees based upon the
open market value; provided, however, that the
Company may, at its option, deliver shares of common
unissued shares in lieu of cash contributions
pursuant to Section 3.1, with such common stock being
valued at its closing price (as reported in the Wall
Street Journal) on the date of the contributions
(I) ACQUISITION OF SHARES THROUGH LOANS
The Administrative Committee may direct the
Trustees to incur Acquisition Loans from time to
time to finance the acquisition of Company Stock
(Financed Shares) for the Trust or to repay a
prior Acquisition Loan. An installment
obligation incurred in connection with the
purchase of Company Stock shall constitute an
Acquisition Loan. An Acquisition Loan shall be
for a specific term, shall bear a reasonable
rate of interest and shall not be payable on
demand except in the event of default. An
Acquisition Loan may be secured by a collateral
pledge of the Financed Shares so acquired. No
other Trust Assets may be pledged as collateral
for an Acquisition Loan, and no lender shall
have recourse against Trust Assets other than
any Financed Shares remaining subject to pledge.
Any pledge of Financed Shares must provide for
the release of shares so pledged on pro-rata
basis as principal and interest on the
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Acquisition Loan are repaid by the Trustees and
such Financed Shares are allocated to
Participants' Company Stock Accounts (as
provided in Section 3.1 (b)). Repayments of
principal and interest on any Acquisition Loan
shall be made by the Trustees (as directed by
the Committee) only from Employer contributions
paid in cash to enable the Trustees to repay
such Loan, from earnings attributable to such
Employer Contributions and from any cash
dividends received by the Trust on such Financed
Shares.
(A) LOAN SUSPENSE ACCOUNT
Financed Shares shall be deposited
in the Loan Suspense Account when
acquired. They shall be reallocated
out of the Loan Suspense Account as
the Acquisition Loan is repaid as
provided in Section 3.1 (b).
(b) PARTICIPANT DIRECTED ACCOUNTS
Notwithstanding any other provisions hereof the
Administrative Committee may at any time determine that
the Plan will permiit each Participant (and the
Beneficiary of a Participant, if applicable) to invest all
of the funds in his Matching, Salary Deferral, Voluntary
Contribution or Rollover Accounts in a range of options
beginning at the time specified by the Administrative
Committee. Provided, however, that such investments shall
not include "collectibles" as defined in IRS Section
408(m). After the effective date of such action the
Participant may, from time to time, instruct the
Administrative Committee, or other person designated by
the Administrative Committee to purchase and/or sell
assets of the type permitted for his Accounts.
Notwithstanding the preceding, the Administrative
Committee may establish reasonable rules limiting the
investment discretion and investment timing of a
Participant, and similar matters. Neither the Employer nor
the Administrative Committee will be held liable for the
Participant's investment choice, so long as the investment
is made pursuant to this Section 6.1.
6.2 ESOP AND CAPITAL ACCUMULATION ACCOUNTS
(a) The Trustees shall invest a Participant's ESOP
Account and Capital Accumulation Account solely in
the Company Common Stock Fund described in Section
6.1 (a).
(b) DIVIDENDS RECEIVED
(I) CASH DIVIDENDS
(A) Cash dividends on Company Stock
allocated to a Participant's ESOP
Account and Capital Accumulation
Account will be added
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<PAGE>
to the Participant's balance in such
Accounts. Cash dividends on Company
Stock which has not been allocated
to a Participant's ESOP Account and
Capital Accumulation Account and is
held in the Company Common Stock
Fund will be treated as income to
the Company Common Stock Fund. Cash
dividends on Company Stock held in
the Loan Suspense Account shall be
used as ESOP Contributions under
Section 3.1 (b) and not be treated
as income.
(B) At the Administrative Committee's
sole discretion, cash dividends on
Company Stock allocated to a
Participant's ESOP Account and
Capital Accumulation Account may be
distributed to the Participant. In
order to satisfy Code Section
404(k), such distribution must occur
not later than 90 days after the
close of the Plan Year in which
paid.
(II) STOCK DIVIDENDS
Stock dividends on Company Stock allocated
to a Participant's ESOP Account and Capital
Accumulation Account will be added to the
Participant's balance in such Accounts.
Stock dividends on Company Stock that has
not been allocated to a Participant's
account and is held in the Company Common
Stock Fund will be treated in the same
manner as ESOP Contributions. Stock
dividends on Company Stock held in the Loan
Suspense Account shall be allocated to the
Loan Suspense Account.
(c) VOTING AND TENDER RIGHTS
The Trustee will vote all Company Stock held in the ESOP
Account and Capital Accumulation Account of an Employee as
directed by the Employee for whom the accounts are held. The
Trustee will vote and/or tender all stock held for the
accounts of Employees from whom no instructions are received
and all Company Stock which is not credited to Employees'
Accounts, pro rata to the manner in which shares for which
instructions were received voted and/or were tendered.
Employees shall be named fiduciaries of the plan to the
extent that they exercise rights pursuant to this section.
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<PAGE>
(d) DIVERSIFICATION REQUIREMENTS
(I) OUALIFICATION
Pursuant to Code Section 401(a)(28), a
Participant shall qualify for the election
in Section 6.2(d)(II) below if he has been a
Participant for at least 10 years and has
attained the age of 55.
(II) ELECTION
A Participant may elect within 90 days after
the close of a Plan Year to have up to 25 %
of his ESOP Account and 25 % of his Capital
Accumulation Account (to the extent such
portion exceeds the amount to which a prior
election under this Section 6.2(d)(II)
applies) reinvested in any of the other
Investment Funds offered in Section 6.1. In
the case of the election year in which the
Participant can make his last election, the
preceding sentence shall be applied by
substituting "50 percent" for "25 percent. "
(III) LIMITATION ON THE ELECTION
The election in Section 6.2(d)(II) above may
only be taken in the six consecutive Plan
Years beginning with the Plan Year in which
the Participant first meets the
qualification requirements in Section
6.2(d)(I) above.
6.3 INVESTMENT PERFORMANCE
(a) EFFECT ON INVESTMENT FUNDS
Income or losses from the investments in each Investment Fund
above shall correspondingly increase or decrease the same
Investment Fund.
(b) ADJUSTMENT OF ACCOUNTS
The Administrative Committee shall adjust, as of each
Valuation Date, the balance of each Participant's Capital
Accumulation, ESOP, Matching, Salary Deferral, Voluntary
Contribution and Rollover Accounts to reflect the current fair
market value of the assets in which such Accounts are
invested. Such accounts may be adjusted more frequently than
each Valuation Date but in no case shall be adjusted any less
frequently.
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<PAGE>
6.4 INDEPENDENT APPRAISER
In the event that the trust shall hold any securities issued by the
employer which are not readily tradable on an established securities
market, all valuations of such securities shall be performed by an
independent appraiser meeting the requirements prescribed in
regulations issued pursuant to section 170(a)(1) of the Code.
SECTION 7.
DISTRIBUTIONS
7.1 DISTRIBUTIONS DURING EMPLOYMENT
(a) WITHDRAWALS
(I) ESOP ACCOUNT
A Participant may elect to withdraw the benefits
attributable to an ESOP Contribution. The election
shall occur in the Fifth Plan Year following the
Plan Year for which the Contribution was made and
shall be made on a written form prescribed or
approved by the Administrative Committee no later
than 30 days prior to the end of the Fifth Plan Year
following the Plan Year for which the Contribution
was made. Distribution shall occur as soon as
practicable following the end of the Fifth Plan
Year. The valuation date of the benefits attributed
to the Contribution shall be the day preceding the
date of distribution. The benefits which are not
withdrawn shall be contributed to the Participant's
Capital Accumulation Account.
(II) VOLUNTARY CONTRIBUTIONS ACCOUNT
A Participant may withdraw the beneffts in his
Voluntary Contribution Account, at any time except
that the withdrawal amount cannot be less than $500
unless the Participant withdraws his total account
balance. The request for distribution shall be made
on a written form prescribed or approved by the
Administrative Committee. Distribution shall be made
as soon as practicable following receipt of the
request for distribution. The valuation date of the
benefits to be withdrawn shall be the date
immediately preceding the day of distribution. A
Participant will be limited to one withdrawal during
any six (6) month period.
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<PAGE>
(III) SALARY DEFERRAL ACCOUNT
(A) WITHDRAWAL
A Participant may withdraw Salary Deferral
Contributions or Rollover Contributions to
meet the need created by a Financial
Hardship. Such withdrawal shall be
consistent with Treasury Regulation
1.401(k)-l(d)(2) and such other regulations
as the Secretary of the Treasury may
prescribe.
(B) DETERMINATION OF HARDSHIP
(i) The determination of whether a
Financial Hardship exists shall be
made by the Administrative
Committee, in its absolute
discretion and on a
nondiscriminatory basis. The
Participant shall complete and
submit to the Administrative
Committee a Financial Hardship
withdrawal form on which he shall
state the reason for the need, the
amount necessary to satisfy the
Financial Hardship, and that funds
are not reasonably available from
other sources.
(ii) Pursuant to Treasury Regulation
1.401(k)-l(d)(2)(ii)(B), a Financial
Hardship is deemed to occur if it
cannot be relieved:
a) Through reimbursement or
compensation by insurance
or otherwise;
b) By reasonable liquidation
of the Employee's assets,
to the extent such
liquidation would not
itself cause an immediate
heavy financial need;
c) By cessation of Salary
Deferral Contributions
under Section 3.2(a) of the
Plan; or
d) By other distributions or
non-taxable (at the time
of the loan) loans from
Plans maintained by the
Employer or by any other
Employer, or by borrowing
from commercial sources on
reasonable commercial
terms.
(iii) Pursuant to Treasury Regulation
1.401(k)-l(d)(2)(iii)(A), a
distribution will be deemed to be
made on account of a Financial
Hardship if it is for:
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<PAGE>
a) Medical Expenses as
described in Section
213 (d) of the Code
incurred by the
Employee, the
Employee's spouse or
any dependents of the
Employee;
b) Purchase (excluding
mortgage payments) of
a principal residence
of the Employee;
c) Payment of tuition
for the next semester
or quarter of
post-secondary
education for the
Employee, his or her
spouse, children, or
dependents; or
d) The need to prevent
the eviction of the
Employee from his
principal residence
or foreclosure on the
mortgage of the
Employee's principal
residence.
(C) RESTRICTIONS ON WITHDRAWALS
(i) No investment income
related to the Salary
Deferral Contributions may
be withdrawn.
(ii) The withdrawn amount cannot
exceed the sum of the
amounts credited to the
Participant's Salary
Deferral Account and
Rollover Account.
(iii) No amount shall be
withdrawn from the
Participant's Salary
Deferral Account while
there are amounts credited
to the Participant's
Voluntary Contribution
Account which may be
distributed.
(D) EFFECT OF DISTRIBUTION
In the event of such a withdrawal by
a Participant, the Participant will
not be permitted to make Salary
Deferral and Voluntary Contributions
until the next Enrollment Date
following the one year anniversary
of such withdrawal.
(b) Loans
(I) A Participant or former Participant may apply for a
loan from his Salary Reduction Rollover or Voluntary
Contribution Accounts by making a request to the
Administrative Committee specifying the amount
requested, the proposed use of the loan proceeds, and
the proposed method of repayment. The Administrative
Committee shall determine whether the loan should be
approved, the amount of such loan, the repayment
terms,
28
<PAGE>
the rate of interest to be charged, and all other
loan terms. The minimum amount of any loan shall be
$1,000. The loan shall be secured by, and cannot
exceed, 50% of the Participant's nonforfeitable
accrued benefit in his Salary Deferral and Matching
Accounts at the time the loan is entered into. The
loan's interest rate shall be in accordance with
rates normally charged by banks for similar loans.
The loan shall provide for level amortization with
payments to be made not less frequently than
quarterly over a period not to exceed five (5) years.
However, loans used to acquire any dwelling unit
which, within a reasonable time, is used (determined
at the time the loan is made) as a principal
residence of the Participant shall provide for
periodic repayment over a reasonable period of time
that may exceed five (5) years.
(II) LIMIT
Loans made pursuant to this Section 7. l(b) (when
added to the outstanding balance of all other loans
made by the Plan to the Participant) shall be limited
at the time the loan is entered into to the lesser
of:
(A) $50,000 reduced by the excess (if any) of
the highest outstanding balance of loans
from the Plan to the Participant during the
one year period ending on the day before the
date on which such loan is made, over the
outstanding balance of loans from the Plan
to the Participant on the date on which such
loan was made, or
(B) one-half (1/2) of the Participant's
non-forfeitable accrued benefit in his
Salary Deferral and Matching Accounts.
(III) SPOUSAL CONSENT
Any loan made pursuant to this Section 7.1 (b) shall
require the written consent of the Participant's
spouse. Such written consent must be obtained within
the 90 day period prior to the date the loan is made.
7.2 DISTRIBUTIONS UPON SEPARATION FROM SERVICE
(a) RETIREMENT
(I) Upon a Participant's Normal or Early Retirement Date
he shall receive his benefits in a lump sum no later
than the later of:
(A) Sixty (60) days following the last day of
the month in which he attains his Normal or
Early Retirement Date; or
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<PAGE>
(B) Sixty (60) days after the earliest date on
which the amount of such benefits can be
ascertained.
Distributions of benefits other than Company Stock
shall be valued as of the Valuation Date immediately
preceding the date of distribution.
In no event shall such distribution commence later
than April 1 of the calendar year following the
calendar year in which the Participant attains age
seventy-and one-half (701/2) except if the Participant
attained age 701/2 before January 1, 1988, in which
case the distribution may commence April 1 of the
calendar year following the calendar year in which the
employee retires.
(II) SPECIAL PROVISION FOR A PARTICIPANT WHO ATTAINS AGE
70 1/2 AFTER DECEMBER 31, 1987 AND RETIRES AFTER AGE
70 1/2
In addition to the required distribution of the total
amount in the Participant's Accounts as of age 701/2
under Section 7.2(a)(I), additional benefits which are
contributed to his Accounts for Plan Years after age
701/2 must be distributed no later than the later of:
(A) Sixty (60) days after the Anniversary Date of
the Plan Year within which the Contributions
were made, or
(B) Sixty (60) days after the earliest date on
which the amount of such benefits can be
ascertained.
However, for Plan Years beginning after December 31,
1996: (A) the distribution of the Accounts of any
Participant who is a 5% owner (as defined in section
416(i) of the Code) and who attains age 701/2 in a
Plan Year must commence not later than April 1 of the
next Plan Year (even if he has not terminated Service)
and must be made in accordance with the regulations
under section 401(a)(9) of the Code, including Section
1.401(a)(9)-2 of the regulations thereunder; and (B)
distribution of the Accounts of any other Participant
who has attained age 701/2 may be made upon the
election of the Participant.
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<PAGE>
(b) Disability
The Administrative Committee shall distribute the benefits
payable to a Participant upon sustaining Disability no later
than the later of sixty (60) days following the last day of the
month in which Disability is determined by the Administrative
Committee under Section 1.13 or sixty (60) days after the
earliest date on which the amount of such benefits can be
ascertained. Distributions of benefits other than Company Stock
shall be valued as of the Valuation Date immediately preceding
the date of distribution. Such benefits shall be paid in a lump
sum.
(c) DEATH BENEFITS
(I) Unless otherwise elected as provided below,
upon the death of a Participant while in the
employ of the Company his surviving spouse
shall be entitled to receive benefits equal
to the total amount in the Deceased
Participant's Accounts. Such benefits shall
be paid in a lump sum, no later than the
later of sixty (60) days following the last
day of the Month in which the Administrative
Committee determines such Participant's
death or sixty (60) days after the earliest
date on which the amount of such benefits
can be ascertained. Distributions of
benefits other than Company Stock shall be
valued as of the Valuation Date immediately
preceding the date of distribution. The
Committee may require such proof of death
and such evidence of the right of any person
to receive payment of a deceased
Participant's interest in the Trust Fund as
the Committee may deem desirable.
(II) The benefits described in Section 7.2(c)(I)
may be paid to the Participant's designated
beneficiary and not to the Participant's
surviving spouse only if (1) the Participant
elected that a designated beneficiary other
than his surviving spouse receive such
benefits, and (2) the Participant's spouse
consented to such election in writing. Such
spouse's consent must acknowledge the effect
of such election and be witnessed by a Plan
representative or a notary public. Such
consent shall not be required if it is
established to the satisfaction of the
Administrative Committee that the consent
cannot be obtained because there is no
spouse, the spouse cannot be located or
other circumstances that may be prescribed
by Treasury regulations. The election by the
Participant and consented to by the
Participant's spouse may be revoked by the
Participant in writing without the consent
of the spouse, but may not be otherwise
amended without the spouse's consent. Any
new election must comply with the
requirements of this paragraph. A former
spouse's waiver shall not be binding on a
new spouse.
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<PAGE>
(III) ABSENCE OF VALID DESIGNATION OF
BENEFICIARIES
Except as provided in Sections 7.2(c)(I) and
(II), if, on the death of a Participant,
former Participant, or beneficiary, there is
no valid designation of beneficiary on file
with the Company, the Administrative
Committee shall designate as the
beneficiary, in the following order of
priority: the surviving spouse; surviving
children, including adopted children, in
equal shares; surviving parents, in equal
shares; or the Participant's estate. The
Administrative Committee's determination of
this matter shall be binding.
(d) TERMINATION OF EMPLOYMENT
(I) GENERAL
Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect,
at the time and in the manner prescribed by the
Administrative Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the paid
distributee in a direct rollover.
(A) DEFINITIONS
(i) ELIGIBLE ROLLOVER DISTRIBUTION
An eligible rollover distribution is
any distribution of all or any
portion of the balance to the credit
of the distributee, except that an
eligible rollover distribution does
not include: any distribution that
is one of a series of substantially
equal periodic payments (not less
frequently than annually) made for
the life (or life expectancy) of the
distributee or the joint lives (or
joint life expectancies) of the
distributee and the distributee's
desigted baneficiary, or for a
specified period of ten years or
more; any distribution to the extent
such distribution is required under
section 401(a)(9) of the Code; and
the portion of any distribution that
is not includible in gross income
(determined without regard to the
exclusion for net unrealized
appreciation with respect to
employer securities).
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<PAGE>
(ii) ELIGIBLE RETIREMENT PLAN
An eligible retirement plan is an
individual retirement account
described in section 408(a) of the
Code, an individual retirement
annuity described in section 408(b)
of the Code, an annuity plan
described in section 403(a) of the
Code, or a qualified trust described
in section 401 (a) of the Code, that
accepts the distributee's eligible
rollover distribution. However, in
the case of an eligible rollover
distribution to the surviving
spouse, an eligible retirement plan
is an individual retirement account
or individual retirement annuity.
(iii) DISTRIBUTEES
A distributee includes an Employee
or former Employee. In addition, the
Employee's or former Employee's
surviving spouse and the Employee's
or former Employee's spouse or
former spouse who is the alternate
payee under a qualified domestic
relations order, as defined in
section 414(p) of the Code, are
distributees with regard to the
interest of the spouse or former
spouse.
(iv) DIRECT ROLLOVER
A direct rollover is a payment by
the Plan to the eligible retirement
plan specified by the distributee.
(II) VESTED BENEFITS NOT EXCEEDING $3.500 (EFFECTIVE
JANUARY 1, 1998, $5000)
(A) NONVESTED PARTICIPANTS
A Participant who
(i) incurs a Termination of Employment,
(ii) is not Fully Vested in his Accounts,
and
(iii) has not had vested accrued benefits
exceeding $3,500 (effective January
1, 1998, $5,000) between, and
including, the date he commenced
participation in the Plan and his
Termination of Employment, shall
receive his vested accrued benefits
in a lump sum no later than the
later of:
33
<PAGE>
a) Sixty (60) days
following the last
day of the month
in which he
incurred his
Termination of
Employment; or
b) Sixty (60) days
after the earliest
date on which the
amount of such
benefit can be
ascertained.
Distributions of
benefits other
than Company Stock
shall be valued as
of the Valuation
Date immediately
preceding the date
of distribution.
(B) FULLY VESTED PARTICIPANTS
A Participant who
(i) incurs a Termination of
Employment,
(ii) is Fully Vested in his
Accounts, and
(iii) has not had vested accrued
benefits exceeding $3,500
(effective January 1, 1998,
$5,000) between, and
including, the date he
commenced participation in
the Plan and his
Termination of Employment,
shall receive his vested
accrued benefits under
Section 7.2(d)(II)(B)(ii)
as if he made the election
described under Section
7.2(d)(II)(B)(i).
(III) VESTED BENEFITS IN EXCESS OF $3,500
(EFFECTIVE JANUARY 1, 1998, $5.000)
(A) NONVESTED PARTICIPANTS
A Participant who incurs a
Termination of Employment and who is
not Fully Vested in his Accounts but
has vested accrued benefits in
excess of $3,500 (effective January
1, 1998, $5,000) on his termination
date, may elect to receive such
vested accrued benefits in a lump
sum prior to his Early Retirement or
Normal Retirement Dates. Such
election must be made within 60 days
of termination on a form prescribed
or approved by the Administrative
Committee. Furthermore, if he is
married, his spouse must also
consent to such an election. The
spouse's consent shall be
irrevocable, must acknowledge the
effect of such election and be
witnessed by a notary public. Upon
receipt of such election, the
Trustee shall distribute the
Participant's vested accrued
benefits no later than the later of:
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<PAGE>
(i) Sixty (60) days after the
next Valuation Date
following the date he
incurred his Termination of
Employment; or
(ii) Sixty (60) days after the
earliest date on which the
amount of such benefits can
be ascertained.
(B) FULLY VESTED PARTICIPANTS
(i) ELECTION
A Fully Vested Participant who
incurs a Termination of Employment
and has vested accrued benefits in
excess of $3,500 (effective January
1, 1998, $5,000) on his termination
date, may elect to receive such
vested accrued benefits prior to his
Early Retirement or Normal
Retirement Dates. Such election must
be made within 60 days of
termination on a form prescribed or
approved by the Administrative
Committee. Furthermore, if he is
married, his spouse must also
consent to such an election. The
spouse's consent shall be
irrevocable, must acknowledge the
effect of such election and be
witnessed by a notary public.
(ii) DISTRIBUTION
a) CAPITAL ACCUMULATION,
ROLLOVER, SALARY DEFERRAL,
AND VOLUNTARY CONTRIBUTION
ACCOUNTS
Upon the election described
in Section 7.2(d)(II)(B)(i)
above, the Trustees shall
distribute the
(1) proceeds in the
Participant's
Rollover, Salary
Deferral, and
Voluntary Contribution
Accounts in a
lump-sum, and
(2) proceeds in his
Capital Accumulation
Account, no later than
the later of:
/bullet/ Sixty (60) days
following the
last day of the
month in which
he incurred his
Termination of
Employment; or
35
<PAGE>
/bullet/ Sixty (60) days after the earliest
date on which the amount of such
benefits can be ascertained.
Distributions of benefits other than Company
Stock shall be valued as of the Valuation
Date immediately preceding the date of the
distribution.
b) ESOP AND MATCHING ACCOUNTS
(1) Upon the election described in
Section 7.2(d)(II)(B)(i) above,
the Trustees shall distribute
the proceeds in the
Participant's Matching Account
in a lump-sum, and the stock in
his ESOP Account, no later than
sixty (60) days after the
earlier of:
/bullet/ the end of five consecutive
One-Year-Breaks-In-Service, or
/bullet/ the day the former Participant
attains Normal Retirement Age.
Distributions of benefits other than
Company Stock shall be valued as of
the Valuation Date immediately
preceding the earlier of:
/bullet/ the end of five consecutive
One-Year-Breaks-In Service, or
/bullet/ the day the former Participant
attains Normal Retirement Age.
(c) EXCEPTIONS
/bullet/ DEATH AND DISABILITY
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<PAGE>
/bullet/ For purposes of Section
7.2(d)(II)(B)(ii)(2)(a) above,
if a Participant who incurs a
Termination of Employment
becomes disabled or dies prior
to the applicable distribution
date above, then his account
balances shall be distributed in
accordance with Sections 7.2(b)
or (c), whichever is applicable,
as if he were an Employee on the
date of disability or death.
(2) HARDSHIP
WITHDRAWAL
/bullet/ A Participant may withdraw his
vested accrued benefits prior to
the date noted in Section
7.2(d)(II)(B)(ii)(2)(a) to meet
the need created by a Financial
Hardship.
/bullet/ DETERMINATION OF HARDSHIP
The determination of whether a
Financial Hardship exists shall
be made by the Administrative
Committee, in its absolute
discretion and on a
nondiscriminatory basis. The
Participant shall complete and
submit to the Administrative
Committee a Financial Hardship
withdrawal form on which he
shall state the reason for the
need, the amount necessary to
satisfy the Financial Hardship,
and that funds are not
reasonably available from other
sources.
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<PAGE>
A Financial Hardship shall be
deemed to occur if it cannot be
relieved:
(i) Through reimbursement or
compensation by
insurance or otherwise;
(ii) By reasonable
liquidation of the
Employee's assets, to
the extent such
liquidation would not
itself cause an
immediate heavy
financial need;
(iii) By other distributions
or non-taxable (at the
time of the loan) loans
from Plans maintained by
the Employer or by any
other Employer, or by
borrowing from
commercial sources on
reasonable commercial
terms.
A distribution will be deemed to
be made on account of a
Financial Hardship if it is for:
(i) Medical Expenses as
described in Section 213
(d) of the Code incurred
by the Employee, the
Employee's spouse or any
dependents of the
Employee;
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<PAGE>
(ii) Payment of tuition for
the or next semester or
quarter of
post-secondary education
for the Employee, his or
her spouse, children, or
dependents; or
(iii) The need to prevent the
eviction of the Employee
from his principal
residence or foreclosure
on the mortgage of the
Employee's principal
residence.
/bullet/ Vested accrued benefits shall be
distributed no later than the
later of
Sixty (60) days after
the last day of the
month in which the
Administrative Committee
has determined that a
Financial Hardship
exists; or
Sixty (60) days after
the earliest date on
which the amount of such
benefits can be
ascertained.
Distributions of benefits other
than Company Stock shall be
valued as of the Valuation Date
immediately preceding the date
of distribution.
(e) VALUATION OF COMPANY STOCK UPON SEPARATION OF SERVICE
Distributions of Company Stock shall be valued as of the date
the stock certificates are delivered by Trustee to the
transfer agent with instructions to reissue them in the name
of the distributee.
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<PAGE>
7.3 DISTRIBUTEE'S RIGHT TO DEMAND COMPANY STOCK
A Participant, or his beneficiary, entitled to a distribution
from his ESOP Account or Capital Accumulation Account shall
have the right to demand that the distribution be in the form
of Company Stock.
7.4 INCOMPETENCE OF DISTRIBUTEE
If the Administrative Committee receives evidence that a
person entitled to receive any distribution under the Plan is
physically or mentally incompetent or incompetent by reason of
age to receive such distribution and give valid release
therefor, such distribution may be made to the guardian,
committee, or other representative of such person duly
appointed by a court of competent jurisdiction. If a person or
institution other than a guardian, committee or other
representative of such person who has been duly appointed by a
court of competent jurisdiction is then maintaining or has
custody of such incompetent person, the distribution may be
made to such other person or institution and the release to
such other person or institution shall be a valid and complete
discharge for the distribution.
7.5 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, of any portion that the distribution
payable to a Participant or his beneficiary under Section 7.2
remains unpaid solely by reason of the inability of the
Administrator to ascertain the whereabouts of such Participant
or his beneficiary after sending a registered letter, return
receipt requested, to the last known address, and further
diligent effort, an Individual Retirement Account, as defined
in Code Section 408, shall be established in the persons name
and the distribution shall be deposited therein.
7.6 PUT OPTION
The Company shall provide a "put option" to any Participant
(or Beneficiary) who receives a distribution of Company Stock
which is not readily tradable on an established market. The
put option shall permit the Participant (or Beneficiary) to
sell such Company Stock to the Company at any time during two
option periods, at the then fair market value. The first put
option period shall be for at least 60 days beginning on the
date of distribution. The second put option period shall be
for at least 60 days beginning after the new determination of
fair market value (and notice to the Participant thereof) in
the following Plan Year. The Company may allow the Trust to
purchase shares of Company Stock tendered to the Company under
a put option. The payment for any Company Stock sold under a
put option shall be made within 30 days if the shares were
distributed as part of an installment distribution. If the
shares were distributed in a lump sum distribution, payment
shall commence within 30 days and may be made in a lump sum or
in substantially equal, annual installments over a period not
exceeding five years,
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with adequate security provided and interest payable at a
reasonable rate on any unpaid installment balance.
7.7 RESTRICTIONS
Shares of Company Stock held or distributed by the Trust may
include such legend restrictions on transferability as the
Company may reasonably require in order to assure compliance
with applicable Federal and state securities laws. Except as
otherwise provided in this Section 7, no shares of Company
Stock held or distributed by the Trustee may be subject to a
put, call or other option, or buy-sell or similar arrangement.
The provisions of this Section 14 are nonterminable and shall
continue to be applicable to Company Stock even if the Plan
ceases to be an employee stock ownership plan under Section
4975(e)(7) of the Code.
SECTION 8.
AMENDMENT AND TERMINATION
8.1 AMENDMENT
The Company reserves the right to amend the Plan at any time
and from time to time, in whole or in part, including, without
limitation, retroactive amendments necessary or advisable to
qualify the Plan and Trust under the provision of Section
401(a) of the Internal Revenue Code, or any successor or
similar statute hereafter enacted. However, except as set
forth in Section 8.3, no such amendment shall (1) cause any
part of the assets of the Plan and Trust to revert to or be
recoverable by the Company or be used for or diverted to
purposes other than the exclusive benefit of Participants,
former Participants, and beneficiaries; (2) deprive any
Participant, former Participant, or beneficiary of any benefit
already vested; (3) alter, change, or modify the duties,
powers, or liabilities of the Trustees without its written
consent; or (4) permit any part of the assets of the Plan and
the Trust to be used to pay premiums or contributions of the
Company under any other plan maintained by the Company for the
benefit of its Employees. No amendment to the vesting schedule
shall deprive a Participant of His unenforceable rights to
benefits accrued to the date of the amendment. Further, if an
amendment to the vesting schedule of the Plan reduces the
vesting percentage of a Participant with at least 3 Years of
Service, the Participant may elect, within a reasonable period
after the adoption of the amendment, to have his
nonforfeitable percentage computed under the Plan without
regard to the amendment. The period during which the election
may be made shall commence with the date the amendment is
adopted and shall end on the latest of (1) 60 days after the
amendment is adopted, (2) 60 days after the amendment becomes
effective, (3) 60 days after the Participant is issued written
notice of the amendment by the Company or by the
Administrative Committee.
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8.2 TERMINATION. PARTIAL TERMINATION OR COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS
Although the Company has established the Plan with the
intention and expectation that it will make contributions
indefinitely, nevertheless the Company shall not be under any
obligation or liability to continue its contributions or to
maintain the Plan for any given length of time. The Company
may in its sole and absolute discretion discontinue
contributions or terminate the Plan in whole or in part in
accordance with its provisions at any time without any
liability for the discontinuance or termination. If the Plan
shall be terminated or partially terminated or if
contributions of the Company shall be completely discontinued,
the rights of all affected Participants in their Accounts
shall become 100% vested and nonforfeitable notwithstanding
any other provisions of the Plan. However, the Trust shall
continue until all Participants' Accounts have been completely
distributed to or for the benefit of the Participants in
accordance with the Plan.
8.3 PERMISSIBLE REVERSIONS
(a) Notwithstanding any other provision of the Plan:
(I) No Participant nor beneficiary shall have
any right or claim to any assets of the
Trust or to any benefit under the Plan
before the Internal Revenue Service
determines that the Plan and Trust qualify
under the from a predecessor plan as defined
in Internal Revenue Code Section 411, to the
extent vested upon transfer to this Plan and
Trust from such predecessor plan. Upon the
distribution to the Participants of any
vested amounts or benefits transferred from
a predecessor plan and the return of any
remaining contributions to the Company
following the denial of initial
qualification of the Plan and Trust under
the provisions of Code Section 401 (a) the
Trust provided for in this Plan shall be
terminated and the Trustees shall be
discharged from all obligations hereunder.
(II) To the extent the Company's contributions
are made by reason of a mistake of fact,
they may be returned to the Company within
one year from the date of contribution.
(III) If the Company's contributions are
conditioned on their deductibility for
federal income tax purposes, to the extent
the deduction is disallowed they may be
returned to the Company within one year from
the date of the disallowance.
(b) The amounts that may be returned to the Company under
Sections 8.3(a)(ii) and 8.3(a)(iii) above shall be the
excess of the amounts contributed over the amounts that
would have been contributed had there not been a mistake
of fact or mistake
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in determining the deduction, as applicable. No earnings
on the mistaken or nondeductible contributions may be
returned to the Company and losses sustained by the Trust
after the date of contribution shall proportionately
reduce the amount that may be returned to the Company.
SECTION 9.
CLAIMS
Distributions of Accounts under the Plan will normally be made
without a Participant (or beneficiary) having to file a claim for
benefits. However, a Participant (or beneficiary) who does not
receive a distribution to which he believes he is entitled may
present a claim to the Administrative Committee for any unpaid
benefits. All questions and claims regarding benefits under the
Plan shall be acted upon by the Administrative Committee.
Each Participant (or beneficiary) who wishes to file a claim for
benefit with the Administrative Committee shall do so in writing,
addressed to the Committee or to the Company. If the claim for
benefits is wholly or partially denied, the Committee shall notify
the Participant (or beneficiary) in writing of such denial of
benefits within Ninety (90) days after the Committee initially
received the benefit claim.
Any notice of a denial of benefits shall advise the Participant
(or beneficiary) of:
(a) the specific reason or reasons for the denial;
(b) the specific provisions of the Plan on which the
denial is based;
(c) any additional materdial or information necessary for
the Participant (or beneficiary) to perfect his claim
and an explanation of why such material or
information is necessary; and
(d) the steps which the Participant (or beneficiary) must
take to have his claim for benefits reviewed.
Each Participant (or beneficiary) whose claim for benefits has
been denied shall have the opportunity to file a written
request for a full and fair review of this claim by the
Administrative Committee, to review all documents pertinent to
his claim and to submit a written statement regarding issues
relative to his claim. Such written request for review of his
claim must be filed by the Participant (or beneficiary) within
sixty (60) days after receipt of written notification of the
denial of his claim. The Committee shall schedule an
opportunity for a full and fair hearing of the issue within
the next thirty (30) days. The decision of the Committee will
be made within thirty (30) days thereafter and
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shall be communicated in writing to the claimant. Such written
notice shall set forth the specific reasons and specific Plan
provisions on which the Committee based its decision.
All notices by the Administrative Committee denying a claim for
benefits, and all decisions on requests for a review of the denial
of a claim for the benefits, shall be written in a manner
calculated to be understood by the Participant (or beneficiary)
filing claim for requesting the review.
SECTION 10.
TOP HEAVY PROVISION
10.1 APPLICATION OF TOP-HEAVY PROVISIONS
If the sum of the Present Value of Accrued Benefits of
Participants who are "Key Employees" for such Plan Year and
the Aggregate Accounts of all the Key Employees under this
Plan and of an Aggregation Group, exceed sixty percent of the
sum of the Present Value of Accrued Benefit and Aggregate
Accounts of all Participants under this Plan and all plans of
an Aggregation Group, then the following provisions under this
Section shall apply for such Plan Year.
The date for determining the applicability of this Secdon
("determination date") is the last day of the preceding Plan
Year.
(a) If any Participant is a Non-Key Employee for any Plan
Year, but such Participant was a Key Employee for any
prior Plan Year, such Participant's Present Value of
Accrued Benefit and/or Aggregate Account Balance
shall not be taken in account for purposes of
determining whether this Plan is a Top Heavy Plan (or
whether any Aggregation Group which includes this
Plan is a Top Heavy Group). In addition, if a
Participant or Former Partcipant has not received any
Compensation from any Employer maintaining the Plan
(other than benefits under the Plan) at any time
during the five year period ending on the
Determination Date, the Aggregate Account and/or
Present Value of Accrued Benefit for such Participant
or Former Participant shall not be taken into account
for the purposes of determining whether this Plan is
a Top Heavy Plan.
(b) SUPER TOP HEAVY
This Plan shall be a Super Top Heavy Plan for any
Plan Year in which, as of the Determination Date, the
sum of Present Value of Accrued Benefits of Key
Employees in the Aggregate Accounts of Key Employees
under this Plan and all Plans of the Aggregation
Group, exceeds ninety percent (90%) of the sum of the
Present Value of Accrued Benefits in the Aggregate
Accounts of all Key and Non-Key Employees under this
Plan and all plans of the Aggregate Group.
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(c) AGGREGATE ACCOUNT
Participant's Aggregate Account as of the Determination Date is
the sum of:
(I) participant's Account balance as of the most recent
valuation occurring within a twelve (12) month period
ending on the Determination Date;
(II) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the
amount of any contributions actually made after the
valuation date but on or before the Determination
Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any
contributions made after the Determinadon Date that
are allocated as of a date in that first Plan Year;
(III) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of
distributions made after the valuation date and prior
to the Determination Date, such distributions are not
included as distributions for top heavy purposes to
the extent that such distributions are already
included in the Participant's Aggregate Account
balance as of the valuation date. Notwithstanding
anything herein to the contrary, all distributions and
distributions under a terminated plan which if it had
not been terminated would have been required to be
included in an Aggregation Group, will be counted;
(IV) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deduchble qualified deductible employee contributions
shall not be considered to be a part of the
Participant's Aggregate Account balance;
(V) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the
Employee and made from a plan maintained by one
employer to a plan maintained by another employer), if
this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollover or
plan-to-plan transfer as a distribution for the
purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, it
shall not consider such rollovers or plan-to-plan
transfers as part of the Participant's Aggregate
Account balance; and
(VI) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee
or made to a plan maintained by the same employer),
if this Plan provides the rollover or plan-to-plan
transfer, it shall not be counted as a distribution
for purposes of this Section. If this
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Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such
rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance, irrespective
of the date on which such rollover or plan-to-plan
transfer is accepted.
(d) AGGREGATION GROUP
"Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
I) REQUIRED AGGREGATION GROUP:
In determining a Required Aggregation Group
hereunder, each plan of the Employer in which a Key
Employee is a participant, and each other plan of the
Employer which enables any plan in which a Key
Employee participates to meet the requirements of
Code Sectdons 401(a)(4) or 410, will be required to
be aggregated. Such group shall be known as a
Required Aggregation Group. In the case of a Required
Aggregation Group, each plan in the group will be
considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in
the Required Aggregation Group will be considered a
Top Heavy Plan if The Required Aggregation Group is
not a Top Heavy Group.
(II) PERMISSIVE AGGREGATION GROUP:
The Employer may also include any other plan not
required to be included in the Required Aggregation
Group, provided the resulting group, taken, as a
whole, would continue to satisfy the provisions of
Code Sections 401(a)(4) and 410. Such group shall be
known as a Permissive Aggregation Group. In the case
of a Permissive Aggregation Group, only a plan that
is part of the Required Aggregation Group will be
considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in
the Permissive Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is
not a Top Heavy Group.
(III) Only those plans of the Employer in which the
Determination Dates fall within the same calendar
year shall be aggregated in order to determine
whether such plans are Top Heavy Plans.
(e) DETERMINATION DATE
"Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last
day of such Plan Year.
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(f) PRESENT VALUE OF ACCRUED BENEFIT
In the case of a defined benefit plan, a Participant's Present
Value of Accrued Benefit shall be as determined under the
provisions of the applicable defined benefit plan.
(g) TOP HEAVY GROUP
"Top Heavy Group" means an Aggregation Group in which, as
of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defind benefit plans
included in the group, and
(2) the Aggregate Accounts of Key Employees under
all defined contribution plans included in the
group, exceeds sixty percent (60%) of a similar
sum determined for all Participants.
(h) TOP HEAVY PLAN YEAR
"Top Heavy Plan Year" means that, for a particular
Plan Year, the Plan is a Top Heavy Plan.
10.2 KEY EMPLOYEES
For purposes of this Section, the term "Key Employee" means
any Employee or former Employee (and his beneficiaries) who,
at any time during the Plan Year or any of the preceding four
Plan Years, is:
(a) An officer of the Employer and has annual compensation
(as defined in Code Section 414(q)(7)) greater than 50%
of the amount in effect under Code Section 415(b)(1)(A)
for any such Plan Year;
(b) One of ten employees having annual compensation (as
defined in Code Section 414(q)(7)) greater than $30,000
(or such amount adjusted in accordance with Code Section
415(c)(1)(A) as in effect for the calendar year in which
the Determination Date falls) and owning (or considered
as owning within the meaning of Code Section 318) the
largest interests in an Employer;
(c) A five percent owner of the Employer; and
(d) A one percent owner of the Employer who has annual
compensation (as defined in Section 414(q)(7)) more than
$150,000.
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A five percent owner means any person who owns (or is
considered as owning within the meaning of Code Section 318)
more than five percent of the outstanding stock of an Employer
or stock possessing more than five percent of the total
combined voting power of all stock of an Employer. A one
percent owner means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than one
percent of the outstanding stock of an Employer or stock
possessing more than one percent of the total combined voting
power of all stock of an Employer. If an Employee ceases to be
a Key Employee, such Employee's Account balances shall be
disregarded under the top heavy plan computation for any Plan
Year following the last Plan Year for which the Employee was
treated as a Key Employee. The Account Balances of an Employee
who has not performed any service for an Employer at any time
during the five year period ending on the Determination Date
are excluded from the calculation to determine top heaviness.
For purposes of clause (a) above no more than the lesser of
(i) fifty Employees, or (ii) the greater of three Employees or
ten percent of all Employees, are to be treated as Key
Employees. For purposes of clause (b) above, if two Employees
have the same interest in an Employer, the Employee having
greater annual compensation from an Employer shall be treated
as having a larger interest. For purposes of determining the
number of officers taken into account under clause (a),
Employees described in Code Section 414(q)(8) shall be
excluded.
10.3 NON-KEY EMPLOYEE
Any employee or former employee (and his beneficiaries) who is
not a Key Employee.
10.4 ADDITIONAL RULES
In determining the sum of the account balances under a defined
contribution plan, Employer contributions and Employee
contributions shall be taken into account. The account balance
in a defined contribution plan will include any amount
distributed to a Participant within the five year period
ending on the Determination Date.
10.5 VESTING REQUIREMENTS
If this Plan is determined to be top-heavy in any Plan Year
under the provisions of paragraph 10.1 or 10.3, then a
Participant's right to the contributions allocated to his
Accounts shall vest in accordance with the following schedule:
YEARS OF SERVICE VESTING PERCENTAGE
---------------- ------------------
Less than 3 0
3 or more 100
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For this purpose, the term "Year of Service" shall be as
defined in Section 1. Once the above schedule applies to a
Participant, it will continue to apply to him, whether or not
the Plan is top-heavy in any subsequent years, for as long as
he remains a Participant.
10.6 MINIMUM BENEFIT
If this Plan is determined to be top-heavy in any Plan Year
under the provisions of paragraph 10.1 or 10.3, then the
contribution for such Plan Year to be allocated to each
Participant who is not a Key Employee in such Plan Year shall
not be less than three percent of such Participant's
compensation (as defined in Code 414(q)(7)) or such lesser
percentage as may be made with respect to Key Employees in
such Plan Year. Amounts contributed under Plan Section 3.2(a)
sha11 be taken into consideration in determining the lesser
percentage for Key Employers noted in the immediately
preceding sentence.
10.7 CEILING ON INCLUDIBLE COMPENSATION
If this Plan is determined to be top-heavy in any Plan Year
under the provision of paragraph 10.1 or 10.3, then only the
first $200,000 of a Participant's compensation (as defined in
Code Section 414(q)(7)) may be taken into account in
determining the amount of the allocation to such Participant's
Account for the Plan Year. The $200,000 limit shall
automatically be adjusted for the Plan Years beginning after
1985 to the extent permitted by the Internal Revenue Service.
SECTION 11.
MISCELLANEOUS
11.1 LIMITATION OF RIGHTS: EMPLOYMENT RELATIONSHIP
Neither the establishment of the Plan and the Trust nor any
modifications of them, nor the creation of any fund or
account, nor the payment of any benefits, shall be construed
as modifying or affecting in any way the terms of employment
of any Employee.
11.2 MERGER: TRANSFER OF ASSETS
(a) If the Company merges or consolidates with or into a
corporation, or if substantially all the assets of
the Company are transferred to a corporation, the
Plan shall terminate on the effective date of the
merger, consolidation, or transfer. However, if the
surviving corporation resulting from the merger or
consolidation, or the corporation to which the assets
have been transferred, adopts this Plan, the Plan
shall continue and the successor corporation shall
succeed to all rights, powers, and duties of the
Company under the Plan, and the employment of any
Employee who is continued in the successor
corporation's
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employ shall not be deemed to have been terminated
for any purpose under the Plan.
(b) This Plan shall not be merged or consolidated with
any other employee benefit plan' nor shall there by
any transfer of assets or liabilities from this Plan
to any other plan, unless, immediately after the
merger, consolidation, or transfer, each
Participant's benefits, if the other plan were then
to terminate, are at least equal to the benefits to
which the Participant would have been entitled had
this Plan been terminated immediately before the
merger, consolidation, or transfer.
11.3 PROHIBITION AGAINST ASSIGNMENT
(a) Except as provided below, the benefits provided by
this Plan may not be assigned or alienated. Neither
the Company nor the Trustees shall recognize any
transfer, mortgage, pledge, hypothecation, order, or
assignment by any Participant or beneficiary of all
or part of his interest under the Plan, and the
interest shall not be subject in any manner to
transfer by operation of law and shall be exempt from
the claims of creditors or other claimants from all
orders, decrees, levies, garnishment, and/or
executions, and other legal or equitable process or
proceedings against the Participant or beneficiary to
the fullest extent that may be permitted by law.
(b) This provision shall not apply to the extent a
Participant or beneficiary is indebted to the Plan,
for any reason, under any provision of this
Agreement. At the time a distribution is to be made
to or for a Participant's or beneficiary's benefit,
such proportion of the amount distributed as shall
equal such indebtedness, shall be paid by the
Trustees to the Trustees or the Administrative
Committee, at the direction of the Administrative
Committee, to apply against or discharge such
indebtedness. Prior to making a payment, however, the
Participant or beneficiary must be given written
notice by the Administrative Committee that such
indebtedness is to be so paid in whole or part from
his account. If the Participant or beneficiary does
not agree that the indebtedness is a valid claim
against his vested Accounts, he shall be entitled to
a review of the validity of the claim in accordance
with procedures provided in Section 9.
(c) This provision shall not apply to a "qualified
domestic relations order" defined in Code Section
414(p), and those other domestic relations orders
permitted to be so treated by the Administrative
Committee under the Code. The Administrative
Committee shall establish a written procedure to
determine the qualified status of domestic relations
orders and to administer distributions under such
qualified orders. Further, to the extent provided
under a "qualified domestic relations order", a
former spouse of a Participant shall be treated as
the spouse or surviving spouse for all purposes under
the Plan.
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11.4 APPLICABLE LAW: SEVERABILITY
This Plan shall be construed, administered, and governed in
all respects in accordance with ERISA and the laws of the
State of Florida, provided, however, that if any provision is
susceptible of more than one interpretation, it shall be
interpreted in a manner consistent with the Plan's being a
qualified employees' cash or deferred profit sharing plan
within the meaning of the Internal Revenue Code. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions of the Plan shall continue to be fully
effective.
11.5 RELIANCE UPON COPY OF PLAN
Any person dealing with the Trustees may rely upon copies of
the Plan and the Trust Agreement, and any amendments thereto,
certified by the Administrative Committee to be true and
correct copies.
11.6 GENDER AND NUMBER: CAPTIONS OR HEADINGS
Wherever appropriate to the meaning or interpretation of this
Plan, the masculine gender shall include the feminine, and the
singular number shall include the plural and vice versa.
Captions or headings are inserted and intended for
organizational format and convenience of reference only; they
are not to be given independent substantive meaning or effect.
SECTION 12.
ADMINISTRATIVE COMMITTEE
12.1 APPOINTMENT OF COMMITTEE
The Board shall appoint the Administrative Committee (the
"Committee") the members of which shall serve at the pleasure
of the Board, without bond, unless a bond shall be requested
by the Board or secured voluntarily by a member. Any member of
the Committee who is not an officer or employee of an Employer
may be compensated for services as a member of the Committee.
The Committee members may, but need not be, Participants under
the Plan. Vacancies arising shall be filled in the same manner
as appointments. Any member of the Committee may resign by
delivering a written resignation to the Board and to the
Secretary of the Committee and such resignation will become
effective upon such delivery or at any later date specified
therein.
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12.2 COMMITTEE ORGANIZATION
The members of the Committee shall elect from their number a
Chairman and shall appoint a Secretary, who need not be a
member of the Committee. The Chairman and the Secretary shall
serve without bond and without compensation at the pleasure of
the Committee.
12.3 COMMITTEE MEETINGS
The Committee shall hold meetings upon such notice, at such
time, and at such place as it may determine. A majority of the
members of the Committee shall constitute a quorum for the
transaction of business. All resolutions of actions taken by
the Committee shall be by vote of a majority of those present
at a meeting, or, if they act without a meeting, by unanimous
written consent of the members of the Committee.
12.4 COMMITTEE FUNCTIONS AND POWERS
The Committee shall be the administrator of the Plan, and its
duties shall include, without limitation, powers with respect
to the administration of the Trust as may be conferred upon it
by the Trust Agreement and by the Plan. The Committee shall
have the power to take all action and to make all decisions
that shall be necessary or proper in order to carry out the
provisions of the Plan and, without limiting the generality of
the foregoing, the Committee shall have the following powers:
(a) to make (and enforce by suspension or forfeiture)
such rules and regulations as it shall deem necessary
or proper for the efficient administration of the
Plan;
(b) to interpret or construe the Plan;
(c) to decide questions concerning the Plan and the
eligibility of any Employee to participate therein
and the right of any person to receive benefits
thereunder;
(d) to decide any dispute arising under the Plan;
(e) to compute the amount of benefits which shall be
payable to any person in accordance with the
provisions of the Plan;
(f) to authorize all disbursements by the Trustees;
(g) to recommend to the Board and to the respective
boards of directors of the other Employers the
amounts of the Employer contributions and payments
for expenses to be made from time to time under the
provisions of the Plan;
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(h) to prescribe and require the use of such forms as it
shall deem necessary or desirable in connections with
the administration of the Plan;
(i) to fix the criteria to be followed in determining the
market value of any security or property held in the
Trust Fund or the amount of any unliquidated charge,
expense, or obligation of the Trust Fund;
(j) to establish and monitor policy of proxy voting by
the Trustees for stock held for the plan consistent
with regulations and rulings of the U.S. Department
of Labor;
(k) to appoint one (1) or more Independent Advisors and
dismiss and replace any of these, as it deems
warranted;
(1) to supply any omissions in the Plan;
(l) to reconcile and correct any errors or
inconsistencies in the Plan; and
(n) to make equitable adjustments for any mistakes or
errors made in the administration of the Plan.
12.5 COMMITTEE ACTIONS CONCLUSIVE
All actions and decisions taken by the Committee shall be fnal
and conclusive and binding on all persons having any interest
in the Plan or Trust Fund or in any benefits payable
thereunder.
12.6 COMMITTEE APPOINTMENT OF AGENTS
The Committee may employ or engage such accountants, counsel,
other experts, and other persons as it deem necessary in
connections with the administration of the Plan.
12.7 RELIANCE ON OPINIONS, ETC.
The Committee and each member thereof and each person to whom
it may delegate any power or duty in connection with
administering the Plan shall be entitled to rely conclusively
upon, and shall be fully protected in any action taken by them
or any of them in good faith reliance upon any valuation,
certificate, opinion, or report which shall be furnished to
them or any of them by the Trustees or by any accountant,
counsel, other expert, or other person who shall be employed
or engaged by the Trustees or the Committee.
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12.8 RECORDS AND ACCOUNTS
The Committee shall keep or cause to be kept all data, records and
documents pertaining to the administration of the Plan, and the
Secretary of the Committee may execute all documents necessary to carry
out the provisions of the Plan. To enable the Committee to perform its
functions, the Employer shall supply full and timely information to the
Committee on all matters relating to the salaries of Participants,
their retirement, death, termination of employment, and such other
pertinent facts as the Committee may require. The Committee shall
advise the Trustees of such of the foregoing facts as may be pertinent
to the Trustees' administration of the Trust Fund and shall give proper
instruction to the Trustees for carrying out the purposes of the Plan.
12.9 PAYMENT OF EXPENSE
(a) Subject to the provisions of paragraph (b) of this Section
12.9, expenses in connection with the administration of the
Plan and Trust including commissions, taxes or other expenses
relating to the purchase and maintenance of property held as a
part of any Investment Fund, expenses payable to any member of
the Committee pursuant to Section 12.1, expenses of the
Committee or any member thereof, expenses of the Trustees and
of any accountant or other person who shall be employed by the
Committee or Trustees in the administration thereof, shall be
paid by the Plan. To the extent such expenses are not paid by
the Plan, they may be paid by the Company.
(b) In the event of permanent discontinuance of contributions or
termination any further payment of expenses which arise or
have arisen in connection with the administration of the Plan
and Trust Agreement shall be paid by the Plan unless paid by
the Employer.
12.10 Liability of the Administrative Committee
No member of the Administrative Committee shall incur liability for any
action taken or not taken in good faith reliance on advice of counsel,
who may be counsel for the Company or taken or not taken in good faith
reliance on a determination as to a matter of fact which has been
represented or certified by a person reasonably believed to have
knowledge of the fact so represented or certified, or taken or not
taken in good faith reliance on a recommendation or opinion expressed
by a person reasonably believed to be qualified or expert as to any
matter where it is reasonable or customary to seek or rely on such
recommendadons or opinions. Nor shall any Administradve Committee
member be liable for the wrongful or negligent conduct of any other
Administrative Committee member or any person having fiduciary
responsibilities with respect to the Plan unless he (i) knowingly
participates in or undertakes to conceal an act or omission of such
other person knowing the act or omission is a breach of fiduciary duty,
(ii) by failing to act solely in the interests of participants and
beneficiaries or to exercise the care, skill, prudence and diligence
under the circumstances prevailing from time to time
54
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that a prudent man acting in a like capacity and familiar with such
matters would exercise, has enabled the other fiduciary to commit a
breach of his obligation, or (iii) he has knowledge of a breach by the
other fiduciary and does not make reasonable efforts under the
circumstances to remedy it. Except as otherwise affirmatively required
by the Act, no Administrative Committee member shall be required to
post a bond. The Company shall jointly and severally indemnify the
Administrative Committee members and hold them harmless from loss,
liability and expense in respect of the Plan, including the legal cost
of defending claims and amounts paid in satisfaction or settlement
thereof provided only that no indemnification is intended that would be
void as against public policy under the Act.
SECTION 13.
TRUST AGREEMENT
13.1 THE TRUST AGREEMENT
All contributions under the Plan shall be made to the Trust Fund held
by the Trustees under a separate Trust Agreement known as the "SBS
Trust Company Trust Agreement" (the "Trust Agreement"). The Trustees
are to hold, invest, and distribute the Trust's assets, and maintain
records of the Trust Fund in accordance with the terms and provisions
of the Trust Agreement except that they may delegate such
responsibility to an Investment Manager. The Trustees are to invest the
Trust's assets designated as ESOP contributions primarily in the
Employer's securities. The Trust Agreement Shall be deemed to form a
part of the Plan, and any and all rights or benefits which may Accrue
to any person under the Plan shall be subject to all the terms and
provisions of the Trust Agreement. If there is any conflict between the
terms of the Plan and the terms of the Trust Agreement, the terms of
the Plan shall control.
13.2 NO DIVERSION OF CORPUS OR INCOME
In no event shall any portion of the corpus or income of the Trust Fund
be used for or diverted to purposes other than the exclusive benefit of
Participants and their Beneficiaries.
55
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IN WITNESS WHEREOF, the Company has caused this Plan as
revised and amended to be executed and have affixed their seals this day of
____________________, 19___.
COMPANY:
By:___________________________________
56
Exhibit 10.3
SHARED FACILITIES AGREEMENT BETWEEN LNR PROPERTY CORPORATION
AND LENNAR CORPORATION
This Shared Facilities Agreement is made as of the 27th day of October,
1997, by and between Lennar Corporation, a Delaware corporation ("Lennar"), and
LNR Property Corporation, a Delaware corporation ("LNR"), wherein it is agreed:
1. PURPOSES.
1.1 Pursuant to various agreements executed or to be executed by and
between Lennar and LNR, Lennar will transfer its real estate investment
and management business to LNR, and thereafter, pursuant to a
Separation and Distribution Agreement, dated June 10, 1997, executed by
the parties hereto (the "Distribution Agreement"), Lennar will
distribute to its stockholders on the Distribution Date (defined in the
Distribution Agreement), on a one-for-one basis, the issued and
outstanding shares of capital stock of LNR received by it from LNR in
accordance with Paragraphs 2.1(a) and 2.1(b) of the Distribution
Agreement so that after such transfer and distribution, LNR will be a
corporation independent of Lennar (the "Distribution").
1.2 Prior to the Distribution Date, Lennar provided certain services to its
real estate investment and management business.
1.3 After the Distribution Date, LNR will require for a limited term that
Lennar continue providing certain computer services to LNR and its
subsidiaries until LNR and its subsidiaries are able to otherwise
contract or arrange for such services.
2. TERM. Subject to the provisions of Section 5 hereof, this Agreement
shall be effective on the Distribution Date and shall continue until
the earlier of (i) one year following the Distribution Date, and (ii)
termination of all Services (as herein defined) pursuant to Section 5
of the Agreement (the "Term").
3. AGREEMENT TO PERFORM SELECTED SERVICES.
3.1 Subject to all of the terms and conditions hereof, Lennar and LNR
hereby agree that Lennar shall offer and provide to LNR and its
subsidiaries during the Term those services described on Schedule "A"
hereto (collectively, the "Services"). Services heretofore provided to
LNR will be provided on a basis consistent with prior practice. Charges
for Services shall be as set forth in Section 4 hereof.
3.2 The Services to be available hereunder shall include all Services
provided by Lennar to LNR and its subsidiaries on the Distribution Date
or at any time during the calendar year immediately preceding the
Distribution Date. If LNR elects to utilize any services not set forth
on Schedule A, it shall notify Lennar
<PAGE>
in writing of those services it elects to use and, to the extent Lennar
agrees to furnish such new services to LNR, which agreement shall not
be unreasonably withheld by Lennar, Lennar shall furnish such new
services to LNR on a basis consistent with past practices and
procedures for services previously provided to LNR by Lennar or on a
basis to be agreed upon by both parties hereto if such services were
not previously provided to LNR by Lennar; provided, however, that
Lennar shall not be required to furnish any new services to LNR which
are not permitted to be provided by it pursuant to the ruling it has
received from the Internal Revenue Service that the Distribution
(defined in the Distribution Agreement) will qualify as a tax-free
distribution. Lennar's compensation, if any, for providing such new
services shall be as agreed to by the parties hereto.
4. CHARGES FOR SERVICES; PAYMENT.
4.1 It is the intention of the parties hereto that the charges for Services
will be based on direct and indirect costs of providing Services but
without any profit to Lennar until otherwise agreed to by the parties
hereto. The costs of providing Services shall be $15,600 per month as
described on Schedule "B" hereto.
4.2 Lennar shall bill LNR monthly for all charges for Services provided
hereunder, which bill shall be accompanied by reasonable documentation
or explanation supporting such charges, and LNR shall pay Lennar in
full for all charges for Services within 30 days after receipt of such
bill and other documentation or explanation.
5. REDUCTIONS IN SERVICES; TERMINATION. The parties recognize that during
the Term hereof the requirements of LNR for certain Services will
decrease and that LNR intends to reduce or completely phase out any
Services no longer required. Accordingly, at any time after the
Distribution Date, LNR may request termination of all or any part of
the Services provided to or received by it (including termination of
any part of any individual Service) by giving Lennar not less than 30
days' advance notice in writing of any anticipated termination of any
Services or part thereof and, to the extent practicable, the parties
will agree to an orderly reduction or phase-out of such Services and to
a reduction of the fees payable hereunder.
Following the termination or discontinuance of any Service as provided
herein, to the extent Lennar is thereafter requested to provide any
terminated or discontinued Service, including any transition-related
assistance necessary for any other organization to perform the
terminated or discontinued Service, Lennar shall perform such Service
and Lennar shall be entitled to compensation therefor reflecting
incurred costs; provided, however, that Lennar shall not be obligated
to perform any Service, after the date which is one year following the
Distribution Date.
2
<PAGE>
6. COVENANT.Except to the extent otherwise provided herein, Lennar
covenants and warrants that the charges for Services hereunder are and
shall be determined in a fair and equitable manner with the intent to
reimburse Lennar for all related direct and indirect costs of providing
Services to LNR but without any profit to Lennar.
7. FORCE MAJEURE. If either party is unable to perform any of its duties
or fulfill any of its covenants or obligations under this Agreement as
a result of causes beyond its control and without its fault or
negligence, including but not limited to acts of God or government,
fire, flood, war, governmental controls, and labor strife, then such
party shall not be deemed to be in default of this Agreement during the
continuance of such events which rendered it unable to perform; such
party shall have such additional time thereafter as is reasonably
necessary to enable it to resume performance of its duties and
obligations under this Agreement; and the party entitled to such
Service shall not be required to pay the other party for any Service to
the extent that such other party is unable to perform. Notwithstanding
the foregoing, if the suspension of Lennar's obligation to perform
under this Agreement is of such a nature or duration as to
substantially frustrate the purpose of this Agreement, then LNR shall
have the right to terminate this Agreement by giving Lennar 30 days'
prior written notice of termination, in which case termination shall be
effective upon the expiration of such 30-day period unless performance
is resumed prior to such expiration.
8. SEVERABILITY. The invalidity of any provision of this Agreement as
determined by a court of competent jurisdiction in no way shall affect
the validity of any other provision hereof. If a provision is
determined to be invalid, the parties shall negotiate in good faith in
an effort to agree upon a suitable and equitable alternative provision
to effect the original intent of the parties.
9. TIME OF THE ESSENCE. The parties hereto agree that with respect to the
performance of all terms, conditions and covenants of this Agreement,
time is of the essence.
10. CAPTIONS. Section captions are not a part hereof and are merely for the
convenience of the parties.
11. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof, this
Agreement shall bind the parties, their successors and assigns. This
Agreement shall be governed by the laws of the State of Delaware
without reference to the conflict or choice of law provisions thereof.
12. ASSIGNMENT. Lennar shall not assign or sublease this Agreement or any
Services to be provided hereunder without the prior written consent of
LNR.
3
<PAGE>
13. AMENDMENT. This Agreement may not be amended without the express
written agreement of both parties hereto.
14. NOTICES. All notices under this Agreement must be in writing and
delivered personally or sent by United States mail, postage prepaid,
addressed as follows, except that any party by written notice given as
aforesaid, may change its address for subsequent notices to be given
hereunder.
If to Lennar:
Lennar Corporation
700 NW 107th Ave., Suite 400
Miami, FL 33172
Attention: Ms. Cory Boydston
If to LNR:
LNR Property Corporation
760 NW 107th Ave., Suite 100
Miami, FL 33172
Attention: Ms. Shelly Rubin
Notice sent by U.S. mail will be deemed given when deposited with the
U.S. postal service.
15. INDEMNITY. Notwithstanding anything to the contrary contained herein,
Lennar agrees to indemnify and hold harmless LNR and its subsidiaries
and affiliates from and against any claim, loss, liability, cost or
expense arising from Lennar's activities or actions under this
Agreement. Lennar further agrees that it will conduct its business at
all times in accordance with all applicable laws, codes and
regulations, including, but not limited to, the maintenance of all
appropriate licenses. Notwithstanding anything to the contrary
contained herein, in the event Lennar commits an error with respect to
or incorrectly performs or fails to perform any Service, at LNR's
request, Lennar shall use reasonable efforts and good faith to correct
such error, re-perform or perform such Service at no additional cost to
LNR and Lennar shall reimburse LNR for any costs incurred by LNR as a
result of any such errors.
16. INDEPENDENT ENTITIES. In carrying out the provisions of this Agreement,
Lennar and LNR are and shall be deemed to be for all purposes, separate
and independent entities. Lennar and LNR shall select their employees
and agents, and such employees and agents shall be under the exclusive
and complete supervision and control of Lennar or LNR, as the case may
be. Lennar hereby acknowledges responsibility for full payment of wages
and other compensation to all employees and agents engaged by it in the
performance of the Services under this Agreement. It is the express
intent of this Agreement that the relationship of Lennar to LNR and LNR
to Lennar shall be solely that of separate and
4
<PAGE>
independent companies and not that of a joint venture, partnership or
any other joint relationship.
17. NONFIDUCIARY STATUS. In carrying out the provisions of this Agreement,
neither party shall be a fiduciary (as defined in Section 3 (21) of
ERISA) with respect to any employee benefit plan, program or
arrangement maintained by or on behalf of the other party. Lennar will
provide Services pursuant to the terms and conditions of this Agreement
in accordance with the directions, guidelines and/or procedures
established by it or the plan administrator (as defined in Section 3
(16) of ERISA) of its employee benefit plans or arrangements.
18. THIRD PARTY BENEFICIARIES. The provisions of this Agreement are solely
for the benefit of the parties and are not intended to confer upon any
person except the parties any rights or remedies hereunder. There are
no third party beneficiaries of this Agreement, and this Agreement
shall not provide any third person with any remedy, claim, liability,
reimbursement, action or other right in excess of those existing
without reference to this Agreement.
19. CONSTRUCTION. For purposes of this Agreement, references to LNR, with
respect to events or periods prior to the Distributions Date, shall
mean and include, where appropriate, Lennar's real estate investment
and management business as it existed prior to such date, including,
but not limited to, the operations of its financial services division
that became part of LNR.
20. APPENDICES. The Appendices shall be construed with and as an integral
part of this Agreement to the same extent as if the same had been set
forth verbatim herein. In the event of any inconsistency between the
terms of any Appendix and the terms set forth in the main body of this
Agreement, the terms of the Appendix shall govern.
21. CONFIDENTIALITY.
21.1 Each of (i) Lennar and its subsidiaries and (ii) LNR and its
subsidiaries shall not use or permit the use of (without the prior
written consent of the other) and shall keep, and shall cause its
consultants and advisors to keep, confidential all information
concerning the other party received pursuant to or in connection with
this Agreement.
21.2 With respect to any confidential information, each party agrees as
follows:
(a) it shall use the same degree of care in safeguarding said
information as it uses to safeguard its own information which
must be held in confidence; and
(b) upon the discovery of any inadvertent disclosure or
unauthorized use of said information, or upon obtaining notice
of such a disclosure or use from the other party, it shall
take all necessary actions to prevent any further
5
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inadvertent disclosure or unauthorized use, and, subject to
the provisions of Section 15 above, the other party shall be
entitled to pursue any other remedy which may be available to
it.
IN WITNESS WHEREOF, this Agreement has been executed in multiple
counterparts on the date set forth above, each of which shall, for all purposes,
be deemed an original and all of which shall evidence but one agreement between
the parties hereto.
LENNAR CORPORATION, LNR PROPERTY CORPORATION,
a Delaware corporation a Delaware corporation
By: /s/ CORY BOYDSTON By: /s/ SHELLY RUBIN
------------------- -----------------------------
Name: CORY BOYDSTON Name: SHELLY RUBIN
Title: VICE PRESIDENT Title: FINANCIAL VICE PRESIDENT
6
Exhibit 10.4
PARTNERSHIP AGREEMENT
BY AND BETWEEN
LENNAR LAND PARTNERS SUB, INC.
AND
LNR LAND PARTNERS SUB, INC.
<PAGE>
PARTNERSHIP AGREEMENT
BY AND BETWEEN
LENNAR LAND PARTNERS SUB, INC.
AND
LNR LAND PARTNERS SUB, INC.
TABLE OF CONTENTS
PAGE
----
ARTICLE I
Organizational Matters
1.1 Formation.......................................................... 1
1.2 Name .......................................................... 1
1.3 Principal Office................................................... 1
1.4 Term .......................................................... 1
1.5 Purpose .......................................................... 2
1.6 Powers ........................................................... 2
1.7 Statutory Filings.................................................. 2
ARTICLE II
Definitions
ARTICLE III
Capital Contributions
3.1 Initial Capital Contributions..................................... 5
3.2 Voluntary Contributions........................................... 5
3.3 Required Additional Capital Contributions......................... 5
3.4 No Withdrawal..................................................... 6
3.5 Interest ......................................................... 6
3.6 Loans to the Partnership.......................................... 6
3.7 Capital Accounts.................................................. 6
ARTICLE IV
Allocations and Distributions
4.1 Allocations for Capital Account Purposes......................... 8
4.2 Allocations for Tax Purposes..................................... 9
4.3 Distributions.................................................... 10
ii
<PAGE>
ARTICLE V
Governance and Management of Business
5.1 Executive Committee............................................. 10
5.2 Management Agreement............................................ 12
5.3 Indemnification................................................. 13
5.4 Insurance....................................................... 13
5.5 Annual Business Plan............................................ 13
5.6 Reimbursement of Partners....................................... 14
5.7 Outside Activities.............................................. 14
5.8 Dealings With Partnership....................................... 14
5.9 Partnership Funds............................................... 14
5.10 Title to Partnership Assets..................................... 15
ARTICLE VI
Books, Records, Accounting and Reports
6.1 Records and Accounting.......................................... 15
6.2 Fiscal Year..................................................... 15
6.3 Financial Statements and Financial Information.................. 15
6.4 Other Information............................................... 16
6.5 Reimbursement................................................... 16
ARTICLE VII
Tax Matters
7.1 Recognition of Partnership...................................... 16
7.2 Preparation of Tax Returns...................................... 16
7.3 Accounting Methods; Tax Elections............................... 16
7.4 Tax Controversies............................................... 17
7.5 Withholding..................................................... 17
7.6 Reimbursement................................................... 17
ARTICLE VIII
Transfer of Interests
8.1 Restrictions on Transfer........................................ 17
8.2 Permissible Transfers........................................... 17
8.3 Right of First Refusal.......................................... 17
ARTICLE IX
Admission of Partners
9.1 Admission of Additional Partners................................ 19
9.2 Interest of New Partner......................................... 19
iii
<PAGE>
ARTICLE X
Dissolution and Liquidation
10.1 Dissolution..................................................... 19
10.2 Effect of Dissolution........................................... 19
10.3 Liquidation..................................................... 19
10.4 Distribution in Kind............................................ 20
10.5 Reasonable Time for Winding Up.................................. 20
10.6 Waiver of Partition............................................. 20
10.7 Voluntary Termination........................................... 20
ARTICLE XI
General Provisions
11.1 Indemnification................................................. 20
11.2 Contribution by Partners........................................ 20
11.3 Notices ........................................................ 21
11.4 Amendments...................................................... 21
11.5 Titles and Captions............................................. 21
11.6 Binding Effect.................................................. 21
11.7 Integration..................................................... 21
11.8 Creditors....................................................... 22
11.9 Counterparts.................................................... 22
11.10 Applicable Law.................................................. 22
11.11 Survival........................................................ 22
iv
<PAGE>
EXHIBITS
A. Schedule of Original Properties, Fair Market Values and Option Prices
B. Management Agreement
C. Business Plan and Budget for the Partnership's fiscal year 1997
v
<PAGE>
PARTNERSHIP AGREEMENT
This is a PARTNERSHIP AGREEMENT (the "AGREEMENT"), dated as of
October 24, 1997, by and among LENNAR LAND PARTNERS SUB, INC., a Delaware
corporation (the "MANAGING GENERAL PARTNER"), and LNR LAND PARTNERS SUB, INC., a
Delaware corporation (the "GENERAL PARTNER" and together with the Managing
General Partner, the "PARTNERS"), and, only with respect to Section 8.1, LENNAR
CORPORATION, a Delaware corporation ("LENNAR") and LNR Property Corporation, a
Delaware corporation ("LNR").
RECITALS
A. The Partners desire to form a general partnership under the
laws of the State of Florida for the purposes and on the terms and conditions
stated in this Agreement.
B. The Managing General Partner was formed solely for the
purpose of participating in the partnership created by this Agreement, and is a
wholly owned subsidiary of Lennar.
C. The General Partner was formed solely for the purpose of
participating in the partnership created by this Agreement, and is a wholly
owned subsidiary of LNR.
All capitalized terms used in this Agreement which are not
otherwise defined are defined in Article II.
ARTICLE I
Organizational Matters
1.1 FORMATION. By signing this Agreement, the Managing General
Partner and the General Partner form a general partnership (the "PARTNERSHIP")
under the laws of the State of Florida.
1.2 NAME. The name of the Partnership is "Lennar Land Partners."
1.3 PRINCIPAL OFFICE. The principal business address of the
Partnership will be 700 Northwest 107th Avenue, Miami, Florida 33172, or such
other place as the Executive Committee may from time to time provide. The
Partnership may maintain offices at such other place or places as the Executive
Committee deems advisable.
1.4 TERM. The Partnership will begin on the date of this
Agreement and will continue until one or more of the Partners gives written
notice to the Partnership and to the other Partner(s) of an election to
terminate the Partnership, which any Partner may do at any time after November
30, 2002, but not before then. Beginning 60 days after a Partner elects to
terminate the Partnership, the Partnership will cease acquiring assets and will
engage in no activities other than (i) fulfilling agreements in effect at the
end of the 60 day period, (ii) disposing of assets in the ordinary course, and
(iii) when an event described in any of paragraphs 10.1 (a) through (d) occurs,
dissolving and liquidating the Partnership as described in Article X.
<PAGE>
1.5 PURPOSE. The purposes of the Partnership will be to acquire,
own, invest in, hold, develop, improve and sell land and to engage in all
activities which are incidental or necessary to the foregoing.
1.6 POWERS. The Partnership is empowered to do any and all
things necessary, appropriate, or convenient for the furtherance and
accomplishment of its purposes, and for the protection and benefit of the
Partnership and its properties.
1.7 STATUTORY FILINGS. The Partnership shall execute and file
with the Florida Department of State a registration statement pursuant to
Section 620.8105 of the Florida Act in which the name of the Partnership and the
location and complete address of the Partnership's principal office in Miami,
Florida, as set forth above, is set forth and in which an agent of the
Partnership for service of process is designated.
ARTICLE II
Definitions
The following definitions will, unless otherwise clearly
indicated to the contrary, apply to the terms used in this Agreement.
"ADJUSTED ASSET" means any Partnership asset, the Carrying Value
of which has been adjusted pursuant to Section 3.7(c) or (d).
"AFFILIATE" means any Person that directly or indirectly
controls, is controlled by, or is under common control with, the Person in
question. As used in the definition of "Affiliate," the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise. The Partnership will not be
deemed an Affiliate of any Partner.
"AGREEMENT" means this Partnership Agreement, as it may be
amended, supplemented or restated from time to time.
"BUSINESS DAY" means Monday through Friday of each week, except
that a day on which state chartered banks in the State of Florida are not
required to be open for general business will not be regarded as a Business Day.
"BUSINESS PLAN" means the annual Business Plan for the
Partnership contemplated by Section 5.5.
"CAPITAL ACCOUNT" means the capital account maintained for a
Partner pursuant to Section 3.7.
"CAPITAL CONTRIBUTION" means any cash or Contributed Asset that
a Partner contributes to the Partnership pursuant to Sections 3.1, 3.2 or 9.2.
"CARRYING VALUE" means (a) with respect to a Contributed Asset,
the Fair Market Value of the asset reduced (but not below zero) by all
depreciation, cost recovery and amortization deductions charged to the Partners'
Capital Accounts pursuant to Section 3.7(a) with respect to the
2
<PAGE>
asset, and (b) with respect to any other asset, the adjusted basis of the asset
for Federal income tax purposes, as of the time of determination. The Carrying
Value of any asset will be adjusted from time to time in accordance with
Sections 3.7(c) and (d), and to reflect costs or proceeds of dispositions,
acquisitions or improvements relating to the asset, as deemed appropriate by the
Executive Committee.
"CODE" means the Internal Revenue Code of 1986, as amended (and
any successor to it). Any reference in this Agreement to a specific section of
the Code will be deemed to include a reference to any corresponding provision of
any future law.
"CONTRIBUTED ASSET" means the interest in a property or other
asset (at the time of contribution to the Partnership), other than cash,
contributed to the Partnership by a Partner, including the Original Properties.
"EXECUTIVE COMMITTEE" means the committee which governs the
Partnership pursuant to Section 5.1.
"FAIR MARKET VALUE" of any Contributed Asset (other than the
Original Properties, which have the Fair Market Values shown on Exhibit A) means
the gross fair market value of that asset (I.E., without regard to any
liabilities assumed by the Partnership or to which that asset is subject) as
determined by the Executive Committee. The Executive Committee shall, in its
discretion, use such method as it deems reasonable and appropriate to allocate
the Fair Market Value of any group of Contributed Assets (other than the
Original Properties) transferred to the Partnership in a single or integrated
transaction among each separate asset. The Fair Market Value of any Contributed
Asset will reflect any adjustments made pursuant to Section 3.7(c).
"FLORIDA ACT" means the Florida Revised Uniform Partnership Act
of 1995, Florida Statutes Section 620.81001 to Section 620.8908, as it may be
amended from time to time, and any successor to such Act.
"GENERAL PARTNER" means LNR Land Partners Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of LNR, or any successor to such
Person admitted as a Partner of the Partnership, in its capacity as a Partner of
the Partnership.
"LENNAR" means Lennar Corporation, a Delaware corporation.
"LIQUIDATION DATE" means the earlier of the date upon which (i)
the Partnership is terminated under Section 708(b)(1) of the Code or (ii) the
Partnership ceases to be a going concern.
"LNR" means LNR Property Corporation, a Delaware corporation.
"MANAGEMENT AGREEMENT" means the management agreement, dated
[the date hereof], between the Partnership and the Manager, pursuant to which
the Manager will conduct the day-to-day activities of the Partnership.
"MANAGER" means Lennar in its capacity as manager under the
Management Agreement or, if the Management Agreement terminates, the manager
under a successor agreement. If there is no management agreement, the Managing
General Partner will be the Manager.
3
<PAGE>
"MANAGING GENERAL PARTNER" means Lennar Land Partners Sub, Inc.,
a Delaware corporation and a wholly-owned subsidiary of Lennar, or any successor
to such Person admitted as a Partner of the Partnership, in its capacity as a
Partner of the Partnership.
"MASTER PLAN" means a subdivision plan, zoning plan or other
plan required to be filed with any governmental authority relating to the manner
in which a property can be developed.
"NET FAIR MARKET VALUE" means (a) in the case of any Contributed
Asset, the Fair Market Value of the Contributed Asset reduced by any
indebtedness or liabilities assumed by the Partnership, or to which the
Contributed Asset is subject, when the Contributed Asset is contributed to the
Partnership and (b) in the case of any asset distributed to a Partner pursuant
to Section 4.3 or distributed in liquidation of the Partnership pursuant to
Sections 10.3 and 10.4, the Fair Market Value of the asset at the time it is
distributed reduced by any indebtedness assumed by the Partner, or to which the
asset is subject, when it is distributed.
"ORIGINAL PROPERTIES" mean the assets described on Exhibit A.
"PARTNER" means the Managing General Partner, the General
Partner and any Person admitted as a general partner pursuant to Article VII or
IX of this Agreement.
"PARTNER MINIMUM GAIN" has the meaning set forth in Regulation
Section 1.704-2(i).
"PARTNERSHIP" means the general partnership created pursuant to
this Agreement.
"PARTNERSHIP INTEREST" means the interest of a Partner in the
Partnership under this Agreement and the Florida Act.
"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in
Regulation Section 1.704-2(d).
"PERCENTAGE INTEREST" of a Partner at a point in time means the
quotient of that Partner's Capital Account at that point in time divided by the
total Capital Accounts of all the Partners at that point in time.
"PERSON" means an individual or a corporation, partnership,
limited liability company, trust, estate, unincorporated organization,
association or other entity.
"REGULATIONS" mean the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"UNREALIZED GAIN" attributable to a Partnership asset means, as
of any date, the excess, if any, of the fair market value of the asset (as
determined under Section 3.7(d)) on that date over the Carrying Value of the
asset on that date (prior to any adjustment to be made pursuant to Section
3.7(d) as of that date).
"UNREALIZED LOSS" attributable to a Partnership asset means, as
of any date, the excess, if any, of the Carrying Value of the asset on that date
(prior to any adjustment to be made pursuant to Section 3.7(d) on that date)
over the fair market value of the asset (as determined under Section 3.7(d)) on
that date.
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ARTICLE III
Capital Contributions
3.1 INITIAL CAPITAL CONTRIBUTIONS. The aggregate Net Fair Market
Value on the date of this Agreement of the Capital Contribution made by each
Partner is $_____________ and the initial Percentage Interest of each Partner is
50%.
3.2 VOLUNTARY CONTRIBUTIONS. A Partner may with the consent of
the Executive Committee (but not without it) make voluntary contributions of
capital to the Partnership.
3.3 REQUIRED ADDITIONAL CAPITAL CONTRIBUTIONS. (a) If at any
time the Managing General Partner requests that the Executive Committee require
the Partners to make additional capital contributions to the Partnership in a
specified aggregate amount (the requested aggregate amount being a "Requested
Additional Capital Contribution") and the Executive Committee approves the
request, each Partner will be required to contribute to the Partnership a
portion of the aggregate amount approved by the Executive Committee (the
"Additional Capital Contribution"), whether or not it is the same as the
Requested Additional Capital Contribution) equal to the Partner's Percentage
Interest (the portion of an Additional Capital Contribution which a Partner is
required to contribute being the "Partner's Additional Contribution"). The
Executive Committee may reject a request for a Requested Additional Capital
Contribution, may approve Additional Capital Contributions in an aggregate
amount which is greater or less than the Requested Additional Capital
Contribution, and may cause the Partnership to borrow some or all of the funds
which would have been provided by the Requested Additional Capital Contribution
instead of asking the Partners to contribute those funds.
(b) Each Partner will make any Partner's Additional Contribution
it is required to make within 20 business days after the day on which the
Executive Committee approves the Additional Capital Contribution of which the
Partner's Additional Contribution is a part, by wire transfer to a bank account
of the Partnership specified by the Executive Committee.
(c) If any Partner (the "Non-Contributing Partner") fails to
make any Partner's Additional Contribution when it is due, the Partner which
made its required Partner's Additional Contribution (the "Contributing Partner")
will have the option to (i) bring an action at law or in equity, in the
Partner's own name or on behalf of the Partnership, to enforce the obligation of
the Non-Contributing Partner to make the required Partner's Additional
Contribution (provided that the liability of the Non-Contributing Partner will
be limited to its own assets, and no shareholder, officer or director of the
Non-Contributing Partner will have any liability as a result of a failure of the
Non-Contributing Partner to make the required Partner's Additional
Contribution), or (ii) pay into the Partnership a sum equal to the Partner's
Additional Contribution which the Non-Contributing Partner failed to make, which
payment will be treated as (x) a capital contribution by the Non-Contributing
Partner and (y) a loan from the Contributing Partner to the Non-Contributing
Partner, which is (A) payable on demand by the Contributing Partner, (b) will
bear interest from the date the sum is paid into the Partnership until the date
it is repaid at 20% per annum (or such lower rate as is the maximum rate
permitted by law), (C) will be secured by a lien on the Non-Contributing
Partner's Partnership Interest, and (D) will be automatically repaid (whether or
not the Contributing Partner has demanded payment) by the Partnership's paying
to the Contributing Partner all sums which otherwise would be paid to the
Non-Contributing Partner, to be applied first against interest, and then against
principal, until the loan and all interest on it has been repaid in full.
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3.4 NO WITHDRAWAL. No Partner will be entitled to withdraw any
part of its Capital Contribution or Capital Account or to receive any
distribution from the Partnership without the consent of the Executive
Committee.
3.5 INTEREST. No interest will be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts.
3.6 LOANS TO THE PARTNERSHIP. No Partner may lend to the
Partnership or advance money for the Partnership's benefit without the approval
of the Executive Committee. Except as otherwise provided in Section 3.3, loans
by a Partner to the Partnership, or advances by a Partner for the Partnership's
benefit, (a) will not be considered Capital Contributions, and (b) will be on
terms (including terms as to interest and repayment) which are approved by the
Executive Committee.
3.7 CAPITAL ACCOUNTS. (a) The Partnership will maintain a
separate Capital Account for each Partner. A Partner's Capital Account will be:
(i) increased by (A) the cash amount or Net Fair Market Value of all Capital
Contributions made by the Partner and (B) all items of Partnership income and
gain allocated to the Partner pursuant to Section 4.1, and (ii) decreased by (A)
the cash amount or Net Fair Market Value of all distributions of cash or assets
made by the Partnership to the Partner and (B) all items of Partnership
deduction and loss allocated to the Partner pursuant to Section 4.1.
(b) For the purpose of computing the amount of any item of
income, gain, loss or deduction to be reflected in a Partner's Capital Account,
the determination, recognition and classification of each item will be the same
as its determination, recognition and classification for Federal income tax
purposes (including any method of depreciation, cost recovery or amortization
used for this purpose), subject to the following exceptions:
(i) In accordance with Section 704 of the Code, any deduction
for depreciation, cost recovery or amortization attributable to a Contributed
Asset will be determined as if the adjusted basis of the asset on the date it
was contributed to the Partnership were equal to the Fair Market Value of the
asset ("BOOK DEPRECIATION"). Upon an adjustment pursuant to Section 3.7(c) or
(d) to the Carrying Value of any Partnership asset subject to depreciation,
cost recovery or amortization, any further deductions for the Book
Depreciation with regard to the asset immediately after the adjustment will be
determined as if the adjusted basis of the asset immediately after the
adjustment were equal to the Carrying Value of the asset immediately following
the adjustment. For any period, Book Depreciation attributable to any asset
will be the amount that bears the same relationship to the Fair Market Value
(in the case of Contributed Asset) or Carrying Value (immediately following
any adjustment referred to in the preceding sentence), as the case may be, of
the asset at the beginning of the period that the Federal income tax
depreciation, cost recovery or amortization deduction with respect to the
asset for the period bears to the adjusted basis of the asset at the beginning
of the period; PROVIDED that if an asset has a zero adjusted basis, the Book
Depreciation may be determined under any reasonable method selected by the
Managing General Partner. For all purposes of this Section 3.7, Book
Depreciation will be in lieu of any Federal income tax depreciation, cost
recovery or amortization deductions with respect to Partnership Assets and
will be allocated among the Partners pursuant to Section 4.1.
(ii) Any income, gain or loss resulting from the taxable
disposition of any Partnership asset will be determined as if the adjusted
basis of the asset at the date of the disposition were equal in amount to the
Carrying Value of the asset at that date. For all purposes of this Section
3.7, the income, gain or loss computed in that manner will be in lieu of any
income, gain or loss for Federal
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income tax purposes resulting from such a disposition and will be allocated
among the Partners pursuant to Section 4.1.
(iii) Any expenditures of the Partnership described, or treated
under, Regulation Section 1.704-1(b)(2)(iv)(i) as described in Section
705(a)(2)(B) of the Code and not otherwise taken into account in computing any
item of income, gain, deduction or loss for Federal income tax purposes will
be treated as an item of deduction and allocated among the Partners pursuant
to Section 4.1.
(iv) To the extent an adjustment to the adjusted basis of any
Partnership asset under Section 734(b) of the Code or Section 743(b) of the
Code is required by Regulation Section 1.704-1(b)(2)(iv)(m) to be taken into
account in determining Capital Accounts, the amount of the adjustment to the
Capital Account of each of the Partners will be treated as an item of gain (if
the adjustment increases the basis of the Partnership asset) or loss (if the
adjustment decreases its basis), and that gain or loss will be specially
allocated to the Partners in a manner consistent with the manner in which
their Capital Accounts are required to be adjusted pursuant to such
Regulation; PROVIDED that no adjustment pursuant to this Section 3.7(b)(iv)
will be made to the extent that the Managing General Partner determines that
an adjustment to Capital Accounts pursuant to Section 3.7(c) or (d) is
necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this Section 3.7(b)(iv).
(v) Any income of the Partnership that is exempt from Federal
income tax, or any expense of the Partnership that is not deductible or
available as a credit for Federal income tax purposes, will be treated as an
item of income or expense and allocated among the Partners pursuant to Section
4.1.
(c) If there is a termination of the Partnership under Section
708(b)(1)(B) of the Code, to the extent provided in applicable Regulations, the
Partnership assets will be deemed to have been distributed in liquidation of the
Partnership to the remaining Partners (including the transferee of the
Partnership Interest) and deemed contributed by those Partners and transferees
in reconstitution of the Partnership. Those deemed distributions and deemed
contributions will be made in accordance with all provisions of this Agreement
relating to Capital Accounts. In addition, in such event, the Carrying Values of
the Partnership properties will be adjusted immediately prior to the deemed
distribution pursuant to Section 3.7(d)(ii) (and those adjusted Carrying Values
will constitute the Fair Market Values of the assets upon the deemed
contribution to the reconstituted Partnership). The Capital Accounts of the
reconstituted Partnership will be maintained in accordance with the principles
of this Section 3.7.
(d) (i) Upon the admission of additional Partners pursuant to
Article IX, the Capital Accounts of all Partners and the Carrying Values of all
Partnership assets will, immediately prior to the admission of the additional
Partners, be adjusted upwards or downwards to reflect any Unrealized Gain or
Unrealized Loss attributable to those assets (as if that Unrealized Gain or
Unrealized Loss had been recognized upon an actual sale of each such asset,
immediately prior to such admission, and had been allocated to the Partners at
that time pursuant to Section 4.1). In determining such Unrealized Gain or
Unrealized Loss, the Executive Committee will determine the aggregate gross fair
market value of Partnership using any reasonable method of valuation which it
deems appropriate and shall adjust the Carrying Value of the Partnership's
assets to reflect that fair market value.
(ii) Immediately prior to a distribution (whether in connection
with a Liquidation of the Partnership or otherwise) of Partnership property
(other than a DE MINIMIS distribution, as determined by the Managing General
Partner), the Capital Accounts of all Partners and the Carrying Values of all
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Partnership assets shall, be adjusted upwards or downwards to reflect any
Unrealized Gain or Unrealized Loss attributable to those assets (as if the
Unrealized Gain or Unrealized Loss had been recognized upon an actual sale of
each asset immediately prior to the distribution, and had been allocated to the
Partners at that time pursuant to Section 4.1). In determining such Unrealized
Gain or Unrealized Loss, the Managing General Partner shall determine the
aggregate gross fair market value of the Partnership using any reasonable method
of valuation which it deems appropriate.
(iii) Notwithstanding anything to the contrary in this Section
3.7(d), all or any portion of any adjustment pursuant to Section 3.7(d)(i) or
(ii) will be made only if, and to the extent that, the Managing General Partner
reasonably determines that the adjustment is necessary or appropriate to reflect
the relative economic interests of the Partners in the Partnership.
(e) The determination of the amount of any liability for
purposes of this Section 3.7 (including, without limitation, in connection with
the computation of Net Fair Market Value, Unrealized Gain and Unrealized Loss)
will be made in accordance with Section 752(c) of the Code and any other
applicable provisions of the Code and Regulations.
(f) If all or a portion of a Partnership Interest is transferred
in accordance with the terms of this Agreement, the transferee will succeed to
the Capital Account of the transferor in accordance with Regulation Section
1.704-1(b)(2)(iv)(1).
(g) It is the intention of the Partners that Capital Accounts
will be determined in a manner so that the allocations in this Agreement will
have, or be deemed to have, substantial economic effect under Section 704(b) of
the Code and Regulations thereunder. If the Managing General Partner determines
that it is prudent to modify the manner in which Capital Accounts, or any debits
or credits (including, without limitation, debits or credits relating to
liabilities that are secured by contributed or distributed property or that are
assumed by the Partnership or the Partners or their Affiliates), are computed in
order to comply with such Regulations, the Managing General Partner shall make
that modification. The Managing General Partner may also make any modifications
to this Agreement which are necessary so unanticipated events will not cause
this Agreement to fail to comply with those Regulations.
ARTICLE IV
Allocations and Distributions
4.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. (a) For purposes
of maintaining the Capital Accounts, except as otherwise provided in this
Section 4.1, each item of Partnership income, gain, loss and deduction will be
allocated to the Partners in proportion to their respective Percentage
Interests, determined as of the end of each fiscal year or other applicable
period and before taking into account the allocations under this Section 4.1.
(b) Notwithstanding anything to the contrary in this Agreement,
if there is a net decrease in Partnership Minimum Gain or Partner Minimum Gain
for any fiscal year, each Partner will be specially allocated items of
Partnership income and gain for that fiscal year (and, if necessary, for each
subsequent fiscal year) equal to that Partner's share of the net decrease in
Partnership Minimum Gain and Partner Minimum Gain for that fiscal year to the
extent required in Regulation Sections 1.704-2(f) and 1.704-2(i)(4). This
Section 4.1(b) is intended to constitute a "minimum gain
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chargeback" and "partner minimum gain chargeback" within the meaning of those
Regulations and is to be interpreted consistently with those Regulations.
(c) The Managing General Partner is authorized to adopt any
convention or combination of conventions (including, without limitation, a
semi-monthly or full-month convention) likely to be upheld under Section 706 of
the Code regarding the allocation of items of Partnership income, gain, loss and
deduction with respect to a transferred Partnership Interest or a newly issued
Partnership Interest.
(d) Except as otherwise provided in Section 4.1(b), if Federal
income tax principles dealing with the deduction, apportionment or allocation of
tax items between or among commonly controlled taxpayers apply to any
transaction between the Partnership and a Partner, any items of Partnership
income, gain, loss or deduction with regard to that transaction shall be
allocated by the Managing General Partner, and correlative adjustments to
Capital Accounts will be deemed to have been made by the Managing General
Partner, such that each Partner will be in the same net after-tax position it
would have been in (to the fullest extent practicable and taking into account
net after-tax disparities, if any, remaining from prior taxable years), and have
the same Capital Account balance that it would have had (to the fullest extent
practicable and taking into account Capital Account disparities, if any,
remaining from prior taxable years) if those Federal income tax principles had
not applied.
4.2 ALLOCATIONS FOR TAX PURPOSES. (a) For Federal, state and
local income tax purposes, except as otherwise provided in this Section 4.2,
each item of Partnership income, gain, loss and deduction shall be allocated to
the Partners consistent with the allocations of income, gain, loss and deduction
described in Section 4.1.
(b) In the case of a Contributed Asset or Adjusted Asset, items
of income, gain, and loss and depreciation, cost recovery and amortization
deductions, attributable to the Contributed Asset or Adjusted Asset will be
allocated for Federal income tax purposes among the Partners as follows:
(i) In the case of a Contributed Asset, deductions for
depreciation, cost recovery or amortization attributable to the asset and gain
or loss upon the sale or other disposition of the assets will be allocated to
the Partners in accordance with Regulation Section 1.704-3, using methods
permitted by that Regulation selected by the Managing General Partner.
(ii) In the case of an Adjusted Asset which was not originally
a Contributed Asset, such items will be allocated among the Partners in a
manner consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to the
Adjusted Asset and the allocations of that Unrealized Gain or Unrealized Loss
pursuant to Section 3.7(d)(i). In the case of an Adjusted Asset which was
originally a Contributed Asset, such items shall be allocated among the
Partners in a manner consistent with Section 4.2(b)(i).
(c) All items of income, gain, loss, deduction, credit and basis
allocation recognized by the Partnership for Federal income tax purposes and
allocated to the Partners in accordance with the provisions of this Section 4.2
will be determined without regard to any election under Section 754 of the Code
that may be made by the Partnership; PROVIDED that those allocations, once made,
will be adjusted, as necessary or appropriate, to take into account the
adjustments permitted by Sections 734 and 743 of the Code and, where
appropriate, to provide only Partners recognizing gain on Partnership
distributions covered by Section 734 of the Code with the Federal income tax
benefits attributable to the increased basis in Partnership assets resulting
from any election under Section 754 of the Code.
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(d) Any credits of the Partnership will be allocated to the
Partners in accordance with their respective Percentage Interests.
(e) Allocations pursuant to this Section 4.2 are solely for
Federal, state and local tax purposes and will not affect, or in any way be
taken into account in computing, any Partner's Capital Account or share of
income, gain, loss and deduction described in Section 4.1 or distributions
pursuant to any provision of this Agreement.
(f) The Partners are aware of the income and other tax
consequences of the allocations made by this Article IV and agree to report
their shares of items of Partnership income, gain, loss, deduction and credit in
accordance with this Article IV; subject, however, to any adjustments required
as a result of an audit of the Partnership or a Partner by a taxing authority.
4.3 DISTRIBUTIONS. The Executive Committee may from time to time
cause the Partnership to distribute cash or other property to the Partners in
accordance with their respective Percentage Interests.
ARTICLE V
Governance and Management of Business
5.1 EXECUTIVE COMMITTEE. The Partnership will be governed by an
Executive Committee as follows:
(a) The Executive Committee will consist of not more than three
members designated by each Partner. The members of the Executive Committee
designated by a Partner (the Partner's "Representatives") will act as
representatives of that Partner, and in voting or otherwise acting in their
capacity as members of the Executive Committee, the Representatives of a Partner
will have no obligation to consider what may be in the best interests of any
other Partner and will have no fiduciary or other obligations to any other
Partner. All the members of the Executive Committee designated by a Partner
will, together, have one vote, which they will cast as determined by the Partner
(or by those representatives in accordance with authority granted to them by the
Partner). Except as provided in subsection (c) of this Section, all actions of
the Executive Committee will be by majority vote (based upon one vote per
Partner). Each Partner will have the power to remove and replace any member of
the Executive Committee designated by that Partner.
(b) The business and affairs of the Partnership will be managed
by or under the direction of the Executive Committee, except (i) as specifically
provided in this Agreement or in the Management Agreement, and (ii) that, except
as provided in subsection (c) of this Section, the Executive Committee may
delegate authority to the Managing General Partner or its designees to manage
the affairs of the Partnership.
(c) Each of the following matters will require the unanimous
vote of the Executive Committee (based upon one vote per Partner):
(i) The acquisition by the Partnership of any real property,
other than the acquisition by the Partnership of the Original
Properties.
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(ii) The sale of any real property to a Partner or an
Affiliate of a Partner, other than upon exercise by that Partner
or its Affiliate of an option, or under a purchase agreement,
which had been approved by the Executive Committee, or upon
exercise of the options dated on or before October 31, 1997
relating to portions of the Original Properties.
(iii) The adoption of an annual Business Plan.
(iv) Approval of a Master Plan relating to property owned by
the Partnership.
(v) Any transaction or related series of transactions
involving the expenditure by the Partnership of more than
$50,000, unless the transaction or series of transactions was
contemplated by a Business Plan adopted by the Executive
Committee as contemplated in clause (iii), in which case the
transaction or related series of transactions must be separately
approved only if it exceeds the greater of $50,000 or 110% of
the budgeted amount.
(vi) Any borrowing from, or loan to, any person (including,
but not limited to, a Partner or an Affiliate of a Partner).
(vii) Any amendment to the Management Agreement.
(viii) Any decision by the Executive Committee to require
the Partners to make Additional Capital Contributions as
contemplated by Section 3.3.
(ix) Any agreement with a Partner or an Affiliate of a
Partner, other than one described in clauses (i) through (vii).
(x) The institution of legal proceedings against anyone.
(xi) The selection of the Partnership's auditors.
If any Partner binds the Partnership to any undertaking or liability not
authorized as provided in this Agreement, that Partner will indemnify the
Partnership and each of the other Partners against, and hold each of them
harmless from, any loss, liability or expense (including reasonable attorneys'
fees) incurred by the Partnership or the other Partner as a result of the
unauthorized action.
(d) QUORUM. No meeting of the Executive Committee will be
validly convened unless at least one member appointed by each Partner is
present. The Executive Committee may act without a meeting by written consent
executed on behalf of each Partner by at least one member appointed by that
Partner.
(e) MEETINGS. Meetings of the Executive Committee will be held
at such place as may be determined by the Managing General Partner. Meetings may
be called by any member of the Executive Committee on at least five days' prior
written notice to each member. Decisions made by the Executive Committee at any
meeting will be valid even if the required notice is not given if there was a
quorum present at the meeting or if all Partners waived the requirement of
notice, whether before or after the meeting.
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(f) CONFERENCE TELEPHONE. Meetings of the Executive Committee
may be held by conference telephone or similar communications equipment by means
of which all members participating in a meeting can hear each other member.
(g) MINUTES. Minutes of each meeting of the Executive Committee
will be kept by the Manager (or, if the Manager does not do that, by the
Managing General Partner) and copies will be sent to each member.
(h) LIMITATION OF LIABILITIES AND OBLIGATIONS. (i) No Partner,
no Affiliate, stockholder, officer, director, employee or agent, of any Partner,
and no Representative of any Partner will be liable to the Partnership, any
other Partner or any Affiliate of any Partner for any breach of any alleged duty
to the Partnership or to any other Partner in connection with the management of
the business and affairs of the Partnership, or the exercise of any voting
rights as a member of the Executive Committee, except to the extent such a
breach is found to have involved a knowing violation of law, or, in the case of
an individual only, an improper personal benefit.
(ii) Each Partner, through its Representatives, will be
entitled to act with regard to the business and affairs of the Partnership in
the manner it believes in its sole discretion is in the Partner's best
interests, and will be entitled to cause its Representatives to vote for or
against any matter submitted to a vote or for consent pursuant to this Agreement
in the Partner's sole discretion as it deems to be in its best interests.
Subject to clause (i), no Partner, nor any Affiliate, stockholder, officer,
director, employee or agent, including any Representative, of any Partner will
be liable to the Partnership or any other Partner or any Affiliate of any other
Partner for any such conduct. Without limiting the foregoing, each
Representative of a Partner on the Executive Committee is entitled to manage the
business and affairs of the Partnership, and exercise his or her voting rights
on the Executive Committee, in interest of the Partner for which such person is
a Representative, even if such conduct is not in the interest of the other
Partners, or the Partnership as a whole, and, subject to clause (i), no such
Representative shall be liable to the Partnership, or any other Partner or any
Affiliate of any Partner, for any such act or omission.
(iii) To the extent the provisions of this Section 5.1
eliminate or reduce any duties and liabilities of any person otherwise existing
at law or in equity, the Partners have expressly agreed to eliminate or reduce
those obligations. To the extent that, but for these provisions, any person
would have duties (including fiduciary duties) to the Partnership, the Partners
or any Affiliate of any Partner, or could be liable for failing to perform those
duties, the person is entitled to rely on the provisions of this Section 5.1,
and, except as provided in clause (i), will not be liable to the Partnership,
any Partner or any Affiliate of any Partner for acts or omissions in good faith
reliance on the provisions of this Section 5.1.
5.2 MANAGEMENT AGREEMENT. The Partnership will enter into the
Management Agreement with the Manager. Pursuant to the Management Agreement, the
Manager will conduct the day-to-day activities of the Partnership, including but
not limited to, overseeing planning and development of properties, overseeing
sales of portions of properties to Lennar and its Affiliates upon exercise of
options or otherwise, and the marketing and sale of portions of properties to
other builders. The Manager will be compensated as provided in of the Management
Agreement. Unless otherwise specifically directed by the Executive Committee or
provided in Section 5.1, the Manager will be authorized, without further
approval of the Executive Committee, to conduct the day-to-day operations and
business of the Partnership in accordance with the applicable Business Plan and
Budget or as otherwise provided in Section 5.5.
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5.3 INDEMNIFICATION. The Partnership shall indemnify each member
of the Executive Committee, the Manager and each employee, director or officer
of the Manager as follows:
(a) OBLIGATION TO INDEMNIFY. To the extent permitted by law, the
Partnership will indemnify each Partner, each person who at any time is or was a
member of the Executive Committee, the Manager and each person who at any time
is or was an employee, director or officer of the Manager (each, an "INDEMNIFIED
PERSON") against, and will hold each Indemnified Person harmless from, any
liability, loss, damage, or reasonable expense (including reasonable attorneys'
fees and other costs of investigation and defense and any amounts expended in
the settlement of any claims) incurred in connection with or resulting from a
claim, action, suit, investigation, or proceeding (other than one brought by the
Partnership on its own behalf) by reason of the Indemnified Person's being or
having been a Partner, a member of the Executive Committee, the Manager or an
employee, director or officer of the Manager, except in instances in which the
Indemnified Person is found not to have acted in good faith or to have acted in
a manner opposed to the best interests of the Partnership and, in addition, with
respect to any criminal action or proceeding, except in instances in which the
Indemnified Person had reasonable grounds to believe that conduct was lawful.
(b) SOURCE OF INDEMNIFICATION. Any indemnification pursuant to
this Section 5.3 will be recoverable only from the assets of the Partnership and
not from the assets of the Partners.
5.4 INSURANCE. The Partnership may purchase insurance insuring
the Manager and any Person who is or was a member of the Executive Committee, an
officer, employee, or agent of the Partnership, or an employee, director or
officer of the Manager against any liability asserted against that Person
because that Person served in that capacity or because of any action or omission
by that Person in that capacity, whether or not the Partnership would have the
power to indemnify the Person against the applicable liability under the
provisions of this Agreement.
5.5 ANNUAL BUSINESS PLAN. Attached to this Agreement as Exhibit
C is the Business Plan for the period from the inception of the Partnership to
the end of the Partnership's fiscal year ending November 30, 1997. Not later
than two months before the end of each fiscal year of the Partnership, the
Manager will submit to the Executive Committee a proposed Business Plan for the
next succeeding Partnership fiscal year, which will include a schedule for
development of particular properties, a property development budget, and, if
applicable, a property acquisition budget and such other schedules and details
as are reasonably necessary to enable the Partners fully to understand, and to
evaluate, the proposed Business Plan. If the Executive Committee does not
approve a Business Plan for a fiscal year prior to the beginning of the fiscal
year, until the Executive Committee approves the Business Plan and Budget for
the fiscal year:
(i) the Manager will continue all property development
projects and marketing programs which were in process at the end of the prior
fiscal year,
(ii) the Partnership will not begin any new property
development projects,
(iii) any items or portions of the Business Plan and amounts
of expenses provided therein which have been approved by the Executive Committee
shall become operative immediately and the Partnership shall be entitled to
expend funds in accordance with those operative portions;
(iv) the Partnership will be entitled to expend, in respect
of noncapital, recurring expenses in any quarter of the then-current fiscal
year, an amount equal to the budgeted amount for the corresponding quarter of
the immediately preceding fiscal year, as set forth on the immediately
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preceding fiscal year's Business Plan, after giving effect to any dispositions
or other material changes to the Partnership property or its operations during
the prior fiscal year; provided, however, that if any contract approved by the
Executive Committee provides for an automatic increase in costs thereunder after
the beginning of the then current fiscal year, then the Partnership shall be
entitled to expend the amount of such increase;
(v) the Partnership shall be entitled to expend funds in
respect of debt service on the Partnership's financing (including the expense of
curing any defaults); and
(vi) the Manager will cause the Partnership to conduct its
other activities in a manner consistent with the way in which they were
conducted during the prior fiscal year, except to the extent of differences
because of prior contractual obligations of the Partnership.
5.6 REIMBURSEMENT OF PARTNERS. (a) Each Partner shall be
reimbursed by the Partnership as a cost of the Partnership for all expenses,
disbursements and advances incurred or made in connection with the organization
of the Partnership and the qualification of the Partnership to do business.
(b) Each Partner shall be reimbursed on a monthly basis, or such
other basis as the Executive Committee may determine, for all direct
out-of-pocket expenses the Partner incurs on behalf of the Partnership
(including amounts paid to other Persons to perform services to the
Partnership). Except to the extent provided in the Management Agreement, no
Partner will be reimbursed for time spent by its employees on matters relating
to the Partnership.
5.7 OUTSIDE ACTIVITIES. Any Partner or Affiliate of a Partner
may have business interests and engage in business activities in addition to
those relating to the Partnership, including business interests and activities
which conflict with or are in direct competition with the Partnership. Without
limiting what is said in the preceding sentence, any Partner or any Affiliate of
a Partner (including Lennar, even though it is the Manager) may acquire
properties for its own account without considering whether those properties
would be suitable for the Partnership, and if a Partner or an Affiliate of a
Partner (including Lennar in its role as Manager) proposes to the Executive
Committee that the Partnership acquire a property on particular terms but the
Executive Committee does not approve the acquisition of the property, the
Partner who proposed that the Partnership acquire the property, or any other
Partner, may acquire all or any portion of the property for its own account on
the same terms as those on which it was proposed that the Partnership acquire
the property or on any other terms, even if the other terms are more favorable
to the buyer than the terms proposed to the Partnership.
5.8 DEALINGS WITH PARTNERSHIP. Subject to the approval
requirements of Section 5.1, any Partner or any Affiliate of a Partner
(including Lennar, even though it is the Manager) may acquire properties or
other assets, or interests in them, from, sell properties or other assets, or
interests in them, to, borrow or lend money from or to, and enter into option
agreements or other agreements with, the Partnership on any terms which are
approved by the Executive Committee. Neither the Partnership nor any of the
Partners will have any rights by virtue of this Agreement or the partnership
relationship created by it to participate in any business ventures of any other
Partners or Affiliates of other Partners or any revenues, profits or losses from
any such business ventures.
5.9 PARTNERSHIP FUNDS. Until funds of the Partnership are used
in connection with Partnership activities or distributed to the Partners, the
funds shall be deposited in the Partnership's name in such bank accounts as the
Manager determines or may be invested in commercial paper,
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money market funds or other short or long term investments which the Manager
deems appropriate for the Partnership.
5.10 TITLE TO PARTNERSHIP ASSETS. All Partnership assets,
whether real, personal or mixed, tangible or intangible, will be owned by the
Partnership as an entity, and no Partner individually (or collectively with
other Partners) will have any ownership interest in any Partnership assets.
Title to Partnership assets may be held in the name of the Partnership or one or
more nominees, as the Manager may determine. All Partnership assets will be
recorded on the books of the Partnership as being owned by the Partnership
irrespective of the name in which legal title to such Partnership assets is
held.
ARTICLE VI
Books, Records, Accounting and Reports
6.1 RECORDS AND ACCOUNTING. Complete and accurate books of
account of the Partnership will be kept at the Partnership's principal place of
business and will be open to inspection by any of the Partners or their
authorized representatives at any reasonable times during business hours. The
books of the Partnership will be maintained, for financial reporting purposes,
on an accrual basis in accordance with generally accepted accounting principles.
All decisions as to accounting matters, except as specifically provided to the
contrary in this Agreement, will be made by the Manager.
6.2 FISCAL YEAR. The fiscal year of the Partnership will end on
November 30 of each year or such other date as may be required to be used for
Federal income tax purposes.
6.3 FINANCIAL STATEMENTS AND FINANCIAL INFORMATION. (a) As soon
as practicable, but in no event later than 60 days, after the close of each
fiscal year, the Manager will cause financial statements of the Partnership for
the fiscal year, prepared in accordance with generally accepted accounting
principles, including a balance sheet, a statement of income, a statement of
Partners' equity and a cash flow statement, audited by a firm of independent
public accountants selected by the Manager and approved by the Executive
Committee, to be given to each Partner.
(b) As soon as practicable, but in no event later than the
fifteenth day, after the end of each month, the Manager will cause a flash
report regarding the net income, cash flow and other material operating results
of the Partnership during the month, to be given to each Partner.
(c) As soon as practicable, but not later than the 25th day,
after the end of each month, the Manager will cause financial statements and
other relevant financial information about the Partnership during and at the end
of the month, to be given to each Partner.
(d) As soon as practicable, but in no event later than 30 days,
after the close of each fiscal quarter, except the last quarter of each fiscal
year, the Manager will cause quarterly financial information about the
Partnership, including any financial information which any Partner requires for
any filing it is required to make with the Securities and Exchange Commission,
any stock exchange or securities quotation system, or any other governmental or
self-regulatory organization, to be given to each Partner.
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(e) The Partnership will, and will cause the Manager to,
cooperate in all ways with each of the Partners in enabling the Partner to make
all filings it is required to make generally, or in connection with offerings of
its securities or other transactions, with the Securities and Exchange
Commission, any stock exchange or securities quotation system, or any other
governmental agency or self-regulatory organization, including causing financial
information to be prepared in sufficient detail to enable the Partner to comply
with applicable Securities and Exchange Commission or other governmental
regulations and including permitting auditors for the Partner to review the
audit workpapers relating to the Partnership and to make comfort reviews or
other reviews regarding the Partnership.
6.4 OTHER INFORMATION. The Manager may release to the public
such information concerning the operations of the Partnership as is customary in
the industry or required by law or regulation of any regulatory body.
6.5 REIMBURSEMENT. The Partnership will pay all costs relating
to matters described in this Article VI.
ARTICLE VII
Tax Matters
7.1 RECOGNITION OF PARTNERSHIP. The Partners recognize that this
Agreement creates a partnership for U.S. Federal income tax purposes, and the
Partners shall not elect to be excluded from the application of Subchapter K of
Chapter I of Subtitle A of the Code, or any similar state statute.
7.2 PREPARATION OF TAX RETURNS. The Managing General Partner
shall arrange for the preparation and timely filing of all returns of
Partnership income, gains, deductions, losses and other items necessary for
Federal and state income or other tax purposes and shall use all reasonable
efforts to furnish to each Partner within 75 days after the close of each
taxable year the tax information reasonably required by the Partners for Federal
and state income tax reporting purposes. Each Partner shall provide to the
Manager, when and as requested, all information concerning the affairs of the
Partner which is reasonably required to permit the preparation of such returns.
The Partnership will not file any federal or state income tax return until it
has been approved by the Executive Committee.
7.3 ACCOUNTING METHODS; TAX ELECTIONS. The classification,
realization and recognition of income, gains, losses and deductions and other
items with regard to the Partnership will be on the accrual method of accounting
for Federal income tax purposes; PROVIDED that the Managing General Partner may
change the method of accounting used for Federal income tax purposes if the
Managing General Partner determines that such a change would be possible and
desirable. The taxable year of the Partnership will be the same as the
Partnership's fiscal year, unless the Managing General Partner determines
otherwise. The Partnership shall elect to deduct expenses incurred in organizing
the Partnership ratably over a 60-month period as provided in Section 709 of the
Code. The Managing General Partner may make or revoke (if made) the election
under Section 754 of the Code. Except as specifically provided in this
Agreement, the Managing General Partner may determine whether the Partnership
should make any other available tax elections or select any other appropriate
tax accounting methods or conventions.
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7.4 TAX CONTROVERSIES. The Managing General Partner is
designated the "Tax Matters Partner" (as defined in Section 6231 of the Code)
and is authorized to represent the Partnership (at the Partnership's expense) in
connection with all examinations of the Partnership's affairs by tax authorities
and all resulting administrative and judicial proceedings, and to expend
Partnership funds for costs of professional services and other costs incurred in
connection with those examinations and proceedings. Any Partner may participate
in any such examination or proceeding at the Partner's expense. Each Partner
shall cooperate with the Managing General Partner in connection with all tax
examinations and resulting administrative or judicial proceedings. The Managing
General Partner may not agree to any settlement or adjustment to any tax item in
connection with any examination by any tax authority or legal proceeding without
the consent of the Executive Committee.
7.5 WITHHOLDING. Notwithstanding any other provision of this
Agreement, the Managing General Partner is authorized to cause the Partnership
to comply with any Federal, state, local or foreign withholding requirement with
respect to any payment or distribution by the Partnership to any Partner or
other Person. Any amount withheld from a payment or distribution to a Partner
and paid over to a tax authority will, for the purposes of this Agreement, be
treated as having been paid or distributed to the Partner. Any amount withheld
from any payment or distribution by any Person to the Partnership will be
treated as a distribution to the Partners allocated among them in accordance
with Section 4.3 or Article X, as the case may be.
7.6 REIMBURSEMENT. The Managing General Partner will be
reimbursed for all out-of-pocket costs relating to matters described in Sections
7.2 through 7.5.
ARTICLE VIII
Transfer of Interests
8.1 RESTRICTIONS ON TRANSFER. Except as otherwise provided in
this Article VIII, no Partner may directly or indirectly assign, transfer,
hypothecate, or otherwise dispose of all or any portion of its Partnership
Interests (including, without limitation, any right to receive distributions or
allocations of profits or losses in respect of such Partnership Interests),
whether voluntarily, by operation of law or otherwise (a "TRANSFER" for purposes
of this Article VIII), and any attempt to do so will be null and void and will
not bind, or be recognized by, the Partnership. In addition, neither Lennar nor
LNR may, without the prior written consent of the other of them, transfer any
interest in the Managing General Partner or the General Partner.
8.2 PERMISSIBLE TRANSFERS. Notwithstanding the provisions of
Section 8.1, at any time after November 30, 2002, a Partner may, upon compliance
with Section 8.3, transfer all, but not less than all, of the Partner's
Partnership Interests to a Person on terms permitted by Section 8.3, provided
that (i) the transferee agrees in writing (in a form approved by the other
Partner) to be bound as a party to this Agreement and (ii) the Partnership
receives a written opinion from its counsel that the transferee's acquisition of
the Partnership Interest will not cause the termination of the Partnership or
loss of partnership status under the Code or cause the Partnership to be deemed
to be other than a U.S. partnership for purposes of the Code.
8.3 RIGHT OF FIRST REFUSAL. If a Partner (the "DISPOSING
PARTNER") proposes to transfer all, but not less than all, of its Partnership
Interests to any Person, the Disposing Partner may give the other Partner (the
"NOTIFIED PARTNER") a written notice (a "NOTICE OF INTENTION") stating that the
Disposing Partner intends to sell its Partnership Interests, identifying the
Person to whom the
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Partnership Interests are to be sold and stating the price and other terms of
the proposed sale. The Notified Partner may then, by a notice to the Disposing
Partner given within 30 days after the day on which the Notice of Intention was
given, elect to purchase the Partnership Interests of the Disposing Partner for
the price and on the terms specified in the Notice of Intention. If the Notified
Partner gives that notice, the closing of the purchase will take place at the
Partnership's principal office (or another place agreed upon by the Disposing
Partner and the Notified Partner) at a time and on a date specified in the
notice, which is not fewer than 10 nor more than 30 days after the day on which
the notice is given. If the Notified Partner does not give that notice, the
Disposing Partner may within 90 days after the end of the 30 day period, sell
the Disposing Partner's Partnership Interests to the Person identified in the
Notice of Intention for a price, and on other terms, which are not more
favorable to the buyer than those stated in the Notice of Intention.
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ARTICLE IX
Admission of Partners
9.1 ADMISSION OF ADDITIONAL PARTNERS. The Partners may by
unanimous written consent (but not otherwise), admit new Partners to the
Partnership from time to time. Each new Partner will be admitted when the new
Partner executes this Agreement or an appropriate supplement to it in which the
new Partner agrees to be bound by the terms and provisions of this Agreement as
they may be modified by that supplement. Admission of a new Partner will not
cause dissolution of the Partnership.
9.2 INTEREST OF NEW PARTNER. A newly admitted Partner's Capital
Contribution and share of the Partnership's profits and losses will be set forth
in the written consents of the Partners described in Section 9.1.
ARTICLE X
Dissolution and Liquidation
10.1 DISSOLUTION. Except as otherwise provided in this
Agreement, the business of the Partnership will be continued by the Partners
pursuant to this Agreement, notwithstanding the occurrence of any event which
would result in the dissolution of a Partnership under the laws of the State of
Florida, and no Partner will be released or relieved of any duty or obligation
under this Agreement by reason of any such event. The Partnership will dissolve,
and its affairs will be wound up, upon:
(a) the unanimous approval of all the Partners;
(b) an election to dissolve the Partnership by a Partner as
provided in Section 1.4;
(c) the bankruptcy or insolvency of the Partnership; or
(d) the sale or disposition of all or substantially all of the
assets of the Partnership.
10.2 EFFECT OF DISSOLUTION. Upon dissolution of the Partnership
in accordance with Section 10.1, the Partnership will conduct only activities
necessary to wind up its affairs.
10.3 LIQUIDATION. Upon dissolution of the Partnership pursuant
to Section 10.1, as expeditiously as possible, the Executive Committee shall
appoint a special liquidator (which may be a Partner and may be the Manager) to
wind up the affairs of the Partnership, liquidate the assets of the Partnership
in accordance with a plan prepared by the liquidator and approved by the
Executive Committee, and apply and distribute the proceeds of such liquidation
in the following order of priority, unless otherwise required by mandatory
provisions of applicable law:
(a) to the payment of all costs and expenses of the liquidation;
(b) to creditors of the Partnership, including Partners, in
order of priority provided by law, and the creation of a reserve of cash or
other assets of the Partnership for contingent liabilities in an amount, if any,
determined by the liquidator to be appropriate for that purpose; and
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(c) to the Partners in accordance with the positive balances in
their respective Capital Accounts, after taking into account all adjustments to
Capital Accounts for all periods.
If upon liquidation of the Partnership any Partner has a deficit balance in its
Capital Account, that Partner shall promptly contribute the amount of the
deficit to the Partnership for payment or distribution in accordance with the
preceding sentence.
10.4 DISTRIBUTION IN KIND. If upon dissolution of the
Partnership, the liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the liquidator may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership (other
than those to Partners) and may distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 10.3(b),
undivided interests in the Partnership assets which the liquidator deems not
suitable for liquidation. Any such distributions in kind will be subject to such
conditions relating to the disposition and management of particular assets as
the liquidator deems reasonable and equitable and to any options and any
agreements governing the operation of those assets which are in effect when they
are distributed in kind. The liquidator shall determine the fair market value of
any asset distributed in kind using such reasonable method of valuation as it
deems appropriate.
10.5 REASONABLE TIME FOR WINDING UP. A reasonable time will be
allowed for the orderly winding up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 10.3 in order
to minimize any losses otherwise attendant upon such winding up.
10.6 WAIVER OF PARTITION. Each Partner waives any right to
partition of the Partnership property.
10.7 VOLUNTARY TERMINATION. Notwithstanding anything contained
in this Article X to the contrary, if either Partner desires to terminate the
Partnership pursuant to Section 1.4, that Partner (the "TERMINATING PARTNER")
will give written notice to the other Partner (the "RECEIVING PARTNER") of its
intention to terminate. The Receiving Partner will then have 30 days either to
(i) agree in writing to a termination of the Partnership in accordance with
Sections 10.1 through 10.5, or (ii) propose a price at which the Receiving
Partner would be willing to purchase the Partnership Interests of the
Terminating Partner. If the Receiving Partner proposes a purchase price, the
Terminating Partner may (i) accept the proposed purchase price and sell its
Partnership Interests to the Receiving Partner for the proposed purchase price,
or (ii) reject the proposed purchase price and buy the Receiving Partner's
Partnership Interests for the proposed purchase price.
ARTICLE XI
General Provisions
11.1 INDEMNIFICATION BY PARTNERS. Each Partner will indemnify
the Partnership and each of the other Partners against, and hold each of them
harmless from, any expense or liability resulting from or arising out of any
gross negligence or wilful misconduct on the part of the indemnifying Partner to
the extent the amount is not covered by insurance carried by the Partnership.
11.2 CONTRIBUTION BY PARTNERS. If any Partner (the "Paying
Partner") makes any payment as a result of a liability of the Partnership, or
incurs any costs or expenses on behalf of the
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Partnership, and the Paying Partner is not promptly reimbursed by the
Partnership for the amount paid, or the costs or expenses incurred, by the
Paying Partner, each other Partner will make a payment to the Paying Partner,
promptly after being requested to do so by the Paying Partner, equal to (i) the
amount paid, or the costs or expenses incurred, by the Paying Partner, times
(ii) the other Partner's Percentage Interest, so that, after the payments by all
the other Partners, each Partner (including the Paying Partner) will have borne
a portion of the total amount paid by all the Partners as a result of the
liability of the Partnership, or the total costs or expenses incurred by all the
Partners on behalf of the Partnership, equal to the Partner's Percentage
Interest.
11.3 NOTICES. Any notice, report or other communication required
or permitted to be given to a Partner under this Agreement must be in writing
and will be deemed given or made when delivered in person or sent by facsimile
transmission, or on the third day after the day when mailed by first class mail
from within the United States of America, to the Partner at the following
address (or at the most recent address specified to the sender by the addressee
in the manner provided in this Section):
If to Lennar Land Partners Sub, Inc.
Lennar Land Partners Sub, Inc.
c/o Lennar Corporation
700 N.W. 107th Avenue
Miami, Florida 33172
Attention: President
Facsimile No.: (305) 226-7691
If to LNR Land Partners Sub, Inc.
LNR Land Partners Sub, Inc.
c/o LNR Property Corporation
760 N.W. 107th Avenue
Miami, Florida 33172
Attention: President
Facsimile No.: 305-226-7691
11.4 AMENDMENTS. This Agreement may be amended at any time with
the written consent of all Partners.
11.5 TITLES AND CAPTIONS. The article and section titles or
captions in this Agreement are for convenience only, and are not intended to
affect the terms or the interpretation of this Agreement.
11.6 BINDING EFFECT. This Agreement will be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns, except to the extent of any contrary provision
in this Agreement.
11.7 INTEGRATION. This Agreement constitutes the entire
agreement among the parties relating to the subject matter of this Agreement and
supersedes all prior agreements and understandings relating to that subject
matter.
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11.8 CREDITORS. None of the provisions of this Agreement will be
for the benefit of or enforceable by any creditors of the Partnership or of any
Partner.
11.9 COUNTERPARTS. The parties may execute this Agreement in two
or more counterparts, each of which will be an original, but all of which will
constitute one and the same document.
11.10 APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of Florida.
11.11 SURVIVAL. All indemnities and reimbursement obligations in
this Agreement will survive dissolution and liquidation of the Partnership until
expiration of the longest applicable statute of limitations (including
extensions and waivers) with respect to any matter for which a party would be
entitled to be indemnified or reimbursed, as the case may be.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
or caused it to be executed on their behalf, as of the date shown on the first
page of this Agreement.
LENNAR LAND PARTNERS SUB, INC. LNR LAND PARTNERS SUB, INC.
By:/S/ CORY J. BOYDSTON By:/S/ SHELLY RUBIN
--------------------- ------------------------
Name: Cory J. Boydston Name: Shelly Rubin
Title: Vice President Title: Vice President
Address: Address:
700 Northwest 107th Avenue 760 Northwest 107th Avenue
Miami, Florida 33172 Miami, Florida 33172
Facsimile No.: Facsimile No.:
LENNAR CORPORATION LNR PROPERTY CORPORATION
By:/S/ CORY J. BOYDSTON By:/S/ SHELLY RUBIN
--------------------- -----------------------
Name: Cory J. Boydston Name: Shelly Rubin
Title: Vice President Title: Vice President
Address: Address:
700 Northwest 107th Avenue 760 Northwest 107th Avenue
Miami, Florida 33172 Miami, Florida 33172
Facsimile No.: Facsimile No.:
22
EXHIBIT 10.5
REVOLVING CREDIT AGREEMENT
DATED AS OF DECEMBER 5, 1997
AMONG
LNR PROPERTY CORPORATION
AND CERTAIN OF ITS SUBSIDIARIES
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
AS LENDER
AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS AGENT
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is entered into as of December 5, 1997,
by and among LNR PROPERTY CORPORATION, a Delaware corporation having its
principal place of business at 760 N.W. 107th Avenue, Miami, Florida 33172
("LNR"), the Subsidiaries of LNR identified on SCHEDULE I attached hereto (LNR
and said Subsidiaries being referred to herein individually and collectively as
the "Borrower"), the Lenders (as hereinafter defined), and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BOFA"), as administrative and
documentation agent (the "AGENT") for the Lenders.
RECITALS
A. The Borrower is primarily engaged in the business of (i) acquiring,
developing, owning and operating a variety of commercial and industrial real
properties, (ii) acquiring, itself or through partnerships which it manages,
portfolios of commercial mortgage loans and real properties and providing
workout, property management and asset sale services with regard to such
portfolio assets, (iii) acting as special servicer with regard to commercial
mortgage pools which are the subject of commercial mortgage backed securities
("CMBS"), (iv) acquiring unrated and rated CMBS issued with regard to commercial
mortgage pools as to which LNR acts as special servicer, (v) making mortgage
loans to companies and individuals engaged in commercial real estate activities
and to developers and builders of residential communities, and (vi) investing in
real estate related businesses.
B. The Borrower has requested that the Lenders make loans available to
the Borrower in the maximum aggregate principal amount of $200,000,000
outstanding from time to time pursuant to the terms of this Agreement (the
"Facility"), and that the Agent act as administrative and documentation agent
for the Lenders. The Agent and the Lenders have agreed to do so.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings set forth below:
"ADJUSTED BASE RATE" means a floating interest rate equal to the Base
Rate plus the Applicable Margin changing when and as the Base Rate or the
Applicable Margin changes.
"ADJUSTED EBITDA" means an amount equal to (i) EBITDA less (ii) the
product of (a) 0.03 multiplied by (b) the sum of the Effective Gross Income
generated by each Project.
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"ADJUSTED FIXED CHARGES" means the sum of Fixed Charges, plus the
amount specified in clause (c) of the definition of Debt Service.
"ADJUSTED LIBOR RATE" means, with respect to a LIBOR Advance for the
relevant LIBOR Interest Period, the sum of (i) the quotient of (a) the LIBOR
Rate applicable to such LIBOR Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such LIBOR Interest
Period, plus (ii) the Applicable Margin in effect from time to time during such
LIBOR Interest Period.
"ADJUSTED NET OPERATING INCOME" means, as to any property, the Net
Operating Income generated by such property over any fiscal period, on an
annualized basis (if such period is less than a full fiscal year), less an
amount equal to the product of 0.03 multiplied by the Effective Gross Income
generated by such property for such period, on an annualized basis (if such
period is less than a full fiscal year).
"ADVANCE" means a loan to the Borrower hereunder by one or more of the
Lenders pursuant to SECTION 2.l(a) hereof (including Swingline Loans), including
the initial Advance and all subsequent Advances, whether such Advances are, from
time to time, Base Rate Advances, LIBOR Advances or Swingline Loans.
"AFFILIATE" means any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with any other Person.
A Person shall be deemed to control another Person if the controlling Person
owns ten percent (10%) or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"AGENT" means BOFA, acting as administrative and documentation agent
for the Lenders in connection with the transactions contemplated by this
Agreement, and its successors in such capacity.
"AGGREGATE COMMITMENT" means, as of any date, the sum of all of the
Lenders' then-current Commitments, provided that the Aggregate Commitment shall
not at any time exceed an amount equal to the lesser of (a) $200,000,000, (b)
the Borrowing Base and (c) the maximum amount that permits compliance with
ARTICLE VII hereof.
"AGREEMENT" means this Revolving Credit Agreement and all amendments,
modifications and supplements hereto.
"AGREEMENT EXECUTION DATE" shall mean December 12, 1997, the date on
which all of the parties hereto have executed and delivered this Agreement.
"ALLOCATED FACILITY AMOUNT" means, at any time, the sum of all then
outstanding Advances (including all Swingline Loans), and the then Facility
Letter of Credit Obligations.
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"APPLICABLE LAWS " is defined in SECTION 6.26(b) hereof.
"APPLICABLE MARGIN" means the applicable margin set forth in the table
in SECTION 2.6 used in calculating the interest rate applicable to the various
types of Advances, which shall vary from time to time in accordance with the
long term, senior unsecured debt ratings of LNR and the leverage ratio of
Borrower or, in the absence of such rating, in accordance with such leverage
ratio alone, all in the manner set forth in SECTION 2.6 hereof.
"AVERAGE MARKET PRICE" means, as to any Investment Security at any
time, (i) if such Investment Security is traded on an established securities
exchange or there otherwise exists an established market for such Investment
Security an amount equal to the average of the bid prices for such Investment
Security at the close of trading on the last trading day of each calendar month
over the 90 day period immediately preceding the date of determination, and
otherwise (ii) the Market Price Proxy for such Investment Security. With respect
to CMBS, the closing bid price on any given date shall be the average of the
closing bid prices quoted by at least one generally recognized CMBS market
makers for the date in question, subject to Agent's confirmation by obtaining
quotes from one or more other recognized CMBS market makers.
"BASE RATE" means a rate per annum equal to the rate of interest
announced by BOFA from time to time as its reference rate, changing when and as
such reference rate changes.
"BASE RATE ADVANCE" means an Advance that bears interest at the
Adjusted Base Rate.
"BOFA" means Bank of America National Trust and Savings Association.
"BORROWER" means, individually and collectively, LNR and each of its
Subsidiaries identified on SCHEDULE I hereto (as amended from time to time in
accordance with SECTION 8.13 hereof), along with their respective permitted
successors and assigns.
"BORROWING BASE" means, from time to time, the sum of the amounts
described in clauses (i) through (xix) below on a consolidated basis for
Borrower and its Subsidiaries with respect to assets wholly-owned (a) by
Borrower, (b) any wholly-owned Subsidiary of Borrower (including any Subsidiary
deemed to be so owned pursuant to the terms hereof) or (c) any Guarantor, and,
unless otherwise specified below, as reflected from time to time in accordance
with GAAP in the consolidated balance sheet of Borrower and its Subsidiaries.
For purposes of clauses (ii) through (vi) below, a Subsidiary shall be deemed
wholly-owned by Borrower, notwithstanding that Borrower owns less than 100
percent of the Capital Stock thereof, so long as (x) Borrower owns, directly or
indirectly, at least 75 percent of the Capital Stock of such Subsidiary, free
and clear of any Lien, (y) Borrower exercises a level of management control of
such Subsidiary and its assets that is satisfactory to the Agent, and (z) the
Property of such Subsidiary is an Unencumbered Asset; PROVIDED, HOWEVER, THAT
the aggregate amount included in the Borrowing Base at any time with respect to
Properties of such Subsidiaries of which Borrower owns, directly or indirectly,
less than 100 percent of the Capital Stock shall be based
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upon a percentage of the Net Operating Income or book value (as the case may be)
of each such Property equal to Borrower's direct or indirect percentage
ownership interest in the relevant Subsidiary, and shall not exceed the lesser
of 10 percent of the Borrowing Base at that time or $50,000,000.
CASH
(i) 100 percent of cash and Cash Equivalents unencumbered by any Lien;
REAL ESTATE
(ii) 75 percent of the quotient of the Adjusted Net Operating Income of
all Stabilized Projects that are Unencumbered Assets divided by 0.10; (iii) an
amount equal to (a) 70 percent of the quotient of the Adjusted Net Operating
Income of all Stabilized Projects that are not Unencumbered Assets divided by
0.10, minus (b) all Indebtedness of Borrower and its Subsidiaries, other than
unsecured Subordinated Debt, secured by a Lien on any such Stabilized Project
(PROVIDED, HOWEVER, THAT the aggregate amount included at any time in the
Borrowing Base pursuant to this clause (iii) shall not exceed 25 percent of the
Borrowing Base at that time); (iv) 72.5 percent of the net book value of all
Completed Projects that are Unencumbered Assets; (v) 70 percent of the net book
value of all Development Properties that are Unencumbered Assets (PROVIDED,
HOWEVER, THAT the aggregate amount included at any time in the Borrowing Base
pursuant to the foregoing clauses (ii) through (v) for Properties that are
Special Purpose Properties shall not exceed the lesser of (a) 15 percent of the
Borrowing Base at that time, or (b) 30 percent of the aggregate amount included
at that time in the Borrowing Base pursuant to the foregoing clauses (ii)
through (v) for all Properties); (vi) 50 percent of the net book value of
Properties other than Qualified Properties that satisfy the requirements set
forth in clauses (b) and (c) of the definition of "Stabilized Project" and that
are Unencumbered Assets (PROVIDED, HOWEVER, THAT the aggregate amount included
at any time in the Borrowing Base pursuant to this clause (vi) shall not exceed
20 percent of the Borrowing Base at that time; and PROVIDED FURTHER THAT any
direct or indirect investment in real property located outside the United States
of America shall not be included in the Borrowing Base without the prior written
consent of the Agent);
INVESTMENT SECURITIES
(vii) 75 percent of the Average Market Price of Investment Securities
unencumbered by any Lien and rated BB or better by S&P (or having an equivalent
Moody's rating or Third Rating); (viii) an amount equal to (a) 70 percent of the
Market Price Proxy for any encumbered Investment Securities rated BB or better
by S&P (or having an equivalent Moody's rating or Third Rating), minus (b) all
Indebtedness, other than unsecured Subordinated Debt, secured by a Lien on such
Investment Securities; (ix) 70 percent of the Average Market Price of Investment
Securities unencumbered by any Lien and rated B or B- by S&P (or having an
equivalent Moody's rating or Third Rating); (x) an amount equal to (a) 65
percent of the Market Price Proxy for encumbered Investment Securities rated B
or B- by S&P (or having an equivalent Moody's rating or Third Rating), minus (b)
all Indebtedness, other than unsecured
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Subordinated Debt, secured by a Lien on such Investment Securities; (xi) 60
percent of the Average Market Price of Investment Securities unencumbered by any
Lien and either unrated by S&P or rated CCC by S&P (or having an equivalent
Moody's rating or Third Rating); (xii) an amount equal to (a) 55 percent of the
Market Price Proxy for encumbered Investment Securities unrated by S&P or rated
CCC by S&P (or having an equivalent Moody's rating or Third Rating), minus all
Indebtedness, other than unsecured Subordinated Debt, secured by a Lien on such
Investment Securities (PROVIDED, HOWEVER, THAT the aggregate amount included at
any time in the Borrowing Base pursuant to clauses (vii) through (xii) above
shall not exceed 35 percent of the Borrowing Base at that time; and PROVIDED
FURTHER THAT if any Investment Securities are rated by both Moody's, S&P and/or
any Third Rating, the lower of the ratings shall govern and control for purposes
of the foregoing clauses (vii) through (xii); and PROVIDED FURTHER THAT no
residual bonds or interest-only bonds shall be included in the Borrowing Base
pursuant to clauses (viii), (x) or (xii) above, and the amount of all such bonds
included at any time in the Borrowing Base pursuant to clauses (vii), (ix) or
(xi) above shall be determined without regard to clause (ii) of the definition
of Average Market Price (which shall not apply to such bonds) and shall not
exceed 3.5 percent of the Borrowing Base at that time);
MORTGAGE RECEIVABLES
(xiii) 80 percent of the net book value of Mortgage Loans with respect
to which no Mortgage Loan Default has occurred and is continuing, and the
outstanding amount of which (including, without limitation, outstanding
principal, accrued interest and other amounts due) is less than 85 percent of
the fair market value of the real property securing the same; (xiv) 75 percent
of the net book value of Mortgage Loans with respect to which no Mortgage Loan
Default has occurred and is continuing, and the outstanding amount of which
(including, without limitation, outstanding principal, accrued interest and
other amounts due) is 85 percent or more, but less than 95 percent, of the fair
market value of the real property securing the same; (xv) 65 percent of the net
book value of any Mortgage Loan with respect to which a Mortgage Loan Default
has occurred and is continuing, and the outstanding amount of which (including,
without limitation, outstanding principal, accrued interest and other amounts)
is less than 95 percent of the fair market value of the real property securing
the same (PROVIDED, HOWEVER, THAT the aggregate amount included at any time in
the Borrowing Base pursuant to clauses (xiii) through (xv) above shall not
exceed 20 percent of the Borrowing Base at that time; and PROVIDED FURTHER THAT
the interest of any of the Borrower and its Subsidiaries in any Mortgage Loan
included in the computation of the Borrowing Base pursuant to said clauses
(xiii) through (xv) shall not be encumbered by any Lien);
PORTFOLIO/SINGLE ASSET PARTNERSHIPS
(xvi) 75 percent of the net present value, calculated using an annual
discount rate of 12 percent, of projected cash flow (including, without
limitation, management fees payable to one of Borrower or its wholly-owned
Subsidiaries) generated over a period of 60 months following the date of
determination from Investments in Portfolio/Single Asset Partnerships in which
one of Borrower or its Subsidiaries first made an Investment before the
Agreement Execution Date, as such projected cash flow is reasonably projected by
Borrower, subject to
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the Agent's approval (PROVIDED, HOWEVER, THAT the amount included at any time in
the Borrowing Base pursuant to this clause (xvi) shall not exceed the product of
two multiplied by the net book value of such Investments at that time); (xvii)
50 percent of the net book value of Investments in Portfolio/Single Asset
Partnerships first formed, or in which one of the Borrower or its Subsidiaries
first makes an Investment, after the Agreement Execution Date (PROVIDED,
HOWEVER, THAT the amount included at any time in the Borrowing Base pursuant to
this clause (xvii) shall not exceed 15 percent of the Borrowing Base at that
time);
LAND PARTNERSHIPS
(xviii) 30 percent of the net book value of Investments in Land
Partnerships (PROVIDED, HOWEVER, THAT any outstanding Indebtedness secured by a
Lien on the real property owned by each such Land Partnership does not exceed 50
percent of the fair market value of such real property; and PROVIDED FURTHER
THAT the amount included at any time in the Borrowing Base pursuant to this
clause (xviii) does not exceed 20 percent of the Borrowing Base at that time);
and
STRATEGIC INVESTMENTS
(xix) 50 percent of the net book value of Strategic Investments
(PROVIDED, HOWEVER, THAT the amount included at any time in the Borrowing Base
pursuant to this clause (xix) shall not exceed 25 percent of the Borrowing Base
at that time; and PROVIDED FURTHER THAT the aggregate amount included at any
time in the Borrowing Base pursuant to clauses (xvi) through (xix) above shall
not exceed 50 percent of the Borrowing Base at that time; and PROVIDED FURTHER
THAT the interests of Borrower and its Subsidiaries in the Investment referred
to in said clauses (xvi) through (xix) shall not be encumbered by any Lien).
In the event that there exists any uncertainty or ambiguity concerning
the proper classification of any asset or Investment under the foregoing
definition of "Borrowing Base", the determination of the Agent concerning the
proper classification of such asset or Investment shall be determinative.
"BORROWING DATE" means Business Day on which an Advance is made to the
Borrower.
"BORROWING NOTICE" is defined in SECTION 2.11(a) hereof.
"BUSINESS DAY" means a day, other than a Saturday, Sunday or holiday,
on which banks are open for business in Chicago, Illinois and, where such term
is used in reference to the selection or determination of the Adjusted LIBOR
Rate, in London, England.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent equity ownership interests in a Person which is not a
corporation and any and all warrants or options to purchase any of the
foregoing.
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"CASH EQUIVALENTS" shall mean (i) short-term obligations of, or fully
guaranteed by, the United States of America, (ii) commercial paper rated A-1 or
better by S&P's or P-1 or better by Moody's, or (iii) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000.
"CHANGE OF CONTROL" means that either (i) any one of Jeff Krasnoff,
Steve Saiontz and Stuart Miller cease for any reason to be actively engaged in
the management of LNR, in a senior executive capacity, and any two of Leonard
Miller, Steve Saiontz and Stuart Miller cease for any reason to be members of
the Board of Directors of LNR, or (ii) Leonard Miller and/or members of his
Immediate Family (and/or trusts for his or their benefit) cease to own at least
a majority of the voting power attributable to the Capital Stock of LNR.
"CMBS" is defined in RECITAL A.
"CODE" means the Internal Revenue Code of 1986 as amended from time to
time, or any replacement or successor statute, and the regulations promulgated
thereunder from time to time.
"COMMITMENT" means the obligation of each Lender, subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties herein, to make Advances not exceeding in the aggregate the amount
set forth opposite its signature below, or the amount stated in any subsequent
amendment hereto.
"COMPLETED PROJECT" means a Project that satisfies all of the
requirements set forth in clauses (b) and (c) of the definition of Stabilized
Property, but has not achieved the applicable minimum occupancy level set forth
in clause (a) thereof.
"CONSOLIDATED SECURED DEBT" means as of any date of determination, the
sum of the aggregate principal amount of all Indebtedness of the Borrower and
its Subsidiaries outstanding at such date which is secured by a Lien on any
asset or Capital Stock of Borrower or any Subsidiary, including, without
limitation, loans secured by mortgages, stock or partnership interests.
"CONSOLIDATED SENIOR UNSECURED DEBT" means as of any date of
determination, the aggregate principal amount of all Indebtedness of the
Borrower and its Subsidiaries outstanding at such date, including, without
limitation, the undrawn portion of any revolving credit or similar facility,
other than (a) Subordinated Debt and (b) Consolidated Secured Debt.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, the consolidated stockholders' equity of LNR as shown on its
balance sheet as of that date less the stockholders' equity of the Mortgage
Subsidiary (if included in LNR's consolidated stockholders' equity) and less the
aggregate amount of goodwill and other assets subject to classification as
"intangible assets."
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"CONSOLIDATED TOTAL INDEBTEDNESS" means as of any date of
determination, all Indebtedness of the Borrower and its Subsidiaries outstanding
at such date, determined on a consolidated basis in accordance with GAAP, after
eliminating intercompany items; provided that for purposes of defining
"Consolidated Total Indebtedness" the term "Indebtedness" shall not include
short term debt (e.g., accounts payable within 60 days, short term accrued
expenses), Subordinated Debt, Indebtedness of the Mortgage Subsidiary for which
no Borrower or other Subsidiaries have any personal liability, or the portion of
non-recourse Indebtedness of Subsidiaries of Borrower that is allocable to the
owners of minority interests in such Subsidiaries, based on such owners'
percentage interests in such Subsidiaries, provided that such owners are not
Affiliates of Borrower.
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with all or any of the entities in the Borrower,
are treated as a single employer under Sections 414(b) or 414(c) of the Code.
"CREDIT PARTIES" means each Borrower and each Guarantor.
"DEBT SERVICE" means for any period, (a) Interest Expense for such
period PLUS (b) the aggregate amount of regularly scheduled principal payments
of Indebtedness (excluding optional prepayments and balloon principal payments
due on maturity in respect of any Indebtedness) required to be made during such
period by the Borrower or any of its consolidated Subsidiaries (including,
without limitation, principal of Subordinated Debt) plus (c) a percentage of all
such regularly scheduled principal payments required to be made during such
period by any Hot Investment Affiliate on recourse Indebtedness (excluding
optional prepayments and balloon principal payments due on maturity in respect
of any Indebtedness) equal to the percentage of the principal amount of such
Indebtedness for which the Borrower or any consolidated Subsidiary is liable, in
the aggregate, without duplication PLUS (d) Senior Preferred Stock Expense for
such period.
"DEFAULT" means an event which, with notice or lapse of time or both,
would become an Event of Default.
"DEFAULT RATE" means with respect to any Advance, a rate equal to the
interest rate applicable to such Advance plus two percent per annum.
"DEFAULTING LENDER" means any Lender which fails or refuses to perform
its obligations under this Agreement within the time period specified for
performance of such obligation, or, if no time frame is specified, if such
failure or refusal continues for a period of five Business Days after written
notice from the Agent; PROVIDED that if such Lender cures such failure or
refusal, such Lender shall cease to be a Defaulting Lender.
"DEVELOPMENT PROPERTY" means any Property which (a) is under
construction and then treated as an asset under development in accordance with
GAAP, (ii) satisfies the requirements set forth in clauses (b) and (c) of the
definition of Stabilized Project, and (iii) upon completion
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of the development thereof in accordance with the plans and specifications
therefore, will constitute a Project.
"DOLLARS" and "$" mean United States Dollars.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Company.
"EBITDA" means (i) the sum of net income, as reported by the Borrower
and its Subsidiaries on a consolidated basis in accordance with GAAP, plus
Interest Expense, depreciation, amortization and income tax (if any) expense,
minus (ii) the amount by which such net income from Investment Affiliates for
the period in question exceeds cash distributions received by Borrower or its
Subsidiaries from such Investment Affiliates during that period.
"EFFECTIVE DATE" means each Borrowing Date and, if no Borrowing Date
has occurred in the preceding calendar month, the first Business Day of each
calendar month.
"EFFECTIVE GROSS INCOME" means projected gross income, adjusted for
vacancies and collection losses, but in no event in excess of Gross Revenues.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any governmental authority having jurisdiction over the
Borrower, its Subsidiaries or Hot Investment Affiliates, or their respective
assets, and regulating or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or at any time hereafter
in effect, in each case to the extent the foregoing are applicable to the
operations of the Borrower, any Hot Investment Affiliate, or any Subsidiary or
any of their respective Real Estate or other Assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and regulations promulgated thereunder from time to time.
"EVENT OF DEFAULT" means any event set forth in ARTICLE X hereof.
"EXTENSION NOTICE" is defined in SECTION 2.2(a) hereof.
"FACILITY" means the unsecured revolving credit facility described in
SECTION 2.1 hereof.
"FACILITY FEE" is defined in SECTION 2.8(b) hereof.
"FACILITY LETTER OF CREDIT" means a Financial Letter of Credit or
Performance Letter of Credit issued hereunder.
"FACILITY LETTER OF CREDIT FEE" is defined in SECTION 3.8 hereof.
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"FACILITY LETTER OF CREDIT OBLIGATIONS" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower with respect to Facility Letters of Credit, including the sum of (a)
the Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then outstanding Facility Letters of Credit.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"FINANCIAL LETTER OF CREDIT" means any standby Letter of Credit which
represents an irrevocable obligation to the beneficiary on the part of the
Issuing Bank (i) to repay money borrowed by or advanced to or for the account of
the account party or (ii) to make any payment on account of any indebtedness
undertaken by the account party, in the event the account party fails to fulfill
its obligation to the beneficiary.
"FITCH" means Fitch Investors Service, L.P.
"FIXED CHARGES" means the sum of Debt Service (less the amount
specified in clause (c) of the definition thereof) and dividends payable on
preferred stock of the Borrower and its Subsidiaries.
"FUNDED PERCENTAGE" means, with respect to any Lender at any time, a
percentage equal to a fraction the numerator of which is the amount of the
Aggregate Commitment actually disbursed and outstanding to Borrower by such
Lender at such time, and the denominator of which is the total amount of the
Aggregate Commitment disbursed and outstanding to Borrower by all of the Lenders
at such time.
"GAAP" means generally accepted accounting principles in the United
States of America consistent with those utilized in preparing the audited
financial statements of the Borrower required hereunder, and applied
consistently from period to period.
"GROSS REVENUES" means total revenues, calculated in accordance with
GAAP.
"GUARANTEE OBLIGATION" means as to any Person (the "GUARANTEEING
PERSON"), any obligation (determined without duplication) of the guaranteeing
person (or any other Person [including, without limitation, any bank under any
letter of credit] if the guaranteeing person has issued a reimbursement, counter
indemnity or similar obligation in favor of such other Person) guaranteeing or
in effect guaranteeing any Indebtedness, leases, dividends or other obligations
(the "PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR") in
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any manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the
maximum stated amount of the primary obligation relating to such Guarantee
Obligation (or, if less, the maximum stated liability set forth in the
instrument embodying such Guarantee Obligation), PROVIDED, HOWEVER, that in the
absence of any such stated amount or stated liability, the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as reasonably determined by the
Borrower in good faith, subject to the Agent's approval.
"GUARANTOR" means each Person that executes and delivers a Guaranty.
"GUARANTY" means the Guaranty to be executed and delivered by each
wholly-owned Subsidiary of a Borrower which is not itself a Borrower or a Pledge
Subsidiary, in the form attached hereto as EXHIBIT D.
"HEDGING AGREEMENTS" means interest rate protection agreements, foreign
currency exchange agreements, commodity purchase or option agreements or other
interest, exchange rate or commodity price hedging agreements.
"HOT INVESTMENT AFFILIATE" means an Investment Affiliate for the
obligations of which any of Borrower or its Subsidiaries has personal liability,
as a general partner or otherwise.
"IMMEDIATE FAMILY" means, with respect to any natural person, such
person's spouse, children (whether biological or legally adopted) and lineal
descendants (including lineal descendants of legally adopted children of such
person).
"INDEBTEDNESS" of any Person at any date means, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of property or services (other than
current trade liabilities and other current accounts payable and accrued
expenses incurred in the ordinary course of business and payable in accordance
with customary practices), to the extent such obligations constitute
indebtedness for the purposes of GAAP, (c) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar instrument, (d) all
obligations of such Person under financing leases and capital leases, (e) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, (f) all Guarantee Obligations of such Person (excluding
in any calculation of consolidated indebtedness of the Borrower,
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Guarantee Obligations of the Borrower in respect of primary obligations of any
Subsidiary), (g) all reimbursement obligations of such Person for letters of
credit and other similar contingent liabilities, (h) all liabilities secured by
any Lien (other than Liens for taxes not yet due and payable) on any property
owned by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (i) any repurchase obligation or liability of
such Person or any of its Subsidiaries with respect to accounts or notes
receivable sold by such Person or any of its Subsidiaries, (j) Senior Preferred
Stock, (k) such Person's pro rata share of recourse debt of Hot Investment
Affiliates and any recourse loans where such Person is liable as a general
partner or otherwise, (l) all obligations to make advances and contributions to
Investment Affiliates, and (m) to the extent not included in Interest Expense,
all obligations under any Hedging Agreements, whether contingent or otherwise
(but excluding the notional amounts thereunder).
"INSOLVENCY" means insolvency as defined in the United States
Bankruptcy Code, as amended. "INSOLVENT" when used with respect to a Person,
shall refer to a Person who satisfies the definition of Insolvency.
"INTEREST EXPENSE" means all interest expense of the Borrower and its
Subsidiaries determined in accordance with GAAP (including, without limitation,
interest on Subordinated Debt) plus capitalized interest not covered by an
interest reserve from a loan facility.
"INTEREST PERIOD" means a LIBOR Interest Period.
"INVESTMENT" means, as to any Person, any loan, advance, extension of
credit, deposit or contribution by such Person to any other Person, or any
investment in, or purchase or other acquisition of, the Capital Stock,
Investment Securities, notes, debentures or other securities of any other Person
made by such Person.
"INVESTMENT AFFILIATE" means any Person in which the Borrower, directly
or indirectly, has an ownership interest, whose financial results are not
consolidated under GAAP with the financial results of the Borrower on the
consolidated financial statements of the Borrower.
"INVESTMENT SECURITIES" means debt or equity investment instruments
other than Cash Equivalents, including, without limitation, commercial paper and
CMBS.
"ISSUANCE DATE" is defined in SECTION 3.4(a)(2) hereof.
"ISSUANCE NOTICE" is defined in SECTION 3.4(c) hereof.
"ISSUING BANK" means, with respect to each Facility Letter of Credit,
the Lender which issues such Facility Letter of Credit. Unless BOFA otherwise
agrees in writing, BOFA shall be the sole Issuing Bank.
"JOINDER " is defined in SECTION 8.13 hereof.
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"LAND PARTNERSHIP" means an Investment Affiliate engaged in the
business of acquiring, owning, managing and developing (with site improvements
only) raw land, and selling site-improved land.
"LENDERS" means, collectively, BOFA and any Person executing this
Agreement in such capacity, or any Person which subsequently executes and
delivers any amendment hereto in such capacity and each of their respective
permitted successors and assigns. Where reference is made to "the Lenders" in
any Loan Document it shall be read to mean "all of the Lenders".
"LENDING INSTALLATION" means any U.S. office of any Lender authorized
to make loans similar to the Advances described herein.
"LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"LETTER OF CREDIT COLLATERAL ACCOUNT" is defined in SECTION 3.9 hereof.
"LETTER OF CREDIT REQUEST" is defined in SECTION 3.4(a) hereof.
"LEVERAGE RATIO" means the ratio of Consolidated Total Indebtedness,
excluding obligations that would otherwise be included pursuant to clause (m) of
the definition of "Indebtedness", to Consolidated Tangible Net Worth.
"LIBOR ADVANCE" means an Advance that bears interest at the Adjusted
LIBOR Rate.
"LIBOR INTEREST PERIOD" means, with respect to a LIBOR Advance, a
period of 30, 60, 90 or 180 days (to the extent that periods in excess of three
months are generally available from the Lenders), as selected in advance by the
Borrower.
"LIBOR RATE" means, with respect to a LIBOR Advance for the relevant
LIBOR Interest Period, the per annum rate of interest, rounded upward if
necessary to the nearest 1/16th of one percent (0.0625), determined by the Agent
to be the rate at which deposits in immediately available funds in U.S. Dollars
would be offered by the BOFA's London branch to first-class banks in the London
interbank eurodollar market at approximately 11:00 a.m. London time two Business
Days prior to the first day of such LIBOR Interest Period, in the approximate
amount of the relevant LIBOR Advance and having a maturity approximately equal
to such LIBOR Interest Period.
"LIEN" means any mortgage, pledge, hypothecation, deposit arrangement,
preference, priority, security interest, collateral assignment, statutory or
consensual lien, charge, restriction or other encumbrance of any kind
(including, without limitation, any repurchase agreement, any conditional sale
or other title retention agreement or lease in the nature thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code on any property leased to any Person under a lease which is not in the
nature of a
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conditional sale or title retention agreement, or any subordination agreement in
favor of another Person). For purposes of this Agreement, a Lien on the Capital
Stock of any Person shall be deemed to constitute a Lien on the assets of said
Person.
"LNR " means LNR Property Corporation.
"LOAN" means, with respect to a Lender, such Lender's portion of any
Advance.
"LOAN DOCUMENTS" means this Agreement, the Notes, each Guaranty, the
Pledge Agreement and any and all other agreements or instruments required and/or
provided to the Agent or any Lenders hereunder or thereunder, as any of the
foregoing may be amended from time to time.
"MAJORITY LENDERS" means Lenders in the aggregate having in excess of
50% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding in excess of 50% of the aggregate
unpaid principal amount of the outstanding Advances.
"MARGIN STOCK" has the meaning ascribed to it in Regulation U of the
Board of Governors of the Federal Reserve System.
"MARKET PRICE PROXY" means, as to any Investment Security for any
fiscal period, an amount equal to the quotient of (i) the cash flow generated by
such Investment Security for such period (including, without limitation, fees
payable to Borrower for serving as special servicer, where the right so to serve
is attributable to such Investment Security), on an annualized basis (if such
period is less than a full fiscal year), divided by (ii) a factor varying with
the investment rating (or absence thereof) of such Investment Security as
follows: (a) for a rating of BB or better by S&P (or an equivalent Moody's
rating or Third Rating), 0.10; (b) for a rating of B or B- by S&P (or an
equivalent Moody's rating or Third Rating), 0.11; and (c) in the absence of any
rating or for a rating of CCC by S&P (or an equivalent Moody's rating or Third
Rating), 0.18 (provided, however, that the factors set forth in the foregoing
clause (ii) shall be subject to adjustment on a quarterly basis to reflect then
prevailing market conditions, as determined by the Agent in its sole
discretion). In the case of any Investment Security rated by both S&P and
Moody's and/or a Third Rating, the lower of the ratings shall govern and
control.
"MATERIAL ADVERSE EFFECT" means, with respect to any matter, that such
matter, in the Agent's judgment, constitutes a Material Adverse Financial Change
or may (x) materially and adversely affect the business, properties, condition
or results of operations of the Credit Parties taken as a whole, or (y)
constitute a challenge to the validity or enforceability of any material
provision of any Loan Document against any obligor party thereto.
"MATERIAL ADVERSE FINANCIAL CHANGE" shall be deemed to have occurred if
the Agent determines that a material adverse financial change has occurred which
could prevent timely
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<PAGE>
repayment of any Advance hereunder or materially impair Borrower's or any other
Credit Party's ability to perform its obligations under any of the Loan
Documents.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
radon, polychlorinated biphenyls and urea-formaldehyde insulation.
"MATURITY DATE" means December 31, 2000, subject to extension pursuant
to the terms and conditions of SECTION 2.2(a) hereof or such earlier date on
which the principal balance of the Facility and all other sums due in connection
with the Facility shall be due as a result of the acceleration of the Facility
or Borrower's termination of the Commitments pursuant to SECTION 2.2(b) hereof.
"MONETARY DEFAULT" means any Default involving Borrower's failure to
pay any of the Obligations when due.
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"MORTGAGE LOAN" means any Indebtedness of any Person secured by a first
priority Lien on real property, which secured Indebtedness represents a loan,
advance or extension of credit (i) originated and owned by any of Borrower or
its wholly-owned Subsidiaries, or (ii) originated by another Person and
purchased or otherwise acquired in its entirety by any of Borrower or its
wholly-owned Subsidiaries.
"MORTGAGE LOAN DEFAULT" means, as to any Mortgage Loan, any failure of
the obligor(s) (i) to pay any principal when the same becomes due and payable,
(ii) to pay any interest or other amount within 60 days after the same becomes
due and payable or (iii) to observe or perform any other material covenant or
agreement within 60 days after the date such observance or performance becomes
due.
"MORTGAGE SUBSIDIARY" means a wholly-owned, single purpose Subsidiary
of LNR to be formed after the Agreement Execution Date solely for the purpose of
engaging in the mortgage banking business and incidental activities directly
related thereto, which Mortgage Subsidiary shall, upon formation, become a
Guarantor and deliver a Guaranty of the Obligations.
"NET OPERATING INCOME" means, as to any Property for any fiscal period,
an amount equal to (a) rents and other revenues earned in the ordinary course
from such Property (including proceeds of rent loss insurance), less (b) all
expenses paid or accrued related to the ownership, operation or maintenance of
such Property, excluding capital expenditures, but including, without
limitation, taxes, assessments and the like, insurance, utilities, payroll
costs, maintenance, repair and landscaping expenses, management fees, leasing
commissions and on-site marketing expenses.
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"NON-USE FEE" is defined in SECTION 2.7 hereof.
"NOTE" means (i) the promissory note payable to the order of each
Lender in the amount of such Lender's maximum Commitment in the form attached
hereto as EXHIBIT B-1 and (ii) the promissory note payable to the order of the
Swingline Lender in the amount of $20,000,000.00 in the form attached hereto as
EXHIBIT B-2 (collectively, the "NOTES").
"OBLIGATIONS" means the Advances, the Facility Letter of Credit
Obligations and all accrued and unpaid fees and all other obligations of
Borrower to the Agent or any or all of the Lenders arising under this Agreement
or any of the other Loan Documents.
"PARCEL" means each parcel of real property, together with any and all
improvements thereon, owned or leased in whole or in part or operated by the
Borrower, any Subsidiary or Investment Affiliate.
"PARTICIPANTS" is defined in SECTION 13.2.1 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERCENTAGE" means, with respect to each Lender, the applicable
percentage of the then-current Aggregate Commitment represented by such Lender's
then-current Commitment.
"PERFORMANCE LETTER OF CREDIT" means any standby Letter of Credit which
represents an irrevocable obligation to the beneficiary on the part of the
Issuing Bank to make payment on account of any default by the account party in
the performance of a nonfinancial or commercial obligation.
"PERMITTED LIENS" are defined in SECTION 9.6 hereof.
"PERSON" means an individual, a corporation, a limited or general
partnership, an association, a joint venture, a limited liability company or any
other entity or organization, including a governmental or political subdivision
or an agent or instrumentality thereof.
"PLAN" means an employee benefit plan as defined in Section 3(3) of
ERISA, whether or not terminated, as to which the Borrower or any member of the
Controlled Group may have any liability.
"PLEDGE AGREEMENT" is defined in SECTION 8.13 hereof.
"PLEDGE SUBSIDIARY" is defined in SECTION 8.13 hereof.
"PORTFOLIO/SINGLE ASSET PARTNERSHIP" means an Investment Affiliate
primarily engaged in the business of acquiring, owning, managing and, as
appropriate, liquidating (i) portfolios of
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real estate related assets and (ii) single real estate related assets (other
than development land held by a Land Partnership).
"PROJECT" means any parcel of real property wholly-owned in fee simple
of record by the Borrower, any wholly-owned Subsidiary or any Guarantor, or any
long term leasehold estate in any parcel of real estate wholly-owned by Borrower
or any wholly-owned Subsidiary pursuant to a legal, valid, binding and
enforceable ground lease of record, together with any and all improvements
thereon, which is fully improved for use and operated as a commercial or
industrial property (including, without limitation, multi-family residential,
office, retail and warehouse properties), and with respect to which a
certificate of occupancy or comparable authorization has been issued by the
applicable governmental authority.
"PROPERTY" means each parcel of real property owned in fee simple of
record by Borrower or any Subsidiary, or any long term leasehold estate in any
parcel of real estate owned by Borrower or any Subsidiary pursuant to a legal,
valid, binding and enforceable ground lease of record, together with any and all
improvements thereon.
"PURCHASERS" is defined in SECTION 13.3.1 hereof.
"QUALIFIED OFFICER" means, with respect to any entity, the chief
financial officer, chief accounting officer or controller of such entity if it
is a corporation or of such entity's general partner if it is a partnership.
"QUALIFIED PROPERTY" means a Project or Property that is a Stabilized
Project, a Completed Project or a Development Property.
"RATE OPTION" means the Adjusted Base Rate or the Adjusted LIBOR Rate.
The Rate Option in effect on any date shall always be the Adjusted Base Rate
unless the Borrower has properly selected the Adjusted LIBOR Rate pursuant to
SECTION 2.11 hereof.
"REAL ESTATE" means all Projects, Properties and Parcels.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"REIMBURSEMENT OBLIGATIONS" means at any time, the aggregate of the
Obligations of the Borrower to the Lenders, the Issuing Bank and the Agent in
respect of all unreimbursed payments or disbursements made by the Lenders, the
Issuing Bank and the Agent under or in respect of the Facility Letters of
Credit.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of
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<PAGE>
ERISA that it be notified within 30 days of the occurrence of such event,
provided that a failure to meet the minimum funding standard of Section 412 of
the Code and of Section 302 of ERISA shall be a Reportable Event regardless of
the issuance of any such waivers in accordance with either Section 4043(a) of
ERISA or Section 412(d) of the Code.
"RESERVE REQUIREMENT" means, with respect to a LIBOR Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"S&P" means Standard & Poor's Ratings Group and its successors.
"SENIOR PREFERRED STOCK" means the stated value of any preferred stock
issued by any Borrower which is not typical preferred stock but instead is both
(i) redeemable by the holders thereof on any fixed date or upon the occurrence
of any event and (ii) as to payment of dividends or amounts on liquidation,
either guaranteed by any direct or indirect Subsidiary of such Borrower or
secured by any property of such Borrower or any direct or indirect Subsidiary of
such Borrower.
"SENIOR PREFERRED STOCK EXPENSE" means for any period for any Person,
the aggregate dividend payments due to the holders of Senior Preferred Stock of
such Person, whether payable in cash or in kind, and whether or not actually
paid during such period.
"SOLVENT" means, as to any Person on a particular date, that such
Person (a) has capital sufficient to carry on its existing business and
transactions and all business and transactions in which it is about to engage,
(b) owns property having a value, both at fair valuation and at present fair
salable value, greater than the amount required to pay its probable liabilities
(including, without limitation, contingencies), (c) does not intend to or
believe that it will incur debts or liabilities beyond its ability to pay the
same as they mature and (d) is not Insolvent.
"SPECIAL PURPOSE PROPERTY" means a Project or Property improved
primarily for a specialized single purpose use, such as, for example, a hotel,
parking, golf course, amusement park, restaurant or theater facility.
"STABILIZED PROJECT" means a Project which:
(a) has achieved the applicable occupancy level set forth in clauses
(i) through (iv) below, pursuant to arm's length leases with unaffiliated
tenants (for purposes of this definition, Lennar Corporation and its
Subsidiaries shall be deemed unaffiliated tenants) which are in possession and
paying rent in accordance with such leases, such occupancy level to be measured,
as of any date of determination, by the rentable square footage of such Project
subject to such leases during the immediately preceding calendar quarter
relative to the total rentable square footage of such Project:
(i) 80 percent, if such Project is leased primarily for multi-
family residential use;
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<PAGE>
(ii) 75 percent, if such Project is leased primarily for either
retail use or industrial use;
(iii) 70 percent, if such Project is leased primarily for office
use; and
(iv) if such Project is leased primarily for a use other than one
of those specified in clauses (i) through (iii) above, that
level of occupancy that Borrower demonstrates to the Agent's
satisfaction to be the average level of occupancy for
projects of the same type as such Project within the real
estate market in which such Project is located;
(b) is not the subject of any material architectural/engineering issue
or any material Environmental Law issue, as evidenced by a certification of
Borrower, and (c) is in material compliance with the applicable representations
and warranties in ARTICLE VI below. Notwithstanding anything to the contrary
contained in this Agreement, if the Agent determines that any Project or
Property theretofore identified by Borrower as a Qualified Property may be the
subject of a material architectural/engineering issue or a material
Environmental Law issue, the Agent may (i) require Borrower to furnish a current
detailed environmental assessment or architectural/engineering assessment, as
the case may be, and, if applicable, a written estimate of any remediation costs
from a qualified architect, engineer or contractor acceptable to the Agent, in
which event Borrower shall promptly obtain and furnish the same at its own
expense, and (ii) exclude any such Project or Property from the Qualified
Properties at its election.
"STRATEGIC INVESTMENT" means (i) an Investment by one of Borrower or
one of its wholly-owned Subsidiaries in a Subsidiary or Investment Affiliate
engaged in a real estate related businesses, such as, without limitation,
providing management, financing (including, without limitation, making mezzanine
loans), development, credit enhancement and securitization services for real
estate, and (ii) a passive Investment by one of Borrower or one of its
wholly-owned Subsidiaries in a Subsidiary or an Investment Affiliate owning real
estate related assets.
"SUBORDINATED DEBT" means Indebtedness of the Borrower and its
Subsidiaries that is contractually subordinated in right of payment and
otherwise to the Indebtedness under the Loan Documents, such subordination to be
on terms acceptable to the Agent.
"SUBSIDIARY" means as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person, and provided such corporation, partnership or other entity is
consolidated with such Person for financial reporting purposes under GAAP.
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<PAGE>
"SWINGLINE ADVANCES" means, as of any date, collectively, all Swingline
Loans then outstanding under this Facility.
"SWINGLINE COMMITMENT" means the obligation of the Swingline Lender to
make Swingline Loans not exceeding $20,000,000.
"SWINGLINE LENDER" means BOFA, in its capacity as a Lender.
"SWINGLINE LOAN" means a Loan made by the Swingline Lender under the
special availability provisions described in SECTIONS 2.16 hereof.
"TERMINATION NOTICE" is defined in SECTION 2.2(b) hereof.
"THIRD RATING" is defined in SECTION 2.6 hereof.
"TOTAL LIABILITIES" means all Indebtedness plus all other GAAP
liabilities of the Borrower and its Subsidiaries.
"TRANSFEREE" is defined in SECTION 13.4 hereof.
"UNENCUMBERED ASSET" means any Project or Property which, as of any
date of determination, (a) is not subject to any Liens other than Permitted
Liens of the types described in clauses (i) through (v) of SECTION 9.6 hereof
and Liens in favor of the Lenders securing this Facility, (b) is not subject to
any agreement (including any agreement governing Indebtedness incurred in order
to finance or refinance the acquisition of such asset) which prohibits or limits
the ability of the Borrower, or its Subsidiaries, as the case may be, to create,
incur, assume or suffer to exist any Lien upon any assets or Capital Stock of
the Borrower or any of its Subsidiaries, and (c) is not subject to any agreement
(including any agreement governing Indebtedness incurred in order to finance or
refinance the acquisition of such asset) which (i) entitles any Person to the
benefit of any Lien (but excluding Liens in favor of Lenders securing this
Facility and other Permitted Liens described in clause (a) above) on any assets
or Capital Stock of the Borrower or any of its Subsidiaries or (ii) would
entitle any Person to the benefit of any Lien (but excluding liens in favor of
Lenders securing this Facility and other Permitted Liens described in clause (a)
above) on such assets or Capital Stock upon the occurrence of any contingency
(including, without limitation, pursuant to an "equal and ratable" clause).
Notwithstanding the foregoing, no Project or Property of a Subsidiary shall be
deemed to be an Unencumbered Asset unless both such Project or Property and all
Capital Stock of such Subsidiary are unencumbered by any Lien (other than a
Permitted Lien described in clause (a) above and Liens in favor of the Lenders
securing this Facility).
The foregoing definitions shall be equally applicable to both the
singular and the plural forms of the defined terms.
1.2 FINANCIAL STANDARDS. All financial and accounting terms used and
not otherwise defined herein shall be construed in accordance with GAAP. All
financial and accounting
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computations and determinations required of a Person under this Agreement shall
be made, and all financial information required under this Agreement shall be
prepared, in accordance with GAAP, except, in each case, as otherwise set forth
herein.
ARTICLE II
THE FACILITY
2.1 THE FACILITY.
(a) Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower contained herein,
Lenders agree to make Advances through the Agent to Borrower from time to time
prior to the Maturity Date, PROVIDED THAT the making of any such Advance will
not cause the then Allocated Facility Amount to exceed the then-current
Aggregate Commitment. The Advances may be ratable Base Rate Advances, ratable
LIBOR Advances or non-pro rata Swingline Loans. Except as provided in SECTIONS
2.16 and 12.16 hereof, each Lender shall be required to fund only its Percentage
of each such Advance and no Lender will be required to fund any amounts which
when aggregated with such Lender's Percentage of (i) all other Advances then
outstanding, (ii) all Swingline Advances and (iii) all Facility Letter of Credit
Obligations would exceed such Lender's then-current Commitment. This facility
("FACILITY") is a revolving credit facility and, subject to the provisions of
this Agreement, Borrower may request Advances hereunder, repay such Advances and
reborrow Advances at any time prior to the Maturity Date.
(b) The Facility created by this Agreement, and the Commitment of
each Lender to lend hereunder, shall terminate on the Maturity Date, unless
sooner terminated in accordance with the terms of this Agreement.
(c) In no event shall the Aggregate Commitment exceed Two Hundred
Million Dollars ($200,000,000).
2.2 PRINCIPAL PAYMENTS, EXTENSION OPTION AND EARLY TERMINATION OPTION.
(a) Any outstanding Advances and all other unpaid Obligations shall
be paid in full by the Borrower on the Maturity Date. The Maturity Date can be
extended for a single extension period of one year upon notice to the Agent not
later than 60 days prior to the Maturity Date and not earlier than 90 days prior
to the Maturity Date (an "EXTENSION NOTICE"), if, but only if (i) no Default has
occurred and is continuing at the time of the Extension Notice or at the time of
the Maturity Date and (ii) Borrower pays an extension fee to the Agent for the
account of the Lenders equal to Two Hundred and Fifty Thousand Dollars
($250,000) on or before the Maturity Date. If the Borrower timely gives an
Extension Notice, the Agent shall promptly notify the Lenders of the extension
of the Maturity Date, subject to satisfaction of the requirements set forth in
clauses (i) and (ii) above.
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(b) Borrower may terminate the Commitments of the Lenders upon
notice to the Agent not later than 60 days prior to the effective date of such
termination and not more than 90 days prior thereto (a "TERMINATION NOTICE"),
if, but only if, (i) no Default has occurred and is continuing at the time of
the Termination Notice or at the time of the effective date of such termination
specified therein, and (ii) Borrower pays all of the Obligations in full on or
before such effective date, including, without limitation, all break funding
costs and all fees and other amounts accrued but not yet payable hereunder as of
the date of such payment. If the Borrower timely gives a Termination Notice, the
Agent shall promptly notify the Lenders of the termination of their Commitments
on the date specified in the Termination Notice, subject to satisfaction of the
requirements set forth in clauses (i) and (ii) above.
2.3 REQUESTS FOR ADVANCES; RESPONSIBILITY FOR ADVANCES. Ratable
Advances funded by the Lenders shall be made available to Borrower by Agent in
accordance with SECTION 2.1(a) and SECTION 2. 11(a) hereof. The obligation of
each Lender to fund its Percentage of each ratable Advance shall be several and
not joint or joint and several.
2.4 EVIDENCE OF CREDIT EXTENSIONS. The Advances of each Lender
outstanding at any time shall be evidenced by the Notes. Each Note executed by
the Borrower shall be in a maximum principal amount equal to each Lender's
Percentage of the Aggregate Commitment. Each Lender shall record Advances and
principal payments thereof on the schedule attached to its Note or, at its
option, in its records, and each Lender's record thereof shall be conclusive
absent Borrower furnishing to such Lender conclusive and irrefutable evidence of
an error made by such Lender with respect to that Lender's records.
Notwithstanding the foregoing, the failure to make, or an error in making, a
notation with respect to any Advance shall not limit or otherwise affect the
obligations of Borrower hereunder or under the Notes to pay the amount actually
owed by Borrower to Lenders.
2.5 RATABLE AND NON-PRO RATA LOANS. Each Advance hereunder shall
consist of Loans made from the several Lenders ratably in proportion to their
Percentages, except for Swingline Loans which shall be made by the Swingline
Lender in accordance with SECTION 2.16. The ratable Advances may be Base Rate
Advances, LIBOR Advances or a combination thereof selected by the Borrower in
accordance with SECTIONS 2.10 and 2.11.
2.6 APPLICABLE MARGINS. The Applicable Margin (if any) over the then
Base Rate or LIBOR Rate, as applicable to the Advance(s) in question, shall vary
from time to time in accordance with (i) Borrower's Leverage Ratio, which
Leverage Ratio shall be computed, for purposes of this SECTION 2.6 only, without
regard to any Guarantee Obligations with respect to Indebtedness of Lennar Land
Partners, and (ii) LNR's long-term unsecured, non-credit enhanced debt ratings,
if any, by (x) Moody's, (y) S&P and/or (z) Fitch, Duff & Phelps or another
nationally recognized rating agency acceptable to the Agent (a "THIRD RATING").
The Applicable Margin shall be adjusted effective as of the next Business Day
following any change in LNR's Moody's debt rating or S&P debt rating or Third
Rating, as the case may be, or any change in Borrower's Leverage Ratio, in each
case as established by Borrower to the Agent's satisfaction. LNR shall notify
the Agent in writing promptly after becoming aware of any change in any of its
debt ratings. In order to qualify for an Applicable Margin based upon
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a debt rating, LNR shall obtain and maintain debt ratings from at least two (2)
rating agencies identified above, one of which must be Moody's or S&P so long as
such Persons are in the business of providing debt ratings for the real estate
industry; PROVIDED that until such time as LNR obtains two debt ratings or if
LNR fails to maintain at least two debt ratings, the Applicable Margin shall be
based upon an S&P rating of less than BBB- and a Moody's rating of less than
Baa3 in the table below. If at any time of determination of the Applicable
Margin, LNR has then current debt ratings from two (2) or more rating agencies,
then the Applicable Margin shall be based on the lowest of such ratings. The
applicable debt ratings and Leverage Ratios, and the Applicable Margins are set
forth in the following table:
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE
MARGIN-LIBOR MARGIN-BASE
DEBT RATING LEVERAGE RATIO ADVANCES RATE ADVANCES NON-USE FEE
- - ----------- -------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Equal to or higher than less than 1.0:1 1 percent 0 percent 0.1375 percent
BBB- (S&P) Baa3 (Moody's)
or equivalent Third Rating
No rating or less than BBB- less than 1.0:1 1.1 percent 0 percent 0.1425 percent
(S&P), Baa3 (Moody's) or
equivalent Third Rating
1.0:1 or greater but 1.25 percent 0 percent 0.1875 percent
less than 1.5:1
1.5:1 or greater but 1.6 percent 0.1 percent 0.23 percent
less than 1.75:1
1.75:1 or greater but 1.75 percent 0.2 percent 0.275 percent
not to exceed 2.0:1
</TABLE>
2.7 UNUSED COMMITMENT FEE. The Borrower agrees to pay to the Agent for
the account of each Lender an unused commitment fee (the "NON-USE Fee") from the
Agreement Execution Date to and including the Maturity Date, calculated at the
applicable rate per annum set forth in the table appearing in SECTION 2.6 hereof
on the daily unborrowed portion of such Lender's Commitment (which is equal to
the difference between (a) such Lender's Commitment on such day and (b) the then
outstanding Loans owed to such Lender plus the Lender's Percentage of any
outstanding and undrawn Facility Letters of Credit) payable quarterly in arrears
on the first day of each calendar quarter hereafter and on the Maturity Date.
Amounts outstanding under the Swingline Loans shall be considered part of the
available unborrowed portion of the Facility for purposes of computing the
Non-Use Fee.
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Notwithstanding the foregoing, all accrued Commitment Fees shall be payable on
the effective date of any termination of the obligations of the Lenders to make
Loans hereunder.
2.8 OTHER FEES.
(a) The Borrower shall pay all fees payable to the Agent pursuant
to the Borrower's letter agreements with it.
(b) The Borrower shall pay a one time commitment fee ("FACILITY
FEE") to the Agent for the account of the Lenders in the amount of $600,000, to
be shared among the Lenders based on their respective Percentages. The portion
of the Facility Fee allocable to each Lender shall be paid by Borrower on the
date such Lender becomes a party to this Agreement.
2.9 MINIMUM AMOUNT OF EACH ADVANCE. Each LIBOR Advance shall be in the
minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof), and each Base Rate Advance shall be in the minimum amount of $500,000
(and in multiples of $100,000 if in excess thereof), provided, however, that any
Base Rate Advance may be in the amount of the unused Aggregate Commitment.
2.10 INTEREST.
(a) The outstanding principal balance under the Notes shall bear
interest from time to time at a rate per annum equal to:
(i) the Adjusted Base Rate; or
(ii) at the election of Borrower with respect to all or
portions of the Obligations, the Adjusted LIBOR Rate.
(b) All interest shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest accrued on each Advance shall be payable
in arrears on the first day of each calendar month, commencing with the first
such date to occur after the date hereof, and the Maturity Date. Interest shall
not be payable for the day of any payment on the amount paid if payment is
received by Agent prior to noon (Chicago time). If any payment of principal or
interest under the Notes shall become due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a payment of principal, such extension of time shall be included in computing
interest due in connection with such payment.
2.11 SELECTION OF RATE OPTIONS AND LIBOR INTEREST PERIODS.
(a) Borrower, from time to time, may select the Rate Option and,
in the case of each LIBOR Advance, the commencement date (which shall be a
Business Day) and the length of the LIBOR Interest Period applicable to each
LIBOR Advance. Borrower shall give Agent irrevocable notice (a "BORROWING
NOTICE" not later than 11:00 a.m. (Chicago time) (i) at
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least one Business Day prior to a Base Rate Advance, (ii) at least three (3)
Business Days prior to a ratable LIBOR Advance, and (iii) not later than
11:00 a.m. (Chicago time) on the Borrowing Date for each Swingline Loan,
specifying:
(i) the Borrowing Date, which shall be a Business Day,
of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the type of Advance selected, and
(iv) in the case of each LIBOR Advance, the LIBOR Interest
Period applicable thereto.
The Borrower shall also deliver together with each Borrowing Notice the
compliance certificate required in SECTION 5.2, if required, and otherwise
comply with the conditions set forth in SECTION 5.2 for Advances. Agent shall
use reasonable efforts to provide each Lender by facsimile with a copy of each
Borrowing Notice and compliance certificate on the same Business Day it is
received.
Not later than noon (Chicago time) on each Borrowing Date, each Lender
shall make available its Loan or Loans, in funds immediately available in
Chicago to the Agent. Agent will promptly make the funds so received from the
Lenders available to the Borrower.
(b) Agent shall, as soon as practicable after receipt of a
Borrowing Notice requesting a LIBOR Advance, determine the Adjusted LIBOR Rate
applicable to the requested ratable LIBOR Advance and inform Borrower and
Lenders of the same. Each determination of the Adjusted LIBOR Rate by Agent
shall be conclusive and binding upon Borrower in the absence of manifest error.
(c) If Borrower shall prepay a LIBOR Advance other than on the
last day of the LIBOR Interest Period applicable thereto, Borrower shall be
responsible to pay all amounts due to Lenders as required by SECTION 4.4 hereof.
(d) As of the end of each LIBOR Interest Period selected for a
ratable LIBOR Advance, the interest rate on the LIBOR Advance will become the
Adjusted Base Rate, unless Borrower has once again selected a LIBOR Interest
Period in accordance with the timing and procedures set forth in SECTION
2.11(g).
(e) The right of Borrower to select the Adjusted LIBOR Rate for an
Advance pursuant to this Agreement is subject to the availability to Lenders of
a similar option. If Agent determines that (i) deposits of Dollars in an amount
approximately equal to the LIBOR Advance for which the Borrower wishes to select
the Adjusted LIBOR Rate are not generally available at such time in the London
interbank eurodollar market, or (ii) the rate at which the deposits described in
subsection (i) herein are being offered will not adequately and
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fairly reflect the costs to Lenders of maintaining an Adjusted LIBOR Rate on an
Advance or of funding the same in such market for such LIBOR Interest Period, or
(iii) reasonable means do not exist for determining an Adjusted LIBOR Rate, or
(iv) the Adjusted LIBOR Rate would be in excess of the maximum interest rate
which Borrower may by law pay, then in any of such events, Agent shall so notify
Borrower and Lenders and such Advance shall bear interest at the Adjusted Base
Rate.
(f) In no event may Borrower elect a LIBOR Interest Period which
would extend beyond the Maturity Date. In no event may Borrower have more than
seven (7) different LIBOR Interest Periods for LIBOR Advances outstanding at any
one time.
(g) CONVERSION AND CONTINUATION.
(i) Borrower may elect from time to time, subject to the other
provisions of this SECTION 2.11, to convert all or any part of a
ratable Advance into any other type of Advance; provided that any
conversion of a ratable LIBOR Advance shall be made on, and only
on, the last day of the LIBOR Interest Period applicable thereto.
(ii) Base Rate Advances shall continue as Base Rate Advances
unless and until such Base Rate Advances are converted into
ratable LIBOR Advances pursuant to a Conversion/Continuation
Notice from Borrower in accordance with SECTION 2.11(g)(iv).
Ratable LIBOR Advances shall continue until the end of the then
applicable LIBOR Interest Period therefor, at which time each such
Advance shall be automatically converted into an Base Rate Advance
unless the Borrower shall have given the Agent a
Conversion/Continuation Notice in accordance with SECTION
2.11(g)(iv) requesting that, at the end of such LIBOR Interest
Period, such Advance continue as an Advance of such type for an
additional LIBOR Interest Period of the same or a different
duration.
(iii) Notwithstanding anything to the contrary contained in
this SECTION 2, no Advance may be converted into a LIBOR Advance
or continued (following the end of a LIBOR Interest Period) as a
LIBOR Advance when any Monetary Default or Event of Default has
occurred and is continuing.
(iv) The Borrower shall give the Agent irrevocable notice (a
"CONVERSION/CONTINUATION NOTICE") of each conversion of an Advance
or continuation of a LIBOR Advance not later than 11:00 a.m.
(Chicago time) on the Business Day immediately preceding the date
of the requested conversion, in the case of a conversion into a
Base Rate Advance, or 11:00 a.m. (Chicago time) at least three (3)
Business Days prior to the date of the requested conversion or
continuation, in the case of a conversion into or continuation of
a ratable LIBOR Advance, specifying: (1) the requested date (which
shall be a Business Day) of such conversion or continuation; (2)
the amount and type of the Advance to be converted or continued;
and (3) the amounts and type(s) of
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Advance(s) into which such Advance is to be converted or continued
and, in the case of a conversion into or continuation of a ratable
LIBOR Advance, the duration of the LIBOR Interest Period
applicable thereto.
2.12 METHOD OF PAYMENT. All payments of the Obligations hereunder shall
be made, without set-off, deduction, or counterclaim, in immediately available
funds by wire transfer to Agent's account designated in writing from time to
time by notice to Borrower or, in the absence of such notice, to Agent at its
address specified herein, or at any other Lending Installation of Agent
specified in writing by Agent to Borrower, by noon (local time) on the date when
due and shall be applied ratably by Agent among the Lenders, except as otherwise
provided herein. Each payment delivered to Agent for the account of any Lender
shall be delivered promptly by Agent to such Lender in the same type of funds
that Agent received at its address specified herein or at any Lending
Installation specified in a notice received by Agent from such Lender. If Agent
shall not have received payment as provided above, Agent is hereby authorized to
charge any accounts of Borrower maintained with BOFA for each payment of
principal, interest and fees as it becomes due hereunder; provided, however,
that Agent shall first exhaust any funds on deposit in LNR's Account No.
1420804858 with BOFA before having recourse to any other such accounts.
2.13 DEFAULT. Notwithstanding the foregoing and notwithstanding SECTION
3.7(c) hereof to the contrary, during the continuance of a Monetary Default, any
other material Default or any Event of Default, Borrower shall not have the
right to request a LIBOR Advance, continue or select a new LIBOR Interest Period
for an existing ratable LIBOR Advance, convert any Base Rate Advance to a
ratable LIBOR Advance or request (or be deemed to request) a Base Rate Advance
to satisfy any Reimbursement Obligations with respect to Facility Letter of
Credit. During the continuance of a Monetary Default, any other material
Default, or any Event of Default, outstanding Advances shall bear interest at
the applicable Default Rates until such Monetary Default, other material Default
or Event of Default ceases to exist or the Obligations are paid in full.
2.14 LENDING INSTALLATIONS. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written notice to
the Agent and Borrower, designate a Lending Installation through which Loans
will be made by it and for whose account payments are to be made.
2.15 NON-RECEIPT OF FUNDS BY AGENT. Unless Borrower or a Lender, as the
case may be, has notified Agent prior to the date on which it is scheduled to
make payment to Agent of (i) in the case of a Lender, an Advance, or (ii) in the
case of Borrower, a payment of principal, interest or fees to the Agent for the
account of the Agent or of any or all of the Lenders, that it does not intend to
make such payment (which notice shall not affect the obligations of Borrower or
any Lender, as the case may be, hereunder), and such notice has been received by
Administrative Agent, Agent may assume that such payment has been or will be
made when due. Agent may, but shall not be obligated to, make the amount of such
payment available to
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the intended recipient in reliance upon such assumption. If such Lender or
Borrower, as the case may be, has not in fact made such payment to Agent, the
recipient of such payment shall, on demand by Agent, repay to Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by Agent
until the date Agent recovers such amount at a rate per annum equal to (i) in
the case of payment by a Lender, the Federal Funds Effective Rate (as determined
by Agent) for such day or (ii) in the case of payment by Borrower, the interest
rate applicable to the relevant Advance.
2.16 SWINGLINE LOANS. In addition to the other options available to
Borrower hereunder, the amount of the Swingline Commitment shall be available
for Swingline Loans subject to the following terms and conditions. Swingline
Loans shall be made available for same day borrowings provided that notice is
given in accordance with SECTION 2.11 hereof. All Swingline Loans shall bear
interest at the Adjusted Base Rate and shall be deemed to be Base Rate Advances.
In no event shall the Swingline Lender be required to fund a Swingline Loan if
it would increase the total aggregate outstanding Loans by Swingline Lender
hereunder plus its Percentage of Facility Letter of Credit Obligations to an
amount in excess of its Commitment. Upon request of the Swingline Lender made to
all the Lenders, each Lender irrevocably agrees to purchase its Percentage of
any Swingline Loan made by the Swingline Lender regardless of whether the
conditions for disbursement are satisfied at the time of such purchase,
including the existence of an Event of Default hereunder, provided no Lender
shall be required to have total outstanding Loans plus its Percentage of
Facility Letters of Credit Obligations in an amount greater than its Commitment.
Such purchase shall take place on the date of the request by Swingline Lender so
long as such request is made by noon (Chicago time), otherwise on the next
Business Day following such request. All requests for purchase shall be in
writing. From and after the date it is so purchased, each such Swingline Loan
shall, to the extent purchased, (i) be treated as a Loan made by the purchasing
Lenders and not by the selling Lender for all purposes under this Agreement and
the payment of the purchase price by a Lender shall be deemed to be the making
of a Loan by such Lender and shall constitute outstanding principal under such
Lender's Note, and (ii) no longer be considered a Swingline Loan, except that
all interest accruing on or attributable to such Swingline Loan for the period
prior to the date of such purchase shall be paid when due by the Borrower to the
Agent for the benefit of the Swingline Lender, but shall be considered a Base
Rate Advance by each such Lender and all interest accruing on or attributable to
such Loans for the period from and after the date of such purchase shall be paid
when due by the Borrower to the Agent for the benefit of the purchasing Lenders.
If prior to purchasing its Percentage of a Swingline Loan one of the events
described in SECTION 10.10 shall have occurred and such event prevents the
consummation of the purchase contemplated by the preceding provisions, each
Lender will purchase an undivided participating interest in the outstanding
Swingline Loan in an amount equal to its Percentage of such Swingline Loan. From
and after the date of each Lender's purchase of its participating interest in a
Swingline Loan, if the Swingline Lender receives any payment on account thereof,
the Swingline Lender will distribute to such Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating interest was
outstanding and funded); provided, however, that in the event that such payment
was received by the Swingline Lender and is required to be
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returned to the Borrower, each Lender will return to the Swingline Lender any
portion thereof previously distributed by the Swingline Lender to it. If any
Lender fails to so purchase its Percentage of any Swingline Loan, such Lender
shall be deemed to be a Defaulting Lender hereunder. No Swingline Loan shall be
outstanding for more than five (5) Business Days at a time.
2.17 APPLICATION OF MONEYS RECEIVED. All moneys collected or received
by the Agent on account of the Facility directly or indirectly, shall be applied
in the following order of priority:
(i) to the payment of all expenses then due and payable by
Borrower hereunder, including, without limitation, costs incurred
in the collection of such moneys;
(ii) to the reimbursement of any yield protection due to any
of the Lenders in accordance with SECTION 4.1;
(iii) to the payment of all indemnity obligations then due and
payable by Borrower hereunder;
(iv) to payment of all fees then due to the Agent;
(v) the payment of any fee due pursuant to SECTION 3.8(b) in
connection with the issuance of a Facility Letter of Credit to the
Issuing Bank, to the payment of the Non-Use Fee, Facility Fee and
Facility Letter of Credit Fee to the Lenders, if then due, and to
the payment of all fees due hereunder;
(vi) to payment of the full amount of interest and principal
on the Swingline Loans;
(vii) first to interest until paid in full and then to
principal for all Lenders (other than Defaulting Lenders) in
accordance with the respective Funded Percentages of the Lenders;
(viii) any other sums due to the Agent or any Lender under any
of the Loan Documents; and
(ix) to the payment of any sums due to each Defaulting Lender
as their respective Percentages appear (provided that Agent shall
have the right to set-off against such sums any amounts due from
such Defaulting Lender).
ARTICLE III
THE LETTER OF CREDIT SUBFACILITY
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3.1 OBLIGATION TO ISSUE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, the Issuing Bank hereby agrees to issue for the
account of Borrower one or more Facility Letters of Credit in accordance with
this ARTICLE III, from time to time during the period commencing on the
Agreement Execution Date and ending on a date one Business Day prior to the
Maturity Date.
3.2 TYPES AND AMOUNTS. The Issuing Bank shall not have any obligation
to:
(i) issue any Facility Letter of Credit if the aggregate
maximum amount then available for drawing under Letters of Credit
issued by such Issuing Bank, after giving effect to the Facility
Letter of Credit requested hereunder, shall exceed any limit
imposed by law or regulation upon such Issuing Bank;
(ii) issue any Facility Letter of Credit if, after giving
effect thereto, either (1) the then applicable Allocated Facility
Amount would exceed the then current Aggregate Commitment, or (2)
the Facility Letter of Credit Obligations would exceed $75,000,000;
(iii) issue any Facility Letter of Credit having an expiration
date, or containing an extension provision to extend such date, to
a date which is after the Business Day immediately preceding the
Maturity Date; or
(iv) issue any Facility Letter of Credit having an expiration
date, or containing an extension provision to extend such date, to
a date which is more than twelve (12) months after the date of its
issuance.
3.3 CONDITIONS. In addition to being subject to the satisfaction of the
conditions contained in ARTICLE V hereof, the obligation of the Issuing Bank to
issue any Facility Letter of Credit is subject to the satisfaction in full of
the following conditions:
(i) the Borrower shall have delivered to the Issuing Bank at
such times and in such manner as the Issuing Bank may prescribe
such documents and materials (including, without limitation, an
application and reimbursement agreement on Issuing Bank's standard
forms) as the Issuing Bank may require (it being understood that if
any inconsistency exists between such documents and the Loan
Documents, the terms of the Loan Documents shall control) and the
proposed Facility Letter of Credit shall be reasonably satisfactory
to the Issuing Bank as to form and content;
(ii) as of the date of issuance, no order, judgment or decree
of any court, arbitrator or governmental authority shall purport by
its terms to enjoin or restrain the Issuing Bank from issuing the
requested Facility Letter of Credit and no law, rule or regulation
applicable to the Issuing Bank and no request or
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directive (whether or not having the force of law) from any
governmental authority with jurisdiction over the Issuing Bank
shall prohibit or request that the Issuing Bank refrain from the
issuance of Letters of Credit generally or the issuance of the
requested Facility Letter of Credit in particular; and
(iii) there shall not exist any Default or Event of Default.
3.4 PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT.
(a) Borrower shall give the Issuing Bank and the Agent at least
three (3) Business Days' prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement (a "LETTER OF CREDIT REQUEST"), a
copy of which shall be sent promptly by the Agent to all Lenders (except that,
in lieu of such written notice, the Borrower may give the Issuing Bank and the
Agent telephonic notice of such request if confirmed in writing by delivery to
the Issuing Bank and the Agent (i) immediately a telecopy of the written notice
required hereunder which has been signed by an authorized officer, and (ii)
promptly (but in no event later than the requested date of issuance) of the
written notice required hereunder containing the original signature of an
authorized officer); such notice shall be irrevocable and shall specify:
(1) the stated amount of the Facility Letter of Credit requested
(which stated amount shall not be less than $10,000);
(2) the effective date (which day shall be a Business Day) of issuance
of such requested Facility Letter of Credit (the "ISSUANCE DATE");
(3) the date on which such requested Facility Letter of Credit is to
expire;
(4) the purpose for which such Facility Letter of Credit is to be
issued;
(5) the full name and address of the Person for whose benefit the
requested Facility Letter of Credit is to be issued; and
(6) any special language required to be included in the Facility
Letter of Credit.
At the time such request is made, the Borrower shall also provide the Agent and
the Issuing Bank with a copy of any particular form on which Borrower is
requesting that the Facility Letter of Credit be issued. Such notice, to be
effective, must be received by such Issuing Bank and the Agent not later than
noon (Chicago time) on the last Business Day on which notice can be given under
this SECTION 3.4(a).
(b) Subject to the terms and conditions of this ARTICLE III and
provided that the applicable conditions set forth in ARTICLE V hereof have been
satisfied, the Issuing Bank shall, on the Issuance Date, issue a Facility Letter
of Credit on behalf of the Borrower in accordance with the Letter of Credit
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Request and the Issuing Bank's usual and customary business practices unless the
Issuing Bank has actually received (i) written notice from the Borrower
specifically revoking the Letter of Credit Request with respect to such Facility
Letter of Credit, (ii) written notice from a Lender, which complies with the
provisions of SECTION 3.6(a), or (iii) written or telephonic notice from the
Agent stating that the issuance of such Facility Letter of Credit would violate
SECTION 3.2.
(c) The Issuing Bank shall give the Agent (who shall promptly
notify Lenders) and the Borrower written or telecopy notice, or telephonic
notice confirmed promptly thereafter in writing, of the issuance of a Facility
Letter of Credit (the "ISSUANCE NOTICE").
(d) The Issuing Bank shall not extend or amend any Facility Letter
of Credit unless the requirements of this SECTION 3.4 are met as though a new
Facility Letter of Credit was being requested and issued.
SECTION 3.5 REIMBURSEMENT OBLIGATIONS: DUTIES OF ISSUING BANK.
(a) The Issuing Bank shall promptly notify the Borrower and
the Agent (who shall promptly notify Lenders) of any draw under a Facility
Letter of Credit. Any such draw shall immediately be reimbursed (by Advances or
otherwise) in accordance with SECTION 3.7 hereof.
(b) The Borrower and each Lender irrevocably authorizes the Issuing
Bank to honor draws on each Facility Letter of Credit by the beneficiary thereof
in accordance with its terms. Any action taken or omitted to be taken by the
Issuing Bank under or in connection with any Facility Letter of Credit, if taken
or omitted in the absence of willful misconduct or gross negligence, shall not
(i) put the Issuing Bank under any resulting liability to Borrower or any
Lender, (ii) relieve Borrower of any of its obligations hereunder to the Issuing
Bank or the Lenders or (iii) provided that such Lender has not given a notice
contemplated by SECTION 3.6(a) that continues in full force and effect, relieve
any Lender of its obligations hereunder to the Issuing Bank. In determining
whether to pay under any Facility Letter of Credit, the Issuing Bank shall have
no obligation relative to the Lenders or Borrower other than to confirm that any
documents required to be delivered under such Letter of Credit appear to have
been delivered, and that they appear to comply on their face with the
requirements of such Letter of Credit. Without limiting the generality of the
foregoing, the Agent and the Issuing Bank shall be entitled to rely, and shall
be fully protected in relying upon, any Facility Letter of Credit, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements of legal
counsel, independent accountants and other experts selected by the Agent or the
Issuing Bank. The Agent and the Issuing Bank shall in all cases be fully
protected by the Lenders in acting, or in refraining from acting, in accordance
with a request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Lenders and all future
holders of the Notes.
3.6 PARTICIPATION.
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(a) Immediately upon issuance by the Issuing Bank of any Facility
Letter of Credit in accordance with the procedures set forth in SECTION 3.4,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received from the Issuing Bank, without recourse, representation or
warranty, an undivided interest and participation equal to such Lender's
Percentage in such Facility Letter of Credit (including, without limitation, all
obligations of the Borrower with respect thereto) and all related rights
hereunder and under the Guaranty and other Loan Documents; PROVIDED that a
Letter of Credit issued by the Issuing Bank shall not be deemed to be a Facility
Letter of Credit for purposes of this SECTION 3.6 if the Issuing Bank shall have
received written notice from any Lender on or before the Business Day prior to
the date of its issuance of such Letter of Credit that one or more of the
conditions contained in SECTION 5.2 is not then satisfied, and in the event the
Issuing Bank receives such a notice it shall have no further obligation to issue
any Facility Letter of Credit until such notice is withdrawn by that Lender or
the Issuing Bank receives a notice from the Agent that such condition has been
effectively waived in accordance with the provisions of this Agreement. Each
Lender's obligation to make further Loans to Borrower (other than any payments
such Lender is required to make under subparagraph (b) below) or to purchase an
interest from the Issuing Bank in any subsequent Facility Letters of Credit
issued by the Issuing Bank on behalf of Borrower shall be reduced by such
Lender's Percentage of the Facility Letter of Credit Obligations.
(b) In the event that the Issuing Bank makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such amount to
the Issuing Bank pursuant to SECTION 3.7 hereof, the Issuing Bank shall promptly
notify the Agent, which shall promptly notify each Lender of such failure, and
each Lender shall promptly and unconditionally pay to the Agent for the account
of the Issuing Bank the amount of such Lender's Percentage of the unreimbursed
amount of such payment, and the Agent shall promptly pay such amount to the
Issuing Bank. A Lender's payments of its Percentage of such Reimbursement
Obligation as aforesaid shall be deemed to be a Loan by such Lender and shall
constitute outstanding principal under such Lender's Note. The failure of any
Lender to make available to the Agent for the account of the Issuing Bank its
Percentage of the unreimbursed amount of any such payment shall not relieve any
other Lender of its obligation hereunder to make available to the Agent for the
account of such Issuing Bank its Percentage of the unreimbursed amount of any
payment on the date such payment is to be made, but no Lender shall be
responsible for the failure of any other Lender to make available to the Agent
its Percentage of the unreimbursed amount of any payment on the date such
payment is to be made. Any Lender which fails to make any payment required
pursuant to this SECTION 3.6(b) shall be deemed to be a Defaulting Lender
hereunder.
(c) Whenever the Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, the Issuing Bank shall
promptly pay to the Agent and the Agent shall promptly pay to each Lender which
has funded its participating interest therein, in immediately available funds,
an amount equal to such Lender's Percentage thereof.
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(d) Upon the request of the Agent or any Lender, the Issuing Bank
shall furnish to such Agent or Lender copies of any Facility Letter of Credit to
which the Issuing Bank is party and such other readily available documentation
relating thereto as may reasonably be requested by the Agent or Lender.
(e) The obligations of each Lender to make payments to the Agent
for the account of the Issuing Bank with respect to a Facility Letter of Credit
shall be absolute, unconditional and irrevocable, not subject to any
counterclaim, set-off, qualification or exception whatsoever other than a
failure of any such Issuing Bank to comply with the terms of this Agreement
relating to the issuance of such Facility Letter of Credit, and such payments
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances.
3.7 PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) The Borrower agrees to pay to the Agent for the account of the
Issuing Bank the amount of all Reimbursement Obligations, interest and other
amounts payable to the Issuing Bank under or in connection with any Facility
Letter of Credit when due, irrespective of any claim, set-off, defense or other
right which the Borrower may have at any time against any Issuing Bank or any
other Person, under all circumstances, including without limitation any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against a beneficiary named
in a Facility Letter of Credit or any transferee of any Facility
Letter of Credit (or any Person for whom any such transferee may be
acting), the Agent, the Issuing Bank, any Lender, or any other
Person, whether in connection with this Agreement, any Facility
Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions
between the Borrower and the beneficiary named in any Facility
Letter of Credit);
(iii) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect of any statement
therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default or Event of Default.
(b) In order to induce the Issuing Bank to issue, extend and renew
each Facility Letter of Credit and the Lenders to participate therein, the
Borrower agrees, except as
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contemplated in SECTION 3.7(c) below, to reimburse or pay to the Agent, for the
account of the Issuing Bank or (as the case may be) the Lenders, with respect to
each Letter of Credit issued, extended or renewed by the Issuing Bank hereunder.
(i) except as otherwise expressly provided in SECTION
3.7(b)(ii) below or SECTION 3.7(c) below, on each date that any
draft presented under such Facility Letter of Credit is honored in
accordance with its terms by the Issuing Bank, or the Issuing Bank
otherwise makes a payment with respect thereto, (a) the amount paid
by the Issuing Bank under or with respect to such Facility Letter
of Credit, and (b) any amounts payable pursuant to this Agreement
under, or with respect to, such Facility Letter of Credit, and
(ii) upon the termination of the Aggregate Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Facility Letters of Credit, an amount equal to the then maximum
aggregate amount that the beneficiaries may at any time draw under
all outstanding Facility Letters of Credit, which amount shall be
held by the Agent as cash collateral in the Letter of Credit
Collateral Account for the benefit of the Issuing Bank, the Lenders
and the Agent for all Reimbursement Obligations.
Each such payment shall be made to the Agent in immediately available
funds. Interest on any and all amounts not converted to an Advance pursuant to
SECTION 3.7(c) and remaining unpaid by the Borrower under this SECTION 3.7(b) at
any time from the date such amounts become due and payable (whether as stated in
this SECTION 3.7, by acceleration or otherwise) until payment in full (whether
before or after judgment) shall be payable to the Agent for the benefit of the
Issuing Bank and Lenders on demand at the Default Rate.
(c) Notwithstanding anything contained in SECTION 3.7(b) to the
contrary, unless the Borrower shall have notified the Agent and the Issuing Bank
prior to 11:00 a.m. (Chicago time) on the Business Day immediately prior to the
date of a drawing on a Facility Letter of Credit that the Borrower shall
reimburse the Issuing Bank for the amount of such drawing with funds other than
the proceeds of an Advance, the Borrower shall be deemed to have timely given to
the Agent a Borrowing Notice requesting a Base Rate Advance on the date on which
such drawing is honored and in an amount equal to the amount of such drawing.
The Borrowers may thereafter convert any such Base Rate Advance to a LIBOR Rate
Advance in accordance with SECTION 2.10 hereof. Each Lender shall, in accordance
with ARTICLE II hereof, make available such Lender's Percentage of such Advance
to the Agent, the proceeds of which shall be applied directly by the Agent to
reimburse the Issuing Bank for the amount of such draw. In the event that any
Lender fails to make available to the Agent the amount of such Lender's
Percentage of such Advance on the date of the drawing, the Agent shall be
entitled to recover such amount on demand from such Lender plus any additional
amounts payable hereunder in the event of a late funding by a Lender.
(d) In the event any payment by the Borrower received by the
Issuing Bank or the Agent with respect to a Facility Letter of Credit and
distributed by the Agent to the
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Lenders on account of their participations is thereafter set aside, avoided or
recovered from the Agent or Issuing Bank in connection with any receivership,
liquidation, reorganization or bankruptcy proceeding, each Lender which received
such distribution shall, upon demand by the Agent, contribute such Lender's
Percentage of the amount set aside, avoided or recovered together with interest
at the rate required to be paid by the Issuing Bank or the Agent upon the amount
required to be repaid by the Issuing Bank or the Agent.
3.8 COMPENSATION FOR FACILITY LETTERS OF CREDIT.
(a) The Borrower shall pay to the Agent, for the ratable account of
the Lenders, based upon the Lenders' respective Percentages, a per annum fee
(the "FACILITY LETTER OF CREDIT FEE") with respect to each Facility Letter of
Credit in an amount equal to the Applicable Margin in effect from time to time
for LIBOR Advances. The Facility Letter of Credit Fee relating to any Facility
Letter of Credit shall be due and payable with respect to the period during
which the Facility Letter of Credit is outstanding in arrears in equal quarterly
installments on the first Business Day of each calendar quarter following the
issuance of any Facility Letter of Credit and, to the extent any such fees are
then due and unpaid, on the Maturity Date. The Agent shall promptly remit any
such Facility Letter of Credit Fees received by it, when received, to the other
Lenders in accordance with their Percentages thereof.
(b) The Issuing Bank also shall have the right to receive solely
for its own account an issuance fee in the amount of the greater of $500 and
0.125 percent of the face amount of each Facility Letter of Credit, payable by
the Borrower on the Issuance Date for each such Facility Letter of Credit. The
Issuing Bank shall also be entitled to receive upon demand its reasonable
out-of-pocket costs and the Issuing Bank's standard charges for amending,
modifying and servicing Facility Letters of Credit and processing draws
thereunder. The Borrower shall pay such issuance fee and other amounts when due
to the Agent for the account of the Issuing Bank.
3.9 LETTER OF CREDIT COLLATERAL ACCOUNT. The Borrower hereby agrees
that it will, until the Maturity Date, maintain a special collateral account
(the "LETTER OF CREDIT COLLATERAL ACCOUNT") with the Agent in the name of the
Borrower but under the sole dominion and control of the Agent, for the benefit
of the Lenders, and in which the Borrower shall have no interest other than as
set forth in SECTION 11.1. In addition to the foregoing, the Borrower hereby
grants to the Agent, for the benefit of the Lenders, a security interest in and
to the Letter of Credit Collateral Account and any funds that may hereafter be
on deposit in such account, including income earned thereon. The Lenders
acknowledge and agree that the Borrower has no obligation to fund the Letter of
Credit Collateral Account unless and until so required under SECTION 3.7(b)(ii)
and SECTION 11.1 hereof.
ARTICLE IV
CHANGE IN CIRCUMSTANCES
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4.1 YIELD PROTECTION. If the adoption of or change in any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due
from Borrower (excluding federal and state taxation of the overall
net income of any Lender or applicable Lending Installation), or
changes the basis of such taxation of payments to any Lender in
respect of its Loans, its interest in the Facility Letters of
Credit or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender or any applicable Lending
Installation (including reserves and assessments relating to LIBOR
Advances), or
(iii) imposes any other condition, and the result is to
increase the cost to any Lender or any applicable Lending
Installation of making, funding or maintaining Loans or reduces any
amount receivable by any Lender or any applicable Lending
Installation in connection with Loans, or requires any Lender or
any applicable Lending Installation to make any payment calculated
by reference to the amount of Loans held, Facility Letters of
Credit issued or participated in or interest received by it, by an
amount deemed material by such Lender,
THEN, within five (5) days after demand by such Lender, Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.
4.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporate entity controlling such
Lender is increased as a result of a Change (as defined below), then, within
five (5) days after demand by such Lender, Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which such Lender determines is attributable
to this Agreement, its Loans, its interest in the Facility Letters of Credit, or
its obligation to make Loans hereunder or participate in or issue Facility
Letters of Credit hereunder (after taking into account such Lender's policies as
to capital adequacy). "CHANGE" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines (as defined below) or (ii) any
adoption of or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by any Lender or any
Lending Installation or any corporation controlling any
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Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards", including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement. Without in any way
affecting the Borrower's obligation to pay compensation actually claimed by a
Lender under this SECTION 4.2, the Borrower shall have the right to replace any
Lender which has demanded such compensation with a replacement Lender acceptable
to the Agent; provided, however, that no Monetary Default, other material
Default or any Event of Default shall then exist, and that Borrower notifies
such Lender that it has elected to replace such Lender and notifies such Lender
and the Agent of the identity of the proposed replacement Lender not more than
sixty (60) days after the date of such Lender's most recent demand for
compensation under this SECTION 4.2. The Lender being replaced shall assign its
Percentage of the Aggregate Commitment and its rights and obligations under this
Facility to the replacement Lender in accordance with the requirements of
SECTION 13.3 hereof and the replacement Lender shall assume such Percentage of
the Aggregate Commitment and the related obligations under this Facility, all
pursuant to an assignment agreement substantially in the form of EXHIBIT J
hereto. The purchase by the replacement Lender shall be at par (plus all accrued
and unpaid interest and any other sums owed to such Lender being replaced
hereunder) which shall be paid to the Lender being replaced upon the execution
and delivery of the assignment.
4.3 AVAILABILITY OF LIBOR ADVANCES. If any Lender determines that
maintenance of any of Loans bearing interest at the Adjusted LIBOR Rate at a
suitable Lending Installation would violate any applicable law, rule, regulation
or directive of any Governmental Authority having jurisdiction, the Agent shall
suspend by written notice to Borrower the availability of outstanding LIBOR
Advances and require any outstanding LIBOR Advances to be repaid. If the
Majority Lenders determine that deposits of a type or maturity appropriate to
match fund LIBOR Advances are not available, the Agent shall suspend by written
notice to Borrower the availability of LIBOR Advances from and after the date of
any such determination. If the Majority Lenders determine that an interest rate
applicable to a LIBOR Advance does not accurately reflect the cost of making a
LIBOR Advance, and, if for any reason whatsoever the provisions of SECTION 4.1
are inapplicable, the Agent shall suspend by written notice to Borrower the
availability of LIBOR Advances from and after the date of any such
determination.
4.4 FUNDING INDEMNIFICATION. If any payment of a LIBOR Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not made
on the date specified by Borrower for any reason other than default by one or
more of the Lenders, Borrower shall indemnify and hold harmless each Lender from
and against any loss, damage, expense or cost incurred by such Lender resulting
therefrom, including, without limitation, any loss, damage, expense or cost in
liquidating or employing deposits acquired to fund or maintain the LIBOR
Advance.
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4.5 LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its LIBOR Advances to reduce any liability of Borrower to such Lender
under SECTIONS 4.1 and 4.2 or to avoid the unavailability of a LIBOR Advance, so
long as such designation is not disadvantageous to such Lender. Each Lender
shall deliver a written statement of such Lender as to the amount due, if any,
under SECTIONS 4.1, 4.2 or 4.4 hereof. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such amount
and shall be final, conclusive and binding on Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a LIBOR Advance shall be calculated as though each Lender funded
its LIBOR Advance through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Adjusted
LIBOR Rate applicable to such Advance, whether in fact that is the case or not.
Unless otherwise provided herein, the amount specified in the written statement
shall be payable on demand after receipt by Borrower of the written statement.
The obligations of Borrower under SECTIONS 4.1, 4.2 and 4.4 hereof shall survive
payment of the Obligations and termination of this Agreement.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO CLOSING. The Lenders shall not be required
to make the initial Advance hereunder, nor shall the Issuing Bank be required to
issue the initial Facility Letter of Credit hereunder, unless (i) the Borrower
shall have paid all fees then due and payable to the Lenders and the Agent
hereunder, (ii) all of the conditions set forth in SECTION 5.2 are satisfied,
and (iii) the Borrower shall have furnished to the Agent, in form and substance
satisfactory to the Lenders and their counsel and in a number of counterparts
sufficient for all of the Lenders, the following:
(a) CERTIFICATES OF INCORPORATION. A copy of the articles of
incorporation of LNR, and a copy of the articles of incorporation or other
applicable organizational documents of each other Borrower and each Guarantor,
each certified by the appropriate Secretary of State or equivalent state
official.
(b) AGREEMENTS OF LIMITED PARTNERSHIP/BYLAWS. A copy of the bylaws
of LNR, including all amendments thereto, and a copy of the by-laws, partnership
agreement, operating agreement or other applicable governing instrument of each
other Borrower and each Guarantor, each certified by the Secretary or other
appropriate officer of the Person in question as being in full force and effect
on the Agreement Execution Date.
(c) GOOD STANDING CERTIFICATES. A certified copy of a certificate
from the Secretary of State or equivalent state official of the states where
each Borrower and each Guarantor are organized, dated as of the most recent
practicable date, showing the good standing of each Borrower and each Guarantor.
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(d) FOREIGN QUALIFICATION CERTIFICATES. A certified copy of a
certificate from the Secretary of State or equivalent state official of the
states where each Borrower and each Guarantor maintain their principal place of
business, dated as of the most recent practicable date, showing the
qualification to transact business in such state as a foreign entity for each
Borrower and each Guarantor.
(e) RESOLUTIONS. A copy of a resolution or resolutions adopted by
the Board of Directors or other applicable governing body of each Borrower and
each Guarantor, certified by the Secretary or other appropriate officer of the
Person in question as being in full force and effect on the Agreement Execution
Date, authorizing the execution, delivery and performance of the Loan Documents
to which such Person is a party, and the transactions provided for therein.
(f) INCUMBENCY CERTIFICATE. A certificate for each Borrower and
each Guarantor, signed by the Secretary other appropriate officer of the Person
in question and dated the Agreement Execution Date, as to the incumbency, and
containing the specimen signature or signatures, of the Persons authorized to
execute and deliver the Loan Documents to be executed and delivered by such
Borrower or Guarantor, as the case may be.
(g) LOAN DOCUMENTS. Originals of the Loan Documents (in such
quantities as the Lenders may reasonably request), duly executed by authorized
officers of the appropriate entity.
(h) OPINION OF FLORIDA COUNSEL. A written opinion, dated the
Agreement Execution Date, from outside Florida counsel for the Borrower and each
Guarantor, which counsel is reasonably satisfactory to Agent, substantially in
the form attached hereto as EXHIBIT E.
(i) OPINION OF ILLINOIS COUNSEL. A written opinion, dated the
Agreement Execution Date, from outside Illinois counsel for the Borrower and
each Guarantor, which counsel is reasonably satisfactory to Agent, substantially
in the form attached hereto as EXHIBIT F.
(j) INSURANCE. Original or certified copies of insurance policies
or binders therefor, with accompanying receipts showing current payment of all
premiums, evidencing that Borrower carries insurance on all Properties, which
satisfies the Agent's insurance requirements, including, without limitation:
(i) Property and casualty insurance (including coverage for
flood and other water damage for any Properties located within a
100-year flood plain) in the amount of the replacement cost of the
improvements at the Properties with limits (if any) of not less
than $40,000,000 per occurrence;
(ii) Loss of rental income insurance in the amount not less
than one year's net revenues from the Properties; and
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(iii) Comprehensive general liability insurance in the amount
of at least $5,000,000 per occurrence.
All insurance must be carried by companies with a Best
Insurance Reports (1996) Policyholder's and Financial Size Rating of "A-IX" or
better; provided, however, that if Borrower uses multiple insurers to insure
distinct tiers of risk, only the insurers of the first two tiers of risk (I.E.,
the first dollars of loss with respect to any insured risk) must be rated as
aforesaid, but other insurers shall in any event be rated "A-VII" or better.
(k) A calculation of the Borrowing Base and an initial Borrowing
Base report, each conforming to the requirements of SECTION 8.2(ii) hereof.
(l) FINANCIAL AND RELATED INFORMATION. The following information:
(i) A certificate, signed by an executive officer of the
Borrower, stating that on the Agreement Execution Date no Default
or Event of Default has occurred and is continuing and that all
representations and warranties of the Borrower contained herein are
true and correct as of the Agreement Execution Date as and to the
extent set forth herein;
(ii) The most recent consolidated annual and quarterly
financial statements of the Borrower and a certificate from a
Qualified Officer of LNR that no change in the Borrower's financial
condition that could have a Material Adverse Effect has occurred
since August 31, 1997;
(iii) Written money transfer instructions, in substantially the
form of EXHIBIT G hereto, addressed to the Agent and signed by a
Qualified Officer of LNR, together with such other related money
transfer authorizations as the Agent may have reasonably requested;
and
(iv) Operating statements (certified as accurate by a Qualified
Officer of LNR) and other evidence satisfactory to the Agent to
establish Borrower's compliance with the covenants set forth in
ARTICLES VII, VIII AND IX hereof.
(m) OTHER EVIDENCE AS ANY LENDER MAY REQUIRE. Such other documents
and evidence as the Agent or any Lender may reasonably request to fully
effectuate and establish the consummation of the transactions contemplated
hereby, the taking of all necessary actions in any proceedings in connection
herewith and compliance with the conditions set forth in this Agreement.
5.2 CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES. Advances after the
initial Advance shall be made from time to time as requested by Borrower, and
the obligation of each Lender to make any Loan for any such Advance (including
Swingline Loans), and the
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obligation of the Issuing Bank to issue Facility Letters of Credit, are subject
to the following terms and conditions:
(a) prior to and at the time of each such Advance or issuance no
Default or Event of Default shall have occurred and be continuing under this
Agreement or any of the Loan Documents and, if required by Agent, Borrower shall
deliver a certificate of Borrower to such effect; and
(b) The representations and warranties contained in ARTICLE VI are
true and correct as of such Borrowing Date, Issuance Date, or date of conversion
and/or continuation as and to the extent set forth therein, except to the extent
any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall be true and correct on
and as of such earlier date.
(c) As to each Subsidiary that executes and delivers a Joinder or a
Guaranty after the Agreement Execution Date (or that is required to do so), the
Borrower has delivered to the Agent the items described in subsections (a)
through (i) of SECTION 5.1 hereof.
Subject to the last grammatical paragraph of ARTICLE VI hereof, each
Borrowing Notice, Letter of Credit Request, and Conversion/Continuation Notice
shall constitute a representation and warranty by the Borrower that the
conditions contained in SECTIONS 5.2(a) THROUGH (c) have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants that:
6.1 EXISTENCE. Attached hereto as SCHEDULE 6.1 (as updated from time to
time in accordance with this Agreement) is a table showing, for each Credit
Party, its organizational form (E.G., corporation, partnership, limited
liability company, etc.), state of organization, state in which its principal
place of business is located, owner(s) of its Capital Stock and percentage
ownership interest, and certain other information. Each Credit Party is an
entity of the type indicated for such Credit Party on SCHEDULE 6.1 (as updated
from time to time) duly organized and validly existing under the laws of the
state of its organization as indicated on SCHEDULE 6.1 (as updated from time to
time), with its principal place of business in the state indicated for such
Credit Party on SCHEDULE 6.1 (as updated from time to time), and is duly
qualified as a foreign entity, properly licensed (if required), in good standing
and has all requisite authority to conduct its business in each jurisdiction in
which it owns any Real Estate and, except where the failure to be so qualified
or to obtain such authority would not have a Material Adverse Effect, in each
other jurisdiction in which the nature of its business or activities requires
such qualification or authority. Each Subsidiary of each Credit Party is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite authority to conduct its
business in each jurisdiction in which
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it owns any Real Estate, and except where the failure to be so qualified or to
obtain such authority would not have a Material Adverse Effect, in each other
jurisdiction in which the nature of its business or activities requires such
qualification.
6.2 CORPORATE/PARTNERSHIP POWERS. The execution, delivery and
performance of the Loan Documents required to be delivered by each Credit Party
hereunder are within the authority of such entity and the powers of the general
partners of each such entity which is a partnership, have been duly authorized
by all requisite action, and are not in conflict with the terms of any
organizational instruments of such entity, or any instrument or agreement to
which such Credit Party is a party or by which such Credit Party or any of its
respective assets may be bound or affected.
6.3 POWER OF OFFICERS. The officers of each Credit Party, and of the
general partners of each Credit Party which is a partnership, executing the Loan
Documents required to be delivered by such entities hereunder have been duly
elected or appointed and were fully authorized to execute the same at the time
each such agreement, certificate or instrument was executed.
6.4 GOVERNMENT AND OTHER APPROVALS. No approval, consent, exemption or
other action by, or notice to or filing with, any governmental authority is
necessary in connection with the execution, delivery or performance of any of
the Loan Documents by any of the Credit Parties. No other consent to or approval
of the transactions contemplated hereunder is required from any ground lessor,
mortgagee, beneficiary under a deed of trust or any other Person, except as has
been delivered to the Lenders on or before the Agreement Execution Date.
6.5 SOLVENCY. Immediately after the Agreement Execution Date and
immediately following the making of each Advance and after giving effect to the
application of the proceeds of such Advance, each of the Borrower and its
Subsidiaries will be Solvent.
6.6 COMPLIANCE WITH LAWS AND AGREEMENTS. There is no judgment, decree
or order or any law, rule or regulation of any court or governmental authority
binding on any of the Credit Parties or any of their respective assets which
would be violated or contravened by the execution, delivery or performance of
the Loan Documents. The Credit Parties and their respective Real Estate and
other assets are in substantial compliance with applicable laws, and with all
material leases, licenses and other agreements to which any Credit Party is a
party or by which such Credit Party or any of its assets is bound. There exist
no defaults on the part of any other party to any such lease, license or other
agreement which, individually or in the aggregate, could have a Material Adverse
Effect.
6.7 ENFORCEABILITY OF AGREEMENT. This Agreement and each of the other
Loan Documents is (or, when fully executed and delivered, will be) the legal,
valid and binding agreement of each of the Credit Parties thereto, enforceable
against each such Credit Party in accordance with its respective terms, except
to the extent that such enforcement may be limited
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by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting the rights of creditors generally.
6.8 TITLE TO PROPERTY. Borrower or its Subsidiaries (or, in the case of
the Parcels, an Investment Affiliate) has good and marketable title to the Real
Estate and assets reflected in the financial statements most recently delivered
to the Agent as owned by it or any such Subsidiary (or, in the case of the
Parcels, an Investment Affiliate) free and clear of Liens except for the
Permitted Liens, and except for mechanics liens which, individually and in the
aggregate, could not have a Material Adverse Effect. Neither the execution,
delivery nor performance of the Loan Documents required by the Credit Parties
will result in the creation of any Lien on the Real Estate or such assets.
Borrower and its Subsidiaries either own, or have entered into valid leases,
licenses and other agreements for, all assets, services and facilities necessary
for the conduct of their respective businesses and the operation of their
respective assets.
6.9 LITIGATION. There are no suits, arbitrations, claims, disputes or
other proceedings (including, without limitation, any civil, criminal,
administrative or environmental proceedings), pending or, to the best of
Borrower's knowledge after due inquiry, threatened against or affecting any of
the Borrower or its Subsidiaries or any of the Real Estate, the adverse
determination of which individually or in the aggregate could have a Material
Adverse Effect, except as disclosed on SCHEDULE 6.9 hereto.
6.10 EVENTS OF DEFAULT. No Default or Event of Default has occurred and
is continuing or would result from the incurring of obligations by any of the
Credit Parties under any of the Loan Documents or any other document to which
any of the Credit Parties is a party.
6.11 INVESTMENT COMPANY ACT OF 1940. None of the Borrower or its
Subsidiaries is an investment company within the meaning of the Investment
Company Act of 1940 and none of the Credit Parties will become such an
investment company.
6.12 PUBLIC UTILITY HOLDING COMPANY ACT. None of the Borrower or its
Subsidiaries is a "holding company" or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company," or of a "subsidiary company"
of a "holding company," within the definitions of the Public Utility Holding
Company Act of 1935, as amended.
6.13 REGULATION U. The proceeds of the Advances will not be used,
directly or indirectly, to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
6.14 NO MATERIAL ADVERSE FINANCIAL CHANGE. There has been no Material
Adverse Financial Change since the date of the financial and/or operating
statements most recently submitted to the Lenders.
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6.15 FINANCIAL INFORMATION. All financial statements and operating
statements furnished to the Lenders by or at the direction of any of the Credit
Parties and all other financial information and data furnished by any of the
Credit Parties to the Lenders are complete and correct in all material respects
as of the date thereof, and such statements have been prepared in accordance
with GAAP and fairly present the consolidated financial condition and results of
operations of the Credit Parties and the Real Estate as of such date. None of
the Credit Parties has any contingent obligations, liabilities for taxes or
other outstanding financial obligations which are material in the aggregate,
except as disclosed in such statements, information and data. Without limiting
the generality of the foregoing, Borrower has furnished to the Agent pro forma
consolidated financial statements (including a balance sheet, and related
statements of income and stockholders' equity) of Borrower and its Subsidiaries
for the period from December 1, 1996 through August 31, 1997, which pro forma
financial statements fairly and accurately present, in accordance with GAAP,
what the consolidated assets, liabilities, financial condition and results of
operations of Borrower and its Subsidiaries would have been for the said period
had LNR been spun-off by Lennar Corporation, and commenced operations, as of the
close of business on November 30, 1996. Notwithstanding anything to the contrary
contained herein, calculations of the Borrowing Base and of compliance with the
covenants contained in ARTICLE VII hereof shall be based on said pro forma
financial statements to the extent such calculations include information to be
derived from GAAP financial statement and relate to the period covered thereby.
6.16 FACTUAL INFORMATION. All factual information heretofore or
contemporaneously furnished by or on behalf of any of the Credit Parties to the
Lenders for purposes of or in connection with this Agreement and the other Loan
Documents and the transactions contemplated herein and therein is, and all other
such factual information hereafter furnished by or on behalf of any of the
Credit Parties to the Lenders will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to make such
information not misleading at such time.
6.17 ERISA. (i) None of the Borrower or its Subsidiaries is an entity
deemed to hold "plan assets" within the meaning of ERISA or any regulations
promulgated thereunder of an employee benefit plan (as defined in Section 3(3)
of ERISA) which is subject to Title I of ERISA or any plan within the meaning of
Section 4975 of the Code, and (ii) the execution of this Agreement and the other
Loan Documents and the transactions contemplated hereunder and thereunder do not
give rise to a prohibited transaction within the meaning of Section 406 of ERISA
or Section 4975 of the Code.
6.18 TAXES. All required tax returns have been filed by each of the
Borrower or its Subsidiaries with the appropriate authorities except to the
extent that extensions of time to file have been requested, granted and have not
expired or except to the extent such taxes are being contested in good faith by
appropriate proceedings and for which adequate reserves, in accordance with
GAAP, are being maintained.
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6.19 ENVIRONMENTAL MATTERS. Except as disclosed in SCHEDULE 6.19 and
except for Real Estate owned by Investment Affiliates which are not Hot
Investment Affiliates:
(i) The Real Estate does not contain any Materials of
Environmental Concern in amounts or concentrations which
constitute a violation of, or could give rise to liability under,
Environmental Laws.
(ii) None of Borrower, its Subsidiaries or Investment
Affiliates has received any written notice alleging that any or
all of the Real Estate or any or all of the operations at the Real
Estate are not in compliance with all applicable Environmental
Laws, or alleging the existence of any contamination at or under
such Real Estate in amounts or concentrations which constitute a
violation of any Environmental Law.
(iii) To the best of Borrower's knowledge after due inquiry,
no notice, violation, non-compliance or liability referred to in
SECTION 6.19(ii) above is threatened, and no condition, fact or
circumstance exists that could result in such notice, violation,
non-compliance or liability.
(iv) During the ownership of the Real Estate by any or all of
Borrower, its Subsidiaries and Investment Affiliates, Materials of
Environmental Concern have not been released, transported or
disposed of, or otherwise migrated, from the Real Estate in
violation of, or in a manner or to a location which could give
rise to liability under any applicable Environmental Laws, nor
during the ownership of the Real Estate by any or all of Borrower,
its Subsidiaries and Investment Affiliates have any Materials of
Environmental Concern been generated, treated, stored, abandoned
or disposed of at, on or under any of such the Real Estate in
violation of, or in a manner that could give rise to liability
under any applicable Environmental Laws. To the best knowledge of
Borrower after due inquiry, no such release, transport, disposal,
migration, generation, treatment, abandonment or storage from, at,
on or under any of the Real Estate occurred prior to ownership
thereof by Borrower, its Subsidiaries and Investment Affiliates.
(v) No judicial proceedings or governmental or administrative
action is pending, or, to the best knowledge of Borrower after due
inquiry, threatened, under any Environmental Law to which
Borrower, any of its Subsidiaries or any Investment Affiliate is
named as a party with respect to any of the Real Estate, nor are
there any consent or other decrees, orders, or other
administrative or judicial decisions or requirements outstanding
under any Environmental Law with respect to such Real Estate.
6.20 INSURANCE. Borrower has obtained the insurance which Borrower is
required to furnish to Lenders under SECTION 5.1(j) hereof.
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6.21 NO BROKERS. None of the Borrower or its Subsidiaries or Affiliates
has dealt with any brokers, finders or other intermediaries in connection with
this Facility, and no fees, commissions or other compensation are payable by or
to any such Person in connection with this Agreement or the Advances. Lenders
shall not be responsible for the payment of any fees or commissions to any
brokers, finders or other intermediaries and Borrower shall indemnify, defend
and hold Lenders harmless from and against any claims, liabilities, obligations,
damages, costs and expenses (including attorneys' fees and disbursements) made
against or incurred by Lenders as a result of claims made or actions instituted
by any brokers, finders or other intermediaries claiming by, through or under
any of the Borrower or its Subsidiaries or Affiliates in connection with the
Facility.
6.22 NO VIOLATION OF USURY LAWS. No aspect of any of the transactions
contemplated herein or in any of the other Loan Documents violates or will
violate any applicable usury laws or laws regarding the validity of agreements
to pay interest.
6.23 NOT A FOREIGN PERSON. None of the Credit Parties is a "foreign
person" within the meaning of Section 1445 or Section 7701 of the Code.
6.24 NO TRADE NAME. Except for the name "LNR Property Corporation" and
except as otherwise set forth on SCHEDULE 6.24 attached hereto, none of the
Borrower or its Subsidiaries uses any trade name and has not and does not do
business under any name other than their actual names set forth herein.
6.25 SUBSIDIARIES. SCHEDULE 6.25 hereto (as updated from time to time
in accordance with this Agreement) contains an accurate list of all of the
Subsidiaries of each of the Credit Parties, which Subsidiaries are not
themselves Credit Parties, and of all of the Investment Affiliates of each of
the Credit Parties, setting forth their respective jurisdictions of formation,
the percentage of their respective Capital Stock owned by each Credit Party and
the Real Estate owned by them. All of the issued and outstanding shares of
Capital Stock of all of the direct and indirect Subsidiaries and Investment
Affiliates of LNR have been duly authorized and issued and are fully paid and
non-assessable. All of such Capital Stock owned directly or indirectly by
Borrower is free and clear of Liens, except as otherwise specifically noted on
Schedule 6.25 (as updated from time to time).
SECTION 6.26 PROPERTIES. SCHEDULE 6.26 hereto (as updated from time to
time in accordance with the terms of this Agreement) contains a complete and
accurate description, as of the Agreement Execution Date and the date of each
update of SCHEDULE 6.26 submitted by Borrower from time to time in accordance
with the terms of this Agreement, of each Project and Property, including the
name of the entity that owns each such Project or Property, and whether such
Project or Property is a Development Property, a Stabilized Project, a Completed
Project and/or an Unencumbered Asset. With respect to each Project and Property
identified from time to time by Borrower for inclusion in the Borrowing Base,
Borrower hereby represents and warrants as follows, except to the extent
otherwise disclosed in writing to the Lenders and approved in writing by the
Majority Lenders:
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(a) No portion of any improvement on any such Project or
Property is located in an area identified by the Secretary of Housing and Urban
Development or any successor thereto as an area having special flood hazards
pursuant to the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, as amended, or any successor law, or, if located within
any such area, Borrower has obtained and will maintain the insurance prescribed
in SECTION 5.1(j) hereof.
(b) To the Borrower's knowledge, each such Project and Property
and the development, use and occupancy thereof are in material compliance with
all applicable zoning ordinances (without reliance upon adjoining or other
properties), building codes, land use and Environmental Laws, and other laws
regulating the development, use and occupancy of real property ("APPLICABLE
LAWS").
(c) Each such Project and Property is or, in the case of raw
land, can (at reasonable cost) be served by all utilities required for the
current and contemplated uses thereof.
(d) All public roads and streets necessary for service of and
access to each such Property and Project for the current or contemplated use
thereof have been or, in the case of raw land, will be completed, are or, in the
case of raw land, will be serviceable and all-weather and are or, in the case of
raw land, will be physically and legally open for use by the public.
(e) Each such Property and Project is or, in the case of raw
land, will be served by public water and sewer systems.
(f) Each such Property and Project is free of any patent or, to
the best knowledge of Borrower and its Subsidiaries, latent structural or other
material defect or deficiency. Each such Property and Project is free of damage
and waste that would materially and adversely affect its value, is in good
repair and there is no deferred maintenance other than ordinary wear and tear.
Each such Property or Project is free from damage caused by fire or other
casualty. There is no pending or, to the best knowledge of Borrower after due
inquiry, threatened condemnation proceedings affecting any such Project or
Property, or any material part thereof.
(g) All liquid and solid waste disposal, septic and sewer
systems located on each such Property and Project are in a good and safe
condition and repair and are in compliance with all Applicable Laws with respect
to such systems.
(h) All improvements on each such Property and Project lie
within the boundaries and building restrictions of the legal description of
record of such Property or Project, no such improvements encroach upon any
adjoining property, and no improvements on adjoining properties encroach upon
such Property or Project or easements benefiting such Property or Project. All
amenities, access routes or other items that benefit such Property or Project
are under direct control of Borrower or one of its Subsidiaries, constitute
permanent
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easements that benefit all or part of such Property or Project or are public
property, and such Property or Project, by virtue of such easements or
otherwise, is contiguous to a physically open, dedicated all weather public
street, and has the necessary permits for ingress and egress.
(i) There are no delinquent taxes, ground rents, water charges,
sewer rents, assessments, insurance premiums, leasehold payments, or other
outstanding charges affecting any such Project or Property, except to the extent
such items are being contested in good faith by appropriate proceedings and as
to which adequate reserves have been provided.
(j) With respect to each Development Property, each required
performance bond, surety or other security has been issued to and in favor of
and unconditionally accepted by each relevant governmental authority, all plans,
specifications and drawings for improvements have been approved by all relevant
governmental authorities, and all necessary easements, licenses, permits and
other authorizations have been granted for the development thereof (including,
without limitation, demolition, grading and construction permits).
SECTION 6.27 RELATIONSHIP OF THE BORROWER. The Borrower and its
Subsidiaries are engaged as an integrated group in the business of owning,
developing and selling real estate, of providing the required services, credit
and other facilities for those integrated operations and of making other types
of investments permitted herein. The Credit Parties require financing on such a
basis that funds can be made available from time to time to such entities, to
the extent required for the continued successful operation of their integrated
operations. The Advances to be made to the Borrower and the Facility Letters of
Credit to be issued for the account of the Borrower under this Agreement are for
the purpose of financing the integrated operations of the Credit Parties, and
each of the Credit Parties expects to derive benefit, directly or indirectly,
from the Advances and Facility Letters of Credit, both individually and as a
member of the integrated group, since the financial success of the operations of
each Borrower and Guarantor is dependent upon the continued successful
performance of the integrated group as a whole.
SECTION 6.28 NO SIDE DEALS. None of the Borrower or its Subsidiaries or
Affiliates have entered into any written or oral agreements, arrangements or
understandings with any Lender or any Affiliate of any Lender relating to the
Facility or the Loan Documents, except as otherwise disclosed in this Agreement.
SECTION 6.29 STOCK PLEDGE. The Capital Stock of each wholly-owned
direct or indirect Subsidiary of Borrower that is not itself a Borrower or a
Guarantor has been pledged to the Lenders pursuant to the Pledge Agreement.
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ARTICLE VII
FINANCIAL COVENANTS
The Borrower covenants and agrees that, so long as the Commitments
shall remain in effect and until full and final payment of all Obligations,
without the prior written consent of the Majority Lenders, it shall not, and
shall cause the other Credit Parties not to:
7.1 BORROWING BASE LIMIT. At any time, permit the aggregate amount of
the Obligations to exceed an amount equal to the Borrowing Base, less
outstanding Unsecured Senior Debt other than the Facility.
7.2 MAXIMUM LEVERAGE RATIO. At any time, permit the ratio of
Consolidated Total Indebtedness to Consolidated Tangible Net Worth to exceed
2.0:1.
7.3 MINIMUM CONSOLIDATED TANGIBLE NET WORTH. At any time, permit
Consolidated Tangible Net Worth to be less than the sum of (i) $400,000,000,
plus (ii) an amount equal to 75 percent of the aggregate proceeds received by
Borrower in connection with any offering or issuance of Capital Stock of the
Borrower after the Agreement Execution Date, plus (iii) 80 percent of the
consolidated retained earnings of the Borrower accrued after the Agreement
Execution Date.
7.4 INTEREST COVERAGE. At any time, permit the ratio of Adjusted EBITDA
to Interest Expense to be less than 2.0:1.
7.5 FIXED CHARGE COVERAGE. At any time, permit the ratio of Adjusted
EBITDA to Fixed Charges to be less than 1.75:1, or permit the ratio of Adjusted
EBITDA to Adjusted Fixed Charges to be less than 1.25:1.
7.6 OTHER UNSECURED SENIOR DEBT. At any time, permit Consolidated
Senior Unsecured Debt other than the Facility to exceed $150,000,000 satisfying
each of the following requirements: (i) the terms and condition of such other
Consolidated Senior Unsecured Debt shall, in the judgment of the Agent, be no
more favorable to the lender(s) thereof than the terms and conditions of the
Facility, and (ii) such lender(s), the Borrower and the Lenders have entered
into an intercreditor agreement(s) satisfactory to Agent.
7.7 SUBORDINATED DEBT. Incur or issue any Subordinated Debt, except on
terms and conditions with respect to subordination satisfactory to Agent and in
amounts not to exceed $250,000,000 per year.
Compliance with each of the foregoing financial covenants shall be measured and
certified following the end of each fiscal quarter with respect to the one year
period consisting of such
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fiscal quarter and the three immediately proceeding fiscal quarters, in
accordance with SECTION 8.2 hereof.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenant and agree that so long as the Commitment of any
Lender shall remain available and until the full and final payment of all
Obligations incurred under the Loan Documents they will:
8.1 NOTICES. Promptly give written notice to Agent of:
(a) all litigation or arbitration proceedings affecting the
Borrower or any of the other Credit Parties, where the amount claimed is
$2,500,000 or more;
(b) any Default or Event of Default, specifying the nature and the
period of existence thereof and what action has been taken or been proposed to
be taken with respect thereto;
(c) all claims filed against any of the Real Estate which, if
adversely determined, could have a Material Adverse Effect;
(d) the occurrence of any other event which might have a Material
Adverse Effect;
(e) any Reportable Event or any "prohibited transaction" (as such
term is defined in Section 4975 of the Code) in connection with any Plan or any
trust created thereunder, which may, singly or in the aggregate materially
impair the ability of any of the Credit Parties to repay any of its obligations
under the Loan Documents, describing the nature of each such event and the
action, if any, such Credit Party proposes to take with respect thereto;
(f) any notice from any federal, state, local or foreign authority
regarding any Hazardous Material, asbestos, or other environmental condition,
proceeding, order, claim or violation affecting any of the Real Estate of any
Borrower, Subsidiary or Hot Investment Affiliate.
8.2 FINANCIAL STATEMENTS, REPORTS, ETC. The Borrower shall maintain,
for itself and each Subsidiary, a system of accounting established and
administered in accordance with GAAP, and furnish to the Lenders:
(i) as soon as available, but in any event not later than 60
days after the close of each fiscal quarter, for the Borrower
and its Subsidiaries, an
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unaudited consolidated balance sheet as of the close of each
such period and the related unaudited consolidated statements of
income and stockholders equity for such period and for the year to
date and cash flows for the year to date of the Borrower and its
Subsidiaries, setting forth in each case in comparative form the
corresponding figures for the previous year, all prepared in
accordance with GAAP and all certified as being complete and
accurate, subject to normal year end adjustments, by a Qualified
Officer of the Borrower, accompanied by a reasonably detailed
discussion by such Qualified Officer of material variances from the
most recent projections delivered pursuant to SECTION 8.2(v)
hereof;
(ii) As soon as available, but in any event not later than 60
days after the close of each fiscal quarter, for the Borrower and
its Subsidiaries, related reports in form, substance and detail
satisfactory to the Lenders, all certified by a Qualified Officer
of Borrower, including (a) updates of SCHEDULES 6.1, 6.25 AND 6.26
to this Agreement, (b) a rolling 60 month projection of cash flow
from Investments in Portfolio/Single Asset Partnerships, (c) a
report on any amendments to the statement of policy concerning
mitigation of interest rate risks referred to in SECTION 8.14
hereof, and on all Hedging Agreements entered into and all other
steps taken to mitigate interest rate risks pursuant thereto, (d)
a calculation of the Borrowing Base, (e) a separate report
regarding each category of assets included in such calculation
pursuant to one of the numbered subsections of the definition of
"Borrowing Base" (which report shall identify the assets in each
such category, identify any Liens on each such asset, show the
valuation of each such asset used in such calculation in accordance
with such definition and, for any valuation based, in whole or in
part, on projections, show a comparison of projections to actual
results for the period covered by said report), (f) a report
listing and describing all newly formed or acquired Subsidiaries
and all Real Estate newly acquired by any Borrower or Subsidiary,
including their cost and secured or unsecured Indebtedness assumed
in connection with such acquisition, if any, (g) summary
information for all Real Estate owned by any Borrower or
Subsidiary, including, without limitation, occupancy rates, square
footage, property type, date acquired or built, Gross Revenues, Net
Operating Income, operating expenses, capital expenditures and the
status of development, (h) a report of all Liens on the Real Estate
which, due to their perceived significance, have been specifically
brought to the attention of any Qualified Officer, other than the
Permitted Liens, (i) a report regarding payment arrearages and
other defaults by third Persons under any leases, licenses and
other agreements with any Credit Party, or affecting the Real
Estate of any Credit Party, that, due to their perceived
significance, have come to the attention of any Qualified Officer,
and (j) such other information as may be requested (including,
without limitation, operating statements) to evaluate the quarterly
compliance certificate delivered as provided below;
(iii) As soon as available but in no event later than the third
business day after the date such reports are to be filed with the
Securities Exchange
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Commission, copies of any Forms 10K, 10Q, 8K, and any other
annual, quarterly, monthly or other reports, copies of all
registration statements and any other public information which the
Borrower or any of its Subsidiaries files with the Securities
Exchange Commission or any other governmental authority;
(iv) As soon as available, but in any event not later than 120
days after the close of each fiscal year of the Borrower and its
Subsidiaries, (a) (i) a consolidated and, if available,
consolidating balance sheet of Borrower and its Subsidiaries as of
the end of that fiscal year and related consolidated and, if
available, consolidating statements of income, cash flows and
stockholders' equity for that fiscal year, (ii) a separate balance
sheet of the Mortgage Subsidiary as of the end of that fiscal year
and related statements of income, retained earnings, cash flows and
stockholders' equity for that fiscal year, in each case with
accompanying notes and schedules, prepared in accordance with GAAP
and audited by a firm of independent certified public accountants
of recognized standing selected by Borrower and acceptable to the
Agent, which accountants shall have issued an unqualified audit
report thereon, and (b) a letter signed by said accountants to the
effect that, during the course of their examination, nothing came
to their attention which caused them to believe that any Default or
Event of Default has occurred, or if they believe that any Default
or Event of Default occurred, specifying the facts with respect
thereto;
(v) Within 90 days after the beginning of each fiscal year of
Borrower, a projection in reasonable detail and in form and
substance satisfactory to the Agent, on a quarterly basis, of the
assets, liabilities, cash flow and earnings of the Borrower and its
Subsidiaries for that fiscal year and the following fiscal year;
(vi) As soon as available, but in any event not later than
three business days after receipt thereof by any Borrower or
Subsidiary, all monthly and quarterly financial statements,
operating reports and other financial and operating information
regarding Investment Affiliates and/or Real Estate owned by any
Investment Affiliate;
(vii) As soon as available, but in any event not later than 120
days after the close of each fiscal year of each Investment
Affiliate a balance sheet of such Investment Affiliate as of the
end of that fiscal year and related statements of income, cash flow
and stockholders' equity for that fiscal year, with accompanying
notes and schedules, prepared in accordance with GAAP and audited
by a firm of independent certified public accountants, which
accountants have issued an unqualified report thereon, provided,
however, that Borrower may furnish unaudited financial statements
for Investment Affiliates in each of which Borrower has made an
Investment of less than $1,000,000 and in all of which Borrower has
made an aggregate Investment of less than $10,000,000;
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(viii) Not later than sixty (60) days after the end of each of
the first three fiscal quarters, and not later than one-hundred and
twenty (120) days after the end of the fiscal year, a compliance
certificate in substantially the form of EXHIBIT H hereto signed by
a Qualified Officer of the Borrower confirming that Borrower is in
compliance with all of the covenants of the Loan Documents, showing
the calculations and computations necessary to determine compliance
with the financial covenants contained in this Agreement (including
such schedules and backup information as may be necessary to
demonstrate such compliance) and stating that no Default or Event
of Default exists, or if any Default or Event of Default exists,
stating the nature and status thereof;
(ix) (a) As soon as possible and in any event within 10
Business Days after the Borrower knows that any Reportable Event
has occurred with respect to any Plan, a statement, signed by a
Qualified Officer of the Borrower, describing said Reportable Event
and within 20 days after such Reportable Event, a statement signed
by such officer describing the action which Borrower proposes to
take with respect thereto; and (b) within 10 Business Days of
receipt, any notice from the Internal Revenue Service, PBGC or
Department of Labor with respect to a Plan regarding any excise
tax, proposed termination of a Plan, prohibited transaction or
fiduciary violation under ERISA or the Code which could result in
any liability to Borrower or any member of the Controlled Group in
excess of $100,000; and (c) within 10 Business Days of filing, any
Form 5500 filed by Borrower with respect to a Plan or any member of
the Controlled Group which includes a qualified accountant's
opinion.
(x) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to the
effect that the Borrower or any of its Subsidiaries or Hot
Investment Affiliates is or may be liable to any Person as a result
of the release by such entity, or any of its Subsidiaries, or any
other Person of any toxic or hazardous waste or substance into the
environment, and (b) any notice alleging any violation of any
federal, state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries or Hot
Investment Affiliates, which, in either case, could be reasonably
likely to have a Material Adverse Effect;
(xi) Promptly upon the furnishing thereof to the shareholders
of the Borrower, copies of all financial statements, reports,
notices and proxy statements so furnished;
(xii) Promptly upon the distribution thereof to the press or
the public, copies of all press release relating to material
events;
(xiii) As soon as possible, and in any event within 10 days
after the Borrower knows of any fire or other casualty or any
pending or threatened condemnation or eminent domain proceeding
with respect to all or any material
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portion of any of the Real Estate, a statement signed by a
Qualified Officer of Borrower, describing such fire, casualty or
condemnation and the action Borrower intends to take with respect
thereto; and
(xiv) Such supplements to the foregoing documents and such
other information and reports (including, without limitation,
non-financial information) as the Agent or any Lender may from time
to time request.
8.3 EXISTENCE AND CONDUCT OF OPERATIONS. Except as otherwise expressly
permitted herein, the Borrower shall, and shall cause its Subsidiaries to: (i)
maintain and preserve its existence and all rights, privileges, authorizations
and franchises now enjoyed and necessary for the operation of its business,
including remaining in good standing in each jurisdiction in which business is
currently operated; (ii) carry on and conduct their respective businesses in
substantially the same manner and in substantially the same fields of enterprise
as presently conducted; (iii) do all things necessary to remain duly
incorporated and/or duly qualified, validly existing and in good standing as a
corporation, general partnership, limited liability company or limited
partnership, as the case may be, in its jurisdiction of incorporation/formation;
and (iv) maintain all requisite authority to conduct its business in each
jurisdiction in which any of the Real Estate is located and, except where the
failure to be so qualified would not have a Material Adverse Effect, in each
jurisdiction required to carry on and conduct its businesses in substantially
the same manner as it is presently conducted.
8.4 MAINTENANCE OF PROPERTIES. The Borrower shall, and shall cause its
Subsidiaries to, maintain, preserve, protect and keep the Real Estate in good
and safe repair, working order and condition, and make all necessary and proper
repairs, renewals and replacements.
8.5 INSURANCE. The Borrower shall, and shall cause its Subsidiaries to,
provide a certificate of insurance from all insurance carriers which have issued
policies with respect to any of their Real Estate within thirty (30) days after
the end of each fiscal year, evidencing that the insurance required to be
furnished to Lenders pursuant to SECTION 5.1(j) hereof is in full force and
effect. The Agent (for the benefit of the Lenders) shall be named as a loss
payee on each such policy of casualty insurance and as an additional insured on
each such policy of liability insurance, and all such polices of insurance shall
contain provisions to the effect that they may not be canceled or materially
changed without at least 30 days prior notice to the Agent. Borrower shall
timely pay, or cause to be paid, all premiums on all insurance policies required
under this Agreement from time to time. The Borrower shall, and shall cause its
Subsidiaries to, promptly notify the insurance carrier or agent therefor (with a
copy of such notification being provided simultaneously to Agent) if there is
any occurrence which, under the terms of any insurance policy then in effect
with respect to any of their Real Estate, requires such notification.
8.6 PAYMENT OF OBLIGATIONS. The Borrower shall, and shall cause its
Subsidiaries to, pay all taxes, assessments, governmental charges and other
obligations when due, except such as may be contested in good faith by
appropriate proceedings, and for which adequate reserves have been provided in
accordance with sound accounting principles.
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8.7 COMPLIANCE WITH LAWS. The Borrower shall, and shall cause its
Subsidiaries to, comply in all material respects with all applicable laws,
rules, regulations, orders and directions of any governmental authority having
jurisdiction over Borrower, any of its Subsidiaries or any of their respective
businesses or assets.
8.8 ADEQUATE BOOKS. The Borrower shall, and shall cause its
Subsidiaries to, maintain adequate books, accounts and records in order to
provide financial statements in accordance with GAAP and, if requested by any
Lender, permit employees or representatives of such Lender at any reasonable
time and upon reasonable notice (i) to inspect and audit the assets of the
Borrower and its Subsidiaries, or any of them, (ii) to examine or audit the
inventory, books, accounts and records of each of them and make copies and
memoranda thereof and (iii) to consult with appropriate personnel of each of
them regarding the foregoing.
8.9 ERISA. The Borrower shall, and shall cause its Subsidiaries to,
comply in all material respects with all requirements of ERISA applicable with
respect to each Plan.
8.10 MAINTENANCE OF STATUS. LNR shall continue to be a corporation
listed and in good standing on the New York Stock Exchange.
8.11 USE OF PROCEEDS. The Borrower shall use the proceeds of the
Facility solely for the general business purposes of the Borrower, including,
without limitation, repayment of existing indebtedness, acquisitions and
development of real properties, repurchasing LNR's Common Stock, to the extent
permitted herein, purchasing CMBS and working capital needs.
8.12 PRE-ACQUISITION ENVIRONMENTAL INVESTIGATIONS. The Borrower shall,
and shall its Subsidiaries to, obtain, prior to the acquisition of each parcel
of real property that it intends to acquire, an environmental report of the
scope described in EXHIBIT I attached hereto and made a part hereof.
8.13 JOINDER OF NEW SUBSIDIARIES. The Borrower shall, from time to
time, promptly cause each Person that becomes a wholly-owned Subsidiary of
Borrower after the Agreement Execution Date to duly execute and deliver to the
Agent either: (i) a joinder agreement pursuant to which such Subsidiary agrees
to become a Borrower hereunder and under the other Loan Documents, assumes all
of the Obligations and agrees that Schedule I hereto and the signature pages to
the Notes shall be amended to include such Subsidiary, all in form and content
satisfactory to the Agent (a "JOINDER"); or (ii) at the Agent's option, a
Guaranty of the Obligations. Notwithstanding anything to the contrary contained
herein, such duly executed Joinder or Guaranty, together with the related
documentation required to be furnished pursuant to SECTION 5.2(c) hereof, shall
be delivered to the Agent no later than 45 days after the end of the fiscal
quarter during which such Person became a Subsidiary of Borrower. If any
wholly-owned Subsidiary of Borrower is prohibited from becoming a Borrower or a
Guarantor hereunder by the terms of any bona fide agreement with an unaffiliated
third person entered into by such Subsidiary for legitimate business reasons,
and without any intent to avoid becoming a Borrower or a Guarantor hereunder,
then, in lieu of such Subsidiary becoming a
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Borrower or a Guarantor hereunder, Borrower shall pledge all of the stock of
such Subsidiary (a "PLEDGE SUBSIDIARY") to Agent, for the benefit of the
Lenders, pursuant to a Pledge Agreement in the form of EXHIBIT C attached hereto
(the "PLEDGE AGREEMENT").
8.14 INTEREST RATE PROTECTION. Within 60 days after the Agreement
Execution Date, the Board of Directors of LNR shall have approved a written
statement of policy concerning the mitigation of interest rate risks through the
use of Hedging Agreements, or by other appropriate means, with respect to
interest payable on all unsecured Indebtedness of Borrower and its Subsidiaries,
in form and content reasonably satisfactory to Agent, and Borrower and its
Subsidiaries shall thereafter implement said policy, as the same may be amended
from time to time in a manner reasonably acceptable to the Agent.
8.15 INVESTMENT IN MORTGAGE SUBSIDIARY. The aggregate Investment of
Borrower and its Subsidiaries in the Mortgage Subsidiary shall not exceed
$40,000,000.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as the Commitment shall
remain in effect and until full and final payment of all Obligations incurred
under the Loan Documents, without the prior written consent of the Majority
Lenders, it shall not, and shall cause its Subsidiaries not to:
9.1 CHANGE IN BUSINESS. Engage in any business activities or operations
other than (i) acquisition, development, ownership, management, operation and
leasing of commercial and industrial real properties (including, without
limitation, multi-family residential, office, retail and warehouse properties)
and ancillary businesses specifically related thereto, (ii) real estate lending
and (iii) Investments in any type of asset which may be included in the
computation of the Borrowing Base pursuant to the definition thereof.
9.2 [INTENTIONALLY OMITTED].
9.3 CHANGE OF CONTROL. Permit or suffer any Change of Control to occur.
9.4 USE OF PROCEEDS. Apply or permit to be applied any proceeds of any
Advance directly or indirectly, to the funding of any purchase of, or offer for,
any shares of capital stock of any publicly held corporation constituting (alone
or together with other shares owned by Borrower or its Subsidiaries) a
controlling interest in such corporation, or as part of a series of transactions
to acquire such a controlling interest, unless the board of directors of such
corporation has consented to such purchase or offer the Lenders have consented
to such use of the proceeds of the Facility.
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9.5 TRANSFERS OF ASSETS. Sell or otherwise dispose of any Real Estate
(other than Real Estate of any Investment Affiliate) or other asset, or any
interest therein, for less than the fair market value thereof.
9.6 LIENS. Create, incur, or suffer to exist any Lien in, of or on any
of the Real Estate (other than Real Estate of any Investment Affiliate) except:
(i) Liens for taxes, assessments or governmental charges or
levies on their Property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings and for
which adequate reserves shall have been set aside on their books;
(ii) Liens which arise by operation of law, such as carriers',
warehousemen's, landlords', materialmen and mechanics' liens and
other similar liens arising in the ordinary course of business
which secure payment of obligations not more than 30 days past due
or which are being contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set
aside on its books;
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation;
(iv) Utility easements, building restrictions, zoning
restrictions, easements and such other encumbrances or charges
against real property as are of a nature generally existing with
respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere
with the use thereof in the business of the Borrower or any of the
other Credit Parties;
(v) Liens of any Subsidiary in favor of the Borrower; and
(vi) Liens arising in connection with any Indebtedness
permitted hereunder (which permitted Indebtedness includes real
estate mortgage financing) to the extent such Liens will not result
in a violation of any of the provisions of this Agreement.
Liens permitted pursuant to this SECTION 9.6 shall be deemed to be "PERMITTED
LIENS".
9.7 REGULATION U. Use any of the proceeds of the Advances to purchase
or carry any Margin Stock.
9.8 MERGERS AND DISPOSITIONS. Enter into any merger, consolidation,
pool, business combination, reorganization or liquidation, or transfer or
otherwise dispose of all or a
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substantial portion of its properties, except for: such transactions that occur
between wholly-owned Subsidiaries; transactions where Borrower is the surviving
entity and there is no change in business conducted or loss or material
diminution of any credit rating by S&P, Moody's or any Third Rating, and no
Default or Event of Default under the Loan Documents results from such
transaction; or as otherwise approved in advance by the Lenders.
9.9 NEGATIVE PLEDGE. Agree with any third party not to create, assume
or suffer to exist any Lien securing a charge or obligation on any of its real
or personal property, whether now owned or hereafter acquired, except that
Borrower may agree with any Person holding a Lien permitted hereunder on any
particular asset not to further encumber such asset so long as such Lien remains
in effect.
9.10 DISTRIBUTIONS. Declare, pay or agree to declare or pay to any
Person(s) (other than the Credit Parties) during any fiscal period any dividends
or other distributions on or in respect of its Capital Stock (including, without
limitation, any pro rata redemption or pro rata repurchase of Capital Stock) in
an aggregate amount for all Credit Parties that exceeds the consolidated net
income of Borrower and its Subsidiaries for that fiscal period.
ARTICLE X
DEFAULTS
The occurrence of any one or more of the following events shall
constitute an Event of Default:
10.1 NONPAYMENT OF PRINCIPAL. The Borrower fails to pay any principal
portion of the Obligations when due, whether on the Maturity Date or otherwise.
10.2 CERTAIN COVENANTS. The Borrower or any of its Subsidiaries is not
in compliance with any one or more of the provisions of ARTICLE VII or ARTICLE
IX hereof.
10.3 NONPAYMENT OF INTEREST AND OTHER OBLIGATIONS. The Borrower fails
to pay any interest or other portion of the Obligations, other than payments of
principal, and such failure continues for a period of five (5) days after the
date such payment is due.
10.4 CROSS DEFAULT. Any monetary default occurs (after giving effect to
any applicable cure period) under any other Indebtedness (which includes
liability under Guaranties) of one or more of Borrower or its Subsidiaries,
singly or in the aggregate, in excess of Five Million Dollars ($5,000,000),
other than (i) Indebtedness arising from the purchase of personal property or
the provision of services, the amount of which is being contested by Borrower in
good faith by appropriate proceedings or (ii) Indebtedness which is
"non-recourse", i.e., which is not recoverable by the creditor thereof from the
general assets of the Borrower or any of its Subsidiaries, but is limited to the
proceeds of certain real estate, improvements and related personal property.
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10.5 LOAN DOCUMENTS. Any Loan Document is not in full force and effect
in accordance with its terms, or a default has occurred and is continuing
thereunder after giving effect to any cure or grace period in any such document.
10.6 REPRESENTATION OR WARRANTY. At any time or times hereafter any
representation or warranty set forth in ARTICLE VI of this Agreement or in any
other Loan Document or in any statement, report or certificate now or hereafter
made by the Borrower or any of its Subsidiaries to the Lenders or the Agent is
not true and correct in any material respects.
10.7 COVENANTS, AGREEMENTS AND OTHER CONDITIONS. The Borrower fails to
perform or observe any of the covenants, agreements and conditions contained in
this Agreement or any of the other Loan Documents, not specifically referred to
in any other Section of this ARTICLE X, in accordance with the terms hereof or
thereof, and such Default continues unremedied for a period of thirty (30) days
after written notice from Agent, PROVIDED, HOWEVER, that if such Default is
susceptible of cure but cannot by the use of reasonable efforts be cured within
such thirty (30) day period, such Default shall not constitute an Event of
Default under this SECTION 10.7 so long as (i) the Borrower has commenced a cure
within such thirty-day period in a manner satisfactory to the Agent, and (ii)
thereafter, Borrower is proceeding to cure such default continuously and
diligently and in a manner satisfactory to the Agent, and (iii) such default is
fully cured to the Agent's satisfaction not later than sixty (60) days after the
expiration of such thirty (30) day period.
10.8 [INTENTIONALLY OMITTED].
10.9 MATERIAL ADVERSE FINANCIAL CHANGE. Any of the Borrower or its
Subsidiaries has suffered a Material Adverse Financial Change or is Insolvent.
10.10 BANKRUPTCY.
(a) Any of the Borrower or its Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any substantial portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it as a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or effect any of
the foregoing actions set forth in this SECTION 10.10(a), (vi) fail to contest
in good faith any appointment or proceeding described in SECTION 10.10(b) or
(vii) not pay, or admit in writing its inability to pay, its debts generally as
they become due.
(b) A receiver, trustee, examiner, liquidator or similar official
shall be appointed for any of the Borrower or its Subsidiaries or any
substantial portion of any of their
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Properties or other material assets, or a proceeding described in SECTION
10.10(a)(iv) shall be instituted against any of the Borrower or its such
Subsidiaries and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of sixty (60) consecutive days.
10.11 LEGAL PROCEEDINGS. Any of the Borrower or its Subsidiaries is
enjoined, restrained or otherwise impaired by any court order or judgment or if
a notice of lien, levy or assessment is filed of record with respect to all or
any part of their Properties or other material assets by any governmental
department, office, agency or authority, which, alone or in the aggregate, could
have a Material Adverse Affect, or any proceeding is filed or commenced seeking
to enjoin, restrain or otherwise impair any of the said Persons from conducting
all or a substantial part of their respective business affairs, and such
proceeding is not vacated, stayed, dismissed, set aside, removed or otherwise
remedied within ninety (90) days after the occurrence thereof.
10.12 ERISA. Any of the Borrower or its Subsidiaries is deemed to hold
"plan assets" within the meaning of ERISA or any regulations promulgated
thereunder of an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA or any plan (within the meaning of Section
4975 of the Code).
10.13 FAILURE TO SATISFY JUDGMENTS. Any of the Borrower or its
Subsidiaries shall fail within sixty (60) days to pay, bond or otherwise
discharge any judgments or orders for the payment of money in an amount which,
when added to all other judgments or orders outstanding against the Borrower or
any Subsidiary, would exceed Five Million Dollars ($5,000,000) in the aggregate,
which have not been stayed pending appeal, unless the liability is insured
against and the insurer has not challenged coverage of such liability.
10.14 ENVIRONMENTAL REMEDIATION. Failure to remediate within the time
period required by law or governmental order (or within a reasonable time in
light of the nature of the problem if no specific time period is so
established), environmental problems in violation of applicable law related to
any of the Real Estate (other than Real Estate of an Investment Affiliate that
is not a Hot Investment Affiliate) where the estimated cost of remediation is in
the aggregate in excess of Five Million Dollars ($5,000,000), in each case after
all administrative hearings and appeals have been concluded.
ARTICLE XI
ACCELERATION, WAIVERS AMENDMENTS AND REMEDIES
11.1 ACCELERATION.
If any Event of Default described in SECTION 10.10 hereof occurs,
the obligation of the Lenders to make Advances and of the Issuing Bank to issue
Facility Letters of Credit hereunder shall automatically terminate and the
Obligations shall immediately become due and payable. If any other Event of
Default described in ARTICLE X hereof occurs, such obligation to
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make Advances and to issue Facility Letters of Credit shall be terminated and,
at the election of the Majority Lenders, the Obligations may be declared to be
due and payable.
In addition to the foregoing, following the occurrence of an Event
of Default and so long as any Facility Letter of Credit has not been fully drawn
and has not been canceled or expired by its terms, upon demand by the Agent, the
Borrower shall deposit in the Letter of Credit Collateral Account cash in an
amount equal to the aggregate undrawn face amount of all outstanding Facility
Letters of Credit and all fees and other amounts due or which may become due
with respect thereto. The Borrower shall have no control over funds in the
Letter of Credit Collateral Account, which funds shall be invested by the Agent
from time to time in its discretion in certificates of deposit of BOFA having a
maturity not exceeding thirty (30) days. Such funds and any interest thereon
shall be promptly applied by the Agent to reimburse the Issuing Bank for drafts
drawn from time to time under the Facility Letters of Credit. Such funds, if
any, remaining in the Letter of Credit Collateral Account following the payment
of all Obligations in full shall, unless the Agent is otherwise directed by a
court of competent jurisdiction, be promptly paid over to the Person(s) entitled
to the same.
11.2 PRESERVATION OF RIGHTS; AMENDMENTS. No delay or omission of the
Lenders in exercising any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or Event of Default or an
acquiescence therein, and the making of an Advance notwithstanding the existence
of a Default or Event of Default or the inability of the Borrower to satisfy any
conditions precedent to such Advance shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment, release or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Agent and the number of Lenders required hereunder and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative, and may be exercised
concurrently or successively, and all shall be available to the Lenders until
the Obligations have been paid in full.
ARTICLE XII
THE ADMINISTRATIVE AGENT
12.1 APPOINTMENT. BOFA is hereby irrevocably appointed Agent hereunder
and under each other Loan Document, and each of the Lenders irrevocably
authorizes the Agent to act as the agent of such Lender. The Agent agrees to act
as such upon the express conditions contained in this ARTICLE XII. The Agent
shall not have any duties or responsibilities except those expressly set forth
herein and shall not have a fiduciary relationship in respect of any Lender by
reason of this Agreement.
12.2 POWERS. The Agent shall have and may exercise such powers under
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties,
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obligations or liabilities to the Lenders, or any obligation to the Lenders to
take any action thereunder except any action specifically provided by the Loan
Documents to be taken by the Agent. Only Agent may perform the duties reserved
to it under the Loan Documents and no Lender shall act or purport to act on
behalf of the other Lenders or Agent on any such matters. Without limiting the
generality of the foregoing:
(a) Agent shall have the exclusive right to collect from Borrower
and any Guarantor, or third parties, on account of the Facility, including,
principal, interest, fees, protective advances and prepayment premiums (if any),
whether such sums are received directly from Borrower, any Guarantor, or any
other Persons, or obtained by right of offset by Agent of any kind, or by
enforcement of the Loan Documents. Agent will receive and hold all collections
with respect to the Loan for the benefit of the Lenders in accordance with their
Percentages or as otherwise provided herein.
(b) If any Lender shall receive any payments or property in
connection with the Facility (whether or not voluntary), except from Agent, that
Lender shall transfer to Agent all such funds or property within one Business
Day of receipt.
(c) No Lender shall independently initiate any judicial action or
other proceeding against Borrower or any Guarantor with respect to the Facility.
12.3 GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith, except
for its or their own gross negligence or willful misconduct.
12.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of any
condition specified in ARTICLE V, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith.
12.5 ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Majority Lenders (or such greater number of Lenders as may be specifically
required herein in connection with any particular matter), and such instructions
and any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders and on all holders of Notes. The Agent shall be fully justified
in failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first receive such advise or concurrence, if it so
requests, of the Majority Lenders (or such greater number of Lenders as may be
specifically required herein in
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connection with any particular matter), and shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such
action.
12.6 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to engage and
rely upon advice of legal counsel (including the Borrower's counsel),
independent accountants and other professionals and experts selected by the
Agent concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
12.7 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to
rely upon any Note, writing, notice, consent, certificate, facsimile, affidavit,
letter, telegram, statement, paper, document or other communication believed by
it to be genuine and correct and to have been signed, sent or otherwise
communicated by the proper person or persons.
12.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify upon demand the Agent ratably in accordance with their
respective Percentages (i) for any amounts not reimbursed by the Borrower for
which the Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses (including, attorneys' fees) incurred by
the Agent on behalf of the Lenders, in connection with the preparation,
execution, delivery, administration, modification and enforcement of the Loan
Documents, if not paid by Borrower, and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent. Each Lender shall indemnify the Agent and the
other Lenders with respect to claims, liabilities, damages, costs, losses and
expenses (including, without limitation, attorneys' fees) arising from or
relating to the failure of such indemnifying Lender to satisfy its obligations
under this Agreement and the other Loan Documents.
12.9 RIGHTS AS A LENDER. With respect to the Commitment, Advances made
by it, the Note issued to it and otherwise, the Agent shall have the same rights
and powers hereunder and under any other Loan Document as any Lender and may
exercise the same as though it were not the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its capacity as a Lender. The Agent, in its capacity as a Lender, may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Loan Document, with the Borrower or any of its Subsidiaries in
which the Borrower or such Subsidiary is not restricted hereby from engaging
with any other Person. The Lenders
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acknowledge that Agent and its Affiliates now or in the future may have banking
or other financial relationships, including being an agent on other loans, with
Borrower and its Affiliates, as though BOFA were not Agent hereunder and without
notice to or consent of the Lenders. Each Lender hereby expressly waives any
objection to such actual or potential conflict of interest. The Lenders
acknowledge that in the course of such activities, BOFA or its Affiliates may
receive information regarding Borrower or its Affiliates and acknowledge that
Agent shall be under no obligation to provide such information to them, whether
or not confidential.
12.10 COMMITMENT AS A LENDER. BOFA agrees to maintain at all times a
Commitment of at least 10 percent of the Aggregate Commitment so long as BOFA
remains as Agent; provided, that the foregoing agreement of BOFA shall not apply
at any time following a Monetary Default or Event of Default (irrespective of
whether such Monetary Default or Event of Default subsequently is waived).
12.11 LENDER CREDIT DECISION. Each Lender acknowledges that neither the
Agent nor any of its agents has made any representation or warranty to such
Lender and that no action or statement hereafter made or taken by the Agent or
any of its agents shall be deemed to be representation or warranty by the Agent
to such Lenders. Each Lender further acknowledges that it has, independently and
without reliance upon the Agent or any other Lender and based on the financial
statements prepared by the Borrower and such other documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Loan Documents. Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis and decisions in taking or
not taking action under this Agreement and the other Loan Documents.
12.12 SUCCESSOR AGENT. Each Lender agrees that BOFA shall serve as
Agent at all times during the term of this Facility, except that BOFA may resign
as Agent at any time, in its sole discretion, upon thirty (30) days' prior
written notice to the Lenders and Borrower. Upon any such resignation, the
Majority Lenders shall have the right to appoint, on behalf of the Borrower and
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving notice of resignation,
then the retiring Agent may appoint, on behalf of the Borrower and the Lenders,
a successor Agent. Such successor Agent shall be a commercial bank having
capital and retained earnings of at least $100,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent (including the right to receive any
fees for performing such duties which accrue thereafter), and the retiring Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Agent's resignation hereunder as Agent,
the provisions of this ARTICLE XII shall continue in effect for its benefit and
that of the other Lenders in respect of any actions taken or
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omitted to be taken by it while it was acting as the Agent hereunder and under
the other Loan Documents.
12.13 NOTICE OF DEFAULTS. If a Lender becomes aware of a Default or
Event of Default, such Lender shall notify the Agent of such fact. Upon receipt
of such notice that a Default or Event of Default has occurred, the Agent shall
notify each of the Lenders of such fact. Except for defaults in the payment of
principal, interest and fees payable to Agent for the account of the Lenders and
such other Obligations for which Agent is expressly responsible for determining
Borrower's compliance, Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, unless Agent shall have
received written notice from a Lender or Borrower referring to the Loan,
describing such Default or Event of Default and stating that such notice is a
"notice of default". Agent will notify the Lenders of its receipt of any such
notice. Agent shall take action with respect to such Default or Event of Default
in accordance with the provisions of this Agreement and the Loan Documents.
12.14 REQUESTS FOR APPROVAL. If the Agent requests in writing the
consent or approval of a Lender, whether or not such consent or approval is
required hereunder (and no such requirement shall be inferred from any such
request), such Lender shall respond and either approve or disapprove
definitively in writing to the Agent within five (5) Business Days (or sooner if
such notice specifies a shorter period based on Agent's good faith determination
that circumstances exist warranting its request for an earlier response) after
such written request from the Agent. If any Lender does not so respond, that
Lender shall be deemed to have approved the request.
12.15 COPIES OF DOCUMENTS. Agent shall promptly deliver to each of the
Lenders copies of all notices of default and other formal notices sent to or
received by the Agent pursuant to SECTION 15.1 of this Agreement. Within fifteen
(15) Business Days after a request by a Lender to the Agent for other documents
furnished to the Agent by the Borrower, the Agent shall provide copies of such
documents to such Lender except where this Agreement obligates Agent to provide
copies in a shorter period of time.
12.16 DEFAULTING LENDERS. At such time as a Lender becomes a Defaulting
Lender, such Defaulting Lender's right to vote on matters which are subject to
the consent or approval of the Majority Lenders, such Defaulting Lender or all
Lenders shall be immediately suspended until such time as the Lender is no
longer a Defaulting Lender. If a Defaulting Lender has failed to fund its
Percentage of any Advance and until such time as such Defaulting Lender
subsequently funds its Percentage of such Advance, all Obligations owing to such
Defaulting Lender hereunder shall be subordinated in right of payment, as
provided in the following sentence, to the prior payment in full of all
principal of, interest on and fees relating to the Loans funded by the other
Lenders in connection with any such Advance in which the Defaulting Lender has
not funded its Percentage (such principal, interest and fees being referred to
as "SENIOR LOANS" for the purposes of this section). All amounts paid by the
Borrower and otherwise due to be applied to the Obligations owing to such
Defaulting Lender pursuant to the terms hereof shall be distributed by the Agent
to the other Lenders in accordance with their respective Percentages
(recalculated for the purposes hereof to exclude
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the Defaulting Lender) until all Senior Loans have been paid in full. At that
point, the "Defaulting Lender" shall no longer be deemed a Defaulting Lender.
After the Senior Loans have been paid in full equitable adjustments will be made
in connection with future payments by the Borrower to the extent a portion of
the Senior Loans had been repaid with amounts that otherwise would have been
distributed to a Defaulting Lender but for the operation of this SECTION 12.16.
This provision governs only the relationship among the Agent, each Defaulting
Lender and the other Lenders; nothing hereunder shall limit the obligation of
the Borrower to repay all Loans in accordance with the terms of this Agreement.
The provisions of this SECTION 12.16 shall apply and be effective regardless of
whether a Default occurs and is continuing, and notwithstanding (i) any other
provision of this Agreement to the contrary, (ii) any instruction of the
Borrower as to its desired application of payments or (iii) the suspension of
such Defaulting Lender's right to vote on matters as provided above.
12.17 WITHHOLDING TAX. All taxes due and payable on any payments to be
made to a Lender under this Agreement shall be such Lender's sole
responsibility, except to the extent such taxes are actually reimbursed by
Borrower under the Loan Documents. All payments to be made to each Lender under
this Agreement shall be made after deduction for any taxes, charges, levies or
withholdings which are imposed by the country of incorporation of Borrower, the
United States of America or any other applicable taxing authority. Each Lender
agrees to provide to Agent completed and signed copies of any forms that may be
required by the United States Internal Revenue Service (and any applicable state
authority) in order to certify such Lender's exemption from or reduction of
United States (or applicable state) withholding taxes with respect to payments
to be made to such Lender under this Agreement or the Loan Documents. Each
Lender agrees to promptly notify Agent of any change which would modify or
render invalid any claimed exemption or reduction, or of any sale, assignment,
participation, or other transfer by such Lender of all or part of its interest
in the Facility. If any governmental authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender, such Lender shall indemnify
Agent fully for all amounts paid by Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amount payable to Agent under this section, together with all costs and
expenses (including legal expenses). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.
12.18 BORROWER'S DEFAULT; ENFORCEMENT. Upon the occurrence of an Event
of Default under any Loan Document, the Majority Lenders shall have the right,
upon written notice to Agent, to require that Agent exercise the rights of the
Lenders as directed by the Majority Lenders; provided, however, that the Lenders
shall indemnify, exonerate and hold Agent harmless from and against any and all
claims, losses, liabilities, damages and costs (including reasonable legal fees)
incurred by Agent as a result of any such exercise of rights at the direction of
the Lenders.
12.19 WORKOUT. If Borrower is in material default under the Loan
Documents and has not cured the default within any applicable cure period, Agent
may declare by written notice to the Banks that the Loan is "in workout" (the
"NOTICE OF WORKOUT"). The Lenders
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acknowledge that workouts of defaulted loans usually are resolved by either a
borrower cure of the default; or a restructure of or other modification to the
loan; or by exercising remedies; and that it is in the interest of the Lenders
to attain a resolution within a reasonable period of time. Therefor the Lenders
agree that if, after 90 days from the date of Agent's Notice of Workout, there
has been neither a cure of the default(s), nor a restructure nor other
modification executed, nor exercise of the Lenders' remedies hereunder, then
Agent on behalf of the Lenders shall sue Borrower and any Guarantors for
collection of amounts owing to the Lenders, subject to and in accordance with
advice of Agent's counsel. Notwithstanding any action by Agent under this
SECTION 12.19, Agent shall follow the direction of the Majority Lenders under
SECTION 12.18 above at any time. Nevertheless, unless and until the Majority
Lenders shall direct Agent to the contrary, Agent shall have the right but not
the obligation to take such action as it may deem appropriate to preserve the
rights of the Lenders to recover any amounts owing under the Loan Documents,
without the consent of the Majority Lenders.
12.20 BANKRUPTCY OF BORROWER. In the event of a bankruptcy by Borrower,
the Lenders shall act through Agent to petition the court, make any motion for
relief from the automatic stay, participate in any appropriate creditors'
committee, vote on a plan of reorganization or pursue other remedies or actions
in accordance with the approval of the Majority Lenders.
12.21 RELATIONSHIP OF PARTIES. This Agreement is not intended to
establish a partnership or joint venture between Agent and the Lenders. The
provisions of the Loan Documents regarding the relationships among Agent and the
Lenders and this ARTICLE XII is intended solely to facilitate co-lending
relationships among the Lenders for the Facility. No security or investment
contract under any federal or state law is intended to be created among the
Lenders or between Agent and the Lenders. The execution of this Agreement, the
performance of the terms thereof, and the Lenders' purchase of and ownership
interest in the Facility and the Loan Documents shall not constitute any Lender
as owner, purchaser or seller of any security (as that term is defined in the
Securities Act of 1933 or the Securities Exchange Act of 1934) issued, owned,
purchased or sole by BOFA or any of its Subsidiaries or Affiliates, either as
principal or as agent for Borrower. Each Lender is purchasing and acquiring
legal and equitable ownership of its Percentage and is not making a loan to
BOFA, and no debtor-creditor relationship exists between them as a result of
this Agreement.
12.22 COUNSEL. The Lender acknowledge that Agent's counsel has
represented and shall represent only Agent in connection with the Loan Documents
and this Agreement. Each other Lender shall retain independent legal counsel
regarding all such matters, documents and agreements. After an Event of Default,
the Banks shall enter into a joint privilege agreement regarding the exchange of
information that is or may be subject to attorney-client privilege or related
privileges. Agent's counsel shall prepare such joint privilege agreement,
subject to the approval of the Majority Lenders which approval shall not be
unreasonably withheld by any Bank.
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ARTICLE XIII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 SUCCESSORS AND ASSIGNS.
The terms and provisions of the Loan Documents shall be binding
upon and inure to the benefit of Borrower and the Lenders and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents without the consent of
all the Lenders and any assignment by any Lender must be made in compliance with
SECTION 13.3. The Agent may treat the payee of any Note as the owner thereof for
all purposes hereof unless and until such payee complies with SECTION 13.3 in
the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with the Agent. Any assignee or
transferee of a Note agrees by acceptance thereof to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any
Person who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
13.2 PARTICIPATIONS.
13.2.1 PERMITTED PARTICIPANTS: EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("PARTICIPANTS") participating interests
in any Advance owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the holder of any such Note for all purposes under the Loan Documents, all
amounts payable by Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and Borrower and the Agent and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under the Loan Documents.
13.2.2 VOTING RIGHTS. Each Lender shall retain the sole right to vote
its Percentage of the Aggregate Commitment, without the consent of any
Participant, for the approval or disapproval of any amendment, modification or
waiver of any provision of the Loan Documents, provided that such Lender may
grant such Participant the right to approve any amendment, modification or
waiver which forgives principal, interest or fees or reduces the interest rate
or fees payable hereunder, postpones any date fixed for any regularly-scheduled
payment of principal of or interest on the Obligations, releases
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Collateral beyond any releases expressly provided for herein or extends the
Maturity Date.
13.3 ASSIGNMENTS.
13.3.1 PERMITTED ASSIGNMENTS. Any Lender may, with the prior
written consent of Agent and Borrower (which consents shall not be unreasonably
withheld or delayed), in accordance with applicable law, at any time assign to
one or more banks or other entities (collectively, "PURCHASERS") all or any part
of its rights and obligations under the Loan Documents, except that no consent
of Borrower shall be required if a Monetary Default, other material Default or
Event of Default has occurred and is continuing and that no consent of Agent or
Borrower shall ever be required for (i) any assignment to a Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with the assigning Lender or (ii) the pledge or assignment by a Lender of such
Lender's Note and other rights under the Loan Documents to any Federal Reserve
Bank in accordance with applicable law. Such assignments and assumptions shall
be substantially in the form of EXHIBIT J hereto. The Borrower shall execute any
and all documents which are customarily required by such Lender (including,
without limitation, a replacement promissory note or notes in the forms provided
hereunder) in connection with any such assignment, but Borrower shall not be
obligated to pay any fees and expenses incurred by any Lender in connection with
any assignment pursuant to this Section. Any Lender selling all or any part of
its rights and obligation hereunder in a transaction requiring the consent of
the Agent shall pay to the Agent a fee of $3,500.00 per assignee to reimburse
Agent for its involvement in such assignment.
13.3.2 EFFECT: EFFECTIVE DATE OF ASSIGNMENT. Upon delivery to the
Agent of a notice of assignment executed by the assigning Lender and the
Purchaser, such assignment shall become effective on the effective date
specified in such notice of assignment. The notice of assignment shall contain
an undertaking by the Purchaser to be bound as a Lender by this Agreement and
the other Loan Documents with the same force and effect as if it were an
original signatory hereto, and a representation by the Purchaser to the effect
that none of the consideration used to make the purchase of the Commitment and
the Loan under the applicable assignment agreement are "plan assets" as defined
under ERISA and that the rights and interests of the Purchaser in and under the
Loan Documents will not be "plan assets" under ERISA, all in form and content
satisfactory to the Agent. On and after the effective date of such assignment,
such Purchaser shall for all purposes be a Lender party to this Agreement and
any other Loan Document executed by the Lenders and shall have all the rights
and obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by Borrower,
the Lenders or the Agent shall be required to release the transferor Lender with
respect to the percentage of the Commitment and Advances assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to
this SECTION 13.3.2, the transferor Lender, the Agent and Borrower shall make
appropriate arrangements so that replacement Notes are
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issued to such transferor Lender and new Notes or, as appropriate, replacement
Notes, are issued to such Purchaser, in each case in principal amounts
reflecting their respective Commitments, as adjusted pursuant to such
assignment.
13.4 DISSEMINATION OF INFORMATION. Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of Borrower and its Subsidiaries. Each
Transferee shall agree to keep confidential any such information which is not
publicly available.
13.5 TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with all applicable provisions of the Code with respect to withholding and other
tax matters.
ARTICLE XIV
GENERAL PROVISIONS
14.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties
contained in this Agreement shall survive delivery of the Notes and the making
of the Advances herein contemplated.
14.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
14.3 TAXES. Any recording and other taxes (excluding franchise, income
or similar taxes) or other similar assessments or charges payable or ruled
payable by any governmental authority incurred in connection with the
consummation of the transactions contemplated by this Agreement shall be paid by
the Borrower, together with interest and penalties, if any.
14.4 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
14.5 NO THIRD PARTY BENEFICIARIES. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
14.6 EXPENSES: INDEMNIFICATION. Subject to the provisions of this
Agreement, Borrower will pay (a) all out-of-pocket costs and expenses incurred
by the Agent (including the reasonable fees, out-of-pocket expenses and other
reasonable expenses of counsel, which
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counsel may be employees of Agent) in connection with the preparation, execution
and delivery of this Agreement, the Notes, the Loan Documents and any other
agreements or documents referred to herein or therein and any amendments
thereto, (b) all out-of-pocket costs and expenses incurred by the Agent and the
Lenders (including the reasonable fees, out-of-pocket expenses and other
reasonable expenses of counsel to the Agent and the Lenders, which counsel may
be employees of Agent or the Lenders) in connection with the enforcement and
protection of the rights of the Lenders under this Agreement, the Notes, the
Loan Documents or any other agreement or document referred to herein or therein,
and (c) all reasonable and customary costs and expenses of periodic audits by
the Agent's personnel of the Borrower's books and records provided that prior to
an Event of Default, Borrower shall not be required to pay for more than one
such audit during any year and the cost thereof to Borrower shall not exceed
$3,000. The Borrower further agrees to indemnify the Lenders, their directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and reasonable expenses (including, without imitation,
all expenses of litigation or preparation therefor, whether or not the Lenders
are a party thereto) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby or the direct or indirect application or proposed
application of the proceeds of any Advance hereunder, except that the foregoing
indemnity shall not apply to a Lender to the extent that any losses, claims,
etc. are the result of such Lender's gross negligence or willful misconduct. The
obligations of the Borrower under this Section shall survive the termination of
this Agreement.
14.7 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
14.8 NONLIABILITY OF THE LENDERS. The relationship between the Borrower
and the Lenders shall be solely that of borrower and lender. Neither the Agent
nor the Lenders shall have any fiduciary responsibilities to the Borrower.
Neither the Agent nor the Lenders undertake any responsibility to the Borrower
to review or inform the Borrower of any matter in connection with any phase of
the Borrower's business or operations.
14.9 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
14.10 CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE
COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT
ALL
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CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER
HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A
COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT
THE RIGHT OF THE LENDERS TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
LENDERS OR ANY AFFILIATE OF THE LENDERS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
14.11 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
14.12 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights or obligations under the Loan
Documents. Any assignee or transferee of the Notes agrees by acceptance thereof
to be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of the Notes, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Notes or of
any note or notes issued in exchange therefor.
14.13 ENTIRE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan Documents
embody the entire agreement among the Borrower, the Agent, and the Lenders and
supersede all prior conversations, agreements, understandings, commitments and
term sheets among any or all of such parties with respect to the subject matter
hereof. Any provisions of this Agreement may be amended or waived, or any
liability thereunder released, if, but only if, such amendment or waiver is in
writing and is signed by the Borrower, and Agent if the rights or duties of
Agent are affected thereby, and
(a) each of the Lenders if such amendment or waiver
(i) reduces or forgives any payment of principal or interest
on the Obligations or any fees payable by Borrower to such Lender
hereunder; or
(ii) postpones the date fixed for any payment of principal of
or interest on the Obligations or any fees payable by Borrower to
such Lender hereunder; or
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(iii) changes the amount of such Lender's Commitment (other
than pursuant to an assignment permitted under SECTION 13.3) or
the unpaid principal amount of such Lender's Note; or
(iv) extends the Maturity Date; or
(v) changes the definition of Majority Lenders or modifies
any requirement for consent by each of the Lenders under this
SECTION 14.13(a).
(b) the Majority Lenders, as to all other matters.
14.14 DEALINGS WITH THE BORROWER. The Lenders and their affiliates may
accept deposits from, extend credit to and generally engage in any kind of
banking, trust or other business with the Borrower or the Borrower or any of
their Affiliates regardless of the capacity of the Lenders hereunder.
14.15 SET-OFF.
(a) If an Event of Default shall have occurred, each Lender shall
have the right, at any time and from time to time without notice to the
Borrower, any such notice being hereby expressly waived, to set-off and to
appropriate or apply any and all deposits of money or property or any other
indebtedness at any time held or owing by such Lender to or for the credit or
the account of the Borrower against and on account of all outstanding
Obligations and all Obligations which from time to time may become due hereunder
and all other obligations and liabilities of the Borrower under this Agreement,
irrespective of whether or not such Lender shall have made any demand hereunder
and whether or not said obligations and liabilities shall have matured.
(b) Each Lender agrees that if it shall, by exercising any right
of set-off or counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal, interest or fees due with respect to any Note
held by it which is greater than the proportion received by any other Lender in
respect of the aggregate amount of principal, interest or fees due with respect
to any Note held by such other Lender, the Lender receiving such proportionately
greater payment shall purchase such participations in the Notes held by the
other Lenders and such other adjustments shall be made as may be required so
that all such payments of principal, interest or Fees with respect to the Notes
held by the Lenders shall be shared by the Lenders pro rata according to their
respective Commitments.
14.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower and each of the Lenders shown on the signature pages hereof.
14.17 DISCRETION. In exercising any discretion reserved herein to the
Agent, the Majority Lenders or the Lenders, the Agent, the Majority Lenders or
the Lenders, as the case may be, shall exercise such discretion in a manner
which is commercially reasonable by the standards of the commercial lending
industry with respect to credits comparable to the Facility.
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ARTICLE XV
NOTICES
15.1 GIVING NOTICE. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by telex or by facsimile and addressed or delivered to such party at
its address set forth below or at such other address as may be designated by
such party in a notice to the other parties. Any notice, if mailed and properly
addressed with postage prepaid, shall be deemed given when received; any notice,
if transmitted by telex or facsimile, shall be deemed given when transmitted
(answerback confined in the case of telexes). Notice may be given as follows:
To the Borrower:
LNR Property Corporation
760 N.W. 107th Avenue
Miami, Florida 33172
Attn: Shelly Rubin
Telecopy: 305-226-7691
With a copy to:
Rubin Baum Levin Constant Freidman & Bilzin
2500 First Union Financial Center
Miami, Florida 33131
Attn: Brian L. Bilzin, Esq.
Telecopy: 305-374-7593
To each Lender:
As shown below the Lenders' signatures.
To the Agent:
Bank of America National Trust and
Savings Association
Commercial Real Estate Services
231 South LaSalle Street, 12th Floor
Chicago, Illinois 60697
Attention: Mark Lariviere
Telecopy: (312) 974-4970
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With a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 W. Wacker Drive
Suite 2700
Chicago, Illinois 60606
Attention: Howard J. Kirschbaum, Esq.
Telecopy: (312) 984-3150
15.2 CHANGE OF ADDRESS. Each party may change the address for service
of notice upon it by a notice in writing to the other parties hereto.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
BORROWER: LNR PROPERTY CORPORATION
By: /s/ MARK T. BRIGGS
--------------------------------------
Title: VP
[SIGNATURE BLOCKS FOR
OTHER BORROWERS APPEAR ON
THE FOLLOWING PAGES S-1 - S-19]
LENDERS: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ MARK LARIVIERE
----------------------------------------
Title: Vice President
Commitment: $40,000,000
Percentage of Aggregate Commitment: 20%
Address for Notices:
Commercial Real Estate Services
231 South LaSalle Street, 12th Floor
Chicago, Illinois 60697
Attention: Mark Lariviere
Telephone: (312) 282-2513
Telecopy: (312) 974-4970
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AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ MARK T. BRIGGS
-----------------------------------
Title: Vice President
Address for Notices:
Commercial Real Estate Services
231 South LaSalle Street, 12th Floor
Chicago, Illinois 60697
Attention: Mark Lariviere
Telephone: (312) 828-2345
Telecopy: (312) 974-4970
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ALEXANDRIA LP, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
AURORA LP, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
BERT L. SMOKLER & COMPANY
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
MIDWEST MANAGEMENT COMPANY, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
DCA HOMES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-1
<PAGE>
DCA MANAGEMENT CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
DEVCO SHOPPING CENTERS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
DREYFUS INTERSTATE DEVELOPMENT CORP.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
EVERETT LP, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR SHELF I, INC. (formerly known as
Friendswood Development Company)
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-2
<PAGE>
H. MILLER & SONS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
HMS REALTY, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
H. MILLER & SONS OF FLORIDA, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
MILLER'S PLANTATION DEVELOPMENT COMPANY
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LEISURE COLONY MANAGEMENT CORP.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-3
<PAGE>
LEISURE COMMUNITIES MANAGEMENT, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LEN ACQUISITION CORPORATION, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR AFFILIATE PURCHASER CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR ATLANTIC HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR BEVERLY HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-4
<PAGE>
LENNAR CAPITAL SERVICES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR CAPITAL CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR FUNDING CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR COMMUNICATIONS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
WEST COAST MORTGAGE HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-5
<PAGE>
LENNAR CGA HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR COMMERCIAL PROPERTIES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
ARBOR LAKE CLUB, LTD.
By: Lennar Commercial Properties, Inc.,
general partner
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
UNIVERSAL AMERICAN REALTY CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-6
<PAGE>
PRADO ASSOCIATES
By: Leisure Colony Management Corp., a
general partner
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
By: Universal American Realty Corporation, a
general partner
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
SOUTH DADE UTILITIES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR CORPORATE CENTER, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR COTO HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LFH SUB I, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-7
<PAGE>
LFS ASSET CORP.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR GATEWAY CENTER HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR GEORGIA PARTNERS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR HUNTINGTON BEACH, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR KEARNY HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-8
<PAGE>
LENNAR LEGEND OAKS HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR L.W. ASSETS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR LW HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR LW NEVADA ASSETS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR MBS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-9
<PAGE>
LENNAR MARIETTA HOLDINGS INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR MORTGAGE HOLDINGS CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR WESTERN HOLDINGS, INC.
(formerly Nevada Financial Holdings Corporation)
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR CALIFORNIA PARTNERS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR MORTGAGE HOLDINGS I, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-10
<PAGE>
MSWH SUB I, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR NORTHEAST HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR PACIFIC HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR PARK CENTER III HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR PARK JV, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-11
<PAGE>
DORAL PARK JV
By: Lennar Park JV, Inc., a joint venture
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
By: Leisure Colony Management Corp., a joint
venturer
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR PARTNERS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
ATLANTIC HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR PARTNERS OF CALIFORNIA, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-12
<PAGE>
LNVP HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR NEVADA PARTNERS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR REAL ESTATE HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR ROCKLAND, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR ROLLING RIDGE, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-13
<PAGE>
LENNAR SEABOARD HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR SECURITIES HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR STEVENSON HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR TEXAS PROPERTIES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR TRANSAMERICA HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-14
<PAGE>
LENNAR WILSHIRE HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LENNAR PARTNERS OF LOS ANGELES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR CANDLEWOOD HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR LAFAYETTE HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR LAFAYETTE LP, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-15
<PAGE>
LNR LAND PARTNERS SUB, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR MADISON HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR RELATED VENTURE, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR SANDS HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
LNR VERANDAH HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-16
<PAGE>
LNR VERANDAH LP, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
PARKVIEW ASSOCIATES, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
PARKVIEW AT PEMBROKE POINTE, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
SPRINGS DEVELOPMENT CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-17
<PAGE>
THE TURTLE RUN VENTURE
By: Leisure Colony Management Corp., a joint
venturer
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
By: Springs Development Corporation, a joint
venturer
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
TALLADEGA MANUFACTURING, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
VISTA DEL LAGO APARTMENTS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
WESTERN FUNDING HOLDINGS CORPORATION
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-18
<PAGE>
NEVADA SECURITIES HOLDINGS, INC.
By: /s/ MARK T. BRIGGS
-------------------------------------
Its: VP
S-19
<PAGE>
EXHIBIT D
FORM OF GUARANTY
This Guaranty made as of __________________ , 1997, by
______________________ , a _____________________ ("GUARANTOR"), to and for the
benefit of Bank of America National Trust and Savings Association, individually
as a lender ("BOFA") and as agent ("Agent") for itself and the other Lenders, as
defined in the Credit Agreement (as defined below), and their respective
successors and assigns.
RECITALS
A. LNR Property Corporation, a Delaware corporation ("LNR"), and
certain of its Subsidiaries (collectively, "BORROWER") have requested that the
Lenders make an unsecured revolving credit facility available to Borrower in the
aggregate principal amount of up to $200,000,000 ("FACILITY"), and that Agent
act as administrative agent, documentation agent and syndication agent with
respect thereto.
B. The Lenders have agreed to make available the Facility to Borrower,
and Agent has agreed to act in said agency capacities, pursuant to the terms and
conditions set forth in an Revolving Credit Agreement dated as of December 5,
1997, between Borrower, Agent and the Lenders ("CREDIT AGREEMENT"), and
Guarantor desires that the Lenders continue to make Advances under the Credit
Agreement and that Agent continue to act in said agency capacities. All
capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
C. Borrower has executed and delivered to the Lenders one or more
promissory notes each dated ______________ , 1997 in the aggregate principal
amount of $200,000,000 as evidence of its indebtedness to the Lenders with
respect to the Facility (the promissory notes described above, together with any
amendments or allonges thereto, or restatements, replacements or renewals
thereof, and/or new promissory notes to new Lenders under the Credit Agreement,
are collectively referred to herein as the "Revolving Note"). Borrower has also
executed and delivered to BOFA a promissory note dated _____________ , 1997
("SWINGLINE NOTE") which evidences any Swingline Loans that may be made by BOFA
under the Credit Agreement.
D. Guarantor is a newly formed, wholly-owned single purpose Subsidiary
of LNR engaged solely in the mortgage banking business, and Guarantor is
deriving and will continue to derive substantial financial benefit from the
Facility evidenced by the Revolving Note, the Swingline Note, the Credit
Agreement and the other Loan Documents.
E. The execution and delivery of this Guaranty by Guarantor is required
pursuant to the express terms of the Credit Agreement as a condition to any
further Advances under the Facility.
D-1
<PAGE>
AGREEMENTS
NOW, THEREFORE, in consideration of the matters described in the
foregoing Recitals, which Recitals are incorporated herein and made a part
hereof, and for other good and valuable consideration, Guarantor hereby agrees
as follows:
1. Guarantor absolutely, unconditionally, and irrevocably guarantees to
Agent and the Lenders:
(a) the full and prompt payment of the principal of and interest on
the Revolving Note and/or the Swingline Note when due, whether at
stated maturity, upon acceleration or otherwise, and at all times
thereafter, and the prompt payment of all other sums which may now be
or may hereafter become due and owing under the Revolving Note, the
Swingline Note, the Credit Agreement and/or the other Loan Documents;
(b) the payment of all Enforcement Costs (as hereinafter defined);
and
(c) the full, complete, and punctual observance, performance, and
satisfaction of all of the obligations, duties, covenants, and
agreements of Borrower under the Credit Agreement and the Loan
Documents.
All amounts due, debts, liabilities, and payment obligations described in
subparagraphs (a) and (b) of this PARAGRAPH 1 are referred to herein as the
"FACILITY INDEBTEDNESS. " All obligations described in subparagraph (c) of this
PARAGRAPH 1 are referred to herein as the "OBLIGATIONS."
2. In the event of any default by Borrower in making payment of the
Facility Indebtedness, or in performance of the Obligations, Guarantor agrees,
on demand by Agent, to pay all the Facility Indebtedness and to perform all the
Obligations as are or then or thereafter become due and owing or are to be
performed under the terms of the Revolving Note, the Swingline Note, the Credit
Agreement and/or the other Loan Documents, and to pay any reasonable expenses
incurred by Agent or the Lenders in protecting, preserving or defending its
interest in the Real Estate or any collateral for the Facility, or otherwise in
connection with the Facility or under any of the Loan Documents, including,
without limitation, all reasonable attorneys' fees and costs. Agent shall have
the right, at its option, either before, during or after pursuing any other
right or remedy against Borrower or Guarantor, to perform any and all of the
Obligations by or through any agent, contractor or subcontractor, or any of
their agents, of its selection, all as Agent in its sole discretion deems
proper, and Guarantor shall indemnify and hold Agent and the Lenders free and
harmless from and against any and all loss, damage, cost, expense, injury, or
liability Agent or the Lenders may suffer or incur in connection with the
exercise of its rights under this Guaranty or the performance of the
Obligations, except to the extent the same arises as a result of the gross
negligence or willful misconduct of Agent.
D-2
<PAGE>
All of the remedies set forth herein and/or provided by any of the Loan
Documents or law or equity shall be equally available to Agent for the benefit
of itself and the Lenders, and the choice by Agent of one such alternative over
another shall not be subject to question or challenge by Guarantor or any other
person, nor shall any such choice be asserted as a defense, set-off or failure
to mitigate damages in any action, proceeding or counteraction by Agent for the
benefit of itself and/or the Lenders to recover or seeking any other remedy
under this Guaranty, nor shall such choice preclude Agent from subsequently
electing to exercise a different remedy. The parties have agreed to the
alternative remedies hereinabove specified in part because they recognize that
the choice of remedies in the event of a failure hereunder will necessarily and
should properly be a matter of business judgment, which, with hindsight after
the passage of time and events, may or may not prove to have been the best
choice to maximize recovery by Agent for the benefit of itself and the Lenders
at the lowest cost to Borrower and/or Guarantor. It is the intention of the
parties that such choice by Agent be given conclusive effect regardless of such
subsequent developments.
3. Guarantor does hereby waive (i) notice of acceptance of this
Guaranty by Agent or the Lenders and any and all notices and demands of every
kind which may be required to be given by any statute, rule or law, (ii) any
defense, right of set-off or other claim which Guarantor may have against the
Borrower or which Guarantor or Borrower may have against Agent or any of the
Lenders or the holder of the Revolving Note or the holder of the Swingline Note,
(iii) presentment for payment, demand for payment, notice of nonpayment,
dishonor, protest and notice of protest, diligence in collection and any and all
formalities which otherwise might be legally required to charge Guarantor with
liability, (iv) any failure by Agent or any of the Lenders to inform Guarantor
of any facts Agent or any of the Lenders may now or hereafter know about
Borrower, the Facility, or the transactions contemplated by the Credit
Agreement, it being understood and agreed that Agent and the Lenders have no
duty so to inform and that Guarantor is fully responsible for being and
remaining informed by Borrower of all circumstances bearing on the existence or
creation or risk of nonpayment of the Facility Indebtedness or the risk of
nonperformance of the Obligations, and (v) any and all right to cause a
marshalling of assets of the Borrower or any other action by any court or
governmental body with respect thereto, or to cause Agent or any of the Lenders
to proceed against any other security given to Agent or any of the Lenders in
connection with the Facility Indebtedness or the Obligations. Credit may be
granted or continued from time to time Borrower without notice to or
authorization from Guarantor, regardless of the financial or other condition of
Borrower at the time of any such grant or continuation. Guarantor acknowledges
that no representations of any kind whatsoever have been made by Agent or any of
the Lenders to Guarantor. No modification or waiver of any of the provisions of
this Guaranty shall be binding upon Agent or the Lenders except as expressly set
forth in a writing duly signed and delivered on behalf of Agent and the Lenders.
4. Guarantor further agrees that Guarantor's liability as guarantor
shall in nowise be impaired by any renewals or extensions which may be made from
time to time, with or without the knowledge or consent of Guarantor of the time
for payment of interest or principal under the Revolving Note or the Swingline
Note or by any forbearance or delay in collecting interest or principal under
the Revolving Note or the Swingline Note, or by any waiver under
D-3
<PAGE>
the Credit Agreement or any other Loan Documents, or by failure or election not
to pursue any other remedies against Borrower, or by any change or modification
in the Revolving Note, the Credit Agreement, the Swingline Note or any other
Loan Documents, or by the acceptance of any additional security or any increase,
substitution or change therein, or by the release of any security or any
withdrawal thereof or decrease therein, or by the application of payments
received from any source to the payment of any obligation other than the
Facility Indebtedness, even though Agent or the Lenders might lawfully have
elected to apply such payments to any part or all of the Facility Indebtedness,
it being the intent hereof that Guarantor shall remain liable as principal for
payment of the Facility Indebtedness and performance of the Obligations until
all indebtedness has been paid in full and the other terms, covenants and
conditions of the Credit Agreement and other Loan Documents and this Guaranty
have been performed, notwithstanding any act or thing which might otherwise
operate as a legal or equitable discharge of a surety. Guarantor further
understands and agrees that Agent and the Lenders may at any time enter into
agreements with Borrower to amend and modify the Revolving Note, Credit
Agreement, the Swingline Note or other Loan Documents, and may waive or release
any provision or provisions thereof, and, with reference to such instruments,
may make and enter into any such agreement or agreements as Agent, the Lenders
and Borrower may deem proper and desirable, without in any manner impairing this
Guaranty or any of Agent's or the Lenders' rights hereunder or any of the
Guarantor's obligations hereunder.
5. This is an absolute, unconditional, complete, present and continuing
guaranty of payment and performance, and not of collection only. Guarantor
agrees that this Guaranty may be enforced by Agent and the Lenders without the
necessity at any time of resorting to or exhausting any other security or
collateral given in connection herewith or with the Facility or any of the Loan
Documents, or resorting to any other guaranties, and Guarantor hereby waives the
right to require Agent or the Lenders to join Borrower in any action brought
hereunder or to commence any action against or obtain any judgment against
Borrower or to pursue any other remedy or enforce any other right. Guarantor
further agrees that nothing contained herein or otherwise shall prevent Agent
and the Lenders from pursuing concurrently or successively all rights and
remedies available to it at law and/or in equity or under any of the Loan
Documents, and the exercise of any of its rights or the completion of any of its
remedies shall not constitute a discharge of any of Guarantor's obligations
hereunder, it being the purpose and intent of Guarantor that the obligations of
Guarantor hereunder shall be primary, absolute, independent and unconditional
under any and all circumstances whatsoever. Neither Guarantor's obligations
under this Guaranty nor any remedy for the enforcement thereof shall be
impaired, modified, changed or released in any manner whatsoever by any
impairment, modification, change, release or limitation of the liability of
Borrower under the Revolving Note, the Credit Agreement, the Swingline Note or
any other Loan Documents or by reason of Borrower's bankruptcy or by reason of
any creditor or bankruptcy proceeding instituted by or against Borrower. This
Guaranty shall continue to be effective and be deemed to have continued in
existence or be reinstated (as the case may be) if at any time payment of all or
any part of any sum payable pursuant to the Revolving Note, the Credit
Agreement, the Swingline Note or any other Loan Document is rescinded or
otherwise required to be returned by the payee upon the insolvency, bankruptcy,
or reorganization of the payer, all as though such payment had not been made,
regardless of whether Agent or any of the Lenders contested the
D-4
<PAGE>
order requiring the return of such payment. The obligations of Guarantor
pursuant to the preceding sentence shall survive any termination, cancellation
or release of this Guaranty.
6. This Guaranty shall be assignable by Agent and/or any of the Lenders
to any assignee of all or a portion of Agents and/or such Lender's rights under
the Loan Documents.
7. If: (i) this Guaranty, the Revolving Note, the Swingline Note, the
Credit Agreement or any other Loan Document is placed in the hands of an
attorney for collection or is collected through any legal proceeding; (ii) an
attorney is retained to represent Agent and/or any of the Lenders in any
bankruptcy, reorganization, receivership, or other proceedings affecting
creditors' rights and involving a claim under this Guaranty, the Revolving Note,
the Swingline Note, the Credit Agreement or any Loan Document; (iii) an attorney
is retained to provide advice or other representation with respect to the Loan
Documents in connection with an enforcement action or potential enforcement
action; or (iv) an attorney is retained to represent Agent and/or any of the
Lenders in any other legal proceedings whatsoever in connection with this
Guaranty, the Revolving Note, any the Swingline Note, the Credit Agreement, any
of the other Loan Documents or any property subject thereto, then Guarantor
shall pay to Agent upon demand all reasonable attorney's fees, costs and
expenses, including, without limitation, court costs, filing fees, recording
costs and all other costs and expenses whatsoever incurred in connection
therewith (all of which are referred to herein as "ENFORCEMENT COSTS"), in
addition to all other amounts due hereunder.
8. The parties hereto intend that each provision in this Guaranty
comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of any
provision or provisions, in this Guaranty is found by a court of competent
jurisdiction to be in violation of any applicable local, state or federal
ordinance, statute, law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions of this
Guaranty to be illegal, invalid, unlawful, void or unenforceable as written,
then it is the intent of all parties hereto that such portion, provision or
provisions shall be given force to the fullest possible extent that they are
legal, valid and enforceable, that the remainder of this Guaranty shall be
construed as if such illegal, invalid, unlawful, void or unenforceable portion,
provision or provisions were not contained therein, and that the rights,
obligations and interest of Agent, the Lenders and the holder(s) of the
Revolving Note or the Swingline Note under the remainder of this Guaranty shall
continue in full force and effect.
9. Any indebtedness of Borrower to Guarantor now or hereafter existing
is hereby subordinated to the Facility Indebtedness. Guarantor agrees that until
the entire Facility Indebtedness has been paid in full, (i) Guarantor will not
seek, accept or retain for Guarantor's own account, any payment from Borrower on
account of such subordinated debt, and (ii) any such payments to Guarantor on
account of such subordinated debt shall be collected and received by Guarantor
in trust for Agent and the Lenders and shall be paid over to Agent on account of
the Facility Indebtedness without impairing or releasing the obligations of
Guarantor hereunder.
D-5
<PAGE>
10. Guarantor waives and releases any claim (within the meaning of 11
U.S.C. ss. 101) which Guarantor may have against Borrower arising from a payment
made by Guarantor under this Guaranty and agrees not to assert or take advantage
of any subrogation rights of Guarantor, Agent or the Lenders or any right of
Guarantor, Agent or the Lenders to proceed against (i) Borrower for
reimbursement, or (ii) any other guarantor or any collateral security or
guaranty or right of offset held by Agent or the Lenders for the payment of the
Facility Indebtedness and performance of the Obligations, nor shall Guarantor
seek or be entitled to seek any contribution or reimbursement from Borrower or
any other guarantor in respect of payments made by Guarantor hereunder. It is
expressly understood that the waivers and agreements of Guarantor set forth
above constitute additional and cumulative benefits given to Agent and the
Lenders for their security and as an inducement for their continuing extension
of credit to Borrower.
11. Any amounts received by Agent or Lender from any source on account
of any indebtedness may be applied by Agent toward the payment of such
indebtedness, and in such order of application, as Agent may from time to time
elect.
12. This Guaranty shall be governed by the internal laws of the State
of Illinois, without regard to its choice of law rules or conflict of laws
principles. The Guarantor hereby submits to personal jurisdiction in the State
of Illinois for the enforcement of this Guaranty and waives any and all personal
rights to object to such jurisdiction for the purposes of litigation to enforce
this Guaranty. Guarantor hereby consents to the jurisdiction of either the
Circuit Court of Cook County, Illinois, or the United States District Count for
the Northern District of Illinois, in any action, suit, or proceeding which
Agent or the Lenders may at any time wish to file in connection with this
Guaranty or any related matter. Guarantor hereby agrees that an action, suit, or
proceeding to enforce this Guaranty may be brought in any state or federal court
in the State of Illinois and hereby waives any objection which Guarantor may
have to the laying of the venue of any such action, suit, or proceeding in any
such court; provided, however, that the provisions of this Paragraph shall not
be deemed to preclude Agent or the Lenders from filing any such action, suit, or
proceeding in any other appropriate forum.
13. All notices and other communications provided to any party hereto
under this Agreement or any other Loan Document shall be in writing or by
facsimile and addressed or delivered to such party at its address set forth
below or at such other address as may be designated by such party in a notice to
the other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted. Notice may be given as
follows:
To the Guarantor:
D-6
<PAGE>
----------------------------
c/o LNR Property Corporation
760 N.W. 107th Avenue
Miami, Florida 33172
Attention: Shelly Rubin
Telecopy: (305) 226-7691
With a copy to:
To the Agent or the Lenders:
Bank of America National Trust and Savings Association
One First National Plaza
231 S. LaSalle Street, 12th Floor
Chicago, Illinois 60697
Attention: Mark Lariviere
Telecopy: (312) 974-4970
With a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 W. Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attention: Howard J. Kirschbaum, Esq.
Telecopy: (312) 984-3150
or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice.
14. This Guaranty shall be binding upon the heirs, executors, legal and
personal representatives, successors and assigns of Guarantor and shall inure to
the benefit of Agent's and Lender's successors and assigns.
15. This Guaranty shall be construed and enforced under the internal
laws of the State of Illinois.
16. GUARANTOR AND AGENT AND THE LENDERS, BY ACCEPTANCE HEREOF, EACH
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE
OR DEFEND ANY RIGHT UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR RELATING
THERETO OR ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS
GUARANTY AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
D-7
<PAGE>
IN WITNESS WHEREOF, Guarantor has delivered this Guaranty as of the
date first written above.
------------------------------------------
By:
---------------------------------------
Its:___________________________________
D-8
<PAGE>
STATE OF___________________)
) SS.
COUNTY OF__________________)
I, the undersigned, a Notary Public, in and for said County, in the
State aforesaid, DO HEREBY CERTIFY, that ______________ , the ____________ of
_________________ , personally known to me to be the same person whose name is
subscribed to the foregoing instrument, appeared before me this day in person
and acknowledged that he signed and delivered the said instrument as his own
free and voluntary act and as the free and voluntary act of said corporation,
for the uses and purposes therein set forth.
GIVEN under my hand and Notarial Seal, this ___ day of ___________ , 199_.
----------------------------------
Notary Public
D-9
EXHIBIT 10.6
MASTER REPURCHASE AGREEMENT
Dated as of December 8, 1997
Between:
LNR SANDS HOLDINGS INC.
and
GOLDMAN SACHS MORTGAGE COMPANY
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in
which one party ("Seller") agrees to transfer to the other ("Buyer")
securities or financial instruments ("Securities") against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to
transfer to Seller such Securities at a date certain or on demand,
against the transfer of funds by Seller. Each such transaction shall
be referred to herein as a "Transaction" and shall be governed by this
Agreement, including any supplemental terms or conditions contained in
Annex I hereto, unless otherwise agreed in writing.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the
commencement by such party as debtor of any case or proceeding under
any bankruptcy, insolvency, reorganization, liquidation, dissolution
or similar law, or such party seeking the appointment of a receiver,
trustee, custodian or similar official for such party or any
substantial part of its property, or (ii) the commencement of any such
case or proceeding against such party, or another seeking such an
appointment, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely
contested by such party, (B) results in the entry of an order for
relief, such an appointment, the issuance of such a protective decree
or the entry of an order having a similar effect, or (C) is not
dismissed within 15 days, (iii) the making by a party of a general
assignment for the benefit of creditors, or (iv) the admission in
writing by a party of such party's inability to pay such party's debts
as they become due;
(b) "Additional Purchased Securities", Securities provided by
Seller to Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of
any date, the amount obtained by application of a percentage (which
may be equal to the percentage that is agreed to as the Seller's
Margin Amount under subparagraph (q) of this Paragraph), agreed to by
Buyer and Seller prior to entering into the Transaction, to the
Repurchase Price for such Transaction as of such date;
(d) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(e) "Income", with respect to any Security at any time, any
principal thereof then payable and all interest, dividends or other
distributions thereon;
(f) "Margin Deficit", the meaning specified in Paragraph 4(a)
hereof;
(g) "Margin Excess", the meaning specified in Paragraph 4(b)
hereof;
(h) "Market Value", with respect to any Securities as of any date,
the price for such Securities on such date obtained from a generally
recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued Income to the extent
not included therein (other than any Income credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) as of such date (unless contrary to market practice for such
Securities);
(i) "Price Differential", with respect to any Transaction hereunder
as of any date, the aggregate amount obtained by daily application of
the Pricing Rate for such Transaction to the Purchase Price for such
Transaction on a 360 day per year basis for the actual number of days
during the period commencing on (and including) the Purchase Date for
such Transaction and ending on (but excluding) the date of
determination (reduced by any amount of such Price Differential
previously paid by Seller to Buyer with respect to such Transaction);
<PAGE>
(j) "Pricing Rate", the per annum percentage rate for determination
of the Price Differential;
(k) "Prime Rate", the prime rate of U.S. money center commercial
banks as published in THE WALL STREET JOURNAL;
(l) "Purchase Date", the date on which Purchased Securities are
transferred by Seller to Buyer;
(m) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii)
thereafter, such price increased by the amount of any cash transferred
by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased by
the amount of any cash transferred by Seller to Buyer pursuant to
Paragraph 4(a) hereof or applied to reduce Seller's obligations under
clause (ii) of Paragraph 5 hereof;
(n) "Purchased Securities", the Securities transferred by Seller to
Buyer in a Transaction hereunder, and any Securities substituted
therefor in accordance with Paragraph 9 hereof. The term "Purchased
Securities" with respect to any Transaction at any time also shall
include Additional Purchased Securities delivered pursuant to
Paragraph 4(a) and shall exclude Securities returned pursuant to
Paragraph 4(b);
(o) "Repurchase Date", the date on which Seller is to repurchase
the Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraphs 3(c) or 11 hereof;
(p) "Repurchase Price", the price at which Purchased Securities are
to be transferred from Buyer to Seller upon termination of a
Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the Purchase Price
and the Price Differential as of the date of such determination,
increased by any amount determined by the application of the
provisions of Paragraph 11 hereof;
(q) "Seller's Margin Amount", with respect to any Transaction as of
any date, the amount obtained by application of a percentage (which
may be equal to the percentage that is agreed to as the Buyer's Margin
Amount under subparagraph (c) of this Paragraph), agreed to by Buyer
and Seller prior to entering into the Transaction, to the Repurchase
Price for such Transaction as of such date.
3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or
in writing at the initiation of either Buyer or Seller. On the
Purchase Date for the Transaction, the Purchased Securities shall be
transferred to Buyer or its agent against the transfer of the Purchase
Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or
Seller (or both), as shall be agreed, shall promptly deliver to the
other party a written confirmation of each Transaction (a
"Confirmation"). The Confirmation shall describe the Purchased
Securities (including CUSIP number, if any), identify Buyer and Seller
and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii)
the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the
Transaction, and (v) any additional terms or conditions of the
Transaction not inconsistent with this Agreement. The Confirmation,
together with this Agreement, shall constitute conclusive evidence of
the terms agreed between Buyer and Seller with respect to the
Transaction to which the Confirmation relates, unless with respect to
the Confirmation specific objection is made promptly after receipt
thereof. In the event of any conflict between the terms of such
Confirmation and this Agreement, this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand
shall be made by Buyer or Seller, no later than such time as is
customary in accordance with market practice, by telephone or
otherwise on or prior to the business day on which such termination
will be effective. On the date specified in such demand, or on the
date fixed for termination in the case of Transactions having a fixed
term, termination of the Transaction will be effected by transfer to
Seller or its agent of the Purchase Securities and any Income in
respect thereof received by Buyer (and not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to
Paragraph 5 hereof) against the transfer of the Repurchase Price to an
account of Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party
hereto is acting as Buyer is less than the aggregate Buyer's Margin
Amount for all such Transactions (a "Margin Deficit"), then Buyer may
by notice to Seller require Seller in such Transactions, at Seller`s
option, to transfer to Buyer cash or additional Securities reasonably
acceptable to Buyer ("Additional Purchased Securities"), so that the
cash and aggregate Market Value of the Purchased Securities, including
any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer's Margin Amount (decreased by the amount
of any Margin Deficit as of such date arising from any Transactions in
which such Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party
hereto is acting as Seller exceeds the aggregate Seller's Margin
Amount for all such Transactions at such time (a "Margin Excess"),
then Seller may by notice to Buyer require Buyer in such Transactions,
at Buyer's option, to transfer cash or Purchased Securities to Seller,
so that the aggregate Market Value of the Purchased Securities, after
deduction of any such cash or any Purchased Securities so transferred,
will thereupon not exceed such aggregate Seller's Margin Amount
(increased by the amount of any Margin Excess as of such date arising
from any Transactions in which such Seller is acting as Buyer).
(c) Any cash transferred pursuant to this Paragraph shall be
attributed to such Transactions as shall be agreed upon by Buyer and
Seller.
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(d) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer or Seller
(or both) under subparagraphs (a) and (b) of this Paragraph may be
exercised only where a Margin Deficit or Margin Excess exceeds a
specified dollar amount or a specified percentage of the Repurchase
Prices for such Transactions (which amount or percentage shall be
agreed to by Buyer and Seller prior to entering into any such
Transactions).
(e) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer and Seller
under subparagraphs (a) and (b) of this Paragraph to require the
elimination of a Margin Deficit or a Margin Excess, as the case may
be, may be exercised whenever such a Margin Deficit or Margin Excess
exists with respect to any single Transaction hereunder (calculated
without regard to any other Transaction outstanding under this
Agreement).
5. INCOME PAYMENTS
Where a particular Transaction's term extends over an Income
payment date on the Securities subject to that Transaction, Buyer
shall, as the parties may agree with respect to such Transaction (or,
in the absence of any agreement, as Buyer shall reasonably determine
in its discretion), on the date such income is payable either (i)
transfer to or credit to the account of Seller an amount equal to such
Income payment or payments with respect to any Purchased Securities
subject to such Transaction or (ii) apply the Income payment or
payments to reduce the amount to be transferred to Buyer by Seller
upon termination of the Transaction. Buyer shall not be obligated to
take any action pursuant to the preceding sentence to the extent that
such action would result in the creation of a Margin Deficit, unless
prior thereto or simultaneously therewith Seller transfers to Buyer
cash or Additional Purchased Securities sufficient to eliminate such
Margin Deficit.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be
sales and purchases and not loans, in the event any such Transactions
are deemed to be loans, Seller shall be deemed to have pledged to
Buyer as security for the performance by Seller of its obligations
under each such Transaction, and shall be deemed to have granted to
Buyer a security interest in, all of the Purchased Securities with
respect to all Transactions hereunder and all proceeds thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder
shall be in immediately available funds. All Securities transferred by
one party hereto to the other party (i) shall be in suitable form for
transfer or shall be accompanied by duly executed instruments of
transfer or assignment in blank and such other documentation as the
party receiving possession may reasonably request, (ii) shall be
transferred on the book-entry system of a Federal Reserve Bank, or
(iii) shall be transferred by any other method mutually acceptable to
Seller and Buyer. As used herein with respect to Securities,
"transfer" is intended to have the same meaning as when used in
Section 8-313 of the New York Uniform Commercial Code or, where
applicable, in any federal regulation governing transfers of the
Securities.
8. SEGREGATION OF PURCHASED SECURITIES
To the extent required by applicable law, all Purchased Securities
in the possession of Seller shall be segregated from other securities
in its possession and shall be identified as subject to this Agreement
Segregation may be accomplished by appropriate identification on the
books and records of the holder, including a financial intermediary or
a clearing corporation. Title to all Purchased Securities shall pass
to Buyer and, unless otherwise agreed by Buyer and Seller, nothing in
this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities or otherwise pledging or
hypothecating the Purchased Securities, but no such transactions shall
relieve Buyer of its obligations to transfer Purchased Securities to
Seller pursuant to Paragraph. 3, 4 or 11 hereof, or of Buyer's
obligation to credit or pay Income to, or apply Income to the
obligations of, Seller pursuant to Paragraph 5 hereof.
REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH
THE SELLER RETAINS CUSTODY OF THE PURCHASED
SECURITIES
Seller is not permitted to substitute other securities for those
subject to this Agreement and therefore must keep Buyer's securities
segregated at all times, unless in this Agreement Buyer grants Seller
the right to substitute other securities. If Buyer grants the right to
substitute, this means that Buyer's securities will likely be
commingled with Seller's own securities during the trading day. Buyer
is advised that, during any trading day that Buyer's securities are
commingled with Seller's securities, they [will]* be subject to liens
granted by Seller to [its clearing bank]* and may be used by Seller
for deliveries on other securities transactions. Whenever the
securities are commingled, Seller's ability to resegregate substitute
securities for Buyer will be subject to Seller's ability to satisfy
[the clearing]* lien or to obtain substitute securities.
*Language to be used under 17 C.F.R. Section 403.4(e) if Seller is a
government securities broker or dealer other than a financial
institution.
**Language to be used under 17 C.F.R. 403.5(d) if Seller is a
financial institution.
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9. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After
substitution, the substituted Securities shall be deemed to be
Purchased Securities.
(b) In Transactions in which the Seller retains custody of
Purchased Securities, the parties expressly agree that Buyer shall be
deemed, for purposes of subparagraph (a) of this Paragraph, to have
agreed to and accepted in this Agreement substitution by Seller of
other Securities for Purchased Securities; PROVIDED, HOWEVER, that
such other Securities shall have a Market Value at least equal to the
Market Value of the Purchased Securities for which they are
substituted.
10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that
(i) it is duly authorized to execute and deliver this Agreement, to
enter into the Transactions contemplated hereunder and to perform its
obligations hereunder and has taken all necessary action to authorize
such execution, delivery and performance, (ii) it will engage in such
Transactions as principal (or, if agreed in writing in advance of any
Transaction by the other party hereto, as agent for a disclosed
principal), (iii) the person signing this Agreement on its behalf is
duly authorized to do so on its behalf (or on behalf of any such
disclosed principal), (iv) it has obtained all authorizations of any
governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and
effect and (v) the execution, delivery and performance of this
Agreement and the Transactions hereunder will not violate any law,
ordinance, charter, by-law or rule applicable to it or any agreement
by which it is bound or by which any of its assets are affected. On
the Purchase Date for any Transaction Buyer and Seller shall each be
deemed to repeat all the foregoing representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to repurchase or Buyer fails to
transfer Purchased Securities upon the applicable Repurchase Date,
(ii) Seller or Buyer fails, after one business day's notice, to comply
with Paragraph 4 hereof, (iii) Buyer fails to comply with Paragraph 5
hereof, (iv) an Act of Insolvency occurs with respect to Seller or
Buyer, (v) any representation made by Seller or Buyer shall have been
incorrect or untrue in any material respect when made or repeated or
deemed to have been made or repeated, or (vi) Seller or Buyer shall
admit to the other its inability to, or its intention not to, perform
any of its obligations hereunder (each an "Event of Default"):
(a) At the option of the nondefaulting party, exercised by written
notice to the defaulting party (which option shall be deemed to have
been exercised, even if no notice is given, immediately upon the
occurrence of an Act of Insolvency), the Repurchase Date for each
Transaction hereunder shall be deemed immediately to occur.
(b) In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to have
exercised the option referred to in subparagraph (a) of this
Paragraph, (i) the defaulting party's obligations hereunder to
repurchase all Purchased Securities in such Transactions shall
thereupon become immediately due and payable, (ii) to the extent
permitted by applicable law, the Repurchase Price with respect to each
such Transaction shall be increased by the aggregate amount obtained
by daily application of (x) the greater of the Pricing Rate for such
Transaction or the Prime Rate to (y) the Repurchase Price for such
Transaction as of the Repurchase Date as determined pursuant to
subparagraph (a) of this Paragraph (decreased as of any day by (A) any
amounts retained by the nondefaulting party with respect to such
Repurchase Price pursuant to clause (iii) of this subparagraph, (B)
any proceeds from the sale of Purchased Securities pursuant to
subparagraph (d)(i) of this Paragraph, and (C) any amounts credited to
the account of the defaulting party pursuant to subparagraph (e) of
this Paragraph) on a 360 day per year basis for the actual number of
days during the period from and including the date of the Event of
Default giving rise to such option to but excluding the date of
payment of the Repurchase Price as so increased, (iii) all Income paid
after such exercise or deemed exercise shall be retained by the
nondefaulting party and applied to the aggregate unpaid Repurchase
Prices owed by the defaulting, and (iv) the defaulting party shall
immediately deliver to the nondefaulting party any Purchased
Securities subject to such Transactions then in the defaulting party's
possession.
(c) In all Transactions in which the defaulting party is acting as
Buyer, upon tender by the nondefaulting party of payment of the
aggregate Repurchase Prices for all such Transactions, the defaulting
party's right, title and interest in all Purchased Securities subject
to such Transactions shall be deemed transferred to the nondefaulting
party, and the defaulting party shall deliver all such Purchased
Securities to the nondefaulting party.
(d) After one business day's notice to the defaulting party (which
notice need not be given if an Act of Insolvency shall have occurred,
and which may be the notice given under subparagraph (a) of this
Paragraph or the notice referred to in clause (ii) of the first
sentence of this Paragraph), the nondefaulting party may:
(i) as to Transactions in which the defaulting party is acting
as Seller, (A) immediately sell, in a recognized market at such
price or prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting
party hereunder
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or (B) In its sole discretion elect, in lieu of selling all or a
portion of such Purchased Securities, to give the defaulting party
credit for such Purchased Securities in an amount equal to the
price therefor on such date, obtained from a generally recognized
source or the most recent closing bid quotation from such a source,
against the aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder; and
(ii) as to Transactions in which the defaulting party is acting
as Buyer, (A) purchase securities ("Replacement Securities") of the
same class and amount as any Purchased Securities that are not
delivered by the defaulting party to the nondefaulting party as
required hereunder or (B) in its sole discretion elect, in lieu of
purchasing Replacement Securities, to be deemed to have purchased
Replacement Securities at the price therefor on such date, obtained
from a generally recognized source or the most recent closing bid
quotation from such a source.
(e) As to Transactions in which the defaulting party is acting as
Buyer, the defaulting party shall be liable to the nondefaulting parry
(i) with respect to Purchased Securities (other than Additional
Purchased Securities), for any excess of the price paid (or deemed
paid) by the nondefaulting party for Replacement Securities therefor
over the Repurchase Price for such Purchased Securities and (ii) with
respect to Additional Purchased Securities, for the price paid (or
deemed paid) by the nondefaulting party for the Replacement Securities
therefor. In addition, the defaulting party shall be liable to the
nondefaulting party for interest on such remaining liability with
respect to each such purchase (or deemed purchase) of Replacement
Securities from the date of such purchase (or deemed purchase) until
paid in full by Buyer. Such interest shall be at a rate equal to the
greater of the Pricing Rate for such Transaction or the Prime Rate.
(f) For purposes of this Paragraph 11, the Repurchase Price for
each Transaction hereunder in respect of which the defaulting party is
acting as Buyer shall not increase above the amount of such Repurchase
Price for such Transaction determined as of the date of the exercise
or deemed exercise by the nondefaulting party of its option under
subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party
for the amount of all reasonable legal or other expenses incurred by
the nondefaulting party in connection with or as a consequence of an
Event of Default, together with interest thereon at a rate equal to
the greater of the Pricing Rate for the relevant Transaction or the
Prime Rate.
(h) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and
will enter into each Transaction hereunder in consideration of and in
reliance upon the fact that, all Transactions hereunder constitute a
single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller
agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any
such obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to
set off claims and apply property held by them in respect of any
Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall
be deemed to have been made in consideration of payments, deliveries
and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
13. NOTICES AND OTHER COMMUNICATIONS
Unless another address is specified in writing by the respective
party to whom any notice or other communication is to be given
hereunder, all such notices or communications shall be in writing or
confirmed in writing and delivered at the respective addresses set
forth in Annex II attached hereto.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase
transactions. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein
and shall be enforceable notwitlhstanding the unenforceability of any
such other provision or agreement.
15. NON-ASSIGNABILITY; TERMINATION
The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without
the prior written consent of the other party. Subject to the
foregoing, this Agreement and any Transactions shall be binding upon
and shall inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be canceled by either party
upon giving written notice to the other, except that this Agreement
shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.
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16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of law principles thereof.
17. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either
party shalI constitute a waiver of any other Event of Default and no
exercise of any remedy hereunder by any party shall constitute a
waiver of its right to exercise any other remedy hereunder. No
modification or waiver of any provision of this Agreement and no
consent by any party to a departure herefrom shall be effective unless
and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the
failure to give a notice pursuant to subparagraphs 4(a) or 4(b) hereof
will not constitute a waiver of any right to do so at a later date.
18. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision
of the Employee Retirement Income Security Act of 1974 ("ERISA") are
intended to be used by either party hereto (the "Plan Party") in a
Transaction, the Plan Party shall so notify the other party prior to
the transaction. The Plan Party shall represent in writing to the
other party that the Transaction does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed In reliance thereon but shall not be required
so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this
Paragraph, any such Transaction shall proceed only if Seller furnishes
or has furnished to Buyer its most recent available audited statement
of its financial condition and Its most recent subsequent unaudited
statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph,
Seller shall be deemed (i) to represent to Buyer that since the date
of Seller's latest such financial statements, there has been no
material adverse change in Seller's financial condition which Seller
has not disclosed to Buyer, and (ii) to agree to provide Buyer with
future audited and unaudited statements of its financial condition as
they are issued, so long as it is a Seller in any outstanding
Transaction involving a Plan Party.
19. INTENT
(a) The parties recognize that each transaction is a "repurchase
agreement" as that term is defined In Section 101 of Title 11 of the
United States Code, as amended (except insofar as the type of
Securities subject to such Transaction or the term of such Transaction
would render such definition inapplicable), and a "securities
contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended.
(b) it is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions hereunder
or to exercise any other remedies pursuant to Paragraph 11 hereof, is
a contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as
amended.
20. DISCLOSURE RELATING TO CRETAN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange
Commission ("SEC") under Section 15 of the Securities Exchange Act of
1934 ("1934 Act"), the Securities Investor Protection Corporation has
taken the position that the provisions of the Securities investor
Protection Act of 1970 ("SIPA") do not protect the other party with
respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any
Transaction hereunder; and
(c) In the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation or the National Credit
Union Share Insurance Fund, as applicable.
Goldman Sachs Mortgage Company [Name of Party]LNR Sands Holdings Inc.
BY: Goldman Sachs Real Estate
Funding Corp.
By: /s/ PETER L. BRIGER, JR. By: /s/ SHELLY RUBIN
------------------------ ----------------------
Peter L. Briger, Jr. Shelly Rubin
Title: Vice President Title: Vice President - CFO
Date: Date: December 8, 1997
6
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SUPPLEMENTAL TERMS AND CONDITIONS
7
<PAGE>
NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES
8
<PAGE>
ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
This Annex I forms a part of the Master Repurchase Agreement dated
as of DECEMBER 8, 1997 (the "Agreement") between LNR SANDS and Goldman Sachs
Mortgage Company. Capitalized terms used but not defined in this Annex I shall
have the meanings ascribed to them in the Agreement. LNR SANDS shall act only
as Buyer and Goldman Sachs Mortgage Company shall act only as Seller under the
Agreement.
1. (a) "Margin Notice Deadline", as used in the Agreement and in
this Annex I, means __ [a.m./p.m.].
(b) Paragraph 2 of the Agreement is amended by adding the following
defined term:
"Mortgage Loan", any loan or divided or undivided interest
therein secured by a mortgage, deed of trust or other instrument creating a
mortgage lien on any fee interest of the obligor on the related mortgage note
in land and improvements thereon subject to the lien of such mortgage, deed of
trust or other instrument."
(c) The definition of "Market Value" in Paragraph 2 of the Agreement
is amended by adding the following at the end thereof:
"and, with respect to any Mortgage Loan, as of any date, the
market value thereof on such date as may reasonably be determined by Seller in
accordance with commercially acceptable standards on the date of
determination;"
(d) Paragraph 2 of the Agreement is further amended by adding the
following paragraph at the end thereof:
"The term "Securities" shall include Mortgage Loans, but such
inclusion is for purposes of reference only and is not intended to, and shall
not, affect the characterization of Mortgage Loans for any other purpose."
2. Subparagraph 3(c) of the Agreement is amended by adding the
following at the end of the first sentence thereof:
"In the case of Transactions involving Mortgage Loans, such
demand shall be made no later than 4 :00 p.m., New York City time, on the
business day preceding the day on which such termination will be effective,
which day shall also be a business day."
3. Paragraph 6 of the Agreement is amended by adding the following
at the end of the last sentence thereof:
"In the case of Transactions involving Mortgage Loans, Buyer
hereby pledges to Seller as security for the performance by Buyer of its
obligations under each such Transaction, and grants to Seller a security
interest in, all of the Purchased Securities consisting of Mortgage Loans with
respect to all such Transactions and all proceeds thereof."
<PAGE>
4. Paragraph 7 of the Agreement is amended by adding the following
at the end of the last sentence thereof:
"On the Purchase Date in respect of Transactions involving
Mortgage Loans, Seller shall transfer such Mortgage Loans to Buyer by marking
its books and records to reflect that such Mortgage Loans have been sold to
Buyer. Transfers of Mortgage Loans by Buyer to Seller for purposes of this
Paragraph 7 shall be accomplished by an appropriate notation in the Seller's
books and records reflecting that such Mortgage Loans have been sold by Buyer
to Seller."
5. Paragraph 8 of the Agreement is amended by adding the following
at the end of the last sentence thereof:
"In the case of Transactions involving Mortgage Loans, to the
extent that record title to such Mortgage Loans in the name of Seller is
retained by Seller, such record title shall be retained in trust, for the
benefit of Buyer, for the sole purpose of facilitating the servicing and the
supervision of the Mortgage Loans. Upon termination of any Transaction as set
forth in paragraph 3(c) of this Agreement, Buyer agrees promptly to execute
such instruments and documents as are deemed necessary by Seller to reconvey
the related Mortgage Loans to Seller or its designee. Seller shall prepare and
furnish to Buyer all such instruments and documents at Seller's expense. Buyer
shall not be responsible for recording or filing any such instruments or
documents. Any such reconveyance to Seller shall be made without recourse to
Buyer and without any representations and warranties, except that Buyer shall
be deemed to represent and warrant to Seller that (i) Buyer is reconveying to
Seller all right, title and interest to such Mortgage Loans to the same extent
as was originally conveyed by Seller to Buyer and (ii) Buyer has not agreed to
any modification or waiver of any provision of such Mortgage Loans which would
materially adversely affect the value thereof or Seller's interest therein or
materially impair the security therefor."
6. In the case of Transactions involving Mortgage Loans, the text
entitled "Required Disclosure for Transactions in Which the Seller Retains
Custody of the Purchased Securities" is replaced with the following:
<PAGE>
DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS CUSTODY OF THE
PURCHASED SECURITIES
Seller is not permitted to substitute other Purchased Securities for those
subject to this Agreement and therefore must keep the Purchased Securities
segregated at all times, unless in this Agreement the Buyer grants Seller the
right to substitute other Purchased Securities. If Buyer grants Seller such
right to substitute, this means that the Purchased Securities will likely be
commingled with Seller's own assets. Buyer is advised that, if the Purchased
Securities are commingled with Seller's other assets, they may be subject to
liens granted by Seller to third parties and may be used by Seller for
deliveries on other transactions. Seller makes no representation to Buyer
concerning Buyer's rights in Purchased Securities commingled with other assets
of Seller.
7. (a) Subparagraph 11(d)(i) of the Agreement is amended by adding
after the word "hereunder" in the last sentence thereof the following:
"and in either case, upon receipt by Buyer of the aggregate
unpaid Repurchase Prices and any other amount owing by the defaulting party,
including, without limitation, any unpaid fees, expenses or other amounts to
which Buyer is otherwise entitled hereunder, Buyer shall transfer the portion
of the Purchased Securities and proceeds thereof."
(b) Paragraph 11 of the Agreement is amended by adding the following
subparagraph at the end of the last subparagraph thereof.
"Any purchases of Replacement Securities, pursuant to Paragraph
11(d)(ii) of this Agreement, which are Mortgage Loans shall be, to the extent
reasonably possible, of the same type and amount as the Purchased Securities
that are not delivered by Buyer and may be effected in public or private
purchases, in each case as Seller may reasonably deem appropriate and at such
price or prices as Seller may reasonably deem satisfactory. In the event
Seller elects in lieu of so purchasing such Replacement Securities to be
deemed to have purchased Replacement Securities as provided in Paragraph
11(d)(ii), such Replacement Securities shall be deemed to have been purchased
at the market value thereof as reasonably determined by Seller in accordance
with commercially acceptable standards or, if applicable, at the prevailing
price therefor in a recognized market."
8. If the Agreement is in the form of the 1987 Public Securities
Association Master Repurchase Agreement, the Agreement shall be further
amended as follows:
(a) The definition of "Buyer's Margin Amount" in Paragraph 2 of the
Agreement is amended by adding the following at the end thereof:
";in the case of a Transaction involving Mortgage Loans, such
percentage shall be, in the absence of any agreement in respect thereof
between Buyer and Seller, the percentage calculated by dividing the Market
Value of the Purchased Securities on
<PAGE>
the Purchase Date by the Purchase Price on the Purchase Date;"
(b) The definition of "Seller's Margin Amount" in Paragraph 2 of the
Agreement is amended by adding the following at the end thereof:
"; in the case of a Transaction involving Mortgage Loans, such
percentage shall be, in the absence of any agreement in respect thereof
between Buyer and Seller, the percentage employed in calculating the Buyer's
Margin Amount."
(c) Paragraph 4 of the Agreement is amended by adding the following
subparagraph at the end of the last subparagraph thereof.
"If any notice is given by Buyer or Seller under subparagraph
(a) or (b) of this Paragraph at or before the Margin Notice Deadline on any
business day, the party receiving such notice shall transfer cash or
Additional Purchased Securities as provided in such subparagraph no later than
the close of business in the relevant market on such day. If any such notice
is given after the Margin Notice Deadline, the party receiving such notice
shall transfer such cash or Securities no later than the close of business in
the relevant market on the next business day following such notice."
(d) Subparagraph 11(d)(i) of the Agreement is amended by inserting,
following the word "market" and before the word "at", on the second line
thereof, the phrase "or in any other commercially reasonable manner".
GOLDMAN SACHS MORTGAGE COMPANY LNR Sands Holdings Inc
By: Goldman Sachs Real Estate
Funding Corp.
By: /s/ PETER L. BRIGER, JR. By: /s/ SHELLY RUBIN
-------------------------- ---------------------
Name: Peter L. Briger, Jr. Name: Shelly Rubin
Title: Vice President Title: Vice President and CFO
Date: Date: December 8, 1997
<PAGE>
FORM W-9 REQUEST FOR TAXPAYER GIVE FORM TO THE
IDENTIFICATION NUMBER AND REQUESTER. DO NOT
DEPARTMENT OF THE TREASURY CERTIFICATION SEND TO THE IRS.
INTERNAL REVENUE SERVICE
- - --------------------------------------------------------------------------------
PLEASE PRINT OR TYPE
Name (if a joint account or you changed your name, see Specific Instructions on
page 2.)
LNR SANDS HOLDINGS INC.
- - --------------------------------------------------------------------------------
Business name, if different from above. (See Specific Instructions on page 2.)
- - --------------------------------------------------------------------------------
Check appropriate box: [ ] Individual/Sole proprietor [X] Corporation
[ [ Partnership [ ] Other
- - --------------------------------------------------------------------------------
Address (number, street, and apt. or suite no.) Requester's name and
address (optional)
760 NW 7TH AVENUE
- - --------------------------------------------------------------------------------
City, state, and ZIP code
MIAMI, FL 33172
- - --------------------------------------------------------------------------------
PART I TAXPAYER IDENTIFICATION NUMBER (TIN) List account number(s)
here (optional)
Enter your TIN in the Social security number
appropriate box. - -
For individuals, this or
is your social security Employer identification number PART II FOR PAYEES
number (SSN). However, 8 8 - 0 3 7 8 - 2 3 3 EXEMPT FROM BACKUP
if you are a resident WITHHOLDING (SEE
alien OR a sole proprietor, see the instructions THE INSTRUCTIONS ON
on page 2. For other entities, it is your PAGE 2.)
employer identification number (EIN). If you do
not have a number, see HOW TO GET A TIN on page 2.
NOTE: IF THE ACCOUNT IS MORE THAN ONE NAME, SEE THE
CHART ON PAGE 2 FOR GUIDELINES ON WHOSE NUMBER TO
ENTER.
- - --------------------------------------------------------------------------------
PART III CERTIFICATION
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS.--You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding
because you have failed to report all interest and dividends on your tax
return. For real estate transactions, item 2 does not apply. For mortgage
interest paid, acquisition or abandonment of secured property, cancellation of
debt, contributions to an individual retirement arrangement (IRA), and
generally, payments other than interest and dividends, you are not required to
sign the Certification, but you must provide your correct TIN. (See the
instructions on page 2.)
- - --------------------------------------------------------------------------------
SIGN
HERE SIGNATURE /s/ MARGARET A. JORDON DATE 12/8/97
- - --------------------------------------------------------------------------------
PURPOSE OF FORM.--A person who is required to file an information return with
the IRS must get your correct taxpayer identification number (TIN) to report,
for example, income paid to you, real estate transactions, mortgage interest you
paid, acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA.
Use Form W-9 to give your correct TIN to the person requesting it (the
requester) and, when applicable, to:
1. Certify the TIN you are giving is correct (or you are waiting for a
number to be issued.)
2. Certify you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are an exempt payee.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN, YOU
MUST USE THE REQUESTER'S FORM IF IT IS SUBSTANTIALLY SIMILAR TO THIS FORM W-9.
WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that may be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications,
and report all your taxable interest and dividends on your tax return,
payments you receive will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tells you that you are subject to backup withholding because
you did not report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to
backup withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN when required. See the Part III
instructions on page 2 for details.
Certain payees and payments are exempt from backup withholding. See the
Part II instructions and the separate INSTRUCTIONS FOR THE REQUESTER OF FORM
W-9
PENALTIES
FAILURE TO FURNISH TIN.--If you fail to furnish your correct TIN to a requester,
you are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
- - --------------------------------------------------------------------------------
CAT. NO. 10231X
FORM W-9 (REV. 12-96)
EXHIBIT 10.7
DONALDSON, LUFKIN & JENRETTE
DLJ Mortgage Capital, Inc.
277 Park Avenue, 9th Floor, New York, New York 10172 /bullet/ (212) 892-3000
October 21, 1997
LNR Property Corporation
Lennar Capital Services, Inc.
Nevada Securities Holdings, Inc.
Lennar Securities Holdings, Inc.
Lennar MBS, Inc.
LFS Asset Corp.
760 Northwest 107th Avenue - Suite 100
Miami, Florida 33172
Dear Sir/Madam:
DLJ Mortgage Capital, Inc. (the "Buyer" or "DLJ") hereby agrees to enter
into one or more reverse repurchase transactions with LNR Property
Corporation, Lennar Capital Services, Inc., Nevada Securities Holdings,
Inc., Lennar Securities Holdings, Inc., Lennar MBS, Inc. or LFS Asset Corp.
(each a "Seller", or collectively "LNR"), pursuant to which DLJ shall, from
time to time, purchase rated and non-rated Residential and Commercial
Mortgage Pass-Through Securities (the "Securities"). The relevant Seller
shall agree to repurchase such Securities on a specified date (each a
"Transaction"), subject to the terms and conditions set forth in this
letter and in a PSA MASTER REPURCHASE AGREEMENT (the "Repurchase
Agreement") executed by DLJ and such Seller. Capitalized terms not defined
herein shall have the respective meanings given such terms in the
Repurchase Agreement.
1. COLLATERAL: Rated and non-rated Residential and Commercial Mortgage
Pass-Through Securities.
2. EFFECTIVE DATE: LNR hereby discloses that Lennar Corpoartion ("Lennar")
will spin-off LNR to Lennar's shareholder's, the stock of LNR which
will be traded on the New York Stock Exchange (the "Spin-Off"). The
Effective Date of this letter agreement will be the date and time that
the Spin-Off has occurred.
3. TERMINATION: Subject to the terms and conditions hereof and the
provisions of the relevant Repurchase Agreement (including without
limitation, the default and early termination provisions hereof and
thereof), any and all Transactions shall terminate on or before October
20, 1998. Subject to the agreement of both DLJ and LNR, and contingent
on the continued sound financial condition of each Seller, DLJ will
consider extending the term of this letter for an additional twelve
months. Notice as to the consideration and determination of such
extension shall be provided on or about 90 days prior to termination
date.
4. GUARANTEE: Prior to the date of the first Transaction, LNR Property
Corporation shall provide a guarantee, in form and substance acceptable
to DLJ, which shall guarantee the obligations of Lennar Securities
Holdings, Inc. and Nevada Securities Holdings, Inc. (the
<PAGE>
"Guaranteed Entities"), under any transaction pursuant to the relevant
Repurchase Agreement and this letter, and shall, upon DLJ's request,
provide customary legal opinions as to due authorization and
enforceability.
5. MAXIMUM AMOUNT: The aggregate Purchase Price of all Transactions
outstanding with all Sellers at any one time shall not exceed
$150,000,000. The aggregate amount outstanding to Lennar Capital
Services, Inc., and its subsidiaries Lennar MBS, Inc. and LFS Asset
Corp. (the "Non-Guaranteed Entities") at any one time shall not exceed
$50,000,000 (the "Sub-Limit"). The Sub-Limit shall cease to apply at
such time that LNR Property Corporation provides a guarantee for the
Non-Guaranteed Entities, and there shall have been no material adverse
change in the financial condition of LNR Property Corporation pursuant
to paragraph 9 (a) below.
6. COMMITMENT FEE: Prior to the date of the first Transaction, LNR shall
pay a fee to DLJ of $75,000, representing 5 basis points of
$150,000,000.
7. SECURITIES DOCUMENTATION: At least thirty days prior to the execution
of any Transaction, the relevant Seller shall provide to DLJ
information required by DLJ in its sole discretion, including but not
limited to, the related prospectus, pooling and servicing agreement,
current remittance reports, price/yield tables, and a collateral tape
containing property-related information so that DLJ may determine the
Market Value of the Securities. The relevant Seller shall provide such
information to the extent it has or can obtain same. On a monthly
basis, such Seller shall provide to DLJ remittance reports, any
material correspondence between such Seller and the respective Master
Servicer or Special Servicer, (to the extent such Seller is not
prohibited from providing such information in accordance with the
pooling and servicing agreement), and such property level information
that Buyer, in its sole discretion, deems necessary in determining the
Market Value of the Securities.
8. FIXED SPREAD AND MARGIN AMOUNT: As set forth in the following table,
DLJ's Margin Amount for particular Securities which are the subject of
a Transaction corresponds to the lowest Rating assigned to such
Securities by either (i) a nationally recognized statistical rating
organization (each a "Rating Agency") or, (ii) DLJ, in its sole
discretion. DLJ reserves the right to review any rating assigned by any
Rating Agency to any Securities which are subject to a Transaction on a
case by case basis to determine the level of Margin Amount which DLJ,
in its sole discretion, deems adequate:
------------------------------------------------------------------------------
RATING FIXED SPREAD OR PRICING RATE DLJ'S MARGIN
AMOUNT
------------------------------------------------------------------------------
BB or higher 75 basis points plus one month LIBOR 120%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
B or higher 85 basis points plus one month LIBOR 125%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Non-rated 112.5 basis points plus one month LIBOR 135%
------------------------------------------------------------------------------
<PAGE>
9. PRICE DIFFERENTIAL: The price at which the Securities shall be
repurchased by Seller on the Repurchase Date shall equal the Purchase
Price plus the Price Differential which has accrued but has not been
paid as of such Repurchase Date. The Price Differential shall accrue on
a daily basis for the Securities and be calculated on an actual/360 day
basis. The Price Differential shall be payable monthly in arrears. The
Pricing Rate used to calculate the Price Differential, as set forth in
the above table shall initially be set on the Purchase Date of the
Transaction.
10. COVENANTS: In addition to the default and early termination provisions
set forth in the Repurchase Agreement, DLJ's commitment to engage in
the Transactions referred to herein with all Sellers shall, at the
option of DLJ, terminate and in whole or in part all outstanding
Transactions with all Sellers shall, at the option of DLJ, terminate
(and the Repurchase Date shall be deemed to occur immediately), in the
event that:
a) from and after the Effective Date, there shall have been a material
adverse change in the business or financial condition of LNR
Property Corporation or each Seller, as determined by DLJ in its
sole discretion;
b) with respect to rated Securities, the rating shall be downgraded,
withdrawn, or placed on review for a possible downgrade, by the
nationally recognized rating agency that rated the Securities upon
their issuance;
c) there exists a pending or threatened action or proceeding affecting
LNR Property Corporation or any of its subsidiaries before any
court, governmental agency or arbitrator, that may materially and
adversely affect the business or financial condition of LNR Property
Corporation and/or each Seller; and
d) an event or events occur resulting in the effective absence of a
"Repo Market" for mortgage loans for a period of at least 30
consecutive days, which causes DLJ's inability to finance the
Certificates through such Repo Market with DLJ's customary repo
counterparts.
11. MARGIN DEFICIT: In the event that DLJ determines that the aggregate
Market Value of the Securities has declined, after sending notice to
the relevant Seller of a Margin Deficit, DLJ acknowledges that such
Seller may provide to DLJ additional or different information during
the cure period, if any, specified in the relevant Repurchase Agreement
prior to which a margin call must be satisfied, which may be relevant
to Buyer's determination. Notwithstanding the foregoing, Buyer shall
have no obligation to change its determination of aggregate Market
Value and Buyer shall retain all of its rights specified in the
relevant Repurchase Agreement.
12. GOVERNING LAW: This letter shall be construed in accordance with, and
governed by, the law of the State of New York, without giving effect to
the conflict of law principles thereof. LNR waives trial by jury and
hereby irrevocably consents to the non-exclusive jurisdiction of any
court of the State of New York, or in the United States District Court
for the Southern District of New York. LNR hereby submits to, and
waives any objection
<PAGE>
it may have to personal jurisdiction and venue, in the courts of the
State of New York and the United States District Court for the Southern
District of New York, over any disputes arising out of or relating to
the Repurchase Agreements or this letter.
If the terms of this letter are satisfactory to you, please indicate your
agreement and acceptance thereof by signing this letter and returning it to
us, whereupon this letter shall become an agreement between us as of the
date of this letter.
Very truly yours,
DLJ Mortgage Capital, Inc.
By: /s/ JOHN A. FRAEL
---------------------
Name: John A. Frael
Title: Senior Vice President
Agreed and Accepted:
LNR Property Corporation
By: /s/ SHELLY RUBIN
---------------------
Name: Shelly Rubin
Title: Vice President
Lennar Capital Services, Inc.
By: /s/ SHELLY RUBIN
---------------------
Name: Shelly Rubin
Title: Vice President
<PAGE>
Nevada Securities Holdings, Inc.
By: /s/ SHELLY RUBIN
---------------------
Name: Shelly Rubin
Title: Vice President
Lennar Securities Holdings, Inc.
By: /s/ SHELLY RUBIN
---------------------
Name: Shelly Rubin
Title: Vice President
Lennar MBS, Inc.
By: /s/ SHELLY RUBIN
---------------------
Name: Shelly Rubin
Title: Vice President
LFS Asset Corp.
By: /s/ SHELLY RUBIN
---------------------
Name: Shelly Rubin
Title: Vice President
<PAGE>
PSA THE BOND MARKET
TRADE ASSOCIATION
MASTER
REPURCHASE AGREEMENT
SEPTEMBER 1996 VERSION
DATED AS OF OCTOBER 28, 1997
BETWEEN:
DLJ Mortgage Capital, Inc.
and
LFS Asset Corp.
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities
or other assets ("Securities") against the transfer of funds by Buyer,
with a simultaneous agreement by Buyer to transfer to Seller such
Securities at a date certain or on demand, against the transfer of funds
by Seller. Each such transaction shall be referred to herein as a
"Transaction" and, unless otherwise agreed in writing, shall be governed
by this Agreement, including any supplemental terms or conditions
contained in Annex I hereto and in any other annexes identified herein or
therein as applicable hereunder.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the commencement
by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee,
custodian or similar official for such party or any substantial part
of its property, or the convening of any meeting of creditors for
purposes of commencing any such case or proceeding or seeking such an
appointment or election, (ii) the commencement of any such case or
proceeding against such party, or another seeking such an appointment
or election, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely
contested by such party, (B) results in the entry of an order for
relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect,
or (C) is not dismissed within 15 days, (iii) the making by such
party of a general assignment for the benefit of creditors, or (iv)
the admission in writing by such party of such party's inability to
pay such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Buyer's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
<PAGE>
(d) "Buyer's Margin Percentage", with respect to any Transaction as of
any date, a percentage (which may be equal to the Seller's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value
of the Purchased Securities on the Purchase Date by the Purchase
Price on the Purchase Date for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3(b) hereof;
(f) "Income", with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the
relevant Confirmation, Annex I hereto or otherwise as the deadline
for giving notice requiring same-day satisfaction of margin
maintenance obligations as provided in Paragraph 4 hereof (or, in the
absence of any such agreement, the deadline for such purposes
established in accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally
recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued Income to the extent
not included therein (other than any Income credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) as of such date (unless contrary to market practice for such
Securities);
(k) "Price Differential", with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing
Rate for such Transaction to the Purchase Price for such. Transaction
on a 360 day-per-year basis for the actual number of days during the
period commencing on (and including) the Purchase Date for such
Transaction and ending on (but excluding) the date of determination
(reduced by any amount of such Price Differential previously paid by
Seller to Buyer with respect to such Transaction);
(1) "Pricing Rate", the per annum percentage rate for determination of
the Price Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in
THE WALL STREET JOURNAL (or, if more than one such rate is published,
the average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii)
thereafter, except where Buyer and Seller agree otherwise, such price
increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any
cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof
or applied to reduce Seller's obligations under clause (ii) of
Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor
in accordance with Paragraph 9 hereof. The term "Purchased
Securities" with respect to any Transaction at any time also shall
include Additional Purchased Securities delivered pursuant to
Paragraph 4(a) hereof and shall exclude Securities returned pursuant
to Paragraph 4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraph 3(c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the
Price Differential as of the date of such determination;
2
<PAGE>
(s) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Seller's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(t) Seller's Margin Percentage", with respect to any Transaction as of
any date, a percentage (which may be equal to the Buyer's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value
of the Purchased Securities on the Purchase Date by the Purchase
Price on the Purchase Date for such Transaction.
3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase
Date for the Transaction, the Purchased Securities shall be
transferred to Buyer or its agent against the transfer of the
Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other
party a written confirmation of each Transaction (a "Confirmation").
The Confirmation shall describe the Purchased Securities (including
CUSIP number, if any), identify Buyer and Seller and set forth (i)
the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase
Date, unless the Transaction is to be terminable on demand, (iv) the
Pricing Rate or Repurchase Price applicable to the Transaction, and
(v) any additional terms or conditions of the Transaction not
inconsistent with this Agreement. The Confirmation, together with
this Agreement, shall constitute conclusive evidence of the terms
agreed between Buyer and Seller with respect to the Transaction to
which the Confirmation relates, unless with respect to the
Confirmation specific objection is made promptly after receipt
thereof. In the event of any conflict between the terms of such
Confirmation and this Agreement, this Agreement shall prevail.
c) In the case of Transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary
in accordance with market practice, by telephone or otherwise on or
prior to the business day on which such termination will be
effective. On the date specified in such demand, or on the date fixed
for termination in the case of Transactions having a fixed term,
termination of the Transaction will be effected by transfer to Seller
or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) against the transfer of the Repurchase Price to an account of
Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice
to Seller require Seller in such Transactions, at Seller's option, to
transfer to Buyer cash or additional Securities reasonably acceptable
to Buyer ("Additional Purchased Securities"), so that the cash and
aggregate Market Value of the Purchased Securities, including any
such Additional Purchased Securities, will thereupon equal or exceed
such aggregate Buyer's Margin Amount (decreased by the amount of any
Margin Deficit as of such date arising from any Transactions in which
such Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller's Margin Amount for all
such Transactions at such time (a "Margin Excess"), then Seller may
by notice to Buyer require Buyer in such Transactions, at Buyer's
option, to transfer cash or Purchased Securities to Seller, so that
the aggregate Market Value of the Purchased Securities, after
deduction
3
<PAGE>
of any such cash or any Purchased Securities so transferred, will
thereupon not exceed such aggregate Seller's Margin Amount (increased
by the amount of any Margin Excess as of such date arising from any
Transactions in which such Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or
(b) of this Paragraph at or before the Margin Notice Deadline on any
business day, the party receiving such notice shall transfer cash or
Additional Purchased Securities as provided in such subparagraph no
later than the close of business in the relevant market on such day.
If any such notice is given after the Margin Notice Deadline, the
party receiving such notice shall transfer such cash or Securities no
later than the close of business in the relevant market on the next
business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed
to such Transactions as shall be agreed upon by Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both)
under subparagraphs (a) and (b) of this Paragraph may be exercised
only where a Margin Deficit or a Margin Excess, as the case may be,
exceeds a specified dollar amount or a specified percentage of the
Repurchase Prices for such Transactions (which amount or percentage
shall be agreed to by Buyer and Seller prior to entering into any
such Transactions).
(f) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under
subparagraphs (a) and (b) of this Paragraph to require the
elimination of a Margin Deficit or a Margin Excess, as the case may
be, may be exercised whenever such a Margin Deficit or a Margin
Excess exists with respect to any single Transaction hereunder
(calculated without regard to any other Transaction outstanding under
this Agreement).
5. INCOME PAYMENTS
Seller shall be entitled to receive an amount equal to all Income
paid or distributed on or in respect of the Securities that is not
otherwise received by Seller, to the full extent it would be so
entitled if the Securities had not been sold to Buyer. Buyer shall,
as the parties may agree with respect to any Transaction (or, in the
absence of any such agreement, as Buyer shall reasonably determine in
its discretion), on the date such Income is paid or distributed
either (i) transfer to or credit to the account of Seller such Income
with respect to any Purchased Securities subject to such Transaction
or (ii) with respect to Income paid in cash, apply the Income payment
or payments to reduce the amount, if any, to be transferred to Buyer
by Seller upon termination of such Transaction. Buyer shall not be
obligated to take any action pursuant to the preceding sentence (A)
to the extent that such action would result in the creation of a
Margin Deficit, unless prior thereto or simultaneously therewith
Seller transfers to Buyer cash or Additional Purchased Securities
sufficient to eliminate such Margin Deficit, or (B) if an Event of
Default with respect to Seller has occurred and is then continuing at
the time such Income is paid or distributed.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales
and purchases and not loans, in the event any such Transactions are
deemed to be loans, Seller shall be deemed to have pledged to Buyer
as security for the performance by Seller of its obligations under
each such Transaction, and shall be deemed to have granted to Buyer a
security interest in, all of the Purchased Securities with respect to
all Transactions hereunder and all Income thereon and other proceeds
thereof.
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder
shall be in immediately available funds. All Securities transferred
by one party hereto to the other party (i) shall be in suitable form
for transfer or shall be accompanied by duly executed instruments of
transfer or assignment in blank and
4
<PAGE>
such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry
system of a Federal Reserve Bank, or (iii) shall be transferred by
any other method mutually acceptable to Seller and Buyer.
8. SEGREGATION OF PURCHASED SECURITIES
To the extent required by applicable law, all Purchased Securities in
the possession of Seller shall be segregated from other securities in
its possession and shall be identified as subject to this Agreement.
Segregation may be accomplished by appropriate identification on the
books and records of the holder, including a financial or securities
intermediary or a clearing corporation. All of Seller's interest in
the Purchased Securities shall pass to Buyer on the Purchase Date
and, unless otherwise agreed by Buyer and Seller, nothing in this
Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Securities or otherwise selling,
transferring, pledging or hypothecating the Purchased Securities, but
no such transaction shall relieve Buyer of its obligations to
transfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or
11 hereof, or of Buyer's obligation to credit or pay Income to, or
apply Income to the obligations of, Seller pursuant to Paragraph 5
hereof.
---------------------------------------------------------------------
REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS
CUSTODY OF THE PURCHASED SECURITIES
---------------------------------------------------------------------
Seller is not permitted to substitute other securities for those
subject to this Agreement and therefore must keep Buyer's securities
segregated at all times, unless in this Agreement Buyer grants Seller
the right to substitute other securities. If Buyer grants the right
to substitute, this means that Buyer's securities will likely be
commingled with Seller's own securities during the trading day. Buyer
is advised that, during any trading day that Buyers securities are
commingled with Seller's securities, they [will]* [may]** be subject
to liens granted by Seller to [its clearing bank]* [third parties]**
and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller's
ability to resegregate substitute securities for Buyer will be
subject to Seller's ability to satisfy [the clearing]* [any]** lien
or to obtain substitute securities.
* Language to be used under 17 C.F.R. ss. 403.4(e) if Seller is a
government securities broker or dealer other than a financial
institution.
** Language to be used under 17 C.F.R. ss. 403.5(d) if Seller is a
financial institution.
9. SUBSTITUTION
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After
substitution the substituted Securities shall be deemed to be
Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed,
for purposes of subparagraph (a) of this Paragraph, to have agreed to
and accepted in this Agreement substitution by Seller of other
Securities for Purchased Securities; PROVIDED, HOWEVER, that such
other Securities shall have a Market Value at least equal to the
Market Value of the Purchased Securities for which they are
substituted.
10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that
(i) it is duly authorized to execute and deliver this Agreement, to
enter into Transactions contemplated hereunder and to perform its
obligations hereunder and has taken all necessary action to authorize
such execution, delivery and
5
<PAGE>
performance, (ii) it will engage in such Transactions as principal
(or, if agreed in writing, in the form of an annex hereto or
otherwise, in advance of any Transaction by the other party hereto,
as agent for a disclosed principal), (iii) the person signing this
Agreement on its behalf is duly authorized to do so on its behalf (or
on behalf of any such disclosed principal), (iv) it has obtained all
authorizations of any governmental body required in connection with
this Agreement and the Transactions hereunder and such authorizations
are in full force and effect and (v) the execution, delivery and
performance of this Agreement and the Transactions hereunder will not
violate any law, ordinance, charter, by-law or rule applicable to it
or any agreement by which it is bound or by which any of its assets
are affected. On the Purchase Date for any Transaction Buyer and
Seller shall each be deemed to repeat all the foregoing
representations made by it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to transfer or Buyer fails to
purchase Purchased Securities upon the applicable Purchase Date, (ii)
Seller fails to repurchase or Buyer fails to transfer Purchased
Securities upon the applicable Repurchase Date, (iii) Seller or Buyer
fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one
business day's notice, to comply with Paragraph 5 hereof, (v) an Act
of Insolvency occurs with respect to Seller or Buyer, (vi) any
representation made by Seller or Buyer shall have been incorrect or
untrue in any material respect when made or repeated or deemed to
have been made or repeated, or (vii) Seller or Buyer shall admit to
the other its inability to, or its intention not to, perform any of
its obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an
Act of Insolvency), declare an Event of Default to have occurred
hereunder and, upon the exercise or deemed exercise of such option,
the Repurchase Date for each Transaction hereunder shall, if it has
not already occurred, be deemed immediately to occur (except that, in
the event that the Purchase Date for any Transaction has not yet
occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting
party shall (except upon the occurrence of an Act of Insolvency) give
notice to the defaulting party of the exercise of such option as
promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to have
exercised the option referred to in subparagraph (a) of this
Paragraph, (i) the defaulting party's obligations in such
Transactions to repurchase all Purchased Securities, at the
Repurchase Price therefor on the Repurchase Date determined in
accordance with subparagraph (a) of this Paragraph, shall thereupon
become immediately due and payable, (ii) all Income paid after such
exercise or deemed exercise shall be retained by the nondefaulting
party and applied to the aggregate unpaid Repurchase Prices and any
other amounts owing by the defaulting party hereunder, and (iii) the
defaulting party shall immediately deliver to the nondefaulting party
any Purchased Securities subject to such Transactions then in the
defaulting party's possession or control.
(c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, all right, title and
interest in and entitlement to all Purchased Securities subject to
such Transactions shall be deemed transferred to the nondefaulting
party, and the defaulting party shall deliver all such Purchased
Securities to the nondefaulting party.
6
<PAGE>
(d) If the nondefaulting party exercises or is deemed to have exercised
the option referred to in subparagraph (a) of this Paragraph, the
nondefaulting party, without prior notice to the defaulting party,
may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate
unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder or (B) in its sole discretion elect,
in lieu of selling all or a portion of such Purchased Securities,
to give the defaulting party credit for such Purchased Securities
in an amount equal to the price therefor on such date, obtained
from a generally recognized source or the most recent closing bid
quotation from such a source, against the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting
party hereunder; and
(ii) as to Transactions in which the defaulting party is acting as
Buyer, (A) immediately purchase, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not
delivered by the defaulting party to the nondefaulting party as
required hereunder or (B) in its sole discretion elect, in lieu
of purchasing Replacement Securities, to be deemed to have
purchased Replacement Securities at the price therefore on such
date, obtained from a generally recognized source or the most
recent closing offer quotation from such a source.
Unless otherwise provided in Annex I, the parties acknowledge and
agree that (1) the Securities subject to any Transaction hereunder
are instruments traded in a recognized market, (2) in the absence of
a generally recognized source for prices or bid or offer quotations
for any Security, the nondefaulting party may establish the source
therefor in its sole discretion and (3) all prices, bids and offers
shall be determined together with accrued Income (except to the
extent contrary to market practice with respect to the relevant
Securities).
(e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party for
any excess of the price paid (or deemed paid) by the nondefaulting
party for Replacement Securities over the Repurchase Price for the
Purchased Securities replaced thereby and for any amounts payable by
the defaulting party under Paragraph 5 hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is
acting as Buyer shall not increase above the amount of such
Repurchase Price for such Transaction determined as of the date of
the exercise or deemed exercise by the nondefaulting party of the
option referred to in subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for
(i) the amount of all reasonable legal or other expenses incurred by
the nondefaulting party in connection with or as a result of an Event
of Default, (ii) damages in an amount equal to the cost (including
all fees, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in
connection with or as a result of an Event of Default, and (iii) any
other loss, damage, cost or expense directly arising or resulting
from the occurrence of an Event of Default in respect of a
Transaction.
(h) To the extent permitted by applicable law, the defaulting party shall
be liable to the nondefaulting party for interest on any amounts
owing by the defaulting party hereunder, from the date the defaulting
party becomes liable for such amounts hereunder until such amounts
are (i) paid in full
7
<PAGE>
by the defaulting party or (ii) satisfied in full by the exercise of
the nondefaulting party's rights hereunder. Interest on any sum
payable by the defaulting party to the nondefaulting party under this
Paragraph 11(h) shall be at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in
reliance upon the fact that, all Transactions hereunder constitute a
single business and contractual relationship and have been made in
consideration of each other. Accordingly, each of Buyer and Seller
agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any
such obligations shall constitute a default by it in respect of all
Transactions hereunder, (ii) that each of them shall be entitled to
set off claims and apply property held by them in respect of any
Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall
be deemed to have been made in consideration of payments, deliveries
and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
13. NOTICES AND OTHER COMMUNICATIONS
Any and all notices, statements, demands or other communications
hereunder may be given by a party to the other by mail, facsimile,
telegraph, messenger or otherwise to the address specified in Annex
II hereto, or so sent to such party at any other place specified in a
notice of change of address hereafter received by the other. All
notices, demands and requests hereunder may be made orally, to be
confirmed promptly in writing, or by other communication as specified
in the preceding sentence.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase
transactions. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any
such other provision or agreement.
15. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement
and under any Transaction shall not be assigned by either party
without the prior written consent of the other party, and any
such assignment without the prior written consent of the other
party shall be null and void. Subject to the foregoing, this
Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the parties and their respective
successors and assigns. This Agreement may be terminated by
either party upon giving written notice to the other, except that
this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party
from assigning, charging or otherwise dealing with all or any
part of its interest in any sum payable to it under Paragraph 11
hereof.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
8
<PAGE>
17. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no
exercise of any remedy hereunder by any party shall constitute a
waiver of its right to exercise any other remedy hereunder. No
modification or waiver of any provision of this Agreement and no
consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both
of the parties hereto. Without limitation on any of the foregoing,
the failure to give a notice pursuant to Paragraph 4(a) or 4(b)
hereof will not constitute a waiver of any right to do so at a later
date.
18. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 ("ERISA") are
intended to be used by either party hereto (the "Plan Party") in
a Transaction, the Plan Party shall so notify the other party
prior to the Transaction. The Plan Party shall represent in
writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise
exempt therefrom, and the other party may proceed in reliance
thereon but shall not be required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this
Paragraph, any such Transaction shall proceed only if Seller
furnishes or has furnished to Buyer its most recent available
audited statement of its financial condition and its most recent
subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller
shall be deemed (i) to represent to Buyer that since the date of
Seller's latest such financial statements, there has been no
material adverse change in Seller's financial condition which
Seller has not disclosed to Buyer, and (ii) to agree to provide
Buyer with future audited ant unaudited statements of its
financial condition as they are issued, so long as it is a Seller
in any outstanding Transaction involving a Plan Party.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of
the United States Code, as amended (except insofar as the type of
Securities subject to such Transaction or the term of such
Transaction would render such definition inapplicable), and a
"securities contract" as that term is defined in Section 741 of
Title 11 of the United States Code, as amended (except insofar as
the type of assets subject to such Transaction would render such
definition inapplicable).
(b) It is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions
hereunder or to exercise any other remedies pursuant to Paragraph
11 hereof is a contractual right to liquidate such Transaction as
described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in the
Federal Deposit Insurance Act, as amended ("FDIA"), then each
Transaction hereunder is a "qualified financial contract," as
that term is defined in FDIA and any rules, orders or policy
statements thereunder (except insofar as the type of assets
subject to such Transaction would render such definition
inapplicable).
(d) It is understood that this Agreement constitutes a "netting
contract"as defined in and subject to Title IV of the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
and each payment entitlement and payment obligation under any
Transaction hereunder shall constitute a "covered contractual
payment entitlement" or "covered contractual payment obligation",
9
<PAGE>
respectively, as defined in and subject to FDICIA (except insofar
as one or both of the parties is not a "financial institution" as
that term is defined in FDICIA).
20. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange
Commission ("SEC") under Section 15 of the Securities Exchange
Act of 1934 ("1934 Act"), the Securities Investor Protection
Corporation has taken the position that the provisions of the
Securities Investor Protection Act of 1970 ("SIPA") do not
protect the other party with respect to any Transaction
hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA
will not provide protection to the other party with respect to
any Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and
therefore are not insured by the Federal Deposit Insurance
Corporation or the National Credit Union Share Insurance Fund, as
applicable.
[Name of Party] DLJ Mortgage Capital, Inc. [Name of Party]
By: /s/ VINCENT P. BROWNE By: /s/ SHELLY RUBIN
------------------------------ ----------------------
Vincent P. Browne Shelly Rubin
Title: Senior-Vice President Title: Vice President
Date: October 28, 1997 Date: 10/28/97
10
<PAGE>
ANNEX I
SUPPLEMENTAL TERMS AND CONDITIONS
11
<PAGE>
ANNEX II
NAMES AND ADDRESSES FOR COMMUNICATIONS BETWEEN PARTIES
DLJ
277 Park Avenue
8th Floor
New York, NY 10172
Attn: Mr. John A. Friel
Senior Vice President
<PAGE>
LNR PROPERTY CORPORATION
760 Northwest 107th Avenue
Miami, Florida 33172
October 31, 1997
DLJ Mortgage Capital, Inc.
277 Park Avenue
9th Floor
New York, NY 10172
GUARANTY
FOR VALUE RECEIVED, the undersigned does hereby guarantee absolutely and
unconditionally, the payment and performance of all liabilities, obligations and
commitments of Nevada Securities Holdings, Inc. and Lennar Securities Holdings,
Inc. (collectively, the "LNR Companies") with respect to repurchase transactions
("Transactions") under the Repurchase Agreements dated October 21, 1997, to DLJ
Mortgage Capital, Inc. and its affiliates (the "Guarantee") whether now existing
or hereafter incurred, whether matured or unmatured, and whether absolute or
contingent.
This shall be a continuing guaranty. This guaranty may be terminated upon
written notice of the undersigned to the Guarantee, in which event the guaranty
shall remain in force with respect only to those liabilities, obligations and
commitments, whether absolute or contingent, of the LNR Companies with respect
to the Transactions incurred prior to receipt of notice of termination by the
Guarantee.
The undersigned hereby waives all notices, demands and protests of
whatsoever nature, to which the undersigned might otherwise be entitled, and
agrees that no delay in exercising any rights hereunder, or failure to exercise
the same, shall operate as a waiver of such rights.
This agreement shall be binding upon the successors and assigns of the
undersigned and inure to the benefit of the successors and assigns of the
Guarantee.
LNR PROPERTY CORPORATION,
A Delaware corporation
By: /s/ SHELLY RUBIN
--------------------------
Print Name: Shelly Rubin
Title: Vice President
EXHIBIT 10.8
DESK REFERENCE SET
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 31, 1997 BETWEEN
LENNAR CAPITAL SERVICES, INC.
AND
LENNAR MBS, INC.
AS BORROWERS
AND
NATIONSBANK OF TEXAS, N.A.
AS LENDER
TABLE OF CONTENTS
1. Amended and Restated Credit Agreement
2. Collateral Support and Deficiency Agreement
3. Amended and Restated Pledge and Security Agreement
4. Closing Certificate
5. Opinion of Borrower's Counsel
6. UCC Financing Statements
<PAGE>
EXECUTION COPY
---------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
----------------------------
DATED AS OF OCTOBER 31, 1997
----------------------------
LENNAR CAPITAL SERVICES, INC.
AND
LENNAR MBS, INC.
BORROWERS
AND
NATIONSBANK OF TEXAS, N.A.
LENDER
---------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
SECTION 1. DEFINITIONS ............................................... 2
1.1 Defined Terms.................................................. 2
1.2 Other Definitional Provisions..................................13
SECTION 2. AMOUNT AND TERMS OF COMMITMENT...................................14
2.1 Commitment.....................................................14
2.2 Note -------...................................................14
2.3 Procedure for Borrowing........................................14
2.4 Commitment Fee; Collateral Valuation Fee.......................15
2.5 Use of Proceeds of Loans.......................................15
2.6 Termination or Reduction of Commitment.........................15
2.7 Conversion Options; Minimum Amount of Loans....................15
2.8 Maximum Number of Eurodollar Tranches..........................16
2.9 Optional Prepayments...........................................16
2.10 Mandatory Prepayments or Pledge...............................17
2.13 Lending Office................................................17
2.14 Inability to Determine Interest Rate..........................18
2.15 Payments......................................................18
2.16 Illegality....................................................18
2.17 Requirements of Law...........................................19
2.18 Indemnity.....................................................20
SECTION 3. REPRESENTATIONS AND WARRANTIES...................................21
3.1 Financial Condition............................................21
3.2 No Change......................................................22
3.3 Corporate Existence; Compliance with Law.......................22
3.4 Corporate Power; Consent; Enforceable Obligations..............22
3.5 No Legal Bar...................................................22
3.6 No Material Litigation.........................................23
3.7 No Default.....................................................23
3.8 Intellectual Property..........................................23
3.9 No Burdensome Restrictions....................................23
3.10 Taxes-.......................................................23
-i-
<PAGE>
3.11 Federal Regulations..........................................24
3.12 ERISA........................................................24
3.13 Investment Company Act; Public Utility Holding Company Act...24
3.14 Subsidiaries.................................................24
3.15 Pledge Agreement.............................................24
3.16 Accuracy and Completeness of Information.....................25
3.17 Insurance....................................................25
3.18 Solvency.....................................................25
3.19 Purpose of Loans.............................................26
3.20 Environmental Matters........................................26
SECTION 4. CONDITIONS PRECEDENT.............................................27
4.1 Conditions to Effectiveness....................................27
4.2 Conditions to Each Loan........................................29
SECTION 5. AFFIRMATIVE COVENANTS............................................30
5.1 Financial Statements...........................................30
5.2 Certificates; Other Information................................31
5.3 Payment of Obligations.........................................32
5.4 Conduct of Business and Maintenance of Existence...............33
5.5 Maintenance of Property; Insurance.............................33
5.6 Inspection of Property; Books and Records; Discussions.........33
5.7 Notices-----...................................................33
5.8 Environmental Laws.............................................35
5.9 Replacement of Acceptable Special Servicer;
Cooperation....................................................35
SECTION 6. NEGATIVE COVENANTS...............................................36
6.1 Financial Condition Covenants..................................36
6.2 Limitation on Indebtedness.....................................36
6.3 Limitation on Liens............................................37
6.4 Limitation on Guarantee Obligations............................37
6.5 Limitations of Fundamental Changes.............................37
6.6 Transactions with Affiliates..................................38
6.7 Unrelated Activities..........................................38
6.8 Limitation on Sale of Assets..................................38
SECTION 7. EVENTS OF DEFAULT ...............................................38
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<PAGE>
SECTION 8. MISCELLANEOUS..........................................41
8.2 Notices-----...................................................41
8.3 No Waiver; Cumulative Remedies.................................42
8.4 Survival of Representations and Warranties.....................42
8.5 Payment of Expenses and Taxes..................................42
8.6 Successors and Assigns; Participations; Purchasing Lenders.....43
8.7 Set-off-----...................................................45
8.8 Counterparts...................................................46
8.9 Governing Law..................................................46
8.10 Interest Rates................................................46
8.11 Submission To Jurisdiction; Waivers..........................47
8.12 Waiver Of Jury Trial.........................................48
8.13 Acknowledgments..............................................48
SCHEDULES
Schedule 1 Eligible Securities on Restatement Date
Schedule 2 Representations and Warranties with Respect to Underlying
Commercial Mortgage Loans
Schedule 3 Existing Guarantee Obligations; Material Sales and Purchases
Schedule 4 Existing Indebtedness
Schedule 5 Existing Liens
EXHIBITS
Exhibit A---------Form of Note
Exhibit B---------Form of Collateral Support Agreement
Exhibit C---------Form of Pledge Agreement
Exhibit D---------Form of Borrowing Request
Exhibit E---------Form of Legal Opinion
Exhibit F---------Form of Closing Certificate
Exhibit G---------Form of Covenant Compliance Certificate
Exhibit H---------Form of Summary of Eligible Security Key Data
Exhibit I---------Form of Notice of Amendment to Covenants
Exhibit J---------Form of Commitment Transfer Supplement
-iii-
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 31,
1997, by and among (i) LENNAR CAPITAL SERVICES, INC., a Florida corporation
(formerly known as LENNAR FINANCIAL SERVICES, INC.) ("LCS"), (ii) LENNAR MBS,
INC., a Nevada corporation ("LMBS"; LCS and LMBS, each, a "BORROWER", and
collectively, the "BORROWERS"), and (iii) NATIONSBANK OF TEXAS, N.A., a national
banking association (the "LENDER").
RECITALS
WHEREAS, the Borrowers and the Lender are parties to that
certain Credit Agreement, dated as of August 25, 1995 (the "EXISTING CREDIT
AGREEMENT"), whereunder the Lender agreed to make available to the Borrowers
revolving credit loans in an original aggregate principal amount at any one time
outstanding not to exceed $25,000,000, the proceeds of which revolving credit
loans to be used to finance the acquisition of certain commercial
mortgage-backed securities to be pledged as collateral, on the terms and subject
to the conditions set forth in the Existing Credit Agreement;
WHEREAS, in connection with certain restructuring transactions
(the "RESTRUCTURING"), to be consummated on or about the date hereof (the
"RESTRUCTURING EFFECTIVE Date"), LCS has changed its name to Lennar Capital
Services, Inc., and LNR PROPERTY CORPORATION, a Delaware Corporation (the
"Parent") shall replace LENNAR CORPORATION, a Delaware corporation ("PRIOR
PARENT") as the ultimate corporate parent of the Borrowers, and as an obligor
under the Existing Credit Agreement, a Pledge Agreement, dated as of August 25,
1995 (the "EXISTING PLEDGE AGREEMENT") and a Collateral Support and Final
Deficiency Agreement, dated as of August 25, 1995 (the "EXISTING COLLATERAL
SUPPORT AGREEMENT");
WHEREAS, Prior Parent had agreed to pay any Final Deficiency
(as hereinafter defined) that may occur and had the right to pledge Collateral
(as so defined) if a Borrowing Base Deficiency (as so defined) occurs and Lender
hereby agrees, as of the Restatement Date, to substitute the Parent for Prior
Parent under the Existing Pledge Agreement and the Existing Collateral Support
Agreement, thereby completely releasing Prior Parent of all duties and
obligations thereunder, by executing a new Collateral Support and Deficiency
Agreement and amending and restating the Existing Pledge Agreement;
WHEREAS, the Lender is willing to continue to make revolving
credit loans for the purposes specified above, but only on the terms and subject
to the conditions set forth herein; and
WHEREAS, the Borrowers and the Lender now desire to amend and
restate the Existing Credit Agreement to read in its entirety as set forth
herein, such amendment and restatement to become effective upon the date (the
"RESTATEMENT DATE") on which the Borrowers have satisfied all conditions
precedent more particularly set forth in Section 4.1
<PAGE>
(until such time the terms and conditions of the Existing Credit Agreement shall
continue in full force and effect).
NOW, THEREFORE, the Existing Credit Agreement is amended and
restated as in the recitals and as follows:
SECTION 1. DEFINITIONS
1.1. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings:
"ACCEPTABLE SPECIAL SERVICER": shall mean (a) an Affiliate of
either Borrower, reasonably acceptable to the Lender, in the business of
servicing distressed commercial or multifamily mortgage loans, or (b) any other
Person acceptable to the Lender in its sole discretion.
"AFFILIATE": any Person which directly or indirectly
controls, or is under common control with, or is controlled by, another Person.
As used in this definition, "CONTROL" (including, with 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, any
Person which owns directly or indirectly 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
"AGREEMENT": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"APPLICABLE LENDING OFFICE": for each type of Loan, the
lending office of the Lender designated for such type of Loan on the signature
page hereof (as amended from time to time in accordance with this Agreement) as
the office by which its Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN": with respect to any Eurodollar Loan, .90%
per annum, and with respect to any Federal Funds Rate Loan, 1.15% per annum;
PROVIDED, that if at any time the rating assigned to the long-term debt issued
by the Parent is eliminated or falls below its initial rating, once established,
then the Applicable Margin shall become, as of the date of any such event, with
respect to any Eurodollar Loan, 1.15% per annum, and with respect to any Federal
Funds Rate Loan, 1.40% per annum, unless such change in rating is waived by the
Lender in its sole discretion.
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"AVAILABLE COMMITMENT": at any time, an amount equal to the
amount by which the Commitment at such time EXCEEDS the unpaid principal amount
of all Loans made by the Lender at such time.
"BORROWER": as defined in the heading to this Agreement.
"BORROWING BASE": at any time, the sum of:
(a) 70% of the lesser of (i) the sum of the Market Values of
each Pledged Security that is an Eligible Security and (ii) the sum of
the Purchase Prices of each Pledged Security that is an Eligible
Security MINUS all Principal Paydowns and Realized Losses;
(b) 100% of the amount of collected funds standing to the
credit of the Cash Collateral Account (as defined in the Pledge
Agreement) and official bank checks, certified checks, and DTC drafts
held in the Cash Collateral Account; and
(c) the Collateral Value of any Other Collateral pledged to
the Lender pursuant to the Pledge Agreement.
"BORROWING BASE CERTIFICATE": the certificate, substantially
in the form of EXHIBIT D, provided by the Borrowers to the Lender pursuant to
Section 5.2(d).
"BORROWING BASE DEFICIENCY": as defined in Section 2.10.
"BORROWING DATE": any Business Day specified in a notice
pursuant to Section 2.3 as a date on which a Borrower requests the Lender to
make a Loan hereunder.
"BUSINESS DAY": any day (i) on which commercial banks in
Dallas, Texas are not authorized or required by law to close and (ii) if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, or a Conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Borrower with respect to any such borrowing, payment,
prepayment, Conversion or Interest Period, which is also a day on which dealings
in Dollar deposits are carried out in the London interbank market.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"CLOSING DATE": the date on which the Lender makes its initial
Loan.
"CODE": the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL": the property and interests in property subject
to the Lien of the Pledge Agreement.
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"COLLATERAL VALUE": as defined in the Pledge Agreement.
"COLLATERAL SUPPORT AGREEMENT": the Collateral Support and
Final Deficiency Agreement, dated as of the date hereof, between the Parent and
the Lender, substantially in the form of EXHIBIT B, as amended, supplemented or
otherwise modified from time to time.
"COMMERCIAL MORTGAGE LOAN": a mortgage loan secured by real
property and all improvements, buildings, and fixtures thereon constituting a
commercial property or a multi-family residential property and excluding, in any
event, a mortgage loan secured by a single family residential property.
"COMMITMENT": the Lender's obligation to make Loans to the
Borrowers pursuant to Section 2.1 in an aggregate amount not to exceed at any
one time outstanding $25,000,000.
"COMMITMENT PERIOD": the period from and including the date
hereof to but not including the Termination Date or such earlier date as the
Commitment shall terminate as provided herein.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with a Borrower within the meaning
of Section 4001 of ERISA.
"CONSOLIDATED INTANGIBLES": for any Person at a particular
date, all assets of the such Person and its Subsidiaries, determined on a
consolidated basis at such date, that would be classified as intangible assets
in accordance with GAAP, but in any event including, without limitation,
purchased mortgage servicing rights, excess servicing rights, unamortized debt
discount and expense, unamortized organization and reorganization expense, costs
in excess of the net asset value of acquired companies, patents, trade or
service marks, franchises, trade names, goodwill and the amount of any write-up
in the book value of any assets resulting from any revaluation (other than
revaluations arising out of foreign currency valuations in accordance with GAAP)
thereof.
"CONSOLIDATED NET INCOME": for any Person for any period, the
consolidated net income (or deficit) of such Person and its Subsidiaries for
such period (taken as a cumulative whole), determined in accordance with GAAP;
PROVIDED that there shall be excluded (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with such Person or any such Subsidiary, (b) the income (or
deficit) of any Person (other than a Subsidiary) in which such Person or any
such Subsidiary has an ownership interest, except to the extent that any such
income has been actually received by such Person or any such Subsidiary in the
form of dividends or similar distributions, (c) the undistributed earnings of
any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the
terms of any Contractual Obligation or Requirement of Law applicable to such
Subsidiary, (d) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued no
earlier than 12 months prior to
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the date on which such restoration to income occurs, (e) any aggregate net gain
(but not any aggregate net loss) during such period arising from the sale,
exchange or other disposition of capital assets (such term to include all fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed assets), (f) any write-up of any asset, (g) any net
gain from the collection of the proceeds of life insurance policies, (h) any
gain arising from the extinguishment, under GAAP, of any Indebtedness, of such
Person or any such Subsidiary, (i) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets,
and (j) any deferred credit representing the excess of equity in any such
Subsidiary at the date of acquisition over the cost of the investment in such
Subsidiary.
"CONSOLIDATED NET WORTH": for any Person at a particular date,
all amounts which would be included under shareholders' equity on a consolidated
balance sheet of such Person and its Subsidiaries determined on a consolidated
basis in accordance with GAAP as at such date.
"CONSOLIDATED TANGIBLE NET WORTH": for any Person on a
particular date, the Consolidated Net Worth of such Person, MINUS the
Consolidated Intangibles of such Person.
"CONSOLIDATED TOTAL LIABILITIES": for any Person at a
particular date, all amounts which would, in conformity with GAAP, be included
as liabilities on a consolidated balance sheet of such Person and its
Subsidiaries as at such date.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation of a Eurodollar Loan as a Eurodollar Loan from one Interest Period
to the next Interest Period.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONVERT", "CONVERSION" and "CONVERTED": shall refer to a
conversion of Loans of one Type into Loans of another Type, which may be
accompanied by the transfer by the Lender (at its sole discretion) of a Loan
from one Applicable Lending Office to another.
"CREDIT PARTIES": the collective reference to the Borrowers
and the Parent.
"DEFAULT": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"DEFAULT RATE": for any day, the rate per annum equal to rate
otherwise applicable to a Loan plus an additional 2.0%.
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"DLJ FINANCING": certain reverse repurchase agreements
pursuant to a letter agreement dated as of October 21, 1997 among DLJ Mortgage
Capital, Inc., Parent, LCS and LMBS (and other Affiliates of Borrowers).
"DOLLARS" and "$": dollars in lawful currency of the United
States of America.
"ELIGIBLE SECURITIES": securities listed on Schedule 1 hereto,
and any other securities acceptable to the Lender in its sole discretion, which
securities, having a rating of B or higher by S&P or Moody's or another
nationally recognized rating agency acceptable to the Lender, have been issued
pursuant to a pooling and servicing agreement evidencing beneficial interests in
one or more pools of Commercial Mortgage Loans serviced by an Acceptable Special
Servicer pursuant to a Special Servicing Agreement ("CMB SECURITIES") as to
which the review provided for in Section 6.01 of the Pledge Agreement has been
completed; PROVIDED that Eligible Securities shall in no event include:
(a) a CMB Security that entitles the holder to payments based
only or disproportionately on the interest portion of payments on the
underlying Commercial Mortgage Loans;
(b) a CMB Security that entitles the holder to payments based
only or disproportionately on the principal portion of payments on the
underlying Commercial Mortgage Loans;
(c) a CMB Security that is a "residual certificates" as
defined in Section 860G(a)(2) of the Internal Revenue Code of 1986, as
amended; and
(d) a CMB Security as to which
(i) the seller of the underlying Commercial Mortgage Loans
has not made representations and warranties to the issuer of
such CMB Security at least as favorable as the representations
and warranties set forth on Schedule 2 hereto or
(ii) the Lender determines in its sole discretion that
such CMB Security is no longer acceptable as an Eligible
Security.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees, requirements of any Governmental Authority or requirements of
law (including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto), dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such Governmental Authority.
"EURODOLLAR BASE RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the
rate at which the Lender is offered Dollar deposits at or about 10:00 A.M.,
Dallas, Texas time, two Business Days prior to the beginning of such Interest
Period by prime banks in the interbank eurodollar market where the eurodollar
and foreign currency and exchange operations in respect of its Eurodollar Loans
are then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of the Eurodollar Loans to be outstanding during such Interest Period.
"EURODOLLAR LOANS": Loans which bear interest at a rate based
upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum determined for
such Interest Period in accordance with the following formula (rounded upwards
to the nearest 1/100th of one percent):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar
Loans the Interest Periods with respect to all of which begin on the same date
and end on the same later date (whether or not such Loans shall originally have
been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8;
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
"FEDERAL FUNDS RATE": for any day, the weighted average of the
rates per annum on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the date of such transaction received by the Lender from three
federal funds brokers of recognized standing selected by it.
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"FEDERAL FUNDS RATE LOANS": Loans which bear interest at a
rate based on the Federal Funds Rate.
"FIRST BOSTON FINANCING": certain reverse repurchase
agreements pursuant to a letter agreement dated as of June 7, 1996 and October
20, 1997 among CS First Boston (Hong Kong) Limited, Parent, LCS and LMBS (and
other Affiliates of Borrowers).
"FIRST CHICAGO FINANCING": the Commercial Mortgage-Backed Bond
Purchase Agreement, dated as of July 19, 1995, as thereafter amended and
restated (as of October 31, 1997) and as thereafter further amended,
supplemented or otherwise modified from time to time, among LCS, LMBS, certain
Investors (the "INVESTORS"), Preferred Receivables Funding Corp. ("PRFC") and
The First National Bank of Chicago, as Agent for the Investors and PRFC.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time.
"GOVERNING DOCUMENTS": as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person.
"GOVERNMENTAL AUTHORITY": any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTEE OBLIGATION": as to any Person, a guarantee, an
endorsement, a contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become contingently liable
under or with respect to, the Indebtedness, other obligations, net worth,
working capital or earnings of any Person, or a guarantee of the payment of
dividends or other distributions upon the stock of any corporation or the
payment of distributions of a partnership, or an agreement to purchase, sell or
lease (as lessee or lessor) property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of his, her or
its obligations or an agreement to assure a creditor against loss, and including
without limitation, causing a bank to open a letter of credit for the benefit of
another Person, but excluding endorsements for collection or deposit in the
ordinary course of business. The terms "Guarantee" and "Guaranteed" used as a
verb shall have a correlative meaning. The amount of any Guarantee Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Guarantee Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"INDEBTEDNESS": of a Person, at a particular date, (a)
indebtedness created, issued or incurred by such Person for borrowed money
(whether by loan or the issuance and sale of debt securities); (b) obligations
of such Person to pay the deferred purchase or acquisition price of property or
services, other than accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business so long as
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such accounts are payable within 90 days of the date the respective goods are
delivered or respective services rendered; (c) Indebtedness of others secured by
a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) all Guarantee
Obligations of such Person; and (e) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for the account of such Person.
"INITIAL LOANS": as defined in Section 4.1.
"INSOLVENT": at any time, a Multiemployer Plan is insolvent
within the meaning of Section 4245 of ERISA.
"INTEREST PAYMENT DATE": (a) as to any Federal Funds Rate
Loan, the last day of each calendar month during which such Loan is outstanding,
and (b) as to any Eurodollar Loan, the last day of the applicable Interest
Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing
or Conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one month, two months or three months thereafter, as
selected by the Borrower in its notice of borrowing as provided in
Section 2.3 or its notice of Conversion, as the case may be, given with
respect thereto; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one month, two months or three months thereafter, as
selected by the Borrower by irrevocable notice to the Lender not less
than two Business Days prior to the last day of the then current
Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) subject to the preceding subparagraph (i), any
Interest Period that would otherwise extend beyond the Termination Date
shall end on the Termination Date;
(iii) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no
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numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar
month; and
(iv) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of principal of any Eurodollar
Loan during an Interest Period for such Loan.
"LENDER": as defined in the heading to this Agreement.
"LIEN": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing), and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing.
"LOAN" and "LOANS": the collective references to Eurodollar
Loans and Federal Funds Rate Loans.
"LOAN DOCUMENTS": the collective reference to this Agreement,
the Note, the Pledge Agreement and the Collateral Support Agreement.
"MARKET VALUE": as defined in the Pledge Agreement.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a)
the business, operations, property or condition (financial or otherwise) or
prospects of a Credit Party or a Credit Party and its Subsidiaries, if any,
taken as a whole, (b) the validity or enforceability of, or the ability of a
Credit Party to perform its obligations under, this Agreement or any other Loan
Document to which it is a party, or the rights or remedies of the Lender
hereunder or thereunder, (c) the rights and remedies of the Lender under any of
the Loan Documents, (d) the timely payment of the principal of or interest on
the Loans or (e) the Collateral.
"MATERIALS OF ENVIRONMENTAL CONCERN": any petroleum (including
crude oil or any fraction thereof) or petroleum products (including, without
limitation, gasoline) or any hazardous or toxic substances, materials or wastes,
defined as such in or regulated under any Environmental Law, including, without
limitation, asbestos, polychlorinated biphenyls, and urea-formaldehyde
insulation.
"MOODY'S": Moody's Investors Service, Inc., or any successor
thereto.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NOTE": as defined in Section 2.2.
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"OBLIGATIONS": means the unpaid principal amount of, and
interest (including, without limitation, interest accruing after the maturity of
the Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, or like proceeding, relating to either
Borrower, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on, the Note, and all other obligations and
liabilities of the Credit Parties to the Lender, whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement,
the Note or any other Loan Document and any other document made, delivered or
given in connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to the
Lender that are required to be paid by the Borrowers pursuant to the terms of
the Loan Documents) or otherwise.
"OTHER COLLATERAL": as defined in the Pledge Agreement.
"PARENT": as defined in the Recitals hereto.
"PARENT CREDIT AGREEMENT": the Revolving Credit Agreement
contemplated to be entered into by the Parent and a certain lender or lenders,
as hereafter amended, supplemented or otherwise modified from time to time, or
any replacement therefor or refinancing thereof, whether or not any such
replacement or refinancing becomes effective immediately upon the termination of
the Parent Credit Agreement, for the purpose of providing for, among other
things, general working capital requirements of the Parent.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, business
trust, joint stock company, trust, voluntary association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLAN": at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENT": the Amended and Restated Pledge and
Security Agreement, dated as of the date hereof, made by the Borrowers in favor
of the Lender, substantially in the form of EXHIBIT C, as amended, supplemented
or otherwise modified from time to time.
"PLEDGED SECURITIES": as defined in the Pledge Agreement.
"PRINCIPAL PAYDOWNS": for any Eligible Security, all
distributions in respect thereof representing payment of amortized principal on
the underlying mortgage loans.
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"PRIOR PARENT": Lennar Corporation, a Delaware corporation.
"PROCEEDS": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code and, in any event, shall include,
without limitation, all debt-service payments or other income from the Pledged
Securities or other securities constituting Collateral, collections thereon or
distributions with respect thereto.
"PURCHASE PRICE": for any Eligible Security, the price in
Dollars at which the applicable Borrower acquired such Eligible Security.
"REALIZED LOSSES": for any Eligible Security, all writedowns
to the principal balance thereof as a result of losses allocated to such
Eligible Security.
"REGISTRATION STATEMENT": the General Form for Registration of
Securities filed with the Securities and Exchange Commission pursuant to Section
12(b) of the Securities Exchange Act of 1934 in connection with the registration
of the securities of the Parent and the Information Statement filed in
connection therewith.
"REORGANIZATION": at any time, a Multiemployer Plan is in
reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than those events as to
which the thirty day notice period is waived under subsections .13, .14, .17,
.18, .19 or .20 of PBGC Reg. ss. 2615.
"REQUIREMENT OF LAW": as to any Person, the Governing
Documents of such Person, if applicable, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESTATEMENT DATE": shall have the meaning assigned to that
term in the recitals to this Agreement.
"RESTRUCTURING": the transactions in which: (i) there is a
distribution to the shareholders of Prior Parent of all of the capital stock of
the Parent, and (ii) Prior Parent distributes to the Parent the Subsidiaries of
Prior Parent's which have been engaged in its real estate investment and
management business, as well as some assets of other Subsidiaries which were
used in that business and certain other assets, all as more particularly set
forth in the Registration Statement.
"RESTRUCTURING EFFECTIVE DATE" the date and time upon which
the restructuring is completed.
"S&P": Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or any successor thereto.
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"SEC": the Securities and Exchange Commission.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"SPECIAL SERVICING AGREEMENT": an agreement pursuant to which
an Acceptable Special Servicer services Commercial Mortgage Loans underlying a
Pledged Security that are in default or have been identified as otherwise
requiring special attention or administration, as amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY": as to any Person, a corporation of which shares
of stock having ordinary voting power (other than stock having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.
"TERMINATION DATE": August 28, 1998.
"TYPE": as to any Loan, its nature as a Eurodollar Loan or a
Federal Funds Rate Loan.
"UNIFORM COMMERCIAL CODE": as defined in the Pledge Agreement.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Note or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Note, and any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
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SECTION 2. AMOUNT AND TERMS OF COMMITMENT
2.1 COMMITMENT.
(a) Subject to the terms and conditions hereof, the Lender
agrees to make revolving credit loans (individually, a "LOAN"; collectively, the
"LOANS") to the Borrowers from time to time during the Commitment Period in an
aggregate principal amount at any one time outstanding not to exceed, at the
time of the making of such Loan, the lesser of (i) the Borrowing Base at such
time, and (ii) the Available Commitment at such time. During the Commitment
Period, the Borrowers may use the Commitment by borrowing, prepaying the Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Loans may be (i) Eurodollar Loans, (ii) Federal Funds
Rate Loans, or (iii) a combination thereof, as determined by the Borrower and
notified to the Lender in accordance with Section 2.3; PROVIDED, that no
Eurodollar Loan shall be made (x) when any Default or Event of Default has
occurred and is continuing or (y) after the day that is one month prior to the
Termination Date.
2.2 NOTE. The Loans made by the Lender shall be evidenced by a
single amended and restated promissory note of the Borrowers, substantially in
the form of EXHIBIT A (the "NOTE"), payable to the order of the Lender and
evidencing the joint and several obligation of the Borrowers to pay a principal
amount equal to the lesser of (a) the amount of the Commitment and (b) the
aggregate unpaid principal amount of all Loans made by the Lender. The Lender is
hereby authorized to record the date, Type and amount of each Loan made or
Converted by the Lender, the date and amount of each payment or prepayment of
principal thereof, and, in the case of Eurodollar Loans, the Interest Period
with respect thereto, on the schedule annexed to and constituting a part of the
Note, and any such recordation shall, absent manifest error, constitute PRIMA
FACIE evidence of the accuracy of the information so recorded. The Note shall
(x) be dated the Closing Date, (y) be stated to mature on the Termination Date
and (z) bear interest on the unpaid principal amount thereof from time to time
outstanding at the applicable interest rate per annum determined as provided in
Section 2.11. Interest on the Note shall be payable on the dates specified in
Section 2.11.
2.3 PROCEDURE FOR BORROWING. The Borrowers may borrow under
the Commitment during the Commitment Period on any Business Day in an aggregate
principal amount at any one time outstanding up to but not exceeding the lesser
of (a) the Available Commitment then in effect and (b) the Borrowing Base then
in effect; PROVIDED that the Borrower shall give the Lender irrevocable notice
substantially in the form of EXHIBIT E hereto (which notice must be received by
the Lender prior to 10:00 A.M., Dallas, Texas time) (a) two Business Days prior
to the requested Borrowing Date, if all or any part of the requested Loans are
to be Eurodollar Loans, or (b) on the requested Borrowing Date, in the case of
Federal Funds Rate Loans, specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, Federal Funds Rate Loans or a combination thereof, and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans,
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the amount of such Eurodollar Loans and the length of the Interest Period
therefor. Each borrowing pursuant to the Commitment shall be in an aggregate
principal amount equal to $500,000 or a whole multiple of $100,000 in excess
thereof (or, if the then Available Commitment is less than $100,000, such lesser
amount). Such borrowing will then be made available to the Borrower in
immediately available funds by the Lender crediting the account of the Borrower
on the books of the Lender in its office as set forth in Section 8.2, or by wire
transfer of such funds to another account designated in writing by the Borrower.
2.4 COMMITMENT FEE; COLLATERAL VALUATION FEE. The Borrowers
agree to pay to the Lender:
(a) a commitment fee from and including the first day of
the Commitment Period to the Termination Date, computed at the rate of 3/20 of
1% per annum on the average daily amount of the Available Commitment during the
period for which payment is made, payable quarterly in arrears on the last day
of each October, January, April and July, commencing on October 31, 1997, and on
the Termination Date or such earlier date as the Commitment shall terminate as
provided herein; and
(b) a collateral valuation fee of $10,000 per annum,
payable quarterly in arrears on the last day of each October, January, April and
July, commencing on January 31, 1998, and on the Termination Date or such
earlier date as the Commitment shall terminate as provided herein.
2.5 USE OF PROCEEDS OF LOANS. The Loans shall be used (a) by
LCS to purchase Eligible Securities to be held by LCS or to be contributed to
LMBS, and (b) by LMBS to purchase Eligible Securities to be held by LMBS.
2.6 TERMINATION OR REDUCTION OF COMMITMENT. The Borrowers
shall have the right, upon not less than five Business Days' notice to the
Lender, to terminate the Commitment or, from time to time, to reduce the amount
of the Commitment; PROVIDED, that no such termination or reduction shall be
permitted if, after giving effect thereto and to any prepayments of the Loans
made on the effective date thereof, the then outstanding principal amount of the
Loans would exceed the amount of the Commitment then in effect. Any such
reduction shall be in an amount of $500,000, or a whole multiple of $100,000 in
excess thereof, and shall reduce permanently the amount of the Commitment then
in effect.
2.7 CONVERSION OPTIONS; MINIMUM AMOUNT OF LOANS.
(a) The Borrower may elect from time to time to Convert
Eurodollar Loans to Federal Funds Rate Loans, by giving the Lender prior
irrevocable notice of such election notice (which notice must be received by the
Lender prior to 10:00 A.M., Dallas, Texas time) on the date of such borrowing;
PROVIDED, that any such Conversion of Eurodollar Loans shall only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to Convert Federal Funds Rate Loans to Eurodollar Loans by giving
the Lender at least two Business Days' prior irrevocable notice of such
election. Any such
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notice of Conversion to Eurodollar Loans shall specify the length of the initial
Interest Period or Interest Periods therefor. All or any part of outstanding
Eurodollar Loans, and Federal Funds Rate Loans may be Converted as provided
herein; PROVIDED, that (x) no Loan may be Converted into a Eurodollar Loan when
any Default or Event of Default has occurred and is continuing, (y) any such
Conversion may only be made if, after giving effect thereto, Section 2.8 shall
not have been contravened and (z) no Loan may be Converted into a Eurodollar
Loan after the date that is one month prior to the Termination Date.
(b) Any Eurodollar Loans may be Continued as such upon the
expiration of an Interest Period with respect thereto by the Borrower giving
notice to the Lender, in accordance with the provisions of the term "Interest
Period" set forth in Section 1.1, of the length of the next Interest Period to
be applicable to such Loans; PROVIDED, that no Eurodollar Loan may be Continued
as such (i) when any Default or Event of Default has occurred and is continuing,
(ii) if after giving effect thereto, Section 2.8 would be contravened or (iii)
after the date that is one month prior to the Termination Date; and PROVIDED
FURTHER, that if the Borrower shall fail to give any required notice as
described above in this paragraph or if such Continuation is not permitted
pursuant to the preceding proviso, such Loans shall be automatically Converted
to Federal Funds Rate Loans on the last day of the then expiring Interest Period
with respect thereto.
2.8 MAXIMUM NUMBER OF EURODOLLAR TRANCHES. All borrowings,
Conversions and Continuations and all selections of Interest Periods hereunder
shall be made pursuant to such elections so that, after giving effect thereto,
no more than six Eurodollar Tranches shall be in effect at any one time.
2.9 OPTIONAL PREPAYMENTS. The Borrowers may on the last day of
any Interest Period with respect thereto, in the case of Eurodollar Loans, or at
any time and from time to time in the case of Federal Funds Rate Loans, prepay
the Loans, in whole or in part, without premium or penalty, upon at least two
Business Days' irrevocable notice to the Lender, if all or any part of the Loans
to be prepaid are Eurodollar Loans, and same Business Day's irrevocable notice
(which notice must be received by the Lender prior to 10:00 A.M., Dallas, Texas
time) to the Lender otherwise, specifying the date and amount of prepayment and
whether the prepayment is of Eurodollar Loans, Federal Funds Rate Loans, or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. If such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein, together with accrued interest to
such date on the amount prepaid. Partial prepayments shall be in an aggregate
principal amount of $500,000, or a whole multiple of $100,000 in excess,
thereof, and may only be made if, after giving effect thereto, Section 2.8 shall
not have been contravened.
2.10 MANDATORY PREPAYMENTS OR PLEDGE. If at any time the
aggregate outstanding principal amount of Loans exceeds the Borrowing Base (a
"BORROWING BASE DEFICIENCY"), as determined by the Lender and notified to the
Borrowers and the Parent on any Business Day, the Borrowers shall no later than
one Business Day after receipt of such notice,
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either prepay the Loans in part or in whole or pledge additional Collateral
(which Collateral shall be in form and value acceptable to the Lender) to the
Lender, such that after giving effect to such prepayment or pledge the aggregate
outstanding principal amount of the Loans is less than or equal to the Borrowing
Base. Subject to Section 2.18, in the case of prepayments hereunder, payments
shall be applied, at the Borrower's option, to the Type of Loan specified at the
time of such prepayment by the Borrower.
2.11 INTEREST RATE AND PAYMENT DATES.
(a) Each Eurodollar Loan shall bear interest for each day
during each Interest Period with respect thereto at a rate per annum equal to
the Eurodollar Rate determined for such day plus the Applicable Margin.
(b) Each Federal Funds Rate Loan shall bear interest at a rate
equal to the Federal Funds Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any of
the Loans or (ii) the interest payable thereon shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise) such overdue
amount shall bear interest at a rate per annum at the Default Rate from the date
of such non-payment until paid in full (both before and after judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date; PROVIDED that interest accruing pursuant to the preceding Section
2.11(d) shall be payable on demand.
2.12 COMPUTATION OF INTEREST AND FEES.
(a) Commitment fees and interest on Loans shall be calculated
on the basis of a 360-day year for the actual days elapsed. The Lender shall as
soon as practicable notify the Borrower of each determination of a Eurodollar
Rate. Any change in the interest rate on a Loan resulting from a change in the
Federal Funds Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change in the
Federal Funds Rate is announced, or such change in the Eurocurrency Reserve
Requirements shall become effective. The Lender shall as soon as practicable
notify the Borrower of the effective date and the amount of each such change.
(b) Each determination of an interest rate by the Lender
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower in the absence of manifest error. The Lender shall, at the request
of the Borrower, deliver to the Borrower a statement showing the quotations used
by the Lender in determining any interest rate pursuant to Section 2.11(a).
2.13 LENDING OFFICE. Loans of each Type made by the Lender
shall be made and maintained at the Lender's Applicable Lending Office for Loans
of such Type.
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2.14 INABILITY TO DETERMINE INTEREST RATE. In the event that
prior to the first day of any Interest Period:
(i) the Lender shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such requested Interest Period; or
(ii) the Lender shall have determined (which
determination shall be conclusive and binding on the Borrowers) that
the interest rate determined pursuant to Section 2.11(a) for such
Interest Period does not accurately reflect the cost to the Lender (as
conclusively certified by the Lender) of making or maintaining its
affected Loans during such Interest Period,
the Lender shall forthwith give telecopy or telephonic notice of such
determination to the Borrowers as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Federal Funds Rate Loans, (y) any Federal Funds
Rate Loans that were to have been Converted on the first day of such Interest
Period to Eurodollar Loans shall be Continued as Federal Funds Rate Loans and
(z) any outstanding Eurodollar Loans that were to have been Continued as
Eurodollar Loans on the first day of such Interest Period shall be Converted, on
the first day of such Interest Period, to Federal Funds Rate Loans. Until such
notice has been withdrawn by the Lender, no further Eurodollar Loans shall be
made, nor shall the Borrower have the right to convert Federal Funds Rate Loans
to Eurodollar Loans.
2.15 PAYMENTS. All payments (including prepayments) to be made
by the Borrower hereunder and under the Note, whether on account of principal,
interest, fees, reimbursement obligations or otherwise, shall be made without
set-off or counterclaim and shall be made to the Lender's office set forth in
Section 8.2, in lawful money of the United States of America and in immediately
available funds. If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
2.16 ILLEGALITY. Notwithstanding any other provisions herein,
if any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for the Lender to make or maintain Eurodollar
Loans as contemplated by this Agreement, the Lender shall promptly notify the
Borrower thereof and (a) the commitment of the Lender hereunder to make
Eurodollar Loans, Continue Eurodollar Loans as such or Convert Federal Funds
Rate Loans to Eurodollar Loans shall forthwith be suspended until such time as
the Lender may again make and maintain Eurodollar Loans and (b) the Lender's
Loans then
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outstanding as Eurodollar Loans, if any, shall be Converted automatically to
Federal Funds Rate Loans on the respective last day of then current Interest
Periods with respect to such Loans or within such earlier period as is required
by law. If any such Conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 2.18.
2.17 REQUIREMENTS OF LAW.
(a) In the event that any change in any Requirement of Law or
in the interpretation or application thereof or compliance by the Lender with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind
whatsoever with respect to this Agreement, the Note or any Eurodollar
Loans made by it, or change the basis of taxation of payments to the
Lender in respect thereof (except for changes in the rate of tax on the
overall net income of the Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of the Lender which are not
otherwise included in the determination of the Eurodollar Rate; or
(iii) shall impose on the Lender any other related
condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
any amount which the Lender reasonably deems to be material, of making,
Converting into, Continuing or maintaining Eurodollar Loans or to reduce any
amount receivable hereunder in respect of such Eurodollar Loans then, in any
such case, the Borrowers shall pay to the Lender, promptly after the Borrowers'
receipt of notice given in accordance with paragraph (c), below, any additional
amounts necessary to compensate the Lender for such additional cost or reduced
amount receivable.
(b) In the event that the Lender shall have determined that
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on the Lender's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which the Lender or such corporation could have achieved but for such change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount reasonably deemed by the
Lender to be material, then from time to time, the Borrowers shall
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pay to the Lender, promptly after the Borrowers' receipt of notice given in
accordance with paragraph (c) below, such additional amount or amounts as will
compensate the Lender for such reduction.
(c) The Lender shall notify the Borrowers of any event
occurring after the date of this Agreement entitling the Lender to compensation
under paragraph (a) or (b) of this Section 2.17 as promptly as practicable. The
Lender will designate a different Applicable Lending Office for the Loans
affected by such event if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the sole opinion of the
Lender, be disadvantageous to the Lender. The Lender will furnish to the
Borrowers a certificate setting forth the basis and amount (including
calculations of any such amount in reasonable detail) of each request by the
Lender for compensation under paragraph (a) or (b) of this Section 2.17.
Determinations and allocations by the Lender for purposes of this Section 2.17
of the effect of any change in any Requirement of Law pursuant to paragraph (a)
of this Section 2.17, or of the effect of capital maintained pursuant to
paragraph (b) of this Section 2.17, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable by
it in respect of Loans, and of the amounts required to compensate the Lender
under this Section 2.17, shall be conclusive, absent manifest error; PROVIDED
that such determinations and allocations are made on a reasonable basis.
(d) This Section 2.17 shall survive the termination of this
Agreement and payment of the Note.
2.18 INDEMNITY. Each Borrower jointly and severally agrees to
indemnify the Lender and to hold the Lender harmless from any loss or expense
which the Lender may sustain or incur as a consequence of (a) default by either
Borrower in payment when due of the principal amount of or interest on any
Eurodollar Loans, (b) default by either Borrower in making a borrowing or
Conversion after such Borrower has given a notice of borrowing in accordance
with Section 2.3 or a notice of Conversion pursuant to Section 2.7, (c) default
by either Borrower in making any prepayment after such Borrower has given a
notice in accordance with Section 2.9 or a prepayment of a Eurodollar Loan on a
day which is not the last day of an Interest Period with respect thereto,
including, without limitation, in each case, any such loss or expense arising
from the reemployment of funds obtained by it to maintain its Eurodollar Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained. This Section 2.18 shall survive termination of this Agreement and
payment of the Note.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and
to make the Loans herein provided for, each Borrower hereby represents and
warrants to the Lender that:
3.1 FINANCIAL CONDITION.
(a) The unaudited consolidated balance sheet of LCS and its
consolidated Subsidiaries as at May 31, 1997 and the related consolidated
statements of income for the fiscal year ended on such date, reported on by a
Responsible Officer, copies of which have heretofore been furnished to the
Lender, are complete and correct and present fairly the consolidated financial
condition of LCS and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations for the fiscal year then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or Responsible Officer,
as the case may be, and as disclosed therein).
(b) The unaudited combined balance sheet of the Parent and its
consolidated Subsidiaries as at November 30, 1996 and the related combined
statements of income, operations, retained earnings and cash flows for the
fiscal year ended on such date and its financial statements of income and
operations for the six-month period ended May 31, 1997, reported on by a
Responsible Officer, all in the form as set forth in the Registration Statement,
which have been prepared to reflect the Parent and its Subsidiaries as a
separate combined group for such period, and have been extracted from the
financial statements of Prior Parent using Prior Parent's historical results of
operation and historical results of operation and historical cost basis of its
assets and liabilities which are used in the businesses being operated by the
Parent and its Subsidiaries; copies of which have heretofore been furnished to
the Lender, are complete and correct and present fairly the consolidated
financial condition of the Parent and its consolidated Subsidiaries as at such
date, and the consolidated results of their operations and their consolidated
cash flows for the fiscal year then ended. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by a Responsible Officer, as the case may be, and as
disclosed therein).
(c) Except as fully reflected in the financial statements
referred to in Sections 3.1(a) and (b) or in Schedule 3, as of the Restructuring
Effective Date, there are no liabilities or obligations with respect to Borrower
of any nature whatsoever (whether absolute, accrued, contingent or otherwise and
whether or not due) which, either individually or in aggregate, are material to
Borrower. Except as set forth in Schedule 3, as of the Effective Date, the
Borrower knows of no basis for the assertion against the Borrower of any
liability or obligation of any nature whatsoever that is not fully reflected in
the financial statements referred to in Sections 3.1(a) or (b) which, either
individually or in the aggregate, could be expected to have a Material Adverse
Effect.
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3.2 NO CHANGE. Since May 31, 1997, there has been no
development or event nor any prospective development or event, which has had or
could reasonably be expected to have a Material Adverse Effect, excluding
structural, but not financial changes, which may occur in connection with the
Restructuring.
3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the
Credit Parties (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is in compliance in all material respects with all
Requirements of Law, and (d) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except, with respect to the preceding clause (d), to the extent that the failure
to be so qualified and in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 CORPORATE POWER; CONSENT; ENFORCEABLE OBLIGATIONS.
(a) Each Credit Party has the corporate power and authority
and the legal right to make, deliver and perform the Loan Documents to which it
is a party, in the case of each Borrower to borrow hereunder, and to grant Liens
pursuant to the Pledge Agreement and has taken all necessary corporate action to
authorize, in the case of each Borrower the borrowings on the terms and
conditions of this Agreement and the Note, the granting of Liens pursuant to the
Pledge Agreement and the execution, delivery and performance of the Loan
Documents to which it is a party.
(b) No consent or authorization of, filing with or other act
by or in respect of any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Loan Documents to which a Credit
Party is a party, except for consents, authorizations and filings which have
been obtained or made, as the case may be, and are in full force and effect.
(c) Each Loan Document to which a Credit Party is a party has
been duly executed and delivered on behalf of such Credit Party, and each such
Loan Document constitutes the legal, valid and binding obligation of the Credit
Party thereto, enforceable against such Credit Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 NO LEGAL BAR. The execution, delivery and performance by
each Credit Party of the Loan Documents to which it is a party will not violate
any Requirement of Law or any Contractual Obligation of such Credit Party and
will not result in, or require, the creation or imposition of any Lien on any of
its or their respective properties or revenues pursuant to
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any such Requirement of Law or Contractual Obligation (other than the Liens
created by the Pledge Agreement in favor of the Lender).
3.6 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of each Borrower, threatened by or against any Credit
Party or against any of its respective properties or revenues (a) with respect
to this Agreement, the Notes or the other Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Material Adverse Effect.
3.7 NO DEFAULT. No Credit Party is in default under or with
respect to any Contractual Obligation in any respect which could reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.8 INTELLECTUAL PROPERTY. Each Credit Party owns, or is
licensed to use, all trademarks, tradenames, copyrights, technology, know-how
and processes ("INTELLECTUAL PROPERTY") believed to be necessary for the conduct
of its business as currently conducted except for such Intellectual Property the
failure to own or license which could not reasonably be expected to have a
Material Adverse Effect. As of the Restatement Date, no claim is pending, or to
the best knowledge of each Borrower has been asserted, by any Person challenging
or questioning the use of any the Intellectual Property or the validity or
effectiveness of any valid basis for any such claim. After the Restatement Date,
no claim is pending or has been asserted by any Person challenging or
questioning the use of any the Intellectual Property or the validity or
effectiveness of any valid basis for any such claim which, if such claim were
adversely determined, could reasonably be expected to have a Material Adverse
Effect. The use by a Credit Party of the Intellectual Property does not infringe
on the valid intellectual property rights of any Person, except for such claims
and infringements that, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
3.9 NO BURDENSOME RESTRICTIONS. No Contractual Obligation of a
Credit Party and no Requirement of Law applicable to a Credit Party could
reasonably be expected to have a Material Adverse Effect.
3.10 TAXES. Each Credit Party has filed or caused to be filed
all tax returns which are required to be filed and has paid all taxes shown to
be due and payable on said returns or on any assessments made against it or any
of its property and all other taxes, fees or other charges imposed on it or any
of its property by any Governmental Authority (other than those the amount or
validity of which is currently being contested in good faith by appropriate
proceedings, with respect to which reserves in conformity with GAAP have been
provided on the books of such Credit Party, and which, if such contest were
adversely determined, could not reasonably be expected to have a Material
Adverse Effect); and no tax liens have been filed and, to the best knowledge of
each Borrower, no claims are being asserted with respect to any such taxes, fees
or other charges.
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3.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans
hereunder will be used for "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
hereafter in effect or for any purpose which violates, or which would be
inconsistent with, the provisions of the Regulations of such Board of Governors.
If requested by the Lender, each Borrower will furnish to the Lender a statement
to the foregoing effect in conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation U.
3.12 ERISA. No Reportable Event has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. The present value
of all benefits vested under each Single Employer Plan maintained by each Credit
Party or any Commonly Controlled Entity (based on the current liability interest
rate and other assumption used in preparation of the Plan's Form 4400 Annual
Report) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits. No Credit Party nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and no Credit Party nor any Commonly Controlled Entity would
become subject to any liability under ERISA if such Credit Party or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which such
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent. There are no material liabilities of any Credit
Party or any Commonly Controlled Entity for post-retirement benefits to be
provided to their current and former employees under Plans which are welfare
benefit plans (as described in Section 3(1) of ERISA).
3.13 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither Borrower is (a) an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended or (b) a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
3.14 SUBSIDIARIES. As of the Restatement Date:
(a) LCS is a wholly-owned Subsidiary of the Parent;
(b) LMBS is a wholly-owned Subsidiary of LCS; and
(c) LMBS has no Subsidiaries.
3.15 PLEDGE AGREEMENT.
(a) The provisions of the Pledge Agreement are effective to
create in favor of the Lender for the ratable benefit of the Lender and the
Issuer, a legal, valid and enforceable
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security interest in all right, title and interest of the Borrower party thereto
in the "Collateral" described therein.
(b) When certificates representing the Pledged Securities that
are certificated securities (as defined in the Uniform Commercial Code) are
delivered to the Lender, together with bond powers endorsed in blank by a duly
authorized officer of the applicable Borrower, and when the other actions
specified in Section 3(b) are taken the Pledge Agreement shall constitute a
fully perfected first lien on, and security interest in, all right, title and
interest the Borrowers in the "Collateral" described therein.
3.16 ACCURACY AND COMPLETENESS OF INFORMATION.
(a) All factual information, reports and other papers and data
with respect to the Credit Parties (other than projections) furnished, and all
factual statements and representations made, to the Lender by a Borrower, or on
behalf of a Borrower, were, at the time the same were so furnished or made, when
taken together with all such other factual information, reports and other papers
and data previously so furnished and all such other factual statements and
representations previously so made, complete and correct in all material
respects, to the extent necessary to give the Lender true and accurate knowledge
of the subject matter thereof in all material respects, and did not, as of the
date so furnished or made, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances in which the same
were made.
(b) All projections with respect to the Credit Parties
furnished by or on behalf of a Borrower to the Lender were prepared and
presented in good faith by or on behalf of such Borrower. No fact is known to a
Borrower which materially and adversely affects or in the future is reasonably
likely (so far as such Borrower can reasonably foresee) to have a Material
Adverse Effect which has not been set forth in the financial statements referred
to in Section 3.1 or in such information, reports, papers and data or otherwise
disclosed in writing to the Lender prior to the Restatement Date.
3.17 INSURANCE. Each Borrower has, with respect to its
properties and business, insurance meeting the requirements of Section 5.5.
3.18 SOLVENCY. On the Restatement Date, after giving effect to
the incurrence of all indebtedness and obligations being incurred on or prior to
such date in connection herewith, (i) the amount of the "present fair saleable
value" of the assets of each Borrower will, as of such date, exceed the amount
of all "liabilities of such Borrower, contingent or otherwise", as of such date,
as such quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors, (ii) the
present fair saleable value of the assets of such Borrower will, as of such
date, be greater than the amount that will be required to pay such Borrower's
liability on its debts as such debts become absolute and matured, (iii) no
Borrower will have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (iv) any Borrower will be able to pay
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its debts as they mature. For purposes of this Section 3.19, "debt" means
"liability on a claim", "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
3.19 PURPOSE OF LOANS. The proceeds of the Loans shall be used
by the Borrowers for the purpose set forth in Section 2.5.
3.20 ENVIRONMENTAL MATTERS. Except insofar as there is no
reasonable likelihood of a Material Adverse Effect arising from any combination
of facts or circumstances inconsistent with any of the following:
(a) No properties owned or leased by a Credit Party or any of
its Subsidiaries and, to the knowledge of each of the Borrowers and each of its
Subsidiaries, no properties formerly owned or leased by a Credit Party, its
predecessors, or any former subsidiaries or predecessors thereof and no
properties subject to a Commercial Mortgage Loan underlying Pledged Security
(the "PROPERTIES"), contain, or have previously contained, any Materials of
Environmental Concern in amounts or concentrations which constitute or
constituted a violation of, or reasonably could be expected to give rise to
liability under, Environmental Laws.
(b) Each of the Credit Parties and its Subsidiaries is in
compliance, and has in the last five years been in compliance, with all
applicable Environmental Laws, and there is no violation of any Environmental
Laws which reasonably could be expected to interfere with the continued
operations of such Credit Party or such Subsidiaries.
(c) None of the Credit Parties nor any of their Subsidiaries
has received any notice of violation, alleged violation, non-compliance,
liability or potential liability under any Environmental Law, nor do any of the
Credit Parties or any of their Subsidiaries have knowledge that any such notice
will be received or is being threatened.
(d) Materials of Environmental Concern have not been (i)
transported or disposed by any of the Credit Parties or any of their
Subsidiaries in violation of, or in a manner or to a location which reasonably
could be expected to give rise to liability under, any applicable Environmental
Law, nor (ii) has any of them generated, treated, stored or disposed of at, on
or under any of the Properties in violation of, or in a manner that reasonably
could be expected to give rise to liability under, any applicable Environmental
Law.
(e) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of each of the Credit Parties and each
of their Subsidiaries, threatened, under any Environmental Law which any of the
Credit Parties or any of their Subsidiaries is or will be named as a party, nor
are there any consent decrees or other decrees,
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consent orders, administrative orders or other orders, or other administrative
or judicial requirements arising out of judicial proceedings or governmental or
administrative actions, outstanding under any Environmental Law to which any of
them is a party.
(f) There has been no release or, to the best knowledge of any
Borrower, threat of release of Materials of Environmental Concern in violation
of or in amounts or in a manner that reasonably could be expected to give rise
to liability under any Environmental Law for which any of the Credit Parties or
any of the Subsidiaries may become liable.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO EFFECTIVENESS. The amendment and restatement
to the Existing Credit Agreement embodied in this Agreement shall become
effective upon the satisfaction of the following conditions precedent:
(a) RESTRUCTURING. The Restructuring shall have been
completed, and the Lender shall have received evidence of the satisfactory
completion of the Restructuring in form and substance satisfactory to the Lender
and its counsel, as follows:
(i) the legal opinion of Rubin, Baum, Levin,
Constant, Friedman & Bilzin, counsel to the Credit Parties, attesting that the
Restructuring has been consummated in accordance with the Separation and
Distribution Agreement, in rendering its opinion such counsel may rely on the
opinion of Rogers & Wells given for such purposes;
(ii) the certificate of a Responsible Officer that
the Restructuring has been consummated and that the financial and equity
condition of the Parent, as of the Restatement Date, is substantially the same
as that stated in the Registration Statement and its corresponding Form 10
relating to the Prior Parent which has been provided to Lender.
(b) LOAN DOCUMENTS. The Lender shall have received:
(i) this Agreement, executed and delivered by a duly
authorized officer of each Borrower;
(ii) the Note, conforming to the requirements hereof
and executed and delivered by a duly authorized officer of
each Borrower;
(iii) the Pledge Agreement, executed and delivered by
a duly authorized officer of each Credit Party and Prior
Parent, together with (A) certificates representing all of the
Pledged Securities pledged on the Restatement Date, (B) an
undated bond power for each such certificate, endorsed in
blank by a duly authorized officer of the applicable Borrower,
and (C) for all certificates pledged prior to the Restatement
Date under the Existing Credit Agreement, a replacement
undated bond power for each such certificate, endorsed in
blank by a duly authorized officer of the applicable Borrower;
and
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(iv) the Collateral Support Agreement, executed and
delivered by a duly authorized officer of the Parent.
(c) LEGAL OPINION. The Lender shall have received the
executed legal opinion of of Rubin, Baum, Levin, Constant, Friedman &
Bilzin, counsel to the Credit Parties, substantially in the form of
EXHIBIT F, with such changes therein as shall be requested or approved
by the Lender.
(d) CLOSING CERTIFICATE. The Lender shall have
received a Closing Certificate of the Credit Parties, dated the
Restatement Date, substantially in the form of EXHIBIT G, with
appropriate insertions, satisfactory in form and substance to the
Lender and its counsel, executed by a Responsible Officer and the
Secretary or Assistant Secretary of each of the Credit Parties.
(e) GOVERNING DOCUMENTS. The Lender shall have
received true and complete copies of the Governing Documents of each
Credit Party, certified as of the Restatement Date as true, complete
and correct copies thereof by the Secretary or an Assistant Secretary
of such Credit Party.
(f) GOOD STANDING CERTIFICATES. The Lender shall have
received copies of certificates dated as of a recent date from the
Secretary of State or other appropriate authority of such jurisdiction,
evidencing the good standing of each Credit Party in each State where
the ownership, lease or operation of property or the conduct of
business requires it to qualify as a foreign corporation except where
the failure to so qualify would not have a Material Adverse Effect.
(g) CORPORATE PROCEEDINGS OF CREDIT PARTIES. The
Lender shall have received a copy, in form and substance reasonably
satisfactory to the Lender, of the resolutions of the Board of
Directors of each of the Credit Parties, authorizing (i) in the case of
the Borrowers, the execution, delivery and performance of this
Agreement, the Notes, the Pledge Agreement, the borrowings contemplated
hereunder, the granting of Liens pursuant to the Pledge Agreement, and
(ii) in the case of the Parent, the execution, delivery and performance
of this Agreement, the Pledge Agreement and the Collateral Support
Agreement, in each case certified by the Secretary or an Assistant
Secretary of the relevant Credit Party as of the Restatement Date,
which certificates shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the date of
such certificate.
(h) INCUMBENCY CERTIFICATES. The Lender shall have
received a certificate of the Secretary or an Assistant Secretary of
each Credit Party, dated the Restatement Date, as to the incumbency and
signature of the officers of each Credit Party executing each Loan
Document to which it is a party and any certificate or other document
to be delivered by it pursuant hereto and thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary.
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(i) CONSENTS, LICENSES, APPROVALS, ETC. The Lender
shall have received a certificate of a Responsible Officer of the
Borrower (i) attaching copies of all consents, authorizations and
filings referred to in Section 3.4(b), if any, and (ii) stating that
any such consents, authorizations or approvals shall be in full force
and effect, each such consent, authorization and filing shall be in
form and substance satisfactory to the Lender, and there shall have
occurred the expiration of all applicable waiting periods.
(j) LITIGATION. No suit, action, investigation,
inquiry or other proceeding (including, without limitation, the
enactment or promulgation of a statute or rule) by or before any
arbitrator or any Governmental Authority shall be pending and no
preliminary or permanent injunction or order by a state or federal
court shall have been entered (i) in connection with any Loan Document,
or any of the transactions contemplated thereby or (ii) which, in any
such case, in the judgment of the Lender, could reasonably be expected
to have a Material Adverse Effect.
(k) NO VIOLATION. The consummation of the
transactions contemplated hereby and by the other Loan Documents shall
not contravene, violate or conflict with, nor involve the Lender in a
violation of, any Requirement of Law.
(l) AMENDMENTS TO LCS AGREEMENTS. LCS shall have
caused all existing agreements which LCS has entered into with the
Parent or any other Affiliate of LCS, pursuant to which LCS has
incurred Indebtedness, to be amended to provide that the Parent or
other such Affiliate agrees not to commence or join in any proceedings
against LCS or any of its Subsidiaries of the type described in Section
8(h), and the Lender shall have received copies of all such amendments
and agreements certified as true and correct by the Secretary or,
Assistant Secretary of LCS.
4.2 CONDITIONS TO EACH LOAN. The agreement of the Lender to
make any Loan requested to be made by it on any date (including, without
limitation, the initial Loan requested to be made by it) is subject to the
satisfaction of the following conditions precedent as of the date such Loan is
requested to be made:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Credit Parties in or
pursuant to this Agreement or the other Loan Documents shall be true
and correct in all material respects on and as of such date as if made
on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall
have occurred and be continuing on such date or after giving effect to
the Loans requested to be made on such date.
(c) ADDITIONAL DOCUMENTS. The Lender shall have
received each additional document, instrument, legal opinion or item of
information reasonably requested by the Lender.
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(d) ADDITIONAL MATTERS. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and the
other Loan Documents shall be reasonably satisfactory in form and
substance to the Lender, and the Lender shall have received such other
documents, legal opinions and other opinions in respect of any aspect
or consequence of the transactions contemplated hereby or thereby as it
shall reasonably request.
Each borrowing by a Borrower hereunder shall constitute a representation and
warranty by the Borrowers as of the date of such borrowing that the conditions
contained in this Section 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrowers hereby agree that, so long as the Commitment
remains in effect, the Note remains outstanding and unpaid or any other amount
is owing to the Lender hereunder, Borrowers shall:
5.1 FINANCIAL STATEMENTS. Furnish to the Lender:
(a) as soon as available, but in any event within 120 days
after the end of each fiscal year of LCS, a copy of the unaudited consolidated
balance sheet of LCS and its consolidated Subsidiaries as at the end of such
fiscal year, together with the related consolidated statements of incomes and
cash flows, as of and through the end of such fiscal year, setting forth in each
case in comparative form the figures for the preceding fiscal year, reported on
by a Responsible Officer, and if requested by the Lender, the unaudited
consolidating balance sheet of LCS and its subsidiaries as at the end of such
fiscal year, together with the related consolidating statements of income and
cash flows as of and through the end of such fiscal year, setting forth in each
case in comparative form the figures of the preceding fiscal year;
(b) as soon as available, and in any event within 60 days
after the end of each of the first three quarters of each fiscal year of LCS, a
copy of (x) LCS's unaudited consolidated and consolidating balance sheet as of
the end of such quarter, and (y) the related unaudited consolidated and
consolidating statement of income and cash flows for such quarter and for the
period from the beginning of the then current fiscal year of LCS to the end of
such quarter and for the comparable periods in the preceding fiscal year,
reported on by a Responsible Officer;
(c) as soon as available, and in any event within 60 days
after the end of each calender month, a copy of (x) LCS's consolidated balance
sheets as of the end of such month and (y) the related consolidated Statement of
income and cash flows for such month and the period from the beginning of the
then current fiscal year of LCS to the end of such month
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and for the comparable periods in the preceding fiscal year throughout the
periods involved, reported on by a Responsible Officer;
(d) as soon as available in any event within 120 days after
the end of each fiscal year of the Parent, a consolidated balance sheet of the
Parent and its subsidiaries as of the end of that fiscal year and the related
consolidated statements of earnings, stockholders' equity and cash flows for
that fiscal year, all with accompanying notes and schedules; reported upon by
Deloitte and Touche, LLP or another firm of independent certified public
accountants of recognized standing selected by the Parent (such audit report
shall be unqualified except for qualifications relating to changes in United
States general accepted principles of accounts and required or approved by the
Parent's independent certified public accountants). Notwithstanding the
foregoing, the Parent may satisfy its obligations by furnishing copies of the
Parent's annual report on Form 10-K in respect of such fiscal year, together
with the financial statements required to be attached thereto, provided the
Parent is required to file such annual report on Form 10-K with the SEC and such
filing is actually made;
(e) as soon as available and in any event within 60 days after
the end of each of the first three quarters, and within 120 days after the end
of the fourth quarter of each fiscal year of the Parent, a consolidated balance
sheet of the Parent and its subsidiaries as of the end of that quarter, and the
related consolidated statements of earnings of the Parent and its subsidiaries
for the period from the beginning of the fiscal year to the end of that quarter,
certified to be true and accurate subject to normal year-end audit adjustments,
by a Responsible Officer of the Parent. Notwithstanding the foregoing, the
Parent may satisfy its obligations by furnishing copies of the Parent's
quarterly report on Form 10-Q in respect of such fiscal quarter, together with
the financial statements required to be attached thereto, provided the Parent is
required to file such annual report on Form 10-Q with the SEC and such filing is
actually made;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
approved by such accountants or Responsible Officer, as the case may be, and
disclosed therein).
5.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 5.1(d) and (e) above, a certificate
of the independent certified public accountants reporting on such
financial statements stating that in the course of making the
examination necessary therefor, no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in Sections 5.1(a), (b) and (c) above, a
certificate of a Responsible Officer substantially in the form of
EXHIBIT H, (i) stating that, to the best of such officer's knowledge,
each Credit Party during such period has observed or performed all of
its
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covenants and other agreements, and satisfied every condition,
contained in this Agreement and in the other Loan Documents to be
observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) showing in detail the
breakdown and calculation of the Borrowers' compliance with the
requirements of Sections 6.1(a) and 6.1(b) and the Parent's compliance
with the requirements of Sections 3(a) and 3(b) of the Collateral
Support Agreement;
(c) no later than the fifteenth day of each month,
with respect to each Pledged Security, a Summary of Eligible Security
Key Data, substantially in the form of EXHIBIT I, properly completed;
(d) within fifteen days following the end of each
month, a Borrowing Base Certificate showing the Borrowing Base as of
the last day of such month, certified as complete and correct by a
Responsible Officer of each Borrower;
(e) promptly upon receipt thereof, copies of all
reports submitted to any Credit Party or any Subsidiary by independent
certified public accountants in connection with each annual, interim or
special audit of the books and record of such Credit Party or such
Subsidiary made by such accountants, including, without limitation, any
management letter commenting on such Borrower's internal controls
submitted by such accountants to management in connection with their
annual audit;
(f) within fifteen days after the same are sent,
copies of all financial statements and reports which a Credit Party
sends to its stockholders, within fifteen days after the same are
filed, copies of all financial statements and reports which a Credit
Party may make to, or file with any securities exchange or the
Securities and Exchange Commission or any successor or analogous
Governmental Authority, and promptly upon their becoming available,
copies of all other notices and proxy statements sent or made available
generally and all final registration statements and final prospectuses,
if any, filed by a Credit Party with any securities exchange or with
the Securities and Exchange Commission;
(g) promptly upon receipt thereof, copies of any and
all reports and other information delivered to any Credit Party in its
capacity as a holder of any Pledged Security or to any Credit Party or
any Affiliate of any Credit Party in its capacity as an Acceptable
Special Servicer or otherwise pertaining to the Commercial Mortgage
Loans underlying any Pledged Security; and
(h) promptly, such additional financial and other
information as the Lender may from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, except when the amount or validity
thereof is currently being contested in good faith by
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appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of any Credit Party or its Subsidiaries.
5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue
to engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to Section 6.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably likely to have a Material Adverse Effect,
provided that the structural changes in connection with the Restructuring shall
be permissible.
5.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property
useful and necessary in its business in good working order and condition;
maintain with financially sound and reputable insurance companies insurance on
all its property in at least such amounts and against at least such risks (but
including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to each Lender,
upon written request, full information as to the insurance carried.
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired, and to discuss the business,
operations, properties and financial and other condition of any Credit Party or
its Subsidiaries with officers and employees of such Credit Party or such
Subsidiaries and with its independent certified public accountants.
5.7 NOTICES. Promptly give notice to the Lender:
(a) of the occurrence of any Default or Event of
Default;
(b) of any (i) default or event of default under any
Contractual Obligation of any Credit Party or any of its Subsidiaries
or (ii) litigation, investigation or proceeding which may exist at any
time between any Credit Party or any of its Subsidiaries and any
Governmental Authority, which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected
to have a Material Adverse Effect;
(c) of any litigation or proceeding affecting either
Borrower or any of the Subsidiaries (ii) in which the amount involved
is $500,000 or more and not covered by insurance or (ii) in which
injunctive or similar relief is sought and where, if
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adversely determined, such litigation or proceeding could reasonably be
expected to have a Material Adverse Effect;
(d) of the following events, as soon as possible and
in any event within 30 days after any Borrower knows or has reason to
know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or any withdrawal from, or
the termination, Reorganization or Insolvency of any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other
action by the PBGC or any Borrower or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan, to the extent
that any of the events set forth in this Section 5.7(d) could
reasonably be expected to result in a liability to the Borrower or any
Subsidiary of $500,000 or more;
(e) of the resignation or termination of any
Acceptable Special Servicer under any Special Servicing Agreement with
respect to any Pledged Security;
(f) of the conveyance, sale, lease, assignment,
transfer or other disposition (any such transaction, or related series
of transactions, a "SALE") of any property, business or assets
("PROPERTY") of any Credit Party whether now owned or hereafter
acquired, with the exception of any Sale of Property by a Credit Party:
(i) for Parent, the net proceeds of which
aggregate less than $1,000,000; for any
other Credit Party, the net proceeds of
which aggregate less than $250,000 in
the aggregate; and
(ii) which is not material to the conduct of
its business and is effected in the
ordinary course of business;
(g) of the execution of the Parent Credit Agreement
or subsequent amendment thereto, within 10 days thereof in either case,
together with copy of any such agreement or amendment;
(h) of the establishment of a rating assigned to the
long-term unsecured debt issued by the Parent by Moody's or S&P (or
other rating agency acceptable to Lender), and of any downgrade in such
rating once established;
(i) of the downgrading or elimination by S&P or
Moody's of the rating of any Pledged Security;
(j) of any loss or expected loss in respect of any
Pledged Security, or any other event or change in circumstances or
expected event or change in circumstances that could be reasonably be
expected to result in a material decline in value of any Pledged
Security;
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(k) of the formation of any Subsidiary of any Credit
Party; and
(l) of any event or change in circumstances which
could reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 ENVIRONMENTAL LAWS.
(a) Comply, and undertake all reasonable efforts to ensure
compliance by all tenants and subtenants, if any, in all material respects with
all applicable Environmental Laws and obtain and comply with and maintain, and
undertake all reasonable efforts to ensure that all tenants and subtenants
obtain and comply with and maintain, in all material respects any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws;
(b) Conduct and complete in all material respects all
investigations, studies, sampling and testing, and all remedial, removal and
other actions required under Environmental Laws, and promptly comply in all
material respects with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws in each case except to the extent that
the same are being contested in good faith by appropriate proceedings and the
pendency of such proceeding could not be reasonably expected to have a Material
Adverse Effect; and
(c) Defend, indemnify and hold harmless the Lender, and its
parent, subsidiaries, affiliates, employees, agents, officers and directors,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, losses, costs and expenses of whatever kind or nature,
know or unknown, contingent or otherwise, arising out of, or in any way relating
to any asserted or established violation of, noncompliance with or liability
under any Environmental Laws by any Borrower or any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, attorneys' and consultants'
fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise out of
the gross negligence or willful misconduct of the party seeking indemnification
therefor. This indemnity shall continue in full force and effect regardless of
the termination of this Agreement and repayment in full of the Note.
5.9 REPLACEMENT OF ACCEPTABLE SPECIAL SERVICER; COOPERATION.
(a) If an Event of Default shall occur and be continuing, at
the request of the Lender the applicable Borrower shall cause any Acceptable
Special Servicer to resign and shall cooperate in causing a replacement
Acceptable Special Servicer to be appointed.
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(b) Each Borrower shall facilitate the Lender's access to
files and other information held by any Acceptable Special Servicer or other
servicer with respect to Pledged Securities and with respect to the Commercial
Mortgage Loans underlying such Pledged Securities and shall take all such action
as the Lender shall reasonably request in connection with the Lender's request
for reports and other information from any Issuer, trustee or master servicer.
SECTION 6. NEGATIVE COVENANTS
The Borrowers hereby agree that, so long as the Commitment
remains in effect, the Note remains outstanding and unpaid, or any other amount
is owing to the Lender hereunder, the Borrowers shall not:
6.1 FINANCIAL CONDITION COVENANTS.
(a) MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH. In the
case of LCS, on any date, permit Consolidated Tangible Net Worth to be less than
an amount equal to the sum of (i) $60,000,000 and (ii) 75% of Consolidated Net
Income (if positive) for each fiscal quarter of LCS, beginning with the fiscal
quarter beginning December 1, 1997.
(b) MAINTENANCE OF LEVERAGE RATIOS. In the case of LCS, permit
the ratio of Consolidated Total Liabilities to Consolidated Tangible Net Worth
at any time to be greater than 6.0 to 1.0; and
6.2 LIMITATION ON INDEBTEDNESS. In the case of LMBS, create,
incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness in respect of the Loans, the Notes, and other
obligations of such Borrower under this Agreement;
(ii) the existing Indebtedness set forth on Schedule 4;
(iii) Indebtedness of LMBS in an aggregate amount outstanding
not to exceed $50,000,000 incurred in connection with the First Chicago
Financing; and
(iv) Indebtedness of LMBS to Persons of which LMBS is a
Subsidiary or Affiliate.
(v) Indebtedness in favor of DLJ Mortgage Capital, Inc.
granted by Parent, LCS and LMBS in connection with the DLJ Financing.
(vi) Indebtedness in favor of CS First Boston (Hong Kong)
Limited granted by Parent, LCS and LMBS in connection with the First
Boston Financing.
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6.3 LIMITATION ON LIENS. In the case of LMBS, create, incur,
assume or suffer to exist any Lien upon any of its property, assets or revenues,
whether now owned or hereafter acquired, except for:
(i) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings; PROVIDED, that
adequate reserves with respect thereto are maintained on the books of
LMBS in conformity with GAAP;
(ii) carriers', warehousemen's, mechanics',
materialmen's, repairmen's, or other like Liens arising in the ordinary
course of business and not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(iv) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(v) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and which do not in any
case materially detract from the value of the property subject thereto
or materially interfere with the ordinary conduct of the business of
LMBS; and
(vi) Liens in favor of the Lender under the Pledge
Agreement;
(vii) Liens existing on the date hereof and set forth
on Schedule 5; and
(viii) Liens in favor of The First National Bank of
Chicago granted by LMBS in connection with the First Chicago Financing.
(ix) Liens in favor of DLJ Mortgage Capital, Inc.
granted by Parent, LCS and LMBS in connection with the DLJ Financing.
(x) Liens in favor of CS First Boston (Hong Kong)
Limited granted by Parent, LCS and LMBS in connection with the First
Boston Financing.
6.4 LIMITATION ON GUARANTEE OBLIGATIONS. In the case of either
Borrower, create, incur, assume or suffer to exist any Guarantee Obligation.
6.5 LIMITATIONS OF FUNDAMENTAL CHANGES. Enter into any
transaction of acquisition or merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself
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(or suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or substantially all of its property, business or assets, or
acquire by purchase or otherwise all or substantially all the business or assets
of, or stock or other evidences of beneficial ownership of, any Person or any
business unit, or make any material change in the present method of conducting
business, except that:
(i) any Subsidiary may be merged or consolidated with or into
a Borrower (PROVIDED, that such Borrower shall be the continuing or
surviving corporation);
(ii) any Subsidiary may be merged or consolidated with or into
any other Subsidiary; and
(iii) any Subsidiary may be dissolved if all or substantially
all of the assets of such Subsidiary are transferred to a Borrower
prior to or concurrently with such dissolution.
6.6 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
otherwise permitted under this Agreement, is in the ordinary course of such
Borrower's business and is upon fair and reasonable terms no less favorable to
such Borrower than it would obtain in a comparable arm's-length transaction with
a Person not an Affiliate, or make any payment that is not otherwise permitted
by this Section 6.6 to any Affiliate.
6.7 UNRELATED ACTIVITIES. In the case of LMBS, engage in any
activity other than activities specifically permitted by this Section 6 or
purchasing, financing and holding of commercial mortgage-backed securities and
activities incident thereto.
6.8 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of, any of its property, business or assets
(including, without limitation, receivables and leasehold interests) whether now
owned or hereafter acquired other than property not material to the conduct of
its business disposed of in the ordinary course of business.
SECTION 7. EVENTS OF DEFAULT
Upon the occurrence of any of the following events:
(a) The Borrowers shall fail to pay any principal on
the Note when due in accordance with the terms thereof or hereof (other
than pursuant to Section 2.10); or to pay any interest on the Note, or
any other amount payable hereunder, within five Business Days after
such amount becomes due in accordance with the terms thereof or hereof;
or
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(b) Any representation or warranty made or deemed
made by any Credit Party herein or in any other Loan Document to which
such Credit Party is a party, or which is contained in any certificate,
document or financial or other statement furnished at any time under or
in connection herewith or therewith shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) Any Borrower shall default in the observance or
performance of any agreement contained in Section 6 or the Parent shall
default in the observance or performance of any agreement contained in
Section 3 of the Collateral Support Agreement; or
(d) The Borrowers shall fail to comply with the
provisions of Section 2.10 and a Borrowing Base Deficiency shall
continue to exist one Business Day following the date on which the
Lender provides notice of such Borrowing Base Deficiency to the Parent
in accordance with Section 2(c) of the Collateral Support Agreement; or
(e) Any Credit Party shall default in the observance
or performance of any other agreement contained in this Agreement or
any other Loan Document to which it is a party, and such default shall
continue unremedied for a period of 30 Business Days; or
(f) Any Credit Party shall default under, or fail to
perform as requested under, or shall otherwise breach the terms of, the
Parent Credit Agreement, once established, (in the case of the
financial covenants set forth therein whether or not the Parent Credit
Agreement shall have terminated or for any other reason shall have
ceased to be in full force and effect) and such default, failure to
perform or breach continues beyond any applicable grace period (not to
exceed 30 days); or
(g) Any Credit Party shall (i) default in any payment
of principal of or interest of any Indebtedness other than the Note or
in the payment of any Guarantee Obligation, in each case involving
payment in respect of Indebtedness of $1,000,000 or more, beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness of $1,000,000 or more or Guarantee Obligation of
$1,000,000 or more or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity
or such Guarantee Obligation to become payable; or
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(h) (i) Any Credit Party shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to him, or seeking to adjudicate him a
bankrupt or insolvent, or seeking reorganization, composition,
extension or other relief with respect to his debts, or (B) seeking
appointment of a receiver, conservator or other similar official for
all or any substantial part of his assets, or such Credit Party shall
make a general assignment for the benefit of his creditors; or (ii)
there shall be commenced against such Credit Party any case, proceeding
or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged, unstayed or
unbonded for a period of 60 days; or (iii) there shall be commenced
against any Credit Party any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of his assets which results
in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) any Credit Party shall take any action
in furtherance of, or indicating his consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) any Credit Party shall generally not, or shall be
unable to, or shall admit in writing his inability to, pay his debts as
they become due; or
(i) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
any Commonly Controlled Entity shall, or in the reasonable opinion of
the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could subject the Borrower or any of the
Subsidiaries to any tax, penalty or other liabilities which in the
aggregate could reasonably be expected to have a Material Adverse
Effect; or
(j) Either of the Pledge Agreement or the Collateral
Support Agreement shall cease to be in full force and effect, or any
Credit Party party thereto
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shall so assert in writing, or the security interests created by the
Pledge Agreement shall cease to be fully perfected enforceable first
priority security interests; or
(k) One or more judgments or decrees shall be entered
against any Credit Party involving in the aggregate a liability (not
paid or fully covered by insurance) of $1,000,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(l) LCS ceases to be a wholly-owned Subsidiary of the
Parent, or LMBS ceases to be a direct, wholly-owned Subsidiary of LCS;
or
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (h) above with respect to a Borrower,
automatically the Commitment shall immediately terminate and the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this Agreement
and the Note shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) the Lender may by notice to the Borrowers declare the Commitment to
be terminated forthwith, whereupon the Commitment shall immediately terminate;
and (ii) the Lender may, by notice of default to the Borrowers, declare the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the Note to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. Neither this Agreement, the Note,
nor any terms hereof or thereof may be amended, supplemented or modified except
in accordance with the provisions of this Section. The Lender and the Credit
Parties may, from time to time, enter into written amendments, supplements or
modifications hereto for the purpose of adding any provisions to this Agreement
or the Note or changing in any manner the rights of the Lender or of the Credit
Parties hereunder or thereunder or waiving, on such terms and conditions as the
Lender may specify in such instrument, any of the requirements of this Agreement
or the Note or any Default or Event of Default and its consequences. In the case
of any waiver, the Credit Parties and the Lender shall be restored to their
former position and rights hereunder and under the Note, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case
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of telecopy notice, when sent, receipt electronically confirmed, addressed as
follows or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Note:
The Borrowers: c/o Lennar Capital Services, Inc.
760 N.W. 107 Avenue, Suite 100
Miami, FL 33172
Attention: Ms. Shelly Rubin
Telephone: (305) 229-6440
Telecopy: (305) 226-7691
The Lender: NationsBank of Texas, N.A.
901 Main Street
14th Floor
Dallas, Texas 75202
Attention: Mark A. Johnson
Telephone: (214) 508-9349
Telecopy: (214) 508-0944
NationsBank of Texas, N.A.
901 Main Street, 66th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attention: Garrett M. Dolt
Telephone: (214) 508-2664
Telecopy: (214) 508-0338
PROVIDED that any notice, request or demand to or upon the Lender pursuant to
Sections 2.3, 2.7 and 2.9 shall not be effective until received.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of the Lender, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Note.
8.5 PAYMENT OF EXPENSES AND TAXES. Each of the Borrowers
jointly and severally agrees (a) to pay or reimburse the Lender for all its
reasonable out-of-pocket costs
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and expenses incurred in connection with the preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Note, the
other Loan Documents and any other documents prepared in connection herewith,
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the Lender, (b) to pay or reimburse the Lender for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the Note, the other Loan Documents and any such other documents,
including, without limitation, reasonable fees and disbursements of counsel to
the Lender, and (c) to pay, indemnify, and hold the Lender harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the Note, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold the
Lender harmless from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Note, the other Loan Documents and any such other documents, or the use of the
proceeds of the Loans (all the foregoing, collectively, the "indemnified
liabilities"); PROVIDED, that the Borrowers shall have no obligation hereunder
to the Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Lender, (ii) legal proceedings commenced
against the Lender or the Issuer by any security holder or creditor thereof
arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such, or (iii) legal proceedings commenced
against the Lender by or by any transferee. The agreements in this Section shall
survive repayment of the Note and all other amounts payable hereunder.
8.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING
LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrowers and the Lender, all future holders of the Note and
their respective successors and assigns, except that the Credit Parties may not
assign or transfer any of their rights or obligations under this Agreement
without the prior written consent of the Lender. The Lender may assign all or a
portion of its rights and obligations hereunder to any bank or financial
institution which, in the reasonable judgment of the Lender, has the financial
wherewithal to perform the Lender's obligations hereunder.
(b) The Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell to one
or more lenders or other entities ("PARTICIPANTS") participating interests in
any Loan owing to the Lender, the Note, the Commitment or any other interest of
the Lender hereunder and under the other Loan Documents. In the event of any
such sale by the Lender of participating interests to a Participant, the
Lender's obligations under this Agreement to the other parties to this
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Agreement shall remain unchanged, the Lender shall remain solely responsible for
the performance thereof, the Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents, and the Credit
Parties shall, subject to Section 8.6(e), continue to deal solely and directly
with the Lender in connection with the Lender's rights and obligations under
this Agreement and the other Loan Documents. The Borrowers agree that if amounts
outstanding under this Agreement and the Note are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this Agreement
and the Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or the Note;
PROVIDED, that such Participant shall only be entitled to such right of set-off
if it shall have agreed in the agreement pursuant to which it shall have
acquired its participating interest to share with the Lenders the proceeds
thereof as provided in Section 8.7. The Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.17, 2.18, and 8.5
with respect to its participation in the Commitments and the Loans outstanding
from time to time; PROVIDED FURTHER, that no Participant shall be entitled to
receive any greater amount pursuant to such Sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferee by such transferor Lender to such Participant had no
such transfer occurred.
(c) The Lender may, in the ordinary course of its commercial
lending business and in accordance with applicable law at any time sell to one
or more additional lenders or other financial institutions ("PURCHASING
LENDERS") all or any part of its rights and obligations under this Agreement and
the Note pursuant to a Commitment Transfer Supplement, substantially in the form
of EXHIBIT J, executed by such Purchasing Lender and the Lender and delivered;
PROVIDED that if after giving effect to any such transfer and any prior
transfers the Lender shall hold less than 50% of the Commitment or of the Loans,
the Lender shall have received the written consent of the Borrowers (which
consent shall not be unreasonably withheld). Upon such execution and delivery,
from and after the Transfer Effective Date determined pursuant to such
Commitment Transfer Supplement, (x) the Purchasing Lender thereunder shall be
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the Lender thereunder shall, to the extent provided in
such Commitment Transfer Supplement, be released from its obligations under this
Agreement (and, in the case of a Commitment Transfer Supplement covering all or
the remaining portion of the Lender's rights and obligations under this
Agreement, the Lender shall cease to be a party hereto). Such Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
arising from the purchase by such Purchasing Lender of all or portion of the
rights and obligations of the Lender under this Agreement and the Note. On or
prior to the Transfer Effective Date determined pursuant to such Commitment
Transfer Supplement, the Borrowers at their own expense, shall execute and
deliver to the Purchasing Lender in exchange for the surrendered Note a new Note
to the order of such Purchasing Lender in an amount equal to the Commitment
assumed by it pursuant to such Commitment Transfer
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Supplement and, if the Lender has retained a Commitment hereunder, a new Note to
the order of the Lender in an amount equal to the Commitment retained by it
hereunder. Such new Note shall be dated the Restatement Date and shall otherwise
be in the form of the Note replaced thereby. The Note surrendered by the Lender
shall be returned by the Lender to the Borrowers marked "canceled".
(d) The Borrowers authorize the Lender to disclose to any
Participant or Purchasing Lender (each, a "TRANSFEREE") and any prospective
Transferee any and all financial information in the Lender's possession
concerning the Borrowers and their affiliates which has been delivered to the
Lender by or on behalf of the Borrowers pursuant to this Agreement or which has
been delivered to the Lender by or on behalf of the Borrowers in connection with
the Lender's credit evaluation of the Borrower and their affiliates prior to
becoming a party to this Agreement.
(e) If, pursuant to this Section, any interest in this
Agreement or the Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any state thereof,
the Lender shall cause such Transferee, concurrently with the effectiveness of
such transfer, (i) to represent to the Lender (for the benefit of the Lender,
and the Borrowers) that under applicable law and treaties no taxes will be
required to be withheld by the Borrowers or the Lender with respect to any
payments to be made to such Transferee in respect of the Loans, (ii) to furnish
to the Lender either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such Transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the Lender and the Borrower)
to provide the Lender a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
(h) Nothing herein shall prohibit the Lender from pledging or
assigning the Note to any Federal Reserve Bank in accordance with applicable
law.
8.7 SET-OFF. In addition to any rights and remedies of the
Lender provided by law, the Lender shall have the right, without prior notice to
the Borrowers, any such notice being expressly waived by the Borrowers to the
extent permitted by applicable law, upon the filing of a petition under any of
the provisions of the federal bankruptcy act or amendments thereto by or
against; the making of an assignment for the benefit of creditors by; the
application for the appointment, or the appointment, of any receiver of any of
the property of; the issuance of any execution against any of the property of;
the issuance of a subpoena or order, in supplementary proceedings, against or
with respect to any of the property of; or the issuance of a warrant of
attachment against any of the property of; the Borrowers, to set-off and apply
against any indebtedness, whether matured or unmatured, of the Borrowers to the
Lender, any amount owing from the Lender to the Borrowers, at or at any time
after, the
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happening of any of the above mentioned events, and the aforesaid right of
set-off may be exercised by the Lender against the Borrowers or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of the
Borrowers, or against anyone else claiming through or against the Borrowers or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Lender prior to the making, filing or issuance, or service upon
the Lender of, or of notice of, any such petition; assignment for the benefit of
creditors; appointment or application for the appointment of a receiver; or
issuance of execution, subpoena, order or warrant. The Lender agrees promptly to
notify the Borrowers after any such set-off and application made by the Lender;
provided, that the failure to give such notice shall not affect the validity of
such set-off and application.
8.8 COUNTERPARTS. This Agreement may be executed by one or
both of the parties to this Agreement on separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
8.9 GOVERNING LAW. This Agreement and the Note and the rights
and obligations of the parties under this Agreement and the Note shall be
governed by, and construed and interpreted in accordance with, the law of the
State of Texas, without giving effect to the conflict of laws provisions
thereof.
8.10 INTEREST RATES.
(a) It is the intention of the parties hereto that the Loans
made hereunder shall conform strictly to applicable usury laws. Accordingly,
none of the terms and provisions contained in this Agreement or any of the other
Loan Documents shall be construed to create a contract to pay interest to the
Lender for the use, forbearance or detention of money at a rate in excess of the
highest lawful rate applicable (the "MAXIMUM LAWFUL RATE"), and, for purposes of
this Section 8.10, "interest" shall include the aggregate of all charges or
other consideration which constitute interest under applicable laws (whether or
not denominated as interest) and are contracted for, taken, reserved, charged or
received under any of this Agreement or the other Loan Documents or otherwise in
connection with the transactions contemplated by this Agreement and the other
Loan Documents. If as a result of prepayment, acceleration of maturity or
otherwise, the effective rate of interest which would otherwise be payable to
the Lender under this Agreement or any other Loan Document would exceed the
Maximum Lawful Rate for the period during which the principal amount of any Loan
was outstanding, or if the Lender shall receive moneys or other consideration
that is deemed to constitute interest that would increase the effective rate of
interest payable by the Borrowers to the Lender under this Agreement or any
other Loan Document to a rate in excess of the Maximum Lawful Rate for the
period during which the principal amount of any Loan was outstanding, then (i)
the amount of interest that would otherwise be payable by the Borrowers to the
Lender under this Agreement and the other Loan Documents shall be reduced to the
Maximum Lawful Rate, and (ii) any interest paid by the Borrowers to the Lender
in excess of the Maximum Lawful Rate
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shall be credited by the Lender as an optional prepayment of the Loans and,
thereafter, shall be returned to the Borrowers. All calculations of the rate or
amount of interest contracted for, taken, reserved, charged or received by the
Lender under any of this Agreement and the other Loan Documents that are made
for the purpose of determining whether such rate or amount exceeds the Maximum
Lawful Rate shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating and spreading interest payable hereunder
during the full stated term of all of the Loans owed to the Lender.
(b) If at any time and from time to time (i) the amount of
interest payable to the Lender on any date would otherwise exceed the Maximum
Lawful Rate, the amount of interest payable to the Lender shall be limited to
the Maximum Lawful Rate pursuant to paragraph (a) above and (ii) in respect of
any subsequent interest computation period, the amount of interest otherwise
payable to the Lender would be less than the amount of interest payable to the
Lender computed at the Maximum Lawful Rate, then the amount of interest payable
in respect of such subsequent computation period shall be computed at the
Maximum Lawful Rate until the earlier to occur of (x) the date upon which the
total amount of interest payable to the Lender shall equal the total amount of
interest that would have been payable to the Lender if the total amount of
interest had been computed without giving effect to paragraph (a) above, or (y)
payment in full of all Loans held by such Lender.
(c) Without limiting the application of this Section 8.10,
insofar as the provisions of Article 5069-1.04, Title 79 of the Revised Civil
Statutes of Texas, 1925, as amended, are deemed applicable to the determination
of the Maximum Lawful Rate with respect to any of the Loans, the indicated rate
ceiling computed from time to time pursuant to Section (a) of such Article shall
apply to such Loans; PROVIDED that to the extent permitted by such Article, the
Lender may from time to time by notice to the Borrowers revise the election of
such interest rate ceiling as such ceiling affects the then current or future
balances of the Loans and other obligations held by the Lender.
(d) Without limiting the application of this Section 8.10,
pursuant to Article 5069-15.10(b), Title 79, Revised Civil Statutes of Texas,
1925, as amended, the provisions of Chapter 15, Title 79, of the Revised Civil
Statutes of Texas, 1925, as amended, shall not apply to this Agreement, the
other Loan Documents or the transactions contemplated hereby.
8.11 SUBMISSION TO JURISDICTION; WAIVERS. EACH OF THE
BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF TEXAS, THE COURTS OF
THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF TEXAS, AND
APPELLATE COURTS FROM ANY THEREOF;
-47-
<PAGE>
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN
INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION
OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED
OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN SECTION 8.2 OR AT
SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED
PURSUANT THERETO;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT
TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT HE MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES.
8.12 WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THE
LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTE AND FOR ANY
COUNTERCLAIM THEREIN.
8.13 ACKNOWLEDGMENTS. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the Note and
the other Loan Documents to which it is a party;
(b) the Lender has no fiduciary relationship to any
Borrower, and the relationship between the Borrowers on one hand, and
the Lender, on the other hand, is solely that of debtor and creditor;
and
(c) no joint venture exists among the Credit Parties
and the Lender.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York as of the day
and year first above written.
BORROWERS
LENNAR CAPITAL SERVICES, INC.
(formerly known as LENNAR FINANCIAL
SERVICES, INC.)
By: /s/ MARK A. GRIFFITH
------------------------------------------
Title: VICE PRESIDENT
LENNAR MBS, INC.
By: /s/ MARK A. GRIFFITH
------------------------------------------
Title: VICE PRESIDENT
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<PAGE>
LENDER
COMMITMENT: NATIONSBANK OF TEXAS, N.A.
$25,000,000
By: /s/ BOB L. CARTER
------------------------------------------
Title: Senior Vice President
LENDING OFFICE FOR COMPENSATING BALANCE RATE
LOANS, FEDERAL FUNDS RATE LOANS AND EURODOLLAR
LOANS:
NationsBank Texas
901 Main Street
14th Floor
Dallas, Texas 75202
ABA 111000025
Corporate Loans Funds Transfer
Account [129-2000883]
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EXHIBIT 10.9
CREDIT AGREEMENT
AMONG
LENNAR LAND PARTNERS,
AS BORROWER
AND
THE FIRST NATIONAL BANK OF CHICAGO,
NATIONSBANK, N.A.,
CREDIT LYONNAIS ATLANTA AGENCY,
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
COMERICA BANK,
FLEET NATIONAL BANK,
GUARANTY FEDERAL BANK, F.S.B.,
THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY,
U. S. BANK NATIONAL ASSOCIATION,
PNC BANK, NATIONAL ASSOCIATION,
SOCIETE GENERALE,
AMSOUTH BANK,
BARNETT BANK, N.A., SOUTH FLORIDA,
THE DAI-ICHI KANGYO BANK, LTD.,
THE FUJI BANK AND TRUST COMPANY,
KREDIETBANK, N.V.,
SAKURA BANK,
SUNTRUST BANK, MIAMI, N.A. AND
BANQUE PARIBAS
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS ARRANGER AND ADMINISTRATIVE AGENT,
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
AS SYNDICATION AGENT AND
COMERICA BANK
AS DOCUMENTATION AGENT
NATIONSBANK, N.A. AND CREDIT LYONNAIS ATLANTA AGENCY,
AS MANAGING AGENTS
FLEET NATIONAL BANK AND GUARANTY FEDERAL BANK, F.S.B.
AS CO-AGENTS
CLOSING DATE: NOVEMBER 3, 1997
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
ARTICLE I CERTAIN DEFINED TERMS.................................................1
SECTION 1.01. Certain Defined Terms.................................1
SECTION 1.02. Computation of Time Periods..........................23
SECTION 1.03. Accounting Terms.....................................23
ARTICLE II THE CREDITS.........................................................23
SECTION 2.01. Commitments..........................................23
SECTION 2.02. Types of Advances; Mandatory Principal Payments;
Final Maturity.......................................24
SECTION 2.03. Optional Principal Payments..........................25
SECTION 2.04. Commitment Fee and Reduction of Commitments..........26
SECTION 2.05. Method of Borrowing..................................26
SECTION 2.06. Method of Selecting Types and Interest Periods
for Advances.........................................26
SECTION 2.07. Method of Selecting Types and Interest Periods
for Conversion and Continuation of Advances..........27
SECTION 2.08. Minimum Amount of Each Advance.......................28
SECTION 2.09. Rate after Maturity..................................28
SECTION 2.10. Method of Payment....................................28
SECTION 2.11. Notes; Telephonic Notices............................29
SECTION 2.12. Interest Payment Dates; Interest and Fee Basis.......29
SECTION 2.13. Notification of Advances, Interest Rates,
Prepayments and Commitment Reductions................29
SECTION 2.14. Lending Installations................................30
SECTION 2.15. Facility Letters of Credit...........................30
SECTION 2.16. Non-Receipt of Funds by the Agent....................36
SECTION 2.17. Withholding Tax Exemption............................36
SECTION 2.18. Unconditional Obligation to Make Payments............37
SECTION 2.19. Compensating Balances................................37
SECTION 2.20. Extension of Facility A Termination Date.............37
SECTION 2.21. Determination of Borrowing Base......................38
ARTICLE III CHANGE IN CIRCUMSTANCES............................................39
SECTION 3.01. Yield-Protection.....................................39
SECTION 3.02. Changes in Capital Adequacy Regulations..............39
SECTION 3.03. Availability of Types of Advances....................40
SECTION 3.04. Funding Indemnification..............................40
SECTION 3.05. Lender Statements: Survival of Indemnity.............41
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ARTICLE IV REPRESENTATIONS AND WARRANTIES......................................41
SECTION 4.01. Organization, Powers, etc. of Borrower...............41
SECTION 4.02. Organization, Powers, Etc. of
Subsidiary Guarantor.................................41
SECTION 4.03. Organization, Powers, Etc. of Lennar and LNR.........42
SECTION 4.04. Authorization and Validity of this Agreement,
Etc. of Borrower.....................................42
SECTION 4.05. Authorization and Validity of this Agreement,
Etc. By Subsidiary Guarantor.........................42
SECTION 4.06. Authorization and Validity of this Agreement,
Etc. By Lennar and LNR...............................43
SECTION 4.07. INTENTIONALLY OMITTED................................43
SECTION 4.08. INTENTIONALLY OMITTED................................43
SECTION 4.09. No Material Adverse Effect...........................44
SECTION 4.10. Title to Properties..................................44
SECTION 4.11. Litigation...........................................44
SECTION 4.12. Payment of Taxes by Subsidiary Guarantors............44
SECTION 4.13. Agreements...........................................44
SECTION 4.14. Foreign Direct Investment Regulations................45
SECTION 4.15. Federal Reserve Regulations..........................45
SECTION 4.16. Consents, Etc........................................45
SECTION 4.17. Compliance with Applicable Laws......................45
SECTION 4.18. Relationship of the Borrower and the
Subsidiary Guarantors................................46
SECTION 4.19. Subsidiaries; Joint Ventures.........................46
SECTION 4.20. ERISA................................................47
SECTION 4.21. Investment Company Act...............................47
SECTION 4.22. Public Utility Holding Company Act...................47
SECTION 4.23. Post-Retirement Benefits.............................47
SECTION 4.24. Insurance............................................47
SECTION 4.25. Environmental Representations........................47
SECTION 4.26. Security Documents...................................48
SECTION 4.27. Solvency.............................................48
SECTION 4.28. No Misrepresentation.................................48
SECTION 4.29. No Encroachments; Licenses and Permits...............48
SECTION 4.30. Independent Units....................................49
SECTION 4.31. Minimum Tangible Net Worth...........................49
SECTION 4.32. Stevenson Ranch Venture L............................49
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ARTICLE V CONDITIONS PRECEDENT.................................................49
SECTION 5.01. Conditions of Effectiveness..........................49
SECTION 5.02. Conditions Precedent to All Borrowings...............54
ARTICLE VI AFFIRMATIVE COVENANTS...............................................56
SECTION 6.01. Existence, Properties, etc...........................56
SECTION 6.02. Notice...............................................56
SECTION 6.03. Payments of Debts, Taxes, Etc........................56
SECTION 6.04. Accounts and Reports.................................57
SECTION 6.05. Access to Premises and Records.......................60
SECTION 6.06. Maintenance of Properties and Insurance..............60
SECTION 6.07. Financing; New Investments...........................60
SECTION 6.08. Compliance with Applicable Laws......................61
SECTION 6.09. Use of Proceeds......................................61
SECTION 6.10. Further Assurances...................................61
SECTION 6.11. Appraisals...........................................61
ARTICLE VII NEGATIVE COVENANTS.................................................62
SECTION 7.01. Minimum Tangible Net Worth...........................62
SECTION 7.02. Limitation on Indebtedness...........................62
SECTION 7.03. Guaranties...........................................62
SECTION 7.04. Sale of Assets; Acquisitions; Merger.................63
SECTION 7.05. Investments..........................................63
SECTION 7.06. Subordinated Debt....................................64
SECTION 7.07. No Margin Stock......................................64
SECTION 7.08. Transactions with Affiliates.........................64
SECTION 7.09. Fixed Charge Coverage................................65
SECTION 7.10. Pro Forma Fixed Charge Coverage......................65
SECTION 7.11. Restrictions on Distributions........................65
SECTION 7.12. Liens and Encumbrances...............................66
ARTICLE VIII COLLATERAL........................................................66
SECTION 8.01. Security for Obligations.............................66
SECTION 8.02. Collateral Documentation.............................66
SECTION 8.03. Powers and Duties of the Borrower and
Subsidiary Guarantors with Respect to
the Collateral.......................................66
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<PAGE>
SECTION 8.04. Power of Attorney....................................66
SECTION 8.05. Joinder in Subdivision Plats, Subdivision
Maps or Parcel Maps..................................67
SECTION 8.06. Sale of Lots.........................................67
SECTION 8.07. Partial Releases of Lots.............................67
ARTICLE IX EVENTS OF DEFAULT...................................................70
SECTION 9.01. Events of Default....................................70
SECTION 9.02. Acceleration.........................................72
SECTION 9.03. Rights as to Collateral..............................73
SECTION 9.04. Application of Funds.................................75
ARTICLE X THE AGENT............................................................76
SECTION 10.01. Appointment..........................................76
SECTION 10.02. Powers...............................................76
SECTION 10.03. General Immunity.....................................76
SECTION 10.04. No Responsibility for Loans, Recitals, Etc...........76
SECTION 10.05. Employment of Agents and Counsel.....................77
SECTION 10.06. Reliance on Documents; Counsel.......................77
SECTION 10.07. No Waiver of Rights..................................77
SECTION 10.08. Knowledge of Event of Default........................78
SECTION 10.09. Agent's Reimbursement and Indemnification............78
SECTION 10.10. Notices to the Borrower or Subsidiary Guarantor......78
SECTION 10.11. Action on Instructions of Lenders....................78
SECTION 10.12. Lender Credit Decision...............................79
SECTION 10.13. Resignation or Removal of the Agent..................79
SECTION 10.14. Benefits of Article X................................79
SECTION 10.15. Agent's Custodial Duties.............................79
SECTION 10.16. Collateral Value Determination;
Determination Assumptions............................81
ARTICLE XI RATABLE PAYMENTS....................................................81
SECTION 11.01. Ratable Payments.....................................81
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS..................81
SECTION 12.01. Successors and Permitted Assigns.....................81
SECTION 12.02. Participations.......................................82
SECTION 12.03. Assignments..........................................83
ARTICLE XIII MISCELLANEOUS.....................................................84
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<PAGE>
SECTION 13.01. Notice...............................................84
SECTION 13.02. Survival of Representations..........................84
SECTION 13.03. Expenses.............................................84
SECTION 13.04. Indemnification of the Lenders and the Agent.........84
SECTION 13.05. Maximum Interest Rate................................85
SECTION 13.06. Modification of Agreement............................85
SECTION 13.07. Preservation of Rights...............................86
SECTION 13.08. Joint and Several Obligations of Borrower;
Several Obligations of Lenders.......................87
SECTION 13.09. Severability.........................................87
SECTION 13.10. Counterparts.........................................87
SECTION 13.11. Representation and Warranty by the Lenders...........87
SECTION 13.12. The Borrower as Agent for Each
Subsidiary Guarantor.................................87
SECTION 13.13. Loss, Etc., Notes or Subsidiary Guarantees...........87
SECTION 13.14. Governmental Regulation..............................88
SECTION 13.15. Taxes................................................88
SECTION 13.16. Headings.............................................88
SECTION 13.17. Entire Agreement.....................................88
SECTION 13.18. CHOICE OF LAW........................................88
SECTION 13.19. CONSENT TO JURISDICTION..............................88
SECTION 13.20. WAIVER OF JURY TRIAL.................................89
</TABLE>
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<PAGE>
EXHIBITS
EXHIBIT DESCRIPTION
A Facility A Note
B Facility B Note
C Assignment Agreement
C-1 Notice of Assignment
C-2 Consent and Release
D Form of Mortgage/Deed of Trust and Security Agreement,
E Joinder Agreement
F Pricing Grid
G Borrowing Base Certificate
H Environmental Indemnity
I Subsidiary Guaranty
J Lennar and LNR Guaranty
K Security Agreement (Capital Stock and Partnership Interests)
L Requirements for Entitled Land
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<TABLE>
<CAPTION>
SCHEDULES
WHERE FOUND
SCHEDULE DESCRIPTION IN AGREEMENT
- - -------- ----------- ------------
<S> <C> <C>
I Subsidiaries and Joint Venture Subsidiaries (Definition of
of Borrower which are Subsidiary Guarantors "Subsidiary Guarantor")
II Lenders Opening Paragraph
III Mortgaged Property/Real Estate Owned (Definition of
"Mortgaged Property")
IV Required Consents 4.16
V Subsidiaries and Joint Ventures 4.19
VI Permitted Liens (Definition of
"Permitted Liens")
VII Mortgage Filing Offices 4.26(a)
VIII UCC Filing Offices 4.26(b)
</TABLE>
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<PAGE>
CREDIT AGREEMENT, dated as of October 31, 1997, among LENNAR LAND
PARTNERS, a general partnership formed under the laws of the State of Florida
(the "Borrower"), the lenders listed in Schedule II hereto (hereinafter
collectively referred to as the "Lenders"), and THE FIRST NATIONAL BANK OF
CHICAGO, as Agent (the "Agent").
RECITAL
The Borrower desires to obtain from the Lenders and the Lenders are
willing to provide to the Borrower loans and letters of credit in an aggregate
principal amount outstanding from time to time not to exceed $225,000,000, upon
the terms and subject to the conditions hereinafter set forth.
AGREEMENT
In consideration of the foregoing and of the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINED TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used herein, each of the
following terms shall have the meaning ascribed to it below, which meaning shall
be applicable to both the singular and plural forms of the terms defined:
"ADDITIONAL MORTGAGED PROPERTY" means each Property added as a
Mortgaged Property in the manner described in Section 2.21(c).
"ADJUSTED TANGIBLE NET WORTH" means, at any date, Tangible Net Worth at
such date less, to the extent not already deducted in the definition of Tangible
Net Worth, the aggregate of all of the following at such date: (i) the
stockholders' equity of each Subsidiary which is not a Subsidiary Guarantor
hereunder, (ii) the capital account of the Borrower and each Subsidiary in a
Joint Venture wherein the Joint Venture is not a Subsidiary Guarantor hereunder
and (iii) the principal amount of any loan or commitment to loan to any
Subsidiary or Joint Venture wherein the Borrower is an owner or venturer which
is not a Subsidiary Guarantor hereunder.
"ADVANCE" includes any or all of a Facility A Advance and a Facility B
Advance.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to
<PAGE>
direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or otherwise.
"AGENT" means The First National Bank of Chicago in its capacity as
agent for the Lenders pursuant to Article X, and not in its individual capacity
as a Lender or an Issuer, and any successor Agent appointed pursuant to Article
X.
"AGREEMENT DATE" means October 31, 1997.
"AGGREGATE COMMITMENT" means, at any time, the sum of the then
applicable Aggregate Facility A Commitment and Aggregate Facility B Commitment.
"AGGREGATE FACILITY A COMMITMENT" means $125,000,000, as such amount
may be reduced from time to time pursuant to the terms hereof.
"AGGREGATE FACILITY B COMMITMENT" means $100,000,000, as such amount
may be reduced from time to time pursuant to the terms hereof.
"AGGREGATE LETTER OF CREDIT COMMITMENT" means $20,000,000, as such
amount may be reduced from time to time pursuant to the terms hereof.
"AGREEMENT" means this Credit Agreement, including the exhibits and
schedules hereto, as it may be amended, renewed, modified or restated and in
effect from time to time.
"APPLICABLE MARGIN" shall be determined in accordance with the pricing
grid set forth as Exhibit "F" hereto.
"APPRAISAL" means, with respect to any Property, a written appraisal of
such Property prepared by an MAI appraiser approved by the Agent in writing,
which appraisal is acceptable to the Agent and the Majority Lenders, done in
conformity with the following standards: Uniform Standards of Professional
Appraisal Practice, the requirements of the Code of Professional Ethics,
Financial Institutions Reform and Recovery Act and the Standards of Professional
Appraisal Practice of the Appraisal Institute and the Appraisal Guidelines set
forth by the Office of the Controller of the Currency and the Federal Reserve
Board.
"APPRAISED VALUE" means the "as is" value of the land as determined by
the Appraisal for the Real Estate.
"ARTICLE" means an article of this Agreement unless another document is
specifically referenced.
"AUTHORIZED OFFICER" means any Person designated by the Borrower in
writing to act as an Authorized Officer hereunder, acting singly.
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<PAGE>
"BORROWER" has the meaning assigned to that term in the introductory
paragraph of this Agreement. All of the Partners of the Borrower shall be
jointly and severally liable as Borrower under this Agreement, the Notes, and
all other Loan Documents.
"BORROWER OBLIGATIONS" means all unpaid principal of and accrued and
unpaid interest on the Notes, all Facility Letter of Credit Obligations; all
accrued and unpaid fees, all expenses, reimbursements, indemnities and other
obligations of the Borrower to the Lenders or to any Lender, the Agent or any
indemnified party arising under the Loan Documents, and all Rate Hedging
Obligations of the Borrower to the Lenders, any Lender or to the Agent.
"BORROWER SECURITY DOCUMENTS" means collectively the Borrower
Mortgages, Security Agreement (Capital Stock and Partnership Interests) and all
other security documents hereafter delivered to the Agent granting a Lien on any
asset or assets of the Borrower to secure the Borrower Obligations.
"BORROWER'S COUNSELS' OPINIONS" means those opinions of counsel
described in Section 5.01(r) and (s).
"BORROWER'S ORGANIZATIONAL DOCUMENTS" means those documents described
in Section 5.01(y) hereof.
"BORROWING BASE" means, from time to time, the sum of the following
amounts, all as reflected from time to time in accordance with GAAP consistently
applied in the consolidated balance sheet of the Borrower but only to the extent
the same constitutes Collateral: (i) 65% of the Net Book Value of all Finished
Lots owned by the Borrower or a Subsidiary Guarantor, (ii) 50% of the Net Book
Value of all Land Under Development owned by the Borrower or a Subsidiary
Guarantor, (iii) 30% of the Net Book Value of all Unimproved Entitled Land owned
by the Borrower or a Subsidiary Guarantor, (iv) zero percent (0%) of the Net
Book Value of all Unentitled Land owned by the Borrower or a Subsidiary
Guarantor; and (v) 50% of the Net Book Value of Real Estate included in a
project which is under development that is not designated to be used for the
construction of housing units; PROVIDED that the amount determined pursuant to
this clause shall not exceed five percent (5%) of the Borrowing Base; PROVIDED
FURTHER that notwithstanding anything to the contrary provided herein, any asset
which is encumbered by a Lien (other than a Permitted Lien, other than Permitted
Liens described in clauses (a) and (d)) shall not be included in the calculation
of the Borrowing Base pursuant to clauses (i) through (v) above; PROVIDED
FURTHER, the Net Book Value of the Bramalea Land shall be adjusted for the
Purchase Price Accounting Adjustment and, provided further, no Mortgaged
Property shall be included in the Borrowing Base, unless and until all of the
conditions precedent set forth in Section 5.01 with respect to such Mortgaged
Property have been satisfied.
"BORROWING BASE CERTIFICATE" means a certificate of the Borrower
setting forth the components of the Borrowing Base, substantially in the form of
Exhibit "G" delivered under this Agreement. The Borrowing Base Certificate shall
describe all of the Finished Lots, Land Under Devel-
-3-
<PAGE>
opment, Unimproved Entitled Land, Unentitled Land, and other Real Estate. The
Borrowing Base Certificate shall further describe any change in condition from
the last preceding delivered Borrowing Base Certificate.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BORROWING NOTICE" is defined in Section 2.06.
"BRAMALEA" means Bramalea California, LLC, a California limited
liability company.
"BRAMALEA LAND" means that certain Property owned by Bramalea that is a
part of the Borrowing Base.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Fixed Rate Advances, a day (other than a Saturday or Sunday) on
which banks are open for business in Chicago and New York and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
are open for business in Chicago.
"CAPITAL STOCK" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"CAPITALIZED LEASE" of a Person means any lease of property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"CLOSING DATE" means the date on which the Lenders shall first become
obligated to make Advances after satisfaction or waiver of all of the conditions
precedent set forth in Section 5.01 and Section 5.02.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means, at any time, any assets owned by the Borrower or a
Subsidiary Guarantors that then are subject to a Lien in favor of the Agent as
security for the Obligations.
"COLLATERAL DOCUMENTS" is defined in Section 10.15(a).
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<PAGE>
"COMMITMENT" means, for each of the Lenders, the Facility A Commitment
and the Facility B Commitment of such Lender.
"COMMITMENT FEE" means the fee determined in accordance with the
pricing grid set forth as Exhibit "F" hereto.
"CONDEMNATION PROCEEDS" means all compensation, awards, rights of
action and proceeds awarded to the Borrower or any Subsidiary Guarantor by
reason of any Taking.
"CONSOLIDATED INTEREST INCURRED" means, for any period, the aggregate
amount (without duplication and determined in each case in accordance with GAAP)
of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid
or accrued, of the Borrower, and its consolidated Subsidiaries during such
period, including (i) original issue discount and non-cash interest payments or
accruals on any Indebtedness, (ii) the interest portion of all deferred payment
obligations, and (iii) all commissions, discounts and other fees and charges
owed with respect to bankers' acceptances and letter of credit financings and
interest swap and hedging obligations, in each case to the extent attributable
to such period PLUS (b) the amount of dividends accrued or payable by any of the
consolidated Subsidiaries in respect of Disqualified Capital Stock (other than
by a Subsidiary of the Borrower to the Borrower or a Subsidiary Guarantor),
PROVIDED, HOWEVER, that interest, dividends or other payments or accruals of a
consolidated Subsidiary that is not wholly owned shall be included only to the
extent of the interest of the Borrower in such Subsidiary. For purposes of this
definition, (x) interest on Capitalized Lease Obligations shall be deemed to
accrue at an interest rate reasonably determined by the Borrower to be the rate
of interest implicit in such Capitalized Lease Obligations in accordance with
GAAP and (y) interest expense attributable to any Indebtedness represented by
the guaranty by the Borrower or a Subsidiary of the Borrower of an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of the Borrower and the consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; PROVIDED, that (i)
net income (or loss) of any other Person which is not a Subsidiary or is
accounted for by such Person by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid to
the Borrower or a consolidated Subsidiary, (ii) the net income (or loss) of any
other Person acquired by the Borrower or a consolidated Subsidiary in a pooling
of interests transaction for any period prior to the date of such acquisition
shall be excluded, (iii) all gains and losses which are either extraordinary (as
determined in accordance with GAAP) or are either unusual or nonrecurring
(including any gain from the sale or other disposition of assets outside the
ordinary course of business or from the issuance or sale of any Capital Stock),
shall be excluded, and (iv) the net income, if positive, of any of the
consolidated Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or bylaws or any other agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to such
consolidated Subsidiary shall be excluded, PROVIDED, HOWEVER, in the case of
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exclusions from Consolidated Net Income set forth in clauses (ii), (iii) and
(iv), such amounts shall be excluded only to the extent included in computing
such net income (or loss) in accordance with GAAP and without duplication;
PROVIDED FURTHER, HOWEVER, that for purposes of determining Consolidated Net
Income, the net income of any Person which is not a Subsidiary Guarantor shall
be excluded.
"CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement or take-or-pay contract. With respect to the Borrower, Contingent
Obligation includes, without limitation of the foregoing, obligations under
reimbursement agreements with financial institutions (including Lenders)
relating to letters of credit issued by such financial institutions for the
account of Borrower.
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.07(d).
"CONTROLLED GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or its Subsidiaries, are
treated as a single employer under Section 414 of the Code.
"CORPORATE BASE RATE" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes.
"DEFAULT RATE" means the rate after maturity as provided for in Section
2.09.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set forth in (b), with
respect to any Person, Capital Stock of such Person that, by its terms or by the
terms of any security into which it is convertible, exercisable or exchangeable,
is, or upon the happening of an event or the passage of time would be, required
to be redeemed or repurchased (including at the option of the holder thereof) by
such Person or any of its subsidiaries, in whole or in part, on or prior to the
stated maturity of the securities, and (b) with respect to any subsidiary of
such Person (including with respect to any Subsidiary of the Borrower), any
Capital Stock other than any common stock with no preference, privileges, or
redemption or repayment provisions.
"DISTRIBUTION" means (i) any dividend or other distribution, direct or
indirect, on account of any equity interest of the Borrower or of any Subsidiary
(other than those payable or distributable solely to the Borrower or a
Subsidiary Guarantor) now or hereafter outstanding, except (i) a dividend
payable solely in shares of a class of stock to the holders of that class; (ii)
any redemption, conversion, exchange, retirement or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
Capital Stock of either of the Borrower or of any
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Subsidiary (other than those payable or distributable solely to the Borrower or
a Subsidiary Guarantor) now or hereafter outstanding; (iii) any payment made to
retire, or obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of Capital Stock of the Borrower or of any
Subsidiary now or hereafter outstanding; and (iv) any issuance and sale of
Capital Stock of any Subsidiary other than to the Borrower.
"DOLLARS" and the sign "$" each means lawful money of the United States
of America.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Co. or any Person
succeeding to the securities rating business of such company.
"ENGINEER" means each reputable engineer approved by the Agent licensed
as such in the state, province or other jurisdiction in which the Property in
question is located and experienced with real estate of the same type as the
Properties.
"ENGINEERING REPORT" means with respect to any Property, a written
report prepared by an Engineer describing and analyzing the physical condition
of the Improvements of such Property and otherwise in form and substance
reasonably satisfactory to the Agent.
"ENTITLED LAND" means a parcel of Real Estate constituting a part of
the Mortgaged Property owned by the Borrower or a Subsidiary Guarantor which is
to be developed primarily for residential dwelling units and which satisfies the
requirements for the state and county wherein it is located as more particularly
described in the Requirements for Entitled Land attached hereto as Exhibit L.
"ENVIRONMENTAL CLAIM" means any third party (including governmental
agencies and employees) action, lawsuit, claim, demand, regulatory action or
proceeding, order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of the employees) which seeks to impose liability under any
Environmental Law.
"ENVIRONMENTAL INDEMNITY" means one or more environmental indemnity
agreements dated as of the Closing Date in substantially the form attached as
Exhibit "H" executed or to be executed by the Borrower and the Subsidiary
Guarantors and any future Environmental Indemnities executed in connection with
any land as any of such Environmental Indemnities may be amended, modified or
restated hereafter in accordance with the terms of such agreements.
"ENVIRONMENTAL LAW(S)" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
(i) the protection of the environment, (ii) the effect of the environment on
human health, (iii) emissions, discharges or releases of pollutants,
contaminants, Hazardous Substances or wastes
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into surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"ENVIRONMENTAL PERMIT" means any permit, license, order, approval or
other authorization under Environmental Law.
"ENVIRONMENTAL REPORT" means with respect to the Mortgaged Property, an
environmental report issued not earlier than 12 months prior to the Closing Date
that can be relied on by the Agent and Lenders, which is satisfactory to the
Agent certifying to the Agent and the Lenders that the Mortgaged Property and
the soil and groundwater thereunder do not contain Hazardous Substances except
for Hazardous Substances as permitted by applicable laws.
"EQUITY INVESTMENT" means the ownership of, or participation in the
ownership of, an equity interest in Real Estate or an equity interest in a
Person in the business of owning, developing, improving, operating or managing
Real Estate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"EURODOLLAR BASE RATE" means, with respect to a Fixed Rate Advance for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant Fixed
Rate Loan and having a maturity approximately equal to such Eurodollar Interest
Period.
"EURODOLLAR INTEREST PERIOD" means, with respect to a Fixed Rate
Advance, a period of one, two, three or six months, as available, commencing on
a Business Day selected by the Borrower pursuant to this Agreement. Such
Eurodollar Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter, PROVIDED,
HOWEVER, that if there is no such numerically corresponding day in such next,
second, third or sixth succeeding month, such Eurodollar Interest Period shall
end on the last Business Day of such next, second, third or sixth succeeding
month. If a Eurodollar Interest Period would otherwise end on a day which is not
a Business Day, such Eurodollar Interest Period shall end on the next succeeding
Business Day, PROVIDED, HOWEVER, that if said next succeeding Business Day falls
in a new calendar month, such Eurodollar Interest Period shall end on the
immediately preceding Business Day.
"EURODOLLAR RATE" means, with respect to a Fixed Rate Advance for the
relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is
not such a multiple.
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"EVENT" means an event, circumstance, condition or state of facts.
"EVENT OF DEFAULT" is defined in Section 9.01.
"EXISTING CREDIT AGREEMENT" means the Second Amended and Restated
Revolving Credit Agreement, dated as of April 4, 1997, among Lennar and certain
of its Subsidiaries, as borrowers thereunder, First Chicago as Agent and lender
thereunder, and certain other lenders named therein.
"FACILITIES" means Facility A and Facility B.
"FACILITY A" means the revolving credit facility described in Section
2.01(a).
"FACILITY A ADVANCE" means a Loan pursuant to Facility A.
"FACILITY A COMMITMENT" means, for each of the Lenders, the obligation
of such Lender to make Loans pursuant to Facility A and purchase participations
in Facility Letters of Credit in the aggregate not exceeding the amount set
forth opposite its signature below as its "Facility A Commitment", as such
amount may be modified from time to time pursuant to the terms hereof.
"FACILITY A NOTE" means a promissory note in substantially the form of
Exhibit "A" hereto, completed, executed and delivered by the Borrower and
payable to the order of a Lender in the amount of the Facility A Commitment,
including any amendments, modifications, restatements, renewals or replacements
of such promissory note.
"FACILITY A TERMINATION DATE" means the fourth anniversary of the
Closing Date, or such later date, if any, to which the Facility A Commitment is
extended pursuant to Section 2.20.
"FACILITY B" means the term loan facility described in Section 2.01(b).
"FACILITY B ADVANCE" means a term loan made pursuant to Facility B.
"FACILITY B COMMITMENT" means, for each of the Lenders, the obligation
of such Lender to make a term Loan pursuant to the Facility B Advance in the
amount set forth opposite its signature below as its "Facility B Commitment".
"FACILITY B NOTE" means a promissory note in substantially the form of
Exhibit "B" hereto, completed, executed and delivered by the Borrower and
payable to the order of a Lender in the amount of its Facility B Commitment,
including any amendments, modifications, restatements, renewals or replacements
of such promissory note.
"FACILITY B TERMINATION DATE" means the fourth anniversary of the
Closing Date.
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"FACILITY LETTER OF CREDIT" means a letter of credit issued by an
Issuer pursuant to Section 2.15.
"FACILITY LETTER OF CREDIT FEE" means the fee identified in Section
2.15(f)(i).
"FACILITY LETTER OF CREDIT OBLIGATIONS" means, as at the time of
determination thereof, all liabilities, whether actual or contingent, of the
Borrower with respect to Facility Letters of Credit, including the sum of (a)
the Reimbursement Obligations and (b) the aggregate undrawn face amount of the
then outstanding Facility Letters of Credit.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"FINANCING STATEMENT" means any Uniform Commercial Code - Financing
Statement - Form UCC-1 to be executed and delivered by Borrower in connection
with perfecting the security interest assigned by any Borrower Security Document
or Subsidiary Guarantor Security Document or any extension, renewal,
restatement, modification, or amendment thereof.
"FINISHED LOT" means a parcel of Entitled Land which satisfies the
requirements for Land Under Development and which the owner thereof has invested
not less than 85% of the cost to complete the Improvements thereon, and which;
in Florida, is a Lot described within a final recorded subdivision plat or
agreement in lieu of plat; in California is a Lot reflected on a duly recorded
final subdivision map or a parcel reflected on a duly recorded parcel map and is
subject to a final public subdivision report, if required, duly, validly and
unconditionally issued by the California Department of Real Estate pursuant to
and in accordance with the Subdivided Lands Act, Business and Professions Code
Section 11018.2; in Arizona, is a Lot described in a final public subdivision
report duly, validly and unconditionally issued with the Arizona Department of
Real Estate pursuant to and in accordance with Arizona Revised Statute Section
32-2181 et seq.; and, in Texas, is a Lot which constitutes a valid, legally
subdivided Lot within the meanings of the applicable laws of Texas, the County
and/or the City within which it is located, and other requirements governing the
subdivision of land and constitutes a Lot reflected on a duly recorded plat or
delineated representation of the subdivision of lands, being a complete and
exact representation of the subdivision and other conformation in compliance
with the requirements of all applicable sections of VTCA Local Government Code
Section 212, all the applicable local ordinances and other requirements
governing the subdivision of land and approved by the appropriate Governmental
Authority.
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"FIRST CHICAGO" means The First National Bank of Chicago in its
individual capacity, and its successors.
"FITCH" means Fitch Investors Service, L.P. or any Person succeeding to
the securities rating business of such company.
"FIXED RATE" means the Eurodollar Rate.
"FIXED RATE ADVANCE" means an Advance which bears interest at a Fixed
Rate.
"FIXED RATE LOAN" means a Loan which bears interest at a Fixed Rate.
"FLOATING RATE" means, for any day, a rate per annum equal to the
higher of (i) the Corporate Base Rate for such day or (ii) the sum of the
Federal Funds Effective Rate plus 0.5%, in each case changing when and as the
Corporate Base Rate and the Federal Funds Effective Rate change.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
"FLOATING RATE LOAN" means a Loan which bears interest at the Floating
Rate.
"FREE CASH FLOW" means Net Proceeds from the sale of Real Estate less
the sum of: (a) Real Estate development expenses incurred (excluding capitalized
interest), (b) property taxes paid or accrued, (c) general and administrative
expenses, and (d) other property expenses.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
the Lender, the Borrower, any Subsidiaries of the Borrower or any of their
respective properties.
"GOVERNMENTAL PROCEEDINGS" means any action or proceeding by any
Governmental Authority, including without limitation, the promulgation,
enactment or entry of any legal requirement.
"HAZARDOUS SUBSTANCES" means any toxic or hazardous wastes, pollutants
or substances, including, without limitation, asbestos, PCBs, petroleum products
and by-products, substances defined or listed as "hazardous substances" or
"toxic substances" or similarly identified in or
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pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. ss 9061 ET SEQ., hazardous materials
identified in or pursuant to the Hazardous Materials Transportation Act 49
U.S.C. ss 1802 ET SEQ., hazardous wastes identified in or pursuant to The
Resource Conservation and Recovery Act, 42 U.S.C. ss 6901 ET SEQ., any chemical
substance or mixture regulated under the Toxic Substance Control Act of 1976, as
amended, 15 U.S.C. ss 2601 ET seq., any "toxic pollutant" under the Clean Water
Act, 33 U.S.C. ss 466 ET SEQ., as amended, any hazardous air pollutant under the
Clean Air Act, 42 U.S.C. ss 7401 ET SEQ., and any hazardous or toxic substance
or pollutant regulated under any other applicable federal, state or local
Environmental Laws.
"IMPROVEMENTS" means on and off-site development work, including but
not limited to filling to grade, main water distribution and sewer collection
systems and drainage system installation, paving, and other improvements
necessary for the use of residential dwelling units and as required pursuant to
development agreements which may have been entered into with Governmental
Authorities.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any Property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors, (iv) evidenced by
bankers' acceptances, (v) consisting of obligations, whether or not assumed,
secured by Liens or payable out of the proceeds or production from property now
or hereafter owned or acquired by such Person, (vi) consisting of Capitalized
Lease Obligations, (vii) consisting of liabilities and obligations under any
sales/leaseback and receivable sales transactions, or (viii) consisting of a
letter of credit or a reimbursement obligation of such Person with respect to
any letter of credit; (b) all net obligations of such Person under interest swap
and hedging obligations; and (c) all liabilities and obligations of others of
the kind described in the preceding clauses (a) or (b) that such Person has
guaranteed or that is otherwise its legal liability or which are secured by any
assets or property of such Person and all obligations to purchase, redeem or
acquire any Capital Stock, other than liability under executory contracts to
purchase Capital Stock. With respect to the Borrower, Indebtedness includes,
without limitation of the foregoing, all Obligations.
"INSURANCE CERTIFICATES" is defined in Section 5.01(o).
"INTEREST PERIOD" means a Eurodollar Interest Period.
"INVESTMENT" of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade), deposit account or contribution of capital by such Person to any
other Person or any
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investment in, or purchase or other acquisition of, the stock, partnership
interests, membership interests, notes, debentures or other securities of any
other Person made by such Person.
"ISSUANCE DATE" is defined in Section 2.15(c)(i).
"ISSUANCE NOTICE" is defined in Section 2.15(c)(iii).
"ISSUER" means, with respect to each Facility Letter of Credit, First
Chicago or such other Lender selected by the Borrower with the approval of the
Agent to issue such Facility Letter of Credit so long as such other Lender
consents to act in such capacity.
"JOINDER AGREEMENT" means an agreement, in form and substance
substantially similar to the form attached hereto as Exhibit "E", executed by a
future Subsidiary pursuant to which such Subsidiary becomes a Subsidiary
Guarantor hereunder.
"JOINT VENTURE" means a joint venture (whether in the form of a
corporation, a partnership, limited liability company or otherwise) (i) to which
the Borrower or a Joint Venture Subsidiary is or becomes a party, (ii) whether
or not Borrower is required to consolidate the joint venture in its financial
statements in accordance with GAAP, and (iii) in which the Borrower has or will
have a total investment exceeding $25,000 or which has total assets plus
contingent liabilities exceeding $100,000. For the purposes of this definition,
the Borrower's investment in a joint venture shall be deemed to include any
Securities of the joint venture owned by the Borrower, any loans, advances or
accounts payable to the Borrower from the joint venture, any commitment,
arrangement or other agreement by the Borrower to provide funds or credit to the
joint venture and the Borrower's share of the undistributed profits of the joint
venture.
"JOINT VENTURE SUBSIDIARY" means a Subsidiary which is a partner,
shareholder or other equity owner in a Joint Venture.
"LAND UNDER DEVELOPMENT" means Entitled Land upon which construction of
Improvements has commenced but not been completed and for which: (a) to the
extent required, a performance bond, surety or other security has been issued to
and in favor of and unconditionally accepted by each local agency and all
relevant Governmental Authorities, including any municipal utility district in
which the Real Estate is situated with regard to all work to be performed
pursuant to each and all of said subdivision improvement agreements or other
agreements; (b) all necessary plans have been approved by all relevant
Governmental Authorities for the installation of any and all Improvements
required to be installed upon such Real Estate; (c) all necessary permits have
been issued for the installation of said Improvements; and (d) utility services
necessary for construction of Improvements and residential dwelling units and
the operation thereon for the purpose intended will be available to such Real
Estate upon completion of the Improvements and there exists a binding obligation
on the part of each and every utility company to deliver necessary utility
services to such Real Estate.
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"LEGAL REQUIREMENT" means any law, statute, ordinance, decree,
requirement, order, directive, rule, regulation (or official interpretation of
any of the foregoing of, in the terms of any license or permit issued by, any
Governmental Authority).
"LENDERS" means the lending institutions listed on the signature pages
of this Agreement and the respective successors and permitted assigns of such
lending institutions.
"LENDING INSTALLATION" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"LENNAR" means Lennar Corporation, a corporation organized and existing
under the laws of the State of Delaware, and its successors.
"LENNAR AND LNR GUARANTY" means the guaranty of the Loans in
substantially the form of Exhibit "J" hereto including amendments,
modifications, renewals or replacements thereof.
"LENNAR CREDIT AGREEMENT" means the Revolving Credit Agreement
(Facility A) and the Revolving Credit Agreement (Facility B), each dated the
Agreement Date among Lennar and certain Subsidiaries of Lennar, as borrowers
thereunder, First Chicago as agent and lender thereunder, and certain other
lenders named therein, as the same may be amended, modified, or restated from
time to time.
"LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"LETTER OF CREDIT COMMITMENT" means, for each Lender, the obligation of
such Lender to participate in Facility Letters of Credit in an amount not
exceeding the lesser of (i) its Pro Rata Share of the Aggregate Letter of Credit
Commitment or (ii) its Pro Rata Share of the unused amount of the Aggregate
Facility A Commitment.
"LETTER OF CREDIT COLLATERAL ACCOUNT" is defined in Section 2.15(g).
"LETTER OF CREDIT REQUEST" is defined in Section 2.15(c)(i).
"LIABILITIES" of a Person means all items included in the liability
section of a balance sheet of that Person prepared in accordance with GAAP
consistently applied as of the date of calculation. Without limiting the
generality of the foregoing, the term "Liabilities" shall include, without
limitation: (i) all Indebtedness secured by any Mortgage, lien, pledge, security
interest, charge or encumbrance upon or in property owned by that Person, to the
extent attributable to that Person's interest in the property, even though that
Person has not assumed or become liable for the payment of the Indebtedness;
(ii) the aggregate amount of the reserves established on the books of that
Person in respect of contingent liabilities and other contingencies (except
reserves which are prop-
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erly treated as deductions from assets) and in any event shall include with
respect to the Borrower the amount of all outstanding Loans; and (iii)
obligations under reimbursement agreements with financial institutions
(including Lenders) relating to letters of credit issued by such financial
institutions for the account of Borrower.
"LIEN" means any lien (statutory or other), Mortgage (including,
without limitation, purchase money mortgages), security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LLP PARTNER" means Lennar Land Partners Sub, Inc., a Delaware
corporation, a Wholly-Owned Subsidiary of Lennar which holds a 50% interest in
the Borrower and the managing general partner of the Borrower.
"LNR" means LNR Property Corporation, a corporation organized under the
laws of the State of Delaware.
"LNR PARTNER" means LNR Land Partners Sub, Inc., a Delaware
corporation, an indirect Wholly-Owned Subsidiary of LNR which holds a 50%
interest in the Borrower.
"LOAN" means, with respect to a Lender, a loan made by such Lender
pursuant to Article II (and any conversion or continuation thereof).
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary
Guarantees, the Facility Letters of Credit (and any application and/or
reimbursement agreement delivered in connection therewith) the Lennar and LNR
Guaranty, the Borrower Security Documents, the Subsidiary Guarantor Security
Documents, and any and all other instruments or documents delivered or to be
delivered by the Borrower and the Subsidiary Guarantors pursuant hereto and
thereto, as such documents may be amended or modified and in effect from time to
time.
"LOT" means parcel of Real Estate constituting a part of the Mortgaged
Property as depicted upon a subdivision plat or site plan upon which a
residential dwelling unit may be constructed according to a site plan which has
been approved by applicable Governmental Authorities.
"MAJORITY LENDERS" means Lenders in the aggregate having in excess of
fifty percent (50%) of the Aggregate Commitment or, if the Aggregate Commitment
has been terminated, Lenders in the aggregate holding in excess of fifty percent
(50%) of the aggregate unpaid principal amount of the outstanding Loans.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, properties, assets, condition (financial or otherwise), results of
operations, or prospects of (a) the Borrower and the Subsidiary Guarantors,
taken as a whole, or (b) if so specified, the Borrower or a
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Subsidiary Guarantor, (ii) the ability of the Borrower or a Subsidiary Guarantor
to perform its obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder.
"MATURITY DATE" means the date upon which the outstanding principal
amount of the Notes, all accrued but unpaid interest thereon, and all other
Obligations become due and payable, whether as a result of the occurrence of the
stated maturity date or the acceleration of maturity pursuant to the terms of
any of the Loan Documents.
"MOODY'S" means Moody's Investors Service, Inc. or any Person
succeeding to the securities rating business of such company.
"MONTHLY PAYMENT DATE" means the first day of each calendar month.
"MORTGAGE" means collectively the mortgages and deeds of trust and
security agreement (including leasehold mortgages or deeds of trust) to be
executed and delivered by the Borrower and by the appropriate Subsidiary
Guarantor, substantially in the form of Exhibit "D" (with such changes therein
as may be required to reflect different laws and practices in the various
jurisdictions in which the mortgages are to be recorded) as the same may be
amended, supplemented or otherwise modified from time to time.
"MORTGAGED PROPERTIES" means Properties as to which, now or hereafter,
the Agent for the benefit of the Lenders has been granted a first priority
mortgage pursuant to the Mortgages. As of the Closing Date, the Mortgaged
Properties shall be the Properties listed in Schedule III.
"MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NET BOOK VALUE" means, with respect to an asset owned by the Borrower
or a Subsidiary, the gross investment of Borrower or a Subsidiary in the asset,
less all reserves (including loss reserves and reserves for depreciation)
attributable to that asset, all determined in accordance with GAAP consistently
applied.
"NET PROCEEDS" means, in connection with the sale of any Mortgaged
Property or Additional Mortgaged Property or any Recovery Event, the proceeds
thereof net of (A) all bona fide prorations and adjustments to the sales price
required to be made pursuant to the terms of the sales contract and (B) the
aggregate amount of bona fide closing costs due to any Person, PROVIDED that if
such closing costs are due to an Affiliate of the Borrower, such costs comply
with Section 7.08.
"NONRECOURSE DEBT" means Indebtedness of the Borrower or a Subsidiary
secured by a Mortgage on Real Estate of the Borrower or a Subsidiary, as to
which Indebtedness the sole recourse of the holders thereof is to the Real
Estate encumbered by that Mortgage and none of such
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holders has the right (as a matter of law, by contract or otherwise) to enforce
payment thereof against the Borrower or a Subsidiary or any of the Borrower's or
Subsidiary's properties and assets other than the Real Estate encumbered by that
Mortgage.
"NOTES" means, collectively, the Facility A Notes and the Facility B
Notes, and "Note" means any one of the Notes, as the same may be amended,
modified, restated, renewed, or replaced.
"NOTICE OF ASSIGNMENT" is defined in Section 12.03(b).
"OBLIGATIONS" means collectively the Borrower Obligations and the
Subsidiary Guarantor Obligations. Any document which incorporates by reference
the definition of Obligations contained in this Agreement shall in the instance
of a document executed by the Borrower refer to the Borrower Obligations and in
the instance of a document executed by a Subsidiary Guarantor refer to the
Subsidiary Guarantor Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PARTICIPANTS" is defined in Section 12.02.
"PERFORMANCE LETTER OF CREDIT" means a letter of credit issued to a
governmental authority or quasi-governmental agency to insure the completion by
the Borrower of a development of land improvement or to ensure payment by the
Borrower of escrow accounts.
"PERMITTED TITLE EXCEPTIONS" means those exceptions from coverage taken
in the Title Policy which are acceptable to Agent in its sole discretion.
"PERMITTED LIENS" means (a) Liens existing on the date of this
Agreement and described on Schedule VI hereto; (b) Liens imposed by governmental
authorities for taxes, assessments or other charges not yet subject to penalty
or which are being contested in good faith and by appropriate proceedings, if
adequate reserves with respect thereto are maintained on the books of the
Borrower in accordance with GAAP; (c) statutory liens of carriers, warehousemen,
mechanics, materialmen, landlords, repairmen or other like Liens arising by
operation of law in the ordinary course of business PROVIDED that (i) the
underlying obligations are not overdue for a period of more than 30 days or (ii)
such Liens are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of the
Borrower in accordance with GAAP; (d) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (e) the Permitted Title
Exceptions; (f) zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the Real Estate subject thereto (as such Real Estate
is used by the Borrower or any of the Subsidiaries) or interfere with the
ordinary conduct of the business of the Borrower or any of the Subsidiaries; (g)
Liens
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arising by operation of law in connection with judgments, only to the extent,
for an amount and for a period not resulting in a default with respect thereto;
(h) pledges or deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security legislation; and (i) Liens securing the Obligations.
"PERSON" means any natural person, corporation, firm, enterprise,
trust, association, company, partnership, limited liability company, joint
venture or other entity or organization, or any government or political
subdivision or any agency, department, or instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"PRO RATA SHARE" means, for each Lender, the ratio that such Lender's
Commitment bears to the Aggregate Commitment.
"PROJECT" means a parcel of Real Estate, owned by the Borrower or a
Subsidiary Guarantor which is to be developed or sold as part of a common
scheme.
"PROPERTY" means the Real Estate now or hereafter forming a part of the
Borrowing Base.
"PURCHASE PRICE ACCOUNTING ADJUSTMENT" means at the Closing Date the
lower of (x) the appraised value of the Bramalea Land less the book value of the
Bramalea Land at the Closing Date or (y) the absolute value of the purchase
price accounting adjustment as shown on the books of Bramalea or (z) Thirty Nine
Million Dollars ($39,000,000.00); and, following the Closing Date, decreased by
the book value of the purchase price accounting adjustment as determined at the
Closing Date for each Lot sold after the Closing Date.
"PURCHASERS" is defined in Section 12.03(a).
"QUARTERLY PAYMENT DATE" means the first day of each April, July,
October and January.
"RATE HEDGING AGREEMENT" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"RATE HEDGING OBLIGATIONS" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any all Rate
Hedging Agreements, and (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Hedging Agreement.
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"RATING AGENCY" means any one of Duff & Phelps, Fitch, Moody's or S&P.
"RATINGS" means a rating of Lennar's senior unsecured long-term debt
from one or more of the Rating Agencies.
"REAL ESTATE" means land, together with all rights, privileges,
tenements, hereditaments, rights-of-way, easements, appendages, projections,
appurtenances, water rights including riparian and littoral rights, streets,
ways, alleys, and strips and gores of land now or hereafter in any way
belonging, adjoining, crossing or pertaining to the land (including, without
limitation, leasehold interests), and improvements thereto, located on or used
in connection with land, rights in land or interests therein (including
leasehold interests), but shall not include Mortgages or interests therein.
"RECOVERY EVENT" means any settlement or repayment in respect of a
Property or casualty insurance claim or any Taking relating to any Mortgaged
Property (including any condemnation proceeds or insurance proceeds).
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"REORGANIZATION" means (i) the formation of LNR, (ii) the transfer to
LNR of all of the business and assets of the Asset Management Division of Lennar
and that portion of the Financial Services Division of Lennar relating to the
servicing, acquisition and management of commercial mortgages and real estate,
(iii) the distribution to the shareholders of Lennar of all of the capital stock
of LNR, (iv) the transfer by LLP Partner to the Borrower of the Real Estate
described on Schedule III hereto in exchange for a 50% general partnership
interest in the Borrower, and (v) the merger of Lennar with and into Pacific
Greystone Corporation.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"REIMBURSEMENT OBLIGATIONS" means, at any time, the aggregate of the
Borrower Obligations to the Lenders, the Issuers and the Agent in respect of all
unreimbursed payments or disbursements made by the Lenders, the Issuers and the
Agent under or in respect of the Facility Letters of Credit.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, PROVIDED, HOWEVER, that a failure to meet
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the minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such waiver
of the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"REQUIRED LENDERS" means Lenders in the aggregate having at least 66
2/3% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least 66 2/3% of the sum of (i)
the aggregate unpaid principal amount of the outstanding Loans PLUS (ii) the
Facility Letter of Credit Obligations.
"RESERVE REQUIREMENT" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation D
on Eurocurrency liabilities.
"REVOLVING COMMITMENT" means, for each Lender, the obligation of such
Lender to make Facility A Loans and purchase participations in Facility Letters
of Credit not exceeding its Pro Rata Share of the Facility A Commitment.
"S&P" means Standard & Poor's Corporation and any Person succeeding to
the securities rating business of such company.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SECURITIES" of any Person means equity securities and debt securities
and any other instrument commonly understood to be a security issued by that
Person.
"SECURITY DOCUMENTS" means collectively the Borrower Security Documents
and Subsidiary Guarantor Security Documents.
"SECURITY AGREEMENT (CAPITAL STOCK AND PARTNERSHIP INTERESTS)" means
the Security Agreement substantially in the form of Exhibit "K" including any
amendment, modification, renewal or restatement thereof.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"SOLVENT" means, as to any Person, that such Person has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as they
mature and owns property having a value, both at fair valuation and at present
fair saleable value, greater than the amount required to pay its debts.
"SUBORDINATED DEBT" means any Indebtedness of the Borrower which by its
terms is subordinated, in form and substance and in a manner satisfactory to the
Required Lenders, in
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time and right of payment to the prior payment in full of
the Obligations, but which in any event matures after the Facility A Termination
Date.
"SUBSIDIARY" means (i) any corporation more than 50% of the outstanding
securities having ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by the Borrower, or by one or more
Subsidiaries or by the Borrower and one or more Subsidiaries, or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
"SUBSIDIARY GUARANTOR" means a Subsidiary or Joint Venture of the
Borrower listed in Schedule I hereto, and any Subsidiary or Joint Venture of the
Borrower hereafter guaranteeing the Loans.
"SUBSIDIARY GUARANTOR SECURITY DOCUMENTS" means collectively the
Subsidiary Guarantor Mortgages, and all other security documents hereafter
delivered to the Agent granting a Lien on any asset or assets of any Subsidiary
Guarantor to secure the Subsidiary Guarantor Obligations.
"SUBSIDIARY GUARANTOR OBLIGATIONS" means all unpaid principal of and
accrued and unpaid interest on the Subsidiary Guarantees, all accrued and unpaid
fees and expenses, reimbursements, indemnities and other obligations of the
Subsidiary Guarantors to the Lenders or to any lender, the Agent or any
indemnified party arising under the Loan Documents.
"SUBSIDIARY GUARANTY" means the guarantee of the Loans, in
substantially the form of Exhibit "I" hereto, including any amendment,
modification, renewal, restatement or replacement thereof.
"SURVEY" means a survey of the Mortgaged Property prepared by a
registered land surveyor which shall show the legal description of the Mortgaged
Property to be the same as Schedule III hereto; set forth an accurate meets and
bounds description of the Mortgaged Property; be certified to the Lenders and to
the title company; include a certificate of the map or plat and the survey on
which it is based or prepared (i) in accordance with the "minimum standard
detail requirements for land title surveys" jointly established and adopted by
the American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and including items 1, 2, 3, 4, 6, 7, 8, 9, 10, 11 and 13 of
Table A thereof and (ii) pursuant to the Accuracy Standards (as adopted by ALTA
and ACSM and in effect on the date of this certification) of an urban survey.
For Real Estate located in Texas, the survey shall be made in accordance with
then current Texas Surveyor's Association Standards and Specifications for a
Category IA, Condition II Survey.
"SWAP DOCUMENTS" mean any existing or future agreement between the
Borrower and a Lender or any affiliate of a Lender governing or evidencing the
terms of any foreign exchange or derivatives transaction, including, without
limitation, any interest rate swap or option, currency swap or option, any
combination thereof, or any option with respect to any of the foregoing.
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"TAKING" means the taking or appropriation (including by deed in lieu
of condemnation or by voluntary sale or transfer under threat of condemnation or
while legal proceedings for condemnation are pending) of any Mortgaged Property,
or any part thereof or interest therein, for public or quasi public use under
the power of eminent domain, or reason of any public improvement or condemnation
proceedings, or in any other manner or any damage or injury or diminution in
value through condemnation, inverse condemnation or the exercise of the power of
eminent domain. The term "Taking" used as a verb has a correlative meaning.
"TANGIBLE NET WORTH" means, as at any date, the amount of consolidated
partners' equity of the Borrower and its consolidated Subsidiaries as shown on
its balance sheet as of such date, less the aggregate amount of the goodwill and
other assets that are properly classified as "intangible assets" at such date in
accordance with GAAP.
"TITLE POLICY" means, with respect to the Mortgaged Properties, a
mortgagee policy of title insurance which (a) is in the form of American Land
Title Association Standard Loan Policy - 1970 (without modification, revision or
amendment) (or such other form as required by the laws of the state wherein such
Real Estate is located approved by the Agent) with such endorsements as are
available in the state wherein the Real Estate is located and required by the
Agent in its sole discretion, such as endorsements, commonly known as variable
or adjustable rate, environmental protection, comprehensive or ALTA 9, doing
business, usury, contiguity, survey, plat act, revolving credit, tie-in, if more
than one policy is issued for Real Estate located within a single state, patent
reservation, water rights, tax parcel and a Lender's group endorsement, (b) is
issued by underwriters reasonably acceptable to the Agent with such reinsurance
as Agent shall reasonably request, (c) insures that the grantor of the Lien
insured by such policy owns the Real Estate subject to such Lien in fee simple
and that the mortgage covering the Real Estate is a valid lien on the Real
Estate in favor of the Agent for the benefit of the Lenders (subject only to
permitted exceptions), (d) does not contain any exceptions for rights of parties
in possession, or unpaid delinquent sums or taxes, special assessments or
subsequent assessments due to changes in ownership or usage, or any other
exceptions to coverage other than Permitted Exceptions. and (e) contains a
lender's group endorsement.
"TRANSFEREE" is defined in Section 12.03(c).
"TYPE" means, with respect to any Advance, its nature as a Floating
Rate Advance or a Fixed Rate Advance.
"UCC SEARCH" is defined in Section 5.01(n).
"UNAUDITED FINANCIAL STATEMENTS" is defined in Section 4.08.
"UNENTITLED LAND" means a parcel of Real Estate constituting a part of
the Mortgaged Property owned by the Borrower or a Subsidiary which is not either
a Finished Lot, Land Under Development, or Unimproved Entitled Land.
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"UNFUNDED LIABILITIES" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans.
"UNIMPROVED ENTITLED LAND" means Entitled Land upon which no
Improvements have been commenced.
"UNMATURED DEFAULT" means an event which but for the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such Person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (ii) any partnership, association, joint venture
or similar business organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.
SECTION 1.02. COMPUTATION OF TIME PERIODS. For the purposes of this
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each means "to but excluding" and the word "through" means "to and
including".
SECTION 1.03. ACCOUNTING TERMS. All accounting terms used and not
specifically defined herein shall be construed in accordance with GAAP. All
references herein to GAAP shall be deemed to refer to those principles.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS.
(a) FACILITY A REVOLVING COMMITMENT. On and after the Closing Date and
prior to the Facility A Termination Date, upon the terms and conditions set
forth in this Agreement and in reliance upon the representations and warranties
of Borrower herein set forth, each Lender severally agrees to make Advances to
the Borrower from time to time in amounts not to exceed in the aggregate at any
one time outstanding the amount of its Facility A Commitment PROVIDED that (A)
if any Facility Letters of Credit are issued and outstanding or drawn and
unreimbursed, the aggregate availability under the Facility A Commitments of
the Lenders shall be reduced by the aggregate amount of the Facility Letter of
Credit Obligations for as long as, and to the extent that, they remain
outstanding or unreimbursed, and the availability under the Facility A
Commitment of
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each Lender shall accordingly be reduced on a PRO RATA basis in accordance with
its Pro Rata Share, (B) in no event may the aggregate principal amount of all
outstanding Facility A Advances and the aggregate amount of all Facility Letter
of Credit Obligations exceed the Aggregate Facility A Commitment, and (C) in no
event shall the aggregate principal amount of all outstanding Advances at any
time exceed the Borrowing Base at such time. Subject to the terms of this
Agreement, the Borrower may borrow, repay and reborrow under Facility A at any
time prior to the Facility A Termination Date. The Facility A Commitments to
lend hereunder shall expire on the Facility A Termination Date.
(b) FACILITY B COMMITMENT. On the Closing Date, upon the terms and
conditions set forth in this Agreement and in reliance upon the representations
and warranties of Borrower herein set forth, each Lender severally agrees to
make the Facility B Advance to the Borrower in the amount of its Facility B
Commitment.
(c) LETTER OF CREDIT COMMITMENT. On and after the Closing Date and
prior to the Facility A Termination Date, each Lender severally agrees, on the
terms and conditions set forth in this Agreement and in reliance upon the
representations and warranties of Borrower herein set forth, to participate in
Facility Letters of Credit issued for the account of the Borrower pursuant to
Section 2.15; PROVIDED that in no event may the aggregate amount of all Facility
Letter of Credit Obligations exceed the lesser of (i) the Aggregate Letter of
Credit Commitment and (ii) the Aggregate Facility A Commitment minus all
outstanding Facility A Advances.
(d) ADVANCES AND PARTICIPATIONS PRO RATA. Each Advance and each
purchase of a Facility Letter of Credit participation hereunder shall be made by
the several Lenders ratably in accordance with their respective Pro Rata Shares.
SECTION 2.02. TYPES OF ADVANCES; MANDATORY PRINCIPAL PAYMENTS; FINAL
MATURITY.
(a) The Advances may be Floating Rate Advances, or Fixed Rate Advances,
or a combination thereof, selected by the Borrower in accordance with Section
2.06.
(b) Upon the sale, transfer or the disposition of any of the Collateral
in accordance with the provisions of Section 8.07, Borrower shall make a
mandatory prepayment to the Agent of 100% of Net Proceeds as follows:
(i) For each Lot sold, $6,000 shall be applied to Facility B
(first to the next following four scheduled principal payments and then, on a
pro rata basis to all future scheduled principal payments) until paid in full,
and then to prepay the outstanding balance under Facility A;
(ii) any Net Proceeds in excess of $6,000 per Lot shall be
applied to prepayment of the then outstanding balance under Facility A; and
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(iii) for Real Estate other than Lots sold, the Net Proceeds
shall be applied to Facility B in such amount as Agent, in its sole discretion,
deems to be equivalent to a sale of Lots (the payment shall first be applied to
the next following four (4) scheduled principal payments and then on a prorata
basis to all future scheduled principal payments) until paid in full, and then
to repay the outstanding balance under Facility A and, any Net Proceeds in
excess of the amount applied to Facility B shall be applied to prepayment of the
then outstanding balance under Facility A.
(c) Upon the issuance of any debt or equity security by the Borrower,
100% of the Net Proceeds therefrom shall be used to reduce the Facilities as
follows:
(i) first to retire Facility B applied pro rata to all future
scheduled principal payments until paid in full; and
(ii) thereafter to repay Facility A until paid in full.
(d) If at any time the outstanding principal amount of the Advances
exceeds the Borrowing Base at such time, the Borrower shall forthwith prepay the
outstanding Advances by the amount of the excess, plus accrued and unpaid
interest thereon.
(e) Principal of the Facility B Note shall be repaid as follows:
beginning on the third Quarterly Payment Date after the Closing Date and
continuing thereafter on each Quarterly Payment Date the Borrower shall pay the
sum of $7,000,000 (less any amounts paid since the immediately preceding
Quarterly Payment Date pursuant to Section 2.02(b) or (c)) and shall pay the
outstanding principal balance at the Facility B Termination Date.
(f) All Obligations evidenced by the Facility A Notes shall be repaid
on the Facility A Termination Date.
(g) Except as provided above in this Section or elsewhere in this
Agreement, the Borrower may direct the Agent to apply prepayments of the
Obligations against either of the Facilities.
SECTION 2.03. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time
to time pay, without penalty or premium, all outstanding Floating Rate Advances,
or, in a minimum aggregate amount of $100,000 or any integral multiple of
$100,000 (or the amount required to repay all Advances in full) in excess
thereof, any portion of the outstanding Floating Rate Advances upon one Business
Day's prior notice to the Agent. A Fixed Rate Advance may not be paid prior to
the last day of the applicable Interest Period.
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SECTION 2.04. COMMITMENT FEE AND REDUCTION OF COMMITMENTS.
(a) The Borrower agrees to pay to the Agent for the account of each
Lender a Commitment Fee per annum on the daily unborrowed and unused portion of
such Lender's Facility A Commitment (i.e., after deducting from such Facility A
Commitment the then outstanding amount of all Loans made by such Lender under
Facility A and the then outstanding amount of all participations by such Lender
in Facility Letters of Credit) from the Closing Date to and including the
Facility A Termination Date, payable in arrears on each Quarterly Payment Date
thereafter and on the Facility A Termination Date. Such Commitment Fee shall be
determined on each Quarterly Payment Date in accordance with the pricing grid
set forth as Exhibit "F" hereto.
(b) The Borrower may permanently reduce the Aggregate Commitment in
whole, or in part ratably among the Lenders in integral multiples of $5,000,000,
upon at least three Business Days' written notice to the Agent, which notice
shall specify the amount of any such reduction, PROVIDED, HOWEVER, that the
amount of the Aggregate Commitment may not be reduced below the aggregate
principal amount of the outstanding Advances and Facility Letter of Credit
Obligations. All accrued Commitment Fees under this Section 2.04 shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder. The fees payable under this Section 2.04, once
paid, shall not be refundable for any reason.
SECTION 2.05. METHOD OF BORROWING. Not later than noon (Chicago time)
on each Borrowing Date, each Lender shall make available its Loan or Loans, in
funds immediately available in Chicago to the Agent at its address specified
pursuant to Section 13.01. The Agent will make the funds so received from the
Lenders available to the Borrower by deposit into Account No. 5596467 maintained
by the Borrower at First Chicago.
SECTION 2.06. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR
ADVANCES.
(a) The Borrower shall select the Type of Advance and, in the case of
each Fixed Rate Advance, the Interest Period applicable to each Advance from
time to time; PROVIDED, HOWEVER, that the Borrower may have no more than ten
(10) Fixed Rate Advances in Facility A and ten (10) Fixed Rate Advances in
Facility B outstanding at any one time. The Borrower shall give the Agent
irrevocable notice (a "Borrowing Notice") not later than 10:00 a.m. (Chicago
time) on the Borrowing Date for each Floating Rate Advance and prior to 10:00
a.m. (Chicago time) on the date which is two Business Days before the Borrowing
Date for each Fixed Rate Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of
such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
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(iv) in the case of each Fixed Rate Advance, the Interest Period
applicable thereto.
The Borrower shall be entitled to obtain only one Advance in any single Business
Day, which may be comprised in whole or in part of any Fixed Rate Advance.
Changes in the rate of interest on that portion of any Advance maintained as a
Floating Rate Advance will take effect simultaneously with each change in the
Floating Rate. Each Fixed Rate Advance shall bear interest from and including
the first day of the Interest Period applicable thereto to (but not including)
the last day of such Interest Period at the interest rate determined as
applicable to such Fixed Rate Advance. The Borrower shall select Interest
Periods with respect to Fixed Rate Advances so that it is not necessary to pay a
Fixed Rate Advance prior to the last day of the applicable Interest Period in
order to make any mandatory payment required to be made pursuant to Section 2.02
above or to repay the Obligations in full on the Maturity Date.
(b) Each Borrowing Notice shall be irrevocable and binding on the
Borrower and, in respect of the borrowing specified in the Borrowing Notice, the
Borrower shall indemnify each Lender against any loss or expense incurred by
that Lender as a result of any failure to fulfill the applicable conditions set
forth in Section 5.02 on or before the proposed Borrowing Date specified in the
Borrowing Notice, including, without limitation, any loss (including loss of
profit) or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund the Loan to be made by
that Lender as part of that borrowing when that Loan, as a result of that
failure, is not made on that date.
SECTION 2.07. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR
CONVERSION AND CONTINUATION OF ADVANCES.
(a) RIGHT TO CONVERT. The Borrower may elect from time to time, subject
to the provisions of Section 2.07(c), to convert all or any part of an Advance
of any Type into any other Type or Types of Advances; PROVIDED that any
conversion of any Fixed Rate Advance shall be made on, and only on, the last day
of the Interest Period applicable thereto.
(b) AUTOMATIC CONVERSION AND CONTINUATION. Floating Rate Advances shall
continue as Floating Rate Advances unless and until such Floating Rate Advances
are converted into Fixed Rate Advances. Fixed Rate Advances of any Type shall
continue as Fixed Rate Advances of such Type until the end of the then
applicable Interest Period therefor, at which time such Fixed Rate Advance shall
be automatically converted into a Floating Rate Advance unless the Borrower
shall have given the Agent notice in accordance with Section 2.07(d) requesting
that, at the end of such Interest Period, such Fixed Rate Advance either
continue as a Fixed Rate Advance of such Type for the same or another Interest
Period or be converted into an Advance of another Type.
(c) NO CONVERSION IN CASE OF AN EVENT OF DEFAULT OR UNMATURED DEFAULT.
Notwithstanding anything to the contrary contained in Section 2.07(a) or
2.07(b), no Advance may be
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converted into or continued as a Fixed Rate Advance (except with the consent of
the Required Lenders) when any Event of Default or Unmatured Default has
occurred and is continuing.
(d) CONVERSION/CONTINUATION NOTICE. The Borrower shall give the Agent
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of an
Advance or continuation of a Fixed Rate Advance not later than 10:00 a.m.
(Chicago time) on the day of any conversion into a Floating Rate Advance or
prior to 10:00 a.m. (Chicago time) on the date which is two Business Days prior
to the date of the requested conversion into or continuation of a Fixed Rate
Advance, specifying:
(i) the requested date (which shall be a Business Day) of such
conversion or continuation;
(ii) the amount and Type of the Advance to be converted or
continued; and
(iii) the amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a
conversion into or continuation of a Fixed Rate Advance, the duration
of the Interest Period applicable thereto.
SECTION 2.08. MINIMUM AMOUNT OF EACH ADVANCE. Each Advance shall be in
the minimum amount of $500,000 for Floating Rate Advances (and in multiples of
$100,000, if in excess thereof) and $3,000,000 for Fixed Rate Advances (and in
multiples of $100,000, if in excess thereof).
SECTION 2.09. RATE AFTER MATURITY. Except as provided in the next
sentence, any Advance which is not paid at maturity for such Advance, whether by
acceleration or otherwise, shall bear interest until paid in full at a rate per
annum equal to the Floating Rate plus 5% per annum. In the case of a Fixed Rate
Advance the maturity of which is accelerated, such Fixed Rate Advance shall bear
interest at the rate otherwise applicable to such Interest Period plus 5% per
annum for the remainder of the applicable Interest Period, and thereafter at the
Floating Rate plus 5% per annum.
SECTION 2.10. METHOD OF PAYMENT. All payments of principal, interest,
and fees hereunder shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to Article XIII, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by 1:00 p.m. (local time) on
the date when due and shall be made ratably by the Agent among the Lenders with
respect to their Loans. Each payment delivered to the Agent for the account of
any Lender shall be delivered promptly by the Agent to such Lender in the same
type of funds which the Agent received at its address specified pursuant to
Article XIII or at any Lending Installation specified in a notice received by
the Agent from such Lender. The Agent is hereby authorized to charge any account
of the Borrower maintained with First Chicago for each payment of principal,
interest and fees as it becomes due hereunder. The Agent shall endeavor in good
faith to provide telephonic notice to
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Borrower prior to any such charge, but the Agent shall not be liable to Borrower
or any other Person if Agent fails to provide any such notice. If and to the
extent payment owed to any Lender is not made by the Borrower to the Agent or
that Lender, as the case may be, when due hereunder or under the Note held by
that Lender, the Borrower further authorizes such Lender to charge from time to
time against any or all of the accounts maintained by the Borrower with the
Lender, its subsidiaries, affiliates or branches any amount so due, subject to
the provisions of Article XI.
SECTION 2.11. NOTES; TELEPHONIC NOTICES. Each Lender is hereby
authorized to record the principal amount of each of its Loans and each
repayment on the schedule attached to its applicable Notes; PROVIDED, however,
that the failure to so record shall not affect the Borrower's obligations under
any such Note. The Borrower hereby authorizes the Lenders and the Agent to
extend, convert or continue Advances, effect selections of Types of Advances and
to transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. All actions taken by the Lenders and the Agent upon such telephonic
notices are hereby approved by the Borrower, and the Lenders and the Agent shall
incur no liability as a result of any such actions. The Borrower agrees to
deliver promptly to the Agent a written confirmation, if such confirmation is
requested by the Agent or any Lender, of each telephonic notice signed by an
Authorized Officer. If the written confirmation differs in any material respect
from the action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.
SECTION 2.12. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest
accrued on each Floating Rate Advance shall be payable on each Monthly Payment
Date, commencing with the first such date to occur after the date hereof, on any
date on which the Floating Rate Loan is prepaid, whether due to acceleration or
otherwise, and on the Facility A Termination Date or the Facility B Termination
Date, as the case may be. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a Fixed Rate
Advance on a day other than a Monthly Payment Date shall be payable on the date
of conversion. Interest accrued on each Fixed Rate Advance shall be payable on
the last day of its applicable Interest Period, on any date on which the Fixed
Rate Advance is prepaid, whether by acceleration or otherwise, and at maturity.
Interest accrued on each Fixed Rate Advance having an Interest Period longer
than three months shall also be payable on the last day of each three-month
interval during such Interest Period. Interest on Floating Rate Loans and
Commitment Fees shall be calculated for actual days elapsed on the basis of a
365-day year; interest on Fixed Rate Loans shall be calculated for actual days
elapsed on the basis of a 360-day year. Interest shall be payable for the day an
Advance is made but not for the day of any payment on the amount paid if payment
is received prior to 1:00 p.m. (Chicago time) at the place of payment. If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.
SECTION 2.13. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify
each Lender of the contents
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of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice, Letter of Credit Request, Issuance Notice,
notice from a Lender pursuant to Section 2.15(e)(i) and repayment notice
received by it hereunder. The Agent will notify each Lender of the interest rate
applicable to each Fixed Rate Advance promptly upon determination of such
interest rate.
SECTION 2.14. LENDING INSTALLATIONS. Each Lender may book its Loans and
participation in Facility Letters of Credit at any Lending Installation selected
by such Lender and may change its Lending Installation from time to time. All
terms of this Agreement shall apply to any such Lending Installation and the
Notes shall be deemed held by each Lender for the benefit of such Lending
Installation. Each Lender may, by written or telex notice to the Agent and the
Borrower, designate a Lending Installation through which Loans will be made by
it and for whose account Loan payments are to be made.
SECTION 2.15. FACILITY LETTERS OF CREDIT.
(a) OBLIGATION TO ISSUE. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the
Borrower herein set forth, each Issuer hereby agrees to issue upon the request
of and for the account of the Borrower, through such of the Issuer's Lending
Installations or Affiliates as the Issuer and the Borrower may jointly agree
(PROVIDED that in the absence of such joint agreement for any Facility Letter of
Credit for which the Agent is the Issuer, the Agent agrees to issue such
Facility Letters of Credit out of its main office), one or more Facility Letters
of Credit in accordance with this Section 2.15, from time to time during the
period, commencing on the Closing Date and ending on the tenth Business Day
prior to the Facility A Termination Date.
(b) CONDITIONS FOR ISSUANCE. In addition to being subject to the
satisfaction of the conditions contained in Section 5.02, the obligation of an
Issuer to issue any Facility Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) the requested Facility Letter of Credit is (x) for a
Performance Letter of Credit and (y) for the installation of Improvements on
Mortgaged Property;
(ii) the aggregate maximum amount then available for drawing
under Facility Letters of Credit issued by such Issuer, after giving effect to
the Facility Letter of Credit requested hereunder, shall not exceed any limit
imposed by law or regulation upon such Issuer;
(iii) after giving effect to the requested issuance of any
Facility Letter of Credit, the Facility Letter of Credit Obligations do not
exceed the lesser of (a) the Aggregate Letter of Credit Commitment, or (b) an
amount equal to the Aggregate Facility A Commitment minus the outstanding
principal amount of the Facility A Advances;
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(iv) the requested Facility Letter of Credit has an expiration
date not later than the earlier of (x) ten Business Days prior to the Facility A
Termination Date and (y) one year after its date of issuance;
(v) the Borrower shall have delivered to such Issuer at such
times and in such manner as such Issuer may reasonably prescribe such documents
and materials as may be required pursuant to the terms of the proposed Facility
Letter of Credit, and the proposed Facility Letter of Credit shall be
satisfactory to such Issuer as to form and content; and
(vi) as of the date of issuance, no order, judgment or decree
of any court, arbitrator or governmental authority shall purport by its terms to
enjoin or restrain such Issuer from issuing the Facility Letter of Credit and no
law, rule or regulation applicable to such Issuer and no request or directive
(whether or not having the force of law) from any governmental authority with
jurisdiction over the Issuer shall prohibit or request that such Issuer refrain
from the issuance of Letters of Credit generally or the issuance of that
Facility Letter of Credit (and in any such case, such Issuer shall promptly
notify the Agent and the Borrower of such fact).
(c) PROCEDURE FOR ISSUANCE.
(i) The Borrower shall give an Issuer at least three Business
Days' prior written notice of any requested issuance of a Facility Letter of
Credit under this Agreement (a "Letter of Credit Request"). Such notice shall be
irrevocable and shall specify:
(A) the stated amount of the Facility Letter of Credit
requested (which stated amount shall not be less than
$1,000,000), PROVIDED, HOWEVER, that up to five
Facility Letters of Credit issued in any twelve-month
period may have a stated amount of less than
$1,000,000 each;
(B) the effective date (which day shall be a Business
Day) of issuance of such requested Facility Letter of
Credit (the "Issuance Date");
(C) the date on which such requested Facility Letter of
Credit is to expire (which date shall be a Business
Day and shall comply with the provisions of Section
2.15(b)(iv));
(D) the name of the Issuer chosen by the Borrower to
issue the requested Facility Letter of Credit;
(E) the purpose for which such Facility Letter of Credit
is to be issued; and
(F) the Person for whose benefit the requested Facility
Letter of Credit is to be issued.
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At the time the Letter of Credit Request is made, the Borrower shall also
provide the Agent and the Issuer with a copy of the form (if specified by the
beneficiary) of the Facility Letter of Credit it is requesting be issued. Such
Letter of Credit Request, to be effective, must be received by such Issuer and
the Agent not later than 2:00 p.m. (Chicago time) on the last Business Day on
which a Letter of Credit Request can be given under this Section 2.15(c)(i).
(ii) Subject to the terms and conditions of this Section 2.15
and PROVIDED that the applicable conditions set forth in Sections 5.01 and 5.02
hereof have been satisfied, such Issuer shall, on the Issuance Date, issue a
Facility Letter of Credit on behalf of the Borrower in accordance with the
Issuer's usual and customary business practices unless the Issuer has actually
received (a) written notice from the Borrower specifically revoking the Letter
of Credit Request with respect to such Facility Letter of Credit, (b) written
notice from a Lender, which complies with the provisions of Section 2.15(e)(i)
or (c) written or telephonic notice from the Agent stating that the issuance of
such Facility Letter of Credit would violate Section 2.15(b).
(iii) Each Issuer shall give the Agent and the Borrower
written or telex notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance of a Facility Letter of Credit (the "Issuance Notice"),
together with (for the Borrower and the Agent) a copy of such Facility Letter of
Credit.
(iv) An Issuer shall not extend or amend any Facility Letter
of Credit or allow a Facility Letter of Credit to be automatically extended
unless the requirements of this Section 2.15(c) are met as though a new Facility
Letter of Credit was being requested and issued.
(d) PAYMENT OF REIMBURSEMENT OBLIGATIONS; DUTIES OF ISSUERS.
(i) (A) Each Issuer shall promptly notify the Borrower and the
Agent of any draw under a Facility Letter of Credit and the Borrower shall
reimburse such Issuer in accordance with Section 2.15(f), and (B) any
Reimbursement Obligation with respect to any Facility Letter of Credit shall
bear interest from the date of the relevant drawings under the pertinent
Facility Letter of Credit until payment in full is received by the pertinent
Issuer at (X) the Floating Rate until the next succeeding Business Day and (Y)
the Floating Rate plus 2% thereafter.
(ii) Any action taken or omitted to be taken by an Issuer
under or in connection with any Facility Letter of Credit, if taken or omitted
in the absence of bad faith, willful misconduct or gross negligence, shall not
put that Issuer under any resulting liability to any Lender or, assuming that
such Issuer has complied with the procedures specified in Section 2.15(c) all
conditions to the issuance of a Facility Letter of Credit have been satisfied
and any such Lender has not given a notice contemplated by Section 2.15(e)(i)
that continues in full force and effect, relieve any such Lender of its
obligations hereunder to that Issuer. In determining whether to pay under any
Facility Letter of Credit, an Issuer shall have no obligation relative to the
Lenders or to the Borrower other than to confirm that any documents required to
be delivered under such Facility Letter of Credit have been delivered in
compliance and that they comply on their face (including
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that any draw request has been purportedly executed by an authorized signatory,
if and to the extent such a requirement is specified in the related Facility
Letter of Credit), with the requirements of such Facility Letter of Credit.
(iii) The Borrower agrees to pay to each Issuer the amount of
all Reimbursement Obligations, interest and other amounts payable to such Issuer
under or in connection with any Facility Letter of Credit immediately when due
(and in any event shall reimburse an Issuer for drawings under a Facility Letter
of Credit issued by it no later than the next Business Day after payment by that
Issuer), irrespective of any claim, set-off, defense or other right which the
Borrower may have at any time against any Issuer or any other Person, under all
circumstances, including without limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a
beneficiary named in a Facility Letter of Credit or, if
such Facility Letter of Credit is transferable, any
transferee of any Facility Letter of Credit (or any
Person for whom any such transferee may be acting), the
Agent, the Issuer, any Lender, or any other Person,
whether in connection with this Agreement, any Facility
Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying
transactions between the Borrower and the beneficiary
named in any Facility Letter of Credit);
(C) any draft, certificate or any other document presented
under the Facility Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement
therein being untrue or inaccurate in any respect (except
to the extent any such invalidity or insufficiency is
found in a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence
or willful misconduct of such Issuer);
(D) the surrender or impairment of any guaranty or security
for the performance or observance of any of the terms of
any of the Loan Documents; or
(E) the occurrence of any Event of Default or Unmatured
Default.
(iv) As among the Borrower, the Issuers, the Agent and the
Lenders, the Borrower assumes all risks of the acts and omissions of, or misuse
of the Facility Letters of Credit by, the respective beneficiaries of the
Facility Letters of Credit (except such as are found in a final judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of an Issuer). In furtherance and not in limitation of the
foregoing, the Issuers, the Agent and the Lenders shall not be responsible
(absent gross negligence or willful misconduct in
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connection therewith, as determined by the final judgment of a court of
competent jurisdiction) for (A) the forms, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and issuance of any Facility Letter of Credit, even if
it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Facility Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (C) failure of the beneficiary of a Facility Letter of Credit to
comply fully with underlying conditions required in order to draw upon such
Facility Letter of Credit, so long as such beneficiary has presented the
appropriate documentation required to draw upon such Facility Letter of Credit;
(D) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise; (E) errors in
interpretation of technical terms; (F) misapplication by the beneficiary of a
Facility Letter of Credit of the proceeds of any drawing under such Facility
Letter of Credit; (G) any consequences arising from causes beyond the control of
any Issuer, the Agent or any Lender.
(e) PARTICIPATION.
(i) Immediately upon issuance by an Issuer of any Facility
Letter of Credit in accordance with the procedures set forth in Section
2.15(c) each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from the Issuer, without recourse or warranty, an
undivided interest and participation equal to its Pro Rata Share of such
Facility Letter of Credit (including, without limitation, all rights and
obligations of the Issuer with respect thereto) and any security therefor or
guaranty pertaining thereto; PROVIDED, that a Letter of Credit issued by any
Issuer shall not be deemed to be a Facility Letter of Credit for purposes of
this Agreement if the Agent and such Issuer shall have received written notice
from any Lender on or before the Business Day prior to the date of its issuance
of such Letter of Credit that one or more of the conditions contained in
Sections 5.01 and 5.02 is not then satisfied, and, in the event an Issuer
receives such a notice, it shall have no further obligation to issue any
Facility Letter of Credit until such notice is withdrawn by that Lender or it
receives a notice from the Agent that such condition has been effectively waived
in accordance with the provisions of this Agreement.
(ii) In the event that any Issuer makes any payment under any
Facility Letter of Credit and the Borrower shall not have repaid such amount to
such Issuer pursuant to Section 2.15(d), such Issuer shall promptly notify the
Agent, which shall promptly notify each Lender, of such failure, and each Lender
shall promptly and unconditionally pay to the Agent for the account of such
Issuer the amount of such Lender's Pro Rata Share of the unreimbursed amount of
any such payment. The failure of any Lender to make available to the Agent its
Pro Rata Share of the unreimbursed amount of any such payment shall not relieve
any other Lender of its obligation hereunder to make available to the Agent its
Pro Rata Share of the unreimbursed amount of any payment on the date such
payment is to be made, but no Lender shall be responsible for the failure of any
other Lender to make available to the Agent its Pro Rata Share of the
unreimbursed amount of any payment on the date such payment is to be made.
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(iii) Whenever an Issuer receives a payment on account of a
Reimbursement Obligation, including any interest thereon, it shall promptly pay
to the Agent and the Agent shall promptly pay to each Lender which has funded
its participating interest therein, in immediately available funds, an amount
equal to such Lender's Pro Rata Share thereof.
(iv) Upon the request of the Agent or any Lender, an Issuer
shall furnish to such Agent or Lender copies of any Facility Letter of Credit to
which that Issuer is party and such other documentation as may reasonably be
requested by the Agent or Lender.
(v) The obligations of a Lender to make payments to the Agent
for the account of an Issuer with respect to a Facility Letter of Credit shall
be absolute, unconditional and irrevocable, not subject to any counterclaim,
set-off, qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances.
(vi) In the event any payment by the Borrower received by an
Issuer with respect to a Facility Letter of Credit and distributed by the Agent
to the Lenders on account of their participations is thereafter set aside,
avoided or recovered from that Issuer in connection with any receivership,
liquidation, reorganization or bankruptcy proceeding, each Lender which received
such distribution shall, upon demand by that Issuer, contribute such Lender's
Pro Rata Share of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by that Issuer upon the amount required
to be repaid by it.
(f) COMPENSATION FOR FACILITY LETTERS OF CREDIT.
(i) The Borrower shall pay to the Agent, for the ratable
account of the Lenders, based upon the Lenders' respective Pro Rata Shares, a
fee with respect to each Facility Letter of Credit that is for the period from
the Issuance Date thereof to and including the final expiration date thereof, in
a per annum amount equal to the product of (x) the average daily undrawn amount
of such Facility Letter of Credit times (y) the Facility Letter of Credit Fee
percentage shown in the pricing grid set forth in Exhibit "F" hereto. The
Facility Letter of Credit Fees shall be due and payable in arrears on each
Monthly Payment Date and, to the extent any such fees are then due and unpaid,
on the Facility A Termination Date. The Agent shall promptly remit such Facility
Letter of Credit Fees, when paid, to the other Lenders in accordance with their
Pro Rata Shares thereof.
(ii) Each Issuer shall have the right to receive, solely for
its own account, an issuing fee equal to the product of (x) 12.5 basis points
times (y) the amount of each Facility Letter of Credit, and other customary and
competitive fees agreed to between the Borrower and the Issuer with respect to
any Facility Letter of Credit which it issued. In addition, each Issuer shall be
entitled to receive its reasonable out-of-pocket costs of issuing and servicing
Facility Letters of Credit.
(g) LETTER OF CREDIT COLLATERAL ACCOUNT. From and after the occurrence
and during the continuance of an Event of Default, (i) the Borrower hereby
agrees that it will, until the Facility A
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Termination Date, maintain a special collateral account (the "Letter of Credit
Collateral Account") at the Agent's office at the address specified pursuant to
Article XIII, in the name of the Borrower but under the sole dominion and
control of the Agent, for the benefit of the Lenders, and in which the Borrower
shall have no interest other than as set forth in Section 9.03 and (ii) the
Agent shall not be obligated to release any Lots or other Collateral from the
Lien of the Mortgage if the Borrower has not deposited in the Letter of Credit
Collateral Account an amount equal to the aggregate undrawn face amount of all
outstanding Facility Letters of Credit and all fees and other amounts due or
which may become due with respect thereto. In addition to the foregoing, the
Borrower hereby grants to the Agent, for the benefit of the Lenders as security
for the repayment of the Obligations, a security interest in and to the Letter
of Credit Collateral Account and any funds that may hereafter be on deposit in
such account pursuant to Section 9.02.
SECTION 2.16. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or
a Lender, as the case may be, notifies the Agent prior to the date on which it
is scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or the unreimbursed amount of any payment required pursuant
to Section 2.15(e)(ii), (ii) in the case of an Issuer, payment of any
Reimbursement Obligation received from the Borrower, or (iii) in the case of the
Borrower, a payment of principal, interest or fees to the Agent for the account
of the Lenders or an Issuer, that it does not intend to make such payment, the
Agent may assume that such payment has been made. The Agent may, but shall not
be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender, or the Borrower, as
the case may be, has not in fact made such payment to the Agent, the recipient
of such payment shall, on demand by the Agent, repay to the Agent the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to (i)
in the case of payment by a Lender or an Issuer, the Federal Funds Effective
Rate for such day or (ii) in the case of payment by the Borrower, the interest
rate applicable to the relevant Loan or Reimbursement Obligation.
SECTION 2.17. WITHHOLDING TAX EXEMPTION. At least five Business Days
prior to the first date on which interest or fees are payable hereunder for the
account of any Lender, each Lender that is not incorporated under the laws of
the United States of America, or a state thereof, agrees that it will deliver to
each of the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes. Each
Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to
each of the Borrower and the Agent two additional copies of such form (or a
successor form) on or before the date that such form expires (currently, three
successive calendar years for Form 1001 and one calendar year for Form 4224) or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent forms so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrower or the Agent,
in each case certifying that such Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any
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United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
SECTION 2.18. UNCONDITIONAL OBLIGATION TO MAKE PAYMENTS. To the fullest
extent permitted by law, the Borrower shall make all payments hereunder, under
the Notes and under all of the other Loan Documents regardless of any defense,
claim, offset, cross claim, or counterclaim, including any defense, claim,
offset, cross claim, or counterclaim based on any law, rule or policy which is
now or hereafter promulgated by any governmental authority or regulatory body
and which may adversely affect the Borrower's obligations to make, or the right
of the holder of any Note to receive, those payments.
SECTION 2.19. COMPENSATING BALANCES. First Chicago shall have the right
(but no obligation) to enter into a separate agreement with the Borrower or any
Subsidiary which provides for the reduction of the interest rate payable to
First Chicago hereunder in the event that the Borrower or such Subsidiary
maintains collected balances in non-interest bearing accounts at First Chicago,
but in no event shall such agreement affect the amounts payable under this
Agreement to any other Lender. Similarly, each other Lender shall have the right
(but no obligation) to enter into a separate agreement with the Borrower or any
Subsidiary which provides for the rebate to Borrower of a portion of the
interest paid to such Lender under this Agreement in the event that the Borrower
or such Subsidiary maintains collected balances in non-interest bearing accounts
at such Lender, but in no event shall any such agreement affect the amounts
payable under this Agreement to such Lender.
SECTION 2.20. EXTENSION OF FACILITY A TERMINATION DATE. At any time
following the first anniversary of this Agreement, the Borrower may request a
one (1) year extension of the Facility A Termination Date by submitting a
request for an extension to the Agent (an "Extension Request") not less than 60
days prior to the Facility A Termination Date. Promptly following receipt of an
Extension Request, the Agent shall notify each Lender of the contents thereof,
shall request each Lender to approve the Extension Request, and shall specify
the date (which must be at least 30 days but not more than 60 days after the
Extension Request is delivered to the Lenders) as of which the Lenders must
respond to the Extension Request (the "Reply Date"). Each Lender approving the
Extension Request shall deliver its written consent no later than the Reply
Date. If the consent of all of the Lenders is received by the Agent on or prior
to the Reply Date, the Facility A Termination Date specified in the Extension
Request shall become effective at the expiration of the existing Facility A
Termination Date and the Agent shall promptly notify the Borrower and each
Lender of the new Facility A Termination Date. The Borrower may only request one
extension of the Facility A Termination Date pursuant to this Section. If an
Extension Request is granted, the Borrower, prior to same being effective, shall
deliver to the Agent, an endorsement to
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each of the Title Policies insuring that the policy continues to be effective
with respect to any Advances made during the extended term.
SECTION 2.21. DETERMINATION OF BORROWING BASE. The Borrowing Base shall
be determined by the Agent as follows:
(a) MONTHLY. On the 30th day following each month, the
Borrower shall submit to the Agent a Borrowing Base Certificate dated as of the
last day of the immediately preceding calendar month.
(b) NOTICE OF BORROWING BASE CHANGE. Promptly upon receipt,
the Agent shall furnish a copy of the Borrowing Base Certificate to each of the
Lenders.
(c) ADDITIONAL MORTGAGED PROPERTY/ADDITION TO BORROWING BASE.
So long as there is no Event of Default or Unmatured Default, the Borrower may,
but shall not be required to, add additional Real Estate as Mortgaged Property.
Within sixty (60) days after the Closing Date, the Borrower may add to the
Borrowing Base any and all of the Real Estate described in Schedule III hereto,
subject to the Borrower satisfying all of the conditions precedent set forth in
Sections 5.01(e), (g), (h), (i), (l), (m), (p), (q) and (w) hereof with respect
thereto. In addition, if the Borrower wishes to add other Real Estate as a
Mortgaged Property, it shall provide the Agent, with a copy for each Lender,
such information with respect to such Real Estate as shall be required by the
Agent and the Required Lenders, which information shall be generally the same
type of information as that provided in respect of the initial Mortgaged
Properties prior to the Closing Date. The Agent and the Required Lenders shall
review such information to determine, by applying the standards and criteria
consistent with the valuation of the Mortgaged Properties included in the
Borrowing Base on the Closing Date, whether or not to accept such proposed Real
Estate as a Mortgaged Property. If the Agent and the Required Lenders approve
such property to become a Mortgaged Property, the Borrower shall deliver a
Mortgage with respect thereto, together with all other documentation, opinions,
insurance and other items, and take all other actions, consistent with the
deliveries made and actions taken in respect to the Mortgaged Properties
included in the Borrowing Base on the Closing Date. After such approval and upon
delivery of all the foregoing documents, information and approvals thereof in
writing by the Agent and the Required Lenders, such Additional Mortgaged
Property shall be added to the Borrowing Base. The delivery by the Borrower of a
request to add such Real Estate to the Borrowing Base shall constitute a
representation by the Borrower on the date of delivery of the Mortgage with
respect to such Real Estate, and on each date thereafter on which the Borrower
is deemed to make the representations and warranties set forth in Article IV in
respect of each Mortgaged Property, to such additional Real Estate.
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ARTICLE III
CHANGE IN CIRCUMSTANCES
SECTION 3.01. YIELD-PROTECTION. If the adoption, on or after the
Agreement Date, of any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any change, on or after the Agreement Date, in interpretation thereof,
or the compliance of any Lender (which term, for purposes of this Article III,
shall be deemed to include such Issuer in such capacity) therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of any
Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation (other
than reserves and assessments taken into account in determining the
interest rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining loans (or letters of credit or
participations therein) or reduces any amount receivable by any Lender
or any applicable Lending Installation in connection with loans (or
letters of credit or participations therein), or requires any Lender or
any applicable Lending Installation to make any payment calculated by
reference to the amount of loans held or interest received by it, by an
amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans (PROVIDED, that the foregoing shall not include any
amounts which First Chicago certifies is reflected in an increase of the
Corporate Base Rate for the relevant period).
SECTION 3.02. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender
reasonably determines the amount of capital required or expected to be
maintained by such Lender, any Lending Installation of such Lender or any
corporation controlling such Lender is increased as a result of a Change, and
such increase will have the effect of reducing the rate of return on such
Lender's capital as a consequence of such Lender's obligations hereunder to a
level below that which such Lender or such corporation, as the case may be,
could have achieved but for such Change (taking into account such Lender's or
such corporation's policies, as the case may be, with
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respect to capital adequacy and any payments made to such Lender pursuant to
Section 3.01 which relate to capital adequacy and assuming that such Lender's
capital was fully utilized prior to such Change), then within 15 days of demand
by such Lender, the Borrower shall pay to the Agent, for the account of such
Lender, such additional amount or amounts as will compensate such Lender for
such reduction. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 3.02 it shall promptly notify the Borrower through the
Agent of the event by reason of which it has become so entitled, but in any
event within 90 days, after such Lender obtains actual knowledge thereof;
PROVIDED that if such Lender fails to give such notice within the 90-day period
after it obtains actual knowledge of such an event, such Lender shall, with
respect to such compensation in respect of any costs resulting from such event,
only be entitled to payment for costs incurred from and after the date 90 days
prior to the date that such Lender does give such notice. A certificate setting
forth in reasonable detail the computation of any additional amount payable
pursuant to this Section 3.02, submitted by such Lender to the Borrower through
the Agent, shall be delivered to the Borrower promptly after the initial
incurrence of such additional amounts. "Change" means (i) any change after the
Agreement Date in the Risk-Based Capital Guidelines or (ii) any adoption of or
change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending Installation
or any corporation controlling any Lender or any Lending Institution.
"Risk-Based Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of the
Basle Committee on Banking Regulation and Supervisory Practices entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
SECTION 3.03. AVAILABILITY OF TYPES OF ADVANCES. If any Lender
determines that maintenance of its Fixed Rate Loans at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Agent determines that (i)
deposits of a type and maturity appropriate to match fund Fixed Rate Advances
are not available or (ii) the interest rate applicable to a Type of Advance does
not accurately reflect the cost of making or maintaining such Advance, then the
Agent shall suspend the availability of the affected Type of Advance and require
any Fixed Rate Advances of the affected Type to be repaid or to be converted (in
accordance with the terms of this Agreement) to any Type of Advance which is not
affected and is then available under this Agreement.
SECTION 3.04. FUNDING INDEMNIFICATION. If any payment of a Fixed Rate
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a Fixed
Rate Advance is not made on the date specified by the Borrower for any reason
other than default by the Lenders, the Borrower will indemnify each Lender for
any loss or cost incurred by it resulting therefrom, including, without
limitation,
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any loss or cost in liquidating or employing deposits acquired to fund or
maintain the Fixed Rate Advance.
SECTION 3.05. LENDER STATEMENTS: SURVIVAL OF INDEMNITY. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Fixed Rate Loans to reduce any liability of the
Borrower to such Lender under Sections 3.01 and 3.02 or to avoid the
unavailability of a Type of Advance under Section 3.03, so long as such
designation is not disadvantageous to such Lender. Each Lender shall deliver a
written statement of such Lender as to the amount due, if any, under Sections
3.01, 3.02 or 3.04. Such written statement shall set forth in reasonable detail
the calculations upon which such Lender determined such amount and shall be
final, conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a Fixed
Rate Loan shall be calculated as though each Lender funded its Fixed Rate Loan
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the Fixed Rate applicable to such
Loan, whether in fact that is the case or not. Unless otherwise provided herein,
the amount specified in the written statement shall be payable on demand after
receipt by the Borrower of the written statement. The obligations of the
Borrower under Sections 3.01, 3.02 and 3.04 shall survive payment of the
Obligations and termination of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to each of the Lenders that:
SECTION 4.01. ORGANIZATION, POWERS, ETC. OF BORROWER. Borrower (i) is a
general partnership duly organized, validly existing and in good standing under
laws of Florida, (ii) has the power and authority to own or hold under lease the
properties it purports to own or hold under lease and to carry on its business
as now conducted, (iii) is duly qualified or licensed to transact business in
every jurisdiction in which such qualification or licensing is necessary to
enable it to enforce all of its material contracts and other material rights and
to avoid any material penalty or forfeiture or in which the failure to be so
qualified would have a Material Adverse Effect.
SECTION 4.02. ORGANIZATION, POWERS, ETC. OF SUBSIDIARY GUARANTORS. Each
Subsidiary Guarantor (i) is an entity duly organized, validly existing and in
good standing under laws of its state of organization, (ii) has the power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to carry on its business as now conducted, (iii) is duly
qualified or licensed to transact business in every jurisdiction in which such
qualification or licensing is necessary to enable it to enforce all of its
material contracts and other material rights and to avoid any material penalty
or forfeiture, or in which the failure to be so qualified would have a Material
Adverse Effect.
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SECTION 4.03. ORGANIZATION, POWERS, ETC. OF LENNAR AND LNR. Lennar and
LNR (i) are each an entity duly organized, validly existing and in good standing
under laws of its state of organization, (ii) have the power and authority to
own or hold under lease the properties they purport to own or hold under lease
and to carry on their business as now conducted, (iii) are duly qualified or
licensed to transact business in every jurisdiction in which such qualification
or licensing is necessary to enable them to enforce all of their material
contracts and other material rights and to avoid any material penalty or
forfeiture, or in which the failure to be so qualified would have a Material
Adverse Effect.
SECTION 4.04. AUTHORIZATION AND VALIDITY OF THIS AGREEMENT, ETC. OF
BORROWER. Each of the Borrower and LLP Partner has the power and authority to
execute and deliver this Agreement, the Notes and the other Loan Documents to
which it is a party and to perform all its obligations hereunder and thereunder.
The execution and delivery by the Borrower, LLP Partner and LNR Partner of this
Agreement, the Notes and the other Loan Documents to which it is a party and the
performance by the Borrower, LLP Partner and LNR Partner of all its obligations
hereunder and thereunder and any and all actions taken by the Borrower (i) have
been duly authorized by all requisite partnership action, (ii) will not violate
or be in conflict with (a) any provisions of law (including, without limitation,
any applicable usury or similar law), (b) any order, rule, regulation, writ,
judgment, injunction, decree or award of any court or other agency of
government, or (c) any provision of its partnership agreement, (iii) will not
violate, be in conflict with, result in a breach of or constitute (with or
without the giving of notice or the passage of time or both) a default under any
material indenture, agreement or other instrument to which it is a party or by
which it or any of its properties or assets is or may be bound, and (iv) except
as otherwise contemplated by this Agreement, will not result in the creation or
imposition of any Lien upon, or any security interest in, any of its properties
or assets. Each of this Agreement, the Notes and the other Loan Documents to
which the Borrower, LLP Partner or LNR Partner is a party has been duly executed
and delivered by the Borrower, LLP Partner or LNR Partner, as the case may be.
The Loan Documents constitute legal, valid and binding obligations of the
Borrower, LLP Partner and LNR Partner, enforceable against the Borrower, LLP
Partner and LNR Partner in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.05. AUTHORIZATION AND VALIDITY OF THIS AGREEMENT, ETC. BY
SUBSIDIARY GUARANTORS. Each Subsidiary Guarantor has the power and authority to
execute and deliver this Agreement, the Subsidiary Guaranty and the other Loan
Documents and to perform all its obligations thereunder. The execution and
delivery by each Subsidiary Guarantor of the Subsidiary Guaranty and the other
Loan Documents to which such Subsidiary Guarantor is a party and the performance
by each Subsidiary Guarantor of all its obligations thereunder and any and all
actions taken by such Subsidiary Guarantor (i) have been duly authorized by all
requisite entity action, (ii) will not violate or be in conflict with (a) any
provisions of law (including, without limitation, any applicable usury or
similar law), (b) any order, rule, regulation, writ, judgment, injunction,
decree or award of any court or other agency of government, or (c) any provision
of its certificate of organization, joint venture, partnership agreement, or
by-laws, (iii) will not violate, be in conflict
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with, result in a breach of or constitute (with or without the giving of notice
or the passage of time or both) a default under any material indenture,
agreement or other instrument to which it is a party or by which it or any of
its properties or assets is or may be bound, and (iv) except as otherwise
contemplated by this Agreement, will not result in the creation or imposition of
any Lien upon, or any security interest in, any of its properties or assets.
Each of the Subsidiary Guarantees and the other Loan Documents to which a
Subsidiary Guarantor is a party has been duly executed and delivered by such
Subsidiary Guarantor and the Loan Documents to which such Subsidiary Guarantor
is a party constitutes the legal, valid and binding obligations of such
Subsidiary Guarantor, enforceable against such Subsidiary Guarantor in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
SECTION 4.06. AUTHORIZATION AND VALIDITY OF THIS AGREEMENT, ETC. BY
LENNAR AND LNR. Each of Lennar and its subsidiaries and LNR and its subsidiaries
has the power and authority to execute and deliver the Lennar and LNR Guaranty
and the other Loan Documents to which it is a party and to perform all its
obligations thereunder. The execution and delivery by Lennar and its
subsidiaries and LNR and its subsidiaries of the Lennar and LNR Guaranty and the
other Loan Documents to which Lennar and its subsidiaries or LNR and its
subsidiaries are a party and the performance by Lennar and its subsidiaries and
LNR and its subsidiaries of all their obligations thereunder and any and all
actions taken by Lennar and its subsidiaries and LNR and its subsidiaries (i)
have been duly authorized by all requisite entity action, (ii) will not violate
or be in conflict with (a) any provisions of law (including, without limitation,
any applicable usury or similar law), (b) any order, rule, regulation, writ,
judgment, injunction, decree or award of any court or other agency of
government, or (c) any provision of its certificate of organization or by-laws,
(iii) will not violate, be in conflict with, result in a breach of or constitute
(with or without the giving of notice or the passage of time or both) a default
under any material indenture, agreement or other instrument to which it is a
party or by which it or any of its properties or assets is or may be bound, and
(iv) except as otherwise contemplated by this Agreement, will not result in the
creation or imposition of any lien, charge or encumbrance upon, or any security
interest in, any of their properties or assets. Each of the Lennar and LNR
Guaranty and the other Loan Documents to which Lennar and its subsidiaries or
LNR and its subsidiaries are a party has been duly executed and delivered by
Lennar and its subsidiaries and LNR and its subsidiaries, as the case may be.
The Loan Documents to which Lennar and its subsidiaries or LNR and its
subsidiaries are a party constitute legal, valid and binding obligations of
Lennar and its subsidiaries and LNR and its subsidiaries, as the case may be,
enforceable against Lennar and its subsidiaries and LNR and its subsidiaries in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
SECTION 4.07. INTENTIONALLY OMITTED.
SECTION 4.08. INTENTIONALLY OMITTED.
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SECTION 4.09. NO MATERIAL ADVERSE EFFECT WITH RESPECT TO SUBSIDIARY
GUARANTORS. No Event has occurred which has had or could reasonably be expected
to have a Material Adverse Effect upon the Subsidiary Guarantors.
SECTION 4.10. TITLE TO PROPERTIES. Schedule III hereto contains a
complete and accurate list of all Real Estate owned by the Borrower and the
Subsidiary Guarantors and constituting Collateral as of the Closing Date.
SECTION 4.11. LITIGATION. There is no action, suit, proceeding,
arbitration, inquiry or investigation (whether or not purportedly on behalf of
the Borrower or any Subsidiary Guarantor) pending or, to the best knowledge of
the Borrower, threatened against or affecting the Borrower or any Subsidiary
Guarantor which could reasonably be expected to have a Material Adverse Effect.
Neither the Borrower nor any Subsidiary Guarantor is in default with respect to
any final judgment, writ, injunction, decree, rule or regulation of any court or
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which default would or
could have a Material Adverse Effect on the Borrower or Subsidiary Guarantors.
The Borrower and Subsidiary Guarantors have no material contingent obligations
not provided for or disclosed in the Unaudited Financial Statements.
SECTION 4.12. PAYMENT OF TAXES BY SUBSIDIARY GUARANTORS. There have
been filed all federal, state and local tax returns with respect to the
operations of the Subsidiary Guarantors which are required to be filed,
including federal tax returns for the fiscal year ended November 30, 1996 and
all prior fiscal years of the Subsidiary Guarantors, except where extensions of
time to make those filings have been granted by the appropriate taxing
authorities and the extensions have not expired. Each Subsidiary Guarantor has
paid or caused to be paid to the appropriate taxing authorities all taxes as
shown on those returns and on any assessment received by any of them, to the
extent that those taxes have become due, except for taxes the failure to pay
which do not violate the provisions of Section 6.03 hereof. The Internal Revenue
Service has completed an examination of the Subsidiary Guarantors' federal
income tax returns for the years ended 1980 through 1994, as part of its
examination of Lennar's consolidated tax returns for those years, and Subsidiary
Guarantors have paid all additional taxes, assessments, interest and penalties
with respect to such years.
SECTION 4.13. AGREEMENTS. Neither the Borrower nor any Subsidiary
Guarantor is a party to any agreement or instrument or is subject to any charter
or other restriction that could reasonably be expected to have a Material
Adverse Effect on it. Neither the Borrower nor any Subsidiary Guarantor is in
material default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any material agreement or
instrument to which it is a party and consummation of the transactions
contemplated hereby and in the other Loan Documents will not cause Borrower or
such Subsidiary Guarantor to be in material default thereof.
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SECTION 4.14. FOREIGN DIRECT INVESTMENT REGULATIONS. Neither the making
of the Advances nor the repayment thereof nor any other transaction contemplated
hereby will involve or constitute a violation by the Borrower or any Subsidiary
Guarantor any provision of the Foreign Direct Investment Regulations of the
United States Department of Commerce or of any license, ruling, order, or
direction of the Secretary of Commerce thereunder.
SECTION 4.15. FEDERAL RESERVE REGULATIONS.
(a) Neither the Borrower nor any Subsidiary Guarantor is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System of the United States). Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Borrower and its Subsidiaries
and of any Subsidiary Guarantor which are subject to any limitation on sale,
pledge, or other restriction hereunder.
(b) No part of the proceeds of any of the Advances will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock. If requested by the
Lenders, the Borrower and the Subsidiaries shall furnish to the Lenders a
statement in conformity with the requirements of Federal Reserve Form U-l
referred to in Regulation U of said Board of Governors. No part of the proceeds
of the Advances will be used for any purpose that violates, or which is
inconsistent with, the provisions of Regulation X of said Board of Governors.
SECTION 4.16. CONSENTS, ETC. Except as set forth on Schedule IV, no
order, license, consent, approval, authorization of, or registration,
declaration, recording or filing (except for the filing of a Current Report on
Form 8-K, and a Quarterly Report on Form 10-Q, in each case by Lennar and LNR
with the Securities and Exchange Commission) with, or validation of, or
exemption by, any governmental or public authority (whether federal, state or
local, domestic or foreign) or any subdivision thereof is required in connection
with, or as a condition precedent to, the due and valid execution, delivery and
performance by Borrower of this Agreement, the Notes, the other Loan Documents,
and by the Subsidiary Guarantors of the Subsidiary Guarantees and other Loan
Documents to which they are a party or the legality, validity, binding effect or
enforceability of any of the respective terms, provisions or conditions thereof.
To the extent that any franchises, licenses, certificates, authorizations,
approvals or consents from any federal, state or local (domestic or foreign)
government, commission, bureau or agency are required for the acquisition,
ownership, operation or maintenance by the Borrower and the Subsidiary
Guarantors of properties now owned, operated or maintained by it, those
franchises, licenses, certificates, authorizations, approvals and consents have
been validly granted, are in full force and effect and constitute valid and
sufficient authorization therefor.
SECTION 4.17. COMPLIANCE WITH APPLICABLE LAWS. The Borrower and the
Subsidiaries are in compliance with and conform to all statutes, laws,
ordinances, rules,
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regulations, orders, restrictions and all other legal requirements of all
domestic or foreign governments or any instrumentality thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their respective properties, the violation of which would have a Material
Adverse Effect on it, including, without limitation, regulations of the Board of
Governors of the Federal Reserve System, the Federal Interstate Land Sales Full
Disclosure Act and the Florida Land Sales Act, The California Subdivided Lands
Act, the California Subdivision Map, and Regulations promulgated by the
California Department of Real Estate, Arizona Revised Statutes Sections
9-463.01, ET SEQ. and A.R.S. Sections 11-806.01, ET SEQ., A.R.S. Sections
32-2181, ET SEQ. and similar laws, if any in the State of Texas. Neither the
Borrower nor any Subsidiary has received any notice to the effect that its
operations are not in material compliance with any of the requirements of
applicable federal, state and local health and safety statutes and regulations.
SECTION 4.18. RELATIONSHIP OF THE BORROWER AND THE SUBSIDIARY
GUARANTORS. The Borrower and the Subsidiary Guarantors are engaged as an
integrated group in the business of owning, developing and selling Real Estate.
The Borrower and the Subsidiary Guarantors require financing on such a basis
that funds can be made available from time to time to such entities, to the
extent required for the continued successful operation of their integrated
operations. The Advances to be made to the Borrower and the Facility Letters of
Credit to be issued for the account of the Borrower under this Agreement are for
the purpose of financing the integrated operations of the Borrower and the
Subsidiary Guarantors, and each of the Borrower and the Subsidiary Guarantors
expects to derive benefit, fair consideration and reasonably equivalent value,
directly or indirectly, from the Advances and Facility Letters of Credit, both
individually and as a member of the integrated group, since the financial
success of the operations of each Borrower and Subsidiary Guarantor is dependent
upon the continued successful performance of the integrated group as a whole.
SECTION 4.19. SUBSIDIARIES; JOINT VENTURES. Schedule V hereto contains
a complete and accurate list with respect to the Borrower of (i) all
Subsidiaries, including, with respect to each such Subsidiary, (a) its state of
incorporation, (b) all jurisdictions (if any) in which it is qualified as a
foreign corporation, (c) the number of shares of its Capital Stock outstanding,
and (d) the number and percentage of those shares owned by the Borrower and/or
by any other Subsidiary, and (ii) each Joint Venture, including, with respect to
each such Joint Venture, (a) its jurisdiction of organization, (b) all other
jurisdictions in which it is qualified as a foreign entity and (c) all Persons
other than the Borrower that are parties, partners, venturers, or members,
whether direct or indirect, thereto. All the outstanding shares of Capital Stock
of each Subsidiary are validly issued, fully paid and nonassessable, except as
otherwise provided by state wage claim laws of general applicability. All of the
outstanding shares of Capital Stock of each Subsidiary as specified in Schedule
V are owned free and clear of all liens, pledges, security interests, equity or
other beneficial interests, charges and encumbrances of any kind whatsoever. The
Borrower does not own of record or beneficially any shares of the Capital Stock
of any corporation that is not a Subsidiary Guarantor or a Joint Venture
Subsidiary.
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SECTION 4.20. ERISA. Neither the Borrower nor any Subsidiary Guarantor
is executing or delivering any of the Loan Documents or entering into any of the
transactions contemplated hereby, directly or indirectly, in connection with any
arrangement or understanding in any respect involving any "employee benefit
plan" with respect to which the Borrower or any Subsidiary is a "party in
interest" within the meaning of the Employee Retirement Income Security Act of
1974, or a "disqualified person", within the meaning of the Internal Revenue
Code 1986, as amended. No Unfunded Liabilities exist with respect to any Single
Employer Plans. Each Plan complies in all material respects with all applicable
requirements of law and regulations, no Reportable Event has occurred with
respect to any Plan, neither the Borrower nor any other members of the
Controlled Group has withdrawn from any Plan or initiated steps to do so, and no
steps have been taken to reorganize or terminate any Plan.
SECTION 4.21. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.22. PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 4.23. POST-RETIREMENT BENEFITS. The present value of the
expected cost of post-retirement medical and insurance benefits payable by the
Borrower and the Subsidiaries to its employees and former employees, as
estimated by the Borrower in accordance with procedures and assumptions deemed
reasonable by the Required Lenders, does not exceed $ -0- .
SECTION 4.24. INSURANCE. The certificate signed by the President or
Chief Financial Officer of the Borrower, that attests to the existence and
adequacy of, and summarizes, the property, casualty, and liability insurance
programs carried by the Borrower and each Subsidiary Guarantor and that has been
furnished by the Borrower to the Agent and the Lenders, is complete and
accurate. This summary includes the insurer's or insurers' name(s), policy
number(s), expiration date(s), amount(s) of coverage, type(s) of coverage,
exclusion(s), and deductibles. This summary also includes similar information,
and describes any reserves, relating to any self-insurance program that is in
effect.
SECTION 4.25. ENVIRONMENTAL REPRESENTATIONS. To the best of the
Borrower's knowledge and belief, no Hazardous Substances in material violation
of any Environmental Laws are present upon any of the Real Estate owned by
Borrower or any Subsidiary, and neither the Borrower nor any Subsidiary has
received any notice to the effect that any of the Real Estate owned by Borrower
or any Subsidiary or any their respective operations are not in compliance with
any of the requirements of applicable Environmental Laws or are the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any
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Hazardous Substance into the environment which non-compliance or remedial action
could be reasonably expected to have a Material Adverse Effect.
SECTION 4.26. SECURITY DOCUMENTS.
(a) Each Mortgage, when executed and delivered by the relevant
Loan party, and properly filed and recorded (with all required filing and
recording fees being paid) in the office(s) specified in Schedule VIII shall
constitute a Lien on, and security interest in, all right, title, interest,
claim and estate of each Subsidiary Guarantor, Joint Venturer, or Borrower
executing such Mortgage on the Mortgaged Property described therein, security
for the Obligations (as defined in the relevant Mortgage), in each case prior
and superior in right to any other Person, other than with respect to the
Permitted Liens.
(b) The Security Agreement (Capital Stock and Partnership
Interest) is effective to create in favor of the Agent, for the benefit of the
Lenders, legal, valid and enforceable security interests in the Capital Stock
and partnership interests of the Subsidiaries described therein and proceeds
thereof and, when the stock certificates and partnership certificates (if any)
described therein are delivered to the Agent, and such financing statements
describing such Collateral as may be necessary to be filed in the appropriate
jurisdictions in order to perfect the security interest being granted, the
Security Agreement (Capital Stock and Partnership Interests) shall constitute a
perfected first priority lien on, and security interest in, all right, title and
interest of the Borrower, or each Subsidiary owning Capital Stock or partnership
interests of another Subsidiary, in such Capital Stock and partnership interests
and the proceeds thereof as security for the Obligations, in each case prior and
superior in right to any other Person when financing statements in appropriate
form are properly filed (with all required filing fees deemed paid) in the
office(s) specified in Schedule IX.
SECTION 4.27. SOLVENCY. The Borrower, each partner of Borrower, and
each Subsidiary Guarantor are, and after giving effect to the Reorganization and
the incurrence of all Indebtedness and Obligations being incurred and the
transfers to be made in connection herewith and therewith will be and will
continue to be, Solvent.
SECTION 4.28. NO MISREPRESENTATION. No representation or warranty
contained herein or made hereunder and no certificate, schedule, exhibit, report
or other document provided or to be provided by Borrower or any Subsidiary
Guarantor in connection with the transactions contemplated hereby or thereby
(including, without limitation, the negotiation of and compliance with the Loan
Documents) contains or will contain a misstatement of a material fact or omit to
state a material fact required to be stated herein or therein in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
SECTION 4.29. NO ENCROACHMENTS; LICENSES AND PERMITS. Except as shown
on the Title Policy or on the survey referred to in the Title Policy, all of the
Improvements lie wholly within the boundaries and building restriction lines of
the Mortgaged Properties and no
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improvements on adjoining properties encroach upon the Mortgaged Properties,
except in either case for immaterial encroachments which do not adversely affect
the benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the Mortgaged Properties. Each of the
Mortgaged Properties is in compliance with, and is lawfully occupied and used in
compliance with, all applicable laws and insurance requirements, including,
without limitation, building and zoning ordinances and codes. Each of the
Borrower or the Subsidiary Guarantors, as the case may be, is in possession of,
and in compliance with, all licenses, permits, certificates or other
authorizations necessary or required by applicable law or insurance requirements
for the conduct of its business or the use or occupancy of the Mortgaged
Properties; all such licenses, permits, certificates and authorizations are
valid and in full force and effect and have not been modified or qualified in a
manner detrimental to the operation of the Mortgaged Properties. Neither the
Borrower nor any of the Subsidiary Guarantors has received any material written
notification or threat of any action or proceeding regarding the non-compliance
or non-conformity of the Mortgaged Properties with any applicable law or
insurance requirements, nor is the Borrower or any of the Subsidiary Guarantors
aware of any such pending actions or proceedings.
SECTION 4.30. INDEPENDENT UNITS. Each of the Mortgaged Properties is an
independent unit which does not rely on any drainage, water, sewer, access,
parking, structural or other facilities located on any property not included in
the Mortgaged Properties or on public or utility easements (i) to fulfill any
zoning, building code or other requirement of any governmental authority that
has jurisdiction over the Mortgaged Properties, (ii) for structural support or
(iii) to fulfill the requirements of any lease or other agreement affecting the
Mortgaged Properties.
SECTION 4.31. MINIMUM TANGIBLE NET WORTH. On the Closing Date, the
Tangible Net Worth of the Borrower will not be less than $175,000,000.
SECTION 4.32. STEVENSON RANCH VENTURE L.L.C. AND BRESSI RANCH. On the
Closing Date, Investments by the Borrower in Stevenson Ranch Venture L.L.C. and
Bressi Ranch collectively shall not exceed $23,500,000.
SECTION 4.33 IMPROVEMENTS ON PROPERTY. None of the Property is
"improved", as such term is defined in 12 CFR Section 22.1, Subpart (b), except
as has been disclosed to the Lenders, in writing, prior to the Agreement Date.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. CONDITIONS OF EFFECTIVENESS. This Agreement shall become
effective when the Agent shall have received counterparts of this Agreement
executed by the Borrower and each of the Lenders; PROVIDED, HOWEVER, that the
Lenders shall not be required to make any
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Advance and the Issuer shall not be required to issue any Facility Letters of
Credit, hereunder, unless and until the Agent shall have received each of the
following items (with all documents required below, except as otherwise
specified, to be dated the Closing Date, which date shall be the same for all
such documents, and each of such documents to be in form and substance
satisfactory to the Agent, in the sole and absolute discretion of the Agent, be
fully and properly executed by all parties thereto, and (except for the Notes)
to be in sufficient copies for each Lender), and the conditions specified below
shall have been satisfied:
(a) Facility A Notes and the Facility B Notes payable to the order of
each of the Lenders.
(b) The Subsidiary Guarantees.
(c) The Lennar and LNR Guaranty.
(d) Borrowing Base Certificate calculating the Borrowing Base as of the
Closing Date, based upon the Book Value of the Collateral as of August 31, 1997,
executed by an Authorized Officer.
(e) Fully executed and acknowledged counterparts of the Mortgages, and
all other security documents with respect to the Mortgaged Properties as of the
Closing Date and the delivery of evidence satisfactory to the Agent and
counterparts of the Mortgages and all other of such documents the Agent desires
to have recorded have been or will be recorded in all places necessary or
desirable to create and maintain valid and enforceable first priority liens on
the fee simple or leasehold interest of the Borrower and the Subsidiary
Guarantors, as applicable, in the Mortgaged Properties in favor of the Agent, as
mortgagee (or as beneficiary in those jurisdictions where the lien is granted to
a trustee for the benefit of the Agent) and in all other items of Collateral as
of the Closing Date in favor of the Agent.
(f) Security Agreement (Capital Stock and Partnership Interests).
(g) Properly executed Financing Statements or any other documents
required to be filed by legal requirements, satisfactory in form and substance
of the Agent in each jurisdiction as may be necessary (in the Agent's reasonable
judgment) effectively to perfect and maintain the security interest in the
Collateral created by the Borrower Security Documents and Subsidiary Guarantor
Security Documents and the delivery of evidence that such financing statements
or other documents will have been or will be filed and recorded in all places
necessary or desirable, in the reasonable judgment of the Agent, to create and
maintain valid and enforceable first priority Liens on the Collateral in favor
of the Agent.
(h) The Title Policy or marked title commitment for each Mortgaged
Property.
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(i) The Survey (or as to the Lots which have been platted, a copy of
the plat) of all of the constituent parts of the Mortgaged Property dated within
sixty (60) days next prior to the Closing Date.
(j) INTENTIONALLY OMITTED.
(k) The stock certificates (which certificates shall be accompanied by
irrevocable undated stock powers duly endorsed in blank and irrevocable proxies,
all satisfactory in form and substance to the Agent), certificates of
certificated partnership interest, and certificates of certificated limited
liability company membership interest, representing the Capital Stock and
partnership and limited liability company interests to be pledged on the Closing
Date pursuant to the Security Agreement (Capital Stock and Partnership
Interests).
(l) The Environmental Indemnity.
(m) A draft of an Appraisal of each Mortgaged Property satisfactory in
form and substance to the Agent evidencing that the Appraised Value of the
Finished Lots, Land Under Development, Entitled Land, and Unentitled Land
included in the Borrowing Base in the aggregate equals or exceeds the Net Book
Value of such Collateral in the aggregate; PROVIDED, HOWEVER that the Net Book
Value of the Bramalea Land shall be adjusted for the Purchase Price Accounting
Adjustment.
(n) The results of a recent search (the "UCC Search") in such states
and other jurisdictions as the Agent shall determine by a Person satisfactory to
the Agent of the Uniform Commercial Code (or similar legislation), judgment and
tax lien filings which may have been filed with respect to personal property of
the Borrower and the Subsidiary Guarantors, and the results of such search shall
be satisfactory to the Agent.
(o) Evidence of insurance (the "Insurance Certificates") required by
this Agreement satisfactory to the Agent.
(p) A flood plain certificate (if not included in the survey relating
to each Mortgaged Property).
(q) An Environmental Report.
(r) The favorable written opinion by Rubin Baum Levin Constant Friedman
& Bilzin, counsel for the Borrower, the Subsidiary Guarantors, Lennar and LNR
addressed to the Lenders and in form and substance satisfactory to the Agent,
(i) confirming the accuracy of the representations and warranties set forth in
Sections 4.01, 4.02 and 4.03 (excluding from each such section clause (ii)
thereof, and limited, in the case of clause (iii) thereof, to the jurisdictions
listed under the heading "Where Qualified" in Schedule V hereto), 4.11, 4.17,
4.18 and the second sentence of Section 4.13 hereof (which opinion, as to the
representations set forth in clauses (ii)(b),
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(iii) and (iv) of Sections 4.04, 4.05 and 4.06, Sections 4.11, 4.17, 4.18 and
the second sentence of Section 4.13 hereof, may be to the best knowledge of such
counsel, and may in its entirety be limited to Florida, Arizona, Delaware,
Texas, California and United States federal law); and (ii) to the effect that
this Agreement, the Notes, Subsidiary Guarantees, and other Loan Documents have
been duly authorized, executed and delivered by the Borrower and Subsidiary
Guarantors. Such counsel may rely, in its opinion, on the opinions of special
counsel to the Borrower referred to in Section 5.01(s) below, as to matters of
law of the State of Illinois, on the opinion of Fennemore, Craig of Phoenix,
Arizona as to matters of law of the State of Arizona, on the opinion of Belinger
& DeWolf, P.C. as to matters of law of the State of Texas and on the opinion of
Palmieri, Tyler, Wiener, Wilhelm & Waldron as to matters of law of the State of
California. In addition, Rubin, Baum, Levin, Constant, Friedman & Bilzin may
rely on the opinion of Rogers & Wells as to matters of Delaware law applicable
to the transaction. The Borrower hereby instructs its counsel to prepare its
opinion and deliver it to Lenders for their benefit, and such opinion shall
contain a statement to such effect.
(s) The favorable written opinion of Rudnick & Wolfe, special counsel
to the Borrower, the Subsidiary Guarantors, Lennar and LNR that (i) no
authorization, consent, approval, license or exemption of, or filing nor
registration with or other action by any Illinois, United States federal or
Delaware governmental department, commission, board, bureau, regulatory body,
agency or instrumentality or to the best knowledge of such counsel, any court is
or will be necessary for the execution, delivery and performance by the Borrower
of this Agreement, the Notes, and the Subsidiary Guarantees and (ii) this
Agreement, the Notes and the Subsidiary Guarantees constitute the legal, valid
and binding obligations of the Borrower and the Subsidiary Guarantors,
enforceable in accordance with their respective terms, except as the rights and
remedies of the Lenders thereunder may be limited by (A) applicable bankruptcy,
Reorganization, insolvency and other laws effecting creditors' rights generally
from time to time in effect, (B) the exercise of the discretionary powers of the
court before which any proceeding seeking equitable remedies (including, without
limitation, specific performance and injunctive relief) may be brought, and (C)
such other qualifications expressed in the opinion PROVIDED that such
qualifications are acceptable to Agent. Such counsel may rely on the opinion of
counsel to the Borrower and the Subsidiary Guarantors delivered pursuant to
subsection (b) above relating to the representations set forth in Sections 4.01
and 4.02 hereof and on the opinion of Palmieri, Tyler, Wiener, Wilhelm & Waldron
as to matters of law of the State of California. The Borrower hereby instructs
its special counsel to prepare its opinion and deliver it to Lenders for their
benefit, and such opinion shall contain a statement to such effect.
(t) The favorable written opinion of Stearns Weaver Miller Weissler
Alhadeff & Sitterson, P.A., special counsel to the Agent and the Lenders, dated
the Closing Date, addressed to the Lenders to the effect that: while it has not
independently considered the matters covered by the opinions provided pursuant
to Sections 5.01(s) and (t) to the extent necessary to enable it to express the
conclusions stated therein, those opinions of counsel and the other documents
provided pursuant to this Section 5.01 are substantially responsive to the
requirements of this Agreement.
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(u) The following supporting documents with respect to the Borrower,
each Subsidiary Guarantor, Lennar and LNR: (i) a copy of its certificate of
existence or certificate or articles of incorporation, as the case may be, and,
with respect to the Borrower, the certificate of incorporation of LLP Partner
and LNR Partner certified as of a date reasonably close to the Closing Date to
be a true and accurate copy by the Secretary of State of its state of
incorporation, as the case may be, or if a copy of such certificate of
incorporation has been previously delivered to the Agent in connection with the
Existing Credit Agreement, a certificate of its Secretary or Assistant Secretary
to the effect that there have been no amendments to its certificate of
incorporation since April 4, 1997; (ii) a certificate of that Secretary of
State, dated as of a date reasonably close to the Closing Date, as to its
existence and (if available) good standing and, with respect to the Borrower,
also as to LLP Partner and LNR Partner; (iii) a certificate of the Secretary of
State of each jurisdiction, other than its state of incorporation, in which it
does business, as to its qualification as a foreign corporation; (iv) a copy of
its by-laws, certified by its Secretary or Assistant Secretary to be a true and
accurate copy of its by-laws in effect on the Closing Date, or, if a copy of
such by-laws has been previously delivered to the Agent in connection with the
Existing Credit Agreement, a certificate of its Secretary or Assistant Secretary
to the effect that there have been no amendments to its by-laws since April 4,
1997; (v) a certificate of its Secretary or Assistant Secretary, dated the
Closing Date, as to the incumbency and signatures of its general partner or
officers, as the case may be, who have executed any documents in connection with
the transactions contemplated by this Agreement; (vi) a copy of resolutions of
the Executive Committee of its Board of Directors, certified by its Secretary or
Assistant Secretary to be a true and accurate copy of resolutions duly adopted
by such Executive Committee or a certificate executed by an authorized officer
of the general partner as to the partnership actions duly adopted by such
general partner, as the case may be, that are in full force and effect on the
Closing Date, authorizing the execution and delivery by it of this Agreement,
the Notes and the other Loan Documents and the performance by it of all its
obligations thereunder; and (vii) such additional supporting documents and other
information with respect to its operations and affairs as the Agent may
reasonably request.
(v) A certificate signed by a duly authorized officer of the Borrower
stating that: (i) the representations and warranties of the Borrower contained
in Article IV hereof are correct and accurate on and as of the date of that
certificate as though made on and as of that date and (ii) no event has occurred
and is continuing which constitutes an Event of Default or Unmatured Default
hereunder.
(w) Such other documents as any Lender or its counsel may reasonably
request.
(x) There shall not have occurred any changes in the consolidated
financial condition, results of operations or cash flows of the Subsidiary
Guarantors from that reflected in the Pro Forma Financial Statements which has
or reasonably could be expected to have, in the judgment of the Required
Lenders, a Material Adverse Effect on the Borrower's financial condition or
results of operations, taken as a whole.
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(y) The Borrower shall not have entered into or agreed to any amendment
or modification of the Borrower's Partnership Agreement, or waived or released
any material right or benefits of the Borrower thereunder without the prior
written consent of the Agent or the Required Lenders.
(z) The Agent shall have received the Pro Forma consolidated balance
sheet of Lennar referred to in Section 5.01(p) of the Lennar Credit Agreement.
(aa) All conditions precedent to the effectiveness of the Lennar Credit
Agreement and the obligations of the "Lenders" thereunder to make "Advances"
thereunder shall have been satisfied.
(bb) A certificate signed by the Chief Financial Officer of Lennar
showing in reasonable detail the calculations used to determine the Leverage
Ratio for the Pricing Grids attached hereto as Exhibit F.
(cc) A report in reasonable detail and in form and substance
satisfactory to the Agent, with calculations indicating that the Borrower, as of
the Closing Date is in compliance with the provisions of Article VII, which
calculations shall be based upon the financial statements of the Borrower.
(dd) The Agent shall have received an estimated consolidating balance
sheet of the Borrower and its consolidated Subsidiaries, dated as of the Closing
Date, reflecting (i) the combined accounts of the Borrower and all of its
Subsidiaries, (ii) the combined accounts of the Borrower and the Subsidiary
Guarantors, and (iii) the combined accounts of all Subsidiaries that are not
Subsidiary Guarantors (the "Estimated Opening Balance Sheet"). The Estimated
Opening Balance Sheet shall be prepared in accordance with sound accounting
practices, consistent with the financial statements of those Subsidiaries of the
Borrower which were included in the historical financial statements of Lennar
and, to the extent the Estimated Opening Balance Sheet includes estimates, such
estimates shall be made based on factors and assumptions that are reasonable
under the circumstances.
SECTION 5.02. CONDITIONS PRECEDENT TO ALL BORROWINGS.
(a) No Lender shall be required to make any Advance (other than an
Advance that after giving effect thereto and to the application of the proceeds
thereof, does not increase the amount of the sum of outstanding (a) Advances and
(b) Reimbursement Obligations) and no Issuer shall be obligated to issue any
Facility Letter of Credit, unless on the applicable Borrowing Date:
(i) the Agent shall have received notice of Borrower's request
for the Advance and/or the issuance of a Facility Letter of Credit with
respect thereto as provided in Sections 2.06(a) and 2.15(c)(i),
respectively, and such other approvals, opinions or documents as the
Agent may reasonably request; and
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(ii) the representations and warranties of the Borrower contained
in Article IV hereof are true and correct as of such Borrowing Date or
Issuance Date, PROVIDED, HOWEVER, for the purposes hereof (A) from and
after the date of delivery by the Borrower pursuant to Section 6.04(a)
of its Consolidated Financial Statements for the year ending November
30, 1997, the Borrower shall represent and warrant to each of the
Lenders that the annual audited financial statements, and the related
notes and schedules (if any), audited and reported upon by Deloitte &
Touche, independent certified public accountants, most recently
delivered by the Borrower pursuant to Section 6.04(a) as of the date of
the request for an Advance and/or the issuance of a Facility Letter of
Credit (a) were prepared in accordance with GAAP, consistently applied
throughout the respective periods covered thereby, (b) present fairly
the consolidating financial condition of the Borrower and the
Subsidiary Guarantors as of the respective dates thereof, (c) show all
material Liabilities, direct or contingent, of each Subsidiary
Guarantor as of those dates (including, without limitations,
Liabilities for taxes and material commitments), and (d) present fairly
the consolidating results of operations and cash flows of the
Subsidiary Guarantors for the respective periods covered thereby; and
(B) from and after the date of delivery by the Borrower pursuant to
Section 6.04(b) of its Consolidated Financial Statements for the
quarter ending February 28, 1998, the references in Section 4.08 to
"Unaudited Financial Statements" shall be deemed to be references to
the quarterly unaudited financial statements most recently delivered by
the Borrower pursuant to Section 6.04(b) as of the date of the request
for an Advance and/or the issuance of a Facility Letter of Credit and
such financial statements shall present fairly the consolidating
results of operations and cash flows of the Subsidiary Guarantors for
the respective periods covered thereby;
(iii) All legal matters incident to the making of such Advance
shall be satisfactory to the Lenders and their counsel;
(iv) There exists no Event of Default or Unmatured Default;
(v) The making of the Advance and/or the issuance of a Facility
Letter of Credit will not result in any Event of Default or Unmatured
Default.
(b) Each Borrowing Notice with respect to each such Advance or the
Issuance Notice with respect to such Facility Letter of Credit shall constitute
a representation and warranty by the Borrower that all of the conditions
contained in this Section 5.02 have been satisfied.
SECTION 5.03 TERMINATION. Notwithstanding anything to the contrary
contained in this Agreement or any of the other Loan Documents, if all of the
conditions precedent to the obligations of the Lenders set forth in Sections
5.01 and 5.02 (as to the initial Borrowing Date only) shall not have been
satisfied or waived by the Lenders prior to December 31, 1997, the Commitments
and all other obligations of the Lenders under this Agreement and the other Loan
Documents shall terminate as of such date and be of no further force or effect
thereafter. Such termination shall not diminish or affect or relieve the
Borrower or any Subsidiary Guarantor, from
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any of their respective Obligations which are stated to survive a termination of
the Commitments or the termination of this Agreement or the other Loan
Documents.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof until
payment in full of all the Obligations, unless the Required Lenders otherwise
shall consent in writing as provided in Section 13.06 hereof, the Borrower will,
and will cause each of the Subsidiaries to:
SECTION 6.01. EXISTENCE, PROPERTIES, ETC. Do or cause to be done all
things or proceed with due diligence with any actions or courses of action which
may be necessary to preserve and keep in full force and effect its existence
under the laws of their respective states of incorporation and all
qualifications or licenses in jurisdictions in which such qualification or
licensing is required for the conduct of its business or in which the Lenders
shall request such qualification; PROVIDED, HOWEVER, that nothing herein shall
be deemed to prohibit the Borrower or any Subsidiary other than the Borrower
from (i) merging into or consolidating with any other Subsidiary (including the
Borrower, if the Borrower is the surviving entity) or (ii) declaring and paying
dividends in complete liquidation. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted. The primary business of the
Borrower and the Subsidiaries shall at all times be the acquisition,
development, and sale of land.
SECTION 6.02. NOTICE. Give prompt written notice to the Agent of (i)
any proceeding instituted by or against the Borrower or any of the Subsidiaries
in any federal or state court or before any commission or other regulatory body,
federal, state or local, or any such proceedings threatened against the Borrower
or any Subsidiary in writing by any federal, state or other governmental agency,
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect, and (ii) any other Event which could reasonably be expected to
lead to or result in a Material Adverse Effect, or which, with or without the
giving of notice or the passage of time or both, would constitute an Event of
Default or a default under any material agreement, other than this Agreement or
the other Loan Documents, to which the Borrower is a party or by which any of
its properties or assets is or may be bound.
SECTION 6.03. PAYMENTS OF DEBTS, TAXES, ETC. Pay all its debts and
perform all its obligations promptly and in accordance with the respective terms
thereof, and pay and discharge or cause to be paid and discharged promptly all
taxes, assessments and governmental charges or levies imposed upon the Borrower
or Subsidiary or upon its incomes or receipts or upon any of their properties
before the same shall become in default or past due, as well as all lawful
claims for labor, materials and supplies or otherwise which, if unpaid, might
result in the imposition of a lien
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or charge upon such properties or any part thereof; PROVIDED, HOWEVER, that it
shall not constitute a violation of the provisions of this Section 6.03 if the
Borrower or a Subsidiary shall fail to perform any such obligation or to pay any
such debt (except for obligations for money borrowed), tax, assessment,
governmental charge or levy or claim for labor, materials or supplies which is
being contested in good faith, by proper proceedings diligently pursued, and as
to which adequate reserves have been provided.
SECTION 6.04. ACCOUNTS AND REPORTS. Maintain a standard system of
accounting established and administered in accordance with GAAP, and provide to
the Lenders the following:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower (commencing with the fiscal year ending
November 30, 1997), a consolidated balance sheet of the Borrower and the
Subsidiaries as of the end of that fiscal year and the related consolidated
statements of earnings, partners' equity and cash flows for that fiscal year,
all with accompanying notes and schedules, prepared in accordance with GAAP
consistently applied and audited and reported upon by Deloitte & Touche or
another firm of independent certified public accountants of recognized standing
selected by the Borrower and acceptable to the Agent (such audit report shall be
unqualified except for qualifications relating to changes in GAAP and required
or approved by the Borrower's independent certified public accountants);
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters, and within 120 days after the end of the
fourth quarter, of each fiscal year of the Borrower (commencing with the quarter
and Fiscal Year ending November 30, 1997), a consolidated balance sheet of the
Borrower and the Subsidiaries as of the end of that quarter, and the related
consolidated statement of partners' and stockholders' equity earnings and cash
flows of the Borrower and the Subsidiaries for the period from the beginning of
the fiscal year to the end of that quarter, all prepared in accordance with GAAP
consistently applied, unaudited but certified to be true and accurate, subject
to normal year-end audit adjustments, by the Chief Financial Officer of the
Borrower;
(c) within 60 days after the end of each of the first three quarters,
and within 120 days after the end of the fourth quarter, of each fiscal year of
the Borrower (commencing with the quarter and Fiscal Year ending November 30,
1997), the following described balance sheets and statement of earnings all
prepared in accordance with GAAP consistently applied, unaudited but certified
to be true and accurate, subject to normal year-end audit adjustments, by the
Chief Financial Officer of the Borrower, (i) a consolidated balance sheet of the
Borrower (in a form acceptable to the Agent) as of the end of that quarter and
the related consolidated statement of earnings of the Borrower (in a form
acceptable to the Agent) for the period from the beginning of the fiscal year to
the end of that quarter and (ii) a balance sheet of each Subsidiary Guarantor
(in a form acceptable to the Agent) as of the end of that quarter and the
related statement of earnings of such Subsidiary Guarantor (in a form acceptable
to the Agent) for the period from the beginning of the fiscal year to the end of
that quarter;
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(d) concurrently with the delivery of the financial statements
described in subsection (a) above, a letter signed by that firm of independent
certified public accountants to the effect that, during the course of their
examination, nothing came to their attention which caused them to believe that
any Event of Default or Unmatured Default has occurred, or if such Event of
Default or Unmatured Default has occurred, specifying the facts with respect
thereto; and concurrently with the delivery of the financial statements
described in subsections (b) and (c) above, a certificate signed by the
President or Executive Vice President and the Chief Financial Officer of the
Borrower to the effect that, having read this Agreement, and based upon an
examination which they deemed sufficient to enable them to make an informed
statement, there does not exist any Event of Default or Unmatured Default, or if
such Event of Default or Unmatured Default has occurred, specifying the facts
with respect thereto;
(e) within 60 days after the end of each fiscal quarter and within 120
days after the end of each fiscal year of the Borrower (commencing with the
fiscal year ending November 30, 1997), a schedule of all Real Estate owned by
the Borrower and the Subsidiaries in the form of Schedule III annexed hereto or
as otherwise required by Agent, which schedule, in addition to providing all the
categories of information specified in Schedule III, shall specify those
properties the interest and carrying charges attributable to which are being
deducted, for financial reporting purposes, for the fiscal year in which they
are paid and shall contain all such other information as Agent shall require;
(f) within 90 days after the beginning of each fiscal year of the
Borrower, a projection, in reasonable detail and in form and substance
satisfactory to the Agent, on a quarterly basis of the cash flow and of the
earnings of the Borrower and the Subsidiaries for that fiscal year and for the
immediately succeeding fiscal year;
(g) Promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by Lennar and LNR to
their respective stockholders, and of all regular and periodic reports and other
material (including copies of all registration statements and reports under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended) filed by Lennar and LNR with any securities exchange or any
governmental authority or commission, except material filed with governmental
authorities or commissions relating to the development of Real Estate in the
ordinary course of the business of Lennar and LNR;
(h) as soon as available and in any event within 60 days after the end
of each of the first three quarters, and within 120 days after the end of the
fourth quarter, of each fiscal year of each Joint Venture, a balance sheet of
that Joint Venture as of the end of that quarter and a statement of earnings of
that Joint Venture for the period from the beginning of the fiscal year to the
end of that quarter, prepared in accordance with GAAP consistently applied,
unaudited but certified to be true and accurate, subject (in the case of the
financial statements delivered for the first three quarter of each fiscal year)
to normal year-end adjustments, by the Chief Financial Officer of the Borrower;
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(i) within 60 days after the end of each of the first three quarters,
and within 90 days after the end of each fiscal year of the Borrower (commencing
with the quarter and Fiscal Year ending November 30, 1997), a report, in
reasonable detail and in form and substance satisfactory to the Agent, with
calculations indicating that the Borrower is in compliance with the provisions
of Article VII and, Article VIII, of this Agreement;
(j) within 270 days after the close of each fiscal year, a statement of
the Unfunded Liabilities of each Single Employer Plan, certified as correct by
an actuary enrolled under ERISA, but the foregoing statement shall be required
only if any Single Employer Plan shall exist;
(k) as soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any Plan,
a statement, signed by the Chief Financial Officer of the Borrower, describing
said Reportable Event and the action which the Borrower proposes to take with
respect thereto;
(l) as soon as possible and in any event within 10 days after receipt
thereof by the Borrower, a copy of (a) any Environmental Claim against the
Borrower or any of the Subsidiaries, and (b) any notice alleging any violation
of any Environmental Law or any federal, state or local health or safety law or
regulation by the Borrower or any of the Subsidiaries, which, in either case,
could reasonably be expected to have a Material Adverse Effect;
(m) such supplements to the aforementioned documents and additional
information (including, but not limited to, leasing, occupancy and non-financial
information) and reports as the Agent or any Lender may from time to time
reasonably require;
(n) concurrently with the quarterly financial statements described in
subsection (b) above following the end of any quarter in which each new
Subsidiary that is to become a Subsidiary Guarantor under Section 6.07 hereof
was formed, the Borrower shall deliver to the Agent (i) revised copies of
Schedule I to this Agreement and Schedule I to the Notes, adding thereto the
name of such new Subsidiary Guarantor, (ii) a revised copy of Schedule V to this
Agreement, adding thereto the information with respect to such new Subsidiary
required by Section 4.19 hereof, (iii) a Joinder Agreement, in form and content
satisfactory to the Agent, executed by a duly authorized officer of such new
Subsidiary, pursuant to which such Subsidiary agrees to become a Subsidiary
Guarantor hereunder, assumes all of the Obligations, and agrees that Schedule I
hereto and Schedule I to the Notes shall be amended to include the name of such
Subsidiary; (iv) a copy of the certificate of incorporation or other
organizational document of such new Subsidiary, certified by the secretary of
state or other official of the state or other jurisdiction of its incorporation;
and (v) a copy of the bylaws of such new Subsidiary, certified by the secretary
or other appropriate officer or partner of such Subsidiary.
(o) within 60 days of the Closing Date, a Closing Date balance sheet of
the Borrower, as of such date and after giving effect to the formation of the
Borrower, the transfer of assets by LLP Partner to the Borrower pursuant to the
Reorganization and the effectiveness of this
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Agreement and the Lennar Credit Agreement and the funding of the initial loans
thereunder, prepared in accordance with GAAP, unaudited but certified to be true
and accurate by the Chief Financial Officer of the Borrower.
SECTION 6.05. ACCESS TO PREMISES AND RECORDS. At all reasonable times
and as often as any Lender may reasonably request, permit authorized
representatives and agents designated by that Lender to (i) have access to the
premises of the Borrower and each Subsidiary and to their respective corporate
books and financial records, and all other records relating to their respective
operations and procedures, (ii) make copies of or excerpts from those books and
records and (iii) upon reasonable notice to the Borrower, discuss the respective
affairs, finances and operations of the Borrower and the Subsidiaries with, and
to be advised as to the same by, their respective officers and directors.
SECTION 6.06. MAINTENANCE OF PROPERTIES AND INSURANCE. Maintain all its
and each Subsidiary Guarantor's properties and assets in good working order and
condition and make all necessary repairs, renewals and replacements thereof so
that its business carried on in connection therewith may be properly conducted
at all times; and maintain or require to be maintained (i) adequate insurance,
by financially sound and reputable insurers, on all properties of the Borrower
and each Subsidiary Guarantor which are of character usually insured by Persons
engaged in the same or a similar business against loss or damage resulting from
fire, defects in title or other risks insured against by extended coverage and
of the kind customarily insured against by those Persons, (ii) adequate public
liability insurance against tort claims which may be incurred by the Borrower,
and (iii) such other insurance as may be required by law. Upon the request of
the Agent, the Borrower will furnish to the Lenders full information as to the
insurance carried.
SECTION 6.07. FINANCING; NEW INVESTMENTS. Give the Agent (i) written
notice of any serious negotiations for debt or equity financing or for the
placement of the Borrower's Securities in either a private or public financing,
if any of the foregoing transactions are to be in excess of $1,000,000 in any
one transaction or series of related transactions, (ii) advance written notice
of the formation of any new Significant Subsidiary (as hereinafter defined), the
establishment of any new Joint Venture or the commencement of any new Project,
which such new Significant Subsidiary shall become a party to this Agreement as
a Subsidiary Guarantor hereunder, effective upon the date of such Subsidiary's
formation, unless (x) such Subsidiary is a Joint Venture Subsidiary and (y) all
of the issued and outstanding equity Securities of such Subsidiary are pledged
to the Lenders pursuant to Section 7.05 hereof, and (iii) written notice of the
formation of any new Subsidiary which is not a Significant Subsidiary given not
later than ten (10) days after such formation, which new Subsidiary shall become
a party to this Agreement as a Subsidiary Guarantor hereunder effective upon
such Subsidiary's formation; PROVIDED, HOWEVER, that nothing in this Section
6.07 shall be deemed to authorize the Borrower to enter into any such
transaction if the same would violate any of the limitations set forth in
Article VII hereof. As used in this Section 6.07, the term "Significant
Subsidiary" means a Subsidiary in which the Borrower or another Subsidiary makes
investments (whether through the purchase of Capital Stock or instru-
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ments evidencing debt, advances or loans to such Subsidiary or by the guaranty
of Indebtedness of such Subsidiary) in a cumulative amount in excess of
$1,000,000.
SECTION 6.08. COMPLIANCE WITH APPLICABLE LAWS. Promptly and fully
comply with, conform to and obey all present and future laws, ordinances, rules,
regulations, orders, writs, judgments, injunctions, decrees, awards and all
other legal requirements applicable to the Borrower, the Subsidiaries and their
respective properties, including Environmental Laws, Regulation Z of the Board
of Governors of the Federal Reserve System, the Federal Interstate Land Sales
Full Disclosure Act, ERISA and the Florida Land Sales Act, the violation of
which would have a Material Adverse Effect on the Borrower or impose a liability
on the Lender.
SECTION 6.09. USE OF PROCEEDS. Use the proceeds of the Advances to
repay existing Indebtedness outstanding on the Closing Date, to make the
Distributions permitted by the last sentence of Section 7.11, for working
capital including interest payments and general partnership purposes.
SECTION 6.10. FURTHER ASSURANCES. Upon the request of the Agent,
promptly perform or cause to be performed any and all acts, execute or cause to
be executed any and all documents (including without limitation, financing
statements and continuation statements) for filing or recording under the
provisions of the Uniform Commercial Code or any other Legal Requirement which
is necessary or advisable to maintain in favor of the Agent, for the benefit of
the Lenders, Liens on the collateral that are duly perfected in accordance with
all applicable Legal Requirements or otherwise appropriately recorded so as to
put third parties on notice with respect to the Liens on the collateral.
SECTION 6.11. APPRAISALS. Within sixty (60) days of the Closing Date,
each draft Appraisal furnished pursuant to Section 5.01(m) hereof shall be made
final and reviewed for FIRREA compliance by the Agent and each Lender. If and to
the extent that any such Appraisal is not satisfactory to the Agent or if the
Majority Lenders determine that such Appraisal does not comply with FIRREA, such
Mortgaged Property described in such Appraisal shall thereupon no longer be
included in the Borrowing Base and Borrower shall, if necessary, make a
mandatory prepayment of the Loan in such amount as may be necessary to cause the
Borrower to be in compliance with Section 2.02(d) hereof. Furthermore, after
each such Appraisal has been approved for FIRREA compliance by the Majority
Lenders, and such Appraisal is satisfactory to the Agent, the aggregate
appraised value on an "as is basis" of the Mortgaged Property described in such
Appraisals must be greater than the aggregate Net Book Value of the Finished
Lots, Land Under Development, Entitled Land, and Unentitled Land included in the
Borrowing Base at the Closing Date. Upon the request of the Agent, obtain one or
more Appraisals at any time; PROVIDED that, so long as no Unmatured Default has
occurred and is continuing, the Borrower shall not be required to pay for more
than one Appraisal per Property every two years.
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ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof until
payment in full of all the Obligations, unless the Required Lenders otherwise
shall consent in writing as provided in Section 13.06 hereof, Borrower will not,
either directly or indirectly:
SECTION 7.01. MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth
of the Borrower at any time to be less than the sum of (a) $150,000,000, (b) an
amount equal to 50% of the cumulative amount of Consolidated Net Income of the
Borrower and the Subsidiaries for each fiscal quarter of the Borrower ending
after the Closing Date for which the Borrower and the Subsidiaries, taken as a
whole, had Consolidated Net Income, and (c) an amount equal to 100% of the
aggregate amount of the increase in the consolidated partners' equity of the
Borrower resulting from contributions to the capital of the Borrower and the
issuance of equity Securities of the Borrower after the Closing Date. For
purposes of this Section 7.01, "Consolidated Net Income", when used in respect
of any period, shall not include any loss for such period.
SECTION 7.02. LIMITATION ON INDEBTEDNESS.
(a) MAXIMUM LEVERAGE RATIO. As of the last day of each fiscal
quarter of the Borrower, permit the aggregate outstanding amount of the
Indebtedness of the Borrower (excluding the Nonrecourse Debt owed by
Subsidiaries of the Borrower which are not Subsidiary Guarantors), to exceed
150% of Adjusted Tangible Net Worth.
(b) OTHER INDEBTEDNESS. Permit the sum of the Borrower's other
Indebtedness (including Nonrecourse Debt, but excluding the Obligations and
Nonrecourse Debt of Subsidiaries which are not Subsidiary Guarantors), recourse
Indebtedness and Contingent Obligations of Subsidiaries and Joint Ventures
(excluding letters of credit related to assets in the Borrowing Base) to exceed
15% of Tangible Net Worth (excluding Tangible Net Worth of any Subsidiary which
is not a Subsidiary Guarantor).
SECTION 7.03. GUARANTIES. Make or suffer to exist any Contingent
Obligation (including, without limitation, any Contingent Obligation with
respect to the obligations of a Subsidiary or Joint Venture) or otherwise
assume, secure, provide Collateral for, or otherwise hypothecate or transfer any
property in respect of, guarantee or in any way become contingently liable or
responsible for obligations of any other Person, whether by agreement to
purchase those obligations of any other Person, or by agreement for the
furnishing of funds through the purchase of goods, supplies or services (whether
by way of stock purchase, capital contribution, advance or loan) for the purpose
of paying or discharging the obligations of any other Person, except for: (a)
guaranties of obligations of another Borrower issued in the ordinary course of
business; (b) the endorsement of negotiable instruments in the ordinary course
of business; (c) guaranties of performance and completion and performance and
completion bonds issued in connection with the
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construction of Real Estate developments owned by the Borrower; (d) guaranties
of liabilities incurred by Joint Ventures to which the Borrower or a Joint
Venture Subsidiary is a party except as provided in Section 7.02(b) above.
SECTION 7.04. SALE OF ASSETS; ACQUISITIONS; MERGER.
(a) Do any of the following:
(i) sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially
all of the assets (whether now owned or hereafter acquired) of the
Borrower and the Subsidiaries (on a consolidated basis) except for the
sale of inventory in the ordinary course of business;
(ii) merge into or consolidate with any other Person or permit
any other Person to merge into or consolidate with it;
(iii) dissolve, liquidate or wind up its business by operation
of law or otherwise; or
(iv) distribute to the partners of the Borrower any Securities
of any Subsidiary;
PROVIDED, HOWEVER, that any Subsidiary or any other Person may merge into or
consolidate with or may dissolve and liquidate into the Borrower, if (and only
if), (1) in the case of a merger or consolidation, the Borrower is the surviving
Person, (2) in the case of a merger or consolidation involving the Borrower, the
Borrower is the surviving Person, (3) the character of the business of the
Borrower and the Subsidiaries on a consolidated basis will not be materially
changed by such occurrence, and (4) such occurrence shall not constitute or give
rise to an Event of Default or Unmatured Default or a default in respect of any
of the covenants contained in any agreement to which the Borrower or such
Subsidiary is a party or by which its property may be bound.
(b) Acquire another Person unless (i) such Person is involved in the
acquisition, development and/or sale of Real Estate as its primary business and
(ii) the board of directors or other governing body and such Person approves
such acquisition.
Nothing contained in this Section 7.04, however, shall restrict any
sale of assets between the Borrower and any Subsidiary Guarantor, or between
Subsidiary Guarantors, which is in compliance with all other provisions of this
Agreement and the other Loan Documents.
SECTION 7.05. INVESTMENTS. Purchase or otherwise acquire, hold or
invest in the Securities (whether Capital Stock or instruments evidencing debt)
of, make loans or advances to, enter into any arrangements for the purpose of
providing funds or credit to, or make any Equity Investment in, any Person which
is not on the Closing Date a Subsidiary Guarantor or which becomes a Subsidiary
Guarantor upon the making of the investment, except for: (i) Investments in
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or loans or advances to Joint Ventures to which the Borrower or a Subsidiary is
a party, PROVIDED that (A) all such Investments, loans and advances outstanding
at any time, not including Investments, loans and advances with respect to
Stevenson Ranch Venture L.L.C. and Bressi Ranch, when aggregated with the then
outstanding guaranties of the obligations of the Joint Ventures of the type
referred to in clause (d) of Section 7.03 hereof do not exceed 25% of Tangible
Net Worth and (B) all such Investments, loans and advances made after the
Agreement Date with respect to Stevenson Ranch Venture L.L.C. and Bressi Ranch
do not exceed an aggregate of $3,000,000 (the "Additional Investment") at any
one time outstanding, it being presumed that any payment or distribution made to
the Borrower by either Stevenson Ranch Venture L.L.C. or Bressi Ranch, as the
case may be, after the date of making such Additional Investment shall be first
a repayment or return of such Additional Investment and the balance of such
distribution being presumed to be a repayment or return of the Investment made
in such entities prior to the Agreement Date, and (ii) with respect to
Investments in, or loans and advances to each Joint Venture Subsidiary, all of
the issued and outstanding equity Securities of such Joint Venture Subsidiary
shall have been pledged to the Agent pursuant to the terms and provisions of the
Security Agreement (Capital Stock and Partnership Interests) and such pledge
shall not be prohibited by, or result in a breach or violation of, any
agreement, indenture or other instrument to which the Borrower or any Subsidiary
is a party or is bound; (iii) purchases of direct obligations of the government
of the United States of America, or any agency thereof, or obligations
unconditionally guaranteed by the United States of America; (iv) certificates of
deposit of any bank organized or licensed to conduct a banking business under
the laws of the United States or any state thereof having capital, surplus and
undivided profits of not less than $100,000,000; (v) Investments in commercial
paper which, at the time of acquisition by the Borrower, is accorded an "A" or
equivalent rating by any of the Rating Agencies or any other nationally
recognized credit rating agency of similar standing; and (vi) Investments in
publicly traded, readily marketable securities, traded on a recognized national
exchange or over-the-counter, PROVIDED, HOWEVER, that no more than an aggregate
of $15,000,000, may be invested in such securities.
SECTION 7.06. SUBORDINATED DEBT. Directly or indirectly make any
payment of principal or interest with respect to any Subordinated Debt prior to
the date the same is due, or amend or modify the terms of any Subordinated Debt
except for extensions of the due date thereof, or directly or indirectly redeem,
retire, defease, purchase, retire or otherwise acquire any Subordinated Debt.
SECTION 7.07. NO MARGIN STOCK. Use any of the proceeds of the Advances
to purchase or carry any "margin stock" (as defined in Regulation U).
SECTION 7.08. TRANSACTIONS WITH AFFILIATES. Enter into any transaction
(including, without limitation, the purchase or sale of any property or service)
with, or make any payment or transfer to, any Affiliate, except in the ordinary
course of business and pursuant to the reasonable requirements of the Borrower's
or a Subsidiary's business and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction.
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SECTION 7.09. FIXED CHARGE COVERAGE. Permit Free Cash Flow to be less
than 125% of the sum of (x) principal payments made on all Indebtedness of the
Borrower and the Subsidiaries, (y) Consolidated Interest Incurred and (z)
Distributions (other than Distributions permitted by the last sentence of
Section 7.11), in each case calculated (i) with respect to the period commencing
on the date of the formation of the Borrower and ending on the last day of the
quarter in which the first anniversary of the Closing Date occurs, on a
cumulative basis, and (ii) commencing with the first day of the first full
quarter next following the first anniversary of the Closing Date and on the
first day of each quarter thereafter for the four (4) quarters preceding such
day.
SECTION 7.10. PRO FORMA FIXED CHARGE COVERAGE. On the last day of each
fiscal quarter next following the Closing Date and the last day of each fiscal
quarter thereafter, permit unrestricted cash in excess of $2,000,000 plus the
amount, if any, by which the Borrowing Base exceeds all (i) Loans then
outstanding under Facility A and Facility B and (ii) then outstanding Facility
Letters of Credit Obligations to be less than 125% of the sum of the following
for the quarter commencing on such Quarterly Payment Date, (a) required
(including but not limited to scheduled) principal payments (remaining after any
prepayments), (b) interest payments to be made in said quarter and (c) projected
tax distributions which for the purpose of this Agreement shall mean tax
payments on the Consolidated Net Income of the Borrower excluding income from
Subsidiaries which are not Subsidiary Guarantors or Joint Ventures, calculated
at the maximum federal tax rate for a corporation plus the maximum applicable
state income tax.
SECTION 7. 11. RESTRICTIONS ON DISTRIBUTIONS. Permit Distributions by
the Borrower to exceed 50% of the Borrower's Consolidated Net Income. The
Borrower may elect to make Distributions not more frequently than once per
quarter. Free Cash Flow from Subsidiaries which are not Subsidiary Guarantors
may be distributed without limitation; PROVIDED no Default or Event of Default
then exists or would result from such Distribution. No Distribution (other than
for the cash payment of Lennar's and LNR's income taxes related to the Borrower
and Distributions from Subsidiaries that are not Subsidiary Guarantors) shall be
made until after the first two fiscal quarters next following the Closing Date.
No Distributions (other than for the cash payment of Lennar's and LNR's income
taxes related to the Borrower) shall be made in any quarter unless the Borrower
delivers its quarterly compliance certificate showing compliance with all
covenants after giving effect to the Distribution as if it had been made during
said the immediately preceding quarter. Any permitted Distributions which are
not made in a quarter may be made in the following quarter. Notwithstanding
anything in this section to the contrary, the Borrower shall be permitted to
make Distributions by way of return of capital to its partners of up to fifty
percent (50%) of the Net Book Value of all Mortgaged Property contributed by
Lennar (including indirect contributions by way of Capital Stock of Subsidiary
Guarantors) to the capital of the Borrower on or before the Closing Date and
reflected on Schedule III hereto, PROVIDED that (i) such Distributions do not,
individually or in the aggregate, result in an Event of Default or Unmatured
Default, (ii) all such Distributions are completed by December 31, 1997, and
(iii) such Distributions do not, individually or in the aggregate, result in a
violation of Section 4.31.
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SECTION 7.12. LIENS AND ENCUMBRANCES.
(a) NEGATIVE PLEDGE. Grant any Liens on any of its or any Subsidiary's
rights, properties or assets other than Permitted Liens.
(b) NO AGREEMENT FOR NEGATIVE PLEDGE. Agree with any third party not to
create, assume or suffer to exist any Lien securing a charge or obligation on or
of any of Borrower's or any Subsidiary's property, real or personal, whether now
owned or hereafter acquired.
ARTICLE VIII
COLLATERAL
SECTION 8.01. SECURITY FOR OBLIGATIONS. The Borrower and the Subsidiary
Guarantors, respectively, shall grant the Agent, on behalf of the Lenders, as
security for the payment in full of all the Borrower Obligations and Subsidiary
Guarantor Obligations, a first Lien on all of the Borrower's and each Subsidiary
Guarantor's respectively now or hereafter owned assets which are included in the
Borrowing Base.
SECTION 8.02. COLLATERAL DOCUMENTATION. With respect to the assets
forming the Borrowing Base as at the Closing Date and any other asset hereafter
added to the Borrowing Base, the Borrower and each Subsidiary Guarantor shall
deliver to the Agent their respective documentation described in Section 5.01.
SECTION 8.03. POWERS AND DUTIES OF THE BORROWER AND SUBSIDIARY
GUARANTORS WITH RESPECT TO THE COLLATERAL.
(a) Subject to the provisions of this Agreement, so long as no Event of
Default shall have occurred and be continuing, the Borrower and the Subsidiary
Guarantors shall have the right to deal with, manage and administer the
Collateral and to collect and use the proceeds thereof in such manner as they
shall deem appropriate (subject to the provisions of Section 2.02).
(b) Unless the Borrower shall have been notified, pursuant to Section
9.03 hereof, that it has been discharged from its right to deal with, manage and
administer all items of the Collateral, the Borrower shall, subject to the
provisions of this Agreement, manage and administer all the Collateral in such
manner as they shall deem appropriate, without charge to the Lenders; PROVIDED,
HOWEVER, that the Borrower shall remain fully responsible for all its
obligations as owner, creditor or otherwise with respect to the Collateral.
SECTION 8.04. POWER OF ATTORNEY. With respect to the Collateral which
the Agent may from time to time hold and/or be entitled to obtain hereunder, the
Agent hereby is irrevocably appointed by the Borrower and each Subsidiary
Guarantor as Borrower's and each Subsidiary
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Guarantor's true and lawful attorney-in-fact with full power, from time to time
upon the occurrence and during the continuance of an Event of Default, to (i)
take possession of and endorse in Borrower's and each Subsidiary Guarantor's
name any pledges, assignments and other documents and any notes, checks, drafts,
bills of exchange, money orders and any other documents received in payment for
or on account of those assets and properties, (ii) to collect, sue for and give
acquittance for moneys due on account of those assets and properties, (ii) to
withdraw any claims, suits or proceedings pertaining to or arising out of those
assets and properties. The foregoing appointment is with full power of
substitution and is coupled with an interest. The Agent shall not be liable for
any failure to collect or enforce the payment of any of those assets and
properties.
SECTION 8.05. JOINDER IN SUBDIVISION PLATS, SUBDIVISION MAPS OR PARCEL
MAPS. To the extent required by Governmental Authorities, Agent will join in the
execution of plats, subdivision maps or parcel maps of the Mortgaged Property
and Additional Mortgaged Property (each a "Plat"), which joinder shall be
provided within ten (10) Business Days of the fulfillment of each and every one
of the following conditions precedent:
(i) Lenders shall not incur any liability of any kind in
connection with the execution and processing of the Plat, and all
reasonable out-of-pocket costs and expenses incurred by Lenders shall
be paid by Borrower;
(ii) The Borrower, each Subsidiary Guarantor and the Plat
shall have complied in all respects with all Governmental Authority
requirements; and,
(iii) A written commitment from the Title Company that the
Title Policy will be endorsed to insure that the Plat is a valid
subdivision upon recordation of the Plat.
SECTION 8.06. SALE OF LOTS. Borrower and the Subsidiary Guarantors
shall:
(i) Sell all Lots upon a fee simple basis;
(ii) Comply with all Legal Requirements affecting the sale of
the Lots, or any interest in the Lot or any part of the Lot; and
(iii) Assign to Lenders all reservations, deposits, down
payments, or the like, under contracts of sale (which contracts of sale
shall be expressly inferior and subordinate to the lien of any Mortgage
now or hereafter existing which encumbers the subject property) and
reservation receipts for lots, or any similar deposits respecting the
Project.
SECTION 8.07. PARTIAL RELEASES OF LOTS. As long as (i) no Event of
Default or Unmatured Default has occurred and is continuing, and (ii) all then
outstanding Loans do not exceed the Borrowing Base at such time, Lenders agree
to grant partial releases of Lots or other Collateral from the Lien of the
Mortgage within thirty (30) days of a request therefor in accordance with and
subject to all of the following:
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(i) As necessary to satisfy Legal Requirements, the Plat shall
have first been recorded in the public records of the county in which
the Lot is located;
(ii) The Borrower shall be current in all payments required by
this Agreement;
(iii) Requests for partial releases must be in writing,
delivered to Agent, and accompanied by all data necessary to support
the Borrower's entitlement to the partial release, including, without
limitation, (a) a partial release form, in form and content
satisfactory to Agent; (b) a schedule containing a list of the Lots
previously released by Lender, and the Lots remaining to be released;
and (c) if the Lots are not described in a recorded Plat, a Survey
certified to the Agent in accordance with the Agent's requirements,
which survey shall show the unreleased portion of the Real Estate, the
location of the Lot to be released and the location of all previously
released lots;
(iv) The Real Estate encumbered by the Mortgage following the
release shall have access to a publicly dedicated right-of-way insured
by an access endorsement to the applicable Title Policy to the extent
such endorsement is available in the application jurisdiction;
(v) The partial release documents shall be prepared by
Borrower at Borrower's expense, and must be in form and content
satisfactory to the Agent and the Agent's counsel;
(vi) Borrower shall pay all out-of-pocket costs of the Agent
and the Lenders attendant upon obtaining any partial release; and
(vii) The requested release is in connection with payments
made pursuant to Sections 2.02(b)(i) and 2.02(b)(ii) and an all-cash
sale made in the ordinary course of the Borrower's business of the Real
Estate as to which the partial release of the Mortgage is requested;
PROVIDED, HOWEVER, that unless the Required Lenders shall otherwise consent, the
Agent shall not be obligated to grant any such release if, after giving effect
to such release, the sum of all then outstanding Advances and Letter of Credit
Obligations exceeds the sum of (i) the Borrowing Base at such time and (ii) the
amount of cash on deposit at such time in the Letter of Credit Collateral
Account pursuant to Section 9.02.
SECTION 8.08. SALE OF ACREAGE. Borrower and the Subsidiary Guarantor
shall:
(i) Sell all Real estate, not constituting a Lot, upon a fee
simple basis;
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(ii) Comply with all Legal Requirements affecting the sale of
such Real Estate; and
(iii) Assign to Lenders all reservations, deposits, down
payments, or the like under contracts of sale (which contracts of sale
shall be expressly inferior and subordinate to the lien of any mortgage
now or hereafter existing which encumbers the subject property).
SECTION 8.09. PARTIAL RELEASES OF ACREAGE AND COMMON AREAS. As long as
no Event of Default or Unmatured Default has occurred and is continuing, and
(ii) all then outstanding Loans do not exceed the Borrowing Base at such time,
Lenders agree to grant partial releases of Real Estate not constituting Lots
from the Lien of the mortgage within thirty (30) days after the request therefor
in accordance with and subject to all of the following:
(i) The Borrower shall be current in all payments required by
this Agreement;
(ii) Requests for partial releases must be in writing,
delivered to the Agent and accompanied by all data necessary to support
the Borrower's entitlement to the partial release, including, without
limitation, (a) a partial release form, in form and content
satisfactory to the Agent; and (b) a map or sketch showing the real
estate to be released and the real estate remaining encumbered by the
mortgage;
(iii) The Real Estate encumbered by the mortgage following the
release shall have access to a publicly dedicated right-of-way insured
by an access endorsement to the applicable Title Policy to the extent
available in the applicable jurisdiction;
(iv) The partial release document shall be prepared by
Borrower, at Borrower's expense, and must be in form and content
satisfactory to the Agent and the Agent's counsel;
(v) Borrower shall pay all out-of-pocket costs of the Agent
and the Lenders attendant upon obtaining any partial release;
(vii) Unless the Real Estate to be released from the lien of
the Mortgage is common area for the use of homeowners in the Project,
for which no consideration is to be received by the Mortgagor, the
requested release is in connection with payments made pursuant to
Section 2.02(b)(iii) and an all-cash sale made in the ordinary course
of the Borrower's business of the Real Estate as to which the partial
release of the Mortgage is requested;
PROVIDED, HOWEVER, that unless the Required Lenders shall otherwise consent, the
Agent shall not be obligated to grant any such release if, after giving effect
to such release, the sum of all then outstanding Advances and Letter of Credit
Obligations exceeds the sum of (i) the Borrowing Base
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at such time and (ii) the amount of cash on deposit at such time in the Letter
of Credit Collateral Account pursuant to Section 9.02.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01. EVENTS OF DEFAULT. The occurrence of any one or more of
the following Events shall constitute an "Event of Default":
(a) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary Guarantor to the Lenders or the Agent under or
in connection with this Agreement or any Loan Document shall be false or
misleading in any material respect when made;
(b) any report, certificate, financial statement or other document or
instrument furnished in connection with this Agreement or the Loans hereunder
shall be false or misleading in any material respect when furnished;
(c) default shall be made in the payment of (i) the principal of any of
the Notes or of any Reimbursement Obligation when and as due and payable, or
(ii) the interest on any of the Notes, any fees or any other sums due pursuant
to Article II (other than mandatory prepayments pursuant to Section 2.02), which
default continues for five days after the same becomes due and payable;
(d) default shall be made with respect to any Indebtedness or
Contingent Obligations of the Borrower or any Subsidiary Guarantor (other than
the Indebtedness evidenced by the Notes), or in any net liabilities under
interest rate swap, exchange or cap agreements or any Swap Documents, beyond any
applicable period of grace, or default shall be made with respect to the
performance of any other obligation incurred in connection with any such
Indebtedness or liabilities beyond any applicable period of grace, or default
shall be made with respect to any other liability of $100,000 or more, if the
effect of any such default is to accelerate the maturity of such Indebtedness or
liability or to cause any other liability to become due prior to its stated
maturity, or any such Indebtedness or liability shall not be paid when due and
such default shall not have been remedied or cured by the Borrower or such
Subsidiary Guarantor or waived by the obligor;
(e) default shall be made in the due observance or performance of any
of the provisions of Article VII or Article VIII of this Agreement;
(f) default shall be made in the due observance or performance of any
other covenant, agreement or condition on the part of the Borrower or any
Subsidiary Guarantor to be performed under or in connection with this Agreement
or any Loan Document, and such default shall have continued for a period of 30
days after the occurrence thereof;
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(g) the Borrower or any Subsidiary Guarantor shall (i) petition or
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
trustee, examiner, custodian, liquidator or similar official of the Borrower or
any Subsidiary Guarantor or any of its properties or assets, (ii) be unable, or
admit in writing its inability, to pay its debts as they mature, (iii) make a
general assignment for the benefit of or a composition with its creditors, (iv)
have an order for relief entered with respect to it under the Federal bankruptcy
laws as now or hereafter in effect, (v) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in
effect, or file a petition or an answer seeking dissolution, winding up,
liquidation or reorganization or an arrangement with creditors or a composition
of its debts or to take advantage of any bankruptcy, reorganization, insolvency,
readjustment of debts, dissolution or liquidation law or statute or other
statute or law for the relief of debtors, or file any answer admitting the
material allegations of a petition filed against it in any proceeding under such
law, or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, or if corporate or other
action shall be taken by the Borrower or such Subsidiary Guarantor for the
purpose of effecting any of the foregoing, or (vi) fail to contest in good faith
any appointment or proceeding described in Section 9.01(h);
(h) an order, judgment, or decree shall be entered without the
application, approval, or consent of the Borrower or any Subsidiary Guarantor by
any court of competent jurisdiction appointing a receiver, trustee or liquidator
of the Borrower or any Subsidiary Guarantor or a proceeding described in Section
9.01(g) shall be instituted against the Borrower or any Subsidiary Guarantor,
and such appointment shall continue undischarged or such proceeding continues
undismissed or unstayed for any period of 45 days;
(i) final judgment for the payment of money in excess of $250,000 shall
be rendered against the Borrower or any Subsidiary Guarantor and the same shall
remain undischarged for a period of 30 days during which execution shall not be
effectively stayed;
(j) final judgment(s) for the payment of money in excess of an
aggregate of $250,000 shall be rendered against the Borrower or any Subsidiary
Guarantor after the Closing Date and shall remain undischarged and unstayed for
a period of ten days;
(k) there shall occur any Event or Events which, individually or in the
aggregate, shall be deemed by the Required Lenders to have had a Material
Adverse Effect;
(l) The Borrower or any Subsidiary Guarantor shall be the subject of
any proceeding or investigation pertaining to the release by the Borrower, any
Subsidiary Guarantor or any other Person of any Hazardous Substance into the
environment, or any violation of any Environmental Law or any federal, state or
local health or safety law or regulation, which, in either case, could
reasonably be expected to have a Material Adverse Effect;
(m) The occurrence of any "default", as defined in any Loan Document
(other than this Agreement or the Notes) or the breach of any of the terms or
provisions of any Loan Document
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(other than this Agreement or the Notes), which default or breach continues
beyond any period of grace therein provided;
(n) An Event of Default (as such term in defined in the Lennar Credit
Agreement) under the Lennar Credit Agreement shall have occurred;
(o) Lennar or its subsidiaries, LNR or its subsidiaries, or any
Subsidiary Guarantor shall take any action or threaten to take any action to
avoid its obligations under the Lennar and LNR Guaranty or the Subsidiary
Guarantees, respectively, including, without limitation, any repudiation,
revocation, termination or purported revocation or termination thereof;
(p) Any Lien that has been granted to the Lenders pursuant hereto no
longer continues to be a first priority Lien; or
(q) Lennar shall cease to own directly or indirectly a 50% interest in
the Borrower or Lennar or its Wholly-Owned Subsidiary shall at any time for any
reason cease to be the managing general partner of the Borrower.
SECTION 9.02. ACCELERATION. If any Event of Default described in
subsection 9.01(g) or (h) occurs, the obligations of the Lenders to make Loans
and of an Issuer to issue Facility Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent or any Lender.
If any other Event of Default occurs and is continuing, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans and of an
Issuer to issue Facility Letters of Credit hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrower and each Subsidiary Guarantor hereby
expressly waives. In addition to the foregoing following the occurrence and
during the continuance of an Event of Default, so long as any Facility Letter of
Credit has not been fully drawn and has not been canceled or expired by its
terms, upon demand by the Agent the Borrower shall deposit in the Letter of
Credit Collateral Account cash in an amount equal to the aggregate undrawn face
amount of all outstanding Facility Letters of Credit and all fees and other
amounts due or which may become due with respect thereto. The Borrower shall
have no control over funds in the Letter of Credit Collateral Account, which
funds shall be invested by the Agent from time to time in its discretion in
certificates of deposit of First Chicago having a maturity not exceeding 30
days, so long as the Borrower has provided the Agent with such documents as the
Agent shall have requested in order to perfect a security interest in such
certificates of deposit. Such funds shall be promptly applied by the Agent to
reimburse any Issuer for drafts drawn from time to time under the Facility
Letters of Credit. Such funds, if any, remaining in the Letter of Credit
Collateral Account following the payment of all of the Borrower Obligations in
full shall, unless the Agent is otherwise directed by a court of competent
jurisdiction, be promptly paid over to the Borrower.
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If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans and
of an Issuer to issue Facility Letters of Credit hereunder as a result of any
Event of Default (other than any Event of Default as described in subsection
9.01 (g) or (h) with respect to the Borrower) and before any judgment or decree
for the payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall so direct, the Agent shall, by
notice to the Borrower, rescind and annul such acceleration and/or termination.
SECTION 9.03. RIGHTS AS TO COLLATERAL.
(a) If, on the Maturity Date for Facility A or Facility B, the Borrower
shall not have paid in full all the Obligations which are due and payable on
such Maturity Date, the Agent, at the direction of the Required Lenders, shall
take (and/or shall cause one or more of its designees to take) any or all of the
following actions, in addition to and not in derogation of any right contained
in the Loan Documents, after giving at least three Business Days' (which notice
period the Borrower acknowledges to be adequate and reasonable) written notice
to the Borrower (a single such notice being sufficient to entitle the Agent to
take one or more of the actions described below):
(i) prohibit the Borrower from taking any action otherwise
permitted by Section 8.03(a) hereof, and/or discharge the Borrower from
their right to manage and administer the items of Collateral as
provided in Section 8.03(b) hereof;
(ii) notify the obligors or other parties interested in any item
of the Collateral of the interest of the Lenders therein and of any
action proposed to be taken with respect thereto, and inform any of
those parties that all payments otherwise payable to the Borrower with
respect thereto thereafter shall be made to the Agent until all the
Obligations have been paid in full;
(iii) receive and retain all payments and all other distributions
of any kind with respect to any and all of the Collateral;
(iv) exercise any rights of voting or consent pertaining to any
item of Collateral to the same extent as if the Agent were the outright
owner thereof for the benefit of the Lenders, or cause any item of the
Collateral to be transferred to its own name and have such transfer
recorded in any place or places deemed appropriate by the Agent;
(v) deal with the Collateral in all respects as if it were the
outright owner thereof for the benefit of the Lenders;
(vi) take such action as directed by the Required Lenders with
respect to the sale, assignment and delivery of the whole of, or from
time to time any one or more items of, the Collateral, including,
without limitation: to sell, assign and deliver the whole of, or from
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time to time any part of, the Collateral at any broker's board or at
any private sale or at public auction, with or without demand on the
Borrower or advertisement of the time or place of sale or adjournment
thereof or otherwise, for cash, for credit or for other property, for
immediate or future delivery, and for such price or prices and on such
terms as the Required Lenders in their discretion may determine, and
the Agent or any of the other Lenders may bid for and purchase the
whole or any one or more items of the Collateral so sold free from any
right or equity of redemption; to adjourn any such sale or cause the
same to be adjourned from time to time to a subsequent time and place
announced at the time and place fixed for the sale; and to carry out
any agreement to sell any item or items of Collateral in accordance
with the terms of such agreement, notwithstanding that after the Agent
shall have entered into such agreement, all the Obligations may have
been paid in full; and
(vii) in addition to, and not by way of limitation of, any of the
rights specified above, exercise any and all rights and remedies
afforded to it, as a secured party in possession of collateral or
otherwise, under any and all applicable provisions of laws.
(b) The Agent, any Person designated by the Agent to take any of the
action as enumerated in subsection (a) above, any of the Lenders, and their
respective officers, directors, employees, agents and counsel shall not incur
any liability (other than for acts or omissions amounting to gross negligence or
willful misconduct) as a result of the sale of the Collateral, or any part
thereof, in a commercially reasonable manner in accordance with the provisions
of subsection (a)(vi) above or of applicable law, or for the failure to sell or
offer for sale the Collateral, for any reason whatsoever. The Borrower waives
any claims (other than those attributable to acts or omissions amounting to
gross negligence or willful misconduct) against the Agent, any Person designated
by the Agent to take any action, the Lenders, and their respective officers,
directors, employees, agents and counsel arising with respect to the price at
which the Collateral, or any part thereof, may have been sold or by reason of
the fact that such price was less than the aggregate of all the Obligations,
PROVIDED that all such sales have been effected in a commercially reasonable
manner.
(c) The Agent shall collect the cash proceeds received from any sale or
other disposition or from any other source contemplated by subsection (a) above
and, after deducting all costs and expenses incurred by the Agent, any person
designated by the Agent to take any of the actions enumerated in subsection (a)
above, and the Lenders (other than in connection with the purchase by any of the
Lenders of any item of the Collateral) in connection with such collection and
sale (including, without limitation, reasonable counsel fees and expenses),
shall apply the same in accordance with the provisions of Section 9.04 below.
Noncash proceeds received by the Agent shall be held by it, unless and until
instructions are received from the Required Lenders to distribute those
proceeds. Upon any such distribution in the order set forth in Section 9.04
below, the Obligations shall be reduced by the fair market value of any such
noncash proceeds.
(d) If the amount of all proceeds received in liquidation of the
Collateral which shall be applied to payment of the Obligations shall be
insufficient to pay all the Obligations in full, the Borrower acknowledges that
it shall continue to remain liable for any deficiency, together with any
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interest thereon and costs of collection thereof (including reasonable counsel
fees and legal expenses), in accordance with the terms of this Agreement and the
other Loan Documents. The Agent shall account to the Borrower as to all
applications of the proceeds of the Collateral in reduction of the Obligations.
(e) Notwithstanding the foregoing, none of the provisions of this
Section 9.03 shall confer on the Agent or any of the Lenders any rights or
privileges not permissible under applicable law; PROVIDED, HOWEVER, that to the
extent the Borrower may waive any provisions of applicable law which would or
could be in conflict with the terms of this Section 9.03, the Borrower hereby
expressly waives the application of any such laws and provisions.
(f) In connection with the foregoing provisions of this Section 9.03,
the Borrower from time to time promptly shall execute and deliver, or cause to
be executed and delivered, to the Agent such reasonable documents and
instruments, and take or cause to be taken other reasonable and lawful action,
as the Agent reasonably shall deem necessary or desirable to enable it to
exercise any of the rights with respect to the Collateral granted to it pursuant
to this Section 9.03.
SECTION 9.04. APPLICATION OF FUNDS. In the event that all the
Obligations shall have become or been declared due and payable pursuant to the
terms of Section 9.02 hereof, the Lenders agree, by and among themselves (and,
with respect to subsection (f) below, with the Borrower), that any funds
received from or on behalf of the Borrower (pursuant to the provisions of
Section 9.03 or otherwise) by the Agent or any of the Lenders (except funds
retained by any Lender pursuant to the terms of Section 11.01 hereof) shall be
remitted to the Agent, if received by any Lender, and applied by the Agent (in
the case of subsections (c), (d) and (e) below), on a pro rata basis among the
Lenders in accordance with their respective percentages of the Loans outstanding
at the time of such declaration in the following manner and order:
(a) first, to pay to or reimburse the Agent for any out-of-pocket
expenses for which it is entitled to be paid or reimbursed pursuant to the
provisions of Section 13.03 hereof;
(b) second, to reimburse any of the Lenders pursuant to the provisions
of Section 13.03 hereof;
(c) third, to payment of accrued and unpaid interest due on the Notes;
(d) fourth, to payment of the outstanding principal of the Notes;
(e) fifth, to payment in full of all the remaining Obligations (other
than Facility Letter of Credit Obligations and Rate Hedging Obligations);
(f) sixth, if any Facility Letter of Credit remains outstanding, the
Agent shall retain in the Letter of Credit Collateral Account an amount equal to
the aggregate face amount of all outstanding Facility Letters of Credit;
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(g) seventh, to payment in full of all remaining Rate Hedging
Obligations PARI PASSU among those Lenders to whom such Rate Hedging Obligations
are owed; and
(h) eighth, any remainder, including any funds no longer required to
remain on deposit pursuant to subsection (f) of this section, shall be returned
to the Borrower or as otherwise required by applicable law.
ARTICLE X
THE AGENT
SECTION 10.01. APPOINTMENT. The First National Bank of Chicago is
hereby appointed Agent hereunder and under each other Loan Document and, subject
to the provisions of Section 10.13 below, each of the Lenders irrevocably
authorizes the Agent to act as the agent of such Lender. The Agent agrees to act
as such upon the express conditions contained in this Article X. The Agent shall
not have a fiduciary relationship in respect of any Lender by reason of this
Agreement. Bank of America National Trust & Savings Association is hereby
appointed to act as Syndication Agent, Comerica Bank is hereby appointed to act
as Documentation Agent, and NationsBank, N.A. and Credit Lyonnais Atlanta Agency
are hereby appointed as Managing Agents, and Fleet National Bank and Guaranty
Federal Bank, F.S.B. are hereby appointed as Co-Agents. Neither the Syndication
Agent, the Documentation Agent, nor the Managing Agents shall have any right,
power, obligation, liability, responsibility or duty under this Agreement in
such capacity.
SECTION 10.02. POWERS. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Lenders, or
any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.
SECTION 10.03. GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower, any
Subsidiary Guarantor, the Lenders or any Lender for any action taken or omitted
to be taken by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct.
SECTION 10.04. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (i) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document; (iii) the
satisfaction of any condition specified in Article V, except receipt of items
required to be delivered to the Agent; or
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(iv) the validity, effectiveness or genuineness (except its own due execution
thereof) of any Loan Document or any other instrument or writing furnished in
connection therewith. Further, the Agent assumes no obligation to any other
Lender as to the collectibility of any Loans made by any Lender to the Borrower.
Each Lender expressly acknowledges that the Agent has not made any
representations or warranties to it on or prior to the date hereof and that no
act by the Agent hereafter taken shall be deemed to constitute any
representation or warranty by the Agent to any other Lender. Each Lender
acknowledges that it has taken and will take such action and make such
investigation as it deems necessary to inform itself as to the affairs and
creditworthiness of the Borrower and the Subsidiary Guarantors.
SECTION 10.05. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute
any of its duties as Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
SECTION 10.06. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall not be
under a duty to examine into or pass upon the validity, effectiveness,
genuineness or value of this Agreement, the Notes or any other document
furnished pursuant hereto or thereto or in connection herewith, and the Agent
shall be entitled to assume that the same are valid, effective and genuine and
what they purport to be. The Agent shall be entitled to rely upon any Note,
notice, consent, certificate, affidavit, letter, telegram, statement, paper or
document reasonably believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and, in respect to legal
matters, upon the opinion of counsel selected by the Agent, which counsel may be
employees of the Agent. The Agent shall not be liable for any action taken or
suffered in good faith by it based on or in accordance with any of the
foregoing.
SECTION 10.07. NO WAIVER OF RIGHTS. With respect to its Commitment,
Loans made and Facility Letters of Credit issued by it and the Notes issued to
it, the Agent shall have the same rights and powers hereunder and under any
other Loan Document as any Lender or Issuer and may exercise the same as though
it was not the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity as a
Lender. The Agent may accept deposits from, lend money to and issue letters of
credit for the account of, and generally engage in any kind of business with the
Borrower or its Affiliates (including, without limitation, trust, debt, equity
and other transactions) in addition to the transaction contemplated by this
Agreement or any other Loan Document; it being expressly understood and agreed
that neither the Agent nor any other Lender shall be deemed by the execution
hereof to have waived any rights under any term loan or other agreement with the
Borrower relating to any other business or loans to the Borrower which are not a
part of the Aggregate Commitment under this Agreement. Without limiting the
generality of the foregoing, each of the Lenders acknowledges and consents to
First
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Chicago acting as Agent under the Lennar Credit Agreement and the other loan
documents referred to in such agreement.
SECTION 10.08. KNOWLEDGE OF EVENT OF DEFAULT. It is expressly
understood and agreed that the Agent shall be entitled to assume that no Event
of Default or Unmatured Default has occurred and is continuing, unless the
officers of the Agent active on the Borrower's account have actual knowledge of
such occurrence or have been notified by a Lender that such Lender considers
that an Event of Default or Unmatured Default has occurred and is continuing and
specifying the nature thereof.
SECTION 10.09. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders
agree to reimburse and indemnify the Agent ratably in accordance with their
respective Pro Rata Shares (i) for any amounts not reimbursed by the Borrower
for which the Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, administration
and enforcement of the Loan Documents and (iii) for any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any of
the terms thereof or of any such other documents, PROVIDED that no Lender shall
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Agent.
SECTION 10.10. NOTICES TO THE BORROWER OR SUBSIDIARY GUARANTORS. In
each instance that a notice is required, pursuant to the terms hereof, to be
given by one or more of the Lenders to the Borrower or a Subsidiary Guarantor,
the Lenders desiring that such notice be given shall so advise the Agent (which
advice, if given by telephone, shall be promptly confirmed by telex or letter to
the Agent at its address listed in the signature pages hereto), which shall
transmit such notice to the Borrower or such Subsidiary Guarantor promptly after
its having been so advised by the appropriate number of Lenders; PROVIDED,
HOWEVER, that subject to the provisions of Section 10.14 hereof, if the Agent
shall fail to transmit such notice to the Borrower within a reasonable period of
time after its having been so advised by the appropriate number of Lenders, the
Lenders desiring that such notice be given may transmit such notice directly to
the Borrower and PROVIDED FURTHER, HOWEVER, that, in all cases, notice to the
Borrower shall be deemed notice to each Subsidiary Guarantor.
SECTION 10.11. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders or all Lenders, as the case may be, and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders and on all holders of Notes. Except where an
action or inaction is expressly required under this Agreement, the Agent shall
be fully justified in failing or refusing to take any action hereunder and under
any other Loan Document unless it shall first be indemnified
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to its satisfaction by the Lenders, pro rata in accordance with their respective
Pro Rata Shares against any and all liability, cost and expense that it may
incur by reason of taking or continuing to take any such action.
SECTION 10.12. LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and the Subsidiary
Guarantors and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and the other Loan Documents. Each Lender also acknowledges that it
will, independently and without reliance upon the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents.
SECTION 10.13. RESIGNATION OR REMOVAL OF THE AGENT. If, at any time,
Lenders holding Notes having aggregate outstanding principal balances equal to
at least 75% of the then outstanding amount of the Aggregate Commitment
(excluding from such computation the Agent and its Notes) shall deem it
advisable, those Lenders may submit to the Agent notification by certified mail,
return receipt requested of its removal as Agent under this Agreement, which
removal shall be effective as of the date of receipt of such notice by the
Agent. If, at any time, the Agent shall deem it advisable, in its sole
discretion, it may submit to each of the Lenders written notification, by
certified mail, return receipt requested, of its resignation as Agent under this
Agreement, which resignation shall be effective as of thirty days after the date
of such notice. In the event of any such removal or resignation, the Required
Lenders may appoint a successor to the Agent. In the event the Agent shall have
resigned and/or have been removed and so long as no successor shall have been
appointed, the Borrower shall make all payments due each Lender hereunder
directly to that Lender and all powers specifically delegated to the Agent by
the terms hereof may be exercised by the Required Lenders. Upon the removal or
resignation of the Agent, the retiring Agent shall be discharged from its duties
and obligations hereunder and under the other Loan Documents. After the removal
or resignation of the Agent, the provisions of this Article X shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken
while it was acting as the Agent hereunder and under the other Loan Documents.
SECTION 10.14. BENEFITS OF ARTICLE X. None of the provisions of this
Article X shall inure to the benefit of the Borrower or of any Person other than
Agent and each of the Lenders and their respective successors and permitted
assigns. Accordingly, neither the Borrower nor any Person other than Agent and
the Lenders (and their respective successors and permitted assigns) shall be
entitled to rely upon, or to raise as a defense, the failure of the Agent or any
Lenders to comply with the provisions of this Article X.
SECTION 10.15. AGENT'S CUSTODIAL DUTIES.
(a) The Agent shall take custody of and hold on behalf of the Lenders
the following documents (the "Collateral Documents"):
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(i) the Borrower Security Documents;
(ii) the Subsidiary Guarantor Security Documents;
(iii) the Title Policies for each Mortgaged Property;
(iv) the Surveys (or plat or subdivision map if no survey has
been furnished);
(v) the Zoning Certificates;
(vi) the stock certificates, certificates of certificated
partnership interest and certificates of certificated limited
liability company membership interest representing the Capital
Stock and partnership and limited liability company interests
pledged pursuant to the Security Agreement;
(vii) the Environmental Indemnity;
(viii) an Appraisal of each Mortgaged Property;
(ix) the UCC Search;
(x) the Insurance Certificate;
(xi) the Environmental Report;
(xii) the Borrower's Counsels' Opinions; and
(xiii) the Borrower's Organizational Documents.
(b) The Agent's duties with respect to the Collateral Documents are
limited to reviewing the same and verifying that:
(i) they appear regular on their face and are in its
possession;
(ii) that each Collateral Document bears an original signature
which appears to be that of a person authorized to sign such
document;
(iii) there is a loan title commitment which appears to commit
to insure the lien of the Mortgage on each of the Mortgaged
Properties (and the Title Policy when it is issued pursuant to
such commitment);
(iv) there is a plat, subdivision map or a Survey apparently
prepared by a surveyor for each parcel of Mortgaged Property;
and
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(v) they have received information regarding flood zone
verification on each of the Mortgaged Properties.
(c) At the request of any Lender, at any time, at Borrower's sole cost
and expense, the Agent shall cause to be copied any or all of the Collateral
Documents and deliver same to such lender.
SECTION 10.16. COLLATERAL VALUE DETERMINATION; DETERMINATION
ASSUMPTIONS.
(a) Upon the receipt of each Borrowing Notice, the Agent shall review
the computation of the Borrowing Base (a "Collateral Value Determination") and
notify each Lender thereof.
(b) In making any Collateral Value Determination, the Agent shall be
permitted to rely, without independent investigation of the correctness thereof,
on the most recent information supplied by, or at the direction of, the Borrower
pursuant to this Agreement.
ARTICLE XI
RATABLE PAYMENTS
SECTION 11.01. RATABLE PAYMENTS. If any Lender has payment made to it
upon any of its Loans or participations in Facility Letters of Credit (other
than payments received pursuant to Sections 3.01, 3.02 or 3.04) in a greater
proportion than that received by any other Lender with respect to Loans or
participations in Facility Letters of Credit, such Lender agrees, promptly upon
demand, to purchase a portion of such Loans held by the other Lenders so that
after such purchase each Lender will hold its Pro Rata Share of all Loans or
participations in Facility Letters of Credit. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or otherwise,
receives collateral or other protection for its Obligations or such amounts
which may be subject to setoff, such Lender agrees, promptly upon demand, to
take such action necessary such that all Lenders share in the benefits of such
collateral ratably in accordance with their respective Pro Rata Shares. In case
any such payment is disturbed by legal process, or otherwise, appropriate
further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
SECTION 12.01. SUCCESSORS AND PERMITTED ASSIGNS. The terms and
provisions of the Loan Documents shall be binding upon and inure to the benefit
of the Borrower, the Subsidiary
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Guarantors and the Lenders and their respective successors and permitted
assigns, except that (i) neither the Borrower nor any Subsidiary Guarantor shall
have the right to assign its rights or obligations under the Loan Documents and
(ii) any assignment by any Lender must be made in compliance with Section 12.03.
Notwithstanding clause (ii) of this Section, any Lender may at any time, without
the consent of the Borrower, any Subsidiary Guarantor, or the Agent, assign all
or any portion of its rights under this Agreement and its Notes to a Federal
Reserve Bank; PROVIDED, HOWEVER, that no such assignment shall release the
transferor Lender from its obligations hereunder. The Agent may treat the payee
of any Note as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.03 in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed with
the Agent. Any assignee or transferee of a Note agrees by acceptance thereof to
be bound by all the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor. A Lender may not assign less than
the lesser of its Commitment or $10,000,000.
SECTION 12.02. PARTICIPATIONS.
(a) PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("Participants") participating interests
in any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender under the Loan Documents. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents.
(b) VOTING RIGHTS. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan, Facility Letter of Credit Obligations or
Commitment in which such Participant has an interest which forgives principal,
interest or fees or reduces the interest rate or fees payable with respect to
any such Loan, Facility Letter of Credit Obligations or Commitment, postpones
any date fixed for any regularly-scheduled payment of principal of, or interest
or fees on, any such Loan or Commitment, releases any Subsidiary Guarantor of
any such Loan, Facility Letter of Credit Obligations or releases any substantial
portion of collateral, if any, securing any such Loan or Facility Letter of
Credit Obligations.
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(c) NO SETOFF. No Participant shall have the right of setoff in respect
of its participating interest in amounts owing under the Loan Documents without
the prior written consent of the Agent.
SECTION 12.03. ASSIGNMENTS.
(a) PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("Purchasers") all or any part of its rights and
obligations under the Loan Documents. Such assignment shall be substantially in
the form of Exhibit "C" hereto. Unless an Event of Default has occurred and is
continuing, the consent of the Borrower and the Agent shall be required prior to
an assignment becoming effective with respect to a Purchaser which is not a
Lender or an Affiliate thereof. Such consent shall be substantially in the form
attached as Exhibit "C-2" hereto and shall not be unreasonably withheld.
(b) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a notice
of assignment, substantially in the form attached as Exhibit "C-1" hereto (a
"Notice of Assignment"), together with any consents required by Section
12.03(a), and (ii) payment of a $4,000 fee to the Agent for processing such
assignment (PROVIDED that no such fee shall be required if the assignee is an
Affiliate of an assignor Lender or if the assignee is already a Lender
hereunder), such assignment shall become effective on the effective date
specified in such Notice of Assignment. On and after the effective date of such
assignment, such Purchaser shall for all purposes be a Lender party to this
Agreement and any other Loan Document executed by the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the same
extent as if it were an original party hereto, and no further consent or action
by the Borrower, the Lenders or the Agent shall be required to release the
transferor Lender with respect to the percentage of the Aggregate Commitment and
Loans assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 12.03(b), the transferor Lender, the Agent
and the Borrower and each Subsidiary Guarantor shall make appropriate
arrangements so that replacement Notes and Subsidiary Guarantees are issued to
such transferor Lender and new Notes and Subsidiary Guarantees or, as
appropriate, replacement Notes and Subsidiary Guarantees, are issued to such
Purchaser, in each case in principal amounts reflecting their Commitment, as
adjusted pursuant to such assignment.
(c) DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and the Subsidiaries.
(d) TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any state thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.17.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. NOTICE.
(a) Except as otherwise permitted by Section 2.11 with respect to
borrowing notices, all notices and other communications provided to any party
hereto under this Agreement or any other Loan Document shall be in writing or by
telex or by facsimile and addressed or delivered to such party at its address
set forth below its signature hereto or at such other address as may be
designated by such party in a notice to the other parties. Any notice, if mailed
and properly addressed with postage prepaid, shall be deemed given when received
(or when delivery is refused); any notice, if transmitted by telex or facsimile,
shall be deemed given when transmitted (answerback confirmed in the case of
telexes and facsimile confirmation in the case of a facsimile).
(b) The Borrower, the Agent and any Lender may each change the address
for service of notice upon it by a notice in writing to the other parties
hereto.
(c) Notice to the Borrower shall be deemed notice to each Subsidiary
Guarantor.
SECTION 13.02. SURVIVAL OF REPRESENTATIONS. All covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by the Lenders of any Loans herein
contemplated and the execution and delivery to the Lenders of the Notes
evidencing the Commitments, and shall continue in full force and effect until
all of the Obligations have been paid in full and the Aggregate Commitment has
been terminated.
SECTION 13.03. EXPENSES. The Borrower shall pay (i) all expenses,
including attorneys' fees and disbursements (which attorneys may be employees of
the Agent or any Lender), incurred by the Agent and any Lender in connection
with the administration of this Agreement and the other Loan Documents, any
amendments, modifications or waivers with respect to any of the provisions
thereof and the enforcement and protection of the rights of the Lenders and the
Agent under this Agreement or any of the other Loan Documents, including all
recording and filing fees, documentary stamp, intangibles and similar taxes,
title insurance premiums, appraisal fees and other costs and disbursements
incurred in connection with the taking of collateral and the perfection and
preservation of the Lenders' security therein, and (ii) the reasonable fees and
the disbursements of Agent's attorneys (which attorneys may be employees of the
Agent) in connection with the preparation, negotiation, execution, delivery and
review of this Agreement, the Notes and the other Loan Documents (whether or not
the transactions contemplated by this Agreement shall be consummated) and the
closing of the transactions contemplated hereby.
SECTION 13.04. INDEMNIFICATION OF THE LENDERS AND THE AGENT. The
Borrower shall indemnify and hold harmless the Agent and each Lender, and their
respective directors, officers
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and employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) which any of them may pay or incur arising out of or relating to,
directly or indirectly, this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Loan hereunder; PROVIDED, HOWEVER,
that in no event shall the Agent or a Lender have the right to be indemnified
hereunder for its own gross negligence or willful misconduct nor shall the Agent
be indemnified against any liabilities which arise as a result of any claims
made or actions, suits or proceedings commenced or maintained against any Lender
(including the Agent, in its capacity as such) (i) by that Lender's shareholders
or any governmental regulatory body or authority asserting that such Lender or
any of its directors, officers, employees or agents violated any banking or
securities law or regulation or any duty to its own shareholders, customers
(excluding the Borrower) or creditors in any manner whatsoever in entering into
or performing any of its obligations contemplated by this Agreement or (ii) by
any other Lender. The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
SECTION 13.05. MAXIMUM INTEREST RATE. It is the intention of the
Lenders and the Borrower that the interest (as defined under applicable law) on
the Indebtedness evidenced by the Notes which may be charged to, or collected or
received from the Borrower shall not exceed the maximum rate permissible under
applicable law. Accordingly, anything herein or in any of the Notes to the
contrary notwithstanding, should any interest (as so defined) be charged to, or
collected or received from the Borrower by the Lenders pursuant hereto or
thereto in excess of the maximum legal rate, then the excess payment shall be
applied to the reduction of the aggregate outstanding principal balance of the
Obligations, and any portion of the excess payment remaining after payment in
full thereof shall be returned by the Lenders to the Borrower.
SECTION 13.06. MODIFICATION OF AGREEMENT.
(a) No modification, amendment or waiver of any provision of this
Agreement or the Notes, nor any consent to any departure by the Borrower
therefrom, in any event shall be effective unless the same shall be in writing
and signed by the Borrower and by the Required Lenders (or by the Agent on their
behalf if the Required Lenders have so authorized the Agent), and then the
waiver or consent shall be effective only in the specific instance and for the
purpose for which given; PROVIDED, HOWEVER, that no such modification, amendment
or waiver shall, without the consent of all of the Lenders affected thereby:
(i) extend the maturity of any Loan or Note or reduce or
forgive the principal amount thereof, or reduce the rate or extend the
time of payment of interest or fees thereon;
(ii) reduce the percentage specified in the definition of
Required Lenders;
(iii) extend the Facility A Termination Date or the Facility B
Termination Date, as the case may be, or reduce the amount or extend
the payment date for, the mandatory
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payments required under Section 2.02, or increase the amount of the
Commitment of any Lender hereunder, or permit the Borrower to assign
its rights under this Agreement;
(iv) amend, modify or waive any provision of this Section
13.06; or
(v) increase the maximum drawable amount or extend the
expiration date of any outstanding Facility Letter of Credit (except as
expressly permitted by its terms and in accordance with Section 2.15)
or reduce the principal amount of or extend the time of payment of any
Reimbursement Obligation or fee associated with any Facility Letter of
Credit; or
(vi) amend, modify or waive Section 5.03.
(b) Anything in this Agreement to the contrary notwithstanding, if at a
time when the conditions precedent set forth in Article V hereof to any Loan
are, in the opinion of the Required Lenders, satisfied, any Lender (a
"Defaulting Lender") shall fail to fulfill its obligations to make such Loan and
such failure continues for at least two Business Days then, for so long as such
failure shall continue, such Defaulting Lender shall (unless the Required
Lenders, determined as if such Defaulting Lender were not a "Lender" hereunder,
shall otherwise consent in writing) be deemed for all purposes relating to
amendments, modifications, waivers or consents under this Agreement (including,
without limitation, under Section 13.06(a)) to have no Loans or Commitments,
shall not be treated as a "Lender" hereunder when performing the computation of
Required Lenders, and shall have no rights under Section 13.06(a); PROVIDED that
any action taken by the other Lenders with respect to the matters referred to in
clauses (i) through (v) of Section 13.06(a) shall not be effective as against
such Defaulting Lender.
(c) No amendment, modification or waiver of any provision of this
Agreement relating to the Agent shall be effective without the written consent
of the Agent. No notice to or demand of the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in the same, similar or
other circumstances.
SECTION 13.07. PRESERVATION OF RIGHTS. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Event of Default or an
acquiescence therein, and the making of a Loan notwithstanding the existence of
an Event of Default or Unmatured Default, or the inability of the Borrower to
satisfy the conditions precedent to such Loan shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by the Lenders required pursuant to Section 13.06, and then only to the
extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to the Agent and the Lenders until the Obligations have been paid in full.
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SECTION 13.08. JOINT AND SEVERAL OBLIGATIONS OF BORROWER; SEVERAL
OBLIGATIONS OF LENDERS; THIRD PARTY BENEFICIARIES. All obligations,
representations and warranties hereunder and under any of the Loan Documents,
unless otherwise expressly stated, shall be the joint and several liability of
the Borrower and all of the Partners of the Borrower and the Subsidiary
Guarantors. The respective obligations of the Lenders hereunder are several and
not joint and no Lender shall be the partner or agent of any other (except to
the extent to which the Agent is authorized to act as such). The failure of any
Lender to perform any of its obligations hereunder shall not relieve any other
Lender from any of its obligations hereunder. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
SECTION 13.09. SEVERABILITY. If any one or more of the provisions
contained in this Agreement or the Notes is held invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
SECTION 13.10. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which may be executed by one or more of the parties
hereto, but all of which, when taken together, shall constitute a single
agreement binding on all the parties hereto.
SECTION 13.11. REPRESENTATION AND WARRANTY BY THE LENDERS. The Lenders
represent and warrant to the Borrower that the Notes to be acquired by them
hereunder will evidence loans made in the ordinary course of their respective
commercial banking or real estate lending businesses.
SECTION 13.12. THE BORROWER AS AGENT FOR EACH SUBSIDIARY GUARANTOR.
Pursuant to the terms of the Subsidiary Guarantees, each Subsidiary Guarantor
will appoint the Borrower as its agent and attorney-in-fact to execute and
deliver any and all documents for an on behalf of each Subsidiary Guarantor in
connection with the transactions contemplated by this Agreement or any of the
other Loan Documents, or in connection with the amendment, modification or
termination of any thereof, and hereby agree that upon execution of any such
documents or instruments they shall be binding upon each of the Subsidiary
Guarantor. Each Subsidiary Guarantor will further acknowledge that such power is
coupled with an interest and may not be revoked.
SECTION 13.13. LOSS, ETC., NOTES OR SUBSIDIARY GUARANTEES. Upon receipt
by the Borrower of reasonably satisfactory evidence of the loss, theft,
destruction or mutilation of any of the Notes and/or any Subsidiary Guaranty,
upon reimbursement to the Borrower of all reasonable expenses incidental thereto
and upon surrender and cancellation of the relevant Note and/or Subsidiary
Guaranty, if mutilated, the Borrower shall make and deliver in lieu of that Note
or shall cause the Subsidiary Guarantor to make and delivery a new Subsidiary
Guaranty (the "Prior Note" or "Prior Guaranty") a new Note or Subsidiary
Guaranty of like tenor, except that no reference need be made in the new Note to
any installment or installments of principal, if any, previously due and paid
upon the Prior Note. Any Note made and delivered in accordance with the
provisions of this
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Section shall be dated as of the date to which interest has been paid on the
unpaid principal amount of the Prior Note.
SECTION 13.14. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.
SECTION 13.15. TAXES. Any taxes (excluding federal, state or local
income taxes on the overall net income of any Lender) or other similar
assessments or charges payable or ruled payable by any governmental authority in
respect of the Loan Documents shall be paid by the Borrower, together with
interest and penalties, if any.
SECTION 13.16. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
SECTION 13.17. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement of the parties hereto with respect to the subject matter hereof;
PROVIDED, HOWEVER, that the fees payable by Borrower to First Chicago in
consideration of its agreement to serve as Agent hereunder are set forth in a
separate letter agreement between Borrower and First Chicago.
SECTION 13.18. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF
THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
SECTION 13.19. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE
BORROWER AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY
LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT
IN CHICAGO, ILLINOIS.
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SECTION 13.20. WAIVER OF JURY TRIAL. THE BORROWER , THE AGENT AND EACH
LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
[Signatures appear on following pages]
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IN WITNESS WHEREOF, the Borrower and the Lenders have caused this
Agreement to be duly executed as of the date first above written.
BORROWER:
LENNAR LAND PARTNERS, A GENERAL PARTNERSHIP
ORGANIZED UNDER THE LAWS OF THE STATE OF FLORIDA
By: Lennar Land Partners Sub, Inc., a Delaware
corporation, Managing General Partner
By: /s/ CORY J. BOYDSTON
----------------------------------------------
Cory J. Boydston, as Vice President
Address:
700 Northwest 107th Avenue
Miami, Florida 33172
Attention: ________________________
By: LNR Land Partners Sub, Inc., a Delaware
corporation
By: /s/ CORY J. BOYDSTON
----------------------------------------------
________________, as ____________________
Address:
700 Northwest 107th Avenue
Miami, Florida 33172
Attention: ________________________
<PAGE>
COMMITMENTS: LENDERS:
- - ------------ --------
FACILITY A: $11,290,322.58 THE FIRST NATIONAL BANK OF CHICAGO,
FACILITY B: $ 9,032.258.06 Individually and as Agent
By: /s/ GREGORY A. GILBERT
------------------------------------------------
Gregory A. Gilbert, Vice President
Address:
The First National Bank of Chicago
One First National Plaza
14th Floor, Suite 0151
Chicago, Illinois 60670-0151
Attention: Gregory A. Gilbert, Vice President
with a copy to:
The First National Bank of Chicago
One First National Plaza, Suite 0801
Chicago, Illinois 60670-0801
Attention: Law Department
FACILITY A: $ 9,677,419.35 NATIONSBANK, N.A.
FACILITY B: $ 7,741,935.48
By: /s/ PHILIP CARROLL
-----------------------------------------------
Philip Carroll, Senior Vice President
Address:
100 S.E. 2nd Street, 14th FL
Miami, Florida 33131
Attention: Mr. Philip Carroll
FACILITY A: $ 9,677,419.35 CREDIT LYONNAIS ATLANTA AGENCY
FACILITY B: $ 7,741,935.48
By: /s/ DAVID M. CAWRSE
-----------------------------------------------
David M. Cawrse, First Vice President
& Manager
Address:
303 Peachtree Street, N.E., Suite 4400
Atlanta, Georgia 30308
Attention: Mr. Kevin Murphy, Vice President
<PAGE>
FACILITY A: $ 9,677,419.35 BANK OF AMERICA NATIONAL TRUST &
FACILITY B: $ 7,741,935.48 SAVINGS ASSOCIATION
By: /s/ MARK LARIVIERE
----------------------------------------------
Mark Lariviere, Vice President
Address:
231 S. LaSalle, 15th Floor
Chicago, Illinois 60697
Attention: Mr. Mark Lariviere
FACILITY A: $ 9,677,419.35 COMERICA BANK
FACILITY B: $ 7,741,935.48
By: /s/ MARTIN G. ELLIS
------------------------------------------------
Martin G. Ellis, Vice President
Address:
One Detroit Center
500 Woodward Avenue, 9th Floor
Detroit, Michigan 48226
Attention: Mr. Martin Ellis, Vice President
FACILITY A: $ 8,467,741.94 FLEET NATIONAL BANK
FACILITY B: $ 6,774,193.55
By: /s/ JAMES B. MCLAUGHLIN
-----------------------------------------------
James B. McLaughlin, Vice President
Address:
111 Westminster Street
RIMO0215 - 8th FL
Providence, Rhode Island 02903
Attention: Mr. James B. McLaughlin
<PAGE>
FACILITY A: $ 8,467,741.94 GUARANTY FEDERAL BANK, F.S.B.
FACILITY B: $ 6,774,193.55
By: /s/ RANDALL REID
----------------------------------------------
Randall Reid, Vice President
Address:
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Mr. Randy Reid
FACILITY A: $ 6,451,612.90 THE INDUSTRIAL BANK OF JAPAN,
FACILITY B: $ 5,161,290.32 LIMITED, ATLANTA AGENCY
By: /s/ KAZUO IIDA
----------------------------------------------
Kazuo Iida, General Manager
Address:
191 Peachtree Street, Suite 3600
Atlanta, Georgia 30303-1757
Attention: Mr. Michael Harvey, Vice President
FACILITY A: $ 6,451,612.90 U. S. BANK NATIONAL ASSOCIATION
FACILITY B: $ 5,161,290.32
By: /s/ KATHLEEN M. CONNOR
----------------------------------------------
Kathleen M. Connor, Vice President
Address:
Real Estate Banking Division
601 2nd Avenue South
First Bank Place
Minneapolis, Minnesota 55402
Attention: Ms. Kathleen Connor
<PAGE>
FACILITY A: $ 6,451,612.90 PNC BANK, NATIONAL ASSOCIATION
FACILITY B: $ 5,161,290.32
By: /s/ DOUGLAS G. PAUL
----------------------------------------------
Douglas G. Paul, Vice President
Address:
Two Tower Center
Suite J3-JTTC-18-6
East Brunswick, New Jersey 08816
Attention: Mr. Douglas G. Paul
FACILITY A: $ 6,451,612.90 SOCIETE GENERALE
FACILITY B: $ 5,161,290.32
By: /s/ RALPH SAHEB
----------------------------------------------
Ralph Saheb, Manager
Address:
303 Peachtree Street, Suite 3840
Atlanta, Georgia 30308
Attention: Mr. Ed Forseberg
FACILITY A: $ 4,838,709.68 AMSOUTH BANK
FACILITY B: $ 3,870,967.74
By: /s/ RONNY HUDSPETH
----------------------------------------------
Ronny Hudspeth, Vice President
Address:
1900 Fifth Avenue
Birmingham, Alabama 35288
Attention: Mr. William Staples
<PAGE>
FACILITY A: $ 4,032,258.06 BARNETT BANK, N.A., SOUTH FLORIDA
FACILITY B: $ 3,225,806.45
By: /s/ CLAY F. WILSON
----------------------------------------------
____________________,_________________________
Address:
701 Brickell Avenue, 6th FL
Miami, Florida 33131
Attention: Mr. Clay F. Wilson,
Group Senior Vice President
FACILITY A: $ 4,032,258.06 THE DAI-ICHI KANGYO BANK, LTD.
FACILITY B: $ 3,225,806.45
By: /s/ TAKAO MOCHIZUKI
----------------------------------------------
Takao Mochizuki, General Manager
Address:
Marquis Two Tower, Suite 2400
285 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303
Attention: Mr. Guenter Kittel
FACILITY A: $ 4,032,258.06 THE FUJI BANK AND TRUST COMPANY
FACILITY B: $ 3,225,806.45
By: /s/ TORO UENO
----------------------------------------------
Toro Ueno, Executive Vice President
Address:
Two World Trade Center, 79th FL
New York, New York 10048
Attention: Mr. David Lee, Assistant Vice President
<PAGE>
FACILITY A: $ 4,032,258.06 KREDIETBANK, N.V.
FACILITY B: $ 3,225,806.45
By: /s/ MICHAEL V. CURRAN /s/ ROBERT SNAUFFER
----------------------------------------------
Michael V. Curran, Vice President
Robert Snauffer, Vice President
Address:
125 West 55th Street
New York, New York 10019
Attention: Mr. Michael Curran
FACILITY A: $ 4,032,258.06 SAKURA BANK
FACILITY B: $ 3,225,806.45
By: /s/ HIROYASU IMANISHI
----------------------------------------------
Hiroyasu Imanishi, V.P. & Senior Manager
Address:
Marquis 1 Tower
245 Peachtree Center Avenue
Atlanta, Georgia 30303
Attention: Mr. Ric Spenser
FACILITY A: $ 4,032,258.06 SUNTRUST BANK, MIAMI, N.A.
FACILITY B: $ 3,225,806.45
By: /s/ ROBERT E. HUMMEL
----------------------------------------------
Robert E. Hummel, Senior Vice President
Address:
Real Estate Division
777 Brickell Avenue
Miami, Florida 33131
Attention: Mr. Robert Hummel, Senior Vice President
<PAGE>
FACILITY A: $ 3,225,806.45 BANQUE PARIBAS
FACILITY B: $ 2,580,645.16
By: /s/ DUANE HELKOWSKI /s/ JOHN J. MCCORMICK III
------------------------------------------------
Duane Helkowski, Vice President
John J. McCormick III, Vice President
Address:
787 Seventh Avenue
New York, New York 10019
Attention: Mr. Duane Helkowski
<PAGE>
GUARANTY
THIS GUARANTY (this "Guaranty") is made as of the 31st day of October,
1997, jointly and severally by LENNAR CORPORATION, a corporation organized under
the laws of the State of Delaware ("Lennar") AND ITS SUBSIDIARIES LISTED ON
SCHEDULE I ATTACHED HERETO (the "Lennar Subsidiaries; and together with Lennar
the "Lennar Guarantors"), LNR PROPERTY CORPORATION, a corporation organized
under the laws of the State of Delaware ("LNR") AND ITS SUBSIDIARIES LISTED ON
SCHEDULE II ATTACHED HERETO (the "LNR Subsidiaries"; and together with LNR the
"LNR Guarantors") in favor of the Agent, for the ratable benefit of the Lenders,
under the Credit Agreement referred to below. The Lennar Guarantors and the LNR
Guarantors are hereinafter referred to collectively as the "Guarantors").
RECITALS
A. Lennar Land Partners, a general partnership formed under the laws of
the State of Florida (the "Borrower"), and The First National Bank of Chicago,
as Agent (the "Agent"), and certain other Lenders from time to time party
thereto have entered into a certain Credit Agreement dated as of even date
herewith (as same may be amended, modified, extended or restated from time to
time, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for loans to be made by the Lenders to the Borrower;
B. It is a condition precedent to the obligations of the Agent and the
Lenders under the Credit Agreement (including obligations to make Advances and
issue Facility Letters of Credit) that the Guarantors shall have executed and
delivered this Guaranty whereby the Guarantors shall jointly and severally
guarantee the payment when due, of all principal, interest, fees and other
amounts that shall be at any time payable by the Borrower under the Credit
Agreement and the Notes and the other Loan Documents referred to therein.
C. Lennar indirectly owns a 50% interest in the Borrower through its
wholly-owned subsidiary Lennar Land Partners Sub, Inc. and LNR indirectly owns a
50% interest in the Borrower through LNR Land Partners Sub, Inc,. a wholly-owned
subsidiary of Leisure Colony Management Corp., which is a wholly-owned
subsidiary of LNR, and each of the Guarantors will derive direct and indirect
economic benefit from the Loans and Facility Letters of Credit.
D. In order to induce the Lenders and the Agent to enter into the
Credit Agreement, each of the Guarantors is willing to guarantee the obligations
of the Borrower under the Credit Agreement, the Notes and the other Loan
Documents.
<PAGE>
AGREEMENT
In consideration of the forgoing recitals and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings provided
for therein.
SECTION 2.01. REPRESENTATIONS AND WARRANTIES. Each of the Guarantors
represents and warrants (which representations and warranties shall be deemed to
have been renewed upon each Borrowing Date under the Credit Agreement) that:
(a) it (i) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation; (ii) has all requisite corporate power, and has all
material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (iii) is qualified to do business in
all jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to qualify
would have a material adverse effect on its business, properties,
assets, condition (financial or otherwise), results of operations, or
prospects;
(b) it has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Guaranty; the
execution, delivery and performance of this Guaranty have been duly
authorized by all necessary corporate action; and this Guaranty has
been duly and validly executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or moratorium or other similar
laws relating to the enforcement of creditors' rights generally and by
general equitable principles; and
(c) neither the execution and delivery by it of this Guaranty
nor compliance with the terms and provisions hereof will conflict with
or result in a breach of, or require any consent under, its certificate
of incorporation or by-laws or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental
authority or agency, or any agreement or instrument to which it is a
party or by which it is bound or to which it is subject, or constitute
a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of its revenues or assets
pursuant to the terms of any such agreement or instrument.
-2-
<PAGE>
SECTION 2.02. COVENANTS. Each of the Guarantors covenants that, so long
as any Lender has any Commitment outstanding under the Credit Agreement or any
amount payable under the Credit Agreement or any Note shall remain unpaid, that
it will cause the Borrower to, fully comply with those covenants and agreements
set forth in the Credit Agreement.
SECTION 3. THE GUARANTY. The Guarantors hereby jointly, severally and
unconditionally guarantee the full and punctual payment (whether at stated
maturity, upon acceleration or otherwise) of the principal of and interest on
each Note issued by the Borrower pursuant to the Credit Agreement, and the full
and punctual payment of all other amounts payable by the Borrower under the
Credit Agreement and the other Loan Documents including, without limitation, the
Obligations (all of the foregoing being referred to collectively as the
"Guaranteed Obligations"). Upon failure by the Borrower to pay punctually any
such amount, each of the Guarantors agrees that it shall forthwith on demand pay
the amount not so paid at the place and in the manner specified in the Credit
Agreement, any Note or the relevant Loan Document, as the case may be.
SECTION 4. GUARANTY UNCONDITIONAL. The obligations of the Guarantors
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under the Credit
Agreement, any Note, or any other Loan Document, by operation of law or
otherwise or any obligation of any other guarantor of any of the
Obligations;
(b) any modification, amendment, renewal or restatement of or
supplement to the Credit Agreement, any Note or any other Loan
Document;
(c) any release, exchange, enforcement, waiver, (whether
intentional or unintentional) nonperfection, invalidity, purchase at a
public or private sale, or application and direction of order or manner
of sale in the Agent's discretion, of any direct or indirect security
or any part thereof for any obligation of the Borrower under the Credit
Agreement, any Note, the Security Agreement (Capital Stock and
Partnership Interest), any Loan Document, or any obligations of any
other guarantor of any of the Obligations;
(d) any change in the corporate existence, structure or
ownership of the Borrower or any other guarantor of any of the
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower, or any other guarantor of
any of the Obligations, or its assets or any resulting release or
discharge of any obligation of the Borrower, or any other guarantor of
any of the Obligations;
-3-
<PAGE>
(e) the existence of any claim, setoff or other rights which
the Guarantors may have at any time against the Borrower, any other
guarantor of any of the Obligations, the Agent, any Lender or any other
Person, whether in connection herewith or any unrelated transactions;
(f) any invalidity or unenforceability relating to or against
the Borrower, or any other guarantor of any of the Obligations, for any
reason related to the Credit Agreement, any other Loan Document, or any
provision of applicable law or regulation purporting to prohibit the
payment by the Borrower, or any other guarantor of any of the
Obligations, of the principal of or interest on any Note or any other
amount payable by the Borrower under the Credit Agreement, the Notes or
any other Loan Document; or
(g) any other act or omission to act or delay of any kind by
the Borrower, any other guarantor of any of the Obligations, the Agent,
any Lender or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of any Guarantor's obligations hereunder.
SECTION 5. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. The Guarantors' obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been paid in
full and the Commitments under the Credit Agreement shall have terminated or
expired. If at any time any payment of the principal of or interest on any Note
or any other amount payable by the Borrower or any other party under the Credit
Agreement or any other Loan Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, the Guarantors' obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
SECTION 6. WAIVER OF RIGHTS.
(a) Each of the Guarantors waives the right to require the
Agent or any of the Lenders to proceed against the Borrower or any other Person
liable on the Obligations, to proceed against or exhaust any security held from
the Borrower or any other Person, or to pursue any other remedy in the Agent's
or any of the Lenders's power whatsoever and each of the Guarantors waives the
right to have the property of the Borrower first applied to the discharge of the
Obligations. Either the Agent or any of the Lenders may, at its election,
exercise any right or remedy it may have against the Borrower or any security
held by the Agent or any Lenders, including, without limitation, the right to
foreclose upon any such security by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable, without
affecting or impairing in any way the liability of the Guarantors hereunder,
except to the extent the Obligations have been paid, and each of the Guarantors
waives any defense arising out of the absence, impairment or loss of any right
-4-
<PAGE>
of reimbursement, contribution or subrogation or any other right or remedy of
the Guarantors against the Borrower or any such security, whether resulting from
such election by the Agent or any Lenders or otherwise. Each of the Guarantors
waives any defense arising by reason of any disability or other defense of the
Borrower or by reason of the cessation from any cause whatsoever (including
without limitation, any intervention or omission by the Agent or any Lenders) of
the liability, either in whole or in part, of the Borrower to the Agent or any
Lenders for the Obligations. Each of the Guarantors understands that if all or
any part of the liability of the Borrower to the Agent or any Lenders for the
Obligations is secured by real property each of the Guarantors shall be liable
for the full amount of its liability hereunder notwithstanding foreclosure on
such real property by trustee sale or any other reason impairing the Guarantors'
right to proceed against the Borrower. Each of the Guarantors hereby waives, to
the fullest extent permitted by law, all rights and benefits under Section 2809
of the California Civil Code purporting to reduce a guarantor's obligations in
proportion to the obligation of the principal. Each of the Guarantors hereby
waives all rights and benefits under Section 580a of the California Code of
Civil Procedure purporting to limit the amount of any deficiency judgment which
might be recoverable following the occurrence of a trustee's sale under a deed
of trust, all rights and benefits under Section 580b of the California Code of
Civil Procedure stating that no deficiency may be recovered on a real property
purchase money obligation and all rights and benefits under Section 580d of the
California Code of Civil Procedure stating that no deficiency may be recovered
on a note secured by a deed of trust on real property in case such real property
is sold under the power of sale contained in such deed of trust, if such
sections, or any of them, have any application hereto or any application to the
Guarantors. In addition, each of the Guarantors hereby waives, to the fullest
extent permitted by law, (i) any defense arising as a result of any election by
the Agent or any Lenders, in any proceeding instituted under the Bankruptcy
Code, under Section 1111(b)(2) of the Bankruptcy Code, (ii) any defense based on
any borrowing or grant of a security interest under Section 364 of the
Bankruptcy Code, (iii) any defense arising as a result of any election made by
the Agent or any Lenders under Section 9501(4) of the California Uniform
Commercial Code, and (iv) without limiting the generality of the foregoing or
any other provision hereof, all rights and benefits which might otherwise be
available to the Guarantors under California Civil Code Sections 2810, 2819,
2839, 2845, 2818, 2849, 2850, 2899, and 3433.
(b) Each of the Guarantors expressly acknowledges that it will
be and remain fully liable for the Guaranteed Obligations hereunder even if, as
a result of any exercise of the power of sale under the Mortgages and/or any
other election of remedies by the Agent or any Lenders under the Mortgages
and/or any of the other Loan Documents or for any other reason, any rights of
reimbursement, contribution or subrogation on the part of the Guarantors against
the Borrower, in respect of the Mortgaged Property or from or against any other
guarantor has been destroyed or impaired. Each of the Guarantors further
expressly acknowledges that it could, in the absence of the waivers and
agreements set forth herein, have one or more defenses to or otherwise be
exonerated from the obligations and liabilities arising under this Guaranty as a
result of any such election of remedies by the Agent or any Lenders, including,
without limitation, exercise of the power of sale under the Mortgages, and each
of the Guarantors hereby knowingly, expressly and irrevocably
-5-
<PAGE>
waives each and every such defense to its liability hereunder, and expressly
acknowledges the reliance hereon of the Agent and the Lenders.
SECTION 7. WAIVER OF NOTICE. The Guarantors irrevocably waive
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any requirement
that at any time any action be taken by any Person against the Borrower, any
other guarantor of the Obligations, or any other Person.
SECTION 8. SUBROGATION. The Guarantors hereby agree not to assert any
right, claim or cause of action, including, without limitation, a claim for
subrogation, reimbursement, indemnification or otherwise, against the Borrower
arising out of or by reason of this Guaranty or the obligations hereunder,
including, without limitation, the payment or securing or purchasing of any of
the Obligations by the other Guarantor unless and until the Guaranteed
Obligations are paid in full and any commitment to lend under the Credit
Agreement and other Loan Documents is terminated.
SECTION 9. STAY OF ACCELERATION. If acceleration of the time for
payment of any amount payable by the Borrower under the Credit Agreement, any
Note or any other Loan Document is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note or any other Loan
Document shall nonetheless be payable by the Guarantors hereunder forthwith on
demand by the Agent made at the request of the Required Lenders.
SECTION 10. NOTICES. All notices, requests and other communications to
any party hereunder shall be given or made by telecopier or other writing and
telecopied, or mailed or delivered to the intended recipient at its address or
telecopier number set forth on the signature pages hereof or such other address
or telecopier number as such party may hereafter specify for such purpose by
notice to the Agent in accordance with the provisions of Section 13.01 of the
Credit Agreement. Except as otherwise provided in this Guaranty, all such
communications shall be deemed to have been duly given when transmitted by
telecopier, or personally delivered or, in the case of a mailed notice sent by
certified mail return-receipt requested, on the date set forth on the receipt
(PROVIDED that any refusal to accept any such notice shall be deemed to be
notice thereof as of the time of any such refusal), in each case given or
addressed as aforesaid.
SECTION 11. NO WAIVERS. No failure or delay by the Agent or any Lenders
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, the
Notes and the other Loan Documents shall be cumulative and not exclusive of any
rights or remedies provided by law. Each of the Guarantors assumes the
responsibility for being and keeping itself informed of the financial condition
of the Borrower and of all other circumstances bearing upon the risk of
nonpayment of the Obligations which diligent inquiry would reveal, and agrees
that
-6-
<PAGE>
the Agent and the Lenders shall have no duty to advise the Guarantors of
information known to the Agent or the Lenders regarding such condition or any
such circumstances.
SECTION 12. SUCCESSORS AND ASSIGNS. This Guaranty is for the benefit of
the Agent and the Lenders and their respective successors and permitted assigns
and, in the event of an assignment of any amounts payable under the Credit
Agreement, the Notes or the other Loan Documents, the rights hereunder, to the
extent applicable to the indebtedness so assigned, may be transferred with such
indebtedness. This Guaranty shall be binding upon each of the Guarantors and
their respective successors and permitted assigns.
SECTION 13. CHANGES IN WRITING. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by each of the Guarantors and the Agent with the consent of the
Required Lenders.
SECTION 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF ILLINOIS. EACH OF THE GUARANTORS HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS AND OF ANY ILLINOIS STATE COURT SITTING IN CHICAGO,
ILLINOIS FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS)
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE GUARANTORS IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE GUARANTORS, AND THE
AGENT AND THE LENDERS ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 15. TAXES, ETC. All payments required to be made by any of the
Guarantors hereunder shall be made without setoff or counterclaim and free and
clear of and without deduction or withholding for or on account of, any present
or future taxies, levies, imposts, duties or other charges of whatsoever nature
imposed by any government or any political or taxing authority thereof,
PROVIDED, HOWEVER, that if any of the Guarantors is required by law to make such
deduction or withholding, such Guarantor shall forthwith pay to the Agent or any
Lender, as applicable, such additional amount as results in the net amount
received by the Agent or any Lender, as applicable, equaling the full amount
which would have been received by the Agent or any Lender, as applicable, had no
such deduction or withholding been made.
-7-
<PAGE>
IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to
be duly executed by its authorized officer as of the day and year first above
written.
LENNAR CORPORATION AND EACH OF THE SUBSIDIARIES OF
LENNAR CORPORATION LISTED ON SCHEDULE I
By: /S/ STUART A. MILLER
------------------------------------------------
Stuart A. Miller, President or authorized
signatory of each of such corporations
LNR PROPERTY CORPORATION AND EACH OF THE SUBSIDIARIES
OF LNR PROPERTY CORPORATION LISTED ON SCHEDULE II
By: /S/ STUART A. MILLER
------------------------------------------------
Name: Stuart A. Miller
Title: Chairman of the Board or authorized
signatory of each of such corporations
-8-
<PAGE>
SCHEDULE I
LENNAR CORPORATION SUBSIDIARIES
<PAGE>
SCHEDULE II
LNR PROPERTY CORPORATION SUBSIDIARIES
-10-
EXHIBIT 10.10
REVOLVING CREDIT AGREEMENT
dated as of November 6, 1997,
by and between
LENNAR CAPITAL SERVICES, INC.
(the Borrower)
and
THE BANK OF NEW YORK
(Lender)
<PAGE>
TABLE OF CONTENTS
Section 1. Definitions and Principles of Construction. .................... 1
1.1. Defined Terms. .................................................. 1
1.2. Principles of Construction. .....................................14
Section 2. Amount and Terms of Credit. ....................................14
2.1. The Loans. ......................................................14
2.2. Note. ...........................................................14
2.3. Procedure for Borrowings. .......................................14
2.4. Termination or Reduction of Commitment. ........................15
2.5. Payments and Prepayments of the Loans. ..........................15
2.6. Conversions. ....................................................16
2.7. Covered Rate Offers. ............................................16
2.8. Interest Rate and Payment Dates. ................................17
2.9. Application of Payments. ........................................19
2.10. Substituted Interest Rate. .....................................19
2.11. Taxes; Net Payments. ...........................................20
2.12. Illegality. ....................................................20
2.13. Increased Costs. ...............................................20
2.14. Indemnification for Loss. ......................................21
2.15. Option to Fund. ................................................22
2.16. Capital Adequacy. ..............................................22
2.17. Transaction Record. ............................................23
Section 3. Non-Usage Fee. .................................................23
Section 4. Conditions Precedent. ..........................................23
4.1. Note; Credit Documents. .........................................24
4.2. No Default; Representations and Warranties. .....................24
4.3. Borrowing Request. ..............................................24
4.4. Opinions of Counsel. ............................................24
4.5. Subsequent Legal Opinions. ......................................24
4.6. Corporate Documents; Proceedings. ...............................24
4.7. Mandatory Prepayment. ...........................................25
4.8. Financing Statements; Other Documents. ..........................25
4.9. No Adverse Change. ..............................................26
4.10. Fees and Expenses. .............................................26
4.11. No Litigation. .................................................26
Section 5. Representations, Warranties and Agreements. ....................26
5.1. Corporate Status. ...............................................26
5.2. Corporate Power and Authority. ..................................26
5.3. No Violation. ...................................................26
5.4. Governmental Approvals. .........................................27
5.5. Financial Statements; Financial Condition;
Undisclosed Liabilities, etc. ...................................27
5.6. Litigation. .....................................................28
5.7. True and Complete Disclosure. ...................................28
<PAGE>
5.8. Use of Proceeds; Margin Regulations. ............................28
5.9. Tax Returns and Payments. .......................................29
5.10. ERISA. .........................................................29
5.11. Subsidiaries. ..................................................29
5.12. Compliance with Statutes, etc. .................................29
5.13. Investment Company Act. ........................................29
5.14. Public Utility Holding Company Act. ............................30
5.15. Labor Relations. ...............................................30
5.16. No Burdensome Agreements. ......................................30
5.17. Property. ......................................................30
5.18. Security Interests .............................................30
5.19. Principal Places of Business. ..................................31
5.20. Environmental Matters. .........................................31
5.21. Guarantor. .....................................................31
Section 6. Affirmative Covenants of the Borrower. .........................31
6.1. Information. ....................................................32
6.2. Books, Records and Inspections. .................................35
6.3. Maintenance of Property, Insurance. .............................35
6.4. Corporate Franchises. ...........................................35
6.5. Compliance with Statutes, etc. ..................................35
6.6. Performance of Obligations. .....................................36
6.7. Payment of Taxes. ...............................................36
6.8. Corporate Separateness. .........................................36
6.9. Existing Credit Agreement. ......................................36
Section 7. Borrower's Negative Covenants. .................................37
7.1. Adjusted Net Worth. .............................................37
7.2. Ratio of Liabilities to Adjusted Net Worth. .....................37
7.3. Liens. ..........................................................37
7.4. Consolidation, Merger, Sale of Assets, etc. .....................38
7.5. Dividends. ......................................................38
7.6. Indebtedness. ...................................................38
7.7. Guaranties. .....................................................39
7.8. Advances, Investments and Loans. ................................39
7.9. Transactions with Affiliates. ...................................40
7.10. Capital Expenditures. ..........................................40
7.11. Modifications of Articles of Incorporation,
By-Laws and Certain Other Agreements, etc. .....................40
7.12. Creation of Subsidiaries. ......................................40
7.13. Business. ......................................................40
7.14. Use of Proceeds. ...............................................40
7.15. ERISA. .........................................................41
Section 8. Other Eligible Assets; Collateral. .............................41
8.1. Substitutions, Additions and Withdrawals of
Eligible Assets. ................................................41
8.2. Collateral; Successor Security Agreement. .......................42
Section 9. Events of Default. .............................................43
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Section 10. Remedies; Application of Proceeds. ............................45
10.1. Remedies. ......................................................45
Section 11. Miscellaneous. ................................................46
11.1. Payment of Expenses, etc. ......................................46
11.2. Right of Setoff. ...............................................46
11.3. Notices. .......................................................47
11.4. Successors and Assigns. ........................................48
11.5. No Waiver; Remedies Cumulative. ................................49
11.6. Calculation; Computations. .....................................49
11.7. GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE. .........................................................49
11.8. Obligation to Make Payments in Dollars. ........................50
11.9. Counterparts. ..................................................50
11.10. Effectiveness. ................................................50
11.11. Headings Descriptive. .........................................51
11.12. Amendment or Waiver. ..........................................51
11.13. Survival. .....................................................51
11.14. Domicile of Loans. ............................................51
11.15. Severability. .................................................51
11.16. Integration. ..................................................51
11.17. WAIVER OF JURY TRIAL. .........................................51
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EXHIBITS AND SCHEDULES
EXHIBITS:
Exhibit A - Borrowing Base Certificate
Exhibit B - Borrowing Request
Exhibit C - Current Security Agreement
Exhibit D - Guaranty
Exhibit E - Successor Security Agreement
Exhibit F - Note
Exhibit G - Opinion
Exhibit H - Secretary Certificate
SCHEDULES:
Schedule A - Eligible Assets
Schedule B - Existing Pension Plans
Schedule 5.5 - Liabilities
Schedule 5.6 - Litigation
Schedule 5.11 - Subsidiaries
Schedule 6.3 - Insurance of Borrower
<PAGE>
REVOLVING CREDIT AGREEMENT (as the same may be amended, supplemented or
otherwise modified from time to time, this "AGREEMENT"), dated as of November 6,
1997, by and among LENNAR CAPITAL SERVICES, INC., a Florida corporation (the
"BORROWER") and THE BANK OF NEW YORK (the "LENDER").
RECITALS:
WHEREAS, the Borrower has requested that the Lender provide a revolving
credit facility to the Borrower on the terms and conditions hereinafter set
forth; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Lender is agreeable to such request.
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties hereto agree as follows:
Section 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.
1.1. DEFINED TERMS.
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"ACCUMULATED FUNDING DEFICIENCY" shall have the meaning set
forth in Section 302 of ERISA.
"ACTUAL INTEREST AMOUNT" shall have the meaning set forth in
Section 2.8(d)(ii).
"ADJUSTED NET WORTH" means the amount of stockholders' equity
of the Borrower, on a consolidated basis, as shown on the balance sheet of the
Borrower and its consolidated Subsidiaries, less the aggregate amount of all
receivables due from the Guarantor or Affiliates (but not Subsidiaries) of the
Borrower.
"ADVANCE" shall mean an Other Advance or a Eurodollar Advance.
"AFFECTED ADVANCE" shall have the meaning set forth in Section
2.10.
"AFFECTED PRINCIPAL AMOUNT" shall mean (a) in the event that
the Borrower shall fail for any reason to borrow after it shall have notified
the Lender of its intent to do so in which it shall have requested a Eurodollar
Advance pursuant to Sections 2.3 or 2.6, an amount equal to the unborrowed
principal amount of such Eurodollar Advance, (b) in the event that a Eurodollar
Advance shall terminate for any reason prior to the last day of the Eurodollar
Period applicable thereto, an amount equal to the principal amount of such
Eurodollar Advance, or (c) in the event that the Borrower shall prepay or repay
all or any part of the principal amount of a Eurodollar Advance prior to the
last day of the Eurodollar Period applicable thereto, an amount equal to the
principal amount of such Eurodollar Advance so prepaid or repaid.
<PAGE>
"AFFILIATE" shall mean, as to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, however, that for purposes of
Section 7.9, an Affiliate of the Borrower shall include any Person that directly
or indirectly beneficially owns more than 5% of the Borrower and any officer or
director of the Borrower or any such Person.
"AGREEMENT" shall mean this Revolving Credit Agreement, as
modified, supplemented or amended from time to time.
"ALTERNATE BASE RATE" shall mean a rate of interest per annum
equal to the higher of (i) the BNY Rate in effect on such date or (ii) 1/2 of 1%
plus the Federal Funds Rate in effect on such date.
"APPROVED ACCOUNTANT" shall mean Deloitte & Touche, LLP or
such other firm of certified public accountants of recognized national standing
selected by the Borrower and satisfactory to the Lender.
"AVERAGE COVERED AMOUNT" shall mean, during any period, a
number equal to the lesser of (a) the Lender's Average Other Advances during
such period, and (b) the Lender's Average Qualifying Balances during such
period.
"AVERAGE OTHER ADVANCES" shall mean, during any period, the
average daily amount of Other Advances of the Lender during such period.
"AVERAGE QUALIFYING BALANCES" shall mean, during any period,
the average daily amount of Qualifying Balances maintained with the Lender
during such period.
"AVERAGE UNCOVERED AMOUNT" shall mean, during any period, a
number (but not less than zero) equal to the Lender's Average Other Advances
during such period LESS the Lender's Average Qualifying Balances during such
period.
"BNY" shall mean The Bank of New York.
"BNY RATE" shall mean a rate of interest per annum equal to
the prime commercial lending rate of BNY as publicly announced by BNY to be in
effect from time to time, such rate of interest to be adjusted automatically
(without notice) on the effective date of any change in such publicly announced
rate.
"BORROWER" shall have the meaning provided in the first
paragraph of this Agreement.
"BORROWER'S PERCENTAGE INTEREST" means, with respect to an
Eligible Asset which consists of a partnership interest held by the Borrower,
and which partnership owns one or more Mortgage Loans, a percentage equal to the
Borrower's percentage interest in said partnership.
"BORROWING BASE" shall mean, as of any date of determination,
with respect to any computation thereof, the Collateral Value of all Mortgage
Loans (or the Borrower's Percentage Interest therein) and Securities which are
Eligible Assets on such date.
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"BORROWING BASE CERTIFICATE" shall mean a certificate executed
by the Chief Financial Officer, Chief Accounting Officer or Treasurer of the
Company substantially in the form attached hereto as EXHIBIT A and delivered to
the Lender as a condition to each Loan and as otherwise required herein.
"BORROWING DATE" shall mean any date specified in a Borrowing
Request delivered pursuant to Section 2.3 as a date on which the Borrower
request a Loan.
"BORROWING REQUEST" shall mean a request for a Loan in the
form of EXHIBIT B.
"BUSINESS DAY" shall mean any day except Saturday, Sunday and
any day which shall be in New York, New York a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
"CARRYING VALUE" shall mean, on any date, and with respect to
any Mortgage Loan (or the Borrower's Percentage Interest therein) included in
the Eligible Assets or backing a Security which is an Eligible Asset, the lesser
of: (a) the Borrower's acquisition cost of such Mortgage Loan, interest therein
or Security as set forth on its books and records as of such date, net of
amortization, write-downs, loan loss reserves, deductions for uncollectible debt
or other reductions, or (b) the market value of the property or part thereof (or
the Borrower's Percentage Interest therein) encumbered by the Mortgage securing
said Mortgage Loan or backing a Security, as of such date. For purposes of this
definition, the term "MARKET VALUE" shall mean the estimated price at which such
property could readily be sold as set forth in a recent independent appraisal of
such property, or if no such appraisal is available, as determined in a manner
satisfactory to the Lender.
"CODE" shall mean the Internal Revenue Code of 1986, as the
same may be amended, or any successor thereto, and the rules and regulations
issued thereunder as from time to time in effect.
"COLLATERAL" shall mean the Collateral, as such term is
defined in the Current Security Agreement, and, after a Pledge Request Date, the
term "Collateral" shall mean the Collateral, as defined in the Current Security
Agreement and the Successor Security Agreement, collectively.
"COLLATERAL VALUE" shall mean, with respect to any computation
thereof, 75% of the lesser of: (a) the Carrying Value of each Mortgage Loan (or
the Borrower's Percentage Interest therein) or Security included in the Eligible
Assets on such date, or (b) the outstanding principal balance of each Mortgage
Loan (or the Borrower's Percentage Interest therein) included in the Eligible
Assets on such date or the portion of the principal balance of a Mortgage Loan
backing a Security included in the Eligible Assets on such date, in each case
determined in a manner satisfactory to the Lender.
"COMMITMENT" shall mean the commitment of the Lender to make
Loans in an aggregate principal amount at any time outstanding not to exceed the
Commitment Amount.
"COMMITMENT AMOUNT" shall mean the principal sum of
$50,000,000.
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"COMMITMENT PERIOD" shall mean the period commencing on the
Effective Date and ending on the Commitment Expiration Date.
"COMMITMENT EXPIRATION DATE" shall mean the earlier of (i) the
date that is 180 days after the Effective Date, (ii) the date on which the first
advance is made to the Guarantor under a credit facility providing for, among
other things, the general working capital requirements of the Guarantor, or
(iii) a Commitment Termination Date.
"COMMITMENT TERMINATION DATE" shall mean any date on which the
Commitment shall terminate pursuant to Section 2.4.
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or
not incorporated, which is under common control with the Borrower within the
meaning of Sections 414(b) or 414(c) of the Code.
"COMPENSATORY INTEREST PAYMENT" shall have the meaning set
forth in Section 2.8(c).
"CONTINGENT OBLIGATION" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
provided, however, that the term "Contingent Obligation" shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"CONTROL PERSON" shall have the meaning set forth in Section
2.13.
"CONVERSION DATE" shall mean the date on which a Eurodollar
Advance is converted to an Other Advance, or the date on which an Other Advance
is converted to a Eurodollar Advance, or the date on which a Eurodollar Advance
is converted to a new Eurodollar Advance, all in accordance with Section 2.6.
"COVERED AMOUNT" shall mean the Loans or parts thereof which
accrue interest at the rate or rates provided for in Sections 2.8(a)(i) and
2.8(a)(ii).
"COVERED INTEREST AMOUNT" shall have the meaning set forth in
Section 2.8(d)(ii).
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"COVERED RATE" shall mean 0.95% per annum.
"COVERED RATE PERIOD" shall have the meaning ascribed to such
term in Section 2.7.
"CREDIT DOCUMENTS" shall mean this Agreement, the Note, the
Current Security Agreement, the Guaranty and any Successor Security Agreement.
"CREDIT EVENT" shall mean the making of any Loan.
"CURRENT SECURITY AGREEMENT" shall mean the Pledge and
Security Agreement of even date herewith in the form of EXHIBIT C made by the
Borrower to the Lender, and all supplements and amendments thereto.
"DEFAULT" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"DOLLARS" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"EFFECTIVE DATE" shall mean the date and time upon which (i)
there is a distribution to the shareholders of Lennar of all of the capital
stock of the Guarantor as contemplated by the Registration Statement, and (ii)
Lennar has distributed to the Guarantor the Lennar Subsidiaries which have been
engaged in its real estate investment and management business, as well as some
assets of other Subsidiaries which were used in that business and certain other
assets, all as more particularly set forth in the Registration Statement.
"ELIGIBLE ASSETS" shall mean, as of any date, all of the
Mortgages and Mortgage Notes, Securities and the partnership interests in
partnerships owning Mortgages and Mortgage Notes, as described on SCHEDULE A (as
said Schedule A may be amended from time to time pursuant to Section 8),
provided that each such Mortgage and Mortgage Note meets the following
requirements:
(1) each Mortgage (including the Mortgage backing a
Security) must be a first lien on a commercial building consisting of a
multifamily rental apartment building, a hotel, or a retail, office or
industrial building;
(2) the Mortgage Loan secured by said Mortgage or
which backs a Security must be a Performing Mortgage Loan; and
(3) each such Mortgage, Mortgage Note, Security or
partnership interest must be approved by the Lender as acceptable to be
included in the Borrowing Base.
For purposes of this definition, "PERFORMING MORTGAGE LOAN"
shall mean a Mortgage Loan satisfying the following tests: (i) there are no
defaults in the payment of any principal or interest under the terms of the
Mortgage or Mortgage Note for such Mortgage Loan, and (ii) the Cash Flow from
the property encumbered by the Mortgage securing said Mortgage Loan as at the
end of any fiscal quarter of the Borrower equals or
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<PAGE>
exceeds the Projected Carrying Costs of such property as of such date. "CASH
FLOW" shall mean, with respect to any such property, and for any fiscal quarter
of the Borrower, the sum of all rents and, if applicable, hotel receipts,
actually received by the Borrower in respect of such property during said fiscal
quarter. "PROJECTED CARRYING COSTS" shall mean, with respect to any such
property, as of the last day of any fiscal quarter of the Borrower, the sum of
all debt payments (including principal and interest) and operating expenses
associated with such property projected to be payable during the next succeeding
fiscal quarter of the Borrower.
"EMPLOYEE BENEFIT PLAN" shall mean an employee benefit plan
within the meaning of Section 3(3) of ERISA, maintained, sponsored or
contributed to by the Borrower or any ERISA Affiliate.
"ENVIRONMENTAL LAWS" shall mean any and all federal, state and
local laws relating to the environment, the use, storage, transporting,
manufacturing, handling, discharge, disposal or recycling of hazardous
substances, materials or pollutants, including without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 USCA ss.9601 ET SEQ.; (ii) the Resource Conservation and Recovery
Act of 1976, as amended, 42 USCA ss.6901 ET SEQ.; (iii) the Toxic Substance
Control Act, as amended, 15 USCA ss.2601 ET SEQ.; (iv) the Water Pollution
Control Act, as amended, 33 USCA ss.1251 ET SEQ.; (v) the Clear Air Act, as
amended, 42 USCA ss.7401 ET SEQ.; (vi) the Hazardous Material Transportation
Act, as amended, 49 USCA ss.1801 ET SEQ.; and (vii) all rules, regulations
judgments decrees injunctions and restrictions thereunder and any analogous
state law.
"EQUITY INVESTMENT" means the ownership of, or participation
in the ownership of, an equity interest in Real Property or an equity interest
in a Person in the business of owning, developing, improving, operating or
managing Real Property.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, or any successor thereto, and the rules
and regulations issued thereunder, as from time to time in effect.
"ERISA AFFILIATE" shall mean, when used with respect to an
Employee Benefit Plan, ERISA, the PBGC or a provision of the Code pertaining to
Employee Benefit Plans, any Person that is a member of any group of
organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code
of which the Borrower is a member.
"ERISA TERMINATION EVENT" shall mean, with respect to any
Pension Plan, (a) a Reportable Event, (b) the termination of a Pension Plan, or
the filing of a notice of intent to terminate a Pension Plan, or the treatment
of a Pension Plan amendment as a termination under Section 4041(c) of ERISA, (c)
the institution of proceedings to terminate a Pension Plan under Section 4042 of
ERISA, or (d) the appointment of a trustee to administer any Pension Plan under
Section 4042 of ERISA.
"ERISA TEST DATE" shall have the meaning set forth in Section
5.10.
"EURODOLLAR ADVANCES" shall mean the Loans (or any portions
thereof) at such time as they (or such portions) are made and/or being
maintained at a rate of interest based upon the Eurodollar Rate.
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"EURODOLLAR BASE RATE" shall mean, with respect to any
Eurodollar Advance, a rate of interest per annum, as determined by the Lender,
obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if there
is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%):
(a) the rate, as quoted by the Lender to leading
banks in the interbank eurodollar market as the rate at which the
Lender is offering Dollar deposits in an amount equal approximately to
such Eurodollar Advance for a period equal to the Eurodollar Period
applicable to such Eurodollar Advance, as quoted at approximately 11:00
A.M. (London time), two Eurodollar Business Days prior to the first day
of such Eurodollar Period, by
(b) a number equal to 1.00 minus the average of the
aggregate maximum rates during such Eurodollar Period of all reserve
requirements (including, without limitation, marginal, emergency,
supplemental and special reserves), expressed as a decimal, established
by the Board of Governors of the Federal Reserve System and any other
banking authority to which the Lender or any other major United States
money center banking institution is subject, in respect of
"eurocurrency liabilities" (as defined in Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect)
or in respect of any other category of liabilities, in each case
without the benefit of credits for proration, exceptions or offsets
which may be available from time to time to the Lender under such
Regulation D.
"EURODOLLAR BUSINESS DAY" shall mean a Business Day on which
trading is carried on in the London Interbank Market for Dollar deposits.
"EURODOLLAR PERIOD" shall mean, with respect to any Eurodollar
Advance requested by the Borrower, the period commencing on, as the case may be,
the Borrowing Date or Conversion Date with respect to such Eurodollar Advance
and ending one, two or three months thereafter, provided, however, that the
foregoing provisions relating to Eurodollar Periods are subject to the
following:
(i) if any Eurodollar Period would otherwise
end on a day which is not a Eurodollar Business Day, such Eurodollar
Period shall be extended to the next succeeding Eurodollar Business Day
unless the result of such extension would be to carry such Eurodollar
Period into another calendar month, in which event such Eurodollar
Period shall end on the immediately preceding Eurodollar Business Day,
(ii) if, with respect to the borrowing of
any Loan or the conversion of one Advance to another, the Borrower
shall fail to give due notice as provided in Section 2.3 or 2.6, as the
case may be, the Borrower shall be deemed to have elected that such
Loan or Advance shall be made as an Other Advance,
(iii) any Eurodollar Period that begins on
the last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Eurodollar Period) shall end on the last Eurodollar
Business Day of the immediately succeeding calendar month,
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(iv) no Eurodollar Period shall end after
the Maturity Date, and
(v) the Borrower shall select Eurodollar
Periods so as not to have more than five different Eurodollar Periods
outstanding at any one time for all Loans.
"EURODOLLAR RATE" shall mean the Eurodollar Base Rate plus the
Eurodollar Spread.
"EURODOLLAR SPREAD" shall mean 0.95%.
"EVENT OF DEFAULT" shall have the meaning provided in Section
11.
"EXECUTIVE OFFICER" shall mean the President, the Chief
Financial Officer or any Executive Vice President of any Person.
"EXISTING CREDIT AGREEMENT" shall mean that certain Revolving
Credit Agreement between the Lender and Lennar Financial Services, Inc., dated
May 30, 1996, as amended.
"EXISTING PENSION PLAN" shall mean a Pension Plan listed on
SCHEDULE B.
"FASB" shall mean the Financial Accounting Standards Board and
any successor thereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation
and any successor thereto.
"FEDERAL FUNDS RATE" shall mean for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a Business Day, for the preceding Business Day) by
the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.
"FUNDED CURRENT LIABILITY PERCENTAGE" shall have the meaning
set forth in Section 401(a)(29) of the Code.
"FUNDED INDEBTEDNESS" shall mean with respect to any Person
and its Subsidiaries determined on a consolidated basis at a time, without
duplication: (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid or accrued, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property
purchased by such Person, (e) all obligations of such Person issued or assumed
as the deferred purchase price of property or services, but excluding trade
payables incurred and paid in the ordinary course of business, (f) all
obligations of others secured by any Lien on property owned or acquired by such
Person, whether or not the obligations secured
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<PAGE>
thereby have been assumed, (g) the aggregate amount required in accordance with
GAAP to be capitalized under leases for which such Person is the lessee, (h) all
obligations of such Person in respect of interest rate protection agreements
entered into in connection with obligations described in clauses (a), (b), (c),
(d), (e), (f), (g), (i), (j) or (k) of this definition, (i) all obligations of
such Person, actual or contingent, in respect of letters of credit or banker's
acceptances, (j) all obligations of any partnership or joint venture as to which
such Person is or may become personally liable, and (k) all Contingent
Obligations of such Person.
"FUNDING ACCOUNT" shall mean a depository account owned by the
Borrower and maintained by The Bank of New York at its offices located at One
Wall Street, New York, New York 10286.
"GAAP" shall mean generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and the statements and
pronouncements of the FASB or in such other statement by such other entity as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"GUARANTOR" shall mean LNR Property Corporation, its
successors and assigns.
"GUARANTY" shall mean that certain Guaranty of even date
herewith in the form of EXHIBIT D made by the Guarantor to the Lender, and all
supplements and amendments thereto.
"HAZARDOUS SUBSTANCE" shall mean any hazardous or toxic
substance, material or waste, including, but not limited to, (i) those
substances, materials, and wastes listed in the United States Department of
Transportation Hazardous Materials Table (49 CFR ss.172.101) or by the
Environmental Protection Agency as hazardous substances in 40 CFR Part 302 and
any amendments thereto and replacements therefor and (ii) any substance,
pollutant or material defined as, or designated in, any Environmental Law as a
"hazardous substance," "toxic substance," "hazardous material," "hazardous
waste," "restricted hazardous waste," "pollutant," "toxic pollutant" or terms of
similar import.
"HIGHEST LAWFUL RATE" shall mean the maximum rate of interest,
if any, that at any time or from time to time may be contracted for, taken,
charged or received on the Advances or the Note or which may be owing to the
Lender pursuant to this Agreement under the laws applicable to the Lender and
this transaction.
"INCOME PRODUCING PROPERTIES" means all industrial Real
Property, commercial Real Property or multiple family dwellings owned and
developed by the Guarantor, except for Real Property developed for sale as
condominium units directly to individual purchasers for their residential use.
"INDEBTEDNESS" shall mean, as to any Person, without
duplication, (i) all Funded Indebtedness, (ii) all trade payables, and (iii) all
repurchase agreements classified by the Approved Accountant as indebtedness.
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"INTEREST PAYMENT DATE" shall mean: (i) in the case of Other
Advances, the fifth Business Day of each calendar month hereafter, and (ii) in
the case of any Eurodollar Advance, the last day of each applicable Eurodollar
Period.
"INVESTMENTS" shall have the meaning set forth in Section 7.8.
"LENDER" shall have the meaning provided in the first
paragraph of this Agreement.
"LENNAR" means Lennar Corporation, a Delaware corporation.
"LIABILITIES" means, with respect to any Person, all items
included in the liability section of a balance sheet of such Person prepared in
accordance with GAAP consistently applied as of the date of calculation. Without
limiting the generality of the forgoing, the term "Liabilities" shall include,
without limitation: (i) all Indebtedness secured by any Mortgage, lien, pledge,
security interest, charge or encumbrance upon or in property owned by such
Person, to the extent attributable to that Person's interest in the property,
even though that Person has not assumed or become liable for the payment of the
Indebtedness; and (ii) the aggregate amount of the reserves established on the
books of such Person in respect of contingent liabilities and other
contingencies (except reserves which are properly treated as deductions from
assets) and in any event shall include with respect to the Borrower the amount
of all outstanding Loans.
"LIEN" shall mean any mortgage, pledge, hypothecation,
assignment, restricted deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"LOAN" and "LOANS" shall have the meaning set forth in Section
2.1.
"LNR FINANCIAL STATEMENTS" shall have the meaning ascribed to
such term in Section 5.6(b).
"MARGIN STOCK" shall have the meaning provided in Regulation U
of the Board of Governors of the Federal Reserve System.
"MATERIAL ADVERSE CHANGE" shall mean a material adverse change
in the business, assets, property, operations, financial condition or prospects
of the Borrower or the Guarantor, as the case may be, or the Borrower and its
Subsidiaries taken as a whole or the Guarantor and its Subsidiaries taken as a
whole, as the case may be.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the business, assets, property, operations, financial condition or prospects
of the Borrower or the Guarantor, as the case may be, or the Borrower and its
Subsidiaries taken as a whole or the Guarantor and its Subsidiaries taken as a
whole, as the case may be.
"MOODY'S" means Moody's Investors Services, Inc. or any Person
succeeding to the securities rating business of such company.
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"MORTGAGE" shall mean a mortgage, deed of trust, deed to
secure debt or other security device which is customary and serves the same
function as a mortgage under law and practice in the jurisdiction in which the
premises subject to the mortgage or deed of trust are located.
"MORTGAGE LOAN" shall mean a loan evidenced by a Mortgage Note
and secured by a Mortgage.
"MORTGAGE NOTE" shall mean, at any time, a negotiable
promissory note executed by a competent party which is secured by a Mortgage.
"MULTIEMPLOYER PLAN" shall mean a Pension Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"NOTE" shall have the meaning set forth in Section 2.2.
"OBLIGATIONS" shall mean all amounts owing to the Lender
pursuant to the terms of this Agreement, the Note and the other Credit
Documents.
"OFFICE" shall mean the office of the Lender located at One
Wall Street, New York, New York 10286, or such other office as the Lender may
hereafter designate in writing as such to the other parties hereto.
"OTHER ADVANCES" shall mean the Loans (or any portions
thereof) at such time as they or such portions are made and/or being maintained
at a rate of interest which is not based upon the Eurodollar Rate.
"OTHER COMPUTATION PERIOD" shall mean, any month or part
thereof which is not within or part of a Covered Rate Period.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA, or any governmental
body succeeding to the functions thereof.
"PENSION PLAN" shall mean, at any time, any Employee Benefit
Plan (including a Multiemployer Plan), the funding requirements of which (under
Section 302 of ERISA or Section 412 of the Code) are, or at any time within the
six years immediately preceding the time in question, were in whole or in part,
the responsibility of the Borrower or an ERISA Affiliate.
"PLEDGE REQUEST DATE" shall have the meaning ascribed thereto
in Section 8.2.
"PERSON" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or instrumentality
thereof.
"PROHIBITED TRANSACTION" shall mean a transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.
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"QUALIFYING BALANCES" shall mean, with respect to the Lender,
those free collected balances maintained in non-interest bearing accounts (other
than the Funding Account) in the Borrower's name with the Lender (after
deducting for purposes of calculating such balances FDIC insurance premiums,
float and balances required by the Lender under its normal practices to
compensate the Lender for the maintenance of such accounts and taking into
consideration any reserve requirements applicable to such accounts), and which
are not employed by the Borrower to effect an interest rate reduction,
accommodation or other "buy-down" arrangement under any loan or credit facility
other than this Agreement.
"REAL PROPERTY" shall mean all real property which is either
(i) owned by the Borrower or any of its Subsidiaries, or the Guarantor, or (ii)
which is leased by the Borrower or any of its Subsidiaries, or the Guarantor,
and pursuant to the terms of such lease the Borrower or the Guarantor, as the
case may be, is obligated to remove any Hazardous Substances from the property
that is the subject of said lease or indemnify the owner of the property with
respect to Hazardous substances at such property.
"REGISTRATION STATEMENT" means the General Form for
Registration of Securities filed with Securities Exchange Commission pursuant to
Section 12(b) of the Securities Exchange Act of 1934 in connection with the
registration of the securities of the Guarantor and the Information Statement
filed in connection therewith.
"REGULATION D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"REMAINING EURODOLLAR PERIOD" shall mean (i) in the event that
the Borrower shall fail for any reason to borrow or effect a conversion after it
shall have notified the Lender of its intent to do so in which it shall have
requested a Eurodollar Advance pursuant to Section 2.3 or Section 2.6, a period
equal to the Eurodollar Period that the Borrower elected in respect of such
Eurodollar Advance; or (ii) in the event that a Eurodollar Advance shall
terminate for any reason prior to the last day of the Eurodollar Period
applicable thereto, a period equal to the remaining portion of such Period if
such Eurodollar Period had not been so terminated; or (iii) in the event that
the Borrower shall prepay or repay all or any part of the principal amount of a
Eurodollar Advance prior to the last day of the Eurodollar Period applicable
thereto, a period equal to the period from and including the date of such
prepayment or repayment to but excluding the last day of such Eurodollar Period.
"REPORTABLE EVENT" shall mean, with respect to any Pension
Plan, (a) any event set forth in Sections 4043(b) (other than a Reportable Event
as to which the 30 day notice requirement is waived by the PBGC under applicable
regulations), 4068(f) or 4063(a) of ERISA or the regulations thereunder, (b) an
event requiring the Borrower or any ERISA Affiliate to provide security to or
for a Pension Plan under Section 401(a)(29) of the Code, or (c) any failure to
make any payment required by Section 412(m) of the Code.
"SECURITY" means a security which is backed by one or more
Mortgage Loans or parts thereof.
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"SECURITY AGREEMENTS" shall mean, collectively, the Current
Security Agreement and any Successor Security Agreement and all supplements and
amendments thereto.
"SUBORDINATED DEBT" means any Indebtedness of the Guarantor
which by its terms is subordinated, in form and substance and in a manner
satisfactory to the Lender, in lien and right of payment to the prior payment in
full of the Obligations.
"SUBSIDIARY" shall mean, as to any Person, (i) any corporation
50% or more of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person or one or more
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person or one or more Subsidiaries of such Person
is entitled to share in more than 50% of the profits and losses, however
determined.
"SUCCESSOR SECURITY AGREEMENT" shall mean a Pledge and
Security Agreement in the form of EXHIBIT E to be delivered by the Borrower to
the Lender at the request of the Lender pursuant to Section 8.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the State of New York.
"UNFUNDED PENSION LIABILITIES" shall mean, with respect to any
Pension Plan, at any time, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, "Employers' Accounting for Pensions", over the fair market
value of Pension Plan assets.
"UNITED STATES" and "U.S." shall each mean the United States
of America.
"UNQUALIFIED AMOUNT" shall have the meaning set forth in
Section 2.8(c).
"UNRECOGNIZED RETIREE WELFARE LIABILITY" shall mean, with
respect to any Employee Benefit Plan that provides post-retirement benefits
other than pension benefits, the amount of the transition obligation, as
determined in accordance with Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Post-retirement Benefits Other Than Pensions,"
as of the most recent valuation date, that has not been recognized as an expense
in the income statement of the Borrower and its consolidated Subsidiaries,
provided that (i) prior to the date such Statement is applicable to the
Borrower, such amount shall be based on an estimate made in good faith of the
transition obligation, and (ii) for purposes of determining the aggregate amount
of the Unrecognized Retiree Welfare Liability, Plans maintained by a
consolidated Subsidiary of the Borrower that is not otherwise an ERISA Affiliate
shall be included.
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
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1.2. PRINCIPLES OF CONSTRUCTION.
(a) All references to sections, schedules and exhibits are to
sections, schedules and exhibits in or to this Agreement unless otherwise
specified. The words "hereof", "herein", "hereto" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) All accounting terms not specifically defined herein shall
be construed in accordance with GAAP in conformity with those principles used in
the preparation of the financial statements referred to in Section 5.5. All
references herein to consolidated and consolidating financial statements shall
mean the statements of the Borrower and its consolidated Subsidiaries.
(c) All references to time of day shall mean the then
applicable time in New York, New York unless expressly provided to the contrary.
Section 2. AMOUNT AND TERMS OF CREDIT.
2.1. THE LOANS.
Subject to the terms and conditions hereof, the Lender agrees
to make loans during the Commitment Period (each a "LOAN" and, collectively, the
"LOANS") to the Borrower from time to time, provided, however, that at no time
shall such Loan, when combined with the principal balance of all other Loans
outstanding, exceed the lesser of (i) the Commitment Amount, or (ii) the
Borrowing Base. During the Commitment Period, the Borrower may borrow, prepay in
whole or in part and reborrow under the Commitment, all in accordance with the
terms and conditions of this Agreement. Subject to the provisions of Sections
2.3, 2.6 and 2.7, the Loans may be comprised of (x) Other Advances, (y)
Eurodollar Advances, or (z) any combination thereof.
2.2. NOTE.
NOTE. The Loans shall be evidenced by a promissory note of the
Borrower, substantially in the form of EXHIBIT F, payable to the order of the
Lender for the account of its Lending Office, in the maximum principal amount of
the Commitment Amount, and dated the Effective Date (as indorsed or modified
from time to time, the "NOTE").
2.3. PROCEDURE FOR BORROWINGS.
(a) TIME FOR NOTICE; ETC. During the Commitment Period, the
Borrower may borrow one or more Loans, on any Business Day, provided, however,
that the Borrower shall notify the Lender by telephone by 11:00 A.M., three
Eurodollar Business Days prior to the requested Borrowing Date in the case of
Eurodollar Advances, or 11:00 A.M., on such requested Borrowing Date, in the
case of Other Advances specifying (i) the aggregate principal amount requested
to be borrowed, (ii) the requested Borrowing Date, and (iii) if such borrowing
is to consist of a Eurodollar Advance, the portion thereof to constitute such
Eurodollar Advance. Each such notice shall be irrevocable and confirmed
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immediately by delivery to the Lender by telecopier of a Borrowing Request.
Simultaneously with the delivery to the Lender of said Borrowing Request (or on
the Borrowing Date, if such Borrowing Request is dated earlier than the
Borrowing Date), the Borrower shall also deliver to the Lender by telecopier a
Borrowing Base Certificate dated as of the Borrowing Date.
(b) AMOUNT. Each borrowing shall be in an aggregate principal
amount equal to no less than $100,000 or, if less, the unused Commitment amount.
Each Eurodollar Advance shall be in an aggregate principal amount equal to
$1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof.
(c) FUNDING. Each Loan will, subject to the satisfaction of
the terms and conditions of this Agreement, as determined by the Lender, be
disbursed by the Lender on such date either by wire transfer or deposit into the
Funding Account, at which time the Loan shall be deemed made to the Borrower for
purposes of this Agreement.
2.4. TERMINATION OR REDUCTION OF COMMITMENT.
Prior to the Commitment Expiration Date, the Borrower shall
have the right, upon at least fifteen Business Days' prior written notice (which
shall be irrevocable) to the Lender, at any time to terminate the Commitment, or
from time to time to permanently reduce the Commitment, provided, however, that
any such reduction shall be in the amount of $10,000,000 or such amount plus a
whole multiple of $1,000,000 in excess thereof.
2.5. PAYMENTS AND PREPAYMENTS OF THE LOANS.
(a) VOLUNTARY PREPAYMENTS. The Borrower may, at its option,
prepay the Loans, in whole or in part, without premium or penalty, at any time
and from time to time on any Business Day, in an aggregate principal amount of
$1,000,000 or such amount plus a whole multiple of $1,000,000 in excess thereof,
or, if less, the outstanding principal balance of the Loans.
(b) MANDATORY BORROWING BASE PREPAYMENTS. In the event that,
on any Business Day, (i) the outstanding principal amount of the Obligations
shall exceed the Borrowing Base, the Borrower shall, within three business Days
thereafter, prepay the Loans by an amount equal to such excess.
(c) MANDATORY COMMITMENT TERMINATION AND REDUCTION
PREPAYMENTS. Simultaneously with the termination of the Commitment under Section
2.4, the Borrower shall prepay the Loans in full. Simultaneously with each
reduction of the Commitment under Section 2.4, the Borrower shall prepay the
Loan by the amount, if any, by which the aggregate unpaid principal balance of
the Loans, exceeds the Commitment, as so reduced.
(d) MANDATORY PAYMENT ON THE COMMITMENT EXPIRATION DATE. All
Loans outstanding on the Commitment Expiration Date, and all accrued and unpaid
interest, fees and other amounts in respect thereof, shall be due and payable on
the Commitment Expiration Date.
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2.6. CONVERSIONS.
(a) PROCEDURE. The Borrower may elect from time to time to
convert Eurodollar Advances to Other Advances by giving the Lender at least one
Business Day's prior irrevocable written notice of such election, specifying the
amount to be so converted, provided, that any such conversion of Eurodollar
Advances shall only be made on the last day of the Eurodollar Period applicable
thereto. In addition, the Borrower may elect from time to time to convert Other
Advances to Eurodollar Advances or to convert Eurodollar Advances to new
Eurodollar Advances by giving the Lender at least three Eurodollar Business
Days' prior irrevocable written notice of such election, specifying the amount
to be so converted and the initial Eurodollar Period relating thereto, provided
that any such conversion of Other Advances to Eurodollar Advances shall only be
made on a Eurodollar Business Day and any such conversion of Eurodollar Advances
to new Eurodollar Advances shall only be made on the last day of the Eurodollar
Period applicable to the Eurodollar Advances which are to be converted to such
new Eurodollar Advances. Other Advances and Eurodollar Advances may be converted
pursuant to this Section in whole or in part, provided that conversions of Other
Advances to Eurodollar Advances, or Eurodollar Advances to new Eurodollar
Advances, shall be in an aggregate principal amount of $1,000,000 or such amount
plus a whole multiple of $1,000,000 in excess thereof.
(b) FAILURE TO MAKE ELECTION; ETC. Notwithstanding anything in
this Section to the contrary, no Other Advance may be converted to a Eurodollar
Advance, and no Eurodollar Advance may be converted to a new Eurodollar Advance,
if any of the Borrower or the Lender has knowledge that a Default or Event of
Default has occurred and is continuing either (i) at the time the Borrower shall
notify the Lender of its election to convert or (ii) on the requested Conversion
Date. In such event, such Other Advance shall be automatically continued as an
Other Advance or such Eurodollar Advance shall be automatically converted to an
Other Advance on the last day of the Eurodollar Period applicable to such
Eurodollar Advance. If an Event of Default shall have occurred and be
continuing, the Lender may notify the Borrower (by telephone or otherwise) that
all, or such lesser amount as the Lender shall designate, of the outstanding
Eurodollar Advances shall be automatically converted to Other Advances in which
event such Eurodollar Advances shall be automatically converted to Other
Advances on the date such notice is given.
(c) ROLLOVERS, ETC. Each conversion shall be effected by the
Lender by applying the proceeds of its new Other Advance or Eurodollar Advance,
as the case may be, to its Advances (or portion thereof) being converted (it
being understood that such conversion shall not constitute a borrowing for
purposes of Sections 5 or 6).
2.7. COVERED RATE OFFERS.
The Lender may, in its sole discretion, at any time and from
time to time offer to the Borrower the right to have the Average Covered Amount
of the Lender's Average Other Advances bear interest at a rate per annum equal
to the Covered Rate during each period which shall occur during the period (each
a "COVERED RATE PERIOD") commencing upon the date the Borrower shall notify the
Lender, in writing, of its acceptance of such offer and ending upon the earlier
of (a) thirty days after the date the Lender shall notify the Borrower, in
writing that the Lender, in its sole discretion, has withdrawn such offer, or
(b) the date upon which any law, regulation, treaty or directive,
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or any change therein or in the interpretation thereof, shall, in the opinion
of the Lender, make it unlawful for the Lender to maintain or offer to maintain
the Average Covered Amount of the Lender's Average Other Advances at the
Covered Rate.
2.8. INTEREST RATE AND PAYMENT DATES.
(a) INTEREST RATES.
(i) During any Covered Rate Period, the Average Covered
Amount of the Lender's Other Advances shall bear interest at a
rate per annum equal to the Covered Rate,
(ii) During each Covered Rate Period, the Average
Uncovered Amount of the Lender's Other Advances shall bear
interest at a rate per annum equal to the Alternate Base Rate,
(iii) During each Other Computation Period, the Average
Other Advances of the Lender shall bear interest at a rate per
annum equal to the Alternate Base Rate, and
(iv) The outstanding principal balance of each Eurodollar
Advance shall bear interest at the applicable Eurodollar Rate.
(b) LATE PAYMENTS. Notwithstanding anything to the contrary
contained in Section 2.8(a), if all or any portion of the principal amount of or
interest payable on the Loans, or any other amount payable by the Borrower to
the Lender under the Credit Documents, shall not be paid on the date due
(whether on the scheduled due date therefor, by acceleration or otherwise), such
overdue principal, interest or other amount shall bear interest, payable on
demand, from such due date until paid at a rate per annum equal to the Alternate
Base Rate plus 2%.
(c) HIGHEST LAWFUL RATE. Notwithstanding anything to the
contrary contained in this Agreement, at no time shall the interest rate payable
on the Loans, together with all fees and other amounts payable hereunder to the
extent the same constitute or are deemed to constitute interest, exceed the
Highest Lawful Rate. If in respect of any period during the term of this
Agreement, any amount paid hereunder, to the extent the same shall (but for the
provisions of this Section 2.8(c)) constitute or be deemed to constitute
interest, would exceed the maximum amount of interest permitted by the Highest
Lawful Rate during such period (such amount being hereinafter referred to as an
"UNQUALIFIED AMOUNT"), then (i) notwithstanding anything to the contrary
contained in Section 2.5, such Unqualified Amount shall be applied or shall be
deemed to have been applied as a prepayment of the Loans, and (ii) if in any
subsequent period during the term of this Agreement, all amounts payable
hereunder in respect of such period which constitute or shall be deemed to
constitute interest shall be less than the maximum amount of interest permitted
by the Highest Lawful Rate during such period, then the Borrower shall pay to
the Lender in respect of such period an amount (each a "COMPENSATORY INTEREST
PAYMENT") equal to the lesser of (x) a sum which, when added to all such
amounts, would equal the maximum amount of interest permitted by the Highest
Lawful Rate during such period, and (y) an amount equal to the Unqualified
Amount less all other Compensatory Interest Payments made in respect thereof.
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(d) INTEREST PAYMENTS AND COVERED RATE STATEMENTS. The
Borrower will pay interest on the Loans as follows:
(i) On each Interest Payment Date hereafter, the Borrower
shall pay to the Lender interest on the Loans, exclusive of
the Covered Amount, which accrued through the end of the
immediately preceding calendar month or applicable Eurodollar
Period, as the case may be at the rate or rates equal to those
set forth in Sections 2.8(a)(iii) or 2.8(a)(iv), as the case
may be.
(ii) The Borrower shall pay interest to the Lender on the
Covered Amount as follows:
(x) on each Interest Payment Date hereafter,
the Borrower shall pay to the Lender interest on the Covered
Amount at the rate equal to that set forth in Section
2.8(a)(i) (the "COVERED INTEREST AMOUNT"), and
(y) promptly and in any event within 14 days
after the end of each calendar month hereafter which was
within or part of a Covered Rate Period, the Lender shall
deliver to the Borrower an accrued interest statement setting
forth the amount of interest which accrued on the Lender's
Other Advances through the end of such immediately preceding
calendar month in accordance with Sections 2.8(a) and (b) (the
"ACTUAL INTEREST AMOUNT"). In the event that the Actual
Interest Amount shall exceed the Covered Interest Amount, then
the Borrower shall, no later than one Business Day after its
receipt of such statement, pay to the Lender an amount equal
to such excess. In the event that the Borrower shall dispute
the amount set forth on any such statement submitted pursuant
to this Section 2.8(d)(ii)(y), the Borrower shall nevertheless
pay the amount set forth on such statement and, thereafter,
settle such dispute with the Lender.
(iii) Notwithstanding anything to the contrary contained
in any Credit Document in the event that the Lender shall have
failed to render any statement under this Section 2.8(d) when
due, the Borrower shall not be relieved of its obligation to
pay interest to the Lender at the rate or rates provided for
herein.
(e) IN GENERAL. Interest on all Loans shall be calculated on
the basis of a 360 day year for the actual number of days elapsed. Interest on
the Loans shall accrue from and including the date of the making thereof to but
excluding the date of any repayment if payment is received by the Lender prior
to 2:00 P.M. Except as otherwise specifically provided herein, interest shall be
payable in arrears on each Interest Payment Date and upon each payment or
prepayment of the Loans in full. Interest on overdue amounts shall be payable
upon demand. Any change in the interest rate on a Loan resulting from a change
in the Alternate Base Rate shall become effective as of the opening of business
on the day on which such change in the Alternate Base Rate shall become
effective. The Lender shall, as soon as practicable following request therefor,
notify the Borrower of the effective date and the amount of each change in the
BNY Rate, but any failure to give such notice shall not in any manner affect the
obligation of the Borrower to
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pay interest on the Loans in the amounts and on the dates required. The Borrower
and the Lender acknowledge that to the extent interest payable on the Average
Other Advances is based on the BNY Rate, the BNY Rate is only one of the bases
for computing interest on loans made by the Lender, and by basing interest
payable on the Average Other Advances on the BNY Rate, the Lender has not
committed to charge, and the Borrower has not in any way bargained for, interest
based on a lower or the lowest rate at which the Lender may now or in the future
make extensions of credit to other Persons. Each determination by the Lender of
the BNY Rate shall be conclusive and binding absent manifest error. The Lender
is hereby authorized to charge the Funding Account for each payment of
principal, interest and fees as the same become due under this Agreement.
2.9. APPLICATION OF PAYMENTS.
All payments by the Borrower to the Lender in respect of the
interest on the Loans shall be applied first to interest in respect of
Eurodollar Advances and next to interest in respect of Other Advances in
accordance with the provisions of Section 2.8(d). Each payment by the Borrower
shall be made without set-off or counterclaim and shall be made prior to 2:00
P.M., on the applicable due date therefor at the Lender's Office in lawful money
of the United States of America and in immediately available funds. The failure
of the Borrower to make any such payment by 2:00 P.M. on such due date shall not
constitute a Default or Event of Default provided that such payment is made on
such due date, but any such payment received by the Lender on any Business Day
after 2:00 P.M., shall be deemed to have been received on the immediately
succeeding Business Day for the purpose of calculating any interest payable in
respect of the Obligations. If any payment hereunder or under the Note or a
Credit Document becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day (unless,
in the case of Eurodollar Advances, the result of such extension would be to
extend such payment into another calendar month, in which event such maturity
shall be shortened to the immediately preceding Business Day). In the event of
any such extension or shortening, interest shall be adjusted accordingly.
2.10. SUBSTITUTED INTEREST RATE.
In the event that (a) the Lender shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by reason
of circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the Eurodollar Base Rate or (b)
the Lender has determined (which determination shall be conclusive and binding
on the Borrower) that the applicable Eurodollar Base Rate will not adequately
and fairly reflect the cost to the Lender of maintaining or funding loans
bearing interest based on the Eurodollar Rate, in either case, with respect to
proposed Loans that the Borrower has requested be made as a Eurodollar Advance
or a Eurodollar Advance that will result from the requested conversion of any
outstandings into a Eurodollar Advance (hereinafter referred to as an "AFFECTED
ADVANCE"), the Lender shall promptly notify the Borrower (by telephone or
otherwise) of such determination, to be confirmed in writing, to the Borrower on
or prior to, the requested Borrowing Date for such Affected Advance or the
requested Conversion Date of such Advance. If the Lender shall give such notice,
(i) any requested Affected Advance shall be made as an Other
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Advance, (ii) any outstanding Loan balance that was to have been converted to an
Affected Advance shall be converted to or continued as an Other Advance, and
(iii) any outstanding Affected Advance shall be converted, on the last day of
the then current Eurodollar Period with respect thereto, to an Other Advance.
Until any such notice under clause (a) of this Section 2.10 has been withdrawn
by the Lender (by notice to the Borrower promptly upon the Lender having
determined that such circumstances affecting the interbank eurodollar market no
longer exist and that adequate and reasonable means do exist for determining the
Eurodollar Base Rate) no further Eurodollar Advances shall be made by the Lender
nor shall the Borrower have the right to convert any outstandings to Eurodollar
Advances. Until any such notice under clause (b) of this Section 2.10 has been
withdrawn by the Lender (by notice to the Borrower promptly upon the Lender
having determined that circumstances no longer render any Loan or outstanding an
Affected Advance), no further Eurodollar Advances, shall be required to be made
by the Lender nor shall the Borrower have the right to convert any outstanding
of the Lender to a Eurodollar Advance of the Lender.
2.11. TAXES; NET PAYMENTS.
All payments made by the Borrower under the Credit Documents
to the Lender shall be made free and clear of, and without reduction for or on
account of, any taxes required by law to be withheld from any amounts payable
under the Credit Documents. A statement setting forth the calculations of any
amounts payable pursuant to this Section 2.11 submitted by the Lender to the
Borrower shall be conclusive absent manifest error.
2.12. ILLEGALITY.
Notwithstanding any other provisions herein, if any law,
regulation, treaty or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for the Lender to make or
maintain its Eurodollar Advances as contemplated by this Agreement, (a) the
commitment of the Lender hereunder to make or continue Eurodollar Advances or to
convert Other Advances to Eurodollar Advances shall forthwith be suspended and
(b) the Lender's Loans then outstanding as Eurodollar Advances affected thereby,
if any, shall be converted automatically to Other Advances on the last day of
the then current Eurodollar Period applicable thereto or within such earlier
period as required by law. If the commitment of the Lender with respect to
Eurodollar Advances is suspended pursuant to this Section and the Lender shall
determine that it is once again legal for the Lender to make or maintain
Eurodollar Advances, the Lender's commitment to make or maintain Eurodollar
Advances shall be reinstated.
2.13. INCREASED COSTS.
In the event that any law, regulation, treaty or directive
hereafter enacted, promulgated, approved or issued or any change in any
presently existing law, regulation, treaty or directive or in the interpretation
or application thereof by any governmental body charged with the administration
thereof or compliance by the Lender, or any Person directly or indirectly owning
or controlling the Lender (each a "CONTROL PERSON") with any request or
directive from any central bank or other governmental body, agency or
instrumentality hereafter made:
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(a) does or shall subject the Lender or such Control
Person to any tax of any kind whatsoever with respect to any Eurodollar
Advance or the Lender's obligations under this Agreement to make
Eurodollar Advances or changes the basis of taxation of payments to the
Lender of principal, interest or any other amount payable hereunder in
respect of its Eurodollar Advances (except for imposition of, or change
in the rate of, tax on the overall net income of the Lender or such
Control Person); or
(b) does or shall impose, modify or make applicable any
reserve, special deposit, compulsory loan, assessment, increased cost
or similar requirement not in effect on the Effective Date against
assets held by, or deposits of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
the Lender in respect of its Eurodollar Advances which is not otherwise
included in the determination of the applicable rate or rates of
interest hereunder;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing, converting or maintaining the Lender's Eurodollar Advances or
its commitment to make Eurodollar Advances, or to reduce any amount receivable
hereunder in respect of its Eurodollar Advances, then, in any such case, the
Borrower shall promptly pay the Lender, upon its demand, any additional amounts
necessary to compensate the Lender or such Control Person for such additional
cost or reduction in such amount receivable as reasonably determined in good
faith by the Lender. No failure by the Lender to demand compensation for any
increased cost shall constitute a waiver of the Lender's right to demand such
compensation at any time. A statement setting forth in reasonable detail the
calculations of any additional amounts payable pursuant to the foregoing
sentence submitted by the Lender to the Borrower shall be conclusive absent
manifest error.
2.14. INDEMNIFICATION FOR LOSS.
(a) Notwithstanding anything contained herein to the contrary,
if the Borrower shall fail to borrow on a Borrowing Date or to convert on a
proposed Conversion Date, as the case may be, after it shall have given notice
to do so, or if a Eurodollar Advance shall be terminated for any reason prior to
the last day of the Eurodollar Period applicable thereto, or if, while a
Eurodollar Advance is outstanding, any repayment or prepayment of such
Eurodollar Advance is made for any reason (including, without limitation, as a
result of acceleration or illegality) on a date which is prior to the last day
of the Eurodollar Period applicable thereto, the Borrower agree to indemnify the
Lender against, and to pay on demand directly to the Lender, any loss or expense
suffered by the Lender as a result of such failure to borrow, termination,
prepayment or repayment, including without limitation, an amount, if greater
than zero, equal to:
A x (B-C) x D
---
360
where:
"A" equals the Lender's Affected Principal Amount;
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"B" equals the Eurodollar Rate (expressed as a decimal)
applicable to such Affected Principal Amount;
"C" equals the applicable Eurodollar Rate in effect on or
about the first day of the applicable Remaining Eurodollar
Period, based on the applicable rates offered on or about such
date, for deposits in an amount equal approximately to the
Lender's Affected Principal Amount with a Eurodollar Period
equal approximately to the applicable Remaining Eurodollar
Period, as determined by the Lender; and
"D" equals the number of days from and including the first day
of the applicable Remaining Eurodollar Period to but excluding
the last day of such Remaining Eurodollar Period.
(b) The Borrower shall also pay to the Lender all
administrative expenses and other costs suffered by the Lender as a result of
any of the events set forth in Section 2.14(a).
2.15. OPTION TO FUND.
The Lender has indicated that, if the Borrower elects to
borrow or convert to a Eurodollar Advance, the Lender may wish to purchase one
or more deposits in order to fund or maintain its funding of such Eurodollar
Advance during the Eurodollar Period in question; it being understood that the
provisions of this Agreement relating to such funding are included only for the
purpose of determining the rate of interest to be paid in respect of such
Eurodollar Advance and any amounts owing under Sections 2.13, 2.14 and 2.16. The
Lender shall be entitled to fund and maintain its funding of all or any part of
each Eurodollar Advance made by it in any manner it sees fit, but all
determinations under Sections 2.13, 2.14 and 2.16 shall be made as if the Lender
had actually funded and maintained such Eurodollar Advance during the applicable
Eurodollar Period through the purchase of deposits in an amount equal to such
Eurodollar Advance and having a maturity corresponding to such Eurodollar
Period. The obligations of the Borrower under Sections 2.13, 2.14 and 2.16 shall
survive the termination of the Commitment and the payment of the Note and all
other amounts payable hereunder.
2.16. CAPITAL ADEQUACY.
If the amount of capital required or expected to be maintained
by the Lender, or any Control Person with respect to the Lender, shall be
affected by
(a) the introduction or phasing in of any law, rule or
regulation after the date hereof,
(b) any change after the date hereof in the interpretation of
any existing law, rule or regulation by any central bank
or United States or foreign governmental body charged
with the administration thereof, or
(c) compliance by the Lender or such Control Person with any
directive, guideline or request from any central bank or
United States or
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foreign governmental body (whether or not having the
force of law) promulgated or made after the date hereof,
and the Lender shall have determined that such introduction, phasing in, change
or compliance shall have had or will thereafter have the effect of reducing (i)
the rate of return on the Lender's or such Control Person's capital, or (ii) the
asset value to the Lender or such Control Person of the Loans made or maintained
by the Lender, in either case to a level below that which the Lender or such
Control Person could have achieved or would thereafter be able to achieve but
for such introduction, phasing in, change or compliance (after taking into
account the Lender's or such Control Person's policies regarding capital), then,
within ten days after demand by the Lender, the Borrower shall pay to the Lender
or such Control Person such additional amount or amounts as shall be sufficient
to compensate the Lender or such Control Person, as the case may be, for such
reduction. A certificate as to such amount submitted to the Borrower by the
Lender setting forth the determination of such amount shall be conclusive absent
manifest error.
2.17. TRANSACTION RECORD.
The Lender has established a transaction record (the
"TRANSACTION RECORD") with respect to this Agreement. The Transaction Record
sets forth the Lender's Loans, their character from time to time as Eurodollar
Advances, each payment by the Borrower of principal and interest on the Lender's
Advances and certain additional information. The Transaction Record shall be
presumptively correct absent manifest error as to the amount of the Lender's
Advances and as to the amount of principal and interest paid by the Borrower in
respect of such Advances and as to the other information relating to the
Advances and amounts paid and payable by the Borrower hereunder and under the
Note set forth in such Transaction Record.
Section 3. NON-USAGE FEE.
The Borrower agrees to pay to the Lender a fee (the "NON-USAGE
FEE"), during the Commitment Period, equal to 0.15% per annum on the excess of
(a) the Commitment over (b) the average daily sum of the outstanding principal
balance of the Loans. The Non-Usage Fee shall be payable monthly in arrears for
each calendar month, or part thereof, occurring during the Commitment Period.
The Non-Usage Fee shall be paid on the fifth Business Day of each month
following the calendar month, or part thereof, in which such Non-Usage Fee
accrued, commencing on the first such day following the Effective Date, and
ending on the fifth Business Day of the month following the Commitment
Expiration Date. The Non-Usage Fee shall be calculated on the basis of a 360-day
year for the actual number of days elapsed.
Section 4. CONDITIONS PRECEDENT.
The obligation of the Lender to make a Loan is subject, at the
time of the Credit Event with respect thereto (except as hereinafter indicated),
to the satisfaction of the following conditions:
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4.1. NOTE; CREDIT DOCUMENTS.
(a) On the Effective Date, the Borrower shall have delivered
to the Lender the duly executed Note, bearing the appropriate insertions therein
as to date and amount, and the other Credit Documents.
(b) After the Pledge Request Date, the Borrower shall have
delivered to the Lender prior to the next succeeding Credit Event a duly
executed Successor Security Agreement.
4.2. NO DEFAULT; REPRESENTATIONS AND WARRANTIES.
At the time of each Credit Event and immediately after giving
effect thereto (i) no Default or Event of Default shall or would have occurred
and be continuing, and (ii) all representations and warranties contained herein
and in the other Credit Documents shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made both at the time of such Credit Event and immediately after giving
effect thereto.
4.3. BORROWING REQUEST.
Prior to each Credit Event, the Lender shall have received a
Borrowing Request with respect thereto, together with a Borrowing Base
Certificate, meeting the requirements of Section 2.3.
4.4. OPINIONS OF COUNSEL.
On the Effective Date, the Lender shall have received from the
Borrower's counsel (who shall be reasonably satisfactory to the Lender) an
opinion addressed to the Lender and dated as of the Effective Date covering the
matters set forth in EXHIBIT G.
4.5. SUBSEQUENT LEGAL OPINIONS.
If the Lender reasonably believes that any legal matter could
reasonably be expected to have had, or could reasonably be expected to have, a
Material Adverse Effect or a material adverse effect on the transactions
contemplated hereby or on the Lender or any of its respective rights or remedies
under the Credit Documents, then, prior to each Credit Event and if reasonably
requested by the Lender, the Lender shall have received from the Borrower's
counsel (who shall be reasonably satisfactory to the Lender an opinion in form
and substance reasonably satisfactory to the Lender, addressed to the Lender and
dated the date of such Credit Event, covering such matters of law.
4.6. CORPORATE DOCUMENTS; PROCEEDINGS.
(a) On the Effective Date, the Lender shall have received a
certificate, dated as of the Effective Date, signed by an Executive Officer of
the Borrower, and attested to by the Secretary or any Assistant Secretary of the
Borrower, substantially in the form of EXHIBIT H, with appropriate insertions,
together with copies of (i) the Articles of Incorporation and By-Laws of the
Borrower and (ii) the resolutions of the Board of Directors of the Borrower
referred to in such certificate.
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(b) Prior to or simultaneously with each Credit Event, all
corporate and legal proceedings and all instruments and agreements required by
the terms of the Credit Documents or reasonably necessary in connection with the
transactions contemplated by this Agreement and the other Credit Documents shall
be reasonably satisfactory in form and substance to the Lender, and the Lender
shall have received all information and copies of all documents and papers,
including records of corporate proceedings which the Lender reasonably may have
requested in connection therewith, such documents and papers where appropriate
to be certified by proper corporate bodies.
4.7. MANDATORY PREPAYMENT.
After giving effect to the proposed Loan, no prepayment would
be required pursuant to Section 2.5(b).
4.8. FINANCING STATEMENTS; OTHER DOCUMENTS.
(a) On the Effective Date, the Lender shall have received:
(i) Financing Statements in form for
filing in each jurisdiction as may be
necessary or, in the opinion of the Lender,
desirable to perfect the security interests
created by the Current Security Agreement,
duly executed by the Borrower;
(ii) evidence of the completion of all
other recordings and filings as may be
necessary or, in the opinion of the Lender,
desirable to perfect the security interests
created by the Current Security Agreement;
and
(iii) evidence that all other actions
necessary or, in the opinion of the Lender,
desirable to perfect and protect the
security interests created by the Current
Security Agreement have been taken.
(b) After a Pledge Request Date, the Lender shall have
received prior to the next succeeding Credit Event:
(i) Financing Statements in form for
filing in each jurisdiction as may be
necessary in the opinion of the Lender to
perfect the security interests created by
the Successor Security Agreement, duly
executed by the Borrower;
(ii) the documents and opinions
required under Section 8.2(a);
(iii) evidence of the completion of all
other recordings and filings as may be
necessary or, in the opinion of the Lender,
desirable to perfect the security interests
created by the Successor Security Agreement;
and
(iv) evidence that all other actions
necessary or, in the opinion of the Lender,
desirable to perfect and protect the
security interests created by the Successor
Security Agreement have been taken.
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<PAGE>
4.9. NO ADVERSE CHANGE.
As of the date of each Credit Event, no Material Adverse
Change shall have occurred since the date of the Registration Statement or the
ERISA Test Date.
4.10. FEES AND EXPENSES.
Prior to or simultaneously with each Credit Event, the
Borrower shall have paid to the Lender all fees and expenses then due and
payable.
4.11. NO LITIGATION.
On and as of the date of each Credit Event, there shall be no
judgment, order, injunction or other restraint which shall prohibit or impose,
and no litigation pending or threatened against or affecting the Borrower or its
Subsidiaries which would prohibit or result in the imposition of adverse
conditions upon the secured financing contemplated hereby, or otherwise have a
Material Adverse Effect.
Section 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to induce the Lender to enter into this Agreement and to make
the Loans, the Borrower makes the following representations, warranties and
agreements:
5.1. CORPORATE STATUS.
The Borrower (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the power and authority to own its property and assets
and to transact the business in which it is engaged and (iii) is duly qualified
as a foreign corporation and in good standing in each jurisdiction where the
ownership, leasing or operation of its property or the conduct of its business
requires such qualification.
5.2. CORPORATE POWER AND AUTHORITY.
The Borrower has the corporate power to execute, deliver and
perform the terms and provisions of the Credit Documents to which it is a party
and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of each such Credit Document. The Borrower has
duly executed and delivered each of the Credit Documents to which it is a party,
and each of such Credit Documents constitutes its legal, valid and binding
obligations enforceable in accordance with its terms, provided that, (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
5.3. NO VIOLATION.
Neither the execution, delivery or performance by the Borrower
of the Credit Documents to which it is a party, nor compliance by it with the
terms and provisions thereof (i) will contravene any provision of any law,
statute, rule or regulation or
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<PAGE>
any order, writ, injunction or decree of any governmental body, (ii) will
conflict or be inconsistent with or result in any breach of any of the material
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (other than a Lien permitted pursuant to Section 7.3) upon any of the
property or assets of the Borrower pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement, loan agreement or any other
agreement, contract or instrument to which the Borrower is a party or by which
it or any of its property or assets is bound or to which it may be subject or
(iii) will violate any provision of the Articles of Incorporation or By-Laws of
the Borrower.
5.4. GOVERNMENTAL APPROVALS.
No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have been
obtained or made prior to the Effective Date), or exemption by, any governmental
body is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of any Credit Document by the Borrower, or
(ii) the legality, validity, binding effect or enforceability of any Credit
Document.
5.5. FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES, ETC.
(a) The Borrower has heretofore delivered to the Lender copies
of its audited consolidated and consolidating Balance Sheet of the Borrower and
its Subsidiaries for its fiscal year ending November 30, 1996 and the related
consolidated Statements of Operations, Retained Earnings and Cash Flows for the
period then ended, and its financial statements for its fiscal quarter ending
May 31, 1997, and all such financial statements fairly present the consolidated
financial condition and results of the operations of the Borrower and its
Subsidiaries as of the dates and for the periods indicated therein and have been
prepared in conformity with GAAP.
(b) The Borrower has heretofore delivered to the Lender the
consolidated Balance Sheet of the Guarantor and its Subsidiaries as of November
30, 1996 and the six-month period ending May 31 1997 and the related combined
Statements of Operations, Retained Earnings and Cash Flows for the periods then
ended, all in the form as set forth in the Registration Statement (the "LNR
FINANCIAL STATEMENTS"). The LNR Financial Statements have been prepared to
reflect the Guarantor and its Subsidiaries as a separate combined group for such
period, and have been extracted from the financial statements of Lennar using
Lennar's historical results of operations and historical cost basis of its
assets and liabilities which are used in the businesses being operated by the
Guarantor and its Subsidiaries. The LNR Financial Statements fairly present the
financial condition and results of the operations of the Guarantor and its
Subsidiaries as of the dates and for the periods indicated therein and have been
prepared in conformity with GAAP. Since the date of delivery of the LNR
Financial Statements, no event has occurred which has had or could reasonably be
expected to have, a Material Adverse Effect.
(c) Except as fully reflected in the financial statements
referred to in Section 5.5(a) or in SCHEDULE 5.5, as of the Effective Date there
are no liabilities or obligations with respect to the Borrower of any nature
whatsoever (whether absolute, accrued,
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contingent or otherwise and whether or not due) which, either individually or in
aggregate, are material to the Borrower. Except as set forth in Schedule 5.5, as
of the Effective Date the Borrower knows of no basis for the assertion against
the Borrower of any liability or obligation of any nature whatsoever that is not
fully reflected in the financial statements referred to in Section 5.5(a) which,
either individually or in the aggregate, could have a Material Adverse Effect.
5.6. LITIGATION.
Except as set forth on SCHEDULE 5.6, on and as of the date of
this Agreement,
(a) there are no actions, suits or proceedings (whether or not
purportedly on behalf of the Borrower or any of its Subsidiaries) pending or, to
the best knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries. There are no actions, suits or proceedings pending or, to the
best knowledge of the Borrower, threatened (i) with respect to any Credit
Document or (ii) that are reasonably likely to have a Material Adverse Effect,
and
(b) to the best knowledge of the Borrower, there are no
actions, suits or proceedings (whether or not purportedly on behalf of the
Guarantor or any of its Subsidiaries) pending or threatened against the
Guarantor or any of its Subsidiaries (i) with respect to the Guaranty, or (ii)
that are reasonably likely to have a Material Adverse Effect.
5.7. TRUE AND COMPLETE DISCLOSURE.
All factual information (taken as a whole) heretofore or
contemporaneously furnished by or on behalf of the Borrower to the Lender
(including without limitation all information contained in the Credit Documents)
for purposes of or in connection with this Agreement or any transaction
contemplated herein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of the Borrower to the Lender will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.
5.8. USE OF PROCEEDS; MARGIN REGULATIONS.
No part of the proceeds of any Loan will be used by the
Borrower to purchase or carry any Margin Stock or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock. The use of the proceeds
thereof will not violate or be inconsistent with the provisions of Regulation G,
T, U or X of the Board of Governors of the Federal Reserve System.
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5.9. TAX RETURNS AND PAYMENTS.
The Borrower and each of its Subsidiaries has filed all tax
returns required to be filed by it and has paid all income taxes payable by it
which have become due pursuant to such tax returns and all other taxes and
assessments payable by it which have become due, other than those not yet
delinquent and except for those contested in good faith and for which adequate
reserves have been established. The Borrower and each of its Subsidiaries hereof
has paid, or has provided adequate reserves (in the good faith judgment of the
management of the Borrower and such Subsidiaries, as the case may be) for the
payment of, all federal and state income taxes applicable for all prior fiscal
years and for the current fiscal year to the date hereof.
5.10. ERISA.
Each Employee Benefit Plan of the Borrower and any ERISA
Affiliate is in compliance with ERISA and the Code, where applicable, in all
material respects. As of November 30, 1995, (the "ERISA TEST DATE"), (i) the
amount of all Unfunded Pension Liabilities under the Pension Plans, excluding
any plan which is a Multiemployer Plan, does not exceed $1, and (ii) the amount
of the aggregate Unrecognized Retiree Welfare Liability under all applicable
Employee Benefit Plans does not exceed $500,000. There is no Multiemployer Plan.
The Borrower and/or any ERISA Affiliate has, as of the date hereof, made all
contributions or payments to or under each such Pension Plan required by law or
the terms of such Pension Plan or any contract or agreement. No material
liability to the PBGC has been, or is expected by the Borrower or any ERISA
Affiliate to be, incurred by the Borrower or any ERISA Affiliate. Liability, as
referred to in this Section 5.10, includes any joint and several liability. Each
Employee Benefit Plan which is a group health plan within the meaning of Section
5000(b)(1) of the Code is in material compliance with the continuation of health
care coverage requirements of Section 4980B of the Code.
5.11. SUBSIDIARIES.
Set forth on Schedule 5.11 is an accurate and complete list of
all Subsidiaries of the Borrower on the Effective Date, together with a
description of the business of each such Subsidiary.
5.12. COMPLIANCE WITH STATUTES, ETC.
The Borrower and each of its Subsidiaries is in compliance
with all applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies in respect of the conduct of
its business and the ownership of its property, except such noncompliance as
would not, in the aggregate, have a Material Adverse Effect.
5.13. INVESTMENT COMPANY ACT.
Neither the Borrower nor any of its Subsidiaries is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
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5.14. PUBLIC UTILITY HOLDING COMPANY ACT.
Neither the Borrower nor any of its Subsidiaries is a "holding
company," or a "subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
5.15. LABOR RELATIONS.
Neither the Borrower nor any of its Subsidiaries is engaged in
any unfair labor practice that could have a Material Adverse Effect. There is
(i) no significant unfair labor claim or action pending against the Borrower or
any of its Subsidiaries or, to the best knowledge of the Borrower, threatened
against it or any such Subsidiary, before the National Labor Relations Board,
and no significant grievance or significant arbitration proceeding arising out
of or under any collective bargaining agreement is so pending against the
Borrower or any of its Subsidiaries, to the best knowledge of the Borrower,
threatened against it, (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Borrower or any of its Subsidiaries, or, to the
best knowledge of the Borrower, threatened against it or any such Subsidiary,
(iii) to the best knowledge of the Borrower, no union representation question
existing with respect to the employees of the Borrower or any of its
Subsidiaries and, to the best of its knowledge, no union organizing is taking
place, except (with respect to any matter specified in clause (i), (ii) or (iii)
above, either individually or in the aggregate) such as could not have a
Material Adverse Effect.
5.16. NO BURDENSOME AGREEMENTS.
Neither the Borrower nor any of its Subsidiaries is a party to
any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or restriction which by its terms would
have a Material Adverse Effect or a material adverse effect on the ability of
the Borrower to carry out its obligations under the Credit Documents.
5.17. PROPERTY.
(a) The Borrower and its Subsidiaries have good and marketable
title to all of their Property, title to which is material to the Borrower or
such Subsidiary, subject to no Liens, except for Liens permitted under Section
7.3.
(b) All of the tangible property of the Borrower which is
necessary for the operation of its business is in substantially good repair and
operating condition and is and will be in compliance in all material respects
with all material requirements of law.
5.18. Security Interests
The Credit Documents are effective to create in favor of the
Lender a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof, and, (a) after financing statements in
appropriate form are filed in the appropriate offices with respect to Collateral
and (b) after taking possession of any Mortgage Notes and Securities included in
the Collateral, by the Lender and assuming the continued possession thereof by
the Lender, the security interest granted under the Security Agreements
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shall at all times constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Borrower in such Collateral and the
proceeds thereof, in each case prior and superior in right to any other Person.
5.19. PRINCIPAL PLACES OF BUSINESS.
The principal place of business of the Borrower is 760 N.W.
107th Avenue, First Floor, Miami, Florida 33172.
5.20. ENVIRONMENTAL MATTERS.
(a) The Borrower and each of its Subsidiaries is in compliance
in all material respects with the requirements of all applicable Environmental
Laws.
(b) To the best of the Borrower's knowledge and belief, no
Hazardous Substances are present upon the Borrower's Real Property in violation
of any Environmental Law and the Borrower has not received any notice to the
effect that any of its Real Property, or any of the its operations, is not in
compliance with any Environmental Law or that any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Substance into the environment is pending which, in either case, could
be reasonably expected to have a Material Adverse Effect.
(c) No Real Property of the Borrower is located in an area
identified by the Secretary of Housing and Urban Development as an area having
special flood hazards unless the same is covered by flood insurance.
5.21. GUARANTOR.
(a) FORMATION; CONTRIBUTIONS. The Guarantor was formed by
Lennar in June of 1997. Lennar will distribute to the Guarantor the Lennar
Subsidiaries which have been engaged in its real estate investment and
management business, as well as some assets of other Subsidiaries which were
used in that business and certain other assets, all as more particularly set
forth in the Registration Statement prior to December 1, 1997. As of the
Effective Date, the consolidated net worth of the Guarantor and its Subsidiaries
will be not less than $500,000,000.
(b) DISTRIBUTION. The shares of the Guarantor will be
distributed to the shareholders of Lennar prior to December 1, 1997. Such
distribution will be made in a manner consistent with the description thereof
set forth in the Registration Statement.
Section 6. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that on and after the
Effective Date and until the Commitment shall have been terminated and the Loans
and the Note, together with interest, fees and all other obligations incurred
hereunder and under all Credit Documents, are paid in full:
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6.1. INFORMATION.
The Borrower will furnish to the Lender:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in
any event within 120 days after the end of each fiscal year of the Borrower, (i)
a copy of its unaudited consolidated Balance Sheet as at the end of such fiscal
year, together with the related consolidated Statements of Operations, Retained
Earnings and Cash Flows, in each case as of and through the end of such fiscal
year, setting forth in each case in comparative form the figures for the
preceding fiscal year all in reasonable detail, prepared in accordance with GAAP
and certified as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer of the Borrower and
(ii) if requested by the Lender, the unaudited consolidating Balance Sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year, together
with the related consolidating Statement of Operations as of and through the end
of such fiscal year, setting forth in each case in comparative form the figures
for the preceding fiscal year and all in reasonable detail.
(b) PERIODIC FINANCIAL STATEMENTS.
(i) As soon as available, and in any event within 60 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, a copy of (x) the Borrower's unaudited consolidated Balance Sheet as
of the end of such quarter, and (y) the related unaudited consolidated
Statements of Operations, Retained Earnings and Cash Flows for such quarter and
for the period from the beginning of the then current fiscal year of the
Borrower to the end of such quarter and for the comparable periods in the
preceding fiscal year, all in reasonable detail, prepared in accordance with
GAAP and certified as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer of the Borrower.
(ii) As soon as available, and in any event within 30 days
after the end of each calendar month, a copy of (x) the Borrower's consolidated
Balance Sheets as of the end of such month and (y) the related consolidated
Statements of Operations and Retained Earnings for such month and for the period
from the beginning of the then current fiscal year of the Borrower to the end of
such month and for the comparable periods in the preceding fiscal year, all in
reasonable detail, prepared in accordance with GAAP (except as otherwise
disclosed thereon and in any event without footnotes and subject to year-end
adjustments) throughout the periods involved.
(iii) Within five Business Days after the end of each
calender month occurring after the Effective Date, a Borrowing Base Certificate
in the form of EXHIBIT A showing the status and Collateral Value of each
Eligible Asset, and the availability to the Borrower of further Loans, all
calculated as of 5:00 P.M. on said last day of the month, provided that if said
last day of the month is not a Business Day, then such calculation shall be as
of the Business Day immediately preceding said day.
(c) MANAGEMENT LETTERS. Promptly after receipt by the Borrower
thereof, a copy of any "management letter" received by it from its certified
public accountants detailing any "material weaknesses in internal control" noted
by such accountants (as defined by FASB).
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(d) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 7.1(a) and (b), a certificate of
the chief financial officer of the Borrower to the effect that, to the best of
his knowledge, no Default or Event of Default has occurred and is continuing or,
if any Default or Event of Default has occurred and is continuing, specifying
the nature and extent thereof and any actions taken or proposed to be taken with
respect to any such Default or Event of Default, which certificate for the
Borrower shall also set forth the calculations required to establish whether
Borrower was in compliance with the provisions of Sections 7.1, 7.2 and 7.10,
inclusive, at the end of such quarterly accounting period or such fiscal year,
as the case may be.
(e) NOTICES. Promptly, notice of (i) the occurrence of any
event which constitutes a Default or Event of Default, detailing the nature of
such Default or Event of Default and any actions taken or proposed to be taken
with respect to such Default or Event of Default, (ii) the commencement of any
action, suit or proceeding before any court, arbitrator or governmental body
which (A) could result in liability or loss of $1,000,000 or more in the
aggregate, in excess of any applicable insurance coverage, to the Borrower or
any of its Subsidiaries or (B) would otherwise have a Material Adverse Effect,
(iii) with respect to the Borrower, any change in any Executive Officer, (iv)
any threatened loss of any authorization, qualification, license or permit
issued by any governmental body to the Borrower the loss of which could have a
Material Adverse Effect, (v) any written correspondence or notification from any
governmental body, which revokes or threatens to revoke, limits or threatens to
limit, or imposes or threatens to impose any material restrictions on, any
approvals or authorizations granted by such governmental body to either of the
Borrower or any of its Subsidiaries, together with a copy thereof, or (vi) any
violation of any requirements or guidelines established by any governmental
body, which might have a material adverse effect on the status of the Borrower
or any of its Subsidiaries thereof as a lender, seller or servicer approved by
such governmental body.
(f) PREPAYMENTS; MODIFICATION. Prior written notice of any (i)
voluntary or optional payment or prepayment on or redemption or acquisition for
value of any Funded Indebtedness providing for repayment in installments or (ii)
amendment or modification of any provision affecting the term, principal amount,
applicable interest rate, financial covenants or collateral securing any
obligations of the Borrower under any Funded Indebtedness or any agreement
(including, without limitation, any purchase agreement, indenture, loan
agreement or security agreement) otherwise relating to any of the foregoing.
(g) LENDER REQUESTED INFORMATION. Promptly, such additional
financial and other information, including without limitation, financial
statements of the Borrower or any of its Subsidiaries, and information regarding
the Collateral as the Lender may from time to time reasonably request.
(h) ENVIRONMENTAL PROCEEDINGS. Prompt written notice of any
order, notice, claim or proceeding received by, or brought against, the Borrower
or any of its Subsidiaries, or with respect to any of the Real Property, under
any Environmental Law.
(i) EMPLOYEE BENEFIT PLAN INFORMATION. Prompt written notice in the event that
the Borrower or any ERISA Affiliate knows, or has reason to know, that (i) any
ERISA Termination Event with respect to a Pension Plan has occurred or will
occur, (ii)
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any condition exists with respect to a Pension Plan which presents a material
risk of termination of the Pension Plan, imposition of an excise tax,
requirement to provide security to or in respect of the Pension Plan or other
liability of the Borrower or any ERISA Affiliate, (iii) the Borrower or any
ERISA Affiliate has applied for a waiver of the minimum funding standard under
Section 412 of the Code with respect to a Pension Plan, (iv) the aggregate
amount of the Unfunded Pension Liabilities under all Pension Plans has increased
to an amount in excess of $1, (v) the aggregate amount of Unrecognized Retiree
Welfare Liability under all applicable Employee Benefit Plans has increased to
an amount in excess of $500,000, (vi) the Borrower or any ERISA Affiliate has
engaged in a Prohibited Transaction with respect to an Employee Benefit Plan,
(vii) a tax under Section 4980B(a) of the Code shall have been imposed upon the
Borrower or any ERISA Affiliate, (viii) the Secretary of Labor shall have
assessed a civil penalty under Section 502(c) of ERISA against the Borrower or
any ERISA Affiliate, or (ix) there is an action brought against the Borrower or
any ERISA Affiliate under ERISA Section 502 with respect to its failure to
comply with ERISA Section 515, together with a certificate of the president or
chief financial officer of the Borrower setting forth the details of such event
and the action which the Borrower or any ERISA Affiliate proposes to take with
respect thereto, together with a copy of all notices and filings with respect
thereto.
(j) EMPLOYEE BENEFIT PLAN LIABILITY. Prompt written notice in
the event that the Borrower or any ERISA Affiliate shall receive a demand letter
from the PBGC notifying the Borrower or any ERISA Affiliate of any final
decision finding liability and the date by which such liability must be paid,
together with a copy of such letter and a certificate of the president or chief
financial officer of the Borrower setting forth the action which the Borrower or
any ERISA Affiliate proposes to take with respect thereto.
(k) PENSION PLAN AMENDMENTS. Promptly upon the same becoming
available, and in any event by the date such amendment is adopted, a copy of any
Pension Plan amendment that the Borrower or any ERISA Affiliate proposes to
adopt which would require the posting of security under Section 401(a)(29) of
the Code, together with a certificate of the president or chief financial
officer of the Borrower setting forth the reasons for the adoption of such
amendment and the action which the Borrower or any ERISA Affiliate proposes to
take with respect thereto.
(l) PENSION PAYMENT DEFAULT. As soon as possible and in any
event by the 10th day after any required installment or other payment under
Section 412 of the Code owed to a Pension Plan shall have become due and owing
and remains unpaid a copy of the notice of failure to make required
contributions provided to the PBGC by the Borrower or any ERISA Affiliate under
Section 412(n) of the Code, together with a certificate of the president or
chief financial officer setting forth the action which the Borrower or any ERISA
Affiliate proposes to take with respect thereto.
(m) PENSION PLAN TERMINATION. If the termination of any
Pension Plan would result in the imposition of any tax under Section 4980 of the
Code, then as soon as possible, but in no event less than 60 days before the due
date of the tax, a certificate of the president or chief financial officer of
the Borrower setting forth the estimated amount of the tax, any reversion, and
the proposed use of the reversion. This subparagraph shall apply to a
transaction notwithstanding a reduction or complete elimination of the tax
because of the operation of either Sections 4980(d) or 420(a)(3)(A) of the Code.
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(n) NOTICE OF INDEBTEDNESS. Prior written notice of any
Indebtedness it intends to incur in an amount (either singly or in the
aggregate) over $5,000,000.
(o) OTHER INFORMATION. Promptly, from time to time, copies of
any notices or information given to or received from the holders of any
Indebtedness of the Borrower relating to any actual or alleged default, demand
for payment or acceleration of payment, and such other information or documents
(financial or otherwise) as the Lender may reasonably request.
6.2. BOOKS, RECORDS AND INSPECTIONS.
The Borrower will, and will cause each of its Subsidiaries to,
keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all requirements of law shall be made of all
dealings and transactions in relation to its business and activities. The
Borrower will, and will cause each of its Subsidiaries to, permit officers and
designated representatives of the Lender to visit and inspect, under guidance of
officers of the Borrower or such Subsidiary, any of the properties of the
Borrower or such Subsidiary, and to examine the books of record and accounts of
the Borrower or its Subsidiaries and discuss the affairs, finances, accounts and
prospects of the Borrower or its Subsidiaries with, and be advised as to the
same by, its and their officers, all at such reasonable times and intervals and
to such reasonable extent as the Lender may request.
6.3. MAINTENANCE OF PROPERTY, INSURANCE.
SCHEDULE 6.3 sets forth a true listing of the insurance
policies in which the coverage amount is in excess of $1,000,000 maintained by
the Borrower and its Subsidiaries as of the Effective Date. The Borrower will,
and will cause each of its Subsidiaries to, (i) keep all property necessary for
the operation of its business in good working order and condition, (ii) except
as otherwise provided in clause (iii) below, maintain with financially sound and
reputable insurance companies insurance (including such insurance as the Lender
shall reasonably require) in such amounts and against such risks as are usually
carried by corporations engaged in similar businesses similarly situated, and
(iii) furnish to the Lender, upon written request, full information as to the
insurance carried.
6.4. CORPORATE FRANCHISES.
The Borrower will, and will cause each of its Subsidiaries to,
do or cause to be done all things necessary to preserve and keep in full force
and effect (i) their corporate existence in good standing in the state of its
incorporation and in each other state in which it is required to be qualified to
do business as a foreign corporation and (ii) all of their material rights,
franchises, qualifications, licenses, permits, copyrights, trademarks and
patents.
6.5. COMPLIANCE WITH STATUTES, ETC.
(a) The Borrower will, and will cause each of its Subsidiaries
to, comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies in respect of the
conduct of its business and the ownership of its property (including, without
limitation, Environmental Laws), except
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such non-compliances as could not, in the aggregate, have a Material Adverse
Effect or a material adverse effect on the Collateral or the Borrowing Base.
(b) In the event that the Lender shall have a reasonable basis
for believing that any Hazardous Substance may be on, at, under or around any
Real Property of the Borrower in violation of any applicable Environmental Law
and that such violation might reasonably be expected to have a Material Adverse
Effect, the Borrower will conduct and complete (at the Borrower's expense) all
investigations, studies, samplings and testings relative to such Real Property
and such Hazardous Substances as the Lender may reasonably request.
6.6. PERFORMANCE OF OBLIGATIONS.
The Borrower will, and will cause each of its Subsidiaries to,
perform all of its obligations under the terms of each mortgage, indenture,
security agreement, debt instrument or other contract or agreement by which it
is bound, except such non-performances as could not in the aggregate, have a
Material Adverse Effect or a material adverse effect on the Collateral or the
Borrowing Base.
6.7. PAYMENT OF TAXES.
The Borrower will pay and discharge, and will cause each of
its Subsidiaries to pay and discharge all taxes, assessments and governmental
charges or liens imposed upon the Borrower or any of its Subsidiaries or upon
the Borrower's or any such Subsidiary's income or profits, or upon any
properties belonging to the Borrower, or any of its Subsidiaries thereof prior
to the date on which the same become due, and all lawful claims, which, if
unpaid, might become a Lien or charge upon any properties of the Borrower or of
such Subsidiary, provided that neither of the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim for which it has obtained an adequate bond or adequate insurance and which
is being contested in good faith and by appropriate proceedings so long as such
contest shall operate to stay any Material Adverse Effect caused by such Lien or
charge.
6.8. CORPORATE SEPARATENESS.
The Borrower will, and will cause each of its Subsidiaries to
take such actions as are necessary to keep its operations and the operations of
each of its Subsidiaries separate and apart, including, without limitation,
insuring that all customary formalities regarding the corporate existence of the
Borrower and each of its Subsidiaries, including holding regular meetings and
maintenance of its current minute books, are followed.
6.9. EXISTING CREDIT AGREEMENT.
On the Effective Date, the Borrower shall pay in full all
amounts outstanding under the Existing Credit Agreement in accordance with the
terms thereof, whereupon the Existing Credit Agreement shall be deemed
terminated and the parties thereto shall have no further obligations thereunder
(except for the rights of the Lender thereunder to be reimbursed for costs and
expenses relating to, and to be indemnified with respect to, matters
attributable to events, acts or conditions occurring prior to the Effective
Date, to the extent provided for in the Existing Credit Agreement).
Notwithstanding the foregoing,
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from and after the Effective Date Lennar shall no have no further obligations
under its Guaranty (as defined in the Existing Credit Agreement).
Section 7. BORROWER'S NEGATIVE COVENANTS.
The Borrower covenants and agrees that on and after the Effective Date
and until the Commitment shall have been terminated and the Loans and the Note,
together with interest, fees and all other obligations incurred hereunder and
under all Credit Documents, are paid in full:
7.1. ADJUSTED NET WORTH.
The Borrower will not permit its Adjusted Net Worth on any
date to be less than the sum of (i) the greater of (A) $60,000,000 or (B) 90% of
the Borrower's Adjusted Net Worth on the Effective Date, plus (ii) 50% of all
net income (determined in accordance with GAAP) of the Borrower after the
Effective Date, plus (iii) 90% of all capital contributions made to the Borrower
after the Effective Date.
7.2. RATIO OF LIABILITIES TO ADJUSTED NET WORTH.
The Borrower will not on any date permit the ratio of (i) the
Liabilities of the Borrower, on a consolidated basis, on such date to (ii) the
Borrower's Adjusted Net Worth on such date, to be more than 5:1.
7.3. LIENS.
(a) LIENS ON THE COLLATERAL; LIENS ON THE ELIGIBLE ASSETS. The
Borrower will not create, incur, assume or suffer to exist any Lien upon or with
respect to any Collateral or the Eligible Assets other than Liens thereon
arising under the Security Agreements.
(b) OTHER LIENS. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any other property or assets (real or personal, tangible
or intangible) of the Borrower or its Subsidiaries, whether now owned or
hereafter acquired, provided, however, that the provisions of this Section 7.3
shall not prohibit the creation, incurrence, assumption or existence of the
following Liens on property other than the Collateral and the Eligible Assets:
(i) Liens on Mortgage Loans, mortgage-backed securities,
Mortgage Loan servicing rights and receivables securing Indebtedness
described in Section 7.6(b);
(ii) Liens incurred or deposits made in the ordinary course of
business to secure the performance of bids, sales, leases, statutory
obligations, surety, appeal and performance bonds, and other similar
obligations incurred in the ordinary course of business and not
incurred in connection with Funded Indebtedness or otherwise obtaining
credit;
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(iii) Liens on property of the Borrower arising under the
Security Agreements;
(iv) Liens for property taxes not delinquent;
(v) attachments and similar involuntary Liens provided that
such are discharged by bonding or otherwise within 30 days of their
creation; or
(vi) purchase money Liens on property hereafter acquired by
the Borrower created contemporaneously with such acquisition to secure
or provide for the payment or financing of all or any part of the
purchase price thereof, provided that the Lien secured thereby shall
attach only to the property so acquired.
7.4. CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
(a) The Borrower will not wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation, or convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any substantial part of its property or assets.
(b) Except as provided for herein, the Borrower will not
permit any of its other Subsidiaries to wind up, liquidate or dissolve its
affairs, or enter into any transaction of merger or consolidation, and the
Borrower will not, and will not permit any of such Subsidiaries to, convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any part of its property or assets, if any of the foregoing
could have a Material Adverse Effect or result in a material change in the scope
of the business as conducted by the Borrower or such Subsidiaries as of the date
of this Agreement.
7.5. DIVIDENDS.
The Borrower will not declare or pay any dividends or declare
or make any distribution in respect of its capital to its stockholders, or
authorize or make any other distribution, payment or delivery of property or
cash to its stockholders as such, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for a consideration, any shares of any class of
its capital stock now or hereafter outstanding (or any options or warrants
issued by the Borrower with respect to its capital stock), or set aside any
funds for any of the foregoing purposes, or permit any of its Subsidiaries to
purchase or otherwise acquire for a consideration any shares of any class of the
capital stock of the Borrower now or hereafter outstanding (or any options or
warrants issued by the Borrower with respect to its capital stock) if, after
giving effect to any of the foregoing, there shall occur an Event of Default.
7.6. INDEBTEDNESS.
The Borrower will not, nor will it permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness unless (a) such Indebtedness will appear on the financial
statements of the Borrower required to be delivered to the Lender pursuant to
Section 6.1, and (b) such Indebtedness does not create a Default under this
Agreement
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7.7. GUARANTIES.
The Borrower will not, nor will it permit any of its
Subsidiaries to, make or suffer to exist any Contingent Obligation or otherwise
assume, guarantee or in any way become contingently liable or responsible for
obligations of any other Person, whether by agreement to purchase those
obligations of any other Person, or by agreement for the furnishing of funds
through the purchase of goods, supplies or (whether by way of stock purchase,
capital contribution, advance or loan) for the purpose of paying or discharging
the obligations of any other Person.
7.8. ADVANCES, INVESTMENTS AND LOANS.
Without the prior written consent of the Lender, the Borrower
will not, and will not permit any of its Subsidiaries to, lend money or credit
or make advances to any Person, or purchase, acquire or hold any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person on an unsecured basis (collectively,
"INVESTMENTS"), except for:
(i) securities issued or guaranteed by the United States
Government, its agencies (including GNMA), or
government sponsored agencies (including FNMA and
FHLMC) and money market mutual funds that invest in any
of the foregoing, provided however that, the by-laws of
any such fund stipulate that its management seeks to
maintain a $1 redemption value per share, that any
securities acquired by the fund under a repurchase
agreement be segregated and held in custody for the
fund, and that otherwise the fund may only borrow for
temporary emergency purposes in amounts not to exceed
5% of the fund's total assets based on the lower of
cost or market value of the assets less liabilities at
the time the borrowing is made;
(ii) commercial paper which, at the time of a Borrower's
investment therein, or contractual commitment providing
for such investment, is rated at least P-1 by Moody's
Investors Service, Inc. and A-1 by Standard & Poor's
Corporation;
(iii) general obligations of any municipality, PROVIDED,
HOWEVER, that any such security is rated at least AA by
Standard and Poor's Corporation or the equivalent of
Aa2 by Moody's Investor Services, Inc., the amount
invested in any one issuer does not exceed $1,000,000,
and the term to maturity does not exceed twenty-four
(24) months;
(iv) negotiable certificates of deposit in any United States
bank, PROVIDED, HOWEVER, that any such certificate of
deposit has a term not to exceed one year and is issued
by a bank that is rated not less than "75" by IDC
Financial Publishing and not less than "C" by
Thompson's Bank Watch, and has GAAP capital of not less
than $250,000,000;
(v) Mortgage Loans of any type made by the Borrower to any
Person.
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(vi) Investments in partnership interests provided that the
sole purpose of the partnership which is the subject of
such Investment is to make or invest in mortgage loans.
(vii) Investments permitted by Section 7.13.
7.9. TRANSACTIONS WITH AFFILIATES.
The Borrower will not, and will not permit any or its
Subsidiaries to, enter into any transaction or series of related transactions,
whether or not in the ordinary course of business, with any Affiliate of either
of the Borrower, other than on terms and conditions substantially as favorable
to the Borrower or such Subsidiary as would be obtainable by the Borrower or
such Subsidiary at the time in a comparable arm's-length transaction with a
Person other than an Affiliate.
7.10. CAPITAL EXPENDITURES.
The Borrower will not, and will not permit any or its
Subsidiaries to, make any expenditure for fixed or capital assets in excess of
$2,000,000 in the aggregate per year (including, without limitation,
expenditures for maintenance and repairs which should be capitalized in
accordance with GAAP and including capitalized lease obligations).
7.11. MODIFICATIONS OF ARTICLES OF INCORPORATION, BY-LAWS AND
CERTAIN OTHER AGREEMENTS, ETC.
The Borrower will not (a) amend, modify or change its Articles
of Incorporation (including, without limitation, by the filing or modification
of any certificate of designation) or By-Laws, or any agreement entered into by
the Borrower with respect to its capital stock, or (b) enter into any new
agreement with respect to its capital stock, if in either case it would have an
adverse effect on the Lender.
7.12. CREATION OF SUBSIDIARIES.
The Borrower will not, and will not permit any of its
Subsidiaries to, create or acquire any Subsidiaries or issue any capital stock
(including by way of sales of treasury stock) or any options or warrant to
purchase, or securities convertible into, capital stock.
7.13. BUSINESS.
The Borrower will not, and will not permit any of its
Subsidiaries to (other than Lennar Communications Company, Inc.), engage
(directly or indirectly) in any business other than that which the Borrower or
its Subsidiaries, as the case may be, is engaged in as of the Effective Date.
7.14. USE OF PROCEEDS.
The proceeds of the Loans shall be used solely to acquire or
refinance assets which shall thereafter be eligible for inclusion in the
Borrowing Base.
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7.15. ERISA.
The Borrower shall not (a) (i) establish, contribute to, or
become liable (directly or indirectly) in respect of, any Multiemployer Plan, or
(ii) establish or contribute to, or permit any Subsidiary thereof so to do, to
any Pension Plan other than an Existing Pension Plan which would increase the
aggregate Unfunded Pension Liabilities under all Pension Plans to an amount in
excess of $1, (b) cause any Pension Plan, or permit any Subsidiary thereof so to
do, to have a Funded Current Liability Percentage of less than 60 percent, or
(c) increase benefits, or permit any Subsidiary thereof so to do, under any
Employee Benefit Plan or establish or contribute to any new Employee Benefit
Plan which would have the effect of increasing its aggregate Unrecognized
Retiree Welfare Liability to an amount in excess of $500,000.
Section 8. OTHER ELIGIBLE ASSETS; COLLATERAL.
8.1. SUBSTITUTIONS, ADDITIONS AND WITHDRAWALS OF ELIGIBLE
ASSETS.
(a) The Borrower may from time to time, provided there does
not then exist any uncured Default under this Agreement or the other Credit
Documents, and subject to the provisions of Section 8.1(e), on not less than 10
Business Days prior written notice to the Lender, request that other property of
a Borrower qualifying as an Eligible Asset under the definition of "Eligible
Assets" be either (i) substituted for an existing Eligible Asset, or (ii) added
to Schedule A and, in either case, become an Eligible Asset under this
Agreement. In the case of an addition or substitution of Eligible Assets, such
notice shall identify the proposed new Eligible Assets and, in the case of a
substitution, also identify the Eligible Assets which the Borrower is requesting
be withdrawn from Schedule A.
(b) With each notice of a requested substitution or addition
of other Eligible Assets, the Borrower shall deliver to the Lender copies of all
Mortgages, Mortgage Notes, Securities, partnership agreements and other
documents relating thereto, and thereafter such other relevant documents as the
Lender may require. The decision to permit any such addition or substitution
shall be made by the Lender in its sole discretion.
(c) In addition to the foregoing requirements any addition to
or substitution of Eligible Assets, is subject to the Borrower's compliance with
the provisions of Section 12 of the Current Security Agreement, and, if such
addition or substitution shall occur after a Pledge Request Date, the Borrower's
compliance with provisions of Section 11 of the Successor Security Agreement.
(d) The Borrower may from time to time, provided there does
not then exist any uncured Default under this Agreement or the other Credit
Documents, and subject to the provisions of Section 8.1(e), on not less than 5
Business Days prior written notice to the Lender, request that an existing
Eligible Asset be withdrawn from the Eligible Assets under this Agreement.
(e) Each notice described in Sections 8.1(a) or (d) shall be
accompanied by Borrowing Base Certificates which shall calculate the Borrowing
Base prior
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to, and after giving effect to, any such addition, substitution or withdrawal.
No substitution or withdrawal of Eligible Assets shall be permitted if, after
giving effect thereto, the Obligations outstanding as of the date of such
substitution or withdrawal would exceed the Borrowing Base on such date.
(f) If the Lender shall agree to any such addition,
substitution or withdrawal, the Lender shall evidence its agreement to such
addition, substitution or withdrawal by delivering a notice to the Borrower
confirming its agreement, and attaching thereto a new Schedule A. Such new
Schedule A shall thereupon supercede the Schedule A then in effect. With respect
to any Eligible Asset for which other property is substituted in accordance with
this Section 8, or which is withdrawn in accordance with this Section 8, the
Lender shall deliver such partial releases from the financing statements
previously delivered by the Borrower as may be necessary to effect the release
of such Eligible Assets therefrom.
8.2. COLLATERAL; SUCCESSOR SECURITY AGREEMENT.
(a) Upon the written request of the Lender (the "PLEDGE
REQUEST DATE") the Borrower shall pledge and assign to the Lender, and grant to
the Lender a first priority security interest in and to, all of the Eligible
Assets, as security for the payment and performance of all of the Obligations.
Such pledge, assignment and grant shall be pursuant to a Successor Security
Agreement in the form of EXHIBIT E hereto, which the Borrower shall execute and
deliver to the Lender within 5 days after the Pledge Request Date, together
with:
(i) the original recorded Mortgages included in the
Eligible Assets and assignments in favor of the Lender
(or any nominee of the Lender set forth in a notice to
the Borrower) of said Mortgages, in recordable form;
(ii) the original Mortgage Notes included in the Eligible
Assets and endorsements in favor of the Lender (or any
nominee of the Lender set forth in a notice to the
Borrower) of said Mortgage Notes;
(iii) assignments of any financing statements recorded with
respect to the Mortgage Loans included in the Eligible
Assets;
(iv) all title insurance polices, surveys, fire and casualty
policies, environmental audits and other documents in
the possession of either of the Borrower relating to
the Eligible Assets;
(v) all original partnership agreements, consents of
partners and other documentation relating to the
Assigned Partnership Interests (as such term is defined
in the Successor Security Agreement) which the Lender
deems necessary or appropriate to perfect its interest
in said Assigned Partnership Interests and to effect
any disposition of the Assigned Partnership Interests
permitted to the Lender under the Successor Security
Agreement;
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(vi) all original certificates representing the Securities
pledged to the Lender, together with stock powers
signed by the Borrower in blank in respect thereof or,
if the Securities are uncertificated, other appropriate
transfer thereof;
(vii) an opinion of counsel to the Borrower, dated the date
of execution of the Successor Security Agreement to the
effect that, subject to due compliance with the
recording and/or filing requirements of applicable law,
the Lender has a valid and perfected security interest
in the Collateral.
(b) The Collateral under and as defined in the Successor
Security Agreement shall be held by the Lender subject to the terms thereof.
Section 9. EVENTS OF DEFAULT.
The following shall each constitute an "EVENT OF DEFAULT" hereunder:
(a) Any principal amount of any Loan shall not be paid when
due and payable; or
(b) (i) Any interest on any Loan, the amount set forth on any
accrued interest statement delivered to the Borrower in accordance with Section
2.8(d) or the Non-Usage Fee shall not be paid when due and payable and shall
continue to remain unpaid for five Business Days, or (ii) all or any portion of
any other fee or other amount payable by any Borrower to the Lender under this
Agreement, any Credit Document or any other document executed and delivered in
connection therewith shall not be paid upon demand therefor and shall continue
to remain unpaid for three Business Days; or
(c) Any representation or warranty made or deemed made by the
Borrower, the Guarantor or any of their Subsidiaries (or any of their respective
officers) herein or in any Credit Document, or in any certificate, agreement,
instrument or statement contemplated by or made or delivered pursuant to or in
connection herewith or therewith, shall prove to have been incorrect in any
material respect when made; or
(d) If at any time (i) any representation or warranty made by
the Guarantor in the Guaranty or in any other document, statement or writing
shall be incorrect or misleading when made in any material respect; or (ii) the
Guarantor shall fail to comply with any covenant made by it in the Guaranty or
any default shall occur under the Guaranty; or (iii) the Guarantor shall revoke
or attempt to revoke, contest, commence any action or raise any defense against
its obligations under the Guaranty; or
(e) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 6.4, Section 7 or Section 8.2; or
(f) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained herein on its part to be performed or
observed and any such failure remains unremedied for 30 days after the Borrower
shall have obtained knowledge thereof; or
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(g) Any default shall occur under any Security Agreement and
such default shall continue beyond the grace period specified therein, if any;
or
(h) Either this Agreement, the Note or any other Credit
Document shall, at any time after its execution and delivery, for any reason
cease to be in full force and effect (unless such occurrence is in accordance
with its terms or after payment thereof) or shall be declared to be null and
void, or the validity or enforceability thereof shall be contested by the
Borrower or the Borrower shall deny that it has any further liability or
obligation thereunder; or
(i) The Borrower, the Guarantor or any of their Subsidiaries
shall be adjudicated bankrupt or insolvent, or admit in writing its inability to
pay its debts as they mature, or make an assignment for the benefit of
creditors; or the Borrower, the Guarantor or any of their Subsidiaries shall
fail generally to pay their debts as such debts become due and payable; or the
Borrower, the Guarantor or any of their Subsidiaries shall apply for or consent
to the appointment of any receiver, trustee, custodian or similar officer for it
or for all or any substantial part of its property; or such receiver, trustee,
custodian or similar officer shall be appointed without the application or
consent of the Borrower, the Guarantor or such Subsidiary, as the case may be,
and such appointment shall continue undischarged for a period of 45 days; or of
the Borrower, the Guarantor or any of their Subsidiaries shall institute (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application or otherwise)
against the Borrower, the Guarantor or any of their Subsidiaries and shall
remain undismissed for a period of 45 days; or any judgment, writ, warrant of
attachment or execution or similar process shall be issued or levied in respect
of an obligation (alleged or otherwise) of the Borrower, the Guarantor or any of
their Subsidiaries against (i) any of property of the Borrower, the Guarantor or
their Subsidiaries (other than the Collateral), and such obligation is in the
amount of $2,000,000 or more, or (ii) the Collateral, and in either case, such
judgment, writ or similar process shall not be released, vacated, stayed or
fully bonded within 45 days after its issue or levy; or
(j) An order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court having
jurisdiction (i) adjudging the Borrower, the Guarantor or any Subsidiary thereof
bankrupt or insolvent, (ii) approving as properly filed a petition seeking
reorganization, liquidation, arrangement, adjustment or composition of or in
respect of the Borrower, the Guarantor or any Subsidiary thereof under the
United States bankruptcy laws or any other applicable Federal or state law,
(iii) appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Borrower, the Guarantor or any
Subsidiary thereof or of any substantial part of the Property thereof, (iv)
ordering the winding up or liquidation of the affairs of the Borrower, the
Guarantor or any Subsidiary thereof and any such decree or order continues
unstayed and in effect for a period of 45 days; or
(k) Judgments or decrees against the Borrower, the Guarantor
or any Subsidiary thereof aggregating in excess of $2,000,000 shall remain
unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period
of 30 days; or
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(l) The Borrower, the Guarantor or any of their Subsidiaries
shall default in the payment when due of any principal of or interest on any of
its Indebtedness in excess of $2,000,000 in the aggregate and such default shall
continue beyond any applicable grace period therefor; or any event specified in
any note, agreement, indenture or other document evidencing or relating to any
such Indebtedness shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, such Indebtedness to become due, or to be prepaid in full,
prior to its stated maturity; or
(m) (i) any ERISA Termination Event shall occur, (ii) any
Accumulated Funding Deficiency, whether or not waived, shall exist with respect
to any Pension Plan, (iii) any Person shall engage in any Prohibited Transaction
involving any Employee Benefit Plan, (iv) the Borrower, the Guarantor or any
ERISA Affiliate thereof shall fail to pay when due an amount which is payable by
it to the PBGC or to a Pension Plan under Title IV of ERISA, (v) the imposition
upon the Borrower, the Guarantor or any ERISA Affiliate thereof of any tax under
Section 4980(B)(a) of the Code, (vi) the assessment by the Secretary of Labor of
a civil penalty against the Borrower, the Guarantor or any ERISA Affiliate
thereof with respect to any Employee Benefit Plan under Section 502(c) of ERISA,
or (vii) any other event or condition shall occur or exist with respect to an
Employee Benefit Plan, and (2) any such event or condition set forth in clauses
(i) - (vii) of this Section 9(m) might reasonably be expected to have a Material
Adverse Effect; or
(n) The Borrower or the Guarantor shall terminate its
existence or suspend or discontinue its business; or
(o) The Lien against any of the Collateral created under the
Security Agreements shall cease to be a perfected first priority security
interest; or
(p) The use of proceeds of any Loan in a manner inconsistent
with or in violation of this Agreement; or
(q) Any Material Adverse Change since the date of the
Registration Statement.
Section 10. REMEDIES; APPLICATION OF PROCEEDS.
10.1. REMEDIES.
Upon the occurrence of any Event of Default,
(a) The Lender may at the same or different times, take one or
more of the following actions: (i) by notice to the Borrower, terminate the
Commitment and it shall thereupon terminate or (ii) by notice to the Borrower
declare the Obligations to be, and the Obligations shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower, provided that in
the case of any of the Events of Default specified in subparagraphs (i) or (j)
of Section 9, without any notice to the Borrower or any other act by the
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Lender, the Commitment shall thereupon terminate and all Obligations shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
(b) Whether or not the Lender exercises any right given
pursuant to this Section 10.1, the Lender shall have as to any Collateral all
other rights and remedies provided for herein and in the other Credit Documents,
all rights and remedies of a secured party under the Uniform Commercial Code
and, in addition thereto and not in lieu thereof, all other rights or remedies
at law or in equity existing or conferred upon the Lender by other jurisdictions
or other applicable law or given to the Lender pursuant to any Security
Agreement, other instrument or agreement heretofore, now, or hereafter given as
security for, or a guarantee of, the Borrower's obligations hereunder.
Section 11. MISCELLANEOUS.
11.1. PAYMENT OF EXPENSES, ETC.
The Borrower shall: (i) whether or not the transactions herein
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses (x) of the Lender (including, without limitation, the reasonable fees
and disbursements of Emmet, Marvin & Martin, LLP) in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Credit Documents and the documents and instruments referred to herein and
therein and any amendment, waiver or consent relating hereto or thereto, whether
or not executed, and the administration of the Credit Documents, and (y) of the
Lender in connection with the enforcement of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein and
the protection of their respective rights under the Credit Documents (including,
without limitation, the reasonable fees and disbursements of counsel for the
Lender); (ii) pay and hold the Lender harmless from and against any and all
present and future stamp and other similar taxes with respect to the foregoing
matters and save the Lender harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to the Lender) to pay such taxes; and (iii) indemnify the
Lender, its officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses and
disbursements incurred by any of them as a result of, or arising out of, or in
any way related to, or by reason of, any investigation, litigation or other
proceeding (whether or not the Lender is a party thereto) related to the
entering into and/or performance of this Agreement or any other Credit Document
or the use of the proceeds of any Loan hereunder or the consummation of any
transactions contemplated herein or in any other Credit Document, including,
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any such liabilities, obligations, losses, etc., to the extent
incurred solely by reason of the gross negligence or willful misconduct of the
Person to be indemnified).
11.2. RIGHT OF SETOFF.
In addition to any rights granted under applicable law or
otherwise, and not by way of limitation of any such rights, upon the occurrence
of an Event of Default, the
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Lender is hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set-off and
to appropriate and apply all deposits (general or special and including, without
limitation, the Funding Account, but not escrow accounts) and any other
Indebtedness at any time held or owing by the Lender (including without
limitation by branches and agencies of the Lender wherever located) to or for
the credit or the account of the Borrower against and on account of the
Obligations and liabilities of the Borrower to the Lender under this Agreement
or under any of the other Credit Documents, and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not the Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured. To the extent not prohibited by
applicable law, the aforesaid right of set-off may be exercised by the Lender
against either of the Borrower or against any trustee in bankruptcy, custodian,
debtor in possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor of the Borrower, or against anyone
else claiming through or against the Borrower or such trustee in bankruptcy,
custodian, debtor in possession, assignee for the benefit of creditors,
receivers, or execution, judgment or attachment creditor, notwithstanding the
fact that such right of set-off shall not have been exercised by the Lender
prior to the making, filing or issuance, or service upon the Lender of, or of
notice of, any such petition, assignment for the benefit of creditors,
appointment or application for the appointment of a receiver, or issuance of
execution, subpoena, order or warrant.
11.3. NOTICES.
Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder to a party hereto shall be in
writing (including telecopier) and mailed, telecopied or delivered to such
party, at the following address or at such other address as shall be designated
by such party in a written notice to the other parties hereto:
IF TO THE BORROWER:
Lennar Capital Services, Inc.
760 N.W. 107th Avenue, First Floor
Suite 100
Miami, Florida 33172
Attention: Shelly Rubin
Chief Financial Officer
Telephone: (305) 229-6440
Telecopier: (305) 226-7691
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IF TO THE LENDER:
The Bank of New York
One Wall Street -- 17th Floor
New York, New York 10286
Attention: William H. Cunningham
Vice President
Telephone: (212) 635-6471
Telecopier: (212) 635-6468
All such notices and communications shall, (i) when telecopied be
effective when sent, (ii) when mailed by first class mail, postage prepaid, be
effective on the fifth (5th) day following deposit in the mails, and (iii) when
sent or delivered by any other means be effective when received, except that
notices and communications given to the Lender pursuant to Section 2 shall not
be effective until received by the Lender. Any party to a Credit Document may
rely on signatures of the parties thereto which are transmitted by telecopier or
other electronic means as fully as if originally signed.
11.4. SUCCESSORS AND ASSIGNS.
(a) This Agreement and the other Credit Documents shall be
binding upon and inure to the benefit of the Borrower, the Lender, all future
holders of the Note and their respective successors and assigns, except that the
Borrower may not assign, delegate or transfer any of its rights or obligations
under this Agreement or the other Credit Documents without the prior written
consent of the Lender.
(b) The Lender shall have the right at any time, (A) to
assign, transfer or negotiate all or any part of the Lender's rights under this
Agreement and the other Credit Documents to one or more of its Affiliates
(provided that for purposes of determining the interest payable on the Loans of
the Borrower and said Affiliate pursuant to Sections 2.8(a) (i) and (ii) after
giving effect to such assignment, the Loans of the Lender and such Affiliate
shall be deemed held solely by the Lender), or, (B) with the prior written
consent of the Borrower, which consent shall not be unreasonably withheld (and
shall not be required after the occurrence and during the continuance of an
Event of Default) to sell, assign, transfer or negotiate all or any part of the
Lender's rights and obligations under the Credit Documents to any bank,
insurance company, pension fund, mutual fund or other financial institution. At
the request of the Lender, the Borrower shall execute and deliver to such
assignee, any assumption and attornment agreement, replacement note and
amendments to the Credit Documents as shall reasonably be required by such
assignee to effect any such transfer.
(c) The Lender may grant participations in all or any part of
the Loans, the Note and the Commitment to one or more banks, insurance
companies, pension funds, mutual funds or other financial institutions. The
Borrower acknowledges and agrees that any such participant shall, have all of
the benefits of the Lender under Sections 2.11, 2.13, 2.14, 2.15 and 2.19.
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(d) The Lender shall be relieved of its obligations to the
extent of any such sale, assignment, transfer, or negotiation of all or any part
of its Loans, its Commitment or its Note made pursuant to subsection (b) above.
(e) Notwithstanding anything to the contrary contained in this
Section, the Lender may at any time or from time to time assign all or any
portion of its rights under this Agreement and the other Credit Documents to a
Federal Reserve Bank.
11.5. NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Borrower and the Lender shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Lender would otherwise have. No notice to
or demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Lender to any other or further action in any
circumstances without notice or demand.
11.6. CALCULATION; COMPUTATIONS.
(a) The financial statements to be furnished to the Lender
pursuant hereto shall be made and prepared in accordance with GAAP consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Lender);
provided that, except as otherwise specifically provided herein, all
computations determining compliance with Section 7 shall utilize accounting
principles and policies in conformity with those used to prepare the historical
financial statements referred to in Section 5.5(a).
(b) All computations of interest and the Non-Usage Fee
hereunder shall be made on the basis of a year of 360 days for the actual number
of days occurring in the period for which such interest or fees are payable.
11.7. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
(A) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING AGAINST ANY ONE OR MORE OF THE BORROWER OR
THE LENDER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, OR THE DISTRICT COURT OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER AND THE LENDER HEREBY IRREVOCABLY
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ACCEPT FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
(B) THE BORROWER AND THE LENDER EACH HEREBY IRREVOCABLY WAIVE
ANY OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED
TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVE AND AGREE NOT TO
PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(C) THE BORROWER HEREBY AGREES THAT PROCESS MAY BE SERVED
AGAINST IT IN ANY SUIT, ACTION OR PROCEEDING REFERRED TO IN THIS SECTION BY
SENDING THE SAME BY FIRST CLASS MAIL, RETURN RECEIPT REQUESTED OR BY OVERNIGHT
COURIER SERVICE, TO THE ADDRESS OF THE BORROWER SET FORTH IN SECTION 11.3. THE
BORROWER HEREBY AGREES THAT ANY SUCH SERVICE (I) SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON THEN IN ANY SUCH SUIT, ACTION, OR
PROCEEDING, AND (II) SHALL TO THE FULLEST EXTENT ENFORCEABLE BY LAW, BE TAKEN
AND HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO IT.
(D) NOTHING IN THIS AGREEMENT OR ANY OF THE OTHER CREDIT
DOCUMENTS OR ANY MODIFICATION, WAIVER, CONSENT OR AMENDMENT HERETO OR THERETO
SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY MANNER PERMITTED BY
LAW OR LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY JURISDICTION OR JURISDICTIONS IN WHICH THE BORROWER MAY BE
SERVED.
11.8. OBLIGATION TO MAKE PAYMENTS IN DOLLARS.
All payments of the principal and interest on the Note and any
other amounts due hereunder or under any other Credit Document shall be made in
Dollars.
11.9. COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
11.10. EFFECTIVENESS.
This Agreement shall become effective on the Effective Date.
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11.11. HEADINGS DESCRIPTIVE.
The headings of the sections and subsections of this Agreement
are inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
11.12. AMENDMENT OR WAIVER.
No amendment, waiver, consent or supplement to this Agreement
or any other Credit Document nor any terms hereof or thereof shall be effective
unless such amendment, waiver, consent or supplement is in writing and is signed
by the party or parties against which such amendment is to be enforceable.
11.13. SURVIVAL.
All representations, warranties and indemnities set forth in
this Agreement shall survive the termination of this Agreement and the repayment
of the Loans.
11.14. DOMICILE OF LOANS.
The Lender may transfer and carry its Loans at, to or for the
account of any branch or office of the Lender.
11.15. SEVERABILITY.
Every provision of this Agreement and the other Credit
Documents is intended to be severable, and if any term or provision thereof
shall be invalid, illegal or unenforceable for any reason, the validity,
legality and enforceability of the remaining provisions thereof shall not be
affected or impaired thereby, and any invalidity, illegality or unenforceability
in any jurisdiction shall not affect the validity, legality or enforceability of
any such term or provision in any other jurisdiction.
11.16. INTEGRATION.
All exhibits to this Agreement and all exhibits to a Credit
Document shall be deemed to be a part thereof. This Agreement, the other Credit
Documents and any document executed and delivered in connection therewith embody
the entire agreement and understanding among the Borrower and the Lender with
respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings among the Borrower and the Lender with respect to
the subject matter hereof and thereof.
11.17. WAIVER OF JURY TRIAL.
THE LENDER AND THE BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE CREDIT DOCUMENTS
AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY PARTY RELATING HERETO OR
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THERETO. FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT
OF THE LENDER, OR COUNSEL TO THE LENDER, HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE THE LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK
TO ENFORCE THIS PROVISION. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDER TO ENTER INTO THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Revolving Credit Agreement as of
the date first above written.
LENNAR CAPITAL SERVICES, INC.
By: /s/ MARK GRIFFITH
----------------------------------
Name: MARK GRIFFITH
Title: VICE PRESIDENT
THE BANK OF NEW YORK
By: /s/ WILLIAM H. CUNNINGHAM
----------------------------------
William H. Cunningham
Vice President
<PAGE>
EXHIBIT D
to Revolving Credit Agreement
GUARANTY
November 6, 1997
FOR VALUE RECEIVED, and in consideration of loans made or
to be made or credit otherwise extended or to be extended by THE BANK OF NEW
YORK, a New York banking corporation and its participants, successors, endorsees
and assigns (hereinafter referred to collectively as "LENDER") to or for the
account of LENNAR CAPITAL SERVICES, INC. and its successors and assigns
(hereinafter referred to collectively as "BORROWER") and for other good and
valuable consideration and to induce the Lender, in its discretion, to make such
loans or extensions of credit and to make or grant such renewals, extensions,
releases of collateral or relinquishments of legal rights as the Lender may deem
advisable, the undersigned, its successors and assigns, hereby agrees as
follows:
1. GUARANTY.
The undersigned, its successors and assigns, guarantees to
the Lender the prompt payment when due of all present and future obligations and
liabilities, whether deemed principal, interest, additional interest, fees,
expenses or otherwise, of the Borrower to the Lender, including, without
limitation, all obligations under (i) that certain Note dated the date hereof,
in the principal amount of $50,000,000 made by the Borrower to the Lender (the
"NOTE"); (ii) that certain Revolving Credit Agreement dated the date hereof
between the Borrower and the Lender, as the same may be amended from time to
time (the "CREDIT AGREEMENT"), and (iii) all other Credit Documents (as such
term is defined in the Credit Agreement) (all of which are herein collectively
referred to as the "OBLIGATIONS"), and irrespective of the genuineness,
validity, regularity or enforceability of such Obligations, or of any instrument
evidencing any of the Obligations or of any collateral therefor or of the
existence of such collateral. Defined terms used herein which are not defined
herein but which are defined in the Credit Agreement shall have the meanings
ascribed to such terms in the Credit Agreement.
2. REPRESENTATIONS AND WARRANTIES.
The undersigned hereby represents and warrants to the
Lender that:
(a) CORPORATE ORGANIZATION. The undersigned (i) is duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware, (ii) has the power and authority to own its property and
assets and to transact the business in which it is engaged and (iii) is duly
qualified as a foreign corporation and in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of its
business requires such qualification.
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(b) FORMATION; CONTRIBUTIONS; DISTRIBUTION.
(i) FORMATION; CONTRIBUTIONS. The undersigned was
formed by Lennar in June of 1997. Lennar will distribute to the undersigned the
Lennar Subsidiaries which have been engaged in its real estate investment and
management business, as well as some assets of other Subsidiaries which were
used in that business and certain other assets, all as more particularly set
forth in the Registration Statement, prior to November 15. As of the Effective
Date, the consolidated net worth of the undersigned and its Subsidiaries will be
not less than $500,000,000.
(ii) DISTRIBUTION. The shares of the undersigned will
be distributed to the shareholders of Lennar prior to November 15. Such
distribution will be made in a manner consistent with the description thereof
set forth in the Registration Statement.
(iii) FORMATION; CONTRIBUTIONS. The undersigned was
formed by Lennar in June of 1997. Lennar has distributed to the undersigned the
Lennar Subsidiaries which have been engaged in its real estate investment and
management business, as well as some assets of other Subsidiaries which were
used in that business and certain other assets, all as more particularly set
forth in the Registration Statement. As of the date hereof, the consolidated net
worth of the undersigned and its Subsidiaries is not less than $500,000,000.
(iv) DISTRIBUTION. The shares of the undersigned have
been distributed to the shareholders of Lennar. Such distribution was made in a
manner consistent with the description thereof set forth in the Registration
Statement.
(c) POWER AND AUTHORITY. The undersigned has the corporate
power to execute, deliver and perform the terms and provisions of this Guaranty
and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of this Guaranty. The undersigned has duly
executed and delivered this Guaranty and the Guaranty constitutes the legal,
valid and binding obligations of the undersigned and is enforceable in
accordance with its terms, provided that, (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
(d) CONSENTS AND APPROVALS. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to the date hereof), or
exemption by, any governmental body is required to authorize, or is required in
connection with, (i) the execution, delivery and performance of this Guaranty by
the undersigned, or (ii) the legality, validity, binding effect or
enforceability of this Guaranty.
(e) PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the undersigned is 760 N.W. 107th Avenue, First Floor, Miami,
Florida 33172.
(f) SOLVENCY. The undersigned is not insolvent (as such
term is defined in Section 101(32) of the Bankruptcy Code of 1978, as amended)
and will not be rendered insolvent (as such term is defined in Section 101(32)
of the Bankruptcy Code of 1978, as amended) by execution of this Guaranty or
consummation of the transaction contemplated thereby; and
(g) NO OFFSETS. The undersigned has no offsets, defenses or
counterclaims to the enforcement of this Guaranty.
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(h) NO VIOLATIONS. Neither the execution, delivery or
performance by the undersigned of this Guaranty, nor compliance by it with the
terms and provisions hereof (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
governmental body, (ii) will conflict or be inconsistent with or result in any
breach of any of the material covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
the undersigned pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement, loan agreement or any other agreement, contract or instrument
to which the undersigned is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will violate any
provision of the Articles of Incorporation or By-Laws of the undersigned.
(i) FINANCIAL STATEMENTS. The undersigned has heretofore
delivered to the Lender the consolidated Balance Sheet of the undersigned and
its Subsidiaries as of November 30, 1996 and the six-month period ending May 31
1997 and the related combined Statements of Operations, Retained Earnings and
Cash Flows for the periods then ended (the "FINANCIAL STATEMENTS"). The
Financial Statements have been prepared to reflect the undersigned and its
Subsidiaries as a separate combined group for such period, and have been
extracted from the financial statements of Lennar using Lennar's historical
results of operations and historical cost basis of its assets and liabilities
which are used in the businesses being operated by the undersigned and its
Subsidiaries. The Financial Statements fairly present the financial condition
and results of the operations of the undersigned and its Subsidiaries as of the
dates and for the periods indicated therein and have been prepared in conformity
with GAAP. Since the date of delivery of such statements, no event has occurred
which has had or could reasonably be expected to have, a Material Adverse
Effect.
(j) LITIGATION. There are no actions, suits or proceedings
(whether or not purportedly on behalf of the undersigned pending or threatened
against the undersigned (x) with respect to this Guaranty, or (y) which could,
if adversely determined, have a material adverse effect on the business, assets,
property, operations, financial condition or prospects of the undersigned.
(j) TAX RETURNS. The undersigned has filed all tax returns
required to be filed by it and has paid all income taxes payable by it which
have become due pursuant to such tax returns and all other taxes and assessments
payable by it which have become due, other than those not yet delinquent and
except for those contested in good faith and for which adequate reserves have
been established. The undersigned has paid, or has provided adequate reserves
(in the good faith judgment of the management of the undersigned) for the
payment of, all federal and state income taxes applicable for all prior fiscal
years and for the current fiscal year to the date hereof.
(l) ERISA. Each Employee Benefit Plan of the undersigned
and any ERISA Affiliate is in compliance with ERISA and the Code, where
applicable, in all material respects. As of November 30, 1996, (the "ERISA TEST
DATE"), (i) the amount of all Unfunded Pension Liabilities under the Pension
Plans, excluding any plan which is a Multiemployer Plan, does not exceed $1, and
(ii) the amount of the aggregate Unrecognized Retiree Welfare Liability under
all applicable Employee Benefit Plans does not exceed $500,000. There is no
Multiemployer Plan. The undersigned and/or any ERISA Affiliate has, as of the
date hereof, made all contributions or payments to or under each such Pension
Plan required by law or the terms of such Pension Plan or any contract or
agreement. No material liability to the PBGC has been, or is expected by the
undersigned
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or any ERISA Affiliate to be, incurred by the undersigned or any ERISA
Affiliate. Liability, as referred to herein, includes any joint and several
liability. Each Employee Benefit Plan which is a group health plan within the
meaning of Section 5000(b)(1) of the Code is in material compliance with the
continuation of health care coverage requirements of Section 4980B of the Code.
(m) LABOR RELATIONS. The undersigned is not engaged in any
unfair labor practice that could have a Material Adverse Effect. There is (i) no
significant unfair labor claim or action pending against the undersigned or, to
the best knowledge of the undersigned, threatened against it, before the
National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the undersigned or, to the best knowledge of the
undersigned, threatened against it, (ii) no significant strike, labor dispute,
slowdown or stoppage pending against the undersigned or, to the best knowledge
of the undersigned, threatened against it, (iii) to the best knowledge of the
undersigned, no union representation question existing with respect to the
employees of the undersigned and, to the best of its knowledge, no union
organizing is taking place, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, either individually or in the aggregate) such
as could not have a Material Adverse Effect.
(n) NO BURDENSOME AGREEMENTS. The undersigned is not a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or restriction which by its terms would
have a Material Adverse Effect or a material adverse effect on the ability of
the Undersigned to carry out its obligations under this Guaranty.
(o) PROPERTY. The undersigned has good and marketable title
to all of its Property, title to which is material to the undersigned. All of
the tangible property of the undersigned which is necessary for the operation of
its business is in substantially good repair and operating condition and is and
will be in compliance in all material respects with all material requirements of
law.
(p) ENVIRONMENTAL MATTERS. (i) The undersigned is in
compliance in all material respects with the requirements of all applicable
Environmental Laws.
(ii) To the best of the undersigned's knowledge and
belief, no Hazardous Substances are present upon the undersigned's Real Property
in violation of any Environmental Law and the undersigned has not received any
notice to the effect that any of its Real Property, or any of the its
operations, is not in compliance with any Environmental Law or that any federal
or state investigation evaluating whether any remedial action is needed to
respond to a release of any Hazardous Substance into the environment is pending
which, in either case, could be reasonably expected to have a Material Adverse
Effect.
3. AFFIRMATIVE COVENANTS.
Subject to Section 5 of this Guaranty, the undersigned
agrees that so long as the Commitment is not terminated, or any amount remains
outstanding or owing to the Lender under the Credit Agreement or the Note or the
other Credit Documents:
(a) ACCOUNTS AND REPORTING. The undersigned will maintain a
standard system of accounting established and administered in accordance with
generally accepted accounting principles, and provide to the Lender the
following:
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(i) ANNUAL FINANCIAL STATEMENTs. As soon as available
and in any event within 120 days after the end of each fiscal year of the
undersigned, a consolidated balance sheet of the undersigned and its
subsidiaries as of the end of that fiscal year and the related consolidated
statements of earnings, stockholders' equity and cash flows for that fiscal
year, all with accompanying notes and schedules, prepared in accordance with
United States generally accepted accounting principles consistently applied and
audited and reported upon by Deloitte and Touche, LLP or another firm of
independent certified public accountants of recognized standing selected by the
undersigned (such audit report shall be unqualified except for qualifications
relating to changes in United States general accepted principles of accounts and
required or approved by the undersigned's independent certified public
accountants). Notwithstanding any of the foregoing, the Borrower may satisfy its
obligation to furnish Consolidated Balance Sheets and Consolidated Statements of
Operations, Stockholders' Equity and Cash Flows by furnishing copies of the
Borrower's annual report on Form 10-K in respect of such fiscal year, together
with the financial statements required to be attached thereto, provided the
Borrower is required to file such annual report on Form 10-K with the SEC and
such filing is actually made;
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as
available and in any event within 60 days after the end of each of the first
three quarters, and within 120 days after the end of the fourth quarter, of each
fiscal year of the undersigned, a consolidated balance sheet of the undersigned
and its subsidiaries as of the end of that quarter, and the related consolidated
statement of earnings of the undersigned and its subsidiaries for the period
from the beginning of the fiscal year to the end of that quarter, all prepared
in accordance with United States generally accepted accounting principles
consistently applied, unaudited but certified to be true and accurate, subject
to normal year-end audit adjustments, by the chief financial officer of the
undersigned. Notwithstanding any of the foregoing, the Borrower may satisfy its
obligation to furnish quarterly Consolidated Balance Sheets and Consolidated
Statements of Operations and Cash Flows by furnishing copies of the Borrower's
quarterly report on Form 10-Q in respect of such fiscal quarter, together with
the financial statements required to be attached thereto, provided the Borrower
is required to file such quarterly report on Form 10-Q with the SEC and such
filing is actually made;
(iii) OFFICER'S CERTIFICATES. At the time of the
delivery of the financial statements provided for in Section 3(a) (i) and (ii),
a certificate of the chief financial officer of the undersigned to the effect
that, to the best of his knowledge, the undersigned is not in default under this
Guaranty or, if any default has occurred and is continuing, specifying the
nature and extent thereof and any actions taken or proposed to be taken with
respect to any such default.
(iv) MANAGEMENT LETTERS. Promptly after receipt by the
undersigned thereof, a copy of any "management letter" received by it from its
certified public accountants detailing any "material weaknesses in internal
control" noted by such accountants (as defined by FASB).
(v) NOTICES. Promptly, notice of (i) the occurrence of
any default under this Guaranty, (ii) the commencement of any action, suit or
proceeding before any court, arbitrator or governmental body which (A) could
result in liability or loss of $1,000,000 or more in the aggregate, in excess of
any applicable insurance coverage, to the undersigned or (B) would otherwise
have a Material Adverse Effect, (iii) with respect to the undersigned, any
change in any Executive Officer, (iv) any threatened loss of any authorization,
qualification, license or permit issued by any governmental body to the
undersigned the loss of which could have a Material Adverse Effect, (v) any
written correspondence or notification from any governmental body, which revokes
or threatens to
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revoke, limits or threatens to limit, or imposes or threatens to impose any
material restrictions on, any approvals or authorizations granted by such
governmental body to the undersigned, together with a copy thereof, or (vi) any
violation of any requirements or guidelines established by any governmental
body, which might have a material adverse effect on the status of the
undersigned thereof as a lender, seller or servicer approved by such
governmental body.
(vi) LENDER REQUESTED INFORMATION. Promptly, such
additional financial and other information, including without limitation,
financial statements of the undersigned, as the Lender may from time to time
reasonably request.
(vii) ENVIRONMENTAL PROCEEDINGS. Prompt written notice
of any order, notice, claim or proceeding received by, or brought against, the
undersigned, or with respect to any of the Real Property, under any
Environmental Law.
(viii) EMPLOYEE BENEFIT PLAN INFORMATION. Prompt
written notice in the event that the undersigned or any ERISA Affiliate knows,
or has reason to know, that (i) any ERISA Termination Event with respect to a
Pension Plan has occurred or will occur, (ii) any condition exists with respect
to a Pension Plan which presents a material risk of termination of the Pension
Plan, imposition of an excise tax, requirement to provide security to or in
respect of the Pension Plan or other liability of the undersigned or any ERISA
Affiliate, (iii) the undersigned or any ERISA Affiliate has applied for a waiver
of the minimum funding standard under Section 412 of the Code with respect to a
Pension Plan, (iv) the aggregate amount of the Unfunded Pension Liabilities
under all Pension Plans has increased to an amount in excess of $1, (v) the
aggregate amount of Unrecognized Retiree Welfare Liability under all applicable
Employee Benefit Plans has increased to an amount in excess of $500,000, (vi)
the undersigned or any ERISA Affiliate has engaged in a Prohibited Transaction
with respect to an Employee Benefit Plan, (vii) a tax under Section 4980B(a) of
the Code shall have been imposed upon the undersigned or any ERISA Affiliate,
(viii) the Secretary of Labor shall have assessed a civil penalty under Section
502(c) of ERISA against the undersigned or any ERISA Affiliate, or (ix) there is
an action brought against the undersigned or any ERISA Affiliate under ERISA
Section 502 with respect to its failure to comply with ERISA Section 515,
together with a certificate of the president or chief financial officer of the
undersigned setting forth the details of such event and the action which the
undersigned or any ERISA Affiliate proposes to take with respect thereto,
together with a copy of all notices and filings with respect thereto.
(ix) EMPLOYEE BENEFIT PLAN LIABILITY. Prompt written
notice in the event that the undersigned or any ERISA Affiliate shall receive a
demand letter from the PBGC notifying the undersigned or any ERISA Affiliate of
any final decision finding liability and the date by which such liability must
be paid, together with a copy of such letter and a certificate of the president
or chief financial officer of the undersigned setting forth the action which the
undersigned or any ERISA Affiliate proposes to take with respect thereto.
(x) PENSION PLAN AMENDMENTS. Promptly upon the same
becoming available, and in any event by the date such amendment is adopted, a
copy of any Pension Plan amendment that the undersigned or any ERISA Affiliate
proposes to adopt which would require the posting of security under Section
401(a)(29) of the Code, together with a certificate of the president or chief
financial officer of the undersigned setting forth the reasons for the adoption
of such amendment and the action which the undersigned or any ERISA Affiliate
proposes to take with respect thereto.
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(xi) PENSION PAYMENT DEFAULT. As soon as possible and
in any event by the 10th day after any required installment or other payment
under Section 412 of the Code owed to a Pension Plan shall have become due and
owing and remains unpaid a copy of the notice of failure to make required
contributions provided to the PBGC by the undersigned or any ERISA Affiliate
under Section 412(n) of the Code, together with a certificate of the president
or chief financial officer setting forth the action which the undersigned or any
ERISA Affiliate proposes to take with respect thereto.
(xii) PENSION PLAN TERMINATION. If the termination of
any Pension Plan would result in the imposition of any tax under Section 4980 of
the Code, then as soon as possible, but in no event less than 60 days before the
due date of the tax, a certificate of the president or chief financial officer
of the undersigned setting forth the estimated amount of the tax, any reversion,
and the proposed use of the reversion. This subparagraph shall apply to a
transaction notwithstanding a reduction or complete elimination of the tax
because of the operation of either Sections 4980(d) or 420(a)(3)(A) of the Code.
(xiii) OTHER INFORMATION. Promptly, from time to time,
copies of any notices or information given to or received from the holders of
any Indebtedness of the undersigned relating to any actual or alleged default,
demand for payment or acceleration of payment, and such other information or
documents (financial or otherwise) as the Lender may reasonably request.
(b) NO IMPAIRMENT FROM CHANGES IN OBLIGATIONS. The Lender
may at any time and from time to time, either before or after the maturity
thereof, without notice to or further consent of the undersigned, extend the
time of payment of, exchange or surrender any collateral for, renew or extend
any of the Obligations or increase the interest rate thereon, and may also make
any agreement with the Borrower or with any other party to or person liable on
any of the Obligations, or interested therein, for the extension, renewal,
payment, compromise, discharge or release thereof, in whole or in part, or for
any modification of the terms thereof or of any agreement between the Lender and
Borrower or any such other party or person, without in any way impairing or
affecting this Guaranty.
(c) NO OBLIGATION TO PURSUE ANY COLLATERAL. This Guaranty
shall not be impaired or otherwise affected by any failure to call for, take,
hold, protect or perfect, continue the perfection of or enforce any security
interest in or other Lien upon, any collateral for the Obligations, or by any
failure to exercise, delay in the exercising or waiver of, or forbearance with
respect to, any right or remedy available to the Lender with respect to the
Obligations.
(d) REINSTATEMENT OF OBLIGATIONS. To the extent that the
undersigned makes a payment or payments to the Lender on the Obligations, or the
Lender receives any proceeds of collateral to be applied to the Obligations,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or otherwise is required to
be repaid including, without limitation, under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of such
repayment, the obligation or part thereof which has been paid, reduced or
satisfied by such amount shall be reinstated and continued in full force and
effect as of the date that such initial payment, reduction or satisfaction
occurred notwithstanding any contrary action which may have been taken by the
Lender in reliance upon such payment or payments. The undersigned shall defend
and indemnify the Lender from and against any claim or loss under this paragraph
including attorneys' fees and expenses in the defense of any such action or
suit.
(e) BOOKS, RECORDS AND INSPECTIONS. The undersigned will
keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all
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requirements of law shall be made of all dealings and transactions in relation
to its business and activities. The undersigned will permit officers and
designated representatives of the Lender to visit and inspect, under guidance of
officers of the undersigned, any of the properties of the undersigned, and to
examine the books of record and accounts of the undersigned and discuss the
affairs, finances, accounts and prospects of the undersigned with, and be
advised as to the same by, its and their officers, all at such reasonable times
and intervals and to such reasonable extent as the Lender may request.
(f) MAINTENANCE OF PROPERTY, INSURANCE. The undersigned
will (i) keep all property necessary for the operation of its business in good
working order and condition, (ii) except as otherwise provided in clause (iii)
below, maintain with financially sound and reputable insurance companies
insurance (including such insurance as the Lender shall reasonably require) in
such amounts and against such risks as are usually carried by corporations
engaged in similar businesses similarly situated, and (iii) furnish to the
Lender, upon written request, full information as to the insurance carried.
(g) CORPORATE FRANCHISES. The undersigned will do or cause
to be done, all things necessary to preserve and keep in full force and effect
(i) their corporate existence in good standing in the state of its incorporation
and in each other state in which it is required to be qualified to do business
as a foreign corporation and (ii) all of their material rights, franchises,
qualifications, licenses, permits, copyrights, trademarks and patents.
(h) COMPLIANCE WITH STATUTES, ETC. (i) The undersigned will
comply with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies in respect of the
conduct of its business and the ownership of its property (including, without
limitation, Environmental Laws), except such non-compliances as could not, in
the aggregate, have a Material Adverse Effect.
(ii) In the event that the Lender shall have a
reasonable basis for believing that any Hazardous Substance may be on, at, under
or around any Real Property in violation of any applicable Environmental Law and
that such violation might reasonably be expected to have a Material Adverse
Effect, the undersigned will conduct and complete (at the undersigned's expense)
all investigations, studies, samplings and testings relative to such Real
Property and such Hazardous Substances as the Lender may reasonably request.
(i) PERFORMANCE OF OBLIGATIONS. The undersigned will
perform all of its obligations under the terms of each mortgage, indenture,
security agreement, debt instrument or other contract or agreement by which it
is bound, except such non-performances as could not in the aggregate, have a
Material Adverse Effect.
(j) PAYMENT OF TAXES. The undersigned will pay and
discharge all taxes, assessments and governmental charges or liens imposed upon
the undersigned or upon the undersigned's income or profits, or upon any
properties belonging to the undersigned prior to the date on which the same
become due, and all lawful claims, which, if unpaid, might become a Lien or
charge upon any properties of the undersigned, provided that the undersigned
shall not be required to pay any such tax, assessment, charge, levy or claim for
which it has obtained an adequate bond or adequate insurance and which is being
contested in good faith and by appropriate proceedings so long as such contest
shall operate to stay any Material Adverse Effect caused by such Lien or charge.
(k) CORPORATE SEPARATENESS. The undersigned will take such
actions as are necessary to keep its operations separate and apart, including,
without limitation, insuring that all customary formalities regarding the
corporate existence of the undersigned, including holding regular meetings and
maintenance of its current minute books, are followed.
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4. NEGATIVE COVENANTS.
The undersigned agrees that from and after the date hereof
and until the Commitment shall have been terminated and the Loans and the Note,
together with interest, fees and all other obligations incurred hereunder and
under all Credit Documents, are paid in full:
(a) BOOK NET WORTH. The undersigned will not permit its
Book Net Worth to be less than the sum of (i) the greater of (x) $500,000,000 or
(y) 90% of Book Net Worth as of Effective Date, plus (ii) plus 50% of all net
income (determined in accordance with GAAP) of the undersigned after NOVEMBER
30, 1997, plus (iii) 90% of all capital contributions made to the Guarantor
after the Effective Date.
For purposes of this Agreement, "Book Net Worth" means, as
of any date of determination thereof, the net worth of the Guarantor on such
date as determined in accordance with GAAP.
(b) RATIO OF LIABILITIES TO BOOK NET WORTH. The undersigned
will not on any date permit the ratio of (i) the Liabilities of the undersigned,
on a consolidated basis, on such date to (ii) the undersigned's Book Net Worth
on such date, to be more than 2:1.
(c) LIENS. The undersigned will not create, incur, assume
or suffer to exist any Lien upon or with respect to any property or assets (real
or personal, tangible or intangible) of the undersigned, whether now owned or
hereafter acquired, other than in the ordinary course of business of the
undersigned.
(d) CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. (i) The
undersigned will not wind up, liquidate or dissolve its affairs or enter into
any transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or any
substantial part of its property or assets,
(ii) The undersigned will not permit any of its
Subsidiaries to wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, and the undersigned will not, and will
not permit any of its Subsidiaries to, convey, sell, lease or otherwise dispose
of (or agree to do any of the foregoing at any future time) all or any part of
its property or assets, if any of the foregoing could have a Material Adverse
Effect or result in a material change in the scope of the business as conducted
by the undersigned as of the date of this Guaranty.
(e) DIVIDENDS. The undersigned will not declare or pay any
dividends or declare or make any distribution in respect of its capital to its
stockholders, or authorize or make any other distribution, payment or delivery
of property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any options or
warrants issued by the undersigned with respect to its capital stock), or set
aside any funds for any of the foregoing purposes, or permit any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of the undersigned now or hereafter outstanding
(or any options or warrants issued by the undersigned with respect to its
capital stock) if, after giving effect to any of the foregoing, there shall
occur an Event of Default.
(f) INDEBTEDNESS. The undersigned will not contract,
create, incur, assume or suffer to exist any Indebtedness unless (i) such
Indebtedness will appear on the financial statements of the undersigned required
to be delivered to the Lender pursuant to this Guaranty, and (ii) such
Indebtedness does not create a Default under this Guaranty.
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(g) TRANSACTIONS WITH AFFILIATES. The undersigned will not
enter into any transaction or series of related transactions, whether or not in
the ordinary course of business, with any Affiliate of either of the
undersigned, other than on terms and conditions substantially as favorable to
the undersigned as would be obtainable by the undersigned at the time in a
comparable arm's-length transaction with a Person other than an Affiliate.
(h) MODIFICATIONS OF ARTICLES OF INCORPORATION, BY-LAWS AND
CERTAIN OTHER AGREEMENTS, ETC. The undersigned will not (a) amend, modify or
change their Articles of Incorporation (including, without limitation, by the
filing or modification of any certificate of designation) or By-Laws, or any
agreement entered into by either of them with respect to their capital stock, or
(b) enter into any new agreement with respect to their capital stock, if in
either case it would have an adverse effect on the Lender.
(i) RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS. The
undersigned will not, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any such Subsidiary to (a) pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the undersigned or any of its Subsidiaries, or pay any
Indebtedness owed by any such Subsidiary to the undersigned or any other
Subsidiary of the undersigned, (b) make loans or advances to the undersigned, or
(c) transfer any of its properties or assets to the undersigned, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) this Guaranty, (iii) or customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the undersigned or any
Subsidiary of the undersigned.
(j) ERISA. The undersigned shall not (a)(i) establish,
contribute to, or become liable (directly or indirectly) in respect of, any
Multiemployer Plan, or (ii) establish or contribute to any Pension Plan other
than an Existing Pension Plan which would increase the aggregate Unfunded
Pension Liabilities under all Pension Plans to an amount in excess of $1, (b)
cause any Pension Plan to have a Funded Current Liability Percentage of less
than 60 percent, or (c) increase benefits under any Employee Benefit Plan or
establish or contribute to any new Employee Benefit Plan which would have the
effect of increasing its aggregate Unrecognized Retiree Welfare Liability to an
amount in excess of $500,000.
5. NOTICES.
All notices and other communications provided for hereunder
to a party hereto shall be in writing (including telecopier) and mailed,
telecopied or delivered to such party, at the following address or at such other
address as shall be designated by such party in a written notice to the other
parties hereto:
IF TO THE UNDERSIGNED:
LNR Property Corporation
760 N.W. 107th Avenue, First Floor
Suite 100
Miami, Florida 33172
Attention: Shelly Rubin
Chief Financial Officer
Telephone: (305) 229-6640
Telecopier: (305) 226-7691
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IF TO THE LENDER:
The Bank of New York
One Wall Street -- 17th Floor
New York, New York 10286
Attention: William H. Cunningham
Vice President
Telephone: (212) 635-6471
Telecopier: (212) 635-6468
All such notices and communications shall, (i) when
telecopied be effective when sent, (ii) when mailed by first class mail, postage
prepaid, be effective on the fifth (5th) day following deposit in the mails, and
(iii) when sent or delivered by any other means be effective when received. The
undersigned and the Lender may rely on signatures of each other which are
transmitted by telecopier or other electronic means as fully as if originally
signed.
6. JURISDICTION; VENUE.
The undersigned irrevocably submits to the jurisdiction of
any New York State or Federal court sitting in the City or State of New York
over any suit, action or proceeding arising out of or relating to this Guaranty.
The undersigned hereby agrees that Lender shall have the option, in its sole
discretion, to lay the venue of any such suit, action or proceeding, in the
courts of the State of New York or the United States of America for the Southern
District of New York, and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in such court and any claim that
any such suit, action or proceeding brought in such a court has been brought in
an inconvenient forum. The undersigned agrees that a final judgment in any such
suit, action or proceeding brought in such a court shall be conclusive and
binding upon the undersigned.
7. WAIVER OF TRIAL BY JURY.
THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. FURTHER, THE UNDERSIGNED HEREBY CERTIFIES THAT NO
REPRESENTATIVE OF THE LENDER, OR COUNSEL TO THE LENDER, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS PROVISION. THE PROVISIONS OF THIS PARAGRAPH
CONSTITUTE A MATERIAL INDUCEMENT TO THE LENDER TO ACCEPT THIS GUARANTY.
8. GOVERNING LAW.
This Guaranty and the rights and obligations of the parties
hereunder shall be construed, enforced, and interpreted according to the laws of
the State of New York applicable to contracts made in and performed in the State
of New York. Unless the text otherwise requires all terms used herein shall have
the meaning specified in the Uniform Commercial Code as in effect in the State
of New York on the date hereof.
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9. OTHER PROVISIONS.
(a) The undersigned hereby acknowledges that it has derived
or expects to derive a financial or other advantage from each and every
Obligation incurred by Borrower to the Lender.
(b) The undersigned waives notice of the acceptance of this
Guaranty and of the making of any such loans or extensions of credit,
presentment to or demand of payment from anyone whomsoever liable upon any of
the Obligations, protest, notice of presentment, non-payment or protest and
notice of any sale of collateral security or any default of any sort.
(c) The undersigned hereby agrees that, in the event that
any property of the undersigned is or may be hypothecated with property of
Borrower as security for any Obligations, any right of the undersigned to have
such property of Borrower first applied to the discharge of such Obligations is
hereby irrevocably waived by the undersigned.
(d) This is a continuing guaranty and shall remain in full
force and effect and be binding upon the undersigned, and the undersigned's
successors and assigns. Nothing except cash payment in full of all Obligations
and the termination of the Commitment shall release the undersigned from
liability under this Guaranty.
(e) This Guaranty is a guaranty of payment and not of
collection, and the Lender shall be under no obligation to take any action
against Borrower or any other person liable with respect to any of the
Obligations or resort to any collateral security held by it to secure any of the
Obligations as a condition precedent to the undersigned being obligated to
perform as agreed herein. The undersigned hereby waives any rights to interpose
any defense, counterclaim or offset of any nature and description which he may
have or which may exist between and among the Lender, Borrower and/or the
undersigned.
(f) This Guaranty may be assigned by the Lender and its
benefits shall inure to the successors, indorsees and assigns of the Lender.
(g) Until such time as the Lender shall have received
payment in full in cash in satisfaction of all of the Obligations and the
commitment shall have been terminated, the undersigned waives any rights to be
subrogated to the rights of the Lender with respect to the Obligations and the
undersigned waives any right to and agrees that it will not institute or take
any action against the Borrower seeking contribution, reimbursement or
indemnification by the Borrower with respect to any payments made by the
undersigned to the Lender hereunder.
(h) The undersigned waives any and all notice of the
creation, renewal, extension or accrual of any of the Obligations or of the
reliance by Lender upon this Guaranty. The Obligations, and each of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Guaranty. This Guaranty shall be construed as a continuing, absolute
and unconditional guaranty without regard to the validity, regularity or
enforceability of the Obligations and any other indebtedness at any time held or
owing by the Lender to or for the credit or the account of the undersigned
against and on account of the Obligations and liabilities of the undersigned
hereunder.
(i) The undersigned hereby waives any and all legal
requirements that require or compel the Lender to institute any action or
proceedings at law or in equity
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against Borrower, or anyone else, in respect of the Loans or any other document
executed in connection with the Loans or resort to or seek to realize upon or
exhaust the security held by the Lender or pursue any other remedy in the
Lender's power, as a condition precedent to bringing an action against the
undersigned upon this Guaranty, and failure of the Lender to do any of the
foregoing shall not exonerate, release or discharge the undersigned from its
absolute, unconditional and independent liabilities to the Lender hereunder.
(j) The Lender may bring and prosecute a separate action
against the undersigned to enforce its liabilities hereunder, whether or not any
action is brought against Borrower or any other person and whether or not
Borrower or any other person is joined in any such action or actions. Nothing
shall prohibit the Lender from exercising its rights against the undersigned,
the Borrower, the security, if any, for the Obligations, and any other person
simultaneously, jointly and/or severally. The undersigned shall be bound by each
and every ruling, order and judgment obtained by the Lender against Borrower in
respect of the Obligations, whether or not the undersigned is a party to the
action or proceeding in which such ruling, order or judgment is issued or
rendered.
(k) The undersigned shall not be discharged, released or
exonerated, in any way, from its absolute, unconditional and independent
liabilities hereunder, even though any rights or defenses which the undersigned
may have against Borrower, the Lender or others may be destroyed, diminished or
otherwise affected by:
(i) Any declaration by the Lender of a default in
respect of any of the Obligations;
(ii) The exercise by the Lender of any rights or
remedies against Borrower or any other person;
(iii) The failure of the Lender to exercise any rights
or remedies against Borrower or any other person;
(iv) The sale or enforcement of, or realization upon
(through judicial foreclosure, power of sale or any other means) any security
for any of the Obligations, even though (i) recourse may not thereafter be had
against Borrower for any deficiency, or (ii) the Lender fails to pursue any such
recourse which might otherwise be available; whether by way of deficiency
judgment following judicial foreclosure, or otherwise;
(v) Any bankruptcy or reorganization of Borrower;
(vi) The release of any other guarantor by operation of
law or otherwise; or
(vii) The voluntary or involuntary participation by
Borrower in any settlement or composition for the benefit of Borrower's
creditors either in liquidation, readjustment, receivership, bankruptcy or
otherwise.
(l) The undersigned waives any right to plead any election
of remedies.
(m) This Guaranty is absolute and unconditional and shall
not be changed or affected by any representation, oral agreement, act or thing
whatsoever, except as herein otherwise expressly provided. No modification or
amendment of any provisions
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of this Guaranty shall be effective unless in writing and signed by a duly
authorized officer of the Lender.
(n) No failure on the part of the Lender to exercise, and
no delay in exercising, any right, remedy or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the Lender of any
right, remedy or power hereunder preclude any other or future exercise of any
other right, remedy or power.
(o) Each and every right, remedy and power hereby granted
to the Lender or allowed it by law or other agreement shall be cumulative and
not exclusive of any other, and may be exercised by the Lender at any time and
from time to time.
IN WITNESS WHEREOF, this Guaranty has been executed by the
undersigned as of the date first above written.
LNR PROPERTY CORPORATION
By:
------------------------------------------
Name:
Title:
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Exhibit A
GUARANTY
November 21, 1997
FOR VALUE RECEIVED, and in consideration of loans made or to
be made or credit otherwise extended or to be extended by THE BANK OF NEW YORK,
a New York banking corporation and its participants, successors, endorsees and
assigns (hereinafter referred to collectively as "LENDER") to or for the account
of LENNAR CAPITAL SERVICES, INC. and its successors and assigns (hereinafter
referred to collectively as "BORROWER") and for other good and valuable
consideration and to induce the Lender, in its discretion, to make such loans or
extensions of credit and to make or grant such renewals, extensions, releases of
collateral or relinquishments of legal rights as the Lender may deem advisable,
the undersigned, its successors and assigns, hereby agrees as follows:
1. GUARANTY.
The undersigned, its successors and assigns, guarantees to the
Lender the prompt payment when due of all present and future obligations and
liabilities, whether deemed principal, interest, additional interest, fees,
expenses or otherwise, of the Borrower to the Lender, including, without
limitation, all obligations under (i) that certain Note dated the date hereof,
in the principal amount of $50,000,000 made by the Borrower to the Lender (the
"NOTE"); (ii) that certain Revolving Credit Agreement dated November 6, 1997
between the Borrower and the Lender, as the same may be amended from time to
time (the "CREDIT AGREEMENT"), and (iii) all other Credit Documents (as such
term is defined in the Credit Agreement) (all of which are herein collectively
referred to as the "OBLIGATIONS"), and irrespective of the genuineness,
validity, regularity or enforceability of such Obligations, or of any instrument
evidencing any of the Obligations or of any collateral therefor or of the
existence of such collateral. Defined terms used herein which are not defined
herein but which are defined in the Credit Agreement shall have the meanings
ascribed to such terms in the Credit Agreement.
1. REPRESENTATIONS AND WARRANTIES.
The undersigned hereby represents and warrants to the Lender
that:
(a) CORPORATE ORGANIZATION. The undersigned (i) is duly organized and validly
existing corporation in good standing under the laws of the State of Nevada,
(ii) has the power and authority to own its property and assets and to transact
the business in which it is engaged and (iii) is duly qualified as a foreign
corporation and in good standing in each jurisdiction where the ownership,
leasing or operation of its property or the conduct of its
<PAGE>
business requires such qualification. The undersigned is wholly owned and
controlled by Mortgage Investment Holdings, a Nevada partnership, which is owned
(i) 80% by the Borrower and (ii) 20% by Lennar Capital Corp., a wholly owned
subsidiary of the Borrower.
(a) POWER AND AUTHORITY. The undersigned has the corporate power to execute,
deliver and perform the terms and provisions of this Guaranty and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of this Guaranty. The undersigned has duly executed and delivered this
Guaranty and the Guaranty constitutes the legal, valid and binding obligations
of the undersigned and is enforceable in accordance with its terms, provided
that, (i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(a) CONSENTS AND APPROVALS. No order, consent, approval, license, authorization
or validation of, or filing, recording or registration with (except as have been
obtained or made prior to the date hereof), or exemption by, any governmental
body is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of this Guaranty by the undersigned, or (ii)
the legality, validity, binding effect or enforceability of this Guaranty.
(a) PRINCIPAL PLACE OF BUSINESS. The principal place of business of the
undersigned is 760 N.W. 107th Avenue, First Floor, Miami, Florida 33172.
(a) SOLVENCY. The undersigned is not insolvent (as such term is defined in
Section 101(32) of the Bankruptcy Code of 1978, as amended) and will not be
rendered insolvent (as such term is defined in Section 101(32) of the Bankruptcy
Code of 1978, as amended) by execution of this Guaranty or consummation of the
transaction contemplated thereby; and
(a) NO OFFSETS. The undersigned has no offsets, defenses or counterclaims to the
enforcement of this Guaranty.
(a) NO VIOLATIONS. Neither the execution, delivery or performance by the
undersigned of this Guaranty, nor compliance by it with the terms and provisions
hereof (i) will contravene any provision of any law, statute, rule or regulation
or any order, writ, injunction or decree of any governmental body, (ii) will
conflict or be inconsistent with or result in any breach of any of the material
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien upon any of the property or assets of the undersigned pursuant to the terms
of any indenture, mortgage, deed of trust, credit agreement, loan agreement or
any other agreement, contract or instrument to which the undersigned is a party
or by which it or
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any of its property or assets is bound or to which it may be subject or (iii)
will violate any provision of the Articles of Incorporation or By-Laws of the
undersigned.
(a) LITIGATION. There are no actions, suits or proceedings (whether or not
purportedly on behalf of the undersigned pending or threatened against the
undersigned (x) with respect to this Guaranty, or (y) which could, if adversely
determined, have a material adverse effect on the business, assets, property,
operations, financial condition or prospects of the undersigned.
(a) TAX RETURNS. The undersigned has filed all tax returns required to be filed
by it and has paid all income taxes payable by it which have become due pursuant
to such tax returns and all other taxes and assessments payable by it which have
become due, other than those not yet delinquent and except for those contested
in good faith and for which adequate reserves have been established. The
undersigned has paid, or has provided adequate reserves (in the good faith
judgment of the management of the undersigned) for the payment of, all federal
and state income taxes applicable for all prior fiscal years and for the current
fiscal year to the date hereof.
(a) ERISA. Each Employee Benefit Plan of the undersigned and any ERISA Affiliate
is in compliance with ERISA and the Code, where applicable, in all material
respects. As of November 30, 1996, (the "ERISA TEST DATE"), (i) the amount of
all Unfunded Pension Liabilities under the Pension Plans, excluding any plan
which is a Multiemployer Plan, does not exceed $1, and (ii) the amount of the
aggregate Unrecognized Retiree Welfare Liability under all applicable Employee
Benefit Plans does not exceed $500,000. There is no Multiemployer Plan. The
undersigned and/or any ERISA Affiliate has, as of the date hereof, made all
contributions or payments to or under each such Pension Plan required by law or
the terms of such Pension Plan or any contract or agreement. No material
liability to the PBGC has been, or is expected by the undersigned or any ERISA
Affiliate to be, incurred by the undersigned or any ERISA Affiliate. Liability,
as referred to herein, includes any joint and several liability. Each Employee
Benefit Plan which is a group health plan within the meaning of Section
5000(b)(1) of the Code is in material compliance with the continuation of health
care coverage requirements of Section 4980B of the Code.
(a) LABOR RELATIONS. The undersigned is not engaged in any unfair labor practice
that could have a Material Adverse Effect. There is (i) no significant unfair
labor claim or action pending against the undersigned or, to the best knowledge
of the undersigned, threatened against it, before the National Labor Relations
Board, and no significant grievance or significant arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the undersigned or, to the best knowledge of the undersigned, threatened
against it, (ii) no significant strike, labor dispute, slowdown or stoppage
pending against the undersigned or, to the best knowledge of the undersigned,
threatened against it, (iii) to the best knowledge of the undersigned, no union
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representation question existing with respect to the employees of the
undersigned and, to the best of its knowledge, no union organizing is taking
place, except (with respect to any matter specified in clause (i), (ii) or (iii)
above, either individually or in the aggregate) such as could not have a
Material Adverse Effect.
(a) NO BURDENSOME AGREEMENTS. The undersigned is not a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any charter or restriction which by its terms would have a Material
Adverse Effect or a material adverse effect on the ability of the Undersigned to
carry out its obligations under this Guaranty.
(a) PROPERTY. The undersigned has good and marketable title to all of its
Property, title to which is material to the undersigned. All of the tangible
property of the undersigned which is necessary for the operation of its business
is in substantially good repair and operating condition and is and will be in
compliance in all material respects with all material requirements of law.
(a) ENVIRONMENTAL MATTERS. (i) The undersigned is in compliance in all material
respects with the requirements of all applicable Environmental Laws.
(ii) To the best of the undersigned's knowledge and belief, no Hazardous
Substances are present upon the undersigned's Real Property in violation of any
Environmental Law and the undersigned has not received any notice to the effect
that any of its Real Property, or any of the its operations, is not in
compliance with any Environmental Law or that any federal or state investigation
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Substance into the environment is pending which, in either case, could
be reasonably expected to have a Material Adverse Effect.
1. AFFIRMATIVE COVENANTS.
Subject to Section 5 of this Guaranty, the undersigned agrees
that so long as the Commitment is not terminated, or any amount remains
outstanding or owing to the Lender under the Credit Agreement or the Note or the
other Credit Documents:
(a) ACCOUNTS AND REPORTING. The undersigned will maintain a standard system of
accounting established and administered in accordance with generally accepted
accounting principles, and provide to the Lender the following:
(i) NOTICES. Promptly, notice of (i) the occurrence of any default under
this Guaranty, (ii) the commencement of any action, suit or proceeding before
any court, arbitrator or governmental body which (A) could result in liability
or loss of $1,000,000 or more in the aggregate, in excess of any applicable
insurance coverage, to the undersigned or (B) would otherwise have a Material
Adverse Effect, (iii) with respect to the
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undersigned, any change in any Executive Officer, (iv) any threatened loss of
any authorization, qualification, license or permit issued by any governmental
body to the undersigned the loss of which could have a Material Adverse Effect,
(v) any written correspondence or notification from any governmental body, which
revokes or threatens to revoke, limits or threatens to limit, or imposes or
threatens to impose any material restrictions on, any approvals or
authorizations granted by such governmental body to the undersigned, together
with a copy thereof, or (vi) any violation of any requirements or guidelines
established by any governmental body, which might have a material adverse effect
on the status of the undersigned thereof as a lender, seller or servicer
approved by such governmental body.
(ii) LENDER REQUESTED INFORMATION. Promptly, such additional financial and
other information, including without limitation, financial statements of the
undersigned, as the Lender may from time to time reasonably request.
(iii) ENVIRONMENTAL PROCEEDINGS. Prompt written notice of any order, notice,
claim or proceeding received by, or brought against, the undersigned, or with
respect to any of the Real Property, under any Environmental Law.
(iv) EMPLOYEE BENEFIT PLAN INFORMATION. Prompt written notice in the event
that the undersigned or any ERISA Affiliate knows, or has reason to know, that
(i) any ERISA Termination Event with respect to a Pension Plan has occurred or
will occur, (ii) any condition exists with respect to a Pension Plan which
presents a material risk of termination of the Pension Plan, imposition of an
excise tax, requirement to provide security to or in respect of the Pension Plan
or other liability of the undersigned or any ERISA Affiliate, (iii) the
undersigned or any ERISA Affiliate has applied for a waiver of the minimum
funding standard under Section 412 of the Code with respect to a Pension Plan,
(iv) the aggregate amount of the Unfunded Pension Liabilities under all Pension
Plans has increased to an amount in excess of $1, (v) the aggregate amount of
Unrecognized Retiree Welfare Liability under all applicable Employee Benefit
Plans has increased to an amount in excess of $500,000, (vi) the undersigned or
any ERISA Affiliate has engaged in a Prohibited Transaction with respect to an
Employee Benefit Plan, (vii) a tax under Section 4980B(a) of the Code shall have
been imposed upon the undersigned or any ERISA Affiliate, (viii) the Secretary
of Labor shall have assessed a civil penalty under Section 502(c) of ERISA
against the undersigned or any ERISA Affiliate, or (ix) there is an action
brought against the undersigned or any ERISA Affiliate under ERISA Section 502
with respect to its failure to comply with ERISA Section 515, together with a
certificate of the president or chief financial officer of the undersigned
setting forth the details of such event and the action which the undersigned or
any ERISA Affiliate proposes to take with respect thereto, together with a copy
of all notices and filings with respect thereto.
(vi) EMPLOYEE BENEFIT PLAN LIABILITY. Prompt written notice in the event
that the undersigned or any ERISA Affiliate shall receive a demand letter from
the
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PBGC notifying the undersigned or any ERISA Affiliate of any final decision
finding liability and the date by which such liability must be paid, together
with a copy of such letter and a certificate of the president or chief financial
officer of the undersigned setting forth the action which the undersigned or any
ERISA Affiliate proposes to take with respect thereto.
(vii) PENSION PLAN AMENDMENTS. Promptly upon the same becoming available, and
in any event by the date such amendment is adopted, a copy of any Pension Plan
amendment that the undersigned or any ERISA Affiliate proposes to adopt which
would require the posting of security under Section 401(a)(29) of the Code,
together with a certificate of the president or chief financial officer of the
undersigned setting forth the reasons for the adoption of such amendment and the
action which the undersigned or any ERISA Affiliate proposes to take with
respect thereto.
(iii) PENSION PAYMENT DEFAULT. As soon as possible and in any event by the
10th day after any required installment or other payment under Section 412 of
the Code owed to a Pension Plan shall have become due and owing and remains
unpaid a copy of the notice of failure to make required contributions provided
to the PBGC by the undersigned or any ERISA Affiliate under Section 412(n) of
the Code, together with a certificate of the president or chief financial
officer setting forth the action which the undersigned or any ERISA Affiliate
proposes to take with respect thereto.
(ix) PENSION PLAN TERMINATION. If the termination of any Pension Plan would
result in the imposition of any tax under Section 4980 of the Code, then as soon
as possible, but in no event less than 60 days before the due date of the tax, a
certificate of the president or chief financial officer of the undersigned
setting forth the estimated amount of the tax, any reversion, and the proposed
use of the reversion. This subparagraph shall apply to a transaction
notwithstanding a reduction or complete elimination of the tax because of the
operation of either Sections 4980(d) or 420(a)(3)(A) of the Code.
(xii) OTHER INFORMATION. Promptly, from time to time, copies of any notices
or information given to or received from the holders of any Indebtedness of the
undersigned relating to any actual or alleged default, demand for payment or
acceleration of payment, and such other information or documents (financial or
otherwise) as the Lender may reasonably request.
(a) NO IMPAIRMENT FROM CHANGES IN OBLIGATIONS. The Lender may at any time and
from time to time, either before or after the maturity thereof, without notice
to or further consent of the undersigned, extend the time of payment of,
exchange or surrender any collateral for, renew or extend any of the Obligations
or increase the interest rate thereon, and may also make any agreement with the
Borrower or with any other party to or person liable on any of the Obligations,
or interested therein, for the extension, renewal, payment, compromise,
discharge or release thereof, in whole or in part, or for any modification of
the terms thereof or of any
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agreement between the Lender and Borrower or any such other party or person,
without in any way impairing or affecting this Guaranty.
(a) NO OBLIGATION TO PURSUE ANY COLLATERAL. This Guaranty shall not be impaired
or otherwise affected by any failure to call for, take, hold, protect or
perfect, continue the perfection of or enforce any security interest in or other
Lien upon, any collateral for the Obligations, or by any failure to exercise,
delay in the exercising or waiver of, or forbearance with respect to, any right
or remedy available to the Lender with respect to the Obligations.
(a) REINSTATEMENT OF OBLIGATIONS. To the extent that the undersigned makes a
payment or payments to the Lender on the Obligations, or the Lender receives any
proceeds of collateral to be applied to the Obligations, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or otherwise is required to be repaid
including, without limitation, under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such repayment, the
obligation or part thereof which has been paid, reduced or satisfied by such
amount shall be reinstated and continued in full force and effect as of the date
that such initial payment, reduction or satisfaction occurred notwithstanding
any contrary action which may have been taken by the Lender in reliance upon
such payment or payments. The undersigned shall defend and indemnify the Lender
from and against any claim or loss under this paragraph including attorneys'
fees and expenses in the defense of any such action or suit.
(a) BOOKS, RECORDS AND INSPECTIONS. The undersigned will keep proper books of
record and account in which full, true and correct entries in conformity with
GAAP and all requirements of law shall be made of all dealings and transactions
in relation to its business and activities. The undersigned will permit officers
and designated representatives of the Lender to visit and inspect, under
guidance of officers of the undersigned, any of the properties of the
undersigned, and to examine the books of record and accounts of the undersigned
and discuss the affairs, finances, accounts and prospects of the undersigned
with, and be advised as to the same by, its and their officers, all at such
reasonable times and intervals and to such reasonable extent as the Lender may
request.
(a) MAINTENANCE OF PROPERTY, INSURANCE. The undersigned will (i) keep all
property necessary for the operation of its business in good working order and
condition, (ii) except as otherwise provided in clause (iii) below, maintain
with financially sound and reputable insurance companies insurance (including
such insurance as the Lender shall reasonably require) in such amounts and
against such risks as are usually carried by corporations engaged in similar
businesses similarly situated, and (iii) furnish to the Lender, upon written
request, full information as to the insurance carried.
(a) CORPORATE FRANCHISES. The undersigned will do or cause to be done, all
things necessary to preserve and keep in full force and effect (i) their
corporate existence in good standing in the state of its incorporation and in
each other state in which it is required to be
-2-
<PAGE>
qualified to do business as a foreign corporation and (ii) all of their material
rights, franchises, qualifications, licenses, permits, copyrights, trademarks
and patents.
(i) COMPLIANCE WITH STATUTES, ETC. The undersigned will comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies in respect of the conduct of its business
and the ownership of its property (including, without limitation, Environmental
Laws), except such non-compliances as could not, in the aggregate, have a
Material Adverse Effect.
(i) In the event that the Lender shall have a reasonable basis for believing
that any Hazardous Substance may be on, at, under or around any Real Property in
violation of any applicable Environmental Law and that such violation might
reasonably be expected to have a Material Adverse Effect, the undersigned will
conduct and complete (at the undersigned's expense) all investigations, studies,
samplings and testings relative to such Real Property and such Hazardous
Substances as the Lender may reasonably request.
(a) PERFORMANCE OF OBLIGATIONS. The undersigned will perform all of its
obligations under the terms of each mortgage, indenture, security agreement,
debt instrument or other contract or agreement by which it is bound, except such
non-performances as could not in the aggregate, have a Material Adverse Effect.
(a) PAYMENT OF TAXES. The undersigned will pay and discharge all taxes,
assessments and governmental charges or liens imposed upon the undersigned or
upon the undersigned's income or profits, or upon any properties belonging to
the undersigned prior to the date on which the same become due, and all lawful
claims, which, if unpaid, might become a Lien or charge upon any properties of
the undersigned, provided that the undersigned shall not be required to pay any
such tax, assessment, charge, levy or claim for which it has obtained an
adequate bond or adequate insurance and which is being contested in good faith
and by appropriate proceedings so long as such contest shall operate to stay any
Material Adverse Effect caused by such Lien or charge.
(a) CORPORATE SEPARATENESS. The undersigned will take such actions as are
necessary to keep its operations separate and apart, including, without
limitation, insuring that all customary formalities regarding the corporate
existence of the undersigned, including holding regular meetings and maintenance
of its current minute books, are followed.
1. NEGATIVE COVENANTS.
The undersigned agrees that from and after the date hereof and
until the Commitment shall have been terminated and the Loans and the Note,
together with interest, fees and all other obligations incurred hereunder and
under all Credit Documents, are paid in full:
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<PAGE>
(a) LIENS. The undersigned will not create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets (real or personal, tangible
or intangible) of the undersigned, whether now owned or hereafter acquired,
other than in the ordinary course of business of the undersigned.
(i) CONSOLIDATION, MERGER, SALE OF ASSETS, ETC. The undersigned will not wind
up, liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any substantial part of its
property or assets,
(i) The undersigned will not permit any of its Subsidiaries to wind up,
liquidate or dissolve its affairs, or enter into any transaction of merger or
consolidation, and the undersigned will not, and will not permit any of its
Subsidiaries to, convey, sell, lease or otherwise dispose of (or agree to do any
of the foregoing at any future time) all or any part of its property or assets,
if any of the foregoing could have a Material Adverse Effect or result in a
material change in the scope of the business as conducted by the undersigned as
of the date of this Guaranty.
(a) INDEBTEDNESS. The undersigned will not contract, create, incur, assume or
suffer to exist any Indebtedness unless (i) such Indebtedness will appear on the
financial statements of the undersigned required to be delivered to the Lender
pursuant to this Guaranty, and (ii) such Indebtedness does not create a Default
under this Guaranty.
(a) TRANSACTIONS WITH AFFILIATES. The undersigned will not enter into any
transaction or series of related transactions, whether or not in the ordinary
course of business, with any Affiliate of either of the undersigned, other than
on terms and conditions substantially as favorable to the undersigned as would
be obtainable by the undersigned at the time in a comparable arm's-length
transaction with a Person other than an Affiliate.
(a) MODIFICATIONS OF ARTICLES OF INCORPORATION, BY-LAWS AND CERTAIN OTHER
AGREEMENTS, ETC. The undersigned will not (a) amend, modify or change their
Articles of Incorporation (including, without limitation, by the filing or
modification of any certificate of designation) or By-Laws, or any agreement
entered into by either of them with respect to their capital stock, or (b) enter
into any new agreement with respect to their capital stock, if in either case it
would have an adverse effect on the Lender.
(a) RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS. The undersigned will not,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary to (a)
pay dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the undersigned or any of its
Subsidiaries, or pay any Indebtedness owed by any such Subsidiary to the
undersigned or any other Subsidiary of the undersigned, (b) make loans or
advances to the undersigned, or (c) transfer any of its properties or assets to
the undersigned, except for such encumbrances or restrictions existing under or
by reason of (i) applicable law, (ii) this Guaranty,
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<PAGE>
(iii) or customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the undersigned or any Subsidiary of the
undersigned.
(a) ERISA. The undersigned shall not (a)(i) establish, contribute to, or become
liable (directly or indirectly) in respect of, any Multiemployer Plan, or (ii)
establish or contribute to any Pension Plan other than an Existing Pension Plan
which would increase the aggregate Unfunded Pension Liabilities under all
Pension Plans to an amount in excess of $1, (b) cause any Pension Plan to have a
Funded Current Liability Percentage of less than 60 percent, or (c) increase
benefits under any Employee Benefit Plan or establish or contribute to any new
Employee Benefit Plan which would have the effect of increasing its aggregate
Unrecognized Retiree Welfare Liability to an amount in excess of $500,000.
1. NOTICES.
All notices and other communications provided for hereunder to
a party hereto shall be in writing (including telecopier) and mailed, telecopied
or delivered to such party, at the following address or at such other address as
shall be designated by such party in a written notice to the other parties
hereto:
IF TO THE UNDERSIGNED:
LNR Sands Holdings, Inc.
c/o LNR Property Corporation
760 N.W. 107th Avenue, First Floor
Suite 100
Miami, Florida 33172
Attention: Shelly Rubin
Chief Financial Officer
Telephone: (305) 229-6640
Telecopier: (305) 226-7691
IF TO THE LENDER:
The Bank of New York
One Wall Street -- 17th Floor
New York, New York 10286
Attention: William H. Cunningham
Vice President
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<PAGE>
Telephone: (212) 635-6471
Telecopier: (212) 635-6468
All such notices and communications shall, (i) when telecopied be
effective when sent, (ii) when mailed by first class mail, postage prepaid, be
effective on the fifth (5th) day following deposit in the mails, and (iii) when
sent or delivered by any other means be effective when received. The undersigned
and the Lender may rely on signatures of each other which are transmitted by
telecopier or other electronic means as fully as if originally signed.
1. JURISDICTION; VENUE.
The undersigned irrevocably submits to the jurisdiction of any
New York State or Federal court sitting in the City or State of New York over
any suit, action or proceeding arising out of or relating to this Guaranty. The
undersigned hereby agrees that Lender shall have the option, in its sole
discretion, to lay the venue of any such suit, action or proceeding, in the
courts of the State of New York or the United States of America for the Southern
District of New York, and irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding brought in such court and any claim that
any such suit, action or proceeding brought in such a court has been brought in
an inconvenient forum. The undersigned agrees that a final judgment in any such
suit, action or proceeding brought in such a court shall be conclusive and
binding upon the undersigned.
1. WAIVER OF TRIAL BY JURY.
THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS AND
THE TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. FURTHER, THE UNDERSIGNED HEREBY CERTIFIES THAT NO
REPRESENTATIVE OF THE LENDER, OR COUNSEL TO THE LENDER, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS PROVISION. THE PROVISIONS OF THIS PARAGRAPH
CONSTITUTE A MATERIAL INDUCEMENT TO THE LENDER TO ACCEPT THIS GUARANTY.
1. GOVERNING LAW.
This Guaranty and the rights and obligations of the parties hereunder
shall be construed, enforced, and interpreted according to the laws of the State
of New York applicable to contracts made in and performed in the State of New
York. Unless the text otherwise requires all terms used herein shall have the
meaning specified in the Uniform Commercial Code as in effect in the State of
New York on the date hereof.
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<PAGE>
1. OTHER PROVISIONS.
(a) The undersigned hereby acknowledges that it has derived or expects to derive
a financial or other advantage from each and every Obligation incurred by
Borrower to the Lender.
(a) The undersigned waives notice of the acceptance of this Guaranty and of the
making of any such loans or extensions of credit, presentment to or demand of
payment from anyone whomsoever liable upon any of the Obligations, protest,
notice of presentment, non-payment or protest and notice of any sale of
collateral security or any default of any sort.
(a) The undersigned hereby agrees that, in the event that any property of the
undersigned is or may be hypothecated with property of Borrower as security for
any Obligations, any right of the undersigned to have such property of Borrower
first applied to the discharge of such Obligations is hereby irrevocably waived
by the undersigned.
(a) This is a continuing guaranty and shall remain in full force and effect and
be binding upon the undersigned, and the undersigned's successors and assigns.
Except as provided in Section 10 below, nothing except cash payment in full of
all Obligations and the termination of the Commitment shall release the
undersigned from liability under this Guaranty.
(a) This Guaranty is a guaranty of payment and not of collection, and the Lender
shall be under no obligation to take any action against Borrower or any other
person liable with respect to any of the Obligations or resort to any collateral
security held by it to secure any of the Obligations as a condition precedent to
the undersigned being obligated to perform as agreed herein. The undersigned
hereby waives any rights to interpose any defense, counterclaim or offset of any
nature and description which he may have or which may exist between and among
the Lender, Borrower and/or the undersigned.
(a) This Guaranty may be assigned by the Lender and its benefits shall inure to
the successors, indorsees and assigns of the Lender.
(a) Until such time as the Lender shall have received payment in full in cash in
satisfaction of all of the Obligations and the commitment shall have been
terminated, the undersigned waives any rights to be subrogated to the rights of
the Lender with respect to the Obligations and the undersigned waives any right
to and agrees that it will not institute or take any action against the Borrower
seeking contribution, reimbursement or indemnification by the Borrower with
respect to any payments made by the undersigned to the Lender hereunder.
(a) The undersigned waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations or of the reliance by Lender upon
this Guaranty. The Obligations, and each of them, shall conclusively be deemed
to have been created, contracted
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<PAGE>
or incurred in reliance upon this Guaranty. This Guaranty shall be construed as
a continuing, absolute and unconditional guaranty without regard to the
validity, regularity or enforceability of the Obligations and any other
indebtedness at any time held or owing by the Lender to or for the credit or the
account of the undersigned against and on account of the Obligations and
liabilities of the undersigned hereunder.
(a) The undersigned hereby waives any and all legal requirements that require or
compel the Lender to institute any action or proceedings at law or in equity
against Borrower, or anyone else, in respect of the Loans or any other document
executed in connection with the Loans or resort to or seek to realize upon or
exhaust the security held by the Lender or pursue any other remedy in the
Lender's power, as a condition precedent to bringing an action against the
undersigned upon this Guaranty, and failure of the Lender to do any of the
foregoing shall not exonerate, release or discharge the undersigned from its
absolute, unconditional and independent liabilities to the Lender hereunder.
(a) The Lender may bring and prosecute a separate action against the undersigned
to enforce its liabilities hereunder, whether or not any action is brought
against Borrower or any other person and whether or not Borrower or any other
person is joined in any such action or actions. Nothing shall prohibit the
Lender from exercising its rights against the undersigned, the Borrower, the
security, if any, for the Obligations, and any other person simultaneously,
jointly and/or severally. The undersigned shall be bound by each and every
ruling, order and judgment obtained by the Lender against Borrower in respect of
the Obligations, whether or not the undersigned is a party to the action or
proceeding in which such ruling, order or judgment is issued or rendered.
(a) The undersigned shall not be discharged, released or exonerated, in any way,
from its absolute, unconditional and independent liabilities hereunder, even
though any rights or defenses which the undersigned may have against Borrower,
the Lender or others may be destroyed, diminished or otherwise affected by:
(i) Any declaration by the Lender of a default in respect of any of the
Obligations;
(i) The exercise by the Lender of any rights or remedies against Borrower or any
other person;
(i) The failure of the Lender to exercise any rights or remedies against
Borrower or any other person;
(i) The sale or enforcement of, or realization upon (through judicial
foreclosure, power of sale or any other means) any security for any of the
Obligations, even though (i) recourse may not thereafter be had against Borrower
for any deficiency, or (ii) the Lender fails
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<PAGE>
to pursue any such recourse which might otherwise be available; whether by way
of deficiency judgment following judicial foreclosure, or otherwise;
(i) Any bankruptcy or reorganization of Borrower;
(i) The release of any other guarantor by operation of law or otherwise; or
(i) The voluntary or involuntary participation by Borrower in any settlement or
composition for the benefit of Borrower's creditors either in liquidation,
readjustment, receivership, bankruptcy or otherwise.
(a) The undersigned waives any right to plead any election of remedies.
(a) This Guaranty is absolute and unconditional and shall not be changed or
affected by any representation, oral agreement, act or thing whatsoever, except
as herein otherwise expressly provided. No modification or amendment of any
provisions of this Guaranty shall be effective unless in writing and signed by a
duly authorized officer of the Lender.
(a) No failure on the part of the Lender to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by the Lender of any right,
remedy or power hereunder preclude any other or future exercise of any other
right, remedy or power.
(a) Each and every right, remedy and power hereby granted to the Lender or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Lender at any time and from time to time.
1. TERMINATION.
Subject to Section 3(d) hereof, this Guaranty shall terminate,
and the undersigned shall have no further obligations hereunder, upon the
occurrence of the following conditions: (i) the Lender shall have received
payment, in immediately available funds for application to the outstanding
Obligations, of the sum of $33,092,000 and (ii) on the date such payment is
received, and after giving effect thereto, there shall not exist any Event of
Default under and as defined in the Credit Agreement.
IN WITNESS WHEREOF, this Guaranty has been executed by the
undersigned as of the date first above written.
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<PAGE>
LNR SANDS HOLDINGS, INC.
By:_____________________________
Name:
Title:
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<TABLE>
<CAPTION>
EXHIBIT 10.11
CS FIRST BOSTON
<S> <C>
CS First Boston (Hong Kong) Limited 9/F One Exchange Square
Hong Kong
Telephone (852) 2847 0388
Telex 66652 CSFBHX
Facsimile (852) 2845 2456
</TABLE>
June 7, 1996
Lennar Corporation
Lennar Financial Services, Inc.
Lennar MBS, Inc.
Lennar Securities Holdings, Inc.
LFS Asset Corp.
730 Northwest 107th Avenue
Miami, FL 33172
Dear Sirs:
CS first Boston (Hong Kong) Limited ("Buyer") hereby agrees to
enter into one or more reverse repurchase agreements with Lennar
Financial Services, Inc., Lennar MBS, Inc., Lennar Securities
Holdings, Inc., or LFS Asset Corp. (each a "Seller") whereby
Buyer shall, from time to time, purchase on a specified date
commercial mortgage pass-through certificates (the "Securities")
and whereby a Seller shall agree to repurchase such Securities on
a specified date (each such transaction, a "Transaction"),
subject to the terms and conditions set forth herein and in each
of four Global Master Repurchase Agreements Dated as of June 4,
1996 (the "Repurchase Agreement"), one of which has previously
been executed by each Seller and Buyer. It is acknowledged and
agreed that (i) Buyer and Lennar MBS, Inc. shall execute a
Transaction with respect to the Securities described in Exhibit A
and Buyer and Lennar Securities Holdings, Inc. shall execute two
Transactions with respect to the Securities described in Exhibits
B and C, all pursuant to the timetable set forth below and (ii)
the parties hereto may execute one or more additional
Transactions provided that the Securities which are the subject
of any proposed Transaction and the terms are acceptable to Buyer
in its sole discretion.
1. Subject to the terms and conditions hereof and the
provisions of the relevant Repurchase Agreement
(including, without limitation, the default and early
termination provisions hereof and thereof), any and all
Transactions will terminate on or before May 29, 1998.
2. Prior to the date of the first Transaction, Lennar
Corporation shall provide a guarantee. In form and
substance acceptable to Buyer, which shall guarantee the
obligations of each Seller under any Transaction pursuant
to the relevant Repurchase Agreement and this letter, and
shall upon Buyer's request provide customary legal
opinions as to enforceability.
3. The maximum aggregate Purchase Price for all
Transactions outstanding with all Sellers at any one
time shall not exceed U.S. $150,000,000.
4. Prior to the date of the first Transaction, Lennar
Corporation shall have paid a fee to Buyer of U.S.
$75,000 (i.e., 5 basis points on $150,000,000).
5. With respect to the Securities set forth in Exhibits A,
B and C, Buyer and Lennar MBS, Inc., and Buyer and
Lennar Securities Holdings, Inc., shall execute
Transactions, each in
<PAGE>
CS FIRST BOSTON
an amount not to exceed U.S. $25,000,000, on June 17,
1996, June 24, 1996, July 1, 1996, respectively. All
other Transactions shall be additional Transactions
which are entered into by Buyer at its sole discretion.
6. Prior to the execution of any Transaction, the relevant
Seller shall have provided to Buyer the related
prospectus, pooling and servicing agreement, current
remittance reports, price/yield tables, and a
collateral tape containing property-related information
that Buyer, in its sole discretion, deems necessary in
determining the Market Value of the Securities, in a
form acceptable to Buyer. On a monthly basis, such
Seller shall provide to Buyer monthly remittance
reports, any material correspondence between such
Seller and the respective Master Servicer or Special
Servicer, and such property level information that
Buyer, in its sole discretion, deems necessary in
determining the Market Value of the Securities.
7. The price at which the Securities shall be repurchased
by any Seller on a Repurchase Date shall equal the
Purchase Price plus the Price Differential which has
accrued but not been paid as of such Repurchase Date.
The Price Differential shall accrue on a daily basis for
the Securities and be calculated on an actual/360 day
basis. The Price Differential shall be payable monthly
in arrears. The Pricing Rate used to calculate the Price
Differential shall equal the one-month LIBOR rate set
for such payment plus the Fixed Spread (as defined
below), and shall initially be set on the Purchase Date
of the Transaction.
The Fixed Spread for particular Securities which are the
subject of a Transaction is set forth below in paragraph
9 and corresponds to the lowest rating (the "Rating")
assigned to such Securities by any nationally
recognized rating agency that rated the Securities upon
their issuance.
8. The Buyer's Margin Amount for particular Securities
which are the subject of a Transaction is set forth
below in paragraph 9 and corresponds to the lowest
Rating assigned to such Securities. Paragraph 4(b) of
the relevant Repurchase Agreement shall not apply. The
relevant Seller shall maintain margin by transferring
to Buyer U.S. dollars.
9. The Fixed Spread and Buyer's Margin Amount with respect
to particular Securities in any particular Transaction
is set forth below:
Rating FIXED SPREAD BUYER'S MARGIN AMOUNT
BB or higher 75 basis points 120%
B or higher
(but less
than BB) 90 basis points 120%
Unrated or
less than B 120 basis points 125%
10. In addition to the default and early termination
provisions set forth in the relevant Repurchase
Agreement, Buyer's commitment to engage in the
Transactions referred to herein with all Sellers shall,
at the option of Buyer, terminate, and/or all
outstanding Transactions with all Sellers shall, at the
option of Buyer, terminate (and the Repurchase Date
shall be deemed to occur immediately), in the event
that:
<PAGE>
CS FIRST BOSTON
(a) there shall been a material adverse change in
the business or financial condition of Lennar
Corporation and/or any Seller, as determined by
Buyer in its sole discretion;
(b) the rating of the Securities shall be
downgraded, withdrawn, or placed on review for a
possible downgrade, by the nationally recognized
rating agency that rated the Securities upon
their issuance; and
(c) either (i) a change of control of Lennar
Corporation and/or Seller shall have occurred;
(ii) either Steven Saiontz, President of Lennar
Financial Services, Inc. and Director of Lennar
Corporation or Stuart Miller, President of
Lennar Commercial Properties, Inc. and Vice
President of Lennar Corporation shall cease to
be employed by such entities and functioning in
their respective capacities and successors
acceptable to Buyer shall not have been employed
by such entities and commenced functioning in
such capacities;
PROVIDED, HOWEVER, if solely an event set forth in
Paragraph 10(b) hereof has occurred with respect to a
particular Transaction and the related Securities, then
Buyer's commitment to engage in the Transactions
referred to herein shall continue to be effective and
only such particular Transaction shall, at the option of
Buyer, terminate (and the Repurchase Date for such
Transaction shall be deemed to occur immediately).
11. In addition to the default and early termination
provisions set forth herein and in the relevant
Repurchase Agreement, Buyer shall not be committed
to engage in any additional Transactions referred to
herein if the Standard & Poors credit rating of
Lennar Corporation as of the date hereof shall be
downgraded or withdrawn (whether or not the
aggregate Purchase Price for all outstanding
Transactions with all Sellers at the time of such
downgrade or withdrawal equals U.S. $150,000,000);
provided, however, at the request of Seller, Buyer
shall be obligated to execute one additional
Transaction (with respect to any then existing
Transaction) with a term of up to 30 days,
commencing on the Repurchase Date of such then
existing Transaction provided that no other event of
default or early termination event provided herein
or in the relevant Repurchase Agreement (including,
without limitation the events provided in Paragraph
10 hereof) entitles the Buyer to establish an
earlier Repurchase Date with respect to such then
existing Transaction.
12. In the event that Buyer determines that the
aggregate Market Value of the Collateral has
declined, after sending notice to the relevant
Seller of a Margin Deficit, Buyer acknowledges that
such Seller may provide to Buyer additional or
different information during the period, if any,
specified In the relevant Repurchase Agreement prior
to which a margin call must be satisfied, which may
have been relevant to Buyer's determination.
Notwithstanding the foregoing, Buyer shall have no
obligation to change its determination of aggregate
Market Value and Buyer shall retain all of its
rights specified in the relevant Repurchase
Agreement.
13. Capitalized terms not defined herein have the
meanings given to them in the relevant Repurchase
Agreement.
<PAGE>
CS FIRST BOSTON
14. The governing law provisions set forth in the relevant
Repurchase Agreement shall be applicable hereto. Except as
otherwise provided herein, the rights and obligations
provided pursuant to such Repurchase Agreement shall
remain in full force and effect.
Very truly yours,
CS FIRST BOSTON (HONG KONG) LIMITED
By: /s/ Terrence B. Clarke
----------------------
Name: Terrence B. Clarke
Title: Vice President
Legal & Compliance Department
AGREED AND ACCEPTED:
LENNAR CORPORATION
By: /s/ Allan J. Pekor
----------------------
Name: Allan J. Pekor
Title: Financial Vice President
LENNAR FINANCIAL SERVICES, INC.
By: /s/ Janice Munoz
---------------------
Name: Janice Munoz
Title: VP/Treasurer
LENNAR MBS, INC.
By: /s/ Janice Munoz
---------------------
Name: Janice Munoz
Title: VP/Treasurer
LENNAR SECURITIES HOLDINGS, INC.
By: /s/ Allan J. Pekor
----------------------
Name: Allan J. Pekor
Title: Financial Vice President
<PAGE>
CS FIRST BOSTON
LFS ASSET CORP.
By: /s/ Janice Munoz
---------------------
Name: Janice Munoz
Title: VP/Treasurer
ACCEPTED AND AGREED TO SOLELY
IN ITS CAPACITY AS AGENT
CS FIRST BOSTON
By: /s/ Walter P. Fekula
----------------------
Name: WALTER P. FEKULA
Title: DIRECTOR-CREDIT DEPT.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PSA ISMA
INTERNATIONAL SECURITIES MARKET ASSOCIATION
Public Securities Association
40 Broad Street, New York, NY 10004-2373 Rigistrasse 60. P.O. Box 169, CH-8033 Zurich
VERSION I
GROSS PAY1NG SECURITIES
</TABLE>
GLOBAL MASTER REPURCHASE AGREEMENT
This agreement is to be used for repos or reverse repos of securities
other than equities. U.S. Treasury Instruments Net Paying Securities
Dated as of JUNE 4, 1996
Between:
CS FIRST BOSTON (HONG KONG) LIMITED ("Party A")
and
LENNAR FINANCIAL SERVICES, INC. ("Party B")
1. Applicability
From time to time the parties hereto may enter into
transactions in which one party ("SELLER") agrees to sell to the other
("Buyer") securities and financial instruments (other than equities,
U.S. Treasury instruments and Net Paying Securities) ("SECURITIES")
against the payment of the purchase price in money by Buyer to Seller,
with a simultaneous agreement by Buyer to sell to Seller securities
equivalent to such Securities at a date certain or on demand against
the payment of the purchase price in money by Seller to Buyer. Each
such transaction shall be referred to herein as a "TRANSACTION" and
shall be governed by this Agreement, including any supplemental terms
or conditions contained in Annex I hereto, unless otherwise agreed in
writing.
2. Definitions
(a) "ACT OF INSOLVENCY" shall occur with respect to any party
hereto upon (i) its making a general assignment for the benefit of, or
entering into a reorganization, arrangement, or composition with
creditors, or (ii) its admitting in writing its inability to pay its
debts as they become due, or (iii) its seeking, consenting to or
acquiescing in the appointment of any trustee, administrator, receiver
or liquidator or analogous officer of it or any material part of its
property, or (iv) the presentation or filing of a petition in respect
of it (other than by the counterparty to this Agreement in respect of
any obligation under this Agreement) in any court or before any agency
alleging or for the bankruptcy, winding-up or other insolvency of such
party (or any analogous proceeding) or seeking any reorganization,
arrangement, composition, re-adjustment, administration, liquidation,
dissolution or similar relief under any present or future statute law
or regulation, such petition (except in the case of a petition for
winding-up or any analogous proceeding) not having been stayed or
dismissed within 30 days of its filing, or (v) the appointment of a
receiver, administrator, liquidator or trustee or analogous officer of
such party over all or any material part of such party's property;
(B) "ADDITIONAL PURCHASED SECURITIES", Securities transferred
by Seller to Buyer pursuant to paragraph 4(a) hereof;
(C) "BASE CURRENCY", the currency indicated in Annex I hereto:
<PAGE>
(d) "BUSINESS DAY", (i)a day other than a Saturday or a
Sunday on which banks are open for business in London and in the
principal financial centre of the country of which the currency
in which the Purchase Price and the Repurchase Price are
denominated is the official currency (or, in the case of ECU,
Brussels) and (ii) in the event that the Transaction is to be
settled through CEDEL or Euroclear on a payment against delivery
basis, a day on which CEDEL or, as the case may be, Euroclear is
open to settle business in the currency in which the Purchase
Price and the Repurchase Price are denominated and (iii) in the
event that the Transaction is to be settled otherwise than
through CEDEL or Euroclear on a payment against delivery basis, a
day on which the settlement system through which the Transaction
is to be settled is open to settle such Transaction and (iv)
where settlement is not being effected through a specific
settlement system, a day on which banks are open for business in
the place where delivery of the Securities the subject of such
Transaction is to be settled;
(e) "BUYER'S MARGIN AMOUNT", with respect to any
Transaction as of any date, the amount obtained by application of
a percentage to the Repurchase Price for such Transaction as of
such date, such percentage (which may be equal to the percentage
that is agreed to for the purposes of Seller's Margin Amount
under sub-paragraph (aa) of this paragraph) being a percentage
agreed to by Buyer and Seller for this purpose in relation to
that Transaction;
(f) "CEDEL", Cedel S.A.;
(g) "CONFIRMATION" the meaning specified in paragraph
3(b) hereof;
(h) "CONTRACTUAL CURRENCY",- the meaning specified in
paragraph 7(a) hereof;
(i) "DEFAULTING PARTY", the meaning specified in
paragraph 10 hereof;
(j) "DEFAULT MARKET VALUE" in relation to Securities on
any date (where Seller is the Defaulting Party) the Market value
of such Securities on such date; and (where Buyer is the
Defaulting Party) the amount it would cost to buy such Securities
at the best available offer price therefore (and where different
offer prices are available for different delivery dates, such
offer price in respect of the earliest available such delivery
date) on the most appropriate market on such date together with
all broker's fees and commissions, transfer taxes and all other
costs, fees and expenses that would be incurred in connection
therewith (calculated on the assumption that the aggregate
thereof is the least that could reasonably be expected to be paid
in order to carry out the Transaction), all as determined by
Seller; and for these purposes any sum in a currency other than
the Contractual Currency For the Transaction in question shall be
converted into such Contractual Currency at the Spot Rate;
(k) "EQUIVALENT SECURITIES", with respect to a
Transaction, securities of the same issuer, forming part of the
same issue and being of an identical type, nominal value,
description and (except where otherwise stated) amount to the
Purchased Securities under that Transaction. If and to the
extent that such Purchased Securities have been redeemed the
expression shall mean a sum of money equivalent to the proceeds
of the redemption;
(l) "EUROCLEAR", Morgan Guaranty Trust Company of New
York, Brussels Branch, as operator of the Euroclear System;
(m) "EVENT OF DEFAULT", the meaning specified in
paragraph 10 hereof;
(n) "INCOME", with respect to any Security at any time,
all interest, dividends or other distributions thereon;
(o) "LIB0R" in relation to any sum in any currency, the
three-month London Inter Bank Offered Rate in respect of that
currency as quoted on Page 3750 on the Telerate Service (or such
other page as may replace Page 3750 on that service or such
other service as may be nominated for the time being by the
British Bankers' Association as the information vendor for the
purpose of displaying British Bankers' Association Interest
Settlement Rates) as of 11.00 a.m., London time, on the date on
which it is to be determined;
(p) "MARGIN DEFICIT", the meaning specified in paragraph
4(a) hereof;
(q) "MARGIN EXCESS", the meaning specified in paragraph
4(b) hereof;
(r) "MARKET VALUE", with respect to any Securities as of
any time on any date, the price for such Securities at such time
on such date obtained from a generally recognized source agreed
to by the parties (and where different prices are obtained for
different delivery dates, the price so obtainable for the
earliest available such delivery date) (provided that the price
of Securities that are suspended shall (for the purposes of
paragraph 4 hereof) be nil unless the parties otherwise Agree
and (for all other purposes) shall be the price of those
Securities as of close of business on the Business Day last
preceding the date of suspension) plus the aggregate amount of
Income which, as of such date, has accrued but not yet been paid
in respect of the
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Securities to the extent not included in such price as of such date,
and for these purposes any sum in a currency other than the
Contractual Currency for the Transaction in question shall be
converted into such Contractual Currency at the Spot Rate;
(s) "NET PAYING SECURITIES", Securities in respect of which
any interest, dividend or other distribution payable by the issuer to
either Seller or buyer is required by law to be paid subject to
withholding or deduction for or on account of taxes or duties of
whatsoever nature imposed, levied, collected, withheld or assessed by
any authority having power to tax;
(t) "PRICE DIFFERENTIAL", with respect to any Transaction as
of any date, the aggregate amount obtained by daily application of
the Pricing Rate for such Transaction to the Purchase Price for such
Transaction (on a 360 day year basis, or 365 day year basis as agreed
between the parties for the Transaction) for the actual number of
days during the period commencing on (and including) the Purchase
Date for such Transaction and ending on (but excluding) the date of
calculation;
(u) "PRICING RATE", with respect to any Transaction, the per
annum percentage rate for calculation of the Price Differential
agrees to by Buyer and Seller in relation to that Transaction;
(v) "PURCHASE DATE", with respect to any Transaction, the
date on which Purchased Securities are to be sold by Seller to Buyer
in relation to that Transaction;
(w) "PURCHASE PRICE", (I) on the Purchase Date, the price at
which Purchased Securities are sold or are to be sold by Seller to
Buyer, and (ii) thereafter, such price increased by the amount of any
money paid by Buyer to Seller pursuant to paragraph 4(b) hereof and
decreased by the amount of any money paid by Seller to Buyer pursuant
to paragraph 4(a) hereof (and for this purpose any amount of money
not denominated in the Contractual Currency shall (subject to
paragraph (a)) be converted into the Contractual Currency at the
Spot Rate);
(x) "PURCHASED SECURITIES", with respect to any Transaction,
subject to paragraph 8 hereof, the Securities sold or to be sold by
Seller to Buyer under that Transaction. With respect to any
Transaction the term "PURCHASED SECURITIES" shal1 include Additional
Purchased Securities transferred pursuant to paragraph 4(a) and
attributed to that Transaction and shall exclude Purchased Securities
in respect of which Equivalent Securities have been transferred
pursuant to paragraph 4(b);
(y) "REPURCHASE DATE", with respect to any Transaction, the
date on which Buyer is to sell Equivalent Securities to Seller in
relation to that Transaction;
(z) "REPURCHASE PRICE", WITH respect to any Transaction and
as of any date the sum of the Purchase Price and the Price
Differential as of such date (and for this purpose any amount of
money not denominated in the Contractual Currency shall (subject to
paragraph 7(a)) be converted into the Contractual Currency at the
Spot Rate);
(aa) "SELLER'S MARGIN AMOUNT", WITH respect to any
Transaction as of any date, the amount obtained by application of a
percentage to the Repurchase Price, such percentage (which may be
equal to the percentage that is agreed to for the purposes of Buyer's
Margin Amount under sub-paragraph (e) of this paragraph) being a
percentage agreed to by Buyer and Seller for this purpose in relation
to that Transaction;
(bb) "SPOT RATE", where an amount in one currency is to be
converted into a second currency on any date, unless the parties
otherwise agree, at the spot rate of exchange quoted by Barclays 8ank
PLC in the London interbank market for the sale by it of such second
currency against a purchase by it of such first currency;
(cc) "TERM", with respect to any Transaction, the interval of
time commencing with the Purchase Date and ending with the
Repurchase Date; and
(dd) "TERMINATION", with respect to any Transaction, refers
to the requirement with respect to such Transaction for Buyer to
sell Equivalent Securities against payment by Seller of the
Repurchase Price in accordance with paragraph 3(d)(ii), and
references to a Transaction having a "fixed term or being
"terminable upon demand" shall be construed accordingly.
3. Initiation; Confirmation; Termination
(a) A Transaction may be entered into orally or in writing at
the initiation of either Buyer or Seller.
(b) Upon agreeing to enter into a Transaction hereunder,
Buyer or Seller (or both), as shall be agreed, shall promptly deliver
to the other party a written confirmation of such Transaction (a
"CONFIRMATION").
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The Confirmation shall describe the Purchased Securities
(including CUSIP or CINS or other identifying number, if any),
identify Buyer and Seller and set forth (i) the Purchase Date, (ii)
the Purchase Price, (iii) the Repurchase Date, unless the
Transaction is to be terminable on demand (in which case the
Confirmation will say that it is so terminable), (iv) the Pricing
Rate applicable to the Transaction, (v) in respect of each party
the details of the bank account[s] to which payments to be made
hereunder are to be credited, and (vi) any additional terms or
conditions of the Transaction not inconsistent with this Agreement
and shall be substantially in the form of Annex II hereto or such
other form as the parties may agree.
The Confirmation relating to a Transaction shall, together
with this Agreement, constitute prima facie evidence of the terms
agreed between Buyer and Seller for that Transaction, unless
specific objection is made with respect to the Confirmation
promptly after receipt thereof. In the event of any conflict
between the terms of such Confirmation and this Agreement, this
Agreement shall prevail except in the case of those provisions in
relation to which the Agreement specifically states that the
parties may otherwise agree; and as to those provisions, the
Confirmation shall prevail.
(c) (i) In the case of on demand Transactions, demand for
Termination shall be made by Buyer or Seller, by telephone or
otherwise and shall provide for Termination to occur after not less
than the minimum period as is customarily required for the
settlement or delivery of money or Equivalent Securities of the
relevant kind.
(ii) Termination of a Transaction will be effected, in the
case of on demand Transactions, on the date specified for
Termination in such demand, and, in the case of fixed term
Transactions on the date fixed for Termination.
(d) (i) On the Purchase Date for a Transaction, the
Purchased Securities shall be transferred to Buyer or its agent
against the payment of the Purchase Price to Seller.
(ii) Termination of a Transaction will be effected on the
Repurchase Date by transfer to Seller or its agent of Equivalent
Securities against the payment by the Seller of the Repurchase
Price (less any amount then payable and unpaid by Buyer to Seller
pursuant to paragraph 5 hereof).
4. Margin Maintenance
(a) If at any time the aggregate Market Value of all
Purchased Securities then subject to any Transaction in which a
particular party hereto is acting as Buyer is less than the
aggregate of the Buyer's Margin Amounts for all such Transactions
(the difference between such amounts being a "MARGIN DEFICIT"),
then Buyer may by notice to Seller in such Transactions require
Seller to pay money or, at Seller's option, to transfer additional
Securities reasonably acceptable to Buyer ("ADDITIONAL PURCHASED
SECURITIES"), so that the aggregate Market Value of the Purchase
Securities, including any such Additional Purchased Securities.
will thereupon equal or exceed an amount which equals the aggregate
of the Buyer's Margin Amounts for all such Transactions less the
amount of the Margin Deficit (if any) as of such date in respect of
all the Transactions in which such Buyer is acting as Seller. For
the purposes of this calculation all sums not denominated in the
Base Currency shall be converted into the Base Currency on the
relevant date at the Spot Rate.
(b) If at any time the aggregate Market Value of all
Purchase Securities then subject to any Transaction in which a
particular party hereto is acting as Seller exceeds the aggregate
of the Seller's Margin amounts for all such Transactions (the
difference between such amounts being "Margin Excess"), then
Seller may by notice to Buyer in such Transactions require Buyer
to pay money or, at Buyer's option, to transfer Equivalent
Securities to Seller in an amount such that the aggregate Market
Value of all Purchased Securities will thereupon not exceed an
amount which equals the aggregate of the Seller's Margin Amounts
for allsuch Transactions plus the amount of the Margin Excess (If
any) as of such date in respect of all the Transactions in which
such Seller is acting as Buyer. For the purposes of this
calculation all sums not denominated in the Base Currency shall be
converted into the Base Currency on the relevant date at the Spot
Rate.
(c) Any money paid or Securities transferred pursuant to
this paragraph shall be attributed as between all the different
Transactions then outstanding as shall be agreed upon by Buyer and
Seller and, failing such agreement, as determined by the party
receiving such money or Securities. Any money paid shall be paid
in the currency agreed therefor between Buyer and Seller and
failing such agreement in the Base Currency.
(d) The parties may agree, with respect to any or ail
Transactions, that their respective rights under sub-paragraphs
(a) and (b) of this paragraph may be exercised only where a
Margin Deficit or a Margin Excess exceeds an agreed amount or an
agreed percentage of the aggregate of the Repurchase Prices of
the relevant Transactions.
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<PAGE>
(e) The parties may agree that their respective rights under
sub-paragraphs (a) and (b) of this paragraph (to require the
elimination of a Margin Deficit or a Margin Excess, as the case may be)
may be exercised in respect of an individual Transaction whenever &
Margin Deficit or Margin Excess (calculated on the basis that
Transaction is the only Transaction then outstanding) exists with
respect to it.
(f) Where the Seller or Buyer becomes obliged under either of
sub-paragraph (a) or (b) of this paragraph to pay money or to transfer
Securities or Equivalent Securities, it shall pay or transfer the same
within the minimum period specified in Annex I or, if no period is
there specified, such minimum period as is customarily required for the
settlement or delivery of money, Securities or Equivalent Securities of
the relevant kind.
5. Income Payments
Unless otherwise agreed, where a particular Transaction's Term
extends over an Income payment date in respect of any Securities
subject to that Transaction, Buyer shall on the date such Income is
paid transfer to or credit to the account of Seller an amount equal to
(and in the same currency as) such Income payment or payments.
6. Payment and Transfer
(a) Unless otherwise agreed, all money paid hereunder shall be
in immediately available, freely convertible funds of the relevant
currency. All Securities transferred hereunder (i) shall be in suitable
form for transfer and shall be accompanied by duly executed instruments
of transfer or assignment in blank (where required for transfer) and
such other documentation as the transferee party may reasonably
request, or (ii) shall be transferred through the book entry system of
Euroclear or CEDEL, or (iii) shall be transferred through any other
agreed securities clearance system, or (iv) shall be transferred by any
other method mutually acceptable to Seller and Buyer.
(b) Unless otherwise agreed, all money payable by one party to
the other in respect of any Transaction shall be paid free and clear
of, and without withholding or deduction for, any taxes or duties of
whatsoever nature imposed, levied, collected, withheld or assessed by
any authority having power to tax, unless the withholding or deduction
of such taxes or duties is required by law. In that event, unless
otherwise agreed, the paying party shall pay such additional amounts as
will result in the net amounts receivable by the other party (after
taking account of such withholding or deduction) being equal to such
amounts as would have been received by it had no such taxes or duties
been required to be withheld or deducted.
(c) Unless otherwise agreed in writing between the parties,
under each Transaction transfer of Purchased Securities by Seller and
payment of Purchase Price payable by Buyer against the transfer of such
Purchased Securities shall be made simultaneously and transfer of
Equivalent Securities by Buyer and payment of Repurchase Price payable
by Seller against the transfer of such Equivalent Securities shall be
made simultaneously.
(d) In the case of any Transaction where, pursuant to the
provisions of this Agreement, a party performs an obligation to
transfer Securities or to pay money at a time when the other party, in
accordance with this Agreement, is required to perform an obligation to
pay money or transfer Securities simultaneously with the performance of
the first party's obligation but, nevertheless, the second party's
obligation is not performed simultaneously, the second party shall hold
on trust for the first party any assets (including money or Securities)
that it receives from the first party prior to the performance of its
own obligation being completed provided always that the second party
shall be at liberty to dispose of any such assets to the extent such
disposal occurs in the ordinary course of its business and provided
further that any such trust shall terminate upon the completion of the
performance of the aforesaid obligations of the second party or
disposal of such assets whichever shall first occur.
(e) Subject to and without prejudice to the provisions of
sub-paragraph 6(c), either party may from time to time in accordance
with market practice and in recognition of the practical difficulties
in arranging simultaneous delivery of Securities and money waive in
relation to any Transaction its rights under this Agreement to receive
simultaneous transfer and/or payment provided that transfer and/or
payment shall. notwithstanding such waiver, be made on the Same day and
provided also that no such waiver in respect of one Transaction shall
affect, or bind it in respect of, any other Transaction.
(f) The parties shall execute and deliver all necessary
documents and take all necessary steps to procure that all right, title
and interest in any Purchased Securities and any Equivalent Securities
shall pass to the party to which transfer is being made upon transfer
of the same in accordance with this Agreement, free from all
liens, claims, charges and encumbrances.
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<PAGE>
(g) Notwithstanding the use of expressions such as "Repurchase
Date", "Repurchase Price", "Margin", "Margin Excess" and Margin
Deficit which are used to reflect terminology used in the market for
transactions of the kind provided for in this Agreement, all right,
title and interest in and to Securities and money transferred or paid
under this Agreement Shall pass to the transferee upon transfer or
payment (subject to the trust provided for in paragraph 6(d) of this
Agreement), the obligation of the party receiving Purchased
Securities being an obligation to transfer Equivalent Securities. For
the avoidance of doubt all right, title and interest in and to
Securities and money transferred or paid pursuant to paragraphs 4(a)
and (b) shall pass in like manner.
(h) Time shall be of the essence in this Agreement.
(i) Subject to paragraph 10 hereof, all amounts in the same
currency payable by each party to the other under any Transaction or
hereunder on the same date shall be combined in a single calculation
of a net amount payable by one party to the other.
(j) Subject to paragraph 10 hereof, all Securities of the
same issue, denomination, currency and series, transferable by each
party to the other under any transaction or hereunder on the same
date shall be combined in a single calculation of a net quantity of
Securities transferable by one party to the other.
7. Contractual Currency
(a) All the payments made in respect of the Purchase Price or
the Repurchase Price of any Transaction shall be made in the
currency of the Purchase Price (the "CONTRACTUAL CURRENCY") save as
provided in paragraph 10(b)(ii). Notwithstanding the foregoing, the
payee of any money may, at its option, accept tender thereof in any
other currency, provided, however, that, to the extent permitted by
applicable law. the obligation of the payer to pay Such money will
be discharged only to the extent of the amount of original currency
that such payee may, consistent with normal banking procedures,
purchase with such other currency (after deduction of any premium
and costs of exchange) for delivery on the second Business Day
following its receipt of such currency.
(b) If for any reason the amount in the original currency
received by a party, including amounts received after conversion of
any recovery under any judgment or order expressed in a currency
other than the original currency, Falls short of the amount in the
original currency due and payable, the party required to make the
payment will, as a separate and independent obligation, to the
extent permitted by applicable law, immediately transfer such
additional amount in the original currency as may be necessary to
compensate for the shortfall.
(c} If for any reason the amount in the original currency
received by a party exceeds the amount of the original currency due
and payable, the party, receiving the transfer will refund promptly
the amount of such excess.
8. Substitution
In relation to any Transaction, at any time between the
Purchase Date and the Repurchase Date Seller may, subject to
agreement with and acceptance by Buyer, substitute other Securities
for any Purchased Securities, provided, however, that such
substitute Securities shall have a Market Value at least equal to
the Market Value of the Purchased Securities for which they are
substituted as at the date of substitution. Such substitution shall
be made by transfer to Buyer of such other Securities and
simultaneous transfer to Seller of the relevant amount of Equivalent
Securities in respect of the Purchased Securities being substituted.
Where ether or both of such transfers is or are settled on a payment
against delivery basis the parties shall make such payments as
between each other as will ensure that the aggregate amount paid by
each party equals the aggregate amount received by it. After
substitution, the substituted Securities shall be deemed to be
Purchased Securities and the original Purchased Securities so
substituted shall cease to be Purchased Securities.
9. Representations
Each party represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter
into the Transactions contemplated hereunder and to perform its
obligations hereunder and thereunder and has taken all necessary
action to authorize such execution, delivery and performance, (ii)
it will engage in this Agreement and the Transactions contemplated
hereunder as principal, (iii) the person signing this Agreement on
its behalf is, and any person representing it in entering into a
Transaction will have been, duly authorized to do so on its behalf,
(iv) it has obtained all authorizations of any governmental body
required in connection with this Agreement and the Transactions
contemplated hereunder and such authorizations are in full force
and effect, (v) the execution, delivery and performance of
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this Agreement and the Transactions contemplated hereunder will not violate
any law, ordinance, charter. by-law or rule applicable to it or any agreement
by which it is bound or by which any of its assets are affected, (vi) it has
satisfied itself and will continue to satisfy itself as to the tax
implications, if any, of the Transactions contemplated hereunder, (vii) when
acting as Seller, at the time of transfer to the Buyer of any Purchased
Securities it will have the full and unqualified right to make such transfer
and that upon such transfer of Purchased Securities the Buyer will receive the
same free and clear of any lien, claim, charge or encumbrance, (viii) when
acting as Buyer, at the time of transfer to the Seller of any Equivalent
Securities it will have the full and unqualified right to make such transfer
and that upon such transfer of Equivalent Securities the Seller will receive
the same free and clear of any lien, claim, charge or encumbrance and (ix)
when acting as Seller, the paying and collecting arrangements applied in
relation to any Purchased Securities prior to their transfer to the Buyer will
not have resulted in the payment of any Income to the Seller in respect of
such Purchased Securities under deduction or withholding for or on account of
UK tax. On the date on which any Transaction is entered into pursuant hereto,
and on each day on which Securities or Equivalent Securities are to be
transferred under any Transaction, Buyer and Seller shall each be deemed to
repeat all the foregoing representations made by it. For the avoidance of
doubt and notwithstanding any arrangements which the Seller or the Buyer may
have with any third party, each party will be liable as a principal for its
obligations under this Agreement and each Transaction.
10. Events of Default
If any of the following events (each an "Event of Default") occurs in
relation to either party (the "Defaulting Party", the other party being the
"Non-defaulting Party") whether acting as Seller or Buyer (i) Buyer fails to
pay the Purchase Price or Seller fan's to deliver Securities upon the
applicable Purchase Dale or Seller fan's to pay the Repurchase Price or Buyer
fan's to deliver Equivalent Securities upon the applicable Repurchase Date,
and the non-Defaulting Party serves written notice on the Defaulting Party, or
(ii) Seller or Buyer fails. after one Business Day's written notice, to comply
with paragraph 4 hereof, and the non-Defaulting Party serves written notice on
the Defaulting Party, or (iii) Buyer fan's to comply with paragraph S hereof,
and the non-Defaulting Party serves written notice on the Defaulting Party, or
(iv) an Act of Insolvency occurs with respect to Seller or Buyer and (except
in the case of an Act of Insolvency which is the presentation of a petition
for winding-up or any analogous proceeding or the appointment of a liquidator
or analogous officer of the Defaulting Party in which case no such notice
shall be required) the non-Defaulting Party serves notice on the Defaulting
Party, or (v) any representations made by Seller or Buyer shall have been
incorrect or untrue in any material respect when made or repeated or deemed to
have been made or repeated, and the non-Defaulting Party serves written notice
on the Defaulting Party, or (vi) Seller or Buyer shall admit to the other its
inability to, or its intention not to, perform any of its obligations
hereunder and/or in respect of any Transaction and the non-Defaulting Party
serves written notice on the Defaulting Party, or (vii) Seller or Buyer shall
be suspended or expelled from membership of or participation in any securities
exchange or association or other self regulating organization, or suspended
from dealing in securities by any government agency, or any of the assets of
either of them or the assets of investors held by these or to their order
shall be transferred or ordered to be transferred to a trustee by a regulatory
authority pursuant to any securities regulating legislation and the
non-Defaulting Party serves notice on the Defaulting Party, or (viii) Seller
or Buyer shall fail to perform any other of its obligations hereunder and
shall not remedy such failure within 30 days after the non-Defaulting Party
serves written notice relating to such failure on it; then:
(a) the Repurchase Date for each Transaction hereunder shall be
deemed immediately to occur,
(b) (i) the Default Market Value of the Equivalent Securities
to be transferred and the Repurchase Prices to be paid by each party
shall be established by the non-Defaulting Party for all Transactions
as at the Repurchase Date; and
(ii) on the basis of the sums so established an account
shall be taken (as at the Repurchase Date) of what is due from each
party to the other under this Agreement (on the basis that each party's
claim against the other in respect of the transfer to it of Equivalent
Securities under this Agreement equals the Default Market Value
therefor) and the sums due from one party shall be set-off against the
sums due from the other and only the balance of the account shall be
payable (by the party having the claim valued at the lower amount
pursuant to the foregoing) and such balance shall be due and payable on
the Repurchase Date For the purposes of this calculation. all sums not
denominated in the Base Currency shall be converted into the Base
Currency on the relevant date at the Spot Rate; and
(iii) interest shall accrue (as well after as before
judgement) on any sum payable by the Defaulting Party to the
non-Defaulting Party under this sub-paragraph 10(b) at LIBOR on a day
to day basis from the date on which such sum becomes due and payable
to the date of payment:
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(c) the Defaulting Party shall be liable to the non-Defaulting
Party for the amount of all reasonable legal and other expenses
incurred by the non-Defaulting Party in connection with or as a
consequence of an Event of Default, together with interest thereon at
LIBOR or (in the case of an expense attributable to a particular
Transaction, and if greater than LIBOR) the Pricing Rate for the
relevant Transaction; and
(d) the non-Defaulting Party shall have, in addition to its
rights hereunder, any rights otherwise available to it under any other
agreement or applicable law.
Each party shall immediately notify the other if an Event of Default occurs in
relation to it.
11. Withholding of Payment or Delivery
Without prejudice to the provisions of paragraph 10 hereof, in the case
of transfers to be made otherwise than on a payment against delivery basis,
neither party shall be obliged on any Repurchase Date to transfer Equivalent
Securities or to pay the Repurchase Price to the other in respect of a
particular Transaction unless it is satisfied that the other party will pay or
deliver to it on such date the Repurchase Price or, as the case may be, the
relevant Equivalent Securities. If it is not so satisfied it shall by not
later than the time, if any, specified in Annex I notify the other party sad
request assurances of that other party's ability to make such delivery or
payment to it, as the case may be, and unless the other party gives such
assurances which are reasonably adequate to the notifying party, the notifying
party shall (provided ;t is itself in a position, and willing, to perform its
own obligations) be entitled to withhold delivery or payment to the other
party (but where it exercises such entitlement it shall immediately give
notice thereof to the other party) and in this event the procedures set out in
paragraph 10(b) hereof shall have effect and be applied (on the basis that
such other party is the Defaulting Party) but only in relation to the
particular Transaction in question and for this purpose the Contractual
Currency of that Transaction shall be treated as the 3ase Currency.
12. Interest
Without prejudice to the provisions of paragraph 10 hereof and to the
extent permitted by applicable law, if any sum of money payable hereunder or
under any Transaction is not paid when due, interest shall accrue on such
unpaid sum as a separate debt at the greater of the Pricing Rate for the
Transaction to which such sum relates (where such sum is referable to s
Transaction) and LIBOR on a 360 day year basis, or a 365 day year basis, as
shall have been agreed for this purpose, for the actual number of days during
the period from and including the date on which payment was due to, but
excluding, the date of payment.
13. Single Agreement
Buyer and Seller acknowledge that, and have entered into this
Agreement and will enter into each Transaction hereunder in consideration of
and in reliance upon the fact that, all Transactions hereunder constitute a
single business and contractual relationship and have been mate in
consideration of each other. Accordingly, each of Buyer and Seller agrees (i)
to perform all of its obligations in respect of each Transaction hereunder,
sad that a default in the performance of any such obligations shall
constitute a default by it in respect of all Transactions hereunder. and (ii)
that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration
of payments, deliveries and other transfers in respect of any other
Transactions hereunder.
14. Notices and Other Communications
Unless another address has been specified in writing by the party to
whom any notice or other communication is to be given hereunder, all such
notices or other communications shall be in writing in the English language
and shall be delivered personally or sent by mail (first class mail in the UK
and by air mail if overseas) or by telex or by telefax. and delivered at the
respective addresses set forth in Annex III hereto or to such other person,
address, telex number or telefax number as either party may specify by notice
in writing to the other.
In the absence of evidence of earlier receipt, any notice or other
communication shall be deemed to have been duly given:--
(a) if delivered personally, when left at the address referred
to above
(b) if sent by mail other than air mail, two days after
posting it:
(c) if sent by air mail. six days after posting it;
8
<PAGE>
(d) if sent by telex, when the proper answer-back is
received; and
(e) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of
the recipient in legible form, it being agreed that the
burden of proving receipt will be on thc sender and will
not be met by a transmission report generated by the
sender's facsimile machine
15. Entire Agreement; Severability
This Agreement shall supersede any existing agreements
between the parties containing general terms and conditions for
Transactions. Each provision and agreement herein shall be treated
as separate from any other provision or agreement herein and shall
be enforceable notwithstanding the unenforceability of any such
other provision or agreement.
16. Non-assignability; Termination of Agreement
The rights and obligations of the parties under this
Agreement and under any Transaction shall not be assigned. charged
or otherwise dealt with by either party without the prior written
consent of the other party. Subject to thc foregoing, this Agreement
and any Transactions shall be binding upon ant shall inure to the
benefit of the parties and their respective successors and assigns.
This Agreement may be terminated by either party upon giving
written notice to the other, except that this Agreement shall.
notwithstanding such notice, remain applicable to any Transactions
then outstanding.
All remedies hereunder shall survive Termination in respect
of the relevant Transaction and termination of this Agreement.
17. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of England. Buyer and Seller hereby
irrevocably submit for all purposes of or in connection with
this Agreement and each Transaction to the jurisdiction of the
Courts of England.
Party A hereby appoints the person identified in Annex [V
hereto as its agent to receive on its behalf service of process in
such courts. Party A shall promptly appoint, and notify Party B of
the identity of, a new agent in England if such agent ceases to be
its agent.
Party B hereby appoints the person identified in Annex V
hereto as its agent to receive on its behalf service of process in
such courts. Party B shall promptly appoint, and notify Party A of
the identity of, a new agent in England if such agent ceases to be
its agent.
Nothing in this paragraph shall limit the right of any party
to take proceedings in the courts of any other country of competent
jurisdiction.
18. No Waivers, Etc
No express or implied waiver of any Event of default by
either party shall constitute a waiver of any other Event of Default
and no exercise of any remedy hereunder by any party shall
constitute a waiver of its right to exercise any other remedy
hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall
be effective unless and until such modification, waiver or consent
shall be in writing and duly executed by both of the parties hereto.
Without limitation on any of the foregoing, the failure to give &
notice pursuant to sub-paragraphs 4(a) or 4(b) hereof will not
constitute a waiver of any right to do so at a later date.
19. Waiver of Immunity
Each party hereto hereby waives, to the fullest extent
permitted by applicable law, all immunity (whether on the basis of
sovereignty or otherwise) from jurisdiction, attachment (both before
and after judgment) and execution to which it might otherwise h
entitled in any action or proceeding in the Courts of
9
<PAGE>
England or of any other country or jurisdiction. relating in any
way to this Agreement or any Transaction, and agrees that it will
not raise, claim or cause to be pleaded any such immunity at or in
respect of any such action or proceeding.
<TABLE>
<CAPTION>
<S> <C>
CS FIRST BOSTON (HONG KONG) LIMITED LENNAR FINANCIAL SERVICES, INC.
By /s/ Terrence B. Clarke By /s/ Janice Munoz
-------------------------------- ----------------------------
Title Terrence B. Clarke Title VP/Treasurer
Vice President
Date June 22, 1996 Date 6/13/96
</TABLE>
10
<PAGE>
ANNEX I
Supplemental Terms or Conditions
Paragraph references are to paragraphs in the Agreement.
1. The following elections shall apply:
(a) paragraph 2(c). The Base Currency shall be: U.S. Dollars.
(i) for the purposes of paragraph 4 hereof, U.S. Dollars.
(ii) for the purposes of paragraph 10 hereof, where the
Defaulting Party is Party A, U.S. Dollars and where the
Defaulting Party is Party B, U.S. Dollars or the
currency of incorporation of Party A.
(b) paragraph 2(r). The pricing source for calculation of Market
Value shall be Telerate, Reuters or Bloomberg.
(c) paragraph 2(bb). Spot Rate: If applicable, to be as defined in
paragraph 2(bb) or as is otherwise agreed by the parties
hereto.
(d) paragraph 3(b). Both Seller and Buyer to deliver a
Confirmation in respect of each Transaction.
(e) paragraph 4(c). Attribution to Transactions of money or
Securities transferred under margin maintenance provisions
will be as mutually agreed upon by both parties at the time of
each Transaction.
(f) paragraph 4(e). Margin maintenance provisions to apply on a
net aggregate basis.
(g) paragraph 4(f). Delivery period for margin calls to be
standard practice in the principal financial center of the
country of which the currency in which the Purchase Price and
Repurchase Price are denominated in the official currency.
(h) paragraph 11. Latest time, if any, for issue of request for
assurance under paragraph 11 to be: twenty-four hours (24)
London time.
(i) paragraph 12. Interest calculated on a basis according to the
agreed terms of the transaction and specified in the
Confirmation and if not so specified on an actual/360 basis.
2. The following Supplement Terms and Conditions shall apply:
Pursuant to the terms of Paragraph 1 of the Global Master Repurchase
Agreement (the "Agreement"), Buyer and Seller agree to be governed by
the Supplemental Terms and Conditions stated herein. To the extent
that any provisions in these Supplemental Terms and Conditions are in
conflict with provisions contained in the Agreement the provisions of
these Supplemental Terms and Conditions shall prevail.
11 - a
<PAGE>
1. All Transactions under the Agreement shall constitute sales and
purchases of Securities. Notwithstanding any other language to the
contrary, this Agreement will constitute a Securities Lending Agreement
under Internal Revenue Code Section 1058 for U.S. Federal income tax
purposes. As such, any reference to "sell", "payment", or any
derivation thereof, shall be replaced with the word "transfer". For the
avoidance of doubt, absolute title to all Purchased Securities shall
pass to the Buyer and nothing in this Agreement shall prevent the Buyer
from engaging in transactions with the Purchased Securities but no such
transaction shall relieve the Buyer of its obligations to deliver
Equivalent Securities to the Seller pursuant to this Agreement, or of
the Buyer's obligations under Paragraph 5 hereof (as amended by
Paragraph 5 of these Supplemental Terms and Conditions).
2. Paragraph I is amended by deleting the words "at a date certain or" in
the first sentence thereof.
3. The last sentence of Paragraph 3(b) of the Agreement is amended to
read as follows:
"In the event of any conflict between the terms of such
Confirmation and this Agreement, such Confirmation shall
prevail."
4. Paragraph 3(c)(i) is amended by adding the words "but under no
circumstances shall such notice exceed 5 business days" after the
word "kind". Paragraph 3(c)(ii) is amended by deleting the words
"and, in the case of fixed term Transactions on the date fixed for
Termination".
5. Income payments on the Securities subject to Transactions under the
Agreement pursuant to Paragraph 6(b) shall be treated as follows:
(1) DEDUCTION OR WITHHOLDING FOR TAX
Each party agrees to be liable to the relevant taxing
authority for the full amount of any Taxes required by
governing law to be deducted or withheld from payments or
distributions of income that the party receives from the
issuer of the Securities ("Income Payments"). AU payments
made by one party to the other party in respect of any
Transaction pursuant to this Agreement, including any Income
Payments payable by the Buyer to the Seller, shall be made
free and clear of, and without any, withholding or deduction
for or on account of any Taxes, unless such withholding or
deduction is required by any applicable law, as modified by
the practice of any relevant governmental revenue authority.
If such withholding or deduction is so required, then the
payor shall (i) promptly notify the payee of such
requirement, (ii) pay to the relevant authorities the full
amount required to be deducted or withheld promptly upon
learning that such deduction or withholding is required (iii)
promptly forward to the payee an official receipt (or
certified copy), or other such documentation, evidencing such
payment to such authorities, and (iv) pay to the payee such
additional amounts as are necessary to yield and remit to the
payee an amount which, after deduction of all Taxes
(including any Taxes imposed on the additional amounts) so
withheld or deducted, equals the full amount that the payee
would have received had no such withholding or deduction been
required; provided, however, that in no event will Seller be
entitled to receive any amount in respect of any Income
Payment greater than Seller would have received had it not
entered into the relevant Transaction. If (i) the payor fails
to timely remit the appropriate amount to the relevant
governmental revenue authority in respect of any amount that
the payor is required to withhold or deduct from any payment
to the payee, and (ii) a liability for such amount is
assessed directly against the payee, then the payor shall in
addition to its liability to pay additional amounts to the
payee pursuant to the preceding sentence, be liable to the
payee for any interest or penalties that are thereby imposed
upon the
11 - b
<PAGE>
payee by reason of such failure by the payor. In the
event of the Buyer failing to remit, either directly or
through its agent, the full amount owing to the Seller
pursuant to this Agreement, the Buyer hereby undertakes to
pay interest to the Seller (upon demand) on the amount due
and outstanding at the rate of the LIBOR Rate as it
fluctuates from day to day plus 1%. Such sum shall accrue
daily commencing on and inclusive of the third Business Day
after the relevant payment date, unless otherwise agreed
between the Parties.
(2) TAX COVENANTS
(A) Party A agrees to complete accurately and in a manner
reasonably satisfactory to Party B, and to execute
and deliver to Party B, a United States Internal
Revenue Service Form W-8 and a United States Internal
Revenue Service Form 1001, or any successor forms,
(i) upon the execution of this Agreement, (ii)
promptly, upon reasonable demand by Party B, and
(iii) promptly, upon learning that any such form
previously provided by Party A has become obsolete or
incorrect;
(B) Party A agrees to complete accurately and in a manner
reasonably satisfactory to Party B, and to execute
and deliver to Party B, a United States Internal
Revenue Service Form 4224, or any successor form, in
respect of any payments received or to be received by
Party A in connection with this Agreement that are
effectively connected or otherwise attributable to
its conduct of a trade or business in the United
States (i) before the first date on which any such
payment is or may be so connected or attributable,
(ii) promptly, upon reasonable demand by Party B, and
(iii) promptly, upon learning that any such form
previously provided has become obsolete or incorrect;
and
(C) Each party agrees to complete (accurately and in a
manner reasonably satisfactory to the other party),
execute, arrange for any required certification of,
and deliver to the other party or such government or
taxing authority as the other party directs, any
form or document that may be required or reasonably
requested in order to assist or enable the other
party to secure the benefit of any available
exemption or relief from any deduction or
withholding on account of any Tax or, if there is no
available exemption or relief as aforesaid, to
secure the benefit of any reduced rate of deduction
or withholding, in respect of any payment under this
Agreement, promptly upon the earlier of: (I)
reasonable demand by the other party, and (ii)
learning that the form or document is so required.
For purposes of subparagraph 6(b)(1) of this Agreement,
Seller's failure to comply with or perform any tax covenant
provided for hereunder will terminate Buyer's obligation to
pay any additional amount to Seller to the extent such
additional amount would not be required to be paid but for
such failure.
(3) EARLY TERMINATION DUE TO TAX EVENT
In the event a Tax Event occurs with respect to a party to
this Agreement, at the option of such party (exercised by
written notice to the other party, such notice being treated
as a demand pursuant to paragraph 3(c) of this Agreement),
the Repurchase Date for the Transaction with respect to
which the Tax Event occurred shall be immediately deemed to
occur and such Repurchase Date shall be treated as the date
of determination for purposes of calculating the Repurchase
Price.
11 - c
<PAGE>
The occurrence with respect to either party of any of the
following events will constitute a Tax Event for purposes of
this subparagraph:
(A) the party shall be required on the next succeeding
payment date to pay to the other party an additional
amount under subparagraph 6(b)(1) as a result of a Change
in Tax Law;
(B) there is a substantial likelihood that the party will be
required on the next succeeding payment date to pay to
the other party an additional amount under subparagraph
6(b)(1) and such substantial likelihood results from an
action taken by a taxing authority or court of competent
jurisdiction, on or after the date on which such
Transaction was entered into (regardless of whether such
action was taken or brought with respect to a party to
this
Agreement); or
(C) the party will be required on the next succeeding payment
date to pay to the other party an additional amount under
subparagraph 6(b)(1) as a result of a consolidation,
amalgamation, merger or transfer of substantially all of
the assets of such other party by such other party.
(4) STAMP TAX
Each party agrees that it will pay any Stamp Tax levied or
imposed upon it or in respect of its execution or performance
of this Agreement by a jurisdiction in which it is
incorporated, organized, managed and controlled, or is
considered to have its seat, or in which a branch or office
through which it is acting for the purpose of this Agreement is
located (a "Stamp Tax jurisdiction") and will indemnify the
other party against any Stamp Tax levied or imposed upon the
other party or h respect of the other party's execution or
performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party. Notwithstanding the foregoing if a
party becomes a Defaulting Party under this Agreement, then
such party agrees to indemnify the other party for any Stamp
Taxes imposed upon such other party by reason of such other
party's enforcement and protection, as a result of such other
default, of its rights under this Agreement or any related
credit support document.
(5) DEFINITIONS
(A) "Change in Tax Law" means the enactment, promulgation,
execution or ratification of, or any change in or
amendment to, any law (or h the application or official
interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
(B) "Law" includes any treaty, law, rule or regulation (as
modified, h the case of tax matters, by the practice of
any relevant governmental revenue authority either
generally or with respect to a party to this Agreement)
and "Change in Tax Law" shall be construed accordingly.
(C) "Stamp Tax" means any stamp, registration,
documentation or similar tax.
(D) "Tax" means any present or future tax, levy, impost,
duty, charge, assessment or fee of any nature that is
imposed by any government or other taxing authority in
respect of any payment under this Agreement.
11 - d
<PAGE>
6. Notwithstanding any provision contained in this Agreement or in any
additional terms or conditions contained in the Confirmation
relating to any Transaction, Transactions in Securities shall be
effected only if the Securities are (i) not listed h Hong Kong, (ii)
not Hong Kong stock which is unlisted in Hong Kong, and (iii) in the
event that Party B is a UK person or entity, are "securities" as
defined in Section 710 of the United Kingdom Income and Corporations
Taxes Act 1988.
7. In the event that Party B is a U.S. person or entity not registered
as a broker-dealer in the U.S.:
a. Each Transaction made under the Agreement shall be confirmed by
CS First Boston Corporation ("First Boston") as Agent for Buyer
and Seller on Purchase Date by authenticated telecommunication
and in writing, h accordance with Paragraph 3(b).
b. Notwithstanding the provisions of Paragraph 17, in those
instances where a provision or term of this Agreement, these
Supplemental Terms and Conditions, or any Confirmation expressly
refers to statutes, regulations or laws of the United States or
of any state thereof, such provision or term shall be construed
in accordance with the applicable provision of the laws of the
State of New York.
c. Notwithstanding anything to the contrary contained in the
Agreement, any Confirmation or any other agreements or
instruments delivered in connection with any Transaction
hereunder
(i) First Boston, as a broker-dealer registered with the
U.S. Securities and Exchange Commission ("SEC"), will
arrange, as Agent for each of Buyer and Seller, each
Transaction to be entered into pursuant to this
Agreement h accordance with Rule l5a-6 promulgated
under the Securities Exchange Act of 1934 (the
"Exchange Act). As Agent, first Boston will be
responsible for (i) effecting and settling all such
Transactions in compliance with said Rule 15a-6, (ii)
issuing all required confirmations and statements to
Buyer and Seller in compliance with Rule 15c3-1 under the
Exchange Act, (iii) maintaining books and records
relating to such Transactions as required by Rules 17a-3
and 17a-4 under the Exchange Act, and (iv) if requested
by Buyer or Seller, receiving, delivering, and
safeguarding such party's funds and securities in
connection with such Transactions in compliance with Rule
15c3-3 under the Exchange Act.
(ii) First Boston is participating in each Transaction solely
as Agent for Buyer and Seller. first Boston shall have no
responsibility or personal liability to Buyer and Seller
arising from any failure of Buyer or Seller to pay or
perform any obligation hereunder, including without
limitation, any obligation to maintain margin. Each of
Buyer and Seller agrees to proceed solely against the
other to collect or recover any securities or monies
owing to it in connection with or as a result of any
Transaction or otherwise hereunder. first Boston shall
otherwise have no liability in respect of this Agreement
or any Transaction, except that First Boston shall be
liable for its gross negligence or willful misconduct, or
its failure to comply with applicable U.S. securities
laws and regulations, in performing its cubes as Agent
hereunder.
8. The first sentence of Paragraph 9 is amended by deleting the words
"and (ix) when acting as Seller, the paying and collecting
arrangements applied in relation to any Purchased Securities prior
to their transfer to the Buyer will not have resulted in the
payment of any Income to the Seller in respect of such Purchased
Securities under deduction or withholding for or on account of U.K.
tax".
11 - e
<PAGE>
9. The second subparagraph of Paragraph 16 is amended by inserting the
words "of not more than 5 days" after the words "written notice".
CS FIRST BOSTON (HONG KONG) LENNAR FINANCIAL SERVICES, INC.
LIMITED
By /s/ Terrence B. Clarke By: Janice Munoz
----------------------------- ----------------------
Name: Terrence B. Clarke Name: Janice Munoz
Title: Vice President Title: VP/Treasurer
Legal & Compliance Department
ACCEPTED AND AGREED TO SOLELY
IN ITS CAPACITY AS AGENT:
CS FIRST BOSTON CORPORATION
By: /s/ Patricia H. Brady
---------------------------
Name: PATRICIA H. BRADY
Title: DIRECTOR
11 - f
<PAGE>
ANNEX II
Form of Confirmation
To: ___________________________
From: _________________________
Date: _________________________
Subject: Repurchase Transaction
(Reference Number: )
Dear Sirs,
The purpose of this [letter]/[facsimile]/[telex] is to set
forth the terms and conditions of the above repurchase transaction
entered into between us on the Contract Date referred to below.
This confirmation supplements and Corms pan of and is
subject to the Global Master Repurchase Agreement as entered into
between us as of as the same may be amended
from time to time (the "AGREEMENT"). All provisions contained in
the Agreement govern this confirmation except as expressly
modified below. Words and phrases defined in the Agreement and
used in this confirmation shall have the same meaning herein as
in the Agreement.
1. Contract Date:
2. Purchase Securities:
3. CUSIP, CINS or other identifying number:
4. Buyer:
5. Seller:
6. Purchase Date:
7. Purchase Price:
8. Contractual Currency:
[9. Repurchase Date]:
[9. Terminable on demand]:*
10. Pricing Rate:
11. Price Differential to be calculated on a [360/365]* tax year
basis:
12. Percentage for calculating Buyer's Margin Amount:
13. Percentage for calculating Seller's Margin Amount:
- - ------------------
*Delete as appropriate
12
<PAGE>
14. Buyer's Bank Account[s] Details:
15. Seller's Bank Account[s] Details:
[16. Additional Terms]:
Yours faithfully,
13
<PAGE>
Names and Addresses for Communications Between Parties
1. Party A
CS FIRST BOSTON (HONG KONG) LIMITED
One Exchange Square
9th Floor
HONG KONG
Attn: Terrence Clarke
Tel: (852) 847-0553
Fax: (852) 537-8159
2. Party B
Lennar Financial Services, Inc.
730 N.W. 107th Avenue
4th Floor
Miami, Florida 33172
Attn: Janice Munoz, Vice President and Treasurer
Tel: (305) 229-6504
Fax: (305) 229-6657
14
<PAGE>
ANNEX IV
Name and Address of Party A's Agent for Service of Process
15
<PAGE>
ANNEX V
Name and Address of Party B's Agent for Service of Process
16
<PAGE>
June 13, 1996
CS First Boston Corporation
55 East 52 Street
New York, NY 10055
ATTENTION: Wendy Sanfilippo, Credit Department
Dear Sirs:
LENNAR CORPORATION ("Guarantor") hereby unconditionally guarantees the
full, complete, and prompt payment and performance by LENNAR FINANCIAL
SERVICES, INC., LENNAR MBS, INC., LENNAR SECURITIES HOLDINGS, INC. AND
LFS ASSET CORP. ("Obligors") of any and all liabilities, obligations, and
undertakings now or hereafter owing by Obligor (the "Guaranteed
Obligations") to CS First Boston Corporation ("CS First Boston"), or any
of CS First Boston's affiliates or subsidiaries (collectively, the
"Beneficiary"). Guarantor hereby agrees that if Obligor shall fail at any
time to make due and punctual payment to any beneficiary of any
Guaranteed Obligation then due and payable by Obligor to such
beneficiary, Guarantor will forthwith pay such amount, without demand
therefor.
Guarantor hereby waives any requirement that any beneficiary take legal
action against Obligor before enforcing this guarantee; agrees that its
obligation hereunder shall be unconditional, irrespective of the
validity, regularity, or enforceability of the Guaranteed Obligations;
waives diligence, presentment, demand of payment or notice of any kind
whatsoever; waives filing of claims with any court in case of the
insolvency, reorganization, or bankruptcy of the Obligor; waives any
fact, event, or circumstance which might otherwise constitute a legal or
equitable defense to or discharge of a guarantor; covenants that this
guarantee will not be discharged except by full, complete, and final
payment to beneficiary of the Guaranteed Obligations; and agrees that
this guarantee shall continue to be effective or be reinstated (as the
case may be) if at any time all or any part of any payment, or interest
thereon, by Obligor is avoided or must otherwise be restored by
beneficiary.
This guarantee is a continuing guarantee on the part of Guarantor, which
shall be governed by the laws of the State of New York without giving
effect to the conflict of law principles there of and shall remain
effective until written notice of termination is delivered to CS First
Boston's offices at the above address; provided, however, that
notwithstanding notice of termination, this guarantee shall remain
effective with respect to all obligations of Obligor incurred prior to CS
First Boston's receipt of such notice. Guarantor agrees to pay, on
demand, all out-of-pocket expenses (including legal fees and
disbursements) incurred by beneficiary by reason of the enforcement and
protection of its rights hereunder.
LENNAR CORPORATION Attest:/s/ [ILLEGIBLE]
------------------------------- --------------------------
Asst. Secretary
By /s/ Allan J. Pekor Dated: June 13,1996
Name: Allan J. Pekor
(Corporate seal)
Title: Financial Vice President (Corporate seal)
Exhibit 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
Primary earnings per share are computed by dividing earnings available to common
shares by the weighted average number of common and common equivalent shares
outstanding during the period.
For purposes of computing primary earnings per share, common equivalent shares
include the average number of common shares issuable upon the exercise of all
employee stock options, if dilutive, less the common shares which could have
been purchased at the average market price during the period with the assumed
proceeds, including "windfall" tax benefits, from the exercise of the options,
awards and subscriptions.
Fully-diluted earnings per share are computed by dividing the sum of earnings
available to common shares by the weighted average number of common shares,
common equivalent shares and common shares assumed converted from potentially
dilutive securities outstanding during the period.
For purposes of computing fully-diluted earnings per share, common equivalent
shares are computed on a basis comparable to that for primary earnings per
share, except that common shares are assumed to be purchased at the market price
at the end of the period, if dilutive.
Exhbit 21.1
<TABLE>
<CAPTION>
LNR PROPERTY CORPORATION
List of Subsidiaries
CORPORATION STATE OF INCORPORATON
- - -------------------------------------------------------------
<S> <C>
Alexandria LP, Inc. Virginia
Aurora LP, Inc. Colorado
Bert L. Smokler & Company Delaware
Midwest Management Company, Inc. Michigan
DCA Homes, Inc. Florida
DCA Management Corporation Florida
Devco Shopping Centers, Inc. Florida
Dreyfus Interstate Development Corp. Delaware
Everett LP, Inc. Massachusetts
LNR Shelf I, Inc. Florida
(formerly Friendswood Development Company)
H. Miller & Sons, Inc. Florida
HMS Realty, Inc. Florida
H. Miller & Sons of Florida, Inc. Florida
Miller's Plantation Development Company Florida
Leisure Colony Management Corp. Florida
Leisure Communities Management, Inc. Florida
Len Acquisition Corporation, Inc. Florida
Lennar Affiliate Purchaser Corporation Florida
Lennar Atlantic Holdings, Inc. Florida
Lennar Beverly Holdings, Inc. Nevada
Lennar Capital Services, Inc. Florida
Lennar Capital Corporation Florida
Lennar Funding Corporation Florida
Lennar Communications, Inc. Florida
West Coast Mortgage Holdings, Inc. Florida
Lennar CGA Holdings, Inc. Nevada
<PAGE>
<CAPTION>
Lennar Commercial Properties, Inc. Florida
Arbor Lake Club, Ltd. Florida
Universal American Realty Corporation Delaware
Prado Apartments Limted Florida
South Dade Utilities, Inc. Florida
Lennar Corporate Center, Inc. Florida
Lennar Coto Holdings, Inc. California
LFH SUB I, Inc. Florida
LFS Asset Corp. Nevada
Lennar Gateway Center Holdings, Inc. Massachusetts
Lennar Georgia Partners, Inc. Georgia
Lennar Huntington Beach, Inc. California
Lennar Kearny Holdings, Inc. California
Lennar Legend Oaks Holdings, Inc. Colorado
Lennar L.W. Assets, Inc. Florida
Lennar LW Holdings, Inc. Florida
Lennar LW Nevada Assets, Inc. Nevada
Lennar MBS, Inc. Nevada
Lennar Marietta Holdings, Inc. Georgia
Lennar Mortgage Holdings Corporation Florida
Lennar Western Holdings, Inc. Nevada
(formerly Nevada Financial Holdings Corporation)
Lennar California Partners, Inc. California
Lennar Mortgage Holdings I, Inc. Florida
MSWH Sub I, Inc. Florida
Lennar Pacific Holdings, Inc. California
Lennar Park Center III Holdings, Inc. Virginia
<PAGE>
<CAPTION>
Lennar Park JV, Inc. Florida
Doral Park JV Florida
Lennar Partners, Inc. Florida
Atlantic Holdings, Inc. Louisiana
Lennar Partners of California, Inc. Florida
LNVP Holdings, Inc. Florida
Lennar Nevada Partners, Inc. Nevada
Lennar Real Estate Holdings, Inc. Florida
Lennar Rockland, Inc. Florida
Lennar Rolling Ridge, Inc. California
Lennar Seaboard Holdings, Inc. Florida
Lennar Securities Holdings, Inc. Florida
Lennar-Corry, Inc. Florida
Lennar Stevenson Holdings, Inc. California
Lennar Texas Properties, Inc. Texas
Lennar Transamerica Holdings, Inc. Florida
Lennar U.S. Holdings, Inc. Florida
Lennar Wilshire Holdings, Inc. Nevada
Lennar Partners of Los Angeles, Inc. California
LNR Arrowhead Ranch Holdings, Inc. Arizona
LNR Brickell Bayview Corporation Florida
LNR Capital Mortgage Holdings, Inc. Florida
LNR Candlewood Holdings, Inc. Nevada
LNR Lafayette Holdings, Inc. Louisiana
LNR Lafayette LP, Inc. Louisiana
LNR Land Partners Sub, Inc. Delaware
LNR Madison Holdings, Inc. Nevada
LNR Memphis Holdings, Inc. Tennessee
<PAGE>
<CAPTION>
LNR Memphis LP, Inc. Tennessee
LNR Phoenix LP, Inc. Arizona
LNR Property Corporation Delaware
LNR Related Venture, Inc. Nevada
LNR Sands Holdings, Inc. Nevada
LNR Verandah Holdings, Inc. Texas
LNR Verandah LP, Inc. Texas
Parkveiw Associates, Inc. Florida
Parkview at Pembroke Pointe, Inc. Florida
Springs Development Corporation Florida
The Turtle Run Venture Florida
Talladega Manufacturing, Inc. Alabama
Vista del Lago Apartments, Inc. Florida
Western Funding Holdings Corporation Nevada
Nevada Securities Holdings, Inc. Nevada
Lennar Mayfair Holdings, Inc. Florida
Lennar U.S. Holdings, Inc. Florida
Lennar Northeast Holdings, Inc. Florida
</TABLE>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> NOV-30-1996
<PERIOD-END> NOV-30-1997
<CASH> 90,696
<SECURITIES> 304,660
<RECEIVABLES> 95,593
<ALLOWANCES> 8,744
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 264,694
<DEPRECIATION> 36,096
<TOTAL-ASSETS> 1,023,337
<CURRENT-LIABILITIES> 0
<BONDS> 391,171
0
0
<COMMON> 3,613
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,023,337
<SALES> 0
<TOTAL-REVENUES> 167,483
<CGS> 0
<TOTAL-COSTS> 68,411
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,584
<INCOME-PRETAX> 72,488
<INCOME-TAX> 28,270
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,218
<EPS-PRIMARY> 1.21
<EPS-DILUTED> 1.21
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