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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
JOINT ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1994
<TABLE>
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COMMISSION FILE NO. 1-6776 COMMISSION FILE NOS. 1-9624 AND 1-9625, RESPECTIVELY
CENTEX CORPORATION 3333 HOLDING CORPORATION AND
CENTEX DEVELOPMENT COMPANY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
NEVADA NEVADA AND DELAWARE, RESPECTIVELY
(STATE OF INCORPORATION) (STATES OF INCORPORATION OR ORGANIZATION)
75-0778259 75-2178860 AND 75-2168471, RESPECTIVELY
(I.R.S. EMPLOYER IDENTIFICATION NO.) (I.R.S. EMPLOYER IDENTIFICATION NOS.)
3333 LEE PARKWAY, SUITE 1200, DALLAS, TEXAS 75219 3333 LEE PARKWAY, SUITE 500, DALLAS, TEXAS 75219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(214) 559-6500 (214) 559-6700
(REGISTRANT'S TELEPHONE NUMBER) (REGISTRANTS' TELEPHONE NUMBER)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
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NAME OF EACH NAME OF EACH
EXCHANGE ON WHICH EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED TITLE OF EACH CLASS REGISTERED
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<S> <C>
CENTEX CORPORATION 3333 HOLDING CORPORATION
COMMON STOCK NEW YORK STOCK COMMON STOCK NEW YORK STOCK
($.25 PAR VALUE) EXCHANGE ($.01 PAR VALUE) EXCHANGE
CENTEX DEVELOPMENT COMPANY, L.P.
WARRANTS TO PURCHASE NEW YORK STOCK
CLASS B UNITS OF EXCHANGE
LIMITED PARTNERSHIP
INTEREST EXPIRING
NOVEMBER 30, 1997
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether each 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
each such 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 the registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to Form 10-K. _____
The aggregate market value of the tandem traded Centex Corporation
common stock, 3333 Holding Corporation common stock and Centex Development
Company, L.P. warrants to purchase Class B units of limited partnership
interest held by non-affiliates of the registrants on June 15, 1994 was
approximately $854 million.
Indicate the number of shares of each of the registrants' classes of
common stock (or other similar equity securities) outstanding as of the close
of business on June 15, 1994:
<TABLE>
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Centex Corporation Common Stock 31,201,520 shares
3333 Holding Corporation Common Stock 1,000 shares
Centex Development Company, L.P. Class A Units of Limited Partnership Interest 1,000 units
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in Parts
A.III and B.III of this Report: Joint proxy statement for the annual
meetings of stockholders of Centex Corporation and 3333 Holding
Corporation to be held on July 28, 1994.
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JOINT ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED MARCH 31, 1994
CENTEX CORPORATION AND SUBSIDIARIES
AND
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
JOINT EXPLANATORY STATEMENT
On November 30, 1987, Centex Corporation ("Centex" or the "Company")
distributed as a dividend to its stockholders (through a nominee, the
"Nominee") all the issued and outstanding shares of the common stock, par value
$.01 per share ("Holding Common Stock"), of 3333 Holding Corporation
("Holding"), and 900 warrants (the "Stockholder Warrants") to purchase Class B
Units of limited partnership interest in Centex Development Company, L.P.
("CDC" or the "Partnership"). The Nominee is the record holder of the
Stockholder Warrants and 1,000 shares of Holding Common Stock, which
constitutes all of the issued and outstanding capital stock of Holding, on
behalf of and for the benefit of persons who are from time to time the holders
of the common stock, par value $.25 per share ("Centex Common Stock"), of
Centex ("Centex Stockholders"). Each Centex Stockholder owns a beneficial
interest in that portion of the 1,000 shares of Holding Common Stock and the
Stockholder Warrants that the total number of shares of Centex Common Stock
held by such stockholder bears to the total number of shares of Centex Common
Stock outstanding from time to time. This beneficial interest is not
represented by a separate certificate or receipt. Instead, each Centex
Stockholder's beneficial interest in such pro rata portion of the shares of
Holding Common Stock and the Stockholder Warrants is represented by the
certificate or certificates evidencing such Centex Stockholder's Centex Common
Stock, and is currently tradeable only in tandem with, and as a part of, each
such Centex Stockholder's Centex Common Stock. The tandem securities are
listed and traded on the New York Stock Exchange and The International Stock
Exchange of the United Kingdom and the Republic of Ireland, Ltd. and are
registered with the Securities and Exchange Commission (the "Commission")
separately under Section 12(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Holding and CDC were each organized in 1987 in
connection with the distribution. 3333 Development Corporation, a wholly owned
subsidiary of Holding ("Development"), is the sole general partner of CDC.
At present, Centex, Holding and CDC have elected to satisfy their
respective periodic reporting obligations under the Exchange Act, and the rules
and regulations promulgated thereunder, by preparing and filing joint periodic
reports. PART A of this Annual Report on Form 10-K for the fiscal year ended
March 31, 1994 (the "Report") relates to Centex and its subsidiaries. PART B
of this Report relates to Holding (and its subsidiary, Development) and to CDC.
This Report should be read in conjunction with the proxy statements of
Centex and Holding in connection with their respective 1994 annual meetings of
stockholders (portions of which are incorporated by reference into this
Report), the Annual Report to Stockholders of Centex for the fiscal year ended
March 31, 1994 and the Annual Report to Stockholders of Holding and CDC for the
fiscal year ended March 31, 1994. For a complete understanding of the tandem
traded securities, PART A and PART B of this Report should be read in
combination. Information concerning the earnings and financial condition of
the three companies, on an aggregate basis, is included in Note (G) of the
Notes to Consolidated Financial Statements of Centex Corporation and
subsidiaries on pages 34-35 of this Report.
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FORM 10-K TABLE OF CONTENTS
<TABLE>
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PAGE
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JOINT EXPLANATORY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PART A. CENTEX CORPORATION AND SUBSIDIARIES
-------
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . 14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . 15
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 17
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . 19
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial 19
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . 19
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . 19
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . 19
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
PART B. 3333 HOLDING CORPORATION AND SUBSIDIARY AND
CENTEX DEVELOPMENT COMPANY, L.P.
PART I
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Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 54
</TABLE>
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TABLE OF CONTENTS (CONTINUED)
<TABLE>
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PART II PAGE
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Item 5. Market for Registrants' Common Equity and Related Stockholder Matters . . . . . . 54
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Item 7. Management's Discussion and Analysis of Financial Condition and Results of 56
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . 56
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . 56
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . 59
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . 62
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . 63
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73-74
INDICES TO EXHIBITS
CENTEX CORPORATION AND SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75-79
3333 HOLDING CORPORATION AND SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 80-81
CENTEX DEVELOPMENT COMPANY, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82-84
</TABLE>
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PART A.
CENTEX CORPORATION AND SUBSIDIARIES
PREFATORY STATEMENT
PART A of this Report includes information relating to Centex
Corporation and subsidiaries ("Centex" or the "Company"), file No. 1-6776. See
Joint Explanatory Statement on page 2 of this Report. References to Centex or
the Company in this Report shall include Centex and its subsidiaries unless the
context otherwise requires. Reference is made to PART B of this Report for
information relating separately to 3333 Holding Corporation ("Holding") and its
subsidiary, 3333 Development Corporation ("Development"), and to Centex
Development Company, L.P. ("CDC" or the "Partnership").
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Since its founding in 1950 as a Dallas, Texas-based residential and
commercial construction company, Centex has evolved into a multi-industry
company. Centex currently operates in five business segments: Home Building,
Mortgage Banking, Contracting and Construction Services, Construction Products
and Savings and Loan. Centex is incorporated in the State of Nevada. The
Company's common stock, par value $.25 per share ("Centex Common Stock"), began
trading publicly in 1969. As of June 15, 1994, 31,201,520 shares of Centex
Common Stock, which are traded on the New York Stock Exchange and The
International Stock Exchange of the United Kingdom and the Republic of Ireland,
Ltd., were outstanding.
Centex's Home Building and Mortgage Banking operations involve the
construction, sale and financing of residential housing. These activities
include the purchase and development of land, mortgage originations and other
related services on homes sold by subsidiaries and by others. Centex has
participated in the home building business since 1950 and the mortgage banking
business since 1973.
Centex entered the contracting and construction services business in
1966 with the acquisition of J. W. Bateson Company, Inc. (now Centex Bateson
Construction Company, Inc.), a Dallas-based contractor which has been in
business since 1936. Its contracting and construction activities involve the
construction of buildings for both government and private interests, including
office, commercial and industrial buildings, hospitals, hotels, museums,
libraries, airport facilities, condominiums and educational institutions.
Centex's involvement in the construction products business dates to
1963 when it began construction on its first cement plant. Since that time,
the Company's Construction Products operations have been expanded to include
additional cement production and distribution facilities and the production,
distribution and sale of aggregates, readymix concrete and gypsum wallboard.
In April 1994, the Construction Products group completed an initial public
offering of its common stock, resulting in the reduction of Centex's ownership
interest in this group to 49%. Centex received payments totaling $186.5
million in the transaction.
Centex's Saving and Loan operations were acquired in December 1988
under the Federal Savings and Loan Insurance Corporation's Southwest Plan.
These operations include CTX Holding Company and its subsidiary, Texas Trust
Savings Bank, FSB.
Centex established CDC in fiscal year 1988. Reference is made to PART
B of this Report for a discussion of the business of CDC.
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FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Notes (B) and (H) of the Notes to Consolidated Financial Statements of
Centex on pages 28-29 and 36-37 of this Report contain additional information
about the savings and loan acquisition and the Company's business segments for
the years ended March 31, 1994, 1993 and 1992 and are incorporated herein by
reference.
NARRATIVE DESCRIPTION OF BUSINESS
HOME BUILDING
The Company's Home Building operation primarily involves the
construction, sale and financing of residential housing, including the purchase
and development of land. The Company's home building operation ranks, by the
number of units produced in calendar 1993, as the largest U.S. builder of
single-family homes. Centex sells to both first time and move-up home buyers.
Approximately 95% of the houses Centex sells are single-family detached homes
and the remainder are townhomes and low-rise condominiums.
Centex follows a strategy of reducing exposure to local market
volatility by spreading operations across geographically and economically
diverse markets. Centex presently builds houses in 44 market areas in 20
states. These markets include Phoenix, Arizona; Ft. Lauderdale, Orlando,
Jacksonville, Naples/Ft. Myers, Tampa, Palm Beach, Titusville and
Sarasota/Bradenton, Florida; East San Francisco Bay, Sacramento, Bakersfield,
Southern California, Los Angeles/Ventura, Central Valley and San Diego,
California; Chicago, Illinois; Seattle, Washington; Reno, Nevada; Minneapolis,
Minnesota; Portland, Oregon; Nashville, Tennessee; Atlanta, Georgia; Northern
Virginia; Hampton Roads, Virginia; Central Maryland; Western Maryland; Austin,
Dallas/Fort Worth, Houston, Killeen and San Antonio, Texas; Denver, Colorado;
Albuquerque, New Mexico; Charlotte and Raleigh/Durham, North Carolina;
Indianapolis, Indiana; Columbus, Ohio; Charleston, Columbia and Greenville,
South Carolina; and East Windsor, New Jersey.
In fiscal 1994, Centex closed 12,563 houses, including first-time,
move-up and, in some markets, custom homes, ranging in price from approximately
$64,000 to about $805,000, with the average sale price being approximately
$147,500. In several locations including Denver, Dallas, San Antonio and West
Palm Beach, Centex has opened custom home divisions which offer the higher-end
homes.
The table below sets forth information regarding Centex's house
closings, sales (orders) backlog and sales (orders) by geographic area for its
fiscal years ended March 31, 1994 and 1993.
<TABLE>
<CAPTION>
SALES (ORDERS)
CLOSINGS BACKLOG SALES (ORDERS)
-------- ------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
GEOGRAPHIC AREA 3/31/94 3/31/93 3/31/94 3/31/93 3/31/94 3/31/93
- --------------- ------- ------- ------- ------- ------- -------
West . . . . . . . . . . . . . . . . . . . 1,973 1,358 756 663 2,066 1,440
Midwest . . . . . . . . . . . . . . . . . . 1,114 1,118 622 461 1,275 1,092
East . . . . . . . . . . . . . . . . . . . 2,599 2,118 1,279 1,192 2,686 2,522
Southeast . . . . . . . . . . . . . . . . . 2,895 2,433 1,387 1,260 3,022 2,671
Southwest . . . . . . . . . . . . . . . . . 3,982 3,252 1,751 1,575 4,158 3,696
------ ------ ----- ----- ------ ------
12,563 10,279 5,795 5,151 13,207 11,421
====== ====== ===== ===== ====== ======
</TABLE>
The residential housing industry is essentially a "local" business and
is highly competitive. Centex competes in each of its market areas with
numerous other home builders. The Company's operations account for less than
2% of the total housing starts in the United States. The main competitive
factors affecting Centex's operation are location, price, cost of providing
mortgage financing for customers, construction costs, design and quality of
homes, marketing expertise, availability of land and a builder's reputation.
Management believes the Company competes effectively by maintaining geographic
diversity, being responsive to the specific demands of each market and managing
the operations at a local level.
The home building industry is cyclical and is particularly affected by
changes in local economic conditions and in long-term and short-term interest
rates and, to a lesser extent, changes in property taxes and energy costs,
federal income tax laws, federal mortgage financing programs and various
demographic factors. The political and economic environment affects both the
demand for housing constructed by the Company and the Company's cost of
financing. Although Centex's Home Building operations, in the aggregate, are
not generally seasonal, certain phases of home construction are seasonal in
certain geographic
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areas where Centex's Home Building operations are located. Unexpected climatic
conditions, such as unusually heavy or prolonged rain or snow, may affect Home
Building operations in certain areas.
Centex has numerous suppliers of all the materials and services and
sources of lots and land used in home building and believes that it can deal
effectively with any problems it may experience relating to the supply of
materials and services as well as lots and land.
The housing industry is subject to extensive and complex regulations.
The Company and its subcontractors must comply with various federal, state and
local laws and regulations including zoning, building, environmental,
advertising and consumer credit rules and regulations. The Company is also
subject to other rules and regulations in connection with its manufacturing and
sales activities, including requirements as to building materials to be used
and building designs. The Company's homes are inspected by local authorities,
where required, and homes eligible for insurance or guarantees provided by the
Federal Housing Administration ("FHA") and the Veterans Administration ("VA")
are inspected by the FHA and VA.
MORTGAGE BANKING
The Mortgage Banking operation offers mortgage origination and other
related services on homes sold by subsidiaries and by others.
Through CTX Mortgage Company ("CTX"), Centex provides mortgage
origination and other mortgage related services for FHA and VA and conventional
loans on homes built and sold by the Company as well as for purchases of homes
not built by the Company. During fiscal 1994, CTX opened 50 new operating
locations, raising the number of CTX offices and "satellite" locations to 152
as of March 31, 1994. CTX originates mortgage loans, securitizes and sells
them on the secondary market shortly after closing and also sells the servicing
rights. Revenues come primarily from three sources: the loan origination fee,
the positive spread between short-term and long-term rates during the
securitization period (the time between the loan's closing and its delivery to
the secondary market), and the sale of servicing rights. The establishment by
CTX of mortgage operations in substantially all of Centex's housing markets has
enabled it to expand the solicitation of mortgage business that is not
associated with the sale of a Centex home. In fiscal 1994 CTX provided
financing for 9,289 Centex-built homes, representing approximately 74% of
Centex's total closings. In addition CTX provided 49,254 loans to others. The
58,543 loans for fiscal 1994 aggregated approximately $6.4 billion, compared to
$4.2 billion in the prior year. Other financial-related services provided by
CTX affiliates include acting as an agent for the issuance of homeowners'
insurance policies and title insurance policies and escrow services. CTX
Insurance Agency provides hazard insurance to home buyers in Texas and Florida.
During fiscal 1994, CTX opened its first commercial loan operation.
The mortgage banking industry in the United States is highly
competitive. CTX competes with other mortgage banking companies as well as
financial institutions to supply mortgage financing at attractive rates to
purchasers of Centex homes as well as the general public.
The origination of mortgage loans by CTX is subject to rules and
regulations promulgated by FHA, VA, Government National Mortgage Association
("Ginnie Mae"), Federal National Mortgage Association ("Fannie Mae") and
Federal Home Loan Mortgage Corporation ("Freddie Mac").
CONTRACTING AND CONSTRUCTION SERVICES
Centex's construction contracting work is performed nationwide.
Centex entered the contracting and construction services industry in 1966 with
the acquisition of J. W. Bateson Company, Inc. (now called Centex Bateson
Construction Company, Inc.), a Dallas-based contractor which has become one of
the nation's larger general contractors specializing in public facilities.
Centex's participation in the industry was expanded in 1978 with the
acquisition of Frank J. Rooney, Inc. (now Centex-Rooney Construction Co.,
Inc.), one of the larger general contractors in Florida, followed in fiscal
1982 by the purchase of M. H. Golden Company (now Centex Golden Construction
Company), a general contractor with operations in the San Diego and Los Angeles
markets, and Eugene Simpson & Brother, Inc., a contractor in the Washington,
D.C. area, which had been engaged primarily
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in negotiated work for the private sector. Centex also had a subsidiary
company, Centex Construction Company, Inc., in the Washington, D.C. area which
had been engaged primarily in construction of buildings for the federal
government. In the first half of fiscal 1991, the two Washington, D.C. area
subsidiaries, Centex Construction Company, Inc. and Eugene Simpson & Brother,
Inc. merged into a single entity, now known as Centex-Simpson Construction
Company, Inc. In 1987, the Company formed a subsidiary, Centex-Rodgers
Construction Company in Nashville, Tennessee, which is active nationally in the
private medical construction services market. Centex also has another Florida
subsidiary, Centex-Great Southwest Corporation (formerly Great Southwest
Corporation), which does work principally in the Tampa and Orlando areas.
During its 1990 fiscal year, Centex's Contracting and Construction Service
operations were expanded into the industrial contracting area with the
acquisition of the working assets of Forcum-Lannom Associates Inc. of
Dyersburg, Tennessee.
As a general contractor or construction manager, Centex provides the
supervisory personnel for the construction of the building or facility. In
addition, Centex may perform varying amounts of the actual construction work on
a project, but will generally hire subcontractors to perform the majority of
the work. As a result, the Company's Contracting and Construction Services
operation requires a relatively small asset base.
Construction contracts are primarily entered into under two formats:
competitively bid and negotiated jobs. In a competitively bid format, Centex
will bid a fixed amount for which it will agree to construct the project based
on an evaluation of detailed plans and specifications. In a negotiated job,
the contractor bids on a fixed fee over the cost of the project and, in many
instances, agrees that the final cost will not exceed a designated amount.
Such contracts may include a provision whereby the owner will pay a part of any
savings from the guaranteed amount to the contractor. The Company's highest
margins in contracting operations have usually been on competitively bid jobs.
On average, about half of Centex's projects are competitively bid, public jobs
and the other half are negotiated contracts with private owners. The Company's
public work for federal, state and local governments includes hospitals, jails,
airports, parking garages, office buildings, military facilities, post offices
and convention and performing arts centers. Most of Centex's private owner
contracts are for hotels, medical facilities and office buildings, plus some
shopping centers and condominiums.
Centex Contracting and Construction Services companies participate in
a diversified range of building construction in both the public and private
sectors across broad geographic lines. Among the buildings which Centex's
general construction group has completed are: Cinderella's Castle, the Land
Pavilion at Epcot Center, the Grand Floridian and Caribbean Beach Resorts in
the Disney World complex; portions of the Department of Labor and the Library
of Congress; the CIA Buildings in Washington, D.C.; a number of Veterans
Affairs Medical Centers and major airport terminals; Texas Stadium, the Dallas
Museum of Art and the Morton H. Meyerson Symphony Center in Dallas; the Tampa
Convention Center and the Tampa Bay Performing Arts Center in Florida; Wilshire
Court in Los Angeles and America Plaza in San Diego.
New contracts for fiscal 1994 totaled $1.03 billion versus $1.17
billion in fiscal 1993. At March 31,1994, the backlog of uncompleted
construction contracts was $1.24 billion, a record for any fiscal year end,
compared to the $1.17 billion backlog at March 31, 1993. The new contracts
included the $153.9 million Acute Care Naval Hospital in Portsmouth, Virginia;
a $100 million Clinical Addition and Spinal Cord Injury Center at the Veterans
Affairs Medical Center in Dallas, Texas; the $90.2 million Genesys Regional
Medical Center in Flint, Michigan; a $41.8 million Airside Terminal for Tampa
International Airport in Tampa, Florida; the $35.9 million Brittany
Condominiums in Naples, Florida; the $32.1 million State Farm Insurance
Regional Center in Frederick, Maryland; the $30.5 million Martin Luther King
Trauma Center in Los Angeles, California; the $29.5 million El Centro Southwest
High School in El Centro, California; a $26 million addition to Medical City
Dallas Hospital; $24.1 million Veterans Affairs Medical Center in El Paso,
Texas; a $23.5 million Performing Arts Center for California Polytechnic in San
Luis Obispo, California; $20.8 million of additions to our current contract at
Donelson Hospital in Nashville, Tennessee; a $20.8 million middle school and
elementary school complex in Naples, Florida; a $20.3 million medical center in
Odessa, Texas; the $16.2 million Catoma Water Pollution Control plant in
Montgomery, Alabama; a $14.1 million addition to the Audubon Institute's
Aquarium of the Americas in New Orleans, Louisiana; a $13.9 million police
facility in Alhambra, California; the $13.0 million Eastern Idaho Regional
Medical Center in Idaho Falls; and a $6.6 million Wal-Mart store in
Fayetteville, Arkansas.
As a group, Centex's Contracting and Construction Services
subsidiaries rank as the second largest general building contractor in the
country as well as the third largest constructor of healthcare facilities.
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The construction industry has become increasingly competitive, and
Centex competes with numerous other companies. With respect to competitively
bid projects, Centex generally competes for projects throughout the United
States and with local, regional or national contractors, depending upon the
nature of the project. In negotiated contract projects, Centex's subsidiaries
compete primarily in the general geographical area where they are located and
with other local, regional and national contractors. Centex solicits new
projects by attending project bid meetings, meetings with builders and owners
and through existing customers. Centex competes successfully on the basis of
its reputation and financial strength.
The Company's Contracting and Construction Services operations obtain
materials and services from numerous sources. The Company believes that its
construction companies can deal effectively with problems that they may
experience in the supply of materials and services.
CONSTRUCTION PRODUCTS
Centex's Construction Products operations include the manufacture,
production, distribution and sale of portland cement (a basic construction
material which is the essential binding ingredient in concrete), aggregates
(sand and gravel), readymix concrete and gypsum wallboard.
Centex operates cement plants in Buda, Texas, LaSalle, Illinois,
Fernley, Nevada and Laramie, Wyoming. The plants in LaSalle and Buda are owned
by joint ventures in which the Company has 50% interest. In fiscal 1992,
Centex completed the purchase of the remaining 1% interest in the joint venture
that owns the Laramie, Wyoming plant. As a result, Centex currently owns 100%
of this plant.
The cement plants operated by the Company use coal as their primary
source of energy. Natural gas can also be used as a backup or primary source
of fuel. All four of the cement plants are fuel efficient dry process plants.
The kiln start-up dates of the cement plants were: Buda, Texas, 1978 (expanded
in 1983); LaSalle, Illinois, 1974; Fernley, Nevada (2 kilns), 1964 and 1969;
and Laramie, Wyoming, 1988.
The principal raw material used in the production of portland cement
is calcium carbonate in the form of limestone. Limestone is obtained
principally from quarries owned or leased by Centex or the joint ventures and
located in close proximity to the plants. Other raw materials used in
substantially smaller quantities than limestone are sand, clay, iron ore and
gypsum, which are either obtained from reserves owned or leased by Centex or
the joint ventures or are purchased from outside suppliers and are readily
available. Centex's management estimates that its primary raw material
reserves, either owned, leased or available, will be adequate to permit
production at present capacities for the foreseeable future at all four of the
existing plants.
The Company's net cement production, which excludes the joint venture
partners' 50% shares in the LaSalle and Buda plants, totaled 1.8 million tons
in fiscal 1994 and 1.6 million tons in fiscal 1993. Total net cement sales
were 1.9 million tons in fiscal 1994 and 1.8 million tons in fiscal 1993. In
fiscal 1994 and 1993 all four cement plants sold all of the product that they
produced and each had supplemental sales with outside cement purchases.
Cement produced by cement plants operated by Centex is sold
principally to readymix concrete producers and paving contractors. No single
customer accounts for as much as 10% of Centex's total cement sales.
The principal markets for Centex's cement are Texas and the Western
portion of Louisiana (serviced by the Buda, Texas plant); Illinois and Southern
Wisconsin (serviced by the LaSalle, Illinois plant); Nevada (except Las Vegas)
and Northern California (serviced by the Fernley, Nevada plant) and Wyoming,
Utah, Southern Idaho, Northern Colorado and Western Nebraska (serviced by the
Laramie, Wyoming plant).
Distribution of cement is generally made by common carriers or
customer pick up and, to a lesser degree, by trucks owned and operated by
Centex. In addition, the Company transports cement principally by rail to its
storage and distribution terminals located in Roanoke, Waco, Corpus Christi,
Houston and Orange, Texas; Hartland, Wisconsin; Sacramento, California; Denver,
Colorado; Salt Lake City, Utah; Rock Springs, Wyoming; North Platte, Nebraska
and Bliss, Idaho, from which further distribution occurs.
9
<PAGE> 10
The cement business is highly competitive. In every regional market in
which Centex sells cement, one or more other domestic producers compete for the
available business. In addition, foreign companies compete in most of the
Company's markets by importing cement into the United States. Centex competes
by operating efficient cement plants, merchandising a high quality product and
providing good service and competitive pricing. The Company also sells cement
from terminals to expand each cement plant's marketing area.
Demand for cement has generally been cyclical and is closely related
to the general level of the economy, new housing starts, government
construction programs and other construction activities. The cement business
is seasonal and requires some build-up of inventory during the winter
(particularly in northern states) to meet peak demands from spring into the
fall. Significant increases in the Texas market price have occurred during
fiscal 1994 and 1993 primarily as a result of improved levels of business
activity.
Centex's readymix concrete and aggregate operations are located in
Austin, Texas and in northern California. Centex also operates an
aggregate-only production facility south of the Dallas/Fort Worth, Texas
metropolitan area. In addition, Centex has a 10,000 acre aggregate deposit in
Northern California which contains in excess of 2 billion tons of reserves.
Centex sells aggregates from this deposit in the Sacramento, California market.
Centex operates two gypsum wallboard manufacturing facilities in
Albuquerque, New Mexico and nearby Bernilillo, New Mexico. These facilities
use natural gas as their primary energy source. The Company has lease rights
and owns mineral rights to extract gypsum rock, which is the principal
ingredient of gypsum wallboard, from quarries in close proximity to its plants.
Other materials required to manufacture gypsum wallboard are readily available
to the Company, and no problems relating to material supply are anticipated in
the foreseeable future.
The newer gypsum wallboard manufacturing facility in Bernalillo, New
Mexico, north of the original plant, more than doubled Centex's total
productive capacity. The newer plant commenced operation at the beginning of
fiscal 1991 and has made encouraging progress toward correcting design
deficiencies and attaining stable production. Centex's older Albuquerque
wallboard plant did not operate during fiscal 1993, but began operating on a
limited production schedule in early fiscal 1994. The gypsum wallboard
industry is highly competitive and subject to cyclical pricing based upon
supply and demand. During fiscal 1994, demand and pricing for gypsum wallboard
continued to increase, and the company's wallboard operation reported a
profitable fiscal year for the first time since 1990.
Subsequent to fiscal year end, 51% of the stock of Centex Construction
Products, Inc., the entity in which the Company had consolidated its
cement-related and gypsum wallboard operations, was sold through an initial
public offering, raising $164 million. Including a dividend and other
payments, Centex received $186.5 million from the transaction, which was used
to pay down corporate debt.
SAVINGS AND LOAN
In December 1988, Centex purchased certain assets and assumed certain
liabilities of four Texas savings and loan associations under the Federal
Savings and Loan Insurance Corporation's assisted transactions process commonly
known as the "Southwest Plan". The acquisition was made by Texas Trust Savings
Bank, FSB ("Texas Trust"), a federal stock savings bank and subsidiary of CTX
Holding Company ("CTX Holding"), a wholly owned subsidiary of Centex. The
Federal Savings and Loan Insurance Corporation (the "FSLIC") received a warrant
to purchase a 20% interest in Texas Trust's common stock for $400,000 through
December 2003.
The acquisition was made pursuant to acquisition agreements and an
assistance agreement (the "Assistance Agreement") with the FSLIC. Under the
terms of these agreements, the FSLIC provided assistance to Texas Trust in the
form of a note (the "Note") in the original principal amount of $172.3 million
representing the aggregate negative capital (as defined in the agreements) of
the insolvent associations as of December 29, 1988. This note, which was due
on December 29, 1998, was prepaid in fiscal 1991 and 1992.
10
<PAGE> 11
In August 1989, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") was enacted which abolished the FSLIC and
established the FSLIC Resolution Fund (the "Fund") to assume all reserves,
assets, debts, obligations and other liabilities of the FSLIC. The Fund is
managed by the Federal Deposit Insurance Corporation (the "FDIC"). All
subsequent references to the Fund include its obligations created pursuant to
previous agreements with the FSLIC.
Certain of the acquired assets are subject to Fund assistance through
December 1998 ("Covered Assets"). Subject to the terms of the Assistance
Agreement, the Fund will reimburse Texas Trust for any write-downs, losses or
costs incurred in connection with the operations and disposition of these
assets. Disposition gains, if any, will be shared by the Fund and Texas Trust.
In addition, the Fund will supplement the actual yield on Covered Assets to
provide a guaranteed yield equal to the Texas Cost of Funds plus a designated
spread until December 29, 1998. At that time, any remaining Covered Assets
will be adjusted to their then fair market value and retained by Texas Trust.
The Fund will reimburse Texas Trust for any required valuation adjustments.
Yield maintenance on Covered Assets for the years ended March 31,
1994, 1993 and 1992 were $2.8, $8.5 and $22.0 million, respectively. In
addition, $12.1, $86.1 and $80.1 million of assistance was provided in fiscal
1994, 1993 and 1992, respectively, as reimbursement for losses relating to
Covered Assets.
Fund agreements also provide for maintenance by Texas Trust of certain
minimum capital levels; reimbursement by the Fund of certain amounts over a
10-year period; sharing by the Fund in a portion of the tax benefits realized
by Centex in connection with the acquisitions by Texas Trust; and
indemnification by the Fund against unassumed liabilities and claims.
Under the terms of a related capital maintenance agreement, Texas
Trust is prohibited from declaring or paying dividends that would cause its
regulatory capital to fall below specified levels. Centex has no obligations
to make additional capital contributions to CTX Holding or Texas Trust.
During fiscal 1990, certain forbearances previously granted by
regulatory authorities were rescinded by FIRREA. In addition, more stringent
capital requirements were established. At March 31, 1994, and throughout the
period since their establishment, Texas Trust has been in full compliance with
the new federally-mandated capital requirements. The elimination of
forbearances does not significantly impact Texas Trust. Also, under FIRREA,
all 1988 transactions and their agreements, including the Texas Trust
transaction, became subject to further review by the Resolution Trust
Corporation (the "RTC"). Cost reduction options exercised to date by the RTC
include the early payoff of the $172.3 million Fund note, substantial Covered
Asset write-downs and directed dispositions. Texas Trust and the RTC are
currently negotiating to terminate the Assistance Agreement. In connection
therewith, the RTC would prepay a non-interest-bearing obligation at a
discounted value, purchase all remaining Covered Assets and sell its 20%
warrant to Texas Trust. Management anticipates that the termination process
will be concluded during fiscal year 1995 without a significant impact on the
Company's financial condition or results of operations.
Texas Trust, currently headquartered in Dallas, Texas, operates eight
savings and loan branch offices in the central Texas cities of Buchanan Dam,
Burnet, Giddings, Kingsland, Llano, Marble Falls, Mason and San Angelo. In
fiscal 1993, Texas Trust expanded its financial services businesses with the
formation of a new mortgage banking operation, TxT Mortgage Company, and the
initiation of an interim lending program for single-family home builders. TxT
Mortgage Company, also headquartered in Dallas, Texas, currently has offices in
Arlington, Austin, Hurst, and, Tyler, Texas, Denver, Colorado and three offices
in California. Texas Trust offers a number of services and products including
checking accounts, savings accounts, certificates of deposit, residential
mortgage loans, consumer loans and interim construction loans to single-family
home builders. Subsequent to March 31, 1994, Texas Trust commenced
negotiations to sell the assets and related liabilities of its TXT Mortgage
Company division to CTX Mortgage Company.
The financial services industry in Texas is highly competitive.
Competition for customer deposits is intense among commercial banks, credit
unions, savings and loan associations, mutual funds and insurance companies.
After the acquisition, Texas Trust lowered the rates that it offers on variable
rate accounts and new fixed rate certificates of deposit. As expected, some
depositors responded to these changes by withdrawing or choosing not to renew
maturing deposits. Total deposits increased by $6.9 million from April 1, 1993
to March 31, 1994, and decreased by $31.8 million from April 1, 1992 to March
31, 1993, by $120.4 million from April 1, 1991 to March 31, 1992, and by $30.1
million from April 1, 1990 to March 31, 1991, and were replaced with funds
generated by the disposition of certain assets and with lower-cost funds from
the Federal Home Loan Bank of Dallas ("FHLBD") advances. At March 31, 1994,
total deposits of $207.1 million included $130.1 million of deposits which
mature
11
<PAGE> 12
during the next twelve months. At March 31, 1993, the total deposits of $200.1
million included $144.3 million of deposits, which matured during fiscal year
1994.
Texas Trust, chartered as a federal savings bank, is required to be a
member of the Federal Home Loan Bank System and to have its deposits insured by
the Savings Association Insurance Fund administered by the FDIC. Texas Trust
is subject to extensive regulation by the Office of Thrift Supervision ("OTS"),
a bureau in the U.S. Department of Treasury. Such regulatory supervision
includes, among other things, net worth and regulatory capital maintenance
requirements, liquidity maintenance requirements, limitations on the rate of
growth of deposit liabilities and limitations on the type and amount of its
investments. Regulations promulgated under the Home Owners Loan Act and other
federal laws limit Texas Trust's ability to engage in transactions with, and
pay dividends to, Centex and Centex's affiliates. Texas Trust is also subject
to regulations of the Federal Reserve Board governing reserves required to be
maintained on deposits and other matters. The FDIC and OTS conduct periodic
examinations to test compliance with these and other regulatory requirements.
Centex and CTX Holding, as savings and loan holding companies, are
subject to certain regulation by the OTS.
Negotiations are underway with the Federal Deposit Insurance
Corporation (FDIC) to terminate the agreement under which Texas Trust was
acquired. It is expected that the termination of the Assistance Agreement will
be completed sometime during fiscal 1995. The Savings and Loan group has
established adequate reserves for the costs associated with this transaction.
12
<PAGE> 13
The following is a summary of average balances and average interest
rates for the year ended March 31, 1994, 1993 and 1992.
TEXAS TRUST SAVINGS BANK, FSB
AVERAGE BALANCES AND INTEREST RATES
($ IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED MARCH 31, 1994 ENDED MARCH 31, 1993
-------------------- --------------------
AVERAGE REVENUE/INTEREST AVERAGE REVENUE/INTEREST
BALANCE EXPENSE % BALANCE EXPENSE %
------- ------- - ------- ------- -
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Interest-bearing deposits in other
financial institutions and other
investment securities . . . . . . . . . $101,181 $5,208 5.15% $ 78,756 $ 6,469 8.21%
Loans, primarily residential
mortgage, net of $830, $1,565 and
$3,377, respectively, of valuation
adjustments . . . . . . . . . . . . . . 37,665 3,161 8.39% 10,728 1,347 12.56%
Assets covered by Fund assistance . . . 60,827 1,316 2.16% 111,101 8,015 7.21%
Notes and receivables from the Fund . . -- -- -- -- -- --
-------- ------ ---- -------- ------- -----
Total earning assets . . . . . . . 199,673 9,685 4.85% 200,585 15,831 7.89%
------ ---- ------- -----
Cash and amounts due from banks . . . . . . 3,465 807
Other assets . . . . . . . . . . . . . . . 25,446 84,500
-------- --------
Total assets . . . . . . . . . . . $228,584 $285,892
======== ========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . $197,341 7,205 3.65% $217,561 9,480 4.36%
FHLB advances and short-term
borrowings . . . . . . . . . . . . . . . 10,882 622 5.72% 47,735 2,567 5.38%
-------- ------ ---- -------- ------- -----
Total interest-bearing liabilities 208,223 7,827 3.76% 265,296 12,047 4.54%
------ ---- ------- -----
Other liabilities . . . . . . . . . . . . . 4,928 4,254
Stockholder's equity . . . . . . . . . . . 15,433 16,342
-------- --------
Total liabilities and stock-
holder's equity . . . . . . . . . $222,584 $285,892
======== ========
Net interest margin . . . . . . . . . . . . $1,858 $ 3,784
====== =======
Net yield on earning assets . . . . . . . . .93% 1.89%
==== =====
Net margin . . . . . . . . . . . . . . . . 1.09% 3.35%
==== =====
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED MARCH 31, 1992
--------------------
AVERAGE REVENUE/INTEREST
BALANCE EXPENSE %
------- ------- -
<S> <C> <C> <C>
Earning assets:
Interest-bearing deposits in other
financial institutions and other
investment securities . . . . . . . . . $ 32,887 $2,350 7.15%
Loans, primarily residential
mortgage, net of $830, $1,565 and
$3,377, respectively, of valuation
adjustments . . . . . . . . . . . . . . 9,504 1,982 20.85%
Assets covered by Fund assistance . . . 213,822 19,218 8.99%
Notes and receivables from the Fund . . 27,831 2,263 8.13%
-------- ------ -----
Total earning assets . . . . . . . 284,044 25,813 9.09%
------ -----
Cash and amounts due from banks . . . . . . 804
Other assets . . . . . . . . . . . . . . . 52,714
--------
Total assets . . . . . . . . . . . $337,562
========
Interest-bearing liabilities:
Deposits . . . . . . . . . . . . . . . . $284,358 18,530 6.52%
FHLB advances and short-term
borrowings . . . . . . . . . . . . . . . 31,702 2,353 7.42%
-------- ------ -----
Total interest-bearing liabilities 316,060 20,883 6.61%
------ -----
Other liabilities . . . . . . . . . . . . . 2,429
Stockholder's equity . . . . . . . . . . . 19,073
--------
Total liabilities and stock-
holder's equity . . . . . . . . . $337,562
========
Net interest margin . . . . . . . . . . . . $4,930
======
Net yield on earning assets . . . . . . . . 1.74%
=====
Net margin . . . . . . . . . . . . . . . . 2.48%
=====
</TABLE>
13
<PAGE> 14
EMPLOYEES
The Company and its subsidiaries had approximately 8,430 employees at
March 31, 1994.
ITEM 2. PROPERTIES
PLANT FACILITIES
The Company, in connection with its Construction Products operations,
operates cement plants, quarries and related facilities at Buda, Texas,
LaSalle, Illinois, Fernley, Nevada and Laramie, Wyoming. The Buda and LaSalle
plants are owned by separate joint ventures in each of which Centex has a 50%
interest. The Company's principal aggregate plants and quarries are located in
Austin and Cleburne, Texas and Marysville, California. In addition, the
Company operates gypsum wallboard plants near Albuquerque and Bernalillo, New
Mexico. The Buda cement plant is no longer pledged as security on debts
incurred by such joint venture for construction or renovation of this facility,
as the principal and interest relating to such debts were paid in full by the
joint venture during fiscal 1994.
See "Item 1. Business" on pages 5-14 of this Report for additional
information relating to the Company's properties.
ITEM 3. LEGAL PROCEEDINGS
The management of the Company believes that none of the litigation
matters in which Centex or any subsidiary is involved, if determined
unfavorable to Centex or any subsidiary, would have a material adverse effect
on the consolidated financial condition or operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF CENTEX (SEE ITEM 10 OF PART III)
The following is an alphabetical listing of the Company's executive
officers, as such term is defined under the rules and regulations of the
Securities and Exchange Commission. All of these executive officers have been
employed by the Company and/or one or more subsidiaries of the Company for the
past five years. All of these executive officers were elected by the Board of
Directors of the Company at its Annual Meeting on July 23, 1993, to serve until
the next Annual Meeting of Directors or until their respective successors are
duly elected. There is no family relationship between any of these officers.
<TABLE>
<CAPTION>
Name Age Positions with Centex
---- --- ---------------------
<S> <C> <C>
Michael S. Albright 46 Vice President - Finance and Controller (Vice President - Finance
since July 1992; Controller since November 1987; Vice President
from July 1989 to July 1992)
Timothy R. Eller 45 President, Chief Executive Officer and Chief Operating Officer of
Centex Real Estate Corporation (President and Chief Operating
Officer since January 1990; Chief Executive Officer since July 1991;
Executive Vice President from July 1987 to January 1990)
William J Gillilan III 48 President and Chief Operating Officer (President since July 1991;
Chief Operating Officer since January 1990; Executive Vice President
from July 1989 until July 1991)
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C> <C>
Laurence E. Hirsch 48 Chairman of the Board and Chief Executive Officer (Chairman of the
Board since July 1991; Chief Executive Officer since July 1988;
President from March 1985 until July 1991)
David W. Quinn 52 Executive Vice President and Chief Financial Officer (since February
1987)
Raymond G. Smerge 50 Vice President, Chief Legal Officer, General Counsel and Secretary
(Vice President and Chief Legal Officer since September 1985;
General Counsel and Secretary since April 1993)
</TABLE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
<TABLE>
<CAPTION>
STOCK PRICES AND DIVIDENDS
--------------------------
Year Ended March 31, 1994 Year Ended March 31, 1993
------------------------- -------------------------
Price Price
----- -----
QUARTER High Low Dividends High Low Dividends
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
First $35 1/2 $27 1/2 $.05 $24 3/8 $20 $.05
Second $42 5/8 $32 1/2 $.05 $26 $22 1/4 $.05
Third $44 5/8 $36 7/8 $.05 $32 3/4 $24 $.05
Fourth $45 5/8 $30 7/8 $.05 $34 1/8 $29 3/4 $.05
</TABLE>
The common stock of Centex Corporation is traded on the New York Stock
Exchange (ticker symbol CTX) and The International Stock Exchange (London).
The approximate number of record holders of the common stock of Centex
Corporation as of June 15, 1994 was 1,713. The closing price of Centex common
stock on the New York Stock Exchange on June 15, 1994 was $28.125.
On November 30, 1987, Centex Corporation distributed as a dividend to
its stockholders securities relating to Centex Development Company, L.P. (see
Note G to the Consolidated Financial Statements of Centex Corporation and
Subsidiaries). Since this distribution, such securities have traded in tandem
with, and as a part of, the common stock of Centex Corporation.
Dividend amounts represent cash dividends per share paid by Centex
Corporation on the common stock of Centex Corporation. 3333 Holding
Corporation has paid no dividends on its common stock since its incorporation.
15
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
Centex Corporation and Subsidiaries
SUMMARY OF SELECTED FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenues $ 3,214,482 $ 2,502,692 $ 2,165,707 $ 2,243,836 $ 2,072,644
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 85,162 $ 61,038 $ 34,557 $ 43,605 $ 62,003
Net Earnings from
Discontinued Operations -- -- -- -- --
Cumulative Effect of Change in
Accounting for Income Taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 85,162 $ 61,038 $ 34,557 $ 43,605 $ 62,003
=========== =========== =========== =========== ===========
Total Assets $ 2,580,356 $ 2,272,093 $ 2,347,452 $ 2,037,486 $ 2,045,141
Total Long-term Debt, including
debentures $ 222,832 $ 223,988 $ 232,294 $ 137,235 $ 140,112
Total Debt $ 429,470 $ 368,988 $ 298,508 $ 267,946 $ 267,739
Deferred Income Taxes $ 35,088 $ 55,722 $ 56,627 $ 80,205 $ 59,311
Negative Goodwill $ 24,102 $ 28,102 $ 31,702 $ 34,702 $ 37,102
Stockholders' Equity $ 668,659 $ 578,415 $ 518,494 $ 483,677 $ 447,911
Total Debt as a Percent of
Total Capitalization (Total
Debt, Deferred Income Taxes,
Negative Goodwill and
Stockholders' Equity) 37.1% 35.8% 33.0% 30.9% 33.0%
Net Earnings as a Percent of
Beginning Stockholders'
Equity 14.7% 11.8% 7.1% 9.7% 16.1%
Per Common Share
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 2.60 $ 1.91 $ 1.11 $ 1.42 $ 2.01
Net Earnings from
Discontinued Operations -- -- -- -- --
Cumulative Effect of Change
in Accounting for Income
Taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 2.60 $ 1.91 $ 1.11 $ 1.42 $ 2.01
=========== =========== =========== =========== ===========
Cash Dividends $ .20 $ .20 $ .20 $ .20 $ .20
Book Value Based on Shares
Outstanding at Year End $ 21.12 $ 18.57 $ 16.99 $ 16.07 $ 14.85
Stock Prices
High $ 45 5/8 $ 34 1/8 $ 27 3/8 $ 21 7/8 $ 20 7/8
Low $ 27 1/2 $ 20 $ 17 $ 9 3/4 $ 14
</TABLE>
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1989 1988 1987 1986 1985
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Revenues $ 1,845,484 $ 1,485,068 $ 1,321,961 $ 1,441,907 1,219,840
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 40,020 $ 24,063 $ 44,204 $ 47,569 $ 39,354
Net Earnings from
Discontinued Operations -- -- -- -- 3,780
Cumulative Effect of Change in
Accounting for Income Taxes -- 50,100 -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 40,020 $ 74,163 $ 44,204 $ 47,569 $ 43,134
=========== =========== =========== =========== ===========
Total Assets $ 1,800,522 $ 1,148,098 $ 1,150,720 $ 1,068,063 922,745
Total Long-term Debt, including
debentures $ 140,192 $ 178,862 $ 133,461 $ 65,263 $ 63,674
Total Debt $ 240,457 $ 222,962 $ 134,724 $ 120,394 $ 137,674
Deferred Income Taxes $ 74,487 $ 139,767 $ 229,576 $ 204,588 $ 169,303
Negative Goodwill $ 38,981 $ -- $ -- $ -- $ --
Stockholders' Equity $ 384,174 $ 364,846 $ 363,014 $ 327,792 $ 301,954
Total Debt as a Percent of
Total Capitalization (Total
Debt, Deferred Income Taxes,
Negative Goodwill and
Stockholders' Equity) 32.6% 30.6% 18.5% 18.4% 22.6%
Net Earnings as a Percent of
Beginning Stockholders'
Equity 11.0% 20.4% 13.5% 15.8% 10.5%
Per Common Share
Earnings Before Discontinued
Operations and 1988
Accounting Change $ 1.32 $ .75 $ 1.24 $ 1.31 $ 1.01
Net Earnings from
Discontinued Operations -- -- -- -- .09
Cumulative Effect of Change
in Accounting for Income
Taxes -- 1.57 -- -- --
----------- ----------- ----------- ----------- -----------
Net Earnings $ 1.32 $ 2.32 $ 1.24 $ 1.31 $ 1.10
=========== =========== =========== =========== ===========
Cash Dividends $ .14375 $ .125 $ .125 $ .125 $ .125
Book Value Based on Shares
Outstanding at Year End $ 13.28 $ 12.13 $ 10.23 $ 9.17 $ 8.14
Stock Prices
High $ 14 7/8 $ 17 $ 20 1/4 $ 16 3/4 $ 14 1/4
Low $ 10 $ 7 7/8 $ 14 1/2 $ 10 1/4 $ 9
</TABLE>
Discontinued operations represents revenues and earnings data of Cenergy
Corporation, an oil and gas subsidiary spun off on October 1, 1984.
On November 30, 1987, Centex Corporation distributed as a dividend to its
stockholders securities relating to Centex Development Company, L.P. (see Note
G to the Consolidated Financial Statements of Centex Corporation and
Subsidiaries). Since this distribution, such securities have traded in tandem
with, and as a part of, the common stock of Centex Corporation.
Debt represents Centex Corporation's debt with the mortgage company and savings
and loan association reflected on the equity method versus consolidation.
16
<PAGE> 17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Led by record results from its Home Building and Mortgage Banking
businesses and significant improvement in its Construction Products operations,
Centex reported for fiscal year 1994 the highest fiscal year revenues of $3.2
billion, earnings before income taxes of $135 million, net earnings of $85.2
million and earnings per share of $2.60, in its history.
During fiscal 1994, Home Building revenues, operating earnings and
closings reached record highs. The following table summarizes Home Building
only results (excluding CDC and certain other items reported in this segment)
for the three-year period ending March 31, 1994 (in millions, except per unit
data):
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Home Building Revenues* $ 1,869.8 100.0% $1,433.1 100.0% $1,061.9 100.0%
Cost of Sales (1,560.0) (83.5) (1,186.6) (82.8) (869.2) (81.9)
Selling, General & Administrative (213.8) (11.4) (170.4) (11.9) (137.4) (12.9)
--------- ----- -------- ----- -------- -----
Operating Earnings* $ 96.0 5.1% $ 76.1 5.3% $ 55.3 5.2%
========= ===== ======== ===== ======== =====
Units Closed 12,563 10,279 7,739
Unit Sales Price $ 147,466 $138,359 $135,678
% Change 6.6% 2.0% 5.6%
Operating Earnings per Unit $ 7,640 $ 7,408 $ 7,141
% Change 3.1% 3.7% (23.9%)
</TABLE>
*CDC and other items excluded from this table represented revenues of $1.8,
$(1.8) and $1.4 million, respectively, and operating losses of $1.8, $.5 and
$1.0 million, respectively.
Closings increased 22% in 1994 resulting in an approximate 31%
increase in housing revenues from 1993. The average home sales price increased
6.6% in fiscal 1994 compared to fiscal 1993. Operating earnings from this
segment, including CDC and other items, were a record $94.2 million this year,
up more than 25% over the prior fiscal year. Home Building's gross profit
margin declined in fiscal 1994 compared to fiscal 1993 due to increases in
construction materials costs, primarily lumber. Margins in 1994 were also
impacted by the results of operations in California, which continued to
experience negative economic conditions. Operating margins did, however,
improve sequentially throughout the year, rising from 4.2% in the first quarter
to 5.7% in the fourth quarter. Home closings and orders for fiscal 1994 were at
the highest level in company history. New orders for the current fiscal year
reached an all-time high of 13,207 homes, up 16% over 11,421 homes for the prior
fiscal year. The backlog of homes sold but not closed at March 31, 1994 reached
5,795 units, a 13% increase over the backlog of 5,151 homes at March 31, 1993.
Revenues from Mortgage Banking for the year ended March 31, 1994
totaled $187.9 million, up 45% from $129.7 million for the prior fiscal year.
Operating earnings reached an all-time high of $71.0 million, a 48% increase
over $47.8 million in 1993. For fiscal 1994, the company originated 58,543
loans valued at approximately $6.4 billion compared to 38,301 originations
valued at about $4.2 billion last year. Originations for Centex-built homes
rose 20% to 9,289 this year while third-party originations increased 61% to
49,254.
For fiscal 1994, revenues from Contracting and Construction Services
were $966.6 million, up 23% from $783.2 million for fiscal 1993. This segment
had an operating loss of $4.5 million this year versus an operating loss of
$4.1 million for the prior fiscal year. The operating loss was due primarily
to continued weak operating margins which resulted from fewer available
projects and increased competition. However, the backlog of uncompleted
construction contracts at March 31, 1994 was $1.24 billion, slightly higher
than the March 31, 1993 backlog of $1.17 billion and a little lower than the
record backlog of $1.3 billion reported at December 31, 1993.
Construction Products revenues were $172.9 million in fiscal 1994, up
22% from $141.2 million for fiscal 1993. Operating earnings from Construction
Products reached $16.6 million this year, compared to earnings of $4.6 million
in the prior fiscal year. The increase was due primarily to high demand for
the cement-related and Gypsum wallboard operations, which resulted in improved
pricing levels.
17
<PAGE> 18
The Savings and Loan segment reported fiscal 1994 revenues of $15.5
million, compared to $17.3 million in the prior fiscal year. Operating
earnings from the Savings and Loan were $2.6 million for the current fiscal
year, compared to $3.0 million in the previous year.
The record fiscal year Home Building results were due to more closings
and to margins that improved throughout the year because of home price
increases and lower lumber costs. The record Mortgage Banking results were due
to the lower interest rate environment which prevailed throughout most of
fiscal 1994 and stimulated new home sales and refinancings.
The gain in Construction Products results was due primarily to
increased demand for its products, higher production levels and improved
pricing in its cement-related and gypsum wallboard operations. The company's
wallboard operation reported a profit in fiscal 1994, the first since 1990.
Despite the high construction backlog levels maintained by its Contracting and
Construction Services division throughout the year, margins in this business
remained under intense competitive pressure.
Lumber prices have recently retreated from record levels. The lower
current lumber prices coupled with higher prices for the company's homes will
result in a further strengthening of Home Building margins as fiscal 1995
progresses. Higher mortgage interest rates, however, have slowed home building
orders and significantly reduced mortgage refinancing activity, both of which
will negatively impact fiscal 1995 results for the segments. Results from the
company's Contracting and Construction Services division are not expected to
improve until later in the economic cycle.
FINANCIAL CONDITION
The company has adequate unsecured revolving credit facilities. These
credit facilities serve as back-up lines for overnight borrowings under
uncommitted bank lines and commercial paper. In addition, CTX Mortgage Company
has sufficient committed and uncommitted credit facilities of its own to
finance mortgages which are held during the period while they are being
securitized and readied for delivery against forward sale commitments.
Information regarding Centex's short-term and long-term debt is
included in Note (D) of the Notes to Consolidated Financial Statements of
Centex Corporation and subsidiaries on pages 30-31 of this Report.
Based on its financial condition and existing credit relationships,
Centex believes it will be able to provide adequately for its current and
future growth.
STOCK REPURCHASE PROGRAM
In April and May 1994, Centex announced a 2.1 million share common
stock repurchase program of which approximately 1.1 million shares have been
repurchased.
SUBSEQUENT EVENT
Subsequent to fiscal year end, the Company completed an initial public
offering of 51% of its construction products subsidiary. The new publicly-held
entity, Centex Construction Products, Inc., is trading on the New York Stock
Exchange under the symbol "CXP." Centex received a dividend and other payments
from CXP totaling approximately $186.5 million which has been used to reduce
Centex's outstanding indebtedness. In addition, Centex will report an
after-tax gain related to CXP's initial public offering of approximately $37.5
million during the first quarter of fiscal 1995.
18
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for in this Item 8 is included herein on pages
21-46 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(See Item 11 below.)
ITEM 11. EXECUTIVE COMPENSATION
Except for the information relating to the executive officers of the
Company, which follows Item 4 of Part I of this Report, the information called
for by Items 10, 11, 12 and 13 is incorporated herein by reference to the
information included and referenced under the following captions (on the pages
indicated) in the Company's Proxy Statement dated July 1, 1994 for the July 28,
1994 Annual Meeting of Stockholders (the "1994 Centex Proxy Statement"):
<TABLE>
<CAPTION>
ITEM CAPTION IN THE 1994 CENTEX PROXY STATEMENT PAGES
---- ------------------------------------------ -----
<S> <C> <C>
10 Election of Directors 3-6
10 Section 16(a) Compliance 15
11 Executive Compensation 9-14
12 Security Ownership of Management
and Certain Beneficial Owners 7-8
13 Certain Transactions 15-16
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(See Item 11 above.)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(See Item 11 above and Schedule II on page 45 of this Report for
information respecting indebtedness to Centex of certain officers and
directors.)
19
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) AND (2) See the Index to Consolidated Financial Statements and Schedules
below for a list of the Financial Statements and Financial Statement schedules
filed herewith.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<CAPTION>
FORM 10-K
PAGE REFERENCE
--------------
<S> <C>
CENTEX CORPORATION AND SUBSIDIARIES
Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Statement of Consolidated Earnings for the years ended March 31, 1994, 1993 and 1992 . . . . . 22
Consolidated Balance Sheets as of March 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . 23
Statement of Consolidated Cash Flows for the years ended March 31, 1994, 1993 and 1992 . . . . 24
Statement of Consolidated Stockholders' Equity for the years ended March 31, 1994, 1993 and 1992 25
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Quarterly Results (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Consolidated Supporting Schedules:
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
I - Marketable Securities - Other Investments - March 31, 1994 . . . . . . . . . . . . . . . . 44
II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees Other
Than Related Parties for the years ended March 31, 1994, 1993 and 1992 . . . . . . . . . . . . 45
IX - Short-Term Borrowings for the years ended March 31, 1994, 1993 and 1992 . . . . . . . . . 46
</TABLE>
Consolidated supporting schedules other than those listed above have
been omitted either because the required information is contained in notes to
the consolidated financial statements or because such schedules are not
required or are not applicable.
(3) EXHIBITS
The information on exhibits required by this Item 14 is set forth in
the Centex Index to Exhibits appearing on pages 75-79 of this Report.
(b) Reports on Form 8-K:
None.
20
<PAGE> 21
Centex Corporation and Subsidiaries
AUDITORS' REPORT
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF CENTEX CORPORATION:
We have audited the accompanying consolidated balance sheets of Centex
Corporation (a Nevada corporation) and subsidiaries as of March 31, 1994 and
1993, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three years in the period ended March
31, 1994. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these 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 audit 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 financial statements referred to above present fairly, in
all material respects, the financial position of Centex Corporation and
subsidiaries as of March 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1994, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The supplemental balance sheet data of
Centex Corporation and Financial Services are presented for purposes of
additional analysis and are not a required part of the consolidated financial
statements. This information has been subjected to the auditing procedures
applied in our audits of the consolidated financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
May 11, 1994
21
<PAGE> 22
Centex Corporation and Subsidiaries
STATEMENT OF CONSOLIDATED EARNINGS
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
REVENUES
Home Building $1,871,627 $1,431,265 $1,063,271
Mortgage Banking 187,870 129,747 74,642
Contracting and Construction Services 966,562 783,222 865,009
Construction Products 172,900 141,164 135,676
Savings and Loan 15,523 17,294 27,109
---------- ---------- ----------
3,214,482 2,502,692 2,165,707
---------- ---------- ----------
COSTS AND EXPENSES
Home Building 1,777,449 1,355,677 1,008,934
Mortgage Banking 116,885 81,920 55,175
Contracting and Construction Services 971,062 787,325 861,267
Construction Products 156,274 136,516 134,538
Savings and Loan 12,958 14,267 24,994
Corporate General and Administrative 15,158 13,120 12,807
Interest 29,683 22,108 22,140
---------- ---------- ----------
3,079,469 2,410,933 2,119,855
---------- ---------- ----------
EARNINGS BEFORE INCOME TAXES 135,013 91,759 45,852
Income Taxes 49,851 30,721 11,295
---------- ---------- ----------
NET EARNINGS $ 85,162 $ 61,038 $ 34,557
========== ========== ==========
EARNINGS PER SHARE $ 2.60 $ 1.91 $ 1.11
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 23
Centex Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Centex Corporation and
Subsidiaries Centex Corporation
------------ ------------------
March 31, March 31,
--------- ---------
1994 1993 1994 1993
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
ASSETS
Cash and Cash Equivalents $ 76,287 $ 26,065 $ 13,284 $ 13,802
Marketable Securities 78,241 110,316 - -
Receivables -
Residential Mortgage Loans 677,641 591,328 - -
Construction Contracts 161,929 153,780 161,929 153,780
Trade 79,487 67,623 54,630 45,086
Note 10,115 8,163 10,115 8,163
Affiliates - - - -
Inventories -
Housing Projects 969,769 764,959 969,769 764,959
Land Held for Development and Sale 104,869 106,785 104,869 106,785
Construction Products 22,819 24,601 22,819 24,601
Investments -
Joint Ventures and Unconsolidated Subsidiaries 56,928 50,277 62,191 73,350
Centex Development Company, L.P. 71,000 71,517 71,000 71,517
Property and Equipment, net 188,930 177,610 169,234 167,406
Government-Guaranteed S&L Assets -
Receivables 19,030 13,579 - -
Covered Assets 24,737 69,244 - -
Other Assets and Deferred Charges 38,574 36,246 22,101 24,020
---------- ---------- ---------- ----------
$2,580,356 $2,272,093 $1,661,941 $1,453,469
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued
Liabilities $ 618,943 $ 527,094 $ 504,622 $ 422,242
S&L Deposits and FHLB Borrowings 211,055 204,140 - -
Short-term Debt 783,585 637,570 206,638 145,000
Long-term Debt 222,832 223,988 222,832 223,988
Deferred Income Taxes 51,180 72,784 35,088 55,722
Negative Goodwill 24,102 28,102 24,102 28,102
Stockholders' Equity -
Common Stock, $.25 Par Value; Authorized
50,000,000 Shares; Issued 31,663,808 and
31,140,878 Shares 7,916 7,785 7,916 7,785
Capital in Excess of Par Value 26,631 15,376 26,631 15,376
Retained Earnings 634,112 555,254 634,112 555,254
---------- ---------- ---------- ----------
Total Stockholders' Equity 668,659 578,415 668,659 578,415
---------- ---------- ---------- ----------
$2,580,356 $2,272,093 $1,661,941 $1,453,469
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Financial Services
------------------
March 31,
---------
1994 1993
---- ----
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 63,003 $ 12,263
Marketable Securities 78,241 110,316
Receivables -
Residential Mortgage Loans 677,641 591,328
Construction Contracts - -
Trade 24,857 22,537
Note - -
Affiliates 80,806 63,555
Inventories -
Housing Projects - -
Land Held for Development and Sale - -
Construction Products - -
Investments -
Joint Ventures and Unconsolidated Subsidiaries - -
Centex Development Company, L.P. - -
Property and Equipment, net 19,696 10,204
Government-Guaranteed S&L Assets -
Receivables 19,030 13,579
Covered Assets 24,737 69,244
Other Assets and Deferred Charges 16,473 12,226
---------- ----------
$1,004,484 $ 905,252
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued
Liabilities $ 114,321 $ 104,852
S&L Deposits and FHLB Borrowings 211,055 204,140
Short-term Debt 576,947 492,570
Long-term Debt - -
Deferred Income Taxes 16,092 17,062
Negative Goodwill - -
Stockholders' Equity -
Common Stock, $.25 Par Value; Authorized
50,000,000 Shares; Issued 31,663,808 and
31,140,878 Shares 12 12
Capital in Excess of Par Value 51,938 46,982
Retained Earnings 34,119 39,634
---------- ----------
Total Stockholders' Equity 86,069 86,628
---------- ----------
$1,004,484 $ 905,252
========== ==========
</TABLE>
See notes to consolidated financial statements. In the supplemental data
presented above, "Centex Corporation" means the basis of presentation as
described in Note A to the consolidated financial statements; "Financial
Services" means CTX Mortgage Company and CTX Holding Company and its savings
and loan subsidiary, Texas Trust Savings Bank, FSB and affiliates.
Transactions between Centex Corporation and Financial Services have been
eliminated from the Centex Corporation and Subsidiaries balance sheets.
23
<PAGE> 24
Centex Corporation and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net Earnings $ 85,162 $ 61,038 $ 34,557
Adjustments -
Depreciation, Depletion and
Amortization 19,640 16,156 15,421
Deferred Income Taxes (7,760) 3,545 (3,962)
Equity in (Earnings) Losses of Joint
Ventures, Unconsolidated Subsidiaries
and CDC (3,387) 120 (1,040)
-------- -------- --------
93,655 80,859 44,976
(Increase) Decrease in Receivables (21,965) (15,001) 11,889
Increase in Inventories (201,539) (136,259) (49,221)
Increase in Payables and Accruals 91,864 77,920 3,981
(Increase) Decrease in Other Assets (4,190) (6,337) 813
Other, net (13,859) (2,265) (5,026)
-------- -------- --------
(56,034) (1,083) 7,412
-------- -------- --------
CASH FLOWS - INVESTING ACTIVITIES
(Increase) Decrease in Advances to Joint
Ventures, Unconsolidated Subsidiaries
and CDC (2,747) 2,669 (2,374)
Property and Equipment Additions, net (31,936) (18,019) (18,119)
Decrease (Increase) in
Marketable Securities 32,075 91,710 (202,026)
-------- -------- --------
(2,608) 76,360 (222,519)
-------- -------- --------
CASH FLOWS - FINANCING ACTIVITIES
Increase in Residential Mortgage Loans (87,048) (12,840) (279,453)
Decrease in Government-Guaranteed S&L Assets 39,056 105,275 241,589
Increase (Decrease) in S&L
Deposits, FHLB Borrowings and Debt 6,915 (241,130) (2,203)
Increase in Debt 144,859 30,250 284,362
Stock and Dividend Transactions, net 5,082 (1,117) 260
-------- -------- --------
108,864 (119,562) 244,555
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 50,222 (44,285) 29,448
CASH AT BEGINNING OF YEAR 26,065 70,350 40,902
-------- -------- --------
CASH AT END OF YEAR $ 76,287 $ 26,065 $ 70,350
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
24
<PAGE> 25
Centex Corporation and Subsidiaries
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
COMMON STOCK
Balance at Beginning of Year $ 7,785 $ 7,623 $ 7,569
Exercise of Stock Options, net 131 200 86
Retirement of 187,400 and 128,800
Shares in 1993 and 1992 - (38) (32)
-------- -------- --------
Balance at End of Year 7,916 7,785 7,623
-------- -------- --------
CAPITAL IN EXCESS OF PAR VALUE
Balance at Beginning of Year 15,376 10,501 4,257
Exercise of Stock Options,
including related tax benefits 11,255 8,828 10,684
Retirement of Common Shares - (3,953) (4,440)
-------- -------- --------
Balance at End of Year 26,631 15,376 10,501
-------- -------- --------
RETAINED EARNINGS
Balance at Beginning of Year 555,254 500,370 471,851
Net Earnings 85,162 61,038 34,557
Cash Dividends (6,304) (6,154) (6,038)
-------- -------- --------
Balance at End of Year 634,112 555,254 500,370
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY $668,659 $578,415 $518,494
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
25
<PAGE> 26
Centex Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
(A) SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of Centex
Corporation and subsidiaries (Centex or the company) after the elimination of
all significant intercompany balances and transactions.
BASIS OF BALANCE SHEET PRESENTATION
Balance sheet data are presented in the following categories:
* CENTEX CORPORATION AND SUBSIDIARIES. This represents the adding together
of Centex Corporation, Financial Services and all of their consolidated
subsidiaries. The effects of transactions among related companies within
the consolidated group have been eliminated.
* CENTEX CORPORATION. This information is presented as supplemental
information and represents the adding together of all subsidiaries other
than CTX Mortgage Company (Mortgage Banking group) and CTX Holding Company
(CTX Holding) and its savings and loan subsidiary, Texas Trust Savings
Bank, FSB (Texas Trust) and affiliates (together, the Savings and Loan
group) which are presented on an equity basis of accounting.
* FINANCIAL SERVICES. This represents the adding together of the Mortgage
Banking group and the Savings and Loan group.
REVENUE RECOGNITION
Revenue from housing projects is recognized as homes are sold and title passes.
Earnings from sale of mortgage servicing rights and from loan origination fees
are recognized when the related loan is sold and delivered to third-party
purchasers.
Long-term construction contract revenues are recognized on the
percentage-of-completion method based on the costs incurred relative to total
estimated costs. Full provision is made for any anticipated losses. Billings
for long-term construction contracts are rendered monthly, including the amount
of retainage withheld by the customer until contract completion. As a general
contractor, the company withholds similar retainages from each subcontractor.
Retainages of $63 million included in construction contracts receivable and $54
million included in accounts payable at March 31, 1994 are generally receivable
and payable within one year.
Claims are recognized as revenue only after management is confident of
collection or when agreement has been reached with the customer.
Notes receivable at March 31, 1994 are collectible primarily over 4 years, with
$4.4 million being due within one year. The weighted average interest rate at
March 31, 1994 was 5.1%.
INVENTORY, CAPITALIZATION AND SEGMENT EXPENSES
Housing projects and land held for development and sale are stated at the lower
of cost (including direct construction costs and capitalized interest and real
estate taxes) or market. The capitalized costs, other than interest, are
included in Home Building costs and expenses in the statement of consolidated
earnings as related revenues are recognized. Interest costs relieved from
inventories are included as interest expense.
Construction Products inventories are stated at the lower of average cost
(including applicable material, labor and plant overhead) or market.
General operating expenses associated with each segment of business are
expensed as incurred and are included in the appropriate segment of business.
26
<PAGE> 27
JOINT VENTURES
The company is involved in joint ventures with interests ranging up to 50%.
Proportionate revenues and costs and expenses, which are not significant, are
included in the statement of consolidated earnings for 50%-owned ventures.
Earnings or losses of less than 50%-owned ventures are not significant and are
included in the appropriate segment of business revenues. Investments in joint
ventures are carried on the equity method in the consolidated balance sheets.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major renewals and improvements are
capitalized and depreciated. Repairs and maintenance are expensed as incurred.
Depreciation is provided on a straight-line basis over the estimated useful
lives of depreciable assets. Raw material deposits are depleted as such
deposits are extracted for production. Costs and accumulated depreciation
applicable to assets retired or sold are eliminated from the accounts and any
resulting gains or losses are recognized at such time.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common and
common equivalent shares outstanding in 1994, 1993 and 1992 of 32,789,852;
32,015,785 and 31,251,626, respectively.
MARKETABLE SECURITIES
Marketable securities at March 31, 1994 represent U.S. Government and corporate
securities owned by Texas Trust. These securities had a market value which
approximates book value.
RESIDENTIAL MORTGAGE LOANS RECEIVABLE
Residential mortgage loans held by CTX Mortgage of $632.1 million and Texas
Trust of $45.5 million at March 31, 1994 are stated at the lower of aggregate
cost or market. Market is determined based on CTX Mortgage and Texas Trust's
forward sale commitments. Substantially all of CTX Mortgage and Texas Trust's
mortgage loans are sold forward upon closing and subsequently delivered to
third-party purchasers within 60 days thereafter.
STATEMENT OF CONSOLIDATED CASH FLOWS - SUPPLEMENTAL DISCLOSURES
Interest expenses relating to the financial services operations (Mortgage
Banking and Savings and Loan) are included in their respective costs and
expenses. Interest related to non-financial services operations are included
as interest expense as summarized below.
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Total Interest Incurred $68,856 $63,721 $67,838
Less--Mortgage Banking (30,696) (28,882) (23,726)
Savings and Loan ( 8,477) (12,731) (21,972)
------- ------- -------
Interest Expense $29,683 $22,108 $22,140
======= ======= =======
</TABLE>
Net payments made for federal, state and foreign income taxes during the fiscal
years ended March 31, 1994, 1993 and 1992 were $41.9 million, $11.4 million,
and $18.5 million, respectively.
OFF-BALANCE-SHEET RISK
CTX Mortgage and Texas Trust enter into various financial agreements, in the
normal course of business, in order to manage the exposure to changing interest
rates as a result of having issued loan commitments to their customers at a
specified price and period, and committing to sell mortgage loans to various
investors.
27
<PAGE> 28
CTX Mortgage and Texas Trust had commitments to mortgagors of approximately
$505 million and commitments to sell to investors against these loan
commitments of approximately $379 million at March 31, 1994.
POST-RETIREMENT OBLIGATIONS
The company has no significant post-retirement obligations. Accordingly, the
adoption of Statement of Financial Accounting Standards (SFAS) No. 106, had no
impact on the company's financial statements.
(B) SAVINGS AND LOAN OPERATIONS
ACQUISITION
In December 1988, the company purchased certain assets and assumed certain
liabilities of four Texas savings and loan associations pursuant to acquisition
agreements and an assistance agreement with the Federal Savings and Loan
Insurance Corporation (FSLIC). The acquisition was made by Texas Trust, a
federal stock savings bank and subsidiary of CTX Holding, a wholly-owned
subsidiary of the company. The FSLIC received a warrant to purchase a 20%
interest in Texas Trust's common stock for $.4 million through December 2003.
Texas Trust's common equity as of March 31, 1994 was approximately $5.9
million.
In August 1989, Congress passed the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA) which abolished the FSLIC and established the
FSLIC Resolution Fund (the Fund) to assume all assets, debts, obligations and
other liabilities of the FSLIC. The Fund is managed by the Federal Deposit
Insurance Corporation (FDIC). All subsequent references to the Fund include
previous agreements with the FSLIC.
Certain of the acquired assets are subject to Fund assistance through December
1998 (Covered Assets). Any losses, write-downs or costs incurred in connection
with the operation and disposition of these assets are reimbursed by the Fund.
In addition, the Fund provided a guaranteed minimum yield on the Covered Assets
equal to the Texas Cost of Funds plus a designated spread through December
1998. At that time, any remaining Covered Assets will be adjusted to their
then fair market value and retained by Texas Trust. The Fund will reimburse
Texas Trust for any required valuation adjustments. Yield maintenance on
Covered Assets for the years ended March 31, 1994, 1993 and 1992 were $2.8,
$8.5, and $22.0 million, respectively. In addition, $12.1, $86.1, and $80.1
million of assistance were provided in fiscal 1994, 1993 and 1992,
respectively, primarily as reimbursement for losses relating to Covered Assets.
The agreements also provide for maintenance by Texas Trust of certain minimum
capital levels, reimbursement by the Fund of certain non-interest bearing
amounts over a 10-year period, sharing by the Fund in a portion of the tax
benefits realized by Centex Corporation, and indemnification by the Fund
against unassumed liabilities and claims.
Under the terms of a related capital maintenance agreement, Texas Trust cannot
declare or pay dividends that would cause its regulatory capital to fall below
specified levels or which would exceed 50% of net income on a cumulative basis
for common dividends and 75% for preferred dividends. Centex Corporation has
no obligation to make additional capital contributions to CTX Holding or Texas
Trust.
At March 31, 1994, and throughout the period since their establishment, Texas
Trust has been in full compliance with federally- mandated capital
requirements.
Centex and Texas Trust are negotiating with the FDIC to terminate the
assistance agreement and to have the FDIC prepay the non-interest-bearing fund
receivable at a discounted value, retire the warrant to purchase 20% of Texas
Trust common stock and purchase all remaining covered assets. Management
anticipates that the termination of the assistance agreement will be concluded
during fiscal year 1995 without a significant impact on the company's financial
condition or results of operations.
PURCHASE METHOD OF ACCOUNTING
The acquisition, recorded under the purchase method of accounting, resulted in
the establishment of negative goodwill representing the net assets acquired
(including the company's portion of certain tax benefits existing at
acquisition date) in excess of costs.
28
<PAGE> 29
GOVERNMENT-GUARANTEED S&L ASSETS
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
<S> <C> <C>
Receivables from the Fund $19,030 $13,579
======= =======
Covered Assets, including mortgage loans,
by type of collateral -
Land and Commercial Real Estate $11,961 $37,077
Single- and Multi-family Residential - 15,833
Investments in Subsidiaries and Other 12,776 16,334
------- -------
24,737 69,244
Less--Management's Estimate of Future
Disposition Losses to be Reimbursed
by the Fund--Unaudited (3,155) (6,000)
------- -------
Estimated Market Value--Unaudited $21,582 $63,244
======= =======
</TABLE>
DEPOSITS AND FHLB BORROWINGS
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
Weighted Weighted
Average Average
Contractual Contractual
Interest Rate Amount Interest Rate Amount
-------------- ------ ------------- -------
<S> <C> <C> <C> <C>
Certificates of
Deposit 3.87% $169,715 4.27% $160,828
Savings and
Checking Accounts 2.42% 37,340 2.58% 39,312
-------- --------
Total Deposits 207,055 200,140
Federal Home Loan Bank
(FHLB) Borrowings,
secured by assets
aggregating $4.5
million 9.88% 4,000 9.88% 4,000
-------- --------
$211,055 $204,140
======== ========
</TABLE>
Contractual maturities of certificates of deposit as of March 31, 1994 are:
fiscal 1995, $130,067; fiscal 1996, $25,245; fiscal 1997, $6,131; fiscal 1998,
$2,471; fiscal 1999, $5,513; and thereafter, $288. Maturities of FHLB
borrowings at March 31, 1994 are: fiscal 1996, $2,000; and fiscal 1999, $2,000.
29
<PAGE> 30
(C) PROPERTY AND EQUIPMENT
Cost by major category and accumulated depreciation are summarized below:
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
<S> <C> <C>
Land, Buildings and Improvements $ 37,707 $ 37,793
Plants, Machinery, Equipment and
Other 273,242 247,051
---------- ---------
310,949 284,844
Accumulated Depreciation (122,019) (107,234)
---------- ---------
$ 188,930 $ 177,610
========== =========
</TABLE>
(D) INDEBTEDNESS
SHORT-TERM DEBT
Balances of short-term debt were:
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
Centex Mortgage Centex Mortgage
Corporation Banking Corporation Banking
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Banks $ 84,500 $ 225,500 $ 86,500 $305,000
Commercial Paper 122,000 - 58,500 -
Other Financial Institutions 138 351,447 - 187,570
-------- --------- -------- --------
$206,638 $ 576,947 $145,000 $492,570
-------- --------- -------- --------
Consolidated Short-term Debt $783,585 $637,570
======== ========
</TABLE>
The company borrows on a short-term basis from banks under uncommitted lines
which bear interest at prevailing market rates. The weighted average interest
rates of the short-term indebtedness outstanding during fiscal 1994 and 1993
were 3.6% and 4.2%, respectively. The weighted average interest rates of
balances outstanding at March 31, 1994 and 1993 were 4.1% and 4.4%,
respectively.
LONG-TERM DEBT
Balances of long-term debt were:
30
<PAGE> 31
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
<S> <C> <C>
Senior Notes, 9.05% Due in May 1996 $100,000 $100,000
Subordinated Debentures, 8.75% to 8.8%
Due in 2007 119,284 119,255
Other Indebtedness, 4.25% to 10% Due
Through 2000 3,548 4,733
-------- --------
$222,832 $223,988
======== ========
</TABLE>
Maturities of long-term debt during the next five fiscal years are: 1995,
$3,139; 1996, $409; 1997, $100,000; 1998, $0; 1999, $0.
Included in other long-term debt is a $2.1 million convertible subordinated
debenture sold in August 1985 to a corporate officer at par. The indebtedness
bears interest at prime and is convertible into 200,000 shares of the company's
common stock. In connection with this transaction, the company has guaranteed
the payment of a $2.1 million note payable to a bank by the officer.
CREDIT FACILITIES
Centex has a long-term revolving credit agreement totaling $350 million with a
group of banks, which is available for general corporate purposes. Borrowings
under this agreement bear interest at money market rates. Annual commitment
fees are .25% of the facility amount. The agreement expires in April 1996.
Under the terms of the agreement, $140 million may be borrowed directly by CTX
Mortgage. The maximum principal amount outstanding under this agreement during
the fiscal year ended March 31, 1994 was $140 million, all of which was
borrowed by CTX Mortgage. There were no borrowings outstanding to Centex
Corporation under this or the previous facilities during the fiscal years ended
March 31, 1994 and 1993.
During August 1993, Centex entered into a $115 million, 364-day revolving
credit agreement with a group of banks. The facility was also for general
corporate purposes and the stated interest rates were tied to short-term money
market indices. Effective May 1994, this facility was canceled by the company.
CTX Mortgage has a $300 million committed and secured mortgage warehouse
facility with a group of banks, which expires in November 1994. CTX Mortgage
also maintains committed mortgage warehouse facilities of $300 million expiring
in December 1994 with two investment banks. In addition, in May 1993, CTX
Mortgage established a $200 million asset-backed commercial paper program,
which expires in May 1996. The bank warehouse facility and the commercial
paper program provide for limited support by Centex, as defined, of up to a
maximum of 10% of the commitments. Management believes the facilities expiring
by December 1994 can be renewed or replaced on essentially the same terms.
Under the most restrictive covenants of the various debt agreements, retained
earnings of $285 million were free of restrictions at March 31, 1994.
(E) CAPITAL STOCK
SHAREHOLDER RIGHTS PLAN
In September 1986, the company adopted a Shareholder Rights Plan (Rights Plan)
pursuant to which each holder of record of a share of common stock was granted
one right for each share of common stock held. The Rights Plan was amended in
May 1988. Under the Rights Plan, as amended, each right entitles its holder to
purchase one one-hundredth of a share of a new series of preferred stock
designated Junior Participating Preferred Stock, Series D at an exercise price
of $120. The rights will become exercisable 10 days after anyone acquires 20%
or more of the company's common stock, or 10 business days after anyone
commences a tender offer which, if successful, would result in such person
owning 20% or more of the company's common stock. In addition, if anyone
acquires 20% or more of the common stock (other than pursuant to certain offers
for all shares of common stock specified in the Rights Plan), or a 20% or more
holder engages in certain specified "self-dealing" transactions or combines
with the company in a reverse merger in which the company survives and its
shares of common stock are not changed, each right will entitle its holder
(other than a holder which owns 20% or more of the common stock) to purchase
shares of company common stock (or, in certain circumstances, other
consideration) with a value of twice the $120 exercise price. If, following an
acquisition of 20% or more of the common stock, the company is acquired in a
merger or sells 50% of its assets or earning power, each right will entitle its
holder (other than a holder which owns 20% or more of the common stock) to
purchase common stock of the acquiring company with a value of twice the $120
exercise price. In general, the rights are redeemable at $.05 per right until
15 days after anyone acquires 20% or more of the common stock. Unless earlier
redeemed, the rights will expire on October 1, 1996.
31
<PAGE> 32
STOCK OPTIONS
The company has two stock option plans for directors, officers and key
employees of the company, the Centex Corporation 1987 Stock Option Plan (the
1987 Plan) and the Centex Corporation Stock Option Plan (the Centex Plan).
Option grants under the Centex Plan may not be less than the fair market value
at the date of the grant. Option grants under the 1987 Plan may be less than
the fair market value at the date of the grant. Under both plans, option
periods and exercise dates may vary within a maximum period of 10 years. A
summary of the activity in the stock option plans is presented below:
<TABLE>
<CAPTION>
Number Option Price
Options at March 31, of Shares Range per Share
- -------------------- --------- ---------------
<S> <C> <C>
Outstanding
1994 3,641,300 $8.50 TO $33.875
1993 3,699,230 $8.50 to $23.125
Exercised
1994 518,930 $8.50 TO $18.313
1993 1,262,414 $5.30 to $18.375
Exercisable
1994 849,002 $8.50 TO $18.375
1993 956,678 $8.50 to $18.375
Available for grant
1994 872,656
1993 1,333,656
</TABLE>
During fiscal 1994, options for 475,000 shares were granted and previously
granted options for 14,000 shares became available for reissue. At March 31,
1994, the company had 4,513,956 common shares reserved for stock options.
The company records proceeds from the exercise of options as additions to
common stock and capital in excess of par value. The federal tax benefit, if
any, is considered additional capital in excess of par value. No charges or
credits would be made to earnings unless options were to be granted at less
than fair market value at the date of the grant.
PREFERRED STOCK
The company is authorized to issue 5,000,000 shares of preferred stock, the
terms of which shall be set by the Board of Directors.
(F) INCOME TAXES
The provision for income taxes includes the following components:
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current Provision
Federal $ 52,943 $ 22,429 $ 10,994
State 4,668 4,747 4,263
-------- -------- --------
57,611 27,176 15,257
-------- -------- --------
Deferred Provision (Benefit)
Federal (10,762) 2,581 (1,983)
State 3,002 964 (1,979)
-------- -------- --------
(7,760) 3,545 (3,962)
-------- -------- --------
Provision for Income Taxes $ 49,851 $ 30,721 $ 11,295
======== ======== ========
</TABLE>
32
<PAGE> 33
The effective tax rate is greater than the federal statutory rate of 35% in
1994 and less than the federal statutory rate of 34% in 1993 and 1992 due to
the following items:
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Financial Income Before Taxes $135,013 $91,759 $45,852
======== ======= =======
Income Taxes at Statutory Rate $ 47,254 $31,198 $15,590
Increases (Decreases) in Tax Resulting From -
State Income Taxes, net 4,826 3,840 1,379
Statutory Depletion in Excess of Cost (912) (603) (560)
Tax Exempt Fund Assistance (1,238) (3,000) (4,650)
Other (79) (714) (464)
-------- ------- -------
Provision for Income Taxes $ 49,851 $30,721 $11,295
======== ======= =======
Effective Tax Rate 37% 33% 25%
</TABLE>
During fiscal year 1994, the "Revenue Reconciliation Act of 1993" was signed
into law which, among other things, changed the federal statutory tax rate from
34% to 35%. In accordance with SFAS No. 109, "Accounting for Income Taxes,"
the tax effect of this new law was recognized by the company during the year.
These changes had no material effect on the financial statements of the
company.
Certain payments from the Fund are exempt from federal income taxes. These tax
benefits have been reflected as a reduction of the income tax provision.
The deferred income tax provision (benefit) results from the following
temporary differences in the recognition of revenues and expenses for tax and
financial reporting purposes:
<TABLE>
<CAPTION>
For the Years Ended March 31,
------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Installment Sale Reversals $ (153) $ (326) $(1,469)
Net Operating Loss Utilization (Carryforward) 247 918 (1,165)
Uniform Capitalization for Tax Reporting (777) (580) (605)
Completed Contract Reporting (318) (2,997) (42)
Excess Tax Depreciation and Amortization 444 88 2,878
Interest and Real Estate Taxes Expensed
as Incurred 430 2,988 2,149
Alternative Minimum Tax 11,012 3,985 (7,683)
Financial Accrual Changes and Other (18,645) (531) 1,975
------- ------- -------
$(7,760) $ 3,545 $(3,962)
======= ======= =======
</TABLE>
33
<PAGE> 34
Components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
<S> <C> <C>
Deferred Tax Liabilities
Excess Tax Depreciation and Amortization $ 37,977 $ 37,533
Interest and Real Estate Taxes Expensed
as Incurred 26,698 26,459
Financial Accruals - 17,333
Consolidated Return Regulation Deferrals 6,898 6,767
All Other 11,163 9,780
------- --------
Total Deferred Tax Liabilities 82,736 97,872
------- --------
Deferred Tax Assets
Alternative Minimum Tax (507) (10,560)
Uniform Capitalization for Tax Reporting (12,574) (11,797)
Financial Accruals (16,143) -
All Other (2,332) (2,731)
------- --------
Total Deferred Tax Assets (31,556) (25,088)
------- --------
Net Deferred Tax Liability $51,180 $ 72,784
======= ========
</TABLE>
(G) CENTEX DEVELOPMENT COMPANY, L.P.
In March 1987, certain of the company's subsidiaries contributed to Centex
Development Company, L.P. (CDC), a newly formed master limited partnership,
properties with a historical cost basis (which approximated market value) of
approximately $76 million. CDC was formed to enable stockholders to
participate in long-term real estate development projects whose dynamics are
inconsistent with Centex's traditional financial objectives.
In November 1987, the company distributed as a dividend to its stockholders
securities relating to CDC. These securities included all of the issued and
outstanding shares of common stock of 3333 Holding Corporation and warrants to
purchase approximately 80% of the Class B units of limited partnership interest
in CDC. A wholly-owned subsidiary of 3333 Holding Corporation serves as
general partner of CDC. These securities are held by a nominee on behalf of
the stockholders and will trade in tandem with the common stock of the company
until such time as they are detached. The securities may be detached at any
time by Centex's Board of Directors but the warrants to purchase Class B units
automatically become detached in November 1997 unless extended by Centex's
stockholders.
The partnership agreement provides that Centex, the Class A limited partner, is
entitled to a cumulative preferred return of 9% per annum on the average
outstanding balance of its unrecovered capital, defined as its initial capital
contribution, adjusted for cash distributions representing return of the
initial capital contribution. No payments were made in fiscal 1994, 1993 or
1992.
Supplementary condensed combined financial statements for the company, 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. are set
forth below. For additional information on 3333 Holding Company and its
subsidiary and Centex Development Company, L.P., see their separate financial
statements and related footnotes included elsewhere in this annual report.
34
<PAGE> 35
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 76,388 $ 27,317
Marketable Securities 78,241 110,316
Receivables 930,428 821,852
Inventories 1,223,753 1,027,938
Investments in Joint Ventures and
Unconsolidated Subsidiaries 56,928 50,277
Property and Equipment, net 188,930 177,610
Government-Guaranteed S&L Assets 43,767 82,823
Other Assets and Deferred Charges 38,574 36,246
---------- ----------
$2,637,009 $2,334,379
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued
Liabilities $ 620,824 $ 529,381
S&L Deposits and FHLB Borrowings 211,055 204,140
Short-term Debt 837,734 696,832
Long-term Debt 222,832 223,988
Deferred Income Taxes 51,180 72,784
Negative Goodwill 24,102 28,102
Stockholders' Equity 669,282 579,152
---------- ----------
$2,637,009 $2,334,379
========== ==========
</TABLE>
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Revenues $3,224,025 $2,501,691 $2,174,777
Costs and Expenses 3,089,126 2,410,028 2,129,032
---------- ---------- ----------
Earnings Before Income Taxes 134,899 91,663 45,745
Income Taxes 49,851 30,721 11,295
------------ ---------- ----------
Net Earnings $ 85,048 $ 60,942 $ 34,450
=========== ========== ==========
</TABLE>
35
<PAGE> 36
(H) BUSINESS SEGMENTS
The company operates in five business segments: Home Building, Mortgage
Banking, Contracting and Construction Services, Construction Products and
Savings and Loan.
Intersegment revenues are not material and are not shown in the following
tables. Included with the Construction Products segment are Investments in
Joint Ventures of $50.5, $46.9 and $44.0 million at March 31, 1994, 1993, and
1992, respectively, including their earnings before income taxes of $5.3, $4.5
and $2.2 million for 1994, 1993, and 1992, respectively. The remaining
investments are included in the other segments. The investment in Centex
Development Company, L.P. is included in the Home Building segment.
HOME BUILDING
Home Building operations involve the construction and sale of residential
housing. These activities also include the purchase and development of land.
The following table sets forth financial information relating to the Home
Building operations.
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Revenues $ 1,871.6 $1,431.3 $1,063.3
Cost of Sales & Expenses 1,777.4 1,355.7 1,009.0
--------- -------- --------
Operating Earnings $ 94.2 $ 75.6 $ 54.3
========= ======== ========
Identifiable Assets $ 1,203.2 $ 981.1 $ 838.3
========= ======== ========
Capital Expenditures $ 9.3 $ 2.1 $ 2.0
========= ======== ========
Depreciation and Amortization $ 2.8 $ 2.2 $ 1.9
========= ======== ========
</TABLE>
Mortgage Banking
Mortgage Banking operations involve the financing of residential housing.
These activities include mortgage origination and other related services on
homes sold by subsidiaries and by others. The following table sets forth
financial information relating to the Mortgage Banking operations.
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Revenues $187.9 $129.7 $ 74.6
Cost of Sales & Expenses 116.9 81.9 55.1
------ ------ -------
Operating Earnings $ 71.0 $ 47.8 $ 19.5
====== ====== =======
Identifiable Assets $685.6 $624.8 $ 598.1
====== ====== =======
Capital Expenditures $ 11.0 $ 7.1 $ 1.7
====== ====== =======
Depreciation and Amortization $ 3.6 $ 1.5 $ 1.0
====== ====== =======
</TABLE>
CONTRACTING AND CONSTRUCTION SERVICES
Contracting and Construction Services includes the construction of buildings
for both private and government interests, including office, commercial and
industrial buildings, hospitals, hotels, museums, libraries, airport
facilities, condominiums and educational institutions.
The following table sets forth financial information relating to the
Contracting and Construction Services operation. As this segment generates
significant levels of cash flow for use in the company's other segments,
Intracompany Interest Income (credited at the prime rate in effect) is
reflected in this segment. These amounts are eliminated in consolidation.
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
---- ---- ----
(Dollars in millions)
<S> <C> <C> <C>
Revenues $966.6 $783.2 $865.0
Cost of Sales & Expenses 971.1 787.3 861.3
------ ------ ------
Operating Earnings (Loss) (4.5) (4.1) 3.7
Intracompany Interest Income 13.8 14.0 16.5
------ ------ ------
Total $ 9.3 $ 9.9 $ 20.2
====== ====== ======
Identifiable Assets * $178.9 $170.4 $175.2
====== ====== ======
Capital Expenditures $ 2.8 $ 1.8 $ 2.4
====== ====== ======
Depreciation and Amortization $ 3.0 $ 2.8 $ 2.9
====== ====== ======
</TABLE>
* The "net assets" position of the Contracting and Construction Services
segment provides significant cash flow because payables and accruals
consistently exceed gross assets.
36
<PAGE> 37
CONSTRUCTION PRODUCTS
Construction Products operations include the production, distribution and sale
of cement, aggregates, readymix concrete and gypsum wallboard. Financial
information relating to the Construction Products operation is summarized
below:
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
(Dollars in millions)
1994 1993 1992
---- ---- ----
Cement Gypsum Total Cement Gypsum Total Cement Gypsum Total
------ ------ ----- ------ ------ ----- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $140.1 $ 32.8 $172.9 $119.8 $ 21.4 $141.2 $118.2 $ 17.5 $135.7
Cost of Sales & Expenses 123.6 32.7 156.3 110.6 26.0 136.6 110.7 23.9 134.6
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating Earnings
(Loss) $ 16.5 $ 0.1 $ 16.6 $ 9.2 $ (4.6) $ 4.6 $ 7.5 $ (6.4) $ 1.1
====== ======= ====== ====== ====== ====== ====== ====== ======
Identifiable Assets $182.8 $ 70.5 $253.3 $181.4 $ 68.3 $249.7 $180.7 $ 67.5 $248.2
====== ======= ====== ====== ====== ====== ====== ====== ======
Capital Expenditures $ 5.7 $ 1.5 $ 7.2 $ 3.3 $ 1.5 $ 4.8 $ 12.7 $ 1.3 $ 14.0
====== ======= ====== ====== ====== ====== ====== ====== ======
Depreciation,
Depletion and
Amortization $ 8.7 $ 2.9 $11.6 $ 9.0 $ 2.9 $ 11.9 $ 8.9 $ 2.8 $ 11.7
====== ======= ====== ====== ====== ====== ====== ====== ======
</TABLE>
SAVINGS AND LOAN
The Savings and Loan segment includes the operations of CTX Holding Company and
its subsidiary, Texas Trust Savings Bank, FSB (see Note B). The following
table sets forth financial information relating to the Savings and Loan
operations.
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------
1994 1993 1992
------ ------ ------
(Dollars in millions)
<S> <C> <C> <C>
Interest, Fund Assistance, Other Income and
Negative Goodwill Amortization $ 18.9 $ 20.3 $ 29.6
Interest and Other Expenses (16.3) (17.3) (27.5)
-------- ------- -------
Operating Earnings $ 2.6 $ 3.0 $ 2.1
======== ======= =======
Identifiable Assets $ 238.0 $ 216.7 $ 458.4
======== ======= =======
Capital Expenditures $ 2.3 $ 0.5 $ -
======== ======= =======
Depreciation and Amortization, including Negative Goodwill $ (2.2) $ (3.1) $ (3.0)
======== ======= =======
</TABLE>
CORPORATE
Corporate general and administrative expenses represent salaries and other
costs not identifiable with a specific segment. Corporate assets are primarily
cash and cash equivalents, receivables and other assets not associated with a
business segment. The following table summarizes financial information
relating to the Corporate segment.
<TABLE>
<CAPTION>
For the Years Ended March 31
----------------------------
1994 1993 1992
------ ------ ------
(Dollars in millions)
<S> <C> <C> <C>
Corporate General and Administrative Expenses $ 15.2 $ 13.1 $ 12.8
====== ====== ======
Identifiable Assets $ 21.3 $ 29.3 $ 29.3
====== ====== ======
Capital Expenditures $ 0.1 $ 0.2 $ 0.7
====== ====== ======
Depreciation and Amortization $ 0.8 $ 1.0 $ 1.0
====== ====== ======
</TABLE>
37
<PAGE> 38
(I) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", requires companies to disclose the estimated
fair value of their financial instrument assets and liabilities. The estimated
fair values shown below have been determined using current quoted market prices
where available and, where necessary, estimates based on present value
methodology suitable for each category of financial instruments. 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.
All assets and liabilities which are not considered financial instruments have
been valued using historical cost accounting. No disclosure of the intangible
relationship value of Texas Trust's customer deposits is required by Statement
No. 107, nor has the company estimated that value. There is no material
difference between the recorded amount and the estimated fair value of CTX
Mortgage or Texas Trust's off-balance-sheet unfunded loan commitments. These
are generally priced at market at the time of funding. For Texas Trust's loans
and deposits with floating interest rates, the estimated fair values generally
approximate the carrying values. The consolidated carrying values of Cash and
Cash Equivalents, Other Receivables, Accounts Payable and Accrued Liabilities
and Short-term Debt approximate their fair values. The carrying values and
estimated fair values of other financial assets and liabilities were as
follows:
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
<S> <C> <C> <C> <C>
Financial Assets
Marketable Securities $ 78,241 $ 78,241 (a) $110,316 $110,821 (a)
Residential Mortgage
Loans $ 677,641 $677,052 (a) $591,328 $595,103 (a)
Government-Guaranteed
S&L Receivables $ 19,030 $ 19,030 (b) $ 13,579 $ 14,138 (b)
Financial Liabilities
S&L Deposits and FHLB
Borrowings $ 211,055 $210,930 (b) $204,140 $205,772 (b)
Long-term Debt $ 222,832 $234,618 (b) $223,988 $241,632 (b)
</TABLE>
(a) Fair values are based on quoted market prices for similar instruments.
(b) Fair values are based on a present value discounted cash flow with the
discount rate approximating current market for similar instruments.
38
<PAGE> 39
(J) COMMITMENTS AND CONTINGENCIES
In order to assure the future availability of land for home building, the
company has made deposits totaling $8.0 million as of March 31, 1994 for
options to purchase undeveloped land and developed lots having a total purchase
price of approximately $300 million. These options expire at various dates to
1997. The company has also committed to purchase land and developed lots
totaling approximately $107 million. In addition, the company has executed lot
purchase contracts with CDC (see Note G) which aggregate approximately $9.9
million.
The company is contingently liable at March 31, 1994 on $3.8 million of
long-term debt of joint ventures which represents the company's share of
mortgages on plant facilities and land. In addition, a Centex subsidiary has
guaranteed repayment of a $2.1 million bank loan to CDC.
Management believes that none of the litigation matters in which it or any
subsidiary is involved, if determined unfavorable to Centex or any subsidiary,
would have a material adverse effect on the consolidated financial condition or
results of operations of the company.
The company has certain deductible limits under its workers' compensation and
automobile and general liability insurance policies for which reserves are
established based on the estimated costs of known and anticipated claims.
(K) SUBSEQUENT EVENT
In April 1994 the company's construction products subsidiary, Centex
Construction Products, Inc. (CXP), completed the sale of 11.73 million shares
(51%) of its common stock in an initial public offering. CXP is comprised of
Centex's cement, concrete, aggregate and gypsum wallboard operations, including
CXP's 50% joint venture interests in its Texas and Illinois cement plants.
Centex retains a 49% ownership in CXP.
In connection with CXP's initial public offering, Centex received a dividend
and other payments from CXP of $186.5 million, which was used by Centex to
reduce outstanding indebtedness. CXP used the proceeds from the offering,
together with borrowings under a credit facility, to repay the debt incurred
under a bridge loan to fund the dividend and other payments to Centex. As a
result of the sale of CXP stock, the company no longer holds a majority
interest in CXP and will account for its investment in CXP on the equity method
in subsequent periods.
The following pro forma statement of consolidated earnings for the fiscal year
ended March 31, 1994, assumes the above-mentioned transactions occurred as of
the beginning of the fiscal year. Pro forma adjustments include (i) the
elimination of CXP fiscal 1994 operating results, (ii) the addition of Centex's
49% portion of CXP earnings, (iii) the reduction of interest expense due to the
dividend and other payments being used to decrease short-term debt, and (iv)
the related tax effect of the above adjustments. The pro forma statement of
earnings does not reflect adjustments for the $37.5 million non-recurring
after-tax gain on the sale of the stock, which will be recorded in the quarter
ending June 30, 1994.
39
<PAGE> 40
PRO FORMA STATEMENT OF CONSOLIDATED EARNINGS
<TABLE>
<CAPTION>
As Pro Forma
Reported (Unaudited)
--------- -----------
<S> <C> <C>
REVENUES
Home Building $1,871,627 $1,871,627
Mortgage Banking 187,870 187,870
Contracting and Construction Services 966,562 966,562
Construction Products/49% of CXP Earnings 172,900 8,147
Savings and Loan 15,523 15,523
---------- ----------
$3,214,482 $3,049,729
---------- ----------
COSTS AND EXPENSES
Home Building $1,777,449 $1,777,449
Mortgage Banking 116,885 116,885
Contracting and Construction Services 971,062 971,062
Construction Products 156,274 -
Savings and Loan 12,958 12,958
Corporate General and Administrative 15,158 15,158
Interest 29,683 22,681
---------- ----------
$3,079,469 $2,916,193
---------- ----------
INCOME BEFORE INCOME TAXES 135,013 133,536
Income Taxes 49,851 49,568
---------- ----------
NET INCOME $ 85,162 $ 83,968
========== ==========
EARNINGS PER SHARE * $ 2.60 $ 2.56
========== ==========
</TABLE>
* Based on the weighted average number of common and common equivalent shares
outstanding of 32,789,852.
40
<PAGE> 41
The following pro forma consolidated balance sheets give effect to (i) the
elimination of CXP's assets and liabilities as if the initial public offering
had occurred as of March 31, 1994 and (ii) the use of the dividend and other
payments to reduce short-term debt.
PRO FORMA CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Centex Corporation and
Subsidiaries Centex Corporation
---------------------- ------------------
As Pro Forma As Pro Forma
Reported (unaudited) Reported (unaudited)
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and Cash Equivalents $ 76,287 $ 74,995 $ 13,284 $ 11,992
Marketable Securities 78,241 78,241 - -
Receivables 929,172 902,623 226,674 200,125
Inventories 1,097,457 1,074,638 1,097,457 1,074,638
Investments 127,928 156,895 133,191 162,158
Property and Equipment, net 188,930 42,273 169,234 22,577
Government-Guaranteed S&L Assets 43,767 43,767 - -
Other Assets and Deferred Charges 38,574 33,098 22,101 16,625
---------- ---------- ---------- ----------
$2,580,356 $2,406,530 $1,661,941 $1,488,115
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities $ 618,943 $ 610,829 $ 504,622 $ 496,508
S&L Deposits and FHLB Borrowings 211,055 211,055 - -
Short-term Debt 783,585 597,085 206,638 20,138
Long-term Debt 222,832 222,217 222,832 222,217
Deferred Income Taxes 51,180 35,088 35,088 18,996
Negative Goodwill 24,102 24,102 24,102 24,102
Stockholders' Equity 668,659 706,154* 668,659 706,154*
---------- ---------- ---------- ----------
$2,580,356 $2,406,530 $1,661,941 $1,488,115
========== ========== ========== ==========
</TABLE>
*Reflects the $37.5 million non-recurring after-tax gain related to the CXP
initial public offering.
41
<PAGE> 42
Centex Corporation and Subsidiaries
QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
March 31,
---------
1994 1993
---- ----
(Dollars in thousands,
except per share data)
<S> <C> <C>
First Quarter
Revenues $ 698,249 $ 558,258
Earnings Before Income Taxes $ 26,707 $ 14,573
Net Earnings $ 17,006 $ 10,002
Earnings Per Share $ .52 $ .32
Second Quarter
Revenues $ 813,492 $ 644,799
Earnings Before Income Taxes $ 38,001 $ 27,418
Net Earnings $ 22,846 $ 18,104
Earnings Per Share $ .70 $ .57
Third Quarter
Revenues $ 833,253 $ 648,658
Earnings Before Income Taxes $ 36,682 $ 26,697
Net Earnings $ 23,586 $ 17,645
Earnings Per Share $ .72 $ .55
Fourth Quarter
Revenues $ 869,488 $ 650,977
Earnings Before Income Taxes $ 33,623 $ 23,071
Net Earnings $ 21,724 $ 15,287
Earnings Per Share $ .66 $ .47
</TABLE>
42
<PAGE> 43
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Stockholders and Board of Directors of Centex Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements of Centex Corporation (a
Nevada corporation) and subsidiaries included in Centex Corporation and
subsidiaries' annual report to the stockholders included in this Form 10-K, and
have issued our report thereon dated May 11, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
consolidated supporting schedules are presented for purposes of complying with
the Securities and Exchange Commission's rules and are not part of the basic
consolidated financial statements. These consolidated supporting schedules
have been subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
May 11, 1994
43
<PAGE> 44
CENTEX CORPORATION AND SUBSIDIARIES
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER INVESTMENTS
MARCH 31, 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Amount At Which
No. Of Shares Market Carried In The
Description Or Units Cost Value Balance Sheet
----------- ------------- ---- ------ ---------------
<S> <C> <C> <C> <C>
U.S. Treasury Notes 33,000 $ 34,320 $ 33,899 $ 33,899
Other Securities (A) 45,357 $ 45,244 $ 44,342 44,342
--------
$ 78,241
========
</TABLE>
(A) Securities of any one individual issuer did not exceed two percent of
total assets of the Company.
44
<PAGE> 45
CENTEX CORPORATION AND SUBSIDIARIES
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Deductions
Balance ----------- Balance
At Amounts At End
Beginning Amounts Written Of
Of Period Additions Collected Off Period
--------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
1994
----
(A) Laurence E. Hirsch . . . . . . . . $ 1,000 $ -- $ -- $ -- $ 1,000
(B) David W. Quinn . . . . . . . . . . $ 125 $ -- $ 125 $ -- $ --
(C) Bob L. Moss . . . . . . . . . . . . $ 150 $ -- $ 50 $ -- $ 100
1993
----
(A) Laurence E. Hirsch . . . . . . . . $ 1,000 $ -- $ -- $ -- $ 1,000
(B) David W. Quinn . . . . . . . . . . $ 250 $ -- $ 125 $ -- $ 125
(C) Bob L. Moss . . . . . . . . . . . . $ 200 $ -- $ 50 $ -- $ 150
(D) Bruce Lady . . . . . . . . . . . . $ 195 $ -- $ 195 $ -- $ --
1992
----
(A) Laurence E. Hirsch . . . . . . . . $ 1,000 $ -- $ -- $ -- $ 1,000
(B) David W. Quinn . . . . . . . . . . $ 250 $ -- $ -- $ -- $ 250
(C) Bob L. Moss . . . . . . . . . . . . $ 200 $ -- $ -- $ -- $ 200
(D) Bruce Lady . . . . . . . . . . . . $ 197 $ -- $ 2 $ -- $ 195
</TABLE>
NOTES: (A) This represents a real estate lien note secured by Mr.
Hirsch's Dallas, Texas residence and is due in March 1995.
This loan, which was made in September 1985 in connection
with Centex's employment of Mr. Hirsch, is for the principal
amount of $1,000,000, of which $700,000 is non-interest
bearing and $300,000 bears interest at 10% (12% through
September 1990).
(B) This represents a real estate lien note secured by Mr.
Quinn's residence which bears interest at 10% and was due on
January 30, 1996. In June 1993, Mr. Quinn repaid to Centex
the full amount of all outstanding principal and interest
owed on such loan.
(C) This represents two non-interest bearing real estate lien
notes which are secured by Mr. Moss' residence. Principal is
due in four annual installments of $50,000 beginning August
8,1992 and continuing through August 8, 1995. Interest is to
accrue and be paid annually on August 8 only on matured,
unpaid principal and all interest and unpaid principal is due
and payable August 8, 1995.
(D) This represented a real estate lien note secured by Mr.
Lady's residence with an annualized interest rate of 10%.
Principal and interest were due in monthly installments
through August 1, 2019. The note was repaid in fiscal year
1993.
The above notes receivable are included in the consolidated balance sheet
caption "trade receivables" or "notes receivable". In addition, the Company
from time to time extends loans to its personnel in connection with
relocations in accordance with established policies.
45
<PAGE> 46
CENTEX CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED MARCH 31, 1994, 1993 AND 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Weighted Weighted
Average Maximum Average Average
Interest Amount Amount Interest
Balance Rate At Outstanding Outstanding Rate During
Category Of Aggregate At End End Of During The During The The
Short-term Borrowings Of Period Period Period Period Period
--------------------- -------------- ----------- -------------- ------------ -----------
(A) (B)
<S> <C> <C> <C> <C> <C>
1994
----
Banks . . . . . . . . . . . . . . . . $310,000 3.7% $ 584,397 $ 414,969 3.6%
Commercial Paper . . . . . . . . . . 122,000 3.8% $ 177,000 $ 118,686 3.4%
Other Financial Institutions . . . . 351,585 4.3% $ 577,571 $ 350,444 3.8%
--------
$783,585
========
1993
----
Banks . . . . . . . . . . . . . . . . $391,500 4.5% $ 818,300 $ 445,205 4.3%
Commercial Paper . . . . . . . . . . 58,500 3.4% $ 215,000 $ 173,925 3.9%
Other Financial Institutions . . . . 187,570 3.8% $ 563,476 $ 128,444 4.1%
--------
$637,570
========
1992
----
Banks . . . . . . . . . . . . . . . . $579,014 4.9% $ 579,014 $ 269,154 5.5%
Commercial Paper . . . . . . . . . . 20,000 4.6% $ 217,838 $ 141,385 5.7%
Other Financial Institutions . . . . 201,195 4.2% $ 201,195 $ 16,766 4.2%
--------
$800,209
========
</TABLE>
(A) The average amount outstanding during the period is derived by dividing
the aggregate of principal balances by the number of months in each year.
(B) The weighted average interest rate during the period is derived by
dividing the sum of calculated interest expense by the average principal
outstanding.
46
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTEX CORPORATION
------------------
Registrant
June 28, 1994 By: /s/ LAURENCE E. HIRSCH
-----------------------------------
Laurence E. Hirsch, Chairman of the
Board and Chief Executive
Officer
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
registrant in the capacities and on the dates indicated.
June 28, 1994 /s/ LAURENCE E. HIRSCH
----------------------
Laurence E. Hirsch, Chairman of the
Board and Chief Executive
Officer
(principal executive officer)
June 28, 1994 /s/ DAVID W. QUINN
------------------
David W. Quinn, Executive Vice
President and Chief Financial
Officer
(principal financial officer)
June 28, 1994 /s/ MICHAEL S. ALBRIGHT
-----------------------
Michael S. Albright, Vice President --
Finance and Controller
(principal accounting officer)
Directors: Alan B. Coleman, Dan W. Cook III, Frank
M. Crossen, William J Gillilan III,
Laurence E. Hirsch, Clint W. Murchison,
III, Charles H. Pistor, David W. Quinn,
Paul R. Seegers, Paul T. Stoffel
June 28, 1994 By: /s/ LAURENCE E. HIRSCH
----------------------
Laurence E. Hirsch, Individually and
as Attorney-in-Fact*
---------------
*Pursuant to authority granted by powers of attorney, copies of which
are filed herewith.
47
<PAGE> 48
PART B.
3333 HOLDING CORPORATION AND SUBSIDIARY
AND CENTEX DEVELOPMENT COMPANY, L.P.
PREFATORY STATEMENT
PART B of this Report includes information relating to 3333 Holding
Corporation ("Holding"), file No. 1-9624, and subsidiary, and Centex
Development Company, L.P. ("CDC" or the "Partnership"), file No. 1-9625. See
the Joint Explanatory Statement on page 2 of this Report. References to
Holding in this Report shall include references to its subsidiary, 3333
Development Corporation, a Nevada corporation and the sole general partner of
CDC ("Development"), unless the context otherwise requires. Because CDC is a
separate reporting entity under the Exchange Act, the information required by
Form 10-K is separately included even though CDC may be deemed a "subsidiary"
of Holding under the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated pursuant to the Exchange Act.
Accordingly, information provided with respect to CDC should be deemed provided
with respect to Holding to the extent appropriate. Information relating to
both Holding and CDC is included herein as a single disclosure where applicable
or appropriate; all other information is set forth separately. Reference is
made to PART A of this Report for information relating separately to Centex
Corporation and its subsidiaries ("Centex").
PART I
ITEM 1. BUSINESS
(a) Holding
Holding is a Nevada corporation incorporated on May 5, 1987. Its executive
offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219;
telephone (214) 559-6700.
Holding owns all of the outstanding common stock of Development, and, as a
result, has the ability to control Development. Development is the sole
general partner of CDC, a Delaware limited partnership engaged in the real
estate development business. Information concerning the acquisition of the
capital stock of Development by Holding is included in Note (A) of the Notes to
Combining Financial Statements of Holding and CDC (the "Holding/CDC Combining
Financial Statements") included on page 67 of this Report. Holding operates in
a single industry segment.
The principal liability of Holding is a $7,700,000 note payable to Centex
which had an unpaid balance of $7,600,000 at March 31, 1994 (the "Holding
Note"). See "Item 13. Certain Relationships and Related Transactions".
Presently, Holding is not engaged in any business other than its ownership and
control of Development. The Amended and Restated Agreement of Limited
Partnership of Centex Development Company, L.P. (the "Partnership Agreement"),
which governs the operations of CDC, provides that neither Holding nor
Development shall be permitted, prior to Payout (as defined in the Partnership
Agreement)("Payout") and repayment of the Holding Note, to own business
interests or to engage in business activities other than those relating to CDC.
Were Holding to engage in any other business activities the Partnership
Agreement would need to be amended to provide for the same.
(b) CDC
GENERAL DEVELOPMENT OF BUSINESS
CDC is a Delaware limited partnership formed in March 1987 to enable Centex
Stockholders to participate in long term real estate development projects whose
dynamics are inconsistent with Centex's traditional financial objectives and is
presently governed by the Partnership Agreement. Development, a wholly owned
subsidiary of Holding, is the sole general partner of CDC. CDC's executive
offices are located at 3333 Lee Parkway, Suite 500, Dallas, Texas 75219;
telephone (214) 559-6700.
Six subsidiaries of Centex (the "Original Limited Partners") contributed
certain real estate with an approximate market value of $75.9 million (the
"Original Properties") to CDC in exchange for an aggregate of 1,000 Class A
Units of limited partnership
48
<PAGE> 49
interest in CDC (the "Class A Units"). See "Item 2. Properties". The Class A
Units were originally issued to Centex Land Company ("CLC") (244 units), Centex
Homes of New Jersey, Inc. ("CHNJ") (220 units), Centex Homes Corporation
("CHC") (71 units), Fox & Jacobs, Inc. ("F&J") (400 units), Great Lakes
Development Co., Inc. ("GLD") (31 units) and 111 E. Chestnut Corp. ("111
Chestnut") (34 units). Dividends consisting of Class A partnership units were
made to Centex Real Estate Corporation ("CREC") by certain of its subsidiaries,
as follows: CHC, 71 units on March 31, 1987; F&J, 400 units on March 31, 1987;
GLD, 31 units on April 30, 1988; and CLC, 244 units on December 2, 1988. On
December 15, 1988, CREC received 34 units from 111 Chestnut in consideration
for the assumption by CREC of debt in the amount of $2,570,000. On December
31, 1989 CREC bought 220 units from Centex Development Management Company
(formerly known as CHNJ) in exchange for the assumption of debt amounting to
$16,710,000. See "Item 12. Security Ownership of Certain Beneficial Owners and
Management". Prior to their contribution to CDC, the Original Properties were
each separately owned or controlled and managed by the Original Limited
Partners. The Original Properties are now owned by or for the benefit of CDC.
Under the Partnership Agreement, the holder of the Class A Units, presently
CREC, a wholly owned subsidiary of Centex, is entitled to a 9% preferred return
(the "Preferred Return") on its unrecovered capital and certain other
distributions of cash and other property and allocations of income and loss in
preference to other limited partners. See Note (F) of the Notes to the
Holding/CDC Combining Financial Statements included on pages 70-71 of this
Report. In addition to the Original Properties, the Partnership has additional
properties which it has acquired ("Additional Properties"). The Additional
Properties were purchased from third parties at negotiated prices or from
affiliates for the affiliate's cost basis which approximated market value. To
fund the purchase of the Additional Properties, the Partnership borrowed funds
from unrelated financial institutions and CREC. Information concerning the
debt incurred by CDC is included in Note (E) of the Notes to the Holding/CDC
Combining Financial Statements included on pages 69-70 of this Report.
NARRATIVE DESCRIPTION OF BUSINESS
The purpose of CDC, as stated in the Partnership Agreement, is (a) to engage
in all aspects of the real estate business, including investing in, acquiring,
owning, holding a leasehold interest in, managing, maintaining, developing,
operating, leasing, improving, selling, exchanging and otherwise disposing of
the Original Properties and any other properties acquired by CDC, with all such
activities related to the Original Properties to be conducted pursuant to the
Plan for Original Properties (which is an exhibit to the Partnership Agreement)
(the "Plan"), (b) in connection therewith, to exercise all of the rights and
powers conferred on CDC by the Partnership Agreement, and (c) to enter into any
lawful transaction and engage in any lawful activities in furtherance of such
purposes. CDC will hold for investment and development purposes the Original
Properties, which predominantly consist of unimproved land and, to a lesser
extent, improved properties. CDC may invest in or acquire additional
properties of any kind and may dispose of or develop any or all of the Original
Properties or any other properties acquired (subject to the Plan).
Pursuant to management agreements with CDC, Centex subsidiaries provide
property management and development assistance and expertise to CDC in respect
of the properties under CDC's control, including seeking zoning changes and
special use permits, negotiating utility agreements, and securing necessary
rights of way and access on behalf of CDC, and will, consistent with the Plan,
develop and/or contract for the sale and sell on behalf of CDC some or all of
such properties in exchange for compensation for its efforts to enhance the
value of the properties owned or controlled by CDC. See "Item 10. Directors
and Executive Officers of the Registrant--Management Agreement".
Although subsidiaries of Centex also engage generally in the real estate
business, such subsidiaries typically acquire land that is already zoned for
one purpose, usually home development. These entities generally develop such
land over a relatively short time period and build and sell homes to individual
purchasers. Unlike such subsidiaries, CDC intends principally to invest in
larger tracts of undeveloped land, which land may be zoned for different types
of development or which may not be zoned for any particular development. CDC
anticipates holding such tracts for a longer period of time than Centex's
subsidiaries might otherwise have held such real estate because of the broader
range of development activities and with the anticipation that such land will
increase in value as a result of preparing such tracts for development and
subdivision into multiple parcels and/or uses, as appropriate for the
particular tract. In the course of holding such real property, CDC may sell a
portion of any particular tract and retain the remainder for eventual
development or sale. CDC may develop such properties alone or in conjunction
with others, including Centex subsidiaries. Any newly-acquired properties may
be wholly owned, or may consist of interests in joint ventures with other
persons or entities, including Centex and its affiliates, and any properties to
be sold or developed may be acquired by Centex or any of its affiliates.
However, Centex and its affiliates continue to conduct many facets of real
estate development and, for this reason, may be in competition with CDC in
certain activities and projects. See "Competition and Regulation" below in
this Item 1.
49
<PAGE> 50
Although the real estate interests held by CDC from time to time will
normally be held for the purpose of maximizing values through the development
process, some portion of CDC's portfolio may consist of income producing
properties, and in order to meet CDC's cash flow needs, certain parcels may be
sold prior to the time that they may otherwise have been sold or developed.
Increases in real estate values may occur from development of raw land or
general increases in the value of such real estate caused by factors external
to CDC.
The Partnership had a backlog of land sales of approximately $11 million as
of March 31, 1994, and $3 million as of March 31, 1993. The ultimate sales
prices may vary due to contractual clauses that adjust the price depending upon
the closing date.
The Plan prescribes in general terms the manner by which CDC will conduct
its activities in respect of the Original Properties. The Plan sets forth
certain guidelines regarding sales and maintenance of the Original Properties
and zoning considerations, and places restrictions on these and other types of
activities, including, without the consent of the Original Limited Partner that
contributed such Original Property, the sale of any Original Property at a
price that is less than the value at which such Original Property was
contributed to CDC plus the portion of the unpaid Preferred Return related
thereto. CDC also continues to analyze the present zoning for certain of the
Original Properties with a view to determining the highest and best use to
which the tracts may be made and, if appropriate, seeking zoning changes for
such uses. If zoning changes are obtained, CDC will have to decide whether to
further develop these properties or to seek the sale of all or a portion
thereof. If not developed sooner, the Plan provides that CDC will generally
endeavor to sell the Original Properties over time for the best price
available, taking into account the condition of the marketplace and CDC's cash
flow requirements. See "Item 2. Properties".
Except as otherwise provided in the Plan, CDC is not limited by any
provision of the Partnership Agreement, any Operating Partnership Agreement (as
herein defined) or otherwise with regard to the types of real estate or other
investments it may make, the percentage of its assets that it may invest in any
one type of real estate or other investment, the percentage of securities of
any one issuer or interest in any joint venture or partnership that it may
acquire, or the geographic areas in which it may make investments. CDC is not
a real estate investment trust, and therefore CDC's activities will not be
subject to the restrictions on its activities imposed on real estate investment
trusts qualified under the Internal Revenue Code of 1986, as amended.
CDC anticipates that it will incur additional indebtedness or issue
additional equity interests to the extent that Development, as CDC's general
partner, deems it appropriate to finance operations, acquisitions of additional
properties, development or construction. Such indebtedness will generally be
in the form of temporary or term loans from banks, institutional investors or
other lenders, and, subject to the Plan, may be secured by certain mortgages on
any one or more of CDC's properties. Further, Development has the authority
under the Partnership Agreement to issue debt securities of CDC; provided, that
if Development proposes to take any of these actions prior to Payout, such
action shall require the consent of a majority in interest (as defined) of the
limited partners. Centex and its affiliates may lend additional money to or
subscribe for additional interests in CDC from time to time; however, Centex is
not obligated to make any such loans or to provide additional capital to CDC.
The Articles of Incorporation of Holding contain provisions that may affect
certain business combinations with, and sales of assets and issuances of
securities of CDC, to certain persons at any time when a subsidiary of Holding,
such as Development, acts as general partner of CDC. However, it is not
believed that such restrictions or pledge will negatively affect the ability of
CDC to undertake its activities, to incur additional indebtedness or to issue
additional securities as and when deemed necessary.
For regulatory and administrative purposes, CDC may conduct many of its
operations or own or manage certain assets through one or more Operating
Partnerships ("Operating Partnerships") in which CDC will hold a 99% interest
as the sole limited partner and Development will hold a 1% interest as the sole
general partner. To date, CDC has not determined that it is necessary or
appropriate to establish any Operating Partnerships.
COMPETITION AND REGULATION
Within the geographical areas where the remaining Original Properties and
the Additional Properties are located, CDC is subject to substantial
competition from other owners of similarly-situated or developed properties who
wish to sell or develop their properties, many of whom may hold or be in the
process of developing more parcels than CDC or may have greater financial
resources and longer operating histories than CDC. CDC will also compete in
the acquisition of additional desirable
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<PAGE> 51
properties with a variety of investors, including Centex and its affiliates,
and institutional investors and developers, seeking similar investments.
The failure of many financial institutions and seizure of assets by agencies
of the federal government has created an oversupply of inventory in various
markets. The terms under which the Resolution Trust Corporation (the "RTC")
(depository for the seized assets) ultimately disposes of these assets may have
a significant effect on these markets.
The economic recession in California and the overbuilding of commercial
properties in California and Texas, where certain of CDC's properties are
located, may limit CDC's ability to sell these properties at favorable prices
or may make current development of such properties by CDC inadvisable. CDC's
mixed-use properties located in California and, to a lesser extent, Texas are
believed to be most affected by the present economic environment. However,
certain of CDC's properties are located in geographical areas where there is
moderate to good demand for land suitable for development, including Florida,
Illinois and New Jersey. Except for the Forster Ranch property located in San
Clemente, California, CDC believes that it is well situated to weather the
current adverse economic environment in those geographical areas affected and
to take advantage of the long-term economic outlook for the areas where its
properties are located. See "Properties--(b) CDC--California Properties" on
pages 52-53 of this Report.
Ownership and development of each of CDC's properties is subject to
licensing and regulation by zoning, land use, environmental, health, sanitation
and other agencies in the state and/or municipality in which the property is
located. Difficulties or failures in obtaining the required licenses or
approvals could delay or prevent the development or sale of any of such
properties. In addition, certain of the Original Properties and the Additional
Properties may be subject to zoning limitations that may not permit development
of such properties for their highest and best use. The ability of CDC to
obtain favorable zoning changes may affect the ultimate value of such
properties to CDC or to a third-party purchaser.
ITEM 2. PROPERTIES
(a) Holding
Due to the nature of its business, Holding does not own or hold for
investment any real or personal properties other than cash, receivables and
other similar assets, and the securities relating to its subsidiary,
Development.
(b) CDC
The Original Properties transferred to CDC by the Original Limited Partners
and the Additional Properties consist of properties located in Illinois, Texas,
New Jersey, Florida, California and Puerto Rico. Such properties predominantly
consist of undeveloped sites zoned for light manufacturing, agricultural,
general retail, office, research and development, single- and multi-family uses
and resort property purposes.
The description set forth below of the remaining Original Properties and the
Additional Properties owned by CDC at March 31, 1994 includes the present
zoning therefor. Also, in those cases where CDC is considering seeking a
change in zoning, an alternate zoning classification is set forth.
Illinois Properties:
Fox Hills Lots--Originally 100 acres in Cook County, Illinois fronting
131st Street that have been subdivided into 118 residential lots. These
lots are located adjacent to an existing development of single-family
detached housing. CDC has installed residential improvements such as
streets, street signs, water, sanitary sewer and energy lines and other
typical pre- construction subdivision improvements. CDC still owned 20 of
these lots at March 31, 1994.
Bolingbrook Commercial--Two non-contiguous tracts totaling 33.92 acres
in Bolingbrook located at the intersection of Interstate 55 and State
highway 355. This acreage is zoned for commercial use.
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<PAGE> 52
Texas Properties:
Colony South Planning Unit--located in suburban Dallas in the cities
of The Colony (519.87 acres) and Lewisville (151.95 acres). The
Lewisville acreage is zoned light industrial. The acreage in The Colony
is zoned office (26.84 acres), general retail (21.70 acres), business park
(350.04 acres), residential (119.22 acres) and open space (2.07 acres).
CREC acquired 113 residential lots in March 1994.
Bryan Place--located in Dallas just east of downtown and Central
Expressway. This property is comprised of 28 parcels zoned industrial and
office ranging from approximately 2,000 square feet to 80,000 square feet.
The total area of the property is approximately 622,000 square feet.
Carrollton Property--30,028 square foot office building and five
fabrication-warehouse buildings containing a total of 95,178 square feet
on 17.413 paved acres, zoned industrial, with a rail spur located in
Carrollton, a suburb of Dallas; however, the buildings do not necessarily
add value to the property.
New Braunfels Acreage--398 acres of unzoned, wooded land on FM 306 and
Hoffman Lane near the north city limits of New Braunfels. CDC may seek to
have this tract zoned for a mixed use planned development, including
residential, commercial and retail uses.
Fate Lots and Acreage--18 developed single-family residential detached
lots on Pecan and Ellis Streets and 7.152 cleared acres, to be zoned prior
to development, on State Highway 66 located in or near Fate, a community
located east of Dallas.
New Jersey Property:
East Windsor--a 600 acre parcel with four separate residential tracts,
13 farm parcels and 100 acres of office industrial zoned property in East
Windsor, a township located in the vicinity of Princeton. The residential
tracts have final plan approval for a total of 75 half-acre lots, 174
quarter-acre lots and preliminary plan approval for 426 multi-family
units. The farm parcels vary in size from 11 to 35 acres and total 313
acres. Two of the quarter-acre lots have been sold to CREC, which has a
contract for the remaining 172.
Puerto Rico Property:
116.5 acres of land (approximately 6 acres zoned commercial and the
remainder zoned residential) in Canovanas and Rio Grande, Puerto Rico.
In most cases, CDC has acquired record title to the Original
Properties. However, CDC has acquired only beneficial title rather than
record title to the New Jersey and Puerto Rico properties. Pursuant to
agreements dated as of March 31, 1987 among CDC and the entities holding
record title, the parties agreed that CDC shall have all of the benefits
and burdens of ownership of such properties. Upon the direction of CDC,
title to such properties will be conveyed to CDC or its designee or
transferee.
The descriptions set forth below of the Additional Properties owned by
CDC at March 31, 1994 include present zoning therefor. Also, in cases
where CDC is considering seeking a change in zoning, an alternate zoning
classification is set forth.
California Properties:
Forster Ranch--This property was purchased on March 31, 1989 and
originally included 1,077 acres primarily zoned agricultural. The
Partnership's Development Agreement with the City of San Clemente allows a
series of residential villages containing a total of approximately 2,200
lots and 78 acres of mixed use property. As of March 31, 1994, 580 of
these lots had been sold to CREC and 21 acres of mixed use property had
been sold to other entities. The Partnership
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has entered an agreement with the holder of the Forster Ranch non-recourse
notes that may result in the transfer of the underlying real estate to
them in satisfaction of the debt, a portion of which is past due.
Sonora Shopping Center--In March of 1992, the Partnership acquired
9.45 acres of commercial property that it developed into a 116,000 square
foot shopping center in Sonora, California. As of March 31, 1994, all of
this property had been sold except for a half-acre restaurant site which
sold in June 1994.
Florida Property:
Deerfield--This property, located in Orlando, Florida, was originally
purchased by CREC for the account of CDC. CDC purchased the property from
CREC at its cost utilizing bank financing. This 345 acre parcel included
994 residential lots, a 10 acre church site, a 14 acre school site and 20
acres of commercial property. As of March 31, 1994, CREC had acquired 906
residential lots and had the remaining 88 lots under contract. All other
Deerfield properties have been sold to outside entities.
Kingsbridge--CDC acquired 340 developed residential lots in the
Orlando area in January, 1993 utilizing seller provided non-recourse
financing. The Partnership sold 131 of these lots to CREC in April, 1993
and the remainder in April, 1994.
Lake Down--In April, 1992, CDC purchased 18 developed residential lots
with non-recourse financing. As of March 31, 1994, 5 of these Orlando
area lots had been sold to CREC.
Texas Property:
Allen Property--In December 1991, CDC acquired 108 acres of
residential property in Allen, Texas, principally through an exchange of a
portion of the Bryan Place property. CDC anticipates developing this
property into a residential subdivision.
CDC's principal assets consist of the Original Properties and the
Additional Properties remaining unsold.
ITEM 3. LEGAL PROCEEDINGS
Holding is not a party to, and its assets are not the subject of, any
material pending legal proceedings. CDC may be involved from time to time in
litigation matters incident to its day-to-day business; however, management of
Development believes that such litigation, if determined unfavorably to CDC,
would not have a material adverse effect on the financial condition or
operations of CDC.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF HOLDING AND DEVELOPMENT
Information concerning the present executive officers of Holding is
set forth below. All of such officers have served in their capacities since
the organization of Holding, except as indicated. CDC has no executive
officers. The executive officers of Holding set forth below hold the same
offices in Development, the general partner of CDC, as disclosed in "Item 10.
Directors and Executive Officers of the Registrant - Directors and Executive
Officers of Development".
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
J. Stephen Bilheimer President (1) 62
Roger D. Sefzik Vice President and Treasurer (2) 38
</TABLE>
(1) Mr. Bilheimer is an employee of Centex Development Management Company
("CDMC"), a subsidiary of Centex, and served as Executive Vice President
of CREC from April 1987 until March 31, 1988. Mr. Bilheimer was a
director of Development from its date of incorporation until his
resignation as of June 1, 1987 and was re-elected to the Board of
Directors of Development on May 24, 1989. Since April 1, 1988, Mr.
Bilheimer has devoted a majority of his time to the business and affairs
of Holding and Development.
(2) Mr. Sefzik is an employee of CDMC and was a Vice President of CTX Mortgage
Company from May 1987 to March 1988 and Executive Vice President of Centex
Title Company from July 1986 to March 1988. Prior thereto he held various
offices with various Centex subsidiaries since March 1983. Mr. Sefzik was
elected to his present positions with Holding as of April 1, 1988. Since
April 1, 1988, Mr. Sefzik has devoted a majority of his time to the
business and affairs of Holding and Development.
All executive officers of Holding are elected annually by the Board of
Directors to serve until the next annual meeting of the Board of Directors or
until their successors have been duly elected. There are no family
relationships among or between such executive officers or the directors.
Holding's executive officers hold the same positions with its subsidiary,
Development.
Holding has no full time employees. The directors and executive officers
perform all executive management functions; all other services necessary to the
conduct of Holding's business are performed by a subsidiary of Centex or its
designee under a services agreement. See "Item 10. Directors and Executive
Officers of the Registrant--Services Agreement".
PART II
ITEM 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Holding
The information called for by this Item 5 with respect to Holding is
included herein in (1) the Joint Explanatory Statement on page 2 of this
Report, (2) the information included under the caption "Stock Prices and
Dividends" is on page 15 of this Report and (3) the information included in
Notes (F) and (G) of the Notes to the Holding/CDC Combining Financial
Statements is on pages 70-71 of this Report.
Prior to the date of the distribution, Centex owned all of the issued and
outstanding shares of Holding Common Stock and, accordingly, there was no
public market for such shares. Following the distribution by Centex, shares of
Holding Common Stock have been tradeable only in tandem with, and as a part of,
shares of Centex Common Stock, and may not be separately sold or otherwise
transferred. Therefore, except with respect to the trading market established
for the tandem traded securities,
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<PAGE> 55
there is no separate market for shares of Holding Common Stock. Because of the
tandem trading arrangement, it is not possible to identify precisely the
portion of the market price of the tandem traded securities allocable to shares
of Holding Common Stock.
The restrictions on the transfer of the Holding Common Stock and the
Stockholder Warrants separate from Centex Common Stock are imposed by the terms
of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and
the Nominee. Centex Common Stock certificates issued after the date of the
Nominee Agreement bear a legend referring to the restrictions on transfer
imposed thereby.
No dividends have been paid on shares of Holding Common Stock since the
incorporation of Holding. Future cash dividends on Holding Common Stock will
depend on the earnings, financial condition, capital requirements and other
factors affecting Holding and Development.
The provisions of the loan agreement and pledge and security agreement
relating to Holding's $7,700,000 note to Centex (the "Holding Note"), which had
a balance of $7,600,000 at March 31, 1994, include certain restrictive
covenants that limit the extent to which Holding and its subsidiaries
(including Development but not CDC or any Operating Partnership) may create,
assume or guarantee additional indebtedness, pledge or encumber certain of
their assets or otherwise take certain corporate actions. These covenants
include limitations on (a) incurring, assuming or guaranteeing any other
indebtedness, except indebtedness which provides for all payments of principal
to be made after April 1, 1994, indebtedness that is fully and completely
subordinated on terms satisfactory to Centex, and certain trade debt, (b)
creating any additional liens other than statutory liens for taxes, certain
mechanics' and materialmen's liens and other similar liens, (c) effecting a
merger or consolidation, (d) selling property and (e) declaring any dividends
or making certain other shareholder payments, as defined. Holding's
obligations under the Holding Note are secured by a pledge of all of the issued
and outstanding shares of the common stock of Development pursuant to a pledge
and security agreement under which a default by Holding in the performance of
its obligations could give Centex the right to vote such shares, to seek the
registration under the Securities Act of 1933, as amended, of all or a portion
thereof, and to sell such shares to satisfy Holding's obligations. See "Item
13. Certain Relationships and Related Transactions" and Note (G) of the Notes
to the Holding/CDC Combining Financial Statements included on page 71 of this
Report.
(b) CDC
Except as additionally provided below, the information called for by
this Item 5 with respect to CDC is included herein in (1) the Joint Explanatory
Statement on page 2 of this Report, (2) the information included and referenced
under the caption "Stock Prices And Dividends" on page 15 of this Report and
(3) the information included in Notes (F) and (G) of the Notes to the
Holding/CDC Combining Financial Statements on pages 70-71 of this Report.
The Stockholder Warrants were issued to Centex immediately prior to the
November 30, 1987 distribution to Centex Stockholders and, accordingly, there
was no public market for the Stockholder Warrants prior to the distribution.
Following the distribution by Centex, the Stockholder Warrants have been
tradeable only in tandem with, and as part of, shares of Centex Common Stock,
and may not be separately sold or otherwise transferred. Therefore, except with
respect to the trading market established for the tandem traded securities,
there is no separate market for the Stockholder Warrants. Because of the
tandem trading arrangement, it is not possible to identify precisely the
portion of the market price of the tandem traded securities allocable to the
Stockholder Warrants.
The restrictions on the transfer of the Stockholder Warrants and the
Holding Common Stock separate from Centex Common Stock are imposed by the terms
of a nominee agreement (the "Nominee Agreement") among Centex, Holding, CDC and
the Nominee. Centex Common Stock certificates issued after the date of the
Nominee Agreement bear a legend referring to the restrictions on transfer
imposed thereby.
No dividends or distributions have been made on the Stockholder Warrants
since their issuance.
CREC, a subsidiary of Centex, is the present holder of all of the Class A
Units, and accordingly, at this time there is no public market for such
securities. See "Item 1. Business--General Development of Business". CDC has
not made any payment to the holder of the Class A Units with respect to the
Preferred Return during the last four fiscal years. Preference payments in
arrears at March 31, 1994 amounted to $28,995,000.
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<PAGE> 56
ITEM 6. SELECTED FINANCIAL DATA
(a) Holding
The information called for by this Item 6 with respect to Holding is
incorporated herein by reference to the Combining Statements of Operations and
the Combining Balance Sheets included in the Holding/CDC Combining Financial
Statements on pages 65-66 of this Report.
(b) CDC
The information called for by this Item 6 with respect to CDC is
incorporated herein by reference to the Combining Statements of Operations and
the Combining Balance Sheets included in the Holding/CDC Combining Financial
Statements on pages 65-66 of this Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(a) Holding
The information called for by this Item 7 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition" on page 72 of this Report.
(b) CDC
The information called for by this Item 7 with respect to CDC is
incorporated herein by reference to the information included and referenced
under the caption "Management's Discussion and Analysis of Results of
Operations and Financial Condition" on page 72 of this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item 8 is included herein on pages
64-72 of this Report (see Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Holding
DIRECTORS AND EXECUTIVE OFFICERS OF HOLDING
Except as additionally provided below, the information called for by this
Item 10 with respect to Holding is incorporated herein by reference to the
information included under the caption "Election of Directors" on page 20 and
the information included under the caption "Section 16(a) Compliance" on
page 24 of Holding's proxy statement dated July 1, 1994
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<PAGE> 57
for the 1994 Annual Meeting of Stockholders of Holding to be held on July 28,
1994 (the "1994 Holding Proxy Statement"); however, as required by Instruction
3 to Item 401(b) of Regulation S-K, information regarding executive officers of
Holding is included under the caption "Executive Officers of Holding" included
in Part B of this Report following Item 4.
SERVICES AGREEMENT
Holding has no full time employees. The directors and executive officers
of Holding, who hold the same directorships and offices in Development, perform
all executive management functions. See "Item 11. Executive Compensation".
All tax, accounting, bookkeeping, clerical and similar services that are
necessary to operate the business of Holding are provided pursuant to a
services agreement (the "Services Agreement") entered into between Holding and
Centex Service Company ("CSC"), an indirect subsidiary of Centex. See "Item
13--Certain Relationships and Related Transactions". The term of the Services
Agreement is subject to automatic renewal for successive one-year terms unless
either party elects to terminate the Services Agreement upon at least 30 days'
written notice prior to December 31 of any year. However, the Services
Agreement may not be terminated by Holding (other than in the event of a breach
by CSC constituting gross negligence or willful or wanton misconduct) prior to
the payment in full of the Holding Note, the full and complete detachment of
the Stockholder Warrants from Centex Common Stock or the occurrence of Payout.
Service fees of $30,000 were paid pursuant to the Services Agreement during
fiscal 1994.
(b) CDC
GENERAL PARTNER AND MANAGEMENT
CDC has no directors, officers or employees and, instead, is managed by
Development, its sole general partner. Directors and officers of Development
perform all executive management functions required for CDC. Except as
provided in the Plan with respect to the Original Properties, the limited
partners of CDC have no power to direct or participate in the control of CDC,
and Development makes all decisions regarding the acquisition, disposition or
development of real estate belonging to CDC and all other decisions regarding
CDC's business or operations. See "Item 1. Business". CDC has entered into a
management agreement pursuant to which CDMC will operate, manage and develop
the properties of CDC for and on behalf of CDC. See "Management Agreement"
below in this Item 10. Except for the allocations of profit and loss and
distributions of cash and other property to which Development is entitled under
the Partnership Agreement, and except for the right to be reimbursed for
certain expenses, Development does not receive any compensation from CDC in
respect of its duties and obligations as general partner of CDC. See "Item 11.
Executive Compensation".
DIRECTORS AND EXECUTIVE OFFICERS OF DEVELOPMENT
Information concerning the present directors and executive officers of
Development is set forth below. All of such persons have served in their
capacities since the organization of Development, except as indicated.
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
J. Stephen Bilheimer . . . . . . Director and President (1) 62
Josiah O. Low, III . . . . . . . Director (2)* 55
David M. Sherer. . . . . . . . . Director (3)* 57
Roger D. Sefzik. . . . . . . . . Vice President and Treasurer (4) 38
</TABLE>
- ---------------
*Member of the audit committee of the Board of Directors.
(1) Mr. Bilheimer is an employee of CDMC and served as Executive Vice
President of CREC from April 1987 until March 31, 1988. Mr. Bilheimer
was a director of Development from its date of incorporation until his
resignation as of June 1, 1987. Mr. Bilheimer was re-elected to the
Board of Directors on May 24, 1989.
(2) Mr. Low serves as Senior Vice President of Donaldson, Lufkin &
Jenrette Securities Corporation (since February 1985). Mr. Low is
also a director of Holding. Mr. Low was elected as a director of
Development as of June 1, 1987.
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<PAGE> 58
(3) Mr. Sherer has been President of David M. Sherer Associates, Inc., a
commercial real estate, investment and brokerage firm, for more than
five years. Mr. Sherer is also a director of Holding. Mr. Sherer was
elected as a director of Development as of June 1, 1987.
(4) Mr. Sefzik is an employee of CDMC and served as Vice President of CTX
Mortgage Company from May 1987 to March 1988 and Executive Vice
President of Centex Title Company from July 1986 to March 1988. Mr.
Sefzik was elected to his present positions with Development as of
April 1, 1988.
All directors are elected annually by the shareholders to serve until
the next annual meeting of stockholders and until their successors have been
elected and qualified, subject to removal by a vote of the holders of not less
than two-thirds of the outstanding shares of the common stock, par value $1.00
per share, of Development. All executive officers of Development are elected
annually by the Board of Directors to serve until the next annual meeting of
the Board of Directors or until their successors have been duly elected. There
are no family relationships among or between Development's directors or
executive officers.
The current executive officers of Development are employees of Centex
or one of its subsidiaries, and it is presently anticipated that this
circumstance will continue. See "Item 11. Executive Compensation".
MANAGEMENT AGREEMENT
All services (other than executive management decision-making)
necessary to operate CDC's business are provided to CDC pursuant to a
management agreement (the "Management Agreement") entered into with Centex
Development Management Company, a subsidiary of Centex ("CDMC"). Under the
Management Agreement, CDMC keeps all necessary books and records, and provides
all additional accounting and clerical services that Development may deem
necessary. CDMC's responsibilities related to real estate management also
include ensuring that CDC's properties are operated, managed and maintained in
full compliance with all relevant laws and regulations, that all real property
and any improvements thereon are maintained and repaired, that all income
produced by CDC's properties is collected and that any development on any
property is done in an efficient manner.
CDMC is entitled to reimbursement from CDC for all reasonable costs
and expenses incurred and paid by CDMC in connection with the performance of
its duties and obligations under the Management Agreement. During fiscal 1994,
CDMC earned fees and is owed reimbursements from CDC totaling $785,000 for its
services.
The Management Agreement also provides that CDMC will provide,
consistent with the Plan, pre-development and development services on behalf of
CDC, and the Management Agreement specifically provides that CDMC is delegated
full authority to carry out and perform on behalf of CDC all aspects of the
Plan.
The term of the Management Agreement is subject to automatic renewal
for successive one-year terms unless either party elects to terminate the
Management Agreement upon at least 30 days' written notice prior to December
31st of any year. However, it may not be terminated by CDC (other than in the
event of a breach by CDMC constituting gross negligence or willful or wanton
misconduct) prior to the latest of the complete detachment of the Stockholder
Warrants from Centex Common Stock, Payout or the payment in full of the Holding
Note.
From time to time, CDMC may delegate the performance of certain of its
responsibilities to CREC, upon terms and conditions to be determined. These
responsibilities may include enhancement of properties owned or controlled by
CDC, for which reasonable additional compensation may be paid by CDC to CDMC
pursuant to terms to be negotiated between them. In turn, some or all of such
additional compensation may be paid by CDMC to CREC.
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<PAGE> 59
ITEM 11. EXECUTIVE COMPENSATION
Holding and CDC
The information called for by this Item 11 with respect to Holding and
CDC is incorporated herein by reference to the information included and
referenced under the caption "Executive Compensation" in the 1994 Holding Proxy
Statement on pages 22-24 thereof.
CDC does not have any directors, officers or employees, and is managed
by its sole general partner, Development. Except for the allocations of profit
and loss and distributions of cash and other property to which Development is
entitled under the Partnership Agreement, and except for the right to be
reimbursed for certain expenses, Development does not receive any compensation
from CDC in respect of its duties and obligations as general partner for CDC.
As general partner, Development is entitled to be allocated certain items of
income and loss of CDC and to receive certain distributions of cash from CDC
depending upon the level of income and cash available for distribution and
whether Payout has occurred. The terms and conditions upon which Development
will be allocated items of income and loss and will receive distributions are
set forth in the Partnership Agreement. For a summary of these rights and
benefits, see Note (F) of the Notes to the Holding/CDC Combining Financial
Statements included on pages 70-71 of this Report.
The directors and executive officers of Development perform all
executive management functions for CDC. See "Item 10. Directors and Executive
Officers of the Registrant". Services required by CDC in its operations are
also provided pursuant to a Management Agreement with CDMC pursuant to which
CDMC operates, manages and develops the properties of CDC for and on behalf of
CDC. See "Item 11--Directors and Executive Officers of the
Registrant--Management Agreement". The executive officers of Development did
not receive any remuneration from Development or CDC for the year ended March
31, 1994. Directors of Development who are neither officers nor employees of
Development, Centex or Centex's subsidiaries received compensation from
Development in the form of directors' and committee members' fees. During the
1994 fiscal year, each executive officer of Development received remuneration
from Centex or one of its subsidiaries in his capacity as a director, officer
or employee thereof. None of the directors or executive officers of
Development received any additional compensation from Centex or any of its
subsidiaries for services rendered on behalf of Development or CDC during the
1994 fiscal year.
During fiscal 1994, J. Stephen Bilheimer, a Director and the President
of Development, and Roger D. Sefzik, Vice President and Treasurer of
Development, both of whom are employees of subsidiaries of Centex, have devoted
a majority of their time and attention to the management of Development and
Holding. Messrs. Bilheimer and Sefzik, who are the only executive officers of
Development, provided such services to Development on behalf of and in their
capacities as officers and employees of CDMC pursuant to the Management
Agreement. Each current executive officer of Development continues to receive
remuneration from Centex or one of its subsidiaries in his capacity as an
officer or employee thereof and is not compensated by Development or CDC.
The directors of Development, who also hold the same directorships in
Holding and are neither officers nor employees of Development, Centex or
Centex's subsidiaries, each receive approximately $8,000 annually in the form
of directors' and committee members' fees in their capacities as directors
and/or committee members of Development. In addition, Development reimburses
these directors for the reasonable expenses incurred in attending directors'
and committee meetings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Holding
The information called for by this Item 12 with respect to Holding is
incorporated herein by reference to the information included and referenced
under the caption "Security Ownership of Management and Certain Beneficial
Owners" in the 1994 Holding Proxy Statement on pages 21-22.
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<PAGE> 60
(b) CDC
The following table sets forth certain information with respect to the
ownership of the equity securities of CDC as of June 15, 1994 by Development,
the directors of Development, individually itemized, all directors and
executive officers of Development as a group, and any person known to CDC to be
the beneficial owner of more than 5% of any class of CDC's equity securities.
Except as otherwise indicated, all securities are owned directly, and the
beneficial owner of such securities has the sole voting and investment power
with respect thereto.
<TABLE>
<CAPTION>
NAME OF NUMBER OF UNITS PERCENT
TITLE OF CLASS* BENEFICIAL OWNER** OR WARRANTS OWNED OF CLASS
---------------------- ------------------ ----------------- --------
<S> <C> <C> <C>
General Partner Interest (1) 3333 Development Corporation . . . . . . . . All 100%
3333 Lee Parkway, Suite 500
Dallas, Texas 75219
Class A Units (2) Centex Real Estate Corporation . . . . . . . 1,000 100%
3333 Lee Parkway, Suite 1100
Dallas, Texas 75219
Stockholder Warrants (3) 3333 Development Corporation . . . . . . . . -- ***
J. Stephen Bilheimer . . . . . . . . . . . . -- ***
Josiah O. Low, III . . . . . . . . . . . . . -- ***
Roger D. Sefzik . . . . . . . . . . . . . . -- ***
David M. Sherer . . . . . . . . . . . . . . -- ***
All directors and executive officers of
Development as a group (4 persons) . . . . . -- ***
FMR Corp.(4) . . . . . . . .. . . . . . . 145 14.47%
82 Devonshire Street
Boston, Massachusetts 02109
Centex Class B Unit Centex Corporation . . . . . . . . . . . . . 100 100%
Warrants (5) 3333 Lee Parkway, Suite 1200
Dallas, Texas 75219
Class B Units (6) Centex Corporation (7) . . . . . . . . . . . 350 (8) 28% (7)
3333 Lee Parkway, Suite 1200
Dallas, Texas 75219
</TABLE>
- ---------------
*Under the terms of the Partnership Agreement, CDC is managed by a
sole corporate general partner and none of the present classes of
CDC's securities are "voting securities" within the meaning of the
rules and regulations of the Commission promulgated pursuant to the
Exchange Act. Nonetheless, information with respect to each class of
CDC's equity securities has been set forth in accordance with such
rules and regulations.
**The address of any person who is the beneficial owner of more than
five percent of a class of CDC's securities is also included.
***Less than 1%.
(1) In connection with the formation of CDC, Development made a capital
contribution to CDC of $767,182, in exchange for Development's general
partner interest in CDC. As general partner, Development is entitled
to receive allocations of income and loss and distributions of
property from CDC. See "Item 11. Executive Compensation".
60
<PAGE> 61
(2) The Class A Units were issued to the Original Limited Partners in
exchange for the contribution to CDC of the Original Properties.
Record title to the Class A Units presently is held by CREC, a
subsidiary of Centex. See "Item 1. Business-- General Development of
Business". As of the date or dates when the Stockholder Warrants are
deemed to have been exercised, the Class A Units will be automatically
converted into (i) a number of Class B Units equal to 20% of the total
number of Class B Units that would be outstanding after conversion
based on the actual exercise of the Stockholder Warrants and the
assumed exercise of all the then exercisable Centex Class B Unit
Warrants (see footnote (3)) and (ii) a like number of Class A Units.
The Class A Units will be automatically cancelled upon Payout and the
exercise and/or expiration of all of the Stockholder Warrants and the
Centex Class B Unit Warrants.
(3) The Nominee holds record title to the Stockholder Warrants, which are
exercisable for Class B Units, for the benefit of Centex Stockholders
pursuant to the Nominee Agreement. See "Item 5. Market for
Registrant's Common Equity and Related Stockholder Matters". However,
the Nominee has no power to vote the Class B Units issuable upon
exercise of the Stockholder Warrants or to direct the investment of
the Stockholder Warrants or such Class B Units. Beneficial ownership
of the Stockholder Warrants is, by virtue of the Nominee arrangement,
indirect and undivided. The number of Stockholder Warrants listed as
beneficially owned has been rounded to the nearest whole warrant and
is based on the assumption that options to purchase Centex Common
Stock, presently exercisable, or exercisable within 60 days, have been
exercised. The Class B Units issuable upon exercise of the
Stockholder Warrants have not been shown as "beneficially owned" under
the rules and regulations of the Commission promulgated pursuant to
the Exchange Act because the beneficial owners of the Stockholder
Warrants have no present right to exercise the Stockholder Warrants
and acquire Class B Units.
(4) Centex has received information from FMR Corp. ("FMR") stating that,
as of June 15, 1994, FMR may be deemed to beneficially own 4,514,872
shares of Centex Common Stock, (and therefore to own a beneficial
interest in 145 Stockholder Warrants) acquired solely for investment
purposes, as a parent holding company with respect to holdings of
wholly owned investment adviser subsidiaries of FMR or other entities
affiliated with FMR. FMR stated that it held 147,284 shares of Centex
Common Stock with sole voting power (and therefore held a beneficial
interest in 5 Stockholder Warrants with sole voting power) and no
shares with shared voting power. The remaining shares that FMR may
beneficially own may be voted by (i) the Board of Trustees of certain
Fidelity Funds, or (ii) certain institutions whose funds are managed
by Fidelity Management Trust Company, a wholly owned subsidiary of
FMR.
(5) On November 30, 1987, Centex acquired from CDC 100 warrants (the
"Centex Class B Unit Warrants") to purchase a like number of Class B
Units, subject to adjustment, pursuant to an agreement for purchase of
warrants. The Centex Class B Unit Warrants are generally in the same
form as, and contain the same terms as, the Stockholder Warrants,
except for the manner in which they may be subdivided (and the
corresponding exercise price) and the applicable exercise period. See
Note (F) of the Notes to the Holding/CDC Combining Financial
Statements included on pages 54-55 of this Report.
(6) Presently, there are no Class B Units issued or outstanding.
(7) When issued, record title to 200 of these Class B Units will be held
by the owners of the Class A Units. See footnote (2).
(8) The Class B Units that may be acquired upon conversion of outstanding
Class A Units as of the date of the exercise of the Stockholder
Warrants, which date Centex may indirectly determine by virtue of its
ability, in its sole and absolute discretion, to determine the date of
detachment of the Stockholder Warrants from Centex Common Stock, and
the Class B Units that may be acquired upon exercise of the Centex
Class B Unit Warrants are included as "beneficially owned" pursuant to
the rules and regulations of the Commission promulgated pursuant to
the Exchange Act. See footnotes (2) and (3). The number of Class B
Units and the percentage of class listed assume that the Stockholder
Warrants and the Centex Class B Unit Warrants have been exercised in
full for Class B Units but that no subdivision of any of the warrants
has occurred; however, both the Stockholder Warrants and the Centex
Class B Unit Warrants may be subdivided or combined and any such
subdivision or combination would necessarily change the number of
Class B Units beneficially owned and the percent of class represented
thereby.
61
<PAGE> 62
All of the issued and outstanding shares of Development have been
pledged to secure the Holding Note. See "Item 5. Market for Registrant's
Common Equity and Related Stockholder Matters".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Holding
The information called for by this Item 13 with respect to Holding is
incorporated herein by reference to the information included under the caption
"Certain Transactions" in the 1994 Holding Proxy Statement on pages 24-25.
(b) CDC
Holding entered into a services agreement in May, 1987 with Centex
Service Company ("CSC"), whereby CSC will provide certain tax, accounting and
other similar services for Holding at a fee of $2,500 per month. Service fees
of $30,000 were paid pursuant to this agreement for fiscal year 1994.
CDC has entered into agreements with certain Centex subsidiaries for
them to provide management services to CDC in connection with the development
and operation of properties acquired by CDC, maintenance of CDC property, and
accounting and clerical services. Management fees and development costs
totaling $785,000 were incurred in fiscal 1994, and remain unpaid as of June
15, 1994.
In connection with Holding's acquisition of additional shares of common
stock of Development in 1987, Holding borrowed $7,700,000 from Centex pursuant
to a secured promissory note (the "Holding Note"). The Holding Note, which had
a fluctuating balance during 1994, bears interest, payable quarterly, at the
prime rate of interest of NationsBank of Texas, N.A. ("NationsBank") plus 1% (8
1/4% at June 15, 1994). As of June 15, 1994, the outstanding principal balance
of the Holding Note was $6,710,000. The Holding Note is secured by a pledge of
all of the issued and outstanding shares of Development. The Holding Note, as
amended, matures on the earlier to occur of April 1, 1996 or the last
detachment of Holding Common Stock and the Stockholder Warrants from Centex
Common Stock pursuant to the Nominee Agreement. There was interest expense of
$439,000 related to the Holding Note for the year ended March 31, 1994.
In fiscal year 1994, CDC sold to CREC 246 lots for $2,354,000. CREC
acquired 209 lots for $2,050,000 in April 1994, and has contracts to purchase
an additional 260 lots from CDC.
In 1987, Development loaned $7,700,000 to CREC, pursuant to an
unsecured note (the "CREC Note") and related loan agreement. The CREC Note
bears interest, payable quarterly, at the prime rate of interest of NationsBank
plus 7/8% (8 1/8% at June 15 , 1994). As of June 15, 1994, the outstanding
principal balance on the CREC Note was $7,700,000. The CREC Note matures on
April 30, 1996. There was interest income of $537,000 related to the CREC Note
for the year ended March 31,1994.
In July 1992, on behalf of CDC, CREC guaranteed a $10,000,000 bank
line of credit for CDC to utilize in conjunction with development of lots to be
sold to CREC. In July 1993, the amount of such line of credit was reduced to
$5,000,000. This line of credit, which had an outstanding balance of
$2,165,000 at June 15, 1994, bears interest at LIBOR plus 3/4% (5 1/16% at June
15, 1994), is unsecured and matures in July 1994.
62
<PAGE> 63
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) and (2) See the Index to Financial Statements below for a
list of the Financial Statements filed herewith.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FORM 10-K
PAGE REFERENCE
--------------
<S> <C>
3333 HOLDING CORPORATION AND SUBSIDIARY AND CENTEX DEVELOPMENT COMPANY, L.P.
Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Combining Balance Sheets as of March 31, 1994 and 1993 . . . . . . . . . . . . . . . 65
Combining Statements of Operations and Cash Flows for the years ended
March 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Combining Statements of Stockholders' Equity and Partners' Capital for
the years ended March 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . . . . . . 67
Notes to Combining Financial Statements . . . . . . . . . . . . . . . . . . . . . . 67
Quarterly Results (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
All other schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
(3) EXHIBITS
(A) Holding
The information on exhibits required by this Item 14 is set
forth in the Holding Index to Exhibits appearing on pages 80-81 of
this Report.
(B) CDC
The information on exhibits required by this Item 14 is set
forth in the CDC Index to Exhibits appearing on pages 82-84 of this
Report.
(b) Reports on Form 8-K:
Neither Holding nor CDC filed any reports on Form 8-K during the
quarter ended March 31, 1994.
63
<PAGE> 64
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
AUDITORS'REPORT
TO THE BOARD OF DIRECTORS OF 3333 HOLDING CORPORATION:
We have audited the accompanying combining balance sheets of 3333 Holding
Corporation and subsidiary and Centex Development Company, L.P. as of March 31,
1994 and 1993, and the related combining statements of operations and cash
flows and stockholders'equity and partners'capital for each of the three years
in the period ended March 31, 1994. These financial statements are the
responsibility of the companies' management. Our responsibility is to express
an opinion on these 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 audit 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 financial statements referred to above present fairly, in
all material respects, the individual and combined financial positions of 3333
Holding Corporation and subsidiary and Centex Development Company, L.P. as of
March 31, 1994 and 1993, and the individual and combined results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
May 11, 1994
64
<PAGE> 65
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
--------------------------------------------------------------------------------------------
1994 1993 1994 1993 1994 1993
---------------------------- ------------------------- ----------------------
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
---------------------------- ------------------------- ----------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash $ 101 $ 1,252 $ 101 $ 1,252 $ -- $ --
Accounts Receivable--
Affiliates -- -- 768 1,763 -- --
Centex Corporation
and Subsidiaries 133 133 -- -- 133 133
Other 105 287 105 287 -- --
Notes Receivable--
Centex Corporation
and Subsidiaries 7,700 7,700 -- -- 7,700 7,700
Other 1,151 671 1,151 671 -- --
Investment in Affiliate -- -- -- -- 767 767
Land Held for Development and
Sale--
Forster Ranch 49,199 44,777 49,199 44,777 -- --
Other 69,703 79,871 69,703 79,871 -- --
-------- -------- -------- -------- ------ ------
$128,092 $134,691 $121,027 $128,621 $8,600 $8,600
======== ======== ======== ======== ====== ======
Liabilities, Stockholders' Equity
And Partners' Capital
Accounts Payable and Accrued
Liabilities--
Affiliates $ -- $ -- $ -- $ -- $ 768 $1,763
Centex Corporation
and Subsidiaries 894 1,450 785 1,350 109 100
Other 2,369 2,759 2,369 2,759 -- --
Notes Payable--
Centex Corporation
and Subsidiaries 7,600 6,500 -- -- 7,600 6,500
Forster Ranch 49,199 44,777 49,199 44,777 -- --
Other 4,950 14,485 4,950 14,485 -- --
Land Sale Deposits 141 157 141 157 -- --
Stockholders' Equity
and Partners' Capital--
Stock and Stock/Class B
Unit Warrants 501 501 500 500 1 1
Capital in Excess of
Par Value 800 800 -- -- 800 800
Retained Earnings (Deficit) (678) (564) -- -- (678) (564)
Partners' Capital 62,316 63,826 63,083 64,593 -- --
-------- -------- -------- -------- ------ ------
Total Stockholders' Equity
and Partners' Capital 62,939 64,563 63,583 65,093 123 237
-------- -------- -------- -------- ------ ------
$128,092 $134,691 $121,027 $128,621 $8,600 $8,600
======== ======== ======== ======== ====== ======
</TABLE>
See notes to combining financial statements.
65
<PAGE> 66
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF OPERATIONS AND CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------------------------- ------------------------------- ---------------------------
3333 Holding
Centex Corporation
Combined Development Company,L.P. and Subsidiary
----------------------------- ------------------------------- ---------------------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Combining Statements Of
Operations
Revenues
Real Estate Sales $12,540 $ 9,097 $23,601 $12,540 $ 9,097 $23,601 $ -- $ -- $ --
Interest
and Other Income 709 1,059 798 319 686 397 537 566 679
------- ------- ------- ------- ------- ------- ----- ----- -----
13,249 10,156 24,399 12,859 9,783 23,998 537 566 679
------- ------- ------- ------- ------- ------- ----- ----- -----
Costs And Expenses
Real Estate Sales 12,684 8,360 23,071 12,684 8,360 23,071 -- -- --
Forster Ranch
Valuation Provision -- 3,702 -- -- 3,702 -- -- -- --
Selling and
Administrative 1,750 1,962 1,694 1,685 1,897 1,633 65 65 61
Interest 439 404 447 -- -- -- 586 597 725
------- ------- ------- ------- ------- ------- ----- ----- -----
14,873 14,428 25,212 14,369 13,959 24,704 651 662 786
------- ------- ------- ------- ------- ------- ----- ----- -----
Loss Before Income
Taxes (1,624) (4,272) (813) (1,510) (4,176) (706) (114) (96) (107)
Income Taxes -- -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ----- ----- -----
Net Loss $(1,624) $(4,272) $ (813) $(1,510) $(4,176) $ (706) $(114) $ (96) $ (107)
======= ======= ======= ======= ======= ======= ===== ===== ======
Loss Per Share/Unit
(Average Outstanding
Shares, 1,000; Units,
1,000) $(1,510) $(4,176) $ (706) $(114) $ (96) $ (107)
======= ======= ======= ===== ===== ======
Combining Statements Of Cash Flows
Cash Flows-Operating Activities
Net Loss $(1,624) $(4,272) $ (813) $(1,510) $(4,176) $ (706) $(114) $ (96) $ (107)
Forster Ranch
Valuation Provision -- 3,702 -- -- 3,702 -- -- -- --
Net Change in Payables,
Receivables
and Deposits (110) (3,692) 281 (224) (3,788) 175 114 96 106
(Increase) Decrease in
Notes Receivable (480) 262 (46) (480) 262 (46) -- -- --
Decrease (Increase) in
Land Held for
Development
and Sale 5,746 (10,680) 5,494 5,746 (10,680) 5,494 -- -- --
------- ------- ------- ------- ------- ------ ----- ----- -----
3,532 (14,680) 4,916 3,532 (14,680) 4,917 -- -- (1)
------- ------- ------- ------- -------- ------ ----- ----- -----
Cash Flows-Financing Activities
Increase (Decrease) in
Notes Payable-
Centex Corporation
& Subsidiaries 430 (870) 870 430 (870) 870 -- -- --
Other (5,113) 15,852 (5,871) (5,113) 15,852 (5,871) -- -- --
------- ------- ------- ------- ------- ------ ----- ----- -----
(4,683) 14,982 (5,001) (4,683) 14,982 (5,001) -- -- --
------- ------- ------- ------- ------- ------ ----- ----- -----
Net (Decrease) Increase
In Cash (1,151) 302 (85) (1,151) 302 (84) -- -- (1)
Cash At Beginning
Of Year 1,252 950 1,035 1,252 950 1,034 -- -- 1
------- ------- ------- ------- ------ ------ ----- ----- -----
Cash At End Of Year $ 101 $ 1,252 $ 950 $ 101 $ 1,252 $ 950 $ -- $ -- $ --
======= ======= ======= ======= ======= ====== ===== ===== =====
</TABLE>
See notes to combining financial statements.
66
<PAGE> 67
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
COMBINING STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
<TABLE>
<CAPTION>
For the Years Ended March 31, 1994, 1993 and 1992
-------------------------------------------------
Centex Development 3333 Holding
Company, L.P. Corporation and Subsidiary
-------------------------------- ------------------------------------------------
Class B General Limited Capital In Retained
Unit Partner's Partner's Stock Common Excess Of Earnings
Combined Warrants Capital Capital Warrants Stock Par Value (Deficit)
-------- -------- ------- ------- -------- ----- --------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1991 $69,648 $500 $767 $68,708 $ 1 $ -- $800 $(361)
Net Loss (813) -- -- (706) -- -- -- (107)
------- ---- ---- ------- ---- ---- ---- -----
Balance at
March 31, 1992 68,835 500 767 68,002 1 -- 800 (468)
Net Loss (4,272) -- -- (4,176) -- -- -- (96)
------- ---- ----- ------- ---- ---- ---- -----
Balance at
March 31, 1993 64,563 500 767 63,826 1 -- 800 (564)
Net Loss (1,624) -- -- (1,510) -- -- -- (114)
------- ---- ----- ------- ---- ---- ---- -----
Balance at
March 31, 1994 $62,939 $500 $767 $62,316 $ 1 $ -- $800 $(678)
======= ==== ==== ======= ==== ==== ==== =====
</TABLE>
See notes to combining financial statements.
NOTES TO COMBINING FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(A) ORGANIZATION
Centex Development Company, L.P. (the Partnership) was formed on March 31, 1987
to invest in, acquire, develop, operate and sell residential and commercial
real estate. Centex Real Estate Corporation (CREC), its limited partner, is
a subsidiary of Centex Corporation (Centex). 3333 Development Corporation (a
Nevada corporation) (Development), which serves as its general partner, is
owned by 3333 Holding Corporation (a Nevada corporation) (Holding). In
November 1987, Centex distributed all of the issued and outstanding shares of
the common stock of Holding and warrants to purchase approximately 80% of the
Class B units of limited partnership interest in the Partnership (see Note F).
These securities trade in tandem with the common stock of Centex and are being
held by a nominee on behalf of Centex stockholders until such time as the
securities are detached and trade separately. The securities may be detached
at any time by Centex's Board of Directors, but the warrants to purchase Class
B units automatically become detached in November 1997 unless extended by
Centex's stockholders.
Supplementary condensed combined financial statements of Centex Corporation and
subsidiaries, 3333 Holding Corporation and subsidiary and Centex Development
Company, L.P. are set forth below. For additional information on Centex
Corporation and subsidiaries, see their separate financial statements and
related footnotes.
67
<PAGE> 68
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
SUPPLEMENTARY CONDENSED COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
-------------------------------------------
1994 1993
-------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Assets
Cash and Cash Equivalents $ 76,388 $ 27,317
Marketable Securities 78,241 110,316
Receivables 930,428 821,852
Inventories 1,223,753 1,027,938
Investments in Joint Ventures and Unconsolidated Subsidiaries 56,928 50,277
Property and Equipment, net 188,930 177,610
Government-Guaranteed S&L Assets 43,767 82,823
Other Assets and Deferred Charges 38,574 36,246
---------- ----------
$2,637,009 $2,334,379
========== ==========
Liabilities And Stockholders' Equity
Accounts Payable and Accrued Liabilities $ 620,824 $ 529,381
S&L Deposits and FHLB Borrowings 211,055 204,140
Short-term Debt 837,734 696,832
Long-term Debt 222,832 223,988
Deferred Income Taxes 51,180 72,784
Negative Goodwill 24,102 28,102
Stockholders' Equity 669,282 579,152
---------- ----------
$2,637,009 $2,334,379
========== ==========
</TABLE>
SUPPLEMENTARY CONDENSED COMBINED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
For the Years Ended March 31,
---------------------------------------------------------------------------
1994 1993 1992
---------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Revenues $3,224,025 $2,501,691 $2,174,777
Costs and Expenses 3,089,126 2,410,028 2,129,032
---------- ---------- ----------
Earnings Before Income Taxes 134,899 91,663 45,745
Income Taxes 49,851 30,721 11,295
---------- ---------- ----------
Net Earnings $ 85,048 $ 60,942 $ 34,450
========== ========== ==========
</TABLE>
68
<PAGE> 69
(B) BASIS OF PRESENTATION
The accompanying combining financial statements present the individual and
combined financial statements of Holding and its subsidiary and the Partnership
as of March 31, 1994 and 1993 and results of operations for each of the three
years ended March 31, 1994. The financial statements of the Partnership are
included in the combined statements since Development, as general partner of
the Partnership, is able to exercise effective control over the Partnership.
(C) SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue from real estate sales is recognized as required payments are received
and title passes.
Inventory Capitalization and Cost Allocation
Land held for development and sale is stated at the lower of cost (including
development costs and, where appropriate, capitalized interest and real estate
taxes) or market. The capitalized costs are included in cost of land sales in
the combining statements of operations as related revenues are recognized.
Earnings (Loss) per Share/Unit
Earnings (loss) per share/unit are based on the weighted average number of
outstanding shares of common stock (1,000 for Holding) and Class A limited
partnership units (1,000 for the Partnership). These shares/units do not
include common stock/unit equivalents because they have no material effect on
earnings (loss) per share/unit.
Combining Statements of Operations and Cash Flows - Supplemental Disclosures
Interest capitalized by the Partnership during fiscal years ended March 31,
1994, 1993 and 1992 totaled $4,090,000, $4,039,000 and $4,288,000,
respectively, of which $3,945,000, $3,834,000 and $3,865,000, respectively,
relates to the Forster Ranch property. No income taxes were paid during the
years ended March 31, 1994, 1993 and 1992.
(D) NOTES RECEIVABLE
Development issued common stock to Holding and used the proceeds to advance
$7.7 million to CREC, as evidenced by a note receivable due April 30, 1996.
Interest at prime plus .875% is due in quarterly installments. Interest income
of $537,000, $547,000 and $679,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1994,
1993 and 1992, respectively.
Notes Receivable - Other at March 31, 1994 and 1993 have stated interest rates
ranging up to 10% and are due in monthly or quarterly installments. Discounts
and allowances totaled $313,000 at March 31, 1994 and $248,000 at March 31,
1993. The weighted average interest rate, inclusive of discounts, was 9% at
March 31, 1994 and 10% at March 31, 1993. Notes receivable at March 31, 1994
are collectible over eight years, with $154,000 being due within one year.
(E) NOTES PAYABLE
Centex had advanced Holding $7.6 million as of March 31, 1994 which is
evidenced by a note secured by the common stock of Development. The note,
which had a fluctuating balance during fiscal 1994 and 1993, bears interest at
prime plus 1% which is payable quarterly. The principal balance together with
all unpaid accrued interest is due on the earlier of April 1, 1996 or the date
on which the warrants to purchase Class B units of limited partnership interest
are detached from shares of the common stock of Centex. Interest expense of
$439,000, $404,000 and $447,000 related to this note is included in the
accompanying combining financial statements for the years ended March 31, 1994,
1993 and 1992, respectively.
Under the most restrictive covenants of the note agreement, Holding and its
subsidiary (excluding the Partnership) may not, without Centex's consent, (i)
create any additional liens on or sell real estate properties contributed by
the limited partner, (ii) effect a merger or consolidation, (iii) declare
dividends or make certain other shareholder payments or (iv) allow tangible net
worth, as defined, to be less than $7.7 million for Development.
69
<PAGE> 70
All Forster Ranch and other notes payable are non-recourse, secured solely by
the underlying real estate. As land is sold, a portion of the proceeds is
restricted for repayment of the notes. The prime rate in effect was 6 1/4% at
March 31, 1994 and 6% at March 31, 1993. The 30-day LIBOR rate at March 31,
1994 was 3 11/16% and 3 3/16% at March 31, 1993. The note balances and rates
in effect were as follows:
<TABLE>
<CAPTION>
March, 31
-----------------------
1994 1993
--------- -------
(Dollars in thousands)
<S> <C> <C>
Credit Line at LIBOR Plus 3/4% Maturing in fiscal year 1995
unsecured, guaranteed by CREC $ 2,115 $10,000
Note Payable at 6 1/2%, Paid in April 1994 2,050 3,700
Note Payable at 12%, Maturing in fiscal year 1995 785 785
Forster Ranch Non-recourse Notes -
Payable at Prime Plus 1%, Matured in April 1993 12,420 12,420
Payable at Prime Plus 2% (10 1/2% floor),
Maturing in fiscal year 2002 36,779 32,357
------- -------
$54,149 $59,262
======= =======
</TABLE>
The Partnership and the holder of the Forster Ranch non-recourse notes have
signed an agreement to transfer ownership of the property in satisfaction of
this debt, subject to revision of certain land use entitlements by April 1995.
In connection with this agreement, CREC has agreed to fund certain holding and
other costs CDC will incur through April 1995 in connection with its rezoning
efforts. CDC wrote down its investment in the Forster Ranch real estate by
approximately $3.7 million during fiscal year 1993 to an amount which equaled
the related non-recourse debt after receiving notice that the note, which
matured in April 1993, would not be renewed.
(F) STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
Preferred Return
The partnership agreement provides that the Class A limited partner is entitled
to a cumulative preferred return of 9% per annum on the average outstanding
balance of its Unrecovered Capital, which is defined as its initial capital
contribution adjusted for cash distributions representing return of the initial
capital contributions. Preference payments in arrears at March 31, 1994
amounted to $28,995,000.
Allocation of Profits and Losses
As provided in the partnership agreement, prior to Payout (as defined below),
net income of the Partnership is to be allocated to the partners in the
following order of priority:
(i) To the Class A limited partner to the extent of the cumulative
preferred return.
(ii) To the partners to the extent and in the same ratio that cumulative
net losses were allocated.
(iii) To the partners in accordance with their percentage interests, as
defined. Currently, this would be 20% to the Class A limited partner
and 80% to the general partner.
All loss allocations and allocations of net income after Payout, shall be made
to the partners in accordance with their percentage interests, as defined.
70
<PAGE> 71
Distributions
Distributions of cash or other property are to be made at the discretion of the
general partner and are to be distributed in the following order of priority:
(i) Prior to the time at which the Class A limited partner has
received aggregate distributions equal to its original capital
contribution (Payout), distributions of cash or other property
shall be made as follows:
(a) To the Class A limited partner with respect to its
preferred return, then
(b) To the partners in an amount equal to the maximum marginal
corporate tax rate times the amount of taxable income
allocated to the partners, then
(c) To the Class A limited partner until its Unrecovered
Capital is reduced to zero.
(ii) After Payout, distributions of cash shall be made to the partners
in accordance with their percentage interests, as defined.
Warrants
In November 1987, Centex acquired from the Partnership 100 warrants to purchase
100 Class B units in the Partnership at an exercise price of $500 per Class B
unit, and Centex acquired from Holding 100 warrants to purchase 100 shares of
Holding common stock at an exercise price of $800 per share. These warrants
are subject to future adjustment to provide the holders of options to purchase
Centex common stock with the opportunity to acquire Class B units and shares of
Holding. These warrants will generally become exercisable upon the detachment
of the tandem-traded securities from Centex common stock.
(G) RELATED PARTY TRANSACTIONS
Service and Management Agreements
Holding entered into a service agreement in May 1987 with Centex Service
Company (CSC), a wholly-owned subsidiary of Centex, whereby CSC will provide
certain tax, accounting and other similar services for Holding at a fee of
$2,500 per month. Service fees of $30,000 for each of fiscal years 1994, 1993
and 1992 are reflected as administrative expenses in the accompanying combining
financial statements.
The Partnership has entered into agreements with certain Centex Corporation
subsidiaries for them to provide management services to the Partnership in
connection with the development and operation of properties acquired by the
Partnership, maintenance of partnership property and accounting and clerical
services. Management fees of $785,000 were accrued under these agreements and
are reflected as administrative expenses in the accompanying combining
financial statements for the year ended March 31, 1994. These fees amounted to
$1,350,000 and $1,100,000 for the years ended March 31, 1993 and 1992.
Additionally, property management fees of $28,000 and $104,000 were capitalized
in fiscal years 1993 and 1992 respectively.
Sales and Purchases
Partnership revenues during fiscal years 1994, 1993, and 1992 include land
sales to CREC of $2,354,000, $8,648,000 and $13,520,000, respectively.
Additionally, CREC has contracts to purchase lots for the aggregate price of
approximately $9.9 million to be paid as lots are delivered.
Accounts Receivable and Accounts Payable
Included in Accounts Receivable-Affiliates and Accounts Payable-Affiliates in
the accompanying combining financial statements are $768,000 at March 31, 1994
and $1,763,000 at March 31, 1993, which the Partnership advanced to Holding.
Interest of $148,000 and $193,000 was accrued on advances during fiscal years
1994 and 1993 respectively.
(H) INCOME TAXES
At March 31, 1994, Holding had operating loss carryforwards for income tax
reporting purposes of $650,000. If unused, the loss carryforwards will expire
in the fiscal years 2003 through 2010. Holding joins with its subsidiary in
filing consolidated income tax returns. The taxable income of the Partnership
has been allocated to the holder of the Class A units. Accordingly, no tax
provision for Partnership earnings is shown in the combining financial
statements.
71
<PAGE> 72
3333 Holding Corporation and Subsidiary and Centex Development Company, L.P.
QUARTERLY RESULTS (Unaudited)
<TABLE>
<CAPTION>
March 31,
------------------------------------------------------------------------------
1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ----
3333 Holding
Centex Development Corporation
Combined Company, L.P. and Subsidiary
-------- ------------- --------------
(Dollars in thousands, except per share/unit data)
<S> <C> <C> <C> <C> <C> <C>
First Quarter
Revenues $ 1,928 $ 8,734 $ 1,832 $ 8,637 $134 $144
Earnings (Loss) Before Taxes $ (264) $ 397 $ (235) $ 424 $(29) $(27)
Net Earnings (Loss) $ (264) $ 397 $ (235) $ 424 $(29) $(27)
Earnings (Loss) Per Share/Unit $ (235) $ 424 $(29) $(27)
Second Quarter
Revenues $10,136 $ 253 $10,039 $ 166 $134 $135
Loss Before Taxes $ (664) $ (321) $ (636) $ (293) $(28) $(28)
Net Loss $ (664) $ (321) $ (636) $ (293) $(28) $(28)
Loss Per Share/Unit $ (636) $ (293) $(28) $(28)
Third Quarter
Revenues $ 374 $ 947 $ 275 $ 843 $136 $155
Loss Before Taxes $ (424) $ (321) $ (395) $ (313) $(29) $ (8)
Net Loss $ (424) $ (321) $ (395) $ (313) $(29) $ (8)
Loss Per Share/Unit $ (395) $ (313) $(29) $ (8)
Fourth Quarter
Revenues $ 811 $ 222 $ 713 $ 137 $133 $132
Loss Before Taxes $ (272) $(4,027) $ (244) $(3,994) $(28) $(33)
Net Loss $ (272) $(4,027) $ (244) $(3,994) $(28) $(33)
Loss Per Share/Unit $ (244) $(3,994) $(28) $(33)
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
- --------------------------------------------------------------------------------
On a combined basis, 3333 Holding Corporation (Holding) and subsidiary
(Development) and Centex Development Company, L.P. (the Partnership) operations
for the year ended March 31, 1994 reflected a loss of $1,624,000 on revenue of
$13,249,000. The loss was $4,272,000 and revenue was $10,156,000 for the
fiscal year ended March 31, 1993. The fiscal 1993 loss included the
Partnership' expensing of its equity in the Forster Ranch project. According
to an agreement with the lender, the Partnership expects to transfer ownership
of the property to the lender in satisfaction of the related non-recourse debt
upon receipt of certain development approvals.
The Partnership completed construction of its shopping center in Sonora,
California during the year, and sold all of this property except a restaurant
site which was sold in June 1994. Two of the original partnership properties,
a 15 acre industrial site in Houston, Texas, and 168 acres of ranch land in
Comal County, Texas, were also sold during the year.
The Partnership sold 131 residential lots to Centex Real Estate Corporation
(CREC) at a subdivision in Orlando, Florida. Subsequent to year end, the
Partnership sold the remaining 209 lots in the subdivision to CREC. In East
Windsor, New Jersey, CDC delivered the first two lots of this development to
CREC and expects additional sales as development continues. CDC also sold 113
lots to CREC at its development in The Colony, Texas. The Partnership has an
additional development underway in the Dallas/Fort Worth metroplex where
closings are expected next fiscal year.
Holding, Development and the Partnership believe that they will be able to
provide or obtain the necessary funding for their current operations and future
expansion needs. The revenues, earnings and liquidity of these companies are
largely dependent on future land sales, the timing of which is uncertain. The
ability to obtain external debt or equity capital is subject to the provisions
of Holding's loan agreement with Centex and the partnership agreement governing
the Partnership.
72
<PAGE> 73
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
3333 HOLDING CORPORATION
------------------------
Registrant
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
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
registrant in the capacities and on the dates indicated.
June 28, 1994 /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
(principal executive officer)
June 28, 1994 /s/ ROGER D. SEFZIK
-------------------
Roger D. Sefzik,
Vice President and Treasurer
(principal financial and accounting officer)
Directors: J. Stephen Bilheimer, Josiah O. Low, III, David M. Sherer
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
Individually and as
Attorney-in-Fact*
______________
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith.
73
<PAGE> 74
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTEX DEVELOPMENT COMPANY, L.P.
--------------------------------
Registrant
By: 3333 Development Corporation,
-----------------------------
General Partner
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of 3333
Development Corporation, as general partner of, and on behalf of, the
registrant in the capacities and on the dates indicated.
June 28, 1994 /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
President
(principal executive officer)
June 28, 1994 /s/ ROGER D. SEFZIK
-------------------
Roger D. Sefzik,
Vice President and Treasurer
(principal financial and accounting officer)
Directors: J. Stephen Bilheimer, Josiah O. Low, III, David M. Sherer
June 28, 1994 By: /s/ J. STEPHEN BILHEIMER
------------------------
J. Stephen Bilheimer,
Individually and as
Attorney-in-Fact*
______________
*Pursuant to authority granted by powers of attorney, copies of which are
filed herewith.
74
<PAGE> 75
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------- ------- ------------------------- --------
<S> <C> <C>
2.1 The Acquisition Agreement, dated December Exhibit 2.1 to Annual Report on Form 10-K
29, 1988, between The Federal Savings and of Centex Corporation ("Centex") (File
Loan Insurance Corporation as Receiver for No. 1-6776) for fiscal year ended March
Burnet Savings and Loan Association and 31, 1993 ("Centex Form 10-K")
Texas Trust Savings Bank, FSB.
2.2 Capital Maintenance Agreement, dated Exhibit 2.2 to Centex Form 10-K
December 29, 1988, among CTX Holding
Company, Texas Trust Savings Bank, FSB and
The Federal Savings and Loan Insurance
Corporation.
2.3 Warrant Agreement, dated as of December 29, Exhibit 2.3 to Centex Form 10-K
1988, between Texas Trust Savings Bank, FSB
and The Federal Savings and Loan Insurance
Corporation.
2.4 Assistance Agreement, dated December 29, Exhibit 2.4 to Centex Form 10-K
1988, between the Federal Savings and Loan
Insurance Corporation, CTX Holding Company
and Texas Trust Savings Bank, FSB.
3.1 Restated Articles of Incorporation of Exhibit 3.1 to Centex Form 10-K
Centex.
3.2 By-laws of Centex. Exhibit 3.2 to Centex Form 10-K
4.1 Specimen Centex common stock certificate Exhibit 4.1 to Centex Form 10-K
(with tandem legend and Rights Agreement
legend).
4.2 Nominee Agreement, dated November 30, 1987, Exhibit 4.2 to Centex Form 10-K
by and between Centex, 3333 Holding
Corporation ("Holding") and Centex
Development Company, L.P. ("CDC"), and
Chemical Bank, as successor nominee.
4.3 Agreement for Purchase of Warrants, dated Exhibit 4.3 to Centex Form 10-K
as of November 30, 1987, by and between
Holding and Centex.
</TABLE>
75
<PAGE> 76
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C>
4.4 Common Loan Administration Agreement dated Exhibit 4.4 to Centex Form 10-K
as of July 31, 1984, between Centex and six
commercial banks.
4.5 Rights Agreement, dated as of September 17, Exhibit 1 to Form 8-A Registration
1986, between Centex and Chemical Bank, as Statement of Centex dated September 17,
successor rights agent. 1986
4.6 Amendment No. 1 to Rights Agreement, dated Exhibit 4.6 to Centex Form 10-K
as of May 18, 1988, between Centex and
Chemical Bank, as successor rights agent.
4.7 Indenture dated as of March 12, 1987 Exhibit 4.7 to Centex Form 10-K
between Centex and Texas Commerce Bank--
Dallas, N.A. with respect to Subordinated
Debt Securities of Centex.
4.8 Supplemental Indenture dated as of Exhibit 4.8 to Centex Form 10-K
March 12, 1987 between Centex and Texas
Commerce Bank-Dallas, N.A. with respect to
$100,000,000 8 3/4% Subordinated Debentures
Due March 1, 2007.
4.9 Supplemental Indenture dated as of June 16, Exhibit 4.9 to Centex Form 10-K
1988 between Centex and Texas Commerce
Bank-Dallas, N.A. with respect to up to
$100,000,000 Subordinated Medium-Term
Notes, Series A.
4.10 Instruments with respect to long-term debt N/A
which do not exceed 10% of the total assets
of Centex and its subsidiaries have not
been filed. Centex agrees to furnish a
copy of such instruments to the Commission
upon request.
</TABLE>
76
<PAGE> 77
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C>
4.11 Debenture Purchase Agreement, dated as of Exhibit 4.11 to Centex Form 10-K
June 17, 1987, between Centex and the State
Investment Council of New Mexico with
respect to $20,000,000 Aggregate Principal
Amount of 8.80% Subordinated Debenture of
Centex due June 30, 2007.
4.12 Indenture dated as of May 1, 1991 between Exhibit 4.12 to Centex Form 10-K
Centex and Chemical Bank with respect to
Senior Debt Securities.
4.13 Supplemental Indenture dated as of May 10, Exhibit 4.13 to Centex Form 10-K
1991 between Centex and Chemical Bank with
respect to $100,000,000 9.05% Senior Notes
due May 1, 1996.
4.14 Subordination Agreement dated as of May 1, Exhibit 4.14 to Centex Form 10-K
1991 by and among Centex Corporation and
all of its subsidiaries.
4.15 Supplemental Indenture dated as of June 17, Filed herewith.
1987 between Centex and Texas Commerce
Bank--Dallas, N.A. with respect to 8.80%
Subordinated Debentures due June 30, 2007.
4.16 Debenture No. 1 dated June 17, 1987 of Filed herewith.
Centex 8.80% Subordinated Debentures due
June 30, 2007.
10.1 Centex Corporation Stock Option Plan, as Exhibit 10.1 to Centex Form 10-K
amended.
10.2 Centex Corporation 1987 Stock Option Plan, Exhibit 28.1 to Joint Registration
as amended. Statement of Centex, Holding and CDC on
Form S-8 (No. 33-44575) dated December
13, 1991.
10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3 dated
by and between Holding and Centex and November 24, 1987 to Registration
related (i) Promissory Note dated May 1, Statement of Holding on Form 10 (File No.
1987, executed by Holding and payable to 1-9624) dated July 12, 1987.
the order of Centex in the principal amount
of $7,700,000 and (ii) Pledge and Security
Agreement dated as of May 1, 1987 executed
by Holding in favor of Centex.
10.4 Employment Agreement dated as of July 15, Exhibit 10.4 to Centex Form 10-K
1988 between Centex and Paul R. Seegers.
</TABLE>
77
<PAGE> 78
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C>
10.5 Amendment to Employment Agreement dated as Exhibit 10.5 to Centex Form 10-K.
of July 18, 1991 between Centex and Paul R.
Seegers.
10.6 Executive Employment Agreement dated as of Exhibit 10.6 to Centex Form 10-K
September 17, 1990 between Centex and
Laurence E. Hirsch.
10.7 Executive Employment Agreement dated as of Exhibit 10.7 to Centex Form 10-K
January 18, 1991 between Centex and David
W. Quinn.
10.8 Executive Employment Agreement dated as of Exhibit 10.8 to Centex Form 10-K
January 18, 1991 between Centex and William
J Gillilan III.
10.9 Centex Corporation $2,100,000 Subordinated Filed herewith.
Convertible Note issued to Laurence E.
Hirsch on August 26, 1985.
</TABLE>
78
<PAGE> 79
INDEX TO EXHIBITS
CENTEX CORPORATION
AND SUBSIDIARIES-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C>
21.A List of Subsidiaries of Centex. Filed herewith.
23.A Consent of Independent Public Accountants. Filed herewith.
24.A Powers of Attorney. Filed herewith.
</TABLE>
- ---------------
79
<PAGE> 80
INDEX TO EXHIBITS
3333 HOLDING CORPORATION
AND SUBSIDIARY
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C>
3.1 Articles of Incorporation of 3333 Holding Exhibit 3.2a to Amendment No. 1 dated
Corporation ("Holding"). October 14, 1987 ("Amendment No. 1") to
the Registration Statement of Holding on
Form 10 (File No. 1-9624) dated July 12,
1987 (the "Holding Registration
Statement").
3.2 By-laws of Holding, as amended. Exhibit 3.2 to Annual Report on Form 10-K
of Holding (File No. 1-9624) for fiscal
year ended March 31, 1993 (the "Holding
10-K")
4.1 Specimen Holding common stock Exhibit 4.1 to Amendment No. 1.
certificate.
4.2 Specimen Centex Corporation ("Centex") Exhibit 4.2 to Holding Form 10-K.
common stock certificate (with tandem
trading legend and Rights Agreement
legend).
4.3 Nominee Agreement, dated as of November 30, Exhibit 4.3 to Holding Form 10-K.
1987 by and between Centex, Holding and
Centex Development Company, L.P. ("CDC"),
and Chemical Bank, as successor nominee.
4.4 Agreement for Purchase of Warrants, dated Exhibit 4.4 to Holding Form 10-K.
as of November 30, 1987, by and between
Holding and Centex.
10.1 Services Agreement, dated as of May 5, Exhibit 10.1 to Amendment No. 3 dated
1987, by and between Holding and Centex November 24, 1987 ("Amendment No. 3") to
Service Company. the Holding Registration Statement.
10.2 Credit Agreement dated as of May 1, 1987, Exhibit 10.2 to Amendment No. 3.
by and between Holding and Centex and
related (i) Promissory Note dated May 1,
1987, executed by Holding and payable to
the order of Centex in the principal amount
of $7,700,000 and (ii) Pledge and Security
Agreement dated as of May 1, 1987 executed
by Holding in favor of Centex.
</TABLE>
80
<PAGE> 81
INDEX TO EXHIBITS
3333 HOLDING CORPORATION
AND SUBSIDIARY-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- -------
<S> <C> <C>
10.3 Credit Agreement dated as of May 1, 1987, Exhibit 10.3 to the Holding Registration
by and between 3333 Development Corporation Statement.
and Centex Real Estate Corporation and
related Promissory Note dated May 1, 1987,
executed by Centex Real Estate Corporation
payable to the order of 3333 Development
Corporation in the principal amount of
$7,700,000.
21.B Subsidiaries of Holding. Filed herewith.
23.B Consent of Independent Public Accountants. Filed herewith.
24.B Powers of Attorney. Filed herewith.
</TABLE>
- ---------------
81
<PAGE> 82
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- ----
<S> <C> <C>
2.1 Option Agreement, dated as of November 3, Filed herewith.
1988, by and between Centex Development
Company, L.P. ("CDC") and Estrella
Properties, Ltd.
2.2 Additional Interest Agreement, dated March Filed herewith.
30, 1989, by and between CDC and Westinghouse
Credit Corporation.
2.3 Construction Loan Agreement, dated March 30, Filed herewith.
1989, by and among Westinghouse Credit
Corporation and CDC.
2.4 Forster Ranch Development Agreement, dated Filed herewith.
March 31, 1989, by and between the City of
San Clemente, California and CDC.
3.1 Articles of Incorporation, as amended, of Exhibit 3.2a to Amendment No. 1 dated
3333 Development Corporation ("Development") October 14, 1987 ("CDC Amendment No. 1") to
as currently in effect. the Registration Statement of CDC on Form
10 (File No. 1-9625) dated July 12, 1987
(the "CDC Registration Statement").
3.2 By-laws of Development, as amended. Exhibit 3.2 to Annual Report on Form 10-K
of CDC (File No. 1-9625) for fiscal year
ended March 31, 1993 (the "CDC 10-K").
4.1 Certificates of Limited Partnership of CDC. Exhibit 4.1 to the CDC Registration
Statement.
4.2 Amended and Restated Agreement of Limited Exhibit 4.2 to Amendment No. 3 dated
Partnership of CDC. November 24, 1987 ("CDC Amendment No. 3")
to the CDC Registration Statement.
4.3 Specimen certificate for Class A limited Exhibit 4.3 to the CDC Registration
partnership units. Statement.
4.4 Specimen certificate for Class B limited Exhibit 4.4 to the CDC Registration
partnership units. Statement.
</TABLE>
82
<PAGE> 83
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- -------
<S> <C> <C>
4.5 Warrant Agreement, dated as of November 30, Exhibit 4.5 to CDC Form 10-K
1987, by and between CDC and Centex
Corporation ("Centex").
4.6 Specimen warrant certificate. Exhibit 4.6 to CDC Amendment No. 3.
4.7 Specimen Centex common stock certificate Exhibit 4.7 to CDC Form 10-K.
(with tandem trading legend and Rights
Agreement legend).
4.8 Nominee Agreement, dated as of November 30, Exhibit 4.8 to CDC Form 10-K.
1987, by and between Centex, 3333 Holding
Corporation ("Holding") and CDC, and Chemical
Bank, as successor nominee.
4.9 Agreement for Purchase of Warrants, dated as Exhibit 4.9 to CDC Form 10-K.
of November 30, 1987, by and between CDC and
Centex.
4.10 Form of Operating Partnership Agreement. Exhibit 4.9 to the CDC Registration
Statement.
10.1 Management Agreement by and between Centex Exhibit 10.1 to CDC Amendment No. 3.
Real Estate Corporation and CDC.
10.2 Supplement to Management Agreement by and Exhibit 10.1a to CDC Amendment No. 3.
between Centex Real Estate Corporation and
CDC.
10.3 Documents of Conveyance of Property from Exhibit 10.2 to CDC Amendment No. 1.
Centex Land Corporation to CDC.
10.4 Documents of Conveyance of Property from Exhibit 10.3 to the CDC Registration
Centex Homes Corporation to CDC. Statement.
10.5 Documennts of Conveyance of Property from Fox Exhibit 10.4 to the CDC Registration
& Jacobs, Inc. to CDC. Statement.
10.6 Documents of Conveyance of Property from Exhibit 10.5 to the CDC Registration
Great Lakes Development Co., Inc., to CDC. Statement.
10.7 Agreement dated as of April 1, 1987 by and Exhibit 10.6 to the CDC Registration
among CDC, Centex Real Estate Corporation, Statement.
Centex Homes Corporation and Centex Land
Company.
</TABLE>
83
<PAGE> 84
INDEX TO EXHIBITS
CENTEX DEVELOPMENT COMPANY, L.P.-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT FILED HEREWITH OR SEQ. NO.
NUMBER EXHIBIT INCORPORATED BY REFERENCE PAGE
------ ------- ------------------------- --------
<S> <C> <C>
10.8 Agreement dated as of April 1, 1987 by and Exhibit 10.7 to the CDC Registration
between CDC and Centex Homes of New Jersey, Statement.
Inc.
10.9 Agreement dated as of April 1, 1987 by and Exhibit 10.8 to CDC Amendment No. 1.
between CDC and David Little.
10.10 Trust Agreement dated March 31, 1987 by and Exhibit 10.9 to CDC Amendment No. 1.
between CDC and David Little.
23.C Consent of Independent Public Accountants. Filed herewith.
24.C Powers of Attorney. Filed herewith.
</TABLE>
- ---------------
84
<PAGE> 1
EXHIBIT 4.15
CENTEX CORPORATION
CENTEX CORPORATION
Issuer
and
TEXAS COMMERCE BANK-DALLAS, N.A.
Trustee
SUPPLEMENTAL INDENTURE
Dated as of June 17, 1987
to
INDENTURE
Dated as of March 12, 1987
$20,000,000
8.80% SUBORDINATED DEBENTURES DUE JUNE 30, 2007
<PAGE> 2
SUPPLEMENTAL INDENTURE, dated as of June 17, 1987, between CENTEX
CORPORATION, a Nevada corporation (together with its successors and assigns as
provided in the Indenture referred to below, the "Company"), and TEXAS COMMERCE
BANK-DALLAS, N.A., a national banking association (together with its successors
in trust thereunder as provided in the Indenture referred to below, the
"Trustee"), as trustee under an Indenture dated as of March 12, 1987 (the
"Indenture").
PRELIMINARY STATEMENT
Section 2.02 of the Indenture provides, among other things, that the
Company may, when authorized by its Board of Directors, and the Trustee may,
at any time and from time to time, enter into an indenture supplemental to the
Indenture for the purpose of authorizing a Series of Subordinated Debt
Securities and to specify certain terms of such Series of Subordinated Debt
Securities. The Board of Directors of the Company has duly authorized the
creation of a Series of Subordinated Debt Securities with an aggregate
principal amount of $20,000,000 to be known as the Company's 8.80% Subordinated
Debentures due June 30, 2007 (the "Debentures"), and the Company and the
Trustee are executing and delivering this Supplemental Indenture in order to
provide for the issuance of the Debentures. All terms used in this
Supplemental Indenture which are defined in the Indenture, either directly or
by reference therein, have the meanings assigned to them therein, except to the
extent such terms are defined in this Supplemental Indenture or the context
clearly requires otherwise.
SECTION 1. Designation.
The Debentures shall be designated as the Company's "8.80%
Subordinated Debentures due June 30, 2007."
SECTION 2. Date of Debentures.
The Debentures which are authenticated and delivered by the Trustee to
or upon the order of the Company on the Closing Date for the Debentures shall
be dated June 17, 1987. All other Debentures which are authenticated after the
Closing Date for the Debentures for any other purpose under the Indenture shall
be dated the date of their authentication. For the purposes of this Section 2
and Section 12 hereof, "Closing Date" shall mean the
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date on which the Debentures are first executed, authenticated and delivered.
SECTION 3. Aggregate Principal Amount.
The aggregate principal amount of Debentures that may be authenticated
and delivered under the Indenture and this Supplemental Indenture is limited to
$20,000,000, except for Debentures authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Debentures pursuant to Sections 2.06, 2.07, 2.08 or 11.04 of the Indenture.
SECTION 4. Interest Rate.
The Debentures shall bear interest at the rate of 8.80% per annum.
Interest shall be computed based on the actual number of days elapsed in a year
consisting of 365 days or 366 days, as the case may be.
SECTION 5. Interest Payment Dates.
The interest payment dates for the Debentures are June 30 and December
31 in each year, commencing December 31, 1987.
SECTION 6. Record Date.
The record date with respect to an interest payment date shall be the
close of business on the 15th day of the calendar month in which the related
interest payment is due, or in the case of defaulted interest, the close of
business on any special record date.
SECTION 7. Denominations of Debentures.
The Debentures are issuable in denominations of $100,000 and in
integral multiples of $1,000 above such amount.
SECTION 8. Currency of Issuance and Payments.
The Debentures shall be issued in the currency of United States of
America and shall be paid in such coin or currency.
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SECTION 9. Redemption of Debentures at the Option of the Company.
In accordance with the provisions of Article Four of the Indenture,
the Debentures will be redeemable at the option of the Company on or after June
30, 1997, in whole at any time or in part from time to time at 100% of the
principal amount thereof plus accrued interest to the date fixed for
redemption; provided however, that no such redemption may be made by the
Company directly or indirectly from or in anticipation of money borrowed having
an interest cost to the Company of less than 8.80% per annum.
SECTION 10. Sinking Fund.
Prior to maturity, the Debentures will not be subject to any sinking
fund payments by the Company.
SECTION 11. Additions to Article Four of the Indenture.
With respect to the Debentures, as permitted by clause (12) of Section
2.02 of the Indenture, Article Four of the Indenture shall be amended by adding
new Sections 4.13, 4.14 and 4.15 thereto to read in their entirety as follows:
"Section 4.13. To the extent specified in the related
Series Supplement, a Holder may request the redemption of
Subordinated Debt Securities of a Series upon such terms and
conditions as may be set forth in such Series Supplement.
Section 4.14. Any request for redemption pursuant
to Section 4.13 hereof may be withdrawn by the person making
the same upon the delivery of a written request for such
withdrawal received by the Trustee not later than the close of
business on the Business Day immediately preceding the
applicable redemption date with respect to which such request
occurs. If not so withdrawn, the redemption request will be
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irrevocable after such date. In the event a request for
redemption has been withdrawn as provided herein, the Trustee
shall return the certificate or certificates representing the
Subordinated Debt Securities of the Series in respect of
which the redemption request has been withdrawn.
Section 4.15. The Trustee shall maintain at its
Corporate Trust Office a register in which it shall record, in
order of receipt, all requests for redemptions received by the
Trustee under Section 4.13. If necessary under the
circumstances, the Trustee may establish such procedures as it
may deem fair and equitable in order to determine the order of
receipt of requests for redemption received by the Trustee
on a single day, and any such determination shall be
conclusive. In establishing procedures for determining the
order of receipt of requests for redemption, the Trustee may
designate from time to time any particular person, department
or office as a designated recipient of such requests and
provide that, after Holders have been notified in writing of
such designation, no request for redemption will be deemed
received until received by the person, department or office so
designated. Unless withdrawn as provided in Section 4.14
hereof, all such requests shall remain in effect until the
Subordinated Debt Securities of a Series which are the subject
of such request have been redeemed."
SECTION 12. Redemption of Debentures at Request of Debentureholders.
The Company, through its wholly-owned subsidiary, Centex American
Gypsum Company (the "Subsidiary"), will use the proceeds to it from the sale of
the Debentures to construct a gypsum wallboard manufacturing facility (the
"Facility") in the State of New Mexico. The State Investment Council, acting on
behalf of the Severance Tax Permanent Fund, of the State New Mexico (the
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"Purchaser") has agreed to purchase the Debentures pursuant to the authority
granted by the provisions of Section 7-27-5.4(B) NMSA 1978 (the "Bonding Act"),
which provides in part that the Company must establish or expand business
outlets or ventures, such as the Facility, in the State of New Mexico.
Pursuant to Section 4.13 of the Indenture, in the event that (i) the
Company or the Subsidiary fails to break ground for the Facility by June 30,
1988, (ii) the Company or the Subsidiary fails to initiate the first production
run of the Facility by June 30, 1990, (iii) the total expenditures by the
Company or the Subsidiary for the Facility are not in excess of $20,000,000 by
June 30, 1990 as shown by a certificate of the Company's independent public
accountants (in substantially the form attached hereto as Exhibit A) which
shall be provided to the Trustee within a reasonable period of time thereafter,
(iv) the Company or the Subsidiary ceases the operation of the Facility as a
production facility for gypsum wallboard for 12 consecutive months with the
intention to permanently cease production operations, dismantles the operating
capability of the Facility with the intention to permanently cease production
operations or otherwise declares an intention to permanently cease production
operations of the Facility, (v) the proceeds to the Company from the sale of
the Debentures to the Purchaser are not used for the construction of the
Facility as required by the Bonding Act and subparagraph F of Part II of the
State Investment Council Guidelines, Rule 85-1, adopted February 28, 1985, or
(vi) the Company or the Subsidiary fails to permit a duly authorized
representative of the Purchaser access to the Facility for purposes of
conducting a physical inspection thereof during normal business hours and
without undue interruption of production activities, after the Purchaser
provides not less than 10 Business Days' notice of its intention to make such
an inspection to the President or the Treasurer of the Company (which notice
must actually be received by such President or Treasurer), then any
Debentureholder shall have the right to request the redemption of its
Debentures, or any portion thereof which is an integral multiple of $1,000,
prior to maturity, unless the Debentures have been declared due and payable by
reason of an Event of Default under the Indenture, at 100% of the principal
amount thereof with respect to which redemption has been requested plus accrued
interest to the redemption date; provided however, that the right of a
Debentureholder to request redemption of its Debentures under clause (iii)
above shall extend only to such Debentureholder's pro rata portion of the
aggregate principal amount of all of the Debentures issued on the Closing Date
in excess of the total expenditures by the Company or the Subsidiary for the
Facility upon completion thereof; and
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provided further however, that if the Facility is damaged or destroyed by an
event beyond the control of the Company (such as a fire, tornado, flood or
similar event) which renders the Facility substantially inoperable for its
intended purpose, and the Company commences the repair or reconstruction of the
Facility as soon as practicable thereafter and completes such repairs or
reconstruction within three years of such event, a Debentureholder shall not be
entitled to request the redemption of its Debentures under clause (iv) above.
A Debentureholder may request redemption by delivering the following
to the Trustee at the Corporate Trust Office not less than 60 days prior to the
date specified for such redemption: (i) a written request for redemption in
form satisfactory to the Trustee (such as the form appearing on the Debenture
certificate) and signed by the Debentureholder or the Debentureholder's legal
representative (with appropriate evidence of authority), with such signature
guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the City of New York or the city of in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and (ii) the certificate or certificates representing the Debenture
or Debentures, or portions thereof, for which redemption is being requested.
Such written request for redemption shall specify the date on which such
redemption is to be effected (which shall be no earlier than the 60th day
following the date on which the Trustee receives such written request) and
shall certify that an event permitting redemption at the request of a
Debentureholder has occurred. The Trustee shall be entitled to rely on such
certification as to the occurrence of a redemption event without further
investigation. Upon receipt of a request for redemption satisfying all of the
conditions of this Section 12, the Trustee shall accept for redemption the
Debentures accompanying such request whereupon such Debentures shall become due
and payable on the applicable redemption date at 100% of the principal amount
thereof plus accrued interest to the date fixed for redemption, and on or after
such date fixed for redemption (unless the Company shall default in the payment
of such Debentures at such redemption price, together with interest accrued to
the date fixed for redemption) no interest shall thereafter accrue or be
payable in respect of the Debentures so redeemed. No payment in respect of the
redemption of such Debentures, or portions thereof, will be made until such
Debentures are surrendered to the Trustee. Requests for redemption may be
rejected by the Trustee if not made in accordance with this Section 12, in
which event the Trustee shall
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return such request and documentation to the persons submitting the same with
instructions as to the further documentation required and such rejected request
for redemption shall be deemed to have been withdrawn by the person making the
same as provided in Section 4.14 of the Indenture (without prejudice, however,
to the right of the Debentureholder to thereafter submit a request for
redemption for the same event).
The second paragraph of Section 4.03 of the Indenture shall apply to
redemptions effected pursuant to Section 4.13 of the Indenture in the same
manner and to the same extent that such paragraph applies to redemptions
effected pursuant to Section 4.01 of the Indenture.
A redemption or a request therefor pursuant to this Section 12 shall
not be deemed a declaration of acceleration of the maturity of the Debentures
for purposes of Section 3.02(e) of the Indenture.
SECTION 13. Amendments to Provisions of Article Three of the Indenture.
With respect to the Debentures, as permitted by clause (12) of Section
2.02 of the Indenture, the following provisions of Article Three of the
Indenture shall be amended as specified below:
(a) The proviso clause of Section 3.04 of the Indenture shall be
amended to read in its entirety as follows:
"provided, however, that, unless prior to the date on which
(i) any written request for redemption of Subordinated Debt
Securities of a Series at the request of a Debentureholder, to
the extent permitted by the related Series Supplement, is
received by the Trustee, or (ii) the notice of redemption of
any Subordinated Debt Securities of a Series is mailed
pursuant to Article Four hereof, the Trustee or any paying
agent shall have received such notice, the Trustee or any
paying agent shall have full power and authority to receive
any monies which may be paid to it for such purpose and to
apply the same to the redemption of such Subordinated Debt
Securities."
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(b) The second proviso clause of Section 3.06 of the Indenture
shall be amended to read in its entirety as follows:
"provided, further, that, unless prior to the date on which
(i) any written request for redemption of Subordinated Debt
Securities of a Series at the request of a Debentureholder, to
the extent permitted by the related Series Supplement, is
received by the Trustee, or (ii) the notice of redemption of
any Subordinated Debt Securities of a Series is mailed
pursuant to Article Four hereof, the Trustee or any paying
agent shall have received such notice, then, anything herein
contained to the contrary notwithstanding, the Trustee or any
paying agent shall have full power and authority to receive
any monies which may be paid to it for such purpose and to
apply the same to the redemption of such Subordinated Debt
Securities, and shall not be affected by any notice to the
contrary which may be received by it on or after such date."
SECTION 14. Form of Debentures.
The Debentures shall be in the form attached hereto as Exhibit B.
Pursuant to Section 2.01 of the Indenture, the Debentures need not be issued in
printed, lithographed or engraved form.
SECTION 15. Maturity.
The Debentures will mature and be payable in accordance with their
terms on June 30, 2007, if not previously redeemed in accordance with their
terms.
SECTION 16. Counterparts.
This Supplemental Indebenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
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SECTION 17. Governing Law.
This Supplemental Indenture and the Indenture and each Debenture
issued hereunder and thereunder shall be deemed to be a contract made under the
laws of the State of Texas, and for all purposes shall be construed in
accordance with the laws of said State.
SECTION 18. Acceptance of Trusts.
Texas Commerce Bank-Dallas, N.A., hereby accepts the trusts in this
Supplemental Indenture declared and provided, upon the terms and conditions
herein and in the Indenture set forth.
SECTION 19. Ratification of Indenture.
As supplemented by this Supplemental Indenture, the Indenture is in
all respects ratified and confirmed and the Indenture as so supplemented by
this Supplemental Indenture shall be read, taken and construed as one and the
same instrument.
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IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized and their respective seals duly attested to be
hereunto affixed all as of the day and year first above written.
CENTEX CORPORATION
(SEAL) "Company"
Attest: By /s/ HARRY J. LEONHARDT
Harry J. Leonhardt,
Executive Vice President
/s/ JOHN G. JONES
John G. Jones,
Vice President, General
Counsel and Secretary
TEXAS COMMERCE BANK-DALLAS, N.A.
(SEAL) "Trustee"
Attest: By /s/ BRAD A. CARSON
Brad A. Carson, Senior
Vice President and
Trust Officer
/s/ PATTY A. STREETY
Patty A. Streety, Vice
President and Trust Officer
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<PAGE> 12
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public in and for said
state, on this day personally appeared Harry J. Leonhardt and John G. Jones,
known to me to be the persons and officers whose names are subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said CENTEX CORPORATION, a Nevada corporation, and that they executed the same
as the act of said corporation for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 15th day of June, 1987.
/s/ ELIZABETH S. BOOHER
Notary Public in and for the
State of Texas
My commission expires: Elizabeth S. Booher
(Type or Print Name)
4/29/89
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public in and for said
state, on this day personally appeared Brad A. Carson and Patty A. Streety,
known to me to be the persons and officers whose names are subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said TEXAS COMMERCE BANK-DALLAS, N.A., a national banking association, and that
they executed the same as the act of said association for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 15th day of June, 1987.
/s/ ELIZABETH S. BOOHER
Notary Public in and for the
State of Texas
My commission expires: Elizabeth S. Booher
(Type or Print Name)
4/29/89
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<PAGE> 1
EXHIBIT 4.16
CENTEX CORPORATION
$20,000,000 No. 1
CUSIP No. 152312 AB 0
CENTEX CORPORATION
8.80% SUBORDINATED DEBENTURES DUE JUNE 30, 2007
CENTEX CORPORATION, a corporation duly organized and existing under the
laws of the State of Nevada (herein referred to as the "Company"), for value
received, hereby promises to pay to the State Investment Council, acting on
behalf of the Severance Tax Permanent Fund, of the State of New Mexico, or
registered assigns, the principal sum of TWENTY MILLION DOLLARS ($20,000,000),
on June 30, 2007, in such coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts, and to pay interest on said principal sum at the rate per annum
specified in the title of this Debenture, with respect to interest accrued
(based on the actual number of days elapsed in a year consisting of 365 or 366
days, as the case may be) from the date of delivery to the date of the current
interest payment, to the registered holder hereof as of the close of business
on the 15th day of the month in which the related interest payment is due, in
like coin or currency, all at any office or agency of the Company to be
maintained by the Company pursuant to Section 5.02 of the Indenture hereinafter
referred to, which at all times shall include an office or agency in the
Borough of Manhattan, the City of New York, such interest payments to be made,
except as otherwise provided in the Indenture hereinafter referred to,
semiannually on June 30 and December 31, in each year, commencing December 31,
1987, until payment of said principal sum has been made or duly provided for;
provided, however, that payment of interest may be made at the option of the
Company by check mailed on or before each such payment date to the address of
the person entitled thereto as such address shall appear on the Subordinated
Debt Security Register.
This Debenture shall be deemed to be a contract made under the laws of
the State of Texas, and for all purposes shall be construed in accordance with
the laws of said State.
Additional provisions of this Debenture are contained on the following
pages hereof and such provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Debenture shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee under the Indenture.
IN WITNESS WHEREOF, Centex Corporation has caused this instrument to
be signed in its corporate name by the facsimile signature of its President or
a
<PAGE> 2
Vice President and by its Secretary or an Assistant Secretary by his signature
or a facsimile thereof, and a facsimile of its corporate seal to be affixed
hereunto or imprinted hereon.
Dated: June 17, 1987
CENTEX CORPORATION
(SEAL)
By /s/ JEFFREY N. SECHAL
Vice President and Treasurer
Attest:
/s/ JOHN JONES
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned
Indenture.
TEXAS COMMERCE BANK-DALLAS, N.A.,
as Trustee
By: /s/ BRAD CARSON
Authorized Signature
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<PAGE> 3
CENTEX CORPORATION
8.80% SUBORDINATED DEBENTURES DUE JUNE 30, 2007
This Debenture is one of a duly authorized issue of Subordinated Debt
Securities of the Company issued and to be issued in one or more Series, and
this Debenture is one of the Series of Subordinated Debt Securities designated
as its 8.80% Subordinated Debentures due June 30, 2007 (herein referred to as
the "Debentures"), limited to the aggregate principal amount of Twenty Million
Dollars ($20,000,000), all issued or to be issued under and pursuant to an
indenture dated as of March 12, 1987 (herein referred to as the "Indenture"),
duly executed and delivered by the Company to Texas Commerce Bank-Dallas, N.A.,
as trustee (herein referred to as the "Trustee"), to which Indenture and all
indentures supplemental thereto (including the Supplemental Indenture dated as
of June 17, 1987, which authorizes the Debentures) reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Subordinated Debt Securities of each particular Series and the terms upon which
the Subordinated Debt Securities of each Series are, and are to be,
authenticated and delivered. All terms used in this Debenture which are defined
in the Indenture shall have the meanings assigned to them in the Indenture. As
provided in the Indenture, the Subordinated Debt Securities are issuable in
Series which may vary as in the Indenture provided or permitted.
The indebtedness evidenced by the Debentures is, to the extent and in
the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company.
As provided in the Indenture, each holder of this Debenture, by his acceptance
hereof, agrees to and shall be bound by all the provisions of the Indenture
relating to such subordination and authorizes the Trustee to take such action
in his behalf as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and appoints the Trustee his
attorney-in-fact for any and all such purposes.
In case an Event of Default shall have occurred and be continuing with
respect to the Debentures, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture. The Indenture provides
that in certain events such declaration and its consequences may be waived by
the holders of a majority in aggregate principal amount of the Debentures then
outstanding. An Event of Default with respect to the Subordinated Debt
Securities of any other Series issued under the Indenture, including the
failure to make any payment of principal or interest with respect thereto when
and as due, will not be an Event of Default with respect to the Debentures.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures at the time outstanding, evidenced
as in the Indenture provided, to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
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of the Indenture or of any supplemental indenture or modifying in any manner
the rights of the holders of the Debentures, provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Debentures,
or reduce the principal amount thereof, or reduce the rate or extend the time
of payment of interest thereon, without the consent of the holder of each
Debenture so affected, or (ii) reduce the aforesaid percentage of the
Debentures, the consent of the holders of which is required for any such
supplemental indenture, without the consent of the holders of all Debentures
then outstanding. It is also provided in the Indenture that the holders of a
majority in aggregate principal amount of the Debentures at the time
outstanding may on behalf of the holders of all the Debentures waive any past
default under the Indenture and its consequences, except a default in the
payment of the principal of or premium, if any, or interest on any of the
Debentures. Any such consent or waiver by the holder of this Debenture (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
holder and upon all future holders and owners of this Debenture and of any
Debenture issued in exchange or substitution herefor, whether or not any
notation of such consent or waiver is made upon this Debenture.
Subject to the rights of holders of Senior Indebtedness of the Company
set forth in the Indenture, no reference herein to the Indenture and no
provision of this Debenture or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and premium, if any, and interest on this Debenture at the place,
at the respective times, at the rate and in the currency herein prescribed.
As provided in the Indenture, the Debentures will be redeemable at the
option of the Company on or after June 30, 1997, in whole at any time or in
part from time to time at 100% of the principal amount thereof plus accrued
interest to the date fixed for redemption: provided, however, that no such
redemption may be made by the Company directly or indirectly from or in
anticipation of money borrowed having an interest cost to the Company of less
than 8.80% par annum. In addition, as provided in the Indenture, unless the
Debentures have been declared due and payable by reason of an Event of
Default, a Holder may request redemption of the Debentures, or any portion
thereof which is an integral multiple of $2,000, held thereby upon the terms
and subject to the conditions set forth in the Indenture by delivering the
following to the Trustee not less than 60 days prior to the date specified for
such redemption: (i) a written request for redemption in form satisfactory to
the Trustee (such as the form appearing on this certificate) and signed by the
Holder or the Holder's legal representative (with appropriate evidence of
authority), with such signature guaranteed by a commercial bank or trust
company located, or having a correspondent located, in the City of New York or
the city in which the Corporate Trust Office is located, or by a member firm of
a national securities exchange, and (ii) the certificate or certificates
representing the Debenture or Debentures, or portions thereof, for which
redemption is being requested. Such written request for redemption shall
specify the date on which such redemption is to be effected (which shall be no
earlier than the 60th day following the date on which the Trustee receives such
written request) and shall certify that an event permitting redemption at the
request of a Holder has occurred. The Trustee shall be entitled to rely on such
certification as to the occurrence of a redemption event without
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<PAGE> 5
further investigation. Upon receipt of a request for redemption satisfying all
of the conditions of the Indenture, the Trustee shall accept for redemption the
Debentures accompanying such request whereupon such Debentures shall become due
and Payable on the applicable redemption date at 100% of the principal amount
thereof plus accrued interest to the date fixed for redemption, and on and
after such date fixed for redemption (unless the Company shall default in the
payment of such Debentures at such redemption price, together with interest
accrued to the date razed for redemption) no interest shall thereafter accrue
or be payable in respect of the Debentures so redeemed. No payment in respect
of the redemption of a Debenture, or portion thereof, will be made until such
Debenture is surrendered to the Trustee. Requests for redemption may be
rejected by the Trustee if not made in accordance with the Indenture, in which
event the Trustee shall return such request and documentation to the persons
submitting the same with instructions as to the further documentation required
and such rejected request for redemption shall be deemed to have been withdrawn
by the person making the same as provided in the Indenture (without prejudice,
however, to the right of a Holder to thereafter submit a request for redemption
for the same event). The Debentures shall not be subject to any sinking fund
payments by the Company.
Upon due presentment for registration of transfer of this Debenture at
any designated office or agency of the Company to be maintained by the Company
pursuant to Section 5.02 of the Indenture, which at all times shall include an
office or agency in the Borough of Manhattan, the City of New York, a new
Debenture or Debentures of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange herefor, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith, and the
Debentures may in like manner be exchanged for one or more new Debentures of
other authorized denominations but of the same aggregate principal amount.
The Company, the Trustee, any paying agent and any Subordinated Debt
Security registrar for the Debentures may deem and treat the registered holder
hereof as the absolute owner of this Debenture (whether or not this Debenture
shall be overdue and notwithstanding any notation of ownership or other writing
hereon made by anyone other than the Company or any such Subordinated Debt
Security Registrar), for the purpose of receiving payment hereof or on account
hereof and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any such Subordinated Debt Security Registrar shall be
affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of, or
premium, if any, or interest on, this Debenture, or for any claim based hereon
or otherwise in respect hereof, or based on or in respect of the Indenture or
any indenture supplemental thereto, against any incorporator, stockholder,
officer or director, as such, past, present or future, of the Company or of
any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise,
all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
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<PAGE> 6
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, ________________________________________________
hereby sells, assigns and transfers unto ____________________________________
the within Debenture of Centex Corporation standing in the name(s) of the
undersigned in the Subordinated Debt Security Register of the Company with
respect to such Debenture and does hereby irrevocably constitute and appoint
_______________________________ Attorney to transfer such Debenture in such
Subordinated Debt Security Register, with full power of substitution in the
premises.
Please insert social security or other
identifying number of assignee:
Dated:________________________________ ______________________________________
______________________________________
(Signature)
______________________________________
(Signature)
Signature Guarantee: Notice: The signature(s) to this
assignment must correspond with
the name(s) as written upon the
______________________________________ face of this Debenture in every
Authorized Officer particular without alteration
or any change whatsoever. The
______________________________________ signature(s) must be guaranteed
Name of Institution by a commercial bank or trust
company located, or having a
correspondent located, in the
City of New York or the city
in which the Corporate Trust
Office is located, or by a
member firm of a national
securities exchange.
Notarized or witnessed
signatures are not acceptable
as guaranteed signatures.
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<PAGE> 7
REQUEST FOR REDEMPTION
TO: Texas Commerce Bank-Dallas, N.A.
Corporate Trust Department
600 North Pearl, Suite 344
Dallas, Texas 75201
The undersigned Holder, or legal representative of the Holder,
hereby Presents the within Debenture of Centex Corporation for
redemption in the principal amount indicated below on the
redemption date set forth below for redemption in accordance
with, and subject to, the terms and conditions of the within
Debenture and the Indenture. By executing this Request for
Redemption in the space provided below, the undersigned Holder,
or legal representative of the Holder, hereby represents and
certifies that an event permitting redemption at the request of a
Holder under the Indenture has occurred.
Redemption Request (complete one):
/_/ Full principal amount of Debenture
/_/ Principal amount of $_________________
(must be an integral multiple of $1,000)
Redemption Date:_______________________________
(Holder must specify)
Dated:______________________________ ___________________________________
(Signature)
___________________________________
(Signature)
Signature Guarantee: Notice: The signature(s) to
this request must correspond with
the name(s) as written upon
_________________________ the face of this Debenture
Authorized Officer in every particular without
alteration or any change
_________________________ whatsoever. The signatures
Name of Institution must be guaranteed by a
commercial bank or trust
company located, or having a
correspondent located, in the
City of New York or the city
in which the Corporate Trust
Office is located or by a member
firm of a national securities
exchange. Notarized or
witnessed signatures are not
acceptable as guaranteed
signatures.
-7-
<PAGE> 1
EXHIBIT 10.9
CENTEX CORPORATION
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS ("STATE LAWS") AND
MAY NOT BE TRANSFERRED UNLESS THE COMPANY IS FIRST FURNISHED AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH TRANSFER WILL NOT VIOLATE THE
SECURITIES ACT OR ANY STATE LAWS. TRANSFER OF THIS NOTE IS ALSO RESTRICTED AS
HEREINAFTER PROVIDED.
CENTEX CORPORATION
CONVERTIBLE SUBORDINATED NOTE
$2,100,000 Dallas, Texas August 26, 1985
FOR VALUE RECEIVED, Centex Corporation, a Nevada corporation (herein,
together with any successor to all or substantially all its assets, by merger
or otherwise, called the "Company"), promises to pay to Laurence E. Hirsch (the
"Holder"), at the Company's principal executive office in Dallas, Dallas
County, Texas, or such other place as the Company may specify to the Holder in
writing, the principal sum of Two Million One Hundred Thousand dollars
($2,100,000), in lawful money of the United States of America, and to pay
interest from the date hereof on the unpaid principal balance hereof at a
fluctuating rate per annum which shall change from time to time so that it will
always be equal to the Prime Rate or the Highest Lawful Rate, whichever is the
lesser. As used herein, the term "Prime Rate" shall mean the rate of interest
announced or published by RepublicBank Dallas, N.A. as its prime rate from time
to time. The "Highest Lawful Rate" shall be the maximum rate of interest that
the Company may pay on this Note from time to time under applicable laws. If
and to the extent the Highest Lawful Rate is determined pursuant to the laws of
the State of Texas, the Indicated Rate Ceiling provided by Article 5069-1.04 of
the Texas Revised Civil Statutes Annotated, as amended, shall be the ceiling
applicable to this Note.
1. Payment Terms.
The principal of this Note shall be payable in full on March 1, 1995.
Accrued interest on this Note shall be payable quarterly on October 1, January
1, April 1, and July 1 in each year, beginning with October 1, 1985, and at
maturity. The Company promises to pay interest, payable on demand, on overdue
principal and, to the extent permitted by law, on overdue interest, from their
due dates at the Highest Lawful Rate.
2. Subordination.
Upon any liquidation of the Company or distribution of assets to
creditors of the Company in bankruptcy, receivership, or otherwise, no payment
of principal or interest shall be demanded, made, or received on this Note, nor
shall any portion of this Note be directly or indirectly repurchased by the
Company (except through conversion of this Note into Common Stock, to the
extent permitted by Section 3 below), until all Senior Indebtedness has been
paid in full. Any cash, securities, or property received by the Holder in
<PAGE> 2
violation of the immediately preceding sentence shall be held in trust for the
benefit of the holders of Senior Indebtedness and promptly paid over to them,
pro rata as their respective interests may appear, upon demand. The Holder
shall be subrogated to the rights of any holder of Senior Indebtedness to the
extent the Holder or the Company pays funds over to any holder of Senior
Indebtedness pursuant to these subordination provisions, but such right of
subrogation may not be enforced until all Senior Indebtedness has been paid in
full. "Senior Indebtedness" means obligations of the Company, whether
outstanding on the date hereof or created hereafter, for (a) money borrowed by
the Company, (b) money borrowed by others and guaranteed by the Company, (c)
indebtedness incurred, assumed or guaranteed by the Company in connection with
the payment of all or any portion of the purchase price of any business, real
property or other assets (except indebtedness incurred for materials acquired
or services rendered in the ordinary course of business of the Company)
purchased by the Company or any of its subsidiaries, (d) indebtedness arising
in favor of any bonding company under any performance or payment bond or other
similar bond issued by such bonding company in connection with any construction
contract to which the Company or any of its subsidiaries is or was a party, (e)
renewals, extensions and refundings of any indebtedness described in clauses
(a)-(d), inclusive, and (f) interest due and premium and collection costs owed
by the Company with respect to any indebtedness described in clauses (a)-(e),
inclusive, including interest which accrues subsequent to any bankruptcy or
similar proceeding involving the Company; provided that Senior Indebtedness
shall not include (i) any indebtedness which is expressly stated in any
instrument binding on the holder of such indebtedness not to be Senior
Indebtedness, (ii) this Note or (iii) any indebtedness as to which neither the
Company nor any subsidiary has any personal liability. Upon request of the
Company, the Holder will expressly confirm to any holder or proposed holder of
indebtedness conforming to the preceding definition that such indebtedness is
"Senior Indebtedness" within the meaning of the preceding sentence.
3. Conversion.
The Holder may, at his option (but subject to the provisions of this Note
relating to compliance with the Securities Act and State Laws), convert the
unpaid Vested Principal (as hereinafter defined) of this Note into Common Stock
(as hereinafter defined) of the Company, at the rate of one share of Common
Stock for each twenty-one dollars ($21.00) of Vested Principal so converted, at
any time and from time to time in accordance with the third paragraph of this
Section 3, by surrendering this Note, together with written directions as to
the amount of Vested Principal to be converted, to the Company at its principal
executive office. Upon such surrender, the Company shall promptly issue and
deliver to the Holder one or more certificates (as the Holder may specify)
evidencing the shares into which the Vested Principal has been converted, and
shall return this Note to the Holder with a notation thereon showing the amount
of Vested Principal that has been converted and the date of such conversion.
Any such conversion shall be deemed effective, and the shares issuable in
respect thereof shall be deemed issued, on the first Business Day (defined as
any day on which banks are authorized to be open for business under Texas law)
following the day this Note is duly surrendered for conversion, as described
above, regardless of when the Company actually issues
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<PAGE> 3
and delivers the shares to the Holder. No adjustment shall be made in respect
of any dividends (except common stock dividends, as hereinafter provided) or
distributions paid prior to the effective conversion date or payable, after the
effective conversion date, to holders of record as of a date prior to the
effective conversion date.
No fractional shares shall be issuable on conversion of this Note, and if
the Holder designates an amount of Vested Principal which would result in
issuance of a fractional share, the amount of Vested Principal to be converted
shall be reduced to eliminate the issuance of such fractional shares.
The principal of this Note shall become "Vested Principal" as follows:
(a) On March 1, 1986 and on March 1 in each of the following four
years (1987 through 1990), an amount of principal equal to 20% of the
original principal amount of this Note shall become Vested Principal.
(b) If the Holder should cease to be an employee of at least one of
the employers in the group of employers consisting of the Company and its
Affiliates (defined as any parent or subsidiary of the Company, within the
meaning of subsections 425(e) and (f) of the Internal Revenue Code of
1954, as amended), as a result of (i) his death, (ii) his Disability
(defined as mental or physical impairment which, in the opinion of the
Company's board of directors, (A) renders the Holder incapable of
performing his obligations and agreements under the Executive Employment
Agreement between the Company and the Holder dated as of February 20,
1985, and (B) lasts for a period of twelve or more months), or (iii) his
discharge by the Company's or an Affiliate's board of directors for any
reason other than Cause (defined as acts constituting theft, dishonesty,
fraud, embezzlement, or breach of any employment agreement between the
Holder and the Company or an Affiliate, as determined in good faith by the
Company's board of directors), or if the shareholders of the Company
approve a plan of complete liquidation and dissolution of the Company
(other than a plan adopted in connection with a Reorganization, as defined
below), the entire unpaid principal of this Note shall become Vested
Principal.
Notwithstanding the foregoing, if the Holder is discharged as an employee
by the Company's or an Affiliate's board of directors for Cause, then any part
of the principal of this Note which is Vested Principal shall, upon such
discharge, cease to be Vested Principal.
For purposes of this Section 3, the term "Common Stock" shall mean the
common stock, $.25 par value, of Centex Corporation as constituted on the date
of this Note and any stock, securities, or other property (including cash),
whether of Centex Corporation or some other corporation or entity, into which
the outstanding shares of such common stock may hereafter be changed pursuant
to any merger, consolidation, recapitalization, or similar transaction
(collectively, a "Reorganization"). In furtherance of the preceding sentence,
(i) if the outstanding shares of Common Stock of the Company shall be
subdivided into a greater number of shares or combined into a lesser number of
shares (by stock split, reverse stock split, stock dividend, or otherwise),
-3-
<PAGE> 4
the number of shares of Common Stock issuable upon conversion of this Note
shall be appropriately adjusted to give effect to such subdivision or
combination, and (ii) if any Reorganization should occur, there shall be
delivered to the Holder, upon conversion of any portion of the Vested Principal
of this Note subsequent to such Reorganization, the stock, securities, or other
property (including cash) that the Holder would have received if he had
converted such Vested Principal into Common Stock prior to such Reorganization
and participated therein as a holder of such Common Stock. No Reorganization
shall be effected unless, under the express terms thereof, the resulting or
surviving entity assumes the obligations of the Company under this Note.
4. Prepayment.
The Company shall not be entitled to prepay all or any part of this
Note, except that this Note shall be prepaid, in full (but not in part):
(a) On the first anniversary of the date the Holder ceases to be
employed by at least one of the employers in the group of employers
consisting of the Company and its Affiliates for any reason other than (i)
the Holder's voluntary termination of employment with the Company or an
Affiliate or (ii) the Holder's discharge by the Company's or an
Affiliate's board of directors for Cause;
(b) within thirty (30) days after the Holder, as a result of his
voluntary termination of employment, is no longer employed by any of the
employers in the group of employers consisting of the Company and its
Affiliates or is discharged as an employee by the Company's or an
Affiliate's board of directors for Cause; and
(c) within thirty (30) days following the approval by the
shareholders of the Company of a plan of complete liquidation and
dissolution of the Company, other than such a plan adopted in connection
with a Reorganization.
5. Default.
If any one or more of the following events (herein called "Events of
Default") shall occur and be continuing:
(a) Default shall be made in the payment of any principal of or
interest on this Note when due and shall continue for more than 10 days
after written notice from the Holder to the Company; or
(b) The Company shall (i) apply for or consent to the appointment of
a receiver, trustee, or liquidator of the Company or all or substantially
all the assets of the Company, (ii) make a general assignment for the
benefit of creditors, (iii) be adjudicated bankrupt or insolvent or (iv)
file a voluntary petition in bankruptcy, or a petition or answer seeking
reorganization or an arrangement with creditors to take advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, moratorium,
dissolution, liquidation, or debtor relief law, or any chapter of any such
law, or an answer
-4-
<PAGE> 5
admitting the material allegations of a petition filed against it in
any proceeding under any such law or chapter; or an order, judgement, or
decree shall be entered, without the application, approval, or consent of
the Company by any court of competent jurisdiction, approving a petition
seeking liquidation or reorganization of the Company or of all or
substantially all of the assets of the Company and such order, judgment,
or decree shall not have been dismissed within 120 days after it was so
entered;
then and in each and every such case the Holder may, subject to the
subordination provisions previously stated in this Note, by notice in writing
to the Company declare the unpaid principal of this Note, with accrued interest
thereon, to be forthwith due and payable and thereon such principal and
interest shall be due and payable without presentment, protest, or further
demand or notice of any kind, all of which are hereby expressly waived.
6. Transfer.
This Note may not be transferred, voluntarily or involuntarily, by the
Holder to any person or entity whatsoever without the written consent of the
Company and may not in any event be transferred, voluntarily or involuntarily,
by the Holder prior to March 1, 1986; provided, however, that such transfer
restriction shall not apply (i) to a transfer, by will or by the laws of
descent and distribution, to the executor or estate of the Holder upon his
death, (ii) to the pledge of, or grant of a security interest in, this Note by
the Holder to a bank (or other financial institution) approved by the Company
in writing as security for the indebtedness of the Holder to such bank or
institution in connection with the Holder's purchase of this Note, or (iii) to
the foreclosure of any such pledge or security interest so long as only such
bank or financial institution is the purchaser at such sale. In no event may
the conversion privileges of this Note be exercised by any person or entity to
whom this Note is transferred (including the Holder), voluntarily or
involuntarily, in violation of the preceding sentence, or by any transferee of
such person or entity (including the Holder), or by any purchaser (including
the bank or other financial institution that may be the pledgee of or holder of
a security interest in this Note) at a foreclosure sale (even if such
foreclosure is permitted under the preceding sentence).
Subject to the immediately preceding paragraph, this Note is transferable
only on the books of the Company by the Holder or the Holder's duly authorized
attorney-in-fact. The Company shall be entitled to treat the registered holder
of this Note as the true and lawful owner hereof for all purposes, including
payment, notwithstanding any actual knowledge of the Company to the contrary.
7. Miscellaneous.
Except as otherwise expressly specified in this Note, the Company and each
surety, guarantor, endorser, or other party liable for payment on this Note
hereby waive diligence, presentment, demand, protest, and notice of any kind
whatsoever, and agree that their liability on this Note shall not be affected
by any renewal or extension in the time of payment hereof, by any
-5-
<PAGE> 6
indulgences, or by any release or change in any security for payment of this
Note.
In no event shall the Company be obligated to issue any Common Stock on
conversion of this Note if, in the opinion of counsel for the Company, such
issuance would violate the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any State Laws. The Holder shall, as a
condition precedent to his right to convert Vested Principal to Common Stock,
make such written representations to, and agreements with, the Company
concerning the Holder's financial position, business and investment experience,
intentions as to resale or other disposition of the shares, and such other
matters as counsel for the Company may deem necessary in order to assure
compliance with the Securities Act, Exchange Act, and applicable State Laws.
The certificates evidencing the shares issued on conversion of this Note shall
bear such legends as counsel for the Company may deem necessary to ensure
compliance with the Securities Act, Exchange Act, and applicable State Laws.
In no event shall the existence of this Note be deemed to create any
right of continued employment of the Holder by the Company or any Affiliate.
The Company is entitled to offset against this Note (whether or not
this Note is then due), (i) any amounts due and owing by the Holder to the
Company or any Affiliate and (ii) any amounts which the Company may owe to
Republic Bank Dallas, N.A. (the "Bank") arising under the Company's guarantee
of the Holder's $2,100,000 promissory note to the Bank dated August 19, 1985
(and all renewals, extensions, modifications and amendments of and to such
promissory note). Any such offset shall be applied first to accrued and unpaid
interest, next to principal that is not Vested Principal, and then to Vested
Principal. Upon any such offset, the offset principal shall be deemed paid and
shall cease to bear interest.
If this Note is placed in the hands of an attorney for collection after
occurrence of an Event of Default, or if it is collected through legal or
bankruptcy proceedings, the Company agrees to pay all costs of collection,
including but not limited to court costs and reasonable attorneys' fees.
It is the intention of the Holder and the Company that this Note conform
in all respects to applicable law so that no payment of interest or other sum
construed to be interest shall exceed the Highest Lawful Rate. In determining
the rate of interest paid or payable under this Note, all funds paid or to be
paid as interest or construed to be interest shall be prorated, allocated, or
spread as permitted under applicable law. If, through any circumstances, the
provisions of this Note would result in the Company's paying or agreeing to
pay interest on this Note in excess of the Highest Lawful Rate, or if the
Company pays any sum as interest or any amount which is construed to be
interest in excess of such rate, then (1) the amount of interest contracted for
shall be automatically reduced to the amount permitted by the Highest Lawful
Rate and (2) the amount of excess interest paid shall be applied to the
reduction of the principal balance of this Note, if any, and if the principal
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<PAGE> 7
balance has been fully paid, the excess interest shall be refunded to the
Company.
This Note shall be governed by and construed in accordance with the laws
of the State of Texas.
CENTEX CORPORATION
By /s/ PAUL R. SEEGERS
Paul R. Seegers, Chairman of the
Board and Chief Executive Officer
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<PAGE> 1
EXHIBIT 21.A
CENTEX CORPORATION
The following is a list of the subsidiaries of the Company, wholly-owned
unless otherwise stated. This list of subsidiaries includes all of the
significant subsidiaries of the Company as of March 31, 1994.
FEDERALLY CHARTERED:
Texas Trust Savings Bank, FSB
NEVADA CORPORATIONS:
B C N Industries, Inc.
CDMC Holding, Inc.
C P Service Company
Centex Acceptance Corporation
Centex Bateson Enterprises, Inc.
Centex Cement Corporation
Centex Construction Products, Inc.
Centex Collateralized Mortgage Corporation
Centex Construction Group, Inc.
Centex Construction Group Texas, Inc.
Centex Credit Corporation
Centex Development Management Company
Centex Escrow Company
Centex Financial Corporation
Centex Financial Management Corporation
Centex Golden Construction Company
Centex International, Inc.
Centex Materials, Inc.
Centex New Jersey Realty, Inc.
Centex Real Estate Corporation
Centex Realty Company
Centex-Rodgers Construction Company
Centex Roofing Company
Centex-Rooney Enterprises, Inc.
Centex Service Company
Centex-Simpson Construction Company, Inc.
Centex Title Company
CTX Financial Corporation
CTX Holding Company
CTX Mortgage Company
CTX Mortgage Ventures Corporation
Forcum-Lannom Associates Inc.
4500 Finance Company
GHQ Company, Inc.
Great Lakes Development Co., Inc.
H Corp. .
Ilce, Inc.
MCC, Inc.
MCC II, Inc.
<PAGE> 2
NEVADA CORPORATIONS (continued):
M & W Drywall Supply Company
M&W General Construction Company (1)
Mogul Water Company (2)
Moore Design, Inc.
Mountain Cement Company
Nevada Cement Company
Russell Creek Coal Company
San Juan Land Company
Texas Cement Company
Texas-CTX Holding Company
Western Aggregates, Inc.
CALIFORNIA CORPORATIONS:
Mathews Readymix, Inc.
Western Cement Company of California
DELAWARE CORPORATIONS:
Brazos Point, Inc.
Centex Construction Products, Inc.
FLORIDA CORPORATIONS:
Centex-Great Southwest Corporation
Centex-Rooney Construction Co., Inc.
Metropolitan Title & Guaranty Company
GEORGIA CORPORATIONS:
Centex-Hamby Construction, Inc.
Centex Homes Marketing, Inc.
ILLINOIS CORPORATIONS:
111 E. Chestnut Corporation
LOUISIANA CORPORATIONS:
Centex Landis Construction Co., Inc.
NEW MEXICO CORPORATIONS:
Centex American Gypsum Company
NORTH CAROLINA CORPORATIONS:
Bradfield Farms Water Company
John Crosland Acceptance Corporation Three
Crosland Bond Company
John Crosland Company
Genbond Two, Inc.
<PAGE> 3
SOUTH CAROLINA CORPORATIONS:
Woodlake Village, Inc. (3)
TEXAS CORPORATIONS:
Apple Development and Realty, Inc.
Burnet Mortgage Corp.
Centex Bateson Construction Company, Inc.
Centex Homes, Inc.
Dundee Insurance Agency, Inc.
Forest Lane, Inc.
Fox & Jacobs, Inc.
Independent General Agency, Inc.
Peoples Mortgage Company
Ranchers Development Corporation
1629 Service Corporation
VERMONT CORPORATIONS:
Armor Insurance Company
VIRGIN ISLANDS CORPORATIONS:
Centex-Rooney Thermac, Inc. (4)
WISCONSIN CORPORATIONS:
Wisconsin Cement Company, Inc.
WYOMING CORPORATIONS:
Wyoming Construction Company
PARTNERSHIPS:
Bateson Dailey, a Joint Venture (5)
Bayfront Associates, Ltd. (6)
Blakeney Heath Venture Company (7)
Centex Auchter, a Joint Venture (5)
Centex-Draper 156 Partnership (8)
Centex-Draper 162 Partnership (8)
Centex Engle Joint Venture (12)
Centex-Great Southwest Corporation/Construct Two, a Joint Venture (9)
Centex-Great Southwest Corporation Polote (10)
Centex Homes Company, General Partnership
Centex-Rodgers Construction Company-Construction
Control Services Corporation, a Joint Ventue (5)
Centex-Rodgers-Sorenson Gross, J.V. (9)
Centex-Rooney Jones, J.V. (10)
Centex-Rooney/Landis Co., a Joint Venture (17)
Centex-Rooney National Development, J.V. (11)
Centex-Rooney/Russell, a Joint Venture (12)
<PAGE> 4
PARTNERSHIPS (continued):
Centex-Schaumberg Industrial Park (13)
Central Park Professional Center (12)
COINS #1 CCMC A FB (14)
COINS #4 CAC D B (14)
COINS #5 CAC E B (14)
COINS #8 CAC H B (14)
COINS #9 CAC I, J & K, FB (14)
COINS #15 CAC 0 FB (14)
COINS #21 CCC C FS (14)
Crosland Acceptance Associates V, a General Partnership
Hines Baseball Limited Partnership (15)
Illinois Cement Company, a Joint Venture (8)
Mortgage Acceptance Associates No. 2, a General Partnership
Mortgage Collateral Associates No. 1, a General Partnership
Mortgage Collateral Associates No. 3, a General Partnership
Mountain Cement Company, a Joint Venture
Palmdale 101 (12)
Queen Isabella Development, a Joint Venture (16)
Roselie Property (13)
Sycamore Creek (12)
Texas-Lehigh Cement Company, a Joint Venture (8)
All of the Company's subsidiaries are included in the Consolidated
Financial Statements of the Company included in this Form 10-K.
- -----------------------------------
(1) 49% owned subsidiary
(2) 51% owned subsidiary
(3) 60% owned subsidiary
(4) 80% owned subsidiary
(5) 65% owned joint venture
(6) 50% owned limited partnership
(7) 15% owned joint venture
(8) 50% owned joint venture
(9) 80% owned joint venture
(10) 55% owned joint venture
(11) 75% owned joint venture
(12) 50% owned general partnership
(13) 20% owned general partnership
(14) 1% owned general partnership
(15) 1% owned limited partnership
(16) 60% owned joint venture
(17) 70% owned joint venture
<PAGE> 1
EXHIBIT 23.A
CENTEX CORPORATION
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed registration statements on Form S-8 (numbers
33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831) of
our report dated May 11, 1994, included in Centex Corporation's Form 10-K for
the year ended March 31, 1994, and to all references to our firm included in
these registration statements.
ARTHUR ANDERSEN & CO.
Dallas, Texas,
June 29, 1994
<PAGE> 1
EXHIBIT 24.A
CENTEX CORPORATION
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Alan B. Coleman
Alan B. Coleman
Director
Centex Corporation
<PAGE> 2
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Dan W. Cook III
Dan W. Cook III
Director
Centex Corporation
<PAGE> 3
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Frank M. Crossen
Frank M. Crossen
Director
Centex Corporation
<PAGE> 4
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ William J Gillilan III
William J Gillilan III
Director
Centex Corporation
<PAGE> 5
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Clint W. Murchison, III
Clint W. Murchison, III
Director
Centex Corporation
<PAGE> 6
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, with full power of substitution
in the premises, as the undersigned's true and lawful agents and
attorneys-in-fact (the "Attorneys-in-Fact"), with full power and authority in
the name and on behalf of the undersigned, in his capacity as a Director of
Centex Corporation (the "Company"), to execute and file with the Securities and
Exchange Commission the Company's Annual Report on Form 10-K for the Company's
fiscal year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this
28th day of June, 1994.
/s/ Charles H. Pistor
Charles H. Pistor
Director
Centex Corporation
<PAGE> 7
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch, as
the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of Centex Corporation (the
"Company"), to execute and file with the Securities and Exchange Commission the
Company's Annual Report on Form 10-K for the Company's fiscal year ended March
31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this
28th day of June, 1994.
/s/ David W. Quinn
David W. Quinn
Director
Centex Corporation
<PAGE> 8
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, as the undersigned's true and
lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power
and authority in the name and on behalf of the undersigned, in his capacity as
a Director of Centex Corporation (the "Company"), to execute and file with the
Securities and Exchange Commission the Company's Annual Report on Form 10-K for
the Company's fiscal year ended March 31, 1994, together with any and all
amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorneys-in-Fact, may
not be revoked until the Attorneys-in-Fact have received five days' written
notice of such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Paul T. Stoffel
Paul T. Stoffel
Director
Centex Corporation
<PAGE> 9
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints Laurence E. Hirsch and
David W. Quinn, or either of such individuals, as the undersigned's true and
lawful agents and attorneys-in-fact (the "Attorneys-in-Fact"), with full power
and authority in the name and on behalf of the undersigned, in his capacity as
a Director of Centex Corporation (the "Company"), to execute and file with the
Securities and Exchange Commission the Company's Annual Report on Form 10-K for
the Company's fiscal year ended March 31, 1994, together with any and all
amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Paul R. Seegers
Paul R. Seegers
Director
Centex Corporation
<PAGE> 10
CENTEX CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints David W. Quinn as his
true and lawful agent and attorney-in-fact (the "Attorney-in-Fact"), with full
power and authority in the name and on behalf of the undersigned, in his
capacity as a Director of Centex Corporation (the "Company"), to execute and
file with the Securities and Exchange Commission the Company's Annual Report on
Form 10-K for the Company's fiscal year ended March 31, 1994, together with any
and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Laurence E. Hirsch
Laurence E. Hirsch
Director
Centex Corporation
<PAGE> 1
EXHIBIT 21.B
3333 HOLDING CORPORATION
The following list of subsidiaries of 3333 Holding Corporation,
wholly-owned unless otherwise stated, includes all of the significant
subsidiaries of 3333 Holding Corporation as of March 31, 1994:
NEVADA CORPORATIONS:
3333 Development Corporation
PARTNERSHIPS:
Centex Development Company, L.P.
All of the Company's subsidiaries are included in the Consolidated
Financial Statements of the Company incorporated by reference into this Form
10-K from the Centex 1994 Annual Report to Stockholders.
<PAGE> 1
EXHIBIT 23.B
3333 HOLDING CORPORATION
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed registration statements on Form S-8 (numbers
33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831) of
our report dated May 11, 1994, included in 3333 Holding Corporation and
Subsidiary and Centex Development Company, L.P. Form 10-K for the year ended
March 31, 1994, and to all referendes to our firm included in these
registration statements.
ARTHUR ANDERSEN & CO.
Dallas, Texas
June 29, 1994
<PAGE> 1
EXHIBIT 24.B
3333 HOLDING CORPORATION
3333 HOLDING CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer
as the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of 3333 Holding Corporation
(the "Company"), to execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the Company's fiscal
year ended March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Josiah O. Low, III
Josiah O. Low, III
Director
3333 Holding Corporation
<PAGE> 2
3333 HOLDING CORPORATION
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer
as the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of 3333 Holding Corporation (the
"Company"), to execute and file with the Securities and Exchange Commission
the Company's Annual Report on Form 10-K for the Company's fiscal year ended
March 31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ David M. Sherer
David M. Sherer
Director
3333 Holding Corporation
<PAGE> 1
EXHIBIT 2.1
CENTEX DEVELOPMENT COMPANY, L.P.
OPTION AGREEMENT
by and between
CENTEX DEVELOPMENT COMPANY, L.P.
and
ESTRELLA PROPERTIES, LTD.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Additional Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2. OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.01. Grant of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.02. Option Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.03. Monthly Option Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.04. Option Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.05. Exercise of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.01. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4. INVESTIGATION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . 16
4.01. As Is With All Faults Conveyance . . . . . . . . . . . . . . . . . . . . 16
4.02. Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . . . . . 17
4.03. Authorization by Estrella to CDC . . . . . . . . . . . . . . . . . . . . 17
4.04. Limitations on CDC Rights . . . . . . . . . . . . . . . . . . . . . . . . 18
4.05. Right to Work Product . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 5. ESTRELLA'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 20
5.01. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 6. CDC'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 21
6.01. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7. EFFECT OF REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION . . . . . . . . 21
7.01. Effect of Representations and Warranties . . . . . . . . . . . . . . . . 21
7.02. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 8. CDC'S REQUIREMENTS AND ESTRELLA'S COVENANTS . . . . . . . . . . . . . . . 22
8.01. CDC'S Pre-Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.02. Golf Course Easement . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.03. SDG&E Site Relocation . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.04. Green Belt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.05. Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.06. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.07. No Representation or Warranty . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 9. ASSIGNMENT OF DEVELOPMENT RIGHTS AND OBLIGATIONS. . . . . . . . . . . . . 26
9.01. Settlement/Development Agreement . . . . . . . . . . . . . . . . . . . . 26
9.02. Tentative Tract 12895 . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.03. Wastewater Treatment Capacity . . . . . . . . . . . . . . . . . . . . . . 27
9.04. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.05. Subdivision Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.06. Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.07. Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 10. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.01. Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.02. Recovery on Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.03. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.04. Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.05. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.06. Commissions; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.07. Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
10.08. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.09. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 34
10.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.11. Confidentiality and Publicity . . . . . . . . . . . . . . . . . . . . . 34
10.12. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.13. Limitation on CDC Damages and Indemnities . . . . . . . . . . . . . . . 36
10.14. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.15. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 37
10.16. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.17. Memorandum of Option . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.18. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . 38
10.19. Counterparts; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.20. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.21. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 11. SPECIAL REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.01. Reference Provision . . . . . . . . . . . . . . . . . . . . . . . . . . 39
LIST OF EXHIBITS
Exhibit A - Description of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit B - Grant Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Exhibit C - Nonforeign Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exhibit D - Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exhibit E - Estrella's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Exhibit F - Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Exhibit G - Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit H - Grant of Easement and Declaration of Covenants . . . . . . . . . . . . . . . . . 23
Exhibit I - Greenbelt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Exhibit J - Memorandum of Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Exhibit K - Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit L - Letter of Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Exhibit M - Outline of Proposed Development Agreement . . . . . . . . . . . . . . . . . . . 17
</TABLE>
iii
<PAGE> 5
OPTION AGREEMENT
THIS OPTION AGREEMENT is made as of November 3, 1988, between
CENTEX DEVELOPMENT COMPANY, L.P. (hereinafter called "CDC"), a Delaware limited
partnership whose sole general partner is 3333 Development Corporation, a
Nevada corporation, and ESTRELLA PROPERTIES, LTD. (hereinafter called
"Estrella"), a California limited partnership whose general partners are
Shannon Developers, Inc., a California corporation, and Leo Fitzsimmon, an
individual, and whose limited partners are Borg-Warner Equities Corporation, a
Delaware corporation and Sea-Aire Properties, Inc., a California corporation.
ARTICLE 1
DEFINED TERMS
1.01. Definitions. The following terms used in this Agreement, unless
the context otherwise requires, shall have the meanings set forth in this
Section 1.01:
"Acceptable Conditions of Title" shall mean those exceptions to the
title set forth in Section 3.01.4, subject to which CDC shall accept title to
the Property.
"Affordable Housing Site" shall mean that approximately 24.9-acre
portion of the Property consisting of Lot 26 of Tract 11781, and more
particularly described in Exhibit A attached hereto.
"Agreement" shall mean this Option Agreement.
"City" shall mean the City of San Clemente, a municipal corporation.
<PAGE> 6
"Closing" shall mean the recordation of the Deed in accordance with
the provisions of Article 3.
"Closing Date" shall mean the date which is designated for closing in
Section 3.01.3.
"Commercial Site" shall mean that approximately 7.3-acre portion of
the Property consisting of Lot 25 of Tract 11781, and more particularly
described in Exhibit A attached hereto.
"County" shall mean Orange County, California.
"Deed" shall mean a duly executed and acknowledged grant deed, in the
form attached hereto as Exhibit B, conveying the Property to CDC.
"Development Area" shall mean that real property identified as the
Development Area in the Settlement/Development Agreement.
"Development Entitlements" shall mean all approvals, grants, permits,
licenses, development allocations and subdivision maps related to development
of the Property, including any applications therefor.
"Effective Date" shall mean the date of the making of this Agreement
as set forth on page 1 of this Agreement.
"Estrella's Best Knowledge" shall mean information known to the
current officers of Shannon Developers, Inc., but without any duty of such
officers to conduct any independent investigation or inquiry.
"Excluded Property" shall mean the following real property which is
not part of the Property: (a) the Golf Course (including the hotel site),
(b) Tract 10764 (as shown on map
2
<PAGE> 7
recorded in Book 521, pages 7-9 of miscellaneous maps); Tract 10596 (as shown
on map recorded in Book 531, pages 31-38), lots 1-23 and lot 27 in Tract 11781
(as shown on map recorded in book 531, pages 3-6 of miscellaneous maps) and (c)
the balance of the Development Area to the extent not included within the
Property.
"Exercise Date" shall mean the date the Option is exercised by CDC
pursuant to Section 2.05 of this Agreement.
"Exercise Deposit" shall mean the sum of One Hundred Thousand Dollars
($100,000) to be delivered by CDC into escrow upon exercise of the Option
pursuant to Section 2.05 of this Agreement.
"Golf Course" shall mean the Shorecliffs Golf Course located in the
City and described in the preliminary title report of the Company dated as of
October 7, 1988, Order No. 592794-9.
"Hazardous Materials" shall include, but shall not be limited to
any flammable explosives, radioactive materials, hazardous wastes, toxic
substances or related materials, substances defined as "hazardous substances,"
hazardous materials" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
42 USC Section 9601, et seq.; the Hazardous Materials Transportation Act,
49 USC Section 1801, et seq.; the Resource Conservation and Recovery Act,
42 USC Section 6901, et seq.; those substances defined as "hazardous wastes"
in California Health & Safety Code Section 25117 or as "hazardous substances"
in California Health & Safety Code Section 25316; and those chemicals
3
<PAGE> 8
known to cause cancer or reproductive toxicity, as published pursuant to the
Safe Drinking Water and Toxic Enforcement Act of 1986, California Health &
Safety Code Section 25249.5 et seq.; and in the regulations adopted and
publications promulgated pursuant to each of the aforesaid laws.
"Intermediate School Site" shall mean that approximately 14-acre
portion of the Property more particularly described in Exhibit A attached
hereto.
"Monthly Option Fee" shall mean the sum of One Hundred Seventy-five
Thousand Dollars ($175,000) to be paid monthly to Estrella to continue the
Option as provided in Section 2.03.
"Nonforeign Certification" shall mean a certification in the form
attached hereto as Exhibit C, duly executed by Estrella under penalty of
perjury, certifying that Estrella is not a "foreign person" in accordance with
the provisions of Section 1445 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Option" shall mean CDC's right to purchase the Property subject
to the terms and conditions of this Agreement.
"Option Payment" shall mean the sum of One Million Dollars
($1,000,000) paid by CDC to Estrella pursuant to Section 2.04.
"Planning Area" shall mean that approximately 1,031-acre portion of
the Property more particularly described in Exhibit A attached hereto.
"Property" shall mean the real property, improvements and other
assets described in Section 2.01 which CDC is granted
4
<PAGE> 9
the Option to purchase pursuant to this Agreement. In no event shall the
Property include all or any part of the Excluded Property.
"Purchase Price" shall mean the sum of Fifty Million Dollars
($50,000,000).
"Settlement/Development Agreement" shall mean that certain
Settlement/Development Agreement between Estrella and the City dated August 5,
1981, as amended by that certain First Amendment to Settlement/Development
Agreement dated as of December 14, 1983 and that certain undated Second
Amendment to Settlement/Development Agreement.
"Specific Plan" shall mean the Forster Ranch Specific Plan prepared
by Tierra Planning & Design, Inc., dated October 1985 and approved by the City
on October 1, 1986.
"Title Company" shall mean Chicago Title Insurance Company, 825 North
Broadway, Santa Ana, California, 92701; Attn: David Butler (FAX (714)
667-0343; telephone (714) 547-7251)).
"Title Policy" shall mean an ALTA 1970 Form B Extended Coverage
Owner's Form title insurance policy, insuring that fee title to the Property is
vested in CDC in the amount of the Purchase Price.
"Title Reports" shall mean the following preliminary title reports
prepared by the Title Company:
(a) Order No. 592744-9, dated as of August 3, 1988, as
amended by Supplemental Report dated October 26, 1988, and received November
3, 1988, for the Planning Area;
5
<PAGE> 10
(b) Order No. 592745-9, dated as of August 3, 1988, as
amended by Supplemental Report dated October 26, 1988, for the Commercial Site;
(c) Order No. 592746-9, dated as of August 3, 1988, as
amended by Supplemental Report dated October 26, 1988, for the Affordable
Housing Site; and
(d) Order No. 592770-9, dated as of September 7, 1988, as
amended by Supplemental Report dated October 26, 1988, for the Intermediate
School Site.
"Wastewater Agreement" shall mean that certain Agreement for
Construction of Wastewater Treatment Facilities dated as of October 3, 1984.
"Work Product" shall mean preliminary engineering drawings, any final
subdivision map for Tentative Tract 12895, the ALTA survey of the Property
prepared by Madole & Associates, Inc., soils reports and other studies related
to the Property which have been prepared for CDC by third party consultants.
1.02. Additional Defined Terms. To the extent capitalized terms are
not defined in Section 1.01, such terms shall have the meaning otherwise
ascribed to them in this Agreement.
ARTICLE 2
OPTION
2.01. Grant of Option. Estrella grants to CDC the Option, during the
period and subject to all of the provisions of this Agreement, to purchase all
of the following property:
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2.01.1 Land. The real property consisting of approximately
1,077.2 acres located in the City as more particularly described in Exhibit A
attached hereto, together with all of Estrella's rights in and to (a) all
privileges, rights, easements and appurtenances belonging to the real property,
including without limitation, all minerals, oil, gas and other hydrocarbon
substances on and under the real property, (b) all development rights, air
rights, water, water rights and water stock relating to the real property and
(c) all rights of Estrella in and to any streets, alleys, passages, other
easements and other rights-of-way or appurtenances included in, adjacent to or
used in connection with the real property, before or after the vacation
thereof;
2.01.2 Improvements. All rights of Estrella in and to any
and all buildings, systems, facilities, fixtures, structures, fences, parking
areas, machinery, equipment, apparatus and appliances located on the real
property described in Section 2.01.1; and
2.01.3 Other Assets. All rights of Estrella, if any, in and
to all tangible and intangible assets of any nature relating to the Property
(except as they pertain to the Excluded Property), including without limitation
(a) all Development Entitlements, (b) all surveys, maps, studies, reports, test
results, plans, specifications, engineering drawings and prints relating to
development of the Property or construction of any improvements thereon, (c)
all trade names and goodwill associated with the Property, (d) all other
intangible property used by
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Estrella in connection with the Property, (e) all warranties upon the
improvements, to the full extent such warranties are assignable, and (f) to the
extent the same are approved by CDC pursuant to the provisions of this
Agreement, all claims, causes of action, contract and lease rights, agreements,
utility contracts or other rights relating to the ownership, use and operation
of the Property.
2.02. Option Term. The Option shall commence on the Effective Date and
shall continue to and including February 28, 1989, provided CDC is not in
default in payment of the Monthly Option Fee under Section 2.03.
2.03. Monthly Option Fee. Commencing on the Effective Date and on the
first business day of each month thereafter until the Closing Date, but
excluding the month in which the Closing Date occurs, CDC shall pay to Estrella
the Monthly Option Fee. The Monthly Option Fees shall constitute consideration
for the granting of the Option and shall not be credited toward the Purchase
Price. If Estrella fails to receive the Monthly Option Fee on any date it is
due, Estrella shall notify CDC of such fact by written notice, in which case
CDC shall have the right to make such payment within two business days without
being in default in payment of the Monthly Option Fee. If CDC fails to pay the
Monthly Option Fee within the two business days after receipt of such notice,
the Option shall terminate. The Monthly option Fee shall not be refundable to
CDC if CDC fails to exercise the Option under any circumstances.
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2.04. Option Payment. Upon the Effective Date, and as additional
consideration for the Option, CDC shall deliver the Option Payment to Estrella
and Estrella hereby directs that the payment be wired to Borg-Warner
Corporation, First National Bank of Chicago, ABA No. 071000013, Account No.
53-06841, for the account of Borg-Warner Corporation. The Option Payment shall
not be refundable to CDC for any reason except as provided in Section 10.12.
The Option Payment shall be applied to the Purchase Price at Closing pursuant
to Section 3.01.2.
2.05. Exercise of Option. The Option shall be exercised by CDC's
delivery to Estrella, on or before the expiration of the Option, of written
notice stating that CDC exercises the Option, and the delivery of the Exercise
Deposit into escrow with Chicago Title Insurance Company, Santa Ana, California
(the "Escrow") within two business days after delivery of such written notice.
The Exercise Deposit shall be applied to the Purchase Price at Closing, or
shall be treated as liquidated damages under Section 10.01 if the purchase and
sale fails to close because of the default of CDC. If CDC fails to exercise the
Option within the time allowed herein, Estrella shall be entitled to receive
the Work Product and retain the Option Payment and all Monthly Option Fees,
this Agreement shall immediately terminate, and the parties shall have no
further obligations under this Agreement, except as provided in Sections
4.04.2, 4.05, 10.06, and 10.07.
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ARTICLE 3
PURCHASE AND SALE
3.01. Purchase and Sale. Upon timely exercise of the Option by CDC,
Estrella shall sell the Property to CDC, and CDC shall purchase the Property
from Estrella, upon each and all of the following terms:
3.01.1 Purchase Price. The Purchase Price for the Property
shall be the sum of Fifty Million Dollars ($50,000,000).
3.01.2 Manner of Payment. On the Closing Date, CDC shall pay
the Purchase Price to Estrella by (a) crediting to the Purchase Price the
Option Payment and applying the Exercise Deposit from the Escrow and paying the
balance of the Purchase Price through the Escrow by electronic transfer of
federal funds or other immediately available funds.
3.01.3 Closing Date. The Closing shall occur through the
Escrow on or before the fiftieth (50th) day after exercise of the Option, but
not later than March 31, 1989.
3.01.4 Condition of Title. Title to the Property shall be
conveyed by Estrella on or before the Closing Date free and clear of all liens,
leases, restrictions and encumbrances, except for the Acceptable Conditions of
Title. The Acceptable Conditions of Title are: (a) the lien for real property
taxes, supplemental taxes, and assessments not delinquent; (b) exceptions shown
on the Title Report for the Planning Area, but excluding exceptions Nos. 5, 6
and 7; (c) exceptions shown on the Title Report for the Commercial Site, but
excluding exceptions No. 3; (d) exceptions shown on the Title Report for the
Intermediate
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School Site; (e) exceptions shown on the Title Report for the Affordable
Housing Site, but excluding exception 3; (f) such other matters as shall be
created by or with the consent of CDC or by any persons claiming by or under
CDC; and (g) that certain lease between Estrella and Rams Manufacturing, Inc.,
dated January 2, 1987, and (h) matters shown on the ALTA survey being prepared
by Madole & Associates, Inc. Estrella's obligation to convey title shall be
satisfied only by the willingness of the Title Company to issue the Title
Policy showing fee title to the Property vested in CDC or its nominee, subject
only to the Acceptable Conditions of Title, and the standard printed exclusions
contained in the Title Policy. If Estrella is unable to convey title as
required under this Section 3.01.4, then Estrella: (i) may elect to eliminate
the unpermitted title exception and Estrella shall have up to 30 days for such
purpose, and (ii) shall be obligated to remove any liens of a definite or
ascertainable amount and pay any delinquent taxes using the proceeds of sale
for such purpose. Estrella shall not be in default of this Agreement for
failure to convey title in the condition required by this Section 3.01.4 unless
(i) Estrella fails to pay any delinquent taxes or remove any liens against the
Property as to which Estrella has agreed to apply the proceeds of sale or (ii)
failure of Estrella to convey title is due to the affirmative act of Estrella,
which affirmative act would result in an exception to title on the title policy
to be issued at Closing, and which affirmative act occurs after the date of the
Title
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Reports (including supplements) applicable to the respective portions of the
Property, in which case CDC shall be entitled to the remedies contained in
Section 10.12. In the event of any other defects in title, CDC shall within
five days after expiration of the 30 days period either terminate this
Agreement and receive a return of the Exercise Deposit or accept title in the
condition tendered and proceed to close the purchase and sale. In such case,
CDC shall not be entitled to a return of the Option Payment or to recover
damages or seek any other remedies.
3.01.5 Estrella's Deposit of Documents and Funds. Estrella
shall deposit or cause to be deposited the following into Escrow before the
Closing Date for delivery to CDC:
(a) The Deed duly executed and acknowledged by
Estrella;
(b) Counterpart original of the assignment and
assumption agreement, in the form attached as Exhibit D, duly executed and
acknowledged by Estrella;
(c) A certificate executed by Estrella in the form
attached as Exhibit E representing that all representations and warranties made
by Estrella under this Agreement are true and correct as of the Closing Date;
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(d) A duly executed certification in the form
attached as Exhibit F representing that neither Estrella, nor any party with
any interest in Estrella, has or shall receive any brokerage commission or
finder's fee paid or to be paid in connection with the sale of the Property to
CDC;
(e) A Nonforeign Certification duly executed by
Estrella as of the Closing Date; and
(f) The Grant of Easement and Declaration of
Covenants, duly executed and acknowledged by Shorecliffs Golf Course, Inc. or
its successor in interest, as required by Section 8.03.
(g) Such additional documents, including written
escrow instructions consistent with this Agreement, as may be reasonably
required for conveyance of the Property to CDC in accordance with this
Agreement.
3.01.6 CDC's Deposit of Documents and Funds. CDC shall deposit
or cause to be deposited the following into Escrow for delivery to Estrella on
or before the Closing Date:
(a) Sums sufficient to close the purchase of the
Property;
(b) A certificate executed by CDC affirming that all
representations and warranties made by CDC under this Agreement are true and
correct as of the Closing Date; and
(c) The letter of credit for $1,500,000 (hereinafter
"B-W Letter of Credit") held by the City as security for certain obligations
under the Settlement/Development Agreement, or in lieu thereof, a letter of
credit in the amount of $1,500,000
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in favor of Borg-Warner corporation which, by its terms, may be drawn on if the
City makes demand upon Estrella or Shorecliffs Golf Course, Inc. to perform the
obligations secured under the Settlement/Development Agreement, or if the B-W
Letter of Credit is drawn on by the City.
(d) Counterpart original of the assignment and
assumption agreement, in the form attached as Exhibit D, duly executed and
acknowledged by CDC.
(e) The improvement bonds held by the City as
security for Estrella's obligations under the subdivision agreement for the
Affordable Housing Site and the Commercial Site, or in lieu thereof, a bond or
other security reasonably satisfactory to Estrella which shall indemnify
Estrella and BorgWarner Corporation if the City makes demand upon such bonds or
upon Estrella to perform its obligations secured under such subdivision
agreements relative to the installation of subdivision improvements in the
Commercial Site and the Affordable Housing Site, and Estrella shall be
responsible for maintaining bonds required by the City for other real property
covered by such subdivision agreement.
(f) Such additional documents, including written
escrow instructions consistent with this Agreement, as may be reasonably
required for conveyance of the Property in accordance with this Agreement.
3.01.7 Closing Costs and Prorations.
(a) Estrella shall pay the cost of a CLTA Owner's
Form title insurance policy, any documentary transfer taxes, and one-half of
any escrow fees. CDC shall pay the
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difference between the cost of the Title Policy and the cost of a CLTA title
policy, all recording fees, and one-half of any escrow fees. All other Closing
costs shall be paid in accordance with the custom of the County.
(b) All real property taxes and interest on
assessments, whether payable in installments or not, including without
limitation all supplemental taxes for the fiscal year in which the Closing
occurs, shall be prorated as of the Closing Date. It is understood that CDC
shall be responsible for paying any supplemental taxes levied and assessed as a
result of the sale of the Property or applicable to the period after the
Closing (it being understood that Estrella shall be responsible for paying such
supplemental taxes for the period before Closing). If the amount of taxes or
charges applicable to any portion of the Property cannot be determined as of
the Closing Date because the assessed value of the Property or the tax rate
affecting the Property has not been determined or publicly announced, or
portions of the Property have not yet been segregated for tax purposes, or for
any other reason, then a proration shall be made based upon the Title Company's
best estimate of the taxes or charges applicable to the Property and an
adjustment outside of escrow shall be made between the parties upon written
request of either party when the correct amount of taxes or charges becomes
known. All utility charges accrued up to the Closing Date shall be paid by
Estrella.
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ARTICLE 4
INVESTIGATION OF PROPERTY
4.01. As Is With All Faults Conveyance. CDC acknowledges and agrees
the Property is being optioned and sold by Estrella in an AS IS, WITH ALL
FAULTS condition. CDC and Estrella have previously executed and entered into a
non binding Letter of Intent dated July 20, 1988, attached hereto as Exhibit K,
pursuant to which CDC was allowed to pursue its own independent analysis and
due diligence inspection of the Property and Development Entitlements. Under
said Letter of Intent CDC was granted access to the Property, Title Reports,
Settlement/Development Agreement, Specific Plan, Wastewater Agreement, the
proposed City Regional Circulation, Financing and Phasing Program and the
Development Entitlements within the possession of Estrella. CDC was also
granted access to the Property consultants including, but not limited to,
Tierra Planning & Design, Madole & Associates, the attorneys for Estrella
(Menke, Fahrney & Carroll), as well as the officials of the City. Estrella has,
during the term of the Letter of Intent, provided to CDC certain information as
to the Property, but, with the express understanding that CDC should do its own
investigation and analysis and come to its own conclusions as to any such
information. Estrella has also allowed CDC to take an active part relating to
certain matters affecting the Property, including but not limited to: (i)
Estrella has delivered a Letter of Authorization, attached hereto as Exhibit L,
to the City Planning Commission which authorized CDC to submit information or
applications on behalf of Estrella with respect to both the
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existing 155 allocations and the pending application for allocations for the
balance of the units in Tentative Tract Map 12895 and (ii) Estrella has
authorized CDC to submit an Outline of Proposed Development Agreement, attached
hereto as Exhibit M, to the City.
4.02. Disclaimer of warranties. Estrella makes no warranty,
representation or guarantee as to CDC's ability to successfully obtain the
allocations referenced in the Letter of Authorization or as to the willingness
of the City to enter into a development agreement. Except for the express
representations and warranties of Estrella contained in Article 5, CDC is
acquiring the Property "as is" and without any warranty of Estrella, express or
implied, as to the Property or fitness of any of the Property for CDC's use.
EXCEPT FOR OBLIGATIONS CONTAINED IN THIS AGREEMENT OR REPRESENTATIONS CONTAINED
IN ARTICLE 5, NEITHER ESTRELLA NOR ANY PERSON ACTING FOR OR WITH ESTRELLA HAS
MADE OR DOES MAKE ANY STATEMENT, AFFIRMATION, REPRESENTATION OR WARRANTY UPON
WHICH CDC SHOULD RELY, WHETHER EXPRESS OR IMPLIED, AS TO THE PROPERTY
INCLUDING, BUT NOT LIMITED TO, ANY ITEM OF PERSONAL PROPERTY OR AS TO THE
CONDITION, QUALITY, OPERATING CHARACTERISTICS OR RELIABILITY OF SUCH PROPERTY,
OR AS TO ITS SUITABILITY FOR ANY GENERAL OR PARTICULAR PURPOSE, WHATSOEVER, AND
ANY AND ALL WARRANTIES IMPLIED BY LAW, INCLUDING, BUT NOT LIMITED TO, ALL
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE
HEREBY EXPRESSLY DISCLAIMED AND EXCLUDED.
4.03 Authorization By Estrella to CDC. Subject to the limitations
contained in Section 4.04 of this Agreement, during the
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term of this Agreement, provided the Monthly Option Fees are paid to Estrella
and provided that the Option has not been terminated, Estrella authorizes CDC
to proceed as follows:
4.03.1 CDC can proceed with its activities as outlined in the
Letter of Authorization.
4.03.2 CDC can proceed with its efforts to obtain the City
approval of its proposed development agreement; provided, however, the
development agreement shall not adversely affect the rights of Estrella under
the Settlement/Development Agreement.
4.03.3 Estrella shall allow CDC, on behalf of Estrella, to
process a final subdivision map for a portion of Tentative Tract 12895
containing a total of 161 lots and permitting construction of not less than 155
market-rate single-family residences, five (5) model homes and an adjacent
parking lot, and to process other final subdivision maps with respect to
tentative Tract 12895.
4.03.4 CDC may proceed with further inspections, due
diligence, and other activities related to Section 4.03.1 through 4.03.
4.04 Limitations on CDC Rights. While Estrella shall allow CDC, during
the term of the option, to proceed as set forth in Section 4.03, Estrella's
authorization to CDC is expressly subject to the following terms and
conditions:
4.04.1 CDC may proceed to enter upon the Property as set forth
in, and subject to, Section 10.07.
4.04.2 To the extent CDC proceeds with the activities
authorized by Estrella under Sections 4.03.1 through
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4.03.4 above, such activities shall be at CDC's sole cost and expense,
including without limitation, the costs and expenses of the property
consultants, agents, contractors and subcontractors engaged by CDC with respect
to such activities.
4.04.3 In connection with CDC's activities under Sections
4.03.1 through 4.03.4, above, Estrella may be requested to enter into
agreements with the City or other parties, or to undertake certain commitments
or obligations which would be binding on Estrella or the Property, even if CDC
does not exercise the Option and close the purchase of the Property
(hereinafter called "Binding Agreements"). Estrella shall be under no
obligation to enter into any Binding Agreements, even if Estrella's refusal to
enter into the Binding Agreements results in CDC's inability to continue and/or
successfully complete its activities under Sections 4.03.1 through 4.03.4
above; except Estrella shall not act unreasonably in refusing to enter into any
Binding Agreement or unreasonably delay in doing so upon request of CDC. If
requested by CDC, Estrella shall affirm in writing to third parties, including
the City, its approval of the cost allocations in the traffic plan approved by
the City at the City Council meeting of November 2, 1988.
4.04.4 CDC shall not record any final subdivision maps with
respect to Tentative Tract Map 12895, or any portion thereof.
4.04.5 CDC shall indemnify, defend and hold Estrella harmless
from and against any and all claims, losses, liabilities, damages or expenses,
including but not limited to
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reasonable attorneys fees and costs of defense, arising in whole or in part out
of a breach by CDC of its obligations under Section 4.03 or 4.04.
4.05 Right to Work Product. As part of the consideration for the grant
of option, if CDC does not exercise the option or close the purchase of the
Property, it shall promptly furnish to Estrella at CDC's expense copies of the
Work Product and assign to Estrella all of CDC's right, title and interest
therein.
ARTICLE 5
ESTRELLA'S REPRESENTATIONS AND WARRANTIES
5.01. Representations and Warranties. Estrella makes the following
representations and warranties for the benefit of CDC:
5.01.1 Condemnation. Estrella has not received written notice
of any actions by the City or any other governmental agency to condemn any
portion of the Property by action of eminent domain.
5.01.2 Authorization. This Agreement and all other documents
delivered by Estrella to CDC (a) have been or will be duly authorized, executed
and delivered by Estrella, (b) are legal, valid and binding obligations of
Estrella and, with respect to those documents that are instruments of
conveyance, are sufficient to convey title and (c) are enforceable in
accordance with their respective terms. Estrella is a limited partnership duly
formed and validly existing under the laws of the State of California.
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5.01.3 Hazardous Wastes. To Estrella's Best Knowledge,
Estrella has not used or installed any underground tank, or used, generated,
manufactured, treated, stored, placed, deposited or disposed of any Hazardous
Materials on or about the Property or transported any Hazardous Materials to or
from the Property and Estrella has not received any written notice from any
state or federal agency concerning the violation of any laws or regulations
relating to Hazardous Materials on the Property.
ARTICLE 6
CDC'S REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties. CDC represents and warrants that
this Agreement and all other documents delivered by CDC to Estrella (a) have
been or will be duly authorized, executed and delivered by CDC, (b) are legal,
valid and binding obligations of CDC and (c) are enforceable in accordance with
their respective terms. CDC is a limited partnership formed and validly
existing under the laws of the State of Delaware.
ARTICLE 7
EFFECT OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.01. Effect of Representations and Warranties. Each representation
and warranty contained in Articles 5 and 6, respectively, (a) shall survive for
a period of one year after the Closing Date and not merge with the delivery to
CDC of the Deed, (b) is material and is being relied upon by the other party,
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(c) is true in all material respects as of the Effective Date and (d) shall be
true in all material respects on the Closing Date.
7.02. Indemnification. CDC and Estrella each shall indemnify, defend
and hold the other party, harmless from and against any and all claims, losses,
liabilities, damages, or expenses, including without limitation reasonable
attorneys' fees and costs of defense, arising in whole or in part, out of the
breach or untruth of any representation, warranty or covenant contained in
Article 5 and Article 6 of this Agreement.
ARTICLE 8
CDC's REQUIREMENTS
AND
ESTRELLA'S COVENANTS
8.01. CDC's Pre-Conditions. In purchasing the Property, CDC is relying
on its ability to develop the Property substantially in accordance with the
Specific Plan, and to obtain the approvals from the City necessary for the
residential development of 2,200 units and the commercial development of 55
acres on the Property. Accordingly, CDC intends to purchase the Property if the
following approvals are obtained on or before the Closing Date:
8.01.1. Final Map. City shall have approved a final
subdivision map for a portion of Tentative Tract 12895 containing not less than
161 lots and such map shall be ready for immediate recording;
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8.01.2. Development Allocations. The City shall have granted
development allocations in sufficient quantity to permit the issuance of
building permits for not less than 397 market-rate single family residences,
exclusive of model homes, and, at Closing, such allocations shall be
immediately transferable to CDC;
8.01.3. Development Agreement. The City and CDC shall have
approved and executed a development agreement for the Property and the
statutory referendum period shall have expired without initiation of a
referendum; provided, however, the development agreement shall provide for
termination if the purchase and sale shall fail to close as provided in this
Agreement; and
8.01.4. General Plan Amendment. The City shall have amended
its General Plan to the extent required to bring it into compliance with law.
8.02. Golf Course Easement. On or before the Closing Date, Estrella
shall cause Shorecliffs Golf Course, Inc. (or its successor-in-interest as
owner of the Golf Course) to execute and record a Grant of Easement and
Declaration of Covenants in substantially the form attached hereto as Exhibit H
providing for, among other things, a grant of easement in favor of CDC for
construction and installation of, and access to, an enclosed box culvert storm
drain across a portion of the Golf Course (which easement may be assigned to
the County Flood Control District). In addition, before Closing, Estrella shall
cause any beneficiary under any deed of trust encumbering the Golf Course to
subordinate
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to the Grant of Easement and Declaration of Covenants in form satisfactory to
CDC.
8.03. SDG&E Site Relocation. Estrella shall not enter into any
agreement with San Diego Gas & Electric Company ("SDG&E") relocating the
substation site of SDG&E near the entrance to the Forster Ranch without the
written approval of CDC, which approval shall not be unreasonably withheld or
delayed. Upon Closing CDC shall assume Estrella's obligations under any such
agreement.
8.04. Green Belt. Estrella, at its sole cost and expense, shall
maintain the approximately 12-acre linear greenbelt (hereinafter called the
"Greenbelt") described on Exhibit I attached in an attractive and healthy
condition until such time as the Greenbelt is transferred to and accepted for
ownership and maintenance by a homeowners association, or until Closing,
whichever shall first occur. If the Greenbelt has not been conveyed to a
homeowners association by Closing, then CDC shall accept title to the Greenbelt
and Estrella shall have no further obligations relating thereto. Estrella shall
continue its efforts to convey the Greenbelt to a homeowners association until
Closing.
8.05. Alterations. Estrella shall not make any material alterations to
the physical condition of the Property without CDC's prior written consent,
which consent shall not be unreasonably withheld or delayed.
8.06. Cooperation. Estrella shall continue to cooperate with CDC and
its agents and consultants in CDC'S: (i) investigation of the Property, (ii)
efforts to negotiate with the City and other public agencies relating to
development of the
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Property and obtaining Development Entitlements, (iii) efforts to eliminate any
title defects that may affect the Property, and (iv) efforts to work with other
builders and developers in mutual resolution of any issues affecting the
Property. Such cooperation shall include, but not necessarily be limited to,
assisting CDC in meeting the requirements contained in Section 8.01, attending
meetings with the City regarding development of the Property, providing
information concerning the history and background of the Property, providing
letters to the City and other public agencies in support of resolving traffic
and other development impacts to the Property, assistance in obtaining approval
of public agencies for the storm drain and related improvements over the Golf
Course, and assistance in relocating the SDG&E substation. Notwithstanding any
failure of Estrella to cooperate as provided herein, CDC expressly acknowledges
and agrees that neither the term of the Option nor the time of Closing shall be
extended and CDC shall have no right to refund of the option Payment or Monthly
Option Fees due to its failure to cooperate and CDC's exclusive remedy for any
breach of this Section 8.06, shall be to proceed under Section 10.12, but
nothing herein contained shall be construed to limit the damages available.
Estrella shall not be in default of its obligations under this Section 8.06
unless such failure to cooperate is in bad faith and unless it has received
from CDC at least five business days' written notice of failure to cooperate
and Estrella fails to cure its failure to cooperate within such
five-business-day period; provided, however, that after
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two such defaults have occurred and been cured, Estrella shall have no further
right to cure.
8.07 No Representation or Warranty. Estrella makes no warranty,
representation, or guarantee as to CDC's ability to satisfy the requirements or
obtain the approvals from the City as provided in this Article 8. The failure
of such requirements to be satisfied or approvals to be obtained shall not
extend the term of the Option or time of Closing, and shall not give CDC any
right to receive a refund of the Option Payment or Monthly Option Fees.
ARTICLE 9
ASSIGNMENT OF DEVELOPMENT RIGHTS AND OBLIGATIONS
9.01. Settlement/Development Agreement. Estrella shall assign to CDC,
effective as of the Closing Date, all its rights in and to the
Settlement/Development Agreement and CDC shall assume Estrella's obligations
thereunder; provided, however, that CDC shall not assume any obligations under
Sections 305D (dedication and landscaping of park site located in Development
Area), 312 (Golf Course obligations), 501.1 (dismissal of lawsuits) or any
other sections of the Settlement/Development Agreement which affects only that
portion of the Development Area not included within the Property and such
obligations shall remain the obligations of Estrella or the owner of the Golf
Course, as the case may be.
9.02. Tentative Tract 12895. Estrella shall assign to CDC, effective
as of the Closing Date, all its rights in and to Tentative Tract Map 12895 and
all Development Entitlements
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thereunder, including, without limitation, any final subdivision maps,
development allocations, building permits, and grading permits issued or
initiated thereunder, and any application for any of the foregoing.
9.03. Wastewater Treatment Capacity. Estrella shall assign to CDC,
effective as of the Closing Date, all its rights in and to the Wastewater
Agreement including, but not limited to, the allocation of wastewater treatment
capacity designated for the Forster Ranch, and CDC shall assume Estrella's
obligations thereunder.
9.04. Litigation. Estrella shall assign to CDC effective as of the
Closing Date, all of its rights in and to the lawsuits described in Exhibit G
and, upon request of CDC, Estrella shall execute and deliver to CDC a
substitution of legal counsel and such other documents as may be required by
CDC to substitute itself in place of Estrella in such lawsuits and CDC shall
accept such assignment. CDC shall indemnify, defend and hold Estrella harmless
from and against any and all claims, damages, liabilities and expenses
(including, without limitation, actual attorneys' fees and costs of defense)
arising out of such litigation; provided, however, Estrella shall be liable
(and CDC shall have no responsibility for) any of Estrella's attorney's fees,
expert and consultant fees, or any other costs or expenses related to the
lawsuits incurred before the Closing. Nothing contained in this Agreement is
intended to limit Estrella's control or conduct of the litigation described in
Exhibit G.
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9.05. Subdivision Agreements. Estrella shall assign to CDC effective
as of the Closing Date, all of its rights in and to the subdivision agreement
dated August 15, 1984 between Estrella and the City to the extent it affects
the Commercial Site and the Affordable Housing Site (but not as to any other
real property) in force as of the Effective Date, and at Closing, CDC shall
assume Estrella's obligations thereunder as to the Affordable Housing Site and
the Commercial Site and substitute subdivision improvement bonds in place of
those which have been posted by Estrella with respect to subdivision
improvements to be made for the Commercial Site and the Affordable Housing
Site, but Estrella shall maintain bonds relating to any other real property
covered by such subdivision agreement.
9.06. Other Rights. Estrella shall assign to CDC, effective as of the
Closing Date, all its rights in and to that certain lease dated January 2,
1987, between Estrella and Rams Manufacturing, Inc., relating to the grazing of
livestock on the Property, and any Development Entitlements, except as they may
pertain to Excluded Property. Upon written request of Estrella, Estrella shall
give notice of termination to the lessee under such lease, as provided under
Paragraph 4 of such lease.
9.07. Indemnities. CDC shall indemnify, defend, and hold Estrella
harmless from and against any and all claims, damages, liabilities and expenses
(including, without limitation, actual attorneys' fees and costs of defense)
arising from or in any way related to CDC's failure after Closing to perform
obligations it assumes under the Settlement/Development Agreement, Wastewater
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Agreement, the Subdivision Agreement, or the lease and Development Entitlements
referred to in Section 9.06.
ARTICLE 10
GENERAL
10.01. LIQUIDATED DAMAGES. EXCEPT AS PROVIDED IN SECTION 10.02, IF CDC
DEFAULTS IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, ESTRELLA,
BY WRITTEN NOTICE TO CDC, SHALL MAKE DEMAND FOR PERFORMANCE, AND IF CDC SHALL
FAIL TO PERFORM WITHIN FIFTEEN (15) BUSINESS DAYS AFTER RECEIPT OF SUCH DEMAND,
ESTRELLA MAY TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO CDC. UPON SUCH
TERMINATION, ESTRELLA SHALL BE ENTITLED TO RETAIN THE EXERCISE DEPOSIT AS
LIQUIDATED DAMAGES. ESTRELLA AND CDC ACKNOWLEDGE AND AGREE THAT DETERMINING
ESTRELLA'S ACTUAL DAMAGES, IN THE EVENT OF AN UNCURED DEFAULT BY CDC, WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICABLE. THEREFORE, IN THE EVENT OF AN UNCURED
DEFAULT BY CDC, THE PARTIES HAVE AGREED THAT, AFTER NEGOTIATION, THE EXERCISE
DEPOSIT SHALL CONSTITUTE ESTRELLA'S SOLE AND EXCLUSIVE REMEDY, AND THAT THIS
SUM REPRESENTS A REASONABLE ESTIMATE OF THE ACTUAL DAMAGES ESTRELLA WOULD INCUR
IN THE EVENT OF AN UNCURED MATERIAL DEFAULT BY CDC. BY INITIALING IN THE SPACES
WHICH FOLLOW, ESTRELLA AND CDC SPECIFICALLY AND EXPRESSLY AGREE TO ABIDE BY THE
TERMS AND PROVISIONS OF THIS SECTION 10.01 GOVERNING LIQUIDATED DAMAGES, AND
ESTRELLA WAIVES ANY RIGHT TO SPECIFICALLY ENFORCE THIS AGREEMENT. IT IS
EXPRESSLY UNDERSTOOD THAT ANY PAYMENT OF LIQUIDATED DAMAGES UNDER THIS SECTION
10.01 SHALL BE IN ADDITION TO
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PAYMENT TO ESTRELLA OF THE OPTION PAYMENT, THE MONTHLY OPTION FEES, AND THE
WORK PRODUCT.
ESTRELLA: /s/ DS CDC: /s/ J
10.02 Recovery on Indemnities. Nothing contained in Section 10.01
shall preclude or limit recovery by Estrella under the indemnity covenants of
CDC as provided in Sections 4.04.5, 7.02, 9.07, 10.03, 10.06, 10.07 and 10.14
of this Agreement.
10.03. Indemnity. Estrella shall indemnify, defend and hold CDC
harmless from and against any and all claims, damages, liabilities or expenses
(including reasonable attorneys' fees and costs of defense) for personal injury
or damage to property of others occurring on the Property before the Closing.
CDC shall indemnify, defend and hold Estrella harmless from and against any and
all claims, damages, liabilities or expenses (including reasonable attorneys'
fees and costs of defense) for personal injury or damage to property of others
occurring on the Property after the Closing.
10.04. Eminent Domain. If before Closing all or any material portion
of the Property is taken by eminent domain, or any public authority having the
power of eminent domain threatens to take all or any material portion of the
Property, CDC shall have the right to terminate this Agreement by written
notice to Estrella and recover the Exercise Deposit. If CDC does not elect to
terminate this Agreement because of such taking or threatened taking, the
purchase and sale shall close, CDC shall have the right
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to any award made by the condemning authority, and Estrella shall immediately
assign to CDC its right to such award. Estrella shall notify CDC of any action
or threatened action to condemn all or any part of the Property within fifteen
business days after first receiving written notice of same. For purposes of
this Section 10.04, a "material" portion of the Property shall mean a taking of
(a) more than ten percent (10%) of the real property, (b) a means of access to
the Property, unless alternative means of access exist which in CDC's judgment
are adequate to serve the Property or (c) 10% or more of the dwelling units
that may be constructed on the Property or 20% or more of the buildable area of
the Commercial Site. If any nonmaterial portion of the Property is taken by
eminent domain before the Closing Date, CDC shall complete the purchase of the
Property, and shall have the right to any award made by the condemning
authority, and Estrella shall assign to CDC its right to any such award.
10.05. Notice. Every notice, demand, request, designation, consent,
approval or other document or instrument delivered pursuant to this Agreement
shall be in writing, and shall be either personally delivered, sent by Federal
Express or other reputable overnight courier, sent by facsimile transmission
with the original subsequently delivered by other means, or sent by registered
or certified United States mail, postage prepaid, return receipt requested, to
the address set forth below, or to such other address as a party may designate
from time to time:
To CDC: Centex Development Company, L.P.
5928 Pascal Court, Suite 213
Carlsbad, CA 92009
Attn: Ron Brent
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Phone Number: (619) 431-9228
Facsimile: (619) 431-0721
With a copy to: Raymond G. Smerge
3333 Lee Parkway, Suite 1200
P. 0. Box 19000
Dallas, Texas 75219
Phone Number: (214) 559-6500
Facsimile: (214) 522-7568
With a copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, CA 94111
Attn: Robert E. Merritt, Jr.
Phone Number: (415) 393-2000
Facsimile: (415) 393-2286
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To Estrella: Estrella Properties, Ltd.
33971 Selva Road, Suite 260
Laguna Niguel, California 92677
Attn: Darrel M. Spence
Phone Number: (714) 496-7770
With a copy to: Leonard M. Klehr, Esq.
Klehr, Harrison, Harvey,
Branzburg, Ellers & Weir
1401 Walnut Street
Philadelphia, PA 19102
Phone Number: (215) 568-6060
Facsimile: (215) 568-6603
With a copy to: D. William Wagner, Esq.
Sidley & Austin
2049 Century Park East, #3900
Los Angeles, CA 90067
Phone Number: (213) 556-6421
Facsimile: (213) 556-6502
With a copy to: Patrick D. Carroll
Menke, Fahrney & Carroll
650 Town Center Drive, #1850
Costa Mesa, CA 92626
Phone Number: (714) 556-7111
Facsimile: (714) 566-6426
Written notices served by registered or certified mail shall be deemed
delivered 48 hours after the date mailed. Other notices shall be effective upon
delivery.
10.06. Commissions; Indemnity. CDC shall indemnify, defend and hold
Estrella harmless from and against all claims, liability, damages and expenses
(including, without limitation, actual attorneys' fees and costs of defense)
for fees or other compensation claimed due to any broker, salesman or finder
based on any agreement or commitment made or alleged to have been made by CDC.
Estrella shall indemnify, defend and hold CDC harmless from and against all
claims, liability, damages and expenses (including, without limitation, actual
attorneys' fees and costs of defense) for fees or other compensation claimed
due to any broker, salesman
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or finder based on any agreement or commitment made or alleged to have been
made by Estrella.
10.07. Right of Entry. At any time before Closing, CDC and its
authorized representatives, agents, employees and contractors shall have the
right to enter upon the Property for purposes of inspecting the Property,
conducting tests and studies, preparing surveys and maps and all other purposes
reasonably related to the proposed acquisition and development of the Property.
CDC shall (a) exercise reasonable care in connection with any such entry and
activities upon the Property, (b) keep the Property free of liens and (c)
indemnify Estrella against any claims, damages, liabilities or expenses
resulting from CDC's exercise of its rights under this Section 10.07.
10.08. Entire Agreement. This Agreement, including the exhibits
attached hereto, is intended by the parties as a final expression of their
agreement with respect to the subject matter contained in this Agreement and
this Agreement shall supersede any prior agreements oral or written.
10.09. Amendments and Waivers. No amendment to this Agreement shall be
effective unless set forth in writing signed by both parties.
10.10. Governing Law. This Agreement shall be governed by the laws of
the State of California applicable to contracts made and to be performed in
California.
10.11. Confidentiality and Publicity. A signed, redacted copy of this
Agreement may be delivered by either party to the City and a full copy to any
prospective lender of CDC and
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the partners of either party. In all other respects, the parties shall at all
times keep this transaction and any documents received from each other
confidential, except to the extent necessary to (a) comply with applicable law
and regulations or (b) carry out the obligations set forth in this Agreement.
Any disclosure to third parties shall indicate that the information is
confidential and should be so treated by the third party. No press release or
other public disclosure shall be made by either party or any of its agents
concerning this transaction without the prior written consent of CDC.
10.12 Remedies. The remedies of Estrella for a default under this
Agreement by CDC are addressed in Sections 10.01 and 10.02 and these rights
constitute the exclusive remedies available to Estrella. If Estrella defaults
in the performance of any of its covenants or obligations under this Agreement,
including breaches of any of its representations or warranties made in this
Agreement, CDC shall have as its exclusive remedy the right to: (i) proceed to
close the purchase and sale of the Property, in which case CDC shall be deemed
to have waived all claims for damages for defaults, including breaches of
representations or warranties to the extent such matters were known or
disclosed to CDC at, or prior to, Closing, or seek specific performance of this
Agreement if Estrella shall fail or refuse to close, provided that this remedy
shall be available only on the conditions contained below in this Section
10.12; or (ii) recover the Exercise Deposit and, subject to Section 10.13, any
and all damages for such default as may be available to CDC under the law, but
without limiting the foregoing, if the
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default consists of the failure of Estrella to close the purchase and sale or
to remove any liens or delinquent taxes against the Property as provided in
Section 3.01.4, or the creation of a defect in title by the affirmative act of
Estrella after the dates of the Title Reports as provided in Section 3.01.4,
CDC shall be entitled to a refund of the Option Payment.
In order to be entitled to seek specific performance under this
Agreement and to file a lis pendens with respect to the Property, CDC shall
have: (i) timely exercised the Option as required in Section 2.05; (ii)
deposited into Escrow before March 31, 1989, all deposits required under
Section 3.01.6 (provided, however, CDC shall be entitled to withdraw such funds
and documents three (3) days after tender has been made, unless Estrella shall
perform by completing the sale of the Property as provided in the Agreement);
and (iii) tendered waiver of all conditions for Closing, except performance of
any covenants of Estrella under Sections 3.01.1, 3.01.2, 3.01.3, 3.01.5,
3.01.6, 3.01.7, Article 9, and the obligation of Estrella to pay any delinquent
taxes and remove liens from the Property out of the proceeds of sale as
contained in Section 3.01.4.
10.13 Limitation on CDC Damages and Indemnities. With respect to any
default by Estrella under this Agreement, except the failure of Estrella to
make all deposits as required by Section 3.01.5, or the creation of a defect in
title by the affirmative act of Estrella after the date of the Title Report as
provided in Section 3.01.4 or the failure of Estrella to remove any liens or
pay delinquent taxes as provided in Section 3.01.4, CDC shall only
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be entitled to recover its out-of-pocket expenses as damages. Nothing contained
in Section 10.12 shall preclude or limit recovery by CDC under the indemnity
covenants of Estrella as provided in Sections 7.02, 10.03, 10.06, and 10.14 of
this Agreement.
10.14. Attorneys' Fees. In the event of any legal proceeding for
enforcement of any of the terms or conditions of this Agreement, the prevailing
party in such action, or the nondismissing party where the dismissal occurs
other than by reason of a settlement, shall be entitled to recover its
reasonable costs and expenses, including without limitation reasonable
attorneys' fees and costs. The "prevailing party," for purposes of this
Agreement, shall be deemed to be that party which obtains substantially the
result sought, whether by dismissal or judgment.
10.15. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
assigns. Neither party shall have any right to assign their interest in this
Agreement, except at the Closing or except to an Affiliate. As used herein
"Affiliate" shall mean an entity controlled by, or under common control with,
either party, or partners of a party having at least a 20% interest in equity.
10.16. Further Assurances. CDC and Estrella each, at any time before
or after Closing and at their own expense, shall execute, acknowledge and
deliver any further deeds, assignments, conveyances and other assurances,
documents and instruments of transfer reasonably requested by the other party,
and shall take
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any other action consistent with the terms of this Agreement for the purpose of
carrying out the intent of this Agreement.
10.17. Memorandum of Option. A memorandum of this Agreement in the
form attached hereto as Exhibit J shall be recorded in the official records of
the County contemporaneously with the execution of this Agreement.
10.18. No Third Party Beneficiaries. Nothing in this Agreement,
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any person other than the parties to it and their
respective permitted successors and assigns, nor is anything in this Agreement
intended to relieve or discharge any obligation of any third person to any
party hereto or give any third person any right of subrogation or action over
against any party to this Agreement.
10.19. Counterparts; Exhibits. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. The exhibits
attached to this Agreement are incorporated herein and made a part hereof by
this reference.
10.20. Headings. The headings used in this Agreement are for
descriptive purposes only and shall not be used in the interpretation or
construction of this Agreement.
10.21 Time. Time is of the essence of each and every term of this
Agreement.
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ARTICLE 11
SPECIAL REMEDIES
11.1 Reference Provision.
11.1.1 Each controversy, dispute or claim between the parties
arising out of or relating to this Agreement, which controversy, dispute or
claim is not settled in writing within thirty (30) days after the "Claim Date"
(as hereinafter defined), will be settled by a reference proceeding in Orange
County, California, in accordance with the provisions of Sections 638, et seq.,
of the California Code of Civil Procedure, or their successor sections ("CCP"),
which shall constitute the exclusive remedy for the settlement of any
controversy, dispute or claim concerning this Agreement, including whether such
controversy, dispute or claim is subject to the reference proceeding, and the
parties waive their rights to initiate any legal proceedings against each other
in any court or jurisdiction other than the Superior Court of Orange County
(the "Court"). The referee shall be a retired Judge of the Court selected by
mutual agreement of the parties, and if they cannot so agree within forty-five
(45) days after the Claim Dates, the referee shall be promptly selected by the
Presiding Judge of the Orange County Superior Court (or his representative).
The referee shall be appointed to sit as a temporary judge, as authorized by
law, and upon selection should take and subscribe to the oath of office as
provided for in Rule 244 of the California Rules of Court (or any subsequently
enacted Rule). Each party shall have one preemptory challenge pursuant to CCP
170.6. The referee shall: (a) be requested to set the matter
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for hearing within sixty (60) days after the Claim Date; and (b) try any and
all issues of law or fact and report a statement of decision upon them, if
possible, within ninety (90) days of the Claim Date. Any decision rendered by
the referee will be final, binding and conclusive, and judgment shall be
entered pursuant to CCP 644 in any court in the State of California having
jurisdiction and be subject to review as provided in CCP 645. Any party may
apply for a reference at any time after thirty (30) days following notice to
any other party of the nature of the controversy, dispute or claim (the "Claim
Date"), by filing a petition for a hearing or trial. All discovery permitted by
this Agreement shall be completed no later than fifteen (15) days before the
first hearing date established by the referee. The referee may extend such
period in the event of a party's refusal to provide requested discovery for any
reason whatsoever, including, without limitation, legal objections raised to
such discovery or unavailability of a witness due to absence or illness. No
party shall be entitled to "priority" in conducting discovery. Depositions may
be taken by either party upon fifteen (15) days' written notice, and requests
for production or inspection of documents shall be responded to within twenty
(20) days after service. All disputes relating to discovery which cannot be
resolved by the parties shall be submitted to the referee.
11.1.2 Except as expressly set forth in this Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted, including the time and place of all hearings, the order or
presentation of evidence, and all other
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questions that arise with respect to the course of the reference proceeding.
All proceedings and hearings conducted before the referee, except for trial,
shall be conducted without a court reporter, except that when any party so
requests, a court reporter will be used at any hearing conducted before the
referee. The party making such a request shall have the obligation to arrange
for and pay for the court reporter at the trial, which payment shall be borne
equally by the parties.
11.1.3 The referee shall be required to determine all issues
in accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and provisional remedies and to enter equitable orders that will be
binding upon the parties. The referee shall issue a single judgment at the
close of the reference proceeding which shall dispose of all of the claims of
the parties that are the subject of the reference. The parties hereto expressly
reserve the right to findings of fact, conclusions of law, a written statement
of
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decision, and the right to move for a new trial or a different judgment.
IN WITNESS WHEREOF, the parties have executed this Option
Agreement the day and year first above set forth.
ESTRELLA PROPERTIES, LTD., a
California limited partnership
By: Shannon Developers, Inc., a
California Corporation
By: /s/ DARREL SPENCE
Darrel Spence, President
CENTEX DEVELOPMENT COMPANY, L.P., a
Delaware limited partnership
By: 3333 Development Corporation,
general partner
By: /s/ RAYMOND G. SMERGE
Raymond G. Smerge,
Agent and Attorney-In-Fact
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<PAGE> 1
EXHIBIT 2.2
CENTEX DEVELOPMENT COMPANY, L.P.
ADDITIONAL INTEREST AGREEMENT
THIS ADDITIONAL INTEREST AGREEMENT ("Agreement"), made and entered
into this 30th day of March, 1989, by and between CENTEX DEVELOPMENT COMPANY,
L.P., a Delaware limited partnership, having its principal place of business at
3333 Lee Parkway, Dallas, Texas 75219 (hereinafter referred to as "Owner") and
WESTINGHOUSE CREDIT CORPORATION, a Delaware corporation, having its principal
place of business at One Oxford Centre, 301 Grant Street, Pittsburgh,
Pennsylvania 15219 (hereinafter referred to as "WCC").
W I T N E S S E T H:
WHEREAS, WCC has agreed pursuant to a Construction Loan Agreement of
even date herewith ("Loan Agreement") to provide financing to Owner on the
terms and in the amounts set forth in the Loan Agreement (the "Loan") for the
acquisition and improvement of approximately 1,077.2 acres of land located in
the City of San Clemente, Orange County, California and more particularly
described in Exhibit "A" hereto (the "Premises"); and
WHEREAS, the Loan is evidenced by two Promissory Notes (the "Notes")
from Owner and is secured by, inter alia, a Construction Deed of Trust ("Deed
of Trust"), a Security Agreement ("Security Agreement") and an Assignment of
Leases, Rents and Profits ("Assignment of Rents"), an Assignment of Developer's
Rights ("Assignment of Developer's Rights"), Assignment of Contracts and Sales
Proceeds ("Assignment of Contracts"), and Assignment of Easements and
Maintenance Agreements ("Assignment of Easements"), each of even date herewith
and each executed by Owner (the Loan Agreement, this Agreement, Notes, Deed of
Trust, Security Agreement, Assignment of Rents, Assignment of Developer's
Rights, Assignment of Contracts and Assignment of Easements are hereinafter
collectively referred to as the "Loan Documents"); and
WHEREAS, to induce WCC to make the Loan, Owner has agreed on the terms
hereinafter stated to pay, in addition to all amounts due under the Notes, a
portion of the Net Sales Proceeds (as hereinafter defined) generated by the
Sale or Partial Sale of the Premises (as hereinafter defined), as additional
interest.
NOW, THEREFORE, in consideration of WCC making the Loan to Owner and
other good and valuable consideration, the receipt, sufficiency and adequacy
whereof are hereby acknowledged by Owner, the parties hereto agree as follows:
<PAGE> 2
1. DEFINITIONS.
In addition to the terms defined in the Loan Agreement or
elsewhere in this Agreement, the following terms are defined below:
(a) "ACCOUNTING PERIOD" refers to (i) a twelve (12) month
period from October 1 of a year to September 30 of the following year,
commencing with the period October 1, 1993 to September 30, 1994, and
continuing with each succeeding twelve (12) month period thereafter to
and including October 1, 1999 to September 30, 2000; (ii) the period
April 1, 1993 to September 30, 1993; and (iii) the period October 1,
2000 to April 1, 2001.
(b) "AFFILIATE": An Affiliate shall mean any Person (as
defined below in this subparagraph) which is directly or indirectly
controlling, controlled by or under common control with the other
Person in question. A "Person" shall mean an individual, a partnership
and each of its constituent partners, a trust, a corporation, an
unincorporated association, or other entity or association. The term
"control" as used in this subparagraph, means: (i) with respect to a
Person that is a corporation, the right to the exercise, directly or
indirectly, of fifty percent (50%) or more of the voting rights
attributable to the shares of the controlled corporation; and (ii)
with respect to a Person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of the controlled Person.
(c) "APPLICABLE PERCENTAGE" is determined by the date on which
escrow closes on a Sale or Partial Sale of the Premises by Owner, and
is fifteen percent (15%) if the closing date is during Loan Months 1
through 12, zero percent (0%) if the closing date is during Loan
Months 13 through 36, and twenty-five percent (25%) if the closing
date is during Loan Month 37 or thereafter.
(d) "APPRAISED VALUE": Appraised Value shall mean a value of
the Unsold Premises (as hereinafter defined) based upon the following
procedure. After WCC's election to accelerate all amounts then unpaid
to WCC under the Loan Documents by virtue of an Event of Default (as
defined in the Loan Agreement), WCC shall select a MAI Appraiser (the
"WCC Appraiser"). The WCC Appraiser, within thirty (30) days of its
selection, shall present Owner and WCC with a computation of the
Appraised Value based on the fair market value of the Unsold Premises
(the "WCC Appraisal"). Owner's failure to provide written notice to
WCC of Owner's non-acceptance of the WCC Appraisal (such notice also to
include
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<PAGE> 3
the name of another MAI appraiser of Owner's selection (the "Owner's
Appraiser")) within fourteen (14) days of Owner's receipt of the WCC
Appraisal shall be deemed to be Owner's acceptance of the WCC
Appraisal. If Owner does timely provide the foregoing notice, then
Owner shall present WCC within thirty (30) days of Owner's receipt of
the WCC Appraisal with a computation of the Appraised Value based on
the fair market value of the Unsold Premises (the "Owner's
Appraisal"). Unless WCC and Owner can otherwise agree on a fair market
value of the Unsold Premises, their respective Appraisers shall then
mutually agree on and select a third MAI appraiser (the "Third
Appraiser") within ten (10) days of being asked by either WCC or
Borrower to do so. Neither the WCC Appraiser, the Owner's Appraiser
nor the Third Appraiser shall have any direct or indirect financial or
other business interest in Owner, WCC or any affiliate of either Owner
or WCC. Within thirty (30) days of its selection (and in no event
later than twenty-five (25) days prior to a scheduled foreclosure sale
of WCC's Deed of Trust) the Third Appraiser shall render a statement
of the Appraised Value based on the fair market value of the Premises
(the "Third Appraisal"). The average of the Third Appraisal and the
closer in amount to it of the WCC Appraisal or the Owner's Appraisal
shall then constitute the "Appraised Value" and shall be binding on
both Owner and WCC.
(e) "GROSS DISBURSEMENTS" shall mean disbursements actually
and necessarily made by Owner consistent with a budget approved by WCC
in connection with the ownership, maintenance, improvement or sale of
all or any part of the Premises.
(f) "GROSS SALES PROCEEDS" shall mean all cash proceeds
received in connection with a Sale of the Premises or a Partial Sale
of the Premises, except as otherwise agreed to by WCC and Owner.
(g) "LOAN MONTH" shall mean each consecutive calendar month
throughout the term of the Loan until maturity, except that Loan Month
one (1) shall be deemed to have begun March 31, 1989 and extended
through April 30, 1989.
(h) "NET APPRAISED VALUE" is the positive difference between
Appraised Value and all amounts (including Additional Interest) then
outstanding and unpaid to WCC under the Loan Documents.
(i) "NET SALES PROCEEDS" shall mean Gross Sales Proceeds less
(i) normal and customary closing costs and (ii) if the Sale or Partial
Sale was not to an Affiliate of Owner, reasonable broker's
commissions.
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(j) "PARTIAL SALE OF THE PREMISES" shall mean the sale,
assignment, transfer, condemnation, conveyance or other disposition,
to which WCC consented, covering a portion of the Premises and any of
Owner's interest therein.
(k) "PARTICIPATION AMOUNT" shall mean the amount resulting
from applying the Applicable Percentage to the Net Sales Proceeds.
(l) "PERCENTAGE INTEREST" shall mean twenty-five percent (25%)
of the Participation Amount, and shall be payable to WCC as provided
by this Agreement and the other Loan Documents. The Percentage
Interest to which WCC shall be entitled hereunder shall be considered
additional interest under the Notes and the other Loan Documents.
(m) "SALE OF THE PREMISES" shall mean the sale, assignment,
transfer, condemnation, conveyance or other disposition, to which WCC
consented, covering the entire Premises (or so much thereof as
remaining unreleased from the lien of WCC's Deed of Trust) and all of
Owner's interest therein.
(n) "UNSOLD PREMISES" shall mean that portion of the Premises
which has not been the subject of a Sale or Partial Sale of the
Premises.
2. PAYMENT OF ADDITIONAL INTEREST.
WCC will earn, upon any Sale or Partial Sale of the Premises,
additional interest ("ADDITIONAL INTEREST"). Such Additional Interest shall be
computed and payable to WCC as follows:
(a) WCC's Additional Interest from a Sale or Partial Sale of
the Premises which closes during Loan Months 1 through 48 shall be in
an amount equal to WCC's Percentage Interest and paid to WCC upon the
closing and from the proceeds of the sale, provided that the
Additional Interest from the sale of even date herewith to Centex Real
Estate Corporation ("CREC") under the contract described in
subparagraph A16 of Exhibit B to the Loan Agreement will be paid to
WCC at closing of the sale to CREC in approximately September of 1989
under said contract. Upon payment of Additional Interest, Owner will
receive the balance of the Participation Amount relating to such
Additional Interest. Provided, however, that if at the time of the
closing of the sale an Event of Default under the Loan Documents
exists, then the entire Participation Amount shall be applied to
repayment of the Loan.
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(b) Additional Interest earned by WCC from a Sale or Partial
Sale of the Premises occurring in an Accounting Period, the first of
which shall commence with Loan Month 49, shall be in an amount equal
to WCC's Percentage Interest and paid to WCC from an advance from the
Loan as provided in Section 5.1g of the Loan Agreement. Upon such
payment, Owner shall receive from an advance from the Loan the balance
of the Participation Amounts for such Accounting Period, as provided
in Section 5.1g of the Loan Agreement. Provided, however, that in any
event payments to WCC and Owner of Participation Amounts are subject
to the limitation that the aggregate of the Participation Amounts
payable under this Agreement to WCC and Owner respectively with
respect to a given Accounting Period shall not exceed the positive
difference, if any, between Net Sales Proceeds and Gross Disbursements
in that Accounting Period. To the extent that the aggregate of the
Participation Amounts exceeds such difference, neither WCC nor Owner
shall be entitled to receive any part of such excess portion of the
Participation Amounts. Provided, further, that if at the time the
advance provided for in Section 5.1g of the Loan Agreement is to be
made an Event of Default under the Loan Documents exists, then no
Participation Amount shall be payable to either WCC or Owner and no
advance for such payment shall be made.
(c) To the extent that the Net Sales Proceeds from a Sale or
Partial Sale of the Premises occurring in any Loan Month exceeds the
then outstanding balance on the Loan (exclusive of any Additional
Interest which may be due from such Sale), in addition to Additional
Interest under subparagraphs 2(a) and 2(b) of this Agreement,
Additional Interest in an amount equal to twenty-five percent (25%) of
such excess shall be paid to WCC upon the closing and form the
proceeds of the sale, and the remainder of that excess shall be paid
to Owner.
(d) Attached hereto as Exhibit B and incorporated by reference
is a chart which is illustrative of how Additional Interest is to be
paid.
3. TERMINATION.
WCC shall cease to earn Additional Interest after the earlier
of (a) a Sale of the Premises, or (b) March 31, 1993, if Lender provides
Borrower with notice as set forth in subpart (c) of Section 5.6 of the Loan
Agreement. Prior to the occurrence of the first of these events, a full
repayment of all amounts then outstanding under the Loan shall not act as a
termination of this Agreement.
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4. PROCEDURE IF DEFAULT AND ACCELERATION OF LOAN.
In the event of the occurrence of an Event of Default (as
defined in the Loan Agreement) and the election by WCC to accelerate all
outstanding amounts under the Loan Documents:
(a) If WCC causes to be completed a judicial or non-judicial
foreclosure sale of the Premises, then WCC shall also be entitled to
payment of twenty-five percent (25%) of the Net Appraised Value, and
upon such payment, WCC shall cease to earn any further Additional
Interest;
(b) If, prior to completion of a judicial or non-judicial
foreclosure sale of the Premises, WCC is paid all amounts outstanding
to WCC under the Loan Documents, then
(i) If the Event(s) of Default was not based on
an occurrence other than those set forth in
subparts g, j or p of Section 7.1 of the Loan
Agreement, then WCC shall cease to earn any
further Additional Interest;
(ii) If the Event(s) of Default was based on an
occurrence other than those set forth in
subparts g, j or p of Section 7.1 of the Loan
Agreement, then WCC shall continue to earn
Additional Interest under this Agreement
through and including such time as there has
been a Sale of the Premises, except that
notwithstanding anything to the contrary in
paragraph 2 of this Agreement, the earning,
computation and payment of such Additional
Interest shall be as follows: Additional
Interest shall be equal to twenty-five
percent (25%) of cash received by Owner from
a Sale or Partial Sale of the Premises after
satisfaction of current debt service and
related monetary obligations under a deed of
trust to which WCC subordinated the lien of
its Deed of Trust pursuant to Paragraph 42
thereof, and shall be paid to WCC by Owner
within ten (10) days of Owner's receipt
thereof.
Furthermore, in the event WCC gives Owner notice pursuant to Section 4 of the
Deed of Trust to repay all amounts outstanding under the Loan, provided Owner
does so within the one hundred eighty (180) day period provided for in Section
4 of the Deed of Trust, then upon such payment WCC shall cease to earn any
further Additional Interest.
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5. REPORTING REQUIREMENTS.
(a) Owner agrees to notify WCC at least ten (10) days in
advance of any proposed Sale or Partial Sale of the Premises. The
written notice to WCC shall include all pertinent terms of the
proposed transaction and shall include an estimate of the amount of
the Additional Interest to be earned. No Sale or Partial Sale of the
Premises shall take place or be entered into without the prior written
consent or preapproval (as provided in Section 8.1 of the Loan
Agreement) of WCC.
(b) Within twenty (20) days after the end of an Accounting
Period, Owner shall furnish WCC with a report, as referred to in
Section 5.1g of the Loan Agreement, with such detail as WCC may
reasonably require, of the Gross Sales Proceeds, Gross Disbursements
and earned Additional Interest relating to that Accounting Period.
(c) WCC may require Owner, from time to time hereafter, in
addition to, and not in derogation of, any reporting or auditing
requirements under the Loan Documents, to give WCC such other
information as may be reasonably required to verify the correctness of
the payments received by WCC pursuant to this Agreement.
(d) Owner agrees to cooperate with WCC should WCC or its
agents wish to discuss the affairs, finances and accounts of Owner,
and Owner agrees to inform WCC as to the same at such reasonable times
and intervals as WCC may desire.
(e) The acceptance by WCC of any payments under this Agreement
shall not imply WCC's approval of the computation of such payments,
and such acceptance by WCC shall be without prejudice to WCC's right
to an examination of Owner's books and records relating to the
Premises. At WCC's option, WCC at its expense (subject to the further
provisions hereof) may cause, at any reasonable time, a complete audit
to be made at Owner's accounting office of Owner's entire business
affairs and records relating to the Premises. If such audit shall
disclose that any report furnished by Owner to WCC is false in any
material respect or shall disclose an understatement or underpayment
in an amount greater than five percent (5%) of the amounts actually
owing to WCC hereunder and the sum of $10,000.00, then Owner shall
promptly pay the full cost of the audit (which cost is not eligible to
be paid or reimbursed from an advance under the Loan) and shall also
pay to WCC the deficiency between the amount that has been theretofore
paid by Owner and the amount actually due from Owner under this
Agreement. In the event such an audit shall disclose that
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Owner has over-paid WCC, WCC will promptly refund or credit to Owner
the amount of any overpayment. Except for instances of fraud or
concealment, no audit shall be commenced later than twelve (12) months
after the end of an Accounting Period.
6.1 EVENT OF DEFAULT.
The occurrence of one or more of the following events shall,
at the option of WCC, constitute an "Event of Default" following the expiration
of any cure or grace period provided in Section 7.1 of the Loan Agreement.
(a) Owner fails to make payment to WCC of WCC's Additional
Interest as provided in this Agreement; or
(b) Owner fails to comply with any of the covenants, duties or
obligations of Owner in this Agreement.
Provided, however, that in the event that WCC subordinates the lien of its Deed
of Trust as provided in Paragraph 42 of the Deed of Trust, then, in addition to
the Events of Default listed above, only the following Events of Default under
the Loan Agreement or any of the other Loan Documents shall be an Event of
Default under this Agreement:
(i) an Event of Default relating to subparagraphs
6.3c or 7.1f(i) of the Loan Agreement, or
(ii) a default by Owner under the deed of trust to
which WCC has subordinated not cured by Owner
within any applicable grace or cure period
under such deed of trust, or if WCC cured
such default and Owner has not made WCC whole
for such cure within the original grace or
cure period.
6.2 EFFECT OF BREACH.
The occurrence of an Event of Default under this Agreement
shall constitute an Event of Default under each of the Loan Documents. All
obligations of the Owner to WCC hereunder are intended to be secured by the
Deed of Trust, the Security Agreement, the Assignment of Rents and each of the
other Loan Documents securing the Notes.
7. REMEDIES.
Upon the occurrence of an Event of Default hereunder, WCC has
the right and may exercise any one or more of remedies provided for at law, in
equity, in the Loan Agreement, or in any of the other Loan Documents.
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8. MISCELLANEOUS.
8.1 MODIFICATION OF AGREEMENTS.
This Agreement and the Loan Documents may not be modified,
altered or amended, except by an agreement in writing signed by Owner and WCC.
8.2 ATTORNEYS' FEES AND EXPENSES.
Owner shall pay WCC for all expenses incurred by WCC in
connection with the enforcement of this Agreement and the collection of all
sums due hereunder, including without limitation, reasonable attorneys' fees
and court costs. The prevailing party shall be entitled to reasonable
attorneys' fees in any litigation arising out of or related to this Agreement.
8.3 COMPLIANCE WITH LAWS.
Notwithstanding any provisions in this Agreement or in any of
the Loan Documents, the total liability for payments legally regarded as
interest shall not exceed the maximum limits, if any, applicable to WCC as
Lender and imposed by the laws of the State of California in effect on the date
hereof, and payment of same in excess of the amount allowed thereby shall, as
of the date of such payment, automatically be deemed to have been applied to
the payment of principal of the Loan. Except as required by this subsection,
Owner acknowledges that Owner and WCC have conferred specifically concerning
the contingent and uncertain nature of Additional Interest, and that Owner and
WCC understand and agree that Additional Interest and each element thereof
payable pursuant to this Agreement are speculative in nature and both the
amount and the payment thereof are dependent upon a number of contingencies
which are not within WCC's control. WCC has not been guaranteed by Owner or any
other party that such contingencies will occur to generate the accrual and
payment of any Additional Interest. All amounts paid under this Agreement shall
be deemed to have accrued on a pro rata basis each month over the entire term
of the Loan commencing on the date of this Agreement, regardless of when such
Additional Interest amounts were received by WCC.
8.4 NO JOINT VENTURE.
WCC and Owner intend and agree that the relationship between
them shall be solely that of creditor and debtor parties. Nothing contained
herein or in any of the Loan Documents, including the provisions for the
payment of Additional Interest, shall be deemed or construed to create a
partnership, tenancy-in-common, joint tenancy, joint venture or co-ownership by
or between WCC and Owner. WCC shall not in any way be responsible
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<PAGE> 10
for the debts, losses or obligations of Owner or any other party with respect
to the Premises or otherwise as a result of this Agreement. All obligations to
pay real property or other taxes, assessments, insurance premiums and all other
fees and charges arising from the ownership, operation or occupancy of the
Premises and to perform all other agreements and contracts relating to the
Premises shall be the sole responsibility of Owner. Owner, at all times
consistent with the terms hereof and of the Loan Documents, shall be free to
determine and follow its own policies and practices in the conduct of its
business on the Premises. Owner hereby agrees to indemnify and hold WCC
harmless from and against any and all liabilities, losses, injuries, costs,
expenses and damages, including, without limitation, attorneys' fees and
litigation costs, which WCC may suffer or incur as a result hereof and from any
and all claims or demands whatsoever, whether meritorious or not, which may be
instituted against WCC by reason of any alleged obligation or undertaking on
WCC's part to perform or discharge any of the terms, covenants or agreements
contained in any lease, agreement or contract relating to the Premises to which
WCC is not a direct and express party. Should WCC incur any such liability
under any such lease, agreement or contract, or under or by virtue hereof or of
the Loan Documents, or in the defense of any claims or demands related thereto,
the amount thereof, including costs, expenses and attorneys' fees shall
constitute a part of the indebtedness secured by the Deed of Trust.
8.5 INTEREST AND LATE CHARGE ON PAST DUE PAYMENTS.
Any and all payments due from Owner to WCC under this
Agreement after the same are due shall bear simple interest at the Default Rate
under and as defined in the Revolving Note. If any payment due from Owner to
WCC under this Agreement is not received by WCC after the same is due, Owner
shall pay a late charge equal to two percent (2%) of such late payment.
8.6 SUPPLEMENTAL DOCUMENTATION.
At WCC's request, Owner shall execute and deliver to WCC all
supplemental documentation that WCC may reasonably request, in form and
substance acceptable to WCC, and pay the costs of any recording or filing of
the same.
8.7 WAIVER BY WCC.
WCC's failure, at any time or times hereafter, to require
strict performance by Owner of any provision of this Agreement shall not waive,
affect or diminish any right of WCC thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by WCC of an Event of Default
by Owner under this Agreement or any of the Loan Documents shall not suspend,
waive or affect any other Event of Default by Owner
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under this Agreement or any of the other Loan Documents, whether the same is
prior or subsequent thereto and whether of the same or of a different type.
None of the undertakings, agreements, warranties, covenants and representations
of Owner under this Agreement or the Loan Documents shall be deemed to have
been suspended or waived by WCC, unless such a suspension or waiver is by an
instrument in writing signed by a duly authorized representative of WCC and
directed to Owner specifying such suspension or waiver.
8.8 SEVERABILITY.
To the fullest extent permitted by law, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement; provided, however, that if any material provision hereof
respecting the accrual or payment of any part of the Additional Interest is
held to be invalid or unenforceable, then at WCC's option and upon notice to
Borrower the entire indebtedness secured by the Deed of Trust shall become due
and payable within one hundred eighty (180) days after the giving of such
notice.
8.9 PARTIES.
This Agreement and the Loan Documents shall be binding upon
Owner, its successors and assigns, and inure to the benefit of WCC, its
successors and assigns. The Owner may not assign its obligations hereunder
without the prior written consent of WCC.
8.10 GOVERNING LAW.
This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto shall be governed by the laws of the State of
California.
8.11 NOTICE.
All notices and demands under and with respect to this
Agreement shall be in writing and shall be served in the manner and on the
terms specified in the Loan Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by Owner and
WCC as of the day and year first above written.
CENTEX DEVELOPMENT COMPANY, L.P.
ATTEST: a Delaware limited partnership
By: /s/ DAVID H. MORROW By: 3333 Development Corporation,
a Nevada corporation,
General Partner
By: /s/ HARRY J. LEONHARDT
Title: Agent and Attorney in Fact
WESTINGHOUSE CREDIT CORPORATION,
ATTEST: a Delaware corporation
By: /s/ DAVID H. MORROW By: /s/ DOUGLAS W. PHILLIPS
Title: Vice President
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EXHIBIT 2.3
CENTEX DEVELOPMENT COMPANY, L.P.
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is made this 30th day
of March, 1989 by and among WESTINGHOUSE CREDIT CORPORATION, a Delaware
corporation, having its principal office at One Oxford Centre, 301 Grant
Street, Pittsburgh, Pennsylvania 15219 (hereinafter called "Lender") and
CENTEX DEVELOPMENT COMPANY, L.P., a Delaware limited partnership, having an
address at 3333 Lee Parkway, P. O. Box 19000, Dallas, Texas 75219 (hereinafter
called "Borrower").
W I T N E S S E T H:
WHEREAS, Borrower represents and warrants that Borrower is acquiring
the fee simple of that certain real estate located in the City of San Clemente,
Orange County, California, containing approximately 1,077.2 acres and legally
described in Exhibit A hereof, which real estate is hereinafter referred to as
the "Premises"; and
WHEREAS, Borrower intends to develop the Premises with certain
grading, landscaping, streets, utilities and other improvements in accordance
with the Plans and Specifications (as defined hereafter), which improvements
and all other improvements incidental thereto and intended to be erected or
completed in connection therewith are hereinafter collectively referred to as
the "Improvements"; and
WHEREAS, Borrower has requested Lender to lend certain monies (the
"Loan") to Borrower or to otherwise make advances in accordance with this
Agreement to be used for: (i) acquisition of the Premises; (ii) payment of
labor and material costs in connection with the construction of the
Improvements; (iii) the payment of commitment and permit fees; and (iv) for
such other purposes incidental to such development and construction as are
herein provided for, including the payment of fees, costs and charges related
thereto, which monies Lender has agreed to lend or advance, subject to the
terms and conditions hereof; provided, however, the proceeds of the Loan shall
be disbursed in accordance with the terms of this Agreement and with those
certain instruments and documents as stated in Article II below, so that
Lender's Construction Deed of Trust will be a first lien against the Premises
(and the Improvements to be erected thereon) as insured by Chicago Title
Insurance Company (hereinafter referred to as the "Title Company").
<PAGE> 2
NOW, THEREFORE, in consideration of the premises and of the mutual
undertakings herein set forth, the parties hereto, intending to be legally
bound hereby, do covenant and agree as follows:
ARTICLE I - RECITALS
1.1 The foregoing preambles are made a part hereof.
ARTICLE II - LOAN DOCUMENTS
2.1 ACQUISITION COST NOTE. Concurrently with the execution and
delivery of this Agreement, Borrower has executed and delivered a Promissory
Note (Acquisition Cost) of even date herewith in the amount of FORTY-TWO
MILLION DOLLARS ($42,000,000.00) (hereinafter referred to as the "Acquisition
Cost Note") to evidence and provide for the repayment of Lender's initial
advance at closing for Borrower's acquisition of title to the Premises and
related expenses, as more specifically provided in subparagraph 5.1b of this
Agreement. This Note contains prepayment and non-recourse provisions as more
fully set forth therein.
2.2 REVOLVING NOTE. Concurrently with the execution and delivery
of this Agreement, Borrower has executed and delivered a Promissory Note
(Revolving) of even date herewith in the amount of FORTY-TWO MILLION DOLLARS
($42,000,000.00) (hereinafter referred to as the "Revolving Note") to evidence
and provide for the repayment, on the terms and conditions set forth in this
Agreement, of Lender's advances at and subsequent to closing for Borrower's
improvement of the Premises, related expenses, accrued and unpaid interest
under the Acquisition Cost Note and the Revolving Note (said Notes hereinafter
collectively referred to as the "Notes"), extension fees under the Acquisition
Cost Note, the outstanding amount of the Acquisition Cost Note as of its Final
Termination Date (as defined in said Note), and such amounts as may be payable
to Lender or Borrower under paragraph 2(b) of the Additional Interest
Agreement, all as provided for in subparagraphs c through g of paragraph 5.1 of
this Agreement. This Note contains prepayment and non-recourse provisions as
more fully set forth therein.
2.3 ADDITIONAL INTEREST AGREEMENT. Concurrently with the execution
and delivery of this Agreement, Borrower and Lender have executed an Additional
Interest Agreement of even date herewith (hereinafter referred to as the
"Additional Interest Agreement") providing on the terms stated therein for the
payment to Lender of additional interest from proceeds from the sale by
Borrower of portions of the Premises.
2.4 CONSTRUCTION DEED OF TRUST. Concurrently with the execution
and delivery of this Agreement, Borrower has executed
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and delivered to Lender a Construction Deed of Trust (the "Deed of Trust")
encumbering the Premises in order to secure Borrower's obligations under this
Agreement, the Notes and the Additional Interest Agreement. Advances may be
made under the Deed of Trust and any extensions, modifications or
consolidations thereof.
2.5 ASSIGNMENT OF LEASES AND SECURITY AGREEMENT. As further
security for Borrower's obligations under this Agreement, the Notes and the
Additional Interest Agreement, Borrower has executed and delivered to Lender
concurrently with the execution and delivery of this Agreement (a) an
Assignment of Leases, Rents and Profits ("Assignment of Leases") covering
rents, issues and profits from the Premises and (b) a Security Agreement
("Security Agreement") covering fixtures and personal property located on or
used in connection with the Premises.
2.6 ASSIGNMENT OF DEVELOPER'S RIGHTS, OF EASEMENTS AND OF
CONTRACTS AND SALES PROCEEDS. As further security for Borrower's obligations
under this Agreement, the Notes and the Additional Interest Agreement, Borrower
has executed and delivered to Lender concurrently with the execution and
delivery of this Agreement (a) an Assignment of Developer's Rights ("Assignment
of Developer's Rights"), (b) an Assignment of Easements and Maintenance
Agreements ("Assignment of Easements") and (c) an Assignment of Contracts and
Sales Proceeds ("Assignment of Contracts").
2.7 LOAN DOCUMENTS. As used herein, the term "Loan Documents"
shall mean, collectively, this Agreement, the Notes, the Additional Interest
Agreement, the Deed of Trust, the Assignment of Leases, the Security Agreement,
the Assignment of Developer's Rights, the Assignment of Easements, the
Assignment of Contracts and all other documents (other than the hereinafter
defined Environmental Indemnification Agreement) executed by Borrower in
connection with the Loan and establishing or providing security for the Loan.
2.8 ENVIRONMENTAL INDEMNIFICATION Agreement. Borrower has executed
and delivered to Lender concurrently with the execution and delivery of this
Agreement an Environmental Indemnification Agreement ("Environmental
Indemnification").
ARTICLE III - IMPROVEMENTS AND CONSTRUCTION
3.1 CONSTRUCTION - PLANS AND SPECIFICATIONS AND BIDS. Borrower
will cause all portions and phases of the Improvements to be completed by
Borrower in accordance with the final plans and specifications therefor to be
prepared by a licensed and qualified engineer to be retained by Borrower
(hereinafter referred to as "Borrower's Engineer"), which plans and
specifications shall be incorporated herein by reference thereto,
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subject to the written approval of Lender and approved by all applicable local,
state and federal authorities. In addition to said plans and specifications,
Borrower will prepare or cause to be prepared from time to time such additional
plans, drawings and specifications as may be necessary or desirable to
facilitate expeditious construction of the Improvements in accordance with said
plans and specifications. All such plans and specifications referred in this
Paragraph 3.1 and any such additional items are herein collectively referred to
as the "Plans and Specifications."
3.2 DEVIATION; AMENDMENT. Borrower will not deviate materially nor
permit any material deviation from the Plans and Specifications without the
prior written consent of Lender. No revision to the Plans and Specifications,
which revision is material in scope or increases the cost of construction,
shall be made without the prior written consent of Lender.
3.3 GOVERNMENTAL APPROVALS.
a. Prior to any advances hereunder for specific categories of
work, Borrower shall have caused all governmental agencies, bureaus, districts
and departments having jurisdiction over all or any part of the Premises and/or
the construction of the Improvements to have issued, or committed to issue
conditioned only upon payment of fees and such other conditions which may be
imposed by the governmental entity, all approvals and permits which may be
reasonably necessary in the opinion of the Lender in connection with the
categories of work for which an advance is requested; in addition, Borrower
will supply Lender with evidence of the availability of all utility and
municipal services reasonably necessary in the opinion of Lender to the
feasibility of the Improvements.
b. Borrower shall also provide Lender with copies of any
environmental impact statement, if any, prepared by Borrower and of any
environmental submissions to a governmental agency, and copies of responses or
opinions, if any, therefrom or thereof.
3.4 CONTRACTOR; MANAGEMENT; SUBCONTRACTS.
a. Borrower will itself, or contract with licensed general
contractors (such contracts referred to as the "General Contracts") to, manage
the construction of the Improvements and coordinate the provision of all labor,
supervision, materials, supplies, equipment and architectural and engineering
services necessary to complete the Improvements in accordance with the Plans
and Specifications. Borrower, itself or through its general contractor, will
enter into subcontracts (the "Subcontracts") which, in the case of Subcontracts
in excess of $500,000.00, shall have terms and be with subcontractors
acceptable to Lender. All General Contracts and Subcontracts
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shall require the completion of the relevant portion of the Improvements free
from all materialmens' liens and all mechanics' liens and claims. All General
Contracts, and Subcontracts in excess of $500,000.00 shall be in form and
content satisfactory to Lender. Except as otherwise approved by Lender, all
General Contracts, and all Subcontracts for amounts in excess of $500,000.00,
shall be for a maximum fixed price, and all Subcontracts for amounts in excess
of $500,000 (but no General Contract) shall be accompanied by payment and
performance bonds in amounts and with sureties acceptable to Lender. All
General Contracts and all Subcontracts for amounts in excess of $500,000 shall
be assigned to Lender as provided in Exhibit E to this Agreement. Any change or
amendment to any General Contract or Subcontract, or the change of any general
contractor or subcontractor, must be submitted to Lender and Lender's Inspector
(as hereinafter defined) for approval prior to acceptance or enactment;
provided any change order of $10,000.00 or less in value in an individual
instance (up to an aggregate of $100,000.00 in the aggregate for all
construction contracts), may be carried out without the prior written consent
of Lender or Lender's Inspector provided Lender and Lender's Inspector must
promptly be provided with notice and copies of all such changes. Each General
Contract and Subcontract shall provide for ten percent (10%) retainage in
connection with interim payments; disbursement of retainages will take place as
provided in Exhibit C hereto.
b. A project management fee will be paid to Borrower. The amount
of the fee shall be $350,000.00 per year and shall be paid monthly in equal
increments.
3.5 COMMENCEMENT AND COMPLETION. Borrower will cause construction
of the Improvements to be commenced and prosecuted with diligence and without
delay so that:
(i) All development and construction obligations of
the Borrower under the Forster Ranch Development Agreement dated March
, 1989 between Borrower and the City of San Clemente (the
"Development Agreement") are discharged within the time periods
required by the Development Agreement;
(ii) All development and construction obligations of
Borrower with respect to the approval by or on behalf of the City of
San Clemente, County of Orange, State of California, approving the
revised tentative Map of Tract No. 12895 are fully met within the time
period therein provided;
(iii) All development and construction obligations of
the Borrower with respect to governmental approvals of Borrower's
proposed improvement and development of any portion of the Premises
(including without limitation approvals relating to tentative maps and
final maps) are
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fully met within the time periods therein provided;
(iv) All development and construction obligations of
the Borrower under each agreement of sale for any part of the Premises
are discharged within the time periods required by such agreements;
and
(v) Progress on the Improvements in accordance with
the Plans and Specifications shall be constructed and completed
pursuant to the development schedule or a schedule to be prepared by
Borrower, certified by Borrower's Engineer and approved by Lender (the
"Development Schedule").
3.6 FURTHER GOVERNMENTAL APPROVALS. Borrower has obtained approval
of Tentative Map 12895 and has received allocations from the City of San
Clemente for 388 units in Plan Area 2 of the Planning Area. Borrower will
submit further tentative tract maps, request further allocations from the City
of San Clemente and otherwise pursue development of the Premises consistent
with Development Schedules which Borrower will present to Lender on or before
March 31 of each year for Lender's review and approval. Such Development
Schedules shall specify in general terms for the immediately following three
(3) year period (a) the areas of the Premises to be improved, (b) the time
schedule for such improvements, (c) the anticipated sales and timing therefor
during the period and (d) such other information as Lender may reasonably
require.
3.7 BUDGET. Borrower has previously submitted to Lender an initial
budget of acquisition and development costs which is attached as Exhibit G and
is incorporated by this reference (the "Initial Budget"). Any cost of
constructing the Improvements not included in the Initial Budget must be
preapproved by Lender. Additionally, commencing March 31, 1990, and annually
thereafter, Borrower will submit to WCC for WCC's approval an updated budget
detailing the costs of Improvements to be made during the following three (3)
years and other projected costs during such three (3) year period concerning
Borrower's ownership, maintenance, development and improvement of the Premises.
Such further budgets shall not be inconsistent with the applicable Development
Schedule, or such inconsistency shall be resolved to Lender's reasonable
satisfaction, and shall not be inconsistent with the limits set forth in
subparagraph 5.1h of this Agreement. Items of expense eligible for inclusion in
such further budgets shall relate to Borrower's ownership, maintenance,
development, improvement or sale of the Premises, and can include, unless
language or context otherwise provides or requires, fees, costs and expenses
which under the Loan Documents Borrower is required to pay or incur.
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3.8 SOILS TESTS. Borrower shall employ an independent testing firm
to provide soils compaction tests and other tests deemed necessary by Lender.
The results of such tests must be satisfactory to Lender and Lender's
Inspector. Borrower shall further provide Lender with a soils report from a
testing firm satisfactory to Lender, describing the underlying soil conditions
and such other information reasonably requested by Lender. Borrower shall
further provide Lender with a soils report from a testing firm satisfactory to
Lender describing any potential hazardous waste, substances, pollutants or
contaminants which may be on the Premises. All tests and reports shall be
furnished at Borrower's expense.
ARTICLE IV - INSURANCE, TAXES AND ASSESSMENTS.
4.1 INSURANCE.
a. Borrower will, at its expense, insure Borrower, the
Improvements and all materials purchased for use in connection with the
Improvements in such amounts, with such coverage and with such insurance
carriers as may be required by Lender so as to protect the respective interests
of Borrower and Lender in the Improvements and materials and so as to protect
Borrower and Lender against liability in connection with the Improvements and
the construction and completion thereof. Said insurance policies, whenever
required by Lender, shall be issued with riders (including a mortgagee clause
and such other clauses as Lender may reasonably require) covering the interests
of Lender, its successors and assigns, and shall provide 30-day notice of
cancellation to Lender.
b. Said insurance shall include coverage for public liability (in
at least $2,000,000.00 of coverage) and for hazards such as vandalism and
malicious mischief. Lender must also be provided with evidence of worker's
compensation insurance. Prior to commencement of construction of any of the
Improvements, Borrower shall provide or cause to be provided insurance
satisfactory to Lender in an amount sufficient to cover Lender's interests in
the Improvements and all materials purchased for use in connection with the
Improvements; Borrower must at all times avoid coinsurance liability. Said
policy must be acceptable to Lender and must contain a loss payee mortgagee
clause and other clauses acceptable to Lender as mortgagee on both real and
personal property, and shall provide that losses covered thereby shall be
payable to Lender notwithstanding any adverse act or omission of Borrower.
Borrower must also provide, in an amount satisfactory to Lender, insurance
coverage for flood (if in designated flood zone), hurricane, tornado and other
wind-related damage.
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c. Any contractor employed by Borrower shall furnish evidence
satisfactory to Lender of acceptable Worker's Compensation and other insurance
coverage required by Lender.
d. Lender shall be under no obligation to make loans or advances
hereunder until Borrower shall have submitted evidence to Lender of the
insurance coverages required.
4.2 TAXES AND ASSESSMENTS; CONTEST.
a. Borrower will promptly pay or cause to be paid all the annual
real estate taxes, special assessments and any other tax, assessment, claim,
lien or encumbrance which may at any time be or become a lien upon the
Premises. The undertakings of Borrower under this Section and under Section 4.1
hereof shall be continuing obligations of Borrower during the entire period of
time that any amounts loaned or advanced pursuant hereto or interest thereon
remain unpaid. Borrower shall furnish to Lender paid tax receipts within thirty
(30) days after the final due date on which such taxes would be delinquent or
bear a late charge or penalty. Lender reserves the right to require that a
monthly escrow account be established for the payment of taxes in an amount
satisfactory to Lender, but only if reasonably necessary to protect Lender's
security interests. Notice of any change in assessment shall be delivered to
Lender.
b. Borrower may in good faith contest, by proper legal
proceedings, the validity of any tax, assessment, lien or encumbrance provided,
(i) an Event of Default does not exist; (ii) Borrower provides Lender with
security satisfactory to Lender assuring compliance with or payment of the tax,
assessment, lien or encumbrance, and any additional charge, interest, penalty,
expense or other payment which may arise from or be incurred as a result of
such contest; (iii) such contest operates to suspend enforcement of compliance
with or collection or enforcement of the tax, assessment, lien or encumbrance;
(iv) such contest is maintained and prosecuted at all times with diligence; and
(v) Lender is at all times kept informed in writing of all material
developments as to such contest and all reasonable requests by Lender for
information are fully responded to.
ARTICLE V - ADVANCES - REPAYMENT
5.1 ADVANCES.
a. Lender is obliged, subject to the terms and conditions herein
set forth, to lend to Borrower, or advance on Borrower's behalf and for
Borrower's account, a sum or sums in any event not to exceed the limitations
set forth in subpart h of this Section 5.1, and subject to the provisions of
Exhibits B, C and F hereof, to be used for the payment of those items set forth
on the
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Schedule of Estimated Costs attached hereto as Exhibit G and for the payment of
such other costs incidental thereto as may be approved by Lender. Such loan
shall be evidenced by the Acquisition Cost Note or the Revolving Note, as the
case may be, and may be advanced by Lender to Borrower or, if reasonably
necessary to protect Lender's security interests, advanced at Lender's option
by Lender or through the Title Company to such persons, firms or corporations
as have actually supplied labor, materials or services in connection with or
incidental to such construction.
b. The initial advance at closing under the Acquisition Cost Note
shall be limited to the amounts as budgeted by Borrower and approved by Lender
necessary to acquire title to the Premises free and clear of liens, legal
expenses, and costs, including Lender's commitment fee, Lender's counsel's
legal fees, and other costs related to the acquisition of its Premises or to
the documentation, administration and closing of the Loan. The balance of the
initial advance shall be evidenced and repaid as provided in the Revolving Note
on account of items budgeted under the Revolving Note.
c. Subsequent to closing, advances will be made for fees, costs
and expenses, which under the Loan Documents Borrower is required to pay or
incur and under Section 3.7 of this Agreement are items of expense eligible for
inclusion in a budget, to the extent set forth in an approved budget, or if not
so set forth, to the extent not exceeding $10,000.00 in an individual instance
or $100,000.00 in the aggregate in a given fiscal year of Borrower, or
otherwise approved by Lender. Additionally, subsequent to closing, advances
will be made for construction costs incurred, work performed and materials in
place, consistent with a budget previously approved by Lender, no more
frequently than once per month (unless extraordinary circumstances dictate that
an advance be made prior to the next scheduled date) based on certified
contractors' draws (on forms specified by Lender, a sample of which is attached
hereto as Exhibit F) as approved by Lender and Lender's Inspector. These
advances (i) will be made directly to Borrower or through the Title Company or
other approved disbursement agent upon receipt of an endorsement, if requested
by Lender, to Lender's title policy in form and content acceptable to Lender,
(ii) will be in an amount of the draw request as approved, which draw request
shall be net of retainage and (iii) will be made within five (5) business days
of Lender's receipt of the completed draw request package, which package shall
include the written confirmation by Borrower's Engineer or Architect as to the
percentage of completion and such other matters concerning which Lender
customarily requires certification. Repayment of these advances shall be as
provided in the Revolving Note.
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d. Prior to the final disbursement of the ten percent (10%)
retainage for site development work, which will be made on a contractor by
contractor basis as provided in Exhibit C of this Agreement, Lender will
require a certificate of completion (in form satisfactory to Lender) from
Borrower and from Lender's Inspector, together with (i) evidence from the
responsible local authorities that the portion of the Improvements as
constructed by the contractor in issue meets the applicable contract and/or
regulatory standards and (ii) if Lender has evidence that subcontractors or
suppliers are not being paid, then Lender at its option may require affidavits
and/or lien releases from Borrower's general contractor and all major
subcontractors.
e. Subsequent to closing, advances will be made to pay when due
accrued interest under the Acquisition Cost Note and under the Revolving Note,
and these advances shall be evidenced and repaid as provided in the Revolving
Note.
f. Should Borrower have effectively exercised all of the
Extension Options (as that term is defined in the Acquisition Cost Note), on
the Final Termination Date (as defined in the Acquisition Cost Note) of the
Acquisition Cost Note, upon Borrower's election upon thirty (30) days written
notice, an advance will be made to repay all sums then unpaid under the
Acquisition Cost Note, and such advance shall be evidenced and repaid as
provided in the Revolving Note. Extension fees for the exercise of an option
also will be paid by an advance.
g. Advances will be made within ten (10) days of receipt of
Borrower's report in compliance with paragraph 5(b) of the Additional Interest
Agreement to pay such amounts as may be payable to Lender and Borrower
respectively under paragraph 2(b) of the Additional Interest Agreement with
respect to the preceding Accounting Period (as defined in the Additional
Interest Agreement). Such advances will be evidenced and repaid as provided in
the Revolving Note.
h. Notwithstanding any of the foregoing, at no time shall Lender
be obligated to make an advance which would result in (i) the amount
outstanding on the Loan exceeding at any one time $50,000,000.00, (ii) the
amount outstanding under the Revolving Note exceeding at any one time
$42,000,000.00, or (iii) the aggregate amount of advances, exclusive of that
portion of the initial advance described in subparagraph 5.1b above which is to
be evidenced by the Acquisition Cost Note, and also exclusive of advances made
pursuant to subparagraph 5.1g, but inclusive of advances made pursuant to
subparagraph 5.1f, exceeding $85,000,000.00 on a non-revolving basis.
i. The Title Company will be called upon to insure the Lender
against loss or damage on account of defects in, mechanic's liens upon or
unmarketability of the title to the
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Premises and Improvements, as well as to insure that the Deed of Trust, at the
time of each disbursement, constitutes a valid first lien on said Premises and
Improvements and that there exist no encumbrances, liens or other matters of
record affecting title, whether inferior or superior to the Deed of Trust,
except as acknowledged and accepted in writing by Lender or listed on the
original title policy insuring the Deed of Trust. Therefore, and in order to
facilitate the smooth and orderly disbursement of funds and the proper
administration of the development loan, the Borrower agrees to promptly and
fully observe and comply with all reasonable regulations, requirements and
requests of the Lender and the Title Company with respect to all matters
relating to the loan and the administration thereof, including but not being
limited to matters of title, disbursement of advances, proof as to payment of
construction bills of suppliers, laborers or subcontractors, surveys,
inspections, proof of development progress, lien waivers, partial and final
releases and satisfactions of liens, execution of papers, proof of costs,
closings and deposits for costs.
j. Notwithstanding the foregoing, Borrower may reasonably and in
good faith contest any claim, lien or demand of any Construction Subcontractor
provided that Borrower complies with all of the conditions for the permitted
contest of taxes, assessments, liens and encumbrances specified in Section 4.2b
of this Agreement.
5.2 USE OF FUNDS.
a. Borrower will cause all monies borrowed or advanced pursuant
hereto to be applied entirely and exclusively for the acquisition of the
Premises, the development thereof and the construction of the Improvements, and
for the payment of such costs incidental thereto, as may be specifically
approved by Lender.
b. Notwithstanding anything contained in this Agreement to the
contrary, Lender shall not be required to advance any amounts to the Borrower
for any building materials or other goods intended for use in, on or about the
Premises (collectively "Building Materials"), which are not stored at the
Premises after purchase, without the written consent of Lender and upon such
conditions and additional security as Lender, in its sole discretion, may
impose. The storage off the site of the Premises of any Building Materials upon
which Lender has advanced to Borrower sums under this Agreement without the
consent and approval of Lender shall constitute an Event of Default under this
Agreement.
5.3 REPAYMENT. Borrower will repay the principal sum evidenced by
the Notes, the Deed of Trust and this Agreement, together with interest on such
sum and together with the charges
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specified therein, herein or in the other Loan Documents, and will observe and
perform all of the covenants and conditions at the times and in the manner set
forth herein and in the Notes, Deed of Trust and the other Loan Documents.
5.4 REIMBURSEMENT FOR DEVELOPMENT EXPENSES. Until the Loan has
been repaid in full, Lender shall receive one hundred percent (100%) of any
reimbursement payable to Borrower from any source for city fees, marketing
costs, landscape costs or any other costs funded by proceeds of the Loan.
Borrower agrees to report on a monthly basis all reimbursements from third
parties and the amount of such reimbursement. Such report shall be accompanied
with a payment to Lender of all reimbursement covered by this section. All
reimbursements paid to Lender shall be applied as provided in the Notes against
the Loan balance until the Loan has been repaid in full. Failure by Borrower to
pay the appropriate amounts of reimbursement to Lender shall constitute an
Event of Default hereunder.
5.5 LENDER'S INSPECTOR; COMPLETION DEPOSIT.
a. Lender shall, at Borrower's expense, employ Eckland
Consultants or such other inspector approved by Lender in writing ("Lender's
Inspector") for the purpose of analyzing anticipated construction costs,
performing periodic inspections of the construction of the Improvements,
approving the Plans and Specifications and certifying that the amount of each
draw request is not in excess of the work completed. Borrower shall pay the
reasonable costs incurred for the services of the Lender's Inspector.
b. If at any time and from time to time, in the reasonable
opinion of Lender, the estimated cost of acquisition and construction of the
Premises and Improvements and all related expenses, exceeds the funds remaining
in the Loan for disbursement, and Lender reasonably determines that this
circumstance impairs to a material extent its security or prospects for
repayment, and Lender, in its option, does not elect to increase the amount of
such funds, then Borrower shall within thirty (30) days after notice from
Lender either (i) deliver to Lender an unconditional irrevocable letter of
credit in form and substance acceptable to Lender and issued by a bank
reasonably satisfactory to Lender, or other security satisfactory to Lender, in
the amount of the difference between the funds remaining in the Loan and the
higher estimated cost or (ii) give Lender irrevocable notice that it will pay
all amounts outstanding under the Loan, which payment will be due and payable
no later than one hundred and eighty (180) days thereafter.
5.6 LOAN TERMINATION. Any further, obligation of Lender under this
Agreement or the other Loan Documents to lend or otherwise advance monies to or
for the benefit of Borrower, shall
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terminate, and all amounts then outstanding under the Loan shall become
entirely due and payable, upon the earliest of the following events: (a) April
1, 2001; (b) the closing of a Sale of the Premises (as defined in the
Additional Interest Agreement); or (c) March 31, 1993, if Lender, in its sole
discretion, gives Borrower one hundred twenty (120) days prior written notice.
Prior to the occurrence of the first of these events, a full repayment of all
amounts then outstanding under the Loan shall not act as a termination of the
Loan. The termination of Lender's right to receive Additional Interest under
the Additional Interest Agreement shall be as provided in that agreement.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES; COVENANTS
6.1 REPRESENTATIONS AND WARRANTIES. Borrower does specifically
represent and warrant that as of the date of this Agreement:
a. It is a duly organized, bona fide and validly existing limited
partnership under the laws of the State of Delaware, is qualified to do
business in the State of California, and has the full power and authority to
consummate the transactions contemplated hereby and to conduct business in the
State of California, and that its sole General Partner, 3333 Development
Corporation, is a duly organized and validly existing corporation organized
under the laws of the State of Nevada, and is qualified to do business in the
State of California.
b. Upon the closing of the Loan, Borrower will have good,
indefeasible and merchantable title to and fee simple ownership of the
Premises, all free and clear of all liens, claims, security and encumbrances
except those of Lender and those reflected in the title policy issued by the
Title Company.
c. The Plans and Specifications to the extent required by
applicable law will have been approved by all governmental agencies and
authorities having jurisdiction thereof prior to commencement of construction
of the Improvements, and the use of the Premises contemplated hereby will
comply with all local zoning requirements, and all necessary approvals and
permits have been or will be obtained at the times required by applicable law,
regulation, rule or ordinance.
d. To the knowledge of Borrower, or except as may have been
previously disclosed by Borrower in writing to Lender, there are no actions,
suits or proceedings pending or, threatened in writing against or affecting
Borrower or the Premises or involving the validity or enforceability of the
Deed of Trust or any other Loan Document, or the priority of the lien thereof,
at law or in equity, or before or by any governmental authority, or any other
matters which would substantially impair
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either the ability of Borrower to pay when due any amounts which may become
payable in respect to the Notes or any other Loan Document, and to the
Borrower's knowledge it is not in default with respect to any order, writ,
injunction, decree or demand of any court or any governmental authority.
e. The consummation of the transaction contemplated and the
performance of this Agreement, the Deed of Trust and the other Loan Documents
will not result in any breach of, or constitute a default under any other
mortgage, deed of trust, lease, bank or other loan, credit agreement or any
other instrument to which the Borrower is a party.
f. To the best of Borrower's knowledge, as of the date of this
Agreement, the Borrower has not (i) become insolvent; (ii) voluntarily or
involuntarily become the subject of a proceeding under the Bankruptcy Act as
amended; (iii) sought any form of relief under the bankruptcy laws of the
United States, or (iv) defaulted on any present obligation to Lender.
g. No representation or warranty by Borrower in this Agreement or
in any of the other Loan Documents to which it is a party, nor any statement
furnished or to be furnished to Lender by Borrower pursuant hereto or thereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
h. No broker, other than Bear Stearns Real Estate Group,
Inc., has been retained or utilized by Borrower to arrange the
financing reflected in this Agreement.
i. No construction, excavation or work of any sort relative to
construction of the Improvements has been commenced, nor has any material to be
used in the construction of the Improvements been purchased or delivered.
j. To the best of Borrower's knowledge, no toxic or hazardous
substances, including, without limitation, asbestos and the group of organic
compounds known as polychlorinated biphenyls, have been generated, treated,
stored or disposed of, or otherwise deposited in or located on the Premises,
including, without limitation, the surface and subsurface waters of the
Premises, nor has any activity been undertaken on the Premises which would
cause a release or threatened release of hazardous waste from the Premises
within the meaning of, or otherwise bring the Premises within the ambit of, the
comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Section 9601 through 9657, or any similar state law or
local ordinance or any other Environmental Law. To the best of Borrower's
knowledge, no underground storage tanks or underground deposits are located on
the Premises nor have there been any
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leakage from underground storage tanks or underground deposits previously
located on the Premises.
6.2 AFFIRMATIVE COVENANTS. Borrower hereby covenants that without
further request or notice from Lender (unless otherwise noted) the Borrower
shall:
a. Promptly pay all principal and interest under the Notes and
all other indebtedness in respect of the Notes, any of the Loan Documents or
the Environmental Indemnification.
b. Keep the Premises, including all Improvements now or hereafter
situated thereon, in good condition, not commit or permit any waste thereof,
make all repairs, replacements and improvements and complete and restore
promptly and in good workmanlike manner any building, improvements, or other
items of the Premises which may be damaged, or destroyed, and pay when due all
costs incurred therefor.
c. Pay or reimburse Lender, from time to time, upon demand, for
all expenses relating to the Loan and its administration including, but without
limiting the generality of the foregoing, all recording charges, registration
taxes, recording taxes, mortgage taxes, charges of the title insurance company,
charges for certified copies of instruments, all costs, including all
attorneys' fees, incurred by Lender relative to the preparation and review of
this Agreement, the Loan Documents, and all costs incurred in connection with
any disbursement of the Loan. Such expenses shall not include travel expenses
or compensation of full-time employees of Lender.
d. Perform all things necessary to preserve and keep in full
force and effect the existence and rights of Borrower; comply with all laws
applicable to each; and conduct and operate its business in the normal course.
e. Furnish to Lender as soon as available, but in no event later
than one hundred twenty (120) days after Borrower's fiscal year end, its
audited fiscal year-end financial statement.
f. Furnish to Lender, immediately upon becoming aware of the
existence of an Event of Default or any condition which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default, written
notice of the occurrence of any such event or the existence of any such
condition.
g. Keep and maintain complete and orderly books and records of
account in which full, true and correct entries are made of all dealings and
transactions relative to the Premises and the Improvements being constructed
thereon. Such books and records shall be kept on a cash basis.
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h. Permit any person designated by Lender to visit, inspect
and/or audit the Premises and Improvements and the books and records of
Borrower at such reasonable times and as often as Lender may reasonably
request.
i. Immediately notify Lender (A) of any attachment or other legal
process levied against the Premises or Improvements, or the institution of any
action, suit or proceeding by or against Borrower, or affecting the Premises or
Improvements, or (B) any information received by Borrower relative to the
Premises which may materially and adversely affect (i) Borrower's ability to
pay the Notes, (ii) the value of the Premises or (iii) the rights and remedies
of Lender granted and continued pursuant to the Loan Documents.
j. Pay when due all obligations, lawful claims or demands with
respect to the Premises and Improvements which, if unpaid, would result in, or
permit the creation of, any lien or encumbrance on the Premises or
Improvements, including but not limited to all lawful claims for labor,
materials and supplies, and, in general, do or cause to be done everything
necessary to fully preserve the rights and interests of Lender under this
Agreement and the other Loan Documents, except with respect to amounts
contested in good faith and with respect to which Lender is bonded or otherwise
protected. Borrower shall at all times defend Lender's interest in and to the
Premises, and the first priority position of said interest, against any and all
claims of any person adverse to Lender. Borrower shall take all actions
reasonably deemed necessary or appropriate by Lender to give effect to Lender's
priority of interests contemplated by this Agreement and the other Loan
Documents.
k. Upon Lender's request, provide Lender with a written report
setting forth the status of each agreement of sale affecting the Premises.
6.3 Negative Covenants. Borrower shall not, directly or
indirectly, without the prior written consent of Lender:
a. Application of Loan Proceeds. Use or apply any portion of any
funds provided by Lender pursuant to the Loan Documents for any purpose other
than the acquisition of the Premises, construction of the Improvements, payment
of costs and expenses related thereto and payment on the Loan.
b. Non-consensual Encumbrances. Hereafter suffer or allow to be
sustained a non-consensual lien or encumbrance upon the Premises or
Improvements, or any portion of either, unless released within sixty (60) days
or contested and secured in the manner provided for in Sections 4.2b or 5.1j of
this Agreement.
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c. Control. Permit the transfer of any general partnership
interest in Borrower.
d. Sale, Modification or Encumbrance. Sell, assign, transfer,
convey, mortgage, pledge, lease, materially change the intended use of (as set
forth in the "Specific Plan" as that term is defined in the Development
Agreement), substantially modify, or refinance without concurrently paying in
full all indebtedness to WCC, including additional interest and release fees
then due, or otherwise alienate or encumber the Premises, the Improvements, or
any portion of either or any interest therein, whether legal or equitable,
other than as expressly provided in this Agreement, provided, however, that
Lender will not unreasonably withhold its consent to a request by Borrower that
it be permitted to encumber the Premises with a junior lien to secure financing
in addition to the maximum Loan amounts under this Agreement if such
encumbrance would not unreasonably impair Lender's security or prospects for
payment of all amounts to which Lender is or might become entitled under the
Loan Documents.
e. Assertion of Certain Defenses. Assert in any judicial
proceeding the defense of lack of consideration or violation of any applicable
usury laws or any similar legal or equitable defense to the validity or
enforceability of this Agreement or any other Loan Document.
f. Name Change. Change its name to any other name without thirty
(30) days notice to Lender.
g. Appointment of Management or Development Agent. Appoint or
retain any agent or entity to manage and/or develop the Premises or any portion
thereof, or enter into any agreement with respect to the management of the
Premises. In this connection, any management agreement to which Lender may
consent shall provide, unless Lender elects otherwise, for an assignment of
Borrower's rights thereunder to Lender and a subordination of the management
company's rights thereunder to Lender's liens with respect to the Premises and
Improvements thereon, and that such assignment and subordination shall be
irrevocable by Borrower and the management company. Lender agrees that it will
not withhold consent except on objective grounds stated in writing to the
appointment of an Affiliate of Borrower to act as management company provided
said Affiliate executes a subordination of management agreement in form and
content acceptable to Lender.
h. Use of Lender's Name. Disclose to third parties the nature of
Lender's lending relationship with Borrower or use Lender's name in any manner
in any communication or dealings with third parties, ther than as required by
law, for financial reporting purposes or for obtaining other financing in the
due course of Borrower's business.
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ARTICLE VII - DEFAULT
7.1 EVENTS OF DEFAULT The occurrence of one or more of the
following events shall, at the option of the Lender upon written notice to
Borrower after the expiration of any applicable cure or grace period, constitute
an "Event of Default" hereunder if, in the event of a monetary default (i.e., a
failure to pay sums due Lender) for which no cure period is otherwise prescribed
in the Loan Documents, payment is not made by Borrower within five (5) days of
its receipt of notice to pay (provided that after two (2) such notices in any
twelve (12) month period no additional notices to pay need be given within such
period and payment must be made by Borrower within five (5) days of the due date
without further notice), or, in the event of a non-monetary default for which no
cure period is otherwise prescribed in the Loan Documents, Borrower does not
commence to cure within ten (10) days of its receipt of notice to cure, and does
not cure the default within thirty (30) days of its receipt of notice to cure,
provided, however, that if such non-monetary default is not reasonably
susceptible to cure within thirty (30) days, so long as cure is diligently
pursued, the defaulting party shall have sixty (60) days from its receipt of
such notice to cure; provided further, however, that if Borrower in bad faith
fails to give Lender written notice as required by Paragraph 6.2f, Lender may,
at its option, give Borrower ten (10) days' written notice of default without
opportunity to cure:
a. Failure by the Borrower to make any payment required to be
made by the Borrower under the Notes, the Deed of Trust, this Loan Agreement,
the Environmental Indemnification or any other document relating to the Loan in
accordance with the respective terms thereof (no payment which Borrower is
entitled to have paid by an advance from the Loan shall be deemed to be
delinquent or unpaid for the purposes of this subparagraph unless Borrower has
instructed Lender not to make such payment from the proceeds of the Loan);
b. Failure by the Borrower to perform or observe any other
covenant or agreement contained herein, in the Deed of Trust, in any of the
other Loan Documents, in the Environmental Indemnification or in any Pending
Disbursements Agreement;
c. (Intentionally Omitted).
d. Any representation or warranty made by Borrower in
this Agreement, the Deed of Trust, any of the other Loan Documents or any other
documents or instruments delivered pursuant hereto shall prove incorrect in any
material respect or intentionally false;
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e. Time Being of the Essence, if any action agreed to be taken is
not taken or carried out in a timely manner by Borrower or, upon Lender's
reasonable request, evidence satisfactory to Lender that such action has been
taken or carried out is not promptly presented;
f. There (i) occurs a Default as defined in Section
6.02.1 of the Development Agreement, or (ii) unless a replacement permit is
simultaneously issued and a copy is provided to Lender, Borrower neglects,
fails or refuses to keep in full force and effect any permit or approval issued
with respect to construction of the Improvements, or any notice that such
permit or approval has been or will be cancelled, and such action would impair
to a material extent Lender's security;
g. Lender, after notice from the city of San Clemente, cures an
alleged occurrence of an event which with the passage of time would have
constituted a Default by Borrower under the Development Agreement;
h. The conveyance or transfer of the Premises or any property
encumbered by the Deed of Trust in a manner not permitted by Lender hereunder,
under the Deed of Trust or under any of the other Loan Documents;
i. Except as permitted by Lender in writing, the entry of any
lien or encumbrance against the Premises, the Improvements or any property
encumbered by the Deed of Trust; provided, that Lender agrees not to
unreasonably withhold its consent to a request by Borrower that it be permitted
to encumber the Premises with a junior lien to secure financing in addition to
the maximum Loan amounts under this Agreement if such encumbrance would not
unreasonably impair Lender's security or prospects for payment of all amounts
for which Lender is or might become entitled under the Loan Documents;
j. Any party shall obtain an order or decree in any court of
competent jurisdiction: (i) to enjoin the construction of a material portion
(as determined reasonably by Lender) of the Improvements; or (ii) to materially
delay construction or completion of the same; or (iii) to enjoin or prohibit
Borrower and Lender, or either of them, from carrying out a material portion
(as determined reasonably by Lender) of the terms and conditions hereof, and
such proceedings are not discontinued or such decree is not vacated within
sixty (60) days after Lender shall have given Borrower written notice thereof;
k. Borrower fails to prosecute construction of the Improvements
with diligence as required by paragraph 3.5 herein;
l. Borrower abandons (which is understood not to include delay
caused by forces beyond Borrower's control) construction or
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development of the Improvements or the Premises and such abandonment continues
for a period of ten (10) days;
m. Borrower allows cancellation or termination of any insurance
required hereunder or under the Deed of Trust without timely replacing such
insurance and notifying Lender of such replacement;
n. The failure of Borrower to file all federal, state and local
tax returns which are required to be filed or to pay, contest or make
provisions for the payment of all taxes (including taxes of its employees
withheld by it) which have or may become due pursuant to any return or
otherwise;
o. Any one of the following events occur with respect to Borrower:
i. Its failure to pay its debts generally as they
become due or entry of judgments in excess of $50,000 against it which
remain unstayed or unpaid for more than sixty (60) days, or execution
on any judgment so entered;
ii. The voluntary filing of a petition in bankruptcy
or for reorganization or for the adoption of arrangements under the
Bankruptcy Code, as now or in the future amended, or an admission
seeking the relief therein provided or the filing of a similar action
pursuant to the laws of the State of Delaware, of the State of
California or of any other state;
iii. The making of an assignment for the benefit of
creditors;
iv. The consenting to the appointment of a receiver
for all or a substantial part of Borrower's property;
v. Borrower being adjudicated as bankrupt;
vi. The entry of a court order which shall not be
vacated, set aside or stayed within sixty (60) days from the date of
entry, (i) appointing a receiver or trustee for all or a substantial
part of its property, (ii) approving a petition filed against it for
an arrangement in bankruptcy or for a reorganization pursuant to the
Bankruptcy Code or for any other judicial modification or alteration
of the rights of creditors;
vii. The assumption of custody or sequestration of a
court of competent jurisdiction of all or a significant part of any of
the properties of Borrower, which custody or sequestration shall not
be suspended or terminated within thirty (30) days from its inception;
or
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p. A material decline in the financial condition of Borrower
which Lender in its discretion reasonably exercised and in good faith believes
renders the obligations of Borrower to Lender unsafe or insecure in view of the
value of the real and personal property security therefor.
7.2 REMEDIES. If one or more of the foregoing Events of Default
(which is defined in Section 7.1 and includes as stated therein the expiration
of any applicable cure or grace period) occur, Lender may exercise any one or
more of the following remedies:
a. Lender may refuse to make further advances or loans hereunder
with or without demanding immediate payment by Borrower of all amounts loaned
or advanced hereunder, together with interest on such amounts, and Lender may
assert any or all of the rights and remedies provided herein or in the Notes,
the Deed of Trust or any of the other Loan Documents; such rights or remedies
may be asserted concurrently, cumulatively or successively from time to time so
long as Borrower is indebted to Lender on account of any amounts loaned or
advanced pursuant hereto or on account of interest due on such amounts.
b. Enter upon the Premises, expel or eject Borrower and all
persons claiming through or under Borrower and collect the rent, issues and
profits therefrom.
c. Enter upon the Premises, complete at the expense of Borrower
in accordance with Plans and Specifications such Improvements as are reasonably
required for economic development of the Premises and place in effect such
insurance and bonds as are or may be required hereunder. The cost of such
completion, insurance and bonds shall be charged to and deducted from the sum
agreed to be loaned or advanced by Lender hereunder but shall be deemed to be
indebtedness of Borrower evidenced by the Notes and secured by the Deed of
Trust. In the event Lender exercises the option to complete said construction,
Lender shall have the right to enter into any contracts Lender deems necessary
or desirable for the completion of the Improvements.
d. Pay or discharge any lien or claim against the Premises
or any part thereof and charge the amount so paid to the sum agreed to be
loaned or advanced by Lender.
e. Institute such legal proceedings or other proceedings in the
name of Borrower or Lender, as Lender may deem appropriate, for the purpose of
protecting the Premises and Lender's interest therein.
f. Do and perform such acts and deeds as Lender shall deem
necessary or desirable to protect the Premises and Lender's interest therein.
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g. All amounts paid under subparagraphs c, d, e and/or f of this
Section 7.2 shall be deemed to be indebtedness of Borrower evidenced by the
Revolving Note and secured by the Deed of Trust and other Loan Documents, and
in the event such indebtedness exceeds the face amount of the Revolving Note,
such excess or overage shall be added to the face amount of the Revolving Note
and to the principal balance outstanding and shall bear interest at the Default
Rate as provided therein and shall be secured by the Deed of Trust and may be
collected as part of the debt evidenced thereby.
h. Exercise any and all remedies available to it in law, in
equity or provided for in any document executed in connection with this loan
transaction.
7.3 REMEDIES - CUMULATIVE OR ALTERNATE
a. Any Event of Default hereunder shall constitute an Event of
Default under the Deed of Trust and the Notes to the same extent as though the
Notes had by their terms become due and payable and payment thereof had not
been made, and in such event Lender may, without liability to Borrower, assert
and exercise any or all of the rights and remedies provided herein or in the
Notes, the Deed of Trust, the other Loan Documents or otherwise provided by law
with respect to the Notes, the Deed of Trust, this Agreement or the other Loan
Documents, and such other collateral as Lender may hold as security for the
indebtedness evidenced by the Notes or for the performance of Borrower's
undertaking hereunder.
b. No delay or failure of Lender in the exercise of any right or
remedy hereunder or under the Notes, Deed of Trust or the other Loan Documents
shall affect any such right or remedy, nor shall any single or partial exercise
thereof preclude any further exercise thereof, and no action taken or omitted
by Lender shall be deemed to be a waiver of any such right or remedy.
ARTICLE VIII - PARTIAL RELEASES OF LIEN
8.1 PARTIAL RELEASES.
a. Borrower may enter into binding agreements for the Sale or
Partial Sale of the Premises (as those terms are defined in the Additional
Interest Agreement) which are previously consented to in writing by Lender.
Lender has at this time consented to three (3) Partial Sales of the Premises to
Centex Real Estate Corporation ("CREC") under the agreements listed in
subparagraphs A16 and A18 of Exhibit B to this Agreement. The consent of
Lender to additional Partial Sales of the Premises shall be deemed to have been
given if the price has been preapproved
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<PAGE> 23
pursuant to the following procedure and the contract documents have been
preapproved by Lender. The preapproval procedure for price is as follows. By
March 1 of each year, commencing March 1, 1990, Borrower will furnish to Lender
its recommended pricing (on an all cash consideration basis) of lots (the
selection of which lots shall not be inconsistent with the Development Schedule
and the budget) to be sold to CREC during the following fiscal year of Borrower
along with a market survey supporting the recommended pricing. Lender will have
thirty (30) days to respond. Lack of response during that time will be deemed
consent to the recommended pricing. If Lender timely gives notice of its
disagreement with the recommended pricing, and Lender and Borrower cannot
otherwise agree, then Lender and Borrower shall endeavor to engage a mutually
acceptable MAI appraiser, whose determination of the proper recommended minimum
pricing will be complied with by Borrower and deemed consented to by Lender for
all Partial Sales of Premises involving such lots during the applicable fiscal
year. The price list arrived at by this procedure shall be deemed part of
Exhibit H. If Borrower and Lender cannot agree on a MAI appraiser, then the
pricing of the lots will be the purchase price which can be obtained from a
third party, who is not an Affiliate of Borrower, on a best efforts basis in
an arms length transaction. Lender shall be obligated to provide partial
releases of the lien of the Deed of Trust on any given portion of the Premises
if and only if each of the following conditions has been fully met:
(i) At the time a partial release is requested, no
Event of Default hereunder, under any of the other Loan Documents, or
under the Environmental Indemnification, shall exist; and no condition
or event, which with the passage of time, the giving of notice, or
both would constitute an Event of Default hereunder, under any of the
other Loan Documents or under the Environmental Indemnification, shall
exist unless such condition or event would be cured by payment of the
Release Price (as hereinafter defined);
(ii) Borrower has paid to Lender all of Lender's costs
relating to such partial releases or made arrangements reasonably
satisfactory to Lender for payment of such costs;
(iii) Lender shall have received, as Additional
Interest, at the closing of the sale, its Additional Interest (as
defined in the Additional Interest Agreement) to the extent then
payable under the Additional Interest Agreement.
(iv) Lender shall have received, at closing of the
sale, one hundred percent (100%) of the Adjusted Sales Proceeds (as
hereinafter defined) of the portion of the Premises being conveyed
(the "Release Price"), provided, however, the Release Price will never
exceed the outstanding
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balance of the Loan;
(v) The Gross Sales Proceeds (as hereinafter defined)
equals or exceeds the Minimum Sales Price plus specified lot premiums
for each such unit as specified on Exhibit H attached as amended from
time to time;
(vi) After the requested partial release has been
granted, all remaining portions of the Premises which are included
within any recorded subdivision map have legal access to a public or
private street, which access shall be acceptable to Lender; and
(vii) Borrower has satisfied the requirements of Section
8.3 hereof.
b. All Release Prices (but no Additional Interest as that term is
defined in the Additional Interest Agreement) received by Lender shall be
applied to repayment of the Acquisition Cost Note in the order set forth
therein for application of payments so long as that Note has not been fully
repaid. After the Acquisition Cost Note has been fully repaid, then Release
Prices received by Lender shall be applied to repayment of the Revolving Note
in the order set forth therein for application of payments. Upon the
occurrence of an Event of Default, all Release Prices received by Lender shall
be applied, in Lender's sole discretion as to order of payment, to any of
accrued and unpaid late charges or interest, principal, costs and expenses of
operating or developing the Premises, or attorneys' fees or other costs related
to enforcement or collection of the foregoing.
c. The term "Gross Sales Proceeds" shall mean all cash proceeds
received in connection with a Sale of the Premises or a Partial Sale of the
Premises, except as otherwise agreed to by Lender and Borrower.
d. The term "Adjusted Sales Proceeds" shall mean Gross Sales
Proceeds less (i) normal and customary closing costs, (ii) if the Sale or
Partial Sale of the Premises was not to an Affiliate (as defined in the
Additional Interest Agreement) of Owner, reasonable broker's commissions, and
(iii) the Participation Amount (as defined in said Additional Interest
Agreement) to the extent payable at the time of the Sale or Partial Sale to
Lender or Borrower respectively pursuant to the Additional Interest Agreement.
e. Lender acknowledges that it has irrevocably consented to the
release of a portion of the Premises consisting of 161 lots pursuant to the
sale referred to in Exhibit B, paragraph A, item 17, and agrees to execute
promptly upon request a Partial Release and any other documents reasonably
necessary to accomplish the release.
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8.2 PARTIAL RELEASE PROCEDURES. Any and all Partial Releases shall
be in accordance with the following procedures:
a. Borrower's ten (10) days' advance written request for a
Partial Release shall be given to Lender and accompanied by (i) the legal
description of the portion of the Premises to be released, and (ii) information
necessary to process the request for Partial Release, including the name and
address of the title company, if any, to whose attention the Partial Release
should be directed, numbers that should be referenced (title company order
number, loan number, etc.) and the date when such Partial Release is to be
made. Borrower shall also specify the name and address of the prospective
purchaser and the intended use of the portion of the Premises to be released
and shall supply such other documents and information concerning such Partial
Release as Lender may reasonably request.
b. Within five (5) days after receipt of such written request,
and in accordance with and pursuant to the terms and conditions of Sections
8.1, 8.2 and 8.3 hereof, Lender shall, if appropriate, execute and deliver such
Partial Release to the Title Company so specified; provided that all costs and
expenses of Lender associated with such Partial Release (including, but not
limited to, reasonable legal fees) shall be paid by Borrower. Borrower shall
also obtain all title insurance endorsements reasonably required by Lender in
connection with such Partial Release.
c. The execution and delivery of such Partial Release shall not
affect Borrower's obligations hereunder or under the Deed of Trust or Notes,
except to the extent that the payment of the Release Price is actually received
by Lender. Regardless of the time such Partial Release is executed, delivered
and recorded, the payment made by Borrower to Lender in respect to such Partial
Release shall be credited against the applicable Note only upon receipt by
Lender of the Release Price. The Partial Release shall be delivered, in
escrow, by Lender to the title company so designated, to be held, released,
delivered and recorded in accordance with Lender's escrow instructions, which
shall require payment, in cash, of the Release Price to Lender prior to
delivery and recordation of the Partial Release.
8.3 PRIOR APPROVAL. No Partial Release shall be made, as set forth
above, if such Partial Release is for a sale or other transfer occurring under
an agreement not previously approved by Lender.
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ARTICLE IX - MISCELLANEOUS
9.1 REIMBURSEMENT TO LENDER. Borrower hereby agrees to reimburse
and fully compensate Lender upon demand by Lender for all loss, damage and
expense, including out-of-pocket expenses and the reasonable fees of Lender's
counsel, together with interest on the amount thereof from the date the same
accrued at the Default Rate (defined in the Notes), incurred by Lender, (i) by
reason of any default or defaults hereunder by Borrower not cured within any
applicable cure period, (ii) by reason of the neglect by Borrower of any duty
or undertaking, and (iii) in the exercise of any right or remedy hereunder.
9.2 EXPENSES TO LENDER. All items which Borrower agrees to furnish
hereunder or in connection herewith will be furnished at Borrower's sole cost
and expense and without cost or expense to Lender. In addition, Borrower shall
pay to Lender any reasonable fees or costs incurred by Lender's Inspector in
the performance of its duties hereunder.
9.3 CONDITIONS PRECEDENT TO DISBURSEMENT. Prior to the initial
disbursement of any funds hereunder, the Lender shall be furnished with the
documents as required by paragraph A of Exhibit B, all in form and substance
satisfactory to Lender. Subsequent disbursements shall be subject to
satisfaction by Borrower of the provisions of Exhibits B and C hereto and shall
be in accordance with the procedures outlined in Exhibit F hereto.
9.4 LENDER - NO OBLIGATION AS TO PLANS OR SITE. Any inspection by
Lender of the Plans and Specifications or of construction or of the site are
made solely for the purpose of evaluation of Lender's security. The adequacy
and suitability of these matters as they may apply to the Borrower and all
other persons are solely the responsibility of the Borrower and Borrower's
Engineer, without any liability or obligation of Lender whatsoever.
9.5 ASSIGNMENT: PLANS, SPECIFICATIONS AND CONTRACT AND ALL
DOCUMENTS RELATING TO THE IMPROVEMENTS. Borrower, to the extent permitted by
law, hereby makes a present assignment to the Lender, its successors and
assigns of: (a) the right to possess and use all the Plans and Specifications
prepared by it or for it or at its direction for the purpose of completing the
Improvements, (b) all of Borrower's rights in and to each General Contract and
Subcontract, agreement or subcontract pertaining to the Improvements, and (c)
all of Borrower's rights under any and all permits, contracts, agreements,
certificates and any other documents or agreements of any kind or nature
whatsoever which are used, entered into or held by Borrower in connection with
Borrower's acquisition of the Premises or the construction of the Improvements.
Lender shall exercise its
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rights under this assignment only in the event the Borrower fails to construct
and complete the Improvements in accordance with the terms and provisions of
this Agreement or defaults under this Agreement, the Notes, the Deed of Trust,
any other Loan Document or any other agreement securing the indebtedness
evidenced by the Notes. Borrower shall furnish to Lender prior to commencement
of construction the consent of Borrower's Engineer and of each Subcontractor in
substantially the form as set forth in Exhibits D and E hereof. Lender's rights
with respect to this Section 9.5 shall survive the completion of the
Improvements.
9.6 NOTICE. Any notice required or permitted to be given pursuant
hereto, or in connection herewith, shall be in writing, and shall be either
personally delivered, sent by Federal Express or other reputable overnight
courier, sent by facsimile transmission with the original subsequently
delivered promptly by other means, or sent by registered or certified United
States mail, postage prepaid, to the addresses set forth below, or to such
other addresses as either of the parties may for themselves designate in
writing from time to time for the purpose of receiving notices pursuant hereto:
Lender: Westinghouse Credit Corporation
One Oxford Centre - 301 Grant Street
Pittsburgh, Pennsylvania 15219
Attention: Vice President,
Residential Real Estate
Phone Number: (412) 393-3000
Facsimile: (412) 338-1460
With copy to: Poindexter & Doutre', Inc.
624 South Grand Avenue, Suite 2420
Los Angeles, California 90017
Attention: James P. Drummy, Esq.
Phone Number: (213) 628-8297
Facsimile: (213) 488-9890
Borrower: Centex Development Company, L.P.
3333 Lee Parkway
Dallas, Texas 75219
Attention: Raymond G. Smerge, Esq.
Phone Number: (214) 559-6500
Facsimile: (214) 522-7568
With copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attention: Robert E. Merritt, Jr., Esq.
Thomas G. Reddy, Esq.
Phone Number: (415) 393-2000
Facsimile: (415) 393-2286
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Written notices served by registered or certified mail shall be deemed
delivered on the third non-postal holiday after the date mailed. Other notices
shall be effective upon delivery.
9.7 NO LIABILITY TO THIRD PARTIES. This Agreement shall not be
construed to make the Lender liable to materialmen, contractors, craftsmen,
laborers or others for goods and services delivered by them to or upon said
Premises or for debts or claims accruing to the said parties against the
Borrower, and it is expressly understood and agreed that, except as expressly
provided for in exhibits hereto relating to assignments for security by
Borrower to Lender, and then only to the extent therein provided, there are no
contractual relationships, either expressed or implied, between the Lender and
any materialman, subcontractor, craftsman, laborer or any person supplying
work, labor or materials on the job, nor shall any third person or persons,
individuals or corporate, be deemed to be beneficiaries of this Agreement, or
of any term, condition or provision hereof, or on account of any action taken
by Lender pursuant hereto or any assignment by Borrower contained herein.
Nothing in this Agreement shall be construed to permit Lender to participate in
the day-to-day management of the development of the Premises.
9.8 INDEMNIFICATION. Borrower shall at all times indemnify,
defend, hold harmless and, on demand, reimburse Lender for any and all loss,
damage, expenses or cost, of whatsoever kind and nature including, without
limitation, cost of evidence of title, appraisal fees, documentary and expert
evidence, stenographer's and publication charges, and attorneys', accountants'
and other professional fees, arising out of or incurred in connection with (a)
any suit, action or proceeding relative to or having any impact on Lender's
interests hereunder or under any of the other Loan Documents including, without
limitation, probate, bankruptcy, appellate proceedings, and foreclosure of
Lender's interests therein or thereunder, (b) good faith preparation for the
commencement or defense of any proceeding relating to the Loan, the Loan
Documents or the Premises and/or Improvements, (c) adjustment and settlement of
insurance proceeds and condemnation awards, (d) advances made by the Lender
pursuant to this Agreement, (e) any Event of Default or any act or omission
which would constitute an Event of Default but for the passage of time, the
giving of notice or both, or any other breach of this Agreement or any other
Loan Document, including a breach of any representation or warranty hereunder
or thereunder, (f) any costs incurred by Lender in connection with enforcing
the obligations of Borrower under this Agreement or under any other Loan
Document or in connection with collecting the Indebtedness or preserving
Lender's collateral, (g) retaking, holding, preparing and selling the Premises,
or (h) any of the transactions contemplated by this Agreement or the other Loan
Documents, whether or not caused by Lender's negligence. The sum of such
expenditures shall be due and
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payable on demand, shall bear interest from the date of such demand at the
Default Rate (as that term is used in the Notes) and shall be secured by the
Deed of Trust and the other Loan Documents. Notwithstanding the foregoing,
Borrower shall have no liability under this subparagraph to indemnify Lender
from any liability caused solely by the Lender's gross negligence or
intentional act.
9.9 RELIANCE AND SEVERABILITY. All covenants, agreements,
representations and warranties made herein, and in the Deed of Trust, in the
Notes and in any other of the Loan Documents, instruments or certificates
executed in connection herewith shall be deemed to have been and are material
and relied upon by Lender, notwithstanding any investigation by Lender on its
behalf. No provisions contained in this Agreement which are contrary to,
prohibited by or invalid under applicable laws or regulations shall be
applicable, and they shall be deemed omitted herefrom and shall not invalidate
the remaining provisions hereof.
9.10 ATTACHMENTS. The exhibits attached to this Agreement are
incorporated herein and deemed a part hereof as if fully recited in this
Agreement prior to the place of execution hereof.
9.11 CAPTIONS. The paragraph captions contained herein are for
convenience only and in no way limit or alter the terms and conditions hereof.
9.12 LAW GOVERNING AND AMENDMENTS. This Agreement shall be
construed and governed by and enforced, insofar as possible, in accordance with
the laws of the State of California. This Agreement may be amended only in
writing executed by both of the parties hereto.
9.13 SUCCESSORS AND ASSIGNS. The words "Lender" and "Borrower"
shall include singular or plural, individual or corporate, and their respective
heirs, executors, administrators, legal representatives, successors and
assigns, as the case may be. In the event the Borrower is two or more
individuals or other entities, all the obligations and liabilities hereunder
shall be joint and several.
9.14 COMPLIANCE WITH FEDERAL RESERVE SYSTEM REGULATIONS. Borrower
represents and warrants that no part of the proceeds of any borrowing hereunder
will be used to purchase or carry any securities subject to the margin
requirements of Regulation G of the Federal Reserve System or to extend credit
to others for the purpose of purchasing or carrying any margin stock. Borrower
further represents and warrants that it is not engaged principally or as one of
its important activities in the business of extending credit for the purpose of
purchasing or carrying any such margin stock. If requested by Lender, Borrower
will furnish
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to Lender a statement in conformity with the requirements of the Federal
Reserve System. The provisions of this Paragraph 9.14 shall survive release of
the Deed of Trust, the repayment of the Loan, and completion of construction of
the Improvements.
9.15 FIRPTA CERTIFICATION. Under penalties of perjury, the person
("Affiant") executing this Agreement on behalf of the Borrower hereby certifies
on behalf of the Borrower as follows:
a. That Borrower is not a foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined in the
Internal Revenue Code of 1954, as amended (the "IRC"), and Income Tax
Regulations promulgated thereunder, all pursuant to the requirements of Section
1445 of the IRC and the regulations promulgated thereunder.
b. That Borrower does accordingly make and deliver this
Certification for the express purpose of inducing the Lender to make the
subject Loan in accordance with the terms and conditions of this Agreement, and
Borrower hereby represents that Borrower has read and understands Sections 1445
and 7701 of the IRC and the regulations promulgated under these sections and
declares that Borrower is not a foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in the IRC and the
Income Tax Regulations, and Lender is not required to withhold any tax as a
result of the sale, foreclosure or other disposition by Borrower of the
property of Borrower.
c. That Borrower understands and acknowledges that Lender is
relying and will rely upon the certification contained in this Section 9.15 in
refraining from withholding ten percent (10%) of any amount which may
ultimately be realized by Borrower.
d. Borrower's United States Taxpayer Identification Number is
75-2168471.
e. That Borrower understands and acknowledges that the
certification may be disclosed to the Internal Revenue Service by Lender and
that any false statement contained herein could be punished by fine,
imprisonment, or both.
f. That Affiant hereby acknowledges that Affiant has examined the
certification contained in this Section 9.15 and, under penalties or perjury,
declares that to the best of Affiant's knowledge and belief, it is true,
correct and complete, and Affiant further represents and declares that Affiant
has the authority to sign this certification on behalf of Borrower.
The provisions of this Section 9.15 shall survive release of the Deed of Trust,
the repayment of the Loan, and completion of construction of the Improvements.
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9.16 LENDER'S CONSENTS. Except as language otherwise provides or
context otherwise requires, all consents and approvals of Lender necessary
under this Agreement and the other Loan Documents will not be withheld
unreasonably.
9.17 SUBORDINATION TO SUBDIVISION MAPS. At Borrower's request,
Lender agrees to sign, as Lender, and to subordinate its rights under the Loan
Documents to any subdivision map or development agreement concerning the
Premises, or easements, rights of way, restrictive covenants or similar
documents required under such subdivision maps or development agreements, the
terms of which subdivision map, development agreement or other document or
instrument are not inconsistent with the intended use of the Premises as set
forth in the Specific Plan.
9.18 RELEASED PREMISES. Unless the context otherwise requires, the
term "Premises" does not include at a point in time that portion thereof
previously released from the lien of the Deed of Trust.
9.19 LOAN AGREEMENT CONTROLS. In the event of an inconsistency
between the Loan Agreement and any of the other Loan Documents, the Loan
Agreement controls.
9.20 COOPERATION. Lender agrees to provide all consents or
approvals reasonably requested by Borrower in connection with governmental
approvals necessary for the construction of the Improvement.
9.21 FUNDING OF EXPENSES. Notwithstanding language such as "at
Borrower's expense," "at Borrower's sole expense," and the like, unless
otherwise expressly provided herein or in any of the other Loan Documents or
for fraud, misappropriation and the like, any expenses imposed on Borrower
under any of the Loan Documents, including reimbursement of any of Lender's
expenses in connection with the Loan Documents on the Premises, may be funded
from an advance or advances under the Revolving Note, subject to the
limitations in Section 5.1h of the Loan Agreement.
ARTICLE X - NON-RECOURSE
10.1 Lender agrees that: (i) in the event of a foreclosure under
the Deed of Trust, Lender shall not seek or enforce a deficiency judgment
against Borrower or its General Partner; and (ii) in the event a suit is
brought on the Notes or any of the other Loan Documents, any judgment obtained
in such suit shall be enforced only against the property and interests
encumbered by the Deed of Trust and other Loan Documents, and any other
property or collateral which hereafter may be given to secure the Notes.
Nothing contained herein shall be deemed to be a release of the lien of the
Deed of Trust or, except as specifically limited hereby, a release or waiver of
any of Lender's rights or
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remedies provided in any Loan Document or in any other document or agreement
now or hereafter entered into between Borrower and Lender. This paragraph shall
not be deemed to be a release or waiver of any claim, warranty, covenant, or
cause of action not expressly set forth in the first sentence of this
paragraph, including without limitation, a claim based on fraud or
misrepresentation, or a cause of action for waste, misappropriation or
intentional impairment of the collateral securing this Note. Nothing contained
in this paragraph shall limit or affect Lender's rights with respect to
Borrower's obligations under the Environmental Indemnification Agreement.
WITNESS the due execution hereof the date and year first above
written.
ATTEST: WESTINGHOUSE CREDIT CORPORATION,
a Delaware corporation
By: /s/ DAVID H. MORROW By: /s/ DOUGLAS W. PHILLIPS
Title: Vice President
CENTEX DEVELOPMENT COMPANY, L.P.
ATTEST: a Delaware limited partnership
By: /s/ RAY GLAZE By: 3333 Development Corporation,
a Nevada corporation,
General Partner
By: /s/ HARRY J. LEONHARDT
Title: Agent and Attorney in Fact
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EXHIBIT 2.4
CENTEX DEVELOPMENT COMPANY, L.P.
FORSTER RANCH DEVELOPMENT AGREEMENT
BY AND BETWEEN
CITY OF SAN CLEMENTE
AND
CENTEX DEVELOPMENT COMPANY, L. P.
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TABLE OF CONTENTS
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ARTICLE 1. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.02 Additional Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2. DEVELOPMENT OF THE PROPERTY . . . . . . . . . . . . . . . . . . . . . . 9
2.01 Development of the Property . . . . . . . . . . . . . . . . . . . . . . 9
2.01.1 CDC's Right to Develop . . . . . . . . . . . . . . . . . . . . 9
2.01.2 Police Power . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.01.3 State and Federal Laws . . . . . . . . . . . . . . . . . . . . 10
2.02 Permitted Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Density and Intensity of Use . . . . . . . . . . . . . . . . . . . . . . 11
2.04 Zoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 Revised Tentative Map 12895 . . . . . . . . . . . . . . . . . . . . . . . 11
2.05.1 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05.2 Development Allocations . . . . . . . . . . . . . . . . . . . . 14
2.06 Measure B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.06.1 Stipulated Judgment . . . . . . . . . . . . . . . . . . . . . . 14
2.06.2 Changes to Measure B . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3. OBLIGATIONS OF CDC . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.01 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.02 Storm Drain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.02.1 Construction and Maintenance . . . . . . . . . . . . . . . . . . 16
3.02.2 Plans and Specifications . . . . . . . . . . . . . . . . . . . . 20
3.02.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.02.4 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Letters of credit . . . . . . . . . . . . . . . . . . . . 22
(b) Construction funding . . . . . . . . . . . . . . . . . . . 25
3.02.5 Waiver of Fees . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.02.6 Master Plan Facilities
Reimbursement Agreement . . . . . . . . . . . . . . . . . . . . 29
3.03 Traffic Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.04 Affordable Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.05 Park Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(i) Baseball Park and Phase 1 Park
Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(ii) Subsequent Phases of Improvements . . . . . . . . . . . . . . . 36
(iii) Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.06 Development Fees and Taxes . . . . . . . . . . . . . . . . . . . . . . . 38
3.06.1 Planned Drainage Facilities Fee . . . . . . . . . . . . . . . . 38
3.06.2 Sanitary Sewer Connection Fees . . . . . . . . . . . . . . . . . 39
3.06.3 Park Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.06.4 Other Fees, Charges, and Taxes . . . . . . . . . . . . . . . . . 40
3.07 Reservoir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.08 Option to City to Acquire Civic
Center Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.08.1 Determination of Boundaries . . . . . . . . . . . . . . . . . . 41
3.08.2 Option Fee and Purchase Price . . . . . . . . . . . . . . . . . 42
3.08.3 Option Period . . . . . . . . . . . . . . . . . . . . . . . . . 42
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3.08.4 Manner of Exercise of Option . . . . . . . . . . . . . . . . . . 43
3.08.5 Condition of Title . . . . . . . . . . . . . . . . . . . . . . . 44
3.08.6 Escrow Fees and Closing Costs . . . . . . . . . . . . . . . . . . 45
3.08.7 Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.08.8 Physical Condition of the
Civic Center Site . . . . . . . . . . . . . . . . . . . . . . . 46
3.08.9 Close of Escrow . . . . . . . . . . . . . . . . . . . . . . . . 48
3.08.10 Wastewater Treatment Capacity . . . . . . . . . . . . . . . . . 48
ARTICLE 4. IMPLEMENTATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.01 Processing and Approvals . . . . . . . . . . . . . . . . . . . . . . . . 49
4.02 Conditions of Approval Regarding
Specific Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
4.03 Tentative Map Extensions . . . . . . . . . . . . . . . . . . . . . . . . 51
4.04 Other Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 5. AMENDMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 6. ANNUAL REVIEW; DEFAULT; TERMINATION . . . . . . . . . . . . . . . . . . . 52
6.01 Annual Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.02 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.02.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.02.2 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.02.3 No Obligation to Develop . . . . . . . . . . . . . . . . . . . . 54
6.02.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.03 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.01 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.02 Settlement/Development Agreement . . . . . . . . . . . . . . . . . . . . 56
7.03 Transfer of Property . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.04 Mortgagee Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.04.1 Definition of Mortgagee . . . . . . . . . . . . . . . . . . . . 57
7.04.2 Default Rights . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.05 Cascadita Landslide . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.06 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.07 Parties In Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.08 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.09 Cooperation in the Event of Legal
Challenge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.10 Entire Agreement; Recordation . . . . . . . . . . . . . . . . . . . . . . 62
7.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.12 Successors and Assigns; Survival of
Representations, Warranties, and
Indemnity Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.13 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.14 Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.15 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.16 Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
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EXHIBITS
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A Map of the Forster Ranch
B Legal Description of the Golf Course
C Land Use Parameters
D Legal Description of the Property
D-1 Map of the Property
E Storm Drain Concept Plan
F Stipulation for Judgment
G Draft Forster Ranch Park Site Master Plan
H Description of Portion of Site Within Which
Civic Center Site Can Be Located
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FORSTER RANCH DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT is entered into as of March 31, 1989, by and
between the CITY OF SAN CLEMENTE, a municipal corporation ("City"), and CENTEX
DEVELOPMENT COMPANY, L.P., a Delaware limited partnership ("CDC").
R E C I T A L S:
A. To strengthen the public planning process, encourage
private participation in comprehensive planning and reduce the economic risk of
development, the Legislature of the State of California adopted the Development
Agreement Statute. The Development Agreement Statute authorizes City to enter
into an agreement with any individual or entity having a legal or equitable
interest in real property in order to establish development rights for such
property.
B. Pursuant to an Option Agreement dated as of November 3, 1988,
CDC has acquired the right to purchase the "Property" (defined below) from
"Estrella" (defined below). The Property is part of a larger parcel of land
known as the "Forster Ranch" (defined below).
C. In the late 1970's, disputes arose between Estrella and City
regarding the intensity and timing of Forster Ranch development, and the nature
and extent of the fees,
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dedications, improvements, and other conditions required or imposed by City
with respect to such development. With reference to these disputes, Estrella
filed three separate lawsuits against City and various officials and employees
of city. The parties settled these lawsuits, with minor exceptions, pursuant to
the "Settlement/Development Agreement" (defined below).
D. The Settlement/Development Agreement permits construction of a
total of 3,359 residential dwelling units on the Forster Ranch, establishes
prescribed time periods for City action on certain development approval
applications, proscribes certain city actions, subject to other terms and
conditions of the Settlement/Development Agreement, which actions would render
development of the Property "infeasible," and imposes other restrictions on
City's exercise of its discretionary authority with respect to development of
the Forster Ranch. The Settlement/Development Agreement also sets forth
Estrella's obligations with respect to annexation fees, drainage fees and
facilities, sewer connection fees, parkland dedication and in-lieu fees,
certain street improvements, provision of affordable housing, and other matters
pertaining to the development of the Forster Ranch.
E. On October 1, 1986, the City Council of the City of San
Clemente adopted its Resolution No. 86-101 amending Specific Plans 80-3 and
80-7 for the "Development Area"
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(defined below) and approving Specific Plan 83-1 for the "Planning Area"
(defined below) (collectively, the "Forster Ranch Specific Plan"). An
environmental impact report for the Forster Ranch Specific Plan (EIR No. 84-01)
was prepared in accordance with the provisions of the California Environmental
Quality Act ("CEQA") and certified by City as adequate and complete pursuant to
Resolution No. 86-99 on October 1, 1986.
F. On April 20, 1988, the City Council adopted its Resolution No.
88-28 approving Tentative Tract Map 12895 and Site Plan Review 87-17, which
provide for the subdivision of approximately 99 acres of the Property into 397
lots (including 389 single-family residential lots) and development thereof,
subject to the conditions set forth in such resolution.
G. Estrella has filed two lawsuits against City which are now
pending and are described as follows:
Estrella Properties, Ltd. v. City of San Clemente, Orange
County Superior Court Case No. 49-04-07.
Estrella Properties, Ltd. v. City of San Clemente, et al.,
"United States District Court Case No. CV 86-3345 IH(Kx).
In these lawsuits, Estrella seeks a ruling that "Measure B" (defined
below) is either null and void or is not applicable to the Forster Ranch
because the Settlement Development Agreement precedes the adoption of Measure
B. CDC has represented to City that Estrella has agreed to
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assign all of its interests in these lawsuits to CDC as of the "Closing Date"
(defined below).
H. CDC has further represented to City that Estrella has agreed
to assign to CDC at the Closing Date all of Estrella's right, title, and
interest under those certain agreements relating to the Property to which
Estrella and City are parties which are referenced in Article 9 of the November
3, 1988, Option Agreement between Estrella and CDC, including without
limitation the Settlement/Development Agreement and the Agreement For
Construction Of Wastewater Treatment Facilities dated on or about October 3,
1984.
I. City and CDC desire to enter into this Agreement to supersede
those provisions of the Settlement/Development Agreement which have been
executed or which are no longer needed, to provide CDC with certain assurances
with respect to its future development rights concerning the Property, to
provide for the development of park and storm drain improvements, to provide
City with an option to acquire a portion of the Property for use as a future
civic center site, and otherwise to enhance the public health, safety, and
welfare of the residents of the City of San Clemente and foster certainty and
efficiency in the planning of future development of the Property.
NOW, THEREFORE, the parties agree as follows:
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ARTICLE 1
DEFINED TERMS
1.01 Definitions. The following terms used in this Agreement,
unless the context otherwise requires, shall have the meanings set forth in
this Section 1.01:
"Affordable Housing" shall mean equal numbers of Low, Moderate I, and
Moderate II units as defined in the Housing Element of the General Plan of the
City.
"CDC" shall mean Centex Development Company, L.P., a Delaware limited
partnership, whose sole general partner is 3333 Development Corporation, a
Nevada corporation, and any successors and assigns to the rights or obligations
of Centex Development Company, L.P., under this Agreement, as provided herein.
"Closing Date" shall mean the date on which the grant deed or deeds
is/are recorded conveying the Property from Estrella to CDC.
"Development Agreement Statute" shall mean Article 2.5 (commencing with
Section 65864) of Chapter 4 of Division 1 of Title 7 of the California
Government Code, as the same may be amended from time to time.
"District" shall mean the Orange County Flood Control District.
"Effective Date" shall mean the thirtieth day after the City Council
adopts an ordinance approving this Agreement.
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"Estrella" shall mean Estrella Properties, Ltd., a California limited
partnership, and any successors and assigns (other than CDC and successors and
assigns of CDC) to the rights of Estrella Properties, Ltd., under the
Settlement/Development Agreement or with respect to the Property.
"Forster Ranch" shall mean the approximately 1,774-acre area of the
City more particularly depicted in the "Map of the Forster Ranch" attached
hereto as Exhibit A. The Forster Ranch consists of the "Development Area" and
the "Planning Area," as shown in the Specific Plan described below.
"Golf Course" shall mean the Shorecliffs Golf Course located in the
City. A legal description of the Golf Course is attached hereto as Exhibit B.
"Land Use Parameters" shall mean the development parameters governing
development of the Property as described in Exhibit C to this Agreement.
"Litigation" shall mean the two lawsuits described in Recital G above.
"Measure B" shall mean that certain growth control initiative adopted
by City voters in 1986 and adopted by the City Council on March 5, 1986, as
Ordinance No. 922, as amended by Ordinance No. 931 adopted on September 17,
1986, by Ordinance No. 953 adopted on December 17, 1987, by Ordinance No. 991
adopted on February 1, 1989, and as may be further amended from time to time by
the City Council
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pursuant to Section 10 of Ordinance No. 922, provided that such amendment is
not inconsistent with any of the express provisions contained in this
Agreement.
"Property" shall mean the real property in the City consisting of an
approximately 1,077.2 acre portion of the Forster Ranch, as more particularly
described in the legal description attached hereto as Exhibit D. The Property
includes the so-called "Planning Area" (1,031 acres, more or less), Lot 25 in
Tract 11781, Lot 26 in Tract 11781, and 14 acres, more or less, in Lot 35 of
Tract 10417, which are depicted on the "Map of the Property" attached hereto
as Exhibit D-1.
"RCFPP" shall mean the Regional Circulation, Financing and Phasing
Program of the City which is being processed by City as of the Effective Date
of this Agreement, as the same may be amended from time to time, provided that
the RCFPP, including any amendments thereto, shall not be applied to the
Property to the extent it is not consistent with the express provisions
contained in this Agreement.
"Settlement/Development Agreement" shall mean that certain
Settlement/Development Agreement by and between Estrella and City dated August
5, 1981, as amended by that certain First Amendment to Settlement/Development
Agreement dated December 14, 1983, and that certain Second Amendment to
Settlement/Development Agreement by and among Estrella, City,
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and Shorecliffs which was approved by the City on July 20, 1988.
"Shorecliffs" shall mean Shorecliffs Golf Course, Inc., a California
corporation, and any successor and assign to the right, title, and interest of
Shorecliffs Golf Course, Inc., in and to the Golf Course or any portion
thereof, excepting only the owner of the Storm Drain and the owner of any
easement, license, right-of-way, or similar property interest relating to use
of the Golf Course for flood control and storm drain purposes.
"Specific Plan" shall mean the Forster Ranch Specific Plan prepared by
Tierra Planning & Design, Inc., dated October 1985 and approved by City on
October 1, 1986, including all conditions of approval (and any mitigation
measures required pursuant to such conditions).
"Revised Tentative Map 12895" shall mean that certain tentative map
revising Tentative Tract Map 12895, an application for which was filed with
the City on or about January 17, 1989, as the same may be approved by the
Council of City after City's approval of this Agreement, including all
conditions of approval (and any mitigaticn measures required pursuant to such
conditions).
1.02 Additional Defined Terms. To the extent capitalized terms are not
defined in Section 1.01, such terms shall have the meaning otherwise ascribed
to them in Agreement.
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ARTICLE 2
DEVELOPMENT OF THE PROPERTY
2.01 Development of the Property.
2.01.1 CDC's Right to Develop. During the term of this
Agreement, CDC shall have the vested right to develop the Property in
accordance with and subject to the terms and conditions set forth or referenced
in this Agreement.
2.01.2 Police Power. Except as otherwise expressly provided
herein, the City shall have the right to exercise its lawful police power
authority to regulate development of the Property, including without limitation
the adoption or application to the Property of laws, rules, regulations, and
policies in effect at the Effective Date and laws, rules, regulations, and
policies adopted or approved after the Effective Date. Without CDC's prior
written consent, no City ordinance, resolution, or other rule, regulation, or
policy adopted after the Effective Date, whether by action of the City Council,
by initiative, or otherwise, shall apply to the Property if and to the extent
that the same is inconsistent with any of the express provisions of this
Agreement. Nothing contained herein is intended to prevent the City from
applying to the Property any subsequently adopted City ordinances, resolutions,
or other rules, regulations, or policies which are not inconsistent with the
express provisions of this Agreement
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(including without limitation Sections 2.01.3 and 2.05 below).
2.01.3 State and Federal Laws. By entering into this
Agreement, CDC does not waive the benefit or protection of any rights it may
have under applicable state or federal laws or regulations that may apply to
the development of the Property from time to time, including without limitation
any laws applying the laws in effect at a given time in processing land use
applications such as Government Code Sections 66474.2 and 66498.1 through
66498.9, except to the extent that applying such laws and regulations to the
Property would be inconsistent with any of the express provisions of this
Agreement. In the event that state or federal laws or regulations, enacted
after the Effective Date, prevent or preclude compliance with one or more
provisions of this Agreement, such provisions of this Agreement shall be
modified or suspended as may be necessary to comply with such state or federal
laws or regulations.
2.02 Permitted Uses. The permitted uses of tne Property, the density
or intensity of use, the maximum height and size of proposed buildings, and
provisions for reservation or dedication of land for public purposes shall be
as set forth in this Agreement, including without limitation the Land Use
Parameters. It is specifically understood that the City reserves the right
after the Effective Date to amend the Specific Plan and other City
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laws, rules, regulations, and policies applicable to the Property under
procedures provided by law and such amendment or amendments shall be binding
on the Property except to the extent that the same conflict with the express
provisions of this Agreement.
2.03 Density and Intensity of Use. The maximum permitted density and
intensity of residential development on the Property will be 1,762 market rate
residential units and a number of multi-family Affordable Housing units equal
to 174 plus 15% of all market rate residential units constructed on the
Property. The City shall not reduce this maximum permitted density without
CDC's prior written consent, which CDC may grant or withhold in its sole
discretion. In addition, City shall permit commercial, industrial, and/or
mixed use development on a minimum of 57 gross acres contained in the Planning
Area and commercial development of Lot 25 in Tract 11781.
2.04 Zoning. The zoning of the Property throughout the term of this
Agreement shall be kept consistent with the permitted uses of the Property as
set forth or referenced in Sections 2.02 and 2.03, including such changes to
such permitted uses as are allowed in accordance with this Agreement.
2.05 Revised Tentative Map 12395.
2.05.1 Applicable Law. The City laws, rules, regulations, and
official policies governing design,
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improvement, development, and construction on the land described in Revised
Tentative Map 12895, and all on-site and off-site improvements and
appurtenances constructed in connection therewith, shall be those City laws,
rules, regulations, and official policies in force on the Effective Date of
this Agreement, except as follows:
(i) Section 2.01.3 shall prevail over this
Section 2.05 to the extent of any
inconsistency.
(ii) CDC shall comply with the most recently
adopted provisions of the Uniform Building,
Plumbing, Mechanical, Electrical, Fire, and
other uniform codes (including any generally
applicable local amendments thereto) in
effect at the time development actually takes
place.
(iii) The City reserves the right to require CDC to
comply with all conditions previously imposed
on the original tentative tract map for Tract
12895 and accompanying site plan which are
applicable to the revised project; provided,
however, that CDC reserves the right to
argue that Condition 43, which relates to
Estrella's performance of certain obligations
on the Forster Ranch
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off of the Property being acquired by CDC,
should not be applied to CDC.
(iv) To the extent that CDC revises the project
from what already has been reviewed and
approved by City, City reserves the right to
impose additional or modified conditions or
requirements to the extent reasonably related
to such revisions.
(v) CDC shall be required to pay all city
development and building fees, charges,
assessments, and taxes in existence on the
Effective Date at the rates in effect at the
time such fees, charges, assessments,
and taxes become due, including any increases
adopted or imposed after the Effective Date.
(vi) CDC shall be required to pay City's applicable
RCFPP fee and beach parking fee for Tract
12895 at the rate in effect at the time such
fees become due, notwithstanding that such
fees are not in existence as of the Effective
Date, but otherwise CDC shall not be obligated
to pay any new City fee, charge,
assessment or tax which is not in effect as of
the
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Effective Date as a condition to CDC's right to develop or
build Tract 12895.
2.05.2 Development Allocations. The 155 development
allocations issued by the City for residential construction on the tentative
map for Tract 12895 approved by the City on April 20, 1988, shall not be
reallocated to another developer or otherwise revoked or withdrawn from CDC
prior to June 1, 1991, due to any failure of CDC to commence construction
before that date.
2.06 Measure B.
2.06.1 Stipulated Judgment. CDC and City agree to enter into a
stipulation for Judgment with respect to Orange County Superior Court Case
No. 49-04-07 in substantially the form set forth in Exhibit F to this
Agreement. Within thirty (30) days following the Closing Date, CDC and City
shall present the stipulation to the Court for execution and entry of
judgment. In the event the Court requires modifications to the stipulation,
the parties agree to cooperate in effectuating such modification provided
the same do not materially impair the rights of either party hereunder.
Within fifteen (15) days after judqment is entered in Case No. 49-04-07,
CDC shall dismiss with prejudice United States District Court Case No.
CV 86-3345 IH (Kx). CDC and City agree to bear their respective costs and
attorney's fees with respect to the Litigation. Notwithstanding the
stipulated judgment and dismissal
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referenced herein, in the event Measure B is repealed (by action of the
City's voters) or a final, nonappealable judgment is entered by a court of
competent jurisdiction (as a result of litigation pursued by a third party)
declaring that Measure B is invalid or enjoining its enforcement, Measure B
shall not apply to the Property. If for any reason any court determines
that the Settlement/ Development Agreement precludes application of Measure
B to development of the Property prior to the entry of Judgment in Orange
County Superior Court Case No. 49-04-07 or United States District Court
Case No. CV 86-3345 IH (Kx), CDC shall waive the benefit of such ruling.
CDC agrees that from and after the Effective Date, and except as
specifically set forth in the preceding paragraph, it will not participate
in, finance, or otherwise promote any litigation which seeks a judicial
determination that Measure B is invalid, either on its face or as applied
to all or any portion of the Property, or which seeks tc enjoin the
enforcement of Measure B.
During the term of this Agreement, and without limiting or restricting
CDC's rights under Section 2.01 above, City agrees that no amendment to
Measure B and no new City ordinance, resolution, rule, regulation, or
official policy shall apply to the Property if and to the extent that the
same either (i) reduces the number of residential building permits that
City can approve or issue in any year
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below the number now authorized by Measure B (i.e., 500, as the same may be
adjusted in accordance with Section 4.B of Measure B), or (ii) further
reduces or restricts the exemptions set forth in Section 2 of Measure B.
In any case, if within two years from the Effective Date Measure B is
repealed or declared invalid through the issuance of a final, nonappealable
Judgment entered by a court of competent jurisdiction, the term of this
Agreement shall then change from fifteen years to ten years.
2.06.2 Changes to Measure B. If any change is made to Measure B on or
after the Effective Date, other than a change allowed under the above
definition of Measure B, such change will not be binding upon the Property
without the prior written consent of CDC.
ARTICLE 3
OBLIGATIONS OF CDC
3.01 General. CDC shall construct the public improvements, dedicate the
property, and pay the fees set forth in this Article 3.
3.02 Storm Drain.
3.02.1 Construction and Maintenance. CDC shall construct a
reinforced concrete enclosed box culvert storm drain (the "Storm Drain")
from the downstream side of Calle Nuevo across the Golf Course to the site
of the proposed District inlet facility, all as shown on the concept plan
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attached hereto as Exhibit E. The Storm Drain shall be designed to meet all
standards and criteria of the District for accepting the dedication of the
completed facility for full ownership and maintenance purposes.
CDC has represented to City that Estrella has agreed to cause
Shorecliffs to enter into an agreement with CDC prior to the Closing Date
which agreement will provide, inter alia, that: (i) Shorecliffs will give a
nonexclusive easement to CDC for the construction, maintenance, and repair
of the Storm Drain on, under, and across the Golf Course; (ii) after CDC's
completion of construction of the Storm Drain, Shorecliffs shall restore or
landscape the portion of the Golf Course through which the Storm Drain has
been constructed; (iii) Shorecliffs shall maintain the Storm Drain until
dedication of the Storm Drain is accepted by the District or City; and (iv)
Shorecliffs, at its sole expense, shall maintain the Golf Course in a
reasonable manner and condition and keep the Golf Course open for public
play, both for two years after the date that the Storm Drain has been
completed, as provided herein.
In addition, at or prior to the Closing Date, CDC shall exercise best
efforts to cause Shorecliffs to agree (i) that the easement granted to CDC
pursuant to clause (i) of the preceding sentence shall include all
temporary and permanent easements which may reasonably be required by the
District (in accordance with the District's standard forms)
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for acceptance of the Storm Drain for full ownership and maintenance purposes,
that CDC may assign said easements to District, and that CDC may assign said
easements to City in the event that the District fails or refuses for any
reason to accept said assignment; (ii) to grant the necessary easements or
rights-of-way (in accordance with the District's standard forms) to permit the
use of portions of the Golf Course as a retention basin or basins in the event
of storm water runoff in the Prima Deshecha Drainage Basin exceeding the
carrying capacity of the Storm Drain, all without any charge to or liability of
the District or City, as the case may be; (iii) if the District does not accept
Shorecliffs' offer of dedication of the Storm Drain within ninety (90) days
following the satisfactory completion of construction thereof, City shall have
the right, but not the obligation, at any time thereafter to accept the same
for full ownership and maintenance purposes, provided the following conditions
are satisfied:
a. The Storm Drain has been completed in accord with the
plans and specifications described in Section 3.02.2
below;
b. CDC agrees to indemnify, defend, and hold City
harmless from all claims arising from defective
design or construction by CDC of the Storm Drain
other than defects caused by
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City-imposed changes to the plans and specifications;
and
c. CDC assigns to City its rights under any agreement it
may have with the District relative to the District's
obligation to accept the Storm Drain; and
(iv) to make City a third party beneficiary with the right to enforce all of
Shorecliffs' obligations referenced in this Section 3.02.1, including the
right, if Shorecliffs fails to maintain the Storm Drain prior to the District's
or City's acceptance of Shorecliffs' offer of dedication, to declare the Golf
Course property a public nuisance, to enter onto the Golf Course to perform the
maintenance necessary to abate the nuisance, and to recover the costs of such
maintenance in the same manner permitted for recovery of the costs of abating
nuisances, including filing and enforcing a lien against the Golf Course, and
with City's rights to be memorialized in a document recorded against the Golf
Course and running with the land in favor of City, in a form reasonably
acceptable to the City Attorney.
Notwithstanding any other provision of this Agreement to the
contrary, all of City's obligations under this Agreement shall be conditioned
and contingent upon CDC's obtaining such agreement from Shorecliffs. If CDC
fails to timely obtain such agreement, City shall have the right to terminate
this Agreement upon thirty (30) days' written
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notice to CDC; provided, however, that if City notifies CDC of its intent to
terminate this Agreement and CDC obtains Shorecliffs' agreement to such
matters, this Agreement shall continue in force and effect. In the event this
Agreement is terminated pursuant to this Section 3.02.1, neither party shall
have any rights or obligations hereunder.
3.02.2 Plans and Specifications. CDC shall prepare and submit
to City and the District plans and specifications for all portions of the Storm
Drain within ninety (90) working days after CDC receives from the District all
criteria it needs to prepare such plans and specifications. CDC will use due
diligence to obtain such criteria from the District on or before March 31,
1989. CDC shall cooperate with both City staff and the District and their
consultants to provide full information regarding the design and construction
of the Storm Drain, and shall exercise reasonable diligence in processing the
plans and specifications. City shall cooperate and consult with CDC regarding
the processing and approval of the plans and specifications, subject to its
rights to independently evaluate engineering design and feasibility.
City shall review and comment upon the proposed plans and
specifications and return the same to CDC. Thereafter, CDC shall revise the
plans and specifications to conform to the reasonable requirements of City and
the District and then resubmit the plans and specifications to
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City and the District within thirty (30) days of receipt of comments from each
agency. If CDC makes any material change in the plans and specifications after
final approval by City or the District, CDC will resubmit the amended plans and
specifications in the same manner as outlined above.
City shall review all submissions and resubmissions of the
plans and specifications in an expedited manner, and its approval of the same
will not be unreasonably withheld or delayed.
To the extent required by law, CDC shall also submit the
necessary applications for permits to construct the Storm Drain to the United
States Army Corps of Engineers, the California Department of Fish & Game, the
California Coastal Commission, and any other governmental agencies with
jurisdiction over the project. Such applications shall be filed as soon as
practicable after the Closing Date. CDC shall use due diligence in processing
such permit applications. City shall provide reasonable assistance to CDC in
obtaining such permit approvals, provided CDC shall advance or promptly
reimburse City for any out-of-pocket costs (excluding staff time) City incurs
in providing such assistance.
3.02.3 Construction. CDC shall commence construction of the
Storm Drain as soon as weather permits after the plans and specifications are
approved and all required governmental permits are issued, and thereafter CDC
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shall diligently prosecute such construction to completion. The phrase "as
weather permits" means that construction shall commence within thirty (30) days
after the plans and specifications are approved and all required governmental
permits are issued, provided that CDC shall not be required to commence
construction earlier than April 1 nor later than July 1, and if construction
cannot be commenced prior to July 1, the commencement date shall be no later
than the following April 1. CDC shall complete construction of the Storm Drain
within six (6) months following commencement, subject to Section 6.02.2 herein.
CDC shall construct the Storm Drain in a manner that minimizes interference
with the on-going operation of the Golf Course to the extent reasonably
practicable.
3.02.4 Funding. Except as provided below, CDC shall have the
sole obligation to fund the planning, design, engineering, construction,
supervision, inspection, and all other costs associated with the design and
construction of the Storm Drain.
(a) Letters of credit. As security for its obligation
to plan, design, engineer, construct, supervise, and inspect the Storm Drain,
CDC, no later than the Closing Date, shall deliver to City an irrevocable
direct-pay letter of credit in favor of City, in a form acceptable to the City
Attorney, and drawn on a financial institution acceptable to City, in the
amount of $1,500,000. Upon receipt of such
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letter of credit, City shall return to Estrella its $1,500,000 letter of credit
which was submitted to City pursuant to Section 3.c.(i) of the Second Amendment
to the Settlement/Development Agreement. Further, prior to CDC obtaining any
building permit regarding the Property, it shall post a new irrevocable
direct-pay letter of credit ("Box Culvert Letter of Credit") in favor of City,
in a form acceptable to the City Attorney, and issued by a financial
institution acceptable to City, in an amount equal to the difference between
the "City Funds" (defined below) and the estimated cost of the box culvert as
reasonably determined by an engineering firm engaged by CDC and approved by
City ("Estimated Cost").
Upon delivery to City of the Box Culvert Letter of
Credit, City shall immediately return to CDC its $1,500,000 letter of credit.
The $1,500,000 Letter of Credit and the Box Culvert
Letter of Credit shall provide for direct payment to the City upon the receipt
by the issuing bank of a written statement from the City Manager or designee
that CDC has defaulted under this Agreement by failing to timely commence,
proceed with, or complete construction of the Storm Drain pursuant to this
Agreement and that the amount of the City's demand on the letter of credit has
been determined by the City to be the amount necessary to complete the work.
City will deliver to CDC a copy of any such written notice to the
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issuing bank five working days prior to presenting such notice to the issuing
bank. Upon written request by CDC to City (not more frequently than monthly)
accompanied by such documentation as may be reasonably required by the City
Engineer which proves that portions of the Storm Drain construction work have
been satisfactorily completed and subcontractors have been paid therefor, City
shall permit a reduction of the Box Culvert Letter of Credit or, at CDC's
option, the substitution of a smaller letter of credit (otherwise in the same
form), provided that the remaining balance secured by the reduced or
substituted letter of credit shall be not less than 125% of the then-estimated
cost to complete the project less the then-unexpended balance of the "City
Funds" referenced in paragraph (b) below. In the event the funds obtained by
City from either letter of credit (less the amount of the City Funds) are
insufficient to enable City to complete construction of the Storm Drain project
as provided herein, as reasonably determined by City, CDC shall pay the
additional amount required by City for such purpose within ten (10) days after
City provides written notice to CDC with documentation itemizing the need for
the additional funds. Within five (5) days after construction is completed and
accepted and the period for filing any lien claims with respect to the Storm
Drain construction has expired (or, if any claims are filed, within five (5)
days after CDC posts a bond with the District or City, as
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applicable, in an amount sufficient to satisfy such claims), city shall
promptly refund to CDC any funds advanced or paid by CDC for the storm Drain
which are not needed for this purpose and/or release or return the letter of
credit to the extent that there is any balance thereon.
(b) Construction funding. Simultaneously with the
delivery of the Box Culvert Letter of Credit by CDC to City, City shall
contribute to the cost of constructing the Storm Drain by depositing into a
mutually agreeable escrow account the sum of $887,830.34 (the amount previously
collected by the City from storm drain fees and deposited into the Master Plan
Drainage Account for the Prima Deshecha Canada, including interest thereon
through July 1, 1987, which amount was previously committed to the Storm Drain
project under Section 3.c.(ii) of the Second Amendment to the
Settlement/Development Agreement), plus all interest accumulated on such amount
from July 1, 1987, to the date such funds are deposited into the escrow account
(the "City Funds"). The escrow account shall be administered pursuant to escrow
instructions letter which shall incorporate the following terms and conditions
and otherwise be reasonably acceptable as to form by both parties.
The terms and conditions of the escrow shall be as
follows:
(i) CDC shall be responsible for paying all fees
and expenses of the escrow agent.
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(ii) CDC shall be entitled to all interest
generated on the funds in the escrow account
from the time of deposit until the funds in
the account have been disbursed.
(iii) Periodically during the course of
constructing the Storm Drain, CDC shall be
entitled to submit written statements to City
and the escrow agent requesting progress
payments upon the satisfactory completion of
portions of the work. CDC will not submit
more than one statement in any thirty day
period. Each such statement shall be
accompanied by a certified statement signed
by a mutually agreed upon consulting engineer
retained by CDC to verify the extent of the
work performed and the compliance of the work
with the approved plans. City shall request
the District to verify whether the certified
statement submitted by CDC's consulting
engineer is acceptable and, if it is, shall
so notify the escrow agent. If the District
declines to assume this responsibility, the
City Engineer shall do so. The approval of
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the City Engineer shall not be unreasonably
withheld or delayed. If the City Engineer is
responsible for reviewing such statements,
approvals or disapprovals shall be given
within fifteen (15) working days after
delivery of each certified statement from
CDC's consulting engineer, together with
whatever supporting information may be
reasonably requested by the City Engineer,
and if the written request for approval
contains a bold-face warning on the first
page that if no reply is received within
fifteen (15) working days after approval,
approval will be deemed to have been given,
and if no response from the City Engineer is
received by CDC within such time, approval
will be deemed to have been given. Upon
approval either by the District or City, the
City Engineer shall promptly so notify the
escrow agent. Any disapproval of the City
Engineer shall be in writing and shall state
the reasons therefor in detail. No approval
shall be deemed a waiver by the City (or the
District) of
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any claims or rights against CDC if it is
later discovered that the work has not in
fact been completed according to the approved
plans or in a workmanlike manner.
(iv) Upon receipt of notice from the District or
the City Engineer, as applicable, that the
work described in the request for payment has
been satisfactorily completed, the escrow
agent shall make a progress payment to CDC
from the City Funds in an amount equal to a
percentage of the estimated cost of that
portion of the work which has been certified
and approved as substantially complete less a
retention of 10%. The percentage will be
determined by dividing the amount of the City
Funds by the amount of Estimated Cost, as the
Estimated Cost may be adjusted from time to
time. The escrow agent shall be instructed to
pay to CDC the balance of the funds in the
escrow account, including the 10% retention,
five (5) days after all three of the
following conditions have been satisfied: (a)
a notice of completion has been
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recorded for the entire storm Drain, (b) the
District (or the City, if applicable) has
certified in writing that the storm Drain has
been satisfactorily completed, and (c) the
time for filing lien claims or stop notices
has expired (or a sufficient sun is withheld
or a bond is posted by CDC with the District
or City, as applicable, to satisfy any claims
that are pending).
3.02.5 Waiver of Fees. City shall waive all fees and charges
which would otherwise be imposed on CDC in connection with its construction of
the Storm Drain, but CDC shall reimburse City for all out-of-pocket costs
incurred by City in reviewing plans and inspecting the work performed by CDC.
3.02.6 Master Plan Facilities Reimbursement Agreement. CDC
shall cause Estrella to assign to CDC at the Closing Date all of Estrella's
right, title, and interest under the Master Plan Facilities Reimbursement
Agreement between Estrella and City dated December 21, 1983, and the provisions
of paragraph 1 of said agreement (which relate in part to the Storm Drain)
shall be terminated at such time.
3.03 Traffic Improvements. CDC shall dedicate land, construct
improvements, and/or pay fees as required to comply with the RCFPP, and shall
otherwise be bound by the same.
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CDC shall have the right to construct the traffic improvements located on the
Property which are subject to the RCFPP, subject to city's reasonable approval
which shall not be unreasonably withheld. If City desires to have any of such
improvements constructed prior to the time that CDC is prepared to proceed,
City shall have the right to do so.
3.04 Affordable Housing. CDC shall construct multifamily Affordable
Housing units in an amount equal to the sum of 174 plus 15% times the number of
market rate residential units constructed on the Property. The City will not
require a mix of rental units and for-sale units on the same Affordable Housing
site.
3.05 Park Improvements. As of the Effective Date, City is processing a
Master Plan for the approximately 22-acre City park site which is located
adjacent to the elementary school and proposed intermediate school site in the
"Development Area" of the Forster Ranch (as defined in the Specific Plan)
(hereinafter the "Forster Ranch Park Site") A copy of the draft Master Plan as
recommended for approval by the City's Parks and Recreation Commission is
attached hereto as Exhibit G. City shall exercise reasonable diligence to
complete and approve the Forster Ranch Park Site Master Plan as soon as
possible after the Effective Date.
CDC agrees to contribute the sum of Three Million Dollars
($3,000,000), calculated as of the Effective Date of this Agreement and to be
increased as provided hereinbelow,
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to the cost of planning, designing, and constructing improvements to the
Forster Ranch Park Site in accordance with the City's approved Master Plan, as
the same may be revised by City (after consulting with CDC) from time to time
consistent with this Agreement. If the Capistrano Unified School District
("CUSD") acquires the approximately 14-acre parcel adjacent to the elementary
school site which is a portion of Lot 35 of Tract 10417 (the "Intermediate
School Site"), City may elect to require that a portion of CDC's contribution
be expended on said property for the construction of the "Baseball Park" (as
defined below), as shown on Exhibit G hereto; otherwise, the Baseball Park
shall be constructed on the Forster Ranch Park Site.
The unexpended portion of CDC's $3 million contribution shall be
increased on each January 1 after the Effective Date during the term of this
Agreement until the funds are actually expended or paid to the City in
accordance with increases during the preceding year in the California
Construction Cost Index published by the California Department of
Transportation ("CalTrans") (or, in the event such index or publication is
discontinued, another comparable index to be agreed upon by the parties);
provided, however, that in no event shall the inflation factor for any calendar
year commencing in 1990 and continuing through the term of this Agreement
exceed the percentage derived by dividing the number of building permits for
market-rate residential units
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issued for the Property in the preceding year by 1762 (the maximum number of
market-rate residential units permitted hereunder).
The plans and specifications for each improvement to be funded by CDC
shall be prepared by a licensed and qualified landscape (or other qualified)
architect selected and retained by CDC after consultation with the City and
subject to City's reasonable approval with regard to (i) the identity of the
architect, (ii) the scope of work, (iii) the schedule of performance, and (iv)
the contract price. The architect shall be required to coordinate the
preparation of the plans and specifications with City staff at all times to
assure compliance with all City standards.
CDC shall construct or cause to be constructed each of the park
improvements through a licensed and responsible contractor selected and
retained by CDC after consultation with City and subject to City's reasonable
approval with regard to (i) the identity of the contractor and any
subcontractors, (ii) the plans and specifications, (iii) the schedule of
performance, (iv) the contract price, and (v) all change orders above a
cumulative amount in excess of ten percent (10%) of the original approved
contract price.
It is understood and agreed that CDC may enter into contracts with
contractors performing other work for CDC beyond this scope of this Section
3.05. In such event, CDC shall require each proposed contractor to separately
bid the
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portion of its work within the scope of this Section 3.05 from the portion of
its work outside the scope of this section 3.05, and City shall have the right
to approve a fair and reasonable allocation of costs. In all circumstances, CDC
agrees to act reasonably to have any work performed for CDC within the scope of
this Section 3.05 completed at a reasonable cost, subject to the parties'
mutual objective of having such work performed by contractors with a reputation
for high quality, experience, and reliability. In no event shall CDC receive
credit toward its financial contribution under this Section 3.05 for any
management or developer's fee, overhead, staff time, or profit, by whatever
name called.
During the course of CDC's expenditure of funds eligible to be
credited toward its financial contribution under this Section 3.05, but not
more frequently than quarterly, CDC shall submit to the City Manager (or the
City Manager's designee) an itemized statement, with such supporting
information as the City Manager or his/her designee may reasonably require,
documenting all of CDC's costs eligible to be credited under this Section 3.05.
In lieu of any other obligations hereunder, CDC shall have the option
to pay to City the funds required to be expended by CDC on or before the dates
such expenditures are otherwise required to be made and, in such event, City
agrees to deposit said funds in an interest-bearing special fund
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with interest earned to be credited to the fund and to exercise reasonable
diligence to expend such funds solely for the planning, design, and
construction of improvements to the Forster Ranch Park Site (and, if the
Baseball Park is constructed on the adjacent 14-acre CUSD site, that property)
in accordance with the approved Master Plan.
CDC shall make its financial contribution to the Forster Ranch Park
Site park improvements at the following times:
(i) Baseball Park and Phase 1 Park Improvements.
CDC shall commence construction of the
Baseball Park and "Phase 1 Park Improvements"
(as defined below) no later than six (6)
months after CDC commences grading in the
area included in the first final map under
Revised Tentative Map 12895, provided that if
CUSD has not acquired the Intermediate School
Site by that time, or CUSD has not approved
the construction of the Baseball Park on the
Intermediate School Site, or CUSD and City
have not entered into a joint use agreement
for the Baseball Park, City may elect either
to have CDC defer construction of the
Baseball Park until such conditions are
satisfied or to amend the Forster Ranch
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Park Site Master Plan to include the Baseball
Park and thereafter to have CDC construct the
Baseball Park thereon. Once construction is
commenced, it shall be diligently pursued to
completion, and the construction contract(s)
shall provide for a completion date for all
improvements, including landscaping, no later
than one hundred eighty (180) days
thereafter.
As used herein, the term "Baseball
Park" shall mean the field and such related
improvements approved as a part of the
Forster Ranch Park Site Master Plan. As used
herein, the term "Phase 1 Park Improvements"
shall mean the following for the entire
Forster Ranch Park Site (including the
Baseball Park to the extent applicable and
not provided for in the preceding sentence):
finish grading (except for any buildings or
other structures not included in Phase 1),
installation of irrigation systems, full
grass and landscaping improvements, restroom
facilities, benches, picnic tables, barbeque
grills,
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lighting, and parking lot and driveway paving
and striping. In no event shall CDC be
required to expend more than Six Hundred
Seventy Thousand Dollars ($670,000.00) for
the Baseball Park and Phase 1 Park
Improvements (with such principal sum to be
inflated as provided in the third paragraph
of this Section 3.05).
(ii) Subsequent Phases of Improvements. After the
Baseball Park and the Phase 1 Park
Improvements are completed, CDC shall not be
required to make any further contribution to
the cost of planning, designing, or
constructing improvements on the Forster
Ranch Park Site until the issuance of the
three hundred and ninetieth (390th) building
permit for a market-rate residential unit on
the Property. Thereafter, upon the issuance
of the 390th and all additional residential
building permits for market-rate units on the
Property, CDC shall expend or deposit into an
escrow or trust approved by City additional
funds for park improvements in an amount
equal to
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$1,697.01 per unit, adjusted for inflation as
provided herein. Such funds shall be
allocated to park improvements designated on
the Master Plan for the Forster Ranch Park
Site, as the same may be amended by City from
time to time in accordance with this
Agreement, in the order determined by City.
In the event the amount required to be
expended by CDC as provided in this
subparagraph (ii) is at any time less than
the amount reasonably determined by the
parties to be necessary to fund the next park
improvement desired by City, the funds shall
be deposited into an escrow or trust account.
The escrow or trust account shall be an
interest-bearing account with interest
earnings to be utilized for the same purpose
as the principal, but interest earnings shall
not be credited against future expenditure
obligations by CDC hereunder. CDC shall pay
all costs for establishing and administering
the escrow or trust account.
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(iii) Prepayment. CDC shall have the right, but not the
obligation, from time to time to expend more than the
minimum amounts required hereunder, and in such event
the excess shall, at the option of CDC, be credited
against its next required expenditure.
3.06 Development Fees and Taxes. CDC's obligations to pay certain
described fees and taxes relating to development of the Property are limited as
set forth in Sections 3.06.1 through 3.06.3 below.
3.06.1 Planned Drainage Facilities Fee. Construction of the
Storm Drain under Section 3.02 shall constitute full and complete satisfaction
of any obligation of CDC to pay Planned Drainage Facilities Fees or other
drainage-related fees or otherwise mitigate any downstream drainage impacts
which may be caused by development of that portion of the Property within the
Prima Deshecha Drainage Basin. Nothing in this Section 3.06.1 is intended to
limit or restrict City's authority to require CDC to construct storm drainage
improvements on the Property required to satisfy applicable (City requirements
and nothing contained herein is intended to limit or restrict City's authority
with regard to CDC's obligation to pay fees, construct improvements, or both
for that portion of the Property located outside the Prima Deshecha Drainage
Basin.
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3.06.2 Sanitary Sewer Connection Fees. City acknowledges
that pursuant to Section 8.4 of that certain Agreement for Construction of
Wastewater Treatment Facilities dated October 3, 1984, the formation of an
assessment district including the Property, the sale of assessment district
bonds to finance the refurbishment and expansion of the City wastewater
treatment facility and related improvements, the levy of assessments on the
separate parcels comprising the Property, and the timely payment of such
assessments shall constitute full and complete satisfaction of any obligation
of CDC to pay any sanitary sewer connection fees or other fees for construction
of and connection to such treatment facility, and of any obligation of CDC to
construct any reclaimed water facilities on the Property (except under Section
8.6 of the October 3, 1984, agreement). Notwithstanding the foregoing, CDC
acknowledges that if additional wastewater facility improvements are required
in the future which are of benefit to the Property, or if any additional
assessment must be imposed to complete the facilities covered by the October 3,
1984, Agreement for Construction of Wastewater Treatment Facilities, CDC will
be obligated to pay its proportional share for the same. Nothing in this
Agreement is intended to limit or restrict City's authority to impose sewer
service charges on persons using City's wastewater treatment facilities.
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3.06.3 Park Fees. CDC's obligation to pay any open space,
park or recreation fee with respect to development of the Property shall be
deemed satisfied by the previous dedications of parks and open space by
Estrella to City and by CDC's timely compliance with its obligations under
Section 3.05 of this Agreement. Nothing in this Agreement shall be construed to
limit City's authority to include any portion of the Property in an assessment
district (including without limitation a district formed pursuant to the
Landscaping and Lighting Act of 1972) or a community facilities district
(including without limitation a district formed pursuant to the Mello-Roos
Community Facilities Act of 1982) for the purpose of levying assessments or
imposing taxes for the maintenance and operation of open space, parks,
recreation areas, street lighting, or median landscaping, nor as a waiver by
CDC of any right of protest or election with respect thereto.
3.06.4 Other Fees, Charges, and Taxes. Except as expressly
specifically set forth in Sections 2.05.1(vi) and 3.06.1 through 3.06.3,
inclusive, of this Agreement, nothing set forth herein is intended or shall be
construed to limit or restrict City's authority to impose new fees, charges,
assessments, or taxes for the development of the Property or to increase any
existing fees, charges, assessments, or taxes, and nothing set forth herein is
intended or shall be construed to limit or restrict whatever right CDC might
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otherwise have to challenge any fee, charge, assessment, or tax not in effect
as of the Effective Date.
3.07 Reservoir. CDC shall construct, at its sole cost and expense,
an approximately 3,000,000 gallon water storage facility near Camino Vera Cruz
and a water distribution system for the Property, all as set forth more fully
in the City-approved Forster Ranch Master Water Plan prepared by Lowry and
Associates dated June 1982 and supplemented by Madole and Associates' Forster
Ranch Water Master Plan dated June 10, 1983. Upon completion of construction of
the reservoir and the trunk line water distribution system to City's reasonable
satisfaction, CDC shall offer to dedicate such facilities to City (with all
necessary easements and rights-of-way) and City shall accept such offer of
dedication.
3.08 Option to City to Acquire Civic Center Site. Contingent upon
the Closing, CDC grants to City and City accepts from CDC an option to acquire
an approximately 7-acre site in Planning Area 15 (as depicted in the Specific
Plan) on the southwest side of the future extension of Avenida La Pata
(hereinafter the "Civic Center Site"), subject to the terms and conditions set
forth in this Section 3.08.
3.08.1 Determination of Boundaries. The Civic Center Site
shall be located entirely within the portion of the Property designated in
Exhibit H to this Agreement. The
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precise size and configuration of the Civic Center Site shall be as reasonably
determined by City, provided that the size of the Civic Center Site shall not
exceed seven (7) buildable acres of land area without CDC's consent and the
configuration of the Civic Center Site shall not deprive any other legal lot
within the balance of the Property of legal access to a public street or road.
City shall be responsible for the cost of any boundary survey required to
precisely designate the Civic Center Site. City shall, at its sole expense,
satisfy all requirements of the Subdivision Map Act and City's local
subdivision ordinance arising in connection with the creation of the Civic
Center Site as a legal lot.
3.08.2 Option Fee and Purchase Price. CDC's granting of the
option referenced in this Section 3.08 shall be in consideration of City's
performance of its obligations set forth in this Agreement. City shall not be
required to pay any option fee or consideration or purchase price for the Civic
Center Site, other than the miscellaneous costs and expenses related to the
conveyance which are City's responsibility as specifically set forth in this
Section 3.08.
3.08.3 Option Period. City shall have the right to exercise
its option to acquire the Civic Center Site at any time during the term of this
Agreement commencing with the date that is four (4) years after the Effective
Date, provided, however, that, subject to Section 3.08.9 below, if
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at any time after the fourth anniversary of the Effective Date CDC determines
in its sole discretion that City's unexercised option is adversely affecting
CDC's plans for the use, development, or sale of any of the property included
within Exhibit H to this Agreement, CDC shall have the right to provide written
notice to City that the option must be exercised by City (if at all) within one
(1) year of City's receipt of such notice and if City does not exercise the
option within said one (1) year period, the option shall automatically
terminate at that time, unless CDC agrees in writing to extend the option for
an additional period of time, which extension CDC may grant or withhold in its
sole discretion.
3.08.4 Manner of Exercise of Option. City shall exercise its
option to acquire the Civic Center Site by delivering to CDC written notice of
City's intention to do so. Within ten (10) days after City delivers such notice
to CDC, City and CDC shall open an escrow for the conveyance with a title
company selected by CDC and subject to City's reasonable approval. The escrow
instructions for the conveyance shall be consistent with this Section 3.08.
City and CDC agree to execute such additional instructions as may be reasonably
required by the escrow agent in order to accomplish the purposes of this
Section 3.08 and close the escrow; provided, however, that in the event of any
conflicts between the standard printed form escrow instructions of the
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escrow agent and the provisions of this Section 3.08, the provisions of this
Section 3.08 shall prevail.
3.08.5 Condition of Title. CDC shall convey title to the
Civic Center Site by grant deed. CDC shall convey and City shall accept fee
simple merchantable title to the Civic Center Site free and clear of all
recorded and unrecorded monetary liens. CDC further agrees to convey the Civic
Center Site free and clear of all recorded and unrecorded non-monetary lions,
encumbrances, easements, leases, covenants, conditions, restrictions, and other
exceptions to or defects in title (collectively, "Title Exceptions"), excepting
only (i) those Title Exceptions City determines in its reasonable discretion do
not interfere with City's planned development and use of the Civic Center Site,
(ii) Title Exceptions existing at the Closing, and (iii) Title Exceptions
created after the Closing which are not a result of any act or omission by CDC.
CDC represents to City that as of the Effective Date CDC has no knowledge of
the existence of any unrecorded Title Exceptions which may affect the Civic
Center Site other than as may have been disclosed in writing to City prior to
the Effective Date.
At CDC's option, the grant deed conveying the Civic Center Site to
City shall contain a power of termination meeting the requirements of Chapter 5
(commencing with Section 885.010) of Title 5 of Part 2 of Division 2. of the
California Civil Code exercisable by CDC as to any portion of
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the Civic Center Site that is used for purposes other than construction,
maintenance, and operation of public uses (including without limitation a city
hall, community center, library, police station, fire station, and related
landscaped open areas).
3.08.6 Escrow Fees and Closing Costs. City shall pay all of
the escrow fees and closing costs incurred for the conveyance of the Civic
Center Site, except that CDC shall pay any property taxes and assessments
(which shall be prorated at close of escrow), or cause a reallocation of same
to some or all of the balance of the Property, and all costs required to place
title in the condition referenced in the first paragraph of Section 3.08.5. If
City desires to obtain a policy of title insurance, City shall pay the premium
therefor. CDC and City hereby warrant and represent to one another that neither
party has engaged the services of a broker or finder in this transaction, and
each agrees to indemnify, defend, and hold the other harmless from and against
any claims, liabilities, or losses arising out of a breach of such warranty and
representation.
3.08.7 Right of Entry. Between the Effective Date of this
Agreement and the close of escrow or earlier termination of City's option to
acquire the Civic Center Site, CDC hereby grants to City and its authorized
agents a non-exclusive irrevocable license to enter onto the Civic Center Site
and adjacent portions of the Property for the
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purpose of conducting soils tests and engineering and boundary surveys and
other investigations related to city's intended use of the Civic Center Site,
provided that City shall notify CDC in writing prior to such entry. City agrees
to indemnify, defend, and hold harmless CDC and the Property from and against
any and all claims, liabilities, and losses arising from City's activities,
including those of its agents and contractors, as provided for under this
Section 3.08.7, including but not limited to mechanic's liens. City agrees to
bear all costs in connection with such work.
3.08.8 Physical Condition of the Civic Center Site. CDC
shall be responsible for rough grading the Civic Center Site to within a
tolerance of +/- one foot, in accordance with the rough grading plan to be
prepared and approved as set forth in this Section 3.08.8.
Upon City's written request (which request may occur prior or
subsequent to City's exercise of its option as provided herein), CDC shall
prepare a rough grading plan for the Civic Center Site reflecting a "sheet
graded" configuration. Said rough grading plan shall be prepared in cooperation
with City and shall be submitted to and approved by City.
Subject to the next paragraph hereinbelow, CDC shall commence
rough grading on the Civic Center Site within thirty (30) days after the later
of the following dates: (i) the date that City exercises its option to acquire
the Civic
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Center Site, and (ii) the date that City approves the rough grading plan for
the Civic Center Site. Once grading is commenced, it shall be diligently
pursued to completion and, except in the event of a delay entitling CDC to an
extension of time to perform under Section 6.02.2 of this Agreement, the
grading shall be completed within sixty (60) days after it is commenced. CDC
shall comply with all applicable City ordinances in connection with such
grading.
Notwithstanding the foregoing, in the event that the Civic
Center Site is located adjacent to Planning Area 1 of the Rancho San Clemente
property and at the time the grading would otherwise be required to commence
hereunder, City has not yet acquired the adjacent property in Rancho San
Clemente Planning Area 1 which City needs to acquire to create a complete civic
center complex, CDC's obligation to commence rough grading the Civic Center
Site shall be extended for a reasonable period of time to avoid the need for
extensive corrective grading operations off of the Property. City's election to
close escrow on the Civic Center Site prior to CDC's completion of rough
grading shall not be deemed a waiver of City's right to require such rough
grading to be performed at a later date, including, if the grading is to be
deferred until City acquires adjacent property in Rancho San Clemente Planning
Area 1, at the time such adjacent property is acquired.
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CDC warrants and represents (which warranty and representation
shall survive the close of escrow) that it has no actual knowledge of the
presence of any hazardous or toxic substances or materials within the portion
of the Property designated on Exhibit H to this Agreement. CDC shall indemnify,
defend, and hold City harmless from any claims, liabilities, or losses incurred
by City arising out of CDC's violation of this limited warranty and
representation. Otherwise, CDC makes no warranty, express or implied, regarding
the physical condition of the Civic Center Site and, except for CDC's
obligation to deliver the Civic Center Site in a. rough graded condition in
accordance with the approved grading plan, as referenced herein, City shall
accept the Civic Center Site in an "as is" physical condition.
3.08.9 Close of Escrow. Escrow shall close sixty (60) days
after the opening of escrow; provided, however, that City shall have the right
to extend the closing date to a date not later than fifteen (15) days after CDC
satisfactorily completes the rough grading of the Civic Center Site in
accordance with Section 3.08.8 herein, and in the event such an extension is
made, the Option Period referenced in Section 3.08.3 shall be extended until
the escrow is closed.
3.08.10 Wastewater Treatment Capacity. City agrees that the
Property shall not be assessed for any
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wastewater treatment capacity used for the Civic Center Site (after City
acquires the same), and that the wastewater treatment capacity for the Civic
Center Site shall be allocated to the City's share, rather than Estrella's,
CDC'S, or the Property's share, under Article IX of the October 3, 1984,
Agreement for Construction of Wastewater Treatment Facilities.
ARTICLE 4
IMPLEMENTATION
4.01 Processing and Approvals. During the term of this Agreement,
City shall process all of CDC's applications for development projects on the
Property (including without limitation general plans, specific plans, zone
changes, tentative tract maps, site plan reviews, conditional use permits, and
variances) within the times set forth in the Permit Streamlining Act (Chapter
4.5 (commencing with Section 65920) of Division 1 of Title 7 of the California
Government Code), the Subdivision Map Act (Division 2 (commencing with Section
66410) of Title 7 of the California Government Code), and other applicable
provisions of law, as the same may be amended from time to time. In addition,
to the extent City can do so with its limited resources and without illegally
discriminating against other applicants, City shall exercise reasonable
diligence to expedite the processing of CDC's permit applications for
development projects on the Property
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in shorter periods of time. In no event shall City disapprove, condition, or
delay the processing of any development project proposed by CDC on the Property
for reasons inconsistent with the express provisions of this Agreement.
With respect to applications by CDC for tentative subdivision maps for
portions of the Property, City agrees that CDC may file and process vesting
tentative maps in accordance with Chapter 4.5 (commencing with Section 66498.1)
of Division 2 of Title 7 of the California Government Code and the applicable
provisions of City's subdivision ordinance, as the same may be amended from
time to time. With respect to meeting any requirements of the California
Environmental Quality Act (Division 13 (commencing with Section 21000) of the
Public Resources Code) ("CEQA"), CDC shall provide all information required of
it and pay for any necessary studies and reports, and City shall process such
matters in accordance with the preceding paragraph and, to the extent permitted
by CEQA, shall use and adopt existing environmental reports and studies without
requiring new or supplemental environmental documentation.
If City is unable to timely process any of CDC's permit applications
for development projects, upon request by CDC, City will consider engaging
outside consultants to aid in such processing, provided that CDC shall be
required to
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advance all charges to be incurred by City for such outside consultants.
4.02 Conditions of Approval Regarding Specific Plan. With respect to
the Conditions of Approval for the Specific Plan, City acknowledges that
Conditions 13 (Back Country Trails Study) and 34 (Beach Parking Study), except
the last sentence, have been satisfied, and Condition 2 (water reclamation) is
not applicable to the Property as now proposed for development in accordance
with the Specific Plan. City further acknowledges that Condition 8 (update of
Water, Sewer, and Drainage Master Plans) shall be limited to necessary updating
of existing plan(s). City acknowledges that Condition 10 (Traffic Study), 28
(freeway interchange), and 29 (Avenida La Pata extension) will be implemented
by way of CDC's compliance with the RCFPP.
4.03 Tentative Map Extensions. If final maps are not recorded for
all the property comprising Revised Tentative Map 12895 before such tentative
map would otherwise expire, the term of such tentative map shall be extended
for the term of this Agreement.
4.04 Other Governmental Permits. Provided that CDC will pay the
reasonable cost of such cooperation, after City has approved the development of
any portion of the Property, City shall cooperate with CDC in its efforts to
obtain such additional permits and approvals as may be required by any other
governmental or quasi-governmental agencies having
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jurisdiction over the Property which permits and approvals are consistent with
City's approval and which are consistent with applicable regulatory
requirements.
ARTICLE 5
AMENDMENT OF AGREEMENT
This Agreement may not be amended except by a writing executed by City
and CDC, after City has complied with any public notice and hearing
requirements which may be a prerequisite to such amendment.
ARTICLE 6
ANNUAL REVIEW; DEFAULT; TERMINATION
6.01 Annual Review. City shall review the good faith compliance of
CDC with the terms of this Agreement at the first City Council meeting of
February 1990 and at the same time each year thereafter during the term of this
Agreement (the "Annual Review"). The Annual Review shall be conducted in
accordance with Article 6 of City's regulations for consideration of
development agreements approved by Resolution No. 46-81 on June 17, 1981, as
the same may be amended from time to time. City shall provide CDC, at least ten
(10) business days before the Annual Review, with a copy of all final public
staff reports and, to the extent practical, related exhibits, as well as any
proposed determinations concerning CDC's performance under this
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Agreement. At the conclusion of the Annual Review meeting, City shall make
written findings and determinations, on the basis of substantial evidence,
whether CDC has complied in good faith with the terms and conditions of this
Agreement. If City finds and determines that CDC has not complied with such
terms and conditions, City shall provide CDC with written notice and an
opportunity to cure as set forth in Section 6.02.1, and if CDC fails to cure
the default within the time period provided therein, City may terminate or
modify this Agreement by giving CDC notice of its intention to do so in the
manner set forth in Government Code Sections 65867 and 65868, as the same may
be amended from time to time. In no event shall City's failure to conduct a
timely Annual Review or failure to notify CDC of any default under this
Agreement be deemed a waiver of City's rights with respect to such default.
Nothing set forth in this Section 6.01 is intended to limit City's rights to
pursue any of its remedies under Section 6.02 outside the Annual Review
process.
6.02 Default.
6.02.1 Default. Neither party shall be in default of this
Agreement unless it receives written notice of an event of default from the
non-defaulting party and the defaulting party fails to cure such event of
default within thirty (30) days after such written notice, or if such event of
default requires more than thirty (30) days to cure, such
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additional period as may be appropriate, provided the defaulting party
diligently prosecutes such cure to completion. Such notice shall specify the
nature of the alleged default and the manner in which the default may be
satisfactorily cured. If the defaulting party fails to cure the event of
default as provided herein, the non-defaulting party may pursue the remedies
set forth in Section 6.02.4.
6.02.2 Force Majeure. If any performance by CDC or the City
under this Agreement is delayed because of war, strike, walkout, flood,
earthquake, fire, casualty, act of God, or other cause not within the
reasonable control of CDC or the City, as the case may be, the time to perform
shall be automatically extended by the period of such delay. In no event shall
adverse market or financial conditions or financial ability of a party
constitute an event of force majeure extending the times for such party's
performance hereunder. In addition, in no event shall the term of this
Agreement set forth in Section 7.01 herein be extended by an event of force
majeure.
6.02.3 No Obligation to Develop. It is understood that CDC's
development of the Property depends on a number of factors including, but not
necessarily limited to, the housing market, the availability of financing, and
the general economic climate of the area. Nothing in this Agreement shall be
construed as requiring CDC to develop the
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Property, and any failure to develop the Property shall not be deemed a default
of CDC under this Agreement.
6.02.4 Remedies. In the event of a material default, either
party may institute legal action to cure, correct, or remedy such default,
enjoin any threatened or attempted violation, or enforce the terms of this
Agreement by specific performance. Furthermore, City, in addition to or as an
alternative to exercising the remedies set forth in this Section 6.02.4, in the
event of a material default by CDC, may terminate or modify this Agreement in
accordance with Section 6.01 or give notice of its intent to terminate or
modify this Agreement pursuant to the Development Agreement Statute, in which
latter event the matter shall be scheduled for consideration by the City
Council at a noticed public hearing within thirty (30) calendar days after
delivery of such notice of intent to terminate in the manner set forth in
Government Code Sections 65865, 65867, and 65868, as the same may be amended
from time to time. In no event shall CDC have the right to sue City for damages
arising out of City's default under this Agreement, the parties agreeing that
declaratory and injunctive relief, mandate, and specific performance shall be
CDC's sole and exclusive judicial remedies.
6.03 Termination. If title to the Property has not vested in CDC
on or before March 31, 1989, either party shall have the right to terminate
this Agreement upon thirty (30)
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days' written notice to the other; provided, however, that if either party
notifies the other of its intent to terminate this Agreement and CDC acquires
title to the Property before the expiration of the 30-day period, the Agreement
shall continue in force and effect. In the event this Agreement is terminated
pursuant to this Section 6.03, neither party shall have any rights or
obligations hereunder.
ARTICLE 7
MISCELLANEOUS
7.01 Term. The term of this Agreement shall commence on the
Effective Date, and shall expire on the earliest of the following dates: (i)
the 15th anniversary of the Effective Date; (ii) the applicable date set forth
in the last sentence of Section 2.06.1; (iii) the applicable date set forth in
the last paragraph of Section 3.02.1; and (iv) the applicable date set forth in
Section 6.03.
7.02 Settlement/Development Agreement. This Agreement supersedes
the Settlement/Development Agreement with respect to the Property, and City and
CDC mutually agree that notwithstanding any provision in the
Settlement/Development Agreement to the contrary, neither City nor CDC shall
have any obligations under the Settlement/Development Agreement.
7.03 Transfer of Property. If all or any of the Property is
transferred by CDC to any person or entity (the "Transferred Property"), the
transferee shall succeed to all
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of CDC's rights under this Agreement as they affect the right to proceed with
development of the Transferred Property, and the transferee shall automatically
assume all obligations of CDC hereunder which relate to the Transferred
Property. Furthermore, unless CDC is released in writing by City, a transfer of
all or any part of the Property to any other person or entity shall not release
CDC from any obligation hereunder. Individual home buyers shall have no rights
or obligations hereunder.
In the event CDC or the owner of the Transferred Property develops or
attempts to develop or use its portion of the Property in a manner inconsistent
with the terms of this Agreement, such default shall not constitute a default
by the owner of any other portion of the Property hereunder (including but not
limited to CDC) and shall not entitle City to terminate or modify this
Agreement with respect to such other portion of the Property.
Except as expressly provided herein, this Agreement shall run with the
land and be binding upon, and inure to the benefit of, all of the successors
and assigns of CDC with respect to all or any portion of the Property.
7.04 Mortgagee Rights.
7.04.1 Definition of Mortgagee. As used in this Agreement,
"Mortgagee" shall include the holder of any mortgage or the beneficiary of any
deed of trust covering all or part of the Property or any successor or assignee
of any
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such mortgage holder or beneficiary, provided such mortgage holder or
beneficiary has delivered written notice to the City stating its desire to
receive notices of default under this Section 7.04.
7.04.2 Default Rights. City shall notify any Mortgagee of
any event of default by CDC under this Agreement and shall provide any such
Mortgagee the same opportunity to cure such event of default as is provided to
CDC under this Agreement. Failure to so notify any Mortgagee shall incur no
liability as to City, provided that this Agreement shall not be terminated by
City as to any Mortgagee to whom notice is given and which cures any default by
CDC involving the payment of money within sixty (60) days after the notice of
default or, as to defaults requiring title or possession of the Property (or
portion thereof) to effectuate such cure, if (i) the Mortgagee agrees in
writing, within ninety (90) days after the written notice of default, to
perform all CDC's obligations under this Agreement conditioned upon such
Mortgagee's acquisition of the Property or portion thereof by foreclosure
(including a trustee's sale) or by a deed in lieu of foreclosure, and (ii) the
Mortgagee commences foreclosure proceedings to reacquire title to the Property
or portion thereof within said ninety (90) days and thereafter diligently
pursues such foreclosure to completion, and (iii) the Mortgagee promptly and
diligently cures such default after obtaining title or possession. Subject to
the
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foregoing, in the event any Mortgagee records a notice of default as to its
mortgage or deed of trust, City shall consent to the assignment of all of CDC's
rights and obligations under this Agreement to the Mortgagee or to any
purchaser of CDC's interest at a foreclosure or trustee's sale and CDC shall
remain liable for such obligations unless released by City in accordance with
Section 7.03.
7.05 Cascadita Landslide. City acknowledges and agrees that CDC
shall not be obligated to make any contribution or otherwise bear any portion
of the cost of the repair of the Cascadita landslide based upon CDC's
acquisition, ownership, or development of the Property or its construction of
the Storm Drain.
7.06 Notice. Every notice, demand, request, designation, consent,
approval, or other document or instrument delivered pursuant to this Agreement
shall be in writing, and shall be either personally delivered, sent by Federal
Express or other reputable overnight courier, sent by facsimile transmission
with the original subsequently delivered by other means, or sent by registered
or certified United States mail, postage prepaid, return receipt requested, to
the addresses set forth below, or to such other address as a party may
designate from time to time:
To CDC: Centex Development Company, L.P.
San Clemente, CA 92672
Attn: Ronald M. Brent
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With cc to: Raymond G. Smerge
Post Office Box 19000
3333 Lee Parkway, Suite 1200
Dallas, TX 75219
Telephone: (214) 559-6530
FAX: (214) 522-7568
To City: City of San Clemente
City Hall, 100 Avenida Presidio
San Clemente, CA 92672
Attn: City Manager
Telephone: (714) 361-8322
With cc to: Jeffrey M. Oderman, Esq.
Rutan & Tucker
611 Anton Blvd., Suite 1400
Costa Mesa, CA 92626
Telephone: (714) 641-5100
FAX: (714) 546-9035
Written notices served by registered or certified mail shall be deemed
delivered forty-eight (48) hours after the date mailed. Other notices shall be
effective upon delivery.
7.07 Parties In Interest. This Agreement and all of its terms,
conditions, and provisions are entered into only for the benefit of the parties
executing this Agreement (and any successors in interest), and not for the
benefit of any other individual or entity.
7.08 No Partnership. The parties to this Agreement renounce the
existence of any form of joint venture or partnership between them and agree
that nothing contained in this Agreement or in any document executed in
connection with this Agreement shall be construed as making the parties joint
venturers or partners.
7.09 Cooperation in the Event of Legal Challenge. In
the event of any legal action instituted by any third party
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challenging the validity or enforceability of any provision of this Agreement,
the parties hereby agree to cooperate in defending said action as set forth in
this Section 7.09.
City shall have the right to defend such action. City shall have no
obligation to defend any such action, except that if CDC timely provides City
with written notice that CDC has elected to defend the action City shall not
allow any default or judgment to be taken against it and shall not enter into
any settlement or compromise of any claim which has the effect, directly or
indirectly, of prohibiting, preventing, delaying, or further conditioning or
impairing CDC's rights hereunder. In addition, if CDC elects to defend the
action City shall provide reasonable assistance to CDC, such assistance to
include (i) making available upon reasonable notice, and at no cost to CDC,
City officials and employees who are or may be witnesses in such action, and
(ii) provision of other information within the custody or control of City that
is relevant to the subject matter of the action.
CDC shall have the right, but not the obligation, to defend any such
action. If CDC defends any such action, it shall indemnify, defend, and hold
harmless City from and against any claims, losses, or liabilities assessed or
awarded against City by way of judgment, settlement, or stipulation. If CDC
does not defend any such action, CDC shall have no responsibility for the
payment or defense of
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any claims, losses, or liabilities incurred by or filed against City.
7.10 Entire Agreement; Recordation. This Agreement consists of
sixty-five (65) pages and nine (9) exhibits, which constitute the entire
understanding and agreement of the parties.
This Agreement integrates all of the terms and conditions mentioned
herein or incidental hereto, and supersedes all negotiations or previous
agreements between the parties with respect to all or any part of the subject
matter hereof. All waivers of the provisions of this Agreement shall be in
writing and signed by the appropriate authorities of City and CDC. This
Agreement shall be recorded against the Property, at CDC's expense, at the
Closing immediately following recordation of the grant deed or deeds conveying
the Property to CDC and prior to any monetary lien, or any other encumbrance,
covenant, or restriction, which lien, encumbrance, covenant, or restriction is
placed on the Property at Closing.
7.11 Severability. If any term, provision, covenant, or condition
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remaining provisions of this Agreement shall
continue in full force and effect, unless the rights and obligations of one or
both parties have been materially altered or abridged by such holding.
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7.12 Successors and Assigns; Survival of Representations,
Warranties, and Indemnity Obligations. This Agreement shall bind and inure to
the benefit of the successors and assigns of the parties hereto. Any
representations and warranties made by a party in this Agreement and any
indemnity obligations of a party which are set forth herein shall survive the
Closing, the close of escrow referenced in Section 3.08 (as applicable), and
the termination of this Agreement.
7.13 Applicable Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of California.
7.14 Attorney's Fees. In the event of any legal action for
enforcement of any of the terms or conditions of this Agreement, the prevailing
party in such action shall be entitled to recover its reasonable costs and
expenses, including without limitation reasonable attorney's fees and costs.
Attorney's fees shall include attorney's fees on any appeal, and in addition a
party entitled to attorney's fees shall be entitled to all other reasonable
costs for investigating such action, taking depositions and discovery, and all
other necessary costs incurred in the litigation. All such fees shall be
deemed to have accrued on commencement of such action and shall be enforceable
whether or not such action is prosecuted to a final judgment.
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7.15 Estoppel Certificates. Upon written request of either party
directed to the other, the party requested shall promptly furnish to the other
(at the expense of the requesting party) a written statement certifying that
(a) this Agreement, subject to any amendments that may have been duly adopted,
is in full force and effect and binding on the parties in accordance with its
terms, and (b) to the best of the certifying party's knowledge, the other party
is not in default under this Agreement (except to the extent any defaults are
known to exist in which case they shall be listed). Any third party shall be
entitled to rely on the certificate.
7.16 Reasonableness. Each of the parties, and their agents,
employees, attorneys, and consultants, shall act reasonably in exercising any
rights or taking any actions pursuant to this Agreement.
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IN WITNESS WHEREOF, the parties have entered into this Development
Agreement as of the date first written above.
CITY OF SAN CLEMENTE,
a municipal corporation
By /s/ BRIAN J. RICE
Mayor
ATTEST:
/s/ MEJINA ERWAY
City Clerk
APPROVED AS TO FORM:
By JOHNNY M. ODERMAN
City Attorney
CENTEX DEVELOPMENT COMPANY,
L.P., a Delaware limited
partnership
By: Centex Real Estate Corporation,
Managing Agent
By /s/ RONALD M. BRENT
Ronald M. Brent,
Division Vice President
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IN WITNESS WHEREOF, the parties have entered into this Development
Agreement as of the date first written above.
CITY OF SAN CLEMENTE,
a municipal corporation
By /s/ BRIAN J. RICE
Mayor
ATTEST:
(Public Agency Form of Acknowledgement)
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS.
CITY OF SAN CLEMENTE )
On this 29 day of March, in the year 1989, before me, Brian J. Rice personally
appeared, known to me to be Mayor of the City of San Clemente (name of the
public corporation, agency, or political subdivision) and known to me to be the
person who executed the within instrument on behalf of said public corporation,
agency, or political subdivision, and acknowledged to me that such municipality
(public corporation, agency, or political subdivision) executed the same.
/s/ MEJINA ERWAY
City Clerk
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
On March 16, 1989, before me, the undersigned, a Notary Public in and for said
State, personally appeared Ronald M. Brent, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person who executed the
within instrument as Division Vice President, on behalf of Centex Real Estate
Corporation, the corporation therein named, and acknowledged to me that said
corporation executed the within instrument pursuant to its by-laws or a
resolution of its board of directors, said corporation being known to me to be
the Managing Agent of Centex Dev. Co., L.P., the limited partnership that
executed the within instrument, and acknowledged to me that such corporation
executed the same as such agent and that such partnership executed the same.
WITNESS my hand and official seal. (Official Seal)
VINCY VAN VALKENBURG
Signature /s/ VINCY VAN VALKENBURG NOTARY PUBLIC - CALIFORNIA
CONTRA COSTA COUNTY
My Comm. Expires Sept 25, 1992
(This area for official notarial seal)
<PAGE> 1
EXHIBIT 23.C
CENTEX DEVELOPMENT COMPANY, L.P.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in the previously filed registration statements on Form S-8 (numbers
33-44575; 33-29174; 2-95271; 2-51637; 2-54043; 2-59535; 2-68747; 2-78831) of
our report dated May 11, 1994, included in 3333 Holding Corporation and
Subsidiary and Centex Development Company, L.P. Form 10-K for the year ended
March 31, 1994, and to all references to our firm included in these
registration statements.
ARTHUR ANDERSEN & CO.
Dallas, Texas
June 29, 1994
<PAGE> 1
EXHIBIT 24.C
CENTEX DEVELOPMENT COMPANY, L.P.
CENTEX DEVELOPMENT COMPANY, L.P.
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer
as the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of 3333 Development Corporation,
as the general partner of Centex Development Company, L.P. (the "Company"), to
execute and file with the Securities and Exchange Commission the Company's
Annual Report on Form 10-K for the Company's fiscal year ended March 31, 1994,
together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ Josiah O. Low, III
Josiah O. Low, III
Director
3333 Development Corporation
General Partner of Centex
Development Company, L.P.
<PAGE> 2
CENTEX DEVELOPMENT COMPANY, L.P.
POWER OF ATTORNEY
THE UNDERSIGNED hereby constitutes and appoints J. Stephen Bilheimer
as the undersigned's true and lawful agent and attorney-in-fact (the
"Attorney-in-Fact"), with full power and authority in the name and on behalf of
the undersigned, in his capacity as a Director of 3333 Development
Corporation, as the general partner of Centex Development Company, L.P. (the
"Company"), to execute and file with the Securities and Exchange Commission the
Company's Annual Report on Form 10-K for the Company's fiscal year ended March
31, 1994, together with any and all amendments thereto.
This Power of Attorney and all authority granted and conferred hereby
shall continue indefinitely and, unless waived by the Attorney-in-Fact, may not
be revoked until the Attorney-in-Fact has received five days' written notice of
such revocation.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 28th day of June, 1994.
/s/ David M. Sherer
David M. Sherer
Director
3333 Development Corporation
General Partner of Centex
Development Company, L.P.