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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-------------
HOMEFED CORPORATION
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE 436919104
(Title of class of securities) (CUSIP number)
STEPHEN E. JACOBS, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
(Name, address and telephone number of person authorized to receive
notices and communications)
AUGUST 14, 1998
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
of that Section of the Exchange Act but shall be subject to all other provisions
of the Exchange Act.
(Continued on following page(s))
(Page 1 of 12 Pages)
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<TABLE>
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CUSIP No. 436919104 13D Page 2 of 12
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<S> <C> <C> <C>
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1 NAME OF REPORTING PERSON: TRUST UNDER TRUST AGREEMENT DATED
AUGUST 14, 1998 BETWEEN LEUCADIA
NATIONAL CORPORATION AND JOSEPH A.
ORLANDO, AS TRUSTEE
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
- ---------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
- ---------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: NOT APPLICABLE
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF NEW YORK
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: NONE
SHARES
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8 SHARED VOTING POWER: 4,117,986 (DOES NOT
INCLUDE 37,056,112 SHARES
THAT MAY BE ACQUIRABLE BY
BENEFICIALLY THE TRUST ON OR AFTER JULY
OWNED BY 5, 1999 PURSUANT TO A
STOCK PURCHASE AGREEMENT
DATED AUGUST 14, 1998.)
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9 SOLE DISPOSITIVE POWER: NONE
EACH
REPORTING ----------------------------------------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 4,117,986 (DOES NOT
INCLUDE 37,056,112 SHARES
THAT MAY BE ACQUIRABLE BY
THE TRUST ON OR AFTER JULY
5, 1999 PURSUANT TO A
STOCK PURCHASE AGREEMENT
DATED AUGUST 14, 1998.)
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 4,117,986 (DOES NOT
REPORTING PERSON: INCLUDE 37,056,112 SHARES
ACQUIRABLE BY THE TRUST ON
OR AFTER JULY 5, 1999
PURSUANT TO A STOCK
PURCHASE AGREEMENT DATED
AUGUST 14, 1998.)
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [X]
SHARES:
SEE ROW 11
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 41.2%
- ---------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: 00
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CUSIP No. 436919104 13D Page 3 of 12
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1 NAME OF REPORTING PERSON: IAN M. CUMMING
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: NOT APPLICABLE
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF USA
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: NONE
SHARES
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BENEFICIALLY 8 SHARED VOTING POWER: 4,117,986 (1)
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER: NONE
REPORTING
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PERSON WITH 10 SHARED DISPOSITIVE POWER: 4,117,986 (1)
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 4,117,986 (1)
REPORTING PERSON:
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [X]
SHARES:
SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 41.2%
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14 TYPE OF REPORTING PERSON: IN
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(1) All of such shares of common stock of HomeFed Corporation are directly owned
by a Trust under a Trust Agreement dated August 14, 1998 between Leucadia
National Corporation for the benefit of its shareholders of record on August 25,
1998 and Joseph A. Orlando, as Trustee (the "Trust"). Does not include
37,056,112 shares that may be acquirable by the Trust on or after July 5, 1999
pursuant to a Stock Purchase Agreement dated August 14, 1998.
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CUSIP No. 436919104 13D Page 4 of 12
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1 NAME OF REPORTING PERSON: JOSEPH S. STEINBERG
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X]
(B) [_]
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3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS: NOT APPLICABLE
- ---------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- ---------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF USA
ORGANIZATION:
- ---------------------------------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: NONE
SHARES
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BENEFICIALLY 8 SHARED VOTING POWER: 4,117,986 (1)
OWNED BY
----------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: NONE
REPORTING
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PERSON WITH 10 SHARED DISPOSITIVE POWER: 4,117,986 (1)
- ---------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 4,117,986 (1)
REPORTING PERSON:
- ---------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [X]
SHARES:
SEE NOTE 1
- ---------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 41.2%
- ---------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: IN
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</TABLE>
(1) All of such shares of common stock of HomeFed Corporation are directly owned
by a Trust under a Trust Agreement dated August 14, 1998 between Leucadia
National Corporation for the benefit of its shareholders of record on August 25,
1998 and Joseph A. Orlando, as Trustee (the "Trust"). Does not include
37,056,112 shares that may be acquirable by the Trust on or after July 5, 1999
pursuant to a Stock Purchase Agreement dated August 14, 1998.
<PAGE>
Item 1. Security and Issuer.
-------------------
This Statement on Schedule 13D relates to the common stock, $.01 par
value (the "Common Stock"), of HomeFed Corporation, a Delaware corporation (the
"Company"). The address of the Company's principal executive office is 529 East
South Temple, Salt Lake City, Utah 84102.
Item 2. Identity and Background.
------------------------
(a), (b), (c) and (f). This Statement on Schedule 13D is filed on
behalf of a Trust under the Trust Agreement dated August 14, 1998 between
Leucadia National Corporation ("Leucadia") for the benefit of its shareholders
and Joseph A. Orlando, as Trustee (the "Trust"), Ian M. Cumming and Joseph S.
Steinberg (collectively, the "Beneficial Owners").
The Trust is a New York trust established under the Trust Agreement
dated August 14, 1998 between Leucadia for the benefit of its shareholders and
the Trustee (the "Trust Agreement"). The Trust does not conduct business, but
principally holds 4,117,986 shares of Common Stock of the Company (the "Shares")
that were contributed to it by Leucadia on August 14, 1998, together with a
Stock Purchase Agreement dated as of August 14, 1998 between the Company and
Leucadia, which has been assigned by Leucadia to the Trust (the "Stock Purchase
Agreement"), all for the benefit of shareholders of record of Leucadia at August
25, 1998 (the "Beneficiaries"). The business address of the Trust is c/o Joseph
A. Orlando, Trustee, c/o Leucadia National Corporation, 315 Park Avenue South,
New York, New York 10010.
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Mr. Cumming's business address is 529 East South Temple, Salt Lake
City, Utah 84102. Mr. Cumming is Chairman of the Board of Leucadia, a
diversified financial services holding company principally engaged in personal
and commercial lines of property and casualty insurance, life insurance, banking
and lending and manufacturing. Leucadia's address is 315 Park Avenue South, New
York, New York 10010. Mr. Cumming is a United States citizen.
Mr. Steinberg's business address is 315 Park Avenue South, New York,
New York 10010. Mr. Steinberg is the President of Leucadia, a diversified
financial services holding company principally engaged in personal and
commercial lines of property and casualty insurance, life insurance, banking and
lending and manufacturing. Leucadia's address is 315 Park Avenue South, New
York, New York 10010. Mr. Steinberg is a United States citizen.
(d) and (e). During the past five years, none of the Beneficial
Owners has (a) been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or (b) been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or a finding of any violation with respect
to such laws.
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Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The Shares were transferred to the Trust by Leucadia for the benefit
of the Beneficiaries without consideration. The information included in response
to Item 4 is specifically incorporated herein by reference.
Item 4. Purpose of Transaction.
----------------------
On August 14, 1998, Leucadia transferred (i) the Shares, (ii) the
right to purchase an additional 37,056,112 shares of Common Stock pursuant to
the Stock Purchase Agreement (the "Additional Shares"), and (iii) $1,670,100,
representing the funds necessary to purchase the Additional Shares (after giving
effect to a $5 million advance made by Leucadia on the payment of the purchase
price for the Additional Shares) to the Trust (the "Trust Transfer"). Pursuant
to the terms of the Stock Purchase Agreement and subject to the satisfaction of
certain conditions, on or after July 5, 1999, the Trust would purchase the
Additional Shares from the Company. The Trust is required to distribute all
shares of the Company's Common Stock owned by the Trust as promptly as
practicable following such acquisition of the Additional Shares or, if not
acquired by July 31, 1999, as promptly as practicable after such date.
The Trust Agreement provides that the Trustee may vote and/or act
with respect to the disposition of the Shares (and upon acquisition, the
Additional Shares) as directed in a written notice jointly signed by Mr. Cumming
and
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Mr. Steinberg acting on behalf of all Beneficiaries. On August 14, 1998,
Leucadia announced that it had declared a pro rata dividend to its shareholders
of record on August 25, 1998 of beneficial interests in the Trust. Beneficial
interests in the Trust are not certificated, are not transferable except under
the laws of descent and distribution, do not have voting rights, are not
entitled to receive dividends or interest and do not represent any equity
interest in the Company. By virtue of his ownership of approximately 15.5% of
the common shares of Leucadia, Mr. Cumming will have an approximately 15.5%
beneficial interest in the Trust. By virtue of his ownership of approximately
14.2% of the Common Shares of Leucadia, Mr. Steinberg will have an approximately
14.2% beneficial interest in the Trust.
Pursuant to the terms of the Stock Purchase Agreement, on August 14,
1998, the Company increased the size of its Board of Directors from three to
five directors and appointed two designees of Leucadia, Mr. Steinberg and
Patrick D. Bienvenue, an employee of a Leucadia subsidiary, to the Company's
Board of Directors. As a result of such expansion and appointment, three persons
affiliated with Leucadia currently are members of the Company's Board of
Directors.
Except as described above, the Beneficial Owners have no plans or
intentions which would result in or relate to any of
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the transaction described in subpargraphs (a) through (g) of Item 4 of Schedule
13D.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) and (b). As of August 14, 1998 (after giving
effect to the Trust Transfer) each of the Trust, Joseph S. Steinberg and Ian M.
Cumming, may be deemed to beneficially own, for purposes of Section 13(d) of the
Exchange Act, 4,117,986 shares of HomeFed Common Stock, representing
approximately 41.2% of the outstanding Common Stock.
Each of Joseph S. Steinberg and Ian M. Cumming share voting and
dispositive power with respect to the Shares. Pursuant to the terms of the Trust
Agreement, the Trust has sole power to dispose of the Shares.
(c). Except as described in this Schedule 13D with respect to the
Trust Transfer, none of the Beneficial Owners effected any transactions in
shares of Common Stock during the past 60 days.
(d). Not applicable.
(e). Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
------------------------------------------------------
The information set forth in response to Item 4 is specifically
incorporated herein by reference. Except as described above, there are no
contracts, arrangements, understandings or relationships with respect to any
securities of
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the Company (i) among the Beneficial Owners and, to the best of their knowledge,
any of the other persons identified pursuant to Item 2 above and (ii) between
(a) the Beneficial Owners and, to the best of their knowledge, any of the other
persons identified pursuant to Item 2 above and (b) any other person, other than
the agreement filed herewith as Exhibit 1.
Item 7. Materials to Be Filed as Exhibits
---------------------------------
1. Agreement among the Beneficial Owners with respect to the filing
of this Schedule 13D.
2. Trust Agreement, dated August 14, 1998, between Leucadia National
Corporation for the benefit of its shareholders and Joseph A. Orlando, as
Trustee; and
3. Stock Purchase Agreement, dated August 14, 1998, between Leucadia
National Corporation and HomeFed Corporation.
10
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SIGNATURE
---------
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: August 24, 1998
TRUST UNDER TRUST AGREEMENT DATED
AUGUST 14, 1998 BETWEEN LEUCADIA
NATIONAL CORPORATION AND JOSEPH A.
ORLANDO, AS TRUSTEE
By: /s/ Joseph A. Orlando
--------------------------------
Joseph A. Orlando, as Trustee
/s/ Joseph S. Steinberg
--------------------------------------
Joseph S. Steinberg
/s/ Ian M. Cumming
---------------------------------------
Ian M. Cumming
11
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EXHIBIT INDEX
Exhibit No. Document Page No.
- ----------- -------- --------
1 Agreement among the
Beneficial Owners with
Respect to the filing of
this Schedule 13D
2 Trust Agreement, dated
August 14, 1998, between
Leucadia National
Corporation for the
benefit of its
shareholders and Joseph
A. Orlando, as Trustee.
3 Stock Purchase Agreement,
dated August 14, 1998, between
Leucadia National Corporation
and HomeFed Corporation.
12
EXHIBIT 1
AGREEMENT
This will confirm the agreement by and among all the undersigned
that the Schedule 13D filed on or about this date with respect to the beneficial
ownership of the undersigned of shares of common stock of HomeFed Corporation is
being filed on behalf of each of the entities named below. This agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Dated: August 24, 1998
TRUST UNDER TRUST AGREEMENT DATED
AUGUST 14, 1998 BETWEEN LEUCADIA
NATIONAL CORPORATION AND JOSEPH A.
ORLANDO, AS TRUSTEE
By: /s/ Joseph A. Orlando
--------------------------------
Joseph A. Orlando, as Trustee
/s/ Joseph S. Steinberg
--------------------------------------
Joseph S. Steinberg
/s/ Ian M. Cumming
---------------------------------------
Ian M. Cumming
13
EXHIBIT 2
TRUST AGREEMENT
---------------
THIS TRUST AGREEMENT (the "Agreement") is made this 14th day of
August, 1998, between Leucadia National Corporation ("Leucadia") for the benefit
of its shareholders, and Joseph A.
Orlando (the "Trustee").
WHEREAS, Leucadia is the beneficial owner of 4,117,986 shares of
common stock of HomeFed Corporation (the "Owned HomeFed Common Stock") which
represents approximately 41% of the outstanding shares of common stock of
HomeFed Corporation ("HomeFed Stock"); and
WHEREAS, Leucadia has entered into a Stock Purchase Agreement, dated
as of August 14, 1998 (the "Purchase Agreement"), among Leucadia and HomeFed
Corporation, pursuant to which Leucadia is entitled and obligated to purchase
for an aggregate purchase price of $6,670,100, a portion of which has already
been paid (the "Purchase Price") a number of additional shares of common stock
of HomeFed Corporation (the "Additional HomeFed Stock" and together with the
Owned HomeFed Stock, the "HomeFed Stock Interest") such that Leucadia would
beneficially own 87.5% of the outstanding shares of HomeFed Stock, ; and
WHEREAS, Leucadia wishes to convey all of its right, title and
interest in and to the HomeFed Stock Interest and all of its right, title and
interest in and to the Purchase Agreement and the remainder of the Purchase
Price, together with any right, title and interest that Leucadia may acquire on
or before November 10, 1998 in and to additional shares of HomeFed Stock or any
contract to acquire shares of HomeFed Stock, together with the purchase price
for such shares (collectively, the "Trust Property"), to and for the benefit of
and account of the holders of common shares, par value $1.00 per share, of
Leucadia as of August 25, 1998 (the "Beneficiaries"); and
WHEREAS, the Trustee has agreed to act as the Trustee under this
Agreement for the purposes herein provided;
NOW, THEREFORE, in consideration of the premises and of the
acceptance by the Trustee of the Trust hereby created and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, the parties hereby agree as follows:
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ARTICLE 1
THE TRUST
Section 1.1 All of Leucadia's right, title and interest in and to
the Trust Property is hereby vested in the Trust. Any property that may in the
future be vested in the Trust pursuant to the provisions of this Agreement shall
thereafter also be considered Trust Property. To the extent any law or
regulation prohibits the transfer of ownership of any of the Trust Property from
Leucadia to the Trustee, the Trustee's interest shall be a lien upon and
security interest in such Trust Property, in trust, nevertheless, for the sole
use and purposes set forth in Section 2.1, and this Agreement shall be deemed a
security agreement granting such interest thereon.
Section 1.2 Leucadia shall, upon reasonable request of the Trustee,
execute, acknowledge and deliver such further instruments and do such further
acts as may be necessary or appropriate to more effectively vest in the Trust
any portion of the Trust Property intended to be vested herein.
ARTICLE 2
PURPOSES OF THE TRUST
Section 2.1 The purposes of this Trust are (i) to hold the assets
transferred to it by Leucadia on behalf of the Beneficiaries and collect income
derived from such assets, (ii) to close the transaction contemplated by the
Purchase Agreement, (iii) to take such other action as is necessary to conserve
and protect the Trust Property, and (iv) to liquidate and distribute the Trust
Property.
ARTICLE 3
POWERS OF TRUSTEE
Section 3.1 The Trustee accepts and undertakes to discharge the
Trust created by this Agreement upon the terms and conditions hereof and agrees,
for the benefit of the Beneficiaries, to exercise such of the rights and powers
vested in it by this Agreement in the same manner, and use the same degree of
care and skill in its exercise, as a prudent person would exercise and use under
the circumstances in the conduct of
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his own affairs, having due regard to the purposes of the Trust set forth in
Article 2 hereof.
Section 3.2 In accepting the Trust hereby created, the Trustee acts
solely as Trustee hereunder, and all persons having any claim against the
Trustee in connection with its performance of its rights, powers and duties as
such Trustee shall only look to the Trust Property for payment or satisfaction
thereof.
Section 3.3 The Trustee shall not commingle any of the Trust
Property with its own property or the property of any other person.
Section 3.4 The Trustee is hereby empowered to:
(a) perform all of the obligations and agreements of
the Trust provided for in this Agreement;
(b) make payment under the Purchase Agreement and perform any other
obligations and agreements under the Purchase Agreement necessary for the
issuance by HomeFed Corporation of the Additional HomeFed Stock;
(c) keep and maintain an account in the name of the Trustee for the
benefit of the Beneficiaries into which the Trustee shall deposit all
Trust Property consisting of cash or cash equivalents (the "Trust
Account"); the Trustee shall not permit any person other than the Trustee
to have authority to make withdrawals from, or to issue drafts against,
the Trust Account and no Trust Account may be maintained with any bank
unless such bank has been furnished a copy of this Agreement;
(d) collect and receive all sums of money or other property due to
the Trust;
(e) engage professionals, including attorneys, accountants, experts
and others, to assist the Trustee in carrying out its duties hereunder;
(f) receive additional Trust Property and take all appropriate
action necessary to preserve the value of Trust Property as the Trustee in
the reasonable exercise of its discretion shall determine, subject to
Article 4 hereof;
(g) vote and/or act with respect to the disposition of the Owned
HomeFed Common Stock and, upon issuance, the Additional HomeFed Stock and
any other shares
3
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of common stock of HomeFed Corporation that may then be Trust Property as
directed in a written notice jointly signed by mutual agreement of Ian M.
Cumming and Joseph S. Steinberg, each of whom is a Beneficiary of the
Trust and, accordingly, are together thereby acting on behalf of all of
the Beneficiaries;
(h) pay all reasonable and necessary Trust expenses incurred in the
administration of the Trust, including without limitation, attorneys' fees
and disbursements, accounting fees, expert fees and other costs and
expenses arising out of the consummation of the transactions contemplated
by the Purchase Agreement;
(i) prepare and deliver written statements or notices, annually or
otherwise, required by law to be delivered to Beneficiaries; provided that
the Trustee shall have no obligation to deliver any statements or notices
to a permitted transferee of a beneficial trust interest unless, prior to
the date on which the statement or notice is required to be delivered, the
Trustee receives (1) written notice adequately identifying the permitted
transferee (including the transferee's name, address and tax
identification number), and (2) reasonable evidence that the transfer was
authorized by this Agreement;
(j) to file and execute, on behalf of the Trust such applications,
surety bonds, irrevocable consents, appointments of attorney for service
of process and other papers and documents that shall be necessary or
desirable to register or establish the exemption from registration of the
HomeFed Stock Interest, and/or any additional shares of common stock of
HomeFed Corporation that may become Trust Property, under the Securities
Act of 1933, as amended (the "Securities Act"), and under state securities
or blue sky laws and to otherwise assist in the registration of such
shares of common stock of HomeFed Corporation;
(k) maintain and preserve the originals of any and all instruments
and documents pertaining to Trust Property; and
(l) take any of the foregoing action, and execute any documents
relating thereto, in the Trustee's own name, on behalf of the Trust.
Notwithstanding any other provision of this Agreement, the Trustee
shall not, and is not empowered to, acquire any property after the date hereof
other than the Trust Property (and
4
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any proceeds arising therefrom) or vary the investment of the Trust within the
meaning of Treasury Regulation Section 301.7701- 4(c)(i).
Section 3.5 The Trustee shall prepare or have prepared, and file on
behalf of the Trust all United States, federal, state and local income tax
returns and information returns required to be filed by the Trust, and shall
prepare and distribute to the Beneficiaries any reports regarding any income,
gain, deduction, credit or loss of the Trust as are required by applicable law
and, in addition thereto, as the Trustee in its sole discretion may from time to
time determine is appropriate or necessary to enable the Beneficiaries to
determine their respective tax obligations arising out of operations of the
Trust.
Section 3.6 The Trustee may withhold from the amount distributable
from the Trust at any time to any person such sum or sums as may be sufficient
to pay any taxes which have been or may be imposed on such person or upon the
Trust with respect to the amount distributable or to be distributed under the
income tax laws of the United States or of any state or political subdivision or
entity by reason of any distribution provided for hereunder, wherever such
withholding is determined by the Trustee in its reasonable sole discretion to be
required.
Section 3.7 The Trustee shall maintain records and books of account
relating to the Trust Property, in accordance with generally accepted accounting
principles consistently applied and shall, at all reasonable times, permit any
authorized representative designated by a Beneficiary to have access, during
normal business hours and upon reasonable notice, to inspect and/or copy (at
Beneficiary's expense payable at the time of copying), the financial records
relating to the Trust Property. The Trustee shall provide to each Beneficiary,
as soon as practicable after each anniversary of its creation and, in addition,
after termination of the Trust, an unaudited financial statement and a report
showing all transactions and the amounts thereof (including all sales or other
dispositions of Trust Property and expenses relating to the operation of the
Trust) consummated during the reporting period.
Section 3.8 The Trustee may rely upon and shall be protected in
acting or refraining from acting upon any certificates, opinions, statements,
instruments or reports believed by it to be genuine and to have been signed or
presented by the proper person or persons; provided, however, that the Trustee
shall be under a duty to have examined the same to
5
<PAGE>
determine whether or not such writings conform to the requirements of this
Agreement.
Section 3.9 The Trustee and its agents shall not be liable for any
error of business judgment or with respect to any action taken or omitted to be
taken by them in their capacity as Trustee or agent, unless it shall be proved
that the Trustee or its agents shall have been grossly negligent or shall have
acted with willful misconduct in ascertaining the pertinent facts or in
performing any of their rights, powers or duties hereunder. In the event such
liability is proven, the Beneficiaries shall be entitled to reimbursement of
their reasonable costs, including attorneys' fees and disbursements. The Trustee
makes no representations as to the value or condition of the Trust Property or
any part thereof, or as to the security afforded by this Agreement, or as to the
validity, execution (except its own execution), enforceability, legality or
sufficiency of this Agreement, and the Trustee shall incur no liability or
responsibility in respect of such matters.
Section 3.10 The Trustee shall have no duty to accomplish any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities law) or any
rerecording, refiling or reregistration thereof.
Section 3.11 The Trustee shall be indemnified by and receive
reimbursement from the Trust against and from any and all loss, liability, cost,
damage or expense, including reasonable attorneys' fees and disbursements, which
it may incur or sustain in the exercise and performance of any of its powers and
duties as such Trustee under this Agreement, unless such loss, liability, cost,
damage or expense shall be incurred or sustained as a result of the Trustee's
gross negligence or willful misconduct.
ARTICLE 4
PERMITTED INVESTMENTS OF TRUST PROPERTY
Section 4.1 The cash constituting the remainder of the Purchase
Price shall, to the extent permitted by applicable law and to the extent
provided in Section 4.2, be invested by the Trustee as soon as practicable after
establishment of the Trust in state or local government securities with a
maturity date on or about June 15, 1999 and the income from which will not
result in any federal tax liabilities to the Beneficiaries. All
6
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investments of Trust Property shall be made in a manner such that the Trust will
at all times be classified as a grantor trust of which the Beneficiaries are the
grantors for United States federal income tax purposes (each such investment, a
"Permitted Investment"); provided, however, that (i) each Permitted Investment
shall be held solely in the name of the Trustee as Trustee, (ii) to the extent
practicable, the Trustee shall take physical possession of all such securities
and secure them in a safe deposit box registered solely in the name of the
Trustee as Trustee, and (iii) no Permitted Investment may be made unless the
Trustee shall furnish the bank or brokerage firm through which such Permitted
Investment is made with a copy of this Agreement, and such bank shall have
acknowledged to the Trustee in writing that upon the maturity of such Permitted
Investment the proceeds thereof, if not reinvested in a Permitted Investment in
accordance with the instructions of the Trustee, shall be deposited solely in a
Trust Account in accordance with Section 3.4(c).
Section 4.2 The Trustee may pay litigation and administrative
expenses, deposit money from the Trust Account in one or more FDIC insured
demand deposit accounts at any bank or trust company, excluding that of the
Trustee, which has a capital stock and surplus aggregating at least
$100,000,000; provided that total deposits in each account and with each
institution do not exceed the FDIC insurance limits for such account or
accounts.
Section 4.3 All Permitted Investments shall be on terms consistent
with the distribution requirements of Article 7 of this Agreement and the other
obligations of the Trust.
Section 4.4 Any of the foregoing investments purchased with any of
the Trust Property shall be deemed a part of the Trust Property. Any earned
interest, dividends, distributions or gains from Permitted Investments shall be
included in the Trust Property.
ARTICLE 5
CONCERNING THE TRUSTEE
Section 5.1 The Trustee may resign as Trustee at any time by giving
prior written notice to Leucadia; provided, however, that such resignation shall
not be effective earlier than sixty (60) days after the date of such notice
unless an
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earlier effective date is agreed to by Leucadia and a new Trustee shall have
been appointed.
Section 5.2 Upon resignation, death, or removal of a Trustee, a
successor trustee (a "Successor Trustee") shall be appointed by Leucadia on
behalf of the Beneficiaries, and the appointment of the Successor Trustee shall
be binding upon all Beneficiaries then holding beneficial interests in the
Trust.
Section 5.3 Any Successor Trustee shall execute and deliver to the
Beneficiaries and to the predecessor Trustee an instrument accepting such
appointment, the terms and conditions of which shall be the same as those
contained in this Agreement, and thereupon such Successor Trustee, without
further act, shall be vested with all the estates, properties, rights, powers,
duties and trusts of the predecessor Trustee in the Trust with like effect as if
originally named as Trustee herein; but nevertheless, upon the written request
of such Successor Trustee, the predecessor Trustee shall (i) execute,
acknowledge and deliver such instruments of conveyance and further assurances
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming unto said Successor Trustee all the right,
title and interest of the predecessor Trustee in and to the Trust Property; (ii)
duly assign, transfer, deliver, account for and pay over to such Successor
Trustee any property or money then held by such predecessor Trustee upon the
trusts herein expressed; and (iii) deliver to such Successor Trustee any and all
records, or copies thereof, in respect of the Trust which it may have.
ARTICLE 6
TRUSTEE'S COMPENSATION
Section 6.1 The Trustee hereby waives any commission or fees for the
performance of its obligations as Trustee under this Agreement.
ARTICLE 7
DISTRIBUTIONS TO BENEFICIARIES
Section 7.1 All Trust Property shall be distributed by the Trustee
to the Beneficiaries, as beneficiaries under the Trust solely in accordance with
Section 7.2, on one or more distribution dates as determined by the Trustee.
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Section 7.2 The Trustee shall not be obligated to make any
distributions of Trust Property prior to July 5, 1999. As promptly as
practicable following the acquisition by the Trust of the Additional HomeFed
Stock under the Purchase Agreement, the Trust shall distribute the HomeFed Stock
Interest (and any other shares of HomeFed Stock that may then be Trust Property)
and any cash then held as Trust Property to the Beneficiaries; provided,
however, that the distribution of such shares of HomeFed Stock from the Trust to
the Beneficiaries shall be pursuant to an effective registration statement under
the Securities Act, unless the Trustee shall have received an opinion of counsel
to the effect that no such registration statement is required for such
distribution. In the event that the shares of Additional HomeFed Stock are not
purchased by July 31, 1999 and the Purchase Agreement is then terminated, the
Trustee as promptly as practicable shall distribute to the Beneficiaries the
Trust Property then owned by the Trust; provided, however, that the distribution
of shares of the Owned HomeFed Stock from the Trust to the Beneficiaries shall
be pursuant to an effective registration statement under the Securities Act,
unless the Trustee shall have received an opinion of counsel to the effect that
no such registration statement is required for such distribution. No
certificates representing fractional shares of HomeFed Stock will be distributed
by the Trustee to the Beneficiaries. In lieu of any fractional shares of HomeFed
Stock, (the "Fractional Shares"), the Trustee shall, on behalf of all holders of
such Fractional Shares, (i) determine the number of shares of HomeFed Stock that
would otherwise have been distributed as Fractional Shares, (ii) sell such
shares at the then prevailing market price, and (iii) determine the portion, if
any, of the net proceeds of such sale to which each holder of a Fractional Share
interest is entitled, by multiplying the amount of the aggregate net proceeds of
the sale of the Factional Shares, by a fraction, the numerator of which is the
amount of the Fractional Share to which such holder of a Fractional Share is
entitled, and the denominator of which is the aggregate amount of Fractional
Shares to which all holders of Fractional Shares are entitled. As soon as
practicable after the determination of the amount of cash, if any, to be paid to
holders of Fractional Shares in lieu of such Fractional Shares, the Trustee
shall distribute such amounts, without interest, to such holders. Any cash
received on distribution in respect of, or proceeds from the sale of, the
HomeFed Stock Interest (or any other shares of HomeFed Stock that may then be
Trust Property) shall be distributed by the Trustee as promptly as practicable.
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ARTICLE 8
LIMITATION ON BENEFICIARY'S ASSIGNMENT
OF RIGHT TO DISTRIBUTION
Section 8.1 Beneficial interests in the Trust, and any other
interests therein, (i) cannot be assigned, conveyed, hypothecated, pledged or
otherwise transferred, voluntarily or involuntarily, directly or indirectly,
except by will or under the laws of descent and distribution; (ii) shall not be
evidenced by a certificate or other instrument; (iii) shall not possess any
voting rights; (iv) shall not be entitled to receive any distributions, except
pursuant to Article 7; and (v) shall not represent any equity interest in
HomeFed Corporation.
ARTICLE 9
TERMINATION OF THE TRUST
Section 9.1 Other than the obligations of the Trustee under Section
3.5 hereof, this Agreement and the Trust created hereby shall terminate and this
Agreement shall be of no further force or effect on the earlier to occur of (i)
the date on which all of the Trust Property has been distributed to the
Beneficiaries in accordance with Article 7 or (ii) December 31, 2001.
Section 9.2 No transfer, by operation of law or death, of the right,
title and interest of any Beneficiary in and to the Trust Property or hereunder
shall operate to terminate this Agreement or the Trust hereunder or entitle any
successor or transferee of such Beneficiary to an accounting (except to the
extent generally required under Section 3.7) or to the transfer to it of legal
title to any part of the Trust Property.
ARTICLE 10
JURISDICTION
Section 10.1 Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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ARTICLE 11
MISCELLANEOUS
Section 11.1 As used in this Agreement (including the recitals
herein), capitalized terms shall have the meanings assigned to them (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined or to the feminine, masculine or neuter gender, as the case may
be), unless the context otherwise requires.
Section 11.2 This Agreement is not intended to create and shall not
be interpreted as creating an association, corporation, partnership or joint
venture of any kind; it is intended to create an investment trust within the
meaning of Treasury Regulation Section 301.7701-4(c)(i), to be governed and
construed in all respects as a trust without transferable interests; any
ambiguities in this Agreement shall be resolved, and any income tax reporting
obligations of the Trust and the Beneficiaries shall be fulfilled, in a manner
consistent with such treatment.
Section 11.3 Leucadia shall not have or incur any obligation or
liability to any other person on account of any act or failure to act by the
Trustee or any other person.
Section 11.4 The Trustee shall not assume any liability or incur any
obligation or liability to any other person in connection with the transfer by
Leucadia to the Trustee of the Trust Property, and no delegation of duty of
performance to the Trustee or assumption of liabilities of Leucadia by the
Trustee is intended hereby except as expressly set forth in Section 1.1 of this
Trust Agreement.
Section 11.5 As promptly as practicable after the date hereof,
Leucadia shall certify to the Trustee the names of the Beneficiaries and the
amount of beneficial interests in the Trust held by each such Beneficiary.
Leucadia shall indemnify, defend and hold the Trustee harmless against claims of
any nature whatsoever with respect to Leucadia's determination of a
Beneficiary's share of beneficial interests in the Trust.
Section 11.6 This Trust Agreement may be amended from time to time
by the Trustee and Leucadia, without the consent of any holders of beneficial
interests in the Trust, but only (i) to cure any ambiguity, correct or
supplement any provision herein which may be inconsistent with any other
provision herein, or to
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make any other provisions with respect to matters or questions arising under
this Trust Agreement not inconsistent with the other provisions of this Trust
Agreement, or (ii) to modify, eliminate or add to any provisions of this Trust
Agreement to such extent as shall be necessary to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust at
all times or to ensure that the Trust will not be required to register as an
"investment company" under the 1940 Act, or be classified as other than a
grantor trust for United States federal income tax purposes; provided, however,
that in the case of clause (i), such action shall not adversely affect in any
material respect the interests of any holder of a beneficial interest in the
Trust. In all other cases, this Trust Agreement may be amended with the approval
of holders of a majority of beneficial interests in the Trust, except with
respect to changes to the definition of Trust Property, which shall require a
favorable vote of all Beneficiaries. Any amendments to this Trust Agreement
shall become effective upon execution by the Trustee and Leucadia and notice
thereof shall be given to the Beneficiaries.
Section 11.7 Except as provided herein, the obligations, duties
and/or rights of the Trustee under this Agreement shall not be assignable,
voluntarily, involuntarily or by operation of law, and any such assignment shall
be void. All covenants and agreements contained herein shall be binding upon and
are personal to the Trustee and shall inure to the benefit of the Trustee and
any Successor Trustee in the same manner.
Section 11.8 This Agreement, together with the related instruments
expressly referred to herein, constitutes the entire agreement of the parties,
and all such agreements shall be construed as integrated and complimentary of
each other.
Section 11.9 Article headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
SECTION 11.10 This Agreement, shall be construed in accordance with
and governed by the laws of the State of New York.
SECTION 11.11 This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument. This Agreement shall
become effective immediately upon the exchange of executed signature pages,
which may be by facsimile.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the first date hereinabove written.
Leucadia National Corporation
By: /s/ Barbara L. Lowenthal
------------------------------------
Title: Vice President
Trustee:
/s/ Joseph A. Orlando
-----------------------------------------
Joseph A. Orlando
EXHIBIT 3
STOCK PURCHASE AGREEMENT
BETWEEN
HOMEFED CORPORATION
AND
LEUCADIA NATIONAL CORPORATION
Dated as of August 14, 1998
NYFS04...:\30\76830\0001\2475\AGR7238W.59H
<PAGE>
TABLE OF CONTENTS
Page
I. DEFINITIONS........................................................ 1
II. PURCHASE OF SECURITIES............................................. 2
2.1. Purchase of Securities....................................... 2
2.2. Anti-dilution................................................ 2
III. PURCHASE PRICE AND PAYMENT......................................... 2
3.1. Amount of Purchase Price..................................... 2
3.2. Payment of Purchase Price.................................... 2
IV. THE COMPANY'S REPRESENTATIONS AND WARRANTIES....................... 2
4.1. Organization................................................. 3
4.2. Due Authorization............................................ 3
4.3. Authorized and Outstanding Shares of Capital Stock........... 3
4.4. Authorization and Issuance of Securities..................... 3
4.5. Subsidiary Organizations..................................... 4
4.6. No Other Rights.............................................. 4
4.7. No Conflicts................................................. 4
4.8. No Consents.................................................. 4
4.9. Litigation................................................... 4
V. LUK's REPRESENTATIONS AND WARRANTIES............................... 5
5.1. Organization................................................. 5
5.2. Due Authorization............................................ 5
5.3. No Conflicts................................................. 5
5.4. LUK's Investment Intention................................... 6
VI. COVENANTS.......................................................... 6
6.1. Board of Directors........................................... 6
6.2. Tax Compliance............................................... 6
6.3. Registration Rights.......................................... 6
VII. CONDITIONS PRECEDENT............................................... 7
7.1. Conditions Precedent to Obligations of LUK................... 7
7.2. Conditions Precedent to Obligations of the Company........... 8
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VIII. CLOSING............................................................ 8
8.1. Closing Date................................................. 8
8.2. Liquidated Damages........................................... 9
8.3. Specific Performance......................................... 9
IX. SECURITIES LAW MATTERS............................................. 9
9.1. Legends...................................................... 9
X. INDEMNIFICATION AND EXPENSES....................................... 10
10.1. Indemnification by the Company.............................. 10
10.2. Indemnification by LUK...................................... 10
XI. MISCELLANEOUS...................................................... 10
11.1. Notices..................................................... 10
11.2. Binding Effect; Benefits.................................... 12
11.3. Waiver...................................................... 12
11.4. Amendment................................................... 12
11.5. Assignability............................................... 12
11.6. Applicable Law.............................................. 13
11.7. Section and Other Headings.................................. 13
11.8. Severability................................................ 13
11.9. Counterparts................................................ 13
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STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT, dated as of August 14, 1998, between HomeFed
Corporation, a Delaware corporation having an office at 529 East South Temple,
Salt Lake City, Utah 84012 (the "Company"), and Leucadia National Corporation, a
New York corporation having an office at 315 Park Avenue South, New York, New
York 10010 ("LUK").
W I T N E S S E T H:
WHEREAS, the Company emerged from bankruptcy under the United States
Bankruptcy Code, pursuant to a plan of reorganization (the "Plan") that became
effective on July 3, 1995 (the "Effective Date"); and
WHEREAS, the Plan prohibits the Company from issuing any additional
shares of stock prior to the fourth anniversary of the Effective Date; and
WHEREAS, currently LUK beneficially owns approximately 41% of the
issued and outstanding common stock, par value $.01 per share of the Company
(the "Common Stock"); and
WHEREAS, upon the terms and conditions hereinafter provided, the
Company has agreed to issue and sell to LUK shares of its Common Stock, and LUK
has agreed to purchase such shares upon the terms and conditions hereinafter
provided;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
I. DEFINITIONS
References to this "Agreement" shall mean this Stock Purchase Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to this Agreement as the same
may be in effect at the time such reference becomes operative.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole, including the schedules and exhibits
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hereto, as the same may from time to time be amended or supplemented, and not to
any particular section, subsection or clause contained in this Agreement.
II. PURCHASE OF SECURITIES
2.1. Purchase of Securities. Upon the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined herein) the Company
shall issue, sell and deliver to LUK, and LUK shall purchase from the Company
37,056,112 shares of Common Stock (the "Securities").
2.2. Anti-dilution. Subject to the provisions of Section 7.2(c) hereof, if
the Company issues additional shares to any party other than LUK, the number of
shares of Common Stock constituting the Securities shall be increased so that
the Securities purchased on the Closing Date will give LUK an 87.5% interest in
the Company on a fully diluted basis.
III. PURCHASE PRICE AND PAYMENT
3.1. Amount of Purchase Price. The aggregate purchase price for the
Securities (the "Purchase Price") shall be $6,670,100; provided, however, that
if the number of shares constituting the Securities to be purchased under this
Agreement results in LUK's percentage share ownership in the Company being below
87.5% pursuant to Section 7.2(c), the Purchase Price shall be reduced
accordingly.
3.2. Payment of Purchase Price. (a) On the date hereof, LUK shall advance
five million dollars ($5,000,000) of the Purchase Price, against the aggregate
Purchase Price (the "Advance").
(b) Upon the terms and subject to the conditions set forth in this
Agreement, on the Closing Date, LUK shall pay to the Company the unpaid balance
of the Purchase Price and the Company shall deliver to LUK the Securities issued
in the name of LUK or such other person or persons as LUK shall direct.
(c) Payments of the Purchase Price shall be made by wire transfer of
immediately available funds into an account designated by the Company.
IV. THE COMPANY'S REPRESENTATIONS AND WARRANTIES
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The Company makes the following representations and warranties to LUK,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing (as defined herein) hereunder:
4.1. Organization. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own, lease and operate its
properties and to conduct its business as currently being and as proposed to be
conducted. The Company is qualified as a foreign corporation to transact
business in California and in any other jurisdiction where it is required to be
so qualified, except where the failure to be so qualified would not have a
material adverse effect on the condition, financial or otherwise, or the results
of operations, business or business prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect").
4.2. Due Authorization. The Company has the requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and, assuming that this Agreement has been duly executed and delivered
by LUK, constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity hereunder may be limited by federal or state securities laws and
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization and similar laws relating to or affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.3. Authorized and Outstanding Shares of Capital Stock. The authorized
capital stock of the Company consists of one hundred million (100,000,000)
shares of Common Stock, of which ten million (10,000,000) shares currently are
issued and outstanding as of the date hereof. No subscription, warrant, option
or other right to purchase or acquire any shares of any class of capital stock
of Company or securities convertible into such capital stock is authorized or
outstanding, and other than this Agreement there is no commitment of Company to
issue any such shares, warrants, options or other such rights or securities.
After giving effect to the issuance of the Securities pursuant to this
Agreement, an aggregate of 47,056,112 shares of Common Stock will be
outstanding, of which the Securities together with other shares of Common Stock
beneficially owned by LUK will represent approximately 87.5% of the outstanding
shares of Common Stock, unless the number of shares constituting the Securities
is reduced pursuant to Section 7.2(c) hereof.
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4.4. Authorization and Issuance of Securities. The issuance of the
Securities has been duly authorized and, upon delivery to LUK of certificates
therefor against payment in accordance with the terms hereof, the Securities
will have been validly issued and fully paid and non-assessable, free and clear
of all pledges, liens, encumbrances and preemptive rights.
4.5. Subsidiary Organizations. Each subsidiary of the Company has been
duly organized and is validly existing and in good standing under the laws of
the State of California, has corporate power and authority to own, lease and
operate its properties and to conduct its business as currently being and as
proposed to be conducted and is not required to be qualified as a foreign entity
to transact business in any jurisdiction. All of the issued and outstanding
capital stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and nonassessable and is owned directly by the Company.
4.6. No Other Rights. The issuance of the Securities is not subject to
preemptive or other similar rights.
4.7. No Conflicts. Neither the Company nor any of its subsidiaries is in
violation of its charter or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any of its subsidiaries is subject, the effect of which
default in performance or observance would have a Material Adverse Effect. None
of the execution and delivery of this Agreement will conflict with or constitute
a breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of the
certificate of incorporation or by-laws of the Company or any applicable law,
administrative regulation or administrative or court decree.
4.8. No Consents. No authorization, approval or consent of, or filing
with, any court or governmental authority or agency is necessary or required in
connection with the sale of the Securities hereunder or under the certificate of
incorporation of the Company or the execution, delivery or performance of this
Agreement or the Restated Certificate of Incorporation.
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4.9. Litigation. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending or, to
the best knowledge of the Company, threatened, against or affecting the Company
or any of its subsidiaries, which is reasonably likely to have a Material
Adverse Effect. There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or, to the best
knowledge of the Company, threatened, which would materially and adversely
affect the consummation of the transactions contemplated by this Agreement.
V. LUK's REPRESENTATIONS AND WARRANTIES
LUK makes the following representations and warranties to the Company,
each and all of which shall survive the execution and delivery of this Agreement
and the Closing hereunder:
5.1. Organization. LUK has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of New York with
corporate power and authority to own, lease and operate its properties and to
conduct its business as currently being and as proposed to be conducted and to
enter into and perform its obligations under this Agreement. LUK is qualified as
a foreign corporation to transact business in each jurisdiction where it is
required to be so qualified, except where the failure to be so qualified would
not have a material adverse effect on the business, financial condition or
results of operation of LUK and its subsidiaries taken as a whole.
5.2. Due Authorization. LUK has the requisite corporate power and
authority to enter into this Agreement and consummate the transactions
contemplated hereby. This Agreement and the transactions contemplated hereby
have each been duly authorized, executed and delivered by LUK, and this
Agreement constitutes a legal, valid and binding agreement of the Company,
enforceable against LUK in accordance with its terms, except as rights to
indemnity hereunder may be limited by federal or state securities laws and
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization and similar laws relating to or affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
5.3. No Conflicts. LUK is not in violation of its certificate of
incorporation or in default in the performance or observance of any material
obligation, agreement,
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covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which LUK is a party
or by which it may be bound, or to which any of the property or assets of LUK or
any of its subsidiaries is subject, the effect of which default in performance
or observance would have a material adverse effect on the condition, financial
or otherwise, or the results of operations, business or business prospects of
LUK and its subsidiaries considered as one enterprise. The execution and
delivery of this Agreement will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the LUK or any of its subsidiaries
pursuant to any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which LUK or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the property or
assets of LUK or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the certificate of incorporation or
by-laws of LUK or any applicable law, administrative regulation or
administrative or court decree.
5.4. LUK's Investment Intention. LUK represents and warrants that it is
purchasing the Securities for its own account, for investment purposes and not
with a view to the distribution thereof, except in compliance with the
provisions of the Securities Act of 1933, as amended (the "Act"). LUK agrees
that it will not, directly or indirectly, offer, transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any of the Securities (or solicit any offers
to buy, purchase, or otherwise acquire or take a pledge of any of the
Securities), except in compliance with the Act and the rules and regulations
thereunder.
5.5. Access to Data. LUK has had an opportunity to discuss the Company's
business, management, and financial affairs with its management and to review
the Company's records and facilities, and LUK is relying for purposes of this
Agreement upon its own due diligence review of the Borrower, not on any
representation or warranty of the Borrower other than as expressly set forth in
this Agreement.
VI. COVENANTS
6.1. Board of Directors. Upon the execution of this Agreement, the number
of directors constituting the Company's Board of Directors shall be increased to
five, and Messrs. Joseph Steinberg and Patrick Bienvenue shall be nominated and
duly elected to each serve as directors on the Company's Board of Directors.
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6.2. Tax Compliance. The Company shall pay all transfer, excise or similar
taxes in connection with the issuance, sale, delivery or transfer by the Company
to LUK of the Securities and shall save LUK and any other holder of the
Securities harmless without limitation as to time against any and all
liabilities with respect to such taxes. The Company shall not be responsible for
any taxes in connection with the transfer of the Securities by the holder
thereof. The obligations of Company under this Section 6.2 shall survive the
payment, prepayment or redemption of the Securities and the termination of this
Agreement.
6.3. Registration Rights. At any time after the date hereof, upon the
written request of LUK that the Company effect the registration under the Act
(which shall be a shelf registration if requested by LUK) of all or part of the
shares of Common Stock (including the Securities upon their issuance) owned by
LUK (including any affiliate of LUK or any trust for the benefit of LUK's
shareholders) and specifying the intended method or methods of disposition
thereof, the Company shall cooperate with LUK and effect the registration under
the Act of such shares as soon as practicable after receipt of such request.
VII. CONDITIONS PRECEDENT
7.1. Conditions Precedent to Obligations of LUK. The obligation of LUK to
purchase the Securities and to consummate the transactions contemplated by this
Agreement is subject to the following conditions:
(a) LUK shall have been furnished with certificates (dated the Closing
Date and in form and substance reasonably satisfactory to LUK) executed by an
officer of the Company certifying that (i) all representations and warranties of
the Company to LUK contained herein are true and correct in all material
respects as of the Closing Date, with the same force and effect as if made as of
the Closing Date; (ii) the Company shall have performed and complied in all
material respects with the covenants and provisions of this Agreement required
to be performed or complied with by it, on or prior to the Closing Date; and
(iii) after giving effect to the sale of Securities contemplated hereby, the
Company will not be in default under or breach of any material contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party.
(b) LUK's receipt of certificates representing the Securities registered
in LUK's name or in the name of such persons as LUK shall direct.
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(c) LUK's receipt of a copy of the Company's certificate of incorporation,
certified as of a recent date by the Secretary of State of the State of
Delaware, and a copy of the by-laws, certified by the Secretary or Assistant
Secretary of the Company as true and correct;
(d) LUK's receipt of governmental certificates or telegrams evidencing
that the Company is organized and in good standing in the State of Delaware;
(e) The Company and Provence Hills Development Company, LLC have entered
into a Development Management Agreement, dated the date hereof (the "Development
Management Agreement"), a copy of which has been delivered to LUK, and each of
such entities shall have delivered a certificate that such agreement is in full
force and effect on the Closing Date and neither party to such agreement has
given notice of termination to the other party to such agreement.
7.2. Conditions Precedent to Obligations of the Company. The obligation of
the Company to issue the Securities pursuant to this Agreement is subject to the
following conditions:
(a) The Company shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to the Company)
executed by an officer of LUK certifying that (i) all representations and
warranties of LUK to the Company contained herein are true and correct in all
material respects as of the Closing Date, with the same force and effect as if
made as of the Closing Date; and (ii) LUK shall have performed and complied in
all material respects with the covenants and provisions of this Agreement
required to be performed or complied with by it, on or prior to the Closing
Date.
(b) Provence Hills Development Company, LLC shall have entered into the
Development Management Agreement.
(c) The Company shall have been furnished with an opinion of Weil, Gotshal
& Manges LLP dated the Closing Date to the effect that the issuance of the
Securities pursuant to this Agreement shall not result in the application of any
limitations under Section 382 or Section 383 of the Internal Revenue Code of
1986, as amended (the "Code"), on the use of the Tax Benefits (as defined in the
Company's Restated Certificate of Incorporation); provided, however, that if the
Company fails to receive the foregoing opinion, the Company will be obligated to
deliver such lesser number of shares under Article 2 hereof, which number shall
constitute the Securities under this Agreement, as shall result in increases
calculated under Sections
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382(g)(1)(A) and (B) of the Code aggregating 49.8 percentage points during the
applicable "testing period" as defined in Section 382 of the Code culminating on
the Closing Date, and the Company shall be furnished with an opinion of Weil,
Gotshal & Manges LLP to the effect that the issuance of the Securities (as so
adjusted) pursuant to this Agreement shall not result in the application of any
Section 382 limitation on the use of the Tax Benefits.
VIII. CLOSING
8.1. Closing Date. (a) The closing of the sale and purchase of the Shares
provided for in Article III hereof (the "Closing") shall take place at the
offices of Weil, Gotshal & Manges LLP, New York, New York at 10:00 a.m. (New
York City time) (or at such time and at such place as the parties may designate)
on the second business day following the date on which each of the conditions
specified in Article VII hereof has been fulfilled (or waived by the party
entitled to waive that condition), provided that in no event shall the Closing
take place prior to July 5, 1999. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date".
(b) In the event that LUK fails to close because the conditions set forth
in Section 7.1 have not been satisfied, the Company shall repay to LUK an amount
equal to the Advance plus interest on the Advance which shall accrue at the rate
of 6% per annum from the date of deposit of the Advance with the Company through
the date such Advance is repaid to LUK.
8.2. Liquidated Damages. If the Company fails to deliver the Securities at
the Closing (other than as a result of the exercise of its rights under Section
7.2 hereof), then the Company shall be required to pay the Advance to LUK and,
at LUK's option, the Company shall either (i) repurchase the shares of Common
Stock owned by LUK at 200% of the fair market value for such shares as of the
Closing Date, but not less than a price per share of $1; or (ii) pay LUK
$10,000,000. The Company and LUK agree that the payment obligation contained in
the foregoing sentence is an integral part of the transactions contemplated by
this Agreement and constitute liquidated damages and not a penalty. If the
Company fails to pay such amount to LUK, then the Company shall pay the costs
and expenses (including reasonable legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Chase Manhattan Bank from the Closing Date to
the date of prepayment.
8.3. Specific Performance. The parties hereto acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
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therefore consent that the rights and obligations of the parties under this
Agreement, including the Company's obligation to sell the Securities to LUK, may
be enforced by a decree of specific performance issued by a court of competent
jurisdiction. Such remedy shall, however, not be exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.
IX. SECURITIES LAW MATTERS
9.1. Legends. Unless the Securities are the subject of an effective
registration statement, each certificate representing the Securities shall bear
a legend substantially in the following form:
"THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED ("THE ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM."
X. INDEMNIFICATION AND EXPENSES
10.1. Indemnification by the Company. The Company agrees to indemnify,
defend and hold LUK and its respective officers, directors, employees, agents
and controlling persons (collectively, the "LUK Indemnitees") harmless from and
against any and all expenses, losses, claims, damages and liabilities which are
incurred by or threatened against the LUK Indemnitees, or any of them,
including, without limitation, reasonable attorneys' fees and expenses, caused
by, or in any way resulting from or relating to the Company's breach of any of
the representations, warranties, covenants or agreements of the Company set
forth in this Agreement.
10.2. Indemnification by LUK. LUK agrees to indemnify, defend and hold
harmless the Company and its respective officers, directors, employees, agents,
partners and controlling persons (collectively, the "Company Indemnitees")
harmless from and against any and all expenses, losses, claims, damages and
liabilities which are incurred by or threatened against the Company Indemnitees,
or any of them, including, without limitation, reasonable attorneys' fees and
expenses, caused by, or in any way resulting from or relating to LUK's breach of
any of the representations, warranties, covenants or agreements of LUK set forth
in this Agreement.
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XI. MISCELLANEOUS
11.1. Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answerback addressed as follows:
If to Company at:
HomeFed Corporation
529 East South Temple
Salt Lake City, Utah 84012
Attn: Corrinne A. Maki
Telecopy Number: (801) 524-1761
With a copy to:
Pillsbury Madison & Sutro LLP
101 West Broadway
Suite 1800
San Diego, California 92101-8219
Attn: K. Michael Garrett
Telecopy Number: (619) 236-1995
If to LUK at:
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attn: Joseph S. Steinberg, President
Telecopy Number: (212) 598-3245
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with a copy to:
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153
Attn: Stephen E. Jacobs
Telecopy Number: (212) 310-8007
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) business days after the same shall have been deposited with the United
States mail.
11.2. Binding Effect; Benefits. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors, transferees and permitted assigns.
Except as expressly set forth herein, nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors, transferees or
permitted assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
11.3. Waiver. Either party hereto may by written notice to the other (a)
extend the time for the performance of any of the obligations or other actions
of the other party under this Agreement; (b) waive compliance with any of the
conditions or covenants of the other party contained in this Agreement; and (c)
waive or modify performance of any of the obligations of the other party under
this Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of either party, shall be deemed to constitute a waiver by the
party taking such action, of compliance with any representations, warranties,
covenants or agreements contained herein. The waiver by either party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any preceding or succeeding breach and no failure by either party to
exercise any right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a waiver of such
party's rights to exercise the same at any subsequent time or times hereunder.
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11.4. Amendment. This Agreement may be amended, modified or
supplemented only by a written instrument executed by LUK and the Company.
11.5. Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by Company. Neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason hereof shall be assignable by LUK
without the prior written consent of the Company; provided, however, that
without the consent of the Company LUK may assign this Agreement and any or all
rights or obligations hereunder (including, without limitation, LUK's rights to
purchase the Securities and LUK's rights to seek indemnification hereunder) to
any affiliate of LUK or to any trust for the benefit of LUK's shareholders. Upon
any such permitted assignment, the references in this Agreement to LUK shall
also apply to any such assignee unless the context otherwise requires; provided,
however, that the conditions set forth in Section 7.2 shall continue to apply to
LUK.
11.6. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
principles thereof regarding conflict of laws.
11.7. Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
11.8. Severability. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
11.9. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HOMEFED CORPORATION
By: /s/ Timothy M. Considine
------------------------------
Name: Timothy M. Considine
Title: Chairman of the Board
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph A. Orlando
------------------------------
Name: Joseph A. Orlando
Title: Vice President and Chief
Financial Officer
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