-------------------------
OMB APPROVAL
-------------------------
OMB Number: 3235-0145
Expires:October 31, 1994
Estimated average burden
hours per form.....14.90
-------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)*
HOMEFED CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
436919104
------------------------------------------------
(CUSIP Number)
Stephen E. Jacobs, Esq.,
Weil, Gotshal & Manges LLP, 767 Fifth Ave., New York, NY 10153 (212) 310-8330
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 25, 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 remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
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 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 11.
Exhibit Index appears at page 11.
<PAGE>
SCHEDULE 13D
<TABLE>
<CAPTION>
- ----------------------------------- -----------------------------------
CUSIP NO. 436919104 PAGE 2 OF 11 PAGES
- ----------------------------------- -----------------------------------
- ----------------------------------------------------------------------------------------------
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Leucadia Financial Corporation
- ----------------------------------------------------------------------------------------------
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 ITEMS 2(d) OR 2(e)|_|
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Utah
- ----------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None.
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------------------------
8 SHARED VOTING POWER
None.
--------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
- ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------------------- -----------------------------------
CUSIP NO. 436919104 PAGE 3 OF 11 PAGES
- ----------------------------------- -----------------------------------
- ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
American Investment Company
- ----------------------------------------------------------------------------------------------
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 ITEMS 2(d) OR 2(e)|_|
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None.
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------------------------
8 SHARED VOTING POWER
None
--------------------------------------------------------------------------------
9 SHARED VOTING POWER
None.
--------------------------------------------------------------------------------
10 SOLE DISPOSITIVE POWER
None.
- ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
- ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------------------- -----------------------------------
CUSIP NO. 436919104 PAGE 4 OF 11 PAGES
- ----------------------------------- -----------------------------------
- ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LUK-CPH, Inc.
- ----------------------------------------------------------------------------------------------
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 ITEMS 2(d) OR 2(e)|_|
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None.
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------------------------
8 SHARED VOTING POWER
None.
--------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
- ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------------------- -----------------------------------
CUSIP NO. 436919104 PAGE 5 OF 11 PAGES
- ----------------------------------- -----------------------------------
- ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LUK-CPG, Inc.
- ----------------------------------------------------------------------------------------------
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 ITEMS 2(d) OR 2(e)|_|
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None.
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------------------------
8 SHARED VOTING POWER
None.
--------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
- ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------------------- -----------------------------------
CUSIP NO. 436919104 PAGE 6 OF 11 PAGES
- ----------------------------------- ----------------------------------
- ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Charter National Life Insurance Company
- ----------------------------------------------------------------------------------------------
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 ITEMS 2(d) OR 2(e)|_|
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Missouri
- ----------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None.
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------------------------
8 SHARED VOTING POWER
None.
--------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
- ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ----------------------------------- -----------------------------------
CUSIP NO. 436919104 PAGE 7 OF 11 PAGES
- ----------------------------------- -----------------------------------
- ----------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Leucadia National Corporation
- ----------------------------------------------------------------------------------------------
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 ITEMS 2(d) OR 2(e)|_|
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- ----------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF None.
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
--------------------------------------------------------------------------------
8 SHARED VOTING POWER
None.
--------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
None.
--------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None.
- ----------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None.
- ----------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- ----------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
- ----------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- ----------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Securities and Issuer.
---------------------
This Statement constitutes Amendment No. 1 to the Statement on Schedule 13D
(the "Schedule 13D") filed by Leucadia National Corporation ("Leucadia") and its
subsidiaries, Leucadia Financial Corporation ("LFC"), American Investment
Company ("AIC"), LUK-CPH, Inc. (formerly known as Colonial Penn Holdings, Inc.)
("CPH"), LUK-CPG, Inc. (formerly known as Colonial Penn Group, Inc.) ("CPG") and
Charter National Life Insurance Company ("Charter") (collectively, the
"Beneficial Owners") with respect to the Common Stock, par value $.01 per share
(the "Common Stock"), of HomeFed Corporation (the "Company"). Unless otherwise
indicated, all capitalized terms used herein shall have the respective meanings
ascribed to them in the Schedule 13D.
Item 4. Purpose of the Transaction.
--------------------------
On August 14, 1998, Leucadia transferred (i) 4,117,986 shares of Common
Stock, (ii) the right to purchase an additional 37,056,112 shares of Common
Stock (the "Additional Shares") pursuant to a Stock Purchase Agreement dated as
of August 14, 1998 between the Company and Leucadia (the "Stock Purchase
Agreement"), and (iii) $1,670,100, representing the funds necessary to purchase
the Additional Shares (after giving effect to a $5 million advance on the
payment of the purchase price) to a trust (the "Trust") pursuant to a Trust
Agreement dated August 14, 1998 between Leucadia for the benefit of its
shareholders and Joseph A. Orlando, as Trustee (the "Trust Transfer").
On August 14, 1998, Leucadia declared a pro rata dividend of
8
<PAGE>
beneficial interests in the Trust to Leucadia's shareholders of record at August
25, 1998 (the "Beneficiaries"). Upon distribution of uncertificated beneficial
interests in the Trust on August 25, 1998 to the Beneficiaries, the Beneficial
Owners ceased to have any beneficial interest in the Company's Common
Stock.
Also on August 14, 1998, LFC and the Company entered into an Amended and
Restated Loan Agreement (the "Amended Loan Agreement"), pursuant to which
certain terms of the original Loan Agreement, dated July 3, 1995, were amended
to, among other things, eliminate the right to convert the loan into shares of
the Company's Common Stock.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a) As of August 25, 1998 and after giving effect to the Trust
Transfer and the Amended Loan Agreement, none of the Beneficial Owners
beneficially owned any shares of the Company's Common Stock.
(c) The information included in response to Item 4 hereof is specifically
incorporated herein by reference.
(e) As a result of the Trust Transfer and the Amended Loan Agreement, on
August 25, 1998, the Beneficial Owners ceased to be the beneficial owners of
more than 5% of the outstanding shares of Common Stock.
9
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement
is true, complete and correct.
Dated: August 28, 1998
LEUCADIA FINANCIAL CORPORATION LUK-CPG, INC.
By:/s/ Joseph A. Orlando By:/s/ Corinne A. Maki
---------------------------- ----------------------------
Vice President Vice President
AMERICAN INVESTMENT COMPANY CHARTER NATIONAL LIFE
INSURANCE COMPANY
By:/s/ Joseph A. Orlando By:/s/ Joseph A. Orlando
---------------------------- ----------------------------
Vice President Vice President
LUK-CPH, INC. LEUCADIA NATIONAL CORPORATION
By:/s/ Corinne A. Maki By:/s/ Joseph A. Orlando
---------------------------- ----------------------------
Vice President Vice President
10
<PAGE>
EXHIBIT INDEX
Exhibit No. Document Page No.
- ----------- -------- --------
1 Trust Agreement, dated August 14, 1998,
between Leucadia National Corporation
for the benefit of its shareholders and
Joseph A. Orlando, as Trustee.
2 Stock Purchase Agreement, dated August
14, 1998, between Leucadia National
Corporation and HomeFed Corporation.
3 Amended and Restated Loan Agreement,
dated August 14, 1998, between Leucadia
Financial Corporation and HomeFed
Corporation.
11
EXHIBIT 1
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:
NYFS04...:\30\76830\0194\2037\AGR8068V.43K
<PAGE>
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
2
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
7
<PAGE>
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.
8
<PAGE>
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.
9
<PAGE>
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.
10
<PAGE>
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
11
<PAGE>
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.
12
<PAGE>
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 2
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
i
<PAGE>
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
ii
<PAGE>
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
1
<PAGE>
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
2
<PAGE>
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.
3
<PAGE>
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.
4
<PAGE>
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,
5
<PAGE>
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.
6
<PAGE>
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.
7
<PAGE>
(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
8
<PAGE>
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
9
<PAGE>
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.
10
<PAGE>
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
11
<PAGE>
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.
12
<PAGE>
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]
13
<PAGE>
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
14
EXHIBIT 3
AMENDED AND RESTATED
LOAN AGREEMENT
between
HOMEFED CORPORATION
a Delaware corporation,
as Borrower,
and
LEUCADIA FINANCIAL CORPORATION,
a Utah corporation,
as Lender
Dated as of August 14, 1998
NYFS04...:\30\76830\0001\2475\AGR7088X.50F
<PAGE>
AMENDED AND RESTATED
LOAN AGREEMENT
This AMENDED AND RESTATED LOAN AGREEMENT, dated as of August __,
1998, is entered into by and between HOMEFED CORPORATION, a Delaware
corporation, as Borrower, and LEUCADIA FINANCIAL CORPORATION, a Utah corporation
as Lender.
RECITALS
A. On October 22, 1992, Borrower filed in the United States Court for the
Southern District of California (the "Bankruptcy Court"), a voluntary petition
for relief under chapter 11 of Title 11 of the United States Bankruptcy Code
which was later consolidated with an involuntary bankruptcy case initiated by
certain holders of debentures on June 25, 1992, and was assigned Case No.
92-07591-All (the "Bankruptcy Case").
B. Borrower filed a Fourth Amended Plan of Reorganization (the "Plan") in
the Bankruptcy Case, which was approved by its creditors and confirmed by the
Bankruptcy Court by Order of Confirmation dated December 19, 1994 (which Order
of Confirmation was modified as of June 14, 1995).
C. Lender is the largest shareholder of Borrower, and Lender worked with
Borrower to create the Plan. It is in the best interest of Lender to enter into
this Loan Agreement, and to perform its other obligations under and otherwise
act in compliance with the Plan.
D. The original Loan Agreement, entered on the Effective Date (the
"Original Loan Agreement"), was required under the Plan. The borrowing made
under the Original Loan Agreement was evidenced by a promissory note executed on
the Effective Date by Borrower ("Original Note"), and was secured by the Stock
Pledge, the Guaranties, the Security Agreements, the Deeds of Trusts, and
related financing statements, all of which documents are more fully described
below in the definition of "Original Plan Documents."
E. As an inducement to the Borrower to enter into a Development Management
Agreement with Provence Hills Development Company, LLC, a Delaware limited
liability company, Lender has agreed to restructure certain of Borrower's
obligations under the Original Loan Agreement and the Original Note (the
"Restructuring"), among other things, (a) to extinguish the convertibility
provisions thereof; (b) to increase the principal amount outstanding by the
amount of accrued but unpaid interest to date; (c) to reduce the interest rate
to 6% per year,
<PAGE>
compounded annually; and (d) to extend the term of the Original Note to December
31, 2004. The terms of the Restructuring are reflected in the amended and
restated promissory note executed by Borrower as of the date hereof (the "Note")
and this Loan Agreement, the Stock Pledge, the Guaranties, the Security
Agreements, the Deeds of Trusts, and related financing statements, all of which
documents are more fully described below in the definition of Restructured Plan
Documents.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants and agreements herein contained, the parties hereto covenant and agree
as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Defined Terms. As used in this Loan Agreement, the following terms
shall have the meanings set forth respectively after each:
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (and its
correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, (i) any Person that owns,
directly or indirectly, 50% or more of the securities having ordinary
voting power for the election of directors or other governing body of a
corporation (other than securities having such power only by reason of the
happening of a contingency) will be deemed to control such corporation,
(ii) any Person who is a general partner or an Affiliate of a general
partner of a partnership will be deemed to control such partnership, and
(iii) any Person who owns or controls 50% or more of either the voting
power as to any matters on which owners are permitted to vote or of the
value of the ownership interests of any other Person (including a
corporation or partnership), will be deemed to control such other Person.
"Borrower" means HomeFed Corporation, a Delaware
corporation.
2
<PAGE>
"Business Day" means a day other than Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close
under the laws of the States of California and/or Utah.
"Cash" means, when used in connection with any Person, all
monetary and non-monetary items belonging to such Person that are treated
as cash in accordance with generally accepted accounting principles,
consistently applied.
"Cash Equivalent" means (i) securities with maturities of one year
or less from the date of the acquisition issued or fully guaranteed or
insured by the United States government or any agency thereof, (ii)
commercial paper of an issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the
two named rating agencies cease publishing ratings of investments.
"Certificate of a Responsible Official" means a certificate signed
by a Responsible Official of the Person providing the certificate.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Common Stock" means the common stock, par value $.01
per share, of Borrower.
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such person with
respect to any Indebtedness or contractual obligation of another person,
if the purpose or intent of such Person in incurring the Contingent
Obligation is to provide assurance to the obligee of such Indebtedness or
contractual obligation that such Indebtedness or contractual obligation
will be paid or discharged, or that any agreement relating thereto will be
complied with, or that any holder of such Indebtedness or contractual
obligation will be protected (in whole or in part) against loss in respect
thereof. Contingent Obligations of a Person include, without limitation,
(a) the direct or indirect guarantee, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of an
obligation of another Person, and (b) any liability of such Person for an
Obligation of
3
<PAGE>
another Person through any agreement (contingent or otherwise) (i) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of a loan, advance, stock purchase,
capital contribution or otherwise), (ii) to maintain the solvency or any
balance sheet item, level of income or financial condition of another
Person, (iii) to make take-or-pay or similar payments, if required,
regardless of non-performance by any other party or parties to an
agreement, (iv) to purchase, sell or lease (as lessor or lessee) property,
or to purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such obligation or to assure the holder of such
obligation against loss, or (v) to supply funds to or in any other manner
invest in such other Person (including, without limitation, to pay for
property or services irrespective of whether such property is received or
such services are rendered), if in the case of any agreement described in
subclause (i), (ii), (iii), (iv), or (v) of this sentence the primary
purpose or intent thereof is as described in the preceding sentence. The
amount of any Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported.
"Default" means any Event of Default and/or any event that, with
the giving of notice or passage of time or both, would be an Event of
Default.
"dollars" or "$" means United States dollars.
"Effective Date" means July 3, 1995.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Event of Default" shall have the meaning ascribed to
it in Section 8.1.
"GAAP" means United States generally accepted accounting
principles as established from time to time.
"Government Securities" means readily marketable direct
obligations of the United States of America or obligations fully
guaranteed by the United states of America.
4
<PAGE>
"Governmental Agency" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body, or
(c) any court, administrative tribunal or public utility.
"Hazardous Materials" means flammable explosives, radioactive
materials, petroleum, asbestos, polychlorinated biphenyls and hazardous
substances, materials or wastes which are defined as hazardous or toxic
substances, materials or waste under any applicable Law.
"Indebtedness" means, with respect to any Person (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments,
(iii) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of
the seller or Lender under such agreement in the event of default are
limited to repossession or sale of such property), (iv) all Contingent
Obligations of such Person, (v) all obligations of such Person to
purchase, redeem or otherwise acquire for value any stock or stock
equivalents of such Person, valued, in the case of redeemable preferred
stock, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, and (vi) all Indebtedness
referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien upon or on property,
and (vii) all liabilities of such Person that would be shown on a balance
sheet of such Person prepared in conformity with GAAP.
"Interest Payment Date" means the last day of each September,
December, March and June to occur while the Note is outstanding.
"Investment" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities or by means of loan, advance,
capital contribution, guaranty or other debt or equity participation or
interest in any other Person, or otherwise, and includes, without
limitation, any partnership and joint venture interests of such Person.
5
<PAGE>
"Laws" means, collectively, all international, foreign, federal,
state and local statutes, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents.
"Lender" means Leucadia Financial Corporation, a Utah corporation,
and any holder of the Note or any interest therein or any one or more or
all of their successors in interest, as the context requires or permits.
"Lender's Office" means Lender's address as set forth on the
signature pages of this Loan Agreement, or such other address as Lender
hereafter may designate by written notice to Borrower.
"Lien" means any pledge, hypothecation, security interest,
encumbrance, lien or charge of any kind, whether voluntarily incurred or
arising by operation of Law or otherwise, affecting any Property,
including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, any lease in the nature thereof,
and/or the filing of or agreement to give any financing statement under
the Uniform Commercial Code or comparable Law of any jurisdiction.
"Loan" means the principal amount outstanding under the Original
Loan Agreement as of the date hereof.
"Loan Agreement" means this Amended and Restated Loan Agreement,
either as originally executed or as it may from time to time be
supplemented, modified, amended, restated or extended.
"Material Adverse Effect" means a material adverse effect on the
business, operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole.
"Maturity Date" means December 31, 2004.
"Note" shall have the meaning set forth in Recital E and shall be
substantially in the form and substance of Exhibit A, with all blanks
properly completed, either as originally executed or as the same may from
time to time be supplemented, modified, amended, renewed, extended or
refinanced.
6
<PAGE>
"Obligations" means all present and/or future obligations of every
kind or nature of Borrower and its Subsidiaries at any time and/or from
time to time owed to Lender under any one or more of the Plan Documents,
whether due or to become due, matured or unmatured, liquidated or
unliquidated, or contingent or noncontingent, including obligations of
performance as well as obligations of payment, and including, without
limitation, any and all expenses (including without limitation, counsel
fees and expenses) incurred by Lender in enforcing its rights under this
Loan Agreement as well as interest that accrues after the commencement of
any bankruptcy or insolvency proceeding by or against Borrower or any
Subsidiary or Affiliate of Borrower.
"Person" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock
company, trust, unincorporated organization, bank, business association,
firm, joint venture, Governmental Agency, or otherwise.
"Plan Documents" means all of the following documents, in each
case either as originally executed or as the same may from time to time be
supplemented, modified, amended, restated or extended:
(a) this Loan Agreement;
(b) the Note;
(c) the Security Agreement and Stock Pledge
("Stock Pledge"), dated July 3, 1995, between Borrower
and Lender;
(d) the Payment Guaranty, dated July 3, 1995, executed by
HomeFed Communities, Inc., a California corporation ("HomeFed
Communities");
(e) the Security Agreement, dated July 3, 1995, between
HomeFed Communities and Lender;
(f) the Payment Guaranty, dated July 3, 1995, executed by
HomeFed Resources Corporation a California corporation ("HomeFed
Resources");
(g) the Security Agreement, dated July 3, 1995, between
HomeFed Resources and Lender;
7
<PAGE>
(h) the Deed of Trust, dated July 3, 1995, executed by
Paradise Valley Communities No. 1, a California general
partnership ("Paradise Valley");
(i) the Payment Guaranty, dated July 3, 1995, executed by
Paradise Valley in favor of Lender;
(j) the Security Agreement, dated July 3, 1995, between
Paradise Valley and Lender;
(k) the Payment Guaranty, dated July 3, 1995, executed by
Northfork in favor of Lender (collectively with the Payment
Guaranties of HomeFed Communities, HomeFed Resources and Paradise
Valley, the "Payment Guaranties"); and
(l) the Security Agreement, dated July 3, 1995, between
Northfork and Lender (collectively with the Security Agreements of
HomeFed Communities, HomeFed Resources and Paradise Valley, the
"Security
Agreements").
"Principal" means the outstanding principal amount of the Loan,
which shall equal $26,462,381.64.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Responsible Official" means:
(a) When used with reference to any Person other than an
individual, any corporate officer of such Person, general partner
of such Person, corporate officer of a corporate general partner
of such Person, or corporate officer of a corporate general
partner of a partnership that is a general partner of such Person,
or any other responsible official thereof duly acting on behalf
thereof; and
(b) When used with reference to a Person who is an
individual, such Person.
"Right of Others" means, as to any Property in which a Person has
an interest, any legal or equitable claim, right, title or other interest
(other than a Lien) in or with respect to that Property held by any other
Person, and any option or right held by any other Person to acquire any
such
8
<PAGE>
claim, right, title or other interests including any option or right to
acquire a Lien.
"Securities Act" means the Securities Act of 1933, as
amended.
"Subsidiary" means HomeFed Communities, HomeFed Resources,
Northfork, Paradise Valley and, after the date hereof, any other
corporation, association, partnership business trust or other business
entity of which Borrower shall at any time own directly or indirectly
through one or more Subsidiaries at least a majority (by number of votes)
of the outstanding voting stock of such entity.
"to the best knowledge of" means, when modifying a representation,
warranty or other statement of any Person, that the fact or situation
described therein is known by the Person (or, in the case of a Person
other than a natural Person, known by a Responsible Official of that
Person) making the representation, warranty or other statement, or with
the exercise of reasonable due diligence under the circumstances (in
accordance with the standard of what a reasonable Person in similar
circumstances would have done) should have been known by the Person (or,
in the case of a Person other than a natural Person, should have been
known by a Responsible Official of that Person).
1.2 Use of Defined Terms. Any defined term used in the plural shall refer
to all members of the relevant class, and any defined term used in the singular
shall refer to any one or more of the members of the relevant class.
1.3 Accounting Terms. All accounting terms not specifically defined in
this Loan Agreement shall be construed in conformity with, and all financial
data required to be submitted by this Loan Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect on the date
hereof, except as otherwise specifically prescribed herein.
1.4 Exhibits. Any and all exhibits to this Loan Agreement, either as
originally existing or as the same may from time to time be supplemented,
modified or amended, are incorporated herein by this reference.
9
<PAGE>
ARTICLE 2
NONREVOLVING LOAN
2.1 The Loan. The Loan shall be evidenced by the Note of even date
herewith, which shall be executed and delivered by Borrower.
2.2 Non-revolving. To the extent the Loan from time to time shall be
repaid by Borrower as permitted by Section 3.5, the Loan may not be reborrowed.
2.3 Use of Proceeds. The Borrower has used the proceeds of the Loan to
finance the Plan. No part of the proceeds of the Loan was used for the purpose
of "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of governors of the
Federal Reserve System as now and from time to time in effect ("Regulation U").
ARTICLE 3
PAYMENTS
3.1 Payment Terms. Commencing on September 30, 1998, only interest on the
outstanding Principal shall be payable quarterly in arrears on each Interest
Payment Date, through the Maturity Date, interest calculated at the rate of 6%
per annum; and on the Maturity Date, all unpaid Principal shall be due and
payable.
3.2 Non-Business Days. If any payment to be made by Borrower or any other
party under any Plan Document shall come due on a day other than a Business Day,
payment shall be made on the next succeeding Business Day and the extension of
time shall be reflected in computing interest.
3.3 Manner and Treatment of Payments.
(a) Each payment hereunder or on the Note or under any other Plan
Document shall be made to Lender, at Lender's Office or at such other
place as Lender may designate, for the account of Lender, in immediately
available funds not later than 12 noon Utah time on the day of payment
(which must be a Business Day). All payments shall be made in lawful money
of the United States of America.
(b) Each payment of any amount payable by Borrower under this Loan
Agreement and/or any other Plan Document shall be made free and clear of,
and without reduction by
10
<PAGE>
reason of, any taxes, assessments or other charges imposed by any
Governmental Agency, central bank or comparable authority.
3.4 Payment of Overdue Principal and Interest. The Borrower shall pay
interest on overdue Principal at the rate borne by the Note; it shall pay
interest on the overdue installments of interest at the same rate to the extent
lawful, such interest being due and payable on demand of Lender.
3.5 Prepayments. The Note shall be prepayable in whole, or in part,
without penalty or charge, upon 30 days prior written notice to Lender.
3.6 Limitation on Interest. All agreements between Borrower and Lender are
hereby expressly limited so that in no contingency or event whatsoever shall the
amount paid or agreed to be paid to Lender for the use, forbearance or retention
of the indebtedness evidenced hereby exceed the maximum amount which Lender is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision hereto, at the time performance of such
provision shall be due, shall involve exceeding such amount, then the obligation
to be fulfilled shall automatically be reduced to the limit of such validity,
and if from any circumstance Lender should ever receive as interest an amount
which would exceed such maximum amount, such amount which would be excessive
interest shall be applied to the reduction of the Principal balance evidenced
hereby and not to the payment of interest. As used herein, the term "applicable
law" shall mean the law in effect as of the date hereof, provided, however, that
in the event there is a change in the law which results in a higher permissible
rate of interest, then the Note shall be governed by such new law as of its
effective date. This provision shall control every provision of all agreements
between Borrower and Lender.
3.7 Failure to Charge Not Subsequent Waiver. Any decision by Lender not to
require payment of any interest, fee, cost or other amount payable under any
Plan Document on any occasion shall in no way limit or be deemed a waiver of
Lender's right to require full payment of any interest, fee cost or other amount
payable under any Plan Document on any other or subsequent occasion.
3.8 Survivability. All of Borrower's obligations under this Article 3
shall survive until the Loan shall have been fully paid.
11
<PAGE>
ARTICLE 4
COLLATERAL SECURITIES AND GUARANTIES
4.1 Security of Borrower. All of the Obligations are to be secured by a
perfected first priority security interest (except as set forth in Section 6.4
of this Agreement) in all of the assets of Borrower whether now owned or
hereafter acquired, including any capital stock held by Borrower, pursuant to
the terms of the Stock Pledge.
4.2 Guaranties and Security of the Subsidiaries. The Obligations shall
also be guaranteed pursuant to the terms of the Payment Guaranties. All of the
obligations of the Subsidiaries under their respective Payment Guaranties shall
be in turn secured by a perfected first priority security interest (except as
set forth in Section 6.4 of this Agreement, and as revealed by title insurance
policies issued to Lender as of July 3, 1995 covering real Property that shall
as of July 3, 1995 be encumbered by the Deeds of Trust) in all of the assets of
such Subsidiary, whether now owned or hereafter acquired pursuant to the terms
of the Plan Documents to which such Subsidiary is a party.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower represents and warrants to Lender, as of the date hereof,
that:
5.1 Existence and Qualification; Power; Compliance With Laws. Borrower is
a corporation duly formed, validly existing and in good standing under the Laws
of Delaware. The chief executive offices of Borrower are in Salt Lake City,
Utah. Borrower is duly qualified or registered to transact business and is in
good standing in California and in each other jurisdiction in which the conduct
of its business or the ownership or leasing of its Property makes such
qualification or registration necessary where the failure to be so qualified
would have a Material Adverse Effect. Borrower has all requisite power and
authority to conduct its business, to own and lease its Property and to execute,
deliver and perform all of its Obligations under the Plan Documents. All
outstanding Common Stock of Borrower is duly authorized, validly issued, fully
paid and non-assessable and issued in compliance with all applicable state and
federal securities and other Laws. Borrower is in compliance with all Laws and
other legal requirements applicable to its business, has obtained all
authorizations, consents, approvals, orders, licenses and permits from, and has
accomplished all filings, registrations and qualifications with, or obtained
exemptions from any of the foregoing from, any Governmental Agency that are
12
<PAGE>
necessary for the transaction of its business as now conducted, except where the
failure so to comply, file, register, qualify or obtain exemptions would not
have a Material Adverse Effect.
5.2 Authority; Compliance with Other Agreements and Instruments and
Government Regulations. The execution delivery and performance by Borrower of
the Loan Agreement has been duly authorized by all necessary action on the part
of Borrower, and do not and will not:
(a) Require any consent or approval not heretofore obtained of any
director, stockholder, security holder, partner or creditor of Borrower;
(b) Violate or conflict with any provision of Borrower's charter,
certificate or articles of incorporation or bylaws, or amendments thereto,
as applicable;
(c) Result in or require the creation or imposition of any Lien or
Right of Others upon or with respect to any Property now owned or leased
or hereafter acquired by Borrower;
(d) Violate any provision of any Law, order, writ, judgment,
injunction, decree, determination or award presently in effect and having
applicability to Borrower; or
(e) Result in a breach of or constitute a default under, or cause
or permit the acceleration of any obligation owed under, any indenture or
loan or credit agreement or any other material agreement, lease or
instrument to which Borrower is a party or by which such Borrower or any
of its Property is bound or affected;
and neither Borrower, nor any Affiliate of Borrower is in default under any Law,
order, writ, judgment, injunction, decree, determination or award, or any
indenture, agreement, lease or instrument described in Section 5.2(e), in any
respect that is materially adverse to the interests of Lender or that would have
any Material Adverse Effect.
5.3 No Governmental Approvals Required. The Original Loan Agreement was
approved by the Bankruptcy Court in conjunction with the Plan, and no additional
authorization, consent, approval, order, license or permit from, or filing,
registration or qualification with, or exemption from any of the foregoing from,
any Governmental Agency is or will be required to authorize or permit under
applicable Law the execution, delivery and performance by Borrower of and under
any of the Plan Documents.
13
<PAGE>
5.4 Subsidiaries. Borrower holds 400 shares of the outstanding Common
Stock of HomeFed Communities, which shares constitute all of the outstanding
shares of HomeFed Communities and are represented by a certificate of HomeFed
Communities. Borrower also holds 20 shares of the outstanding Common Stock of
HomeFed Resources, which shares constitute all of the outstanding shares of
HomeFed Resources and are represented by a certificate of HomeFed Resources.
HomeFed Resources and HomeFed Communities comprise all of the partners of
Northfork and Paradise Valley.
5.5 Title to and Location of Property. Borrower and the Subsidiaries have
good and valid title to all the Property reflected in the Financial Statements,
other than Property subsequently sold in the ordinary course of business, free
and clear of all Liens and Rights of Others other than Liens or Rights of Others
permitted pursuant to Section 6.4.
5.6 Investment Company Act of 1940. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940.
5.7 Litigation. Except as described in the Borrower Reports there are no
actions, suits or proceedings pending or, to the best knowledge of Borrower,
threatened against or affecting Borrower or any Property of Borrower in any
court of Law or before any Governmental Agency.
5.8 Binding Obligations. Each of the Plan Documents will continue to
constitute the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization arrangement, moratorium or
other similar Laws relating to or affecting creditors' rights generally or
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion.
5.9 No Default. No event has occurred and is continuing that
is an Event of Default.
5.10 Disclosure. No written statement made by Borrower to Lender in
connection with this Loan Agreement or the Loan contains any untrue statement of
a material fact or omits a material fact necessary to make the statement made
not misleading. There is no fact which Borrower has not disclosed to Lender in
writing which materially and adversely affects nor, so far as Borrower can now
foresee, is reasonably likely to prove to affect materially and adversely the
business, operations, Property, prospects, profits or
14
<PAGE>
condition (financial or otherwise) of Borrower, or the ability of Borrower to
perform its obligations under the Plan Documents.
5.11 Tax Liability. Borrower has filed all income tax returns which are
required to be filed, and has paid, or made provision for the payment of, all
taxes due for the transactions or periods covered by such returns, except such
taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided.
5.12 Insurance Coverage. There is in full force and effect one or more
policies of insurance issued by insurers of nationally recognized responsibility
insuring Borrower and its Property and business against losses and risks and in
such amounts as are adequate for the business of Borrower and as are customarily
carried by Persons engaged in the same or similar business.
5.13 Access to Data. Lender has had an opportunity to discuss Borrower's
business, management, and financial affairs with its management and to review
Borrower's records and facilities, and Lender is relying for purposes of this
Agreement upon its own due diligence review of Borrower, not on any
representation or warranty of Borrower other than as expressly set forth in this
Agreement.
ARTICLE 6
COVENANTS OF BORROWER
From the date of this Agreement and for so long as any of the Loan remains
unpaid, or any other sums, of any kind, due and payable by Borrower under this
Loan Agreement or due and payable by Borrower to Lender under any other debt
security, instrument, loan or other agreement, remain unpaid, Borrower shall,
and shall, if appropriate, cause each of its Subsidiaries to, unless Lender
otherwise consents in writing:
6.1 Payment of Principal and Interest. Duly and punctually pay the
Principal and interest on the Note in accordance with its terms and the terms of
this Loan Agreement.
6.2 Existence. Do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and the existence of the
Subsidiaries, rights (charter and statutory) and franchises; provided, however,
that it shall not be required to preserve any such right or franchise if its
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of its business and that the loss thereof does not have
a Material Adverse Effect.
15
<PAGE>
6.3 Maintenance of Property. Cause all Property used or useful in the
conduct of its business to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment, and prohibit waste and
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its judgment may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent discontinuing the operation or maintenance of any of such Property if
such discontinuance does not have a Material Adverse Effect and is, in its
judgment, desirable in the conduct of its business.
6.4 Payment of Taxes and Other Claims. Pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (1) all taxes,
assessments and governmental charges levied or imposed upon it or upon its
income, profits or Property, and (2) any and all Liens and any and all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
Lien; provided, however, that it shall not be required (i) to terminate that
certain financing statement (California Federal Bank, secured party) filed with
the California Secretary of State at no. 910092913, (ii) [to terminate those
certain financing statements (Brock HomeFed Communities La Quinta, debtor;
Community Bank, secured party) filed with the California Secretary of State at
nos. 90209536, 90209538, and 90261832, which financing statements are due to
expire in 1995, or (iii)] to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge, Lien or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings and for
which adequate reserves are maintained.
6.5 Margin Stock. Refrain from "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U.
6.6 No Plan Amendments, Etc. Refrain from amending any Plan Documents
without the prior written consent of Lender except as specifically contemplated
by this Agreement.
6.7 Preservation of Tax Attributes. Take all reasonable steps necessary to
preserve the existence and availability for federal income tax purposes of
Borrower's net operating losses.
6.8 Conversion Reinstatement. Upon the written request of the Lender, the
Company agrees that it shall submit for shareholder approval a proposal to amend
its Restated Certificate of Incorporation to eliminate the restriction contained
in Article 4A
16
<PAGE>
thereof and to reinstate Article 5 of the Original Loan Agreement and any
related provisions of the Original Loan Agreement necessary to provide the
Lender or its permitted assignees conversion privileges to convert the Note into
not more than 54,000,000 shares of Common Stock at a conversion price of $0.45
per share, as such number of shares and purchase price may be adjusted from time
to time in accordance with the terms of the Original Loan Agreement.
ARTICLE 7
INFORMATION AND REPORTING REQUIREMENTS
7.1 Financial and Business Information. From the date of this Loan
Agreement and for so long as the Loan remains unpaid or any other sums of any
kind due and payable by Borrower under this Loan Agreement or due and payable by
Borrower to Lender under any other debt security, instrument, loan or under any
other agreement, remain unpaid Borrower shall, unless Lender shall otherwise
consent in writing, deliver to Lender, at Borrower's sole expense:
(a) As soon as practicable, and in any event within twenty (20)
days after the end of each fiscal month of Borrower, (i) consolidated
balance sheets of Borrower and its Subsidiaries as at the end of such
month, setting forth in comparative form the corresponding figures as at
the end of the corresponding month of their preceding fiscal year and (ii)
consolidated statements of income, shareholders' equity, and cash flows of
Borrower and its Subsidiaries for such month and for the portion of their
fiscal year ended with such month, setting forth in comparative form the
corresponding figures for the corresponding periods of their preceding
fiscal year, all in reasonable detail, including footnotes. The preceding
financial statements shall be certified by a Responsible Official of
Borrower as fairly presenting in all material respects the financial
condition, results of operations and changes in financial position of
Borrower and its Subsidiaries in accordance with generally accepted
accounting principles, consistently applied, as at such date and for such
periods, subject only to normal year- end audit adjustments.
(b) As soon as practicable, and in any event within thirty (30)
days after the end of each fiscal quarter of Borrower (including the last
fiscal quarter of each fiscal year, provided that with respect to such
last quarter the financial statements required hereby may be in
preliminary form, prior to year-end audit adjustments), (i) consolidated
balance sheets of Borrower and its Subsidiaries as at the end of such
quarter, setting forth in comparative form the
17
<PAGE>
corresponding figures as at the end of the corresponding quarter of their
preceding fiscal year and (ii) consolidated statements of income,
shareholders' equity, and cash flows of Borrower and its Subsidiaries for
such quarter and for the portion of their fiscal year ended with such
quarter, setting forth in comparative form the corresponding figures for
the corresponding periods of their preceding fiscal year, all in
reasonable detail, including footnotes. The preceding financial statements
shall be certified by a Responsible Official of Borrower as fairly
presenting in all material respects the financial condition, results of
operations and changes in financial position of Borrower and its
Subsidiaries in accordance with generally accepted accounting principles,
consistently applied, as at such date and for such periods, subject only
to normal year-end audit adjustments.
(c) As soon as practicable, and in any event within ninety (90)
days after the close of each fiscal year of Borrower, (i) consolidated
balance sheets of Borrower and its Subsidiaries as at the end of such
fiscal year, setting forth in comparative form the corresponding figures
as at the end of their preceding fiscal year, and (ii) consolidated
statements of income, shareholders' equity, and cash flows of Borrower and
its Subsidiaries for such fiscal year, setting forth in comparative form
the corresponding figures for their previous fiscal year, all in
reasonable detail. Such balance sheets and statements shall be prepared in
accordance with generally accepted accounting principles, consistently
applied, and such consolidated balance sheet and consolidated statements
shall be accompanied by a report and opinion of independent public
accountants selected by Borrower and reasonably satisfactory to Lender
which report and opinion shall be prepared in accordance with generally
accepted auditing principles as at such date.
(d) As soon as practicable, and in any event within thirty (30)
days after the end of each fiscal month of Borrower, a Certificate of a
Responsible Official of Borrower setting forth a schedule of Investments
made by Borrower and/or its Subsidiaries during such month, and during
their fiscal year to date, separately for Borrower and each of its
Subsidiaries, and in reasonable detail.
(e) As soon as practicable, and in any event within thirty (30)
days after filing, copies of any report or other document filed by
Borrower or any of its Subsidiaries with any Governmental Agency.
18
<PAGE>
(f) Promptly after the same are available, copies of each annual
report, proxy or financial statement or other report or communication sent
to the shareholders of Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which Borrower
may file or be required to file with any Governmental Agency or with any
securities exchange.
(g) Promptly upon (and in no event later than five (5) Business
Days after) becoming aware of the existence of any condition or event
which constitutes a Default, a written notice specifying the nature and
period of existence thereof and what action Borrower or its Subsidiaries
are taking or propose to take with respect thereto.
(h) Promptly upon becoming aware that any Person asserts a claim
against Borrower or any of its Subsidiaries in excess of $25,000 and that
such Person has given notice or taken any other action with respect to a
claimed default or event of default, a written notice specifying the
notice given or action taken by such Person and the nature of the claimed
default or event of default and what action Borrower or its Subsidiaries
are taking or propose to take with respect thereto.
(i) Promptly upon any change in the name of Borrower or any
Subsidiary or a change in Borrower's organizational structure, a written
notice specifying such change.
(j) Promptly upon the occurrence of any uninsured or partially
insured loss (including the deductible amount) as a result of fire, theft,
liability or Property damage in excess of an aggregate of $25,000, a
written notice specifying the nature and amount of such loss.
(k) Such other data and information as from time to time may be
reasonably requested by Lender, including environmental audit reports
prepared by recognized California environmental consultants retained by
Borrower with the approval of Lender.
7.2 Compliance Certificates. So long as the loan remains unpaid or any
other Obligation remains unpaid or unperformed in whole or in part, Borrower
shall, upon the reasonable request of Lender, deliver to Lender, at Borrower's
sole expense, not later than 45 days after the end of each fiscal quarter of
Borrower, a Certificate of a Responsible Official of Borrower setting forth
computations or other appropriate information showing, in detail satisfactory to
Lender, whether any Default exists and, if so, the nature of the Default.
19
<PAGE>
ARTICLE 8
EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT
8.1 Events of Default. The existence or occurrence of any
one or more of the following events, whatever the reason therefor,
shall constitute an Event of Default;
(a) Borrower fails to pay any installment of Principal or interest
of any indebtedness on the Note or any portion thereof, or to pay any fee
or any other amount due Lender under any Plan Document within five (5)
Business Days after such payment is due and payable; or
(b) Any failure to comply with Section 7.1(g); or
(c) Any failure to perform or observe any other term, covenant or
agreement contained in any Plan Document to be performed or observed by
Borrower or a Subsidiary which is not cured within ten (10) calendar days;
or
(d) Borrower or any of its Subsidiaries (i) fails to pay the
principal, or any principal installment, of any present or future
Indebtedness or in connection with the purchase or lease of Property, or
any guaranty of present or future Indebtedness for borrowed money or
issued in connection with the Purchase or lease of Property, on its part
to be paid, when due (or within any stated grace period), whether at the
stated maturity, upon acceleration, by reason of required prepayment or
otherwise, or (ii) fails to perform or observe any other term, covenant or
agreement on its part to be performed or observed in connection with any
present or future Indebtedness for borrowed money or in connection with
the purchase or lease of Property, or of any guaranty of present or future
Indebtedness for borrowed money or issued in connection with the purchase
or lease of Property, if as a result of such failure any holder or holders
thereof (or an agent or trustee on its or their behalf) has the right to
declare such Indebtedness due before the date on which it otherwise would
become due; or
(e) Any Plan Document, at any time and for any reason other than
the agreement of Lender or satisfaction in full of all the Obligations,
ceases to be in full force and effect or is declared by a court of
competent jurisdiction to be null and void, invalid or unenforceable in
any respect which, in the reasonable opinion of Lender, is materially
adverse to the interests of Lender; or any party thereto other than Lender
denies that it has any or further liability or obligation under
20
<PAGE>
any Plan Document, or purports to revoke, terminate or rescind
same; or
(f) Borrower or any of its Subsidiaries is the subject of an order
for relief in a bankruptcy case, or is unable or admits in writing its
inability to pay its debts as they mature, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
similar officer for it or for all or any part of its Property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of that
Person and the appointment continues undischarged or unstayed for thirty
(30) calendar days; or institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt,
dissolution, custodianship, conservatorship, liquidation, rehabilitation
or similar case or proceedings relating to it or to all or any part of its
Property under the Laws of any jurisdiction; or any similar case or
proceeding is instituted without the consent of that Person and continues
undismissed or unstayed for thirty (30) calendar days; or any judgment,
writ, warrant of attachment or execution or similar process is issued or
levied against all or any material part of the Property of any such Person
and is not released, vacated or fully bonded within thirty (30) calendar
days after its issue or levy; or
(g) Borrower or any Subsidiary thereof is dissolved or liquidated
or all or substantially all of the assets of Borrower or any Subsidiary of
Borrower are sold or otherwise transferred in violation of the provisions
of this Loan Agreement without the written consent of Lender; provided,
however, that Borrower shall be entitled to dissolve or liquidate any of
Borrower's Subsidiaries in the ordinary course of business if such act
does not have a Material Adverse Effect or (i) all of the proceeds of such
dissolution or liquidation go to Borrower, and (ii) such dissolution or
liquidation results in no breach of any obligations of Borrower or such
Subsidiary to any Person; or
(h) The revocation or nonrenewal of any permit or license,
authorization, consent, order or other approval from any Governmental
Agency necessary for the conduct of Borrower's business that has a
Material Adverse Effect; or
(i) Any judgment or order for the payment of money in excess of
$50,000 to the extent not fully covered by insurance shall be rendered
against Borrower or any of its Subsidiaries
21
<PAGE>
and either, (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order, or (ii) there shall be any period of
ten (10) consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect.
8.2 Remedies Upon Event of Default. Without limiting any other rights or
remedies of Lender provided for elsewhere in this Loan Agreement, the Plan
Documents, or by applicable Law, or in equity, or otherwise:
(a) Upon the occurrence of any Event of Default other than an
Event of Default described in Section 11.1(f) Lender may declare all or
any part of the unpaid Principal of the Note, all interest accrued and
unpaid thereon and all other amounts payable under the Plan Documents to
be forthwith due and payable, whereupon the same shall become and be
forthwith due and payable, without protest, presentment, notice of
dishonor, demand or further notice of any kind, all of which are expressly
waived by Borrower.
(b) Upon the occurrence of any Event of Default described in
Section 8.1(f):
(1) all obligations of Lender and all rights of Borrower
under the Plan Documents shall terminate without notice to or
demand upon Borrower, which are expressly waived by Borrower;
provided, however, that Lender may waive the Event of Default or,
without waiving, determine, upon terms and conditions satisfactory
to Lender, to extend the Maturity Date; and
(2) the unpaid Principal of the Note, all interest accrued
and unpaid thereon and all other amounts payable under the Plan
Documents shall be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any
kind, all of which are expressly waived by Borrower.
(c) Upon the occurrence of any Event of Default, Lender, without
notice to or demand upon Borrower, which are expressly waived by Borrower,
may proceed to protect, exercise and enforce its rights and remedies under
the Plan Documents against Borrower and such other rights and remedies as
are Provided by Law or equity.
22
<PAGE>
(d) The order and manner in which Lender's rights and remedies are
to be exercised shall be determined by Lender in its sole discretion, and
all payments received by Lender shall be applied first to the costs and
expenses (including attorneys' fees and disbursements) of Lender, and
thereafter paid to Lender. Regardless of how Lender may treat payments for
the purpose of its own accounting, for the purpose of computing Borrower's
Obligations hereunder and under the Note, payments shall be applied,
first, to the costs and expenses of Lender, as set forth above, second, to
the payment of accrued and unpaid interest due under any Plan Document to
and including the date of such application (ratably, and without
duplication, according to the accrued and unpaid interest due under each
of the Plan Documents), third, to the payment of all unpaid Principal
amounts due under any Plan Document (including, for the purposes hereof,
Principal due under the Note), and fourth, to the payment of all other
amounts (including fees) then owing to Lender under the Plan Documents. No
application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the Plan
Documents, or prevent the exercise, or continued exercise, of rights or
remedies of Lender hereunder or thereunder or at Law or in equity.
(e) Upon the occurrence of any event that would be an Event of
Default under Section 11.1(f) with the passage of time, Lender may take
such action as Lender may deem necessary to protect the interests of
Lender under the Plan Documents.
ARTICLE 9
MISCELLANEOUS
9.1 Cumulative Remedies; No Waiver. The rights, powers, privileges and
remedies of Lender provided herein and in the Note and every other Plan Document
are cumulative and not exclusive of any right, power, privilege or remedy
provided by Law or equity. No failure or delay on the part of Lender in
exercising any right, power, privilege or remedy may be, or may be deemed to be,
a waiver thereof; nor may any single or partial exercise of any right, power,
privilege or remedy preclude any other or further exercise of the same or any
other right, power, privilege or remedy.
9.2 Amendments; Consents. No amendment, modification, supplement,
extension, termination or waiver of any provision of this Loan Agreement or any
other Plan Document, no approval or consent thereunder, and no consent to any
departure therefrom by Borrower or any other party to the Plan Documents other
than Lender,
23
<PAGE>
may in any event be effective (except as otherwise provided in any other Plan
Document) unless in writing signed by the Parties hereto.
9.3 Nature of Lender's Obligations. Nothing contained in this Loan
Agreement or any other Plan Document and no action taken by Lender pursuant
hereto or thereto may, or may be deemed to, make Borrower and Lender a
partnership, an association, a joint venture or other entity, either between
themselves or with any Affiliate of Borrower. The relationship between Borrower
and Lender is, and shall at all times remain, solely that of a borrower and
Lender; Lender shall under no circumstance be construed to be a partner or joint
venturer of Borrower or its Affiliates; Lender shall under no circumstance be
deemed to be in a relationship of confidence or trust or a fiduciary
relationship with Borrower or its Affiliates, or to owe any fiduciary duty to
Borrower or its Affiliates; Lender undertakes or assumes no responsibility or
duty to Borrower or its Affiliates to select, review, inspect, supervise, pass
judgment upon or inform Borrower or its Affiliates of any matter in connection
with their Property, or the operations of Borrower or its Affiliates; Borrower
and its Affiliates shall rely entirely upon their own judgment with respect to
such matters; and any review, inspection, supervision, exercise of judgment or
supply of information undertaken or assumed by Lender in connection with such
matters is solely for the protection of Lender and neither Borrower nor any
other Person is entitled to rely thereon.
9.4 Survival of Representations and Warranties and Covenants. All
representations and warranties contained herein or in any other Plan Document,
or in any certificate or other writing delivered by or on behalf of Borrower,
will survive the making and repayment of the loan hereunder and the execution
and delivery of the Note and have been or will be relied upon by Lender,
notwithstanding any investigation made by Lender. All affirmative and negative
covenants contained herein will survive the payment of the Loan hereunder until
all indebtedness of Borrower to Lender under any other security debt instrument,
loan or other agreement is satisfied in full.
9.5 Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including, without limitation, telegraphic,
telex, telecopy or cable communication) and mailed, telegraphed, telecopied, or
delivered by hand, if to the Borrower, at its address at 529 East South Temple,
Salt Lake City, Utah 84012 (telecopy number: (801) 524-1761) (telephone number:
(801) 521-1049); and if to Lender, at its address at 529 East South Temple, Salt
Lake City, Utah 84012 (telecopy number: (801-524-1761) (telephone number:
(801-521-1049), Attention: Corrinne A. Maki; with a copy to Weil, Gotshal &
Manges, 767 Fifth Avenue, New York, New
24
<PAGE>
York 10153 (telecopy number 212-310-8007) (telephone number 212-310- 8000),
Attention: Stephen E. Jacobs, Esq.; or, at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall, when mailed, telegraphed, telecopied or
delivered, be effective when deposited in the mails, delivered to the telegraph
company, telecopied with confirmation of receipt, or delivered by hand to the
addressee.
9.6 Execution of Loan Agreements. This Loan Agreement may be executed in
any number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be an
original and all of which counterparts of this Loan Agreement, as the case may
be, when taken together will be deemed to be but one and the same instrument.
The execution of this Loan Agreement by any party hereto or thereto will not
become effective until counterparts hereof or thereof, as the case may be, have
been executed by all the parties hereto or thereto
9.7 Binding Effect; Assignment. This Loan Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and thereto and their
respective successors and assigns, except that Borrower and/or its Affiliates
may not assign their rights hereunder or thereunder or any interest herein or
therein without the prior written consent of Lender. Lender may assign its
rights and obligations hereunder without the consent of Borrower.
9.8 Statements Required in Certificate. Each certificate with respect to
compliance with a condition or covenant provided for in the Note or this Loan
Agreement shall include:
(a) a statement that each Person making such certificate has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in such
certificate are based;
(c) a statement that, in the opinion of each such Person, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether or not, in the opinion of each such
Person, such covenant or condition has been complied with.
25
<PAGE>
9.9 Indemnity by Borrower. Borrower agrees to indemnify, save and hold
harmless Lender and each of its directors, officers, agents, attorneys and
employees (collectively the "Indemnitees") from and against: (a) any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee by any Person (other than Lender) if the claim, demand, action or
cause of action directly or indirectly relates to a claim, demand, action or
cause of action that such Person has or asserts against Borrower, any Subsidiary
of Borrower or any of their respective officers, directors, agents, attorneys,
employees or shareholders; (b) any and all claims, demands, actions or causes of
action that are asserted against any Indemnitee if the claim, demand, action or
cause of action arises out of or relates to the relationship between Borrower
and Lender under any of the Plan Documents or the transactions contemplated
thereby; (c) any and all administrative or investigative proceedings by any
Governmental Agency arising out of or related to any claim, demand, action or
cause of action described in clauses (a) or (b) above; and (d) any and all
liabilities, losses, costs or expenses (including attorneys' fees and
disbursements and other professional services) that any Indemnitee suffers or
incurs as a result of the assertion of any of the foregoing; provided that no
Indemnitee shall be entitled to indemnification for any loss caused by its own
gross negligence or willful misconduct. Each Indemnitee is authorized to employ
counsel of its own choosing in enforcing its rights hereunder and in defending
against any claim, demand, action, cause of action or administrative or
investigative proceeding covered by this Section 9.9; provided that each
Indemnitee shall endeavor, in connection with any matter covered by this Section
9.9 which also involves other Indemnitees, to use reasonable efforts to avoid
unnecessary duplication of effort by counsel for all Indemnitees. Any obligation
or liability of Borrower to any Indemnitee under this Section 9.9 shall be and
hereby is covered and secured by the Plan Documents, and shall survive the
expiration or termination of this Loan Agreement and the repayment of the Loan
and the payment and performance of all other Obligations owed to Lender.
9.10 No Third Parties Benefited. This Loan Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower and Lender in connection with the Loan, and is made for the sole
protection of Borrower and Lender, and Lender's successors and assigns, and no
other Person shall have any rights of any nature hereunder or by reason hereof.
9.11 Further Assurances. Borrower and its Subsidiaries shall, at their
expense and without expense to Lender, do, execute and deliver such further acts
and documents as Lender from time to time reasonably requires for the assuring
and confirming unto Lender of
26
<PAGE>
the rights hereby created or intended now or hereafter so to be, or for carrying
out the intention or facilitating the performance of the terms of any Plan
Document, or for assuring the validity, perfection, priority or enforceability
of any Lien under any Plan Document.
9.12 Integration. This Loan Agreement, together with the other Plan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and supersedes all prior agreements, written or oral, on
the subject matter hereof. In the event of any conflict between the provisions
of this Loan Agreement and those of any other Plan Document, the provisions of
this Loan Agreement shall control and govern; provided that the inclusion of
supplemental rights or remedies in favor of Lender in any other Plan Document
shall not be deemed a conflict with this Loan Agreement. Each Plan Document was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
9.13 Governing Law. This Loan Agreement and, except to the extent
otherwise provided therein each Plan Document, shall be governed by, and
construed and enforced in accordance with, the internal Laws of the State of
Utah (without regard to choice of law or conflict of law provisions).
9.14 Severability of Provisions. Any provision in any Plan Document that
is held to be inoperative, unenforceable or invalid as to any party or in any
jurisdiction shall, as to that party or jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions or the
operation, unenforceability or validity of that provision as to any other party
or in any other jurisdiction, and to this end the provisions of all Plan
Documents are declared to be severable.
9.15 Headings. Article and Section headings in this Loan Agreement and the
other Plan Documents are included for convenience of reference only and are not
part of this Loan Agreement or the other Plan Documents for any other purpose.
9.16 Submission to Jurisdiction; Service of Process.
(a) Any legal action or proceeding with respect to the Note or
this Loan Agreement or any document related thereto may be brought in the
courts of the State of Utah or of the United States of America for the
District of Utah, and, by execution and delivery of the Note and this Loan
Agreement, Borrower hereby accepts for itself and in respect of its
property,
27
<PAGE>
generally and unconditionally, the jurisdiction of the aforesaid courts.
The parties hereto hereby irrevocably waive any objection, including,
without limitation, any objection to the laying of venue or based on the
ground of forum non conveniens, which any of them may now or hereafter
have to the bringing of any such action or proceeding in such respective
jurisdictions.
(b) The Borrower irrevocably consents to the service of process of
any of the aforesaid courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, to Borrower at its address provided herein.
(c) Nothing contained in this Section shall affect the right of
Lender or any holder of the Note to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed
against Borrower in any other jurisdiction.
9.17 Certification. Except as otherwise specifically provided herein, any
requirement that any document or certificate be signed or executed by any Person
requires that such document or certificate be signed or executed by a
Responsible Official of such Person, and that the Responsible Official signing
or executing such document or certificate on behalf of such Person shall be
authorized to do so by all necessary corporate, partnership and/or other action.
[Remainder of Page Intentionally Left Blank]
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the date first above written.
BORROWER:
HomeFed Corporation,
a Delaware Corp.
By /s/ Timothy M. Considine
---------------------------------
Chairman of the Board
[Print Name and Title]
Address: 529 East South Temple
Salt Lake City, Utah 84012
Telecopier: (801-524-1761)
Telephone: (801-523-1049)
Lender:
Leucadia Financial Corporation,
a Utah corporation
By /s/ Joseph A. Orlando
---------------------------------
Vice President
and Chief Financial Officer
[Print Name and Title]
Address: 529 East South Temple
Salt Lake City, Utah 84012
Telecopier: (801-524-1751)
Telephone: (801-521-1049)
29
<PAGE>
EXHIBIT "A"
TO Loan Agreement
AMENDED AND RESTATED 6% SECURED NOTE
DUE DECEMBER 31, 2004
Salt Lake City, Utah
August 14, 1998
For value received, the undersigned HomeFed corporation, a
Delaware corporation ("Borrower"), unconditionally promises to pay to the order
of Leucadia Financial Corporation, a Utah corporation ("Lender"), at Lender's
principal place of business or at such other place as may be designated in
writing by Lender, in lawful money of the United States of America and in
immediately available funds, the principal sum of $26,462,381.64 plus interest.
This Note is made pursuant to that certain Amended and Restated
Loan Agreement of even date herewith between Borrower and Lender ("Loan
Agreement"). Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Loan Agreement. Interest on this Note shall be payable
quarterly in arrears on each Interest Payment Date. Interest on this Note shall
be calculated at the rate of 6% per annum. This Note is due and payable on
December 31, 2004. There are no conversion rights under this Note.
This Note is being issued in replacement and substitution for the
Note dated as of July 3, 1995 in the aggregate principal amount of TWENTY
MILLION AND 00/100 DOLLARS ($20,000,000), as such amount has been increased
pursuant to the Amended and Restated Loan Agreement dated August 14, 1998.
This Note is secured by, among other things, the following:
(i) that certain Security Agreement and Stock Pledge dated July 3,
1995, executed by Borrower;
(ii) that certain Payment Guaranty dated July 3, 1995, executed
by HomeFed Communities, Inc., a California corporation ("HomeFed
Communities"), which Payment Guaranty is secured by a Security Agreement
of even date herewith, executed by HomeFed Communities;
(iii) that certain Payment Guaranty dated July 3, 1995, executed
by HomeFed Resources Corporation, a California corporation ("HomeFed
Resources"), which Payment Guaranty is
<PAGE>
secured by a Security Agreement of even date herewith, executed
by HomeFed Resources; and
(iv) that certain Payment Guaranty and Deed of Trust dated July
3, 1995, each executed by Paradise Valley Communities No. I, a California
general partnership (and related financing statements).
If an Event of Default shall occur and be continuing, all
Principal and all interest accrued and other amounts due hereunder may be
declared due and payable in the manner and with the effect provided in the Loan
Agreement.
If any attorney is engaged by Lender to enforce or defend any
provision of this Note or the Loan Agreement, or as a consequence of any
Default, with or without the filing of any legal action or proceeding, then
Borrower shall pay to Lender immediately upon demand reasonable attorneys' fees
and costs incurred by Lender in connection therewith, together with interest
thereon from the date of such demand until paid at the rate of interest
applicable to the Principal as if such unpaid attorneys' fees and costs had been
added to Principal.
No previous waiver and no failure or delay by Lender in acting
with respect to the terms of this Note or the Loan Agreement shall constitute a
waiver of any breach, default, or failure of condition under this Note or the
Loan Agreement. A waiver of any term of this Note or the Loan Agreement must be
made in writing and shall be limited to the express written terms of such
waiver. In the event of any inconsistencies between the terms of this Note and
the terms of any other document related to the Loan, the terms of the Loan
Agreement and this Note shall prevail.
Except as may otherwise be provided in the Loan Agreement,
Borrower waives: presentment; demand; notice of dishonor; notice of default or
delinquency; notice of acceleration; notice of protest and nonpayment; notice of
costs, expenses or losses and interest thereon; notice of late charges; and
diligence in taking any action to collect any sums owing under this Note or in
proceeding against any of the rights or interests in or to properties, if any,
securing payment of this Note.
Time is of the essence with respect to every provision hereof.
This Note shall be construed and enforced in accordance with the internal laws
of the State or Utah, except to the extent that Federal laws preempt the laws of
the State of Utah.
<PAGE>
Any legal action or proceeding with respect to this Note or any
document related hereto may be brought in the courts of the State of Utah or of
the United States of America for the District of Utah, and, by execution and
delivery of this Note, the Borrower hereby accepts for itself and in respect of
its Property, generally and unconditionally, the jurisdiction of the aforesaid
courts. The Borrower hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the ground of forum
non conveniens, which Borrower may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions.
The Borrower irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at its address provided in the Loan Agreement.
Nothing contained in this Note shall affect the right of Lender to
serve process in any other manner permitted by law or commence legal proceedings
or otherwise proceed against the Borrower in any other jurisdiction.
BORROWER:
HomeFed Corporation,
a Delaware corporation
By
---------------------------------
---------------------------------
[Print Name and Title]
Address: 529 East South Temple
Salt Lake City, UT 84102
Telecopier: (801) 524-1751
Telephone: (801) 521-1049
<PAGE>
Each of the parties to the Plan Documents, by
signing below, confirms in favor of the Lender
that it (i) consents to the terms and conditions
of this Amended and Restated Loan Agreement,
(ii) agrees that all references in each of the
Plan Documents to the Loan Agreement shall refer
to this Amended and Restated Loan Agreement and
the Note executed in connection therewith, and
(iii) agrees it has no defense, offset, claim,
counterclaim or recoupment with respect to any
of its obligations or liabilities under its
respective Guaranty, Security Document and/or
its Deed of Trust and that all terms of such
Guaranty, Security Document or Deed of Trust
shall continue in full force and effect, subject
to the terms thereof and shall continue to
secure the Loan as amended thereby.
HOMEFED CORPORATION
By:_______________________________
Name:
Title:
HOMEFED COMMUNITIES, INC.
By:_______________________________
Name:
Title:
HOMEFED RESOURCES CORPORATION
By:_______________________________
Name:
Title:
<PAGE>
PARADISE VALLEY COMMUNITIES NO. 1
By:_______________________________
Name:
Title:
NORTHFORK COMMUNITIES
By:_______________________________
Name:
Title:
