Exhibit 10.39
OBLIGATION AGREEMENT
AGREEMENT, dated as of October 1, 2002, between Leucadia National
Corporation, a New York corporation ("LUK") and San Elijo Ranch, Inc., a
California corporation ("SERI").
W I T N E S S E T H:
WHEREAS, LUK is the record and beneficial owner of all of the issued and
outstanding shares of capital stock of CDS Holding Corporation, a California
corporation ("Holdings"); and
WHEREAS, Holdings is the record owner of 80% of the issued and outstanding
shares of capital stock of CDS Devco, a California corporation ("Devco"); and
WHEREAS, Devco is the record owner of 85% of the issued and outstanding
shares of capital stock of SERI; and
WHEREAS, SERI is the owner of certain real property located in San Elijo
Hills, San Diego County, California being developed as a residential real estate
project (the "Project"); and
WHEREAS, in connection with the Project, SERI is required to satisfy
certain governmental bonding requirements relating to development of an
infrastructure for the Project (the "Bonding Requirements"); and
WHEREAS, LUK, either directly or through an affiliate, currently provides
and in the past has provided certain guarantees or other credit enhancements to
third parties for which LUK has not charged SERI a fee (the "Credit
Enhancements") to enable SERI to satisfy its Bonding Requirements through the
issuance by third parties of improvement bonds, warranty bonds and other bonds
required to meet the Bonding Requirements ("Bonds"); and
WHEREAS, SERI and LUK each want to document their existing agreement that
SERI is obligated and will continue to be obligated to pay or reimburse LUK for
(i) all amounts, including, but not limited to, all costs and expenses, incurred
by or charged to LUK (directly or through an affiliate) by any party as a result
of a draw under any Bond issued to or for the benefit of SERI under the Credit
Enhancements, plus interest thereon at a rate of 12% per annum calculated on the
basis of a 360 day year for the actual number of days elapsed from the date of
any such draw to the date of repayment in full of such draw by SERI to LUK, or
if paid by SERI to such party, the date of repayment in full of such draw by
such party to LUK and (ii) all out-of-pocket third party costs incurred by or
charged to LUK (directly or through an affiliate) in connection with the
issuance by such third parties of any Bond issued to or for the benefit of SERI
under the Credit Enhancements, plus interest at a rate of 12% per annum
calculated on the basis of a 360 day year for the actual number of days elapsed
from the date that is 30 days following the date SERI is billed for any such
cost is incurred by or charged to the LUK (directly or though an affiliate) to
the date of payment in full of such cost.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, on the terms and subject to the
conditions hereof, each of the parties hereto agrees as follows:
1. OBLIGATION. SERI hereby acknowledges and agrees that it is obligated and
will continue to be obligated to pay or reimburse LUK for (i) all amounts,
including, but not limited to, all costs and expenses, incurred by or charged to
LUK (directly or through an affiliate) by any party as a result of a draw under
any Bond issued to or for the benefit of SERI under the Credit Enhancements,
plus interest thereon at a rate of 12% per annum calculated on the basis of a
360 day year for the actual number of days elapsed from the date of any such
draw to the date of repayment in full of such draw by SERI to LUK, or if paid by
SERI to such party, the date of repayment in full of such draw by such party to
LUK and (ii) all out-of-pocket third party costs incurred by or charged to LUK
(directly or through an affiliate) in connection with the issuance by such third
parties of any Bond issued to or for the benefit of SERI under the Credit
Enhancements, plus interest at a rate of 12% per annum calculated on the basis
of a 360 day year for the actual number of days elapsed from the date that is 30
days following the date that SERI is billed for any such cost incurred by or
charged to LUK (directly or through an affiliate) to the date of payment in full
of such cost.
2. MISCELLANEOUS.
2.1 Amendments and Waivers. This Agreement may not be amended, and
none of its provisions may be modified, except expressly by an instrument
signed by the parties hereto.
2.2 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either of the
parties hereto without the prior written consent of the other party. This
Agreement shall be binding upon and shall inure to the benefit of each of
the parties hereto and its respective successors and permitted assigns.
2.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all other prior negotiations, commitments, agreements and
understandings, both written and oral, between the parties or any of them
with respect to the subject matter hereof.
2.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
2.5 Notices. All written notices required under this Agreement shall
be given in writing and shall be deemed to have been given upon (i)
transmitter's confirmation of a receipt of a facsimile transmission, (ii)
confirmed delivery by a standard overnight carrier or when delivered by
hand or (iii) the expiration of five (5) business days after the day when
mailed by certified or registered mail, postage prepaid, addressed at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Leucadia National Corporation, to:
Leucadia National Corporation
315 Park Avenue South
20th Floor
New York, NY 10010
Attention: President
Facsimile: (212) 598-3245
Telephone: (212) 460-1900
With a copy to: Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, NY 10153
Attention: Andrea A. Bernstein
Facsimile: (212) 310-8007
Telephone: (212) 310-8000
(b)if to SERI, to:
San Elijo Ranch, Inc.
1903 Wright Place, Suite 220
Carlsbad, CA 92008
Attention: President
Facsimile: (760) 918-8210
Telephone: (760) 918-8200
2.6 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same instrument.
2.7 No Third Party Beneficiaries. Nothing in this Agreement is
intended or shall be construed to give any individual, corporation, limited
liability company, partnership, firm, joint venture, association, trust,
unincorporated organization, governmental authority or other entity, other
than the parties hereto, their successors and permitted assigns, any legal
or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as
of the day and year first above written.
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph A. Orlando
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Name: Joseph A. Orlando
Title: Vice President
SAN ELIJO RANCH, INC.
By: /s/ Joseph A. Orlando
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Name: Joseph A. Orlando
Title: President