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EXHIBIT 2.2
CENTEX DEVELOPMENT COMPANY, L.P.
ADDITIONAL INTEREST AGREEMENT
THIS ADDITIONAL INTEREST AGREEMENT ("Agreement"), made and entered
into this 30th day of March, 1989, by and between CENTEX DEVELOPMENT COMPANY,
L.P., a Delaware limited partnership, having its principal place of business at
3333 Lee Parkway, Dallas, Texas 75219 (hereinafter referred to as "Owner") and
WESTINGHOUSE CREDIT CORPORATION, a Delaware corporation, having its principal
place of business at One Oxford Centre, 301 Grant Street, Pittsburgh,
Pennsylvania 15219 (hereinafter referred to as "WCC").
W I T N E S S E T H:
WHEREAS, WCC has agreed pursuant to a Construction Loan Agreement of
even date herewith ("Loan Agreement") to provide financing to Owner on the
terms and in the amounts set forth in the Loan Agreement (the "Loan") for the
acquisition and improvement of approximately 1,077.2 acres of land located in
the City of San Clemente, Orange County, California and more particularly
described in Exhibit "A" hereto (the "Premises"); and
WHEREAS, the Loan is evidenced by two Promissory Notes (the "Notes")
from Owner and is secured by, inter alia, a Construction Deed of Trust ("Deed
of Trust"), a Security Agreement ("Security Agreement") and an Assignment of
Leases, Rents and Profits ("Assignment of Rents"), an Assignment of Developer's
Rights ("Assignment of Developer's Rights"), Assignment of Contracts and Sales
Proceeds ("Assignment of Contracts"), and Assignment of Easements and
Maintenance Agreements ("Assignment of Easements"), each of even date herewith
and each executed by Owner (the Loan Agreement, this Agreement, Notes, Deed of
Trust, Security Agreement, Assignment of Rents, Assignment of Developer's
Rights, Assignment of Contracts and Assignment of Easements are hereinafter
collectively referred to as the "Loan Documents"); and
WHEREAS, to induce WCC to make the Loan, Owner has agreed on the terms
hereinafter stated to pay, in addition to all amounts due under the Notes, a
portion of the Net Sales Proceeds (as hereinafter defined) generated by the
Sale or Partial Sale of the Premises (as hereinafter defined), as additional
interest.
NOW, THEREFORE, in consideration of WCC making the Loan to Owner and
other good and valuable consideration, the receipt, sufficiency and adequacy
whereof are hereby acknowledged by Owner, the parties hereto agree as follows:
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1. DEFINITIONS.
In addition to the terms defined in the Loan Agreement or
elsewhere in this Agreement, the following terms are defined below:
(a) "ACCOUNTING PERIOD" refers to (i) a twelve (12) month
period from October 1 of a year to September 30 of the following year,
commencing with the period October 1, 1993 to September 30, 1994, and
continuing with each succeeding twelve (12) month period thereafter to
and including October 1, 1999 to September 30, 2000; (ii) the period
April 1, 1993 to September 30, 1993; and (iii) the period October 1,
2000 to April 1, 2001.
(b) "AFFILIATE": An Affiliate shall mean any Person (as
defined below in this subparagraph) which is directly or indirectly
controlling, controlled by or under common control with the other
Person in question. A "Person" shall mean an individual, a partnership
and each of its constituent partners, a trust, a corporation, an
unincorporated association, or other entity or association. The term
"control" as used in this subparagraph, means: (i) with respect to a
Person that is a corporation, the right to the exercise, directly or
indirectly, of fifty percent (50%) or more of the voting rights
attributable to the shares of the controlled corporation; and (ii)
with respect to a Person that is not a corporation, the possession,
directly or indirectly, of the power to direct or cause the direction
of the management or policies of the controlled Person.
(c) "APPLICABLE PERCENTAGE" is determined by the date on which
escrow closes on a Sale or Partial Sale of the Premises by Owner, and
is fifteen percent (15%) if the closing date is during Loan Months 1
through 12, zero percent (0%) if the closing date is during Loan
Months 13 through 36, and twenty-five percent (25%) if the closing
date is during Loan Month 37 or thereafter.
(d) "APPRAISED VALUE": Appraised Value shall mean a value of
the Unsold Premises (as hereinafter defined) based upon the following
procedure. After WCC's election to accelerate all amounts then unpaid
to WCC under the Loan Documents by virtue of an Event of Default (as
defined in the Loan Agreement), WCC shall select a MAI Appraiser (the
"WCC Appraiser"). The WCC Appraiser, within thirty (30) days of its
selection, shall present Owner and WCC with a computation of the
Appraised Value based on the fair market value of the Unsold Premises
(the "WCC Appraisal"). Owner's failure to provide written notice to
WCC of Owner's non-acceptance of the WCC Appraisal (such notice also to
include
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the name of another MAI appraiser of Owner's selection (the "Owner's
Appraiser")) within fourteen (14) days of Owner's receipt of the WCC
Appraisal shall be deemed to be Owner's acceptance of the WCC
Appraisal. If Owner does timely provide the foregoing notice, then
Owner shall present WCC within thirty (30) days of Owner's receipt of
the WCC Appraisal with a computation of the Appraised Value based on
the fair market value of the Unsold Premises (the "Owner's
Appraisal"). Unless WCC and Owner can otherwise agree on a fair market
value of the Unsold Premises, their respective Appraisers shall then
mutually agree on and select a third MAI appraiser (the "Third
Appraiser") within ten (10) days of being asked by either WCC or
Borrower to do so. Neither the WCC Appraiser, the Owner's Appraiser
nor the Third Appraiser shall have any direct or indirect financial or
other business interest in Owner, WCC or any affiliate of either Owner
or WCC. Within thirty (30) days of its selection (and in no event
later than twenty-five (25) days prior to a scheduled foreclosure sale
of WCC's Deed of Trust) the Third Appraiser shall render a statement
of the Appraised Value based on the fair market value of the Premises
(the "Third Appraisal"). The average of the Third Appraisal and the
closer in amount to it of the WCC Appraisal or the Owner's Appraisal
shall then constitute the "Appraised Value" and shall be binding on
both Owner and WCC.
(e) "GROSS DISBURSEMENTS" shall mean disbursements actually
and necessarily made by Owner consistent with a budget approved by WCC
in connection with the ownership, maintenance, improvement or sale of
all or any part of the Premises.
(f) "GROSS SALES PROCEEDS" shall mean all cash proceeds
received in connection with a Sale of the Premises or a Partial Sale
of the Premises, except as otherwise agreed to by WCC and Owner.
(g) "LOAN MONTH" shall mean each consecutive calendar month
throughout the term of the Loan until maturity, except that Loan Month
one (1) shall be deemed to have begun March 31, 1989 and extended
through April 30, 1989.
(h) "NET APPRAISED VALUE" is the positive difference between
Appraised Value and all amounts (including Additional Interest) then
outstanding and unpaid to WCC under the Loan Documents.
(i) "NET SALES PROCEEDS" shall mean Gross Sales Proceeds less
(i) normal and customary closing costs and (ii) if the Sale or Partial
Sale was not to an Affiliate of Owner, reasonable broker's
commissions.
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(j) "PARTIAL SALE OF THE PREMISES" shall mean the sale,
assignment, transfer, condemnation, conveyance or other disposition,
to which WCC consented, covering a portion of the Premises and any of
Owner's interest therein.
(k) "PARTICIPATION AMOUNT" shall mean the amount resulting
from applying the Applicable Percentage to the Net Sales Proceeds.
(l) "PERCENTAGE INTEREST" shall mean twenty-five percent (25%)
of the Participation Amount, and shall be payable to WCC as provided
by this Agreement and the other Loan Documents. The Percentage
Interest to which WCC shall be entitled hereunder shall be considered
additional interest under the Notes and the other Loan Documents.
(m) "SALE OF THE PREMISES" shall mean the sale, assignment,
transfer, condemnation, conveyance or other disposition, to which WCC
consented, covering the entire Premises (or so much thereof as
remaining unreleased from the lien of WCC's Deed of Trust) and all of
Owner's interest therein.
(n) "UNSOLD PREMISES" shall mean that portion of the Premises
which has not been the subject of a Sale or Partial Sale of the
Premises.
2. PAYMENT OF ADDITIONAL INTEREST.
WCC will earn, upon any Sale or Partial Sale of the Premises,
additional interest ("ADDITIONAL INTEREST"). Such Additional Interest shall be
computed and payable to WCC as follows:
(a) WCC's Additional Interest from a Sale or Partial Sale of
the Premises which closes during Loan Months 1 through 48 shall be in
an amount equal to WCC's Percentage Interest and paid to WCC upon the
closing and from the proceeds of the sale, provided that the
Additional Interest from the sale of even date herewith to Centex Real
Estate Corporation ("CREC") under the contract described in
subparagraph A16 of Exhibit B to the Loan Agreement will be paid to
WCC at closing of the sale to CREC in approximately September of 1989
under said contract. Upon payment of Additional Interest, Owner will
receive the balance of the Participation Amount relating to such
Additional Interest. Provided, however, that if at the time of the
closing of the sale an Event of Default under the Loan Documents
exists, then the entire Participation Amount shall be applied to
repayment of the Loan.
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(b) Additional Interest earned by WCC from a Sale or Partial
Sale of the Premises occurring in an Accounting Period, the first of
which shall commence with Loan Month 49, shall be in an amount equal
to WCC's Percentage Interest and paid to WCC from an advance from the
Loan as provided in Section 5.1g of the Loan Agreement. Upon such
payment, Owner shall receive from an advance from the Loan the balance
of the Participation Amounts for such Accounting Period, as provided
in Section 5.1g of the Loan Agreement. Provided, however, that in any
event payments to WCC and Owner of Participation Amounts are subject
to the limitation that the aggregate of the Participation Amounts
payable under this Agreement to WCC and Owner respectively with
respect to a given Accounting Period shall not exceed the positive
difference, if any, between Net Sales Proceeds and Gross Disbursements
in that Accounting Period. To the extent that the aggregate of the
Participation Amounts exceeds such difference, neither WCC nor Owner
shall be entitled to receive any part of such excess portion of the
Participation Amounts. Provided, further, that if at the time the
advance provided for in Section 5.1g of the Loan Agreement is to be
made an Event of Default under the Loan Documents exists, then no
Participation Amount shall be payable to either WCC or Owner and no
advance for such payment shall be made.
(c) To the extent that the Net Sales Proceeds from a Sale or
Partial Sale of the Premises occurring in any Loan Month exceeds the
then outstanding balance on the Loan (exclusive of any Additional
Interest which may be due from such Sale), in addition to Additional
Interest under subparagraphs 2(a) and 2(b) of this Agreement,
Additional Interest in an amount equal to twenty-five percent (25%) of
such excess shall be paid to WCC upon the closing and form the
proceeds of the sale, and the remainder of that excess shall be paid
to Owner.
(d) Attached hereto as Exhibit B and incorporated by reference
is a chart which is illustrative of how Additional Interest is to be
paid.
3. TERMINATION.
WCC shall cease to earn Additional Interest after the earlier
of (a) a Sale of the Premises, or (b) March 31, 1993, if Lender provides
Borrower with notice as set forth in subpart (c) of Section 5.6 of the Loan
Agreement. Prior to the occurrence of the first of these events, a full
repayment of all amounts then outstanding under the Loan shall not act as a
termination of this Agreement.
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4. PROCEDURE IF DEFAULT AND ACCELERATION OF LOAN.
In the event of the occurrence of an Event of Default (as
defined in the Loan Agreement) and the election by WCC to accelerate all
outstanding amounts under the Loan Documents:
(a) If WCC causes to be completed a judicial or non-judicial
foreclosure sale of the Premises, then WCC shall also be entitled to
payment of twenty-five percent (25%) of the Net Appraised Value, and
upon such payment, WCC shall cease to earn any further Additional
Interest;
(b) If, prior to completion of a judicial or non-judicial
foreclosure sale of the Premises, WCC is paid all amounts outstanding
to WCC under the Loan Documents, then
(i) If the Event(s) of Default was not based on
an occurrence other than those set forth in
subparts g, j or p of Section 7.1 of the Loan
Agreement, then WCC shall cease to earn any
further Additional Interest;
(ii) If the Event(s) of Default was based on an
occurrence other than those set forth in
subparts g, j or p of Section 7.1 of the Loan
Agreement, then WCC shall continue to earn
Additional Interest under this Agreement
through and including such time as there has
been a Sale of the Premises, except that
notwithstanding anything to the contrary in
paragraph 2 of this Agreement, the earning,
computation and payment of such Additional
Interest shall be as follows: Additional
Interest shall be equal to twenty-five
percent (25%) of cash received by Owner from
a Sale or Partial Sale of the Premises after
satisfaction of current debt service and
related monetary obligations under a deed of
trust to which WCC subordinated the lien of
its Deed of Trust pursuant to Paragraph 42
thereof, and shall be paid to WCC by Owner
within ten (10) days of Owner's receipt
thereof.
Furthermore, in the event WCC gives Owner notice pursuant to Section 4 of the
Deed of Trust to repay all amounts outstanding under the Loan, provided Owner
does so within the one hundred eighty (180) day period provided for in Section
4 of the Deed of Trust, then upon such payment WCC shall cease to earn any
further Additional Interest.
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5. REPORTING REQUIREMENTS.
(a) Owner agrees to notify WCC at least ten (10) days in
advance of any proposed Sale or Partial Sale of the Premises. The
written notice to WCC shall include all pertinent terms of the
proposed transaction and shall include an estimate of the amount of
the Additional Interest to be earned. No Sale or Partial Sale of the
Premises shall take place or be entered into without the prior written
consent or preapproval (as provided in Section 8.1 of the Loan
Agreement) of WCC.
(b) Within twenty (20) days after the end of an Accounting
Period, Owner shall furnish WCC with a report, as referred to in
Section 5.1g of the Loan Agreement, with such detail as WCC may
reasonably require, of the Gross Sales Proceeds, Gross Disbursements
and earned Additional Interest relating to that Accounting Period.
(c) WCC may require Owner, from time to time hereafter, in
addition to, and not in derogation of, any reporting or auditing
requirements under the Loan Documents, to give WCC such other
information as may be reasonably required to verify the correctness of
the payments received by WCC pursuant to this Agreement.
(d) Owner agrees to cooperate with WCC should WCC or its
agents wish to discuss the affairs, finances and accounts of Owner,
and Owner agrees to inform WCC as to the same at such reasonable times
and intervals as WCC may desire.
(e) The acceptance by WCC of any payments under this Agreement
shall not imply WCC's approval of the computation of such payments,
and such acceptance by WCC shall be without prejudice to WCC's right
to an examination of Owner's books and records relating to the
Premises. At WCC's option, WCC at its expense (subject to the further
provisions hereof) may cause, at any reasonable time, a complete audit
to be made at Owner's accounting office of Owner's entire business
affairs and records relating to the Premises. If such audit shall
disclose that any report furnished by Owner to WCC is false in any
material respect or shall disclose an understatement or underpayment
in an amount greater than five percent (5%) of the amounts actually
owing to WCC hereunder and the sum of $10,000.00, then Owner shall
promptly pay the full cost of the audit (which cost is not eligible to
be paid or reimbursed from an advance under the Loan) and shall also
pay to WCC the deficiency between the amount that has been theretofore
paid by Owner and the amount actually due from Owner under this
Agreement. In the event such an audit shall disclose that
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Owner has over-paid WCC, WCC will promptly refund or credit to Owner
the amount of any overpayment. Except for instances of fraud or
concealment, no audit shall be commenced later than twelve (12) months
after the end of an Accounting Period.
6.1 EVENT OF DEFAULT.
The occurrence of one or more of the following events shall,
at the option of WCC, constitute an "Event of Default" following the expiration
of any cure or grace period provided in Section 7.1 of the Loan Agreement.
(a) Owner fails to make payment to WCC of WCC's Additional
Interest as provided in this Agreement; or
(b) Owner fails to comply with any of the covenants, duties or
obligations of Owner in this Agreement.
Provided, however, that in the event that WCC subordinates the lien of its Deed
of Trust as provided in Paragraph 42 of the Deed of Trust, then, in addition to
the Events of Default listed above, only the following Events of Default under
the Loan Agreement or any of the other Loan Documents shall be an Event of
Default under this Agreement:
(i) an Event of Default relating to subparagraphs
6.3c or 7.1f(i) of the Loan Agreement, or
(ii) a default by Owner under the deed of trust to
which WCC has subordinated not cured by Owner
within any applicable grace or cure period
under such deed of trust, or if WCC cured
such default and Owner has not made WCC whole
for such cure within the original grace or
cure period.
6.2 EFFECT OF BREACH.
The occurrence of an Event of Default under this Agreement
shall constitute an Event of Default under each of the Loan Documents. All
obligations of the Owner to WCC hereunder are intended to be secured by the
Deed of Trust, the Security Agreement, the Assignment of Rents and each of the
other Loan Documents securing the Notes.
7. REMEDIES.
Upon the occurrence of an Event of Default hereunder, WCC has
the right and may exercise any one or more of remedies provided for at law, in
equity, in the Loan Agreement, or in any of the other Loan Documents.
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8. MISCELLANEOUS.
8.1 MODIFICATION OF AGREEMENTS.
This Agreement and the Loan Documents may not be modified,
altered or amended, except by an agreement in writing signed by Owner and WCC.
8.2 ATTORNEYS' FEES AND EXPENSES.
Owner shall pay WCC for all expenses incurred by WCC in
connection with the enforcement of this Agreement and the collection of all
sums due hereunder, including without limitation, reasonable attorneys' fees
and court costs. The prevailing party shall be entitled to reasonable
attorneys' fees in any litigation arising out of or related to this Agreement.
8.3 COMPLIANCE WITH LAWS.
Notwithstanding any provisions in this Agreement or in any of
the Loan Documents, the total liability for payments legally regarded as
interest shall not exceed the maximum limits, if any, applicable to WCC as
Lender and imposed by the laws of the State of California in effect on the date
hereof, and payment of same in excess of the amount allowed thereby shall, as
of the date of such payment, automatically be deemed to have been applied to
the payment of principal of the Loan. Except as required by this subsection,
Owner acknowledges that Owner and WCC have conferred specifically concerning
the contingent and uncertain nature of Additional Interest, and that Owner and
WCC understand and agree that Additional Interest and each element thereof
payable pursuant to this Agreement are speculative in nature and both the
amount and the payment thereof are dependent upon a number of contingencies
which are not within WCC's control. WCC has not been guaranteed by Owner or any
other party that such contingencies will occur to generate the accrual and
payment of any Additional Interest. All amounts paid under this Agreement shall
be deemed to have accrued on a pro rata basis each month over the entire term
of the Loan commencing on the date of this Agreement, regardless of when such
Additional Interest amounts were received by WCC.
8.4 NO JOINT VENTURE.
WCC and Owner intend and agree that the relationship between
them shall be solely that of creditor and debtor parties. Nothing contained
herein or in any of the Loan Documents, including the provisions for the
payment of Additional Interest, shall be deemed or construed to create a
partnership, tenancy-in-common, joint tenancy, joint venture or co-ownership by
or between WCC and Owner. WCC shall not in any way be responsible
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for the debts, losses or obligations of Owner or any other party with respect
to the Premises or otherwise as a result of this Agreement. All obligations to
pay real property or other taxes, assessments, insurance premiums and all other
fees and charges arising from the ownership, operation or occupancy of the
Premises and to perform all other agreements and contracts relating to the
Premises shall be the sole responsibility of Owner. Owner, at all times
consistent with the terms hereof and of the Loan Documents, shall be free to
determine and follow its own policies and practices in the conduct of its
business on the Premises. Owner hereby agrees to indemnify and hold WCC
harmless from and against any and all liabilities, losses, injuries, costs,
expenses and damages, including, without limitation, attorneys' fees and
litigation costs, which WCC may suffer or incur as a result hereof and from any
and all claims or demands whatsoever, whether meritorious or not, which may be
instituted against WCC by reason of any alleged obligation or undertaking on
WCC's part to perform or discharge any of the terms, covenants or agreements
contained in any lease, agreement or contract relating to the Premises to which
WCC is not a direct and express party. Should WCC incur any such liability
under any such lease, agreement or contract, or under or by virtue hereof or of
the Loan Documents, or in the defense of any claims or demands related thereto,
the amount thereof, including costs, expenses and attorneys' fees shall
constitute a part of the indebtedness secured by the Deed of Trust.
8.5 INTEREST AND LATE CHARGE ON PAST DUE PAYMENTS.
Any and all payments due from Owner to WCC under this
Agreement after the same are due shall bear simple interest at the Default Rate
under and as defined in the Revolving Note. If any payment due from Owner to
WCC under this Agreement is not received by WCC after the same is due, Owner
shall pay a late charge equal to two percent (2%) of such late payment.
8.6 SUPPLEMENTAL DOCUMENTATION.
At WCC's request, Owner shall execute and deliver to WCC all
supplemental documentation that WCC may reasonably request, in form and
substance acceptable to WCC, and pay the costs of any recording or filing of
the same.
8.7 WAIVER BY WCC.
WCC's failure, at any time or times hereafter, to require
strict performance by Owner of any provision of this Agreement shall not waive,
affect or diminish any right of WCC thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by WCC of an Event of Default
by Owner under this Agreement or any of the Loan Documents shall not suspend,
waive or affect any other Event of Default by Owner
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under this Agreement or any of the other Loan Documents, whether the same is
prior or subsequent thereto and whether of the same or of a different type.
None of the undertakings, agreements, warranties, covenants and representations
of Owner under this Agreement or the Loan Documents shall be deemed to have
been suspended or waived by WCC, unless such a suspension or waiver is by an
instrument in writing signed by a duly authorized representative of WCC and
directed to Owner specifying such suspension or waiver.
8.8 SEVERABILITY.
To the fullest extent permitted by law, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement; provided, however, that if any material provision hereof
respecting the accrual or payment of any part of the Additional Interest is
held to be invalid or unenforceable, then at WCC's option and upon notice to
Borrower the entire indebtedness secured by the Deed of Trust shall become due
and payable within one hundred eighty (180) days after the giving of such
notice.
8.9 PARTIES.
This Agreement and the Loan Documents shall be binding upon
Owner, its successors and assigns, and inure to the benefit of WCC, its
successors and assigns. The Owner may not assign its obligations hereunder
without the prior written consent of WCC.
8.10 GOVERNING LAW.
This Agreement shall be interpreted, and the rights and
liabilities of the parties hereto shall be governed by the laws of the State of
California.
8.11 NOTICE.
All notices and demands under and with respect to this
Agreement shall be in writing and shall be served in the manner and on the
terms specified in the Loan Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by Owner and
WCC as of the day and year first above written.
CENTEX DEVELOPMENT COMPANY, L.P.
ATTEST: a Delaware limited partnership
By: /s/ DAVID H. MORROW By: 3333 Development Corporation,
a Nevada corporation,
General Partner
By: /s/ HARRY J. LEONHARDT
Title: Agent and Attorney in Fact
WESTINGHOUSE CREDIT CORPORATION,
ATTEST: a Delaware corporation
By: /s/ DAVID H. MORROW By: /s/ DOUGLAS W. PHILLIPS
Title: Vice President
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