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EXHIBIT 2.3
CENTEX DEVELOPMENT COMPANY, L.P.
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is made this 30th day
of March, 1989 by and among WESTINGHOUSE CREDIT CORPORATION, a Delaware
corporation, having its principal office at One Oxford Centre, 301 Grant
Street, Pittsburgh, Pennsylvania 15219 (hereinafter called "Lender") and
CENTEX DEVELOPMENT COMPANY, L.P., a Delaware limited partnership, having an
address at 3333 Lee Parkway, P. O. Box 19000, Dallas, Texas 75219 (hereinafter
called "Borrower").
W I T N E S S E T H:
WHEREAS, Borrower represents and warrants that Borrower is acquiring
the fee simple of that certain real estate located in the City of San Clemente,
Orange County, California, containing approximately 1,077.2 acres and legally
described in Exhibit A hereof, which real estate is hereinafter referred to as
the "Premises"; and
WHEREAS, Borrower intends to develop the Premises with certain
grading, landscaping, streets, utilities and other improvements in accordance
with the Plans and Specifications (as defined hereafter), which improvements
and all other improvements incidental thereto and intended to be erected or
completed in connection therewith are hereinafter collectively referred to as
the "Improvements"; and
WHEREAS, Borrower has requested Lender to lend certain monies (the
"Loan") to Borrower or to otherwise make advances in accordance with this
Agreement to be used for: (i) acquisition of the Premises; (ii) payment of
labor and material costs in connection with the construction of the
Improvements; (iii) the payment of commitment and permit fees; and (iv) for
such other purposes incidental to such development and construction as are
herein provided for, including the payment of fees, costs and charges related
thereto, which monies Lender has agreed to lend or advance, subject to the
terms and conditions hereof; provided, however, the proceeds of the Loan shall
be disbursed in accordance with the terms of this Agreement and with those
certain instruments and documents as stated in Article II below, so that
Lender's Construction Deed of Trust will be a first lien against the Premises
(and the Improvements to be erected thereon) as insured by Chicago Title
Insurance Company (hereinafter referred to as the "Title Company").
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NOW, THEREFORE, in consideration of the premises and of the mutual
undertakings herein set forth, the parties hereto, intending to be legally
bound hereby, do covenant and agree as follows:
ARTICLE I - RECITALS
1.1 The foregoing preambles are made a part hereof.
ARTICLE II - LOAN DOCUMENTS
2.1 ACQUISITION COST NOTE. Concurrently with the execution and
delivery of this Agreement, Borrower has executed and delivered a Promissory
Note (Acquisition Cost) of even date herewith in the amount of FORTY-TWO
MILLION DOLLARS ($42,000,000.00) (hereinafter referred to as the "Acquisition
Cost Note") to evidence and provide for the repayment of Lender's initial
advance at closing for Borrower's acquisition of title to the Premises and
related expenses, as more specifically provided in subparagraph 5.1b of this
Agreement. This Note contains prepayment and non-recourse provisions as more
fully set forth therein.
2.2 REVOLVING NOTE. Concurrently with the execution and delivery
of this Agreement, Borrower has executed and delivered a Promissory Note
(Revolving) of even date herewith in the amount of FORTY-TWO MILLION DOLLARS
($42,000,000.00) (hereinafter referred to as the "Revolving Note") to evidence
and provide for the repayment, on the terms and conditions set forth in this
Agreement, of Lender's advances at and subsequent to closing for Borrower's
improvement of the Premises, related expenses, accrued and unpaid interest
under the Acquisition Cost Note and the Revolving Note (said Notes hereinafter
collectively referred to as the "Notes"), extension fees under the Acquisition
Cost Note, the outstanding amount of the Acquisition Cost Note as of its Final
Termination Date (as defined in said Note), and such amounts as may be payable
to Lender or Borrower under paragraph 2(b) of the Additional Interest
Agreement, all as provided for in subparagraphs c through g of paragraph 5.1 of
this Agreement. This Note contains prepayment and non-recourse provisions as
more fully set forth therein.
2.3 ADDITIONAL INTEREST AGREEMENT. Concurrently with the execution
and delivery of this Agreement, Borrower and Lender have executed an Additional
Interest Agreement of even date herewith (hereinafter referred to as the
"Additional Interest Agreement") providing on the terms stated therein for the
payment to Lender of additional interest from proceeds from the sale by
Borrower of portions of the Premises.
2.4 CONSTRUCTION DEED OF TRUST. Concurrently with the execution
and delivery of this Agreement, Borrower has executed
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and delivered to Lender a Construction Deed of Trust (the "Deed of Trust")
encumbering the Premises in order to secure Borrower's obligations under this
Agreement, the Notes and the Additional Interest Agreement. Advances may be
made under the Deed of Trust and any extensions, modifications or
consolidations thereof.
2.5 ASSIGNMENT OF LEASES AND SECURITY AGREEMENT. As further
security for Borrower's obligations under this Agreement, the Notes and the
Additional Interest Agreement, Borrower has executed and delivered to Lender
concurrently with the execution and delivery of this Agreement (a) an
Assignment of Leases, Rents and Profits ("Assignment of Leases") covering
rents, issues and profits from the Premises and (b) a Security Agreement
("Security Agreement") covering fixtures and personal property located on or
used in connection with the Premises.
2.6 ASSIGNMENT OF DEVELOPER'S RIGHTS, OF EASEMENTS AND OF
CONTRACTS AND SALES PROCEEDS. As further security for Borrower's obligations
under this Agreement, the Notes and the Additional Interest Agreement, Borrower
has executed and delivered to Lender concurrently with the execution and
delivery of this Agreement (a) an Assignment of Developer's Rights ("Assignment
of Developer's Rights"), (b) an Assignment of Easements and Maintenance
Agreements ("Assignment of Easements") and (c) an Assignment of Contracts and
Sales Proceeds ("Assignment of Contracts").
2.7 LOAN DOCUMENTS. As used herein, the term "Loan Documents"
shall mean, collectively, this Agreement, the Notes, the Additional Interest
Agreement, the Deed of Trust, the Assignment of Leases, the Security Agreement,
the Assignment of Developer's Rights, the Assignment of Easements, the
Assignment of Contracts and all other documents (other than the hereinafter
defined Environmental Indemnification Agreement) executed by Borrower in
connection with the Loan and establishing or providing security for the Loan.
2.8 ENVIRONMENTAL INDEMNIFICATION Agreement. Borrower has executed
and delivered to Lender concurrently with the execution and delivery of this
Agreement an Environmental Indemnification Agreement ("Environmental
Indemnification").
ARTICLE III - IMPROVEMENTS AND CONSTRUCTION
3.1 CONSTRUCTION - PLANS AND SPECIFICATIONS AND BIDS. Borrower
will cause all portions and phases of the Improvements to be completed by
Borrower in accordance with the final plans and specifications therefor to be
prepared by a licensed and qualified engineer to be retained by Borrower
(hereinafter referred to as "Borrower's Engineer"), which plans and
specifications shall be incorporated herein by reference thereto,
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subject to the written approval of Lender and approved by all applicable local,
state and federal authorities. In addition to said plans and specifications,
Borrower will prepare or cause to be prepared from time to time such additional
plans, drawings and specifications as may be necessary or desirable to
facilitate expeditious construction of the Improvements in accordance with said
plans and specifications. All such plans and specifications referred in this
Paragraph 3.1 and any such additional items are herein collectively referred to
as the "Plans and Specifications."
3.2 DEVIATION; AMENDMENT. Borrower will not deviate materially nor
permit any material deviation from the Plans and Specifications without the
prior written consent of Lender. No revision to the Plans and Specifications,
which revision is material in scope or increases the cost of construction,
shall be made without the prior written consent of Lender.
3.3 GOVERNMENTAL APPROVALS.
a. Prior to any advances hereunder for specific categories of
work, Borrower shall have caused all governmental agencies, bureaus, districts
and departments having jurisdiction over all or any part of the Premises and/or
the construction of the Improvements to have issued, or committed to issue
conditioned only upon payment of fees and such other conditions which may be
imposed by the governmental entity, all approvals and permits which may be
reasonably necessary in the opinion of the Lender in connection with the
categories of work for which an advance is requested; in addition, Borrower
will supply Lender with evidence of the availability of all utility and
municipal services reasonably necessary in the opinion of Lender to the
feasibility of the Improvements.
b. Borrower shall also provide Lender with copies of any
environmental impact statement, if any, prepared by Borrower and of any
environmental submissions to a governmental agency, and copies of responses or
opinions, if any, therefrom or thereof.
3.4 CONTRACTOR; MANAGEMENT; SUBCONTRACTS.
a. Borrower will itself, or contract with licensed general
contractors (such contracts referred to as the "General Contracts") to, manage
the construction of the Improvements and coordinate the provision of all labor,
supervision, materials, supplies, equipment and architectural and engineering
services necessary to complete the Improvements in accordance with the Plans
and Specifications. Borrower, itself or through its general contractor, will
enter into subcontracts (the "Subcontracts") which, in the case of Subcontracts
in excess of $500,000.00, shall have terms and be with subcontractors
acceptable to Lender. All General Contracts and Subcontracts
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shall require the completion of the relevant portion of the Improvements free
from all materialmens' liens and all mechanics' liens and claims. All General
Contracts, and Subcontracts in excess of $500,000.00 shall be in form and
content satisfactory to Lender. Except as otherwise approved by Lender, all
General Contracts, and all Subcontracts for amounts in excess of $500,000.00,
shall be for a maximum fixed price, and all Subcontracts for amounts in excess
of $500,000 (but no General Contract) shall be accompanied by payment and
performance bonds in amounts and with sureties acceptable to Lender. All
General Contracts and all Subcontracts for amounts in excess of $500,000 shall
be assigned to Lender as provided in Exhibit E to this Agreement. Any change or
amendment to any General Contract or Subcontract, or the change of any general
contractor or subcontractor, must be submitted to Lender and Lender's Inspector
(as hereinafter defined) for approval prior to acceptance or enactment;
provided any change order of $10,000.00 or less in value in an individual
instance (up to an aggregate of $100,000.00 in the aggregate for all
construction contracts), may be carried out without the prior written consent
of Lender or Lender's Inspector provided Lender and Lender's Inspector must
promptly be provided with notice and copies of all such changes. Each General
Contract and Subcontract shall provide for ten percent (10%) retainage in
connection with interim payments; disbursement of retainages will take place as
provided in Exhibit C hereto.
b. A project management fee will be paid to Borrower. The amount
of the fee shall be $350,000.00 per year and shall be paid monthly in equal
increments.
3.5 COMMENCEMENT AND COMPLETION. Borrower will cause construction
of the Improvements to be commenced and prosecuted with diligence and without
delay so that:
(i) All development and construction obligations of
the Borrower under the Forster Ranch Development Agreement dated March
, 1989 between Borrower and the City of San Clemente (the
"Development Agreement") are discharged within the time periods
required by the Development Agreement;
(ii) All development and construction obligations of
Borrower with respect to the approval by or on behalf of the City of
San Clemente, County of Orange, State of California, approving the
revised tentative Map of Tract No. 12895 are fully met within the time
period therein provided;
(iii) All development and construction obligations of
the Borrower with respect to governmental approvals of Borrower's
proposed improvement and development of any portion of the Premises
(including without limitation approvals relating to tentative maps and
final maps) are
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fully met within the time periods therein provided;
(iv) All development and construction obligations of
the Borrower under each agreement of sale for any part of the Premises
are discharged within the time periods required by such agreements;
and
(v) Progress on the Improvements in accordance with
the Plans and Specifications shall be constructed and completed
pursuant to the development schedule or a schedule to be prepared by
Borrower, certified by Borrower's Engineer and approved by Lender (the
"Development Schedule").
3.6 FURTHER GOVERNMENTAL APPROVALS. Borrower has obtained approval
of Tentative Map 12895 and has received allocations from the City of San
Clemente for 388 units in Plan Area 2 of the Planning Area. Borrower will
submit further tentative tract maps, request further allocations from the City
of San Clemente and otherwise pursue development of the Premises consistent
with Development Schedules which Borrower will present to Lender on or before
March 31 of each year for Lender's review and approval. Such Development
Schedules shall specify in general terms for the immediately following three
(3) year period (a) the areas of the Premises to be improved, (b) the time
schedule for such improvements, (c) the anticipated sales and timing therefor
during the period and (d) such other information as Lender may reasonably
require.
3.7 BUDGET. Borrower has previously submitted to Lender an initial
budget of acquisition and development costs which is attached as Exhibit G and
is incorporated by this reference (the "Initial Budget"). Any cost of
constructing the Improvements not included in the Initial Budget must be
preapproved by Lender. Additionally, commencing March 31, 1990, and annually
thereafter, Borrower will submit to WCC for WCC's approval an updated budget
detailing the costs of Improvements to be made during the following three (3)
years and other projected costs during such three (3) year period concerning
Borrower's ownership, maintenance, development and improvement of the Premises.
Such further budgets shall not be inconsistent with the applicable Development
Schedule, or such inconsistency shall be resolved to Lender's reasonable
satisfaction, and shall not be inconsistent with the limits set forth in
subparagraph 5.1h of this Agreement. Items of expense eligible for inclusion in
such further budgets shall relate to Borrower's ownership, maintenance,
development, improvement or sale of the Premises, and can include, unless
language or context otherwise provides or requires, fees, costs and expenses
which under the Loan Documents Borrower is required to pay or incur.
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3.8 SOILS TESTS. Borrower shall employ an independent testing firm
to provide soils compaction tests and other tests deemed necessary by Lender.
The results of such tests must be satisfactory to Lender and Lender's
Inspector. Borrower shall further provide Lender with a soils report from a
testing firm satisfactory to Lender, describing the underlying soil conditions
and such other information reasonably requested by Lender. Borrower shall
further provide Lender with a soils report from a testing firm satisfactory to
Lender describing any potential hazardous waste, substances, pollutants or
contaminants which may be on the Premises. All tests and reports shall be
furnished at Borrower's expense.
ARTICLE IV - INSURANCE, TAXES AND ASSESSMENTS.
4.1 INSURANCE.
a. Borrower will, at its expense, insure Borrower, the
Improvements and all materials purchased for use in connection with the
Improvements in such amounts, with such coverage and with such insurance
carriers as may be required by Lender so as to protect the respective interests
of Borrower and Lender in the Improvements and materials and so as to protect
Borrower and Lender against liability in connection with the Improvements and
the construction and completion thereof. Said insurance policies, whenever
required by Lender, shall be issued with riders (including a mortgagee clause
and such other clauses as Lender may reasonably require) covering the interests
of Lender, its successors and assigns, and shall provide 30-day notice of
cancellation to Lender.
b. Said insurance shall include coverage for public liability (in
at least $2,000,000.00 of coverage) and for hazards such as vandalism and
malicious mischief. Lender must also be provided with evidence of worker's
compensation insurance. Prior to commencement of construction of any of the
Improvements, Borrower shall provide or cause to be provided insurance
satisfactory to Lender in an amount sufficient to cover Lender's interests in
the Improvements and all materials purchased for use in connection with the
Improvements; Borrower must at all times avoid coinsurance liability. Said
policy must be acceptable to Lender and must contain a loss payee mortgagee
clause and other clauses acceptable to Lender as mortgagee on both real and
personal property, and shall provide that losses covered thereby shall be
payable to Lender notwithstanding any adverse act or omission of Borrower.
Borrower must also provide, in an amount satisfactory to Lender, insurance
coverage for flood (if in designated flood zone), hurricane, tornado and other
wind-related damage.
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c. Any contractor employed by Borrower shall furnish evidence
satisfactory to Lender of acceptable Worker's Compensation and other insurance
coverage required by Lender.
d. Lender shall be under no obligation to make loans or advances
hereunder until Borrower shall have submitted evidence to Lender of the
insurance coverages required.
4.2 TAXES AND ASSESSMENTS; CONTEST.
a. Borrower will promptly pay or cause to be paid all the annual
real estate taxes, special assessments and any other tax, assessment, claim,
lien or encumbrance which may at any time be or become a lien upon the
Premises. The undertakings of Borrower under this Section and under Section 4.1
hereof shall be continuing obligations of Borrower during the entire period of
time that any amounts loaned or advanced pursuant hereto or interest thereon
remain unpaid. Borrower shall furnish to Lender paid tax receipts within thirty
(30) days after the final due date on which such taxes would be delinquent or
bear a late charge or penalty. Lender reserves the right to require that a
monthly escrow account be established for the payment of taxes in an amount
satisfactory to Lender, but only if reasonably necessary to protect Lender's
security interests. Notice of any change in assessment shall be delivered to
Lender.
b. Borrower may in good faith contest, by proper legal
proceedings, the validity of any tax, assessment, lien or encumbrance provided,
(i) an Event of Default does not exist; (ii) Borrower provides Lender with
security satisfactory to Lender assuring compliance with or payment of the tax,
assessment, lien or encumbrance, and any additional charge, interest, penalty,
expense or other payment which may arise from or be incurred as a result of
such contest; (iii) such contest operates to suspend enforcement of compliance
with or collection or enforcement of the tax, assessment, lien or encumbrance;
(iv) such contest is maintained and prosecuted at all times with diligence; and
(v) Lender is at all times kept informed in writing of all material
developments as to such contest and all reasonable requests by Lender for
information are fully responded to.
ARTICLE V - ADVANCES - REPAYMENT
5.1 ADVANCES.
a. Lender is obliged, subject to the terms and conditions herein
set forth, to lend to Borrower, or advance on Borrower's behalf and for
Borrower's account, a sum or sums in any event not to exceed the limitations
set forth in subpart h of this Section 5.1, and subject to the provisions of
Exhibits B, C and F hereof, to be used for the payment of those items set forth
on the
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Schedule of Estimated Costs attached hereto as Exhibit G and for the payment of
such other costs incidental thereto as may be approved by Lender. Such loan
shall be evidenced by the Acquisition Cost Note or the Revolving Note, as the
case may be, and may be advanced by Lender to Borrower or, if reasonably
necessary to protect Lender's security interests, advanced at Lender's option
by Lender or through the Title Company to such persons, firms or corporations
as have actually supplied labor, materials or services in connection with or
incidental to such construction.
b. The initial advance at closing under the Acquisition Cost Note
shall be limited to the amounts as budgeted by Borrower and approved by Lender
necessary to acquire title to the Premises free and clear of liens, legal
expenses, and costs, including Lender's commitment fee, Lender's counsel's
legal fees, and other costs related to the acquisition of its Premises or to
the documentation, administration and closing of the Loan. The balance of the
initial advance shall be evidenced and repaid as provided in the Revolving Note
on account of items budgeted under the Revolving Note.
c. Subsequent to closing, advances will be made for fees, costs
and expenses, which under the Loan Documents Borrower is required to pay or
incur and under Section 3.7 of this Agreement are items of expense eligible for
inclusion in a budget, to the extent set forth in an approved budget, or if not
so set forth, to the extent not exceeding $10,000.00 in an individual instance
or $100,000.00 in the aggregate in a given fiscal year of Borrower, or
otherwise approved by Lender. Additionally, subsequent to closing, advances
will be made for construction costs incurred, work performed and materials in
place, consistent with a budget previously approved by Lender, no more
frequently than once per month (unless extraordinary circumstances dictate that
an advance be made prior to the next scheduled date) based on certified
contractors' draws (on forms specified by Lender, a sample of which is attached
hereto as Exhibit F) as approved by Lender and Lender's Inspector. These
advances (i) will be made directly to Borrower or through the Title Company or
other approved disbursement agent upon receipt of an endorsement, if requested
by Lender, to Lender's title policy in form and content acceptable to Lender,
(ii) will be in an amount of the draw request as approved, which draw request
shall be net of retainage and (iii) will be made within five (5) business days
of Lender's receipt of the completed draw request package, which package shall
include the written confirmation by Borrower's Engineer or Architect as to the
percentage of completion and such other matters concerning which Lender
customarily requires certification. Repayment of these advances shall be as
provided in the Revolving Note.
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d. Prior to the final disbursement of the ten percent (10%)
retainage for site development work, which will be made on a contractor by
contractor basis as provided in Exhibit C of this Agreement, Lender will
require a certificate of completion (in form satisfactory to Lender) from
Borrower and from Lender's Inspector, together with (i) evidence from the
responsible local authorities that the portion of the Improvements as
constructed by the contractor in issue meets the applicable contract and/or
regulatory standards and (ii) if Lender has evidence that subcontractors or
suppliers are not being paid, then Lender at its option may require affidavits
and/or lien releases from Borrower's general contractor and all major
subcontractors.
e. Subsequent to closing, advances will be made to pay when due
accrued interest under the Acquisition Cost Note and under the Revolving Note,
and these advances shall be evidenced and repaid as provided in the Revolving
Note.
f. Should Borrower have effectively exercised all of the
Extension Options (as that term is defined in the Acquisition Cost Note), on
the Final Termination Date (as defined in the Acquisition Cost Note) of the
Acquisition Cost Note, upon Borrower's election upon thirty (30) days written
notice, an advance will be made to repay all sums then unpaid under the
Acquisition Cost Note, and such advance shall be evidenced and repaid as
provided in the Revolving Note. Extension fees for the exercise of an option
also will be paid by an advance.
g. Advances will be made within ten (10) days of receipt of
Borrower's report in compliance with paragraph 5(b) of the Additional Interest
Agreement to pay such amounts as may be payable to Lender and Borrower
respectively under paragraph 2(b) of the Additional Interest Agreement with
respect to the preceding Accounting Period (as defined in the Additional
Interest Agreement). Such advances will be evidenced and repaid as provided in
the Revolving Note.
h. Notwithstanding any of the foregoing, at no time shall Lender
be obligated to make an advance which would result in (i) the amount
outstanding on the Loan exceeding at any one time $50,000,000.00, (ii) the
amount outstanding under the Revolving Note exceeding at any one time
$42,000,000.00, or (iii) the aggregate amount of advances, exclusive of that
portion of the initial advance described in subparagraph 5.1b above which is to
be evidenced by the Acquisition Cost Note, and also exclusive of advances made
pursuant to subparagraph 5.1g, but inclusive of advances made pursuant to
subparagraph 5.1f, exceeding $85,000,000.00 on a non-revolving basis.
i. The Title Company will be called upon to insure the Lender
against loss or damage on account of defects in, mechanic's liens upon or
unmarketability of the title to the
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Premises and Improvements, as well as to insure that the Deed of Trust, at the
time of each disbursement, constitutes a valid first lien on said Premises and
Improvements and that there exist no encumbrances, liens or other matters of
record affecting title, whether inferior or superior to the Deed of Trust,
except as acknowledged and accepted in writing by Lender or listed on the
original title policy insuring the Deed of Trust. Therefore, and in order to
facilitate the smooth and orderly disbursement of funds and the proper
administration of the development loan, the Borrower agrees to promptly and
fully observe and comply with all reasonable regulations, requirements and
requests of the Lender and the Title Company with respect to all matters
relating to the loan and the administration thereof, including but not being
limited to matters of title, disbursement of advances, proof as to payment of
construction bills of suppliers, laborers or subcontractors, surveys,
inspections, proof of development progress, lien waivers, partial and final
releases and satisfactions of liens, execution of papers, proof of costs,
closings and deposits for costs.
j. Notwithstanding the foregoing, Borrower may reasonably and in
good faith contest any claim, lien or demand of any Construction Subcontractor
provided that Borrower complies with all of the conditions for the permitted
contest of taxes, assessments, liens and encumbrances specified in Section 4.2b
of this Agreement.
5.2 USE OF FUNDS.
a. Borrower will cause all monies borrowed or advanced pursuant
hereto to be applied entirely and exclusively for the acquisition of the
Premises, the development thereof and the construction of the Improvements, and
for the payment of such costs incidental thereto, as may be specifically
approved by Lender.
b. Notwithstanding anything contained in this Agreement to the
contrary, Lender shall not be required to advance any amounts to the Borrower
for any building materials or other goods intended for use in, on or about the
Premises (collectively "Building Materials"), which are not stored at the
Premises after purchase, without the written consent of Lender and upon such
conditions and additional security as Lender, in its sole discretion, may
impose. The storage off the site of the Premises of any Building Materials upon
which Lender has advanced to Borrower sums under this Agreement without the
consent and approval of Lender shall constitute an Event of Default under this
Agreement.
5.3 REPAYMENT. Borrower will repay the principal sum evidenced by
the Notes, the Deed of Trust and this Agreement, together with interest on such
sum and together with the charges
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specified therein, herein or in the other Loan Documents, and will observe and
perform all of the covenants and conditions at the times and in the manner set
forth herein and in the Notes, Deed of Trust and the other Loan Documents.
5.4 REIMBURSEMENT FOR DEVELOPMENT EXPENSES. Until the Loan has
been repaid in full, Lender shall receive one hundred percent (100%) of any
reimbursement payable to Borrower from any source for city fees, marketing
costs, landscape costs or any other costs funded by proceeds of the Loan.
Borrower agrees to report on a monthly basis all reimbursements from third
parties and the amount of such reimbursement. Such report shall be accompanied
with a payment to Lender of all reimbursement covered by this section. All
reimbursements paid to Lender shall be applied as provided in the Notes against
the Loan balance until the Loan has been repaid in full. Failure by Borrower to
pay the appropriate amounts of reimbursement to Lender shall constitute an
Event of Default hereunder.
5.5 LENDER'S INSPECTOR; COMPLETION DEPOSIT.
a. Lender shall, at Borrower's expense, employ Eckland
Consultants or such other inspector approved by Lender in writing ("Lender's
Inspector") for the purpose of analyzing anticipated construction costs,
performing periodic inspections of the construction of the Improvements,
approving the Plans and Specifications and certifying that the amount of each
draw request is not in excess of the work completed. Borrower shall pay the
reasonable costs incurred for the services of the Lender's Inspector.
b. If at any time and from time to time, in the reasonable
opinion of Lender, the estimated cost of acquisition and construction of the
Premises and Improvements and all related expenses, exceeds the funds remaining
in the Loan for disbursement, and Lender reasonably determines that this
circumstance impairs to a material extent its security or prospects for
repayment, and Lender, in its option, does not elect to increase the amount of
such funds, then Borrower shall within thirty (30) days after notice from
Lender either (i) deliver to Lender an unconditional irrevocable letter of
credit in form and substance acceptable to Lender and issued by a bank
reasonably satisfactory to Lender, or other security satisfactory to Lender, in
the amount of the difference between the funds remaining in the Loan and the
higher estimated cost or (ii) give Lender irrevocable notice that it will pay
all amounts outstanding under the Loan, which payment will be due and payable
no later than one hundred and eighty (180) days thereafter.
5.6 LOAN TERMINATION. Any further, obligation of Lender under this
Agreement or the other Loan Documents to lend or otherwise advance monies to or
for the benefit of Borrower, shall
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terminate, and all amounts then outstanding under the Loan shall become
entirely due and payable, upon the earliest of the following events: (a) April
1, 2001; (b) the closing of a Sale of the Premises (as defined in the
Additional Interest Agreement); or (c) March 31, 1993, if Lender, in its sole
discretion, gives Borrower one hundred twenty (120) days prior written notice.
Prior to the occurrence of the first of these events, a full repayment of all
amounts then outstanding under the Loan shall not act as a termination of the
Loan. The termination of Lender's right to receive Additional Interest under
the Additional Interest Agreement shall be as provided in that agreement.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES; COVENANTS
6.1 REPRESENTATIONS AND WARRANTIES. Borrower does specifically
represent and warrant that as of the date of this Agreement:
a. It is a duly organized, bona fide and validly existing limited
partnership under the laws of the State of Delaware, is qualified to do
business in the State of California, and has the full power and authority to
consummate the transactions contemplated hereby and to conduct business in the
State of California, and that its sole General Partner, 3333 Development
Corporation, is a duly organized and validly existing corporation organized
under the laws of the State of Nevada, and is qualified to do business in the
State of California.
b. Upon the closing of the Loan, Borrower will have good,
indefeasible and merchantable title to and fee simple ownership of the
Premises, all free and clear of all liens, claims, security and encumbrances
except those of Lender and those reflected in the title policy issued by the
Title Company.
c. The Plans and Specifications to the extent required by
applicable law will have been approved by all governmental agencies and
authorities having jurisdiction thereof prior to commencement of construction
of the Improvements, and the use of the Premises contemplated hereby will
comply with all local zoning requirements, and all necessary approvals and
permits have been or will be obtained at the times required by applicable law,
regulation, rule or ordinance.
d. To the knowledge of Borrower, or except as may have been
previously disclosed by Borrower in writing to Lender, there are no actions,
suits or proceedings pending or, threatened in writing against or affecting
Borrower or the Premises or involving the validity or enforceability of the
Deed of Trust or any other Loan Document, or the priority of the lien thereof,
at law or in equity, or before or by any governmental authority, or any other
matters which would substantially impair
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either the ability of Borrower to pay when due any amounts which may become
payable in respect to the Notes or any other Loan Document, and to the
Borrower's knowledge it is not in default with respect to any order, writ,
injunction, decree or demand of any court or any governmental authority.
e. The consummation of the transaction contemplated and the
performance of this Agreement, the Deed of Trust and the other Loan Documents
will not result in any breach of, or constitute a default under any other
mortgage, deed of trust, lease, bank or other loan, credit agreement or any
other instrument to which the Borrower is a party.
f. To the best of Borrower's knowledge, as of the date of this
Agreement, the Borrower has not (i) become insolvent; (ii) voluntarily or
involuntarily become the subject of a proceeding under the Bankruptcy Act as
amended; (iii) sought any form of relief under the bankruptcy laws of the
United States, or (iv) defaulted on any present obligation to Lender.
g. No representation or warranty by Borrower in this Agreement or
in any of the other Loan Documents to which it is a party, nor any statement
furnished or to be furnished to Lender by Borrower pursuant hereto or thereto,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
h. No broker, other than Bear Stearns Real Estate Group,
Inc., has been retained or utilized by Borrower to arrange the
financing reflected in this Agreement.
i. No construction, excavation or work of any sort relative to
construction of the Improvements has been commenced, nor has any material to be
used in the construction of the Improvements been purchased or delivered.
j. To the best of Borrower's knowledge, no toxic or hazardous
substances, including, without limitation, asbestos and the group of organic
compounds known as polychlorinated biphenyls, have been generated, treated,
stored or disposed of, or otherwise deposited in or located on the Premises,
including, without limitation, the surface and subsurface waters of the
Premises, nor has any activity been undertaken on the Premises which would
cause a release or threatened release of hazardous waste from the Premises
within the meaning of, or otherwise bring the Premises within the ambit of, the
comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), 42 U.S.C. Section 9601 through 9657, or any similar state law or
local ordinance or any other Environmental Law. To the best of Borrower's
knowledge, no underground storage tanks or underground deposits are located on
the Premises nor have there been any
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leakage from underground storage tanks or underground deposits previously
located on the Premises.
6.2 AFFIRMATIVE COVENANTS. Borrower hereby covenants that without
further request or notice from Lender (unless otherwise noted) the Borrower
shall:
a. Promptly pay all principal and interest under the Notes and
all other indebtedness in respect of the Notes, any of the Loan Documents or
the Environmental Indemnification.
b. Keep the Premises, including all Improvements now or hereafter
situated thereon, in good condition, not commit or permit any waste thereof,
make all repairs, replacements and improvements and complete and restore
promptly and in good workmanlike manner any building, improvements, or other
items of the Premises which may be damaged, or destroyed, and pay when due all
costs incurred therefor.
c. Pay or reimburse Lender, from time to time, upon demand, for
all expenses relating to the Loan and its administration including, but without
limiting the generality of the foregoing, all recording charges, registration
taxes, recording taxes, mortgage taxes, charges of the title insurance company,
charges for certified copies of instruments, all costs, including all
attorneys' fees, incurred by Lender relative to the preparation and review of
this Agreement, the Loan Documents, and all costs incurred in connection with
any disbursement of the Loan. Such expenses shall not include travel expenses
or compensation of full-time employees of Lender.
d. Perform all things necessary to preserve and keep in full
force and effect the existence and rights of Borrower; comply with all laws
applicable to each; and conduct and operate its business in the normal course.
e. Furnish to Lender as soon as available, but in no event later
than one hundred twenty (120) days after Borrower's fiscal year end, its
audited fiscal year-end financial statement.
f. Furnish to Lender, immediately upon becoming aware of the
existence of an Event of Default or any condition which, with the giving of
notice or lapse of time, or both, would constitute an Event of Default, written
notice of the occurrence of any such event or the existence of any such
condition.
g. Keep and maintain complete and orderly books and records of
account in which full, true and correct entries are made of all dealings and
transactions relative to the Premises and the Improvements being constructed
thereon. Such books and records shall be kept on a cash basis.
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h. Permit any person designated by Lender to visit, inspect
and/or audit the Premises and Improvements and the books and records of
Borrower at such reasonable times and as often as Lender may reasonably
request.
i. Immediately notify Lender (A) of any attachment or other legal
process levied against the Premises or Improvements, or the institution of any
action, suit or proceeding by or against Borrower, or affecting the Premises or
Improvements, or (B) any information received by Borrower relative to the
Premises which may materially and adversely affect (i) Borrower's ability to
pay the Notes, (ii) the value of the Premises or (iii) the rights and remedies
of Lender granted and continued pursuant to the Loan Documents.
j. Pay when due all obligations, lawful claims or demands with
respect to the Premises and Improvements which, if unpaid, would result in, or
permit the creation of, any lien or encumbrance on the Premises or
Improvements, including but not limited to all lawful claims for labor,
materials and supplies, and, in general, do or cause to be done everything
necessary to fully preserve the rights and interests of Lender under this
Agreement and the other Loan Documents, except with respect to amounts
contested in good faith and with respect to which Lender is bonded or otherwise
protected. Borrower shall at all times defend Lender's interest in and to the
Premises, and the first priority position of said interest, against any and all
claims of any person adverse to Lender. Borrower shall take all actions
reasonably deemed necessary or appropriate by Lender to give effect to Lender's
priority of interests contemplated by this Agreement and the other Loan
Documents.
k. Upon Lender's request, provide Lender with a written report
setting forth the status of each agreement of sale affecting the Premises.
6.3 Negative Covenants. Borrower shall not, directly or
indirectly, without the prior written consent of Lender:
a. Application of Loan Proceeds. Use or apply any portion of any
funds provided by Lender pursuant to the Loan Documents for any purpose other
than the acquisition of the Premises, construction of the Improvements, payment
of costs and expenses related thereto and payment on the Loan.
b. Non-consensual Encumbrances. Hereafter suffer or allow to be
sustained a non-consensual lien or encumbrance upon the Premises or
Improvements, or any portion of either, unless released within sixty (60) days
or contested and secured in the manner provided for in Sections 4.2b or 5.1j of
this Agreement.
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c. Control. Permit the transfer of any general partnership
interest in Borrower.
d. Sale, Modification or Encumbrance. Sell, assign, transfer,
convey, mortgage, pledge, lease, materially change the intended use of (as set
forth in the "Specific Plan" as that term is defined in the Development
Agreement), substantially modify, or refinance without concurrently paying in
full all indebtedness to WCC, including additional interest and release fees
then due, or otherwise alienate or encumber the Premises, the Improvements, or
any portion of either or any interest therein, whether legal or equitable,
other than as expressly provided in this Agreement, provided, however, that
Lender will not unreasonably withhold its consent to a request by Borrower that
it be permitted to encumber the Premises with a junior lien to secure financing
in addition to the maximum Loan amounts under this Agreement if such
encumbrance would not unreasonably impair Lender's security or prospects for
payment of all amounts to which Lender is or might become entitled under the
Loan Documents.
e. Assertion of Certain Defenses. Assert in any judicial
proceeding the defense of lack of consideration or violation of any applicable
usury laws or any similar legal or equitable defense to the validity or
enforceability of this Agreement or any other Loan Document.
f. Name Change. Change its name to any other name without thirty
(30) days notice to Lender.
g. Appointment of Management or Development Agent. Appoint or
retain any agent or entity to manage and/or develop the Premises or any portion
thereof, or enter into any agreement with respect to the management of the
Premises. In this connection, any management agreement to which Lender may
consent shall provide, unless Lender elects otherwise, for an assignment of
Borrower's rights thereunder to Lender and a subordination of the management
company's rights thereunder to Lender's liens with respect to the Premises and
Improvements thereon, and that such assignment and subordination shall be
irrevocable by Borrower and the management company. Lender agrees that it will
not withhold consent except on objective grounds stated in writing to the
appointment of an Affiliate of Borrower to act as management company provided
said Affiliate executes a subordination of management agreement in form and
content acceptable to Lender.
h. Use of Lender's Name. Disclose to third parties the nature of
Lender's lending relationship with Borrower or use Lender's name in any manner
in any communication or dealings with third parties, ther than as required by
law, for financial reporting purposes or for obtaining other financing in the
due course of Borrower's business.
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ARTICLE VII - DEFAULT
7.1 EVENTS OF DEFAULT The occurrence of one or more of the
following events shall, at the option of the Lender upon written notice to
Borrower after the expiration of any applicable cure or grace period, constitute
an "Event of Default" hereunder if, in the event of a monetary default (i.e., a
failure to pay sums due Lender) for which no cure period is otherwise prescribed
in the Loan Documents, payment is not made by Borrower within five (5) days of
its receipt of notice to pay (provided that after two (2) such notices in any
twelve (12) month period no additional notices to pay need be given within such
period and payment must be made by Borrower within five (5) days of the due date
without further notice), or, in the event of a non-monetary default for which no
cure period is otherwise prescribed in the Loan Documents, Borrower does not
commence to cure within ten (10) days of its receipt of notice to cure, and does
not cure the default within thirty (30) days of its receipt of notice to cure,
provided, however, that if such non-monetary default is not reasonably
susceptible to cure within thirty (30) days, so long as cure is diligently
pursued, the defaulting party shall have sixty (60) days from its receipt of
such notice to cure; provided further, however, that if Borrower in bad faith
fails to give Lender written notice as required by Paragraph 6.2f, Lender may,
at its option, give Borrower ten (10) days' written notice of default without
opportunity to cure:
a. Failure by the Borrower to make any payment required to be
made by the Borrower under the Notes, the Deed of Trust, this Loan Agreement,
the Environmental Indemnification or any other document relating to the Loan in
accordance with the respective terms thereof (no payment which Borrower is
entitled to have paid by an advance from the Loan shall be deemed to be
delinquent or unpaid for the purposes of this subparagraph unless Borrower has
instructed Lender not to make such payment from the proceeds of the Loan);
b. Failure by the Borrower to perform or observe any other
covenant or agreement contained herein, in the Deed of Trust, in any of the
other Loan Documents, in the Environmental Indemnification or in any Pending
Disbursements Agreement;
c. (Intentionally Omitted).
d. Any representation or warranty made by Borrower in
this Agreement, the Deed of Trust, any of the other Loan Documents or any other
documents or instruments delivered pursuant hereto shall prove incorrect in any
material respect or intentionally false;
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e. Time Being of the Essence, if any action agreed to be taken is
not taken or carried out in a timely manner by Borrower or, upon Lender's
reasonable request, evidence satisfactory to Lender that such action has been
taken or carried out is not promptly presented;
f. There (i) occurs a Default as defined in Section
6.02.1 of the Development Agreement, or (ii) unless a replacement permit is
simultaneously issued and a copy is provided to Lender, Borrower neglects,
fails or refuses to keep in full force and effect any permit or approval issued
with respect to construction of the Improvements, or any notice that such
permit or approval has been or will be cancelled, and such action would impair
to a material extent Lender's security;
g. Lender, after notice from the city of San Clemente, cures an
alleged occurrence of an event which with the passage of time would have
constituted a Default by Borrower under the Development Agreement;
h. The conveyance or transfer of the Premises or any property
encumbered by the Deed of Trust in a manner not permitted by Lender hereunder,
under the Deed of Trust or under any of the other Loan Documents;
i. Except as permitted by Lender in writing, the entry of any
lien or encumbrance against the Premises, the Improvements or any property
encumbered by the Deed of Trust; provided, that Lender agrees not to
unreasonably withhold its consent to a request by Borrower that it be permitted
to encumber the Premises with a junior lien to secure financing in addition to
the maximum Loan amounts under this Agreement if such encumbrance would not
unreasonably impair Lender's security or prospects for payment of all amounts
for which Lender is or might become entitled under the Loan Documents;
j. Any party shall obtain an order or decree in any court of
competent jurisdiction: (i) to enjoin the construction of a material portion
(as determined reasonably by Lender) of the Improvements; or (ii) to materially
delay construction or completion of the same; or (iii) to enjoin or prohibit
Borrower and Lender, or either of them, from carrying out a material portion
(as determined reasonably by Lender) of the terms and conditions hereof, and
such proceedings are not discontinued or such decree is not vacated within
sixty (60) days after Lender shall have given Borrower written notice thereof;
k. Borrower fails to prosecute construction of the Improvements
with diligence as required by paragraph 3.5 herein;
l. Borrower abandons (which is understood not to include delay
caused by forces beyond Borrower's control) construction or
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development of the Improvements or the Premises and such abandonment continues
for a period of ten (10) days;
m. Borrower allows cancellation or termination of any insurance
required hereunder or under the Deed of Trust without timely replacing such
insurance and notifying Lender of such replacement;
n. The failure of Borrower to file all federal, state and local
tax returns which are required to be filed or to pay, contest or make
provisions for the payment of all taxes (including taxes of its employees
withheld by it) which have or may become due pursuant to any return or
otherwise;
o. Any one of the following events occur with respect to Borrower:
i. Its failure to pay its debts generally as they
become due or entry of judgments in excess of $50,000 against it which
remain unstayed or unpaid for more than sixty (60) days, or execution
on any judgment so entered;
ii. The voluntary filing of a petition in bankruptcy
or for reorganization or for the adoption of arrangements under the
Bankruptcy Code, as now or in the future amended, or an admission
seeking the relief therein provided or the filing of a similar action
pursuant to the laws of the State of Delaware, of the State of
California or of any other state;
iii. The making of an assignment for the benefit of
creditors;
iv. The consenting to the appointment of a receiver
for all or a substantial part of Borrower's property;
v. Borrower being adjudicated as bankrupt;
vi. The entry of a court order which shall not be
vacated, set aside or stayed within sixty (60) days from the date of
entry, (i) appointing a receiver or trustee for all or a substantial
part of its property, (ii) approving a petition filed against it for
an arrangement in bankruptcy or for a reorganization pursuant to the
Bankruptcy Code or for any other judicial modification or alteration
of the rights of creditors;
vii. The assumption of custody or sequestration of a
court of competent jurisdiction of all or a significant part of any of
the properties of Borrower, which custody or sequestration shall not
be suspended or terminated within thirty (30) days from its inception;
or
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p. A material decline in the financial condition of Borrower
which Lender in its discretion reasonably exercised and in good faith believes
renders the obligations of Borrower to Lender unsafe or insecure in view of the
value of the real and personal property security therefor.
7.2 REMEDIES. If one or more of the foregoing Events of Default
(which is defined in Section 7.1 and includes as stated therein the expiration
of any applicable cure or grace period) occur, Lender may exercise any one or
more of the following remedies:
a. Lender may refuse to make further advances or loans hereunder
with or without demanding immediate payment by Borrower of all amounts loaned
or advanced hereunder, together with interest on such amounts, and Lender may
assert any or all of the rights and remedies provided herein or in the Notes,
the Deed of Trust or any of the other Loan Documents; such rights or remedies
may be asserted concurrently, cumulatively or successively from time to time so
long as Borrower is indebted to Lender on account of any amounts loaned or
advanced pursuant hereto or on account of interest due on such amounts.
b. Enter upon the Premises, expel or eject Borrower and all
persons claiming through or under Borrower and collect the rent, issues and
profits therefrom.
c. Enter upon the Premises, complete at the expense of Borrower
in accordance with Plans and Specifications such Improvements as are reasonably
required for economic development of the Premises and place in effect such
insurance and bonds as are or may be required hereunder. The cost of such
completion, insurance and bonds shall be charged to and deducted from the sum
agreed to be loaned or advanced by Lender hereunder but shall be deemed to be
indebtedness of Borrower evidenced by the Notes and secured by the Deed of
Trust. In the event Lender exercises the option to complete said construction,
Lender shall have the right to enter into any contracts Lender deems necessary
or desirable for the completion of the Improvements.
d. Pay or discharge any lien or claim against the Premises
or any part thereof and charge the amount so paid to the sum agreed to be
loaned or advanced by Lender.
e. Institute such legal proceedings or other proceedings in the
name of Borrower or Lender, as Lender may deem appropriate, for the purpose of
protecting the Premises and Lender's interest therein.
f. Do and perform such acts and deeds as Lender shall deem
necessary or desirable to protect the Premises and Lender's interest therein.
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g. All amounts paid under subparagraphs c, d, e and/or f of this
Section 7.2 shall be deemed to be indebtedness of Borrower evidenced by the
Revolving Note and secured by the Deed of Trust and other Loan Documents, and
in the event such indebtedness exceeds the face amount of the Revolving Note,
such excess or overage shall be added to the face amount of the Revolving Note
and to the principal balance outstanding and shall bear interest at the Default
Rate as provided therein and shall be secured by the Deed of Trust and may be
collected as part of the debt evidenced thereby.
h. Exercise any and all remedies available to it in law, in
equity or provided for in any document executed in connection with this loan
transaction.
7.3 REMEDIES - CUMULATIVE OR ALTERNATE
a. Any Event of Default hereunder shall constitute an Event of
Default under the Deed of Trust and the Notes to the same extent as though the
Notes had by their terms become due and payable and payment thereof had not
been made, and in such event Lender may, without liability to Borrower, assert
and exercise any or all of the rights and remedies provided herein or in the
Notes, the Deed of Trust, the other Loan Documents or otherwise provided by law
with respect to the Notes, the Deed of Trust, this Agreement or the other Loan
Documents, and such other collateral as Lender may hold as security for the
indebtedness evidenced by the Notes or for the performance of Borrower's
undertaking hereunder.
b. No delay or failure of Lender in the exercise of any right or
remedy hereunder or under the Notes, Deed of Trust or the other Loan Documents
shall affect any such right or remedy, nor shall any single or partial exercise
thereof preclude any further exercise thereof, and no action taken or omitted
by Lender shall be deemed to be a waiver of any such right or remedy.
ARTICLE VIII - PARTIAL RELEASES OF LIEN
8.1 PARTIAL RELEASES.
a. Borrower may enter into binding agreements for the Sale or
Partial Sale of the Premises (as those terms are defined in the Additional
Interest Agreement) which are previously consented to in writing by Lender.
Lender has at this time consented to three (3) Partial Sales of the Premises to
Centex Real Estate Corporation ("CREC") under the agreements listed in
subparagraphs A16 and A18 of Exhibit B to this Agreement. The consent of
Lender to additional Partial Sales of the Premises shall be deemed to have been
given if the price has been preapproved
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pursuant to the following procedure and the contract documents have been
preapproved by Lender. The preapproval procedure for price is as follows. By
March 1 of each year, commencing March 1, 1990, Borrower will furnish to Lender
its recommended pricing (on an all cash consideration basis) of lots (the
selection of which lots shall not be inconsistent with the Development Schedule
and the budget) to be sold to CREC during the following fiscal year of Borrower
along with a market survey supporting the recommended pricing. Lender will have
thirty (30) days to respond. Lack of response during that time will be deemed
consent to the recommended pricing. If Lender timely gives notice of its
disagreement with the recommended pricing, and Lender and Borrower cannot
otherwise agree, then Lender and Borrower shall endeavor to engage a mutually
acceptable MAI appraiser, whose determination of the proper recommended minimum
pricing will be complied with by Borrower and deemed consented to by Lender for
all Partial Sales of Premises involving such lots during the applicable fiscal
year. The price list arrived at by this procedure shall be deemed part of
Exhibit H. If Borrower and Lender cannot agree on a MAI appraiser, then the
pricing of the lots will be the purchase price which can be obtained from a
third party, who is not an Affiliate of Borrower, on a best efforts basis in
an arms length transaction. Lender shall be obligated to provide partial
releases of the lien of the Deed of Trust on any given portion of the Premises
if and only if each of the following conditions has been fully met:
(i) At the time a partial release is requested, no
Event of Default hereunder, under any of the other Loan Documents, or
under the Environmental Indemnification, shall exist; and no condition
or event, which with the passage of time, the giving of notice, or
both would constitute an Event of Default hereunder, under any of the
other Loan Documents or under the Environmental Indemnification, shall
exist unless such condition or event would be cured by payment of the
Release Price (as hereinafter defined);
(ii) Borrower has paid to Lender all of Lender's costs
relating to such partial releases or made arrangements reasonably
satisfactory to Lender for payment of such costs;
(iii) Lender shall have received, as Additional
Interest, at the closing of the sale, its Additional Interest (as
defined in the Additional Interest Agreement) to the extent then
payable under the Additional Interest Agreement.
(iv) Lender shall have received, at closing of the
sale, one hundred percent (100%) of the Adjusted Sales Proceeds (as
hereinafter defined) of the portion of the Premises being conveyed
(the "Release Price"), provided, however, the Release Price will never
exceed the outstanding
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balance of the Loan;
(v) The Gross Sales Proceeds (as hereinafter defined)
equals or exceeds the Minimum Sales Price plus specified lot premiums
for each such unit as specified on Exhibit H attached as amended from
time to time;
(vi) After the requested partial release has been
granted, all remaining portions of the Premises which are included
within any recorded subdivision map have legal access to a public or
private street, which access shall be acceptable to Lender; and
(vii) Borrower has satisfied the requirements of Section
8.3 hereof.
b. All Release Prices (but no Additional Interest as that term is
defined in the Additional Interest Agreement) received by Lender shall be
applied to repayment of the Acquisition Cost Note in the order set forth
therein for application of payments so long as that Note has not been fully
repaid. After the Acquisition Cost Note has been fully repaid, then Release
Prices received by Lender shall be applied to repayment of the Revolving Note
in the order set forth therein for application of payments. Upon the
occurrence of an Event of Default, all Release Prices received by Lender shall
be applied, in Lender's sole discretion as to order of payment, to any of
accrued and unpaid late charges or interest, principal, costs and expenses of
operating or developing the Premises, or attorneys' fees or other costs related
to enforcement or collection of the foregoing.
c. The term "Gross Sales Proceeds" shall mean all cash proceeds
received in connection with a Sale of the Premises or a Partial Sale of the
Premises, except as otherwise agreed to by Lender and Borrower.
d. The term "Adjusted Sales Proceeds" shall mean Gross Sales
Proceeds less (i) normal and customary closing costs, (ii) if the Sale or
Partial Sale of the Premises was not to an Affiliate (as defined in the
Additional Interest Agreement) of Owner, reasonable broker's commissions, and
(iii) the Participation Amount (as defined in said Additional Interest
Agreement) to the extent payable at the time of the Sale or Partial Sale to
Lender or Borrower respectively pursuant to the Additional Interest Agreement.
e. Lender acknowledges that it has irrevocably consented to the
release of a portion of the Premises consisting of 161 lots pursuant to the
sale referred to in Exhibit B, paragraph A, item 17, and agrees to execute
promptly upon request a Partial Release and any other documents reasonably
necessary to accomplish the release.
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8.2 PARTIAL RELEASE PROCEDURES. Any and all Partial Releases shall
be in accordance with the following procedures:
a. Borrower's ten (10) days' advance written request for a
Partial Release shall be given to Lender and accompanied by (i) the legal
description of the portion of the Premises to be released, and (ii) information
necessary to process the request for Partial Release, including the name and
address of the title company, if any, to whose attention the Partial Release
should be directed, numbers that should be referenced (title company order
number, loan number, etc.) and the date when such Partial Release is to be
made. Borrower shall also specify the name and address of the prospective
purchaser and the intended use of the portion of the Premises to be released
and shall supply such other documents and information concerning such Partial
Release as Lender may reasonably request.
b. Within five (5) days after receipt of such written request,
and in accordance with and pursuant to the terms and conditions of Sections
8.1, 8.2 and 8.3 hereof, Lender shall, if appropriate, execute and deliver such
Partial Release to the Title Company so specified; provided that all costs and
expenses of Lender associated with such Partial Release (including, but not
limited to, reasonable legal fees) shall be paid by Borrower. Borrower shall
also obtain all title insurance endorsements reasonably required by Lender in
connection with such Partial Release.
c. The execution and delivery of such Partial Release shall not
affect Borrower's obligations hereunder or under the Deed of Trust or Notes,
except to the extent that the payment of the Release Price is actually received
by Lender. Regardless of the time such Partial Release is executed, delivered
and recorded, the payment made by Borrower to Lender in respect to such Partial
Release shall be credited against the applicable Note only upon receipt by
Lender of the Release Price. The Partial Release shall be delivered, in
escrow, by Lender to the title company so designated, to be held, released,
delivered and recorded in accordance with Lender's escrow instructions, which
shall require payment, in cash, of the Release Price to Lender prior to
delivery and recordation of the Partial Release.
8.3 PRIOR APPROVAL. No Partial Release shall be made, as set forth
above, if such Partial Release is for a sale or other transfer occurring under
an agreement not previously approved by Lender.
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ARTICLE IX - MISCELLANEOUS
9.1 REIMBURSEMENT TO LENDER. Borrower hereby agrees to reimburse
and fully compensate Lender upon demand by Lender for all loss, damage and
expense, including out-of-pocket expenses and the reasonable fees of Lender's
counsel, together with interest on the amount thereof from the date the same
accrued at the Default Rate (defined in the Notes), incurred by Lender, (i) by
reason of any default or defaults hereunder by Borrower not cured within any
applicable cure period, (ii) by reason of the neglect by Borrower of any duty
or undertaking, and (iii) in the exercise of any right or remedy hereunder.
9.2 EXPENSES TO LENDER. All items which Borrower agrees to furnish
hereunder or in connection herewith will be furnished at Borrower's sole cost
and expense and without cost or expense to Lender. In addition, Borrower shall
pay to Lender any reasonable fees or costs incurred by Lender's Inspector in
the performance of its duties hereunder.
9.3 CONDITIONS PRECEDENT TO DISBURSEMENT. Prior to the initial
disbursement of any funds hereunder, the Lender shall be furnished with the
documents as required by paragraph A of Exhibit B, all in form and substance
satisfactory to Lender. Subsequent disbursements shall be subject to
satisfaction by Borrower of the provisions of Exhibits B and C hereto and shall
be in accordance with the procedures outlined in Exhibit F hereto.
9.4 LENDER - NO OBLIGATION AS TO PLANS OR SITE. Any inspection by
Lender of the Plans and Specifications or of construction or of the site are
made solely for the purpose of evaluation of Lender's security. The adequacy
and suitability of these matters as they may apply to the Borrower and all
other persons are solely the responsibility of the Borrower and Borrower's
Engineer, without any liability or obligation of Lender whatsoever.
9.5 ASSIGNMENT: PLANS, SPECIFICATIONS AND CONTRACT AND ALL
DOCUMENTS RELATING TO THE IMPROVEMENTS. Borrower, to the extent permitted by
law, hereby makes a present assignment to the Lender, its successors and
assigns of: (a) the right to possess and use all the Plans and Specifications
prepared by it or for it or at its direction for the purpose of completing the
Improvements, (b) all of Borrower's rights in and to each General Contract and
Subcontract, agreement or subcontract pertaining to the Improvements, and (c)
all of Borrower's rights under any and all permits, contracts, agreements,
certificates and any other documents or agreements of any kind or nature
whatsoever which are used, entered into or held by Borrower in connection with
Borrower's acquisition of the Premises or the construction of the Improvements.
Lender shall exercise its
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rights under this assignment only in the event the Borrower fails to construct
and complete the Improvements in accordance with the terms and provisions of
this Agreement or defaults under this Agreement, the Notes, the Deed of Trust,
any other Loan Document or any other agreement securing the indebtedness
evidenced by the Notes. Borrower shall furnish to Lender prior to commencement
of construction the consent of Borrower's Engineer and of each Subcontractor in
substantially the form as set forth in Exhibits D and E hereof. Lender's rights
with respect to this Section 9.5 shall survive the completion of the
Improvements.
9.6 NOTICE. Any notice required or permitted to be given pursuant
hereto, or in connection herewith, shall be in writing, and shall be either
personally delivered, sent by Federal Express or other reputable overnight
courier, sent by facsimile transmission with the original subsequently
delivered promptly by other means, or sent by registered or certified United
States mail, postage prepaid, to the addresses set forth below, or to such
other addresses as either of the parties may for themselves designate in
writing from time to time for the purpose of receiving notices pursuant hereto:
Lender: Westinghouse Credit Corporation
One Oxford Centre - 301 Grant Street
Pittsburgh, Pennsylvania 15219
Attention: Vice President,
Residential Real Estate
Phone Number: (412) 393-3000
Facsimile: (412) 338-1460
With copy to: Poindexter & Doutre', Inc.
624 South Grand Avenue, Suite 2420
Los Angeles, California 90017
Attention: James P. Drummy, Esq.
Phone Number: (213) 628-8297
Facsimile: (213) 488-9890
Borrower: Centex Development Company, L.P.
3333 Lee Parkway
Dallas, Texas 75219
Attention: Raymond G. Smerge, Esq.
Phone Number: (214) 559-6500
Facsimile: (214) 522-7568
With copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attention: Robert E. Merritt, Jr., Esq.
Thomas G. Reddy, Esq.
Phone Number: (415) 393-2000
Facsimile: (415) 393-2286
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Written notices served by registered or certified mail shall be deemed
delivered on the third non-postal holiday after the date mailed. Other notices
shall be effective upon delivery.
9.7 NO LIABILITY TO THIRD PARTIES. This Agreement shall not be
construed to make the Lender liable to materialmen, contractors, craftsmen,
laborers or others for goods and services delivered by them to or upon said
Premises or for debts or claims accruing to the said parties against the
Borrower, and it is expressly understood and agreed that, except as expressly
provided for in exhibits hereto relating to assignments for security by
Borrower to Lender, and then only to the extent therein provided, there are no
contractual relationships, either expressed or implied, between the Lender and
any materialman, subcontractor, craftsman, laborer or any person supplying
work, labor or materials on the job, nor shall any third person or persons,
individuals or corporate, be deemed to be beneficiaries of this Agreement, or
of any term, condition or provision hereof, or on account of any action taken
by Lender pursuant hereto or any assignment by Borrower contained herein.
Nothing in this Agreement shall be construed to permit Lender to participate in
the day-to-day management of the development of the Premises.
9.8 INDEMNIFICATION. Borrower shall at all times indemnify,
defend, hold harmless and, on demand, reimburse Lender for any and all loss,
damage, expenses or cost, of whatsoever kind and nature including, without
limitation, cost of evidence of title, appraisal fees, documentary and expert
evidence, stenographer's and publication charges, and attorneys', accountants'
and other professional fees, arising out of or incurred in connection with (a)
any suit, action or proceeding relative to or having any impact on Lender's
interests hereunder or under any of the other Loan Documents including, without
limitation, probate, bankruptcy, appellate proceedings, and foreclosure of
Lender's interests therein or thereunder, (b) good faith preparation for the
commencement or defense of any proceeding relating to the Loan, the Loan
Documents or the Premises and/or Improvements, (c) adjustment and settlement of
insurance proceeds and condemnation awards, (d) advances made by the Lender
pursuant to this Agreement, (e) any Event of Default or any act or omission
which would constitute an Event of Default but for the passage of time, the
giving of notice or both, or any other breach of this Agreement or any other
Loan Document, including a breach of any representation or warranty hereunder
or thereunder, (f) any costs incurred by Lender in connection with enforcing
the obligations of Borrower under this Agreement or under any other Loan
Document or in connection with collecting the Indebtedness or preserving
Lender's collateral, (g) retaking, holding, preparing and selling the Premises,
or (h) any of the transactions contemplated by this Agreement or the other Loan
Documents, whether or not caused by Lender's negligence. The sum of such
expenditures shall be due and
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payable on demand, shall bear interest from the date of such demand at the
Default Rate (as that term is used in the Notes) and shall be secured by the
Deed of Trust and the other Loan Documents. Notwithstanding the foregoing,
Borrower shall have no liability under this subparagraph to indemnify Lender
from any liability caused solely by the Lender's gross negligence or
intentional act.
9.9 RELIANCE AND SEVERABILITY. All covenants, agreements,
representations and warranties made herein, and in the Deed of Trust, in the
Notes and in any other of the Loan Documents, instruments or certificates
executed in connection herewith shall be deemed to have been and are material
and relied upon by Lender, notwithstanding any investigation by Lender on its
behalf. No provisions contained in this Agreement which are contrary to,
prohibited by or invalid under applicable laws or regulations shall be
applicable, and they shall be deemed omitted herefrom and shall not invalidate
the remaining provisions hereof.
9.10 ATTACHMENTS. The exhibits attached to this Agreement are
incorporated herein and deemed a part hereof as if fully recited in this
Agreement prior to the place of execution hereof.
9.11 CAPTIONS. The paragraph captions contained herein are for
convenience only and in no way limit or alter the terms and conditions hereof.
9.12 LAW GOVERNING AND AMENDMENTS. This Agreement shall be
construed and governed by and enforced, insofar as possible, in accordance with
the laws of the State of California. This Agreement may be amended only in
writing executed by both of the parties hereto.
9.13 SUCCESSORS AND ASSIGNS. The words "Lender" and "Borrower"
shall include singular or plural, individual or corporate, and their respective
heirs, executors, administrators, legal representatives, successors and
assigns, as the case may be. In the event the Borrower is two or more
individuals or other entities, all the obligations and liabilities hereunder
shall be joint and several.
9.14 COMPLIANCE WITH FEDERAL RESERVE SYSTEM REGULATIONS. Borrower
represents and warrants that no part of the proceeds of any borrowing hereunder
will be used to purchase or carry any securities subject to the margin
requirements of Regulation G of the Federal Reserve System or to extend credit
to others for the purpose of purchasing or carrying any margin stock. Borrower
further represents and warrants that it is not engaged principally or as one of
its important activities in the business of extending credit for the purpose of
purchasing or carrying any such margin stock. If requested by Lender, Borrower
will furnish
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to Lender a statement in conformity with the requirements of the Federal
Reserve System. The provisions of this Paragraph 9.14 shall survive release of
the Deed of Trust, the repayment of the Loan, and completion of construction of
the Improvements.
9.15 FIRPTA CERTIFICATION. Under penalties of perjury, the person
("Affiant") executing this Agreement on behalf of the Borrower hereby certifies
on behalf of the Borrower as follows:
a. That Borrower is not a foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined in the
Internal Revenue Code of 1954, as amended (the "IRC"), and Income Tax
Regulations promulgated thereunder, all pursuant to the requirements of Section
1445 of the IRC and the regulations promulgated thereunder.
b. That Borrower does accordingly make and deliver this
Certification for the express purpose of inducing the Lender to make the
subject Loan in accordance with the terms and conditions of this Agreement, and
Borrower hereby represents that Borrower has read and understands Sections 1445
and 7701 of the IRC and the regulations promulgated under these sections and
declares that Borrower is not a foreign corporation, foreign partnership,
foreign trust or foreign estate as those terms are defined in the IRC and the
Income Tax Regulations, and Lender is not required to withhold any tax as a
result of the sale, foreclosure or other disposition by Borrower of the
property of Borrower.
c. That Borrower understands and acknowledges that Lender is
relying and will rely upon the certification contained in this Section 9.15 in
refraining from withholding ten percent (10%) of any amount which may
ultimately be realized by Borrower.
d. Borrower's United States Taxpayer Identification Number is
75-2168471.
e. That Borrower understands and acknowledges that the
certification may be disclosed to the Internal Revenue Service by Lender and
that any false statement contained herein could be punished by fine,
imprisonment, or both.
f. That Affiant hereby acknowledges that Affiant has examined the
certification contained in this Section 9.15 and, under penalties or perjury,
declares that to the best of Affiant's knowledge and belief, it is true,
correct and complete, and Affiant further represents and declares that Affiant
has the authority to sign this certification on behalf of Borrower.
The provisions of this Section 9.15 shall survive release of the Deed of Trust,
the repayment of the Loan, and completion of construction of the Improvements.
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9.16 LENDER'S CONSENTS. Except as language otherwise provides or
context otherwise requires, all consents and approvals of Lender necessary
under this Agreement and the other Loan Documents will not be withheld
unreasonably.
9.17 SUBORDINATION TO SUBDIVISION MAPS. At Borrower's request,
Lender agrees to sign, as Lender, and to subordinate its rights under the Loan
Documents to any subdivision map or development agreement concerning the
Premises, or easements, rights of way, restrictive covenants or similar
documents required under such subdivision maps or development agreements, the
terms of which subdivision map, development agreement or other document or
instrument are not inconsistent with the intended use of the Premises as set
forth in the Specific Plan.
9.18 RELEASED PREMISES. Unless the context otherwise requires, the
term "Premises" does not include at a point in time that portion thereof
previously released from the lien of the Deed of Trust.
9.19 LOAN AGREEMENT CONTROLS. In the event of an inconsistency
between the Loan Agreement and any of the other Loan Documents, the Loan
Agreement controls.
9.20 COOPERATION. Lender agrees to provide all consents or
approvals reasonably requested by Borrower in connection with governmental
approvals necessary for the construction of the Improvement.
9.21 FUNDING OF EXPENSES. Notwithstanding language such as "at
Borrower's expense," "at Borrower's sole expense," and the like, unless
otherwise expressly provided herein or in any of the other Loan Documents or
for fraud, misappropriation and the like, any expenses imposed on Borrower
under any of the Loan Documents, including reimbursement of any of Lender's
expenses in connection with the Loan Documents on the Premises, may be funded
from an advance or advances under the Revolving Note, subject to the
limitations in Section 5.1h of the Loan Agreement.
ARTICLE X - NON-RECOURSE
10.1 Lender agrees that: (i) in the event of a foreclosure under
the Deed of Trust, Lender shall not seek or enforce a deficiency judgment
against Borrower or its General Partner; and (ii) in the event a suit is
brought on the Notes or any of the other Loan Documents, any judgment obtained
in such suit shall be enforced only against the property and interests
encumbered by the Deed of Trust and other Loan Documents, and any other
property or collateral which hereafter may be given to secure the Notes.
Nothing contained herein shall be deemed to be a release of the lien of the
Deed of Trust or, except as specifically limited hereby, a release or waiver of
any of Lender's rights or
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remedies provided in any Loan Document or in any other document or agreement
now or hereafter entered into between Borrower and Lender. This paragraph shall
not be deemed to be a release or waiver of any claim, warranty, covenant, or
cause of action not expressly set forth in the first sentence of this
paragraph, including without limitation, a claim based on fraud or
misrepresentation, or a cause of action for waste, misappropriation or
intentional impairment of the collateral securing this Note. Nothing contained
in this paragraph shall limit or affect Lender's rights with respect to
Borrower's obligations under the Environmental Indemnification Agreement.
WITNESS the due execution hereof the date and year first above
written.
ATTEST: WESTINGHOUSE CREDIT CORPORATION,
a Delaware corporation
By: /s/ DAVID H. MORROW By: /s/ DOUGLAS W. PHILLIPS
Title: Vice President
CENTEX DEVELOPMENT COMPANY, L.P.
ATTEST: a Delaware limited partnership
By: /s/ RAY GLAZE By: 3333 Development Corporation,
a Nevada corporation,
General Partner
By: /s/ HARRY J. LEONHARDT
Title: Agent and Attorney in Fact
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