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Exhibit 10.2
William Lyon Homes, Inc.
Loan No. 906-0100
AGREEMENT FOR FIRST MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS
This Agreement for First Modification of Deeds of Trust and Other Loan
Instruments (this "First Modification") is made as of June 8, 2001 by and
between WILLIAM LYON HOMES, INC., a California corporation ("Borrower") and
GUARANTY BANK, a federal savings bank organized and existing under the laws of
the United States (formerly known as "Guaranty Federal Bank, F.S.B.")
("Lender"), with reference to the following facts:
A. Borrower and Lender entered into a Master Loan Agreement (the "Loan
Agreement") dated August 31, 2000, which provides for a loan of FIFTY-FIVE
MILLION DOLLARS ($55,000,000.00) (the "Loan") to Borrower on the terms and
conditions specified therein. The Loan is evidenced and secured by a revolving
promissory note and other loan instruments (collectively, the "Loan
Instruments"). Upon full execution, this First Modification shall constitute one
of the Loan Instruments. All defined terms used in this First Modification shall
have the meanings ascribed to them in the Loan Agreement unless the context
requires otherwise.
B. At Borrower's request, Lender has agreed to modify one or more of the
Loan Instruments, as herein provided.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the parties hereby agree as follows:
1. Modifications. The Loan Instruments specified in Exhibit "A" attached
hereto and incorporated herein by this reference are modified as set forth
therein, effective upon timely satisfaction of the conditions set forth in
Section 2 below. As used in this First Modification and the attached Exhibit
"A," the term "Deeds of Trust" refers to the Construction Deeds of Trust (With
Security Agreement, Fixture Filing and Assignment of Rents and Leases) (1) dated
August 31, 2000 executed by Borrower for the benefit of Lender and recorded in
the Official Records of San Bernardino County, California on September 27, 2000,
as Instrument No. 349879; (2) dated August 31, 2000 executed by Borrower for the
benefit of Lender and recorded in the Official Records of San Diego County,
California on September 27, 2000, as Instrument No. 2000-0515520; (3) dated
August 31, 2000 executed by Borrower for the benefit of Lender and recorded in
the Official Records of San Diego, California on September 27, 2000 as
Instrument No. 2000-0515518; (4) dated August 31, 2000 executed by Borrower for
the benefit of Lender and recorded in the Official Records of Orange County,
California on September 27, 2000, as Instrument No. 2000-0509250; (5) dated
August 31, 2000 executed by Borrower for the benefit of Lender and recorded in
the Official Records of Riverside County, California on September 27, 2000, as
Instrument No. 379473; (6) dated August 31, 2000 executed by Borrower for the
benefit of Lender and recorded in the Official Records of Maricopa County,
Arizona on September 27, 2000, as Instrument No. 2000-0736812; (7) dated October
5, 2000 executed by Borrower for the benefit of Lender and recorded in the
Official Records of San Diego County, California on October 6, 2000, as
Instrument No. 2000-0539378; (8) dated October 17, 2000 executed by Borrower for
the benefit of Lender and recorded in the Official Records of Orange County,
California on October 26, 2000, as Instrument No. 2000-0575563; (9) dated
October 19, 2000 executed by Borrower for the benefit of Lender and recorded in
the Official Records of Maricopa County, Arizona on October 23, 2000, as
Instrument No. 2000-0809955 (re-recorded in the Official Records of Maricopa
County, Arizona on November 17, 2000, as Instrument No. 2000-0881909); (10)
dated October 25, 2000 executed by Borrower for the benefit of Lender and
recorded in the Official Records of Maricopa County, Arizona on October 31,
2000, as Instrument No. 2000-0838151; (11) dated November 7, 2000 executed by
Borrower for the benefit of Lender and recorded in the Official Records of
Maricopa County, Arizona on November 13, 2000, as Instrument No. 2000-0869149;
(12) dated November 15, 2000 executed by Borrower for the benefit of Lender and
recorded in the Official Records of San Joaquin County, California on November
23, 2000, as Instrument No. 2000-00137389; (13) dated November 22, 2000 executed
by Borrower for the benefit of Lender and recorded in the Official Records of
Maricopa County, Arizona on November 30, 2000, as Instrument No. 2000-0917551;
(14) dated December 6, 2000 executed by Borrower for the benefit of Lender and
recorded in the Official Records of Orange County, California on December 14,
2000, as Instrument No. 2000-0677860; (15) dated December 15, 2000 executed by
Borrower for the benefit of Lender and recorded in the Official Records of
Maricopa County, Arizona on December 28, 2000, as Instrument No. 2000-0993074;
(16) dated January 2, 2001 executed by Borrower for the benefit of Lender and
recorded in the
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Official Records of San Diego, County on January 8, 2001, as Instrument No.
2001-0011691; (17) dated January 26, 2001 executed by Borrower for the benefit
of Lender and recorded in the Official Records of Maricopa County, Arizona on
January 31, 2001, as Instrument No. 2001-0074131; (18) dated February 21, 2001
executed by Borrower for the benefit of Lender and recorded in the Official
Records of San Diego County, California on March 9, 2001, as Instrument No.
2001-0138486; (19) dated February 21, 2001 executed by Borrower for the benefit
of Lender and recorded in the Official Records of Maricopa County, Arizona on
February 28, 2001, as Instrument No. 2001-0153254; (20) dated February 21, 2001
executed by Borrower for the benefit of Lender and recorded in the Official
Records of San Joaquin County, California on February 28, 2001, as Instrument
No. 2001-01027861; (21) dated March 13, 2001 executed by Borrower for the
benefit of Lender and recorded in the Official Records of Orange County,
California on March 29, 2001, as Instrument No. 2001-0183692; (22) dated March
16, 2001 executed by Borrower for the benefit of Lender and recorded in the
Official Records of San Joaquin County, California on March 23, 2001, as
Instrument No. 2001-01040420; (23) dated March 21, 2001 executed by Borrower for
the benefit of Lender and recorded in the Official Records of Maricopa County,
Arizona on March 30, 2001, as Instrument No. 2001-0256951; (24) dated April 11,
2001 executed by Borrower for the benefit of Lender and recorded in the Official
Records of San Joaquin County, California on April 13, 2001, as Instrument No.
2001-01054052; (25) dated April 24, 2001 executed by Borrower for the benefit of
Lender and recorded in the Official Records of Maricopa County, Arizona on April
30, 2001, as Instrument No. 2001-0353521; (26) dated May 17, 2001 executed by
Borrower for the benefit of Lender and recorded in the Official Records of
Maricopa County, Arizona on May 31, 2001, as Instrument 2001-0468480; and (27)
dated May 17, 2001 executed by Borrower for the benefit of Lender and recorded
in the Official Records of Orange County, California on May 30, 2001, as
Instrument No. 2001-0353890.
2. Conditions. The modifications of Section 1 above shall take effect
only upon Borrower's satisfaction, at its expense, of all of the following
conditions not later than the date of this First Modification:
(a) if required by Lender, delivery to Lender of one or more
endorsements to the Title Policy (whether one or more) insuring the lien of the
Deeds of Trust as may be required by Lender, all in form and of content
acceptable to Lender, insuring that, except as set forth in this First
Modification, the priority of such lien is unaffected by the modifications set
forth herein and that the Title Policy insuring the Deeds of Trust remains in
full force and effect in the full amount of the Loan;
(b) if required by Lender, delivery to Lender of one or more duly
executed recordable memorandums of this First Modification (collectively, the
"First Memorandum");
(c) satisfaction of such other conditions as may be set forth on
Exhibit "B" attached hereto and incorporated herein by this reference, if any;
and
(d) if the Loan has been guarantied (or indemnities given) or if
there are junior liens encumbering the property which is encumbered by the Deeds
of Trust, delivery to Lender of duly executed consents to the modifications set
forth in this First Modification by the guarantor(s) and/or junior lienors, as
applicable, as may be set forth in Exhibit "C" attached hereto or as may be
attached to the First Memorandum, each incorporated herein by this reference.
3. Representations and Warranties. Borrower hereby represents and
warrants that no default, event of default, breach or failure of condition has
occurred, or would exist with notice or the lapse of time or both, under any of
the Loan Instruments; and all representations and warranties herein and in the
other Loan Instruments are true and correct, which representations and
warranties shall survive execution of this First Modification. All parties who
execute this First Modification and any other documents required hereunder on
behalf of Borrower represent and warrant that they have full power and authority
to execute and deliver such documents, and that all such documents are
enforceable in accordance with their terms. As of the date of this First
Modification, Borrower hereby acknowledges and agrees that it has no defenses,
offsets or claims against Lender or the enforcement of the Loan Instruments and
that Lender has not waived any of its rights or remedies under any such
documents.
4. No Impairment. Except as expressly provided herein, nothing in this
First Modification shall alter or affect any provision, condition or covenant
contained in the Loan Instruments or affect or impair any of Lender's rights,
powers or remedies thereunder. It is the intent of the parties hereto that the
provisions of the Loan Instruments shall continue in full force and effect
except as expressly modified hereby.
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5. Miscellaneous. This First Modification and the other Loan Instruments
shall be governed by and interpreted in accordance with the laws of the State of
California, except as they may be preempted by federal law. In any action
brought or arising out of this First Modification or the Loan Instruments,
Borrower, and, if applicable, the general partners, members and joint venturers
of Borrower, hereby consent to the jurisdiction of any federal or state court
having proper venue within the State of California and also consent to the
service of process by any means authorized by California or federal law. The
headings used in this First Modification are for convenience only and shall be
disregarded in interpreting the substantive provisions of this First
Modification. Time is of the essence of each term of the Loan Instruments,
including this First Modification. If any provision of this First Modification
or any of the other Loan Instruments shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, that portion shall be
deemed severed therefrom and the remaining parts shall remain in full force as
though the invalid, illegal, or unenforceable portion had never been a part
thereof. This First Modification may be executed in one or more counterparts,
all of which, taken together, shall constitute one and the same First
Modification.
6. Integration; Interpretation. The Loan Instruments, including this
First Modification, contain or expressly incorporate by reference the entire
agreement of the parties with respect to the matters contemplated herein and
supersede all prior negotiations. The Loan Instruments shall not be modified
except by written instrument executed by all parties. Any references to the Loan
Instruments in any of the Loan Instruments includes this First Modification and
any amendments, renewals or extensions approved by Lender hereunder.
IN WITNESS WHEREOF, this Agreement for First Modification of Deeds of
Trust and Other Loan Instruments is executed as of the date first hereinabove
written.
LENDER: GUARANTY BANK,
a federal savings bank organized and existing
under the laws of the United States
By: /s/ Jon M. Larson
------------------------------------
Name: Jon M. Larson
Title: Vice President
BORROWER: WILLIAM LYON HOMES, INC.,
a California corporation
By: /s/ Michael D. Grubbs
------------------------------------
Name: Michael D. Grubbs
Title: Senior Vice President and
Chief Financial Officer
By: /s/ Richard S. Robinson
------------------------------------
Name: Richard S. Robinson
Title: Senior Vice President
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William Lyon Homes, Inc.
Loan No. 906-0100
EXHIBIT "A"
AGREEMENT FOR FIRST MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS
(Modifications)
LOAN INSTRUMENT MODIFIED MODIFICATION
1. Revolving Promissory Note (i) The Note is hereby amended and
restated in the form of the
attached Exhibit "A-1".
2. Master Loan Agreement (i) The introductory paragraph is
hereby modified to provide that
the Loan shall be in the
principal amount of SIXTY-FIVE
MILLION DOLLARS ($65,000,000.00)
and all references in the Loan
Agreement to the principal
amount of the Loan shall be
deemed to refer to such amount.
(ii) Paragraph 2.1(a). Paragraph
2.1(a) is hereby amended to
refer to the Amended and
Restated Promissory Note in the
principal amount of SIXTY-FIVE
MILLION DOLLARS
($65,000,000.00), in the form of
the attached Exhibit "A-1".
(iii) Paragraph 8. The following is
hereby added to Paragraph 8 of
the Loan Agreement:
Notwithstanding the foregoing
provisions of this Paragraph 8,
the aggregate amount of Loan
Allocations for Properties
included in the Borrowing Base
may exceed the Loan Amount;
provided, however, (i) in no
event shall such aggregate
amount of Loan Allocations
exceed an amount equal to
NINETY-THREE MILLION DOLLARS
($93,000,000.00) at any time,
and (ii) in no event shall the
outstanding principal balance of
the Loan exceed the Loan Amount.
3. Exhibit "A" to Loan Agreement (i) Paragraph 4 - Lot/Residence
Limitation. Paragraph 4(i) is
hereby amended and restated to
read in full as follows:
A. Residences. Maximum number
of Residences at any one
time in all Approved
Subdivisions: Five Hundred
(500).
(ii) Paragraph 16 -- Additional Loan
Covenants. Subsection D is
hereby deleted in its entirety
and Subsections B, C and G are
hereby amended and restated in
their entirety to read in full
as follows:
B. Guarantor covenants and
agrees that the Tangible
Net Worth of Guarantor, at
all times shall be not less
than NINETY MILLION DOLLARS
($90,000,000.00), adjusted
upwards quarterly by fifty
percent
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(50%) of Guarantor's net
income earned in the prior
quarter commencing after
March 31, 2001.
C. Guarantor covenants and
agrees to at all times
maintain a ratio to total
liabilities to Tangible Net
Worth in a ratio less than
3.25 to 1.
G. Guarantor covenants and
agrees to at all times
maintain a limitation on
investments in joint
ventures to sixty-five
percent (65%) of
Guarantor's Tangible Net
Worth.
4. Deeds of Trust (i) Section 1.1 of the Deeds of
Trust is hereby modified to
provide that the reference
therein to the "Note" shall
refer to that certain Amended
and Restated Revolving
Promissory Note dated June 8,
2001, executed by Trustor in
favor of Beneficiary in the
stated principal amount of
SIXTY-FIVE MILLION DOLLARS
($65,000,000.00). All other
provisions of Section 1.1 shall
remain the same.
5. Other Loan Instruments (i) All references to the Loan in
all of the Loan Instruments and
in any other instruments or
agreements evidencing or
securing the Loan which are not
expressly referenced as modified
under this First Modification,
shall be deemed to refer to the
principal amount of SIXTY-FIVE
MILLION DOLLARS
($65,000,000.00), and all
references to the Note therein
shall be deemed to refer to the
Amended and Restated Revolving
Promissory Note dated June 8,
2001, executed by Borrower in
favor of Lender in the stated
principal amount of SIXTY-FIVE
MILLION DOLLARS
($65,000,000.00).
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William Lyon Homes, Inc.
Loan No. 906-0100
EXHIBIT "A-1"
AGREEMENT FOR FIRST MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS
(Form of Amended and Restated Note)
AMENDED AND RESTATED REVOLVING PROMISSORY NOTE
$65,000,000.00 June 8, 2001
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than
one, promise to pay to the order of GUARANTY BANK, a federal savings bank
organized and existing under the laws of the United States (formerly known as
"Guaranty Federal Bank, F.S.B."), at its principal offices at 8333 Douglas
Avenue, Dallas, Texas 75225, or at such other place as the holder hereof may
from time to time designate, the principal sum of SIXTY-FIVE MILLION DOLLARS
($65,000,000.00), or so much thereof as may be disbursed, with interest on the
maximum principal balance from time to time remaining unpaid prior to default or
maturity at the rate hereinafter provided, interest only being payable on the
first day of each month commencing July 1, 2001, and continuing until and
including the Maturity Date (defined below), when the unpaid principal balance
of this Amended and Restated Revolving Promissory Note (this "Note"), together
with all accrued and unpaid interest, shall be due and payable. The "Maturity
Date" shall be the date which is the Required Release Date for the final
Residence or Lot located in the final Approved Subdivision whose construction
was financed with proceeds of the Loan pursuant to the Loan Agreement (as
defined below). All defined terms used in this Note shall have the meanings
ascribed to them in the Loan Agreement unless otherwise indicated in this Note.
Borrower may from time to time during the term of this Note borrow,
partially or wholly repay its outstanding borrowings, and reborrow, subject to
all of the limitations, terms and conditions of this Note and of the Loan
Agreement, provided that the outstanding principal balance of this Note shall at
no time exceed the principal amount stated above, and Borrower shall have no
right to borrow or reborrow amounts under this Note for the construction of
Residences for which no prior Disbursements have been made under the Loan
Agreement from and after June 14, 2002 (the "Facility Expiration Date"), subject
to renewal as provided under the Loan Agreement. The unpaid principal balance of
this obligation at any time shall be the total amounts disbursed hereunder by
the holder hereof less the amount of principal payments made hereon by or for
Borrower, which principal balance may be endorsed hereon from time to time by
the holder.
Disbursements hereunder, to the total amount of the principal sum stated
above, may be made by the holder at the written request of Borrower or at the
written request of those authorized by Borrower to request Disbursements and
direct the disposition of any such Disbursements until written notice of the
revocation of such authority is received by the holder at the office designated
above. Any such Disbursements shall be conclusively presumed to have been made
to or for the benefit of Borrower when the holder believes in good faith that
such requests and directions have been made by authorized persons or when said
Disbursements are deposited to the credit of any account of Borrower with the
holder, regardless of the fact that persons other than those authorized
hereunder may have authority to draw against such account.
As herein provided, the unpaid Principal Amount (hereafter defined) of
this Note (or portions thereof) from time to time outstanding shall bear
interest prior to the Maturity Date at a varying rate of interest per annum
equal to, at Borrower's option, (i) the Base Interest Rate (hereafter defined)
or (ii) the applicable Euro-Dollar Base Rate (hereafter defined) (as elected in
the manner specified in this Note), provided that in no event shall the
Applicable Rate (hereafter defined) exceed the Maximum Rate (hereafter defined).
Notwithstanding the foregoing, if at any time the Applicable Rate exceeds the
Maximum Rate, the rate of interest payable under this Note shall be limited to
the Maximum Rate, but any subsequent reductions in the Base Interest Rate or the
Euro-Dollar Base Rate, as the case may be, shall not reduce the Applicable Rate
below the Maximum Rate until the total amount of interest accrued on this Note
equals the total amount of interest which would have accrued at the Applicable
Rate if the Applicable Rate had at all times been in effect. Interest on this
Note, shall be calculated at a daily rate equal to 1/360 of the annual
percentage rate stated above, subject to the provisions hereof specifying the
maximum amount of interest which may be charged or collected hereunder.
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As used in this Note, the following terms shall have the meanings
indicated opposite them:
"Additional Costs": As defined below in this Note.
"Applicable Rate": The Base Interest Rate (as to that portion of
Principal Amount bearing interest at the Base Interest Rate) and the Euro-Dollar
Base Rate (as to each Euro-Dollar Amount) as elected in the manner specified in
this Note.
"Assessments": Any impositions or assessments imposed on Lender with
respect to any Euro-Dollar Amount for insurance or other fees, assessments
and/or surcharges.
"Base Interest Rate": The Base Rate plus the Base Rate Spread, expressed
as a per annum rate of interest.
"Base Rate": The base rate announced or published from time to time by
Guaranty Federal Bank, F.S.B., which rate may not be the lowest rate charged by
Guaranty Federal Bank, F.S.B.; it being understood and agreed that the Base Rate
shall increase or decrease, as the case may be, from time to time as of the
effective date of each change in such rate, and may not correspond with future
increases or decreases in interest rates charged by other lenders or market
rates in general.
"Base Rate Spread": The percentage rate to be added to the Base Rate to
determine the Base Interest Rate, calculated as follows, and effective on the
first (1st) day of the month following Lender's receipt of Borrower's quarterly
Financial Statement pursuant to the Loan Agreement, which receipt shall be not
later than fifteen (15) days prior to an applicable change to the Base Rate
Spread, keyed to Borrower's then ratio of total liabilities to Tangible Net
Worth:
Ratio of Total Liabilities Base Rate
To Tangible Net Worth Spread
-------------------------- ---------
3.25 -- 3.00 to 1 0.10%
2.99 -- 2.50 to 1 0.00%
2.49 -- 2.00 to 1 0.00%
"Default Rate": As defined below in this Note.
"Euro-Dollar Amount": Each portion of the Principal Amount bearing
interest at the applicable Euro-Dollar Base Rate pursuant to a Euro-Dollar Rate
Request. There shall be no more than three (3) portions of the Principal Amount
bearing interest at an applicable Euro-Dollar Base Rate outstanding at any time.
"Euro-Dollar Business Day": Any day on which commercial banks are open
for domestic and international business (including dealings in U.S. Dollar
deposits) in New York City and Dallas, Texas.
"Euro-Dollar Rate Request": Borrower's telephonic notice (to be promptly
confirmed in a written notice which must be received by Lender before such
Euro-Dollar Rate Request will be put into effect by Lender), to be received by
Lender by twelve o'clock noon (Dallas, Texas time) three (3) Euro-Dollar
Business Days prior to the last day of the relevant Interest Period specified in
the Euro-Dollar Rate Request for the commencement of the Interest Period, of (a)
its intention to have (1) all or any portion of the Principal Amount which is
not then the subject of an Interest Period (other than an Interest Period which
is terminating on such Euro-Dollar Business Day), and/or (2) all or any portion
of any Disbursement of Loan proceeds which is to be made on such Euro-Dollar
Business Day, bear interest at the Euro-Dollar Base Rate and (b) the Interest
Period desired by Borrower in respect to the amount specified. There shall be no
more than three (3) such requests for an election outstanding at any time.
"Euro-Dollar Rate Request Amount": The amount, to be specified by
Borrower in each Euro-Dollar Rate Request and stated in increments of FIFTY
THOUSAND DOLLARS ($50,000.00), which Borrower desires to bear interest at the
Euro-Dollar Base Rate; provided, however, in no event shall any such amount be
less than FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) in each instance.
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"Euro-Dollar Reference Source": The display for Euro-Dollar rates
provided on The Bloomberg (a data service), viewed by accessing Page One (1) of
the global deposits segment of money market rates (or such other page as may
replace Page One (1) for the purposes of displaying Euro-Dollar rates); or, at
the option of Lender the display for Euro-Dollar rates on such other service
selected from time to time by Lender and determined by Lender to be comparable
to The Bloomberg, which other service may include Reuters Monitor Money Rates
Service.
"Euro-Dollar Base Rate": With respect to any Euro-Dollar Amount, the
rate per annum (expressed as a percentage) determined by Lender to be equal to
the sum of (a) the quotient of the Euro-Dollar Rate for the applicable
Euro-Dollar Amount and the applicable Interest Period, divided by (1 minus the
applicable Reserve Requirement), rounded up to the nearest 1/100 of 1%, plus (b)
the applicable Assessments, plus (c) a percentage rate calculated as follows,
and effective on the first (1st) day of the month following Lender's receipt of
Borrower's quarterly Financial Statement pursuant to the Loan Agreement, which
receipt shall be not later than fifteen (15) days prior to an applicable change
to the Euro-Dollar Base Rate, keyed to Borrower's then ratio of total
liabilities to Tangible Net Worth:
Rate of Total Liabilities
To Tangible Net Worth Rate
------------------------- -----
3.25 -- 3.00 to 1 2.60%
2.99 -- 2.50 to 1 2.50%
2.49 -- 2.00 to 1 2.40%
"Euro-Dollar Rate": The rate determined by Lender (rounded upward, if
necessary, to the nearest 1/16 of 1%) equal to the offered rate (and not the bid
rate) for deposits in U.S. Dollars of amounts comparable to the Euro-Dollar Rate
Request Amount for the same period of time as the Interest Period selected by
Borrower in the Euro-Dollar Rate Request, as set forth on the Euro-Dollar
Reference Source at approximately 10:00 a.m. (Dallas, Texas time) on the first
day of the applicable Interest Period.
"Interest Period": The period during which interest at the Euro-Dollar
Base Rate, determined as provided in this Note, shall be applicable to the
applicable Euro-Dollar Rate Request Amount; provided however, that each such
period shall be either twenty-four (24) hours (i.e., daily) or thirty (30),
sixty (60), ninety (90), one hundred eighty (180) or three hundred sixty (360)
days (30 day increments), which shall be measured from the date specified by
Borrower in each Euro-Dollar Rate Request for the commencement of the
computation of interest at the Euro-Dollar Base Rate, to the numerically
corresponding day in the calendar month in which such period terminates (or, if
there be no numerical correspondent in such month, or if the date selected by
Borrower for such commencement is the last Euro-Dollar Business Day of a
calendar month, then the last Euro-Dollar Business Day of the calendar month in
which such period terminates, or, if the numerically corresponding day is not a
Euro-Dollar Business Day then the next succeeding Euro-Dollar Business Day,
unless such next succeeding Euro-Business Day enters a new calendar month, in
which case such period shall end on the next preceding Euro-Dollar Business
Day); and in no event shall any such period be elected which extends beyond the
Maturity Date.
"Loan": The SIXTY-FIVE MILLION DOLLAR ($65,000,000.00) loan evidenced
hereby.
"Maturity Date": Is defined in the first paragraph of this Note and is
the date on which this Note becomes due and payable in its entirety, unless
extended pursuant to the terms of the Loan Agreement.
"Maximum Rate": The lesser of (i) the maximum interest rate permitted
under applicable law, or (ii) the per annum rate of thirty percent (30%).
"Principal Amount": That portion of the Loan evidenced hereby as is from
time to time outstanding.
"Regulation D": Regulation D of the Board of Governors of the Federal
Reserve System, as from time to time amended or supplemented.
"Regulation": With respect to the charging and collecting of interest at
the Euro-Dollar Base Rate, any United States federal, state or foreign laws,
treaties, rules or regulations whether now in effect or hereinafter enacted or
promulgated (including Regulation D) or any interpretations, directives or
requests applying to a
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class of depository institutions including Payee or Lender under any United
State federal, state or foreign laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof excluding any change the effect of
which is determined by Lender to be reflected in a change in the Euro-Dollar
Base Rate.
"Reserve Requirement": The average maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained under Regulation D by member banks of the Federal Reserve System in
New York City with deposits exceeding one billion U.S. Dollars against
"Eurocurrency Liability", as such quoted term is used in Regulation D. Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
regulatory change against (a) any category of liability which includes deposits
by reference to which the Euro-Dollar Rate is to be determined as provided in
this Note, or (b) any category of extensions of credit or other assets which
includes loans the interest rate on which is determined on the basis of rates
referred to in the definition of "Euro-Dollar Rate" set forth above.
If Borrower desires the application of the Euro-Dollar Base Rate, it
shall submit a Euro-Dollar Rate Request to Lender. Such Euro-Dollar Rate Request
shall specify the Interest Period and the Euro-Dollar Amount and shall be
irrevocable, subject to Lender's right to convert the rate of interest payable
hereunder with respect to any Euro-Dollar Amount from the Euro-Dollar Base Rate
to the Base Interest Rate as hereinafter provided. In the event that Borrower
fails to submit a Euro-Dollar Rate Request with respect to an existing
Euro-Dollar Amount not later than twelve o'clock noon (New York time) three (3)
Euro-Dollar Business Days prior to the last day of the relevant Interest Period,
then the applicable Euro-Dollar Amount shall bear interest, commencing at the
end of such Interest Period, at the Base Interest Rate.
In no event shall Borrower have the right to have more than three (3)
Interest Periods involving Euro-Dollar Amounts in effect at any one time,
whether or not any portion of the Loan is then bearing interest at the Base
Interest Rate.
Any portion of the Principal Amount to which the Euro-Dollar Base Rate
is not (or cannot pursuant to the terms hereof be) applicable shall bear
interest at the Base Interest Rate.
Borrower shall pay to Lender, promptly upon demand, such amounts as are
necessary to compensate Lender for additional costs ("Additional Costs")
resulting from any Regulation which (i) subjects Lender to any tax, duty or
other charge with respect to the Loan or this Note, or changes the basis of
taxation of any amounts payable to Lender under the Loan or this Note (other
than taxes imposed on the overall net income of Lender or of its applicable
lending office by the jurisdiction in which Lender's principal office or such
applicable lending office is located), (ii) imposes, modifies or deems
applicable any reserve, special deposit or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, Lender, or (iii) imposes on Lender or on the interbank
Euro-Dollar market any other conditions affecting the Loan or this Note, or any
of such extensions of credit or liabilities. Lender will notify Borrower of any
event which would entitle Lender to compensation pursuant to this paragraph as
promptly as practicable after Lender obtains knowledge thereof and determines to
request such compensation.
Without limiting the effect of the immediately preceding paragraph, in
the event that, by reason of any Regulation, (i) Lender incurs Additional Costs
based on or measured by the amount of (1) a category of deposits or other
liabilities of Lender which include deposits by reference to which the
Euro-Dollar Rate is determined as provided in this Note and/or (2) a category of
extensions of credit or other assets of Lender which includes loans the interest
on which is determined on the basis of rates referred to in the definition of
"Euro-Dollar Rate" set forth above, (ii) Lender becomes subject to restrictions
on the amount of such a category of liabilities or assets which it may hold, or
(iii) it shall be unlawful or impractical for Lender to make or maintain the
Loan (or any portion thereof) at the Euro-Dollar Base Rate, then Lender's
obligation to make or maintain the Loan (or portions thereof) at the Euro-Dollar
Base Rate (and Borrower's right to request the same) shall be suspended and
Lender shall give notice thereof to Borrower and, upon the giving of such
notice, interest payable hereunder at the Euro-Dollar Base Rate shall be
converted to the Base Interest Rate, unless Lender may lawfully continue to
maintain the Loan (or any portion thereof) then bearing interest at the
Euro-Dollar Base Rate to the end of the current Interest Period(s), at which
time the interest rate shall convert to the Base Interest Rate. If subsequently
Lender determines that such Regulation has ceased to be in effect, Lender will
so advise Borrower and Borrower may convert the rate of interest payable
hereunder with respect to those portions of the Principal Amount bearing
interest at the Base Interest Rate to the Euro-Dollar Base Rate by
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submitting a Euro-Dollar Rate Request in respect thereof and otherwise complying
with the provisions of this Note with respect thereto.
Determinations by Lender of the existence or effect of any Regulation on
its costs of making or maintaining the Loan, or portions thereof, at the
Euro-Dollar Base Rate, or on amounts receivable by it in respect thereof, and of
the additional amounts required to compensate Lender with respect to Additional
Costs and/or Assessments, shall be conclusive; provided, however, that such
determinations are made without manifest error.
Anything herein to the contrary notwithstanding, if, at the time of or
prior to the determination of the Euro-Dollar Base Rate in respect of any
Euro-Dollar Rate Request Amount as herein provided, Lender determines (which
determination shall be conclusive, provided that such determination is made on a
reasonable basis, absent manifest error) that (i) by reason of circumstances
affecting the interbank Euro-Dollar market generally, adequate and fair means do
not or will not exist for determining the Euro-Dollar Base Rate applicable to an
Interest Period, or (ii) the Euro-Dollar Rate, as determined by Lender, will not
accurately reflect the cost to Lender of making or maintaining the Loan (or any
portion thereof) at the Euro-Dollar Base Rate, then Lender shall give Borrower
prompt notice thereof, and the applicable Euro-Dollar Rate Request Amount shall
bear interest, or continue to bear interest, as the case may be, at the Base
Interest Rate. If at any time subsequent to the giving of such notice Lender
determines that because of a change in circumstances the Euro-Dollar Base Rate
is again available to Borrower hereunder, Lender shall so advise Borrower and
Borrower may convert the rate of interest payable hereunder from the Base
Interest Rate to the Euro-Dollar Base Rate by submitting a Euro-Dollar Rate
Request to Lender and otherwise complying with the provisions of this Note with
respect thereto.
Borrower shall pay to Lender, immediately upon request and
notwithstanding contrary provisions contained in the Mortgage (as hereafter
defined) or other Loan Instruments, such amounts as shall, in the conclusive
judgment of Lender reasonably exercised, compensate Lender for any loss, cost or
expense incurred by it as a result of (i) any payment or prepayment, under any
circumstances whatsoever, of any portion of the Principal Amount bearing
interest at the Euro-Dollar Base Rate on a date other than the last day of an
applicable Interest Period, (ii) the conversion, for any reason whatsoever, of
the rate of interest payable hereunder from the Euro-Dollar Base Rate to the
Base Interest Rate with respect to any portion of the Principal Amount then
bearing interest at the Euro-Dollar Base Rate on a date other than the last day
of an applicable Interest Period, (iii) the failure of all or a portion of an
Disbursement, which was to have borne interest at the Euro-Dollar Base Rate
pursuant to a Euro-Dollar Rate Request, to be made under the Loan Agreement, or
(iv) the failure of Borrower to borrow in accordance with a Euro-Dollar Rate
Request submitted by it to Lender, which amounts shall include, without
limitation, lost profits.
Borrower shall have the right to prepay, in whole or in part, the
Principal Amount of this Note accruing interest at the Base Interest Rate,
without premium or penalty upon the payment of all accrued interest on the
amount prepaid (and any interest which has accrued at the Default Rate and other
sums that may be payable hereunder); provided, however, that any Euro-Dollar
Amount may be prepaid only on the last day of the applicable Interest Period.
All payments of principal shall be credited first against principal
amounts bearing interest at the Base Interest Rate and then toward the payment
of Euro-Dollar Amounts. Payments of Euro-Dollar Amounts shall be applied in such
manner as Borrower shall select; provided, however, that Borrower shall select
Euro-Dollar Amounts to be repaid in a manner designed to minimize any losses
incurred by virtue of such payment. If Borrower shall fail to select the
Euro-Dollar Amounts to which such payments are to be applied, or if an Event of
Default has occurred and is continuing at the time of payment, then Lender shall
be entitled to apply the payment to such Euro-Dollar Amounts in the manner it
deems appropriate. Borrower shall compensate Lender for any loses incurred by
virtue of any payment of those portions of the Loan accruing interest at the
Euro-Dollar Base Rate prior to the last day of the relevant Interest Period,
which compensation shall be determined in accordance with the provisions set
forth in this Note, and any payment received pursuant to this paragraph shall be
applied first to losses incurred by Lender by reason of such payment.
If a default shall occur under the Mortgage, interest on the Principal
Amount shall, at the option of Lender, immediately and without notice to
Borrower, be converted to the Base Interest Rate. The foregoing provision shall
not be construed as a waiver by Lender of its right to pursue any other remedies
available to it
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under the Mortgage or any other instrument evidencing or securing the Loan, nor
shall it be construed to limit in any way the application of the Default Rate.
Borrower hereby agrees that it shall be bound by any agreement extending
the time or modifying the above terms of payment, made by Lender and the owner
of owners of the Property whether with or without notice to Borrower, and
Borrower shall continue to be liable to pay the amount due hereunder, but with
interest at a rate no greater than the Euro-Dollar Base Rate or the interest
Base Rate, as the case may be, according to the terms of any such agreement of
extension or modification.
At the option of the holder hereof, the entire principal balance and
accrued interest owing hereon shall, subject to applicable laws, at once become
due and payable without notice or demand upon the occurrence at any time of any
default under any of the Loan Instruments, including this Note (each, an "Event
of Default").
1. (a) Default in the payment of any installment of principal due
hereunder; (b) default in the payment of any installment of
interest within ten (10) days of the first day of the month in
which such installment is due; (c) default in the payment of any
other amount due (other than principal or interest) hereunder
which is not cured within fifteen (15) days of written notice
thereof; or (d) default in the performance of any of the
covenants or provisions hereunder which is not cured within
thirty (30) days of written notice thereof.
2. Subject to applicable cure periods, if any, set forth in the Loan
Agreement (as defined below), the liquidation, termination,
dissolution or (if any of the undersigned is a natural person)
the death of any of the undersigned or any guarantor hereof.
3. Subject to applicable cure periods, if any, set forth in the Loan
Agreement (as defined below), the bankruptcy or insolvency of,
the assignment for the benefit of creditors by, or the
appointment of a receiver for any of the property of any party
liable for the payment of this Note, whether as maker, endorser,
guarantor, surety or otherwise.
4. Default in the payment of any other indebtedness due the holder
hereof, or default in the performance of any other obligation to
the holder hereof by the undersigned or any other party liable
for the payment hereof, whether as endorser, guarantor, surety or
otherwise currently existing or incurred in the future, it being
reasonably contemplated by the undersigned that it may incur
additional indebtedness owing to the holder hereof, from time to
time, subsequent to the date hereof.
5. As Section 7.6 of the Mortgage (defined below) provides: "Title
to all or any part of the Mortgaged Property (other than obsolete
or worn Personal Property replaced by adequate substitutes of
equal or greater value than the replaced items when new) shall
become vested in any party other than Trustor, whether by
operation of law or otherwise, except as permitted under the
release provisions of this Deed of Trust".
6. Under any of the Loan Instruments, an Event of Default or default
(as defined in that document) occurs.
7. Notwithstanding any other provision, if Lender determines in its
reasonable judgment that the default complained of, other than a
default for the payment of monies, cannot be cured within the
period requiring curing as specified in Lender's written notice
of default, then the default shall be deemed to be cured if
Borrower within the notice period shall have commenced the curing
of the default and shall thereafter diligently prosecute the same
to completion. If in Lender's reasonable judgment Borrower fails
to diligently prosecute the curing of the default or Lender
determines that such default is incurable, then this default
shall constitute an Event of Default.
The failure to exercise the option to accelerate the maturity of this
Note upon the happening of any one or more of the Events of Default hereunder
shall not constitute a waiver of the right of the holder hereof to exercise the
same or any other option at that time or at any subsequent time with respect to
such uncured default or any other event of uncured default hereunder or under
any other of the Loan Instruments. The
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remedies of the holder hereof, as provided in this Note and in any other of the
Loan Instruments, shall be cumulative and concurrent and may be pursued
separately, successively or together, as often as occasion therefor shall arise,
at the sole discretion of the holder hereof. The acceptance by the holder hereof
of any payment under this Note which is less than payment in full of all amounts
due and payable at the time of such payment shall not constitute a waiver of the
rights of the holder to exercise the foregoing option or any other option
granted to the holder hereof or in any other of the Loan Instruments, at that
time or at any subsequent time, or nullify any prior exercise of any such
option. The acceptance by holder of any payment under this Note after the date
that such payment is due shall not constitute a waiver of the right to require
prompt payment when due of future or succeeding payments or to declare a default
as herein provided for any failure to so pay. The acceptance by holder of the
payment of a portion of any installment at any time that such installment is due
and payable in its entirety shall neither cure nor excuse the default caused by
the failure to pay the whole of such installment and shall not constitute a
waiver of holder's right to require full payment when due of all future or
succeeding installments.
After any Event of Default or upon maturity, if permitted by applicable
law, principal and past-due interest shall bear interest at the lesser of the
Applicable Rate plus five percent (5%) per annum or the maximum amount permitted
by applicable law (the "Default Rate"). The undersigned acknowledges that late
payment to holder of any sums due hereunder will cause holder to incur costs not
contemplated hereunder, the exact amount of which will be impracticable or
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if any installment, payment or
any other sum due from the undersigned shall not be received by holder or
holder's designee within ten (10) calendar days after it is due, the undersigned
shall then pay to holder a late payment charge equal to five percent (5%) of
such overdue amount. The parties hereby agree that such late charge represents a
fair and reasonable estimate of the costs holder will incur by reason of late
payment. This provision shall not, however, be construed as extending the time
for payment of any amount hereunder, and the acceptance of such late charge by
holder shall in no event constitute a waiver of the undersigned's default with
respect to such overdue amount nor prevent holder from exercising any of the
other rights and remedies with respect to such default.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, guarantor, surety or otherwise, severally
waive demand, presentment, notice of dishonor, notice of intention to accelerate
the indebtedness evidenced hereby, diligence in collecting, grace, notice and
protest, and consent to all extensions which from time to time may be granted by
the holder hereof and to all partial payments hereon, whether before or after
maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, probate or other
court, whether before or after maturity, the undersigned agrees to pay all costs
of collections, including but not limited to reasonable attorneys' fees,
incurred by the holder hereof.
This Note is executed pursuant to a Master Loan Agreement, dated as of
August 31, 2000 between the undersigned and the payee named herein (the "Loan
Agreement"), which Loan Agreement contains provisions for acceleration of the
maturity hereof upon the happening of certain events, and all Disbursements made
hereunder shall be made pursuant to the Loan Agreement. This Note is secured by
one or more Construction Deeds of Trust (With Security Agreement, Fixture Filing
and Assignment of Rents and Leases) (collectively, the "Mortgage" or "Deed of
Trust") covering certain property more particularly described in such Mortgage.
The proceeds of this Note are to be used for business, commercial, investment or
other similar purposes and no portion thereof will be used for personal, family
or household use.
All agreements between the undersigned and the holder hereof, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged,
received, paid or agreed to be paid to the holder hereof exceed the maximum
amount permissible under applicable law. If, from any circumstance whatsoever,
interest would otherwise be payable to the holder hereof in excess of the
maximum lawful amount, the interest payable to the holder hereof shall be
reduced to the maximum amount permitted under applicable law; and if from any
circumstance the holder hereof shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the
principal hereof and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal hereof, such excess shall be
refunded to the undersigned. All interest paid or agreed to be paid to the
holder hereof shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full period until payment in full
of
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the principal (including the period of any renewal or extension hereof) so that
the interest hereon for such full period shall not exceed the maximum amount
permitted by applicable law. This paragraph shall control all agreements between
the undersigned and the holder hereof.
The undersigned acknowledges and agrees that the holder hereof may, from
time to time, sell or offer to sell interests in the Loan evidenced by this Note
as secured by the Mortgage to one or more participants. The undersigned
authorizes the holder hereof to disseminate any information it has pertaining to
the Loan, including, without limitation, complete and current credit information
on the undersigned, any of its principals and any guarantor of this Note, to any
such participant or prospective participant.
This Note may be prepaid in whole or in part, at any time, without
premium or penalty. All payments on the indebtedness evidenced hereby, other
than regularly scheduled payments, shall be applied to such indebtedness in such
order and manner as the holder hereof may elect in its sole discretion.
This Note amends, restates, and supersedes in its entirety a certain
Revolving Promissory Note dated August 31, 2000 executed by the undersigned in
favor of the payee named herein in the principal amount of FIFTY-FIVE MILLION
DOLLARS ($55,000,000.00), and shall constitute a renewal thereof for purposes of
the Mortgage and otherwise, and all obligations of the undersigned under this
Note shall continue to be secured in full under the Mortgage.
EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND PREEMPTS STATE USURY LAWS),
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.
BORROWER:
WILLIAM LYON HOMES, INC.,
a California corporation
By: _______________________________
Name: Michael D. Grubbs
Title: Senior Vice President and
Chief Financial Officer
By: _______________________________
Name: Richard S. Robinson
Title: Senior Vice President
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William Lyon Homes, Inc.
Loan No. 906-0100
EXHIBIT "B"
AGREEMENT FOR FIRST MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS
(Other Conditions to Modifications)
1. Legal Fees. Borrower shall pay all legal fees and costs incurred by
Lender in connection with the preparation and negotiation of this First
Modification.
2. Title Endorsements/Recording Fees. Borrower shall pay all title charges
and recording fees and costs incurred by Lender in connection with the
requirements of Paragraphs 2(a) and 2(b) of this First Modification.
3. Consent of Guarantor(s). Guarantors of the Loan shall execute and
deliver the attached Consent of Guarantor to Lender and the attached
Consent to the First Memorandum hereof described in Paragraph 2(b) of
this First Modification (suitable for recording).
4. Consent of Junior Lienholder(s). Junior Lienholders shall execute and
deliver the attached Consent of Junior Lienholder and the attached
Consent to the First Memorandum hereof described in Paragraph 2(b) of
this First Modification (suitable for recording).
5. Commitment Fee. Borrower shall pay to Lender a non-refundable commitment
fee equal to TWO HUNDRED FIFTY-SIX THOUSAND TWO HUNDRED FIFTY DOLLARS
($256,250.00) as a condition precedent to the effectiveness of this
First Modification, which fee shall not be applicable to payment of
principal or interest due under the Note, or otherwise, and shall be
retained by Lender in all events.
6. Execution of Amended and Restated Note. Borrower shall execute and
deliver to Lender an Amended and Restated Revolving Promissory Note in
favor of Lender, in the form attached to this First Modification as
Exhibit "A-1", providing for a maximum stated principal amount of
SIXTY-FIVE MILLION DOLLARS ($65,000,000.00)
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William Lyon Homes, Inc.
Loan No. 906-0100
EXHIBIT "C"
AGREEMENT FOR FIRST MODIFICATION OF DEEDS OF TRUST AND OTHER LOAN INSTRUMENTS
(Consents to Modifications)
CONSENT OF GUARANTOR
The undersigned Guarantor confirms its guaranties of Borrower's
obligations to, and indemnities in favor of, Lender under the Loan Agreement and
the other Loan Instruments referenced in, and as modified by the foregoing First
Modification and First Memorandum described therein, and consents to and accepts
the foregoing modifications.
GUARANTOR: WILLIAM LYON HOMES,
a Delaware corporation
By: _______________________________
Name: Michael D. Grubbs
Title: Senior Vice President and
Chief Financial Officer
By: _______________________________
Name: Richard S. Robinson
Title: Senior Vice President
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William Lyon Homes, Inc.
Loan No. 906-0100
CONSENT OF JUNIOR LIENHOLDER
The undersigned is the holder of an obligation secured by a lien (the
"Junior Lien") against the same property which secures, in a senior priority
position, Borrower's obligations to Lender under the Loan Agreement and the
other Loan Instruments. The undersigned consents to and accepts the
modifications set forth in the foregoing First Modification, and agrees that,
notwithstanding such modifications, the undersigned's lien shall be and remain
junior and subordinate to the lien of Lender to secure Borrower's obligations as
modified herein. The undersigned agrees to execute a separate Subordination
Agreement confirming the foregoing if requested by Lender. The undersigned
confirms to Lender that Borrower is not in default of any obligation secured by
the Junior Lien and that the Junior Lien and the obligations secured thereby
have not been modified.
IRVINE COMMUNITY DEVELOPMENT COMPANY,
a Delaware corporation
By: _____________________________
Name: Chick C. Willette
Title: Executive Vice President,
Land Sales and Management
By: _____________________________
Name: Mary K. Westbrook
Title: Vice President
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William Lyon Homes, Inc.
Loan No. 906-0100
CONSENT OF JUNIOR LIENHOLDER
The undersigned is the holder of an obligation secured by a lien (the
"Junior Lien") against the same property which secures, in a senior priority
position, Borrower's obligations to Lender under the Loan Agreement and the
other Loan Instruments. The undersigned consents to and accepts the
modifications set forth in the foregoing First Modification, and agrees that,
notwithstanding such modifications, the undersigned's lien shall be and remain
junior and subordinate to the lien of Lender to secure Borrower's obligations as
modified herein. The undersigned agrees to execute a separate Subordination
Agreement confirming the foregoing if requested by Lender. The undersigned
confirms to Lender that Borrower is not in default of any obligation secured by
the Junior Lien and that the Junior Lien and the obligations secured thereby
have not been modified.
WRI OPPORTUNITY LOANS I, LLC,
a Washington limited liability company
By: WEYERHAEUSER REALTY INVESTORS, INC.,
a Washington corporation
Its: Manager
By: ________________________________
Name: ________________________________
Title: ________________________________
By: ________________________________
Name: ________________________________
Title: ________________________________
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