-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nw5R1yseNUP66lecKjH71y8hnn86AfAjDpcFBlVO0/O98T9OcDVzKlbIUtdTzQcK d7Z1MdpbcwhEZ0ViL3YZpw== 0000909518-98-000575.txt : 19980831 0000909518-98-000575.hdr.sgml : 19980831 ACCESSION NUMBER: 0000909518-98-000575 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980828 SROS: NONE GROUP MEMBERS: AMERICAN INVESTMENT COMPANY GROUP MEMBERS: LEUCADIA FINANCIAL CORPORATION GROUP MEMBERS: LEUCADIA NATIONAL CORP GROUP MEMBERS: LUK-CPG, INC. GROUP MEMBERS: LUK-CPH, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOMEFED CORP CENTRAL INDEX KEY: 0000833795 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330304982 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-40772 FILM NUMBER: 98700336 BUSINESS ADDRESS: STREET 1: 529 E SOUTH TEMPLE CITY: SALT LAKE CITY STATE: UT ZIP: 84102 BUSINESS PHONE: 8015211066 MAIL ADDRESS: STREET 1: 529 E SOUTH TEMPLE CITY: SALT LAKE CITY STATE: UT ZIP: 84102 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEUCADIA NATIONAL CORP CENTRAL INDEX KEY: 0000096223 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 132615557 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 315 PARK AVE S CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2124601900 FORMER COMPANY: FORMER CONFORMED NAME: TALCOTT NATIONAL CORP DATE OF NAME CHANGE: 19800603 SC 13D/A 1 ------------------------- OMB APPROVAL ------------------------- OMB Number: 3235-0145 Expires:October 31, 1994 Estimated average burden hours per form.....14.90 ------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* HOMEFED CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 436919104 ------------------------------------------------ (CUSIP Number) Stephen E. Jacobs, Esq., Weil, Gotshal & Manges LLP, 767 Fifth Ave., New York, NY 10153 (212) 310-8330 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 25, 1998 ------------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 11. Exhibit Index appears at page 11. SCHEDULE 13D
- ----------------------------------- ----------------------------------- CUSIP NO. 436919104 PAGE 2 OF 11 PAGES - ----------------------------------- ----------------------------------- - ---------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Leucadia Financial Corporation - ---------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |x| (B) |_| - ---------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not Applicable - ---------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)|_| - ---------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Utah - ---------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None. SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH -------------------------------------------------------------------------------- 8 SHARED VOTING POWER None. -------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None. -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None. - ---------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ---------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ---------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ---------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------------------- ----------------------------------- CUSIP NO. 436919104 PAGE 3 OF 11 PAGES - ----------------------------------- ----------------------------------- - ---------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON American Investment Company - ---------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |x| (B) |_| - ---------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable. - ---------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)|_| - ---------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ---------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None. SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH -------------------------------------------------------------------------------- 8 SHARED VOTING POWER None -------------------------------------------------------------------------------- 9 SHARED VOTING POWER None. -------------------------------------------------------------------------------- 10 SOLE DISPOSITIVE POWER None. - ---------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ---------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ---------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ---------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------------------- ----------------------------------- CUSIP NO. 436919104 PAGE 4 OF 11 PAGES - ----------------------------------- ----------------------------------- - ---------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON LUK-CPH, Inc. - ---------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |x| (B) |_| - ---------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable. - ---------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)|_| - ---------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ---------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None. SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH -------------------------------------------------------------------------------- 8 SHARED VOTING POWER None. -------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None. -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None. - ---------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ---------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ---------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ---------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------------------- ----------------------------------- CUSIP NO. 436919104 PAGE 5 OF 11 PAGES - ----------------------------------- ----------------------------------- - ---------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON LUK-CPG, Inc. - ---------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |x| (B) |_| - ---------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable. - ---------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)|_| - ---------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ---------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None. SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH -------------------------------------------------------------------------------- 8 SHARED VOTING POWER None. -------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None. -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None. - ---------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ---------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ---------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ---------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------------------- ----------------------------------- CUSIP NO. 436919104 PAGE 6 OF 11 PAGES - ----------------------------------- ---------------------------------- - ---------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Charter National Life Insurance Company - ---------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |x| (B) |_| - ---------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable. - ---------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)|_| - ---------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Missouri - ---------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None. SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH -------------------------------------------------------------------------------- 8 SHARED VOTING POWER None. -------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None. -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None. - ---------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ---------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ---------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ---------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ----------------------------------- ----------------------------------- CUSIP NO. 436919104 PAGE 7 OF 11 PAGES - ----------------------------------- ----------------------------------- - ---------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Leucadia National Corporation - ---------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |x| (B) |_| - ---------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ---------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - ---------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)|_| - ---------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION New York - ---------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF None. SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH -------------------------------------------------------------------------------- 8 SHARED VOTING POWER None. -------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER None. -------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER None. - ---------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ---------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ---------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ---------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ----------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Item 1. Securities and Issuer. --------------------- This Statement constitutes Amendment No. 1 to the Statement on Schedule 13D (the "Schedule 13D") filed by Leucadia National Corporation ("Leucadia") and its subsidiaries, Leucadia Financial Corporation ("LFC"), American Investment Company ("AIC"), LUK-CPH, Inc. (formerly known as Colonial Penn Holdings, Inc.) ("CPH"), LUK-CPG, Inc. (formerly known as Colonial Penn Group, Inc.) ("CPG") and Charter National Life Insurance Company ("Charter") (collectively, the "Beneficial Owners") with respect to the Common Stock, par value $.01 per share (the "Common Stock"), of HomeFed Corporation (the "Company"). Unless otherwise indicated, all capitalized terms used herein shall have the respective meanings ascribed to them in the Schedule 13D. Item 4. Purpose of the Transaction. -------------------------- On August 14, 1998, Leucadia transferred (i) 4,117,986 shares of Common Stock, (ii) the right to purchase an additional 37,056,112 shares of Common Stock (the "Additional Shares") pursuant to a Stock Purchase Agreement dated as of August 14, 1998 between the Company and Leucadia (the "Stock Purchase Agreement"), and (iii) $1,670,100, representing the funds necessary to purchase the Additional Shares (after giving effect to a $5 million advance on the payment of the purchase price) to a trust (the "Trust") pursuant to a Trust Agreement dated August 14, 1998 between Leucadia for the benefit of its shareholders and Joseph A. Orlando, as Trustee (the "Trust Transfer"). On August 14, 1998, Leucadia declared a pro rata dividend of 8 beneficial interests in the Trust to Leucadia's shareholders of record at August 25, 1998 (the "Beneficiaries"). Upon distribution of uncertificated beneficial interests in the Trust on August 25, 1998 to the Beneficiaries, the Beneficial Owners ceased to have any beneficial interest in the Company's Common Stock. Also on August 14, 1998, LFC and the Company entered into an Amended and Restated Loan Agreement (the "Amended Loan Agreement"), pursuant to which certain terms of the original Loan Agreement, dated July 3, 1995, were amended to, among other things, eliminate the right to convert the loan into shares of the Company's Common Stock. Item 5. Interest in Securities of the Issuer. ------------------------------------ (a) As of August 25, 1998 and after giving effect to the Trust Transfer and the Amended Loan Agreement, none of the Beneficial Owners beneficially owned any shares of the Company's Common Stock. (c) The information included in response to Item 4 hereof is specifically incorporated herein by reference. (e) As a result of the Trust Transfer and the Amended Loan Agreement, on August 25, 1998, the Beneficial Owners ceased to be the beneficial owners of more than 5% of the outstanding shares of Common Stock. 9 SIGNATURE --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Dated: August 28, 1998 LEUCADIA FINANCIAL CORPORATION LUK-CPG, INC. By:/s/ Joseph A. Orlando By:/s/ Corinne A. Maki ---------------------------- ---------------------------- Vice President Vice President AMERICAN INVESTMENT COMPANY CHARTER NATIONAL LIFE INSURANCE COMPANY By:/s/ Joseph A. Orlando By:/s/ Joseph A. Orlando ---------------------------- ---------------------------- Vice President Vice President LUK-CPH, INC. LEUCADIA NATIONAL CORPORATION By:/s/ Corinne A. Maki By:/s/ Joseph A. Orlando ---------------------------- ---------------------------- Vice President Vice President 10 EXHIBIT INDEX Exhibit No. Document Page No. - ----------- -------- -------- 1 Trust Agreement, dated August 14, 1998, between Leucadia National Corporation for the benefit of its shareholders and Joseph A. Orlando, as Trustee. 2 Stock Purchase Agreement, dated August 14, 1998, between Leucadia National Corporation and HomeFed Corporation. 3 Amended and Restated Loan Agreement, dated August 14, 1998, between Leucadia Financial Corporation and HomeFed Corporation. 11 EX-1 2 EXHIBIT 1 TRUST AGREEMENT --------------- THIS TRUST AGREEMENT (the "Agreement") is made this 14th day of August, 1998, between Leucadia National Corporation ("Leucadia") for the benefit of its shareholders, and Joseph A. Orlando (the "Trustee"). WHEREAS, Leucadia is the beneficial owner of 4,117,986 shares of common stock of HomeFed Corporation (the "Owned HomeFed Common Stock") which represents approximately 41% of the outstanding shares of common stock of HomeFed Corporation ("HomeFed Stock"); and WHEREAS, Leucadia has entered into a Stock Purchase Agreement, dated as of August 14, 1998 (the "Purchase Agreement"), among Leucadia and HomeFed Corporation, pursuant to which Leucadia is entitled and obligated to purchase for an aggregate purchase price of $6,670,100, a portion of which has already been paid (the "Purchase Price") a number of additional shares of common stock of HomeFed Corporation (the "Additional HomeFed Stock" and together with the Owned HomeFed Stock, the "HomeFed Stock Interest") such that Leucadia would beneficially own 87.5% of the outstanding shares of HomeFed Stock, ; and WHEREAS, Leucadia wishes to convey all of its right, title and interest in and to the HomeFed Stock Interest and all of its right, title and interest in and to the Purchase Agreement and the remainder of the Purchase Price, together with any right, title and interest that Leucadia may acquire on or before November 10, 1998 in and to additional shares of HomeFed Stock or any contract to acquire shares of HomeFed Stock, together with the purchase price for such shares (collectively, the "Trust Property"), to and for the benefit of and account of the holders of common shares, par value $1.00 per share, of Leucadia as of August 25, 1998 (the "Beneficiaries"); and WHEREAS, the Trustee has agreed to act as the Trustee under this Agreement for the purposes herein provided; NOW, THEREFORE, in consideration of the premises and of the acceptance by the Trustee of the Trust hereby created and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties hereby agree as follows: NYFS04...:\30\76830\0194\2037\AGR8068V.43K ARTICLE 1 THE TRUST Section 1.1 All of Leucadia's right, title and interest in and to the Trust Property is hereby vested in the Trust. Any property that may in the future be vested in the Trust pursuant to the provisions of this Agreement shall thereafter also be considered Trust Property. To the extent any law or regulation prohibits the transfer of ownership of any of the Trust Property from Leucadia to the Trustee, the Trustee's interest shall be a lien upon and security interest in such Trust Property, in trust, nevertheless, for the sole use and purposes set forth in Section 2.1, and this Agreement shall be deemed a security agreement granting such interest thereon. Section 1.2 Leucadia shall, upon reasonable request of the Trustee, execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or appropriate to more effectively vest in the Trust any portion of the Trust Property intended to be vested herein. ARTICLE 2 PURPOSES OF THE TRUST Section 2.1 The purposes of this Trust are (i) to hold the assets transferred to it by Leucadia on behalf of the Beneficiaries and collect income derived from such assets, (ii) to close the transaction contemplated by the Purchase Agreement, (iii) to take such other action as is necessary to conserve and protect the Trust Property, and (iv) to liquidate and distribute the Trust Property. ARTICLE 3 POWERS OF TRUSTEE Section 3.1 The Trustee accepts and undertakes to discharge the Trust created by this Agreement upon the terms and conditions hereof and agrees, for the benefit of the Beneficiaries, to exercise such of the rights and powers vested in it by this Agreement in the same manner, and use the same degree of care and skill in its exercise, as a prudent person would exercise and use under the circumstances in the conduct of 2 his own affairs, having due regard to the purposes of the Trust set forth in Article 2 hereof. Section 3.2 In accepting the Trust hereby created, the Trustee acts solely as Trustee hereunder, and all persons having any claim against the Trustee in connection with its performance of its rights, powers and duties as such Trustee shall only look to the Trust Property for payment or satisfaction thereof. Section 3.3 The Trustee shall not commingle any of the Trust Property with its own property or the property of any other person. Section 3.4 The Trustee is hereby empowered to: (a) perform all of the obligations and agreements of the Trust provided for in this Agreement; (b) make payment under the Purchase Agreement and perform any other obligations and agreements under the Purchase Agreement necessary for the issuance by HomeFed Corporation of the Additional HomeFed Stock; (c) keep and maintain an account in the name of the Trustee for the benefit of the Beneficiaries into which the Trustee shall deposit all Trust Property consisting of cash or cash equivalents (the "Trust Account"); the Trustee shall not permit any person other than the Trustee to have authority to make withdrawals from, or to issue drafts against, the Trust Account and no Trust Account may be maintained with any bank unless such bank has been furnished a copy of this Agreement; (d) collect and receive all sums of money or other property due to the Trust; (e) engage professionals, including attorneys, accountants, experts and others, to assist the Trustee in carrying out its duties hereunder; (f) receive additional Trust Property and take all appropriate action necessary to preserve the value of Trust Property as the Trustee in the reasonable exercise of its discretion shall determine, subject to Article 4 hereof; (g) vote and/or act with respect to the disposition of the Owned HomeFed Common Stock and, upon issuance, the Additional HomeFed Stock and any other shares 3 of common stock of HomeFed Corporation that may then be Trust Property as directed in a written notice jointly signed by mutual agreement of Ian M. Cumming and Joseph S. Steinberg, each of whom is a Beneficiary of the Trust and, accordingly, are together thereby acting on behalf of all of the Beneficiaries; (h) pay all reasonable and necessary Trust expenses incurred in the administration of the Trust, including without limitation, attorneys' fees and disbursements, accounting fees, expert fees and other costs and expenses arising out of the consummation of the transactions contemplated by the Purchase Agreement; (i) prepare and deliver written statements or notices, annually or otherwise, required by law to be delivered to Beneficiaries; provided that the Trustee shall have no obligation to deliver any statements or notices to a permitted transferee of a beneficial trust interest unless, prior to the date on which the statement or notice is required to be delivered, the Trustee receives (1) written notice adequately identifying the permitted transferee (including the transferee's name, address and tax identification number), and (2) reasonable evidence that the transfer was authorized by this Agreement; (j) to file and execute, on behalf of the Trust such applications, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents that shall be necessary or desirable to register or establish the exemption from registration of the HomeFed Stock Interest, and/or any additional shares of common stock of HomeFed Corporation that may become Trust Property, under the Securities Act of 1933, as amended (the "Securities Act"), and under state securities or blue sky laws and to otherwise assist in the registration of such shares of common stock of HomeFed Corporation; (k) maintain and preserve the originals of any and all instruments and documents pertaining to Trust Property; and (l) take any of the foregoing action, and execute any documents relating thereto, in the Trustee's own name, on behalf of the Trust. Notwithstanding any other provision of this Agreement, the Trustee shall not, and is not empowered to, acquire any property after the date hereof other than the Trust Property (and 4 any proceeds arising therefrom) or vary the investment of the Trust within the meaning of Treasury Regulation Section 301.7701- 4(c)(i). Section 3.5 The Trustee shall prepare or have prepared, and file on behalf of the Trust all United States, federal, state and local income tax returns and information returns required to be filed by the Trust, and shall prepare and distribute to the Beneficiaries any reports regarding any income, gain, deduction, credit or loss of the Trust as are required by applicable law and, in addition thereto, as the Trustee in its sole discretion may from time to time determine is appropriate or necessary to enable the Beneficiaries to determine their respective tax obligations arising out of operations of the Trust. Section 3.6 The Trustee may withhold from the amount distributable from the Trust at any time to any person such sum or sums as may be sufficient to pay any taxes which have been or may be imposed on such person or upon the Trust with respect to the amount distributable or to be distributed under the income tax laws of the United States or of any state or political subdivision or entity by reason of any distribution provided for hereunder, wherever such withholding is determined by the Trustee in its reasonable sole discretion to be required. Section 3.7 The Trustee shall maintain records and books of account relating to the Trust Property, in accordance with generally accepted accounting principles consistently applied and shall, at all reasonable times, permit any authorized representative designated by a Beneficiary to have access, during normal business hours and upon reasonable notice, to inspect and/or copy (at Beneficiary's expense payable at the time of copying), the financial records relating to the Trust Property. The Trustee shall provide to each Beneficiary, as soon as practicable after each anniversary of its creation and, in addition, after termination of the Trust, an unaudited financial statement and a report showing all transactions and the amounts thereof (including all sales or other dispositions of Trust Property and expenses relating to the operation of the Trust) consummated during the reporting period. Section 3.8 The Trustee may rely upon and shall be protected in acting or refraining from acting upon any certificates, opinions, statements, instruments or reports believed by it to be genuine and to have been signed or presented by the proper person or persons; provided, however, that the Trustee shall be under a duty to have examined the same to 5 determine whether or not such writings conform to the requirements of this Agreement. Section 3.9 The Trustee and its agents shall not be liable for any error of business judgment or with respect to any action taken or omitted to be taken by them in their capacity as Trustee or agent, unless it shall be proved that the Trustee or its agents shall have been grossly negligent or shall have acted with willful misconduct in ascertaining the pertinent facts or in performing any of their rights, powers or duties hereunder. In the event such liability is proven, the Beneficiaries shall be entitled to reimbursement of their reasonable costs, including attorneys' fees and disbursements. The Trustee makes no representations as to the value or condition of the Trust Property or any part thereof, or as to the security afforded by this Agreement, or as to the validity, execution (except its own execution), enforceability, legality or sufficiency of this Agreement, and the Trustee shall incur no liability or responsibility in respect of such matters. Section 3.10 The Trustee shall have no duty to accomplish any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities law) or any rerecording, refiling or reregistration thereof. Section 3.11 The Trustee shall be indemnified by and receive reimbursement from the Trust against and from any and all loss, liability, cost, damage or expense, including reasonable attorneys' fees and disbursements, which it may incur or sustain in the exercise and performance of any of its powers and duties as such Trustee under this Agreement, unless such loss, liability, cost, damage or expense shall be incurred or sustained as a result of the Trustee's gross negligence or willful misconduct. ARTICLE 4 PERMITTED INVESTMENTS OF TRUST PROPERTY Section 4.1 The cash constituting the remainder of the Purchase Price shall, to the extent permitted by applicable law and to the extent provided in Section 4.2, be invested by the Trustee as soon as practicable after establishment of the Trust in state or local government securities with a maturity date on or about June 15, 1999 and the income from which will not result in any federal tax liabilities to the Beneficiaries. All 6 investments of Trust Property shall be made in a manner such that the Trust will at all times be classified as a grantor trust of which the Beneficiaries are the grantors for United States federal income tax purposes (each such investment, a "Permitted Investment"); provided, however, that (i) each Permitted Investment shall be held solely in the name of the Trustee as Trustee, (ii) to the extent practicable, the Trustee shall take physical possession of all such securities and secure them in a safe deposit box registered solely in the name of the Trustee as Trustee, and (iii) no Permitted Investment may be made unless the Trustee shall furnish the bank or brokerage firm through which such Permitted Investment is made with a copy of this Agreement, and such bank shall have acknowledged to the Trustee in writing that upon the maturity of such Permitted Investment the proceeds thereof, if not reinvested in a Permitted Investment in accordance with the instructions of the Trustee, shall be deposited solely in a Trust Account in accordance with Section 3.4(c). Section 4.2 The Trustee may pay litigation and administrative expenses, deposit money from the Trust Account in one or more FDIC insured demand deposit accounts at any bank or trust company, excluding that of the Trustee, which has a capital stock and surplus aggregating at least $100,000,000; provided that total deposits in each account and with each institution do not exceed the FDIC insurance limits for such account or accounts. Section 4.3 All Permitted Investments shall be on terms consistent with the distribution requirements of Article 7 of this Agreement and the other obligations of the Trust. Section 4.4 Any of the foregoing investments purchased with any of the Trust Property shall be deemed a part of the Trust Property. Any earned interest, dividends, distributions or gains from Permitted Investments shall be included in the Trust Property. ARTICLE 5 CONCERNING THE TRUSTEE Section 5.1 The Trustee may resign as Trustee at any time by giving prior written notice to Leucadia; provided, however, that such resignation shall not be effective earlier than sixty (60) days after the date of such notice unless an 7 earlier effective date is agreed to by Leucadia and a new Trustee shall have been appointed. Section 5.2 Upon resignation, death, or removal of a Trustee, a successor trustee (a "Successor Trustee") shall be appointed by Leucadia on behalf of the Beneficiaries, and the appointment of the Successor Trustee shall be binding upon all Beneficiaries then holding beneficial interests in the Trust. Section 5.3 Any Successor Trustee shall execute and deliver to the Beneficiaries and to the predecessor Trustee an instrument accepting such appointment, the terms and conditions of which shall be the same as those contained in this Agreement, and thereupon such Successor Trustee, without further act, shall be vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Trustee in the Trust with like effect as if originally named as Trustee herein; but nevertheless, upon the written request of such Successor Trustee, the predecessor Trustee shall (i) execute, acknowledge and deliver such instruments of conveyance and further assurances and do such other things as may reasonably be required for more fully and certainly vesting and confirming unto said Successor Trustee all the right, title and interest of the predecessor Trustee in and to the Trust Property; (ii) duly assign, transfer, deliver, account for and pay over to such Successor Trustee any property or money then held by such predecessor Trustee upon the trusts herein expressed; and (iii) deliver to such Successor Trustee any and all records, or copies thereof, in respect of the Trust which it may have. ARTICLE 6 TRUSTEE'S COMPENSATION Section 6.1 The Trustee hereby waives any commission or fees for the performance of its obligations as Trustee under this Agreement. ARTICLE 7 DISTRIBUTIONS TO BENEFICIARIES Section 7.1 All Trust Property shall be distributed by the Trustee to the Beneficiaries, as beneficiaries under the Trust solely in accordance with Section 7.2, on one or more distribution dates as determined by the Trustee. 8 Section 7.2 The Trustee shall not be obligated to make any distributions of Trust Property prior to July 5, 1999. As promptly as practicable following the acquisition by the Trust of the Additional HomeFed Stock under the Purchase Agreement, the Trust shall distribute the HomeFed Stock Interest (and any other shares of HomeFed Stock that may then be Trust Property) and any cash then held as Trust Property to the Beneficiaries; provided, however, that the distribution of such shares of HomeFed Stock from the Trust to the Beneficiaries shall be pursuant to an effective registration statement under the Securities Act, unless the Trustee shall have received an opinion of counsel to the effect that no such registration statement is required for such distribution. In the event that the shares of Additional HomeFed Stock are not purchased by July 31, 1999 and the Purchase Agreement is then terminated, the Trustee as promptly as practicable shall distribute to the Beneficiaries the Trust Property then owned by the Trust; provided, however, that the distribution of shares of the Owned HomeFed Stock from the Trust to the Beneficiaries shall be pursuant to an effective registration statement under the Securities Act, unless the Trustee shall have received an opinion of counsel to the effect that no such registration statement is required for such distribution. No certificates representing fractional shares of HomeFed Stock will be distributed by the Trustee to the Beneficiaries. In lieu of any fractional shares of HomeFed Stock, (the "Fractional Shares"), the Trustee shall, on behalf of all holders of such Fractional Shares, (i) determine the number of shares of HomeFed Stock that would otherwise have been distributed as Fractional Shares, (ii) sell such shares at the then prevailing market price, and (iii) determine the portion, if any, of the net proceeds of such sale to which each holder of a Fractional Share interest is entitled, by multiplying the amount of the aggregate net proceeds of the sale of the Factional Shares, by a fraction, the numerator of which is the amount of the Fractional Share to which such holder of a Fractional Share is entitled, and the denominator of which is the aggregate amount of Fractional Shares to which all holders of Fractional Shares are entitled. As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Fractional Shares in lieu of such Fractional Shares, the Trustee shall distribute such amounts, without interest, to such holders. Any cash received on distribution in respect of, or proceeds from the sale of, the HomeFed Stock Interest (or any other shares of HomeFed Stock that may then be Trust Property) shall be distributed by the Trustee as promptly as practicable. 9 ARTICLE 8 LIMITATION ON BENEFICIARY'S ASSIGNMENT OF RIGHT TO DISTRIBUTION Section 8.1 Beneficial interests in the Trust, and any other interests therein, (i) cannot be assigned, conveyed, hypothecated, pledged or otherwise transferred, voluntarily or involuntarily, directly or indirectly, except by will or under the laws of descent and distribution; (ii) shall not be evidenced by a certificate or other instrument; (iii) shall not possess any voting rights; (iv) shall not be entitled to receive any distributions, except pursuant to Article 7; and (v) shall not represent any equity interest in HomeFed Corporation. ARTICLE 9 TERMINATION OF THE TRUST Section 9.1 Other than the obligations of the Trustee under Section 3.5 hereof, this Agreement and the Trust created hereby shall terminate and this Agreement shall be of no further force or effect on the earlier to occur of (i) the date on which all of the Trust Property has been distributed to the Beneficiaries in accordance with Article 7 or (ii) December 31, 2001. Section 9.2 No transfer, by operation of law or death, of the right, title and interest of any Beneficiary in and to the Trust Property or hereunder shall operate to terminate this Agreement or the Trust hereunder or entitle any successor or transferee of such Beneficiary to an accounting (except to the extent generally required under Section 3.7) or to the transfer to it of legal title to any part of the Trust Property. ARTICLE 10 JURISDICTION Section 10.1 Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 10 ARTICLE 11 MISCELLANEOUS Section 11.1 As used in this Agreement (including the recitals herein), capitalized terms shall have the meanings assigned to them (such meanings to be equally applicable to both the singular and plural forms of the terms defined or to the feminine, masculine or neuter gender, as the case may be), unless the context otherwise requires. Section 11.2 This Agreement is not intended to create and shall not be interpreted as creating an association, corporation, partnership or joint venture of any kind; it is intended to create an investment trust within the meaning of Treasury Regulation Section 301.7701-4(c)(i), to be governed and construed in all respects as a trust without transferable interests; any ambiguities in this Agreement shall be resolved, and any income tax reporting obligations of the Trust and the Beneficiaries shall be fulfilled, in a manner consistent with such treatment. Section 11.3 Leucadia shall not have or incur any obligation or liability to any other person on account of any act or failure to act by the Trustee or any other person. Section 11.4 The Trustee shall not assume any liability or incur any obligation or liability to any other person in connection with the transfer by Leucadia to the Trustee of the Trust Property, and no delegation of duty of performance to the Trustee or assumption of liabilities of Leucadia by the Trustee is intended hereby except as expressly set forth in Section 1.1 of this Trust Agreement. Section 11.5 As promptly as practicable after the date hereof, Leucadia shall certify to the Trustee the names of the Beneficiaries and the amount of beneficial interests in the Trust held by each such Beneficiary. Leucadia shall indemnify, defend and hold the Trustee harmless against claims of any nature whatsoever with respect to Leucadia's determination of a Beneficiary's share of beneficial interests in the Trust. Section 11.6 This Trust Agreement may be amended from time to time by the Trustee and Leucadia, without the consent of any holders of beneficial interests in the Trust, but only (i) to cure any ambiguity, correct or supplement any provision herein which may be inconsistent with any other provision herein, or to 11 make any other provisions with respect to matters or questions arising under this Trust Agreement not inconsistent with the other provisions of this Trust Agreement, or (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times or to ensure that the Trust will not be required to register as an "investment company" under the 1940 Act, or be classified as other than a grantor trust for United States federal income tax purposes; provided, however, that in the case of clause (i), such action shall not adversely affect in any material respect the interests of any holder of a beneficial interest in the Trust. In all other cases, this Trust Agreement may be amended with the approval of holders of a majority of beneficial interests in the Trust, except with respect to changes to the definition of Trust Property, which shall require a favorable vote of all Beneficiaries. Any amendments to this Trust Agreement shall become effective upon execution by the Trustee and Leucadia and notice thereof shall be given to the Beneficiaries. Section 11.7 Except as provided herein, the obligations, duties and/or rights of the Trustee under this Agreement shall not be assignable, voluntarily, involuntarily or by operation of law, and any such assignment shall be void. All covenants and agreements contained herein shall be binding upon and are personal to the Trustee and shall inure to the benefit of the Trustee and any Successor Trustee in the same manner. Section 11.8 This Agreement, together with the related instruments expressly referred to herein, constitutes the entire agreement of the parties, and all such agreements shall be construed as integrated and complimentary of each other. Section 11.9 Article headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. SECTION 11.10 This Agreement, shall be construed in accordance with and governed by the laws of the State of New York. SECTION 11.11 This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument. This Agreement shall become effective immediately upon the exchange of executed signature pages, which may be by facsimile. 12 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the first date hereinabove written. Leucadia National Corporation By: /s/ Barbara L. Lowenthal ------------------------------------ Title: Vice President Trustee: /s/ Joseph A. Orlando ----------------------------------------- Joseph A. Orlando EX-2 3 EXHIBIT 2 STOCK PURCHASE AGREEMENT BETWEEN HOMEFED CORPORATION AND LEUCADIA NATIONAL CORPORATION Dated as of August 14, 1998 NYFS04...:\30\76830\0001\2475\AGR7238W.59H TABLE OF CONTENTS Page I. DEFINITIONS........................................................ 1 II. PURCHASE OF SECURITIES............................................. 2 2.1. Purchase of Securities....................................... 2 2.2. Anti-dilution................................................ 2 III. PURCHASE PRICE AND PAYMENT......................................... 2 3.1. Amount of Purchase Price..................................... 2 3.2. Payment of Purchase Price.................................... 2 IV. THE COMPANY'S REPRESENTATIONS AND WARRANTIES....................... 2 4.1. Organization................................................. 3 4.2. Due Authorization............................................ 3 4.3. Authorized and Outstanding Shares of Capital Stock........... 3 4.4. Authorization and Issuance of Securities..................... 3 4.5. Subsidiary Organizations..................................... 4 4.6. No Other Rights.............................................. 4 4.7. No Conflicts................................................. 4 4.8. No Consents.................................................. 4 4.9. Litigation................................................... 4 V. LUK's REPRESENTATIONS AND WARRANTIES............................... 5 5.1. Organization................................................. 5 5.2. Due Authorization............................................ 5 5.3. No Conflicts................................................. 5 5.4. LUK's Investment Intention................................... 6 VI. COVENANTS.......................................................... 6 6.1. Board of Directors........................................... 6 6.2. Tax Compliance............................................... 6 6.3. Registration Rights.......................................... 6 VII. CONDITIONS PRECEDENT............................................... 7 7.1. Conditions Precedent to Obligations of LUK................... 7 7.2. Conditions Precedent to Obligations of the Company........... 8 i VIII. CLOSING............................................................ 8 8.1. Closing Date................................................. 8 8.2. Liquidated Damages........................................... 9 8.3. Specific Performance......................................... 9 IX. SECURITIES LAW MATTERS............................................. 9 9.1. Legends...................................................... 9 X. INDEMNIFICATION AND EXPENSES....................................... 10 10.1. Indemnification by the Company.............................. 10 10.2. Indemnification by LUK...................................... 10 XI. MISCELLANEOUS...................................................... 10 11.1. Notices..................................................... 10 11.2. Binding Effect; Benefits.................................... 12 11.3. Waiver...................................................... 12 11.4. Amendment................................................... 12 11.5. Assignability............................................... 12 11.6. Applicable Law.............................................. 13 11.7. Section and Other Headings.................................. 13 11.8. Severability................................................ 13 11.9. Counterparts................................................ 13 ii STOCK PURCHASE AGREEMENT ------------------------ STOCK PURCHASE AGREEMENT, dated as of August 14, 1998, between HomeFed Corporation, a Delaware corporation having an office at 529 East South Temple, Salt Lake City, Utah 84012 (the "Company"), and Leucadia National Corporation, a New York corporation having an office at 315 Park Avenue South, New York, New York 10010 ("LUK"). W I T N E S S E T H: WHEREAS, the Company emerged from bankruptcy under the United States Bankruptcy Code, pursuant to a plan of reorganization (the "Plan") that became effective on July 3, 1995 (the "Effective Date"); and WHEREAS, the Plan prohibits the Company from issuing any additional shares of stock prior to the fourth anniversary of the Effective Date; and WHEREAS, currently LUK beneficially owns approximately 41% of the issued and outstanding common stock, par value $.01 per share of the Company (the "Common Stock"); and WHEREAS, upon the terms and conditions hereinafter provided, the Company has agreed to issue and sell to LUK shares of its Common Stock, and LUK has agreed to purchase such shares upon the terms and conditions hereinafter provided; NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, it is agreed as follows: I. DEFINITIONS References to this "Agreement" shall mean this Stock Purchase Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to this Agreement as the same may be in effect at the time such reference becomes operative. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits 1 hereto, as the same may from time to time be amended or supplemented, and not to any particular section, subsection or clause contained in this Agreement. II. PURCHASE OF SECURITIES 2.1. Purchase of Securities. Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date (as defined herein) the Company shall issue, sell and deliver to LUK, and LUK shall purchase from the Company 37,056,112 shares of Common Stock (the "Securities"). 2.2. Anti-dilution. Subject to the provisions of Section 7.2(c) hereof, if the Company issues additional shares to any party other than LUK, the number of shares of Common Stock constituting the Securities shall be increased so that the Securities purchased on the Closing Date will give LUK an 87.5% interest in the Company on a fully diluted basis. III. PURCHASE PRICE AND PAYMENT 3.1. Amount of Purchase Price. The aggregate purchase price for the Securities (the "Purchase Price") shall be $6,670,100; provided, however, that if the number of shares constituting the Securities to be purchased under this Agreement results in LUK's percentage share ownership in the Company being below 87.5% pursuant to Section 7.2(c), the Purchase Price shall be reduced accordingly. 3.2. Payment of Purchase Price. (a) On the date hereof, LUK shall advance five million dollars ($5,000,000) of the Purchase Price, against the aggregate Purchase Price (the "Advance"). (b) Upon the terms and subject to the conditions set forth in this Agreement, on the Closing Date, LUK shall pay to the Company the unpaid balance of the Purchase Price and the Company shall deliver to LUK the Securities issued in the name of LUK or such other person or persons as LUK shall direct. (c) Payments of the Purchase Price shall be made by wire transfer of immediately available funds into an account designated by the Company. IV. THE COMPANY'S REPRESENTATIONS AND WARRANTIES 2 The Company makes the following representations and warranties to LUK, each and all of which shall survive the execution and delivery of this Agreement and the Closing (as defined herein) hereunder: 4.1. Organization. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware with corporate power and authority to own, lease and operate its properties and to conduct its business as currently being and as proposed to be conducted. The Company is qualified as a foreign corporation to transact business in California and in any other jurisdiction where it is required to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the condition, financial or otherwise, or the results of operations, business or business prospects of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). 4.2. Due Authorization. The Company has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming that this Agreement has been duly executed and delivered by LUK, constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as rights to indemnity hereunder may be limited by federal or state securities laws and except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and similar laws relating to or affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4.3. Authorized and Outstanding Shares of Capital Stock. The authorized capital stock of the Company consists of one hundred million (100,000,000) shares of Common Stock, of which ten million (10,000,000) shares currently are issued and outstanding as of the date hereof. No subscription, warrant, option or other right to purchase or acquire any shares of any class of capital stock of Company or securities convertible into such capital stock is authorized or outstanding, and other than this Agreement there is no commitment of Company to issue any such shares, warrants, options or other such rights or securities. After giving effect to the issuance of the Securities pursuant to this Agreement, an aggregate of 47,056,112 shares of Common Stock will be outstanding, of which the Securities together with other shares of Common Stock beneficially owned by LUK will represent approximately 87.5% of the outstanding shares of Common Stock, unless the number of shares constituting the Securities is reduced pursuant to Section 7.2(c) hereof. 3 4.4. Authorization and Issuance of Securities. The issuance of the Securities has been duly authorized and, upon delivery to LUK of certificates therefor against payment in accordance with the terms hereof, the Securities will have been validly issued and fully paid and non-assessable, free and clear of all pledges, liens, encumbrances and preemptive rights. 4.5. Subsidiary Organizations. Each subsidiary of the Company has been duly organized and is validly existing and in good standing under the laws of the State of California, has corporate power and authority to own, lease and operate its properties and to conduct its business as currently being and as proposed to be conducted and is not required to be qualified as a foreign entity to transact business in any jurisdiction. All of the issued and outstanding capital stock of each such subsidiary has been duly authorized and validly issued, is fully paid and nonassessable and is owned directly by the Company. 4.6. No Other Rights. The issuance of the Securities is not subject to preemptive or other similar rights. 4.7. No Conflicts. Neither the Company nor any of its subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject, the effect of which default in performance or observance would have a Material Adverse Effect. None of the execution and delivery of this Agreement will conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the certificate of incorporation or by-laws of the Company or any applicable law, administrative regulation or administrative or court decree. 4.8. No Consents. No authorization, approval or consent of, or filing with, any court or governmental authority or agency is necessary or required in connection with the sale of the Securities hereunder or under the certificate of incorporation of the Company or the execution, delivery or performance of this Agreement or the Restated Certificate of Incorporation. 4 4.9. Litigation. There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the best knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, which is reasonably likely to have a Material Adverse Effect. There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending or, to the best knowledge of the Company, threatened, which would materially and adversely affect the consummation of the transactions contemplated by this Agreement. V. LUK's REPRESENTATIONS AND WARRANTIES LUK makes the following representations and warranties to the Company, each and all of which shall survive the execution and delivery of this Agreement and the Closing hereunder: 5.1. Organization. LUK has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of New York with corporate power and authority to own, lease and operate its properties and to conduct its business as currently being and as proposed to be conducted and to enter into and perform its obligations under this Agreement. LUK is qualified as a foreign corporation to transact business in each jurisdiction where it is required to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the business, financial condition or results of operation of LUK and its subsidiaries taken as a whole. 5.2. Due Authorization. LUK has the requisite corporate power and authority to enter into this Agreement and consummate the transactions contemplated hereby. This Agreement and the transactions contemplated hereby have each been duly authorized, executed and delivered by LUK, and this Agreement constitutes a legal, valid and binding agreement of the Company, enforceable against LUK in accordance with its terms, except as rights to indemnity hereunder may be limited by federal or state securities laws and except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and similar laws relating to or affecting creditors' rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 5.3. No Conflicts. LUK is not in violation of its certificate of incorporation or in default in the performance or observance of any material obligation, agreement, 5 covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which LUK is a party or by which it may be bound, or to which any of the property or assets of LUK or any of its subsidiaries is subject, the effect of which default in performance or observance would have a material adverse effect on the condition, financial or otherwise, or the results of operations, business or business prospects of LUK and its subsidiaries considered as one enterprise. The execution and delivery of this Agreement will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the LUK or any of its subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which LUK or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of LUK or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the certificate of incorporation or by-laws of LUK or any applicable law, administrative regulation or administrative or court decree. 5.4. LUK's Investment Intention. LUK represents and warrants that it is purchasing the Securities for its own account, for investment purposes and not with a view to the distribution thereof, except in compliance with the provisions of the Securities Act of 1933, as amended (the "Act"). LUK agrees that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the Securities (or solicit any offers to buy, purchase, or otherwise acquire or take a pledge of any of the Securities), except in compliance with the Act and the rules and regulations thereunder. 5.5. Access to Data. LUK has had an opportunity to discuss the Company's business, management, and financial affairs with its management and to review the Company's records and facilities, and LUK is relying for purposes of this Agreement upon its own due diligence review of the Borrower, not on any representation or warranty of the Borrower other than as expressly set forth in this Agreement. VI. COVENANTS 6.1. Board of Directors. Upon the execution of this Agreement, the number of directors constituting the Company's Board of Directors shall be increased to five, and Messrs. Joseph Steinberg and Patrick Bienvenue shall be nominated and duly elected to each serve as directors on the Company's Board of Directors. 6 6.2. Tax Compliance. The Company shall pay all transfer, excise or similar taxes in connection with the issuance, sale, delivery or transfer by the Company to LUK of the Securities and shall save LUK and any other holder of the Securities harmless without limitation as to time against any and all liabilities with respect to such taxes. The Company shall not be responsible for any taxes in connection with the transfer of the Securities by the holder thereof. The obligations of Company under this Section 6.2 shall survive the payment, prepayment or redemption of the Securities and the termination of this Agreement. 6.3. Registration Rights. At any time after the date hereof, upon the written request of LUK that the Company effect the registration under the Act (which shall be a shelf registration if requested by LUK) of all or part of the shares of Common Stock (including the Securities upon their issuance) owned by LUK (including any affiliate of LUK or any trust for the benefit of LUK's shareholders) and specifying the intended method or methods of disposition thereof, the Company shall cooperate with LUK and effect the registration under the Act of such shares as soon as practicable after receipt of such request. VII. CONDITIONS PRECEDENT 7.1. Conditions Precedent to Obligations of LUK. The obligation of LUK to purchase the Securities and to consummate the transactions contemplated by this Agreement is subject to the following conditions: (a) LUK shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to LUK) executed by an officer of the Company certifying that (i) all representations and warranties of the Company to LUK contained herein are true and correct in all material respects as of the Closing Date, with the same force and effect as if made as of the Closing Date; (ii) the Company shall have performed and complied in all material respects with the covenants and provisions of this Agreement required to be performed or complied with by it, on or prior to the Closing Date; and (iii) after giving effect to the sale of Securities contemplated hereby, the Company will not be in default under or breach of any material contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party. (b) LUK's receipt of certificates representing the Securities registered in LUK's name or in the name of such persons as LUK shall direct. 7 (c) LUK's receipt of a copy of the Company's certificate of incorporation, certified as of a recent date by the Secretary of State of the State of Delaware, and a copy of the by-laws, certified by the Secretary or Assistant Secretary of the Company as true and correct; (d) LUK's receipt of governmental certificates or telegrams evidencing that the Company is organized and in good standing in the State of Delaware; (e) The Company and Provence Hills Development Company, LLC have entered into a Development Management Agreement, dated the date hereof (the "Development Management Agreement"), a copy of which has been delivered to LUK, and each of such entities shall have delivered a certificate that such agreement is in full force and effect on the Closing Date and neither party to such agreement has given notice of termination to the other party to such agreement. 7.2. Conditions Precedent to Obligations of the Company. The obligation of the Company to issue the Securities pursuant to this Agreement is subject to the following conditions: (a) The Company shall have been furnished with certificates (dated the Closing Date and in form and substance reasonably satisfactory to the Company) executed by an officer of LUK certifying that (i) all representations and warranties of LUK to the Company contained herein are true and correct in all material respects as of the Closing Date, with the same force and effect as if made as of the Closing Date; and (ii) LUK shall have performed and complied in all material respects with the covenants and provisions of this Agreement required to be performed or complied with by it, on or prior to the Closing Date. (b) Provence Hills Development Company, LLC shall have entered into the Development Management Agreement. (c) The Company shall have been furnished with an opinion of Weil, Gotshal & Manges LLP dated the Closing Date to the effect that the issuance of the Securities pursuant to this Agreement shall not result in the application of any limitations under Section 382 or Section 383 of the Internal Revenue Code of 1986, as amended (the "Code"), on the use of the Tax Benefits (as defined in the Company's Restated Certificate of Incorporation); provided, however, that if the Company fails to receive the foregoing opinion, the Company will be obligated to deliver such lesser number of shares under Article 2 hereof, which number shall constitute the Securities under this Agreement, as shall result in increases calculated under Sections 8 382(g)(1)(A) and (B) of the Code aggregating 49.8 percentage points during the applicable "testing period" as defined in Section 382 of the Code culminating on the Closing Date, and the Company shall be furnished with an opinion of Weil, Gotshal & Manges LLP to the effect that the issuance of the Securities (as so adjusted) pursuant to this Agreement shall not result in the application of any Section 382 limitation on the use of the Tax Benefits. VIII. CLOSING 8.1. Closing Date. (a) The closing of the sale and purchase of the Shares provided for in Article III hereof (the "Closing") shall take place at the offices of Weil, Gotshal & Manges LLP, New York, New York at 10:00 a.m. (New York City time) (or at such time and at such place as the parties may designate) on the second business day following the date on which each of the conditions specified in Article VII hereof has been fulfilled (or waived by the party entitled to waive that condition), provided that in no event shall the Closing take place prior to July 5, 1999. The date on which the Closing occurs is referred to in this Agreement as the "Closing Date". (b) In the event that LUK fails to close because the conditions set forth in Section 7.1 have not been satisfied, the Company shall repay to LUK an amount equal to the Advance plus interest on the Advance which shall accrue at the rate of 6% per annum from the date of deposit of the Advance with the Company through the date such Advance is repaid to LUK. 8.2. Liquidated Damages. If the Company fails to deliver the Securities at the Closing (other than as a result of the exercise of its rights under Section 7.2 hereof), then the Company shall be required to pay the Advance to LUK and, at LUK's option, the Company shall either (i) repurchase the shares of Common Stock owned by LUK at 200% of the fair market value for such shares as of the Closing Date, but not less than a price per share of $1; or (ii) pay LUK $10,000,000. The Company and LUK agree that the payment obligation contained in the foregoing sentence is an integral part of the transactions contemplated by this Agreement and constitute liquidated damages and not a penalty. If the Company fails to pay such amount to LUK, then the Company shall pay the costs and expenses (including reasonable legal fees and expenses) in connection with any action, including the filing of any lawsuit or other legal action, taken to collect payment, together with interest on the amount of any unpaid fee at the publicly announced prime rate of Chase Manhattan Bank from the Closing Date to the date of prepayment. 8.3. Specific Performance. The parties hereto acknowledge that irreparable damage would result if this Agreement were not specifically enforced, and they 9 therefore consent that the rights and obligations of the parties under this Agreement, including the Company's obligation to sell the Securities to LUK, may be enforced by a decree of specific performance issued by a court of competent jurisdiction. Such remedy shall, however, not be exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise. IX. SECURITIES LAW MATTERS 9.1. Legends. Unless the Securities are the subject of an effective registration statement, each certificate representing the Securities shall bear a legend substantially in the following form: "THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM." X. INDEMNIFICATION AND EXPENSES 10.1. Indemnification by the Company. The Company agrees to indemnify, defend and hold LUK and its respective officers, directors, employees, agents and controlling persons (collectively, the "LUK Indemnitees") harmless from and against any and all expenses, losses, claims, damages and liabilities which are incurred by or threatened against the LUK Indemnitees, or any of them, including, without limitation, reasonable attorneys' fees and expenses, caused by, or in any way resulting from or relating to the Company's breach of any of the representations, warranties, covenants or agreements of the Company set forth in this Agreement. 10.2. Indemnification by LUK. LUK agrees to indemnify, defend and hold harmless the Company and its respective officers, directors, employees, agents, partners and controlling persons (collectively, the "Company Indemnitees") harmless from and against any and all expenses, losses, claims, damages and liabilities which are incurred by or threatened against the Company Indemnitees, or any of them, including, without limitation, reasonable attorneys' fees and expenses, caused by, or in any way resulting from or relating to LUK's breach of any of the representations, warranties, covenants or agreements of LUK set forth in this Agreement. 10 XI. MISCELLANEOUS 11.1. Notices. Whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any such communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged or by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback addressed as follows: If to Company at: HomeFed Corporation 529 East South Temple Salt Lake City, Utah 84012 Attn: Corrinne A. Maki Telecopy Number: (801) 524-1761 With a copy to: Pillsbury Madison & Sutro LLP 101 West Broadway Suite 1800 San Diego, California 92101-8219 Attn: K. Michael Garrett Telecopy Number: (619) 236-1995 If to LUK at: Leucadia National Corporation 315 Park Avenue South New York, New York 10010 Attn: Joseph S. Steinberg, President Telecopy Number: (212) 598-3245 11 with a copy to: Weil, Gotshal & Manges, LLP 767 Fifth Avenue New York, New York 10153 Attn: Stephen E. Jacobs Telecopy Number: (212) 310-8007 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback, or three (3) business days after the same shall have been deposited with the United States mail. 11.2. Binding Effect; Benefits. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors, transferees and permitted assigns. Except as expressly set forth herein, nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors, transferees or permitted assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein. 11.3. Waiver. Either party hereto may by written notice to the other (a) extend the time for the performance of any of the obligations or other actions of the other party under this Agreement; (b) waive compliance with any of the conditions or covenants of the other party contained in this Agreement; and (c) waive or modify performance of any of the obligations of the other party under this Agreement. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of either party, shall be deemed to constitute a waiver by the party taking such action, of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by either party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder. 12 11.4. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument executed by LUK and the Company. 11.5. Assignability. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by Company. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by LUK without the prior written consent of the Company; provided, however, that without the consent of the Company LUK may assign this Agreement and any or all rights or obligations hereunder (including, without limitation, LUK's rights to purchase the Securities and LUK's rights to seek indemnification hereunder) to any affiliate of LUK or to any trust for the benefit of LUK's shareholders. Upon any such permitted assignment, the references in this Agreement to LUK shall also apply to any such assignee unless the context otherwise requires; provided, however, that the conditions set forth in Section 7.2 shall continue to apply to LUK. 11.6. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles thereof regarding conflict of laws. 11.7. Section and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 11.8. Severability. In the event that any one or more of the provisions contained in this Agreement shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and the remaining provisions of this Agreement shall not be in any way impaired. 11.9. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. [Remainder of Page Intentionally Left Blank] 13 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. HOMEFED CORPORATION By: /s/ Timothy M. Considine ------------------------------ Name: Timothy M. Considine Title: Chairman of the Board LEUCADIA NATIONAL CORPORATION By: /s/ Joseph A. Orlando ------------------------------ Name: Joseph A. Orlando Title: Vice President and Chief Financial Officer 14 EX-3 4 EXHIBIT 3 AMENDED AND RESTATED LOAN AGREEMENT between HOMEFED CORPORATION a Delaware corporation, as Borrower, and LEUCADIA FINANCIAL CORPORATION, a Utah corporation, as Lender Dated as of August 14, 1998 NYFS04...:\30\76830\0001\2475\AGR7088X.50F AMENDED AND RESTATED LOAN AGREEMENT This AMENDED AND RESTATED LOAN AGREEMENT, dated as of August __, 1998, is entered into by and between HOMEFED CORPORATION, a Delaware corporation, as Borrower, and LEUCADIA FINANCIAL CORPORATION, a Utah corporation as Lender. RECITALS A. On October 22, 1992, Borrower filed in the United States Court for the Southern District of California (the "Bankruptcy Court"), a voluntary petition for relief under chapter 11 of Title 11 of the United States Bankruptcy Code which was later consolidated with an involuntary bankruptcy case initiated by certain holders of debentures on June 25, 1992, and was assigned Case No. 92-07591-All (the "Bankruptcy Case"). B. Borrower filed a Fourth Amended Plan of Reorganization (the "Plan") in the Bankruptcy Case, which was approved by its creditors and confirmed by the Bankruptcy Court by Order of Confirmation dated December 19, 1994 (which Order of Confirmation was modified as of June 14, 1995). C. Lender is the largest shareholder of Borrower, and Lender worked with Borrower to create the Plan. It is in the best interest of Lender to enter into this Loan Agreement, and to perform its other obligations under and otherwise act in compliance with the Plan. D. The original Loan Agreement, entered on the Effective Date (the "Original Loan Agreement"), was required under the Plan. The borrowing made under the Original Loan Agreement was evidenced by a promissory note executed on the Effective Date by Borrower ("Original Note"), and was secured by the Stock Pledge, the Guaranties, the Security Agreements, the Deeds of Trusts, and related financing statements, all of which documents are more fully described below in the definition of "Original Plan Documents." E. As an inducement to the Borrower to enter into a Development Management Agreement with Provence Hills Development Company, LLC, a Delaware limited liability company, Lender has agreed to restructure certain of Borrower's obligations under the Original Loan Agreement and the Original Note (the "Restructuring"), among other things, (a) to extinguish the convertibility provisions thereof; (b) to increase the principal amount outstanding by the amount of accrued but unpaid interest to date; (c) to reduce the interest rate to 6% per year, compounded annually; and (d) to extend the term of the Original Note to December 31, 2004. The terms of the Restructuring are reflected in the amended and restated promissory note executed by Borrower as of the date hereof (the "Note") and this Loan Agreement, the Stock Pledge, the Guaranties, the Security Agreements, the Deeds of Trusts, and related financing statements, all of which documents are more fully described below in the definition of Restructured Plan Documents. NOW, THEREFORE, in consideration of the above recitals and the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS 1.1 Defined Terms. As used in this Loan Agreement, the following terms shall have the meanings set forth respectively after each: "Affiliate" means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (and its correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, (i) any Person that owns, directly or indirectly, 50% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation (other than securities having such power only by reason of the happening of a contingency) will be deemed to control such corporation, (ii) any Person who is a general partner or an Affiliate of a general partner of a partnership will be deemed to control such partnership, and (iii) any Person who owns or controls 50% or more of either the voting power as to any matters on which owners are permitted to vote or of the value of the ownership interests of any other Person (including a corporation or partnership), will be deemed to control such other Person. "Borrower" means HomeFed Corporation, a Delaware corporation. 2 "Business Day" means a day other than Saturday, Sunday or other day on which commercial banks are authorized or required by law to close under the laws of the States of California and/or Utah. "Cash" means, when used in connection with any Person, all monetary and non-monetary items belonging to such Person that are treated as cash in accordance with generally accepted accounting principles, consistently applied. "Cash Equivalent" means (i) securities with maturities of one year or less from the date of the acquisition issued or fully guaranteed or insured by the United States government or any agency thereof, (ii) commercial paper of an issuer rated at least "A-1" by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc., or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments. "Certificate of a Responsible Official" means a certificate signed by a Responsible Official of the Person providing the certificate. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means the common stock, par value $.01 per share, of Borrower. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of such person with respect to any Indebtedness or contractual obligation of another person, if the purpose or intent of such Person in incurring the Contingent Obligation is to provide assurance to the obligee of such Indebtedness or contractual obligation that such Indebtedness or contractual obligation will be paid or discharged, or that any agreement relating thereto will be complied with, or that any holder of such Indebtedness or contractual obligation will be protected (in whole or in part) against loss in respect thereof. Contingent Obligations of a Person include, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of an obligation of another Person, and (b) any liability of such Person for an Obligation of 3 another Person through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the solvency or any balance sheet item, level of income or financial condition of another Person, (iii) to make take-or-pay or similar payments, if required, regardless of non-performance by any other party or parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such obligation or to assure the holder of such obligation against loss, or (v) to supply funds to or in any other manner invest in such other Person (including, without limitation, to pay for property or services irrespective of whether such property is received or such services are rendered), if in the case of any agreement described in subclause (i), (ii), (iii), (iv), or (v) of this sentence the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported. "Default" means any Event of Default and/or any event that, with the giving of notice or passage of time or both, would be an Event of Default. "dollars" or "$" means United States dollars. "Effective Date" means July 3, 1995. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Event of Default" shall have the meaning ascribed to it in Section 8.1. "GAAP" means United States generally accepted accounting principles as established from time to time. "Government Securities" means readily marketable direct obligations of the United States of America or obligations fully guaranteed by the United states of America. 4 "Governmental Agency" means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or (c) any court, administrative tribunal or public utility. "Hazardous Materials" means flammable explosives, radioactive materials, petroleum, asbestos, polychlorinated biphenyls and hazardous substances, materials or wastes which are defined as hazardous or toxic substances, materials or waste under any applicable Law. "Indebtedness" means, with respect to any Person (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (iii) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or Lender under such agreement in the event of default are limited to repossession or sale of such property), (iv) all Contingent Obligations of such Person, (v) all obligations of such Person to purchase, redeem or otherwise acquire for value any stock or stock equivalents of such Person, valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, and (vi) all Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien upon or on property, and (vii) all liabilities of such Person that would be shown on a balance sheet of such Person prepared in conformity with GAAP. "Interest Payment Date" means the last day of each September, December, March and June to occur while the Note is outstanding. "Investment" means, when used in connection with any Person, any investment by or of that Person, whether by means of purchase or other acquisition of stock or other securities or by means of loan, advance, capital contribution, guaranty or other debt or equity participation or interest in any other Person, or otherwise, and includes, without limitation, any partnership and joint venture interests of such Person. 5 "Laws" means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents. "Lender" means Leucadia Financial Corporation, a Utah corporation, and any holder of the Note or any interest therein or any one or more or all of their successors in interest, as the context requires or permits. "Lender's Office" means Lender's address as set forth on the signature pages of this Loan Agreement, or such other address as Lender hereafter may designate by written notice to Borrower. "Lien" means any pledge, hypothecation, security interest, encumbrance, lien or charge of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, affecting any Property, including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and/or the filing of or agreement to give any financing statement under the Uniform Commercial Code or comparable Law of any jurisdiction. "Loan" means the principal amount outstanding under the Original Loan Agreement as of the date hereof. "Loan Agreement" means this Amended and Restated Loan Agreement, either as originally executed or as it may from time to time be supplemented, modified, amended, restated or extended. "Material Adverse Effect" means a material adverse effect on the business, operations or condition (financial or otherwise) of Borrower and its Subsidiaries taken as a whole. "Maturity Date" means December 31, 2004. "Note" shall have the meaning set forth in Recital E and shall be substantially in the form and substance of Exhibit A, with all blanks properly completed, either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or refinanced. 6 "Obligations" means all present and/or future obligations of every kind or nature of Borrower and its Subsidiaries at any time and/or from time to time owed to Lender under any one or more of the Plan Documents, whether due or to become due, matured or unmatured, liquidated or unliquidated, or contingent or noncontingent, including obligations of performance as well as obligations of payment, and including, without limitation, any and all expenses (including without limitation, counsel fees and expenses) incurred by Lender in enforcing its rights under this Loan Agreement as well as interest that accrues after the commencement of any bankruptcy or insolvency proceeding by or against Borrower or any Subsidiary or Affiliate of Borrower. "Person" means any entity, whether an individual, trustee, corporation, general partnership, limited partnership, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture, Governmental Agency, or otherwise. "Plan Documents" means all of the following documents, in each case either as originally executed or as the same may from time to time be supplemented, modified, amended, restated or extended: (a) this Loan Agreement; (b) the Note; (c) the Security Agreement and Stock Pledge ("Stock Pledge"), dated July 3, 1995, between Borrower and Lender; (d) the Payment Guaranty, dated July 3, 1995, executed by HomeFed Communities, Inc., a California corporation ("HomeFed Communities"); (e) the Security Agreement, dated July 3, 1995, between HomeFed Communities and Lender; (f) the Payment Guaranty, dated July 3, 1995, executed by HomeFed Resources Corporation a California corporation ("HomeFed Resources"); (g) the Security Agreement, dated July 3, 1995, between HomeFed Resources and Lender; 7 (h) the Deed of Trust, dated July 3, 1995, executed by Paradise Valley Communities No. 1, a California general partnership ("Paradise Valley"); (i) the Payment Guaranty, dated July 3, 1995, executed by Paradise Valley in favor of Lender; (j) the Security Agreement, dated July 3, 1995, between Paradise Valley and Lender; (k) the Payment Guaranty, dated July 3, 1995, executed by Northfork in favor of Lender (collectively with the Payment Guaranties of HomeFed Communities, HomeFed Resources and Paradise Valley, the "Payment Guaranties"); and (l) the Security Agreement, dated July 3, 1995, between Northfork and Lender (collectively with the Security Agreements of HomeFed Communities, HomeFed Resources and Paradise Valley, the "Security Agreements"). "Principal" means the outstanding principal amount of the Loan, which shall equal $26,462,381.64. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Responsible Official" means: (a) When used with reference to any Person other than an individual, any corporate officer of such Person, general partner of such Person, corporate officer of a corporate general partner of such Person, or corporate officer of a corporate general partner of a partnership that is a general partner of such Person, or any other responsible official thereof duly acting on behalf thereof; and (b) When used with reference to a Person who is an individual, such Person. "Right of Others" means, as to any Property in which a Person has an interest, any legal or equitable claim, right, title or other interest (other than a Lien) in or with respect to that Property held by any other Person, and any option or right held by any other Person to acquire any such 8 claim, right, title or other interests including any option or right to acquire a Lien. "Securities Act" means the Securities Act of 1933, as amended. "Subsidiary" means HomeFed Communities, HomeFed Resources, Northfork, Paradise Valley and, after the date hereof, any other corporation, association, partnership business trust or other business entity of which Borrower shall at any time own directly or indirectly through one or more Subsidiaries at least a majority (by number of votes) of the outstanding voting stock of such entity. "to the best knowledge of" means, when modifying a representation, warranty or other statement of any Person, that the fact or situation described therein is known by the Person (or, in the case of a Person other than a natural Person, known by a Responsible Official of that Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a reasonable Person in similar circumstances would have done) should have been known by the Person (or, in the case of a Person other than a natural Person, should have been known by a Responsible Official of that Person). 1.2 Use of Defined Terms. Any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. 1.3 Accounting Terms. All accounting terms not specifically defined in this Loan Agreement shall be construed in conformity with, and all financial data required to be submitted by this Loan Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect on the date hereof, except as otherwise specifically prescribed herein. 1.4 Exhibits. Any and all exhibits to this Loan Agreement, either as originally existing or as the same may from time to time be supplemented, modified or amended, are incorporated herein by this reference. 9 ARTICLE 2 NONREVOLVING LOAN 2.1 The Loan. The Loan shall be evidenced by the Note of even date herewith, which shall be executed and delivered by Borrower. 2.2 Non-revolving. To the extent the Loan from time to time shall be repaid by Borrower as permitted by Section 3.5, the Loan may not be reborrowed. 2.3 Use of Proceeds. The Borrower has used the proceeds of the Loan to finance the Plan. No part of the proceeds of the Loan was used for the purpose of "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of governors of the Federal Reserve System as now and from time to time in effect ("Regulation U"). ARTICLE 3 PAYMENTS 3.1 Payment Terms. Commencing on September 30, 1998, only interest on the outstanding Principal shall be payable quarterly in arrears on each Interest Payment Date, through the Maturity Date, interest calculated at the rate of 6% per annum; and on the Maturity Date, all unpaid Principal shall be due and payable. 3.2 Non-Business Days. If any payment to be made by Borrower or any other party under any Plan Document shall come due on a day other than a Business Day, payment shall be made on the next succeeding Business Day and the extension of time shall be reflected in computing interest. 3.3 Manner and Treatment of Payments. (a) Each payment hereunder or on the Note or under any other Plan Document shall be made to Lender, at Lender's Office or at such other place as Lender may designate, for the account of Lender, in immediately available funds not later than 12 noon Utah time on the day of payment (which must be a Business Day). All payments shall be made in lawful money of the United States of America. (b) Each payment of any amount payable by Borrower under this Loan Agreement and/or any other Plan Document shall be made free and clear of, and without reduction by 10 reason of, any taxes, assessments or other charges imposed by any Governmental Agency, central bank or comparable authority. 3.4 Payment of Overdue Principal and Interest. The Borrower shall pay interest on overdue Principal at the rate borne by the Note; it shall pay interest on the overdue installments of interest at the same rate to the extent lawful, such interest being due and payable on demand of Lender. 3.5 Prepayments. The Note shall be prepayable in whole, or in part, without penalty or charge, upon 30 days prior written notice to Lender. 3.6 Limitation on Interest. All agreements between Borrower and Lender are hereby expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to be paid to Lender for the use, forbearance or retention of the indebtedness evidenced hereby exceed the maximum amount which Lender is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereto, at the time performance of such provision shall be due, shall involve exceeding such amount, then the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if from any circumstance Lender should ever receive as interest an amount which would exceed such maximum amount, such amount which would be excessive interest shall be applied to the reduction of the Principal balance evidenced hereby and not to the payment of interest. As used herein, the term "applicable law" shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then the Note shall be governed by such new law as of its effective date. This provision shall control every provision of all agreements between Borrower and Lender. 3.7 Failure to Charge Not Subsequent Waiver. Any decision by Lender not to require payment of any interest, fee, cost or other amount payable under any Plan Document on any occasion shall in no way limit or be deemed a waiver of Lender's right to require full payment of any interest, fee cost or other amount payable under any Plan Document on any other or subsequent occasion. 3.8 Survivability. All of Borrower's obligations under this Article 3 shall survive until the Loan shall have been fully paid. 11 ARTICLE 4 COLLATERAL SECURITIES AND GUARANTIES 4.1 Security of Borrower. All of the Obligations are to be secured by a perfected first priority security interest (except as set forth in Section 6.4 of this Agreement) in all of the assets of Borrower whether now owned or hereafter acquired, including any capital stock held by Borrower, pursuant to the terms of the Stock Pledge. 4.2 Guaranties and Security of the Subsidiaries. The Obligations shall also be guaranteed pursuant to the terms of the Payment Guaranties. All of the obligations of the Subsidiaries under their respective Payment Guaranties shall be in turn secured by a perfected first priority security interest (except as set forth in Section 6.4 of this Agreement, and as revealed by title insurance policies issued to Lender as of July 3, 1995 covering real Property that shall as of July 3, 1995 be encumbered by the Deeds of Trust) in all of the assets of such Subsidiary, whether now owned or hereafter acquired pursuant to the terms of the Plan Documents to which such Subsidiary is a party. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BORROWER Borrower represents and warrants to Lender, as of the date hereof, that: 5.1 Existence and Qualification; Power; Compliance With Laws. Borrower is a corporation duly formed, validly existing and in good standing under the Laws of Delaware. The chief executive offices of Borrower are in Salt Lake City, Utah. Borrower is duly qualified or registered to transact business and is in good standing in California and in each other jurisdiction in which the conduct of its business or the ownership or leasing of its Property makes such qualification or registration necessary where the failure to be so qualified would have a Material Adverse Effect. Borrower has all requisite power and authority to conduct its business, to own and lease its Property and to execute, deliver and perform all of its Obligations under the Plan Documents. All outstanding Common Stock of Borrower is duly authorized, validly issued, fully paid and non-assessable and issued in compliance with all applicable state and federal securities and other Laws. Borrower is in compliance with all Laws and other legal requirements applicable to its business, has obtained all authorizations, consents, approvals, orders, licenses and permits from, and has accomplished all filings, registrations and qualifications with, or obtained exemptions from any of the foregoing from, any Governmental Agency that are 12 necessary for the transaction of its business as now conducted, except where the failure so to comply, file, register, qualify or obtain exemptions would not have a Material Adverse Effect. 5.2 Authority; Compliance with Other Agreements and Instruments and Government Regulations. The execution delivery and performance by Borrower of the Loan Agreement has been duly authorized by all necessary action on the part of Borrower, and do not and will not: (a) Require any consent or approval not heretofore obtained of any director, stockholder, security holder, partner or creditor of Borrower; (b) Violate or conflict with any provision of Borrower's charter, certificate or articles of incorporation or bylaws, or amendments thereto, as applicable; (c) Result in or require the creation or imposition of any Lien or Right of Others upon or with respect to any Property now owned or leased or hereafter acquired by Borrower; (d) Violate any provision of any Law, order, writ, judgment, injunction, decree, determination or award presently in effect and having applicability to Borrower; or (e) Result in a breach of or constitute a default under, or cause or permit the acceleration of any obligation owed under, any indenture or loan or credit agreement or any other material agreement, lease or instrument to which Borrower is a party or by which such Borrower or any of its Property is bound or affected; and neither Borrower, nor any Affiliate of Borrower is in default under any Law, order, writ, judgment, injunction, decree, determination or award, or any indenture, agreement, lease or instrument described in Section 5.2(e), in any respect that is materially adverse to the interests of Lender or that would have any Material Adverse Effect. 5.3 No Governmental Approvals Required. The Original Loan Agreement was approved by the Bankruptcy Court in conjunction with the Plan, and no additional authorization, consent, approval, order, license or permit from, or filing, registration or qualification with, or exemption from any of the foregoing from, any Governmental Agency is or will be required to authorize or permit under applicable Law the execution, delivery and performance by Borrower of and under any of the Plan Documents. 13 5.4 Subsidiaries. Borrower holds 400 shares of the outstanding Common Stock of HomeFed Communities, which shares constitute all of the outstanding shares of HomeFed Communities and are represented by a certificate of HomeFed Communities. Borrower also holds 20 shares of the outstanding Common Stock of HomeFed Resources, which shares constitute all of the outstanding shares of HomeFed Resources and are represented by a certificate of HomeFed Resources. HomeFed Resources and HomeFed Communities comprise all of the partners of Northfork and Paradise Valley. 5.5 Title to and Location of Property. Borrower and the Subsidiaries have good and valid title to all the Property reflected in the Financial Statements, other than Property subsequently sold in the ordinary course of business, free and clear of all Liens and Rights of Others other than Liens or Rights of Others permitted pursuant to Section 6.4. 5.6 Investment Company Act of 1940. Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940. 5.7 Litigation. Except as described in the Borrower Reports there are no actions, suits or proceedings pending or, to the best knowledge of Borrower, threatened against or affecting Borrower or any Property of Borrower in any court of Law or before any Governmental Agency. 5.8 Binding Obligations. Each of the Plan Documents will continue to constitute the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization arrangement, moratorium or other similar Laws relating to or affecting creditors' rights generally or equitable principles relating to the granting of specific performance and other equitable remedies as a matter of judicial discretion. 5.9 No Default. No event has occurred and is continuing that is an Event of Default. 5.10 Disclosure. No written statement made by Borrower to Lender in connection with this Loan Agreement or the Loan contains any untrue statement of a material fact or omits a material fact necessary to make the statement made not misleading. There is no fact which Borrower has not disclosed to Lender in writing which materially and adversely affects nor, so far as Borrower can now foresee, is reasonably likely to prove to affect materially and adversely the business, operations, Property, prospects, profits or 14 condition (financial or otherwise) of Borrower, or the ability of Borrower to perform its obligations under the Plan Documents. 5.11 Tax Liability. Borrower has filed all income tax returns which are required to be filed, and has paid, or made provision for the payment of, all taxes due for the transactions or periods covered by such returns, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided. 5.12 Insurance Coverage. There is in full force and effect one or more policies of insurance issued by insurers of nationally recognized responsibility insuring Borrower and its Property and business against losses and risks and in such amounts as are adequate for the business of Borrower and as are customarily carried by Persons engaged in the same or similar business. 5.13 Access to Data. Lender has had an opportunity to discuss Borrower's business, management, and financial affairs with its management and to review Borrower's records and facilities, and Lender is relying for purposes of this Agreement upon its own due diligence review of Borrower, not on any representation or warranty of Borrower other than as expressly set forth in this Agreement. ARTICLE 6 COVENANTS OF BORROWER From the date of this Agreement and for so long as any of the Loan remains unpaid, or any other sums, of any kind, due and payable by Borrower under this Loan Agreement or due and payable by Borrower to Lender under any other debt security, instrument, loan or other agreement, remain unpaid, Borrower shall, and shall, if appropriate, cause each of its Subsidiaries to, unless Lender otherwise consents in writing: 6.1 Payment of Principal and Interest. Duly and punctually pay the Principal and interest on the Note in accordance with its terms and the terms of this Loan Agreement. 6.2 Existence. Do or cause to be done all things necessary to preserve and keep in full force and effect its existence and the existence of the Subsidiaries, rights (charter and statutory) and franchises; provided, however, that it shall not be required to preserve any such right or franchise if its Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of its business and that the loss thereof does not have a Material Adverse Effect. 15 6.3 Maintenance of Property. Cause all Property used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, and prohibit waste and cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in its judgment may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent discontinuing the operation or maintenance of any of such Property if such discontinuance does not have a Material Adverse Effect and is, in its judgment, desirable in the conduct of its business. 6.4 Payment of Taxes and Other Claims. Pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon it or upon its income, profits or Property, and (2) any and all Liens and any and all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien; provided, however, that it shall not be required (i) to terminate that certain financing statement (California Federal Bank, secured party) filed with the California Secretary of State at no. 910092913, (ii) [to terminate those certain financing statements (Brock HomeFed Communities La Quinta, debtor; Community Bank, secured party) filed with the California Secretary of State at nos. 90209536, 90209538, and 90261832, which financing statements are due to expire in 1995, or (iii)] to pay or discharge or cause to be paid or discharged any such tax, assessment, charge, Lien or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and for which adequate reserves are maintained. 6.5 Margin Stock. Refrain from "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U. 6.6 No Plan Amendments, Etc. Refrain from amending any Plan Documents without the prior written consent of Lender except as specifically contemplated by this Agreement. 6.7 Preservation of Tax Attributes. Take all reasonable steps necessary to preserve the existence and availability for federal income tax purposes of Borrower's net operating losses. 6.8 Conversion Reinstatement. Upon the written request of the Lender, the Company agrees that it shall submit for shareholder approval a proposal to amend its Restated Certificate of Incorporation to eliminate the restriction contained in Article 4A 16 thereof and to reinstate Article 5 of the Original Loan Agreement and any related provisions of the Original Loan Agreement necessary to provide the Lender or its permitted assignees conversion privileges to convert the Note into not more than 54,000,000 shares of Common Stock at a conversion price of $0.45 per share, as such number of shares and purchase price may be adjusted from time to time in accordance with the terms of the Original Loan Agreement. ARTICLE 7 INFORMATION AND REPORTING REQUIREMENTS 7.1 Financial and Business Information. From the date of this Loan Agreement and for so long as the Loan remains unpaid or any other sums of any kind due and payable by Borrower under this Loan Agreement or due and payable by Borrower to Lender under any other debt security, instrument, loan or under any other agreement, remain unpaid Borrower shall, unless Lender shall otherwise consent in writing, deliver to Lender, at Borrower's sole expense: (a) As soon as practicable, and in any event within twenty (20) days after the end of each fiscal month of Borrower, (i) consolidated balance sheets of Borrower and its Subsidiaries as at the end of such month, setting forth in comparative form the corresponding figures as at the end of the corresponding month of their preceding fiscal year and (ii) consolidated statements of income, shareholders' equity, and cash flows of Borrower and its Subsidiaries for such month and for the portion of their fiscal year ended with such month, setting forth in comparative form the corresponding figures for the corresponding periods of their preceding fiscal year, all in reasonable detail, including footnotes. The preceding financial statements shall be certified by a Responsible Official of Borrower as fairly presenting in all material respects the financial condition, results of operations and changes in financial position of Borrower and its Subsidiaries in accordance with generally accepted accounting principles, consistently applied, as at such date and for such periods, subject only to normal year- end audit adjustments. (b) As soon as practicable, and in any event within thirty (30) days after the end of each fiscal quarter of Borrower (including the last fiscal quarter of each fiscal year, provided that with respect to such last quarter the financial statements required hereby may be in preliminary form, prior to year-end audit adjustments), (i) consolidated balance sheets of Borrower and its Subsidiaries as at the end of such quarter, setting forth in comparative form the 17 corresponding figures as at the end of the corresponding quarter of their preceding fiscal year and (ii) consolidated statements of income, shareholders' equity, and cash flows of Borrower and its Subsidiaries for such quarter and for the portion of their fiscal year ended with such quarter, setting forth in comparative form the corresponding figures for the corresponding periods of their preceding fiscal year, all in reasonable detail, including footnotes. The preceding financial statements shall be certified by a Responsible Official of Borrower as fairly presenting in all material respects the financial condition, results of operations and changes in financial position of Borrower and its Subsidiaries in accordance with generally accepted accounting principles, consistently applied, as at such date and for such periods, subject only to normal year-end audit adjustments. (c) As soon as practicable, and in any event within ninety (90) days after the close of each fiscal year of Borrower, (i) consolidated balance sheets of Borrower and its Subsidiaries as at the end of such fiscal year, setting forth in comparative form the corresponding figures as at the end of their preceding fiscal year, and (ii) consolidated statements of income, shareholders' equity, and cash flows of Borrower and its Subsidiaries for such fiscal year, setting forth in comparative form the corresponding figures for their previous fiscal year, all in reasonable detail. Such balance sheets and statements shall be prepared in accordance with generally accepted accounting principles, consistently applied, and such consolidated balance sheet and consolidated statements shall be accompanied by a report and opinion of independent public accountants selected by Borrower and reasonably satisfactory to Lender which report and opinion shall be prepared in accordance with generally accepted auditing principles as at such date. (d) As soon as practicable, and in any event within thirty (30) days after the end of each fiscal month of Borrower, a Certificate of a Responsible Official of Borrower setting forth a schedule of Investments made by Borrower and/or its Subsidiaries during such month, and during their fiscal year to date, separately for Borrower and each of its Subsidiaries, and in reasonable detail. (e) As soon as practicable, and in any event within thirty (30) days after filing, copies of any report or other document filed by Borrower or any of its Subsidiaries with any Governmental Agency. 18 (f) Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the shareholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with any Governmental Agency or with any securities exchange. (g) Promptly upon (and in no event later than five (5) Business Days after) becoming aware of the existence of any condition or event which constitutes a Default, a written notice specifying the nature and period of existence thereof and what action Borrower or its Subsidiaries are taking or propose to take with respect thereto. (h) Promptly upon becoming aware that any Person asserts a claim against Borrower or any of its Subsidiaries in excess of $25,000 and that such Person has given notice or taken any other action with respect to a claimed default or event of default, a written notice specifying the notice given or action taken by such Person and the nature of the claimed default or event of default and what action Borrower or its Subsidiaries are taking or propose to take with respect thereto. (i) Promptly upon any change in the name of Borrower or any Subsidiary or a change in Borrower's organizational structure, a written notice specifying such change. (j) Promptly upon the occurrence of any uninsured or partially insured loss (including the deductible amount) as a result of fire, theft, liability or Property damage in excess of an aggregate of $25,000, a written notice specifying the nature and amount of such loss. (k) Such other data and information as from time to time may be reasonably requested by Lender, including environmental audit reports prepared by recognized California environmental consultants retained by Borrower with the approval of Lender. 7.2 Compliance Certificates. So long as the loan remains unpaid or any other Obligation remains unpaid or unperformed in whole or in part, Borrower shall, upon the reasonable request of Lender, deliver to Lender, at Borrower's sole expense, not later than 45 days after the end of each fiscal quarter of Borrower, a Certificate of a Responsible Official of Borrower setting forth computations or other appropriate information showing, in detail satisfactory to Lender, whether any Default exists and, if so, the nature of the Default. 19 ARTICLE 8 EVENTS OF DEFAULT AND REMEDIES UPON EVENT OF DEFAULT 8.1 Events of Default. The existence or occurrence of any one or more of the following events, whatever the reason therefor, shall constitute an Event of Default; (a) Borrower fails to pay any installment of Principal or interest of any indebtedness on the Note or any portion thereof, or to pay any fee or any other amount due Lender under any Plan Document within five (5) Business Days after such payment is due and payable; or (b) Any failure to comply with Section 7.1(g); or (c) Any failure to perform or observe any other term, covenant or agreement contained in any Plan Document to be performed or observed by Borrower or a Subsidiary which is not cured within ten (10) calendar days; or (d) Borrower or any of its Subsidiaries (i) fails to pay the principal, or any principal installment, of any present or future Indebtedness or in connection with the purchase or lease of Property, or any guaranty of present or future Indebtedness for borrowed money or issued in connection with the Purchase or lease of Property, on its part to be paid, when due (or within any stated grace period), whether at the stated maturity, upon acceleration, by reason of required prepayment or otherwise, or (ii) fails to perform or observe any other term, covenant or agreement on its part to be performed or observed in connection with any present or future Indebtedness for borrowed money or in connection with the purchase or lease of Property, or of any guaranty of present or future Indebtedness for borrowed money or issued in connection with the purchase or lease of Property, if as a result of such failure any holder or holders thereof (or an agent or trustee on its or their behalf) has the right to declare such Indebtedness due before the date on which it otherwise would become due; or (e) Any Plan Document, at any time and for any reason other than the agreement of Lender or satisfaction in full of all the Obligations, ceases to be in full force and effect or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect which, in the reasonable opinion of Lender, is materially adverse to the interests of Lender; or any party thereto other than Lender denies that it has any or further liability or obligation under 20 any Plan Document, or purports to revoke, terminate or rescind same; or (f) Borrower or any of its Subsidiaries is the subject of an order for relief in a bankruptcy case, or is unable or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, or similar officer for it or for all or any part of its Property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of that Person and the appointment continues undischarged or unstayed for thirty (30) calendar days; or institutes or consents to any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, custodianship, conservatorship, liquidation, rehabilitation or similar case or proceedings relating to it or to all or any part of its Property under the Laws of any jurisdiction; or any similar case or proceeding is instituted without the consent of that Person and continues undismissed or unstayed for thirty (30) calendar days; or any judgment, writ, warrant of attachment or execution or similar process is issued or levied against all or any material part of the Property of any such Person and is not released, vacated or fully bonded within thirty (30) calendar days after its issue or levy; or (g) Borrower or any Subsidiary thereof is dissolved or liquidated or all or substantially all of the assets of Borrower or any Subsidiary of Borrower are sold or otherwise transferred in violation of the provisions of this Loan Agreement without the written consent of Lender; provided, however, that Borrower shall be entitled to dissolve or liquidate any of Borrower's Subsidiaries in the ordinary course of business if such act does not have a Material Adverse Effect or (i) all of the proceeds of such dissolution or liquidation go to Borrower, and (ii) such dissolution or liquidation results in no breach of any obligations of Borrower or such Subsidiary to any Person; or (h) The revocation or nonrenewal of any permit or license, authorization, consent, order or other approval from any Governmental Agency necessary for the conduct of Borrower's business that has a Material Adverse Effect; or (i) Any judgment or order for the payment of money in excess of $50,000 to the extent not fully covered by insurance shall be rendered against Borrower or any of its Subsidiaries 21 and either, (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order, or (ii) there shall be any period of ten (10) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. 8.2 Remedies Upon Event of Default. Without limiting any other rights or remedies of Lender provided for elsewhere in this Loan Agreement, the Plan Documents, or by applicable Law, or in equity, or otherwise: (a) Upon the occurrence of any Event of Default other than an Event of Default described in Section 11.1(f) Lender may declare all or any part of the unpaid Principal of the Note, all interest accrued and unpaid thereon and all other amounts payable under the Plan Documents to be forthwith due and payable, whereupon the same shall become and be forthwith due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower. (b) Upon the occurrence of any Event of Default described in Section 8.1(f): (1) all obligations of Lender and all rights of Borrower under the Plan Documents shall terminate without notice to or demand upon Borrower, which are expressly waived by Borrower; provided, however, that Lender may waive the Event of Default or, without waiving, determine, upon terms and conditions satisfactory to Lender, to extend the Maturity Date; and (2) the unpaid Principal of the Note, all interest accrued and unpaid thereon and all other amounts payable under the Plan Documents shall be forthwith due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower. (c) Upon the occurrence of any Event of Default, Lender, without notice to or demand upon Borrower, which are expressly waived by Borrower, may proceed to protect, exercise and enforce its rights and remedies under the Plan Documents against Borrower and such other rights and remedies as are Provided by Law or equity. 22 (d) The order and manner in which Lender's rights and remedies are to be exercised shall be determined by Lender in its sole discretion, and all payments received by Lender shall be applied first to the costs and expenses (including attorneys' fees and disbursements) of Lender, and thereafter paid to Lender. Regardless of how Lender may treat payments for the purpose of its own accounting, for the purpose of computing Borrower's Obligations hereunder and under the Note, payments shall be applied, first, to the costs and expenses of Lender, as set forth above, second, to the payment of accrued and unpaid interest due under any Plan Document to and including the date of such application (ratably, and without duplication, according to the accrued and unpaid interest due under each of the Plan Documents), third, to the payment of all unpaid Principal amounts due under any Plan Document (including, for the purposes hereof, Principal due under the Note), and fourth, to the payment of all other amounts (including fees) then owing to Lender under the Plan Documents. No application of payments will cure any Event of Default, or prevent acceleration, or continued acceleration, of amounts payable under the Plan Documents, or prevent the exercise, or continued exercise, of rights or remedies of Lender hereunder or thereunder or at Law or in equity. (e) Upon the occurrence of any event that would be an Event of Default under Section 11.1(f) with the passage of time, Lender may take such action as Lender may deem necessary to protect the interests of Lender under the Plan Documents. ARTICLE 9 MISCELLANEOUS 9.1 Cumulative Remedies; No Waiver. The rights, powers, privileges and remedies of Lender provided herein and in the Note and every other Plan Document are cumulative and not exclusive of any right, power, privilege or remedy provided by Law or equity. No failure or delay on the part of Lender in exercising any right, power, privilege or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power, privilege or remedy preclude any other or further exercise of the same or any other right, power, privilege or remedy. 9.2 Amendments; Consents. No amendment, modification, supplement, extension, termination or waiver of any provision of this Loan Agreement or any other Plan Document, no approval or consent thereunder, and no consent to any departure therefrom by Borrower or any other party to the Plan Documents other than Lender, 23 may in any event be effective (except as otherwise provided in any other Plan Document) unless in writing signed by the Parties hereto. 9.3 Nature of Lender's Obligations. Nothing contained in this Loan Agreement or any other Plan Document and no action taken by Lender pursuant hereto or thereto may, or may be deemed to, make Borrower and Lender a partnership, an association, a joint venture or other entity, either between themselves or with any Affiliate of Borrower. The relationship between Borrower and Lender is, and shall at all times remain, solely that of a borrower and Lender; Lender shall under no circumstance be construed to be a partner or joint venturer of Borrower or its Affiliates; Lender shall under no circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or its Affiliates, or to owe any fiduciary duty to Borrower or its Affiliates; Lender undertakes or assumes no responsibility or duty to Borrower or its Affiliates to select, review, inspect, supervise, pass judgment upon or inform Borrower or its Affiliates of any matter in connection with their Property, or the operations of Borrower or its Affiliates; Borrower and its Affiliates shall rely entirely upon their own judgment with respect to such matters; and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Lender in connection with such matters is solely for the protection of Lender and neither Borrower nor any other Person is entitled to rely thereon. 9.4 Survival of Representations and Warranties and Covenants. All representations and warranties contained herein or in any other Plan Document, or in any certificate or other writing delivered by or on behalf of Borrower, will survive the making and repayment of the loan hereunder and the execution and delivery of the Note and have been or will be relied upon by Lender, notwithstanding any investigation made by Lender. All affirmative and negative covenants contained herein will survive the payment of the Loan hereunder until all indebtedness of Borrower to Lender under any other security debt instrument, loan or other agreement is satisfied in full. 9.5 Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including, without limitation, telegraphic, telex, telecopy or cable communication) and mailed, telegraphed, telecopied, or delivered by hand, if to the Borrower, at its address at 529 East South Temple, Salt Lake City, Utah 84012 (telecopy number: (801) 524-1761) (telephone number: (801) 521-1049); and if to Lender, at its address at 529 East South Temple, Salt Lake City, Utah 84012 (telecopy number: (801-524-1761) (telephone number: (801-521-1049), Attention: Corrinne A. Maki; with a copy to Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New 24 York 10153 (telecopy number 212-310-8007) (telephone number 212-310- 8000), Attention: Stephen E. Jacobs, Esq.; or, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall, when mailed, telegraphed, telecopied or delivered, be effective when deposited in the mails, delivered to the telegraph company, telecopied with confirmation of receipt, or delivered by hand to the addressee. 9.6 Execution of Loan Agreements. This Loan Agreement may be executed in any number of counterparts and any party hereto or thereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which counterparts of this Loan Agreement, as the case may be, when taken together will be deemed to be but one and the same instrument. The execution of this Loan Agreement by any party hereto or thereto will not become effective until counterparts hereof or thereof, as the case may be, have been executed by all the parties hereto or thereto 9.7 Binding Effect; Assignment. This Loan Agreement shall be binding upon and shall inure to the benefit of the parties hereto and thereto and their respective successors and assigns, except that Borrower and/or its Affiliates may not assign their rights hereunder or thereunder or any interest herein or therein without the prior written consent of Lender. Lender may assign its rights and obligations hereunder without the consent of Borrower. 9.8 Statements Required in Certificate. Each certificate with respect to compliance with a condition or covenant provided for in the Note or this Loan Agreement shall include: (a) a statement that each Person making such certificate has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based; (c) a statement that, in the opinion of each such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether or not, in the opinion of each such Person, such covenant or condition has been complied with. 25 9.9 Indemnity by Borrower. Borrower agrees to indemnify, save and hold harmless Lender and each of its directors, officers, agents, attorneys and employees (collectively the "Indemnitees") from and against: (a) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than Lender) if the claim, demand, action or cause of action directly or indirectly relates to a claim, demand, action or cause of action that such Person has or asserts against Borrower, any Subsidiary of Borrower or any of their respective officers, directors, agents, attorneys, employees or shareholders; (b) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee if the claim, demand, action or cause of action arises out of or relates to the relationship between Borrower and Lender under any of the Plan Documents or the transactions contemplated thereby; (c) any and all administrative or investigative proceedings by any Governmental Agency arising out of or related to any claim, demand, action or cause of action described in clauses (a) or (b) above; and (d) any and all liabilities, losses, costs or expenses (including attorneys' fees and disbursements and other professional services) that any Indemnitee suffers or incurs as a result of the assertion of any of the foregoing; provided that no Indemnitee shall be entitled to indemnification for any loss caused by its own gross negligence or willful misconduct. Each Indemnitee is authorized to employ counsel of its own choosing in enforcing its rights hereunder and in defending against any claim, demand, action, cause of action or administrative or investigative proceeding covered by this Section 9.9; provided that each Indemnitee shall endeavor, in connection with any matter covered by this Section 9.9 which also involves other Indemnitees, to use reasonable efforts to avoid unnecessary duplication of effort by counsel for all Indemnitees. Any obligation or liability of Borrower to any Indemnitee under this Section 9.9 shall be and hereby is covered and secured by the Plan Documents, and shall survive the expiration or termination of this Loan Agreement and the repayment of the Loan and the payment and performance of all other Obligations owed to Lender. 9.10 No Third Parties Benefited. This Loan Agreement is made for the purpose of defining and setting forth certain obligations, rights and duties of Borrower and Lender in connection with the Loan, and is made for the sole protection of Borrower and Lender, and Lender's successors and assigns, and no other Person shall have any rights of any nature hereunder or by reason hereof. 9.11 Further Assurances. Borrower and its Subsidiaries shall, at their expense and without expense to Lender, do, execute and deliver such further acts and documents as Lender from time to time reasonably requires for the assuring and confirming unto Lender of 26 the rights hereby created or intended now or hereafter so to be, or for carrying out the intention or facilitating the performance of the terms of any Plan Document, or for assuring the validity, perfection, priority or enforceability of any Lien under any Plan Document. 9.12 Integration. This Loan Agreement, together with the other Plan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. In the event of any conflict between the provisions of this Loan Agreement and those of any other Plan Document, the provisions of this Loan Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of Lender in any other Plan Document shall not be deemed a conflict with this Loan Agreement. Each Plan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 9.13 Governing Law. This Loan Agreement and, except to the extent otherwise provided therein each Plan Document, shall be governed by, and construed and enforced in accordance with, the internal Laws of the State of Utah (without regard to choice of law or conflict of law provisions). 9.14 Severability of Provisions. Any provision in any Plan Document that is held to be inoperative, unenforceable or invalid as to any party or in any jurisdiction shall, as to that party or jurisdiction, be inoperative, unenforceable or invalid without affecting the remaining provisions or the operation, unenforceability or validity of that provision as to any other party or in any other jurisdiction, and to this end the provisions of all Plan Documents are declared to be severable. 9.15 Headings. Article and Section headings in this Loan Agreement and the other Plan Documents are included for convenience of reference only and are not part of this Loan Agreement or the other Plan Documents for any other purpose. 9.16 Submission to Jurisdiction; Service of Process. (a) Any legal action or proceeding with respect to the Note or this Loan Agreement or any document related thereto may be brought in the courts of the State of Utah or of the United States of America for the District of Utah, and, by execution and delivery of the Note and this Loan Agreement, Borrower hereby accepts for itself and in respect of its property, 27 generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the ground of forum non conveniens, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (b) The Borrower irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to Borrower at its address provided herein. (c) Nothing contained in this Section shall affect the right of Lender or any holder of the Note to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against Borrower in any other jurisdiction. 9.17 Certification. Except as otherwise specifically provided herein, any requirement that any document or certificate be signed or executed by any Person requires that such document or certificate be signed or executed by a Responsible Official of such Person, and that the Responsible Official signing or executing such document or certificate on behalf of such Person shall be authorized to do so by all necessary corporate, partnership and/or other action. [Remainder of Page Intentionally Left Blank] 28 IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed as of the date first above written. BORROWER: HomeFed Corporation, a Delaware Corp. By /s/ Timothy M. Considine --------------------------------- Chairman of the Board [Print Name and Title] Address: 529 East South Temple Salt Lake City, Utah 84012 Telecopier: (801-524-1761) Telephone: (801-523-1049) Lender: Leucadia Financial Corporation, a Utah corporation By /s/ Joseph A. Orlando --------------------------------- Vice President and Chief Financial Officer [Print Name and Title] Address: 529 East South Temple Salt Lake City, Utah 84012 Telecopier: (801-524-1751) Telephone: (801-521-1049) 29 EXHIBIT "A" TO Loan Agreement AMENDED AND RESTATED 6% SECURED NOTE DUE DECEMBER 31, 2004 Salt Lake City, Utah August 14, 1998 For value received, the undersigned HomeFed corporation, a Delaware corporation ("Borrower"), unconditionally promises to pay to the order of Leucadia Financial Corporation, a Utah corporation ("Lender"), at Lender's principal place of business or at such other place as may be designated in writing by Lender, in lawful money of the United States of America and in immediately available funds, the principal sum of $26,462,381.64 plus interest. This Note is made pursuant to that certain Amended and Restated Loan Agreement of even date herewith between Borrower and Lender ("Loan Agreement"). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Loan Agreement. Interest on this Note shall be payable quarterly in arrears on each Interest Payment Date. Interest on this Note shall be calculated at the rate of 6% per annum. This Note is due and payable on December 31, 2004. There are no conversion rights under this Note. This Note is being issued in replacement and substitution for the Note dated as of July 3, 1995 in the aggregate principal amount of TWENTY MILLION AND 00/100 DOLLARS ($20,000,000), as such amount has been increased pursuant to the Amended and Restated Loan Agreement dated August 14, 1998. This Note is secured by, among other things, the following: (i) that certain Security Agreement and Stock Pledge dated July 3, 1995, executed by Borrower; (ii) that certain Payment Guaranty dated July 3, 1995, executed by HomeFed Communities, Inc., a California corporation ("HomeFed Communities"), which Payment Guaranty is secured by a Security Agreement of even date herewith, executed by HomeFed Communities; (iii) that certain Payment Guaranty dated July 3, 1995, executed by HomeFed Resources Corporation, a California corporation ("HomeFed Resources"), which Payment Guaranty is secured by a Security Agreement of even date herewith, executed by HomeFed Resources; and (iv) that certain Payment Guaranty and Deed of Trust dated July 3, 1995, each executed by Paradise Valley Communities No. I, a California general partnership (and related financing statements). If an Event of Default shall occur and be continuing, all Principal and all interest accrued and other amounts due hereunder may be declared due and payable in the manner and with the effect provided in the Loan Agreement. If any attorney is engaged by Lender to enforce or defend any provision of this Note or the Loan Agreement, or as a consequence of any Default, with or without the filing of any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand reasonable attorneys' fees and costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the Principal as if such unpaid attorneys' fees and costs had been added to Principal. No previous waiver and no failure or delay by Lender in acting with respect to the terms of this Note or the Loan Agreement shall constitute a waiver of any breach, default, or failure of condition under this Note or the Loan Agreement. A waiver of any term of this Note or the Loan Agreement must be made in writing and shall be limited to the express written terms of such waiver. In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the Loan, the terms of the Loan Agreement and this Note shall prevail. Except as may otherwise be provided in the Loan Agreement, Borrower waives: presentment; demand; notice of dishonor; notice of default or delinquency; notice of acceleration; notice of protest and nonpayment; notice of costs, expenses or losses and interest thereon; notice of late charges; and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties, if any, securing payment of this Note. Time is of the essence with respect to every provision hereof. This Note shall be construed and enforced in accordance with the internal laws of the State or Utah, except to the extent that Federal laws preempt the laws of the State of Utah. Any legal action or proceeding with respect to this Note or any document related hereto may be brought in the courts of the State of Utah or of the United States of America for the District of Utah, and, by execution and delivery of this Note, the Borrower hereby accepts for itself and in respect of its Property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby irrevocably waives any objection, including, without limitation, any objection to the laying of venue or based on the ground of forum non conveniens, which Borrower may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. The Borrower irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Borrower at its address provided in the Loan Agreement. Nothing contained in this Note shall affect the right of Lender to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. BORROWER: HomeFed Corporation, a Delaware corporation By --------------------------------- --------------------------------- [Print Name and Title] Address: 529 East South Temple Salt Lake City, UT 84102 Telecopier: (801) 524-1751 Telephone: (801) 521-1049 Each of the parties to the Plan Documents, by signing below, confirms in favor of the Lender that it (i) consents to the terms and conditions of this Amended and Restated Loan Agreement, (ii) agrees that all references in each of the Plan Documents to the Loan Agreement shall refer to this Amended and Restated Loan Agreement and the Note executed in connection therewith, and (iii) agrees it has no defense, offset, claim, counterclaim or recoupment with respect to any of its obligations or liabilities under its respective Guaranty, Security Document and/or its Deed of Trust and that all terms of such Guaranty, Security Document or Deed of Trust shall continue in full force and effect, subject to the terms thereof and shall continue to secure the Loan as amended thereby. HOMEFED CORPORATION By:_______________________________ Name: Title: HOMEFED COMMUNITIES, INC. By:_______________________________ Name: Title: HOMEFED RESOURCES CORPORATION By:_______________________________ Name: Title: PARADISE VALLEY COMMUNITIES NO. 1 By:_______________________________ Name: Title: NORTHFORK COMMUNITIES By:_______________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----