thirdamendment_8k112508.htm


    THIRD
AMENDMENT TO PURCHASE AGREEMENT

    AND
TO DEVELOPMENT AGREEMENT

    


    This
THIRD AMENDMENT TO PURCHASE
AGREEMENT AND TO DEVELOPMENT AGREEMENT (the “Third Amendment”) is made
this 19th day of
November, 2008, by and between St. Charles Community, LLC, a Delaware limited
liability company (“Seller/Developer”), and U.S. Home Corporation, a Delaware
corporation (“Purchaser/Builder”).

    


    WITNESSETH:

    


    WHEREAS, Seller/Developer and
Purchaser/Builder are parties to a certain Purchase Agreement dated March 4,
2004, as amended by a certain First Amendment to Purchase Agreement dated June
20, 2006, and as further amended by a certain Second Amendment to Purchase
Agreement and Development Agreement dated December 31, 2007 (collectively, the
“Contract”), for the purchase and sale of certain property located within the
Fairway Village section of the St. Charles Planned Unit Development project in
Charles County, Maryland, as more particularly described in the Contract (the
“Property”); and

    


    WHEREAS, Seller/Developer and
Purchaser/Builder are also parties to a certain Development Agreement dated
March 4, 2004, as amended by a certain First Amendment to Development Agreement
dated September 20, 2004, and as further amended by a certain Second Amendment
to Purchase Agreement and Development Agreement dated December 31,
2007  (collectively, the “Development Agreement”), whereby
Seller/Developer and Purchaser/Builder have made certain agreements with respect
to the development of infrastructure for the Property in connection with the
purchase of residential Lots in the Property by the Purchaser/Builder under the
Contract; and

    


    WHEREAS, Seller/Developer and
Purchaser/Builder desire to amend and modify certain terms of the Contract and
the Development Agreement as more particularly set forth below in this Third
Amendment.

    


    NOW, THEREFORE, in
consideration for the mutual promises and covenants of the parties, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller/Developer and Purchaser/Builder hereby agree as
follows:

    


    1.           Incorporation
of Recitals.  Each of the recitals set forth above are hereby
incorporated by reference as if set forth fully at this point in this Third
Amendment.

    


    2.           Defined
Terms.  Capitalized terms used and not defined in this Third
Amendment shall have the meanings ascribed to them in the Contract and the
Development Agreement.


    3.           Purchaser’s
Pace; 2008-2011 Takedowns.  Section 1.03 of the Contract and
Section 2(b) of the Development Agreement are hereby amended as
follows:

    


    (a)           Seller/Developer
acknowledges and agrees that Purchaser/Builder has, prior to the date of this
Amendment, satisfied all of its requirements under the Contract and the
Development Agreement with respect to the Initial 2008 Takedown (as set forth in
the Second Amendment).

    


    (b)           Seller/Developer
and Purchaser/Builder acknowledge and agree that Purchaser/Builder’s takedown
requirements in the Contract and the Development Agreement are hereby modified
and amended as follows:

    


    
      	
              (i)  

            	
              Between
      the date of this Amendment and December 31, 2008, time being of the
      essence, Purchaser/Builder and Seller/Developer shall proceed to
      settlement (the “Remaining 2008 Takedown”) upon a minimum of 50 Lots to be
      identified by Purchaser/Builder (the “Remaining 2008 Takedown
      Lots”);

            


    

    


    
      	
              (ii)  

            	
              Between
      January 1, 2009 and June 15, 2009, time being of the essence,
      Purchaser/Builder and Seller/Developer shall proceed to settlement (the
      “Initial 2009 Takedown”) upon a minimum of 40 Lots to be identified by
      Purchaser/Builder (the “Initial 2009 Takedown
  Lots”);

            


    

    


    
      	
              (iii)  

            	
              Between
      June 16, 2009 and December 31, 2009, time being of the essence,
      Purchaser/Builder and Seller/Developer shall proceed to settlement (the
      “Remaining 2009 Takedown”) upon a minimum of 60 Lots to be identified by
      Purchaser/Builder (the “Remaining 2009 Takedown
  Lots”);

            


    

    


    
      	
              (iv)  

            	
              Between
      January 1, 2010 and June 15, 2010, time being of the essence,
      Purchaser/Builder and Seller/Developer shall proceed to settlement (the
      “Initial 2010 Takedown”) upon a minimum of 25 Lots to be identified by
      Purchaser/Builder (the “Initial 2010 Takedown
  Lots”);

            


    

    


    
      	
              (v)  

            	
              Between
      June 16, 2010 and December 31, 2010, time being of the essence,
      Purchaser/Builder and Seller/Developer shall proceed to settlement (the
      “Remaining 2010 Takedown”) upon a minimum of 75 Lots to be identified by
      Purchaser/Builder (the “Remaining 2010 Takedown
  Lots”);

            


    

    


    
      	
              (vi)  

            	
              Between
      January 1, 2011 and June 15, 2011, time being of the essence,
      Purchaser/Builder and Seller/Developer shall proceed to settlement (the
      “Initial 2011 Takedown”) upon a minimum of 25 Lots to be identified by
      Purchaser/Builder (the “Initial 2011 Takedown Lots”);
  and

            


    

    


    
      	
              (vii)  

            	
              Between
      June 16, 2011 and December 31, 2011, time being of the essence,
      Purchaser/Builder and Seller/Developer shall proceed to settlement (the
      “Remaining 2011 Takedown”) upon a minimum of 75 Lots to be identified by
      Purchaser/Builder (the “Remaining 2011 Takedown
  Lots”).

            


    

     

    The
Remaining 2008 Takedown, Initial 2009 Takedown, Remaining 2009 Takedown, Initial
2010 Takedown, Remaining 2010 Takedown, Initial 2011 Takedown and Remaining 2011
Takedown shall be individually referred to as a “2008-2011 Takedown” and
collectively referred to as the “2008-2011 Takedowns”.  The Remaining
2008 Takedown Lots, Initial 2009 Takedown Lots, Remaining 2009 Takedown Lots,
Initial 2010 Takedown Lots, Remaining 2010 Takedown Lots, Initial 2011 Takedown
Lots and Remaining 2011 Takedown Lots shall be collectively referred to as the
“2008-2011 Takedowns Lots”.  Each time period identified in the above
schedule in which a 2008-2011 Takedown is required to occur is referred to
herein as a “2008-2011 Takedown Period”.

    


    Each of
the 2008-2011 Takedowns shall be in accordance with and subject to all of the
terms and provisions of this Third Amendment, the Contract and the Development
Agreement, provided however, notwithstanding anything contained in the Contract
or the Development Agreement to the contrary, the purchase price for each of the
2008-2011 Takedowns (the “2008-2011 Takedowns Lots Purchase Price”) shall be as
set forth in Section 4 of this Third Amendment.  Purchaser/Builder
shall have the right at any time to proceed to settlement on more Lots than the
minimum number of Lots required to be purchased during any 2008-2011 Takedown
Period, at the purchase price applicable to such 2008-2011 Takedown
Period.  Purchaser/Builder shall receive credits toward the minimum
number of Lots required to be purchased in any 2008-2011 Takedown Period, for
Lots previously purchased in excess of the minimum number, and such credits
shall be cumulative.  Subject to the provisions set forth below,
Seller/Developer will use its best efforts to ensure that there shall be, as of
the date of each of the 2008-2011 Takedowns, a sufficient number of Lots
finished in accordance with the Contract and Development Agreement so as to be
ready for settlement upon the number of Lots identified by
Purchaser/Builder.  Purchaser/Builder will identify Lots for Takedowns
consistent with the locations and areas then being developed on the Property by
the Seller/Developer and ready for the delivery of
Lots.  Notwithstanding the provisions set forth below, in the event
Seller/Developer does not provide a sufficient number of Lots finished in
accordance with the Contract and Development Agreement so as to be ready for
settlement by Purchaser/Builder to satisfy its minimum takedown requirements
during any 2008-2011 Takedown Period, then Purchaser/Builder’s minimum takedown
requirement for such 2008-2011 Takedown Period shall be reduced to the number of
Lots which are ready for settlement and Purchaser/Builder shall be released from
any and all obligations to proceed to settlement upon such number of Lots which
are not ready for settlement.  The parties acknowledge that, prior to
the execution of this Third Amendment, Seller/Developer has provided
Purchaser/Builder with information regarding available Lots in the Property for
settlement in accordance with the Remaining 2008 Takedown.  Upon
timely settlement of each 2008-2011 Takedown in accordance with the schedule set
forth above, (a) Purchaser will have satisfied all of its takedown requirements
under Section 1.03 and otherwise under the Contract up to and including each
applicable 2008-2011 Takedown Period; and (b) Builder will have satisfied all of
its takedown requirements under the Development Agreement up to and including
each applicable 2008-2011 Takedown Period.  Each of the 2008-2011
Takedowns may be in one or more settlements, provided that all such settlements
are completed within each applicable 2008-2011 Takedown Period, time being of
the essence.

    


    Notwithstanding anything to the
contrary set forth in the Contract, the Development Agreement or this Third
Amendment, Seller/Developer and Purchaser/Builder hereby expressly agree as
follows:

    


    
      	
              (i)  

            	
              That,
      from and after the date of this Third Amendment, Seller/Developer shall
      have the right to market, contract by written agreement, and sell any
      number of Lots it may desire within the Property to third-party builders
      selected by the Seller/Developer in its sole discretion (each, a
      “Third-Party Builder” and collectively the “Third-Party Builders”),
      provided however, Seller/Developer shall not have the right to market,
      contract and sell any Lots to a Third-Party Builder which have previously
      been identified by Purchaser/Builder to be purchased in the current
      2008-2011 Takedown Period (provided that Purchaser/Builder shall only be
      permitted to identify Lots which will reasonably be available for its next
      scheduled Takedown at any particular
time);

            


    

    


    
      	
              (ii)  

            	
              The
      availability to Purchaser of 2008-2011 Takedown Lots (beyond those
      identified by Purchaser/Builder for purchase in the current 2008-2011
      Takedown Period) shall be, at all times, subject to any and all prior
      sales, conveyances, and/or contracts by the Seller/Developer to
      Third-Party Builders on a “first-come, first-serve basis”, and
      accordingly, Purchaser/Builder understands that such Lots may not be
      available when identified by
Purchaser/Builder;

            


    

    


    
      	
              (iii)  

            	
              In
      accordance with the foregoing, the Purchaser/Builder understands and
      acknowledges that, except for those Lots which have previously been
      identified by Purchaser/Builder to be purchased in the current 2008-2011
      Takedown Period, the Seller/Developer will not hold Lots exclusively for
      purchase by the Purchaser/Builder under the Contract and/or the
      Development Agreement, and the right of the Purchaser/Builder to purchase
      such Lots shall be subject to the right of the Seller/Developer to market,
      contract by written agreement and sell such Lots to Third-Party
      Builders;

            


    

    


    
      	
               
      

            	
              (iv)

            	
              In
      the event any single-family detached Lot or townhome building Lot
      identified by Purchaser/Builder is not available for purchase during any
      2008-2011 Takedown Period for the reasons set forth herein, then
      Seller/Developer shall provide Purchaser/Builder with a similar
      replacement Lot finished in accordance with the terms and provisions of
      the Contract and Development Agreement in order for Purchaser/Builder to
      meet its minimum takedown requirements during any 2008-2011 Takedown
      Period.  In the event Seller/Developer does not provide a
      similar replacement Lot as aforesaid, then Purchaser/Builder’s minimum
      takedown requirement for such 2008-2011 Takedown Period shall be reduced
      to the number of Lots which are ready for settlement and Purchaser/Builder
      shall be released from any and all obligations to proceed to settlement
      upon such number of Lots which are not ready for
    settlement;

            


    

    


    
      	
               
      

            	
              (v)

            	
              At
      the end of each calendar quarter, and otherwise upon request of the
      Purchaser/Builder from time to time, the Seller/Developer shall provide a
      list of Lots being marketed, contracted by written agreement and/or sold
      to Third-Party Builders; and

            


    

    


    
      	
               
      

            	
              (vi)

            	
              Upon
      the sale and conveyance of any Lot to a Third-Party Builder, at the
      request of Seller/Developer, the Purchaser/Builder shall authorize the
      Trustees under the Deed of Trust recorded among the Land Records of
      Charles County, Maryland in Liber 5348, at Folio 393 (the “Deed of Trust”)
      to release the Lot sold and conveyed from the lien, operation and effect
      of the Deed of Trust, provided that, in each instance, (i) the
      Seller/Developer escrows the appropriate amount of the proceeds from such
      sale for the sole purpose of paying Seller/Developer’s obligations with
      respect to the Bond Financing (as defined in the Development Agreement),
      and (ii) no event of default exists under the Deed of
    Trust.

            


    

    


    4.           2008-2011
Takedowns Temporary
Purchase Price Modification. Section 1.02 of the Contract and Section
2(a) of the Development Agreement are hereby amended to provide that,
notwithstanding anything contained in the Contract or the Development Agreement
to the contrary, the 2008-2011 Takedowns Lots Purchase Price shall be as
follows:

    


    
      	
              (i)  

            	
              With
      respect to the Remaining 2008 Takedown Lots, an amount equal to 22.5% of
      the “selling price” (as such term is defined in the Contract) of homes
      constructed on the Remaining 2008 Takedown Lots, rather than 30%, provided
      that this temporary purchase price reduction shall only apply to those
      Lots purchased in the Remaining 2008 Takedown;
  and

            


    

    


    
      	
              (ii)  

            	
              With
      respect to the Initial 2009 Takedown Lots, Remaining 2009 Takedown Lots,
      Initial 2010 Takedown Lots, Remaining 2010 Takedown Lots, Initial 2011
      Takedown Lots and Remaining 2011 Takedown Lots, an amount equal to 25% of
      the “selling price” (as such term is defined in the Contract) of homes
      constructed on such Lots, rather than 30%, provided that this temporary
      purchase price reduction shall only apply to those Lots purchased in each
      applicable takedown.

            


    

    


    The
minimum price paid by the Purchaser/Builder under the Contract for the 2008-2011
Takedowns shall be as follows:

    


    
      	
              (a)  

            	
              With
      respect to the Remaining 2008 Takedown Lots, the minimum price shall be
      Seventy-Eight Thousand Dollars ($78,000.00) for single family detached
      building Lots and Sixty-Eight Thousand Dollars ($68,000.00) for townhome
      building Lots;

               

            


    

    
      	
              (b)  

            	
              With
      respect to the Initial 2009 Takedown Lots and the Remaining 2009 Takedown
      Lots, the minimum price shall be Eighty Thousand Dollars ($80,000.00) for
      single family detached building Lots and Seventy Thousand Dollars
      ($70,000.00) for townhome building
Lots;

            


    

    


    
      	
              (c)  

            	
              With
      respect to the Initial 2010 Takedown Lots and the Remaining 2010 Takedown
      Lots, the minimum price shall be Eighty-four Thousand Dollars ($84,000.00)
      for single family detached building Lots and Seventy-four Thousand Dollars
      ($74,000.00) for townhome building Lots;
and

            


    

    


    
      	
              (d)  

            	
              With
      respect to the Initial 2011 Takedown Lots and the Remaining 2011 Takedown
      Lots, the minimum price shall be Eighty-eight Thousand Dollars
      ($88,000.00) for single family detached building Lots and Seventy-seven
      Thousand Dollars ($77,000.00) for townhome building
  Lots.

            


    

    


    In
addition to the purchase price set forth above, for all Lot Takedowns, the
Purchaser/Builder shall continue to reimburse the Seller/Developer at each
Closing, for the Lots purchased, the fees enumerated in Section 2.04(c) of the
Purchase Agreement, including, but not limited to, the road fee, offsite sewer
fee, and sewer connection rebate fee.

    


    The
foregoing provisions of this Section 4 shall apply only to Lots purchased by the
Purchaser/Builder in the 2008-2011 Takedowns.  From and after January
1, 2012, the final purchase price for Lots purchased in the Property by the
Purchaser/Builder shall revert to that shown and set forth in the Contract and
Development Agreement; except that the minimum price per Lot shall not be less
than the minimum price per lot for the Remaining 2011 Takedown
Lots.  The timing of calculation and basis or formula for calculation
of the final purchase price of Lots is not modified by this Amendment, and shall
be as set forth in the Contract and the Development Agreement, whether for the
Lots purchased in the 2008-2011 Takedowns and subject to this temporary purchase
price reduction, or for Lots purchased on or after January 1, 2012 under the
pricing terms of the Contract and Development Agreement and not a part of the
2008-2011 Takedowns.

    


    5.           Effect of
Amendment.  Except as expressly modified by the terms and
provisions of this Third Amendment, the Contract and the Development Agreement
shall each remain in full force and effect in accordance with their terms, and
are hereby ratified and confirmed by the parties as binding and enforceable for
all purposes.  Each party acknowledges that, to the best of their
respective knowledge as of the date of this Third Amendment, the other party is
not in default under the Contract or the Development Agreement.

     

           
6.           Counterparts.  This
Third Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which, taken together, shall constitute
one and the same instrument.

    


    (Signatures
on Following Page)

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, the
undersigned duly authorized representatives of the Seller/Developer and
Purchaser/Builder have hereto placed their hands and seals as of the date and
year first written above. 

    


                                               SELLER/DEVELOPER:

       

                                                 ST. CHARLES COMMUNITY, LLC

       

                                                 By: /s/Mark MacFarland (SEAL)

                                                    Mark
MacFarland,

                                                 
      Chairman of the Management Committee

                                                    Date: November 19, 2008

       

       

                                                  PURCHASER/BUILDER:

         

                                                     
  U.S. HOME CORPORATION

         

                                                   By: /s/Robert Jacoby (SEAL)

                                                         
Robert Jacoby,

                                                         
Division President

                                                      Date: November 19,
2008