Document:

Exhibit 10.2

 

AMENDMENT NO. 1

TO THE

ASSET PURCHASE AND SALE AGREEMENT

 

This Amendment No. 1 to
the Asset Purchase and Sale Agreement (this “Amendment”),
dated as of September 30, 2008, is entered into by and between Cordillera
Texas, L.P., a Texas limited partnership (“Seller”), and
Forest Oil Corporation, a New York corporation (“Buyer”).

 

RECITALS:

 

A.            Reference
is herein made to that certain Asset Purchase and Sale Agreement by and between
Seller and Buyer dated August 15, 2008 (the “Purchase
Agreement”). Terms used but not defined herein shall have the
meanings set forth in the Purchase Agreement.

 

B.            Seller
and Buyer wish to amend the Purchase Agreement to (i) amend and restate the
first sentence of Section 2.1 of the Purchase Agreement in its entirety, (ii) amend
and restate the first sentence of Section 2.4 of the Purchase Agreement in
its entirety, (iii) amend and restate Section 13.2 of the Purchase
Agreement in its entirety, and (iv) revise Exhibit B to the Purchase
Agreement.

 

C.            Seller
and Buyer, who constitute all of the parties to the Purchase Agreement, desire
to amend the Purchase Agreement as set forth herein in accordance with Section 11.3
of the Purchase Agreement.

 

AGREEMENT:

 

NOW,
THEREFORE, for and in consideration of the mutual promises hereinafter set
forth, Seller and Buyer agree as follows:

 

1.             Amendment
to Section 2.1 of the Purchase Agreement.  The first sentence of Section 2.1 of the
Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“In
consideration of the sale of the Assets by Seller to Buyer, Buyer shall pay
Seller $529,000,000 in cash (the “Cash Consideration”)
and shall issue to Seller an aggregate of 7,250,000 shares of Buyer’s common
stock, par value $0.10 per share (“Buyer Common Stock”
and with the Cash Consideration, the “Purchase Price”),
which is quoted under the symbol “FST” on the New York Stock Exchange (“NYSE”).”

 

2.             Amendment
to Section 2.4 of the Purchase Agreement.  The first sentence of Section 2.4 of the
Purchase Agreement is hereby amended and restated in its entirety as follows:

 

“The Cash
Consideration shall be further increased by the amount of capital costs paid
by, and not otherwise reimbursed to, Seller, not to exceed $41,500,000 to (a) complete
the Wells listed on Schedule 2.4(a), and (b) drill and
complete the Wells listed on Schedule 2.4(b), in each case
regardless of when such capital costs are incurred by Seller.”

 

 

3.             Amendment
to Section 13.2 of the Purchase Agreement.  Section 13.2 of the Purchase Agreement
is hereby amended and restated in its entirety as follows:

 

“Section 13.2.      Registration of Buyer Common Stock.  Buyer understands and acknowledges that
Seller intends to distribute shares of Buyer Common Stock constituting a
portion of the Purchase Price at Closing to certain members and beneficial
owners of CEP II, which is the parent company of Seller, as contemplated by Section
2.6(c) (the “Selling Members”).  Buyer covenants and agrees to register the
resales of the Buyer Common Stock by Seller and the Selling Members by filing
the Registration Statement, as promptly as practicable after the Closing.  Buyer shall provide Seller with a reasonable
opportunity to review and comment on the Registration Statement prior to
filing.  Buyer shall have no obligation
to include in the Registration Statement shares of Buyer Common Stock of Seller
or any Selling Member who has failed to provide the information required by Section
10.1(j) or such other information that, in the opinion of counsel to Buyer,
is reasonably required in order for the Registration Statement to comply with
the Securities Act, including without limitation, written confirmation from
Seller to Buyer of the receipt of Buyer Common Stock by Seller and each such
Selling Member.  If, as a result of any
act or omission on the part of Buyer or the failure of Buyer to obtain the
consent of Ernst & Young LLP to the filing of the Registration Statement,
the Registration Statement has not been filed on or prior to 9:30 a.m. New
York, New York time on October 2, 2008 (or if pursuant to Article III,
the Closing Date is later than September 30, 2008, then on or prior to 9:30
a.m. New York, New York time on the second Business Day following the Closing
Date), then Seller shall be entitled to a payment by Buyer with respect to the
shares of Buyer Common Stock required to be registered hereunder, as liquidated
damages and not as a penalty, of $1,000,000 per Business Day commencing after
9:30 a.m. New York, New York time on October 2, 2008 (or if pursuant to Article
III, the Closing Date is later than September 30, 2008, then commencing on
the second Business Day following the Closing Date) until the earlier of (i)
the filing of the Registration Statement and (ii) such time as the Buyer Common
Stock becomes eligible for resale under SEC Rule 144; provided,
however, that the aggregate amount of liquidated damages payable by
Buyer pursuant to this Section 13.2 shall not exceed $20,000,000; and provided further, however, that Buyer shall not be obligated
to pay such liquidated damages if Buyer is unable to file (or is delayed in the
filing of) the Registration Statement for any reason other than any act or
omission on the part of Buyer or the failure of Buyer to obtain the consent of
Ernst & Young LLP to the filing of the Registration Statement, including
without limitation, if Buyer is unable to file (or is delayed in the filing of)
the Registration Statement because Buyer shall have not received any consent
required to be filed as an exhibit to the Registration Statement, other than the
consent from Ernst & Young LLP.”

 

4.             Amendment
to Exhibit B of the Purchase Agreement.  The Leases set forth on Schedule I
hereto are hereby added to and made a part of Exhibit B of the Purchase
Agreement.

 

5.             Ratification.  The Purchase Agreement, as hereby amended, is
ratified and confirmed in all respects.

 

2

 

6.             Governing Law.   This Amendment is governed by the Laws of
the State of Texas, excluding any choice of Law rules that may direct the
application of the Laws of another jurisdiction.

 

7.             Counterparts.  This Amendment may be executed in multiple
counterparts, each of which when so executed shall be deemed an original and
all of which shall constitute one and the same agreement.

 

3

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to the Asset Purchase and Sale Agreement as of the day and year first above
written.

 

 

	
   

  	
  SELLER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CORDILLERA TEXAS, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George H. Solich

  
	
   

  	
  Name: 

  	
  George H. Solich

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FOREST OIL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cyrus D. Marter IV

  
	
   

  	
  Name: 

  	
  Cyrus D. Marter IV

  
	
   

  	
  Title:

  	
  Senior Vice President, General Counsel and

  
	
   

  	
   

  	
  Secretary

  

 

Signature Page to Amendment No. 1 to Asset Purchase and Sale AgreementExhibit 10.1

 

THIRD AMENDMENT TO SENIOR SECURED

REVOLVING CREDIT AGREEMENT

 

This
Third Amendment to Senior Secured Revolving Credit Agreement (this “Amendment”), made as of September 30,
2008 among CALIFORNIA COASTAL COMMUNTIES, INC., a Delaware corporation (“Borrower”), the undersigned
Guarantors, KEYBANK NATIONAL ASSOCIATION, a national banking association (“KeyBank”),
the other financial institutions which are or may become lender parties
to the Credit Agreement (each individually a “Lender”
and collectively, the “Lenders”),
and KEYBANK NATIONAL ASSOCIATION, a national banking association, as Agent for
the Lenders (the “Agent”).

 

W I T N E S S E T H:

 

WHEREAS,
the parties entered into that certain $100,000,000 Senior Secured Revolving
Credit Agreement dated as of September 15, 2006, as amended by First
Amendment to Senior Secured Revolving Credit Agreement dated as of October 30,
2007, and by letter amendment dated as of June 11, 2008 (as amended the “Credit Agreement”); and

 

WHEREAS,
Borrower has requested that certain terms of the Credit Agreement be modified
and amended as hereinafter set forth; and

 

WHEREAS,
the Lenders and the Agent have agreed to such amendments as set forth herein
and subject to the terms and conditions set forth herein; and

 

NOW,
THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
that all capitalized terms used but not otherwise defined herein shall have the
meanings ascribed thereto in the Credit Agreement, and further agree as
follows:

 

1.                                       Amendment
to Section 1 of Credit Agreement. Section 1.1 of the Credit
Agreement, Definitions, is hereby amended as follows:

 

a.                                       A
new definition, “Availability”, is hereby inserted in proper
alphabetical order as follows:

 

“Availability.  The excess, if any, of the Borrowing Base
over the Outstanding.”

 

b.                                      A
new definition, “Cumulative Closed Plus Backlog”, is hereby inserted in
proper alphabetical order as follows:

 

“Cumulative Closed
Plus Backlog.  The sum of (x) the
cumulative number of Homes sold and closed at the Project plus (y) fifty
percent (50%) of the number of Homes subject to a Housing Purchase Contract but
not closed at any time of measurement, with any fractional number being rounded
up to the next whole number.”

 

 

c.                                       A
new definition “Excess Liquidity”, is hereby inserted in proper
alphabetical order as follows:

 

“Excess Liquidity.  At any time the amount by which the sum of
the Borrower’s cash, excluding restricted cash, plus Availability exceeds
$20,000,000.”

 

d.                                      A
new definition, “HHI”, is hereby inserted in proper alphabetical order
as follows:

 

“HHI.  Hearthside Homes, Inc., a California
corporation.

 

e.                                       A
new definition, “Hellman”, is hereby inserted in proper alphabetical
order as follows:

 

“Hellman.  HHI Hellman, LLC, a California limited
liability company.”

 

f.                                         A
new definition, “Hellman Project Debt”, is hereby inserted in proper
alphabetical order as follows:

 

“Hellman Project Debt.  The Indebtedness of Hellman that is
non-recourse with respect to the Borrower, including, but not limited to, that
certain Building Loan Agreement dated as of December 19, 2006 between
Hellman and Indymac Bank, F.S.B., as modified or amended, and any refinancing
of such Indebtedness so long as it is non-recourse with respect to the
Borrower.”

 

g.                                      A
new definition, “Lancaster”, is hereby inserted in proper alphabetical
order as follows:

 

“Lancaster.  HHI Lancaster I, LLC, a California limited
liability company.”

 

h.                                      A
new definition, “Lancaster Project Debt,” is hereby inserted in proper
alphabetical order as follows:

 

“Lancaster Project Debt.  The Indebtedness of Lancaster that is
non-recourse with respect to the Borrower, including, but not limited to, that
certain Building Loan Agreement dated as of November 23, 2005 between
Lancaster and Indymac Bank, F.S.B., as modified or amended, and any refinancing
of such Indebtedness so long as it is non-recourse to the Borrower.”

 

i.                                          A
new definition, “Net Sale Proceeds”, is hereby inserted in proper
alphabetical order as follows:

 

“Net Sale Proceeds.  With respect to the sale of any Unit, the gross sales price payable by the
purchaser thereof (net of any rebates or discounts), less all customary and
reasonable costs of sale that are charged to sellers of property in the given
jurisdiction, including, without limitation, title insurance charges, escrow
fees, legal fees, real estate taxes, transfer taxes and real estate brokers’
commissions.”

 

2

 

j.                                          The
definition of Borrowing Base Value is hereby amended by deleting the
existing language thereof in its entirety and substituting in lieu thereof the
following:

 

“Borrowing Base Value.  The most recent Appraised Value for the
Project plus (x) Hard Costs incurred subsequent to the most recent
Appraisal allocated to the Project, minus (y) an amount equal to
seventy-two percent (72%) of the listed base price of any Spec Homes the
construction of which commenced more than eighteen (18) months prior to the
most recent Borrowing Base Report (except that in the case of any Spec Home
existing as of the date of the Third Amendment to this Agreement, such aging
period shall be twelve (12) months from the date of such Third Amendment), and
minus (z) an amount equal to seventy-two percent (72%) of the gross
proceeds from the closing of any Unit, except that if such Unit was a Spec Home
subject to a deduction under clause (y), the amount deducted under clause (y) shall
first be added back to the Borrowing Base Value before deduction under this
clause (z); provided however, if such gross sales proceeds are less than ninety
percent (90%) of the projected gross sales proceeds as set forth in the Project
Budget for such Unit, Agent may reset the percentages set forth above for
purposes of determining the Borrowing Base Value in its commercially reasonable
discretion.”

 

k.                                       The
definition of Consolidated Tangible Net Worth is hereby amended by
adding a provision at the end thereof as follows:

 

“; provided,
however, that in calculating Consolidated Tangible Net Worth and the components
thereof impairments realized by Borrower from and after the date of the Third
Amendment to this Agreement with respect to the Hellman and Lancaster
development projects and with respect to deferred tax assets will not be taken
into account.”

 

l.                                          The
definition of Majority Lenders is hereby deleted and the term Required
Lenders is substituted therefor throughout the Credit Agreement and is
defined as follows:

 

“Required Lenders.  As of any date, the Lender or Lenders (not
including any Delinquent Lender who shall not be entitled to vote) whose
aggregate Commitment Percentage (as set forth on Schedule 1.0) is greater than
sixty-six and two-thirds percent (66 2/3%),
or if the Commitments have been terminated or reduced to zero, Lenders (other
than Delinquent Lenders who shall not be entitled to vote) holding greater than
sixty-six and two-thirds percent (66 2/3%) of the principal amount of the
aggregate outstanding Loans; provided that in the event that one Lender (other
than any Delinquent Lender) has an aggregate Commitment Percentage or principal
amount of the outstanding Loans equal to or greater than such percentage (the “Sole
Required Lender”) then this definition of Required Lender shall include the
Sole Required Lender and a minimum of one other Lender (other than a Delinquent
Lender, if any) regardless of aggregate Commitment Percentage; and provided
further that with respect to any waiver of the requirements for extension of
the Maturity Date under Section 4.1, the aggregate Commitment Percentage
shall be eighty-five percent (85%) or greater. 
Commitments held by Delinquent Lenders shall be disregarded when
determining the Required Lenders.  For
purposes of this definition, a Lender (other than the Swingline Lender) shall
be deemed to hold a 

 

3

 

Swingline Loan to
the extent such Lender has acquired a participation therein under the terms of
this Agreement and has not failed to perform its obligations in respect of such
participation.

 

m.                                    The
definition of Maturity Date is hereby amended by adding the following to
the end thereof as follows:

 

“; provided, however that
the Maturity Date may be extended pursuant to Section 4.1”.

 

n.                                      The
definition of Release Price is hereby amended by deleting “50 Units” and
inserting in lieu thereof “70 Units.”

 

2.                                       Amendment
to Section 2 of the Credit Agreement. 
Section 2.2(d) of the Credit Agreement, Automatic
Reductions to the Total Commitment, is hereby amended by deleting the
existing language thereof in entirety and inserting in lieu thereof the
following:

 

“(d)                           Reductions
to the Total Commitment (i) on each Termination Date beginning December 31,
2008, the Total Commitment shall automatically be reduced quarterly (and
Borrower shall make such mandatory payments on each Termination Date as
necessary to cause the Borrower to comply with the terms of Section 4.2
herein) as follows:

 

	
  Termination Date

  	
   

  	
  Commitment Amount

  	
   

  
	
  December 31,
  2008

  	
   

  	
  $

  	
  95,000,000

  	
   

  
	
  June 30,
  2009

  	
   

  	
  $

  	
  90,000,000

  	
   

  
	
  September 30,
  2009*

  	
   

  	
  $

  	
  80,000,000

  	
   

  
	
  December 31,
  2009*

  	
   

  	
  $

  	
  70,000,000

  	
   

  
	
  March 31,
  2010*

  	
   

  	
  $

  	
  60,000,000

  	
   

  
	
  June 30,
  2010*

  	
   

  	
  -0-

  	
   

  

 

*Only applicable
if the Maturity Date is extended pursuant to Section 4.1

 

(ii) the
Total Commitment shall be reduced from time to time by the Required Commitment
Reduction; and

 

(iii) the
Total Commitment shall be reduced from time to time by an amount equal to forty
percent (40%) of the amount of any Excess Liquidity.”

 

3.                                       Amendment
to Section 3 of the Credit Agreement. 
Section 3.3 of the Credit Agreement, Interest on Loans, is
hereby amended by deleting the third sentence thereof and the table included
therein in its entirety and inserting in lieu thereof the following:

 

4

 

“The “Applicable Margin” for a LIBOR Rate Loan or a
Prime Rate Loan for each Fiscal Quarter shall be the margin corresponding to
the Project Loan Indebtedness to Value Ratio for the prior Fiscal Quarter as
determined by reference to the following table:

 

	
  Project Loan Indebtedness to

  Value Ratio

  	
   

  	
  LIBOR Applicable Margin

  	
   

  	
  Prime Applicable Margin

  	
   

  
	
  <20%

  	
   

  	
  3.00

  	
  %

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  > 20% to <30%

  	
   

  	
  3.25

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  > 30% to <40%

  	
   

  	
  3.50

  	
  %

  	
  2.00

  	
  %

  

 

4.                                       Amendments
to Section 4 of the Credit Agreement. 
Section 4 of the Credit Agreement, Repayment and Certain General
Provisions, is amended as follows:

 

a.                                       Section 4.1
of the Credit Agreement, Maturity, is hereby amended by adding the
following to the end thereof as follows:

 

“The Borrower may, at its
option, extend the Maturity Date to June 30, 2010 by giving the Agent
written Notice of such election to extend not earlier than the date on which
the Borrower demonstrates compliance with the Financial Covenants as of December 31,
2008, and not later than 10 days prior to the original Maturity Date, provided
that the following conditions are satisfied: 
(i) no Default or Event of Default exists at the time of such
Notice; (ii) the Compliance Certificate required by Section 7.6(d) for
the most recently completed Fiscal Quarter or Fiscal Year, as applicable, has
been timely submitted and demonstrates compliance with the Financial Covenants
as of the end of such period, and (iii) the Borrower has paid to the
Agent, for the accounts of the Lenders in accordance with their respective
Commitment Percentages, an extension fee equal to twenty-five hundredths of one
percent (.25%) of the Total Commitment amount in effect at the time of such
Notice.

 

b.                                      Section 4.2
of the Credit Agreement, Mandatory Prepayments, is hereby amended by
deleting the existing language thereof in its entirety and inserting in lieu
thereof the following:

 

“4.2                           Mandatory
Prepayments.

 

(a)             If
at any time the aggregate Outstanding Loans (including Swingline Loans) exceed
the Total Commitment (as the same may be reduced pursuant to §2.2(d)) or the
Borrowing Base, then Borrower shall immediately pay the amount of such excess
to the Agent for the respective accounts of the Lenders for application to the
Loans.

 

(b)            As
provided in §5.4(c), the Outstanding Loans shall be subject to mandatory
prepayment to the extent of (i) forty (40) percent of the Release Price of
any Unit and (ii) Net Sale Proceeds of any Unit in excess of the Release
Price of such Unit.  The 

 

5

 

prepayments described in clause (ii) shall be available for
re-borrowing to the extent permitted by the terms of this Agreement.

 

(c)             To
the extent the Borrower’s cash, excluding its restricted cash, exceeds
$10,000,000 at any time, then Borrower shall promptly pay the amount of such
excess to the Agent for the respective accounts of the Lenders for application
to the Loans.  Any prepayments of the Loans
made from amounts in excess of $10,000,000 shall be available for re-borrowing
to the extent permitted by the terms of this Agreement.”

 

5.                                       Amendments
to Section 5 of the Credit Agreement. 
Section 5 of the Credit Agreement, Collateral, is amended as
follows:

 

a.                                       Section 5.4(c) of
the Credit Agreement, Delivery of Proceeds, is hereby amended by
deleting the existing language thereof in its entirety and inserting in lieu
thereof the following:

 

“(c)                            Delivery
of Proceeds.  Proceeds equal to Net Sale
Proceeds shall be promptly delivered in the manner required under Section 5.5
or to such other Person as the Agent may from time to time direct.  A portion of Net Sale Proceeds equal to the
Release Price shall be divided sixty (60) percent to the Senior Term Loan and
forty (40) percent to the Loans and shall reduce the respective Commitments by
the allocated amounts thereto. The Agent shall deliver the proceeds allocated
to the Senior Term Loan to the Agent of the Senior Term Loan upon receipt.  The portion of the Release Price allocated to
the Loans plus any Net Sale Proceeds in excess of the Release Price shall be
applied to the Loans and allocated to the account of each of the Lenders
accordingly.  During the pendency of a
Monetary Event of Default or an Uncured Non-Monetary Default, the Net Sale Proceeds
shall be retained by the Agent and applied in accordance with this Agreement,
and during this period the lenders under the Senior Term Loan shall have no
right to any of the Net Sale Proceeds.”

 

b.                                      Section 5.5(a) of
the Credit Agreement is hereby amended by deleting the existing language
thereof in its entirety and inserting in lieu thereof the following:

 

“(a)                            In the
event any payment is required pursuant to 5.4(c), at the beginning of each
Business Day, Signal Landmark shall wire transfer directly to the Master
Account (or to such other account as the Agent may direct) the Net Sale
Proceeds for each Unit sold.”

 

6.                                       Amendments
to Section 7 of the Credit Agreement. 
Section 7 of the Credit Agreement, Affirmative Covenants of the
Borrower and Guarantors, is hereby amended as follows:

 

a.                                       Section 7.6(d) is
amended by deleting “month” in the first line thereof and inserting in lieu
thereof “Fiscal Quarter”.

 

b.                                      Section 7.6(e) is
amended by deleting “Simultaneously with the delivery of the Compliance Certificate”
in the first sentence thereof and inserting in lieu thereof “Not later than
thirty-five (35) days after the end of each month”.

 

6

 

7.                                       Amendments
to Section 8 of the Credit Agreement. 
Section 8 of the Credit Agreement, Certain Negative Covenants of
the Borrower and Guarantors, is amended as follows:

 

a.                                       Section 8.4
of the Credit Agreement, Distributions, is hereby amended by deleting
the existing language thereof in its entirety and inserting in lieu thereof the
following:

 

“8.4 Distributions

 

a.                                 Borrower
Distributions.  The Borrower shall
not make or pay any Distributions.

 

b.                                      Signal
Landmark Distributions.  Signal
Landmark shall not make or pay any Distributions except for Distributions to
the Borrower for the payment of required payments hereunder and with respect to
the Senior Term Loan and to pay the tax obligations of Signal Landmark.”

 

b.                                      Section 8.15
of the Credit Agreement, Spec Homes, is hereby amended by deleting the
existing language thereof in its entirety and inserting in lieu thereof the
following:

 

“8.15 Spec
Homes.  There shall be no more than
seventeen (17) Spec Homes in the Project at any one time; provided that such
limit may be increased by up to eight (8) additional Spec Homes that were
previously subject to a Housing Purchase Contract; and provided further that
for purposes of this Section 8.15 Spec Homes shall not include Homes
meeting the classification for inclusion as Model Homes herein.  At no time shall the sum of Spec Homes plus
Homes subject to a Housing Purchase Contract but not closed exceed sixty
(60).  At no time shall there exist more
than forty (40) Housing Purchase Contracts that contain a contingency for the
sale of a purchaser’s existing home.”

 

c.                                       Section 8.17
of the Credit Agreement, Homes Sales, is hereby amended by adding the
following to the end thereof:

 

“Cumulative Closed
Plus Backlog shall not be less than the following as of the following dates:

 

	
  Date

  	
   

  	
  Cumulative Closed Plus Backlog

  	
   

  
	
  December 31,
  2008

  	
   

  	
  32

  	
   

  
	
  March 31,
  2009

  	
   

  	
  40

  	
   

  
	
  June 30,
  2009

  	
   

  	
  50

  	
   

  
	
  September 30,
  2009

  	
   

  	
  64

  	
   

  
	
  December 31,
  2009

  	
   

  	
  80

  	
   

  
	
  March 31,
  2010

  	
   

  	
  96”

  	
   

  

 

7

 

8.                                       Amendments
to Section 9 of the Credit Agreement. 
Section 9 of the Credit Agreement, Financial Covenants, is
amended as follows:

 

a.                                       Section 9.1
of the Credit Agreement, Leverage Ratio, is hereby amended by deleting
the existing language thereof in its entirety and inserting in lieu thereof the
following:

 

“9.1 Leverage Ratio.  The Borrower shall not, at the end of any
Fiscal Quarter, permit the Leverage Ratio to exceed the following amounts:  2.75 to 1.00 prior to March 31, 2009,
and 2.50 to 1.00 on or after March 31, 2009.

 

b.                                      Section 9.3
of the Credit Agreement, Project Loan Indebtedness to Project  Value,
is hereby amended by deleting the existing language thereof in its entirety and
inserting in lieu thereof the following:

 

“9.3 Project Loan
Indebtedness to Project Value. 
Signal Landmark shall maintain a Project Loan Indebtedness to Value
Ratio of (i) equal to or less than 40% at all times prior to September 30,
2009, (ii) equal to or less than 35% on and after September 30, 2009
but prior to March 31, 2010, and (iii) equal to or less than 30% on
and after March 31, 2010, it being understood that the requirements of
clauses (ii) and (iii) shall only apply if the Maturity Date is
extended pursuant to Section 4.1.”

 

c.                                       A
new Section 9.4, Minimum Liquidity, is hereby added as follows:

 

“9.4 Minimum Liquidity.  The Borrower shall at all times cause the sum
of its cash plus Availability to equal or exceed $4,000,000.”

 

9.                                       Amendments
to Section 27 of the Credit Agreement. 
Section 27 of the Credit Agreement, Consents, Amendments,
Waivers, Etc., is amended in the third sentence thereof by:

 

(i)                                     changing
the clause “a change in the rate of interest on or term of the Notes” to the
following:  “a decrease in the rate of
interest on, or other change in the term of, the Notes.”

 

10.                                 New
Exhibit “I”.  The existing Exhibit “I”,
Project Budget, is deleted and the Exhibit “I” attached to this
Amendment is substituted therefor.

 

11.                                 Exclusion
of Hellman, Hellman Project Debt, Lancaster, Lancaster Project Debt and HHI for
Certain Purposes.  The parties
acknowledge and agree that Hellman, Lancaster and HHI are Guarantors, but the
parties have agreed that certain provisions of the Credit Agreement otherwise
applicable to all Guarantors shall not be applicable with respect to Hellman
and/or the Hellman Project Debt, Lancaster and/or the Lancaster Project Debt,
or HHI to the extent HHI guarantees the Hellman Project Debt or the Lancaster
Project Debt so that certain events with respect to Hellman and a default on
the Hellman Project Debt, Lancaster and a default on the Lancaster Project
Debt, or HHI with respect to its guarantee of the Hellman Project Debt or the
Lancaster Project Debt, by themselves, will not result in a Default or Event of
Default.  Accordingly, the parties agree
that the Credit Agreement is amended and modified as follows:

 

8

 

(i)            The first sentence of Section 7.12
of the Credit Agreement shall not apply to Hellman with respect to the Hellman
Project Debt, to Lancaster with respect to the Lancaster Project Debt or to HHI
with respect to its guarantee of the Hellman Project Debt or the Lancaster
Project Debt;

 

(ii)           Clause (ii) of the
second sentence of Section 7.12 of the Credit Agreement shall not apply to
Hellman or to Lancaster or to HHI with respect to its guarantee of the Hellman
Project Debt or the Lancaster Project Debt;

 

(iii)          Section 12.1(f) of
the Credit Agreement shall not apply with respect to the Hellman Project Debt
or the Lancaster Project Debt, including, without limitation, any guarantee
thereof by HHI; and

 

(iv)          Sections 12.1(g), 12.1(h),
12.1(i), 12.1(j), 12.1(l) and 12.1(m) of the Credit Agreement shall
not apply with respect to Hellman or to Lancaster.

 

12.                                 No
other Amendments.  The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided above, operate as an amendment or waiver of any right, power or remedy
of Agent or Lenders under the Credit Agreement or any of the other Loan
Documents, nor constitute an amendment or waiver of any provision of the Credit
Agreement or any of the other Loan Documents. 
Except for the amendments and waiver expressly set forth above, the text
of the Credit Agreement and all other Loan Documents shall remain unchanged and
in full force and effect and Borrower hereby ratifies and confirms its
obligations thereunder.  This Amendment
shall not constitute a modification of the Credit Agreement or a course of
dealing with Agent or Lenders at variance with the Credit Agreement such as to
require further notice by Agent or Lenders to require strict compliance with
the terms of the Credit Agreement and the other Loan Documents in the future.

 

13.                                 Conditions
of Effectiveness.  This Amendment
shall become effective as of the date hereof when, and only when, Agent, on
behalf of Lenders, shall have received, in form and substance satisfactory to
it, the following:

 

a.                                       Counterparts
of this Amendment duly executed by Borrower, the Guarantors and the appropriate
Lenders; and

 

b.                                      Payment
of all reasonable and documented expenses incurred by Agent in connection with
the execution and delivery of this Amendment, together with fees and actually
incurred expenses of Agent’s counsel with respect to this Amendment and other
post-closing matters through the date of this Amendment.

 

14.                                 Representations
and Warranties.  Each of Borrower and
the Guarantors represents and warrants as follows:

 

a.                                       The
execution, delivery and performance by Borrower and each such Guarantor of this
Amendment and the Loan Documents, as amended hereby, are within each such party’s
legal powers, have been duly authorized by all necessary member action and do
not contravene (i) Borrower’s or any such Guarantor’s organizational
documents, respectively, or (ii) any law or contractual restriction
binding on or affecting such Person;

 

9

 

b.                                      Except
for approvals which have been obtained, no authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body, is required for the due execution, delivery and performance by
Borrower or any Guarantor of this Amendment or any of the Loan Documents, as
amended hereby, to which such Person is or will be a party;

 

c.                                       This
Amendment and each of the other Loan Documents, as amended hereby, to which
Borrower and each Guarantor is a party, respectively, constitute legal, valid
and binding obligations of each such party, enforceable against such Person in
accordance with their respective terms, provided that enforcement may be
limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction
and other similar laws affecting enforcement of creditor’s rights generally;
and

 

d.                                      As
of the effective date of this Amendment, no Default or Event of Default is
existing.

 

15.                                 Reference
to and Effect on the Loan Documents. 
Upon the effectiveness of this Amendment, on and after the date hereof
each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof”
or words of like import referring to the Credit Agreement, and each reference
in the other Loan Documents to the “Credit Agreement,” “thereunder,” “thereof”
or words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as amended hereby.

 

16.                                 Costs,
Expenses and Taxes.  Borrower agrees
to pay on demand all reasonable out-of-pocket expenses of Agent actually
incurred in connection with the preparation, execution and delivery of this
Amendment and the other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses
of Agent’s counsel with respect thereto and with respect to advising Agent as
to its rights and responsibilities hereunder and thereunder.

 

17.                                 Governing
Law.  This Amendment shall be
governed by and construed in accordance with the laws of the State of
California, without regard to the conflict of laws principles thereof.

 

18.                                 Loan
Document.  This Amendment shall be
deemed to be a Loan Document for all purposes.

 

19.                                 Counterparts.  This Amendment may be executed by one or more
of the parties hereto on any number of separate counterparts, each of which
shall be deemed an original and all of which, taken together, shall be deemed
to constitute one and the same instrument. 
Delivery of an executed counterpart of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.

 

10

 

 

IN WITNESS WHEREOF, the
undersigned have duly executed this Amendment as a sealed instrument the date
first set forth above.

 

	
   

  	
  BORROWER:  

  
	
   

  	
   

  
	
   

  	
  CALIFORNIA COASTAL
  COMMUNITIES, INC., a

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  
				

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIGNAL LANDMARK
  HOLDINGS INC., a 

  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  SIGNAL LANDMARK,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

[SIGNATURES
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Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HEARTHSIDE HOLDINGS,
  INC., a Delaware

  
	
   

  	
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HEARTHSIDE HOMES, INC.,
  a California

  
	
   

  	
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HHI CHANDLER, LLC,  a California limited

  
	
   

  	
  liability company

  
	
   

  	
   

  
	
   

  	
  By: Hearthside Homes, Inc.,
  its managing 

  
	
   

  	
  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HHI CHINO II, LLC, a
  California limited liability

  
	
   

  	
  company

  
	
   

  	
   

  
	
   

  	
  By: Hearthside Homes, Inc.,
  its managing 

  
	
   

  	
  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[SIGNATURES
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Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HHI CROSBY, LLC, a
  California limited liability

  
	
   

  	
  company

  
	
   

  	
   

  
	
   

  	
  By: Hearthside Homes, Inc.,
  its managing 

  
	
   

  	
  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[SIGNATURES
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Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HHI HELLMAN, LLC, a
  California limited liability

  
	
   

  	
  company

  
	
   

  	
   

  
	
   

  	
  By: Hearthside Homes, Inc.,
  its managing 

  
	
   

  	
  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[SIGNATURES
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Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HHI LANCASTER I, LLC, a
  California limited

  
	
   

  	
  liability company

  
	
   

  	
   

  
	
   

  	
  By: Hearthside Homes, Inc.,
  its managing 

  
	
   

  	
  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  HHI SENECA, LLC, a
  California limited liability

  
	
   

  	
  company

  
	
   

  	
   

  
	
   

  	
  By: Hearthside Homes, Inc.,
  its managing 

  
	
   

  	
  member

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL
  ASSOCIATION, a national

  banking association, as the Agent

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL
  ASSOCIATION, a national

  banking association, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  WACHOVIA BANK NATIONAL
  ASSOCIATION,

  as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  GUARANTY BANK, as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

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CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  COMERICA BANK, as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

[SIGNATURES CONTINUED
ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  FRANKLIN BANK, SSB, as
  a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

[SIGNATURES
CONTINUED ON FOLLOWING PAGE]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  LASALLE BANK, N.A., a
  national banking

  association, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

 

 

	
   

  	
  UNITED OVERSEAS BANK
  LIMITED, as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Its: 

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]

  

 

 

[END OF
SIGNATURES]

 

Signature page for Third
Amendment to Senior Secured Revolving Credit Agreement

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