Exhibit 10.41
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this " Agreement ") is
made this 4 th day of March, 2004 (the " Effective
Date "), by and between ST. CHARLES COMMUNITY, LLC , a
Maryland limited liability company (the " Developer ") and
U.S. HOME CORPORATION , a Delaware corporation (the "
Builder ").
RECITALS:
A.
The Developer is engaged in the subdivision and development of a
residential planned unit development community located in Charles
County, Maryland and known as St. Charles (" St. Charles
").
B.
A portion of the St. Charles community identified by cross-hatching
on the drawing attached hereto as Exhibit A is being
developed by the Developer as a residential community known as
Fairway Village (" Fairway Village "). The development plans
for Fairway Village contemplate that from and after the Effective
Date, Fairway Village will be developed with an additional
approximately 1,950 residential lots (each, a " Lot " and
collectively, the " Lots "), such Lots to be for the
construction of attached and detached single family homes (and not
condominiums or multifamily units) (each, a " Unit " and
collectively, the " Units ").
C.
The Developer and the County Commissioners of Charles County,
Maryland, a body corporate (the " County ") are parties to
an Order dated as of December 13, 1989, as amended on August 15,
1994, as further amended on July 22, 2002 (collectively, the "
Order "), pursuant to which the Developer has agreed,
inter alia , to make certain public facility improvements as
more fully described in the Order (the " Public Facility
Improvements ") to facilitate the development of Fairway
Village.
D.
The Developer and the County have further agreed, on terms and
conditions more fully set forth in the Order, that the cost of the
Public Facility Improvements will be financed through the issuance
by the County of its general obligation bonds (the " Bond
Financing ").
E.
The County has required that the Developer secure its obligations
with respect to the Bond Financing with the posting of one or more
letters of credit (each, an " LOC " and collectively, the "
LOC's "), from time to time with the County.
F.
To facilitate the development of Fairway Village, the Builder has
agreed to post one or more of the LOC's required in connection with
the Bond Financing, on the terms and conditions set forth in this
Agreement, and in return therefor, the Builder will have the right
to purchase Lots in Fairway Village on a preferential basis, also
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE , for good and valuable consideration, the
receipt and adequacy of which is acknowledged, the Developer and
the Builder agree as follows:
1.
Letters of Credit . The Builder agrees that at any time, and
from time to time, upon not less than thirty (30) days written
notice from the Developer, the Builder will provide one or more
LOC's in form substantially similar to the form attached hereto as
Exhibit B , to secure the obligations of the Developer to
the County pursuant to the Bond Financing. In no event shall the
aggregate face amount of LOC's posted by the Builder from time to
time be required to exceed a sum equal to Twenty Million Dollars
($20,000,000.00). Each LOC shall be issued by a financial
institution acceptable to the County in its sole discretion, shall
be irrevocable for a period of one year, and shall contain an
"evergreen" provision, which provides for automatic renewal of the
LOC unless prior written notice of non-renewal is given by the
issuer of the LOC not less than thirty (30) days prior to the
expiration thereof, in which event the County shall have the right
to draw upon the full amount thereof and hold such proceeds as cash
collateral hereunder in lieu thereof, unless a substitute LOC
acceptable to the County is posted by the Builder at least fifteen
(15) days prior to such expiration date. The Developer agrees that
Bank One will be an acceptable issuer of the LOC. The Builder shall
pay all costs and expenses associated with providing the LOC's from
time to time, including, without limitation, all issuance fees, and
such LOC's shall be issued solely on the credit of the Builder. The
Builder acknowledges that the aggregate face amount of the LOC's
required to be provided by the Builder may both increase and
decrease from time to time, provided that the maximum amount
secured by the LOC's at any time shall not exceed
$20,000,000.00.
2.
Right to Purchase Lots . (a) In consideration of the
Builder's fulfillment of its obligations pursuant to this
Agreement, the Developer grants to the Builder the right to
purchase, on an exclusive basis, all of the Lots as such Lots are
subdivided and developed from time to time. The purchase of the
Lots by Builder shall be on the terms and conditions set forth in
this Agreement, and otherwise on the terms and conditions of the
form purchase and sale agreement attached hereto as Exhibit
C . The mix of the Lots between townhouse lots, large single
family lots and small single family lots shall be in accordance
with the existing approvals for the Fairway Village Project, which
currently include approximately 591 townhouse lots, approximately
752 large single family detached lots and approximately 599 small
single family detached lots. At the request of the Builder, the
Developer shall make reasonable efforts to change the Lot mix, so
long as the change will not result in a material delay in any of
the subdivision and development efforts for the Fairway Village
Project. The purchase price for the Lots to be acquired by the
Builder from the Developer shall be equal to thirty percent (30%)
of the "selling price" of the homes Builder intends to construct on
the Lots being acquired at any given Closing. For purposes of this
paragraph, the "selling price" shall mean the gross sales price of
any Lot and the residence and structure constructed or to be
constructed thereon in accordance with the Builder's published
retail prices in effect at the time of the applicable Closing, and
shall include the Lot and any Lot premium charged by the Builder,
the structure or structures built or to be built on the Lot, all of
the Builder's standard features for the model of home in question,
and unfinished basement, garage, porch, and all floor coverings and
standard finishes for the model in question, but shall not include
charges for any upgrades or optional features selected by the third
party homebuyer which are not routinely included in or with
residences built by the Builder at the time of the closing in
question, including but not limited to sunrooms and finished
basements. Additionally, for purposes of this section, "upgrades or
optional features" shall only include those items or things which
are traditionally upgrades or optional features for new homes sold
in the Charles County area as of the date of the closing in
question. Sales incentives, commissions, closing help and closing
costs paid by the Builder shall not be deducted. In the event
Builder substitutes house types on any Lot following Closing, then
Builder shall so notify Developer, and at the time of closing from
the Builder to the home purchaser, Builder shall pay to Developer,
or Developer shall pay to Builder, as applicable, any difference in
price of the affected Lot which results from the substitution of
house types. Builder shall keep the Developer informed of any price
adjustments made from time to time during the term of this
Agreement in the Builder's retail price of the homes to be
constructed on the Lots by the Builder.
(b) The parties anticipate that
Developer will develop Lots at the rate of two hundred (200) Lots
per year. The Builder covenants and agrees to purchase not less
than two hundred (200) Lots per calendar year (pro rated for any
partial calendar year) from the Developer to the extent that the
same are available pursuant to this Agreement. Developer shall
develop the Lots timely so as to have sufficient Lots available for
Builder to purchase one-twelfth of its required annual number of
Lots each month. If Developer does not maintain its development
pace to allow Builder to purchase one-twelfth of its required
annual number of Lots each month, then Builder's annual purchase
requirement shall be reduced by the shortfall in available Lots. If
at any time Builder fails to purchase any Lots made available to
the Builder pursuant to this Agreement, the Developer shall be free
to sell such Lots to any other party and on any other terms, in the
Developer's sole discretion, and such Lots shall count against the
number of Lots which the Builder is entitled to purchase on a
preferential basis pursuant to this Agreement, or call the Builder
in default of the Agreement and exercise the remedies as set forth
in Section 4.
(c)
The Builder acknowledges that the Developer cannot guarantee that a
certain number of Lots will be offered to the Builder pursuant to
this Agreement, and that the Developer cannot guarantee the timing
when Lots will be made available or the exact mix of types of Lots.
The Builder further acknowledges that the Lots will be subject to
the lien, operation and effect of all covenants, conditions and
restric
